AMERICAN LEADERS FUND INC, 485BPOS, 1995-05-25

AMERICAN LEADERS FUND INC
485BPOS, 1995-05-25

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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. 60 X

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X

Amendment No. 34 X

AMERICAN LEADERS FUND, INC.

(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)
X on May 31, 1995, pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i)
on pursuant to paragraph (a) (i).
75 days after filing pursuant to paragraph (a)(ii)
on _________________ pursuant to paragraph (a)(ii) of Rule 485.

If appropriate, check the following box:

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

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 15,1995; 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:

Matthew G. Maloney, Esquire
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037

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 Synopsis (1, 2 and 4); Summary of Fund
Expenses (1-4).
Item 3. Condensed Financial
Information Financial Highlights (1-4).
Item 4. General Description of
Registrant General Information (3); Federated
LifeTrack_ Program (1, 2 and 4);
Fortress
Investment Program (3); Investment
Information; Investment Objective;
Investment Policies; Investment
Limitations (1-4); Other Classes of
Shares (1-4).
Item 5. Management of the Fund Fund Information; Management of
the Fund
(1-4); Distribution of Shares
(1, 2 and
4); Distribution of Fortress
Shares (3);
Administration of the Fund (1-4); .
Item 6. Capital Stock and Other
Securities Dividends; Capital Gains; Tax
Information; Federal Income Tax;
Pennsylvania Personal Property
Taxes (1-4).

Item 7. Purchase of Securities Being
Offered Net Asset Value; Investing in
the Fund
(1, 2 and 4); Investing in Class A
Shares (1); Investing in Class C
Shares
(2); Investing in Fortress Shares (3);
Investing in Class B Shares (4);
How to
Purchase Shares (1, 2 and 4); Share
Purchases (3); Minimum Investment
Required; What Shares Cost (3);
Reducing
or Eliminating the Sales Load (1);
Eliminating the Sales Load (3);
Systematic Investment Program;
Exchange
Privilege; Certificates and
Confirmations (1-4).
Item 8. Redemption or Repurchase How To Redeem Shares, Special
Redemption
Features (1,2 and 4); Redeeming
Fortress
Shares (3); Redeeming Shares Through A
Financial Institution (1, 2 and 4);
Through a Financial Institution (3);
Redeeming Shares by Mail (1, 2 and 4);
Directly By Mail (3); Redeeming
Shares by
Telephone (1,2 and 4); Redeeming
Shares
by Mail (1, 2 and 4); Contingent
Deferred
Sales Charge (1-4); Elimination of
Contingent Deferred Sales Charge,
Account
and Share Information, 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). Directors Compensation (1-4).
Item 15. Control Persons and Principal
Holders of Securities Fund Information (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 Shares (1, 2
and 4); Distribution of Fortress Shares
(3).
Item 22. Calculation of Performance
Data Total Return; Yield; Performance
Comparisons (1-4).
Item 23. Financial Statements Financial Statements (Incorporated into
the Statement of Additional Information by
reference to the Registrant's Annual
Report dated March 31, 1995, File Nos. 2-
29786 and 811-1704), (1-4).

AMERICAN LEADERS FUND, INC.
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
COMBINED PROSPECTUS

The 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 RISK INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL.

This prospectus contains the information you should read and know before you
invest in Class A Shares, Class B Shares and 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 May 31, 1995,
with the Securities and Exchange Commission. The information contained in the
Combined Statement of Additional Information is incorporated by reference into
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 May 31, 1995

--------------------------------------------------------------------------------
TABLE OF CONTENTS

Summary of Fund Expenses.......................................................1

Financial Highlights...........................................................4

Synopsis.......................................................................7

Liberty Family of Funds........................................................8
Federated LifeTrackTM Program
(Class A Shares and Class C Shares).......................................9

Investment Information........................................................10
Investment Objective........................................................10
Investment Policies.........................................................10
Investment Limitations......................................................11

Net Asset Value...............................................................12

Investing in the Fund.........................................................12

How To Purchase Shares........................................................13

Investing in Class A Shares.................................................13

Investing in Class B Shares.................................................16

Investing in Class C Shares.................................................16

Special Purchase Features...................................................17

Exchange Privilege............................................................18

How To Redeem Shares..........................................................19
Special Redemption Features.................................................20
Contingent Deferred Sales Charge............................................21
Elimination of Contingent
Deferred Sales Charge....................................................22

