[LOGO] FEDERATED INVESTORS
American Leaders
Fund, Inc.
26th Annual Report
March 31, 1995
Establish 1969
EQUITY
President's Message
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Dear Fellow Shareholder:
I am pleased to present the 26th Annual Report
for American Leaders Fund, Inc., established in 1969.
This report covers the 12-month period from April 1, 1994 to March 31, 1995.
The report contains an interview with the fund's co-portfolio managers Peter R.
Anderson, Senior Vice President, and Timothy E. Keefe, Assistant Vice
President, of Federated Advisers. Following the interview is a series of
investment record performance charts as well as a complete listing of the
fund's high-quality, blue-chip investments and Financial Statements.
The fund's net asset value increased over the period for all classes. On April
1, 1994, the share price for Class A Shares, based on net asset value, was
$14.58 compared to $15.66 on March 31, 1995. Dividends paid to shareholders for
Class A Shares totaled $0.24 per share. The fund also paid capital gains for
Class A Shares of $0.35 per share. Total return for Class A Shares for the
fiscal year ended March 31, 1995 was 11.87%, based on net asset value, which
includes the share value increase with all distributions paid to shareholders.*
On July 25, 1994 (inception date of Class B Shares), the share price for Class
B Shares, based on net asset value, was $14.97 compared to $15.67 on March 31,
1995. Dividends paid to shareholders for Class B Shares totaled $0.12 per
share, and the fund paid capital gains for Class B Shares of $0.23 per share.
Total return for Class B Shares for the period ended March 31, 1995 was 7.28%,
based on net asset value, including the share value increase with all
distributions paid to shareholders.*
For Class C Shares, the share price was $14.55 on April 1, 1994 compared to
$15.66 on March 31, 1995, based on net asset value. Dividends paid to
shareholders for Class C Shares totaled $0.13 per share. The fund also paid
capital gains for Class C Shares of $0.35 per share. Total return for Class C
Shares for the fiscal year ended March 31, 1995 was 11.23%, based on net asset
value, which includes the share value increase with all distributions paid to
shareholders.*
* Performance quoted reflects past performance. Investment return and principal
value will fluctuate, so that an investor's shares, when redeemed, may be worth
more or less than their original cost. Total return (based on offering price)
for Class A Shares, Class B Shares, and Class C Shares was 5.71%, 1.67%, and
10.16%, respectively. The start of performance for Class B Shares was July 25,
1994.
On April 1, 1994, the share price for Fortress Shares, based on net asset
value, was $14.58 compared to $15.66 on March 31, 1995. Dividends paid to
shareholders totaled $0.24 per share, and the fund paid capital gains of $0.35
per share for Fortress Shares. Total return for Fortress Shares for the fiscal
year ended March 31, 1995 was 11.80%, based on net asset value, which includes
the share value increase with all distributions paid to shareholders.*
The fund's high-quality portfolio includes common stocks of 55 companies and
convertible preferred stocks of two companies, all of which represent 15 major
industries. These corporations are selected from 100 of America's leading
companies. As a shareholder in American Leaders Fund, Inc., you own stock in
such well-known companies as Hewlett-Packard, Mattel, Western Atlas, Philip
Morris, Sears, Scott Paper, U.S. Healthcare, Reebok, Philips Electronics and
Raytheon.
Shareholder confidence in the fund was reflected by an increase of
more than $100 million in net assets. The fund's net assets grew from $254.0
million on April 1, 1994 to $363.7 million on March 31, 1995. American Leaders
Fund, Inc. has over 28,000 shareholders who desire to own high-quality common
stocks of America's most successful companies for their dividend payments and
capital gains potential.
Thank you for your continued confidence in American Leaders Fund, Inc. As
always, your comments and suggestions are most welcome.
John F. Donahue
President
May 15, 1995
* Performance quoted reflects past performance. Investment return and principal
value will fluctuate, so that an investor's shares, when redeemed, may be worth
more or less than their original cost. Total return (based on offering price)
for Fortress Shares was 9.60%.
Investment Review
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[PHOTO]
Tim Keefe
Assistant Vice President,
Federated Advisers
Will you review what occurred in the bond and stock markets in 1994?
The bond markets experienced one of the worst years in decades. Over the course
of one year, we have experienced dramatic shifts in the yield curve prompted by
the tightening of the Federal Reserve in the face of continued economic
strength. While unpopular at the time, we believe that these actions may prove
to be beneficial to both stocks and bonds over the next few years if the economy
slows to a more sustainable level without slipping into recession.
The equity markets during 1994 appeared calm on the surface as the S&P 500 and
the Dow Jones Industrial Average* registered total returns of 1.3% and 2.1%,
respectively, while, below the surface, the volatility and price change was
substantially greater. For example, the Dow Jones Utility Average posted a
(20.0%), return while the Dow Jones Transports suffered an almost equally dismal
return of a (17.4%). In addition, more than 66% of all stock mutual funds
finished in the red.**
How did American Leaders Fund, Inc. perform?
American Leaders Fund, Inc.'s Class A Shares stayed above breakeven for the year
ended December 31, 1994, with a total return of 0.05% and for the same period
Class B Shares, Class C Shares and Fortress Shares had total returns of (1.71%),
(0.69%) and (0.05%), respectively, based on net asset value.*** While behind the
S&P 500, which had a total return of 1.27%, the fund was ahead of 62% of its
peers. For the one-, five- and 10-year periods ended December 31, 1994,
American Leaders Fund, Inc. ranked 133rd out of 348 funds, 33 out of 182 funds
and 66 out of 109 funds, respectively, in the Lipper growth and income
category.+
* These indexes are unmanaged.
** Source: Lipper Analytical Services, Inc.
*** Performance quoted reflects past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when
redeemed, maybe worth more or less than their original cost. Total
return (based on offering price) for Class A Shares, Class B Shares,
Class C Shares and Fortress Shares was (5.44%), (7.11%), (1.66%) and
(2.01%), respectively, for the year ended December 31, 1994.
+ Lipper rankings do not include the effect of sales loads.
Our disciplined approach has resulted in a five-year cumulative total return for
Class A Shares of 60.7%, based on net asset value, for the period ended December
31, 1994, * which ranks the fund 33rd out of 182 of the Lipper growth and income
funds, which averaged a 49.9% cumulative total return. American Leaders Fund,
Inc. also had better performance than the S&P500, which had a cumulative total
return of 51.6% during the same five-year period.
What is your outlook for 1995?
Many of the technical indicators that measure investor sentiment are extremely
bullish. The put/call volume ratio (0.66%), the percentage of investment
advisors who are bearish (59%), the short interest ratio, and the high
proportion of investor money pouring into "safe haven" money market funds are
all indications of an equity market that lacks the speculative frenzy and excess
that often results in large drops in the market. On a valuation basis, the S&P
500 is selling within the range of historic normalized valuations with the
exception of dividend yields.
The pessimists continue to point to a dividend yield of less than 3% as a sign
of trouble, but a strong case can be made that corporations with increased cash
flow have chosen to buy back stock rather than raise the dividend because it's a
more tax-efficient way to return value to the shareholder.
We don't pretend to be good forecasters of market activity. Our value model is
identifying opportunities with some excellent companies at attractive prices. We
are optimistic that our disciplined value approach will continue to help
performance in the years ahead.
* Performance quoted reflects past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost. The
five-year cumulative total return is not applicable to Class B Shares,
Class C Shares and Fortress Shares due to their respective effective
dates of July 25, 1994, April 21, 1993 and July 27, 1993.
