1933 Act File No. 2-29786
1940 Act File No. 811-1704
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. 59 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 33 X
AMERICAN LEADERS FUND
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
on _________________ pursuant to paragraph (b)
X 60 days after filing pursuant to paragraph (a)
on pursuant to paragraph (a) of Rule 485.
Registrant has filed with the Securities and Exchange Commission a
declaration pursuant to Rule 24f-2 under the Investment Company Act of
1940, and:
X filed the Notice required by that Rule on May 16, 1994; or
intends to file the Notice required by that Rule on or about
____________; or
during the most recent fiscal year did not sell any securities pursuant
to Rule 24f-2 under the Investment Company Act of 1940, and, pursuant to
Rule 24f-2(b)(2), need not file the Notice.
Copies to:
Thomas J. Donnelly, Esquire Charles H. Morin, Esquire
Houston, Houston & Donnelly Dickstein, Shapiro & Morin
2510 Centre City Tower 2101 L Street, N.W.
650 Smithfield Street Washington, D.C. 20037
Pittsburgh, Pennsylvania 15222
CROSS-REFERENCE SHEET
This Amendment to the Registration Statement of AMERICAN LEADERS
FUND, INC., which is comprised of four classes of shares, (1) Class A
Shares, (2) Class C Shares, (3) Fortress Shares, and (4) Class B Shares and
is comprised of the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
Rule 404(c) Cross Reference)
Item 1. Cover Page Cover Page (1-4).
Item 2. Synopsis Summary of Fund Expenses.
Item 3. Condensed Financial
Information Financial Highlights (1,2,3).
Item 4. General Description of
Registrant General Information (1-4); Fortress
Investment Program (3); Investment
Information; Investment Objective;
Investment Policies; Investment
Limitations (1-4).
Item 5. Management of the Fund Fund Information; Management of the
Fund (1-4); Distribution of Class A
Shares (1); Distribution of Class C
Shares (2); Distribution of Fortress
Shares (3); Distribution of Class B
Shares (4); Administration of the
Fund; Expenses of the Fund and Class A
Shares (1); Expenses of the Fund and
Class C Shares (2); Expenses of the
Fund and Fortress Shares (3): Expenses
of the Fund and Class B Shares (4).
Item 6. Capital Stock and Other
Securities Dividends; Capital Gains; Tax
Information; Federal Income Tax;
Pennsylvania Corporate and Personal
Property Taxes (1-4).
Item 7. Purchase of Securities Being
Offered Net Asset Value; Investing in Class A
Shares (1); Investing in Class C
Shares (2); Investing in Fortress
Shares (3); Investing in Class B
Shares (4); Share Purchases; Minimum
Investment Required; What Shares Cost
(1-4); Eliminating the Sales Charge
(1); Systematic Investment Program;
Exchange Privileges; Certificates and
Confirmations.
Item 8. Redemption or Repurchase Redeeming Class A Shares (1);
Redeeming Class C Shares (2);
Redeeming Fortress Shares (3); and
Redeeming Class B Shares (4); Through
a Financial Institution
(1-4); Directly By Mail (3); Directly
from the Fund (1,2,4) Contingent
Deferred Sales Charge (2,3,4)
Systematic Withdrawal Program (1-4);
Accounts With Low Balances (1-4);
Exchanges For Shares of Other Funds
(3).
Item 9. Pending Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page Cover Page (1-4).
Item 11. Table of Contents Table of Contents (1-4).
Item 12. General Information and
History General Information About the Fund (1-
4).
Item 13. Investment Objectives and
Policies Investment Objectives and Policies (1-
4).
Item 14. Management of the Fund See Part A - Management of the Fund
(1-4).
Item 15. Control Persons and Principal
Holders of Securities The Funds (1-4).
Item 16. Investment Advisory and Other
Services Investment Advisory Services;
Administrative Services.
Item 17. Brokerage Allocation Brokerage Transactions (1-4).
Item 18. Capital Stock and Other
Securities Not Applicable.
Item 19. Purchase, Redemption and
Pricing of Securities Being
Offered Purchasing Shares; Determining Net
Asset Value; Redeeming Shares (1-4).
Item 20. Tax Status Tax Status (1-4).
Item 21. Underwriters See Part A - Distribution of Class A
Shares, Class B Shares, Class C
Shares, and Fortress Shares.
Item 22. Calculation of Performance
Data Total Return; Yield; Performance
Comparisons (1-4).
Item 23. Financial Statements Financial Statements incorporated by
reference to Annual Report of
Registrant dated March 31, 1994, File
Nos. 2-29786 and 811-1704,
(1-3) to be filed by amendment (4).
AMERICAN LEADERS FUND, INC.
CLASS A SHARES
PROSPECTUS
The Class A Shares of American Leaders Fund, Inc. (the "Fund") represent
interests in an open-end, diversified management investment company (a mutual
fund) investing in common stocks and other securities of high quality companies
to achieve growth of capital and income.
This prospectus contains the information you should read and know before you
invest in Class A Shares of the Fund. Keep this prospectus for future reference.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
The Fund has also filed a Combined Statement of Additional Information for Class
A Shares, Class B Shares, Class C Shares and Fortress Shares dated August __,
1994, with the Securities and Exchange Commission. The information contained in
the Combined Statement of Additional Information is incorporated by reference in
this prospectus. You may request a copy of the Combined Statement of Additional
Information free of charge, by calling 1-800-235-4669. To obtain other
information, or make inquiries about the Fund, contact your financial
institution.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated August __, 1994
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--
CLASS A SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
LIBERTY FAMILY OF FUNDS 3
- ------------------------------------------------------
Liberty Family Retirement Program 4
INVESTMENT INFORMATION 5
- ------------------------------------------------------
Investment Objective 5
Investment Policies 5
Acceptable Investments 5
The Leaders List 5
Repurchase Agreements 5
Illiquid Securities 6
Lending of Portfolio Securities 6
Portfolio Turnover 6
Investment Limitations 6
NET ASSET VALUE 6
- ------------------------------------------------------
INVESTING IN CLASS A SHARES 7
- ------------------------------------------------------
Share Purchases 7
Through a Financial Institution 7
Directly from the Distributor 7
Minimum Investment Required 8
What Shares Cost 8
Dealer Concession 8
Reducing the Sales Charge 9
Quantity Discounts and Accumulated
Purchases 9
Letter of Intent 9
Reinvestment Privilege 10
Purchases with Proceeds from
Redemptions of Unaffiliated
Investment Companies 10
Concurrent Purchases 10
Systematic Investment Program 10
Certificates and Confirmations 11
Dividends 11
Capital Gains 11
Retirement Plans 11
EXCHANGE PRIVILEGE 11
- ------------------------------------------------------
Reduced Sales Charge 11
Requirements for Exchange 12
Tax Consequences 12
Making an Exchange 12
Telephone Instructions 12
REDEEMING CLASS A SHARES 13
- ------------------------------------------------------
Through a Financial Institution 13
Directly From the Fund 13
By Telephone 13
By Mail 13
Signatures 14
Contingent Deferred Sales Charge 14
Systematic Withdrawal Program 15
Accounts with Low Balances 15
FUND INFORMATION 15
- ------------------------------------------------------
Management of the Fund 15
Board of Directors 15
Officers and Directors 15
Investment Adviser 18
Advisory Fees 19
Adviser's Background 19
Other Payments to Financial
Institutions 19
Distribution of Class A Shares 20
Administration of the Fund 20
Administrative Services 20
Shareholder Services Plan 20
Custodian 21
Transfer Agent and Dividend
Disbursing Agent 21
Legal Counsel 21
Independent Public Accountants 21
Brokerage Transactions 21
SHAREHOLDER INFORMATION 21
- ------------------------------------------------------
Voting Rights 21
TAX INFORMATION 22
- ------------------------------------------------------
Federal Income Tax 22
Pennsylvania Corporate and
Personal Property Taxes 22
PERFORMANCE INFORMATION 22
- ------------------------------------------------------
OTHER CLASSES OF SHARES 23
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--
CLASS C SHARES 24
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--
FORTRESS SHARES 25
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)............................... 4.50%
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)..................................................................... None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable) (1)............................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)........................................ None
Exchange Fee.............................................................................................. None
<CAPTION>
ANNUAL CLASS A SHARES OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee............................................................................................ 0.67%
12b-1 Fee................................................................................................. None
Total Other Expenses...................................................................................... 0.52%
Shareholder Services Fee (2)................................................................. 0.17%
Total Class A Shares Operating Expenses (3)........................................................... 1.19%
</TABLE>
(1) Shareholders who purchased Shares with the proceeds of a redemption of
shares of a mutual fund sold with a sales charge and not distributed by
Federated Securities Corp., prior to June 1, 1994, will be charged a
contingent deferred sales charge by the Fund's distributor of .50 of 1% for
redemptions made within one year of purchase. See "Contingent Deferred Sales
Charge" on page 14.
(2) The maximum shareholder servicing fee is 0.25%.
(3) The Total Class A Shares Operating Expenses in the table above are based on
expenses expected during the fiscal year ending March 31, 1995. The Total
Class A Shares Operating Expenses were 1.18% for the fiscal year ended March
31, 1994.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF CLASS A SHARES OF THE FUND WILL
BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE
VARIOUS COSTS AND EXPENSES, SEE "INVESTING IN CLASS A SHARES" AND "FUND
INFORMATION." WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE SUBJECT TO
ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming (1)
5% annual return and (2) redemption at the end of each time period....... $ 57 $ 81 $ 107 $ 183
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The information set forth in the foregoing table and example relates only to
Class A Shares of the Fund. The Fund also offers three additional classes of
shares called Class B Shares, Class C Shares and Fortress Shares. Class A
Shares, Class B Shares, Class C Shares and Fortress Shares are all subject to
certain of the same expenses. However, Class B Shares are subject to a 12b-1 fee
of 0.75%, and a maximum contingent deferred sales charge of 3.00%, but are not
subject to a sales load. Class C Shares are subject to a 12b-1 fee of 0.75%, and
a maximum contingent deferred sales charge of 1.00% but are not subject to a
sales load. Fortress Shares are subject to a maximum sales load of 1.00% and a
contingent deferred sales charge of 1.00% but are not subject to a 12b-1 fee.
See "Other Classes of Shares."
FINANCIAL HIGHLIGHTS--CLASS A SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by Arthur Andersen & Co., the Fund's
independent public accountants. Their report dated May 13, 1994 on the Fund's
financial statements for the year ended March 31, 1994 and the following table
for each of the periods presented is included in the Annual Report, which is
incorporated by reference.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985*
<S> <C> <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 $ 11.55
- ----------------------
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 0.03
- ----------------------
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 0.01
- ---------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total from investment
operations 0.41 2.34 1.63 1.65 0.91 1.58 (.76) 2.27 3.41 0.04
- ----------------------
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 $ 11.59
- ---------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN** 2.76% 18.31% 12.91% 14.17% 7.13% 13.23% (5.32)% 18.38% 31.80% 0.35%
- ----------------------
RATIOS TO AVERAGE NET
ASSETS
- ----------------------
Expenses 1.18% 1.13% 1.02% 1.02% 1.01% 1.01% 1.00% 1.00% 1.09% 1.06%(a)
- ----------------------
Net investment income 1.48% 2.07% 2.12% 3.06% 4.23% 3.85% 3.35% 3.44% 4.42% 3.18%(a)
- ----------------------
Expense waiver/
reimbursement (b) -- 0.06% 0.16% 0.30% 0.35% 0.12% 0.11% 0.12% 0.18% 0.22%(a)
- ----------------------
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 71,899
- ----------------------
Portfolio turnover
rate 27% 39% 67% 57% 50% 27% 65% 28% 31% 6%
- ----------------------
<CAPTION>
YEAR ENDED
<S> <C>
1985
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.97
- ----------------------
INCOME FROM INVESTMENT
OPERATIONS
- ----------------------
Net investment income 0.54
- ----------------------
Net realized and
unrealized gain
(loss) on investments 1.91
- ---------------------- -------------
Total from investment
operations 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 $ 11.55
- ---------------------- -------------
TOTAL RETURN** 25.85
- ----------------------
RATIOS TO AVERAGE NET
ASSETS
- ----------------------
Expenses 1.29 %
- ----------------------
Net investment income 5.03 %
- ----------------------
Expense waiver/
reimbursement (b) 0.05 %
- ----------------------
SUPPLEMENTAL DATA
- ----------------------
Net assets, end of
period (000 omitted) 71,455
- ----------------------
Portfolio turnover
rate 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).
Further information about the Fund performance is contained in the Fund's annual
report dated March 31, 1994, which can be obtained free of charge.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Fund was incorporated under the laws of the State of Maryland on July 22,
1968. The Fund's address is Liberty Center, Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779. The Articles of Incorporation permit the
Fund to offer separate series of shares of beneficial interest representing
interests in separate portfolios of securities. The shares in any one portfolio
may be offered in separate classes. With respect to this Fund, as of the date of
this prospectus, the Board of Directors ("Directors") has established four
classes of shares, known as Class A Shares, Class B Shares, Class C Shares and
Fortress Shares. This prospectus relates only to the Class A Shares ("Shares")
of the Fund.
Class A Shares of the Fund are designed for individuals as a convenient means of
accumulating an interest in a professionally managed, diversified portfolio of
common stocks and other securities of high quality companies. A minimum initial
investment of $500 is required, unless the investment is in a retirement
account, in which case the minimum initial investment is $50.
Shares are sold at net asset value plus an applicable sales charge and are
redeemed at net asset value.
The Fund's current net asset value and offering price can be found in the mutual
funds section of local newspapers under "Liberty Family Funds."
LIBERTY FAMILY OF FUNDS
- --------------------------------------------------------------------------------
This Fund is a member of a family of mutual funds, collectively known as the
Liberty Family of Funds.
The other funds in the Liberty Family of Funds are the Class A Shares of:
_ Capital Growth Fund, providing appreciation of capital primarily through
equity securities;
_ Fund for U.S. Government Securities, Inc., providing current income
through long-term U.S. government securities;
_ International Equity Fund, providing long-term capital growth and income
through international securities;
_ International Income Fund, providing a high level of current income
consistent with prudent investment risk through high-quality debt
securities denominated primarily in foreign currencies;
_ Liberty Equity Income Fund, Inc., providing above-average income and
capital appreciation through income-producing equity securities;
_ Liberty High Income Bond Fund, Inc., providing high current income
through high-yielding, lower-rated, corporate bonds;
_ Liberty Municipal Securities Fund, Inc., providing a high level of
current income exempt from federal regular income tax through municipal
bonds;
_ Liberty U.S. Government Money Market Trust, providing current income
consistent with stability of principal through high-quality U.S.
government securities;
_ Liberty Utility Fund, Inc., providing current income and long-term growth
of income, primarily through electric, gas, and communications utilities;
_ Limited Term Fund, providing a high level of current income consistent
with minimum fluctuation in principal value through investment grade
securities;
_ Limited Term Municipal Fund, providing a high level of current income
exempt from federal regular income tax consistent with the preservation
of principal, primarily limited to municipal securities;
_ Michigan Intermediate Municipal Trust, providing current income exempt
from federal regular income tax and the personal income taxes imposed by
the state of Michigan and Michigan municipalities, primarily through
Michigan municipal securities;
_ Pennsylvania Municipal Income Fund, providing current income exempt from
federal regular income tax and the personal income taxes imposed by the
Commonwealth of Pennsylvania, primarily through Pennsylvania municipal
securities;
_ Strategic Income Fund, providing a high level of current income,
primarily through domestic and foreign corporate debt obligations;
_ Tax-Free Instruments Trust, providing current income consistent with
stability of principal and exempt from federal income tax, through
high-quality, short-term municipal securities; and
_ World Utility Fund, providing total return through securities issued by
domestic and foreign companies in the utilities industries.
Prospectuses for these funds are available by writing to Federated Securities
Corp.
Each of the funds may also invest in certain other types of securities as
described in each fund's prospectus.
The Liberty Family of Funds provides flexibility and diversification for an
investor's long-term investment planning. It enables an investor to meet the
challenges of changing market conditions by offering convenient exchange
privileges which give access to various investment vehicles and by providing the
investment services of a proven, professional investment adviser.
Shareholders of Class A Shares participating in The Liberty Account are
designated as Liberty Life Members. Liberty Life Members are exempt from sales
charges on future purchases in and exchanges between the Class A shares of any
funds in the Liberty Family of Funds, as long as they maintain a $500 balance in
one of the Liberty Funds.
LIBERTY FAMILY RETIREMENT PROGRAM
The Fund is also a member of the Liberty Family Retirement Program (the
"Program"), an integrated program of investment options, plan record keeping,
and consultation services for 401(k) and other participant-directed benefit and
savings plans. Under the Program, employers or plan trustees may select a group
of investment options to be offered in a plan which also uses the Program for
record keeping and administrative services. Additional fees are charged to
participating plans for these services. As part of the Program, exchanges may be
readily made between investment options selected by the employer or plan
trustee.
The other funds participating in the Liberty Family Retirement Program are:
Capital Growth Fund, Fund for U.S. Government Securities, Inc., International
Equity Fund, International Income Fund, Liberty Equity Income Fund, Inc.,
Liberty High Income Bond Fund, Inc., Liberty Utility Fund, Inc., Prime
Cash Series, and Stock and Bond Fund, Inc.
No sales charge is imposed on purchases made by qualified retirement plans with
over $1 million invested in funds available in the Liberty Family Retirement
Program.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek growth of capital and of income
by concentrating the area of investment decision in the securities of high
quality companies. The Fund's investment approach is based upon the conviction
that over the longer term, the economy will continue to expand and develop and
that this economic growth will be reflected importantly in the growth of major
corporations. The Fund pursues this investment objective by investing at least
65% of its assets in a portfolio of securities issued by the one hundred
companies contained in "The Leaders List." Generally, the Fund's management
makes portfolio selections utilizing fundamental analysis, with emphasis on
earning power, financial condition, and valuation. While there is no assurance
that the Fund will achieve its investment objective, it endeavors to do so by
following the investment policies described in this prospectus. The investment
objective and the policies and limitations described below cannot be changed
without approval of shareholders.
INVESTMENT POLICIES
ACCEPTABLE INVESTMENTS. The Fund invests primarily in securities of companies
selected from "The Leaders List" by the Fund's investment adviser on the basis
of traditional fundamental research techniques and standards. The securities in
which the Fund invests include, but are not limited to:
common stocks;
preferred stocks; and
investment grade corporate bonds and notes; and
warrants.
The Fund may also temporarily hold cash and invest in U.S. government securities
in such proportions as the Fund's investment adviser may deem necessary for
defensive purposes.
THE LEADERS LIST. "The Leaders List" is a trade name which represents a
list of 100 blue chip companies selected by the Fund's investment adviser
principally on the basis of fundamental research techniques and standards.
Shareholders can obtain a copy of "The Leaders List" by contacting the
Fund. In the opinion of the investment adviser, securities of these
companies represent diversified and highly marketable investments. The list
is subject to continuous review and modification. A number of standards and
fundamental research factors are used in determining "The Leaders List."
"The Leaders List" includes leading companies in their industries
determined in terms of sales, earnings, and/or market capitalization.
REPURCHASE AGREEMENTS. The acceptable investments in which the Fund
invests may be purchased pursuant to repurchase agreements. Repurchase
agreements are arrangements in which banks, broker/dealers, and other
recognized financial institutions sell U.S. government or other
securities to the Fund and agree at the time of sale to repurchase
them at a mutually agreed upon time and price.
ILLIQUID SECURITIES. The Fund may acquire securities which are subject to
legal or contractual delays, restrictions, and costs on resale. Because of
time limitations, the Fund might not be able to dispose of these securities
at reasonable prices or at times advantageous to the Fund. Where the Fund
considers these securities to be illiquid, it intends to limit the purchase
of them together with other securities considered to be illiquid, including
repurchase agreements providing for settlement in more than seven days
after notice, to not more than 10% of its net assets.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities to broker/dealers, banks, or other
institutional borrowers of securities. The Fund will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the
investment adviser has determined are creditworthy under guidelines established
by the Fund's Board of Directors and will receive collateral equal to at least
100% of the value of the securities loaned.
PORTFOLIO TURNOVER. Securities in the Fund's portfolio will be sold whenever
the Fund's investment adviser believes it is appropriate to do so in light of
the Fund's investment objective, without regard to the length of time a
particular security may have been held. The adviser to the Fund does not
anticipate that portfolio turnover will result in adverse tax consequences. Any
such trading will increase the Fund's portfolio turnover rate and transaction
costs.
INVESTMENT LIMITATIONS
The Fund will not:
borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a portfolio instrument for a
percentage of its cash value with an agreement to buy it back on a set
date) except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets;
invest more than 5% of its total assets in securities of one issuer
(except U.S. government securities) or purchase more than 10% of any class
of voting securities of any one issuer;
invest more than 5% of its total assets in securities of issuers that have
records of less than three years of continuous operations; or
purchase restricted securities if immediately thereafter more than 15% of
the net assets of the Fund would be invested in such securities.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Class A Shares in the market value
of all securities and other assets of the Fund, subtracting the interest of the
Class A Shares in the liabilities of the Fund and those attributable to the
Class A Shares, and dividing the remainder by the total number of Class A Shares
outstanding. The net asset value for Class A Shares may differ from that of
Class B Shares, Class C Shares and Fortress
Shares 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.
INVESTING IN CLASS A SHARES
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open. Shares may
be purchased through a financial institution which has a sales agreement with
the distributor or directly from the distributor, Federated Securities Corp.
once an account has been established. In connection with the sale of Shares,
Federated Securities Corp. may from time to time offer certain items of nominal
value to any shareholder or investor. The Fund reserves the right to reject any
purchase request.
Participants in plans under the Liberty Family Retirement Program shall purchase
Shares in accordance with the requirements of their respective plans.
THROUGH A FINANCIAL INSTITUTION. An investor may call his financial institution
(such as a bank or an investment dealer) to place an order to purchase Shares or
when converted into federal funds.
Orders placed through a financial institution are considered received when the
Fund is notified of the purchase order or when converted into federal funds.
Purchase orders through a registered broker/dealer must be received by the
broker before 4:00 p.m. (Eastern time) and must be transmitted by the broker to
the Fund before 5:00 p.m. (Eastern time) in order for Shares to be purchased at
that day's price. Purchase orders through other financial institutions must be
received by the financial institution and transmitted to the Fund before 4:00
p.m. (Eastern time) in order for Shares to be purchased at that day's price. It
is the financial institution's responsibility to transmit orders promptly.
DIRECTLY FROM THE DISTRIBUTOR. An investor may place an order to purchase
Shares directly from Federated Securities Corp. once an account has been
established. To do so:
complete and sign the new account form available from the Fund;
enclose a check made payable to American Leaders Fund, Inc.--Class A
Shares; and
mail both to the Fund's transfer agent Federated Services Company, P.O.
Box 8604, Boston, MA 02266-8604.
Orders by mail are considered received after payment by check is converted by
the transfer agent's bank State Street Bank and Trust Company ("State Street
Bank") into federal funds. This is generally the next business day after State
Street Bank receives the check.
To purchase Shares directly from the distributor by wire once an account has
been established, call the Fund. All information needed will be taken over the
telephone, and the order is considered received when the Fund receives payment
by wire. Federal funds should be wired as follows: Federated Services Company,
c/o State Street Bank and Trust Company, Boston, Massachusetts 02105; Attention:
Mutual Fund Servicing Division; For Credit to: American Leaders Fund,
Inc.--Class A Shares; Title or Name of Account; Wire Order Number and/or Account
Number. Shares cannot be purchased by wire on Columbus Day, Veterans' Day, or
Martin Luther King Day.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Class A Shares is $500 unless the investment
is in a retirement plan, in which case the minimum initial investment is $50.
Subsequent investments must be in amounts of at least $100, except for
retirement plans, which must be in amounts of at least $50. (Other minimum
investment requirements may apply to investments through the Liberty Family
Retirement Program.)
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received, plus a sales charge as follows:
<TABLE>
<CAPTION>
SALES CHARGE AS SALES CHARGE AS
A PERCENTAGE OF A PERCENTAGE OF
AMOUNT OF TRANSACTION PUBLIC OFFERING PRICE NET AMOUNT INVESTED
<S> <C> <C>
Less than $100,000 % 4.50 % 4.71
$100,000 but less than $250,000 % 3.75 % 3.90
$250,000 but less than $500,000 % 2.50 % 2.56
$500,000 but less than $750,000 % 2.00 % 2.04
$750,000 but less than $1 million % 1.00 % 1.01
$1 million or more % 0.00 % 0.00
</TABLE>
The net asset value is determined at 4:00 p.m. (Eastern time), Monday through
Friday, except on: (i) days on which there are not sufficient changes in the
value of the Fund's portfolio securities that its net asset value might be
materially affected; (ii) days during which no Shares are tendered for
redemption and no orders to purchase Shares are received; or (iii) the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgving Day, and Christmas Day.
Shareholders designated as Liberty Life Members are exempt from sales charges.
Shareholders of record in the Fund on February 28, 1987, who are NOT
participating in The Liberty Account are exempt from sales charges only in the
Fund and only as long as they maintain a $500 balance in the Fund.
No sales charge is imposed for Shares purchased through bank trust departments
or investment advisers registered under the Investment Advisers Act of 1940 as
amended, or retirement plans where the third party administrator has entered
into certain arrangements with Federated Securities Corp. or its affiliates.
However, investors who purchase Shares through a trust department or investment
adviser may be charged an additional service fee by that institution.
No sales charge is imposed on purchases made by qualified retirement plans with
over $1 million invested in Funds available in the Liberty Family Retirement
Program.
DEALER CONCESSION. For sales of Shares, a dealer will normally receive up to
90% of the applicable sales charge. Any portion of the sales charge which is not
paid to a dealer will be retained by the distributor. However, the distributor
may offer to pay dealers up to one-hundred percent of the sales load retained by
it. Such payments may take the form of cash or promotional incentives, such as
payment of certain expenses of qualified employees and their spouses to attend
informational meetings about the Fund or other special events at
recreational-type facilities, or of items of material value. In some instances,
these incentives will be made available only to dealers whose employees have
sold or may sell significant amount of Shares. On purchases of $1 million
or more, the investor pays no sales charge, however, the distributor will
make twelve monthly payments to the dealer totaling 0.25% of the public
offering price over the first year following the purchase. Such payments
are based on the original purchase price of shares outstanding at each
month end.
The sales charge for Shares sold other than through registered broker/dealers
will be retained by Federated Securities Corp. Federated Securities Corp. may
pay fees to banks out of the sales charge in exchange for sales and/or
administrative services performed on behalf of the bank's customers in
connection with the initiation of customer accounts and purchases of Shares.
Effective June 1, 1994, and until further notice, a dealer will receive 100%
dealer reallowance plus an additional .50 of 1% on all purchases of Shares with
the exception of purchases of shares in which no sales charge is paid.
REDUCING THE SALES CHARGE
The sales charge can be reduced on the purchase of Shares through:
quantity discounts and accumulated purchases;
signing a 13-month letter of intent;
using the reinvestment privilege;
purchases with proceeds from redemptions of unaffiliated mutual fund
shares; or
concurrent purchases.
QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES. As shown in the table above,
larger purchases reduce the sales charge paid. The Fund will combine purchases
of Shares made on the same day by the investor, the investor's spouse, and the
investor's children under age 21 when it calculates the sales charge. In
addition, the sales charge, if applicable, is reduced for purchases made at one
time by a trustee or fiduciary for a single trust estate or a single fiduciary
account.
If an additional purchase of Shares is made, the Fund will consider the previous
purchases still invested in the Fund. For example, if a shareholder already owns
Shares having a current value at the public offering price of $90,000 and he
purchases $10,000 more at the current public offering price, the sales charge on
the additional purchase according to the schedule now in effect would be 3.75%,
not 4.50%.
To receive the sales charge reduction, Federated Securities Corp. must be
notified by the shareholder in writing or by his financial institution at the
time the purchase is made that Shares are already owned or that purchases are
being combined. The Fund will reduce the sales charge after it confirms the
purchases.
LETTER OF INTENT. If a shareholder intends to purchase at least $100,000 of
shares in the funds in the Liberty Family of Funds over the next 13 months, the
sales charge may be reduced by signing a letter of intent to that effect. This
letter of intent includes a provision for a sales charge adjustment depending on
the amount actually purchased within the 13-month period and a provision for the
custodian to hold 4.5% of the total amount intended to be purchased in escrow
(in shares) until such purchase is completed.
The 4.5% held in escrow will be applied to the shareholder's account at the end
of the 13-month period unless the amount specified in the letter of intent is
not purchased. In this event, an appropriate number of escrowed shares may be
redeemed in order to realize the difference in the sales charge.
This letter of intent will not obligate the shareholder to purchase Shares, but
if he does, each purchase during the period will be at the sales charge
applicable to the total amount intended to be purchased. This letter may be
dated as of a prior date to include any purchases made within the past 90 days
towards the dollar fulfillment of the letter of intent. Prior trade prices will
not be adjusted.
REINVESTMENT PRIVILEGE. If Shares in the Fund have been redeemed, the
shareholder has a one-time right, within 120 days, to reinvest the redemption
proceeds at the next-determined net asset value without any sales charge.
Federated Securities Corp. must be notified by the shareholder in writing or by
his financial institution of the reinvestment in order to eliminate a sales
charge. If the shareholder redeems his Shares in the Fund, there may be tax
consequences.
PURCHASES WITH PROCEEDS FROM REDEMPTIONS OF UNAFFILIATED INVESTMENT COMPANIES.
Investors may purchase Shares at net asset value, without a sales charge, with
the proceeds from the redemption of shares of an investment company was sold
with a sales charge or commission and was not distributed by Federated
Securities Corp. (This does not include shares of a mutual fund which were or
would be subject to a contingent deferred sales charge upon redemption.) The
purchase must be made within 60 days of the redemption, and Federated Securities
Corp. must be notified by the investor in writing, or by his financial
institution, at the time the purchase is made.
CONCURRENT PURCHASES. For purposes of qualifying for a sales charge reduction,
a shareholder has the privilege of combining concurrent purchases of two or more
funds in the Liberty Family of Funds, the purchase price of which includes a
sales charge. For example, if a shareholder concurrently invested $30,000 in one
of the other Liberty Funds with a sales charge, and $70,000 in this Fund, the
sales charge would be reduced.
To receive this sales charge reduction, Federated Securities Corp. must be
notified by the shareholder in writing or by his financial institution at the
time the concurrent purchases are made. The Fund will reduce the sales charge
after it confirms the purchases.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their investment on
a regular basis in a minimum amount of $100. Under this program, funds may be
automatically withdrawn periodically from the shareholder's checking account and
invested in Fund Shares at the net asset value next determined after an order is
received by the transfer agent, plus the applicable sales charge. A shareholder
may apply for participation in this program through his financial institution or
directly through the Fund.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
in writing to Federated Services Company.
Detailed confirmations of each purchase and redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
that quarter.
DIVIDENDS
Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date. Dividends are automatically reinvested in additional
Shares of the Fund on payment dates at the ex-dividend date net asset value
without a sales load, unless shareholders request cash payments on the new
account form or by writing to the transfer agent. All shareholders on the record
date are entitled to the dividend. If Shares are redeemed or exchanged prior to
the record date or purchased after the record date, those Shares are not
entitled to that month's dividend.
CAPITAL GAINS
Net long-term capital gains realized by the Fund, if any, will be distributed at
least once every twelve months.
RETIREMENT PLANS
Shares of the Fund can be purchased as an investment for retirement plans or for
IRA accounts. For further details, including prototype retirement plans, contact
the Fund and consult a tax adviser.
EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
Class A shareholders may exchange all or some of their Shares for Class A Shares
in other funds in the Liberty Family of Funds at net asset value. Shareholders
of Class A Shares may also exchange into certain Bonds which are advised by
subsidiaries or affiliates of Federated Investors ("Federated Funds") which are
sold with a sales charge different from that of the Fund's or with no sales
charge. These exchanges are made at net asset value plus the difference between
the Fund's sales charge already paid and any sales charge of the fund into which
the Shares are to be exchanged, if higher. Neither the Fund nor any of the funds
in the Liberty Family of Funds imposes any additional fees on exchanges.
Participants in a plan under the Liberty Family Retirement Program may exchange
all or some of their Shares for Class A Shares of other funds offered under the
plan at net asset value.
REDUCED SALES CHARGE
If a shareholder making such an exchange qualifies for a reduction of the sales
charge, Federated Securities Corp. must be notified in writing by the
shareholder or by his financial institution.
REQUIREMENTS FOR EXCHANGE
Shareholders using this privilege must exchange Shares having a net asset value
equal to the minimum investment requirements of the fund into which the exchange
is being made. Before the exchange, the shareholder must receive a prospectus of
the fund for which the exchange is being made.
This privilege is available to shareholders resident in any state in which the
fund Shares being acquired may be sold. Upon receipt of proper instructions and
required supporting documents, Shares submitted for exchange are redeemed and
the proceeds invested in shares of the other fund. The exchange privilege may be
modified or terminated at any time. Shareholders will be notified of the
modification or termination of the exchange privilege.
Further information on the exchange privilege and prospectuses for the Liberty
Family of Funds or certain Federated Funds are available by contacting the Fund.
TAX CONSEQUENCES
An exercise of the exchange privilege is treated as a sale for federal income
tax purposes. Depending on the circumstances, a capital gain or loss may be
realized.
MAKING AN EXCHANGE
Instructions for exchanges for the Liberty Family of Funds or certain Federated
Funds may be given in writing or by telephone. Written instructions may require
a signature guarantee. Shareholders of the Fund may have difficulty in making
exchanges by telephone through brokers and other financial institutions during
times of drastic economic or market changes. If a shareholder cannot contact his
broker or financial institution by telephone, it is recommended that an exchange
request be made in writing and sent by overnight mail to Federated Services
Company, P.O. Box 8604, Boston, Massachusetts 02266-8604.
Instructions for exchanges for the Liberty Family Retirement Program should be
given to the plan administrator.
TELEPHONE INSTRUCTIONS. Telephone instructions made by the investor may be
carried out only if a telephone authorization form completed by the investor is
on file with the Fund. Telephone exchange instructions may be recorded. If the
instructions are given by a broker, a telephone authorization form completed by
the broker must be on file with the Fund. If reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions. Shares may be exchanged between two funds by
telephone only if the two funds have identical shareholder registrations.
Any Shares held in certificate form cannot be exchanged by telephone but must be
forwarded to Federated Services Company, P.O. Box 8604, Boston, Massachusetts
02266-8604 and deposited to the shareholder's account before being exchanged.
Such instructions will be processed as of 4:00 p.m. (Eastern time) and must be
received by the Fund before that time for shares to be exchanged the same day.
Shareholders exchanging into a Fund will not receive any dividend that is
payable to shareholders of record on that date. This privilege may be modified
or terminated at any time.
REDEEMING CLASS A SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at their net asset value less any applicable contingent
deferred sales charge, next determined after the transfer agent receives the
redemption request. Redemptions will be made on days on which the Fund computes
its net asset value. Redemptions can be made through a financial institution or
directly from the Fund. Redemption requests must be received in proper form.
Redemptions of Shares held through the Liberty Family Retirement Program will be
governed by the requirements of the respective plans.
THROUGH A FINANCIAL INSTITUTION
A shareholder may redeem Shares of the Fund by calling his financial institution
(such as a bank or an investment dealer) to request the redemption. Shares will
be redeemed at the net asset value less any applicable contingent deferred sales
charge, next determined after the Fund receives the redemption request from the
financial institution. Redemption requests through a registered broker/dealer
must be received by the broker before 4:00 p.m. (Eastern time) and must be
transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in order
for Shares to be redeemed at that day's net asset value. Redemption requests
through other financial institutions must be received by the financial
institution and transmitted to the Fund before 4:00 p.m. (Eastern time) in order
for Shares to be redeemed at that day's net asset value. The financial
institution is responsible for promptly submitting redemption requests and
providing proper written redemption instructions to the Fund. The financial
institution may charge customary fees and commissions for this service.
DIRECTLY FROM THE FUND
BY TELEPHONE. Shareholders who have not purchased through a financial
institution may redeem their Shares by telephoning the Fund. Telephone
redemption instructions may be recorded. The proceeds will be mailed to the
shareholder's address of record or wire transferred to the shareholder's account
at a domestic commercial bank that is a member of the Federal Reserve System,
normally within one business day, but in no event longer than seven days after
the request. The minimum amount for a wire transfer is $1,000. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
An authorization form permitting the Fund to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Federated Securities Corp. If reasonable procedures are not
followed by the fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption should be considered.
BY MAIL. Any shareholder may redeem Shares by sending a written request to
Federated Services Company, P.O. Box 8604, Boston, Massachusetts 02266-8604. The
written request should include the shareholder's name, the Fund name and class
designation, the account number, and the Share or dollar amount requested, and
should be signed exactly as the Shares are registered.
If Share certificates have been issued, they must be properly endorsed and
should be sent by registered or certified mail with the written request.
Shareholders should call the Fund for assistance in redeeming by mail.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the Fund, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after receipt of a proper written redemption
request.
CONTINGENT DEFERRED SALES CHARGE
Shareholders who purchased Shares with the proceeds of a redemption of shares of
a mutual fund sold with a sales charge and not distributed by Federated
Securities Corp. prior to June 1, 1994, will be charged a contingent deferred
sales charge by the Fund's distributor of .50 of 1% for redemptions made within
one year of purchase. Purchases under the program made after that date will not
be subject to any type of contingent deferred sales charge.
The contingent deferred sales charge will not be imposed on Shares acquired
through reinvestment of dividends or distributions of short-term or long-term
capital gains. Redemptions are deemed to have occurred in the following order:
i) Shares acquired through the reinvestment of dividends and long-term capital
gains, ii) purchases of Shares occurring more than one year before the date of
redemption, iii) purchases of Shares within the previous year without the use of
redemption proceeds as described above, and iv) purchases of Shares within the
previous year through the use of redemption proceeds as described above.
The contingent deferred sales charge will not be imposed when a redemption
results from a tax-free return under the following circumstances: (i) a total or
partial distribution from a qualified retirement plan, other than an IRA, Keogh
Plan, or a custodial account, following retirement; (ii) a total or partial
distribution from an IRA, Keogh Plan, or a custodial account, after the
beneficial owner attains age 59-1/2; or (iii) from the death or permanent and
total disability of the beneficial owner. The exemption from the contingent
deferred sales charge for qualified plans, an IRA, Keogh Plan or a custodial
account does not extend to account transfers, rollovers, or other redemptions
made for purposes of reinvestment.
A contingent deferred sales charge will not be charged in connection with
exchanges of Shares for Class A Shares in other Liberty Family Funds or Liberty
Family Retirement Program funds or in connection with redemptions by the Fund of
accounts with low balances. No contingent deferred sales charge will be charged
for redemptions from the Liberty Family Retirement Program. For additional
information, see "Other Payments to Financial Institutions."
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount not less
than $100 may take advantage of the Systematic Withdrawal Program. Under this
program, Shares are redeemed to provide for periodic withdrawal payments in an
amount directed by the shareholder. Depending upon the amount of the withdrawal
payments, the amount of dividends paid and capital gains distributions with
respect to Shares, and the fluctuation of the net asset value of Shares redeemed
under this program, redemptions may reduce, and eventually deplete, the
shareholder's investment in the Fund. For this reason, payments under this
program should not be considered as yield or income on the shareholder's
investment in the Fund. To be eligible to participate in this program, a
shareholder must have an account value of at least $10,000. A shareholder may
apply for participation in this program through his financial institution. Due
to the fact that Shares are sold with a sales charge, it is not advisable for
shareholders to be purchasing Shares while participating in this program.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem Shares in any account, except retirement plans, and pay the proceeds to
the shareholder if the account balance falls below the required minimum value of
$500. This requirement does not apply, however, if the balance falls below $500
because of changes in the Fund's net asset value. Before Shares are redeemed to
close an account, the shareholder is notified in writing and allowed 30 days to
purchase additional Shares to meet the minimum requirement.
FUND INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
BOARD OF DIRECTORS. The Fund is managed by a Board of Directors. The Directors
are responsible for managing the Fund's business affairs and for exercising all
the Fund's powers except those reserved for the shareholders. An Executive
Committee of the Board of Directors handles the Board's responsibilities between
meetings of the Board.
OFFICERS AND DIRECTORS. Officers and Directors are listed with their addresses,
principal occupations and present positions, including any affiliation with
Federated Advisers, Federated Investors, Federated Securities Corp., Federated
Services Company, Federated Administrative Services, and the Funds (as defined
in the Combined Statement of Additional Information).
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE FUND DURING PAST FIVE YEARS
<S> <C> <C>
Chairman and Trustee, Federated Investors; Chairman and
Trustee, Federated Advisers, Federated Management, and
Federated Research; Director, AEtna Life and Casualty
Company; Chief Executive Officer and Director, Trustee, or
Managing General Partner of the Funds; formerly, Director,
John F. Donahue\* The Standard Fire Insurance Company. Mr. Donahue is the
Federated Investors Tower President and father of J. Christopher Donahue, Vice President and
Pittsburgh, PA Director Director of the Fund.
John T. Conroy, Jr.
Wood/IPC Commercial President, Investment Properties Corporation; Senior
Department Vice-President, John R. Wood and Associates, Inc., Realtors;
John R. Wood and President, Northgate Village Development Corporation;
Associates, Inc., General Partner or Trustee in private real estate ventures
Realtors in Southwest Florida; Director, Trustee, or Managing General
3255 Tamiami Trail North Partner of the Funds; formerly, President, Naples Property
Naples, FL Director Management, Inc.
William J. Copeland Director and Member of the Executive Committee, Michael
One PNC Plaza-- Baker, Inc.; Director, Trustee, or Managing General Partner
23rd Floor of the Funds; formerly, Vice Chairman and Director, PNC Bank
Pittsburgh, PA Director N.A. and PNC Bank Corp and Director, Ryan Homes, Inc.
President and Trustee, Federated Investors; and Trustee,
Federated Administrative Services; Federated Advisers,
Federated Management, and Federated Research; President or
J. Christopher Donahue* Vice President of the Funds; Director, Trustee, or Managing
Federated Investors Tower Vice President and General Partner of some of the Funds. Mr. Donahue is the son
Pittsburgh, PA Director of John F. Donahue, Chairman and Director of the Fund.
James E. Dowd Attorney-at-law; Director, The Emerging Germany Fund, Inc.;
571 Hayward Mill Road Director, Trustee, or Managing General Partner of the Funds;
Concord, MA Director formerly, Director, Blue Cross of Massachusetts, Inc.
Lawrence D. Ellis, M.D. Hematologist, Oncologist, and Internist, Presbyterian and
3471 Fifth Avenue Montefiore Hospitals; Clinical Professor of Medicine and
Suite 1111 Trustee, University of Pittsburgh; Director, Trustee, or
Pittsburgh, PA Director Managing General Partner of the Funds.