Account and Share Information.................................................23

Fund Information..............................................................24
Management of the Fund......................................................24
Distribution of Shares......................................................25
Administration of the Fund..................................................26
Brokerage Transactions......................................................27

Shareholder Information.......................................................28

Voting Rights...............................................................28

Tax Information...............................................................28
Federal Income Tax..........................................................28
Pennsylvania Personal Property Taxes........................................28

Performance Information.......................................................29

Other Classes of Shares.......................................................30

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

SUMMARY OF FUND EXPENSES
AMERICAN LEADERS FUND, INC.

<TABLE>
<S> <C> <C>
CLASS A SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)..................................... 5.50%
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)..................................................... 0.00%
Redemption Fee (as a percentage of amount redeemed, if applicable).............................................. None
Exchange Fee.................................................................................................... None
ANNUAL CLASS A SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee.................................................................................................. 0.68%
12b-1 Fee....................................................................................................... None
Total Other Expenses............................................................................................ 0.55%
Shareholder Services Fee (after waiver) (2)..................................................... 0.16%
Total Class A Shares Operating Expenses (3)........................................................... 1.23%

</TABLE>

(1) Class A Shares purchased with the proceeds of a redemption of Shares of an
unaffiliated investment company purchased or sold with a sales load and not
distributed by Federated Securities Corp. may be charged a Contingent
Deferred Sales Charge of .50 of 1.00% for redemptions made within one full
year of purchase. See "Contingent Deferred Sales Charge".

(2) The maximum shareholder services 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, 1996. The total
Class A Shares operating expenses were 1.23% for the fiscal year ended
March 31, 1995.

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........ $72 $92 $119 $196
You would pay the following expenses on the same investment, assuming no
redemption................................................................ $67 $92 $119 $196
</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.

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

SUMMARY OF FUND EXPENSES
AMERICAN LEADERS FUND, INC.

<TABLE>
<S> <C> <C>
CLASS B 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)...................................................... 5.50%
Redemption Fee (as a percentage of amount redeemed, if applicable)............................................... None
Exchange Fee..................................................................................................... None
ANNUAL CLASS B SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee................................................................................................... 0.68%
12b-1 Fee........................................................................................................ 0.75%
Total Other Expenses............................................................................................. 0.52%
Shareholder Services Fee (after waiver) (2)....................................................... 0.13%
Total Class B Shares Operating Expenses (3)(4).......................................................... 1.95%

</TABLE>

(1) The contingent deferred sales charge is 5.50% in the first year declining to
1.00% in the sixth year and 0.00% thereafter. (See "Contingent Deferred
Sales Charge").

(2) The maximum shareholder services fee is 0.25%.

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

(4) The total Class B Shares operating expenses would have been 2.07% absent the
voluntary waiver of a portion of the shareholder services fee.

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 charges 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.......................................................... $76 $105
You would pay the following expenses on the same investment, assuming no redemption................ $20 $61
</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.

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

SUMMARY OF FUND EXPENSES
AMERICAN LEADERS FUND, INC.

<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................................................................................................... 0.68%
12b-1 Fee........................................................................................................ 0.75%
Total Other Expenses............................................................................................. 0.61%
Shareholder Services Fee (after waiver) (2)....................................................... 0.22%
Total Class C Shares Operating Expenses (3)............................................................. 2.04%

(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 maximum shareholder services fee is 0.25%.

(3) The total Class C Shares operating expenses in the table above are based on
expenses expected during the fiscal year ending March 31, 1996. The total
Class C Shares operating expenses were 2.04% for the fiscal year ended March
31, 1995.

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 $64 $110 $237
You would pay the following expenses on the same investment, assuming no
redemption................................................................... $21 $64 $110 $237
</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.