Please highlight some of the fund's best performers in 1994.
The fundamentals at Becton, Dickinson & Co. continue to improve. We believe
that sales will be up 6% this year. Margins continue to look better, and we
expect the company to implement a share buyback program over the next few years
with its enormous free cash flow.
General Motors Corp., Class E is a wholly owned subsidiary of General Motors
and is the leader in the design, operations and integration of large data
processing and communication systems. Business is as strong as ever with
revenues and earnings growth continuing to progress at double-digit rates.
Phelps Dodge Corp. is the nation's largest and lowest-cost copper
producer. Phelps Dodge has benefited from a pickup in world demand, a
substantial increase in copper prices and a weak U.S. dollar.
Hewlett-Packard Co., one of the largest manufacturers of computer systems in the
world, is consistently posting strong 20% top-line sales growth and has
successfully defended its 12% net margins. We are encouraged by the success in
the printer sector and look forward to potentially stronger earnings in 1995 as
European and Asian sales, which are 54% of revenues, pursue continued growth.
American Stores Co. is the second largest food chain and one of the largest
drugstore chains in the United States. The numbers keep getting better as store
upgrades have led to increased sales per store. We believe American Stores'
higher margins, sales and lower debt are likely to continue to propel earnings
going forward.
What were some of the underperformers and can you comment on your outlook here?
MCI is the second largest long distance carrier with over $13 billion in revenue
and about $1 billion in 1994 net earnings. We are encouraged by MCI's savvy
marketing and the lowering cost trends at the interchange level. These shares
represent good value at these levels, especially given MCI's relatively low
sensitivity to the economic cycle.
U.S. Healthcare, Inc. is one of the largest HMOs in the country and is an
extremely well-run company. Earnings were $300 million and $400 million in 1993
and 1994, respectively. We are expecting another increase in 1995 to $465
million as enrollment continues to grow and medical loss ratios remain constant.
Eastman Kodak Co. is the world's largest producer of photographic products with
a current equity market cap of $16.2 billion and sales of $13.3
billion. George Fisher, a former CEO at Motorola, has been elusive in his
guidance toward future earnings, and the share price has suffered as a result.
It is our opinion that $2 billion in cash flows and substantial potential for
cost reductions are the ingredients that Fisher needs to improve Kodak's
position in the imaging business and to produce favorable returns for
shareholders.
How has the equity market progressed in 1995?
The best performing funds were in the growth and income category. This category,
which includes American Leaders Fund, Inc. was up 7.9%, according to Lipper.
With the S&P 500* posting a 9.7% gain, the first quarter has been the best
quarter for the equity markets since the fourth quarter of 1992. American
Leaders Fund, Inc.'s Class A Shares, Class B Shares, Class C Shares and Fortress
Shares returned 9.25%, 9.15%, 9.12% and 9.25%, respectively,** based on net
asset value for the first quarter.
* This index is unmanaged.
** Performance quoted reflects past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost. Total
returns (based on offering price) for Class A Shares, Class B Shares,
Class C Shares and Fortress Shares were 3.22%, 3.65%, 8.15% and
7.15%, respectively, for the first quarter of 1995.
Two Ways You May Seek to Invest for Success in
American Leaders Fund, Inc.
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Initial Investment:
If you had made an initial investment of $27,000 in the Class A Shares of
American Leaders Fund, Inc. on 2/26/69, reinvested dividends and capital gains,
and didn't redeem any shares, your account would be worth $292,576 on 3/31/95.
You would have earned a 9.56%* average annual total return for the 26-year
investment life span.
One key to investing wisely is to reinvest all distributions in fund shares.
This increases the number of shares on which you can earn future dividends, and
you gain the benefit of compounding.
As of 3/31/95, the Class A Shares' average annual one-year, five-year, and ten-
year total returns were 5.71%, 10.57%, and 11.47%, respectively. Class B Shares'
total return since inception on July 25, 1994 was 1.67%. Class C Shares' average
annual one-year and since inception on April 21, 1993 total returns were 10.16%
and 7.56%, respectively. Fortress Shares' average annual one-year and since
inception on July 27, 1993 total returns were 9.60% and 5.45%, respectively.
"Graphic representation 'A1' omitted. See Appendix."
* Total return represents the change in the value of an investment after
reinvesting all income and capital gains, and takes into account the 5.5% sales
load applicable to an initial investment in Class A Shares.
Data quoted represents past performance and does not guarantee future results.
Investment return and principal value will fluctuate so an investor's shares,
when redeemed, may be worth more or less than their original cost.
American Leaders Fund, Inc.
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One Step at a Time:
$1,000 invested each year for 26 years (rein-vesting all dividends and capital
gains) grew to $155,854.
With this approach, the key is consistency.
If you had started investing $1,000 annually in the Class A Shares of American
Leaders Fund, Inc. on 2/26/69, reinvested your dividends and capital gains and
didn't redeem any shares, you would have invested only $27,000, but your account
would have reached a total value of $155,854* by 3/31/95. You would have earned
an average annual total return of 11.45%.
A practical investment plan helps you pursue long-term performance from blue-
chip stocks. Through systematic investing, you buy shares on a regular basis and
reinvest all earnings. An investment plan works for you when you invest only
$1,000 annually. You can take it one step at a time. Put time and compounding to
work!
"Graphic representation 'A2' omitted. See Appendix."
* No method of investing can guarantee a profit or protect against loss in down
markets. However, by investing regularly over time and buying shares at
various prices, investors can purchase more shares at lower prices, and all
accumulated shares have the ability to pay income to the investor.
Because such a plan involves continuous investment, regard- less of changing
price levels, the investor should consider whether or not to continue
purchases through periods of low price levels.
American Leaders Fund, Inc.--
Hypothetical Investor Profile: Investing for a College Education
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David and Joan Rice are a fictional couple who, like many shareholders, are
searching for a way to make their money grow over time.
David and Joan are planning for the college education of their child in 15
years. On March 31, 1980, they invested $5,000 in the Class A Shares of American
Leaders Fund, Inc. Since then, David and Joan have made additional investments
of $250 every month.
As this chart shows, over 15 years, the original $5,000 investment along with
their additional monthly $250 investments totaling $50,000 has grown to
$162,750. This represents a 13.20% average annual total return. For the Rices, a
dedicated program of monthly investment really paid off.
"Graphic representation 'A3' omitted. See Appendix."
This hypothetical scenario is provided for illustrative pur-
poses only and does not represent the results obtained by any
particular shareholder. Past performance does not guarantee
future results.
American Leaders Fund, Inc.--
A History of Solid Earnings--Seventeen 10-Year Periods
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$10,000 Invested with Distributions Reinvested
How a $10,000 investment grew during each 10-year period since fund inception.
This chart shows what your account would be worth had you invested $10,000 at
the beginning of these consecutive decades.
Over every 10-year period since the Fund's inception, a $10,000 investment in
its Class A Shares (with all dividends and capital gains reinvested) grew in
value. There was never a decade in which an investor would have lost money.
"Graphic representation 'A4' omitted. See Appendix."
*This 10-year period is February 26, 1969 through March 31, 1979.
American Leaders Fund, Inc.--
Serving A Wide Range of Investors
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American Leaders Fund, Inc. appeals to a broad range of investors seeking long-
term growth through blue-chip stocks.
The Fund invests primarily in a diversified portfolio of stocks issued by some
of America's leading corporations. Fund shares are not guaranteed, and the
value of your investment may fluctuate. Mutual funds involve risk, including
possible loss of principal.