Attorney-at-law; Partner, Meyer and Flaherty; Director,
Eat'N Park Restaurants, Inc., and Statewide Settlement
Edward L. Flaherty, Jr.\ Agency, Inc.; Director, Trustee, or Managing General Partner
5916 Penn Mall of the Funds; formerly, Counsel, Horizon Financial, F.A.,
Pittsburgh, PA Director Western Region.
Consultant; State Representative, Commonwealth of
Massachusetts; Director, Trustee, or Managing General
Peter E. Madden Partner of the Funds; formerly, President, State Street Bank
225 Franklin Street and Trust Company and State Street Boston Corporation and
Boston, MA Director Trustee, Lahey Clinic Foundation, Inc.
Attorney-at-law; Partner, Meyer and Flaherty; Chairman,
Gregor F. Meyer Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.;
5916 Penn Mall Director, Trustee, or Managing General Partner of the Funds;
Pittsburgh, PA Director formerly, Vice Chairman, Horizon Financial, F.A.
Professor, Foreign Policy and Management Consultant;
Trustee, Carnegie Endowment for International Peace, RAND
Corporation, Online Computer Library Center, Inc., and U.S.
Wesley W. Posvar Space Foundation; Chairman, Czecho Slovak Management Center;
1202 Cathedral Director, Trustee, or Managing General Partner of the Funds;
of Learning President Emeritus, University of Pittsburgh; formerly,
University of Pittsburgh Chairman, National Advisory Council for Environmental Policy
Pittsburgh, PA Director and Technology.
Marjorie P. Smuts
4905 Bayard Street Public relations/marketing consultant; Director, Trustee, or
Pittsburgh, PA Director Managing General Partner of the Funds.
Executive Vice President and Trustee, Federated Investors;
Richard B. Fisher President and Director, Federated Securities Corp.;
Federated Investors Tower President or Vice President of the Funds; Director or
Pittsburgh, PA Vice President Trustee of some of the Funds.
Vice President, Treasurer, and Trustee, Federated In-
vestors; Vice President and Treasurer, Federated Advisers,
Federated Management, and Federated Research; Executive Vice
President, Treasurer, and Director, Federated Securities
Edward C. Gonzales* Corp.; Chairman, Treasurer, and Trustee, Federated
Federated Investors Tower Vice President and Administrative Services; Trustee or Director of some of the
Pittsburgh, PA Treasurer Funds; Vice President and Treasurer of the Funds.
Vice President, Secretary, General Counsel, and Trustee,
Federated Investors; Vice President, Secretary, and Trustee,
Federated Advisers, Federated Management, and Federated
Research; Executive Vice President, Secretary, and Trustee,
Federated Administrative Services; Trustee, Federated
John W. McGonigle Services Company; Director and Executive Vice President,
Federated Investors Tower Vice President Federated Securities Corp.; Vice President and Secretary of
Pittsburgh, PA and Secretary the Funds.
Vice President and Trustee, Federated Investors; Executive
Vice President, Federated Securities Corp.; President and
Trustee, Federated Advisers, Federated Management, and
Federated Research; Vice President of the Funds; Director,
John A. Staley, IV* Trustee, or Managing General Partner of the Funds; formerly,
Federated Investors Tower Vice President, The Standard Fire Insurance Company and
Pittsburgh, PA Vice President President of its Federated Research Division.
*This Director is deemed to be an "interested person" of the Fund as
defined in the Investment Company Act of 1940 as amended.
\Members of the Fund's Exectutive Committee. The Exectutive Committee of the
Board of Directors handles the responsibilites of the Board of Directors
between meetings of the Board.
Officers and Directors own less than 1% of the Fund's outstanding Shares.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Advisers (the "adviser"), the Fund's investment adviser, subject to direction by
the Directors. The adviser continually
conducts investment research and supervision for the Fund and is responsible for
the purchase or sale of portfolio instruments, for which it receives an annual
fee from the Fund.
ADVISORY FEES. The Fund's adviser receives an annual investment advisory
fee equal to .55 of 1% of the Fund's average daily net assets, plus 4.5% of
the Fund's gross income (excluding any capital gains or losses). Gross
income includes, in general, discount earned on U.S. Treasury bills and
agency discount notes, interest earned on all interest-bearing obligations,
and dividend income recorded on the ex-dividend date but does not include
capital gains or losses or reduction for expenses. The adviser may
voluntarily choose to waive a portion of its fee or reimburse the Funds for
certain operating expenses. The adviser can terminate this voluntary
reimbursement of expenses at any time at its sole discretion. The adviser
has also undertaken to reimburse the Fund for operating expenses in excess
of limitations established by certain states.
ADVISER'S BACKGROUND. Federated Advisers, a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Advisers and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subisidiaries also provide administrative services
to a number of investment companies. Total assets under management or
administration by these and other subsidiaries of Federated Investors are
approximately $70 billion. Federated Investors, which was founded in 1956
as Federated Investors, Inc., develops and manages mutual funds primarily
for the financial industry. Federated Investors' track record of
competitive performance and its disciplined, risk averse investment
philosophy serve approximately 3,500 client institutions nationwide.
Through these same client institutions, individual shareholders also have
access to this same level of investment expertise.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. _In addition to periodic payments to
financial institutions under the Shareholder Services Plans, certain financial
institutions may be compensated by the adviser or its affiliates for the
continuing investment of customers' assets in certain funds, including the Fund,
advised by those entities. These payments will be made directly by the
distributor or adviser from their assets, and will not be made from the assets
of the Fund or by the assessment of a sales charge on Shares. Furthermore, in
addition to periodic payments to financial institutions under the Plan,
Federated Securities Corp. will pay financial institutions an amount equal to 1%
of the net asset value of Shares purchased by their clients or customers at the
time of purchase (except for participants in the Liberty Family Retirement
Program). Furthermore, the Adviser or its affiliates may offer to pay a fee from
their own assets to financial institutions as financial assistance for providing
substantial marketing, sales and operational support to the distributor. The
support may include sponsoring sales, educational and training seminars for
their employees, providing sales literature, and engineering computer software
programs that emphasize the attributes of the Fund. Assistance will be
predicated upon the amount of Shares the dealer sells or may sell, and/or upon
the type and nature of sales or operational support furnished by the dealer.
Peter R. Anderson has been the Fund's portfolio manager since December, 1989.
Mr. Anderson joined Federated Investors in 1972 as, and is presently, a Senior
Vice President of the Fund's investment adviser. Mr. Anderson is a Chartered
Financial Analyst and received his M.B.A. in Finance from the University of
Wisconsin.
Michael P. Donnelly has been the Fund's co-portfolio manager since February,
1993. Mr. Donnelly joined Federated Investors in 1989 and has been an Assistant
Vice President of the Fund's investment adviser since 1992. From 1989 until
1991, Mr. Donnelly acted as an investment analyst for the investment adviser.
Mr. Donnelly was a Fixed Income Associate at Donaldson, Lufkin & Jenrette from
1987 until 1989. Mr. Donnelly is a Chartered Financial Analyst and received his
M.B.A. in Finance from the University of Virginia.
DISTRIBUTION OF CLASS A SHARES
Federated Securities Corp. is the principal distributor for Shares. Federated
Securities Corp. is located at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779. It is a Pennsylvania corporation organized on November
14, 1969, and is the principal distributor for a number of investment companies.
Federated Securities Corp. is a subsidiary of Federated Investors.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. _Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate which relates
to the average aggregate daily net assets of all funds advised by subsidiaries
of Federated Investors ("Federated Funds") as specified below:
</TABLE>
<TABLE>
<CAPTION>
AVERAGE AGGREGATE DAILY NET
MAXIMUM ADMINISTRATIVE FEE ASSETS OF THE FEDERATED FUNDS
<S> <C>
0.15 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.10 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
SHAREHOLDER SERVICES PLAN. _The Fund has adopted a Shareholder Services Plan
(the "Services Plan") under which it may make payments up to 0.25 of 1% of the
average daily net asset value of the Class to obtain certain personal services
for shareholders and the maintenance of shareholder accounts ("shareholder
services"). The Trust has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under which
Federated Shareholder Services will either perform shareholder services directly
or will select financial institutions to perform shareholder services. Financial
institutions will receive fees based upon shares owned by their clients or
customers. The schedules of such fees and the basis upon which such fees will be
paid will be determined from time to time by the Fund and Federated Shareholder
Services.
The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or savings and loan association) from being an underwriter or distributor
of most securities. In the even the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the capacities described above or should
Congress relax current restrictions on depository institutions, the Directors
will consider appropriate changes in the services.
State securities laws governing the ability of depository institutions to act as
underwriters or distributors of securities may differ from interpretations given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.
CUSTODIAN. State Street Bank and Trust Company, P.O. Box 8604, Boston,
Massachusetts 02266-8604, is custodian for the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. _Federated Services Company, P.O.
Box 8604, Boston, Massachusetts 02266-8604, is transfer agent for the shares of
Fund, and dividend disbursing agent for the Fund.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly, 2510
Centre City Tower, Pittsburgh, Pennsylvania 15222, and Dickstein, Shapiro &
Morin, 2101 L Street, N.W., Washington, D.C. 20037.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen & Co., 2100 One PPG Place, Pittsburgh, Pennsylvania 15222.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the adviser will generally utilize those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the adviser may give consideration to those
firms which have sold or are selling shares of the Fund and other funds
distributed by Federated Securities Corp. The adviser makes decisions on
portfolio transactions and selects brokers and dealers subject to review by the
Board of Directors.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each Share gives the shareholder one vote in Director elections and other
matters submitted to shareholders for vote. All shares of each portfolio or
class in the Fund have equal voting rights, except that only shares of that
particular portfolio or class are entitled to vote in matters affecting that
portfolio or class.
As a Maryland Corporation, the Fund is not required to hold annual shareholder
meetings. Shareholder approval will be sought only for certain changes in the
Fund's operation and for the election of Directors under certain circumstances.
Directors may be removed by a two-thirds vote of the number of Directors prior
to such removal or by a two-thirds vote of the shareholders at a special
meeting. A special meeting of shareholders shall be called by the Directors upon
the written request of shareholders owning at least 10% of the Fund's
outstanding shares of all series entitled to vote.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions, including capital gains distributions,
received. This applies whether dividends and distributions are received in cash
or as additional Shares. Distributions representing long-term capital gains, if
any, will be taxable to shareholders as long-term capital gains no matter how
long the shareholders have held the Shares. No federal income tax is due on any
dividends earned in an IRA or qualified retirement plan until distributed.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Fund:
the Fund is subject to the Pennsylvania corporate franchise tax; and
Shares are exempt from personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Fund advertises its total return and yield for Class A
Shares.
Total return represents the change, over a specific period of time, in the value
of an investment in Class A Shares after reinvesting all income and capital
gains distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of Class A Shares is calculated by dividing the net investment income
per share (as defined by the Securities and Exchange Commission) earned by Class
A Shares over a thirty-day period by the maximum offering price per share of
Class A Shares on the last day of the period. This number is then annualized
using semi-annual compounding. The yield does not necessarily reflect income
actually earned by Class A Shares, and therefore, may not correlate to the
dividends or other distributions paid to shareholders.
The performance information reflects the effect of the maximum sales load,
which, if excluded, would increase the total return.
Total return and yield will be calculated separately for Class A Shares, Class B
Shares, Class C Shares and Fortress Shares. Because Class B Shares and Class C
Shares are subject to Rule 12b-1 fees and Services Plan fees, the yield for
Class A Shares and Fortress Shares, for the same period, may exceed that of
Class B Shares and Class C Shares. Because Class A Shares are subject to a
higher maximum sales load, the total return for Class B Shares, Class C Shares,
and Fortress Shares for the same period will exceed that of Class A Shares.
From time to time the Fund may advertise the performance of Class A Shares,
Class B Shares, Class C Shares and Fortress Shares using certain financial
publications and/or compare the performance of Class A Shares, Class B Shares,
Class C Shares, and Fortress Shares to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund presently offers Class A Shares, Class B Shares, Class C Shares, and
Fortress Shares.
Class B Shares are sold primarily to customers of financial institutions,
subject to certain contingent deferred sales charges. The Fund has also adopted
a Rule 12b-1 Plan whereby the distributor is paid a fee of up to .75 of 1% and a
Shareholder Services Plan Fee of up to .25 of 1% of the Class B Shares' average
daily net assets with respect to Class B Shares. Investments in Class B Shares
are subject to a minimum initial investment of $1,500, unless the investment is
in a retirement account, in which case the minimum investment is $50.
Class C Shares are sold primarily to customers of financial institutions at net
asset value with no initial sales load, however, Class C Shares are subject to a
contingent deferred sales charge of up to 1.0%. Class C Shares are distributed
pursuant to a Rule 12b-1 Plan adopted by the Fund whereby the distributor is
paid a fee of up to .75 of 1%, in addition to a shareholder services plan fee of
.25 of 1% of the Class C Shares' average daily net assets. Investments in Class
C Shares are subject to a minimum initial investment of $1,500, unless the
investment is in a retirement account, in which case the minimum investment is
$50.
Fortress Shares are sold primarily to customers of financial institutions
subject to a front-end sales load of 1.00% and a contingent deferred sales
charge of up to 1.00%. The Fund has also adopted a Services Plan fee of up to
.25 of 1% of the Fortress Shares' average daily net assets with respect to
Fortress Shares. Investments in Fortress Shares are subject to a minimum initial
investment of $1,500, unless the investment is in a retirement account, in which
case the minimum investment is $50.
The amount of dividends payable to Class A Shares may exceed that of Class C
Shares by the difference between class expenses and distribution and shareholder
service expenses borne by shares of each respective class.
The stated advisory fee is the same for all four classes of shares.
FINANCIAL HIGHLIGHTS--CLASS C SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
The following table has been audited by Arthur Andersen & Co., the Fund's
independent public accountants. Their report dated May 13, 1994 on the Fund's
financial statements for the year ended March 31, 1994 and on the following
table for each of the ten years in the period then ended March 31, 1994 is
included in the Annual Report, which is incorporated by reference.
<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).
Further information about the Fund's performance is contained in the Fund's
annual report dated March 31, 1994, which can be obtained free of charge.
FINANCIAL HIGHLIGHTS--FORTRESS SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
The following table has been audited by Arthur Andersen & Co., the Fund's
independent public accountants. Their report dated May 13, 1994 on the Fund's
financial statements for the year ended March 31, 1994 and on the following
table for each of the ten years in the period then ended March 31, 1994 is
included in the Annual Report, which is incorporated by reference.
<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).
Further information about the Fund's performance is contained in the Fund's
annual report dated March 31, 1994, which can be obtained free of charge.
AMERICAN LEADERS
FUND, INC.
CLASS A SHARES
PROSPECTUS
An Open-End, Diversified
Management Investment Company
August __, 1994
[LOGO] FEDERATED SECURITIES CORP.
---------------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
LIBERTY CENTER
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
8062808A-A (8/94)
AMERICAN LEADERS FUND, INC.
FORTRESS SHARES
PROSPECTUS
The Fortress Shares of American Leaders Fund, Inc. (the "Fund") represent
interests in an open-end, diversified management investment company (a mutual
fund) investing in common stocks and other securities of high quality companies
to achieve growth of capital and income.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in Fortress Shares of the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Combined Statement of Additional Information for Class
A Shares, Class B Shares, Class C Shares and Fortress Shares dated August __,
1994, with the Securities and Exchange Commission. The information contained in
the Combined Statement of Additional Information is incorporated by reference in
this prospectus. You may request a copy of the Combined Statement of Additional
Information free of charge by calling 1-800-235-4669. To obtain other
information, or make inquiries about the Fund contact your financial
institution.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated August __, 1994
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--
FORTRESS SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
FORTRESS INVESTMENT PROGRAM 3
- ------------------------------------------------------
INVESTMENT INFORMATION 4
- ------------------------------------------------------
Investment Objective 4
Investment Policies 5
Acceptable Investments 5
The Leaders List 5
Repurchase Agreements 5
Illiquid Securities 5
Lending of Portfolio Securities 5
Portfolio Turnover 5
Investment Limitations 6
NET ASSET VALUE 6
- ------------------------------------------------------
INVESTING IN FORTRESS SHARES 6
- ------------------------------------------------------
Share Purchases 6
Through a Financial Institution 6
Directly By Mail 7
Directly By Wire 7
Minimum Investment Required 7
What Shares Cost 7
Dealer Concession 8
Eliminating the Sales Charge 8
Quantity Discounts and Accumulated
Purchases 8
Letter of Intent 8
Reinvestment Privilege 9
Concurrent Purchases 9
Systematic Investment Program 9
Exchange Privileges 9
Certificates and Confirmations 10
Dividends 10
Capital Gains 10
REDEEMING FORTRESS SHARES 10
- ------------------------------------------------------
Through a Financial Institution 10
Directly By Mail 11
Signatures 11
Receiving Payment 11
Contingent Deferred Sales Charge 12
Systematic Withdrawal Program 12
Accounts with Low Balances 13
Exchanges for Shares of Other Funds 13
FUND INFORMATION 13
- ------------------------------------------------------
Management of the Fund 13
Board of Directors 13
Officers and Directors 13
Investment Adviser 17
Advisory Fees 17
Adviser's Background 17
Distribution of Fortress Shares 18
Administration of the Fund 18
Administrative Services 18
Shareholder Services Plan 18
Other Payments to Financial
Institutions 18
Custodian 19
Transfer Agent and Dividend
Disbursing Agent 19
Legal Counsel 19
Independent Public Accountants 19
Expenses of the Fund and Fortress Shares 19
SHAREHOLDER INFORMATION 20
- ------------------------------------------------------
Voting Rights 20
TAX INFORMATION 20
- ------------------------------------------------------
Federal Income Tax 20
Pennsylvania Corporate and
Personal Property Taxes 20
PERFORMANCE INFORMATION 21
- ------------------------------------------------------
OTHER CLASSES OF SHARES 21
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--CLASS A SHARES 23
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--CLASS C SHARES 24
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FORTRESS SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)................................. 1.00%
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)....................................................................... None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable)(1).................................................. 1.00%
Redemption Fee (as a percentage of amount redeemed, if applicable).......................................... None
Exchange Fee................................................................................................ None
ANNUAL FORTRESS SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee.............................................................................................. 0.67%
12b-1 Fee................................................................................................... None
Total Other Expenses........................................................................................ 0.60%
Shareholder Servicing Fee.................................................................... 0.25%
Total Fortress Shares Operating Expenses (2)....................................................... 1.27%
</TABLE>
(1) The contingent deferred sales charge assessed is 1.00% of the lesser of the
original purchase price or the net asset value of shares redeemed within
four years of their purchase dates. For a more complete description, see
"Redeeming Fortress Shares."
(2) The Total Fortress Shares Operating Expenses in the table above are based on
expenses expected during the fiscal year ending March 31, 1995. The Total
Fortress Shares Operating Expenses were 1.35% for the period ended March 31,
1994.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF FORTRESS SHARES OF THE FUND
WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE
VARIOUS COSTS AND EXPENSES, SEE "INVESTING IN FORTRESS SHARES" AND "FUND
INFORMATION." WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE SUBJECT TO
ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years
<S> <C> <C>
You would pay the following expenses on a $1,000 investment assuming (1) 5% annual return and
(2) redemption at the end of each time period.................................................. $ 33 $ 61
You would pay the following expenses on the same investment, assuming no redemption............ $ 23 $ 50
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The information set forth in the foregoing table and example relates only to
Fortress Shares of the Fund. The Fund also offers three additional classes of
shares called Class A Shares, Class B Shares and Class C Shares. Fortress
Shares, Class A Shares, Class B Shares and Class C Shares are all subject to
certain of the same expenses. However, Class A Shares are subject to a maximum
sales load of 4.50%, but are not subject to a 12b-1 fee or a contingent deferred
sales charge. Class B Shares are subject to a 12b-1 fee of 0.75% and a maximum
contingent deferred sales charge of 3.00%, but are not subject to a front end
sales load. Class C Shares are subject to a 12b-1 fee of 0.75%, and a contingent
deferred sales charge of 1.00% but are not subject to a sales load. See "Other
Classes of Shares."
FINANCIAL HIGHLIGHTS
FORTRESS SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
The following table has been audited by Arthur Andersen & Co., the Fund's
independent public accountants. Their report dated May 13, 1994 on the Fund's
financial statements for the year ended March 31, 1994 and on the following
table for the period ended March 31, 1994 is included in the Annual Report dated
March 31, 1994, which is incorporated by reference.
<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
- --------------------------------------------------------------------------------------------------
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).
Further information about the Fund's performance is contained in the Fund's
annual report dated March 31, 1994, which can be obtained free of charge.
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Fund was incorporated under the laws of the State of Maryland on July 22,
1968. The Fund's address is Liberty Center, Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779. The Articles of Incorporation permit the
Fund to offer separate series of shares of beneficial interest representing
interests in separate portfolios of securities. The shares in any one portfolio
may be offered in separate classes. With respect to this Fund, as of the date of
this prospectus, the Board of Directors ("Directors") has established four
classes of shares, known as Class A Shares, Class B Shares, Class C Shares and
Fortress Shares. This prospectus relates only to the Fortress Shares ("Shares")
of the Fund.
Fortress Shares of the Fund are designed for individuals as a convenient means
of accumulating an interest in a professionally managed, diversified portfolio
of common stocks and other securities of high quality companies. A minimum
initial investment of $1,500 is required, unless the investment is in a
retirement account, in which case the minimum initial investment is $50.
Shares are sold at net asset value plus an applicable sales charge and are
redeemed at net asset value. However, a contingent deferred sales charge is
imposed on shares, other than shares purchased through reinvestment of
dividends, which are redeemed within one to four years of their purchase dates.
FORTRESS INVESTMENT PROGRAM
- --------------------------------------------------------------------------------
This class of shares is a class of Fortress Shares ("Fortress Shares"). It is a
member of a family of funds ("Fortress Funds"), collectively known as the
Fortress Investment Program. The other funds in the Program are:
_ American Leaders Fund, Inc. (Fortress Shares only), providing growth of
capital and income through high-quality stocks;
_ California Municipal Income Fund (Fortress Shares only), providing
current income exempt from federal regular income tax and California
personal income taxes;
_ Fortress Adjustable Rate U.S. Government Fund, Inc., providing current
income consistent with lower volatility of principal through a
diversified portfolio of adjustable and floating rate mortgage securities
which are issued or guaranteed by the U.S. government, its agencies or
instrumentalities;
_ Fortress Bond Fund, providing current income primarily through
high-quality corporate debt;
_ Fortress Municipal Income Fund, Inc., providing a high level of current
income generally exempt from the federal regular income tax by investing
primarily in a diversified portfolio of municipal bonds;
_ Fortress Utility Fund, Inc., providing high current income and moderate
capital appreciation primarily through equity and debt securities of
utility companies;
_ Government Income Securities, Inc., providing current income through
long-term U.S. government securities;
_ Limited Term Fund (Fortress Shares only), providing a high level of
current income consistent with minimum fluctuation in principal value;
_ Limited Term Municipal Fund (Fortress Shares only), providing a high
level of current income which is exempt from federal regular income tax
consistent with the preservation of capital;
_ Money Market Management, Inc., providing current income consistent with
stability of principal through high-quality money market instruments;
_ New York Municipal Income Fund (Fortress Shares only), providing current
income exempt from federal regular income tax, New York personal income
taxes, and New York City income taxes;
_ Ohio Municipal Income Fund (Fortress Shares only), providing current
income exempt from federal regular income tax and Ohio personal income
taxes;
_ Strategic Income Fund (Fortress Shares only), providing high current
income through investing in domestic corporate debt obligations, U.S.
government securities, and foreign government and corporate debt
obligations; and
_ World Utility Fund (Fortress Shares only), providing total return by
investing primarily in securities issued by domestic and foreign
companies in the utilities industry.
Each of the funds may also invest in certain other types of securities as
described in each fund's prospectus.
The Fortress Investment Program provides flexibility and diversification for an
investor's long-term investment planning. It enables an investor to meet the
challenges of changing market conditions by offering convenient exchange
privileges which give access to various investment vehicles, and by providing
the investment services of a proven, professional investment adviser.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek growth of capital and of income
by concentrating the area of investment decision in the securities of high
quality companies. The Fund's investment approach is based upon the conviction
that over the longer term, the economy will continue to expand and develop and
that this economic growth will be reflected importantly in the growth of major
corporations. The Fund pursues this investment objective by investing at least
65% of its assets in a portfolio of securities issued by the one hundred
companies contained in "The Leaders List." Generally, the Fund's management
makes portfolio selections utilizing fundamental analysis, with emphasis on
earning power, financial condition, and valuation. While there is no assurance
that the Fund will achieve its investment objective, it endeavors to do so by
following the investment policies described in this prospectus. The investment
objective and the policies and limitations described below cannot be changed
without approval of shareholders.
INVESTMENT POLICIES
ACCEPTABLE INVESTMENTS. The Fund invests primarily in securities of companies
selected from "The Leaders List" by the Fund's investment adviser on the basis
of traditional fundamental research techniques and standards. The securities in
which the Fund invests include, but are not limited to:
common stocks;
preferred stocks; and
investment grade corporate bonds and notes; and
warrants.
The Fund may also temporarily hold cash and invest in U.S. government securities
in such proportions as the Fund's investment adviser may deem necessary for
defensive purposes.
THE LEADERS LIST. "The Leaders List" is a trade name which represents a
list of 100 blue chip companies selected by the Fund's investment adviser
principally on the basis of fundamental research techniques and standards.
Shareholders can obtain a copy of "The Leaders List" by contacting the
Fund. In the opinion of the investment adviser, securities of these
companies represent diversified and highly marketable investments. The list
is subject to continuous review and modification. A number of standards and
fundamental research factors are used in determining "The Leaders List."
"The Leaders List" includes leading companies in their industries
determined in terms of sales, earnings, and/or market capitalization.
REPURCHASE AGREEMENTS. The acceptable investments in which the Fund
invests may be purchased pursuant to repurchase agreements. Repurchase
agreements are arrangements in which banks, broker/dealers, and other
recognized financial institutions sell U.S. government or other securities
to the Fund and agree at the time of sale to repurchase them at a mutually
agreed upon time and price.
ILLIQUID SECURITIES. The Fund may acquire securities which are subject to
legal or contractual delays, restrictions, and costs on resale. Because of
time limitations, the Fund might not be able to dispose of these securities
at reasonable prices or at times advantageous to the Fund. Where the Fund
considers these securities to be illiquid, it intends to limit the purchase
of them together with other securities considered to be illiquid, including
repurchase agreements providing for settlement in more than seven days
after notice, to not more than 10% of its net assets.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities to broker/dealers, banks, or other
institutional borrowers of securities. The Fund will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the
investment adviser has determined are creditworthy under guidelines established
by the Fund's Board of Directors and will receive collateral equal to at least
100% of the value of the securities loaned.
PORTFOLIO TURNOVER. Securities in the Fund's portfolio will be sold whenever
the Fund's investment adviser believes it is appropriate to do so in light of
the Fund's investment objective, without regard to the length of time a
particular security may have been held. The adviser to the Fund does not
anticipate that portfolio turnover will result in adverse tax consequences. Any
such trading will increase the Fund's portfolio turnover rate and transaction
costs.
INVESTMENT LIMITATIONS
The Fund will not:
borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a portfolio instrument for a
percentage of its cash value with an agreement to buy it back on a set
date) except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets;
invest more than 5% of its total assets in securities of one issuer
(except U.S. government securities) or purchase more than 10% of any class
of voting securities of any one issuer;
invest more than 5% of its total assets in securities of issuers that have
records of less than three years of continuous operations; or
purchase restricted securities if immediately thereafter more than 15% of
the net assets of the Fund would be invested in such securities.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Fortress Shares in the market value
of all securities and other assets of the Fund, subtracting the interest of the
Fortress Shares in the liabilities of the Fund and those attributable to the
Fortress Shares, and dividing the remainder by the total number of Fortress
Shares outstanding. The net asset value for Fortress Shares may differ from that
of Class A Shares, Class B Shares, and Class C Shares 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.
INVESTING IN FORTRESS SHARES
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open. Shares may
be purchased through an investment dealer who has a sales agreement with the
distributor, Federated Securities Corp., or directly from Federated Securities
Corp., either by mail or by wire. The Fund reserves the right to reject any
purchase request.
THROUGH A FINANCIAL INSTITUTION. An investor may call his financial institution
(such as a bank or an investment dealer) to place an order to purchase Shares.
Orders through a financial institution are considered received when the Fund is
notified of the purchase order. Purchase orders through a registered
broker/dealer must be received by the broker before 4:00 P.M. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 P.M. (Eastern time) in
order for Shares to be purchased at that day's price. Purchase orders through
other financial institutions must be received by the financial institution and
transmitted to the Fund before 4:00 P.M. (Eastern time) in order for Shares to
be purchased at that day's price. It is the financial institution's
responsibility to transmit orders promptly.
The financial institution which maintains investor accounts with the Fund must
do so on a fully disclosed basis unless it accounts for share ownership periods
used in calculating the contingent deferred sales charge (see "Contingent
Deferred Sales Charge"). In addition, advance payments made to financial
institutions may be subject to reclaim by the distributor for accounts
transferred to financial institutions which do not maintain investor accounts on
a fully disclosed basis and do not account for share ownership periods (see
"Other Payments to Financial Institutions").
DIRECT BY MAIL. To purchase Shares by mail directly from Federated Securities
Corp.:
complete and sign the new account form available from the Fund;
enclose a check made payable to American Leaders Fund--Fortress Shares;
and
send both to the the Fund's transfer agent, Federated Services Company,
P.O. Box 8604, Boston, MA 02266-8604.
Purchases by mail are considered received after payment by check is converted by
the transfer agent's bank, State Street Bank and Trust Company ("State Street
Bank") into federal funds. This is generally the next business day after State
Street Bank receives the check.
DIRECTLY BY WIRE. To purchase Shares directly from Federated Securities Corp.
by Federal Reserve wire, call the Fund. All information needed will be taken
over the telephone, and the order is considered received when State Street Bank
receives payment by wire.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares is $1,500, except for an IRA account,
which requires a minimum initial investment of $50. Subsequent investments must
be in amounts of at least $100, except for an IRA account, which must be in
amounts of at least $50.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received, plus a sales charge of 1% of the offering price (which is 1.01% of the
net amount invested). There is no sales charge for purchases of $1 million or
more. In addition, no sales charge is imposed for Shares purchased through bank
trust departments or investment advisers registered under the Investment
Advisers Act of 1940 purchasing on behalf of their clients, or by sales
representatives, Trustees, and employees of the Fund, Federated Advisers, and
Federated Securities Corp., or their affiliates, or any investment dealer who
has a sales agreement with Federated Securities Corp., their spouses and
children under age 21, or any trusts or pension or profit-sharing plans for
these persons. Unaffiliated institutions through whom Shares are purchased may
charge fees for services provided which may be related to the ownership of Fund
Shares. This prospectus should, therefore, be read together with any agreement
between the customer and the institution with regard to services provided, the
fees charged for these services, and any restrictions and limitations imposed.
The net asset value is determined at 4:00 P.M. (Eastern time), Monday through
Friday, except on: (i) days on which there are not sufficient changes in the
value of the Fund's portfolio securities that its net asset value might be
materially affected; (ii) days during which no Shares are tendered for
redemption and no orders to purchase Shares are received; and (iii) the
following holidays: New Year's Day, President's Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
Under certain circumstances, described under "Redeeming Fortress Shares",
shareholders may be charged a redemption fee by the distributor at the time
Shares are redeemed.
DEALER CONCESSION. For sales of Shares, broker/dealers will normally receive
100% of the applicable sale charge. Any portion of the sales charge which is not
paid to a broker/dealer will be retained by the distributor. However, from time
to time, and at the sole discretion of the distributor, all or part of the
remaining sales charge or that portion may be paid to a dealer. The sales charge
for Shares sold other than through registered broker/dealers will be retained by
Federated Securities Corp. Federated Securities Corp. may pay fees to banks out
of the sales charge in exchange for sales and/or administrative services
performed on behalf of the bank's customer in connection with the initiation of
customer accounts and purchases of Shares.
ELIMINATING THE SALES CHARGE
The sales charge can be eliminated on the purchase of Shares through:
quantity discounts and accumulated purchases;
signing a 13-month letter of intent;
using the reinvestment privilege; or
concurrent purchases.
QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES. There is no sales charge for
purchases of $1 million or more. The Fund will combine purchases made on the
same day by the investor, his spouse, and his children under age 21 when it
calculates the sales charge.
If an additional purchase of Shares is made, the Fund will consider the previous
purchases still invested in the Fund. For example, if a shareholder already owns
Shares having current value at the public offering price of $900,000 and he
purchases $100,000 more at the current public offering price, there will be no
charge on the additional purchase. The Fund will also combine purchases for the
purpose of reducing the contingent deferred sales charge imposed on some Share
redemptions. For example, if a shareholder already owns Shares having current
value at public offering price of $1 million and purchases an additional $1
million at the current public offering price, the applicable contingent deferred
sales charge would be reduced to .50% of those additional Shares. For more
information on the levels of contingent deferred sales charges and holding
periods, see the section entitled "Contingent Deferred Sales Charge."
To receive the sales charge reduction and/or the contingent deferred sales
charge reduction, Federated Securities Corp. must be notified by the shareholder
in writing or by their financial institution at the time the purchase is made
that Shares are already owned or that purchases are being combined. The Fund
will eliminate the sales charge and/or reduce the contingent deferred sales
charge after it confirms the purchases.
LETTER OF INTENT. If a shareholder intends to purchase at least $1 million of
Shares over the next 13 months, the sales charge may be reduced by signing a
letter of intent to that effect. This letter of intent includes a provision for
a sales charge elimination depending on the amount actually purchased within
the 13-month period and a provision for the Fund's custodian to hold 1.00% of
the total amount intended to be purchased in escrow (in Shares) until such
purchase is completed.
The 1.00% held in escrow will be applied to the shareholder's account at the end
of the 13-month period unless the amount specified in the letter of intent,
which must be $1 million or more of Shares, is not purchased. In this event, an
appropriate number of escrowed Shares may be redeemed in order to realize the
1.00% sales charge.
This letter of intent also includes a provision for reductions in the contingent
deferred sales charge and holding period depending on the amount actually
purchased within the 13-month period. For more information on the various levels
of contingent deferred sales charges and holding periods, see the section
entitled "Contingent Deferred Sales Charge."
This letter of intent will not obligate the shareholder to purchase Shares. The
letter may be dated as of a prior date to include any purchases made within the
past 90 days (purchases within the prior 90 days may be used to fulfill the
requirements of the letter of intent; however, the sales load on such purchases
will not be adjusted to reflect a lower sales load).
REINVESTMENT PRIVILEGE. If Shares have been redeemed, the shareholder has a
one-time right, within 120 days, to reinvest the redemption proceeds at the
next-determined net asset value without any sales charge. Federated Securities
Corp. must be notified by the shareholder in writing or by his financial
institution of the reinvestment in order to receive this elimination of the
sales charge. If the shareholder redeems his Shares, there may be tax
consequences.
CONCURRENT PURCHASES. For purposes of qualifying for a sales charge
elimination, a shareholder has the privilege of combining concurrent purchases
of two or more funds in the Fortress Investment Program, the purchase prices of
which include a sales charge. For example, if a shareholder concurrently
invested $400,000 in one of the other Fortress Funds and $600,000 in Shares, the
sales load would be eliminated.
To receive this sales load elimination, Federated Securities Corp. must be
notified by the shareholder in writing or by his financial institution at the
time the concurrent purchases are made. The Fund will eliminate the sales load
after it confirms the purchases.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their investment on
a regular basis. Under this program, funds may be automatically withdrawn
periodically from the shareholder's checking account and invested in Shares at
the net asset value next determined after an order is received by the transfer
agent, plus the 1% sales charge for purchases under $1 million. A shareholder
may apply for participation in this program through Federated Securities Corp.
or his financial institution.
EXCHANGE PRIVILEGES
The Securities and Exchange Commission has promulgated Rule 11a-3 under the
Investment Company Act of 1940 which allows shareholders to exchange shares in
other Fortress Funds for Shares at net asset value without a sales charge (if
previously paid) or a redemption fee. The exchanging privilege is available to
shareholders residing in any state in which the shares being acquired may be
legally sold.
The Securities and Exchange Commission has also issued an order exempting the
Fund from certain provisions of the Investment Company Act of 1940. The order
allows shares in certain Federated Funds which are advised by subsidiaries or
affiliates of Federated Investors to be exchanged for Shares at net asset value
(plus a sales load, if applicable). Shareholders using this privilege must
exchange Shares equal to the minimum investment requirements of the fund into
which the exchange is being made having a net asset value of at least $1,500.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
on the application or by contacting Federated Services Company.
Detailed confirmations of each purchase and redemption are sent to each
shareholder. Monthly statements are sent to report dividends paid during that
month.
DIVIDENDS>
Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date. Dividends are automatically reinvested in additional
Shares of the Fund on payment dates at the ex-dividend date net asset value
without a sales load, unless shareholders request cash payments on the new
account form or by writing to the transfer agent. All shareholders on the record
date are entitled to the dividend. If Shares are redeemed or exchanged prior to
the record date or purchased after the record date, those Shares are not
entitled to that quarter's dividend.
CAPITAL GAINS
Net long-term capital gains realized by the Fund, if any, will be distributed at
least once every twelve months.
REDEEMING FORTRESS SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at their net asset value, less any applicable contingent
deferred sales charge next determined after the transfer agent receives the
redemption request. Redemptions will be made on days on which the Fund computes
its net asset value. Redemption requests must be received in proper form and can
be made through a financial institution or directly from the Fund by writtem
request.
THROUGH A FINANCIAL INSTITUTION
A shareholder may redeem Shares by calling his financial institution (such as a
bank or an investment dealer) to request the redemption. Shares will be redeemed
at the net asset value next determined after the Fund receives the redemption
request from the financial institution. Redemption requests through a registered
broker/dealer must be received by the broker before 4:00 P.M. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 P.M. (Eastern time) in
order for Shares to be redeemed at that day's net asset value. Redemption
requests through other financial institutions must be received by the financial
institution and transmitted to the Fund before 4:00 P.M. (Eastern time) in order
for Shares to be redeemed at that day's net asset value. The financial
institution is responsible for promptly submitting redemption requests and
providing proper written redemption instructions to the
Fund. The financial institution may charge customary fees and commissions for
this service. If, at any time, the Fund shall determine it necessary to
terminate or modify this method of redemption, shareholders will be promptly
notified.
Before a financial institution may request redemption by telephone on behalf of
a shareholder, an authorization form permitting the Fund to accept redemption
requests by telephone must first be completed. In the event of drastic economic
or market changes, a shareholder may experience difficulty in redeeming by
telephone. If such a case should occur, another method of redemption, such as
"Directly by Mail", should be considered.
Telephone redemption instructions may be recorded. If reasonable procedures are
not followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent instructions.
DIRECTLY BY MAIL
Shareholders may also redeem Shares by sending a written request to Federated
Services Company, P.O. Box 8604, Boston, MA 02266-8604. This written request
must include the shareholders' name, the Fund name and class designation, the
account number, and the Share or dollar amount to be redeemed. Shares will be
redeemed at their net asset value less any applicable contingent deferred sales
charge next determined after the Fund receives the redemption request.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or certified mail with the written request.
Shareholders may call the Fund for assistance in redeeming by mail.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the Fund, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
a member firm of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or
any other "eligible guarantor institution", as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
RECEIVING PAYMENT. A check for the proceeds is mailed within seven days after
receipt of proper written redemption instructions from a broker or from the
shareholder.
CONTINGENT DEFERRED SALES CHARGE
Shareholders redeeming shares from their Fund accounts within certain periods of
the purchase date of those Shares will be charged a contingent deferred sales
charge by the Fund's distribution of the lesser of the original price or the net
asset value of the Shares redeemed as follows:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
AMOUNT OF PURCHASE SHARES HELD SALES CHARGE
<S> <C> <C>
Up to $1,999,999................................... less than 4 years 1%
$2,000,000 to $4,999,999........................... less than 2 years .50%
$5,000,000 or more................................. less than 1 year .25%
</TABLE>
In instances in which Shares have been acquired in exchange for shares in other
Fortress Funds, (i) the purchase price is the price of the shares when
originally purchased and (ii) the time period during which the shares are held
will run from the date of the original purchase. The contingent deferred sales
charge will not be imposed on shares acquired through the reinvestment of
dividends or distributions of long-term capital gains. In computing the amount
of contingent deferred sales charge for accounts with shares subject to a single
holding period, if any, redemptions are deemed to have occurred in the following
order: 1) first of shares acquired through the reinvestment of dividends and
long-term capital gains, 2) second of purchases of shares occurring prior to the
number of years necessary to satisfy the applicable holding period, and 3)
finally of purchases of shares occurring within the current holding period. For
accounts with shares subject to multiple share holding periods, the redemption
sequence will be determined first, with reinvested dividends and long-term
capital gains, and second, on a first-in, first-out basis.
The contingent deferred sales charge will not be imposed when a redemption
results from a tax-free return under the following circumstances: (i) a total or
partial distribution from a qualified plan, other than an IRA, Keogh Plan, or a
custodial account, following retirement; (ii) a total or partial distribution
from an IRA, Keogh Plan, or a custodial account after the beneficial owner
attains age 59-1/2; or (iii) from the death or disability of the beneficial
owner. The exemption from the contingent deferred sales charge for qualified
plans, an IRA, Keogh Plan, or a custodial account does not extend to account
transfers, rollovers, and other redemptions made for purposes of reinvestment.
Contingent deferred sales charges are not charged in connection with exchanges
of Shares for shares in other Fortress Funds, or in connection with redemptions
by the Fund of accounts with low balances. Shares of the Fund originally
purchased through a bank trust department or investment adviser registered under
the Investment Advisers Act of 1940 are not subject to the contingent deferred
sales charge, to the extent that no payment was advanced for purchases made by
such entities.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive monthly or quarterly payments of a
predetermined amount may take advantage of the Systematic Withdrawal Program.
Under this program, Shares are redeemed to provide for periodic withdrawal
payments in an amount directed by the shareholder; the minimum withdrawal amount
is $100. Depending upon the amount of the withdrawal payments, the amount of
dividends paid and capital gains distributions with respect to Shares, and the
fluctuation of the net asset value of Shares redeemed under this program,
redemptions may reduce, and eventually deplete,
the shareholder's investment in the Fund. For this reason, payments under this
program should not be considered as yield or income on the shareholder's
investment in the Fund. To be eligible to participate in this program, a
shareholder must have invested at least $10,000 in the Fund (at current offering
price).