--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS--CLASS A SHARES
AMERICAN LEADERS FUND, INC.
--------------------------------------------------------------------------------

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

The following table has been audited by Arthur Andersen LLP, the Fund's
independent public accountants. Their report, dated May 12, 1995, on the Fund's
financial statements for the year ended March 31, 1995, and on the following
table for the periods presented, is included in the Annual Report, which is
incorporated by reference. This table should be read in conjunction with the
Fund's financial statements and notes thereto, which may be obtained from the
Fund.

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.58 $ 14.90 $ 13.88 $ 13.18 $ 12.21 $ 13.04 $ 12.55 $ 14.21
-------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
-------------------------------------------
Net investment income 0.25 0.23 0.29 0.29 0.37 0.55 0.50 0.45
-------------------------------------------
Net realized and unrealized gain (loss) on
investments 1.42 0.18 2.05 1.34 1.28 0.36 1.08 (1.21)
------------------------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
Total from investment operations 1.67 0.41 2.34 1.63 1.65 0.91 1.58 (0.76)
-------------------------------------------
LESS DISTRIBUTIONS
-------------------------------------------
Distributions from net investment income (0.24) (0.24) (0.28) (0.28) (0.38) (0.56) (0.50) (0.43)
-------------------------------------------
Distributions from net realized gain on
investment transactions (0.35) (0.49) (1.04) (0.65) (0.30) (1.18) (0.59) (0.47)
------------------------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
Total distributions (0.59) (0.73) (1.32) (0.93) (0.68) (1.74) (1.09) (0.90)
------------------------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 15.66 $ 14.58 $ 14.90 $ 13.88 $ 13.18 $ 12.21 $ 13.04 $ 12.55
------------------------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN (A) 11.87% 2.76% 18.31% 12.91% 14.17% 7.13% 13.23% (5.32%)
-------------------------------------------
RATIOS TO AVERAGE NET ASSETS
-------------------------------------------
Expenses 1.23% 1.18% 1.13% 1.02% 1.02% 1.01% 1.01% 1.00%
-------------------------------------------
Net investment income 1.71% 1.48% 2.07% 2.12% 3.06% 4.23% 3.85% 3.35%
-------------------------------------------
Expense waiver/reimbursement (b) -- -- 0.06% 0.16% 0.30% 0.35% 0.12% 0.11%
-------------------------------------------
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
-------------------------------------------
Portfolio Turnover 34% 27% 39% 67% 57% 50% 27% 65%
-------------------------------------------

<CAPTION>
<S> <C> <C>
1987 1986
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.64 $ 11.59
-------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
-------------------------------------------
Net investment income 0.46 0.53
-------------------------------------------
Net realized and unrealized gain (loss) on
investments 1.81 2.88
------------------------------------------- --------- ---------
Total from investment operations 2.27 3.41
-------------------------------------------
LESS DISTRIBUTIONS
-------------------------------------------
Distributions from net investment income (0.47) (0.52)
-------------------------------------------
Distributions from net realized gain on
investment transactions (1.23) (0.84)
------------------------------------------- --------- ---------
Total distributions (1.70) (1.36)
------------------------------------------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 14.21 $ 13.64
------------------------------------------- --------- ---------
TOTAL RETURN (A) 18.38% 31.80%
-------------------------------------------
RATIOS TO AVERAGE NET ASSETS
-------------------------------------------
Expenses 1.00% 1.09%
-------------------------------------------
Net investment income 3.44% 4.42%
-------------------------------------------
Expense waiver/reimbursement (b) 0.12% 0.18%
-------------------------------------------
SUPPLEMENTAL DATA
-------------------------------------------
Net assets, end of period (000 omitted) $157,999 $112,472
-------------------------------------------
Portfolio Turnover 28% 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.

Further information about the Fund's performance is contained in the Fund's
Annual Report, dated March 31, 1995, which can be obtained free of charge.

--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS--CLASS B SHARES
AMERICAN LEADERS FUND, INC.
--------------------------------------------------------------------------------

(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

The following table has been audited by Arthur Andersen LLP, the Fund's
independent public accountants. Their report, dated May 12, 1995, on the Fund's
financial statements for the year ended March 31, 1995, and on the following
table for the period presented, is included in the Annual Report, which is
incorporated by reference. This table should be read in conjunction with the
Fund's financial statements and notes thereto, which may be obtained from the
Fund.

<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.

(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.