"Graphic representation 'A5' omitted. See Appendix."
American Leaders Fund, Inc.--
Portfolio Update
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"Graphic representation 'A6' omitted. See Appendix."
American Leaders Fund, Inc.
(Class A Shares)
--------------------------------------------------------------------------------
Growth of $10,000 Invested in American Leaders Fund, Inc. (Class A Shares)
The graph below illustrates the hypothetical investment of $10,000 in the
American Leaders Fund, Inc. (Class A Shares) (the "Fund") from March 31, 1985 to
March 31, 1995, compared to the Standard and Poor's 500 Index (S&P 500)+ and the
Lipper Growth and Income Funds Average (LGIFA).++
"Graphic representation 'A7' omitted. See Appendix."
Past performance is not predictive of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost.
* Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales load of 5.50% ($10,000 investment minus $550 sales load =
$9,450). The Fund's performance assumes the reinvestment of all dividends
and distributions. The S&P 500 and the LGIFA have been adjusted to reflect
reinvestment of dividends on securities in the indices.
** Represents a hypothetical investment of $10,000 in the Fund after
deducting the maximum sales load of 4.50% ($10,000 investment minus $450
sales load = $9,550) that was in effect prior to October 1, 1994. As of
October 1, 1994, the maximum sales load was 5.50%. The Fund's performance
assumes the reinvestment of all dividends and distributions. The S&P 500
and the LGIFA have been adjusted to reflect reinvestment of dividends on
securities in the indices.
*** Total return quoted reflects all applicable sales loads and contingent
deferred sales charges.
+ The S&P 500 is not adjusted to reflect sales loads, expenses, or other fees
that the SEC requires to be reflected in the Fund's performance. This
index is unmanaged.
++ The LGIFA represents the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as
falling into the category, and is not adjusted to reflect any sales loads.
However, these total returns are reported net of expenses or other fees
that the SEC requires to be reflected in a fund's performance.
American Leaders Fund, Inc.
(Class B Shares, Class C Shares and Fortress Shares)
--------------------------------------------------------------------------------
Growth of $10,000 Invested in American Leaders Fund, Inc.
The graphs below illustrate the hypothetical investment of $10,000 in the
American Leaders Fund, Inc. from the start of performance to March 31, 1995,
compared to the Standard & Poor's 500 Index (S&P 500)++ and Lipper Growth and
Income Funds Average (LGIFA).+++
"Graphic representation 'A8' omitted. See Appendix."
"Graphic representation 'A9' omitted. See Appendix."
American Leaders Fund, Inc.
(Class B Shares, Class C Shares and Fortress Shares)
-------------------------------------------------------------------------------
"Graphic representation 'A10' omitted. See Appendix."
Past performance is not predictive of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost.
* Represents a hypothetical investment of $10,000 in the Fund. The ending
value of the Fund reflects a 5.50% contingent deferred sales charge on any
redemption made within one full year from the purchase date. The Fund's
performane assumes the reinvestment of all dividends and distributions.
The S&P 500 and the LGIFA have been adjusted to reflect reinvestment of
dividends on securities in the indices.
** Represents a hypothetical investment of $10,000 in the Fund. The ending
value of the Fund reflects a 1.00% contingent deferred sales charge on any
redemption made within one full year from the purchase date. The Fund's
performance assumes the reinvestment of all dividends and distributions.
The S&P 500 and the LGIFA have been adjusted to reflect reinvestment of
dividends on securities in the indices.
*** Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales load of 1.00% ($10,000 investment minus $100 sales load =
$9,900). The Fund's performance assumes the reinvestment of all dividends
and distributions. The S&P 500 and the LGIFA have been adjusted to reflect
reinvestment of dividends on securities in the indices.
****The ending value of the Fund reflects a contingent deferred sales charge of
1.00% on any redemption less than four years from the purchase date.
+Total return quoted reflects all applicable sales loads and contingent
deferred sales charges.
++ The S&P 500 is not adjusted to reflect sales loads, expenses, or other fees
that the SEC requires to be reflected in the Fund's performance. This index
is unmanaged.
+++The LGIFA represents the average of the total returns reported by all of the
mutual funds designated by Lipper Analytical Services, Inc. as falling into
the category, and is not adjusted to reflect any sales loads. However,
these total returns are reported net of expenses or other fees that the SEC
requires to be reflected in a fund's performance.
American Leaders Fund, Inc.
Portfolio of Investments
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March 31, 1995
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
------------- ---------------------------------------------------------------------------------- --------------
COMMON STOCK--90.4%
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CONSUMER DURABLES--7.9%
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133,200 Chrysler Corp. $ 5,577,750
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150,000 Eastman Kodak Co. 7,968,750
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212,100 Ford Motor Co. 5,726,700
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387,218 Mattel, Inc. 9,535,243
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Total 28,808,443
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CONSUMER NON-DURABLES--7.2%
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92,300 Avon Products, Inc. 5,584,150
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139,100 Philip Morris Cos., Inc. 9,076,275
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478,000 RJR Nabisco Holdings Corp. 2,808,250
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240,000 Reebok International Ltd. 8,550,000
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Total 26,018,675
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CONSUMER SERVICES--1.9%
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130,000 Gannett Co., Inc. 6,938,750
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ELECTRONIC TECHNOLOGY--12.1%
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59,000 General Dynamics Corp. 2,773,000
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86,900 Hewlett-Packard Co. 10,460,587
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50,100 International Business Machines Corp. 4,101,938
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81,078 Litton Industries, Inc. 2,908,673
----------------------------------------------------------------------------------
153,100 Lockheed Martin Corp. 8,095,162
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117,000 Raytheon Co. 8,526,375
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185,500 Rockwell International Corp. 7,234,500
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Total 44,100,235
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ENERGY MINERALS--6.9%
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91,000 Burlington Resources, Inc. 3,708,250
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161,200 Chevron Corp. 7,737,600
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94,200 Mapco, Inc. 5,251,650
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110,000 Tosco Corp. 3,410,000
----------------------------------------------------------------------------------
</TABLE>
American Leaders Fund, Inc.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
------------- ---------------------------------------------------------------------------------- --------------
COMMON STOCK--CONTINUED
-------------------------------------------------------------------------------------------------
ENERGY MINERALS--CONTINUED
----------------------------------------------------------------------------------
276,300 USX Marathon Group, Inc. $ 4,835,250
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Total 24,942,750
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FINANCE--13.3%
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140,200 Bank of Boston Corp. 4,170,950
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200,000 Dean Witter, Discover & Co. 8,150,000
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100,000 Federal Home Loan Mortgage Corp. 6,050,000
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44,800 First Interstate Bancorp 3,539,200
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163,650 Mellon Bank Corp. 6,668,738
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68,500 NationsBank Corp. 3,476,375
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110,500 Providian Corp. 3,881,313
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203,600 Ryder Systems, Inc. 4,886,400
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200,000 Travelers, Inc. 7,725,000
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Total 48,547,976
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HEALTH SERVICES--2.4%
----------------------------------------------------------------------------------
200,000 U.S. Healthcare, Inc. 8,850,000
---------------------------------------------------------------------------------- --------------
HEALTH TECHNOLOGY--6.4%
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110,000 American Home Products Corp. 7,837,500
----------------------------------------------------------------------------------
112,700 Becton, Dickinson & Co. 6,113,975
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108,500 Bristol-Myers Squibb Co. 6,835,500
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100,000 Ivax Corp. 2,500,000
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Total 23,286,975
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INDUSTRIAL SERVICES--2.6%
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220,000 Western Atlas, Inc. 9,487,500
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NON-ENERGY MINERALS--0.8%
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50,000 Phelps Dodge Corp. 2,843,750
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PROCESS INDUSTRIES--6.1 %
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122,000 Eastman Chemical Co. 6,786,250
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51,500 Great Lakes Chemical Corp. 3,212,312
----------------------------------------------------------------------------------
</TABLE>
American Leaders Fund, Inc.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