A shareholder may apply for participation in this program through Federated
Securities Corp. Due to the fact that Shares are sold with a sales load and
contingent deferred sales charge, it is not advisable for shareholders to be
purchasing Shares while participating in this program.
Contingent deferred sales charges are charged for Shares redeemed through this
program within four years of their purchase dates.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem Shares in any account and pay the proceeds to the shareholder if the
account balance falls below the required minimum value of $1,000. This
requirement does not apply, however, if the balance falls below $1,000 because
of changes in the Fund's net asset value. Before Shares are redeemed to close an
account, the shareholder is notified in writing and allowed 30 days to purchase
additional Shares to meet the minimum requirement.
EXCHANGES FOR SHARES OF OTHER FUNDS
Shares may be exchanged for shares in other Fortress Funds at net asset value
without a contingent deferred sales charge or a sales load.
Shares may also be exchanged for shares in other Federated Funds which are
advised by subsidiaries or affiliates of Federated Investors. With the exception
of exchanges into other Fortress Funds, such exchanges will be subject to a
contingent deferred sales charge and possibly a sales load.
Shareholders using this privilege must exchange shares having a net asset value
which at least meets the minimum investment required for the fund into which the
exchange is being made. A shareholder may obtain information on the exchange
privilege, and may obtain prospectuses for other Fortress Funds and Federated
Funds by calling Federated Securities Corp. or his financial institution.
FUND INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
BOARD OF DIRECTORS. The Fund is managed by a Board of Directors. The Directors
are responsible for managing the Fund's business affairs and for exercising all
the Fund's powers except those reserved for the shareholders. An Executive
Committee of the Board of Directors handles the Board's responsibilities between
meetings of the Board.
OFFICERS AND DIRECTORS. Officers and Directors are listed with their addresses,
principal occupations and present positions, including any affiliation with
Federated Advisers, Federated Investors, Federated Securities Corp., Federated
Services Company, Federated Administrative Services, and the Funds (as defined
in the Combined Statement of Additional Information).
<TABLE>
<S> <C> <C>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE FUND DURING PAST FIVE YEARS
John F. Donahue\* President and Chairman and Trustee, Federated Investors; Chairman and
Federated Investors Tower Director Trustee, Federated Advisers, Federated Management, and
Pittsburgh, PA Federated Research; Director, AEtna Life and Casualty
Company; Chief Executive Officer and Director, Trustee, or
Managing General Partner of the Funds; formerly, Director,
The Standard Fire Insurance Company. Mr. Donahue is the
father of J. Christopher Donahue, Vice President and
Director of the Fund.
John T. Conroy, Jr. Director President, Investment Properties Corporation, Senior
Wood/IPC Commercial Vice-President, John R. Wood and Associates, Inc., Realtors;
Department President, Northgate Village Development Corporation;
John R. Wood and General Partner or Trustee in private
Associates, Inc., real estate ventures in Southwest Florida; Director,
Realtors Trustee, or Managing General Partner of the Funds; formerly,
3255 Tamiami Trail North President, Naples Property Management, Inc.
Naples, FL
William J. Copeland Director Director and Member of the Executive Committee, Michael
One PNC Plaza-- Baker, Inc.; Director, Trustee, or Managing General Partner
23rd Floor of the Funds; formerly, Vice Chairman and Director, PNC
PNC Bank Building Bank, N.A. and PNC Bank Corp and Director, Ryan Homes, Inc.
Pittsburgh, PA
J. Christopher Donahue* Vice President and President and Trustee, Federated Investors; and Trustee,
Federated Investors Tower Director Federated Administrative Services, Federated Advisers,
Pittsburgh, PA Federated Management, and Federated Research; President or
Vice President of the Funds; Director, Trustee, or Managing
General Partner of some of the Funds. Mr. Donahue is the son
of John F. Donahue, Chairman and Director of the Fund.
James E. Dowd Director Attorney-at-law; Director, The Emerging Germany Fund, Inc.;
571 Hayward Mill Road Director, Trustee, or Managing General Partner of the Funds;
Concord, MA formerly, Director, Blue Cross of Massachusetts, Inc.
Lawrence D. Ellis, M.D. Director Hematologist, Oncologist, and Internist, Presbyterian and
3471 Fifth Avenue Montefiore Hospitals; Clinical Professor of Medicine and
Suite 1111 Trustee, University of Pittsburgh; Director, Trustee, or
Pittsburgh, PA Managing General Partner of the Funds.
Edward L. Flaherty, Jr.\ Director Attorney-at-law; Partner, Meyer and Flaherty; Director,
5916 Penn Mall Eat'N Park Restaurants, Inc., and Statewide Settlement
Pittsburgh, PA Agency, Inc.; Director, Trustee, or Managing General Partner
of the Funds; formerly, Counsel, Horizon Financial, F.A.,
Western Region.
Peter E. Madden Director Consultant; State Representative, Commonwealth of
225 Franklin Street Massachusetts; Director, Trustee, or Managing General
Boston, MA Partner of the Funds; formerly, President, State Street Bank
and Trust Company and State Street Boston Corporation;
Trustee, Lahey Clinic Foundation, Inc.
Gregor F. Meyer Director Attorney-at-law; Partner, Meyer and Flaherty; Chairman,
5916 Penn Mall Meritcare, Inc.; Director Eat'N Park Restaurants, Inc.;
Pittsburgh, PA Director, Trustee, or Managing General Partner of the Funds;
formerly, Vice Chairman, Horizon Financial, F.A.
Wesley W. Posvar Director Professor, Foreign Policy and Management Consultant;
1202 Cathedral Trustee, Carnegie Endowment for International Peace, RAND
of Learning Corporation, Online Computer Library Center, Inc. and U.S.
University of Pittsburgh Space Foundation; Chairman, Czecho Slovak Manangement
Pittsburgh, PA Center; Director, Trustee, or Managing General Partner of
the Funds; President Emeritus, University of Pittsburgh;
formerly, Chairman, National Advisory Council for Environ-
mental Policy and Technology.
Marjorie P. Smuts Director Public relations/marketing consultant; Director, Trustee, or
4905 Bayard Street Managing General Partner of the Funds.
Pittsburgh, PA
Richard B. Fisher Vice President Executive Vice President and Trustee, Federated Investors;
Federated Investors Tower President and Director, Federated Securities Corp.;
Pittsburgh, PA President or Vice President of the Funds; Director or
Trustee of some of the Funds.
Edward C. Gonzales Vice President and Vice President, Treasurer, and Trustee, Federated In-
Federated Investors Tower Treasurer vestors; Vice President and Treasurer, Federated Advisers,
Pittsburgh, PA Federated Management, and Federated Research; Executive Vice
President, Treasurer, and Director, Federated Securities
Corp.; Chairman, Treasurer, and Trustee, Federated
Administrative Services; Trustee or Director of some of the
Funds; Vice President and Treasurer of the Funds.
John W. McGonigle Vice President Vice President, Secretary, General Counsel, and Trustee,
Federated Investors Tower and Secretary Federated Investors; Vice President, Secretary, and Trustee,
Pittsburgh, PA Federated Advisers, Federated Management, and Federated
Research; Executive Vice President, Secretary, and Trustee,
Federated Administrative Services; Trustee, Federated
Services Company; Director and Executive Vice President,
Federated Securities Corp.; Vice President and Secretary of
the Funds.
John A. Staley, IV Vice President Vice President and Trustee, Federated Investors; Executive
Federated Investors Tower Vice President, Federated Securities Corp.; President and
Pittsburgh, PA Trustee, Federated Advisers, Federated Management, and
Federated Research; Vice President of the Funds; Director,
Trustee, or Managing General Partner of the Funds; formerly,
Vice President, The Standard Fire Insurance Company and
President of its Federated Research Division.
*This Director is deemed to be an "interested person" of the Fund as
defined in the Investment Company Act of 1940 as amended.
\Members of the Fund's Exectutive Committee. The Exectutive Committee of the
Board of Directors handles the responsibilites of the Board of Directors
between meetings of the Board.
Officers and Directors own less than 1% of the Fund's outstanding Shares.
INVESTMENT ADVISER. _Investment decisions for the Fund are made by Federated
Advisers (the "Adviser"), the Fund's investment adviser, subject to direction by
the Directors. The adviser continually conducts investment research and
supervision for the Fund and is responsible for the purchase and sale of
portfolio instruments, for which it receives an annual fee from the Fund.
ADVISORY FEES. The Fund's adviser receives an annual investment advisory
fee equal to .55 of 1% of the Fund's average daily net assets, plus 4.5% of
the Fund's gross income (excluding any capital gains or losses). Gross
income includes, in general, discount earned on U.S. Treasury bills and
agency discount notes, interest earned on all interest-bearing obligations,
and dividend income recorded on the ex-dividend date but does not include
capital gains or losses or reduction for expenses. The adviser may
voluntarily choose to waive a portion of its fee or reimburse the Funds for
certain operating expenses. The adviser can terminate this voluntary
reimbursement of expenses at any time at its sole discretion. The adviser
has also undertaken to reimburse the Fund for operating expenses in excess
of limitations established by certain states.
ADVISER'S BACKGROUND. Federated Advisers, a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Advisers and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subisidiaries also provide administrative services
to a number of investment companies. Total assets under management or
administration by these and other subsidiaries of Federated Investors are
approximately $70 billion. Federated Investors, which was founded in 1956
as Federated Investors, Inc., develops and manages mutual funds primarily
for the financial industry. Federated Investors' track record of
competitive performance and its disciplined, risk averse investment
philosophy serve approximately 3,500 client institutions nationwide.
Through these same client institutions, individual shareholders also have
access to this same level of investment expertise.
Peter R. Anderson has been the Fund's portfolio manager since 1989. Mr.
Anderson joined Federated Investors in 1972 and has been a Senior Vice
President of Federated Advisers since 1989. Mr. Anderson is a Chartered
Financial Analyst and received his M.B.A. in finance from the University of
Wisconsin.
Michael P. Donnelly has been the Fund's co-portfolio manager since
February, 1993. Mr. Donnelly joined Federated Investors in 1989 and has
been an Assistant Vice President of the Fund's investment adviser since
1992. From 1989 until 1991, Mr. Donnelly acted as an investment analyst for
the investment adviser. Mr. Donnelly was a Fixed Income Associate at
Donaldson, Lufkin & Jenrette from 1987 until 1989. Mr. Donnelly is a
Chartered Financial Analyst and received his M.B.A. in Finance from the
University of Virginia.
DISTRIBUTION OF FORTRESS SHARES
Federated Securities Corp. is the principal distributor for Shares of the Fund.
Federated Securities Corp. is located at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779. It is a Pennsylvania corporation organized on November
14, 1969, and is the principal distributor for a number of investment companies.
Federated Securities Corp. is a subsidiary of Federated Investors.
The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or a savings and loan association) from being an underwriter or distributor
of most securities. In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the administrative capacities described
above or should Congress relax current restrictions on depository institutions,
the Board of Trustees will consider appropriate changes in the services.
State securities laws governing the ability of depository institutions to act as
underwriters or distributors of securities may differ from interpretations given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. _Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate which relates
to the average aggregate daily net assets of all funds advised by subsidiaries
of Federated Investors ("Federated Funds") as specified below:
</TABLE>
<TABLE>
<CAPTION>
AVERAGE AGGREGATE DAILY NET ASSETS
MAXIMUM ADMINISTRATIVE FEE OF THE FEDERATED FUNDS
<S> <C>
0.15 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.10 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
SHAREHOLDER SERVICES PLAN. _The Fund has adopted a Shareholder Services Plan
(the "Services Plan") under which it may make payments up to 0.25 of 1% of the
average daily net asset value of the Fortress Class Shares to obtain certain
personal services for shareholders and the maintenance of shareholder accounts
("shareholder services"). The Fund has entered into a Shareholder Services
Agreement with Federated Shareholder Services, a subsidiary of Federated
Investors, under which Federated Shareholder Services will either perform
shareholder services directly or will select financial institutions to perform
shareholder services. Financial institutions will receive fees based upon shares
owned by their clients or customers. The schedules of such fees and the basis
upon which such fees will be paid will be determined from time to time by the
Fund and Federated Shareholder Services.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. _The distributor will pay financial
institutions, for distribution and/or administrative services, an amount equal
to 1.00% of the offering price of the
Shares acquired by their clients or customers on purchases up to $1,999,999,
.50% of the offering price on purchases of $2,000,000 to $4,999,999, and .25% of
the offering price on purchases of $5,000,000 or more. (This fee is in addition
to the 1.00% sales load on purchases of less that $1 million.) The financial
institutions may elect to waive the initial payment described above; such waiver
will result in the waiver by the Fund of the otherwise applicable contingent
deferred sales charge.
Furthermore, the Adviser or its affiliates may offer to pay a fee from their own
assets to financial institutions as financial assistance for providing
substantial marketing, sales and operational support to the distributor. The
support may include sponsoring sales, educational and training seminars for
their employees, providing sales literature, and engineering computer software
programs that emphasize the attributes of the Fund. Such assistance will be
predicated upon the amount of Shares the dealer sells or may sell, and/or upon
the type and nature of sales or operational support furnished by the dealer.
CUSTODIAN. State Street Bank and Trust Company, Box 8604, Boston, Massachusetts
02266-8604, is custodian for the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. _Federated Services Company, is
transfer agent for the Shares of the Fund, and dividend disbursing agent for the
Fund.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly, 2510
Centre City Tower, Pittsburgh, Pennsylvania 15222, and Dickstein, Shapiro &
Morin, 2101 L Street, N.W., Washington, D.C. 20037.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen & Co., 2100 One PPG Place, Pittsburgh, Pennsylvania 15222.
EXPENSES OF THE FUND AND FORTRESS SHARES
Holders of Shares pay their allocable portion of Fund and portfolio expenses.
The Fund expenses for which holders of Shares pay their allocable portion
include, but are not limited to: the cost of organizing the Fund and continuing
its existence; registering the Fund with federal and state securities
authorities; Directors' fees; auditors' fees; the cost of meetings of Directors;
legal fees of the Fund; association membership dues; and such non-recurring and
extraordinary items as may arise from time to time.
The portfolio expenses for which holders of Shares pay their allocable portion
include, but are not limited to: registering the portfolio and Shares of the
portfolio; investment advisory services; taxes and commissions; custodian fees;
insurance premiums; auditors' fees; and such non-recurring and extraordinary
items as may arise from time to time.
At present, the only expenses allocated specifically to the Shares as a class
are expenses under the Fund's Shareholder Services Plan. However, the Directors
reserve the right to allocate other expenses to holders of Shares as it deems
appropriate ("Class Expenses"). In any case, Class Expenses would be limited to:
transfer agent fee, as identified by the transfer agent as attributable to
holders of Shares; fees under the Fund's Shareholder Service Plan; printing and
postage expenses related to preparing and distributing materials such as
shareholder reports, prospectuses and proxies to current shareholders;
registration fees paid to the Securities and Exchange Commission and
registration fees paid to state securities commissions; expenses related to
administrative personnel and services as required to support holders of Shares;
legal fees relating solely to Shares; and Directors' fees incurred as a result
of issues relating solely to Shares.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each Share gives the shareholder one vote in Director elections and other
matters submitted to shareholders for vote. All shares of each portfolio or
class in the Fund have equal voting rights, except that only shares of that
particular portfolio or class are entitled to vote in matters affecting that
portfolio or class.
As a Maryland Corporation, the Fund is not required to hold annual shareholder
meetings. Shareholder approval will be sought only for certain changes in the
Fund's operation and for the election of Directors under certain circumstances.
Directors may be removed by a two-thirds vote of the number of Directors prior
to such removal or by a two-thirds vote of the shareholders at a special
meeting. A special meeting of shareholders shall be called by the Directors upon
the written request of shareholders owning at least 10% of the Fund's
outstanding shares of all series entitled to vote.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions, including capital gains distributions,
received. This applies whether dividends and distributions are received in cash
or as additional Shares. Distributions representing long-term capital gains, if
any, will be taxable to shareholders as long-term capital gains no matter how
long the shareholders have held the Shares. No federal income tax is due on any
dividends earned in an IRA or qualified retirement plan until distributed.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Fund:
the Fund is subject to the Pennsylvania corporate franchise tax; and
Shares are exempt from personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Fund advertises its total return and yield for Fortress
Shares.
Total return represents the change, over a specific period of time, in the value
of an investment in Fortress Shares after reinvesting all income and capital
gains distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of Fortress Shares is calculated by dividing the net investment income
per share (as defined by the Securities and Exchange Commission) earned by
Fortress Shares over a thirty-day period by the maximum offering price per share
of Fortress Shares on the last day of the period. This number is then annualized
using semi-annual compounding. The yield does not necessarily reflect income
actually earned by Fortress Shares, and therefore, may not correlate to the
dividends or other distributions paid to shareholders.
The performance information reflects the effect of the maximum sales load, such
as the redemption fee, which, if excluded, would increase the total return and
yield.
Total return, and yield will be calculated separately for Class A Shares, Class
B Shares, Class C Shares, and Fortress Shares. Because Class B Shares and, Class
C Shares, are subject to Rule 12b-1 fees and Services Plan Fees, the yield for
Class A Shares and Fortress Shares, for the same period, will exceed that of
Class B Shares and Class C Shares. Because Class A Shares are subject to a
higher maximum sales load, the total return for Fortress Shares, for the same
period, will exceed that of Class A, Class C and Fortress Shares.
From time to time the Fund may advertise the performance of Class A Shares,
Class B Shares, Class C Shares and Fortress Shares using certain financial
publications and/or compare the performance of Class A Shares, Class B Shares,
Class C Shares and Fortress Shares to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund presently also offers Class A Shares, Class B Shares, Class C Shares
and Fortress Shares.
Class A Shares offered by the Fund, are sold to customers of financial
institutions subject to a front-end sales charge of up to 4.50% and certain
contingent deferred sales charges. Class A Shares are distributed pursuant to a
Shareholder Service Plan fee of up to .25 of 1% of the Class A Shares' average
daily net assets. Investments in Class A Shares are subject to a minimum initial
investment of $500, unless the investment is in a retirement account, in which
case the minimum investment is $50. Class C Shares offered by the Fund, are sold
primarily to customers of financial institutions at net asset value with no
initial sales charge.
Class B Shares are sold primarily to customers of Financial Institutions,
subject to certain contingent deferred sales charges. The Fund has also adopted
a Services Plan Fee of up to .25 of 1% of the Class B Shares' average daily net
assets with respect to Class B Shares. Investments in Class B Shares are subject
to a minimum initial investment of $1,500, unless the investment is in a
retirement account, in which case the minimum investment is $50. In all
prospectuses.
Class C Shares are distributed pursuant to a Rule 12b-1 Plan adopted by the Fund
whereby the distributor is paid a fee of up to .75 of 1%, in addition to a
shareholder services fee of up to .25 of 1% of the Class C Shares' average daily
net assets; however, Class C Shares are subject to a contingent deferred sales
charge of up to 1.0%. Investments in Class C Shares are subject to a minimum
initial investment of $1,500, unless the investment is in a retirement account,
in which case the minimum investment is $50.
The amount of dividends payable to Fortress Shares and Class A Shares may exceed
that of Class B Shares and Class C Shares by the difference between class
expenses and distribution and shareholder service expenses borne by shares of
each respective class.
The stated advisory fee is the same for all four classes of shares.
FINANCIAL HIGHLIGHTS--CLASS A SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by Arthur Andersen & Co., the Fund's
independent public accountants. Their report dated May 13, 1994 on the Fund's
financial statements for the year ended March 31, 1994 and the following table
for each of the periods presented included in the Annual Report, which is
incorporated by reference.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985*
<S> <C> <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 $ 11.55
- ----------------------
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 0.03
- ----------------------
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 0.01
- ---------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total from investment
operations 0.41 2.34 1.63 1.65 0.91 1.58 (.76) 2.27 3.41 0.04
- ----------------------
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 $ 11.59
- ---------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN** 2.76% 18.31% 12.91% 14.17% 7.13% 13.23% (5.32)% 18.38% 31.80% 0.35%
- ----------------------
RATIOS TO AVERAGE NET
ASSETS
- ----------------------
Expenses 1.18% 1.13% 1.02% 1.02% 1.01% 1.01% 1.00% 1.00% 1.0 1.06%(a)
- ----------------------
Net investment income 1.48% 2.07% 2.12% 3.06% 4.23% 3.85% 3.35% 3.44% 4.42% 3.18%(a)
- ----------------------
Expense waiver/
reimbursement (b) -- 0.06% 0.16% 0.30% 0.35% 0.12% 0.11% 0.12% 0.18% 0.22%(a)
- ----------------------
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 71,899
- ----------------------
Portfolio turnover
rate 27% 39% 67% 57% 50% 27% 65% 28% 31% 6%
- ----------------------
<CAPTION>
YEAR ENDED
1985
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.97
- ----------------------
INCOME FROM INVESTMENT
OPERATIONS
- ----------------------
Net investment income 0.54
- ----------------------
Net realized and
unrealized gain
(loss) on investments 1.91
- ---------------------- -------------
Total from investment
operations 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 $ 11.55
- ---------------------- -------------
TOTAL RETURN** 25.85
- ----------------------
RATIOS TO AVERAGE NET
ASSETS
- ----------------------
Expenses 1.29 %
- ----------------------
Net investment income 5.03 %
- ----------------------
Expense waiver/
reimbursement (b) 0.05 %
- ----------------------
SUPPLEMENTAL DATA
- ----------------------
Net assets, end of
period (000 omitted) 71,455
- ----------------------
Portfolio turnover
rate 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).
Further information about the Fund performance is contained in the Fund's annual
report dated March 31, 1994, which can be obtained free of charge.
(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)
The following table has been audited by Arthur Andersen & Co., the Fund's
independent public accountants. Their report dated May 13, 1994 on the Fund's
financial statements for the year ended March 31, 1994 and on the following
table for the period ended March 31, 1994 is included in the Annual Report dated
March 31, 1994, which is incorporated by reference.
<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).
Further information about the Fund's performance is contained in the Fund's
annual report dated March 31, 1994, which can be obtained free of charge.
AMERICAN LEADERS
FUND, INC.
FORTRESS SHARES
PROSPECTUS
An Open-End, Diversified
Management Investment Company
August __, 1994
[LOGO] FEDERATED SECURITIES CORP.
---------------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
LIBERTY CENTER
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
8062808A-FS (8/94)
AMERICAN LEADERS FUND, INC.
CLASS C SHARES
PROSPECTUS
The Class C Shares of American Leaders Fund, Inc. (the "Fund") represent
interests in an open-end, diversified management investment company (a mutual
fund) investing in common stocks and other securities of high quality companies
to achieve growth of capital and income.
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 ENDORSED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in Class C Shares of the Fund. Keep this prospectus for future reference.
The Fund has also filed a Combined Statement of Additional Information for Class
A Shares, Class B Shares, Class C Shares and Fortress Shares dated August __,
1994 with the Securities and Exchange Commission. The information contained in
the Combined Statement of Additional Information is incorporated by reference in
this prospectus. You may request a copy of the Combined Statement of Additional
Information free of charge by calling 1-800-235-4669. To obtain other
information, or make inquiries about the Fund contact your financial
institution.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated August __, 1994
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS
CLASS C SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
LIBERTY FAMILY OF FUNDS 3
- ------------------------------------------------------
Liberty Family Retirement Program 4
INVESTMENT INFORMATION 4
- ------------------------------------------------------
Investment Objective 4
Investment Policies 5
Acceptable Investments 5
The Leaders List 5
Repurchase Agreements 5
Illiquid Securities 5
Lending of Portfolio Securities 5
Portfolio Turnover 6
Investment Limitations 6
NET ASSET VALUE 6
- ------------------------------------------------------
INVESTING IN CLASS C SHARES 6
- ------------------------------------------------------
Share Purchases 6
Through a Financial Institution 7
Directly From the Distributor 7
Minimum Investment Required 7
What Shares Cost 7
Systematic Investment Program 8
Certificates and Confirmations 8
Dividends 8
Capital Gains 8
Retirement Plans 8
EXCHANGE PRIVILEGE 8
- ------------------------------------------------------
Requirements for Exchange 9
Tax Consequences 9
Making an Exchange 9
Telephone Instructions 9
REDEEMING CLASS C SHARES 10
- ------------------------------------------------------
Through a Financial Institution 10
Directly from the Fund 10
By Telephone 10
By Mail 10
Signatures 11
Contingent Deferred Sales Charge 11
Systematic Withdrawal Program 12
Accounts with Low Balances 12
FUND INFORMATION 13
- ------------------------------------------------------
Management of the Fund 13
Board of Directors 13
Officers and Directors 13
Investment Adviser 16
Advisory Fees 16
Adviser's Background 16
Other Payments to Financial
Institutions 17
Distribution of Class C Shares 17
Distribution and Shareholder Services Plans 17
Administration of the Fund 18
Administrative Services 18
Custodian 19
Transfer Agent and Dividend
Disbursing Agent 19
Legal Counsel 19
Independent Public Accountants 19
Brokerage Transactions 19
Expenses of the Fund and Class C Shares 19
SHAREHOLDER INFORMATION 20
- ------------------------------------------------------
Voting Rights 20
TAX INFORMATION 20
- ------------------------------------------------------
Federal Income Tax 20
Pennsylvania Corporate and
Personal Property Taxes 21
PERFORMANCE INFORMATION 21
- ------------------------------------------------------
OTHER CLASSES OF SHARES 21
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--
CLASS A SHARES 22
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--
FORTRESS SHARES 23
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS C SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)............................. None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)................................................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, as applicable) (1)............................................................... 1.00%
Redemption Fee (as a percentage of amount redeemed, if applicable)...................................... None
Exchange Fee............................................................................................ None
ANNUAL CLASS C SHARES OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee.......................................................................................... 0.67%
12b-1 Fee............................................................................................... 0.75%
Total Other Expenses.................................................................................... 0.60%
Shareholder Services Fee........................................................................... 0.25%
Total Class C Shares Operating Expenses (2).......................................... 2.02%
</TABLE>
(1) The contingent deferred sales charge assessed is 1.00% of the lesser of the
original purchase price or the net asset value of shares redeemed within
one year of their purchase date. For a more complete description, see
"Redeeming Class C Shares."
(2) The Total Class C Shares Operating Expenses in the table above are based on
expenses expected during the fiscal year ending March 31, 1995. The Total
Class C Shares Operating Expenses were 2.11% for the period ended March 31,
1994.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF CLASS C SHARES OF THE FUND WILL
BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE
VARIOUS COSTS AND EXPENSES, SEE "INVESTING IN CLASS C SHARES" AND "FUND
INFORMATION." WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE SUBJECT TO
ADDITIONAL FEES.
Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charges permitted under the rules of the National
Association of Securities Dealers, Inc.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming (1)
5% annual return and (2) redemption at the end of each time period....... $ 31 $ 63 $ 109 $ 235
You would pay the following expenses on the same investment, assuming no
redemption............................................................... $ 21 $ 63 $ 109 $ 235
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The information set forth in the foregoing table and example relates only to
Class C Shares of the Fund. The Fund also offers three additional classes of
shares called Class A Shares, Class B Shares, and Fortress Shares. Class A
Shares, Class B Shares, Class C Shares, and Fortress Shares are all subject to
certain of the same expenses. However, Class A Shares are subject to a maximum
sales load of 4.50% but are not subject to a 12b-1 fee or a contingent deferred
sales charge. Class B Shares are subject to a 12b-1 fee of 0.75% and a maximum
contingent deferred sales charge of 3.00%, but are not subject to a sales load.
Fortress Shares are subject to a maximum sales load of 1.00% and a contingent
deferred sales charge of 1.00%, but are not subject to a 12b-1 fee. See "Other
Classes of Shares."
AMERICAN LEADERS FUND, INC.
FINANCIAL HIGHLIGHTS
CLASS C SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
The following table has been audited by Arthur Andersen & Co., the Fund's
independent public accountants. Their report dated May 13, 1994 on the Fund's
financial statements for the year ended March 31, 1994 and on the following
table for the period ended March 31, 1994 is included in the Annual Report dated
March 31, 1994, which is incorporated by reference
<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).
Further information about the Fund's performance is contained in the Fund's
annual report dated March 31, 1994, which can be obtained free of charge.
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Fund was incorporated under the laws of the State of Maryland on July 22,
1968. The Fund's address is Liberty Center, Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779. The Articles of Incorporation permit the
Fund to offer separate series of shares of beneficial interest representing
interests in separate portfolios of securities. The shares in any one portfolio
may be offered in separate classes. With respect to this Fund, as of the date of
this prospectus, the Board of Directors ("Directors") has established four
classes of shares, known as Class A Shares, Class B Shares, Class C Shares and
Fortress Shares. This prospectus relates only to the Class C Shares ("Shares")
of the Fund.
Class C Shares of the Fund are designed for individuals as a convenient means of
accumulating an interest in a professionally managed, diversified portfolio of
common stocks and other securities of high quality companies. A minimum initial
investment of $1,500 is required, unless the investment is in a retirement
account, in which case the minimum initial investment is $50.
Shares are sold at net asset value. A contingent deferred sales charge of 1.00%
will be charged on assets redeemed within the first 12 months following
purchase.
The Fund's current net asset value can be found in the mutual funds section of
local newspapers under "Liberty Family Funds."
LIBERTY FAMILY OF FUNDS
- --------------------------------------------------------------------------------
The Fund is a member of a family of mutual funds, collectively known as the
Liberty Family of Funds. The other funds in the Liberty Family of Funds are:
Capital Growth Fund, providing appreciation of capital primarily through
equity securities;
_ Fund for U.S. Government Securities, Inc., providing current income
through long-term U.S. government securities;
_ International Equity Fund, providing long-term capital growth and income
through international securities;
_ International Income Fund, providing a high level of current income
consistent with prudent investment risk through high-quality debt
securities denominated primarily in foreign currencies;
_ Liberty Equity Income Fund, Inc., providing above-average income and
capital appreciation through income producing equity securities;
_ Liberty High Income Bond Fund, Inc., providing high current income
through high-yielding, lower-rated corporate bonds;
_ Liberty Municipal Securities Fund, Inc., providing a high level of
current income exempt from federal regular income tax through municipal
bonds;
_ Liberty U.S. Government Money Market Trust, providing current income
consistent with stability of principal through high-quality U.S.
government securities;
_ Liberty Utility Fund, Inc., providing current income and long-term growth
of income, primarily through electric, gas, and communications utilities;
_ Strategic Income Fund, providing a high level of current income,
primarily through domestic and foreign corporate debt obligations; and
_ Tax-Free Instruments Trust, providing current income consistent with
stability of principal and exempt from federal income tax, through
high-quality, short-term municipal securities.
Prospectuses for these funds are available by writing to Federated Securities
Corp.
Each of the funds may also invest in certain other types of securities as
described in each fund's prospectus.
The Liberty Family of Funds provides flexibility and diversification for an
investor's long-term investment planning. It enables an investor to meet the
challenges of changing market conditions by offering convenient exchange
privileges which give access to various investment vehicles and by providing the
investment services of a proven, professional investment adviser.
LIBERTY FAMILY RETIREMENT PROGRAM
The Fund is also a member of the Liberty Family Retirement Program (the
"Program"), an integrated program of investment options, plan recordkeeping, and
consultation services for 401(k) and other participant-directed benefit and
savings plans. Under the Program, employers or plan trustees may select a group
of investment options to be offered in a plan which also uses the Program for
recordkeeping and administrative services. Additional fees are charged to
participating plans for these services. As part of the Program, exchanges may be
readily made between investment options selected by the employer or plan
trustee.
The other funds participating in the Liberty Family Retirement Program are:
Capital Growth Fund, Fund for U.S. Government Securities,Inc., International
Equity Fund, International Income Fund, Liberty Equity Income Fund, Inc.,
Liberty High Income Bond Fund, Inc., Liberty Utility Fund, Inc., Prime Cash
Series.
Plans with over $1 million invested in funds available in the Liberty Family
Retirement Program may purchase Class A Shares at net asset value without a
sales load.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek growth of capital and of income
by concentrating the area of investment decision in the securities of high
quality companies. The Fund's investment approach is based upon the conviction
that over the longer term, the economy will continue to expand and develop and
that this economic growth will be reflected importantly in the growth of major
corporations. The Fund pursues this investment objective by investing at least
65% of its assets in a portfolio of securities issued by the one hundred
companies contained in "The Leaders List." Generally, the Fund's management
makes portfolio selections utilizing fundamental analysis, with emphasis on
earning power, financial condition, and valuation. While there is no assurance
that the Fund will achieve its investment objective, it endeavors to do so by
following the investment policies described in this prospectus. The investment
objective and the policies and limitations described below cannot be changed
without approval of shareholders.
INVESTMENT POLICIES
ACCEPTABLE INVESTMENTS. The Fund invests primarily in securities of companies
selected from "The Leaders List" by the Fund's investment adviser on the basis
of traditional fundamental research techniques and standards. The securities in
which the Fund invests include, but are not limited to:
common stocks;
preferred stocks;
investment grade corporate bonds and notes; and
warrants.
The Fund may also temporarily hold cash and invest in U.S. government securities
in such proportions as the Fund's investment adviser may deem necessary for
defensive purposes.
THE LEADERS LIST. "The Leaders List" is a trade name which represents a
list of 100 blue chip companies selected by the Fund's investment adviser
principally on the basis of fundamental research techniques and standards.
Shareholders can obtain a copy of "The Leaders List" by contacting the
Fund. In the opinion of the investment adviser, securities of these
companies represent diversified and highly marketable investments. The list
is subject to continuous review and modification. A number of standards and
fundamental research factors are used in determining "The Leaders List."
"The Leaders List" includes leading companies in their industries
determined in terms of sales, earnings, and/or market capitalization.
REPURCHASE AGREEMENTS. The acceptable investments in which the Fund
invests may be purchased pursuant to repurchase agreements. Repurchase
agreements are arrangements in which banks, broker/dealers, and other
recognized financial institutions sell U.S. government or other securities
to the Fund and agree at the time of sale to repurchase them at a mutually
agreed upon time and price.
ILLIQUID SECURITIES. The Fund may acquire securities which are subject to
legal or contractual delays, restrictions, and costs on resale. Because of
time limitations, the Fund might not be able to dispose of these securities
at reasonable prices or at times advantageous to the Fund. Where the Fund
considers these securities to be illiquid, it intends to limit the purchase
of them together with other securities considered to be illiquid, including
repurchase agreements providing for settlement in more than seven days
after notice, to not more than 10% of its net assets.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities to broker/dealers, banks, or other
institutional borrowers of securities. The Fund will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the
investment adviser has determined are creditworthy under guidelines established
by the Fund's Board of Directors and will receive collateral equal to at least
100% of the value of the securities loaned.
PORTFOLIO TURNOVER. Securities in the Fund's portfolio will be sold whenever
the Fund's investment adviser believes it is appropriate to do so in light of
the Fund's investment objective, without regard to the length of time a
particular security may have been held. The adviser to the Fund does not
anticipate that portfolio turnover will result in adverse tax consequences. Any
such trading will increase the Fund's portfolio turnover rate and transaction
costs.
INVESTMENT LIMITATIONS
The Fund will not:
borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a portfolio instrument for a
percentage of its cash value with an agreement to buy it back on a set
date) except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets;
invest more than 5% of its total assets in securities of one issuer
(except U.S. government securities) or purchase more than 10% of any class
of voting securities of any one issuer;
invest more than 5% of its total assets in securities of issuers that have
records of less than three years of continuous operations; or
purchase restricted securities if immediately thereafter more than 15% of
the net assets of the Fund would be invested in such securities.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Class C Shares in the market value
of all securities and other assets of the Fund, subtracting the interest of the
Class C Shares in the liabilities of the Fund and those attributable to the
Class C Shares, and dividing the remainder by the total number of Class C Shares
outstanding. The net asset value for Class C shares may differ from that of
Class A Shares, Class B Shares, and Fortress Shares 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.
INVESTING IN CLASS C SHARES
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open. Shares may
be purchased through a financial institution which has a sales agreement with
the distributor or directly from the distributor, Federated Securities Corp.,
once an account has been established. In connection with the sale of Shares,
Federated Securities Corp. may from time to time offer certain items of nominal
value to any shareholder or investor. The Fund reserves the right to reject any
purchase request.
Participants in plans under the Liberty Family Retirement Program shall purchase
Shares in accordance with the requirements of their respective plans.
THROUGH A FINANCIAL INSTITUTION. An investor may call his financial institution
(such as a bank or an investment dealer) to place an order to purchase Shares.
Orders through a financial institution are considered received when the Fund is
notified of the purchase order. Purchase orders through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for Shares to be purchased at that day's price. Purchase orders through
other financial institutions must be received by the financial institution and
transmitted to the Fund before 4:00 p.m. (Eastern time) in order for Shares to
be purchased at that day's price. It is the financial institution's
responsibility to transmit orders promptly.
The financial institution which maintains investor accounts with the Fund must
do so on a fully disclosed basis unless it accounts for share ownership periods
used in calculating the contingent deferred sales charge (see "Contingent
Deferred Sales Charge"). In addition, advance payments made to financial
institutions may be subject to reclaim by the distributor for accounts
transferred to financial institutions which do not maintain investor accounts on
a fully disclosed basis and do not account for share ownership periods (see
"Other Payments to Financial Institutions").
DIRECTLY FROM THE DISTRIBUTOR. An investor may place an order to purchase
Shares directly from Federated Securities Corp. once an account has been
established. To do so:
complete and sign the new account form available from the Fund;
enclose a check made payable to American Leaders Fund, Inc.--Class C
Shares; and
mail both to the Fund's transfer agent, Federated Services Company, P.O.
Box 8604, Boston, MA 02266-8604.
Orders by mail are considered received after payment by check is converted by
the transfer agent's bank, State Street Bank and Trust Company ("State Street
Bank") into federal funds. This is generally the next business day after State
Street Bank receives the check.
To purchase Shares of the Fund directly from the distributor by wire once an
account has been established, call the Fund. All information needed will be
taken over the telephone, and the order is considered received when State Street
Bank receives payment by wire. Federal funds should be wired as follows:
Federated Services Company, c/o State Street Bank and Trust Company, Boston,
Massachusetts 02105; Attention: Mutual Fund Servicing Division; For Credit to:
American Leaders Fund, Inc.-- Class C Shares; Title or Name of Account; Wire
Order Number and/or Account Number. Shares cannot be purchased by wire on
Columbus Day, Veterans' Day, or Martin Luther King Day.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Class C Shares is $1,500 unless the investment
is in a retirement plan, in which case the minimum initial investment is $50.
Subsequent investments must be in amounts of at least $100, except for
retirement plans, which must be in amounts of at least $50. (Other minimum
investment requirements may apply to investments through the Liberty Family
Retirement Program.)
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received.
The net asset value is determined at 4:00 p.m. (Eastern time), Monday through
Friday, except on: (i) days on which there are not sufficient changes in the
value of the Fund's portfolio securities that its net asset value might be
materially affected; (ii) days during which no Shares are tendered for
redemption and no orders to purchase Shares are received; or (iii) the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgving Day, and Christmas Day.
SYSTEMATIC INVESTMENT PROGRAM. Once a Fund account has been opened,
shareholders may add to their investment on a regular basis in a minimum amount
of $100. Under this program, funds may be automatically withdrawn periodically
from the shareholder's checking account and invested in Shares at the net asset
value next determined after an order is received by the transfer agent. A
shareholder may apply for participation in this program through his financial
institution or directly through the Fund.
CERTIFICATES AND CONFIRMATIONS
As Transfer Agent For The Fund, Federated Services Company maintains a Share
account for each shareholder. Share certificates are not issued unless requested
in writing to Federated Services Company.
Detailed confirmations of each purchase and redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
that quarter.
DIVIDENDS
Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date. Dividends are automatically reinvested in additional
Shares on payment dates at the ex-dividend date net asset value without a sales
load, unless shareholders request cash payments on the new account form or by
writing to the transfer agent. All shareholders on the record date are entitled
to the dividend. If Shares are redeemed or exchanged prior to the record date or
purchased after the record date, those Shares are not entitled to that quarter's
dividend.
CAPITAL GAINS
Net long-term capital gains realized by the Fund, if any, will be distributed at
least once every twelve months.
RETIREMENT PLANS
Shares of the Fund can be purchased as an investment for retirement plans or for
IRA accounts. For further details, including prototype retirement plans, contact
the Fund and consult a tax adviser.
EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
In order to provide greater flexibility to Fund shareholders whose investment
objectives have changed, Class C shareholders may exchange all or some of their
Shares for Class C Shares of other funds in the Liberty Family of Funds at net
asset value without a contingent deferred sales charge. Participants in a plan
under the Liberty Family Retirement Program may exchange some or all of their
Shares for Class C Shares of other funds offered under their plan at net asset
value without a contingent deferred sales charge. Any contingent deferred sales
charge charged at the time exchanged-for Shares are redeemed is calculated as if
the shareholder had held the Shares from the date on which he or she became a
shareholder of the exchanged-from Shares. For more information, see "Contingent
Deferred Sales Charge."
REQUIREMENTS FOR EXCHANGE
Shareholders using this privilege must exchange Shares having a net asset value
equal to the minimum investment requirements of the fund into which the exchange
is being made. Before the exchange, the shareholder must receive a prospectus of
the fund for which the exchange is being made.
This privilege is available to shareholders resident in any state in which the
fund Shares being acquired may be sold. Upon receipt of proper instructions and
required supporting documents, Shares submitted for exchange are redeemed and
the proceeds invested in Class C Shares of the other fund. The exchange
privilege may be modified or terminated at any time. Shareholders will be
notified of the modification or termination of the exchange privilege.
Further information on the exchange privilege and prospectuses for the Liberty
Family of Funds or certain Federated Funds are available by contacting the Fund.
TAX CONSEQUENCES
An exercise of the exchange privilege is treated as a sale for federal income
tax purposes. Depending on the circumstances, a capital gain or loss may be
realized.
MAKING AN EXCHANGE
Instructions for exchanges for the Liberty Family of Funds or certain Federated
Funds may be given in writing or by telephone. Written instructions may require
a signature guarantee. Shareholders of the Fund may have difficulty in making
exchanges by telephone through brokers and other financial institutions during
times of drastic economic or market changes. If a shareholder cannot contact his
broker or financial institution by telephone, it is recommended that an exchange
request be made in writing and sent by overnight mail to Federated Services
Company, Two Heritage Drive, North Quincy, Massachusetts 02171.
Instructions for exchanges for the Liberty Family Retirement Program should be
given to the plan administrator.
TELEPHONE INSTRUCTIONS. Telephone instructions made by the investor may be
carried out only if a telephone authorization form completed by the investor is
on file with the transfer agent. If the instructions are given by a broker, a
telephone authorization form completed by the broker must be on file with the
transfer agent. Shares may be exchanged between two funds by telephone only if
the two funds have identical shareholder registrations.