Further information about the Fund's performance is contained in the Fund's
Annual Report, dated March 31, 1995, which can be obtained free of charge.

--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS--CLASS C SHARES
AMERICAN LEADERS FUND, INC.
--------------------------------------------------------------------------------

(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.

(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.

Further information about the Fund's performance is contained in the Fund's
Annual Report, dated March 31, 1995, which can be obtained free of charge.

--------------------------------------------------------------------------------
SYNOPSIS

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 representing interests in separate
portfolios of securities. As of the date of this prospectus, the Board of
Directors ("Directors") has established four classes of shares for the Fund,
known as Class A Shares, Class B Shares, Class C Shares and Fortress Shares.
This prospectus relates only to the Class A Shares, Class B Shares and Class C
Shares of the Fund (individually and collectively as the context requires,
"Shares").

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.

For information on how to purchase the Shares offered by this prospectus, please
refer to "How to Purchase Shares." The minimum initial investment for Class A
Shares is $500. The minimum initial investment for Class B Shares and Class C
Shares is $1500. However, the minimum initial investment for a retirement
account in any class is $50. Subsequent investments in any class must be in
amounts of at least $100, except for retirement plans which must be in amounts
of at least $50.

Class A Shares are sold at net asset value plus an applicable sales load and are
redeemed at net asset value. However, a contingent deferred sales charge is
imposed under certain circumstances. For a more complete description, see "How
to Redeem Shares."

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 six full years of purchase. See "How to Redeem Shares."

Class C 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. See "How to Redeem Shares."

In addition, the Fund also pays a shareholder services fee at an annual rate not
to exceed 0.25% of average daily net assets.

Additionally, information regarding the exchange privilege offered with respect
to the Fund and certain other funds for which affiliates of Federated Investors
serve as principal underwriter ("Federated Funds") can be found under "Exchange
Privilege."

Federated Advisers is the investment adviser (the "Adviser") to the Fund and
receives compensation for its services. The Adviser's address is Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779.

Investors should be aware of the following general observations. The Fund may
make certain investments and employ certain investment techniques that involve
risks, including investing in equity and illiquid securities, entering into
repurchase agreements and lending portfolio securities. These risks are
described under "Investment Policies."

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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 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 proven, professional investment advisers.

Shareholders of Class A Shares who have been designated as Liberty Life Members
are exempt from sales loads 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.

FEDERATED LIFETRACKTM PROGRAM (CLASS A SHARES AND CLASS C SHARES)

The Fund is also a member of the Federated LifeTrackTM Program sold through
financial representatives. Federated LifeTrackTM Program is an integrated
program of investment options, plan recordkeeping, and consultation services for
401(k) and other participant-directed benefit and savings plans. Under the
Federated LifeTrackTM Program, employers or plan trustees may select a group of
investment options to be offered in a plan which also uses the Federated
LifeTrackTM Program for recordkeeping and administrative services. Additional
fees are charged to participating plans for these services. As part of the
Federated LifeTrackTM Program, exchanges may readily be made between investment
options selected by the employer or a plan trustee.

Other funds participating in the Federated LifeTrackTM Program are: Capital
Growth Fund, Capital Preservation 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, Stock and Bond Fund, Inc. and Strategic Income Fund.

With respect to Class A Shares, no sales load is imposed on purchases made by
qualified retirement plans with over $1 million invested in funds participating
in the Federated LifeTrackTM 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;

domestic issues of corporate debt obligations rated, at the time of purchase,
BBB or better by Standard & Poor's Ratings Group ("Standard & Poor's"), Moody's
Investors Service, Inc. ("Moody's"), or Fitch Investors Service, Inc. or, if
not rated, are determined by the Fund's investment adviser to be of comparable
quality. If a security loses its rating or has its rating reduced after the
Fund has purchased it, the Fund is not required to drop the security from the
portfolio, but will consider doing so. (A description of the rating categories
is contained in the Appendix to the Statement of Additional Information); and
warrants.

Bonds rated "BBB" by Standard & Poor's or "Baa" by Moody's have speculative
characteristics. Changes in economic conditions or other circumstances are more
likely to lead to weakened capacity to make principal and interest payments than
higher rated bonds.