------------- ---------------------------------------------------------------------------------- --------------
COMMON STOCK--CONTINUED
-------------------------------------------------------------------------------------------------
PROCESS INDUSTRIES--CONTINUED
----------------------------------------------------------------------------------
138,500 Praxair, Inc. $ 3,220,125
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100,000 Scott Paper Co. 8,937,500
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Total 22,156,187
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PRODUCER MANUFACTURING--11.4%
----------------------------------------------------------------------------------
67,400 Caterpillar, Inc. 3,749,125
----------------------------------------------------------------------------------
43,700 Deere & Co. 3,550,625
----------------------------------------------------------------------------------
112,600(c) FMC Corp. 6,812,300
----------------------------------------------------------------------------------
90,400 General Electric Co. 4,892,900
----------------------------------------------------------------------------------
58,300 Loews Corp. 5,757,125
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250,000 Philips Electronics N.V., ADR 8,531,250
----------------------------------------------------------------------------------
144,100 Textron, Inc. 8,159,663
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Total 41,452,988
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RETAIL TRADE--4.2%
----------------------------------------------------------------------------------
247,600 American Stores Co. 6,344,750
----------------------------------------------------------------------------------
169,500 Sears, Roebuck & Co. 9,047,063
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Total 15,391,813
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TECHNOLOGY SERVICES--2.1%
----------------------------------------------------------------------------------
192,200 General Motors Corp., Class E 7,471,775
---------------------------------------------------------------------------------- --------------
UTILITIES--5.1%
----------------------------------------------------------------------------------
149,500 AT&T Corp. 7,736,625
----------------------------------------------------------------------------------
81,300 Duke Power Co. 3,130,050
----------------------------------------------------------------------------------
98,400 Enron Corp. 3,247,200
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205,000 MCI Communications Corp. 4,228,125
---------------------------------------------------------------------------------- --------------
Total 18,342,000
---------------------------------------------------------------------------------- --------------
TOTAL COMMON STOCK (IDENTIFIED COST $267,941,290) 328,639,817
---------------------------------------------------------------------------------- --------------
</TABLE>
American Leaders Fund, Inc.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
<C> <S> <C>
------------- ---------------------------------------------------------------------------------- --------------
CONVERTIBLE PREFERRED STOCKS--2.6%
-------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--1.0%
----------------------------------------------------------------------------------
544,000 RJR Nabisco Holdings Corp., Conv. Pfd., Series C, $.60 $ 3,468,000
---------------------------------------------------------------------------------- --------------
FINANCE--1.6%
----------------------------------------------------------------------------------
300,000 Citicorp, PERCS, Series 15, $1.22 5,812,500
---------------------------------------------------------------------------------- --------------
TOTAL CONVERTIBLE PREFERRED STOCKS (IDENTIFIED COST $8,902,861) 9,280,500
---------------------------------------------------------------------------------- --------------
CONVERTIBLE BONDS--1.4%
-------------------------------------------------------------------------------------------------
ELECTRONIC TECHNOLOGY--1.4%
----------------------------------------------------------------------------------
$ 3,425,000 General Instrument Corp., Conv. Jr. Sub. Note, 5.00%, 6/15/2000 5,191,204
---------------------------------------------------------------------------------- --------------
TOTAL CONVERTIBLE BONDS (IDENTIFIED COST $3,662,798) 5,191,204
---------------------------------------------------------------------------------- --------------
(B)REPURCHASE AGREEMENT-4.8%
-------------------------------------------------------------------------------------------------
17,530,000 J.P. Morgan Securities, Inc., 6.30%, dated 3/31/1995, due 4/3/1995
(at amortized cost) 17,530,000
---------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $298,036,949)(A) $ 360,641,521
---------------------------------------------------------------------------------- --------------
</TABLE>
Note: The categories of investments are shown as a percentage of net assets
($363,691,635) at March 31, 1995.
The following abbreviation(s) are used throughout this portfolio:
ADR--American Depository Receipt
PERCS--Preferred Equity Redemption Cumulative Stock
(a) The cost of investments for federal tax purposes amounts to $298,036,949.
The net appreciation on a federal tax basis amounts to $62,604,572, which is
comprised of $65,127,856 appreciation and $2,523,284 depreciation at March
31, 1995.
(b) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement was through participation in a joint
account with other Federated funds.
(c) Non-income producing.
(See Notes which are an integral part of the Financial Statements.)
American Leaders Fund, Inc.
Statement of Assets and Liabilities
--------------------------------------------------------------------------------
March 31, 1995
<TABLE>
<S> <C> <C>
ASSETS:
---------------------------------------------------------------------------------------------------
Investments in securities, at value (identified cost and tax cost $298,036,949) $360,641,521
---------------------------------------------------------------------------------------------------
Cash 893
---------------------------------------------------------------------------------------------------
Income receivable 850,985
---------------------------------------------------------------------------------------------------
Receivable for investments sold 3,103,612
---------------------------------------------------------------------------------------------------
Receivable for shares sold 3,671,702
--------------------------------------------------------------------------------------------------- -----------
Total assets 368,268,713
---------------------------------------------------------------------------------------------------
LIABILITIES:
---------------------------------------------------------------------------------------------------
Payable for investments purchased $3,867,726
----------------------------------------------------------------------------------------
Payable for shares redeemed 585,598
----------------------------------------------------------------------------------------
Accrued expenses 123,754
---------------------------------------------------------------------------------------- ---------
Total liabilities 4,577,078
--------------------------------------------------------------------------------------------------- -----------
NET ASSETS for 23,223,327 shares outstanding $363,691,635
--------------------------------------------------------------------------------------------------- -----------
NET ASSETS CONSISTS OF:
---------------------------------------------------------------------------------------------------
Paid in capital $294,419,883
---------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 62,604,572
---------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments 5,020,868
---------------------------------------------------------------------------------------------------
Undistributed net investment income 1,646,312
--------------------------------------------------------------------------------------------------- -----------
Total Net Assets $363,691,635
--------------------------------------------------------------------------------------------------- -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
---------------------------------------------------------------------------------------------------
CLASS A SHARES:
---------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($268,469,981 / 17,144,389 shares outstanding) $15.66
--------------------------------------------------------------------------------------------------- -----------
Offering Price Per Share (100/94.50 of $15.66)* $16.57
--------------------------------------------------------------------------------------------------- -----------
Redemption Proceeds Per Share $15.66
--------------------------------------------------------------------------------------------------- -----------
FORTRESS SHARES:
---------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($28,495,455 / 1,819,815 shares outstanding) $15.66
--------------------------------------------------------------------------------------------------- -----------
Offering Price Per Share (100/99.00 of $15.66)* $15.82
--------------------------------------------------------------------------------------------------- -----------
Redemption Proceeds Per Share (99.00/100 of $15.66)** $15.50
--------------------------------------------------------------------------------------------------- -----------
CLASS C SHARES:
---------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($20,054,876 / 1,280,678 shares outstanding) $15.66
--------------------------------------------------------------------------------------------------- -----------
Offering Price Per Share $15.66
--------------------------------------------------------------------------------------------------- -----------
Redemption Proceeds Per Share (99.00/100 of $15.66)** $15.50
--------------------------------------------------------------------------------------------------- -----------
CLASS B SHARES:
---------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($46,671,323 / 2,978,445 shares outstanding) $15.67
--------------------------------------------------------------------------------------------------- -----------
Offering Price Per Share $15.67
--------------------------------------------------------------------------------------------------- -----------
Redemption Proceeds Per Share (94.50/100 of $15.67)** $14.81
--------------------------------------------------------------------------------------------------- -----------
</TABLE>
*See "How to Purchase Shares" or "What Shares Cost" in the respective
Prospectus.