Any Shares held in certificate form cannot be exchanged by telephone but must be
forwarded to Federated Services Company, P.O. Box 8604, Boston, Massachusetts
and deposited to the shareholder's account before being exchanged. Telephone
exchange instructions may be recorded. Such instructions will be processed as of
4:00 p.m. (Eastern time) and must be received by the transfer agent before that
time for Shares to be exchanged the same day. Shareholders exchanging into a
Fund will not receive any dividend that is payable to shareholders of record on
that date. This privilege may be modified or terminated at any time. If
reasonable procedures are not followed by the Fund, it may be liable for losses
due to unauthorized or fraudulent telephone instructions.
REDEEMING CLASS C SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at their net asset value, less any applicable contingent
deferred sales charge, next determined after the transfer agent receives the
redemption request. Redemptions will be made on days on which the Fund computes
its net asset value. Redemptions can be made through a financial institution or
directly from the Fund. Redemption requests must be received in proper form.
Redemptions of Shares held through the Liberty Family Retirement Program will be
governed by the requirements of the respective plans.
THROUGH A FINANCIAL INSTITUTION
A shareholder may redeem Shares of the Fund by calling his financial institution
(such as a bank or an investment dealer) to request the redemption. Shares will
be redeemed at the net asset value, less any applicable redemption fee, next
determined after the Fund receives the redemption request from the financial
institution. Redemption requests through a registered broker/dealer must be
received by the broker before 4:00 p.m. (Eastern time) and must be transmitted
by the broker to the Fund before 5:00 p.m. (Eastern time) in order for Shares to
be redeemed at that day's net asset value. Redemption requests through other
financial institutions must be received by the financial institution and
transmitted to the Fund before 4:00 p.m. (Eastern time) in order for Shares to
be redeemed at that day's net asset value. The financial institution is
responsible for promptly submitting redemption requests and providing proper
written redemption instructions to the Fund. The financial institution may
charge customary fees and commissions for this service.
DIRECTLY FROM THE FUND
BY TELEPHONE. Shareholders who have not purchased through a financial
institution may redeem their Shares of the Fund by telephoning the Fund.
Telephone redemption instructions may be recorded. The proceeds will be mailed
to the shareholder's address of record or wire transferred to the shareholder's
account at a domestic commercial bank that is a member of the Federal Reserve
System, normally within one business day, but in no event longer than seven days
after the request. The minimum amount for a wire transfer is $1,000. If at any
time the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
An authorization form permitting the transfer agent to accept telephone requests
must first be completed. Authorization forms and information on this service are
available from Federated Securities Corp. If reasonable procedures are not
followed by the Fund it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption should be considered.
BY MAIL. Any shareholder may redeem Shares by sending a written request to
Federated Services Company, P.O. Box 8604, Boston, Massachusetts 02266-8604. The
written request should include the shareholder's name, the Fund name and class
designation, the account number, and the Share or dollar amount requested, and
should be signed exactly as the Shares are registered.
If Share certificates have been issued, they must be properly endorsed and
should be sent by registered or certified mail with the written request.
Shareholders should call the Fund for assistance in redeeming by mail.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the Fund, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after receipt of a proper written redemption
request.
CONTINGENT DEFERRED SALES CHARGE
Shareholders who purchased Shares will be charged a contingent deferred sales
charge by Federated Securities Corp. of 1.00% for redemptions of these Shares
made within one year from date of purchase. To the extent that a shareholder
exchanges between or among Class C Shares in other funds in the Liberty Family
of Funds, the time for which the exchanged-for shares were held will be added,
or "tacked", to the time for which the exchanged-from Shares were held for
purposes of satisfying the one-year holding period. The contingent deferred
sales charge will be calculated based upon the lesser of the original purchase
price of the Shares or the net asset value of the Shares when redeemed. For
additional information, see "Other Payments to Financial Institutions."
The contingent deferred sales charge will not be imposed on Shares acquired
through reinvestment of dividends or distributions of short-term or long-term
capital gains. Redemptions are deemed to have occurred in the following order:
i) Shares acquired through the reinvestment of dividends and long-term capital
gains, ii) purchases of Shares occurring more than one year before the date of
redemption, and iii) purchases of Shares within the previous year.
The contingent deferred sales charge will not be imposed when a redemption
results from a tax-free return under the following circumstances: (i) a total or
partial distribution from a qualified retirement plan, other than an IRA, Keogh
Plan, or a custodial account, following retirement; (ii) a total or partial
distribution from an IRA, Keogh Plan, or a custodial account, after the
beneficial owner attains age 59-1/2; or (iii) from the death or permanent and
total disability of the beneficial owner. The exemption from the contingent
deferred sales charge for qualified plans, an IRA, Keogh Plan, or a custodial
account does not extend to account transfers, rollovers, or other redemptions
made for purposes of reinvestment.
A contingent deferred sales charge will not be charged in connection with
exchanges of Shares for Class C Shares in other Liberty Family Funds or Liberty
Family Retirement Program funds or in connection with redemptions by the Fund of
accounts with low balances. No contingent deferred sales charge will be imposed
on shares purchased through a bank trust department, an investment adviser or a
retirement plan where the third party administrator has entered into certain
arrangements with Federated Securities Corp. to the extent that no payment was
advanced for purchases made by such entities. No contingent deferred sales
charge will be charged for redemptions from the Liberty Family Retirement
Program. For additional information, see "Other Payments to Financial
Institutions."
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount not less
than $100 may take advantage of the Systematic Withdrawal Program. Under this
program, Shares are redeemed to provide for periodic withdrawal payments in an
amount directed by the shareholder. Depending upon the amount of the withdrawal
payments, the amount of dividends paid and capital gains distributions with
respect to Shares, and the fluctuation of the net asset value of Shares redeemed
under this program, redemptions may reduce, and eventually deplete, the
shareholder's investment in the Fund. For this reason, payments under this
program should not be considered as yield or income on the shareholder's
investment in the Fund. To be eligible to participate in this program, a
shareholder must have an account value of at least $10,000. A shareholder may
apply for participation in this program through his financial institution.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem Shares in any account, except retirement plans, and pay the proceeds to
the shareholder if the account balance falls below the required minimum value of
$1,500. This requirement does not apply, however, if the balance falls below
$1,500 because of changes in the Fund's net asset value.
Before Shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional Shares to meet the minimum
requirement.
FUND INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
BOARD OF DIRECTORS. The Fund is managed by a Board of Directors. The Directors
are responsible for managing the Fund's business affairs and for exercising all
the Fund's powers except those reserved for the shareholders. An Executive
Committee of the Board of Directors handles the Board's responsibilities between
meetings of the Board.
OFFICERS AND DIRECTORS. Officers and Directors are listed with their addresses,
principal occupations and present positions, including any affiliation with
Federated Advisers, Federated Investors, Federated Securities Corp., Federated
Services Company, Federated Administrative Services, and the Funds (as defined
in the Combined Statement of Additional Information).
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE FUND DURING PAST FIVE YEARS
<S> <C> <C>
John F. Donahue\* President and Chairman and Trustee, Federated Investors; Chairman and
Federated Investors Tower Director Trustee, Federated Advisers, Federated Management, and
Pittsburgh, PA Federated Research; Director, AEtna Life and Casualty
Company; Chief Executive Officer and Director, Trustee, or
Managing General Partner of the Funds; formerly, Director,
The Standard Fire Insurance Company. Mr. Donahue is the
father of J. Christopher Donahue, Vice President and Director
of the Fund.
John T. Conroy, Jr. Director President, Investment Properties Corporation; Senior
Wood/IPC Commercial Vice-President, John R. Wood and Associates, Inc., Realtors;
Department President, Northgate Village Development Corporation; General
John R. Wood and Partner or Trustee in private real estate ventures in
Associates, Inc., Realtors Southwest Florida; Director, Trustee, or Managing General
3255 Tamiami Trail North Partner of the Funds; formerly, President Naples Property
Naples, FL Management, Inc.
William J. Copeland Director Director and Member of the Executive Committee, Michael
One PNC Plaza-- Baker, Inc.; Director, Trustee, or Managing General Partner
23rd Floor of the Funds; formerly, Vice Chairman and Director, PNC Bank
PNB Building N.A. and PNC Bank Corp and Director, Ryan Homes, Inc.
Pittsburgh, PA
J. Christopher Donahue* Vice President and President and Trustee, Federated Investors; Trustee,
Federated Investors Tower Director Federated Administrative Services, Federated Advisers,
Pittsburgh, PA Federated Management, and Federated Research; President and
Director, Federated Administrative Services; President or
Vice President of the Funds; Director, Trustee, or Managing
General Partner of some of the Funds. Mr. Donahue is the son
of John F. Donahue, Chairman and Director of the Fund.
James E. Dowd Director Attorney-at-law; Director, The Emerging Germany Fund, Inc.;
571 Hayward Mill Road Director, Trustee, or Managing General Partner of the Funds;
Concord, MA formerly, Director, Blue Cross of Massachusetts, Inc.
Lawrence D. Ellis, M.D. Director Hematologist, Oncologist, and Internist, Presbyterian and
3471 Fifth Avenue Montefiore Hospitals; Clinical Professor of Medicine and
Suite 1111 Trustee, University of Pittsburgh; Director, Trustee, or
Pittsburgh, PA Managing General Partner of the Funds.
Edward L. Flaherty, Jr.\ Director Attorney-at-law; Partner, Meyer and Flaherty; Director, Eat'N
5916 Penn Mall Park Restaurants, Inc., and Statewide Settlement Agency,
Pittsburgh, PA Inc.; Director, Trustee, or Managing General Partner of the
Funds; formerly, Counsel, Horizon Financial, F.A., Western
Region.
Peter E. Madden Director Consultant; State Representative, Commonwealth of
225 Franklin Street Massachusetts; Director, Trustee, or Managing General Partner
Boston, MA of the Funds; formerly, President, State Street Bank and
Trust Company and State Street Boston Corporation and
Trustee, Lahey Clinic Foundation, Inc.
Gregor F. Meyer Director Attorney-at-law; Partner, Meyer and Flaherty; Chairman,
5916 Penn Mall Meritcare, Inc.; Director, Eat'N Park Restaurants; Director,
Pittsburgh, PA Trustee, or Managing General Partner of the Funds; formerly,
Vice Chairman, Horizon Financial, F.A.
Wesley W. Posvar Director Professor, Foreign Policy and Management Consultant; Trustee,
1202 Cathedral of Carnegie Endowment for International Peace, RAND Corporation,
Learning Online Computer Library Center, Inc.; and U.S. Space
University of Pittsburgh Foundation; Chairman, National Advisory Council for
Pittsburgh, PA Environmental Policy and Technology; Chairman, Czecho Slovak
Management Center; Director, Trustee, or Managing General
Partner of the Funds; President Emeritus, University of
Pittsburgh; formerly Chairman, National Advisory Council for
Environmental Policy and Technology.
Marjorie P. Smuts Director Public relations/marketing consultant; Director, Trustee, or
4905 Bayard Street Managing General Partner of the Funds.
Pittsburgh, PA
Richard B. Fisher Vice President Executive Vice President and Trustee, Federated Investors;
Federated Investors Tower President and Director, Federated Securities Corp.; President
Pittsburgh, PA or Vice President of the Funds; Director or Trustee of some
of the Funds.
Edward C. Gonzales* Vice President Vice President, Treasurer, and Trustee, Federated Investors;
Federated Investors Tower and Treasurer Vice President and Treasurer, Federated Advisers, Federated
Pittsburgh, PA Management, and Federated Research; Executive Vice President,
Treasurer, and Director, Federated Securities Corp.;
Chairman, Treasurer, and Trustee, Federated Administrative
Services; Trustee or Director of some of the Funds; Vice
President and Treasurer of the Funds.
John W. McGonigle Vice President and Vice President, Secretary, General Counsel, and Trustee,
Federated Investors Tower Secretary Federated Investors; Vice President, Secretary, and Trustee,
Pittsburgh, PA Federated Advisers, Federated Management, and Federated
Research; Executive Vice President, Secretary, and Trustee,
Federated Administrative Services; Trustee, Federated
Services Company; Director and Executive Vice President,
Federated Securities Corp.; Vice President and Secretary of
the Funds.
John A. Staley, IV* Vice President Vice President and Trustee, Federated Investors; Executive
Federated Investors Tower Vice President, Federated Securities Corp.; President and
Pittsburgh, PA Trustee, Federated Advisers, Federated Management, and
Federated Research; Vice President of the Funds; Director,
Trustee, or Managing General Partner of the Funds; formerly,
Vice President, The Standard Fire Insurance Company and
President of its Federated Research Division.
</TABLE>
*This Director is deemed to be an "interested person" of the Fund as
defined in the Investment Company Act of 1940 as amended.
\Members of the Fund's Exectutive Committee. The Exectutive Committee of the
Board of Directors handles the responsibilites of the Board of Directors
between meetings of the Board.
Officers and Directors own less than 1% of the Fund's outstanding Shares.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Advisers (the "adviser"), the Fund's investment adviser, subject to direction by
the Directors. The adviser continually conducts investment research and
supervision for the Fund and is responsible for the purchase or sale of
portfolio instruments, for which it receives an annual fee from the Fund.
ADVISORY FEES. The Fund's adviser receives an annual investment advisory
fee equal to .55 of 1% of the Fund's average daily net assets, plus 4.5% of
the Fund's gross income (excluding any capital gains or losses). Gross
income includes, in general, discount earned on U.S. Treasury bills and
agency discount notes, interest earned on all interest-bearing obligations,
and dividend income recorded on the ex-dividend date but does not include
capital gains or losses or reduction for expenses. The adviser may
voluntarily choose to waive a portion of its fee or reimburse the Fund for
certain operating expenses. The adviser can terminate this voluntary
reimbursement of expenses at any time in its sole discretion. The adviser
has also undertaken to reimburse the Fund for operating expenses in excess
of limitations established by certain states.
ADVISER'S BACKGROUND. Federated Advisers, a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Advisers and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services
to a number of investment companies. Total assets under management or
administration by these and other subsidiaries of Federated Investors are
approximately $70 billion. Federated Investors, which was founded in 1956
as Federated Investors, Inc., develops
and manages mutual funds primarily for the financial industry. Federated
Investors' track record of competitive performance and its disciplined,
risk averse investment philosophy serve approximately 3,500 client
institutions nationwide. Through these same client institutions, individual
shareholders also have access to this same level of investment expertise.
Peter R. Anderson has been the Fund's portfolio manager since December,
1989. Mr. Anderson joined Federated Investors in 1972 as, and is presently,
a Senior Vice President of the Fund's investment adviser. Mr. Anderson is a
Chartered Financial Analyst and received his M.B.A. in Finance from the
University of Wisconsin.
Michael P. Donnelly has been the Fund's co-portfolio manager since
February, 1993. Mr. Donnelly joined Federated Investors in 1989 and has
been an Assistant Vice President of the Fund's investment adviser since
1992. From 1989 to 1991, Mr. Donnelly acted as an investment analyst for
the investment adviser. Mr. Donnelly was a Fixed Income Associate at
Donaldson, Lufkin & Jenrette from 1987 until 1989. Mr. Donnelly is a
Chartered Financial Analyst and received his M.B.A. in Finance from the
University of Virginia.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. _In addition to periodic payments
to financial institutions under the Distribution and Shareholder Services
Plans, certain financial institutions may be compensated by the adviser or
its affiliates for the continuing investment of customers' assets in
certain funds, including the Fund, advised by those entities. These
payments will be made directly by the distributor or adviser from their
assets, and will not be made from the assets of the Fund or by the
assessment of a sales charge on Shares.
Federated Securities Corp. will pay financial institutions an amount equal
to 1% of the net asset value of Shares purchased by their clients or
customers at the time of purchase (except for participants in the Liberty
Family Retirement Program). In addition to periodic payments to financial
institutions under the Plan, Federated Securities Corp. will pay financial
institutions an amount equal to 1% of the net asset value of Shares
purchased by their clients or customers at the time of purchase (except for
participants in the Liberty Family Retirement Program). Furthermore, the
Adviser or its affiliates may offer to pay a fee from their own assets to
financial institutions as financial assistance for providing substantial
marketing, sales and operations support to the distributor. The support may
include sponsoring sales, educational and training seminars for their
employees, providing sales literature, and engineering computer software
programs that emphasize the attributes of the Fund. Such assistance will be
predicated upon the amount of Shares the dealer sells or may sell, and/or
upon the type and nature of sales or operational support furnished by the
dealer.
DISTRIBUTION OF CLASS C SHARES
Federated Securities Corp. is the principal distributor for Shares. Federated
Securities Corp. is located at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779. It is a Pennsylvania corporation organized on November
14, 1969, and is the principal distributor for a number of investment companies.
Federated Securities Corp. is a subsidiary of Federated Investors.
DISTRIBUTION AND SHAREHOLDER SERVICES PLANS. _Under a distribution plan adopted
in accordance with Investment Company Act Rule 12b-1 (the "Distribution Plan"),
Class C Shares will pay to the
distributor an amount, computed at an annual rate of 0.75 of 1% of the average
daily net assets of the Class to finance any activity which is principally
intended to result in the sale of shares subject to the Distribution Plan. The
distributor may select Financial Institutions such as banks, fiduciaries,
custodians for the public funds, investment advisers, and broker/dealers to
provide sales support services as agents for their clients or customers.
The Distribution Plan is a compensation-type plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the Fund does
not pay for unreimbursed expenses of the distributor, including amounts expended
by the distributor in excess of amounts received by it from the Fund, interest,
carrying or other financing charges in connection with excess amounts expended,
or the distributor's overhead expenses. However, the distributor may be able to
recover such amount or may earn a profit from future payments made by the Fund
under the Distribution Plan.
In addition, the Fund has adopted a Shareholder Services Plan (the "Services
Plan") under which it may make payments up to 0.25 of 1% of the average daily
net asset value of the Class to obtain certain personal services for
shareholders and the maintenance of shareholder accounts ("shareholder
services"). The Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a Subsidiary of Federated Investors, under which
Federated Shareholder Services will either perform shareholder services directly
or will select financial institutions to perform shareholder services. Financial
institutions will receive fees based upon shares owned by their clients or
customers. The schedules of such fees and the basis upon which such fees will be
paid will be determined from time to time by the Fund and Federated Shareholder
Services.
The Glass-Steagall Act limits the ability of a depository institution (such as a
commercial bank or savings and loan association) to become an underwriter or
distributor of securities. In the even the Glass-Steagall Act is deemed to
prohibit depository institutions from acting in the capacities described above
or should Congress relax current restrictions on depository institutions, the
Directors will consider appropriate changes in the services.
State securities laws governing the ability of depository institutions to act as
underwriters or distributors of securities may differ from interpretations given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.
The distributor may, from time to time and for such periods as it deems
appropriate, voluntarily reduce its compensation under the Plan.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. _Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate which relates
to the average aggregate daily net assets of all funds advised by subsidiaries
of Federated Investors ("Federated Funds") as specified below:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE DAILY NET ASSETS
MAXIMUM ADMINISTRATIVE FEE OF THE FEDERATED FUNDS
<S> <C>
0.15 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.10 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
CUSTODIAN. State Street Bank and Trust Company, P.O. Box 8604, Boston,
Massachusetts 02266-8604, is custodian for the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. _ Federated Services Company,
Pittsburgh, Pennsylvania, is transfer agent for the Fund, and dividend
disbursing agent for the Fund.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly, 2510
Centre City Tower, Pittsburgh, Pennsylvania 15222, and Dickstein, Shapiro &
Morin, 2101 L Street, N.W., Washington, D.C. 20037.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen & Co., 2100 One PPG Place, Pittsburgh, Pennsylvania 15222.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the adviser will generally utilize those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the adviser may give consideration to those
firms which have sold or are selling shares of the Fund and other funds
distributed by Federated Securities Corp. The adviser makes decisions on
portfolio transactions and selects brokers and dealers subject to review by the
Board of Directors.
EXPENSES OF THE FUND AND CLASS C SHARES
Holders of Shares pay their allocable portion of Fund and portfolio expenses.
The Fund expenses for which holders of Shares pay their allocable portion
include, but are not limited to: the cost of organizing the Fund and continuing
its existence; registering the Fund with federal and state securities
authorities; Directors' fees; auditors' fees; the cost of meetings of Directors;
legal fees of the Fund; association membership dues; and such non-recurring and
extraordinary items as may arise from time to time.
The portfolio expenses for which holders of Shares pay their allocable portion
include, but are not limited to: registering the portfolio and Shares of the
porfolio; investment advisory services; taxes and commissions; custodian fees;
insurance premiums; auditors' fees; and such non-recurring and extraordinary
items as may arise from time to time.
At present, the only expenses which are allocated specifically to Shares as a
class are expenses under the Fund's Shareholder Services Plan and Distribution
Plan. However, the Directors reserve the right to allocate certain other
expenses to holders of Shares as it deems appropriate ("Class Expenses"). In any
case, Class Expenses would be limited to: distribution fees; transfer agent fees
as identified by the transfer agent as attributable to holders of Shares; fees
under the Fund's Shareholder Services Plan; printing and postage expenses
related to preparing and distributing materials such as shareholder reports,
prospectuses and proxies to current shareholders; registration fees paid to the
Securities and Exchange Commission and registration fees paid to state
securities commissions; expenses related to administrative personnel and
services as required to support holders of Shares; legal fees relating solely to
Shares; and Directors' fees incurred as a result of issues relating solely to
Shares.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each Share gives the shareholder one vote in Director elections and other
matters submitted to shareholders for vote. All shares of each portfolio or
class in the Fund have equal voting rights, except that only shares of that
particular portfolio or class are entitled to vote in matters affecting that
portfolio or class. As a Maryland Corporation, the Fund is not required to hold
annual shareholder meetings. Shareholder approval will be sought only for
certain changes in the Fund's operation and for the election of Directors under
certain circumstances.
Directors may be removed by a two-thirds vote of the number of Directors prior
to such removal or by a two-thirds vote of the shareholders at a special
meeting. A special meeting of shareholders shall be called by the Directors upon
the written request of shareholders owning at least 10% of the Fund's
outstanding shares of all series entitled to vote.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions, including capital gains distributions,
received. This applies whether dividends and distributions are received in cash
or as additional Shares. Distributions representing long-term capital gains, if
any, will be taxable to shareholders as long-term capital gains no matter how
long the shareholders have held the Shares. No federal income tax is due on any
dividends earned in an IRA or qualified retirement plan until distributed.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Fund:
the Fund is subject to the Pennsylvania corporate franchise tax; and
Fund shares are exempt from personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Fund advertises the total return and yield for Class C
Shares.
Total return represents the change, over a specific period of time, in the value
of an investment in Class C Shares after reinvesting all income and capital
gains distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of Class C Shares is calculated by dividing the net investment income
per share (as defined by the Securities and Exchange Commission) earned by Class
C Shares over a thirty-day period by the maximum offering price per share of
Class C Shares on the last day of the period. This number is then annualized
using semi-annual compounding. The yield does not necessarily reflect income
actually earned by Class C Shares, and therefore, may not correlate to the
dividends or other distributions paid to shareholders.
The performance information reflects the effect of non-recurring charges, such
as the contingent deferred sales charge, which, if excluded, would increase the
total return.
Total return and yield will be calculated separately for Class A Shares, Class B
Shares, Class C Shares, and Fortress Shares. Because Class B Shares and Class C
Shares are subject to Rule 12b-1 fees and services plan fees, the yield for
Class A Shares and Fortress Shares, for the same period, may exceed that of
Class B Shares and Class C Shares. Because Class A Shares are subject to a
higher maximum sales load, the total return for Class B Shares, Class C Shares
and Fortress Shares, for the same period, will exceed that of Class A Shares.
From time to time the Fund may advertise the performance of Class A Shares,
Class B Shares, Class C Shares, and Fortress Shares using certain financial
publications and/or compare the performance of Class A Shares, Class B Shares,
Class C Shares, and Fortress Shares to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund presently offers Class A Shares, Class B Shares, Class C Shares, and
Fortress Shares.
Class A Shares are sold primarily to customers of financial institutions subject
to a front-end sales charge of up to 4.50%. The Fund has also adopted a Services
Plan fee of up to 0.25 of 1% of the Class A Shares' average daily net assets
with respect to Class A Shares. Class A Shares are subject to a
minimum initial investment of $500, unless the investment is in a retirement
account, in which case the minimum investment is $50. Class A Shares are not
subject to a distribution fee or a distribution plan pursuant to Rule 12b-1.
Class B Shares are sold primarily to customers of financial institutions subject
to certain contingent deferred sales charges. The Fund has also adopted a Rule
12b-1 plan whereby the distributor is paid a fee of up to .75 of 1% and a
Shareholder Service Plan fee of up to .25 of 1% of the Class B Shares' average
daily net assets with respect to Class B Shares. Investments in Class B Shares
are subject to a minimum initial investment of $1,500, unless the investment is
in a retirement account, in which case the minimum investment is $50.
Fortress Shares are sold primarily to customers of financial institutions
subject to a front-end sales charge of 1.00% and a contingent deferred sales
charge of up to 1.00%. The Fund has also adopted a Services Plan fee of up to
.25 of 1% of the Fortress Shares' average daily net assets with respect to
Fortress Shares. Investments in Fortress Shares are subject to a minimum initial
investment of $1,500, unless the investment is in a retirement account, in which
case the minimum investment is $50.
The amount of dividends payable to Class A Shares may exceed that of Class C
Shares by the difference between class expenses and shareholder service expenses
borne by shares of each respective class.
The stated advisory fee is the same for both classes of shares.
AMERICAN LEADERS FUND, INC.
FINANCIAL HIGHLIGHTS
CLASS A SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by Arthur Andersen & Co., the Fund's
independent public accountants. Their report dated May 13, 1994 on the Fund's
financial statements for the year ended
March 31, 1994 and the following table for each of the periods presented is
included in the Annual Report, which is incorporated by reference.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985*
NET ASSET VALUE,
BEGINNING OF PERIOD $ 14.90 $ 13.88 $ 13.18 $ 12.21 $ 13.04 $ 12.55 $ 14.21 $ 13.64 $ 11.59 $ 11.55
- ----------------------
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 0.03
- ----------------------
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 0.01
- ---------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total from investment
operations 0.41 2.34 1.63 1.65 0.91 1.58 (.76) 2.27 3.41 0.04
- ----------------------
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 $ 11.59
- ---------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN** 2.76% 18.31% 12.91% 14.17% 7.13% 13.23% (5.32)% 18.38% 31.80% 0.35%
- ----------------------
RATIOS TO AVERAGE NET
ASSETS
- ----------------------
Expenses 1.18% 1.13% 1.02% 1.02% 1.01% 1.01% 1.00% 1.00% 1.09% 1.06%(a)
- ----------------------
Net investment income 1.48% 2.07% 2.12% 3.06% 4.23% 3.85% 3.35% 3.44% 4.42% 3.18%(a)
- ----------------------
Expense waiver/
reimbursement (b) -- 0.06% 0.16% 0.30% 0.35% 0.12% 0.11% 0.12% 0.18 0.22%(a)
- ----------------------
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 71,899
- ----------------------
Portfolio turnover
rate 27% 39% 67% 57% 50% 27% 65% 28% 31% 6%
- ----------------------
<CAPTION>
YEAR ENDED
<S> <C>
1985
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.97
- ----------------------
INCOME FROM INVESTMENT
OPERATIONS
- ----------------------
Net investment income 0.54
- ----------------------
Net realized and
unrealized gain
(loss)
on investments 1.91
- ---------------------- -------------
Total from investment
operations 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 $ 11.55
- ---------------------- -------------
TOTAL RETURN** 25.85
- ----------------------
RATIOS TO AVERAGE NET
ASSETS
- ----------------------
Expenses 1.29 %
- ----------------------
Net investment income 5.03 %
- ----------------------
Expense waiver/
reimbursement (b) 0.05 %
- ----------------------
SUPPLEMENTAL DATA
- ----------------------
Net assets, end of
period (000 omitted) 71,455
- ----------------------
Portfolio turnover
rate 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).
Further information about the Fund performance is contained in the Fund's annual
report dated March 31, 1994, which can be obtained free of charge.
AMERICAN LEADERS FUND, INC.
FINANCIAL HIGHLIGHTS
FORTRESS SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
The following table has been audited by Arthur Anderson & Co., the Fund's
independent public accountants. Their report dated May __, 1994 on the Fund's
financial statements for the year ended
March 31, 1994 and on the following table for each of the ten years in the
period then ended March 31, 1994 is included in the Annual Report, which is
incorporated by reference.
<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).
Further information about the Fund's performance is contained in the Fund's
annual report dated March 31, 1994, which may be obtained free of charge.
AMERICAN LEADERS
FUND, INC.
CLASS C SHARES
PROSPECTUS
An Open-End, Diversified
Management Investment Company
August __, 1994
[LOGO] FEDERATED SECURITIES CORP.
---------------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
LIBERTY CENTER
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
8062808A-C (8/94)
DOCUMENT DESCRIPTION
DOCUMENT TYPE
COUNT 26
AMERICAN LEADERS FUND, INC.
CLASS B SHARES
PROSPECTUS
The Class B Shares of American Leaders Fund, Inc. (the "Fund") represent
interests in an open-end, diversified management investment company (a mutual
fund) investing in common stocks and other securities of high quality companies
to achieve growth of capital and income.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENTAL AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in Class B Shares of the Fund. Keep this prospectus for future reference.
The Fund has also filed a Combined Statement of Additional Information for Class
A Shares, Class B Shares, Class C Shares, and Fortress Shares dated August ,
1994, with the Securities and Exchange Commission. The information contained in
the Combined Statement of Additional Information is incorporated by reference in
this prospectus. You may request a copy of the Combined Statement of Additional
Information free of charge by calling 1-800-235-4669. To obtain other
information or make inquiries about the Fund, contact your financial
institution.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated August , 1993
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
GENERAL INFORMATION 2
- ------------------------------------------------------
LIBERTY FAMILY OF FUNDS 2
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 4
Acceptable Investments 4
The Leaders List 4
Repurchase Agreements 4
Illiquid Securities 4
Lending of Portfolio Securities 4
Portfolio Turnover 4
Investment Limitations 5
NET ASSET VALUE 5
- ------------------------------------------------------
INVESTING IN CLASS B SHARES 5
- ------------------------------------------------------
Share Purchases 5
Through a Financial Institution 5
Directly from the Distributor 6
Minimum Investment Required 6
What Shares Cost 6
Conversion of Class B Shares 7
Systematic Investment Program 7
Certificates and Confirmations 7
Dividends 7
Capital Gains 8
Retirement Plans 8
EXCHANGE PRIVILEGE 8
- ------------------------------------------------------
Requirements for Exchange 8
Tax Consequences 8
Making an Exchange 8
Telephone Instructions 9
REDEEMING CLASS B SHARES 9
- ------------------------------------------------------
Through a Financial Institution 9
Directly From the Fund 9
By Telephone 9
By Mail 10
Signatures 10
Contingent Deferred Sales Charge 10
Elimination of Contingent Deferred
Sales Charge 11
Systematic Withdrawal Program 12
Accounts with Low Balances 12
FUND INFORMATION 12
- ------------------------------------------------------
Management of the Fund 12
Board of Directors 12
Officers and Directors 12
Investment Adviser 15
Advisory Fees 16
Adviser's Background 16
Distribution of Class B Shares 16
Distribution and Shareholder
Services Plans 17
Other Payments to Financial Institutions 17
Administration of the Fund 18
Administrative Services 18
Custodian 18
Transfer Agent and Dividend
Disbursing Agent 18
Legal Counsel 18
Independent Public Accountants 18
Brokerage Transactions 18
Expenses of the Fund and Class B Shares 19
SHAREHOLDER INFORMATION 19
- ------------------------------------------------------
Voting Rights 19
TAX INFORMATION 20
- ------------------------------------------------------
Federal Income Tax 20
Pennsylvania Corporate and
Personal Property Taxes 20
PERFORMANCE INFORMATION 20
- ------------------------------------------------------
OTHER CLASSES OF SHARES 21
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--CLASS A SHARES 22
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--CLASS C SHARES 23
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--FORTRESS SHARES 24
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)................................. None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)....................................................................... None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable) (1)................................................. 3.00%
Redemption Fee (as a percentage of amount redeemed, if applicable).......................................... None
Exchange Fee................................................................................................ None
<CAPTION>
ANNUAL CLASS B SHARES OPERATING EXPENSES*
](As a percentage of projected average net assets)
<S> <C> <C>
Management Fee.............................................................................................. 0.67%
12b-1 Fee................................................................................................... 0.75%
Total Other Expenses........................................................................................ 0.60%
Shareholder Service Fee...................................................................... 0.25%
Total Class B Shares Operating Expenses (2)......................................................... 2.02%
</TABLE>
(1) The contingent deferred sales charge is imposed on the lesser of the net
asset value of the redeemed shares at the time of purchase or the net asset
value of the redeemed shares at the time of redemption at the rates of 3%
for shares redeemed within one year of the purchase date, 2% for shares
redeemed within two years of the purchase date, and 1% for shares redeemed
within three years of the purchase date. No contingent deferred sales charge
is imposed on shares redeemed more than three years from the purchase date.
(2) Class B Shares convert to Class A Shares (which pay lower ongoing expenses)
approximately seven years after purchase.
* Total Class B Shares Operating Expenses are estimated based on average
expenses expected to be incurred during the period ending March 31, 1995.
During the course of this period, expenses may be more or less than the
average amount shown.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF CLASS B SHARES OF THE FUND WILL
BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE
VARIOUS COSTS AND EXPENSES, SEE "INVESTING IN CLASS B SHARES" AND "FUND
INFORMATION." WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE SUBJECT TO
ADDITIONAL FEES.
Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charge permitted under the rules of the National
Association of Securities Dealers, Inc.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years
<S> <C> <C>
You would pay the following expenses on a $1,000 investment assuming (1) 5% annual return and
(2) redemption at the end of each time period................................................... $ 51 $ 74
You would pay the following expenses on the same investment, assuming no redemption............. $ 21 $ 63
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THIS
EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FUND'S FISCAL YEAR ENDING MARCH 31,
1995.
The information set forth in the foregoing table and example relates only to
Class B Shares of the Fund. The Fund also offers three additional classes of
Shares called Class A Shares, Class C Shares, and Fortress Shares. Class A
Shares, Class B Shares, Class C Shares, and Fortress Shares are subject to
certain of the same expenses. However, Class A Shares are subject to a maximum
sales load of 4.50%, but are not subject to a contingent deferred sales charge
or a 12b-1 fee. Class C Shares are subject to a 12b-1 fee of 0.75% and a
contingent deferred sales charge of 1.00%, but are not subject to a sales load.
Fortress Shares are subject to a maximum sales load of 1.00% and a contingent
deferred sales charge of 1.00%, but are not subject to a 12b-1 fee. See "Other
Classes of Shares."
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Fund was incorporated under the laws of the State of Maryland on July 22,
1968. The Fund's address is Liberty Center, Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779. The Articles of Incorporation permit the
Fund to offer separate series of shares of beneficial interest representing
interests in separate portfolios of securities. The shares in any one portfolio
may be offered in separate classes. With respect to this Fund, as of the date of
this prospectus, the Board of Directors ("Directors") has established four
classes of shares, known as Class A Shares, Class B Shares, Class C Shares and
Fortress Shares. This prospectus relates only to the Class B Shares ("Shares")
of the Fund.
Class B Shares of the Fund are designed for individuals as a convenient means of
accumulating an interest in a professionally managed, diversified portfolio of
common stocks and other securities of high quality companies. A minimum initial
investment of $1,500 is required, unless the investment is in a retirement
account, in which case the minimum initial investment is $50.
Except as otherwise noted in this prospectus, Class B Shares are sold at net
asset value and are redeemed at net asset value. However, a contingent deferred
sales charge is imposed on certain Shares which are redeemed within three full
years of the date of purchase.
The Fund's current net asset value and offering price can be found in the mutual
funds section of local newspapers under "Liberty Family Funds."
LIBERTY FAMILY OF FUNDS
- --------------------------------------------------------------------------------
This Fund is a member of a family of mutual funds, collectively known as the
Liberty Family of Funds. The other funds in the Liberty Family of Funds are:
.Capital Growth Fund, providing appreciation of capital primarily through
equity securities;
.Fund for U.S. Government Securities, Inc., providing current income
through long-term U.S. government securities;
.International Equity Fund, providing long-term capital growth and income
through international securities;
.International Income Fund, providing a high level of current income
consistent with prudent investment risk through high-quality debt
securities denominated primarily in foreign currencies;
.Liberty Equity Income Fund, Inc., providing above-average income and
capital appreciation through income-producing equity securities;
.Liberty High Income Bond Fund, Inc., providing high current income
through high-yielding, lower-rated, corporate bonds;
.Liberty Municipal Securities Fund, Inc., providing a high level of
current income exempt from federal regular income tax through
municipal bonds;
.Liberty U.S. Government Money Market Trust, providing current income
consistent with stability of principal through high-quality U.S.
government securities;
.Liberty Utility Fund, Inc., providing current income and long-term growth
of income, primarily through electric, gas, and communication utilities;
.Limited Term Fund, providing a high level of current income consistent
with minimum fluctuation in principal value through investment grade
securities;
.Limited Term Municipal Fund, providing a high level of current income
exempt from federal regular income tax consistent with the preservation of
principal, primarily limited to municipal securities;
.Michigan Intermediate Municipal Trust, providing current income exempt
from federal regular income tax and the personal income taxes imposed by
the state of Michigan and Michigan municipalities, primarily through
Michigan municipal securities;
.Pennsylvania Municipal Income Fund, providing current income exempt from
federal regular income tax and the personal income taxes imposed by the
Commonwealth of Pennsylvania, primarily through Pennsylvania municipal
securities;
.Strategic Income Fund, providing a high level of current income,
primarily through domestic and foreign corporate debt obligations;
.Tax-Free Instruments Trust, providing current income consistent with
stability of principal and exempt from federal income tax, through
high-quality, short-term municipal securities; and
.World Utility Fund, providing total return through securities issued by
domestic and foreign companies in the utilities industry.
Prospectuses for these funds are available by writing to Federated Securities
Corp.
Each of the funds may also invest in certain other types of securities as
described in each fund's prospectus.
The Liberty Family of Funds provides flexibility and diversification for an
investor's long-term investment planning. It enables an investor to meet the
challenges of changing market conditions by offering convenient exchange
privileges which give access to various investment vehicles and by providing the
investment services of a proven, professional investment adviser.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek growth of capital and of income
by concentrating the area of investment decision in the securities of high
quality companies. The Fund's investment approach is based upon the conviction
that over the longer term, the economy will continue to expand and develop and
that this economic growth will be reflected importantly in the growth of major
corporations. The Fund pursues this investment objective by investing at least
65% of its assets in a portfolio of securities issued by the one hundred
companies contained in "The Leaders List." Generally, the Fund's management
makes portfolio selections utilizing fundamental analysis, with emphasis on
earning power, financial condition, and valuation. While there is no assurance
that the Fund will achieve its investment objective, it endeavors to do so by
following the investment policies described in
this prospectus. The investment objective and the policies and limitations
described below cannot be changed without approval of shareholders.
INVESTMENT POLICIES
ACCEPTABLE INVESTMENTS. The Fund invests primarily in securities of companies
selected from "The Leaders List" by the Fund's investment adviser on the basis
of traditional fundamental research techniques and standards. The securities in
which the Fund invests include, but are not limited to:
.common stocks;
.preferred stocks; and
.investment grade corporate bonds and notes; and
.warrants.
The Fund may also temporarily hold cash and invest in U.S. government securities
in such proportions as the Fund's investment adviser may deem necessary for
defensive purposes.
THE LEADERS LIST. "The Leaders List" is a trade name which represents a
list of 100 blue chip companies selected by the Fund's investment adviser
principally on the basis of fundamental research techniques and standards.
Shareholders can obtain a copy of "The Leaders List" by contacting the
Fund. In the opinion of the investment adviser, securities of these
companies represent diversified and highly marketable investments. The list
is subject to continuous review and modification. A number of standards and
fundamental research factors are used in determining "The Leaders List."
"The Leaders List" includes leading companies in their industries
determined in terms of sales, earnings, and/or market capitalization.
REPURCHASE AGREEMENTS. The acceptable investments in which the Fund
invests may be purchased pursuant to repurchase agreements. Repurchase
agreements are arrangements in which banks, broker/dealers, and other
recognized financial institutions sell U.S. government or other securities
to the Fund and agree at the time of sale to repurchase them at a mutually
agreed upon time and price.
ILLIQUID SECURITIES. The Fund may acquire securities which are subject to
legal or contractual delays, restrictions, and costs on resale. Because of
time limitations, the Fund might not be able to dispose of these securities
at reasonable prices or at times advantageous to the Fund. Where the Fund
considers these securities to be illiquid, it intends to limit the purchase
of them together with other securities considered to be illiquid, including
repurchase agreements providing for settlement in more than seven days
after notice, to not more than 10% of its net assets.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities to broker/dealers, banks, or other
institutional borrowers of securities. The Fund will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the
investment adviser has determined are creditworthy under guidelines established
by the Fund's Board of Directors and will receive collateral equal to at least
100% of the value of the securities loaned.
PORTFOLIO TURNOVER. Securities in the Fund's portfolio will be sold whenever
the Fund's investment adviser believes it is appropriate to do so in light of
the Fund's investment objective, without regard to the length of time a
particular security may have been held. The adviser to the Fund does not
anticipate that portfolio turnover will result in adverse tax consequences.
Any such trading will increase the Fund's portfolio turnover rate and
transaction costs.
INVESTMENT LIMITATIONS
The Fund will not:
.borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a portfolio instrument for a
percentage of its cash value with an agreement to buy it back on a set
date) except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets;
.invest more than 5% of its total assets in securities of one issuer
(except U.S. government securities) or purchase more than 10% of any class
of voting securities of any one issuer;
.invest more than 5% of its total assets in securities of issuers that
have records of less than three years of continuous operations; or
.purchase restricted securities if immediately thereafter more than 15% of
the net assets of the Fund would be invested in such securities.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Class B Shares in the market value
of all securities and other assets of the Fund, subtracting the interest of the
Class B Shares in the liabilities of the Fund and those attributable to the
Class B Shares, and dividing the remainder by the total number of Class B Shares
outstanding. The net asset value for Class B Shares may differ from that of
Class A Shares, Class C Shares, and Fortress Shares 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.
INVESTING IN CLASS B SHARES
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open. Shares may
be purchased through a financial institution which has a sales agreement with
the distributor or directly from the distributor, Federated Securities Corp.
once an account has been established. In connection with the sale of Shares,
Federated Securities Corp. may from time to time offer certain items of nominal
value to any shareholder or investor. The Fund reserves the right to reject any
purchase request.