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 prices of fixed income securities fluctuate inversely to the direction of
interest rates.

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 on a short-term or a long-term basis up to one-third the value of its
total assets 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.

There is the risk that when lending portfolio securities, the securities may not
be available to the Fund on a timely basis and the Fund may, therefore, lose the
opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.

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 each class of Shares in the market value
of all securities and other assets of the Fund, subtracting the interest of each
class of Shares in the liabilities of the Fund and those attributable to each
class of Shares, and dividing the remainder by the total number of each class of
Shares outstanding. The net asset value for each class of Shares may differ due
to the variance in daily net income realized by each class. Such variance will
reflect only accrued net income to which the shareholders of a particular class
are entitled.

The net asset value of each class of Shares of the Fund 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
it's 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, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day.

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

INVESTING IN THE FUND

This prospectus offers investors three classes of Shares that carry sales loads
and contingent deferred sales charges in different forms and amounts and which
bear different levels of expenses.

CLASS A SHARES

An investor who purchases Class A Shares pays a maximum sales load of 5.50% at
the time of purchase. As a result, Class A Shares are not subject to any charges
when they are redeemed (except for special programs offered under "Purchases
with Proceeds From Redemptions of Unaffiliated Investment Companies.") Certain
purchases of Class A Shares qualify for reduced sales loads. See "Reducing or
Eliminating the Sales Load." Class A Shares have no conversion feature.

CLASS B SHARES

Class B Shares are sold without an initial sales load, but are subject to a
contingent deferred sales charge of up to 5.50% if redeemed within six full
years following purchase. Class B Shares also bear a higher 12b-1 fee than Class
A Shares. Class B Shares will automatically convert into Class A Shares, based
on relative net asset value, on or around the fifteenth of the month eight full
years after the purchase date. Class B Shares provide an investor the benefit of
putting all of the investor's dollars to work from the time the investment is
made, but (until conversion) will have a higher expense ratio and pay lower
dividends than Class A Shares due to the higher 12b-1 fee.

CLASS C SHARES

Class C Shares are sold without an initial sales load, but are subject to a
1.00% contingent deferred sales charge on assets redeemed within

the first 12 months following purchase. Class C Shares provide an investor the
benefit of putting all of the investor's dollars to work from the time the
investment is made, but will have a higher expense ratio and pay lower dividends
than Class A Shares due to the higher 12b-1 fee. Class C Shares have no
conversion feature.

--------------------------------------------------------------------------------
HOW TO PURCHASE SHARES

Shares of the Fund are sold on days on which the New York Stock Exchange is
open. Shares of the Fund may be purchased as described below, either through a
financial institution (such as a bank or broker/dealer which has a sales
agreement with the distributor) or by wire or by check directly to the Fund,
with a minimum initial investment of $500 for Class A Shares and $1,500 for
Class B Shares and Class C Shares. Additional investments can be made for as
little as $100. The minimum initial and subsequent investment for retirement
plans is only $50. (Financial institutions may impose different minimum
investment requirements on their customers.)

In connection with any sale, 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. An account must be
established at a financial institution or by completing, signing, and returning
the new account form available from the Fund before Shares can be purchased.

INVESTING IN CLASS A SHARES
Class A Shares are sold at their net asset value next determined after an order
is received, plus a sales load as follows:

<TABLE>
<CAPTION>
DEALER
SALES LOAD SALES LOAD CONCESSION
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF PUBLIC OF NET OF PUBLIC
AMOUNT OF OFFERING AMOUNT OFFERING
TRANSACTION PRICE INVESTED PRICE
<S> <C> <C> <C>
Less than $50,000 5.50% 5.82% 5.00%
$50,000 but less
than $100,000 4.50% 4.71% 4.00%
$100,000 but less
than $250,000 3.75% 3.90% 3.25%
$250,000 but less
than $500,000 2.50% 2.56% 2.25%
$500,000 but less
than $1 million 2.00% 2.04% 1.80%
$1 million or
greater 0.00% 0.00% 0.25%*
</TABLE>

*See sub-section entitled "DEALER CONCESSION."