**See "Contingent Deferred Sales Charge" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
American Leaders Fund, Inc.
Statement of Operations
--------------------------------------------------------------------------------
Year ended March 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
---------------------------------------------------------------------------------------------------
Interest $ 1,233,334
---------------------------------------------------------------------------------------------------
Dividends 7,436,560
--------------------------------------------------------------------------------------------------- -------------
Total income 8,669,894
---------------------------------------------------------------------------------------------------
EXPENSES--
---------------------------------------------------------------------------------------------------
Investment advisory fee $ 2,010,685
-------------------------------------------------------------------------------------
Administrative personnel and services fee 223,061
-------------------------------------------------------------------------------------
Custodian fees 83,550
-------------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 402,698
-------------------------------------------------------------------------------------
Directors'/Trustees' fees 9,084
-------------------------------------------------------------------------------------
Auditing fees 21,009
-------------------------------------------------------------------------------------
Legal fees 16,918
-------------------------------------------------------------------------------------
Portfolio accounting fees 57,272
-------------------------------------------------------------------------------------
Distribution services fee--Class C Shares 118,850
-------------------------------------------------------------------------------------
Distribution services fee--Class B Shares 109,518
-------------------------------------------------------------------------------------
Shareholder services fee--Class A Shares 395,908
-------------------------------------------------------------------------------------
Shareholder services fee--Fortress Shares 43,727
-------------------------------------------------------------------------------------
Shareholder services fee--Class C Shares 35,589
-------------------------------------------------------------------------------------
Shareholder services fee--Class B Shares 36,505
-------------------------------------------------------------------------------------
Share registration costs 104,253
-------------------------------------------------------------------------------------
Printing and postage 146,510
-------------------------------------------------------------------------------------
Insurance premiums 9,647
-------------------------------------------------------------------------------------
Taxes 43,105
-------------------------------------------------------------------------------------
Miscellaneous 9,701
------------------------------------------------------------------------------------- ------------
Total expenses 3,877,590
-------------------------------------------------------------------------------------
Deduct--Waiver of shareholder services fee--Class B Shares 17,522
------------------------------------------------------------------------------------- ------------
Net expenses 3,860,068
--------------------------------------------------------------------------------------------------- -------------
Net investment income 4,809,826
--------------------------------------------------------------------------------------------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
---------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 9,972,646
---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 20,096,284
--------------------------------------------------------------------------------------------------- -------------
Net realized and unrealized gain (loss) on investments 30,068,930
--------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations $ 34,878,756
--------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
American Leaders Fund, Inc.
Statement of Changes in Net Assets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
1995 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
------------------------------------------------------------------------------------
OPERATIONS--
------------------------------------------------------------------------------------
Net investment income loss $ 4,809,826 $ 3,364,968
------------------------------------------------------------------------------------
Net realized gain (loss) on investments ($9,972,646 and $4,928,604 net gains,
respectively, as computed for federal income tax purposes) 9,972,646 4,928,604
------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 20,096,284 (3,465,543)
------------------------------------------------------------------------------------ ------------- -------------
Change in assets resulting from operations 34,878,756 4,828,029
------------------------------------------------------------------------------------ ------------- -------------
Net equalization credits (debits) 200,306 151,939
------------------------------------------------------------------------------------ ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
------------------------------------------------------------------------------------
Distributions from net investment income:
------------------------------------------------------------------------------------
Class A Shares (3,982,898) (3,432,521)
------------------------------------------------------------------------------------
Fortress Shares (364,849) (82,470)
------------------------------------------------------------------------------------
Class C Shares (139,250) (48,153)
------------------------------------------------------------------------------------
Class B Shares (190,153) --
------------------------------------------------------------------------------------
Distributions from net realized gains:
------------------------------------------------------------------------------------
Class A Shares (5,729,133) (7,004,322)
------------------------------------------------------------------------------------
Fortress Shares (557,910) (97,411)
------------------------------------------------------------------------------------
Class C Shares (380,985) (111,800)
------------------------------------------------------------------------------------
Class B Shares (393,441) --
------------------------------------------------------------------------------------ ------------- -------------
Change in net assets resulting from distributions to shareholders (11,738,619) (10,776,677)
------------------------------------------------------------------------------------ ------------- -------------
SHARE TRANSACTIONS (EXCLUSIVE OF AMOUNTS ALLOCATED TO NET INVESTMENT INCOME)--
------------------------------------------------------------------------------------
Proceeds from sale of Shares 130,916,674 90,270,028
------------------------------------------------------------------------------------
Net asset value of Shares issued to shareholders
in payment of distributions declared 9,247,755 8,479,636
------------------------------------------------------------------------------------
Cost of Shares redeemed (53,847,424) (41,784 861)
------------------------------------------------------------------------------------ ------------- -------------
Change in net assets resulting from Share transactions 86,317,005 56,964,803
------------------------------------------------------------------------------------ ------------- -------------
Change in net assets 109,657,448 51,168,094
------------------------------------------------------------------------------------
NET ASSETS:
------------------------------------------------------------------------------------
Beginning of period 254,034,187 202,866,093
------------------------------------------------------------------------------------ ------------- -------------
End of period (including undistributed net investment income of $1,646,312 and
$1,313,328, respectively) $ 363,691,635 $ 254,034,187
------------------------------------------------------------------------------------ ------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
American Leaders Fund, Inc.