THROUGH A FINANCIAL INSTITUTION. An investor may call his financial institution
(such as a bank or an investment dealer) to place an order to purchase Shares.
Orders through a financial institution are considered received when the Fund is
notified of the purchase order. Purchase orders through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for Shares to be purchased at that day's price. Purchase orders through
other financial
institutions must be received by the financial institution and transmitted to
the Fund before 4:00 p.m. (Eastern time) in order for Shares to be purchased at
that day's price. It is the financial institution's responsibility to transmit
orders promptly.
The financial institution which maintains investor accounts with the Fund must
do so on a fully disclosed basis unless it accounts for share ownership periods
used in calculating the contingent deferred sales charge (see "Contingent
Deferred Sales Charge"). In addition, advance payments made to financial
institutions may be subject to reclaim by the distributor for accounts
transferred to financial institutions which do not maintain investor accounts on
a fully disclosed basis and do not account for share ownership periods.
DIRECTLY FROM THE DISTRIBUTOR. An investor may place an order to purchase
Shares directly from Federated Securities Corp. once an account has been
established. To do so:
.complete and sign the new account form available from the Fund;
.enclose a check made payable to American Leaders Fund, Inc.--Class B
Shares; and
.mail both to Federated Services Company, P.O. Box 8604, Boston, MA
02266-8604.
Orders by mail are considered received after payment by check is converted by
the transfer agent's bank, State Street Bank and Trust Company ("State Street
Bank"), into federal funds. This is generally the next business day after State
Street Bank receives the check.
To purchase Shares directly from the distributor by wire once an account has
been established, call the Fund. All information needed will be taken over the
telephone, and the order is considered received when State Street Bank receives
payment by wire. Federal funds should be wired as follows: Federated Services
Company, c/o State Street Bank and Trust Company, Boston, Massachusetts 02105;
Attention: Mutual Fund Servicing Division; For Credit to: American Leaders Fund,
Inc.--Class B Shares; Title or Name of Account; Wire Order Number and/or Account
Number. Shares cannot be purchased by wire on Columbus Day, Veterans' Day, or
Martin Luther King Day.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Class B Shares is $1,500 unless the investment
is in a retirement plan, in which case the minimum initial investment is $50.
Subsequent investments must be in amounts of at least $100, except for
retirement plans, which must be in amounts of at least $50.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received.
The net asset value is determined at 4:00 p.m. (Eastern time), Monday through
Friday, except on: (i) days on which there are not sufficient changes in the
value of the Fund's portfolio securities that its net asset value might be
materially affected; (ii) days during which no Shares are tendered for
redemption and no orders to purchase Shares are received; or (iii) the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgving Day, and Christmas Day.
Under certain circumstances, described under "Redeeming Class B Shares,"
shareholders may be charged a contingent deferred sales charge by the
distributor at the times Shares are redeemed.
CONVERSION OF CLASS B SHARES. Class B Shares will automatically convert into
Class A Shares at the end of the month seven years after the purchase date,
except as noted below, and will no longer be subject to a distribution services
fee (see "Other Classes of Shares"). Class B Shares acquired by exchange from
Class B Shares of another fund in the Liberty Family of Funds will convert into
Class A Shares based on the time of the initial purchase. Class B Shares
acquired through reinvestment of distributions will convert into Class A Shares
based on the date of the initial purchase to which such shares relate. For this
purpose, Class B Shares acquired through reinvestment of distributions will be
attributed to particular purchases of Class B Shares in accordance with such
procedures as the Directors may determine from time to time. The availability of
the conversion feature is subject to the granting of an exemptive order by the
Securities and Exchange Commission or the adoption of a rule permitting such
conversion. In the event that the exemptive order or rule ultimately issued by
the Securities and Exchange Commission requires any conditions additional to
those described in this prospectus, shareholders will be notified. The
conversion of Class B Shares to Class A Shares is subject to the continuing
availability of a ruling from the Internal Revenue Service or an opinion of
counsel that such conversions will not constitute taxable events for Federal tax
purposes. There can be no assurance that such ruling or opinion will be
available, and the conversion of Class B Shares to Class A Shares will not occur
if such ruling or opinion is not available. In such event, Class B Shares would
continue to be subject to higher expenses than Class A Shares for an indefinite
period.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their investment on
a regular basis in a minimum amount of $100. Under this program, funds may be
automatically withdrawn periodically from the shareholder's checking account and
invested in Fund Shares at the net asset value next determined after an order is
received by the transfer agent. A shareholder may apply for participation in
this program through his financial institution or directly through the Fund.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
in writing to Federated Services Company.
Detailed confirmations of each purchase and redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
that quarter.
DIVIDENDS
Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date. Dividends are automatically reinvested in additional
Shares of the Fund on payment dates at the ex-dividend date net asset value
without a sales charge, unless shareholders request cash payments on the new
account form or by writing to the transfer agent. All shareholders on the record
date are entitled to the dividend. If Shares are redeemed or exchanged prior to
the record date or purchased after the record date, those Shares are not
entitled to that month's dividend.
CAPITAL GAINS
Net long-term capital gains realized by the Fund, if any, will be distributed at
least once every twelve months.
RETIREMENT PLANS
Shares of the Fund can be purchased as an investment for retirement plans or for
IRA accounts. For further details, including prototype retirement plans, contact
the Fund and consult a tax adviser.
EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
In order to provide greater flexibility to Fund shareholders whose investment
objectives have changed, Class B shareholders may exchange all or some of their
Shares for Class B Shares in other funds in the Liberty Family of Funds. (Not
all funds in the Liberty Family of Funds currently offer Class B Shares. Contact
your financial institution regarding the availability of other Class B Shares in
the Liberty Family of Funds.) Exchanges are made at net asset value without
being assessed a contingent deferred sales charge on the exchanged shares. To
the extent that a Shareholder exchanges Shares for Class B Shares in other funds
in the Liberty Family of Funds, the time for which the exchanged-for shares were
held will be added, or tacked, to the time for which exchanged-from shares were
held for purposes of satisfying the applicable holding period.
REQUIREMENTS FOR EXCHANGE
Shareholders using this privilege must exchange Shares having a net asset value
equal to the minimum investment requirements of the fund into which the exchange
is being made. Before the exchange, the shareholder must receive a prospectus of
the fund for which the exchange is being made.
This privilege is available to shareholders resident in any state in which the
fund Shares being acquired may be sold. Upon receipt of proper instructions and
required supporting documents, Shares submitted for exchange are redeemed and
the proceeds invested in Class B shares of the other Fund. The exchange
privilege may be modified or terminated at any time. Shareholders will be
notified of the modification or termination of the exchange privilege.
Further information on the exchange privilege and prospectuses for the Liberty
Family of Funds are available by contacting the Fund.
TAX CONSEQUENCES
An exercise of the exchange privilege is treated as a sale for federal income
tax purposes. Depending on the circumstances, a capital gain or loss may be
realized.
MAKING AN EXCHANGE
Instructions for exchanges for the Liberty Family of Funds may be given in
writing or by telephone. Written instructions may require a signature guarantee.
Shareholders of the Fund may have difficulty in making exchanges by telephone
through brokers and other financial institutions during times of drastic
economic or market changes. If a shareholder cannot contact his broker or
financial institution by
telephone, it is recommended that an exchange request be made in writing and
sent by overnight mail to Federated Services Company, P.O. Box 8604, Boston,
Massachusetts 02266-8604.
TELEPHONE INSTRUCTIONS. Telephone instructions made by the investor may be
carried out only if a telephone authorization form completed by the investor is
on file with the Fund. If the instructions are given by a broker, a telephone
authorization form completed by the broker must be on file with the Fund. Shares
may be exchanged between two funds by telephone only if the two funds have
identical shareholder registrations.
Any Shares held in certificate form cannot be exchanged by telephone but must be
forwarded to Federated Services Company, P.O. Box 8604, Boston, Massachusetts
02266-8604 and deposited to the shareholder's account before being exchanged.
Telephone exchange instructions may be recorded. Such instructions will be
processed as of 4:00 p.m. (Eastern time) and must be received by the transfer
agent before that time for shares to be exchanged the same day. Shareholders
exchanging into a Fund will not receive any dividend that is payable to
shareholders of record on that date. This privilege may be modified or
terminated at any time. If reasonable procedures are not followed by the Fund,
it may be liable for losses due to unauthorized or fraudulent telephone
instructions.
REDEEMING CLASS B SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at their net asset value next determined after the Fund
receives the redemption request, less any applicable contingent deferred sales
charge (see "Contingent Deferred Sales Charge" below). Redemptions will be made
on days on which the Fund computes its net asset value. Redemptions can be made
through a financial institution or directly from the Fund. Redemption requests
must be received in proper form.
THROUGH A FINANCIAL INSTITUTION
A shareholder may redeem Shares of the Fund by calling his financial institution
(such as a bank or an investment dealer) to request the redemption. Shares will
be redeemed at the net asset value, less any applicable contingent deferred
sales charge, next determined after the Fund receives the redemption request
from the financial institution. Redemption requests through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for Shares to be redeemed at that day's net asset value. Redemption
requests through other financial institutions must be received by the financial
institution and transmitted to the Fund before 4:00 p.m. (Eastern time) in order
for Shares to be redeemed at that day's net asset value. The financial
institution is responsible for promptly submitting redemption requests and
providing proper written redemption instructions to the Fund. The financial
institution may charge customary fees and commissions for this service.
DIRECTLY FROM THE FUND
BY TELEPHONE. Shareholders who have not purchased through a financial
institution may redeem their Shares by telephoning the Fund. The proceeds will
be mailed to the shareholder's address of record or wire transferred to the
shareholder's account at a domestic commercial bank that is a member of the
Federal Reserve System, normally within one business day, but in no event longer
than seven
days after the request. The minimum amount for a wire transfer is $1,000. If at
any time the Fund shall determine it necessary to terminate or modify this
method of redemption, shareholders would be promptly notified.
An authorization form permitting the transfer agent to accept telephone requests
must first be completed. Authorization forms and information on this service are
available from Federated Securities Corp.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption should be considered.
Telephone redemption instructions may be recorded. If reasonable procedures are
not followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
BY MAIL. Any shareholder may redeem Shares by sending a written request to the
transfer agent. The written request should include the shareholder's name, the
Fund name and class designation, the account number, and the Share or dollar
amount requested, and should be signed exactly as the Shares are registered.
If Share certificates have been issued, they must be properly endorsed and
should be sent by registered or certified mail with the written request.
Shareholders should call the Fund for assistance in redeeming by mail.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the Fund, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:
.a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
.a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
.a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or
.any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after receipt of a proper written redemption
request.
CONTINGENT DEFERRED SALES CHARGE
Shareholders redeeming Shares from their Fund accounts within three full years
of the purchase date of those Shares will be charged a contingent deferred sales
charge by the fund's distributor. Any applicable contingent deferred sales
charge will be imposed on the lesser of the net asset value of the
redeemed Shares at the time of purchase or the net asset value of the redeemed
Shares at the time of redemption in accordance with the following schedule:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SHARES HELD SALES CHARGE
<S> <C>
Less than one year..................................................................... 3%
More than one year but less than two years............................................. 2%
More than two years but less than three years.......................................... 1%
More than three years.................................................................. None
</TABLE>
The contingent deferred sales charge will be deducted from the redemption
proceeds otherwise payable to the shareholder and will be retained by the
distributor. The contingent deferred sales charge will not be imposed with
respect to: (1) Shares acquired through the reinvestment of dividends or
distributions of long-term capital gains; and (2) Shares held for more than
three full years from the date of purchase. Redemptions will be processed in a
manner intended to maximize the amount of redemption which will not be subject
to a contingent deferred sales charge. In computing the amount of the applicable
contingent deferred sales charge, redemptions are deemed to have occurred in the
following order: (1) Shares acquired through the reinvestment of dividends and
long-term capital gains; (2) Shares held for more than three full years from the
date of purchase; (3) Shares held for fewer than three years on a first-in,
first-out basis. A contingent deferred sales charge is not assessed in
connection with an exchange of Fund shares for shares of other Class B Shares of
funds in the Liberty Family of Funds (see "Exchanges for Shares of Other
Funds"). Any contingent deferred sales charge imposed at the time the
exchanged-for shares are redeemed is calculated as if the shareholder had held
the shares from the date on which he became a shareholder of the exchanged-from
shares. Moreover, the contingent deferred sales charge will be eliminated with
respect to certain redemptions (see "Elimination of Contingent Deferred Sales
Charge" below).
ELIMINATION OF CONTINGENT DEFERRED SALES CHARGE
The contingent deferred sales charge will be eliminated with respect to the
following redemptions: (1) redemptions following the death or disability, as
defined in Section 72(m)(7) of the Internal Revenue Code of 1986, of a
shareholder; (2) redemptions in connection with certain distributions from
Individual Retirement Accounts, qualified retirement plans or tax-sheltered
annuities; and (3) involuntary redemptions by the Fund of shares in shareholder
accounts that do not comply with the minimum balance requirements. In addition,
to the extent that the distributor does not make advance payments to certain
financial institutions for purchases made by their clients, no contingent
deferred sales charge will be imposed on redemptions of Shares held by
Directors, employees and sales representatives of the Fund, the distributor, or
affiliates of the Fund or distributor; employees of any financial institution
that sells Shares of the Fund pursuant to a sales agreement with the
distributor; and spouses and children under the age of 21 of the aforementioned
persons. Finally, no contingent deferred sales charge will be imposed on the
redemption of Shares originally purchased through a bank trust department, an
investment adviser registered under the Investment Advisers Act of 1940, an
insurance company or any other financial institution to the extent that no
payments were advanced for purchases made through or by such entities. The
Directors reserve the right to discontinue elimination of the contingent
deferred sales load. Shareholders will be notified of such elimination. Any
Shares purchased prior to
the termination of such waiver would have the contingent deferred sales charge
eliminated as provided in the Fund's prospectus at the time of the purchase of
the Shares. If a shareholder making a redemption qualifies for an elimination of
the contingent deferred sales charge, the shareholder must notify Federated
Securities Corp. or the transfer agent in writing that he is entitled to such
elimination.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount not less
than $100 may take advantage of the Systematic Withdrawal Program. Under this
program, Shares are redeemed to provide for periodic withdrawal payments in an
amount directed by the shareholder. Depending upon the amount of the withdrawal
payments, the amount of dividends paid and capital gains distributions with
respect to Shares, and the fluctuation of the net asset value of Shares redeemed
under this program, redemptions may reduce, and eventually deplete, the
shareholder's investment in the Fund. For this reason, payments under this
program should not be considered as yield or income on the shareholder's
investment in the Fund. To be eligible to participate in this program, a
shareholder must have an account value of at least $10,000. A shareholder may
apply for participation in this program through his financial institution. A
contingent deferred sales charge will be imposed on Shares redeemed within three
full years of their purchase date.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem Shares in any account, except retirement plans, and pay the proceeds to
the shareholder if the account balance falls below the required minimum value of
$1,500. This requirement does not apply, however, if the balance falls below
$500 because of changes in the Fund's net asset value. Before Shares are
redeemed to close an account, the shareholder is notified in writing and allowed
30 days to purchase additional Shares to meet the minimum requirement.
FUND INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
BOARD OF DIRECTORS. The Fund is managed by a Board of Directors. The Directors
are responsible for managing the Fund's business affairs and for exercising all
the Fund's powers except those reserved for the shareholders. An Executive
Committee of the Board of Directors handles the Board's responsibilities between
meetings of the Board.
OFFICERS AND DIRECTORS. Officers and Directors are listed with their addresses,
principal occupations and present positions, including any affiliation with
Federated Advisers, Federated Investors, Federated Securities Corp., Federated
Administrative Services, Inc., and the Funds (as defined in the Combined
Statement of Additional Information).
<TABLE>
<S> <C> <C>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE FUND DURING PAST FIVE YEARS
John F. Donahue\* President and Chairman and Trustee, Federated Investors; Chairman and
Federated Investors Tower Director Trustee, Federated Advisers, Federated Management, and
Pittsburgh, PA Federated Research; Director, AEtna Life and Casualty
Company; Chief Executive Officer and Director, Trustee, or
Managing General Partner of the Funds; formerly, Director,
The Standard Fire Insurance Company. Mr. Donahue is the
father of J. Christopher Donahue, Vice President and
Director of the Fund.
John T. Conroy, Jr. Director President, Investment Properties Corporation; Senior
Wood/IPC Commercial Vice-President, John R. Wood and Associates, Inc., Realtors;
Department President, Northgate Village Development Corporation;
John R. Wood and General Partner or Trustee in private real estate ventures
Associates, Inc., in Southwest Florida; Director, Trustee, or Managing General
Realtors Partner of the Funds; formerly, President, Naples Property
3255 TamiamiTrail North Management, Inc.
Naples, FL
William J. Copeland Director Director and Member of the Executive Committee, Michael
One PNC Plaza-- Baker, Inc.; Director, Trustee, or Managing General Partner
23rd Floor of the Funds; formerly, Vice Chairman and Director, PNC
Pittsburgh, PA Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes,
Inc.
J. Christopher Donahue* Vice President and President and Trustee, Federated Investors; Trustee,
Federated Investors Tower Director Federated Advisers, Federated Management, and Federated
Pittsburgh, PA Research; President and Director, Federated Administrative
Services; President or Vice President of the Funds;
Director, Trustee, or Managing General Partner of some of
the Funds. Mr. Donahue is the son of John F. Donahue,
Chairman and Director of the Fund.
James E. Dowd Director Attorney-at-law; Director, The Emerging Germany Fund, Inc.;
571 Hayward Mill Road Director, Trustee, or Managing General Partner of the Funds;
Concord, MA formerly, Director, Blue Cross of Massachusetts, Inc.
Lawrence D. Ellis, M.D. Director Hematologist, Oncologist, and Internist, Presbyterian and
3471 Fifth Avenue Montefiore Hospitals; Clinical Professor of Medicine and
Suite 1111 Trustee, University of Pittsburgh; Director, Trustee, or
Pittsburgh, PA Managing General Partner of the Funds.
Edward L. Flaherty, Jr.\ Director Attorney-at-law; Partner, Meyer and Flaherty; Director,
5916 Penn Mall Eat'N Park Restaurants, Inc., and Statewide Settlement
Pittsburgh, PA Agency, Inc.; Director, Trustee, or Managing General Partner
of the Funds; formerly, Counsel, Horizon Financial, F.A.,
Western Region.
Peter E. Madden Director Consultant; State Representative, Commonwealth of
225 Franklin Street Massachusetts; Director, Trustee, or Managing General
Boston, MA Partner of the Funds; formerly, President, State Street Bank
and Trust Company and State Street Boston Corporation; and
Trustee, Lahey Clinic Foundation, Inc.
Gregor F. Meyer Director Attorney-at-law; Partner, Meyer and Flaherty; Chairman,
5916 Penn Mall Meritcare, Inc.; Director, Trustee, or Managing General
Pittsburgh, PA Partner of the Funds; formerly, Vice Chairman, Horizon
Financial, F.A.
Wesley W. Posvar Director Professor, Foreign Policy and Management Consultant;
1202 Cathedral Trustee, Carnegie Endowment for International Peace, RAND
of Learning Corporation, Online Computer Library Center, Inc., and U.S.
University of Pittsburgh Space Foundation; Chairman, Czecho Slovak Management Center;
Pittsburgh, PA Director, Trustee, or Managing General Partner of the Funds;
President Emeritus, University of Pittsburgh; formerly,
Chairman, National Advisory Council for Environmental Policy
and Technology.
Marjorie P. Smuts Director Public relations/marketing consultant; Director, Trustee, or
4905 Bayard Street Managing General Partner of the Funds.
Pittsburgh, PA
Richard B. Fisher Vice President Executive Vice President and Trustee, Federated Investors;
Federated Investors Tower President and Director, Federated Securities Corp.;
Pittsburgh, PA President or Vice President of the Funds; Director or
Trustee of some of the Funds.
Edward C. Gonzales* Vice President and Vice President, Treasurer, and Trustee, Federated In-
Federated Investors Tower Treasurer vestors; Vice President and Treasurer, Federated Advisers,
Pittsburgh, PA Federated Management, and Federated Research; Executive Vice
President, Treasurer, and Director, Federated Securities
Corp.; Chairman, Treasurer, and Director, Federated
Administrative Services; Trustee or Director of some of the
Funds; Vice President and Treasurer of the Funds.
John W. McGonigle Vice President Vice President, Secretary, General Counsel, and Trustee,
Federated Investors Tower and Secretary Federated Investors; Vice President, Secretary, and Trustee,
Pittsburgh, PA Federated Advisers, Federated Management, and Federated
Research; Executive Vice President, Secretary, and Director,
Federated Administrative Services; Director and Executive
Vice President, Federated Securities Corp.; Vice President
and Secretary of the Funds.
John A. Staley, IV* Vice President Vice President and Trustee, Federated Investors; Executive
Federated Investors Tower Vice President, Federated Securities Corp.; President and
Pittsburgh, PA Trustee, Federated Advisers, Federated Management, and
Federated Research; Vice President of the Funds; Director,
Trustee, or Managing General Partner of the Funds; formerly,
Vice President, The Standard Fire Insurance Company and
President of its Federated Research Division.
</TABLE>
*This Director is deemed to be an "interested person" of the Fund as
defined in the Investment Company Act of 1940.
\Members of the Fund's Exectutive Committee. The Exectutive Committee of the
Board of Directors handles the responsibilites of the Board of Directors
between meetings of the Board.
Officers and Directors own less than 1% of the Fund's outstanding Shares.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Advisers, the Fund's investment adviser, subject to direction by the Directors.
The adviser continually conducts investment
research and supervision for the Fund and is responsible for the purchase or
sale of portfolio instruments, for which it receives an annual fee from the
Fund.
ADVISORY FEES. The Fund's adviser receives an annual investment advisory
fee equal to .55 of 1% of the Fund's average daily net assets, plus 4.5% of
the Fund's gross income (excluding any capital gains or losses). Gross
income includes, in general, discount earned on U.S. Treasury bills and
agency discount notes, interest earned on all interest-bearing obligations,
and dividend income recorded on the ex-dividend date but does not include
capital gains or losses or reduction for expenses. The adviser may
voluntarily choose to waive a portion of its fee or reimburse the Funds for
certain operating expenses. The adviser can terminate this voluntary
reimbursement of expenses at any time at its sole discretion. The adviser
has also undertaken to reimburse the Fund for operating expenses in excess
of limitations established by certain states.
ADVISER'S BACKGROUND. Federated Advisers, a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Advisers and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subisidiaries also provide administrative services
to a number of investment companies. Total assets under management or
administration by these and other subsidiaries of Federated Investors is
approximately $70 billion. Federated Investors, which was founded in 1956
as Federated Investors, Inc., develops and manages mutual funds primarily
for the financial industry. Federated Investors' track record of
competitive performance and its disciplined, risk averse investment
philosophy serve approximately 3,500 client institutions nationwide.
Through these same client institutions, individual shareholders also have
access to this same level of investment expertise.
Peter R. Anderson has been the Fund's portfolio manager since January,
1990. Mr. Anderson joined Federated Investors in 1972 as, and is presently,
a Senior Vice President of the Fund's investment adviser. Mr. Anderson is a
Chartered Financial Analyst and received his M.B.A. in Finance from the
University of Wisconsin.
Michael P. Donnelly has been the Fund's co-portfolio manager since
December, 1993. Mr Donnelly joined Federated Investors in 1989 and has been
an Assistant Vice President of the Fund's investment adviser since 1992.
From 1989 until 1991, Mr. Donnelly acted as an investment analyst for the
investment adviser. Mr. Donnelly was a Fixed Income Associate at Donaldson,
Lufkin & Jenrette from 1987 until 1989. Mr. Donnelly is a Chartered
Financial Analyst and received his M.B.A. in Finance from the University of
Virginia.
DISTRIBUTION OF CLASS B SHARES
Federated Securities Corp. is the principal distributor for Shares. Federated
Securities Corp. is located at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779. It is a Pennsylvania corporation
organized on November 14, 1969, and is the principal distributor for a number of
investment companies. Federated Securities Corp. is a subsidiary of Federated
Investors.
The distributor will pay dealers an amount equal to 3% of the net asset value of
shares purchased by their clients or customers. These payments will be made
directly by the distributor from its assets, and will not be made from the
assets of the Fund.
DISTRIBUTION AND SHAREHOLDER SERVICES PLANS. Under a distribution plan adopted
in accordance with Investment Company Act Rule 12b-1 (the "Distribution Plan"),
Class B Shares will pay to the distributor an amount computed at an annual rate
of .75% of the average daily net assets of Class B Shares to finance any
activity which is principally intended to result in the sale of Class B Shares
subject to the Distribution Plan.
Because distribution fees to be paid by the Fund to the distributor may not
exceed an annual rate of .75% of the Class B Shares' average daily net assets,
it will take the distributor a number of years to recoup the expenses it has
incurred for its distribution and distribution-related services pursuant to the
Plan.
The Distribution Plan is a compensation type plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the Fund does
not pay for unreimbursed expenses of the distributor, including amounts expended
by the distributor in excess of amounts received by it from the Fund, interest,
carrying or other financing charges in connection with excess amounts expended,
or the distributor's overhead expenses. However, the distributor may be able to
recover such amounts or may earn a profit from future payments made by Shares
under the Plan.
In addition, the Fund has adopted a Shareholder Services Plan (the "Services
Plan") under which it may make payments up to 0.25 of 1% of the average daily
net asset value of Class B Shares to obtain certain personal services for
shareholders and the maintenance of shareholder accounts ("shareholders
services"). The Fund has entered into a Shareholder Services Agreement with
Federated Shareholders Service, a subsidiary of Federated Investors, under which
Federated Shareholder Services, a subsidiary of Federated Investors, under which
Federated Shareholder Services will either perform shareholder services directly
or will select financial institutions to perform shareholder services. Financial
institutions will receive fees based upon shares owned by their clients or
customers. The schedules of such fees and the basis upon which such fees wil be
paid will be determined from time to time by the Fund and Federated Shareholder
Services.
The Glass-Steagall Act limits the ability of a depository institution (such as a
commercial bank or savings and loan association) to become an underwriter or
distributor of securities. In the event the Glass-Steagall Act is deemed to
prohibit depository institutions from acting in the capacities described above
or should Congress relax current restrictions on depository institutions, the
Directors will consideer appropriate changes in the services.
State securities laws governing the ability of depository institutions to act as
underwriters or distributors of securities may differ from interpretations given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. Certain financial institutions may be
compensated by the adviser or its affiliates for the continuing investment of
customers' assets in certain funds, including
the Fund, advised by those entities. These payments will be made directly by the
distributor or adviser from their assets, and will not be made from the assets
of the Fund. Furthermore, the Adviser or its affiliates may offer to pay a fee
from their own assets to financial institutions as financial assistance for
providing substantial marketing, sales and operational support to the
distributor. The support may include sponsoring sales, educational and training
seminars for their employees, providing sales literature, and engineering
computer software programs that emphasize the attributes of the Fund. Such
assistance will be predicated upon the amount of Shares the dealer sells or may
sell, and/or upon the type and nature of sales or operational support furnished
by the dealer.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate which relates
to the average aggregate daily net assets of all funds advised by subsidiaries
of Federated Investors ("Federated Funds") as specified below:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE DAILY NET ASSETS
MAXIMUM ADMINISTRATIVE FEE OF FEDERATED FUNDS
<S> <C>
0.15 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.10 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
CUSTODIAN. State Street Bank and Trust Company, P.O. Box 8604, Boston
Massachusetts 02266-8604, is custodian for the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Pittsburgh, Pennsylvania, is transfer agent for shares of the Fund and dividend
disbursing agent for the Fund.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly, 2510
Centre City Tower, Pittsburgh, Pennsylvania 15222, and Dickstein, Shapiro &
Morin, 2101 L Street, N.W., Washington, D.C. 20037.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen & Co., 2100 One PPG Place, Pittsburgh, Pennsylvania 15222.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the adviser will generally utilize those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the adviser may give consideration to those
firms which have sold or are
selling shares of the Fund and other funds distributed by Federated Securities
Corp. The adviser makes decisions on portfolio transactions and selects brokers
and dealers subject to review by the Board of Directors.
EXPENSES OF THE FUND AND CLASS B SHARES
Holders of Shares pay their allocable portion of Fund and portfolio expenses.
The Fund expenses for which holders of Shares pay their allocable portion
include, but are not limited to: the cost of organizing the Fund and continuing
its existence; registering the Fund with federal and state securities
authorities; Directors' fees; auditors' fees; the cost of meetings of Directors;
legal fees of the Fund; association membership dues; and such non-recurring and
extraordinary items as may arise from time to time.
The portfolio expenses for which holders of Shares pay their allocable portion
include, but are not limited to: registering the portfolio and Shares of the
portfolio; investment advisory services; taxes and commissions; custodian fees;
insurance premiums; auditors' fees; and such non-recurring and extraordinary
items as may arise from time to time.
At present, the only expenses which are allocated specifically to Shares as a
class are expenses under the Fund's Shareholder Services Plan and Distribution
Plan. However, the Directors reserve the right to allocate certain other
expenses to holders of Shares as it deems appropriate ("Class Expenses"). In any
case, Class Expenses would be limited to: distribution fees; transfer agent fees
as identified by the transfer agent as attributable to holders of Shares; fees
under the Fund's Shareholder Services Plan; printing and postage expenses
related to preparing and distributing materials such as shareholder reports,
prospectuses and proxies to current shareholders; registration fees paid to the
Securities and Exchange Commission and registration fees paid to state
securities commissions; expenses related to administrative personnel and
services as required to support holders of Shares; legal fees relating solely to
Shares; and Directors' fees incurred as a result of issues relating solely to
Shares.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each Share gives the shareholder one vote in Director elections and other
matters submitted to shareholders for vote. All shares of each portfolio or
class in the Fund have equal voting rights, except that only shares of that
particular portfolio or class are entitled to vote in matters affecting that
portfolio or class.
As a Maryland Corporation, the Fund is not required to hold annual shareholder
meetings. Shareholder approval will be sought only for certain changes in the
Fund's operation and for the election of Directors under certain circumstances.
Directors may be removed by a two-thirds vote of the number of Directors prior
to such removal or by a two-thirds vote of the shareholders at a special
meeting. A special meeting of shareholders shall be called by the Directors upon
the written request of shareholders owning at least 10% of the Fund's
outstanding shares of all series entitled to vote.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions, including capital gains distributions,
received. This applies whether dividends and distributions are received in cash
or as additional Shares. Distributions representing long-term capital gains, if
any, will be taxable to shareholders as long-term capital gains no matter how
long the shareholders have held the Shares. No federal income tax is due on any
dividends earned in an IRA or qualified retirement plan until distributed.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Fund:
.the Fund is subject to the Pennsylvania corporate franchise tax; and
.Shares are exempt from personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Fund advertises its total return and yield for Class B
Shares.
Total return represents the change, over a specific period of time, in the value
of an investment in Class B Shares after reinvesting all income and capital
gains distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of Class B Shares is calculated by dividing the net investment income
per share (as defined by the Securities and Exchange Commission) earned by Class
B Shares over a thirty-day period by the maximum offering price per share of
Class B Shares on the last day of the period. This number is then annualized
using semi-annual compounding. The yield does not necessarily reflect income
actually earned by Class B Shares, and therefore, may not correlate to the
dividends or other distributions paid to shareholders.
The performance information reflects the effect non-recurring charges, such as
the contingent deferred sales charge, which, if excluded, would increase the
total return and yield.
Total return and yield will be calculated separately for Class A Shares, Class B
Shares, Class C Shares, and Fortress Shares. Because Class B Shares and Class C
Shares are subject to Rule 12b-1 fees and Services Plan fees, the yield for
Class A Shares and Fortress Shares, for the same period, may exceed that of
Class B Shares and Class C Shares.
From time to time Fund may advertise the performance of Class A Shares, Class B
Shares, Class C Shares, and Fortress Shares using certain financial publications
and/or compare the performance of Class A Shares, Class B Shares, Class C
Shares, and Fortress Shares to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund presently offers Class A Shares, Class B Shares, Class C Shares, and
Fortress Shares.
Class A Shares are sold primarily to customers of financial institutions subject
to a front-end sales charge of up to 4.50%. The Fund has also adopted a Services
Plan fee of up to 0.25 of 1% of the Class A Shares' average daily net assets
with respect to Class A Shares. Investments in Class A Shares are subject to a
minimum initial investment of $500, unless the investment is in a retirement
account, in which case the minimum investment is $50. Class A Shares are not
distributed pursuant to a Rule
12b-1 Plan, and therefore are not subject to a distribution services fee.
Class C Shares are sold primarily to customers of financial institutions at net
asset value with no initial sales charge. Class C Shares are distributed
pursuant to a Rule 12b-1 Plan adopted by the Fund whereby the distributor is
paid a fee of up to 0.75 of 1%, in addition to a Shareholder Services Plan fee
of up to 0.25 of 1% of the Class C Shares' average daily net assets. Investments
in Class C Shares are subject to a minimum initial investment of $1,500, unless
the investment is in a retirement account, in which case the minimum investment
is $50.
Fortress Shares are sold primarily to customers of financial institutions
subject to a front-end sales charge of 1.00% and a contingent deferred sales
charge of up to 1.00%. The Fund has also adopted a Services Plan fee of up to
0.25 of 1% of the Fortress Shares' average daily net assets with respect to
Fortress Shares. Investments in Fortress Shares are subject to a minimum initial
investment of $1,500, unless the inestment is in a retirement account, in which
case the minimum investment is $50.
The amount of dividends payable to Class A Shares will generally exceed that of
Class B Shares, Class C Shares, and Fortress Shares by the difference between
Class Expenses and distribution expenses borne by shares of each respective
class.
The stated advisory fee is the same for all four classes of shares.
FINANCIAL HIGHLIGHTS--CLASS A SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by Arthur Andersen & Co., the Fund's
independent public accountants. Their report dated May 13, 1994 on the Fund's
financial statements for the year ended March 31, 1994 and the following table
for each of the periods presented is included in the Annual Report, which is
incorporated by reference.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985*
NET ASSET VALUE,
BEGINNING OF PERIOD $ 14.90 $ 13.88 $ 13.18 $ 12.21 $ 13.04 $ 12.55 $ 14.21 $ 13.64 $ 11.59 $ 11.55
- ----------------------
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 0.03
- ----------------------
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 0.01
- ---------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total from investment
operations 0.41 2.34 1.63 1.65 0.91 1.58 (.76) 2.27 3.41 0.04
- ----------------------
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 $ 11.5
9
- ---------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN** 2.76% 18.31% 12.91% 14.17% 7.13% 13.23% (5.32)% 18.38% 31.80%
0.35%
- ----------------------
RATIOS TO AVERAGE NET
ASSETS
- ----------------------
Expenses 1.18% 1.13% 1.02% 1.02% 1.01% 1.01% 1.00% 1.00% 1.09%
1.06%(a)
- ----------------------
Net investment income 1.48% 2.07% 2.12% 3.06% 4.23% 3.85% 3.35% 3.44% 4.42%
3.18%(a)
- ----------------------
Expense waiver/
reimbursement (b) -- 0.06% 0.16% 0.30% 0.35% 0.12% 0.11% 0.12% 0.18%
0.22%(a)
- ----------------------
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 71,899
- ----------------------
Portfolio turnover
rate 27% 39% 67% 57% 50% 27% 65% 28% 31% 6
%
- ----------------------
<CAPTION>
YEAR ENDED
<S> <C>
1985
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.97
- ----------------------
INCOME FROM INVESTMENT
OPERATIONS
- ----------------------
Net investment income 0.54
- ----------------------
Net realized and
unrealized gain
(loss) on investments 1.91
- ---------------------- -------------
Total from investment
operations 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 $ 11.55
- ---------------------- -------------
TOTAL RETURN** 25.85
- ----------------------
RATIOS TO AVERAGE NET
ASSETS
- ----------------------
Expenses 1.29 %
- ----------------------
Net investment income 5.03 %
- ----------------------
Expense waiver/
reimbursement (b) 0.05 %
- ----------------------
SUPPLEMENTAL DATA
- ----------------------
Net assets, end of
period (000 omitted) 71,455
- ----------------------
Portfolio turnover
rate 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).
Further information about the Fund performance is contained in the Fund's annual
report dated March 31, 1994, which can be obtained free of charge.
(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)
The following table has been audited by Arthur Andersen & Co., the Fund's
independent public accountants. Their report dated May 13, 1994 on the Fund's
financial statements for the year ended March 31, 1994 and on the following
table for the period ended March 31, 1994 is included in the Annual Report dated
March 31, 1994, which is incorporated by reference.
<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).
Further information about the Fund's performance is contained in the Fund's
annual report dated March 31, 1994, which can be obtained free of charge.
FINANCIAL HIGHLIGHTS
FORTRESS SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
The following table has been audited by Arthur Andersen & Co., the Fund's
independent public accountants. Their report dated May 13, 1994 on the Fund's
financial statements for the year ended March 31, 1994 and on the following
table for the period ended March 31, 1994 is included in the Annual Report dated
March 31, 1994, which is incorporated by reference.
<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).
Further information about the Fund's performance is contained in the Fund's
annual report dated March 31, 1994, which can be obtained free of charge.
AMERICAN LEADERS
FUND, INC.
CLASS B SHARES
PROSPECTUS
An Open-End, Diversified
Management Investment Company
August , 1994
<logo> FEDERATED SECURITIES CORP.
---------------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
LIBERTY CENTER
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
8062808A-B (8/94)
AMERICAN LEADERS FUND, INC.
COMBINED STATEMENT OF ADDITIONAL INFORMATION
This Combined Statement of Additional Information should be read with
the respective prospectuses of Class A Shares, Class B Shares, Class C
Shares, and Fortress Shares of American Leaders Fund, Inc. (the
"Fund") each dated August __, 1994, August __, 1994 and August ,
1994. This Statement is not a prospectus itself. To receive a copy of
any of the prospectuses, write or call the Fund.
LIBERTY CENTER
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated August __, 1994
[LOGO] FEDERATED SECURITIES CORP.
---------------------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND 1
- ---------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES 1
- ---------------------------------------------------------------
Types of Investments 1
Lending of Portfolio Securities 1
Repurchase Agreements 1
Reverse Repurchase Agreements 1
Portfolio Turnover 1
Investment Limitations 2
THE FUNDS 3
- ---------------------------------------------------------------
INVESTMENT ADVISORY SERVICES 4
- ---------------------------------------------------------------
Adviser to the Fund 4
Advisory Fees 4
Other Payments to Financial
Institutions 4
ADMINISTRATIVE SERVICES 4
- ---------------------------------------------------------------
BROKERAGE TRANSACTIONS 5
- ---------------------------------------------------------------
PURCHASING SHARES 5
- ---------------------------------------------------------------
Distribution Plan and Shareholder Services Plan
(Class B and Class C Shares Only) 5
Purchases by Sales Representatives,
Fund Directors, and Employees 6
Exchanging Securities for Fund Shares 6
DETERMINING NET ASSET VALUE 6
- ---------------------------------------------------------------
DETERMINING MARKET VALUE OF SECURITIES 6
- ---------------------------------------------------------------
EXCHANGE PRIVILEGE 7
- ---------------------------------------------------------------
Reduced Sales Charge 7
Requirements for Exchange 7
Tax Consequences 7
Making an Exchange 7
REDEEMING SHARES 7
- ---------------------------------------------------------------
Redemption in Kind 8
TAX STATUS 8
- ---------------------------------------------------------------
The Fund's Tax Status 8
Shareholders' Tax Status 8
TOTAL RETURN 8
- ---------------------------------------------------------------
YIELD 8
- ---------------------------------------------------------------
PERFORMANCE COMPARISONS 9
- ---------------------------------------------------------------
FINANCIAL STATEMENTS 10
- ---------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------
The Fund was incorporated under the laws of the State of Maryland on July 22,
1968. On April 20, 1993, the shareholders of the Fund voted to permit the Fund
to offer separate series and classes of Shares.
Shares of the Fund are offered in four classes known as Class A Shares, Class B
Shares, Class C Shares and Fortress Shares (individually and collectively
referred to as "Shares" as the context may require). This combined statement of
additional information relates to all four classes of the above-mentioned
Shares.
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is to seek growth of capital and of income by
concentrating the area of investment decision in the securities of high quality
companies. The investment objective cannot be changed without shareholder
approval.
TYPES OF INVESTMENTS
The Fund invests primarily in common stocks, preferred stocks, corporate bonds,
notes, and warrants of companies selected from "The Leaders List."
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund lends portfolio securities must be valued
daily and, should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination at the option
of the Fund or the borrower. The Fund may pay reasonable administrative and
custodial fees in connection with a loan. The Fund does not have the right to
vote securities on loan, but would terminate the loan and regain the right to
vote if that were considered important with respect to the investment.
REPURCHASE AGREEMENTS
Repurchase agreements are arrangements in which banks, broker/dealers, and other
recognized financial institution's sell U.S. government securities or
certificates of deposit to the Fund and agree at the time of sale to repurchase
them at a mutually agreed upon time and price. The Fund or its custodian will
take possession of the securities subject to repurchase agreements, and these
securities will be marked to market daily. To the extent that the original
seller does not repurchase the securities from the Fund, the Fund could receive
less than the repurchase price on any sale of such securities. In the event that
such a defaulting seller filed for bankruptcy or became insolvent, disposition
of such securities by the Fund might be delayed pending court action. The Fund
believes that under the regular procedures normally in effect for custody of the
Fund's portfolio securities subject to repurchase agreements, a court of
competent jurisdiction would rule in favor of the Fund and allow retention or
disposition of such securities. The Fund will only enter into repurchase
agreements with banks or 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 Board of Directors.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. This transaction is
similar to borrowing cash. In a reverse repurchase agreement, the Fund transfers
possession of a portfolio instrument to another person, such as an institution,
broker, or dealer, in return for a percentage of the instrument's market value
in cash, and agrees that on a stipulated date in the future the Fund will
repurchase the portfolio instrument by remitting the original consideration plus
interest at an agreed upon rate. The use of reverse repurchase agreements may
enable the Fund to avoid selling portfolio instruments at a time when a sale may
be deemed to be disadvantageous, but the ability to enter into reverse
repurchase agreements does not ensure that the Fund will be able to avoid
selling portfolio instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These securities are marked to market daily
and maintained until the transaction is settled.
PORTFOLIO TURNOVER
The Fund will not engage in short-term trading but may dispose of securities
held for a short period if, after examination of their value, management
believes such disposition to be advisable. In determining whether or not to sell
portfolio securities, consideration will be given among other factors to the
effect on shareholders of the resultant tax liability. Nevertheless changes will
be made whenever, in the judgment of management, they will contribute to the
attainment of the Fund's investment objective, even though such changes may
result in realization of capital gains. For the fiscal years ended March 31,
1994, 1993, and 1992, the portfolio turnover rates were 27%, 39%, and 67%,
respectively.