No sales load is imposed for Class A Shares purchased through bank trust
departments, 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, or to shareholders designated as Liberty Life Members. However,
investors who purchase Shares through a trust department, investment adviser, or
retirement plan may be charged an additional service fee by the institution.
Additionally, no sales load is imposed for Class A Shares purchased through
"wrap accounts" or similar programs, under which clients pay a fee or fees for
services.

No sales load is imposed on purchases made by retirement plans with over $1
million invested in funds available through the Federated LifeTrackTM Program.

DEALER CONCESSION

For sales of Class A Shares, a dealer will normally receive up to 90% of the
applicable sales load. Any portion of the sales load which is not paid to a
dealer will be retained by the distributor. However, the distributor, may offer
to pay dealers up to 100% of the sales load retained by it. Such payments may
take the form of cash or promotional incentives, such as reimbursement 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 items of material value. In some instances,
these incentives will be made available only to dealers whose employees have
sold or may sell a significant amount of Shares. On purchases of $1 million or
more, the investor pays no sales load; 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 load 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 load 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 the entire amount of the
applicable sales load will be reallowed to dealers. In addition, the distributor
will pay dealers additional bonus payments in an amount equal to 0.50 of 1% of
the public offering price of the Shares sold.

REDUCING OR ELIMINATING
THE SALES LOAD

The sales load can be reduced or eliminated on the purchase of Class A Shares
through:

quantity discounts and accumulated purchases;

concurrent purchases;

signing a 13-month letter of intent;

using the reinvestment privilege; or

purchases with proceeds from redemptions of unaffiliated investment company
shares.

QUANTITY DISCOUNTS AND
ACCUMULATED PURCHASES

As shown in the table above, larger purchases reduce the sales load paid. The
Fund will combine purchases of Class A 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 load. In addition, the sales load, 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 Class A Shares is made, the Fund will consider the
previous purchases still invested in the Fund. For example, if a shareholder
already owns Class A 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 load on the additional purchase according to the schedule now in
effect would be 3.75%, not 4.50%.

To receive the sales load 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 Class A Shares are already owned or that purchases are
being combined. The Fund will reduce the sales load after it confirms the
purchases.

CONCURRENT PURCHASES

For purposes of qualifying for a sales load 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 load. For example,
if a shareholder concurrently invested $30,000 in one of the other funds in the
Liberty Family of Funds with a sales load, and $20,000 in this Fund, the sales
load would be reduced.

To receive this sales load 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 load
after it confirms the purchases.

LETTER OF INTENT

If a shareholder intends to purchase at least $50,000 of shares in the funds in
the Liberty Family of Funds (excluding money market funds) over the next 13
months, the sales load may be reduced by signing a letter of intent to that
effect. This letter of intent includes a provision for a sales load adjustment
depending on the amount actually purchased within the 13-month period and a
provision for the custodian to hold up to 5.50% of the total amount intended to
be purchased in escrow (in shares) until such purchase is completed.

The Shares held in escrow in the shareholder's account will be released upon
fulfillment of the letter of intent or the end of the 13-month period, whichever
comes first. If the amount specified in the letter of intent is not purchased,
an appropriate number of escrowed Shares may be redeemed in order to realize the
difference in the sales load.

While this letter of intent will not obligate the shareholder to purchase
Shares, each purchase during the period will be at the sales load applicable to
the total amount intended to be purchased. At the time a letter of intent is
established, current balances in accounts in any Class A Shares of any fund in
the Liberty Family of Funds, excluding money market accounts, will be aggregated
to provide a purchase credit towards fulfillment of the letter of intent. Prior
trade prices will not be adjusted.

REINVESTMENT PRIVILEGE

If Class A Shares in the Fund have been redeemed, the shareholder has the
privilege within 120 days, to reinvest the redemption proceeds at the
next-determined net asset value without any sales load. 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 load. If the
shareholder redeems his Class A Shares in the Fund, there may be tax
consequences.

PURCHASES WITH PROCEEDS FROM
REDEMPTIONS OF UNAFFILIATED
INVESTMENT COMPANIES

Investors may purchase Class A Shares at net asset value, without a sales load,
with the proceeds from the redemption of shares of an unaffiliated investment
company that were purchased or sold with a sales load or commission and were not
distributed by Federated Securities Corp. 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. From time to time, the Fund may offer dealers a payment of .50 of 1.00%
for Shares purchased under this program. If Shares are purchased in this manner,
Fund purchases will be subject to a contingent deferred sales charge for one
year from the date of purchase.