Financial Highlights--Class A Shares
--------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991 1990 1989 1988 1987
NET ASSET VALUE, BEGINNING OF
PERIOD $ 14.58 $ 14.90 $ 13.88 $ 13.18 $ 12.21 $ 13.04 $ 12.55 $ 14.21 $ 13.64
-------------------------------
INCOME FROM INVESTMENT
OPERATIONS
-------------------------------
Net investment income 0.25 0.23 0.29 0.29 0.37 0.55 0.50 0.45 0.46
-------------------------------
Net realized and unrealized
gain (loss) on investments 1.42 0.18 2.05 1.34 1.28 0.36 1.08 (1.21) 1.81
------------------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total from investment
operations 1.67 0.41 2.34 1.63 1.65 0.91 1.58 (0.76) 2.27
-------------------------------
LESS DISTRIBUTIONS
-------------------------------
Distributions from net
investment income (0.24) (0.24) (0.28) (0.28) (0.38) (0.56) (0.50) (0.43) (0.47)
-------------------------------
Distributions from net
realized gain on investment
transactions (0.35) (0.49) (1.04) (0.65) (0.30) (1.18) (0.59) (0.47) (1.23)
------------------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total distributions (0.59) (0.73) (1.32) (0.93) (0.68) (1.74) (1.09) (0.90) (1.70)
------------------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 15.66 $ 14.58 $ 14.90 $ 13.88 $ 13.18 $ 12.21 $ 13.04 $ 12.55 $ 14.21
------------------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN (A) 11.87% 2.76% 18.31% 12.91% 14.17% 7.13% 13.23% (5.32%) 18.38%
-------------------------------
RATIOS TO AVERAGE NET ASSETS
-------------------------------
Expenses 1.23% 1.18% 1.13% 1.02% 1.02% 1.01% 1.01% 1.00% 1.00%
-------------------------------
Net investment income 1.71% 1.48% 2.07% 2.12% 3.06% 4.23% 3.85% 3.35% 3.44%
-------------------------------
Expense waiver/ reimbursement
(b) -- -- 0.06% 0.16% 0.30% 0.35% 0.12% 0.11% 0.12%
-------------------------------
SUPPLEMENTAL DATA
-------------------------------
Net assets, end of period (000
omitted) $268,470 $226,857 $202,866 $171,210 $149,360 $147,235 $149,049 $158,818 $157,999
-------------------------------
Portfolio Turnover 34% 27% 39% 67% 57% 50% 27% 65% 28%
-------------------------------
<CAPTION>
<S> <C>
1986
NET ASSET VALUE, BEGINNING OF
PERIOD $ 11.59
-------------------------------
INCOME FROM INVESTMENT
OPERATIONS
-------------------------------
Net investment income 0.53
-------------------------------
Net realized and unrealized
gain (loss) on investments 2.88
------------------------------- ---------
Total from investment
operations 3.41
-------------------------------
LESS DISTRIBUTIONS
-------------------------------
Distributions from net
investment income (0.52)
-------------------------------
Distributions from net
realized gain on investment
transactions (0.84)
------------------------------- ---------
Total distributions (1.36)
------------------------------- ---------
NET ASSET VALUE, END OF PERIOD $ 13.64
------------------------------- ---------
TOTAL RETURN (A) 31.80%
-------------------------------
RATIOS TO AVERAGE NET ASSETS
-------------------------------
Expenses 1.09%
-------------------------------
Net investment income 4.42%
-------------------------------
Expense waiver/ reimbursement
(b) 0.18%
-------------------------------
SUPPLEMENTAL DATA
-------------------------------
Net assets, end of period (000
omitted) $112,472
-------------------------------
Portfolio Turnover 31%
-------------------------------
</TABLE>
(a) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
American Leaders Fund, Inc.
Financial Highlights--Class B Shares
--------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
MARCH 31,
1995(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.97
-------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
-------------------------------------------------------------------------------------------------
Net investment income 0.13
-------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.92
------------------------------------------------------------------------------------------------- -------
Total from investment operations 1.05
-------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
-------------------------------------------------------------------------------------------------
Distributions from net investment income (0.12)
-------------------------------------------------------------------------------------------------
Distributions from net realized gain on investment transactions (0.23)
------------------------------------------------------------------------------------------------- -------
Total distributions (0.35)
------------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 15.67
------------------------------------------------------------------------------------------------- -------
TOTAL RETURN (B) 7.28%
-------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
-------------------------------------------------------------------------------------------------
Expenses 1.95%(c)
-------------------------------------------------------------------------------------------------
Net investment income 1.09%(c)
-------------------------------------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.12%(c)
-------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $46,671
-------------------------------------------------------------------------------------------------
Portfolio Turnover 34%
-------------------------------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from July 25, 1994 (date of initial
public offering) to March 31, 1995.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
American Leaders Fund, Inc.
Financial Highlights--Class C Shares
--------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31,
1995 1994(a)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.55 $ 14.70
-----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
-----------------------------------------------------------------------------------------------
Net investment income 0.14 0.12
-----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1.45 0.35
----------------------------------------------------------------------------------------------- --------- -----------
Total from investment operations 1.59 0.47
-----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
-----------------------------------------------------------------------------------------------
Distributions from net investment income (0.13) (0.13)
-----------------------------------------------------------------------------------------------
Distributions from net realized gain on investment transactions (0.35) (0.49)
----------------------------------------------------------------------------------------------- --------- -----------
Total distributions (0.48) (0.62)
----------------------------------------------------------------------------------------------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 15.66 $ 14.55
----------------------------------------------------------------------------------------------- --------- -----------
TOTAL RETURN (B) 11.23% 3.16%
-----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
-----------------------------------------------------------------------------------------------
Expenses 2.04% 2.11%(c)
-----------------------------------------------------------------------------------------------
Net investment income 0.91% 0.71%(c)
-----------------------------------------------------------------------------------------------
Expense waiver/reimbursement (d) -- -- (c)
-----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $20,055 $11,895
-----------------------------------------------------------------------------------------------
Portfolio Turnover 34% 27%
-----------------------------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from April 21, 1993 (date of initial
public offering) to March 31, 1994.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are integral part of the Financial Statements)
American Leaders Fund, Inc.
Financial Highlights--Fortress Shares
--------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31,
1995 1994(a)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.58 $ 14.95
----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
----------------------------------------------------------------------------------------------
Net investment income 0.25 0.16
----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1.42 (0.20)
---------------------------------------------------------------------------------------------- --------- -----------
Total from investment operations 1.67 (0.04)
----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
----------------------------------------------------------------------------------------------
Distributions from net investment income (0.24) (0.16)
----------------------------------------------------------------------------------------------
Distributions from net realized gain on investment transactions (0.35) (0.17)
---------------------------------------------------------------------------------------------- --------- -----------
Total distributions (0.59) (0.33)
---------------------------------------------------------------------------------------------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 15.66 $ 14.58
---------------------------------------------------------------------------------------------- --------- -----------
TOTAL RETURN (B) 11.80% (0.30%)
----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
----------------------------------------------------------------------------------------------
Expenses 1.27% 1.35%(c)
----------------------------------------------------------------------------------------------
Net investment income 1.69% 1.51%(c)
----------------------------------------------------------------------------------------------
Expense waiver/reimbursement (d) -- -- (c)
----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $28,495 $15,282
----------------------------------------------------------------------------------------------
Portfolio Turnover 34% 27%
----------------------------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from July 27, 1993 (date of initial
public offering) to March 31, 1994.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
American Leaders Fund, Inc.
Notes to Financial Statements
--------------------------------------------------------------------------------
March 31, 1995
1. ORGANIZATION
American Leaders Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as a diversified, open-end
management investment company. Effective April 21, 1993, July 27, 1993, and July
25, 1994, the Fund added Class C Shares, Fortress Shares, and Class B Shares,
respectively. The Fund offers 4 classes of shares: Class A Shares, Fortress
Shares, Class C Shares and Class B Shares.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on national securities exchanges. Unlisted securities and
short-term securities are generally valued at the prices provided by an
independent pricing service. Short-term securities with remaining
maturities of sixty days or less at the time of purchase may be valued at
amortized cost, which approximates fair market value.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Directors (the
"Directors"). Risks may arise from the potential inability of
counterparties to honor the terms of the repurchase agreement. Accordingly,
the Fund could receive less than the repurchase price on the sale of
collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
Interest income and expenses are accrued daily. Bond premium and discount,
if applicable, are amortized as required by the Internal Revenue Code, as
amended (the "Code").
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
American Leaders Fund, Inc.
--------------------------------------------------------------------------------
EQUALIZATION--The Fund follows the accounting practice known as
equalization, in which a portion of the proceeds from sales and costs of
redemptions of capital stock equivalent, on a per share basis, to the
amount of undistributed net investment income on the date of the
transaction, is credited or charged to undistributed net investment income.