- --------------------------------------------------------------------------------
INVESTMENT LIMITATIONS
The Fund will not change any of the investment limitations described below
without approval of shareholders.
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin.
BORROWING MONEY
The Fund will not borrow money except as a temporary measure for
extraordinary or emergency purposes and then only in amounts not in
excess of 5% of the value of its total assets. In addition, the Fund may
enter into reverse repurchase agreements and otherwise borrow up to
one-third of the value of its total assets, including the amount
borrowed, in order to meet redemption requests without immediately
selling portfolio instruments. This latter practice is not for investment
leverage but solely to facilitate management of the portfolio by enabling
the Fund to meet redemption requests when the liquidation of portfolio
instruments would be inconvenient or disadvantageous.
Interest paid on borrowed funds will not be available for investment and
will reduce net income. The Fund will liquidate any such borrowings as
soon as possible and may not purchase any portfolio securities while the
borrowings are outstanding. However, during the period any reverse
repurchase agreements are outstanding, but only to the extent necessary
to assure completion of the reverse repurchase agreements, the Fund will
restrict the purchase of portfolio instruments to money market
instruments maturing on or before the expiration date of the reverse
repurchase agreements.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate its securities.
DIVERSIFICATION OF INVESTMENTS
The Fund will not invest more than 5% of its total assets in the
securities of any one issuer, except U.S. government securities, and will
not purchase more than 10% of any class of voting securities of any one
issuer.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will not purchase securities of other investment companies,
except by purchase in the open market involving only customary brokerage
commissions or as part of a merger or consolidation.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers with a record of less than three years of
continuous operation, including the operation of any predecessor.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS OF THE FUND
The Fund will not purchase or retain the securities of any issuer if the
officers and Directors of the Fund or its investment adviser owning
individually more than 1/2 of 1% of the issuer's securities together own
more than 5% of the issuer's securities.
UNDERWRITING
The Fund will not underwrite or engage in agency distribution of
securities, except as it may be deemed to be an underwriter, if it
purchases and sells restricted securities as permitted.
INVESTING IN COMMODITIES OR REAL ESTATE
The Fund will not invest in commodities, commodity contracts, or real
estate.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets except portfolio securities.
(This shall not prevent the purchase or holding of bonds, debentures,
notes, certificates of indebtedness or other debt securities of an
issuer, repurchase agreements, or other transactions which are permitted
by the Fund's investment objective and policies or Articles of
Incorporation.)
ACQUIRING SECURITIES
The Fund will not purchase securities of a company for the purpose of
exercising control or management. However, the Fund may invest in up to
10% of the voting securities of any one issuer and may exercise its
voting powers consistent with the best interests of the Fund. In
addition, the Fund, other companies advised by the Fund's investment
adviser, and other affiliated companies may together buy and hold
substantial amounts of voting stock of a company and may vote together
in regard to such company's affairs. In some such cases, the Fund and
its affiliates might collectively be considered to be in control of such
company. In some cases, the Directors and other persons associated with
the Fund and its affiliates might possibly become directors of companies
in which the Fund holds stock.
CONCENTRATION OF INVESTMENTS
The Fund will not invest more than 25% of the value of its total assets
in any one industry.
ISSUING SENIOR SECURITIES
The Fund will not issue senior securities.
INVESTING IN RESTRICTED SECURITIES
The Fund will not purchase restricted securities if immediately
thereafter more than 15% of the net assets of the Fund, taken at market
value, would be invested in such securities. (In order to comply with
certain state requirements, the Fund will not invest more than 5% of its
total assets in restricted securities. If state requirements change, this
policy may be revised without notice to shareholders.)
In addition, in order to comply with certain state restrictions, the Fund
will not invest in real estate limited partnerships or oil, gas, or other
mineral leases. Also, the Fund will not invest more than 5% of its net
assets in warrants. No more than 2% of the Fund's net assets may be in
warrants which are not listed on the New York Stock Exchange. If state
requirements change, these restrictions may be revised without notice to
shareholders.
Except when borrowing money, if a percentage limitation is adhered to at
the time of investment, a later increase or decrease in percentage
resulting from any change in value or net assets will not result in a
violation of such restriction.
The Fund did not borrow money, invest in reverse repurchase agreements,
or purchase restricted securities in excess of 5% of the value of its
total or net assets during the last fiscal year and has no present intent
to do so in the coming fiscal year. Restricted securities are generally
not available from companies comprising "The Leader's List."
THE FUNDS
- --------------------------------------------------------------------------------
"The Funds" and "Funds" mean the following investment companies: American
Leaders Fund, Inc.; Annuity Management Series; Automated Cash Management Trust;
Automated Government Money Trust; California Municipal Cash Trust; Cash Trust
Series II; Cash Trust Series, Inc.; DG Investor Series; Edward D. Jones & Co.
Daily Passport Cash Trust; Federated ARMs Fund; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust; Federated Growth Trust;
Federated High Yield Trust; Federated Income Securities Trust; Federated Income
Trust; Federated Index Trust; Federated Intermediate Government Trust; Federated
Master Trust; Federated Municipal Trust; Federated Short-Intermediate Government
Trust; Federated Short-Term U.S. Government Trust; Federated Stock Trust;
Federated Tax-Free Trust; Federated U.S. Government Bond Fund; First Priorty
Funds; Fixed Income Securities, Inc.; Fortress Adjustable Rate U.S. Government
Fund, Inc.; Fortress Municipal Income Fund, Inc.; Fortress Utility Fund, Inc.;
Fund for U.S. Government Securities, Inc.; Government Income Securities, Inc.;
High Yield Cash Trust; Insight Institutional Series, Inc.; Insurance Management
Series; Intermediate Municipal Trust; International Series, Inc.; Investment
Series Funds, Inc.; Investment Series Trust; Liberty Equity Income Fund, Inc.;
Liberty High Income Bond Fund, Inc.; Liberty Municipal Securities Fund, Inc.;
Liberty U.S. Government Money Market Trust; Liberty Term Trust, Inc. - 1999;
Liberty Utility Fund, Inc.; Liquid Cash Trust; Managed Series Trust; Mark Twain
Funds; Money Market Management, Inc.; Money Market Obligations Trust; Money
Market Trust; Municipal Securities Income Trust; New York Municipal Cash Trust;
111 Corcoran Funds; Peachtree Funds; The Planters Funds; Portage Funds; RIMCO
Monument Funds; The Shawmut Funds; Short-Term Municipal Trust; Signet Select
Funds; Star Funds; The Starburst Funds; The Starburst Funds II; Stock and Bond
Fund, Inc.; Sunburst Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
Trademark Funds; Trust for Financial Institutions; Trust For Government Cash
Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; World Investment Series, Inc.
FUND OWNERSHIP
As of May 9, 1994, the following shareholders of record owned 5% or more
of the outstanding Fortress Shares of the Fund:Merrill Lynch Pierce
Fenner & Smith, Jacksonville, Florida, owned approximately 258,426 shares
(22.43%); United Mineral Resources, Inc., Irving, Texas, owned
approximately 79,203 shares (6.88%).
As of May 9, 1994, the following shareholder of record owned 5% or more
of the outstanding Class C Shares of the Fund: Merrill Lynch Pierce
Fenner & Smith, Jackonsville, Florida, acting in various capacities for
numerous accounts, owned approximately 313,029 shares (37.00%).
INVESTMENT ADVISORY SERVICES
- --------------------------------------------------------------------------------
ADVISER TO THE FUND
The Fund's investment adviser is Federated Advisers. It is a subsidiary of
Federated Investors. All the Class A (voting) shares of Federated Investors are
owned by a trust, the trustees of which are John F. Donahue, his wife, and his
son, J. Christopher Donahue. John F. Donahue is Chairman and Trustee of
Federated Advisers, Chairman and Trustee, Federated Investors, and President and
Director of the Fund. John A. Staley, IV, is President and Trustee of Federated
Advisers, Vice President and Trustee, Federated Investors, Executive Vice
President, Federated Securities Corp., and Vice President of the Fund. J.
Christopher Donahue is Trustee of Federated Advisers, President and Trustee,
Federated Investors, President and Trustee, Federated Administrative Services,
and Vice President and Director of the Fund. John W. McGonigle is Vice
President, Secretary and Trustee of Federated Advisers, Trustee, Vice President,
Secretary and General Counsel, Federated Investors, Executive Vice President,
Secretary and Trustee, Federated Administrative Services, Executive Vice
President and Director, Federated Securities Corp., and Vice President and
Secretary of the Fund.
The adviser shall not be liable to the Fund or any shareholder for any losses
that may be sustained in the purchase, holding, or sale of any security or for
anything done or omitted by it except acts or omissions involving willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
imposed upon it by its contract with the Fund.
ADVISORY FEES
For its advisory services, Federated Advisers receives an annual investment
advisory fee as described in the prospectus. During the fiscal years ended March
31, 1994, 1993, and 1992, the Fund's adviser earned $1,549,057, $1,254,834, and
$1,066,459, respectively, which were reduced by $0, $104,310, and $248,067,
respectively, because of undertakings to limit the Fund's expenses.
STATE EXPENSE LIMITATIONS
The adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary expenses)
exceed 2-1/2% per year of the first $30 million of average net assets, 2%
per year of the next $70 million of average net assets, and 1-1/2% per
year of the remaining average net assets, the adviser will reimburse the
Fund for its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the adviser will
be limited, in any single fiscal year, by the amount of the investment
advisory fee.
This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS
The administrative services for which the distributor will pay financial
institutions include, but are not limited to, providing office space, equipment,
telephone facilities, and various clerical, supervisory and computer personnel,
as is necessary or beneficial to establish and maintain shareholders' accounts
and records, process purchase and redemption transactions, process automatic
investments of client account cash balances, answer routine client inquiries
regarding the Fund, assist clients in changing dividend options, account
designations, and addresses, and providing such other services as the Fund may
reasonably request.
ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------
Federated Administrative Services, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for a fee as described in the
prospectus. Prior to March 31, 1994, Federated Admistrative Services, Inc., also
a subsidiary of Federated Investors, served as the Fund's administrator. For
purposes of this Statement of Additional Information, Federated Administrative
Services and Federated Administrative Services, Inc. may be referred to as the
"Administrators." For the fiscal year ended March 31, 1994, the administrators
collectively earned
$441,948. For the fiscal years ended March 31, 1993, and 1992, Federated
Administrative Services, Inc., earned $369,702, and $303,843, respectively. John
A Staley, IV, an officer of the Corporation, and Dr. Henry J. Gailliot, an
officer of Federated Advisers, the adviser to the Fund, each hold approximately
15% and 20%, respectively, of the outstanding common stock and serve as
directors of Commercial Data Services, Inc., a company which provides computer
processing services to Federated Administrative Services, Inc., and Federated
Administrative Services.
BROKERAGE TRANSACTIONS
- --------------------------------------------------------------------------------
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the adviser will generally utilize those who are
recognized dealers in specific portfolio instruments, expect when a better price
and execution of the order can be obtained elsewhere. The adviser makes
decisions on portfolio transactions and selects brokers and dealers subject to
review by the Board of Directors.
The adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the adviser
and may include:
advice as to the advisability of investing in securities;
security analysis and reports;
economic studies;
industry studies;
receipt of quotations for portfolio evaluations; and
similar services.
The adviser and its affiliates exercise reasonable business judgment in
selecting brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions charged
by such person are reasonable in relationship to the value of the brokerage and
research services provided.
Research services provided by brokers may be used by the adviser or by
affiliates of Federated Investors in advising Federated Funds and other
accounts. To the extent that receipt of these services may supplant services for
which the adviser or its affiliates might otherwise have paid, it would tend to
reduce their expenses.
For the fiscal years ended March 31, 1994, 1993, and 1992, the Fund paid total
brokerage commissions of $140,868 $158,973, and $205,006, respectively.
As of March 31, 1994, the Fund owned approximately $3,361,000 of the securities
of Dean Witter Discover & Co., $6,475,000 of the securities of General Electric
Co., and $6,505,000 of the securities of Travelers (Smith Barney) all of whom
are regular brokers of the Funds that derive more than 15% of gross revenues
from securities-related activities.
PURCHASING SHARES
- --------------------------------------------------------------------------------
Except under certain circumstances described in the prospectus, Shares are sold
at their net asset value (plus a sales charge on Class A Shares and Fortress
Shares only) on days the New York Stock Exchange is open for business. The
procedure for purchasing Shares is explained in the respective prospectus under
"Investing in Class A Shares", "Investing in Class B Shares", "Investing in
Class C Shares" and "Investing in Fortress Shares".
DISTRIBUTION (CLASS B AND CLASS C ONLY) AND SHAREHOLDER SERVICES PLANS
These arrangements permit the payment of fees to financial institutions, the
distributor, and Federated Shareholder Services, as appropriate to stimulate
distribution activities and to cause services to be provided to shareholders by
a representative who has knowledge of the shareholder's particular circumstances
and goals. These activities and services may include, but are not limited to,
marketing efforts; providing office space, equipment, telephone facilities, and
various clerical, supervisory, computer, and other personnel as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries; and assisting
clients in changing dividend options, account designations, and addresses.
By adopting the Distribution Plan, (Class B and Class C Shares only) the Board
of Directors expects that the Fund will be able to achieve a more predictable
flow of cash for investment purposes and to meet redemptions. This will
facilitate more efficient portfolio management and assist the Fund in pursuing
its investment objectives. By identifying potential investors whose needs are
served by the Fund's objectives, and properly serving these accounts, it may be
possible to curb sharp fluctuations in rates of redemptions and sales.
Other benefits, which may be realized under either arrangement, may include: (1)
providing personal services to shareholders; (2) investing shareholder assets
with a minimum of delay and administrative detail; and (3) enhancing shareholder
recordkeeping systems; and (4) responding promptly to shareholders' requests and
inquiries concerning their accounts.
For the fiscal period ending March 31, 1994, payments in the amount of $40,115
were made pursuant to the Distribution Plan all of which was paid to Financial
Institutions. In addition, for this period, payments of $152,161 were made
pursuant to the Shareholder Services Plan.
PURCHASES BY SALES REPRESENTATIVES, FUND DIRECTORS, AND EMPLOYEES
Directors, employees, and sales representatives of the Fund, Federated Advisers,
and Federated Securities Corp. or their affiliates, or any investment dealer who
has a sales agreement with Federated Securities Corp., and their spouses and
children under 21, may buy shares at net asset value without a sales charge.
Shares may also be sold without a sales charge to trusts or pension or
profit-sharing plans for these people.
These sales are made with the purchaser's written assurance that the purchase is
for investment purposes and that the securities will not be resold except
through redemption by the Fund.
EXCHANGING SECURITIES FOR FUND SHARES
Investors may exchange convertible securities they already own for Shares, or
they may exchange a combination of convertible securities and cash for Shares.
Any securities to be exchanged must meet the investment objective and policies
of the Fund, must have a readily ascertainable market value, must be liquid, and
must not be subject to restrictions on resale.
The Fund will prepare a list of securities which are eligible for acceptance and
furnish this list to brokers upon request. The Fund reserves the right to reject
any security, even though it appears on the list, and the right to amend the
list of acceptable securities at any time without notice to brokers or
investors.
An investment broker acting for an investor should forward the securities in
negotiable form with an authorized letter of transmittal to Federated Securities
Corp. Federated Securities Corp. will determine that transmittal papers are in
good order and forward to the Fund's custodian, State Street Bank. The Fund will
notify the broker of its acceptance and valuation of the securities within five
business days of their receipt by State Street Bank.
The Fund values such securities in the same manner as the Fund values its
portfolio securities. The basis of the exchange will depend upon the net asset
value of Shares on the day the securities are valued. One Share will be issued
for each equivalent amount of securities accepted.
Any interest earned on the securities prior to the exchange will be considered
in valuing the securities. All interest, dividends, subscription, conversion, or
other rights attached to the securities become the property of the Fund, along
with the securities.
TAX CONSEQUENCES
Exercise of this exchange privilege is treated as a sale for federal
income tax purposes. Depending upon the cost basis of the securities
exchanged for Shares, a gain or loss may be realized by the investor.
DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------
Net asset value generally changes each day. The days on which net asset value is
calculated by the Fund are described in the respective prospectuses.
DETERMINING MARKET VALUE OF SECURITIES
- --------------------------------------------------------------------------------
Market values of the Fund's portfolio securities are determined as follows:
according to the last sale price on a national securities exchange, if
available;
in the absence of recorded sales for equity securities, according to the mean
between the last closing bid and asked prices and for bonds and other fixed
income securities, as determined by an independent pricing service; or
for short-term obligations according to the prices as furnished by an
independent pricing service or for short-term obligations with remaining
maturities of 60 days or less at the time of purchase at amortized cost, or at
fair value as determined in good faith by the Board of Directors.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider yield, quality, coupon
rate, maturity, type of issue, trading characteristics, and other market data.
EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
The Securities and Exchange Commission has promulgated Rule 11a-3 under the
Investment Company Act of 1940 which allows shareholders to exchange all or some
of their shares for shares in other Fortress Funds or certain Funds which are
sold with a sales charge different from that of the Fund or with no sales charge
and which are advised by subsidiaries or affiliates of Federated Investors.
These exchanges are made at net asset value plus the difference between the
Fund's sales charge already paid and any sales charge of the fund into which the
shares are to be exchanged, if higher.
The SEC has also issued an order exempting the Fund from certain provisions of
the Investment Company Act of 1940. The order allows certain other funds,
including funds that are not advised by subsidiaries or affiliates of Federated
Investors, which do not have a sales charge, to exchange their shares for Fund
shares on a basis other than their current offering price. These exchanges may
be made to the extent that such shares were acquired in a prior exchange, at net
asset value, for shares of a Federated Fund carrying a sales charge.
REDUCED SALES CHARGE
If a shareholder making such an exchange qualifies for a reduction or
elimination of the sales charge, the shareholder must notify Federated
Securities Corp.
REQUIREMENTS FOR EXCHANGE
Shareholders using this privilege must exchange shares having a net asset value
of at least $1,500. Before the exchange, the shareholder must receive a
prospectus of the fund for which the exchange is being made.
This privilege is available to shareholders resident in any state in which the
fund shares being acquired may be sold. Upon receipt of proper instructions and
required supporting documents, shares submitted for exchange are redeemed and
the proceeds invested in shares of the other fund.
Further information on the exchange privilege and prospectuses for Fortress
Funds or certain Federated Funds are available by calling the Fund.
TAX CONSEQUENCES
Exercise of this exchange privilege is treated as a sale for federal income tax
purposes. Depending upon the circumstances, a short-term or long-term capital
gain or loss may be realized.
MAKING AN EXCHANGE
Instructions for exchanges for Fortress Funds or certain Federated Funds may be
given in writing or by telephone. Written instructions may require a signature
guarantee.
TELEPHONE INSTRUCTIONS
Telephone instructions made by the investor may be carried out only if a
telephone authorization form completed by the investor is on file with
the Fund or its agents. If the instructions are given by a broker, a
telephone authorization form completed by the broker must be on file with
the Fund or its agents. Shares may be exchanged betweeen two funds by
telephone only if the two funds have identical shareholder registrations.
Telephoned exchange instructions may be recorded. They must be received
by the transfer agent before 4:00 p.m. (Boston time) for shares to be
exchanged that day.
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at the next computed net asset value after the Fund
receives the redemption request. Shareholder redemptions may be subject to a
contingent deferred sales charge. Redemption procedures are explained in the
respective prospectuses under "Redeeming Class A Shares," "Redeeming Class B
Shares," "Redeeming Class C Shares" or "Redeeming Fortress Shares." Although the
transfer agent does not charge for telephone redemptions, it reserves the right
to charge a fee for the cost of wire-transferred redemptions of less than
$5,000.
Class B, Class C and Fortress shares, redeemed within one to four years of
purchase may be subject to a contingent deferred sales charge. The amount of the
contingent deferred sales charge is based upon the amount of the administrative
fee paid at the time of purchase by the distributor to the financial
institutions for services rendered, and the length of time the investor remains
a shareholder in the Fund. Should financial institutions elect to receive an
amount less than the administrative fee that is stated in the prospectus for
servicing a particular shareholder, the contingent deferred sales charge and/or
holding period for that particular shareholder will be reduced accordingly.
REDEMPTION IN KIND
Although the Fund intends to redeem shares in cash, it reserves the right under
certain circumstances to pay the redemption price in whole or in part by a
distribution of securities from the Fund's portfolio.
Redemption in kind will be made in conformity with applicable Securities and
Exchange Commission rules, taking such securities at the same value employed in
determining net asset value and selecting the securities in a manner the Board
of Directors determine to be fair and equitable.
The Fund has elected to be governed by Rule 18f-1 of the Investment Company Act
of 1940 under which the Fund is obligated to redeem shares for any shareholder
in cash up to the lesser of $250,000 or 1% of the Fund's net asset value during
any 90-day period.
TAX STATUS
- --------------------------------------------------------------------------------
THE FUND'S TAX STATUS
The Fund will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment afforded
to such companies. To qualify for this treatment, the Fund must, among other
requirements:
derive at least 90% of its gross income from dividends, interest, and gains
from the sale of securities;
derive less than 30% of its gross income from the sale of securities held less
than three months;
invest in securities within certain statutory limits; and
distribute to its shareholders at least 90% of its net income earned during the
year.
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends and capital gains
received as cash or additional shares. The Fund's dividends, and any short-term
capital gains, are taxable as ordinary income.
CAPITAL GAINS
Shareholders will pay federal tax at capital gains rates on long-term
capital gains distributed to them regardless of how long they have held
the Fund shares.
TOTAL RETURN
- --------------------------------------------------------------------------------
The Fund's average annual total returns for Class A Shares for the one-year,
five-year, and ten-year periods ended March 31, 1994, were (1.85%), 9.85%, and
12.87%, respectively.
The average annual total return for each class of Shares of the Fund is the
average compounded rate of return for a given period that would equate a $1,000
initial investment to the ending redeemable value of that investment. The ending
redeemable value is computed by multiplying the number of Shares owned at the
end of the period by the net asset value 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
load on Class A Shares or Fortress Shares, adjusted over the period by any
additional Shares, assuming the quarterly reinvestment of all dividends and
distributions. Any applicable redemption fee is deducted from the ending value
of the investment based on the lesser of the original purchase price or the net
asset value of Shares redeemed. Occasionally, total return which does not
reflect the effect of the sales load may be quoted in advertising.
The Fund's cumulative total return for Class C Shares, for the period from April
21, 1993 to March 31, 1994 was 2.52%.
The Fund's cumulative total return for Fortress Shares, for the period from July
27, 1993 to March 31, 1994 was (2.31%).
Cumulative total return reflects the Fund's total performance over a specified
period of time. This total return assumes and is reduced by the payment of
maximum sales load and redemption fee. The Fund's total return is representative
of only eleven months of activity for the Class C Shares and eight months of
activity for the Fortress Class of shares.
YIELD
- --------------------------------------------------------------------------------
The Fund's yields for Class A Shares, Class C Shares, and Fortress Shares were
1.53%, .68%, and 1.41%, respectively, for the thirty-day period ended March 31,
1994.
The yield for each class of Shares of the Fund is determined by dividing the net
investment income per share (as defined by the Securities and Exchange
Commission) earned by the class of Shares over a thirty-day period by the
maximum offering price per share of the respective class on the last day of the
period. This value is then annualized using semi-annual compounding. This means
that the amount of income generated during the thirty-day period is assumed to
be generated each month over a 12-month period and is reinvested every six
months. The yield does not necessarily reflect income actually earned by the
Fund because of certain adjustments required by the Securities and Exchange
Commission and therefore, may not correlate to the dividends or other
distributions paid to the shareholders.
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in a class
of Shares, the performance will be reduced for those shareholders paying those
fees.
PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------
The performance of each class of Shares depends upon such variables as:
portfolio quality;
average portfolio maturity;
type of instruments in which the portfolio is invested;
changes in interest rates and market value of portfolio securities;
changes in the Fund's or a class of Shares' expenses; and
various other factors.
The Fund's performance fluctuates on a daily basis largely because net earnings
and net asset value per Share fluctuate daily. Both net earnings and net asset
value per Share are factors in the computation of yield and total return.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance investors
should consider all relevant factors such as the composition of any index used,
prevailing market conditions, portfolio composition, 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 net asset value over a specific period of time. From
time to time, the Fund will quote its Lipper ranking in the growth and income
funds category in advertising and sales literature.
DOW JONES INDUSTRIAL AVERAGE ("DJIA") --represents share prices of selected
blue-chip industrial corporations as well as public utility and transportation
companies. The DJIA indicates daily changes in the average price of stocks in
any of its categories. It also reports total sales for each group of industries.
Because it represents the top corporations of America, the DJIA index is a
leading economic indicator for the stock market as a whole.
STANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS--a composite
index of common stocks in industry, transportation, and financial and public
utility companies, compares total returns of funds whose portfolios are invested
primarily in common stocks. In addition, the Standard & Poor's index assumes
reinvestment of all dividends paid by stocks listed on the index. Taxes due on
any of these distributions are not included, nor are brokerage or other fees
calculated in the Standard & Poor's figures.
MORNINGSTAR, INC.--an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for two
weeks.
Advertisements and sales literature for all four classes classes of Shares may
quote total returns which are calculated on non-standardized base periods. These
total returns also represent the historic change in the value of an investment
in either class of Shares based on quarterly reinvestment of dividends over a
specified period of time.
From time to time as it deems appropriate, the Fund may advertise the
performance of either class of Shares using charts, graphs, and descriptions,
compared to federally insured bank products including certificates of deposit
and time deposits and to money market funds using the Lipper Analytical Services
money market instruments average.
Advertisements may quote performance information which does not reflect the
effect of the sales charge on Class A Shares.
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The financial statements for the fiscal year ended March 31, 1994 are
incorporated herein by reference to the Annual Report of the Fund dated March
31, 1994 (File Nos. 2-29786 and 811-1704). A copy of the Report may be obtained
without charge by contacting the Fund.
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements. Incorporated into the Statement of
Additional Information by reference to the Registrant's
Annual Report dated March 31, 1994, File Nos. 2-29786 and
811-1704 (Class A Shares, Class C Shares, Fortress Shares);
to be filed by amendment (Class B Shares);
.
(b) Exhibits:
(1) Copy of Articles of Incorporation of the Registrant as
amended (8.);
(2) (i) Copy of By-Laws of the Registrant as
amended (9.);
(ii) Copy of Amendment to By-Laws effective
August 27, 1987(9.);
(3) Not applicable;
(4) Copy of Specimen Certificate for Shares of Capital
Stock of the Registrant (1.);
(5) Copy of the new Investment Advisory Contract of the
Registrant (11.);
(6) Conformed copy of Distributor's Contract of the
Registrant+
(7) Not applicable;
(8) Copy of Custodian Agreement of the Registrant (13);
(9) (i) Conformed copy of Shareholders Service Plan of the
Registrant +;
(ii) Conformed copy of Transfer Agency and
Services Agreement +;
(10) Not applicable;
(11) Conformed copy of Consent of Independent Public
Accountants;+
(12) Not applicable;
(13) Not applicable;
(14) Not applicable
(15) Copy of Rule 12-b-1 Plan of the Registrant +;
(16) Not applicable:
(17) Power of Attorney (13.);
(18) Not applicable
+ All Exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's Initial
Registration Statement on Form S-5 on August 5, 1968. (File Nos.
2-29786 and 811-1704.)
3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 22 on Form N-1 filed May 9, 1980.(File Nos.2-29786 and 811-
1704)
5. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 32 on Form N-1 filed February 28, 1984. (File Nos.
2-29786 and 811-1704))
8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 40 on Form N-1A filed May 19, 1986.(File Nos. 2-29786 and
811-1704))
9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 42 on Form N-1A filed July 15, 1987. (File Nos. 2-29786
and 811-1704)
11. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 47 on Form N-1A filed July 26, 1989. (File Nos. 2-29786
and 811-1704))
13. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 53 on Form N-1A filed July 22, 1992. (File Nos. 2-29786
and 811-1704)
Item 25. Persons Controlled by or Under Common Control with Registrant:
None.
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of May 09, 1994
Shares of Capital Stock
($.20 per Share par value)
Class A Shares 19,002
Class C Shares 960
Fortress Shares 1223
Item 27. Indemnification: (11.)
Item 28. Business and Other Connections of Investment Adviser:
For a description of the other business of the investment adviser,
see the section entitled "Fund Information - Management of the
Fund" in Part A. The affiliations with the Registrant of four of
the Trustees and one of the Officers of the investment adviser are
included in Part A of this Registration Statement under
"Management of the Fund- Officers and Directors." The remaining
Trustee of the investment adviser, his position with the
investment adviser, and, in parentheses, his principal occupation
is: Mark D. Olson, Partner, Wilson, Halbrook & Bayard, 107 W.
Market Street, Georgetown, Delaware 19947.
The remaining Officers of the investment adviser are: William D,
Dawson, III, J. Thomas Madden and Mark L. Mallon, Executive Vice
Presidents; Henry J. Gailliot, Senior Vice President-Economist;
Peter R. Anderson, Gary J.Madich, and J. Alan Minteer, Senior Vice
Presidents; Randall A. Bauer, Jonathan C. Conley, Deborah A.
Cunningham, Mark Durbiano, Roger Early, Kathleen M. Foody-Malus,
David C. Francis, Thomas M. Franks, Edward C. Gonzales, Jeff A.
Kozemchak, Marian R. Marinack, John W. McGonigle, Gregory M.
Melvin, Susan M. Nason, Mary Jo Ochson, Robert J. Ostrowski,
Charles Ritter and Christopher Wiles, Vice Presidents, Edward C.
Gonzales, Treasurer, and John W. McGonigle, Secretary. The
business address of each of the Officers of the Federated Research
Division of the investment adviser is Federated Investors Tower,
Pittsburgh, PA 15222-3779. These individuals are also officers of
a majority of the investment advisers to the Funds listed in Part
B of this Registration Statement under "The Funds."
11. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 47 on Form N-1A filed July 26, 1989. (File No. 2-29786)
Item 29. Principal Underwriters:
(a) Federated Securities Corp., the Distributor for shares of the
Registrant, also acts as principal underwriter for the
following open-end investment companies: Alexander Hamilton
Funds; American Leaders Fund, Inc.; Annuity Management
Series; Automated Cash Management Trust; Automated Government
Money Trust; BayFunds; The Biltmore Funds; The Biltmore
Municipal Funds; The Boulevard Funds; California Municipal
Cash Trust; Cambridge Series Trust; Cash Trust Series, Inc.;
Cash Trust Series II; DG Investor Series; Edward D. Jones &
Co. Daily Passport Cash Trust; Federated ARMs Fund;
Federated Exchange Fund, Ltd.; Federated GNMA Trust;
Federated Government Trust; Federated Growth Trust; Federated
High Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust; Federated
Intermediate Government Trust; Federated Master Trust;
Federated Municipal Trust; Federated Short-Intermediate
Government Trust; Federated Short-Term U.S. Government Trust;
Federated Stock Trust; Federated Tax-Free Trust; Federated
U.S. Government Bond Fund; First Priority Funds; First Union
Funds; Fixed Income Securities, Inc.; Fortress Adjustable
Rate U.S. Government Fund, Inc.; Fortress Municipal Income
Fund, Inc.; Fortress Utility Fund, Inc.; Fountain Square
Funds; Fund for U.S. Government Securities, Inc.; Government
Income Securities, Inc.; High Yield Cash Trust; Independence
One Mutual Funds; Insight Institutional Series, Inc.;
Insurance Management Series; Intermediate Municipal Trust;
International Series Inc.; Investment Series Funds, Inc.;
Investment Series Trust; Liberty Equity Income Fund, Inc.;
Liberty High Income Bond Fund, Inc.; Liberty Municipal
Securities Fund, Inc.; Liberty U.S. Government Money Market
Trust; Liberty Utility Fund, Inc.; Liquid Cash Trust; Managed
Series Trust; Mark Twain Funds; Marshall Funds, Inc.; Money
Market Management, Inc.; Money Market Obligations Trust;
Money Market Trust; The Monitor Funds; Municipal Securities
Income Trust; New York Municipal Cash Trust; 111 Corcoran
Funds; Peachtree Funds; The Planters Funds; Portage Funds;
RIMCO Monument Funds; The Shawmut Funds; Short-Term Municipal
Trust; Signet Select Funds; SouthTrust Vulcan Funds; Star
Funds; The Starburst Funds; The Starburst Funds II; Stock and
Bond Fund, Inc.; Sunburst Funds; Targeted Duration Trust; Tax-
Free Instruments Trust; Tower Mutual Funds; Trademark Funds;
Trust for Financial Institutions; Trust for Government Cash
Reserves; Trust for Short-Term U.S. Government Securities;
Trust for U.S. Treasury Obligations; Vision Fiduciary Funds,
Inc.; Vision Group of Funds, Inc.; and World Investment
Series, Inc.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Richard B. Fisher Director, Chairman, Chief Vice President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, and
Asst. Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice Vice President
Federated Investors Tower President, and Treasurer, and Treasurer
Pittsburgh, PA 15222-3779 Federated Securities
Corp.
John W. McGonigle Director, Executive Vice Vice President and
Federated Investors Tower President, and Assistant Secretary
Pittsburgh, PA 15222-3779 Secretary, Federated
Securities Corp.
John A. Staley, IV Executive Vice President Vice President
Federated Investors Tower and Assistant Secretary,
Pittsburgh, PA 15222-3779 Federated Securities Corp.
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust
Pittsburgh, PA 15222-3779 Federated Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
H. Joseph Kennedy Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James R. Ball Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David C. Glabicki Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William J. Kerns Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Francis J. Matten, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Jeffrey Niss Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charles A. Robison Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Philip C. Hetzel Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
S. Elliott Cohan Secretary, Federated Assistant
Federated Investors Tower Securities Corp. Secretary
Pittsburgh, PA 15222-3779
(c) Not applicable.
Item 30. Location of Accounts and Records:
All accounts and records required to be maintained by Section
31(a) of the Investment Company Act of 1940 and Rules 31a-1
through 31a-3 promulgated thereunder are maintained at one of the
following locations:
Registrant Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Services Company P.O. Box 8604
Boston, MA 02266-8604
Federated Administrative Services Federated Investors Tower
("Administrator") Pittsburgh, PA 15222-3779
Federated Advisers Federated Investors Tower
("Adviser") Pittsburgh, PA 15222-3779
State Street Bank and Trust Company P.O. Box 8604
("Custodian") Boston, MA 02266-8604
Item 31. Management Services: Not applicable.
Item 32. Undertaking:
Registrant hereby undertakes to file a post-effective amendment,
using financial statements which need not be certified, within
four to six months from the effective date of Registrant's 1933
Act Registration Statement.
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Directors and the calling of special shareholder meetings by
shareholders.
Registrat hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, AMERICAN LEADERS FUND, INC.,
has duly caused this Amendment to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, all in the City of
Pittsburgh and Commonwealth of Pennsylvania, on the 25th day of May, 1994.
AMERICAN LEADERS FUND
BY: /s/Charles H. Field
Charles H. Field, Assistant Secretary
Attorney in Fact for John F. Donahue
May 25, 1994
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by the
following person in the capacity and on the date indicated:
NAME TITLE DATE
By: /s/Charles H. Field
Charles H. Field Attorney In Fact May 25, 1994
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* President and Director
(Chief Executive Officer)
J. Christopher Donahue* Vice President and Director
Edward C. Gonzales* Vice President and Treasurer
(Principal Financial and
Accounting Officer)
John T. Conroy, Jr.* Director
William J. Copeland* Director
James E. Dowd* Director
Lawrence D. Ellis, M.D.* Director
Edward L. Flaherty, Jr.* Director
Peter E. Madden* Director
Gregor F. Meyer* Director
Wesley W. Posvar* Director
Marjorie P. Smuts* Director
* By Power of Attorney
Exhibit 11 under N-1A
Exhibit 23 under Item 601/Reg. S-K
ARTHUR ANDERSEN & CO.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in Post-
Effective Amendment No.59 to Form N-1A Registration Statement of American
Leaders Fund, Inc. of our report dated May 13, 1994, on the financial
statements as of March 31, 1994, included in or made a part of this
registration statement.
By: /s/ ARTHUR ANDERSEN & CO.
ARTHUR ANDERSEN & CO.
Pittsburgh, Pennsylvania,
May 23, 1994
Exhibit 15 under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
AMERICAN LEADERS FUND, INC.
RULE 12b-1 PLAN
This Plan ("Plan") is adopted as of this 4th day of May, 1993, by
the Board of Directors of AMERICAN LEADERS FUND, INC. (the
"Corporation"), a Maryland corporation with respect to certain classes
of shares ("Classes") of the Corporation set forth in exhibits hereto.
1. This Plan is adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended ("Act"), so as to allow the
Corporation to make payments as contemplated herein, in conjunction with
the distribution of Classes of the Funds ("Shares").
2. This Plan is designed to finance activities of Federated
Securities Corp. ("FSC") principally intended to result in the sale of
Shares to include: (a) providing incentives to financial institutions
("Institutions") to sell Shares; (b) advertising and marketing of Shares
to include preparing, printing and distributing prospectuses and sales
literature to prospective shareholders and with Institutions; and (c)
implementing and operating the Plan. In compensation for services
provided pursuant to this Plan, FSC will be paid a fee in respect of the
following Classes set forth on the applicable exhibit.
3. Any payment to FSC in accordance with this Plan will be made
pursuant to the "Distributor's Contract" entered into by the Corporation
and FSC. Any payments made by FSC to Institutions with funds received
as compensation under this Plan will be made pursuant to the "Rule 12b-1
Agreement" entered into by FSC and the Institution.
4. FSC has the right (i) to select, in its sole discretion, the
Institutions to participate in the Plan and (ii) to terminate without
cause and in its sole discretion any Rule 12b-1 Agreement.
5. Quarterly in each year that this Plan remains in effect, FSC
shall prepare and furnish to the Board of Directors of the Corporation,
and the Board of Directors shall review, a written report of the amounts
expended under the Plan and the purpose for which such expenditures were
made.
6. This Plan shall become effective with respect to each Class
(i) after approval by majority votes of: (a) the Corporation's Board of
Directors; (b) the members of the Board of the Corporation who are not
interested persons of the Corporation and have no direct or indirect
financial interest in the operation of the Corporation's Plan or in any
related documents to the Plan ("Disinterested Directors"), cast in
person at a meeting called for the purpose of voting on the Plan; and
(c) the outstanding voting securities of the particular Class, as
defined in Section 2(a)(42) of the Act and (ii) upon execution of an
exhibit adopting this Plan with respect to such Class.
7. This Plan shall remain in effect with respect to each Class
presently set forth on an exhibit and any subsequent Classes added
pursuant to an exhibit during the initial year of this Plan for the
period of one year from the date set forth above and may be continued
thereafter if this Plan is approved with respect to each Class at least
annually by a majority of the Corporation's Board of Directors and a
majority of the Disinterested Directors, cast in person at a meeting
called for the purpose of voting on such Plan. If this Plan is adopted
with respect to a Class after the first annual approval by the Directors
as described above, this Plan will be effective as to that Class upon
execution of the applicable exhibit pursuant to the provisions of
paragraph 6(ii) above and will continue in effect until the next annual
approval of this Plan by the Directors and thereafter for successive
periods of one year subject to approval as described above.
8. All material amendments to this Plan must be approved by a
vote of the Board of Directors of the Corporation and of the
Disinterested Directors, cast in person at a meeting called for the
purpose of voting on it.
9. This Plan may not be amended in order to increase materially
the costs which the Classes may bear for distribution pursuant to the
Plan without being approved by a majority vote of the outstanding voting
securities of the Classes as defined in Section 2(a)(42) of the Act.
10. This Plan may be terminated with respect to a particular
Class at any time by: (a) a majority vote of the Disinterested
Directors; or (b) a vote of a majority of the outstanding voting
securities of the particular Class as defined in Section 2(a)(42) of the
Act; or (c) by FSC on 60 days' notice to the Corporation.
11. While this Plan shall be in effect, the selection and
nomination of Disinterested Directors of the Corporation shall be
committed to the discretion of the Disinterested Directors then in
office.
12. All agreements with any person relating to the
implementation of this Plan shall be in writing and any agreement
related to this Plan shall be subject to termination, without penalty,
pursuant to the provisions of Paragraph 10 herein.
13. This Plan shall be construed in accordance with and governed
by the laws of the Commonwealth of Pennsylvania.
EXHIBIT A
to the
12b-1 Plan
AMERICAN LEADERS FUND, INC.
Class C Shares
This Plan is adopted by AMERICAN LEADERS FUND, INC. with respect
to the Class of Shares of the Corporation set forth above.
In compensation for the services provided pursuant to this Plan,
FSC will be paid a monthly fee computed at the annual rate of .75 of 1%
of the average aggregate net asset value of the Class C Shares of the
Corporation held during the month.
Witness the due execution hereof this 4th day of May, 1993.
AMERICAN LEADERS FUND, INC.
By:/s/ J. Christopher Donahue
Vice President
Exhibit 6 under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
AMERICAN LEADERS FUND, INC.
DISTRIBUTOR'S CONTRACT
AGREEMENT made this 1st day of March, 1993, by and between
American Leaders Fund, Inc. (the "Corporation"), a Maryland Corporation,
and FEDERATED SECURITIES CORP. ("FSC"), a Pennsylvania Corporation.
In consideration of the mutual covenants hereinafter contained, it
is hereby agreed by and between the parties hereto as follows:
1. The Corporation hereby appoints FSC as its agent to sell and
distribute shares of the Corporation which may be offered in one or more
series (the "Funds") consisting of one or more classes (the "Classes")
of shares (the "Shares"), as described and set forth on one or more
exhibits to this Agreement, at the current offering price thereof as
described and set forth in the current Prospectuses of the Corporation.
FSC hereby accepts such appointment and agrees to provide such other
services for the Corporation, if any, and accept such compensation from
the Corporation, if any, as set forth in the applicable exhibit to this
Agreement.
2. The sale of any Shares may be suspended without prior notice
whenever in the judgment of the Corporation it is in its best interest
to do so.
3. Neither FSC nor any other person is authorized by the
Corporation to give any information or to make any representation
relative to any Shares other than those contained in the Registration
Statement, Prospectuses, or Statements of Additional Information
("SAIs") filed with the Securities and Exchange Commission, as the same
may be amended from time to time, or in any supplemental information to
said Prospectuses or SAIs approved by the Corporation. FSC agrees that
any other information or representations other than those specified
above which it or any dealer or other person who purchases Shares
through FSC may make in connection with the offer or sale of Shares,
shall be made entirely without liability on the part of the Corporation.