As a result, undistributed net investment income per share is unaffected by
sales or redemptions of capital stock.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
OTHER--Investment transactions are accounted for on the trade date.
3. CAPITAL STOCK
At March 31, 1995, par value shares ($0.20 per share) authorized were as
follows:
<TABLE>
<CAPTION>
NUMBER OF PAR VALUE
CLASS NAME SHARES AUTHORIZED
<S> <C>
Class A Shares 30,000,000
Class B Shares 20,000,000
Class C Shares 25,000,000
Fortress Shares 25,000,000
</TABLE>
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
1995 1994
CLASS A SHARES SHARES DOLLARS SHARES DOLLARS
<S> <C> <C> <C> <C>
Shares sold 3,930,179 $ 58,226,085 4,010,791 $ 59,786,383
------------------------------------------------------
Shares issued to shareholders in
payment of dividends declared 534,011 7,763,914 564,327 8,249,042
------------------------------------------------------
Shares redeemed (2,880,782) (42,703,397) (2,631,678) (39,327,244)
------------------------------------------------------ ----------- -------------- ----------- --------------
Net change resulting from
Class A Shares transactions 1,583,408 $ 23,286,602 1,943,440 $ 28,708,181
------------------------------------------------------ ----------- -------------- ----------- --------------
</TABLE>
American Leaders Fund, Inc.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
1995 1994(a)
FORTRESS SHARES SHARES DOLLARS SHARES DOLLARS
<S> <C> <C> <C> <C>
Shares sold 1,145,830 $ 17,066,187 1,152,663 $ 17,504,900
---------------------------------------------------
Shares issued to shareholders in
payment of dividends declared 45,561 661,854 9,223 137,493
---------------------------------------------------
Shares redeemed (419,627) (6,224,206) (113,835) (1,739,592)
--------------------------------------------------- ---------- ------------- ---------- -------------
Net change resulting from
Fortress Shares transactions 771,764 $ 11,503,835 1,048,051 $ 15,902,801
--------------------------------------------------- ---------- ------------- ---------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
1995 1994(b)
CLASS C SHARES SHARES DOLLARS SHARES DOLLARS
<S> <C> <C> <C> <C>
Shares sold 689,500 $ 10,271,475 858,693 $ 12,978,745
------------------------------------------------------
Shares issued to shareholders in
payment of dividends declared 20,770 300,523 6,285 93,101
------------------------------------------------------
Shares redeemed (246,875) (3,662,616) (47,694) (718,025)
------------------------------------------------------ --------- ------------- --------- -------------
Net change resulting from
Class C Shares transactions 463,395 $ 6,909,382 817,284 $ 12,353,821
------------------------------------------------------ --------- ------------- --------- -------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED MARCH 31,
1995(c) 1994
CLASS B SHARES SHARES DOLLARS SHARES DOLLARS
<S> <C> <C> <C> <C>
Shares sold 3,026,730 $ 45,352,927 -- $ --
---------------------------------------------------
Shares issued to shareholders in
payment of dividends declared 36,359 521,464 -- --
---------------------------------------------------
Shares redeemed (84,644) (1,257,205) -- --
--------------------------------------------------- ---------- ------------- ---------- -------------
Net change resulting from
Class B Shares transactions 2,978,445 $ 44,617,186 -- $ --
--------------------------------------------------- ---------- ------------- ---------- -------------
Net change resulting from
Fund share transactions 5,797,012 $ 86,317,005 3,808,775 $ 56,964,803
--------------------------------------------------- ---------- ------------- ---------- -------------
</TABLE>
(a) Reflects operations for the period from July 27, 1993 (date of initial
public offering) to March 31, 1994.
(b) Reflects operations for the period from April 21, 1993 (date of initial
public offering) to March 31 1994.
(c) Reflects operations for the period from July 25, 1994 (date of initial
public offering) to March 31, 1995.
American Leaders Fund, Inc.
--------------------------------------------------------------------------------
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Advisers, the Fund's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory
fee equal to a maximum of .55 of 1% of the average daily net assets of the
Fund, and 4.5% of the gross income of the Fund, excluding capital gains or
losses.
The Adviser may voluntarily choose to waive any portion of its fee and/or
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and/or reimbursement at any time at its
sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The FAS fee is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received during
the period of the Administrative Services Agreement shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan,
the Fund will compensate Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Fund to finance activities intended
to result in the sale of the Fund's Class B Shares and Class C Shares. The
Plan provides that the Fund may incur distribution expenses up to .75 of 1%
of the average daily net assets of the Class B Shares and Class C Shares,
respectively, annually, to compensate FSC.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services
Agreement with Federated Shareholders Services ("FSS"), the Fund will pay
FSS up to .25 of 1% of average daily net assets for each class of shares of
the Fund for the period. This fee is to obtain certain services for
shareholders and to maintain the shareholder accounts.
TRANSFER AGENT FEES--Federated Services Company ("FServ") serves as
transfer and dividend disbursing agent for the Fund. The fee is based on
the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's
average daily net assets for the period plus, out-of-pocket expenses.
GENERAL--Certain of the Officers and Directors of the Fund are Officers and
Directors or Trustees of the above companies.
American Leaders Fund, Inc.
--------------------------------------------------------------------------------
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended March 31, 1995, were as follows:
<TABLE>
<S> <C>
PURCHASES $ 168,867,226
-------------------------------------------------------------------------------------------------- --------------
SALES $ 92,644,874
-------------------------------------------------------------------------------------------------- --------------
</TABLE>
Report of Independent
Public Accountants
--------------------------------------------------------------------------------
To the Shareholders and Board of Directors of
AMERICAN LEADERS FUND, INC.:
We have audited the accompanying statement of assets and liabilities of American
Leaders Fund, Inc. (a Maryland corporation), including the schedule of portfolio
investments, as of March 31, 1995, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
periods presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1995, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
American Leaders Fund, Inc. as of March 31, 1995, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
May 12, 1995
Directors Officers
-----------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley President
John T. Conroy, Jr. J. Christopher Donahue
William J. Copeland Vice President
J. Christopher Donahue Richard B. Fisher
James E. Dowd Vice President
Lawrence D. Ellis, M.D. Edward C. Gonzales
Edward L. Flaherty, Jr. Vice President and Treasurer
Peter E. Madden John W. McGonigle
Gregor F. Meyer Vice President and Secretary
John E. Murray, Jr. David M. Taylor
Wesley W. Posvar Assistant Treasurer
Marjorie P. Smuts Charles H. Field
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
(LOGO)
FEDERATED SECURITIES CORP.
Distributor
A Subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
027128107
027128206
027128305
027128404
8042504 (5/95)
(LOGO)
A1. The graphic presentation here displayed consists of a boxed legend
in the upper left quadrant indicating the components of the
corresponding mountain chart. The color coded mountain chart is a visual
representation of the narrative text above it. The "x" axis reflects
computation periods from 2/26/69 to 3/31/95. The "y" axis is measured in
increments of $50,000 ranging from $0 to $300,000 and indicates that the
ending value of hypothetical initial investment of $27,000 in the fund's
Class A Shares, assuming the reinvestment of capital gains and
dividends,would have grown to $292,576 on 3/31/95.