No person or dealer, other than FSC, is authorized to act as agent for
the Corporation for any purpose. FSC agrees that in offering or selling
Shares as agent of the Corporation, it will, in all respects, duly
conform to all applicable state and federal laws and the rules and
regulations of the National Association of Securities Dealers, Inc.,
including its Rules of Fair Practice. FSC will submit to the
Corporation copies of all sales literature before using the same and
will not use such sales literature if disapproved by the Corporation.
4. This Agreement is effective with respect to each Class as of
the date of execution of the applicable exhibit and shall continue in
effect with respect to each Class presently set forth on an exhibit and
any subsequent Classes added pursuant to an exhibit during the initial
term of this Agreement for one year from the date set forth above, and
thereafter for successive periods of one year if such continuance is
approved at least annually by the Directors of the Corporation including
a majority of the members of the Board of Directors of the Corporation
who are not interested persons of the Corporation and have no direct or
indirect financial interest in the operation of any Distribution Plan
relating to the Corporation or in any related documents to such Plan
("Disinterested Directors") cast in person at a meeting called for that
purpose. If a Class is added after the first annual approval by the
Directors as described above, this Agreement will be effective as to
that Class upon execution of the applicable exhibit and will continue in
effect until the next annual approval of this Agreement by the Directors
and thereafter for successive periods of one year, subject to approval
as described above.
5 This Agreement may be terminated with regard to a particular
Fund or Class at any time, without the payment of any penalty, by the
vote of a majority of the Disinterested Directors or by a majority of
the outstanding voting securities of the particular Fund or Class on not
more than sixty (60) days' written notice to any other party to this
Agreement. This Agreement may be terminated with regard to a particular
Fund or Class by FSC on sixty (60) days' written notice to the
Corporation.
6. This Agreement may not be assigned by FSC and shall
automatically terminate in the event of an assignment by FSC as defined
in the Investment Company Act of 1940, as amended, provided, however,
that FSC may employ such other person, persons, corporation or
corporations as it shall determine in order to assist it in carrying out
its duties under this Agreement.
7. FSC shall not be liable to the Corporation 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 by this Agreement.
8. This Agreement may be amended at any time by mutual
agreement in writing of all the parties hereto, provided that such
amendment is approved by the Directors of the Corporation including a
majority of the Disinterested Directors of the Corporation cast in
person at a meeting called for that purpose.
9. This Agreement shall be construed in accordance with and
governed by the laws of the Commonwealth of Pennsylvania.
10. (a) Subject to the conditions set forth below, the
Corporation agrees to indemnify and hold harmless FSC and each person,
if any, who controls FSC within the meaning of Section 15 of the
Securities Act of 1933 and Section 20 of the Securities Act of 1934, as
amended, against any and all loss, liability, claim, damage and expense
whatsoever (including but not limited to any and all expenses whatsoever
reasonably incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever) arising
out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement, any
Prospectuses or SAIs (as from time to time amended and supplemented) or
the omission or alleged omission therefrom of a material fact required
to be stated therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in reliance upon
and in conformity with written information furnished to the Corporation
about FSC by or on behalf of FSC expressly for use in the Registration
Statement, any Prospectuses and SAIs or any amendment or supplement
thereof.
If any action is brought against FSC or any controlling person
thereof with respect to which indemnity may be sought against the
Corporation pursuant to the foregoing paragraph, FSC shall promptly
notify the Corporation in writing of the institution of such action and
the Corporation shall assume the defense of such action, including the
employment of counsel selected by the Corporation and payment of
expenses. FSC or any such controlling person thereof shall have the
right to employ separate counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of FSC or such
controlling person unless the employment of such counsel shall have been
authorized in writing by the Corporation in connection with the defense
of such action or the Corporation shall not have employed counsel to
have charge of the defense of such action, in any of which events such
fees and expenses shall be borne by the Corporation. Anything in this
paragraph to the contrary notwithstanding, the Corporation shall not be
liable for any settlement of any such claim of action effected without
its written consent. The Corporation agrees promptly to notify FSC of
the commencement of any litigation or proceedings against the
Corporation or any of its officers or Directors or controlling persons
in connection with the issue and sale of Shares or in connection with
the Registration Statement, Prospectuses, or SAIs.
(b) FSC agrees to indemnify and hold harmless the Corporation,
each of its Directors, each of its officers who have signed the
Registration Statement and each other person, if any, who controls the
Corporation within the meaning of Section 15 of the Securities Act of
1933, but only with respect to statements or omissions, if any, made in
the Registration Statement or any Prospectus, SAI, or any amendment or
supplement thereof in reliance upon, and in conformity with, information
furnished to the Corporation about FSC by or on behalf of FSC expressly
for use in the Registration Statement or any Prospectus, SAI, or any
amendment or supplement thereof. In case any action shall be brought
against the Corporation or any other person so indemnified based on the
Registration Statement or any Prospectus, SAI, or any amendment or
supplement thereof, and with respect to which indemnity may be sought
against FSC, FSC shall have the rights and duties given to the
Corporation, and the Corporation and each other person so indemnified
shall have the rights and duties given to FSC by the provisions of
subsection (a) above.
(c) Nothing herein contained shall be deemed to protect any
person against liability to the Corporation or its shareholders to which
such person would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of the duties of such
person or by reason of the reckless disregard by such person of the
obligations and duties of such person under this Agreement.
(d) Insofar as indemnification for liabilities may be permitted
pursuant to Section 17 of the Investment Company Act of 1940, as
amended, for Directors, officers, FSC and controlling persons of the
Corporation by the Corporation pursuant to this Agreement, the
Corporation is aware of the position of the Securities and Exchange
Commission as set forth in the Investment Company Act Release No. IC-
11330. Therefore, the Corporation undertakes that in addition to
complying with the applicable provisions of this Agreement, in the
absence of a final decision on the merits by a court or other body
before which the proceeding was brought, that an indemnification payment
will not be made unless in the absence of such a decision, a reasonable
determination based upon factual review has been made (i) by a majority
vote of a quorum of non-party Disinterested Directors, or (ii) by
independent legal counsel in a written opinion that the indemnitee was
not liable for an act of willful misfeasance, bad faith, gross
negligence or reckless disregard of duties. The Corporation further
undertakes that advancement of expenses incurred in the defense of a
proceeding (upon undertaking for repayment unless it is ultimately
determined that indemnification is appropriate) against an officer,
Trustee/Director, FSC or controlling person of the Corporation will not
be made absent the fulfillment of at least one of the following
conditions: (i) the indemnitee provides security for his undertaking;
(ii) the Corporation is insured against losses arising by reason of any
lawful advances; or (iii) a majority of a quorum of non-party
Disinterested Directors or independent legal counsel in a written
opinion makes a factual determination that there is reason to believe
the indemnitee will be entitled to indemnification.
11. If at any time the Shares of any Fund are offered in two or
more Classes, FSC agrees to adopt compliance standards as to when a
class of shares may be sold to particular investors.
12. This Agreement will become binding on the parties hereto
upon the execution of the attached exhibits to the Agreement.
Exhibit A
to the
Distributor's Contract
American Leaders Fund, Inc.
Class A Shares
In consideration of the mutual covenants set forth in the
Distributor's Contract dated March 1, 1993, between American Leaders
Fund, Inc. and Federated Securities Corp., American Leaders Fund, Inc.
executes and delivers this Exhibit on behalf of the Funds, and with
respect to the separate Classes of Shares thereof, first set forth in
this Exhibit.
Witness the due execution hereof this 1st day of March, 1993.
ATTEST: AMERICAN LEADERS FUND, INC.
/s/ John W. McGonigle By: /s/ John F. Donahue
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/s/ S. Elliott Cohan By: /s/ John A. Staley, IV
Secretary President
(SEAL)
Exhibit B
to the
Distributor's Contract
American Leaders Fund, Inc.
Class C Shares
The following provisions are hereby incorporated and made part of
the Distributor's Contract dated the 1st day of March, 1993, between
American Leaders Fund, Inc. and Federated Securities Corp. with respect
to Classes of the Funds set forth above.
1. The Corporation hereby appoints FSC to engage in activities
principally intended to result in the sale of shares of the above-listed
Classes ("Shares"). Pursuant to this appointment, FSC is authorized to
select a group of brokers ("Brokers") to sell Shares at the current
offering price thereof as described and set forth in the respective
prospectuses of the Corporation, and to render administrative support
services to the Corporation and its shareholders. In addition, FSC is
authorized to select a group of administrators ("Administrators") to
render administrative support services to the Corporation and its
shareholders.
2. Administrative support services may include, but are not
limited to, the following functions: 1) account openings: the Broker
or Administrator communicates account openings via computer terminals
located on the Broker's or Administrator's premises; 2) account
closings: the Broker or Administrator communicates account closings via
computer terminals; 3) enter purchase transactions: purchase
transactions are entered through the Broker's or Administrator's own
personal computer or through the use of a toll-free telephone number; 4)
enter redemption transactions: Broker or Administrator enters
redemption transactions in the same manner as purchases; 5) account
maintenance: Broker or Administrator provides or arranges to provide
accounting support for all transactions. Broker or Administrator also
wires funds and receives funds for Corporation share purchases and
redemptions, confirms and reconciles all transactions, reviews the
activity in the Corporation's accounts, and provides training and
supervision of its personnel; 6) interest posting: Broker or
Administrator posts and reinvests dividends to the Corporation's
accounts; 7) prospectus and shareholder reports: Broker or
Administrator maintains and distributes current copies of prospectuses
and shareholder reports; 8) advertisements: the Broker or Administrator
continuously advertises the availability of its services and products;
9) customer lists: the Broker or Administrator continuously provides
names of potential customers; 10) design services: the Broker or
Administrator continuously designs material to send to customers and
develops methods of making such materials accessible to customers; and
11) consultation services: the Broker or Administrator continuously
provides information about the product needs of customers.
3. During the term of this Agreement, the Corporation will pay
FSC for services pursuant to this Agreement, a monthly fee computed at
the annual rate of .75 of 1.00% of the average aggregate net asset value
of the Class C Shares held during the month. For the month in which
this Agreement becomes effective or terminates, there shall be an
appropriate proration of any fee payable on the basis of the number of
days that the Agreement is in effect during the month.
4. FSC may from time-to-time and for such periods as it deems
appropriate reduce its compensation to the extent any Classes' expenses
exceed such lower expense limitation as FSC may, by notice to the
Corporation, voluntarily declare to be effective.
5. FSC will enter into separate written agreements with various
firms to provide certain of the services set forth in Paragraph 1
herein. FSC, in its sole discretion, may pay Brokers and Administrators
a periodic fee in respect of Shares owned from time to time by their
clients or customers. The schedules of such fees and the basis upon
which such fees will be paid shall be determined from time to time by
FSC in its sole discretion.
6. FSC will prepare reports to the Board of Directors of the
Corporation on a quarterly basis showing amounts expended hereunder
including amounts paid to Brokers and Administrators and the purpose for
such payments.
In consideration of the mutual covenants set forth in the
Distributor's Contract dated March 1, 1993, between American Leaders
Fund, Inc. and Federated Securities Corp., American Leaders Fund, Inc.
executes and delivers this Exhibit on behalf of the Funds, and with
respect to the separate Classes of Shares thereof, first set forth in
this Exhibit.
Witness the due execution hereof this 4th day of May, 1993.
ATTEST: AMERICAN LEADERS FUND, INC.
/s/ John W. McGonigle By: /s/ John F. Donahue
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/s/ S. Elliott Cohan By: /s/ John A. Staley, IV
Secretary President
(SEAL)
Exhibit C
to the
Distributor's Contract
American Leaders Fund, Inc.
Fortress Shares
In consideration of the mutual covenants set forth in the
Distributor's Contract dated March 1, 1993, between American Leaders
Fund, Inc. and Federated Securities Corp., American Leaders Fund, Inc.
executes and delivers this Exhibit on behalf of the Funds, and with
respect to the separate Classes of Shares thereof, first set forth in
this Exhibit.
Witness the due execution hereof this 1st day of June, 1993.
ATTEST: AMERICAN LEADERS FUND, INC.
/s/ John W. McGonigle By: /s/ John F. Donahue
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/s/ S. Elliott Cohan By: /s/ John A. Staley, IV
Secretary President
(SEAL)
Exhibit 9 (i) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
AMERICAN LEADERS FUND, INC.
SHAREHOLDER SERVICES PLAN
This Shareholder Services Plan ("Plan") is adopted as of this 1st
day of March, 1993, by the Board of Directors of American Leaders Fund,
Inc. (the "Fund"), a Maryland corporation with respect to certain
classes of shares ("Classes") of the portfolios of the Corporation set
forth in exhibits hereto.
1. This Plan is adopted to allow the Fund to make payments as
contemplated herein to obtain certain personal services for shareholders
and/or the maintenance of shareholder accounts ("Services").
2. This Plan is designed to compensate broker/dealers and other
participating financial institutions and other persons ("Providers") for
providing services to the Fund and its shareholders. The Plan will be
administered by Federated Administrative Services, Inc. ("FAS"). In
compensation for the services provided pursuant to this Plan, Providers
will be paid a monthly fee computed at the annual rate not to exceed .25
of 1% of the average aggregate net asset value of the shares of the Fund
held during the month.
3. Any payments made by the Portfolios to any Provider pursuant
to this Plan will be made pursuant to the "Shareholder Services
Agreement" entered into by FAS on behalf of the Fund and the Provider.
Providers which have previously entered into "Administrative Agreements"
or "Rule 12b-1 Agreements" with Federated Securities Corp. may be
compensated under this Plan for Services performed pursuant to those
Agreements until the Providers have executed a "Shareholder Services
Agreement" hereunder.
4. The Fund has the right (i) to select, in its sole
discretion, the Providers to participate in the Plan and (ii) to
terminate without cause and in its sole discretion any Shareholder
Services Agreement.
5. Quarterly in each year that this Plan remains in effect, FAS
shall prepare and furnish to the Board of Directors of the Fund, and the
Board of Directors shall review, a written report of the amounts
expended under the Plan.
6. This Plan shall become effective (i) after approval by
majority votes of: (a) the Fund's Board of Directors; and (b) the
members of the Board of the Corporation who are not interested persons
of the Corporation and have no direct or indirect financial interest in
the operation of the Corporation's Plan or in any related documents to
the Plan ("Disinterested Directors"), cast in person at a meeting called
for the purpose of voting on the Plan; and (ii) upon execution of an
exhibit adopting this Plan.
7. This Plan shall remain in effect with respect to each Class
presently set forth on an exhibit and any subsequent Classes added
pursuant to an exhibit during the initial year of this Plan for the
period of one year from the date set forth above and may be continued
thereafter if this Plan is approved with respect to each Class at least
annually by a majority of the Corporation's Board of Directors and a
majority of the Disinterested Directors, cast in person at a meeting
called for the purpose of voting on such Plan. If this Plan is adopted
with respect to a class after the first annual approval by the Directors
as described above, this Plan will be effective as to that Class upon
execution of the applicable exhibit pursuant to the provisions of
paragraph 6(ii) above and will continue in effect until the next annual
approval of this Plan by the Directors and thereafter for successive
periods of one year subject to approval as described above.
8. All material amendments to this Plan must be approved by a
vote of the Board of Directors of the Fund and of the Disinterested
Directors, cast in person at a meeting called for the purpose of voting
on it.
9. This Plan may be terminated at any time by: (a) a majority
vote of the Disinterested Directors; or (b) a vote of a majority of the
outstanding voting securities of the Fund as defined in Section 2(a)(42)
of the Act.
10. While this Plan shall be in effect, the selection and
nomination of Disinterested Directors of the Fund shall be committed to
the discretion of the Disinterested Directors then in office.
11. All agreements with any person relating to the
implementation of this Plan shall be in writing and any agreement
related to this Plan shall be subject to termination, without penalty,
pursuant to the provisions of Paragraph 9 herein.
12. This Plan shall be construed in accordance with and governed
by the laws of the Commonwealth of Pennsylvania.
Witness the due execution hereof this 1st day of March, 1993.
AMERICAN LEADERS FUND, INC.
By:/s/ J. Christopher Donahue
Vice President
EXHIBIT A
to the
Shareholder Services Plan
American Leaders Fund, Inc.
Class A Shares
This Plan is adopted by American Leaders Fund, Inc. with respect
to the Class of Shares of the Corporation set forth above.
In compensation for the services provided pursuant to this Plan,
Providers will be paid a monthly fee computed at the annual rate of .25
of 1% of the average aggregate net asset value of the Class A Shares of
the Corporation held during the month.
Witness the due execution hereof this 1st day of March, 1993.
AMERICAN LEADERS FUND, INC.
By:/s/ J. Christopher Donahue
Vice President
EXHIBIT B
to the
Shareholder Services Plan
American Leaders Fund, Inc.
Class C Shares
This Plan is adopted by American Leaders Fund, Inc. with respect
to the Class of Shares of the Corporation set forth above.
In compensation for the services provided pursuant to this Plan,
Providers will be paid a monthly fee computed at the annual rate of .25
of 1% of the average aggregate net asset value of the Class C Shares of
the Corporation held during the month.
Witness the due execution hereof this 4th day of May, 1993.
AMERICAN LEADERS FUND, INC.
By:/s/ J. Christopher Donahue
Vice President
EXHIBIT C
to the
Shareholder Services Plan
American Leaders Fund, Inc.
Fortress Shares
This Plan is adopted by American Leaders Fund, Inc. with respect
to the Class of Shares of the Corporation set forth above.
In compensation for the services provided pursuant to this Plan,
Providers will be paid a monthly fee computed at the annual rate of .25
of 1% of the average aggregate net asset value of the Fortress Shares of
the Corporation held during the month.
Witness the due execution hereof this 1st day of June, 1993.
AMERICAN LEADERS FUND, INC.
By:/s/ J. Christopher Donahue
Vice President
Exhibit 9 (ii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
AGREEMENT
for
FUND ACCOUNTING,
SHAREHOLDER RECORDKEEPING,
and
CUSTODY SERVICES PROCUREMENT
AGREEMENT made as of the 1st day of December, 1993, by and between those
investment companies listed on Exhibit 1 as may be amended from time to time,
having their principal office and place of business at Federated Investors
Tower, Pittsburgh, PA 15222-3779 (the "Trust"), on behalf of the portfolios
(individually referred to herein as a "Fund" and collectively as "Funds") of
the Trust, and FEDERATED SERVICES COMPANY, a Delaware business trust, having
its principal office and place of business at Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779 (the "Company").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
with authorized and issued shares of capital stock or beneficial interest
("Shares"); and
WHEREAS, the Trust wishes to retain the Company to provide certain pricing,
accounting and recordkeeping services for each of the Funds, including any
classes of shares issued by any Fund ("Classes"), and the Company is willing
to furnish such services; and
WHEREAS, the Trust desires to appoint the Company as its transfer agent,
dividend disbursing agent, and agent in connection with certain other
activities, and the Company desires to accept such appointment; and
WHEREAS, the Trust desires to appoint the Company as its agent to select,
negotiate and subcontract for custodian services from an approved list of
qualified banks and the Company desires to accept such appointment; and
WHEREAS, from time to time the Trust may desire and may instruct the
Company to subcontract for the performance of certain of its duties and
responsibilities hereunder to State Street Bank and Trust Company or another
agent (the "Agent"); and
WHEREAS, the words Trust and Fund may be used interchangeably for those
investment companies consisting of only one portfolio;
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, and intending to be legally bound hereby, the parties hereto agree
as follows:
SECTION ONE: Fund Accounting.
Article 1. Appointment.
The Trust hereby appoints the Company to provide certain pricing and
accounting services to the Funds, and/or the Classes, for the period and on
the terms set forth in this Agreement. The Company accepts such appointment
and agrees to furnish the services herein set forth in return for the
compensation as provided in Article 3 of this Section.
Article 2. The Company and Duties.
Subject to the supervision and control of the Trust's Board of Trustees or
Directors ("Board"), the Company will assist the Trust with regard to fund
accounting for the Trust, and/or the Funds, and/or the Classes, and in
connection therewith undertakes to perform the following specific services;
A. Value the assets of the Funds and determine the net asset value per
share of each Fund and/or Class, at the time and in the manner from
time to time determined by the Board and as set forth in the
Prospectus and Statement of Additional Information ("Prospectus") of
each Fund;
B. Calculate the net income of each of the Funds, if any;
C. Calculate capital gains or losses of each of the Funds resulting from
sale or disposition of assets, if any;
D. Maintain the general ledger and other accounts, books and financial
records of the Trust, including for each Fund, and/or Class, as
required under Section 31(a) of the 1940 Act and the Rules thereunder
in connection with the services provided by the Company;
E. Preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records to be maintained by Rule 31a-1 under the 1940 Act in
connection with the services provided by the Company. The Company
further agrees that all such records it maintains for the Trust are
the property of the Trust and further agrees to surrender promptly to
the Trust such records upon the Trust's request;
F. At the request of the Trust, prepare various reports or other financial
documents required by federal, state and other applicable laws and
regulations; and
G. Such other similar services as may be reasonably requested by the
Trust.
Article 3. Compensation and Allocation of Expenses.
A. The Funds will compensate the Company for its services rendered
pursuant to Section One of this Agreement in accordance with the fees
set forth on Fee Schedules A ("A1, A2, A3 etc..."), annexed hereto and
incorporated herein, as may be added or amended from time to time.
Such fees do not include out-of-pocket disbursements of the Company
for which the Funds shall reimburse the Company upon receipt of a
separate invoice. Out-of-pocket disbursements shall include, but
shall not be limited to, the items specified in Schedules B ("B1, B2,
B3, etc..."), annexed hereto and incorporated herein, as may be added
or amended from time to time. Schedules B may be modified by the
Company upon not less than thirty days' prior written notice to the
Trust.
B. The Fund and/or the Class, and not the Company, shall bear the cost of:
custodial expenses; membership dues in the Investment Company
Institute or any similar organization; transfer agency expenses;
investment advisory expenses; costs of printing and mailing stock
certificates, Prospectuses, reports and notices; administrative
expenses; interest on borrowed money; brokerage commissions; taxes and
fees payable to federal, state and other governmental agencies; fees
of Trustees or Directors of the Trust; independent auditors expenses;
Federated Administrative Services and/or Federated Administrative
Services, Inc. legal and audit department expenses billed to Federated
Services Company for work performed related to the Trust, the Funds,
or the Classes; law firm expenses; or other expenses not specified in
this Article 3 which may be properly payable by the Funds and/or
classes.
C. The Company will send an invoice to each of the Funds as soon as
practicable after the end of each month. Each invoice will provide
detailed information about the compensation and out-of-pocket expenses
in accordance with Schedules A and Schedules B. The Funds and or the
Classes will pay to the Company the amount of such invoice within 30
days of receipt of the invoices.
D. Any compensation agreed to hereunder may be adjusted from time to time
by attaching to Schedules A revised Schedules dated and signed by a
duly authorized officer of the Trust and/or the Funds and a duly
authorized officer of the Company.
E. The fee for the period from the effective date of this Agreement with
respect to a Fund or a Class to the end of the initial month shall be
prorated according to the proportion that such period bears to the
full month period. Upon any termination of this Agreement before the
end of any month, the fee for such period shall be prorated according
to the proportion which such period bears to the full month period.
For purposes of determining fees payable to the Company, the value of
the Fund's net assets shall be computed at the time and in the manner
specified in the Fund's Prospectus.
F. The Company, in its sole discretion, may from time to time subcontract
to, employ or associate with itself such person or persons as the
Company may believe to be particularly suited to assist it in
performing services under this Section One. Such person or persons
may be third-party service providers, or they may be officers and
employees who are employed by both the Company and the Funds. The
compensation of such person or persons shall be paid by the Company
and no obligation shall be incurred on behalf of the Trust, the Funds,
or the Classes in such respect.
SECTION TWO: Shareholder Recordkeeping.
Article 4. Terms of Appointment.
Subject to the terms and conditions set forth in this Agreement, the Trust
hereby appoints the Company to act as, and the Company agrees to act as,
transfer agent and dividend disbursing agent for each Fund's Shares, and agent
in connection with any accumulation, open-account or similar plans provided to
the shareholders of any Fund ("Shareholder(s)"), including without limitation
any periodic investment plan or periodic withdrawal program.
As used throughout this Agreement, a "Proper Instruction" means a writing
signed or initialed by one or more person or persons as the Board shall have
from time to time authorized. Each such writing shall set forth the specific
transaction or type of transaction involved. Oral instructions will be deemed
to be Proper Instructions if (a) the Company reasonably believes them to have
been given by a person previously authorized in Proper Instructions to give
such instructions with respect to the transaction involved, and (b) the Trust,
or the Fund, and the Company promptly cause such oral instructions to be
confirmed in writing. Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices provided that the
Trust, or the Fund, and the Company are satisfied that such procedures afford
adequate safeguards for the Fund's assets. Proper Instructions may only be
amended in writing.
Article 5. Duties of the Company.
The Company shall perform the following services in accordance with Proper
Instructions as may be provided from time to time by the Trust as to any Fund:
A. Purchases
(1) The Company shall receive orders and payment for the purchase of
shares and promptly deliver payment and appropriate
documentation therefore to the custodian of the relevant Fund,
(the "Custodian"). The Company shall notify the Fund and the
Custodian on a daily basis of the total amount of orders and
payments so delivered.
(2) Pursuant to purchase orders and in accordance with the Fund's
current Prospectus, the Company shall compute and issue the
appropriate number of Shares of each Fund and/or Class and hold
such Shares in the appropriate Shareholder accounts.
(3) For certificated Funds and/or Classes, if a Shareholder or its
agent requests a certificate, the Company, as Transfer Agent,
shall countersign and mail by first class mail, a certificate to
the Shareholder at its address as set forth on the transfer
books of the Funds, and/or Classes, subject to any Proper
Instructions regarding the delivery of certificates.
(4) In the event that any check or other order for the purchase of
Shares of the Fund and/or Class is returned unpaid for any
reason, the Company shall debit the Share account of the
Shareholder by the number of Shares that had been credited to
its account upon receipt of the check or other order, promptly
mail a debit advice to the Shareholder, and notify the Fund
and/or Class of its action. In the event that the amount paid
for such Shares exceeds proceeds of the redemption of such
Shares plus the amount of any dividends paid with respect to
such Shares, the Fund and/the Class or its distributor will
reimburse the Company on the amount of such excess.
B. Distribution
(1) Upon notification by the Funds of the declaration of any
distribution to Shareholders, the Company shall act as Dividend
Disbursing Agent for the Funds in accordance with the provisions
of its governing document and the then-current Prospectus of the
Fund. The Company shall prepare and mail or credit income,
capital gain, or any other payments to Shareholders. As the
Dividend Disbursing Agent, the Company shall, on or before the
payment date of any such distribution, notify the Custodian of
the estimated amount required to pay any portion of said
distribution which is payable in cash and request the Custodian
to make available sufficient funds for the cash amount to be
paid out. The Company shall reconcile the amounts so requested
and the amounts actually received with the Custodian on a daily
basis. If a Shareholder is entitled to receive additional
Shares by virtue of any such distribution or dividend,
appropriate credits shall be made to the Shareholder's account,
for certificated Funds and/or Classes, delivered where
requested; and
(2) The Company shall maintain records of account for each Fund and
Class and advise the Trust, each Fund and Class and its
Shareholders as to the foregoing.
C. Redemptions and Transfers
(1) The Company shall receive redemption requests and redemption
directions and, if such redemption requests comply with the
procedures as may be described in the Fund Prospectus or set
forth in Proper Instructions, deliver the appropriate
instructions therefor to the Custodian. The Company shall
notify the Funds on a daily basis of the total amount of
redemption requests processed and monies paid to the Company by
the Custodian for redemptions.
(2) At the appropriate time upon receiving redemption proceeds from
the Custodian with respect to any redemption, the Company shall
pay or cause to be paid the redemption proceeds in the manner
instructed by the redeeming Shareholders, pursuant to procedures
described in the then-current Prospectus of the Fund.
(3) If any certificate returned for redemption or other request for
redemption does not comply with the procedures for redemption
approved by the Fund, the Company shall promptly notify the
Shareholder of such fact, together with the reason therefor, and
shall effect such redemption at the price applicable to the date
and time of receipt of documents complying with said procedures.
(4) The Company shall effect transfers of Shares by the registered
owners thereof.
(5) The Company shall identify and process abandoned accounts and
uncashed checks for state escheat requirements on an annual
basis and report such actions to the Fund.
D. Recordkeeping
(1) The Company shall record the issuance of Shares of each Fund,
and/or Class, and maintain pursuant to applicable rules of the
Securities and Exchange Commission ("SEC") a record of the total
number of Shares of the Fund and/or Class which are authorized,
based upon data provided to it by the Fund, and issued and
outstanding. The Company shall also provide the Fund on a
regular basis or upon reasonable request with the total number
of Shares which are authorized and issued and outstanding, but
shall have no obligation when recording the issuance of Shares,
except as otherwise set forth herein, to monitor the issuance of
such Shares or to take cognizance of any laws relating to the
issue or sale of such Shares, which functions shall be the sole
responsibility of the Funds.
(2) The Company shall establish and maintain records pursuant to
applicable rules of the SEC relating to the services to be
performed hereunder in the form and manner as agreed to by the
Trust or the Fund to include a record for each Shareholder's
account of the following:
(a) Name, address and tax identification number (and whether
such number has been certified);
(b) Number of Shares held;
(c) Historical information regarding the account, including
dividends paid and date and price for all transactions;
(d) Any stop or restraining order placed against the account;
(e) Information with respect to withholding in the case of a
foreign account or an account for which withholding is
required by the Internal Revenue Code;
(f) Any dividend reinvestment order, plan application, dividend
address and correspondence relating to the current
maintenance of the account;
(g) Certificate numbers and denominations for any Shareholder
holding certificates;
(h) Any information required in order for the Company to
perform the calculations contemplated or required by this
Agreement.
(3) The Company shall preserve any such records required to be
maintained pursuant to the rules of the SEC for the periods
prescribed in said rules as specifically noted below. Such
record retention shall be at the expense of the Company, and
such records may be inspected by the Fund at reasonable times.
The Company may, at its option at any time, and shall forthwith
upon the Fund's demand, turn over to the Fund and cease to
retain in the Company's files, records and documents created and
maintained by the Company pursuant to this Agreement, which are
no longer needed by the Company in performance of its services
or for its protection. If not so turned over to the Fund, such
records and documents will be retained by the Company for six
years from the year of creation, during the first two of which
such documents will be in readily accessible form. At the end
of the six year period, such records and documents will either
be turned over to the Fund or destroyed in accordance with
Proper Instructions.
E. Confirmations/Reports
(1) The Company shall furnish to the Fund periodically the following
information:
(a) A copy of the transaction register;
(b) Dividend and reinvestment blotters;
(c) The total number of Shares issued and outstanding in each
state for "blue sky" purposes as determined according to
Proper Instructions delivered from time to time by the
Fund to the Company;
(d) Shareholder lists and statistical information;
(e) Payments to third parties relating to distribution
agreements, allocations of sales loads, redemption fees,
or other transaction- or sales-related payments;
(f) Such other information as may be agreed upon from time to
time.
(2) The Company shall prepare in the appropriate form, file with the
Internal Revenue Service and appropriate state agencies, and, if
required, mail to Shareholders, such notices for reporting
dividends and distributions paid as are required to be so filed
and mailed and shall withhold such sums as are required to be
withheld under applicable federal and state income tax laws,
rules and regulations.
(3) In addition to and not in lieu of the services set forth above,
the Company shall:
(a) Perform all of the customary services of a transfer agent,
dividend disbursing agent and, as relevant, agent in
connection with accumulation, open-account or similar
plans (including without limitation any periodic
investment plan or periodic withdrawal program), including
but not limited to: maintaining all Shareholder accounts,
mailing Shareholder reports and Prospectuses to current
Shareholders, withholding taxes on accounts subject to
back-up or other withholding (including non-resident alien
accounts), preparing and filing reports on U.S. Treasury
Department Form 1099 and other appropriate forms required
with respect to dividends and distributions by federal
authorities for all Shareholders, preparing and mailing
confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares
and other confirmable transactions in Shareholder
accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account
information; and
(b) provide a system which will enable the Fund to monitor the
total number of Shares of each Fund and/or Class sold in
each state ("blue sky reporting"). The Fund shall by
Proper Instructions (i) identify to the Company those
transactions and assets to be treated as exempt from the
blue sky reporting for each state and (ii) verify the
classification of transactions for each state on the
system prior to activation and thereafter monitor the
daily activity for each state. The responsibility of the
Company for each Fund's and/or Class's state blue sky
registration status is limited solely to the recording of
the initial classification of transactions or accounts
with regard to blue sky compliance and the reporting of
such transactions and accounts to the Fund as provided
above.
F. Other Duties
(1) The Company shall answer correspondence from Shareholders
relating to their Share accounts and such other correspondence
as may from time to time be addressed to the Company;
(2) The Company shall prepare Shareholder meeting lists, mail proxy
cards and other material supplied to it by the Fund in
connection with Shareholder Meetings of each Fund; receive,
examine and tabulate returned proxies, and certify the vote of
the Shareholders;
(3) The Company shall establish and maintain facilities and
procedures for safekeeping of stock certificates, check forms
and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such
certificates, forms and devices.
Article 6. Duties of the Trust.
A. Compliance
The Trust or Fund assume full responsibility for the preparation,
contents and distribution of their own and/or their classes'
Prospectus and for complying with all applicable requirements of the
Securities Act of 1933, as amended (the "1933 Act"), the 1940 Act and
any laws, rules and regulations of government authorities having
jurisdiction.
B. Share Certificates
The Trust shall supply the Company with a sufficient supply of blank
Share certificates and from time to time shall renew such supply upon
request of the Company. Such blank Share certificates shall be
properly signed, manually or by facsimile, if authorized by the Trust
and shall bear the seal of the Trust or facsimile thereof; and
notwithstanding the death, resignation or removal of any officer of
the Trust authorized to sign certificates, the Company may continue to
countersign certificates which bear the manual or facsimile signature
of such officer until otherwise directed by the Trust.
C. Distributions
The Fund shall promptly inform the Company of the declaration of any
dividend or distribution on account of any Fund's shares.
Article 7. Compensation and Expenses.
A. Annual Fee
For performance by the Company pursuant to Section Two of this
Agreement, the Trust and/or the Fund agree to pay the Company an
annual maintenance fee for each Shareholder account as set out in
Schedules C ("C1, C2, C3 etc..."), attached hereto, as may be added or
amended from time to time. Such fees may be changed from time to time
subject to written agreement between the Trust and the Company.
Pursuant to information in the Fund Prospectus or other information or
instructions from the Fund, the Company may sub-divide any Fund into
Classes or other sub-components for recordkeeping purposes. The
Company will charge the Fund the fees set forth on Schedule C for each
such Class or sub-component the same as if each were a Fund.
B. Reimbursements
In addition to the fee paid under Article 7A above, the Trust and/or
Fund agree to reimburse the Company for out-of-pocket expenses or
advances incurred by the Company for the items set out in Schedules D
("D1, D2, D3 etc..."), attached hereto, as may be added or amended
from time to time. In addition, any other expenses incurred by the
Company at the request or with the consent of the Trust and/or the
Fund, will be reimbursed by the appropriate Fund.
C. Payment
The Company shall send an invoice with respect to fees and
reimbursable expenses to the Trust or each of the Funds as soon as
practicable at the end of each month. Each invoice will provide
detailed information about the Compensation and out-of-pocket expenses
in accordance with Schedules C and Schedules D. The Trust or the
Funds will pay to the Company the amount of such invoice within 30
days following the receipt of the invoices.
Article 8. Assignment of Shareholder Recordkeeping.
Except as provided below, no right or obligation under this Section
Two may be assigned by either party without the written consent of the
other party.
(1) This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and
assigns.
(2) The Company may without further consent on the part of the Trust
subcontract for the performance hereof with (A) State Street
Bank and its subsidiary, Boston Financial Data Services, Inc., a
Massachusetts Trust ("BFDS"), which is duly registered as a
transfer agent pursuant to Section 17A(c)(1) of the Securities
Exchange Act of 1934, as amended, or any succeeding statute
("Section 17A(c)(1)"), or (B) a BFDS subsidiary duly registered
as a transfer agent pursuant to Section 17A(c)(1), or (C) a BFDS
affiliate, or (D) such other provider of services duly
registered as a transfer agent under Section 17A(c)(1) as
Company shall select; provided, however, that the Company shall
be as fully responsible to the Trust for the acts and omissions
of any subcontractor as it is for its own acts and omissions; or
(3) The Company shall upon instruction from the Trust subcontract for
the performance hereof with an Agent selected by the Trust,
other than BFDS or a provider of services selected by Company,
as described in (2) above; provided, however, that the Company
shall in no way be responsible to the Trust for the acts and
omissions of the Agent.
SECTION THREE: Custody Services Procurement
Article 9. Appointment.
The Trust hereby appoints Company as its agent to evaluate and obtain
custody services from a financial institution that (i) meets the
criteria established in Section 17(f) of the 1940 Act and (ii) has
been approved by the Board as eligible for selection by the Company as
a custodian (the "Eligible Custodian"). The Company accepts such
appointment.
Article 10. The Company and Its Duties.
Subject to the review, supervision and control of the Board, the
Company shall:
(1) evaluate the nature and the quality of the custodial services
provided by the Eligible Custodian;
(2) employ the Eligible Custodian to serve on behalf of the Trust as
Custodian of the Trust's assets substantially on the terms set
forth as the form of agreement in Exhibit 2;
(3) negotiate and enter into agreements with the Custodians for the
benefit of the Trust, with the Trust as a party to each such
agreement. The Company shall not be a party to any agreement
with any such Custodian;
(4) establish procedures to monitor the nature and the quality of the
services provided by the Custodians;
(5) continuously monitor the nature and the quality of services
provided by the Custodians; and
(6) periodically provide to the Trust (i) written reports on the
activities and services of the Custodians; (ii) the nature and
amount of disbursement made on account of the Trust with respect
to each custodial agreement; and (iii) such other information as
the Board shall reasonably request to enable it to fulfill its
duties and obligations under Sections 17(f) and 36(b) of the
1940 Act and other duties and obligations thereof.
Article 11. Fees and Expenses.
A. Annual Fee
For the performance by the Company pursuant to Section Three of this
Agreement, the Trust and/or the Fund agree to pay the Company an
annual fee as set forth in Schedule E, attached hereto.
B. Payment
The Company shall send an invoice with respect to fees and
reimbursable expenses to each of the Trust/or Fund as soon as
practicable at the end of each month. Each invoice will provide
detailed information about the Compensation and out-of-pocket expenses
in occurrence with Schedule E. The Trust and/or Fund will pay to the
Company the amount of such invoice within 30 days following the
receipt of the invoice.
Article 12. Representations.
The Company represents and warrants that it has obtained all required
approvals from all government or regulatory authorities necessary to
enter into this arrangement and to provide the services contemplated
in Section Three of this Agreement.
SECTION FOUR: General Provisions.
Article 13. Documents.
A. In connection with the appointment of the Company under this Agreement,
the Trust shall file with the Company the following documents:
(1) A copy of the Charter and By-Laws of the Trust and all amendments
thereto;
(2) A copy of the resolution of the Board of the Trust authorizing
this Agreement;
(3) Specimens of all forms of outstanding Share certificates of the
Trust or the Funds in the forms approved by the Board of the
Trust with a certificate of the Secretary of the Trust as to
such approval;
(4) All account application forms and other documents relating to
Shareholders accounts; and
(5) A copy of the current Prospectus for each Fund.
B. The Fund will also furnish from time to time the following documents:
(1) Each resolution of the Board of the Trust authorizing the
original issuance of each Fund's, and/or Class's Shares;
(2) Each Registration Statement filed with the SEC and amendments
thereof and orders relating thereto in effect with respect to
the sale of Shares of any Fund, and/or Class;
(3) A certified copy of each amendment to the governing document and
the By-Laws of the Trust;
(4) Certified copies of each vote of the Board authorizing officers
to give Proper Instructions to the Custodian and agents for fund
accountant, custody services procurement, and shareholder
recordkeeping or transfer agency services;
(5) Specimens of all new Share certificates representing Shares of
any Fund, accompanied by Board resolutions approving such forms;
(6) Such other certificates, documents or opinions which the Company
may, in its discretion, deem necessary or appropriate in the
proper performance of its duties; and
(7) Revisions to the Prospectus of each Fund.
Article 14. Representations and Warranties.
A. Representations and Warranties of the Company
The Company represents and warrants to the Trust that:
(1) It is a business trust duly organized and existing and in good
standing under the laws of the State of Delaware.
(2) It is duly qualified to carry on its business in the State of
Delaware.
(3) It is empowered under applicable laws and by its charter and by-
laws to enter into and perform this Agreement.
(4) All requisite corporate proceedings have been taken to authorize
it to enter into and perform its obligations under this
Agreement.
(5) It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
(6) It is in compliance with federal securities law requirements and
in good standing as a transfer agent.
B. Representations and Warranties of the Trust
The Trust represents and warrants to the Company that:
(1) It is an investment company duly organized and existing and in
good standing under the laws of its state of organization;
(2) It is empowered under applicable laws and by its Charter and By-
Laws to enter into and perform its obligations under this
Agreement;
(3) All corporate proceedings required by said Charter and By-Laws
have been taken to authorize it to enter into and perform its
obligations under this Agreement;
(4) The Trust is an open-end investment company registered under the
1940 Act; and
(5) A registration statement under the 1933 Act will be effective,
and appropriate state securities law filings have been made and
will continue to be made, with respect to all Shares of each
Fund being offered for sale.
Article 15. Indemnification.
A. Indemnification by Trust
The Company shall not be responsible for and the Trust or Fund shall
indemnify and hold the Company, including its officers, directors,
shareholders and their agents employees and affiliates, harmless
against any and all losses, damages, costs, charges, counsel fees,
payments, expenses and liabilities arising out of or attributable to:
(1) The acts or omissions of any Custodian,
(2) The Trust's or Fund's refusal or failure to comply with the terms
of this Agreement, or which arise out of the Trust's or The
Fund's lack of good faith, negligence or willful misconduct or
which arise out of the breach of any representation or warranty
of the Trust or Fund hereunder or otherwise.
(3) The reliance on or use by the Company or its agents or
subcontractors of information, records and documents in proper
form which
(a) are received by the Company or its agents or subcontractors
and furnished to it by or on behalf of the Fund, its
Shareholders or investors regarding the purchase,
redemption or transfer of Shares and Shareholder account
information; or
(b) have been prepared and/or maintained by the Fund or its
affiliates or any other person or firm on behalf of the
Trust.
(4) The reliance on, or the carrying out by the Company or its agents
or subcontractors of Proper Instructions of the Trust or the
Fund.
(5) The offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations or the securities
laws or regulations of any state that such Shares be registered
in such state or in violation of any stop order or other
determination or ruling by any federal agency or any state with
respect to the offer or sale of such Shares in such state.
Provided, however, that the Company shall not be protected by
this Article 15.A. from liability for any act or omission
resulting from the Company's willful misfeasance, bad faith,
gross negligence or reckless disregard of its duties.
B. Indemnification by the Company
The Company shall indemnify and hold the Trust or each Fund harmless
from and against any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liabilities arising out of or
attributable to any action or failure or omission to act by the
Company as a result of the Company's willful misfeasance, bad faith,
gross negligence or reckless disregard of its duties.
C. Reliance
At any time the Company may apply to any officer of the Trust or Fund
for instructions, and may consult with legal counsel with respect to
any matter arising in connection with the services to be performed by
the Company under this Agreement, and the Company and its agents or
subcontractors shall not be liable and shall be indemnified by the
Trust or the appropriate Fund for any action reasonably taken or
omitted by it in reliance upon such instructions or upon the opinion
of such counsel provided such action is not in violation of applicable
federal or state laws or regulations. The Company, its agents and
subcontractors shall be protected and indemnified in recognizing stock
certificates which are reasonably believed to bear the proper manual
or facsimile signatures of the officers of the Trust or the Fund, and
the proper countersignature of any former transfer agent or registrar,
or of a co-transfer agent or co-registrar.
D. Notification
In order that the indemnification provisions contained in this
Article 15 shall apply, upon the assertion of a claim for which either
party may be required to indemnify the other, the party seeking
indemnification shall promptly notify the other party of such
assertion, and shall keep the other party advised with respect to all
developments concerning such claim. The party who may be required to
indemnify shall have the option to participate with the party seeking
indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any
compromise in any case in which the other party may be required to
indemnify it except with the other party's prior written consent.
Article 16. Termination of Agreement.
This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other. Should the Trust
exercise its rights to terminate, all out-of-pocket expenses
associated with the movement of records and materials will be borne by
the Trust or the appropriate Fund. Additionally, the Company reserves
the right to charge for any other reasonable expenses associated with
such termination. The provisions of Article 15 shall survive the
termination of this Agreement.
Article 17. Amendment.
This Agreement may be amended or modified by a written agreement
executed by both parties.
Article 18. Interpretive and Additional Provisions.
In connection with the operation of this Agreement, the Company and
the Trust may from time to time agree on such provisions interpretive
of or in addition to the provisions of this Agreement as may in their
joint opinion be consistent with the general tenor of this Agreement.
Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, provided that no
such interpretive or additional provisions shall contravene any
applicable federal or state regulations or any provision of the
Charter. No interpretive or additional provisions made as provided in
the preceding sentence shall be deemed to be an amendment of this
Agreement.
Article 19. Governing Law.
This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth
of Massachusetts
Article 20. Notices.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Trust at Federated
Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to the
Company at Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-
3779, or to such other address as the Trust or the Company may
hereafter specify, shall be deemed to have been properly delivered or
given hereunder to the respective address.
Article 21. Counterparts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
Article 22. Limitations of Liability of Trustees and Shareholders of
the Trust.
The execution and delivery of this Agreement have been authorized by
the Trustees of the Trust and signed by an authorized officer of the
Trust, acting as such, and neither such authorization by such Trustees
nor such execution and delivery by such officer shall be deemed to
have been made by any of them individually or to impose any liability
on any of them personally, and the obligations of this Agreement are
not binding upon any of the Trustees or Shareholders of the Trust, but
bind only the appropriate property of the Fund, or Class, as provided
in the Declaration of Trust.
Article 23. Limitations of Liability of Trustees and Shareholders of
the Company.
The execution and delivery of this Agreement have been authorized by
the Trustees of the Company and signed by an authorized officer of the
Company, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be
deemed to have been made by any of them individually or to impose any
liability on any of them personally, and the obligations of this
Agreement are not binding upon any of the Trustees or Shareholders of
the Company, but bind only the property of the Company as provided in
the Declaration of Trust.
Article 24. Assignment.
This Agreement and the rights and duties hereunder shall not be
assignable with respect to the Trust or the Funds by either of the
parties hereto except by the specific written consent of the other
party.
Article 25. Merger of Agreement.
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject
hereof whether oral or written.
Article 26. Successor Agent.
If a successor agent for the Trust shall be appointed by the Trust,
the Company shall upon termination of this Agreement deliver to such
successor agent at the office of the Company all properties of the
Trust held by it hereunder. If no such successor agent shall be
appointed, the Company shall at its office upon receipt of Proper
Instructions deliver such properties in accordance with such
instructions.
In the event that no written order designating a successor agent or
Proper Instructions shall have been delivered to the Company on or
before the date when such termination shall become effective, then the
Company shall have the right to deliver to a bank or trust company,
which is a "bank" as defined in the 1940 Act, of its own selection,
having an aggregate capital, surplus, and undivided profits, as shown
by its last published report, of not less than $2,000,000, all
properties held by the Company under this Agreement. Thereafter, such
bank or trust company shall be the successor of the Company under this
Agreement.
Article 27. Force Majeure.
The Company shall have no liability for cessation of services
hereunder or any damages resulting therefrom to the Fund as a result
of work stoppage, power or other mechanical failure, natural disaster,
governmental action, communication disruption or other impossibility
of performance.
Article 28. Assignment; Successors.
This Agreement shall not be assigned by either party without the prior
written consent of the other party, except that either party may
assign to a successor all of or a substantial portion of its business,
or to a party controlling, controlled by, or under common control with
such party. Nothing in this Article 28 shall prevent the Company from
delegating its responsibilities to another entity to the extent
provided herein.
Article 29. Severability.
In the event any provision of this Agreement is held illegal, void or
unenforceable, the balance shall remain in effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
ATTEST: INVESTMENT COMPANIES (listed on Exhibit 1)
/s/ John W. McGonigle By: /s/ John F. Donahue
John W. McGonigle John F. Donahue
Secretary Chairman
ATTEST: FEDERATED SERVICES COMPANY
/s/ Jeannette Fisher-Garber By: /s/ James J. Dolan
Jeannette Fisher-Garber James J. Dolan
Secretary President
Schedule A
Fund Accounting
Fee Schedule
I. Portfolio Record Keeping/Fund Accounting Services
Maintain investment ledgers, provide selected portfolio transactions, position
and income reports. Maintain general ledger and capital stock accounts.
Prepare daily trial balance. Provide selected general ledger reports.
Calculate net asset value daily. Securities yield or market value quotations
will be provided to State Street by the fund or via State Street Bank
automated pricing services.
ANNUAL FEES
ASSET
First $250 Million 2.0 Basis Points
Next $250 Million 1.5 Basis Points
Next $250 Million 1.0 Basis Point
Excess .5 Basis Point
Minimum fee per year $39,000
Additional class of shares per year $12,000
II. Special Services
Fees for activities of a non-recurring nature such as fund consolidation or
reorganization, extraordinary security shipments and the preparation of
special reports will be subject to negotiation.
III. Term of the Contract
The parties agree that this fee schedule shall become effective June 1, 1993
and will remain in effect until it is revised as a result of negotiations
initiated by either party.
Schedule A1
Fund Accounting
Fee Schedule
Annual
First $100 Million 3.0 Basis Points
$100 Million - $300 Million 2.0 Basis Points
$300 Million - $500 Million 1.0 Basis Points
Over $500 Million 0.5 Basis Points
Fund Minimum $39,000
Additional Class of Shares $12,000
(Plus pricing charges and other out-of-pocket expenses)
Schedule B
Out-of-Pocket Expenses
Fund Accounting
Out-of-pocket expenses include, but are not limited to, the
following:
- Postage (including overnight courier service)
- Statement Stock
- Envelopes
- Telephones
- Telecommunication Charges (including FAX)
- Travel
- Duplicating
- Forms
- Supplies
- Microfiche
- Computer Access Charges
- Client Specific System Enhancements
- Access to the Shareholder Recordkeeping System
- Security Pricing Services
- Variable Rate Change Notification Services
- Paydown Factor Notification Services
Schedule C
- Federated Funds -
Fees and Expenses
Shareholder Recordkeeping
I. Annual Maintenance Charge
The annual maintenance charge includes the processing of all transactions
and correspondence. The fee is billable on a monthly basis at the rate of
1/12 of the annual fee. A charge is made for an account in the month that an
account opens or closes.
Basic Annual per Account Fee
The individual per account charges will be billed as follows:
- Money Market Fund/Daily Accrual $16.65
- Money Market Fund/Sweep Account $10.00
- Fluctuating NAV/Daily Accrual
Non FundServe $16.65
Non Networked FundServe $14.65
- CDSC/Declared Dividend
Non FundServe $13.75
Non Networked FundServe $11.75
Networking Levels 1, 2, and 4 $11.75
Networking Level 3 $9.00
- Declared Dividend
Non FundServe $8.75
Non Networked FundServe $6.75
Networked FundServe Levels 1, 2, 3, and 4 $6.75
Taxpayer Identification Processing (TIN)
The charge for TIN solicitation includes maintenance and certification and
complies to all known government regulations regarding TIN processing.
- Maintenance $.25 per item
- Certification $.10 per item
I. Annual Maintenance Charge (con't.)
Closed Account Fee $.10 per account
per month
(No fee assessed for $0 balance open accounts)
Minimum Charges
- The monthly maintenance charge for each fund will be the actual account
fees or $1000, whichever is greater.
- All funds will be subject to the minimum monthly fee of $1,000 except
that the minimum will be waived for the initial six months or until the
fund's net assets exceed $50,000,000, whichever occurs first.
- The "clone" funds will be subject to a monthly minimum fee of $600.
II. Out-of-Pocket Expenses
Out-of-pocket expenses include but are not limited to: postage, forms,
telephone, microfilm, microfiche, and expenses incurred at the specific
direction of the fund. Postage for mass mailings is due seven days in advance
of the mailing date.
III. Payment
Payment is due thirty days after the date of the invoice.
Schedule C1
- Bank Proprietary Funds -
Fees and Expenses
Shareholder Recordkeeping
I. Annual Maintenance Charge
The annual maintenance charge includes the processing of all transactions and
correspondence. The fee is billable on a monthly basis at the rate of 1/12 of
the annual fee. A charge is made for an account in the month that an account
opens or closes.
Basic Annual per Account Fee
The individual per account charges will be billed as follows:
- Money Market Fund/Daily Accrual $16.65
- Money Market Fund/Sweep Account $10.00
- Fluctuating NAV/Daily Accrual
- Non FundServe $16.65
- Non Networked FundServe $14.65
- CDSC/Declared Dividend
- Non FundServe $13.75
- Non Networked FundServe $11.75
- Networking Levels 1, 2, and 4 $11.75
- Networking Level 3 $9.00
- Declared Dividend
- Non FundServe $8.75
- Non Networked FundServe $6.75
- Networked FundServe Levels 1, 2, 3, and 4 $6.75
Taxpayer Identification Processing (TIN)
The charge for TIN solicitation includes maintenance and certification and
complies to all known government regulations regarding TIN processing.
- Maintenance $.25 per item
- Certification $.10 per item
I. Annual Maintenance Charge (con't.)
Closed Account Fee $.10 per account
per month
(No fee assessed for $0 balance open accounts)
Minimum Charges
- The monthly maintenance charge for each fund will be the actual account
fees or $2000, whichever is greater.
II. Out-of-Pocket Expenses
Out-of-pocket expenses include but are not limited to: postage, forms,
telephone, microfilm, microfiche, and expenses incurred at the specific
direction of the fund. Postage for mass mailings is due seven days in advance
of the mailing date.
III. Payment
Payment is due thirty days after the date of the invoice.
Schedule C2
- Bank Proprietary Funds -
Fees and Expenses
Shareholder Recordkeeping
I. Group I Services
Base Fee * (Annual fee per fund, class or other subdivision) $24,000
Account Fee* (Annual account charge)
(includes system access and funds control and reconcilement)
- Daily dividend fund $16.00
- Monthly dividend fund $10.00
- Quarterly dividend fund $10.00
- Contingent Deferred Sales Charge (Additionally) $5.00
(monthly and quarterly funds only)
- Closed Accounts* $1.20
Termination Fee (One time charge per fund, class or other subdivision) $20,000
II. Group II Services
Other Account Fees* (Annual account charge - Services or features not
covered above)
- Account Activity Processing $3.50
(includes account establishment, transaction and maintenance
processing)
- Account Servicing $4.50
(includes shareholder servicing and correspondence)
* All fees are annualized and will be prorated on a monthly basis for
billing purposes. Out-of-pocket expenses are not covered by these fees.
SCHEDULE D
Out-of-Pocket Expenses Schedule
- Postage (including overnight courier service)
- Statement Stock
- Envelopes
- Telecommunication Charges (including FAX)
- Travel
- Duplicating
- Forms
- Supplies
- Microfiche
- Computer Access Charges
- Client Specific Enhancements
- Disaster Recovery
SCHEDULE E
Fee Schedule
I. Custody Services
Maintain Custody of fund assets. Settle portfolio purchases and sales.
Report buy and sell fails. Determine and collect portfolio income.
Make cash disbursements and report cash transactions. Monitor corporate
actions.
ANNUAL FEES
ASSET
First $500 Million 1.0 Basis Point
Excess .5 Basis Point
Minimum fee per year $15,000
Wire Fees $2.70 per wire
Settlements:
. Each DTC Commercial Paper $9.00
. Each DTC Transaction $9.00
. Each Federal Reserve Book Entry Transaction (Repo) $4.50
. Each Repo with Banks Other than State Street Bank $7.50
. Each Physical Transaction (NY/Boston, Private Placement) $21.75
. Each Option Written/Exercised/Expired $18.75
. Each Stock Load Transaction $12.00
. Each Book Entry Muni (Sub-custody) Transaction $15.00
. Index Fund/ETD Cost + 15%
II. Out-Of-Pocket Expenses
Telephone
Postage & Insurance
Armored carrier costs
Legal fees
Supplies related to fund records
Processing validation certificates
Forms, envelopes, Xerox copies, supplies, etc.
III. Special Services
Fees for activities of a non-recurring nature such as fund consolidation
or reorganization, extraordinary security shipments and the preparation of
special reports will be subject to negotiation.
IV. Coupon Clipping
Monitoring for calls and processing for each monthly issue held
Monthly Charge $5.00
V. Balance Credit
A balance credit equal to 75% of the average balance in the custodian account
for the monthly billed times the 30-day T-Bill Rate on the last Monday of
the month billed will be applied against Section I through IV above.
VI. Term of the Contract
The parties agree that this fee schedule shall become effective June 1, 1993
and will remain in effect until it is revised as a result of negotiations
initiated by either party.
EXHIBIT 1
FA=Fund Accounting
SR=Shareholder Recordkeeping
CSP=Custody Services Procurement
CONTRACT SERVICES RELEVANT
DATE INVESTMENT COMPANY PROVIDED SCHEDULES
12/1/93 111 Corcoran Fund
12/1/93 111 Corcoran Bond Fund FA, SR A,B,C1
12/1/93 111 Corcoran North Carolina
Municipal Securities Fund FA, SR A,B,C1
12/13/93 Alexander Hamilton Funds
12/13/93 Alexander Hamilton Government
Income Fund FA,SR,CSP A,B,C2,D,E
12/13/93 Alexander Hamilton Equity Growth
and Income Fund FA,SR,CSP A,B,C2,D,E
12/13/94 Alexander Hamilton Municipal
Income Fund FA,SR,CSP A,B,C2,D,E
12/1/93 American Leaders Fund, Inc.
12/1/93 Class A Shares FA,SR,CSP A,B,C,E
12/1/93 Class C Shares FA,SR,CSP A,B,C,E
12/1/93 Fortress Shares FA,SR,CSP A,B,C,E
12/1/93 Automated Cash Management Trust FA,SR,CSP A,B,C,E
12/1/93 Automated Government Money Trust FA,SR,CSP A,B,C,E
01/07/94 Peachtree Funds (2/11/94
effective/formerly BankSouth Select Funds)
01/07/94 BankSouth Select Georgia Tax-Free
Income Fund FA,SR C2,D
01/07/94 BankSouth Select Government Money
Market Fund FA,SR C2,D
01/07/94 BankSouth Select Prime Money Market Fund FA,SR C2,D
01/07/94 BankSouth Select Bond Fund FA,SR C2,D
01/07/94 BankSouth Select Equity Fund FA,SR C2,D
12/1/93 BayFunds
12/1/93 BayFunds Money Market Portfolio
12/1/93 Investment Shares FA A1,B
12/1/93 Trust Shares FA A1,B
12/1/93 BayFunds Bond Portfolio
12/1/93 Investment Shares FA A1,B
12/1/93 Trust Shares FA A1,B
12/1/93 BayFunds Equity Portfolio
12/1/93 Investment Shares FA A1,B
12/1/93 Trust Shares FA A1,B
12/1/93 BayFunds Short-Term Yield Portfolio
12/1/93 Investment Shares FA A1,B
12/1/93 Trust Shares FA A1,B
12/1/93 BayFunds U.S. Treasury Money Market Portfolio
12/1/93 Investment Shares FA A1,B
12/1/93 Trust Shares FA A1,B
12/1/93 The Biltmore Funds
12/1/93 Biltmore Balanced Fund FA,SR A1,B,C2,D
12/1/93 Biltmore Equity Fund FA,SR A1,B,C2,D
12/1/93 Biltmore Fixed Income Fund FA,SR A1,B,C2,D
12/1/93 Biltmore Equity Index Fund FA,SR A1,B,C2,D
12/1/93 Biltmore Money Market Fund
12/1/93 Institutional Shares FA,SR A1,B,C2,D
12/1/93 Investment Shares FA,SR A1,B,C2,D
12/1/93 Biltmore Prime Cash Management Fund
12/1/93 Institutional Shares FA,SR A1,B,C2,D
12/1/93 Biltmore Quantitative Equity Fund FA,SR A1,B,C2,D
12/1/93 Biltmore Short-Term Fixed Income Fund FA,SR A1,B,C2,D
12/1/93 Biltmore Special Values Fund FA,SR A1,B,C2,D
12/1/93 Biltmore Tax-Free Money Market Fund
12/1/93 Institutional Shares FA,SR A1,B,C2,D
12/1/93 Investment Shares FA,SR A1,B,C2,D
12/1/93 Biltmore U.S. Treasury Money Market Fund
12/1/93 Institutional Shares FA,SR A1,B,C2,D
12/1/93 Investment Shares FA,SR A1,B,C2,D
12/1/93 The Biltmore Municipal Funds
12/1/93 South Carolina Municipal Bond Fund FA,SR A1,B,C2,D
12/1/93 The Boulevard Funds
12/1/93 Boulevard Blue Chip Growth Fund FA,SR A1,B,C1
12/1/93 Boulevard Managed Income Fund FA,SR A1,B,C1
12/1/93 Boulevard Managed Municipal Fund FA,SR A1,B,C1
12/1/93 Boulevard Strategic Balanced Fund FA,SR A1,B,C1
12/1/93 California Municipal Cash Trust FA,SR,CSP A,B,C,E
12/1/93 Cash Trust Series, Inc.
12/1/93 Government Cash Series FA,SR,CSP A,B,C,E
12/1/93 Municipal Cash Series FA,SR,CSP A,B,C,E
12/1/93 Prime Cash Series FA,SR,CSP A,B,C,E
12/1/93 Treasury Cash Series FA,SR,CSP A,B,C,E
12/1/93 Cash Trust Series II
12/1/93 Municipal Cash Series II FA,SR,CSP A,B,C,E
12/1/93 Treasury Cash Series II FA,SR,CSP A,B,C,E
12/1/93 DG Investor Series
12/1/93 DG Equity Fund FA,SR A1,B,C2,D
12/1/93 DG Government Income Fund FA,SR A1,B,C2,D
12/1/93 DG Limited Term Government Income Fund FA,SR A1,B,C2,D
12/1/93 DG Municipal Income Fund FA,SR A1,B,C2,D
12/1/93 DG U.S. Government Money Market Fund FA,SR A1,B,C2,D
12/1/93 Federated ARMs Fund
12/1/93 Institutional Service Shares FA,SR,CSP A,B,C,E
12/1/93 Institutional Shares FA,SR,CSP A,B,C,E
12/1/93 Federated Bond Fund FA,SR,CSP A,B,C,E
12/1/93 Federated Exchange Fund, Ltd. FA,SR,CSP A,B,C,E
12/1/93 Federated GNMA Trust
12/1/93 Institutional Service Shares FA,SR,CSP A,B,C,E
12/1/93 Institutional Shares FA,SR,CSP A,B,C,E
12/1/93 Federated Government Trust
12/1/93 Automated Government Cash Reserves FA,SR,CSP A,B,C,E
12/1/93 Automated Treasury Cash Reserves FA,SR,CSP A,B,C,E
12/1/93 U.S. Treasury Cash Reserves FA,SR,CSP A,B,C,E
12/1/93 Federated Growth Trust FA,SR,CSP A,B,C,E
12/1/93 Federated High Yield Trust FA,SR,CSP A,B,C,E
12/1/93 Federated Income Securities Trust
12/1/93 Federated Short-Term Income Fund
12/1/93 Institutional Service Shares FA,SR,CSP A,B,C,E
12/1/93 Institutional Shares FA,SR,CSP A,B,C,E
12/1/93 Intermediate Income Fund
12/1/93 Institutional Service Shares FA,SR,CSP A,B,C,E
12/1/93 Institutional Shares FA,SR,CSP A,B,C,E
12/1/93 Federated Income Trust
12/1/93 Institutional Service Shares FA,SR,CSP A,B,C,E
12/1/93 Institutional Shares FA,SR,CSP A,B,C,E
12/1/93 Federated Index Trust
12/1/93 Max-Cap Fund
12/1/93 Institutional Service Shares FA,SR,CSP A,B,C,E
12/1/93 Institutional Shares FA,SR,CSP A,B,C,E
12/1/93 Mid-Cap Fund FA,SR,CSP A,B,C,E
12/1/93 Mini-Cap Fund FA,SR,CSP A,B,C,E
12/1/93 Federated Intermediate Government Trust
12/1/93 Institutional Service Shares FA,SR,CSP A,B,C,E
12/1/93 Institutional Shares FA,SR,CSP A,B,C,E
12/1/93 Federated Investment Funds
12/1/93 Growth Portfolio FA,SR,CSP A,B,C,E
12/1/93 High Quality Bond Portfolio FA,SR,CSP A,B,C,E
12/1/93 Pennsylvania Intermediate Municipal
Income Portfolio FA,SR,CSP A,B,C,E
12/1/93 Value Equity Portfolio FA,SR,CSP A,B,C,E
12/1/93 Federated Master Trust FA,SR,CSP A,B,C,E
12/1/93 Federated Municipal Trust
12/1/93 Alabama Municipal Cash Trust FA,SR,CSP A,B,C,E
12/1/93 Connecticut Municipal Cash Trust
12/1/93 Institutional Service Shares FA,SR,CSP A,B,C,E
3/2/94 Maryland Municipal Cash Trust FA,SR,SCP A,B,C,E
12/1/93 Massachusetts Municipal Cash Trust
12/1/93 BayFund Shares FA,SR,CSP A,B,C,E
12/1/93 Institutional Service Shares FA,SR,CSP A,B,C,E
12/1/93 Minnesota Municipal Cash Trust
12/1/93 Cash Series Shares FA,SR,CSP A,B,C,E
12/1/93 Institutional Shares FA,SR,CSP A,B,C,E
12/1/93 New Jersey Municipal Cash Trust
12/1/93 Cash Series Shares FA,SR,CSP A,B,C,E
12/1/93 Institutional Shares FA,SR,CSP A,B,C,E
12/1/93 Institutional Service Shares FA,SR,CSP A,B,C,E
12/1/93 Ohio Municipal Cash Trust
12/1/93 Cash II Shares FA,SR,CSP A,B,C,E
12/1/93 Institutional Shares FA,SR,CSP A,B,C,E
12/1/93 Pennsylvania Municipal Cash Trust
12/1/93 Cash Series Shares FA,SR,CSP A,B,C,E
12/1/93 Institutional Service Shares FA,SR,CSP A,B,C,E
12/1/93 Virginia Municipal Cash Trust
12/1/93 Institutional Service Shares FA,SR,CSP A,B,C,E
12/1/93 Institutional Shares FA,SR,CSP A,B,C,E
12/1/93 Federated Short-Intermediate Government Trust
12/1/93 Institutional Service Shares FA,SR,CSP A,B,C,E
12/1/93 Institutional Shares FA,SR,CSP A,B,C,E
12/1/93 Federated Short-Intermediate Municipal Trust
12/1/93 Institutional Service Shares FA,SR,CSP A,B,C,E
12/1/93 Institutional Shares FA,SR,CSP A,B,C,E
12/1/93 Federated Short-Term U.S. Government
Trust FA,SR,CSP A,B,C,E
12/1/93 Stock and Bond Fund, Inc.
12/1/93 Class A Shares FA,SR,CSP A,B,C,E
12/1/93 Class C Shares FA,SR,CSP A,B,C,E
12/1/93 Federated Stock Trust FA,SR,CSP A,B,C,E
12/1/93 Federated Tax-Free Trust FA,SR,CSP A,B,C,E
12/1/93 Financial Reserves Fund FA A1,B
12/1/93 First Priority Funds
12/1/93 First Priority Equity Fund
12/1/93 Investment Shares FA,SR A1,B,C2,D
12/1/93 Trust Shares FA,SR A1,B,C2,D
12/1/93 First Priority Fixed Income Fund
12/1/93 Investment Shares FA,SR A1,B,C2,D
12/1/93 Trust Shares FA,SR A1,B,C2,D
12/1/93 First Priority Treasury Money Market Fund
12/1/93 Investment Shares FA,SR A1,B,C2,D
12/1/93 Trust Shares FA,SR A1,B,C2,D
12/1/93 First Priority Limited Maturity Government
Fund FA,SR A1,B,C2,D
12/1/93 Fixed Income Securities, Inc.
12/1/93 Limited Term Fund
12/1/93 Fortress Shares FA,SR,CSP A,B,C,E
12/1/93 Investment Shares FA,SR,CSP A,B,C,E
12/1/93 Limited Term Municipal Fund
12/1/93 Fortress Shares FA,SR,CSP A,B,C,E
12/1/93 Investment Shares FA,SR,CSP A,B,C,E
12/1/93 Multi-State Municipal Income Fund FA,SR,CSP A,B,C,E
12/1/93 Limited Maturity Government Fund FA,SR,CSP A,B,C,E
12/1/93 Fortress Adjustable Rate U.S. Government
Fund, Inc. FA,SR,CSP A,B,C,E
12/1/93 Fortress Municipal Income Fund, Inc. FA,SR,CSP A,B,C,E
12/1/93 Fortress Utility Fund, Inc. FA,SR,CSP A,B,C,E
12/1/93 FT Series, Inc.
12/1/93 International Equity Fund
12/1/93 Class A Shares FA,SR,CSP A,B,C,E
12/1/93 Class C Shares FA,SR,CSP A,B,C,E
12/1/93 International Income Fund
12/1/93 Class A Shares FA,SR,CSP A,B,C,E
12/1/93 Class C Shares FA,SR,CSP A,B,C,E
12/1/93 Fund for U.S. Government Securities, Inc.
12/1/93 Class A Shares FA,SR,CSP A,B,C,E
12/1/93 Class C Shares FA,SR,CSP A,B,C,E
12/1/93 Government Income Securities, Inc. FA,SR,CSP A,B,C,E
4/8/94 Independence One Mutual Funds
Independence One Michigan Municipal Cash Fund SR C1,D
Independence One Prime Money Market Fund SR C1,D
Independence One U.S. Government Securities Fund
Investment Shares SR C1,D
Trust Shares SR C1,D
Independence One U.S. Treasury Money Market Fund SR C1,D
1/11/94 Insight Institutional Series, Inc.
1/11/94 Insight Adjustable Rate Mortgage Fund FA,SR,CSP A,B,C,E
1/11/94 Insight Limited Term Income Fund FA,SR,CSP A,B,C,E
1/11/94 Insight Limited Term Municipal Fund FA,SR,CSP A,B,C,E
1/11/94 Insight U.S. Government Fund FA,SR,CSP A,B,C,E
12/15/93 Insurance Management Series
12/15/93 U.S. Government Bond Fund FA,SR,CSP A,B,C,E
12/15/93 Corporate Bond Fund FA,SR,CSP A,B,C,E
12/15/93 Utility Fund FA,SR,CSP A,B,C,E
12/15/93 Equity Growth & Income Fund FA,SR,CSP A,B,C,E
12/15/93 Prime Money Fund FA,SR,CSP A,B,C,E
12/1/93 Intermediate Municipal Trust
12/1/93 Institutional Service Shares FA,SR,CSP A,B,C,E
12/1/93 Institutional Shares FA,SR,CSP A,B,C,E
12/1/93 Ohio Intermediate Municipal Trust FA,SR,CSP A,B,C,E
12/1/93 Pennsylvania Intermediate Municipal Trust FA,SR,CSP A,B,C,E
2/16/94 California Intermediate Municipal Trust FA,SR,CSP A,B,C,E
12/1/93 Investment Series Fund, Inc.
12/1/93 Capital Growth Fund
12/1/93 Investment Shares (Schedules C2 & D
are for IRM) FA,SR,CSP A,B,C,C2,D,E
12/1/93 Class A Shares FA,SR,CSP A,B,C,E
12/1/93 Class C Shares FA,SR,CSP A,B,C,E
12/1/93 Fortress Bond Fund FA,SR,CSP A,B,C,E
12/1/93 Investment Series Trust
12/1/93 High Quality Stock Fund(Schedules
C2 & D are for IRM) FA,SR,CSP A,B,C,C2,D,E
12/1/93 Municipal Securities Income Fund FA,SR,CSP A,B,C,E
12/1/93 U.S. Government Bond Fund(Schedules
C2 & D are for IRM) FA,SR,CSP A,B,C,C2,D,E
12/1/93 Edward D. Jones & Co. Daily Passport
Cash Trust FA,SR,CSP A,B,C,E
12/1/93 Liberty Equity Income Fund, Inc.
12/1/93 Class A Shares FA,SR,CSP A,B,C,E
12/1/93 Class C Shares FA,SR,CSP A,B,C,E
12/1/93 Fortress Shares FA,SR,CSP A,B,C,E
12/1/93 Liberty High Income Bond Fund, Inc.
12/1/93 Class A Shares FA,SR,CSP A,B,C,E
12/1/93 Class C Shares FA,SR,CSP A,B,C,E
12/1/93 Liberty Municipal Securities Fund, Inc.
12/1/93 Class A Shares FA,SR,CSP A,B,C,E
12/1/93 Class C Shares FA,SR,CSP A,B,C,E
12/1/93 Liberty Term Trust, Inc. - 1999 FA,SR,CSP A,B,C,E
12/1/93 Liberty U.S. Government Money Market Trust FA,SR,CSP A,B,C,E
12/1/93 Liberty Utility Fund, Inc.
12/1/93 Class A Shares FA,SR,CSP A,B,C,E
12/1/93 Class C Shares FA,SR,CSP A,B,C,E
12/1/93 Liquid Cash Trust FA,SR,CSP A,B,C,E
12/1/93 Mark Twain Funds
12/1/93 Mark Twain Equity Portfolio FA,SR A,B,C2,D
12/1/93 Mark Twain Fixed Income Portfolio FA,SR A,B,C2,D
12/1/93 Mark Twain Government Money Market Portfolio
12/1/93 Investment Shares FA,SR A,B,C2,D
12/1/93 Trust Shares FA,SR A,B,C2,D
12/1/93 Mark Twain Municipal Income Portfolio FA,SR A,B,C2,D
12/1/93 Marshall Funds, Inc.
12/1/93 Marshall Government Income Fund FA,SR A1,B,C2,D
12/1/93 Marshall Intermediate Bond Fund FA,SR A1,B,C2,D
12/1/93 Marshall Money Market Fund
12/1/93 Investment Shares FA,SR A1,B,C2,D
12/1/93 Trust Shares FA,SR A1,B,C2,D
12/1/93 Marshall Short-Term Income Fund FA,SR A1,B,C2,D
12/1/93 Marshall Stock Fund FA,SR A1,B,C2,D
12/1/93 Marshall Tax-Free Money Market Fund FA,SR A1,B,C2,D
12/1/93 Marshall Balanced Fund FA,SR A1,B,C2,D
12/1/93 Marshall Equity Income Fund FA,SR A1,B,C2,D
12/1/93 Marshall Mid-Cap Stock Fund FA,SR A1,B,C2,D
12/1/93 Marshall Value Equity Fund FA,SR A1,B,C2,D
12/1/93 Marshall Short-Intermediate Tax-free Fund FA,SR A1,B,C2,D
12/1/93 Money Market Management, Inc.(Schedules
C2 & D are for IRM) FA,SR,CSP A,B,C,C2,D,E
12/1/93 Money Market Trust FA,SR,CSP A,B,C,E
12/1/93 Money Market Obligations Trust
12/1/93 Government Obligations Fund FA,SR,CSP A1,B,C,E
12/1/93 Prime Obligations Fund FA,SR,CSP A1,B,C,E
12/1/93 Tax-Free Obligations Fund FA,SR,CSP A1,B,C,E
12/1/93 Treasury Obligations Fund FA,SR,CSP A1,B,C,E
12/1/93 Municipal Securities Income Trust
12/1/93 California Municipal Income Fund
12/1/93 Fortress Shares FA,SR,CSP A,B,C,E
12/1/93 Florida Municipal Income Fund FA,SR,CSP A,B,C,E
12/1/93 Maryland Municipal Income Fund FA,SR,CSP A,B,C,E
12/1/93 Michigan Municipal Income Fund FA,SR,CSP A,B,C,E
12/1/93 New Jersey Municipal Income Fund FA,SR,CSP A,B,C,E
12/1/93 New York Municipal Income Fund
12/1/93 Fortress Shares FA,SR,CSP A,B,C,E
12/1/93 Ohio Municipal Income Fund
12/1/93 Fortress Shares FA,SR,CSP A,B,C,E
12/1/93 Trust Shares FA,SR,CSP A,B,C,E
12/1/93 Pennsylvania Municipal Income Fund
12/1/93 Investment Shares FA,SR,CSP A,B,C,E
12/1/93 Trust Shares FA,SR,CSP A,B,C,E
12/1/93 Income shares FA,SR,CSP A,B,C,E
12/1/93 Texas Municipal Income Fund FA,SR,CSP A,B,C,E
12/1/93 Virginia Municipal Income Fund FA,SR,CSP A,B,C,E
12/1/93 New York Municipal Cash Trust
12/1/93 Cash II Shares FA,SR,CSP A,B,C,E
12/1/93 Institutional Service Shares FA,SR,CSP A,B,C,E
12/1/93 The Planters Funds
12/1/93 Tennessee Tax-Free Bond Fund FA,SR A1,B,C2,D
12/1/93 Portage Funds
12/1/93 Portage Government Money Market Fund
12/1/93 Investment Shares [INV.SH. MERGED INTO TRUST SH. 2/1/94]
12/1/93 Trust Shares SR C2,D
12/1/93 RIMCO Monument Funds
12/1/93 RIMCO Monument Bond Fund FA,SR A,B,C2,D
12/1/93 RIMCO Monument Prime Money Market Fund FA,SR A,B,C2,D
12/1/93 RIMCO Monument Stock Fund FA,SR A,B,C2,D
12/1/93 RIMCO Monument U.S. Treasury Money Market Fund FA,SR A,B,C2,D
12/1/93 Signet Select Funds
12/1/93 Maryland Municipal Bond Fund
12/1/93 Investment Shares FA,SR A,B,C1
12/1/93 Trust Shares FA,SR A,B,C1
12/1/93 Money Market Fund
12/1/93 Investment Shares FA,SR A,B,C1
12/1/93 Trust Shares FA,SR A,B,C1
12/1/93 Treasury Money Market Fund
12/1/93 Investment Shares FA,SR A,B,C1
12/1/93 Trust Shares FA,SR A,B,C1
12/1/93 U.S. Government Income Fund
12/1/93 Investment Shares FA,SR A,B,C1
12/1/93 Trust Shares FA,SR A,B,C1
12/1/93 Value Equity Fund
12/1/93 Investment Shares FA,SR A,B,C1
12/1/93 Trust Shares FA,SR A,B,C1
12/1/93 Virginia Municipal Bond Fund
12/1/93 Investment Shares FA,SR A,B,C1
12/1/93 Trust Shares FA,SR A,B,C1
12/1/93 The Shawmut Funds
12/1/93 The Shawmut Fixed Income Fund
12/1/93 Investment Shares FA,SR A,B,C2,D
12/1/93 Trust Shares FA,SR A,B,C2,D
12/1/93 The Shawmut Growth Equity Fund
12/1/93 Investment Shares FA,SR A,B,C2,D
12/1/93 Trust Shares FA,SR A,B,C2,D
12/1/93 The Shawmut Growth and Income Equity Fund
12/1/93 Investment Shares FA,SR A,B,C2,D
12/1/93 Trust Shares FA,SR A,B,C2,D
12/1/93 The Shawmut Intermediate Government Income Fund
12/1/93 Investment Shares FA,SR A,B,C2,D
12/1/93 Trust Shares FA,SR A,B,C2,D
12/1/93 The Shawmut Limited Term Income Fund
12/1/93 Investment Shares FA,SR A,B,C2,D
12/1/93 Trust Shares FA,SR A,B,C2,D
12/1/93 The Shawmut Prime Money Market Fund
12/1/93 Investment Shares FA,SR A,B,C2,D
12/1/93 Trust Shares FA,SR A,B,C2,D
12/1/93 The Shawmut Small Capitalization Equity Fund
12/1/93 Investment Shares FA,SR A,B,C2,D
12/1/93 Trust Shares FA,SR A,B,C2,D
12/1/93 The Shawmut Connecticut Municipal Money Market Fund
12/1/93 Investment Shares FA,SR A,B,C2,D
12/1/93 Trust Shares FA,SR A,B,C2,D
12/1/93 The Shawmut Connecticut Intermediate Municipal
Income Fund FA,SR A,B,C2,D
12/1/93 The Shawmut Massachusetts Municipal Money
Market Fund FA,SR A,B,C2,D
12/1/93 The Shawmut Massachusetts Intermediate
Municipal Income Fund FA,SR A,B,C2,D
12/1/93 Star Funds
12/1/93 Star Prime Obligations Fund FA,SR A,B,C2,D
12/1/93 Star Relative Value Fund FA,SR A,B,C2,D
12/1/93 Star Tax-Free Money Market Fund FA,SR A,B,C2,D
12/1/93 Star Treasury Fund FA,SR A,B,C2,D
12/1/93 Star U.S. Government Income Fund FA,SR A,B,C2,D
12/1/93 The Stellar Fund FA,SR A,B,C2,D
12/1/93 Sunburst Funds
12/1/93 Sunburst Short-Intermediate
Government Bond Fund FA,ST A,B,C2,D
12/1/93 Tax-Free Instruments Trust
12/1/93 Institutional Service Shares FA,SR,CSP A,B,C,E
12/1/93 Institutional Shares FA,SR,CSP A,B,C,E
12/1/93 The Monitor Funds
12/1/93 The Monitor Fixed Income Securities Fund
12/1/93 Investment Shares SR C1
12/1/93 Trust Shares SR C1
12/1/93 The Monitor Growth Fund
12/1/93 Investment Shares SR C1
12/1/93 Trust Shares SR C1
12/1/93 The Monitor Income Equity Fund SR C1
12/1/93 The Monitor Money Market Fund
12/1/93 Investment Shares SR C1
12/1/93 Trust Shares SR C1
12/1/93 The Monitor Mortgage Securities Fund
12/1/93 Investment Shares SR C1
12/1/93 Trust Shares SR C1
12/1/93 The Monitor Ohio Municipal Money Market Fund
12/1/93 Investment Shares SR C1
12/1/93 Trust Shares SR C1
12/1/93 The Monitor Ohio Tax-Free Fund
12/1/93 Investment Shares SR C1
12/1/93 Trust Shares SR C1
12/1/93 The Monitor Short/Intermediate Fixed Income
12/1/93 Securities Fund SR C1
12/1/93 The Monitor U.S. Treasury Money Market Fund
12/1/93 Investment Shares SR C1
12/1/93 Trust Shares SR C1
12/1/93 The Starburst Funds
12/1/93 The Starburst Government Income Fund FA,SR A,B,C2,D
12/1/93 The Starburst Government Money Market Fund
12/1/93 Investment Shares FA,SR A,B,C2,D
12/1/93 Trust Shares FA,SR A,B,C2,D
12/1/93 The Starburst Money Market Fund
12/1/93 Investment Shares FA,SR A,B,C2,D
12/1/93 Trust Shares FA,SR A,B,C2,D
12/1/93 The Starburst Municipal Income Fund FA,SR A,B,C2,D
12/1/93 The Starburst Funds II
12/1/93 The Starburst Quality Income Fund FA,SR A,B,C2,D
12/1/93 Trademark Funds
12/1/93 Trademark Equity Fund FA,SR A,B,C2,D
12/1/93 Trademark Government Income Fund FA,SR A,B,C2,D
12/1/93 Trademark Kentucky Municipal Bond Fund FA,SR A,B,C2,D
12/1/93 Trademark Short-Intermediate Government Fund FA,SR A,B,C2,D
12/1/93 Trust for Financial Institutions
12/1/93 Government Qualifying Liquidity Fund
12/1/93 Institutional Service Shares FA,SR,CSP A,B,C,E
12/1/93 Institutional Shares FA,SR,CSP A,B,C,E
12/1/93 Short-Term Government Qualifying Liquidity Fund
12/1/93 Institutional Service Shares FA,SR,CSP A,B,C,E
12/1/93 Institutional Shares FA,SR,CSP A,B,C,E
12/1/93 Government Money Market Fund
12/1/93 Institutional Service Shares FA,SR,CSP A,B,C,E
12/1/93 Institutional Shares FA,SR,CSP A,B,C,E
12/1/93 Trust for Government Cash Reserves FA,SR,CSP A,B,C,E
12/1/93 Trust for Short-Term U.S. Government Securities FA,SR,CSP A,B,C,E
12/1/93 Trust for U.S. Treasury Obligations FA,SR,CSP A,B,C,E
12/1/93 Vulcan Funds
12/1/93 Vulcan Bond Fund FA,SR A1,B,C2,D
12/1/93 Vulcan Stock Fund FA,SR A1,B,C2,D
12/1/93 Vulcan Treasury Obligations Money Market Fund FA,SR A1,B,C2,D
2/24/94 World Investment Series, Inc.
World Utility Fund
Class A Shares FA,SR,CSP A,B,C,E
Fortress Shares FA,SR,CSP A,B,C,E
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.