A2. The graphic presentation here displayed consists of a boxed legend
in the upper left quadrant indicating the components of the
corresponding mountain chart. The color coded mountain chart is a
visual representation of the narrative text above it. The "x" axis
reflects computation periods from 2/26/69 to 3/31/95. The "y" axis is
measured in increments of $50,000 ranging from $0 to $200,000 and
indicates that the ending value of hypothetical yearly investments of
$1,000 in the fund's Class A Shares, assuming the reinvestment of
capital gains and dividends,would have grown to $155,854 on 3/31/95.
A3. The graphic presentation here displayed consists of a boxed legend
in the upper left quadrant indicating the components of the
corresponding mountain chart. The color-coded mountain chart is a
visual representation of the narrative text beneath it. The "x" axis
reflects computation periods from 3/31/80 to 3/31/95. The "y" axis is
measured in increments of $50,000 ranging from $0 to $200,000 and
indicates that the ending value of a hypothetical initial investment of
$5,000 and subsequent monthly investments of $250 over 15 years in the
fund's Class A Shares would have grown to $162,750 on 3/31/95.
A4. The Graphic presentation here displayed consists of a five column
chart outlining the seventeen ten-year periods of investment growth. The
columns are as follows: April 1-March 31; Initial Number of Shares;
Dividends and Capital Gains Reinvested; Total Shares; Ending Value. The
information is as follows: 1969-1979*, 919, $5,501, 1,552, $12,386; 1970-
1980, 962, $5,918, 1,729, $13,347; 1971-1981, 919, $7,312, 1,699,
$15,935; 1972-1982, 920, $7,334, 1,784, $15,146; 1973-1983, 957,
$10,781, 1,941, $21,275; 1974-1984, 1,151, $14,597, 2,473, $27,305; 1975-
1985, 1,272, $21,238, 3,104, $35,978; 1976-1986, 1,047, $23,339, 2,758,
$37,613; 1977-1987, 1,081, $28,331, 3,075, $43,696; 1978-1988, 1,287,
$26,800, 3,423, $42,958; 1979-1989, 1,184, $27,487, 3,292, $42,929; 1980-
1990, 1,224, $28,863, 3,588, $43,809; 1981-1991, 1,007, $24,931, 2,899,
$38,209; 1982-1992, 1,113, $28,557, 3,170, $44,006; 1983-1993, 862,
$24,159, 2,484, $37,005; 1984-1994, 856, $20,729, 2,278, $33,209; and
1985-1995, 815, $16,837, 1,891, $29,606.
A5. The graphic presentation here displayed consists of a two-column
chart outlining "Some of the Fund's Major Shareholder Groups." The
information is as follows: Individuals and Joint Tenants, $136,839,974;
IRA's, $70,583,160; Trusts, $29,028,690; Custodians (under Uniform Gift
to Minors Act), $9,593,588; and Corporations, $3,736,881.
A6. The graphic presentation here displayed consists of a two-column
chart outlining the Fund's "Top Ten Holdings" with regard to "Basic
Industries" and "% of Net Assets as of 3/31/95." The information is as
follows: Hewlett-Packard Co., 2.88%; Mattel, Inc., 2.62%; Western Atlas,
Inc., 2.61%; Philip Morris Cos., Inc., 2.50%; Sears, Roebuck & Co.,
2.49%; Scott Paper Co., 2.46%; U. S. Healthcare, Inc., 2.43%; Reebok
International Ltd., 2.35%; Philips Electronics, 2.35%; and Raytheon Co.,
2.34%.
A7. 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 American Leaders Fund, Inc. based on a 5.5% sales
load are represented by a solid line. The Class A Shares of American
Leaders Fund, Inc. based on a 4.5% sales load are represented by a
broken solid line. The Standard & Poor's 500 Index (the "S&P 500") is
represented by a double broken dotted line and the Lipper Growth and
Income Funds Average (the "LGIFA") is represented by a triple broken
dotted line.The line graph is a visual representation of a comparison of
change in value of a $10,000 hypothetical investment in the Class A
Shares of the fund and the S&P 500 and the LGIFA. The "x" axis reflects
computation periods from 3/31/85 to 3/31/95. The "y" axis reflects the
cost of the investment. The right margin reflects the ending value of
the hypothetical investment in the fund's Class A Shares based on a 5.5%
and 4.5% sales load, as compared to the S&P 500 and the LGIFA; the
ending values were $29,617, $29,920, $38,348, and $31,334, respectively.
The legend in the bottom quadrant of the graphic presentation indicates
the fund's Class A Shares Average Annual Total Returns for the one-year,
five-year, and 10-year periods ended 3/31/95, which were 5.71%, 10.57%,
and 11.47%, respectively.
A8. The graphic presentation here displayed consists of a line graph.
The corresponding components of the line graph are listed underneath.
The Class B Shares of American Leaders Fund, Inc. are represented by a
solid line. The S&P 500 is represented by a double broken dotted line
and the LGIFA is represented by a triple broken dotted line. The line
graph is a visual representation of a comparison of change in value of a
$10,000 hypothetical investment in the Class B Shares of the fund and
the S&P 500 and the LGIFA. The "x" axis reflects computation periods
from 7/25/94 to 3/31/95. The "y" axis reflects the cost of the
investment. The right margin reflects the ending value of the
hypothetical investment in the fund's Class B Shares, as compared to the
S&P 500 and the LGIFA; the ending values were $10,167, $11,254, and
$10,781, respectively. The legend in the bottom quadrant of the graphic
presentation indicates the fund's Class B Shares Average Annual Total
Return for the period ended 3/31/95; beginning with the inception date
of the fund (7/25/94), through the eight month period thereafter; the
Average Annual Total Return (cumulative) was 1.67%.
A9. 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 American Leaders Fund, Inc. are represented by a
solid line. The S&P 500 is represented by a double broken dotted line
and the LGIFA is represented by a triple broken dotted line. The line
graph is a visual representation of a comparison of change in value of a
$10,000 hypothetical investment in the Class C Shares of the fund and
the S&P 500 and the LGIFA. The "x" axis reflects computation periods
from 4/21/93 to 3/31/95. The "y" axis reflects the cost of the
investment. The right margin reflects the ending value of the
hypothetical investment in the fund's Class C Shares, as compared to the
S&P 500 and the LGIFA; the ending values were $11,521, $11,940, and
$11,376, respectively. The legend in the bottom quadrant of the graphic
presentation indicates the fund's Class C Shares Average Annual Total
Returns for the period ended 3/31/95; beginning with the inception date
of the fund (4/21/93), and the one-year period thereafter; the Average
Annual Total Returns were 7.56% and 10.16%, respectively.
A10. The graphic presentation here displayed consists of a line graph.
The corresponding components of the line graph are listed underneath.
The Fortress Shares of American Leaders Fund, Inc. are represented by a
solid line. The S&P 500 is represented by a double broken dotted line
and the LGIFA is represented by a triple broken dotted line. The line
graph is a visual representation of a comparison of change in value of a
$10,000 hypothetical investment in the Fortress Shares of the fund and
the S&P 500 and the LGIFA. The "x" axis reflects computation periods
from 7/27/93 to 3/31/95. The "y" axis reflects the cost of the
investment. The right margin reflects the ending value of the
hypothetical investment in the fund's Fortress Shares, as compared to
the S&P 500 and the LGIFA; the ending values were $10,930, $11,732, and
$11,293, respectively. The legend in the bottom quadrant of the graphic
presentation indicates the fund's Fortress Shares Average Annual Total
Returns for the period ended 3/31/95; beginning with the inception date
of the fund (7/27/93), and the one-year period thereafter; the Average
Annual Total Returns were 5.45% and 9.60%, respectively.