INVESTING IN CLASS B SHARES

Class B Shares are sold at their net asset value next determined after an order
is received. While Class B Shares are sold without an initial sales load, under
certain circumstances described under "Contingent Deferred Sales Charge--Class B
Shares," a contingent deferred sales charge may be applied by the distributor at
the time Class B Shares are redeemed.

CONVERSION OF CLASS B SHARES

Class B Shares will automatically convert into Class A Shares on or around the
fifteenth of the month eight full years after the purchase date, except as noted
below, and will no longer be subject to a distribution services fee (see
"Distribution of Shares"). Such conversion will be on the basis of the relative
net asset values per share, without the imposition of any sales load, fee or
other charge. 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. For purposes of conversion to Class A Shares,
Shares purchased through the reinvestment of dividends and distributions paid on
Class B Shares will be considered to be held in a separate sub-account. Each
time any Class B Shares in the shareholder's account (other than those in the
sub-account) convert to Class A Shares, an equal pro rata portion of the Class B
Shares in the sub-account will also convert to Class A Shares. 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.

Orders for $250,000 or more of Class B Shares will automatically be invested in
Class A Shares.

INVESTING IN CLASS C SHARES

Class C Shares are sold at net asset value next determined after an order is
received. A contingent deferred sales charge of 1.00% will be charged on assets
redeemed within the first full 12 months following purchase. For a complete
description of this charge see "Contingent Deferred Sales Charge--Class C
Shares."

PURCHASING SHARES 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 placed through a financial
institution are considered received when the Fund is notified of the purchase
order or when payment is 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.
Financial institutions may charge additional fees for their services.

The financial institution which maintains investor accounts in Class B Shares or
Class C Shares 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.

PURCHASING SHARES BY WIRE

Once an account has been established, Shares may be purchased by wire by calling
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: State Street Bank and Trust Company, Boston,
MA; Attention: EDGEWIRE; For Credit to: (Fund Name) (Fund Class); (Fund Number);
Account Number; Trade Date and Order Number; Group Number or Dealer Number;
Nominee or Institution Name; and ABA Number 011000028. Shares cannot be
purchased by wire on holidays when wire transfers are restricted.

PURCHASING SHARES BY CHECK

Once an account has been established, Shares may be purchased by sending a check
made payable to the name of the Fund (designate class of Shares and account
number) to: Federated Services Company, P.O. Box 8600, Boston, MA 02266-8600.
Orders by mail are considered received when payment by check is converted into
federal funds (normally the business day after the check is received).

SPECIAL PURCHASE FEATURES

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 at
an Automated Clearing House ("ACH") member and invested in the Fund at the net
asset value next determined after an order is received by the Fund, plus the
sales load, if applicable. Shareholders should contact their financial
institution or the Fund to participate in this program.

RETIREMENT PLANS

Fund Shares can be purchased as an investment for retirement plans or IRA
accounts. For further details, contact the Fund and consult a tax adviser.

--------------------------------------------------------------------------------
EXCHANGE PRIVILEGE

CLASS A SHARES
Class A shareholders may exchange all or some of their Shares for Class A Shares
of other funds in the Liberty Family of Funds at net asset value. Neither the
Fund nor any of the funds in the Liberty Family of Funds imposes any additional
fees on exchanges. Participants in a retirement plan under the Federated
LifeTrackTM Program may exchange all or some of their Shares for Class A Shares
of other funds offered under the plan at net asset value.

CLASS B SHARES

Class B shareholders may exchange all or some of their Shares for Class B Shares
of 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 are to be held will
be added to the time for which exchanged-from Shares were held for purposes of
satisfying the applicable holding period.

CLASS C SHARES

Class C shareholders may exchange all or some of their Shares for Class C Shares
in other funds in the Liberty Family of Funds at net asset value without a
contingent deferred sales charge. (Not all funds in the Liberty Family of Funds
currently offer Class C Shares. Contact your financial institution regarding the
availability of other Class C Shares in the Liberty Family of Funds.)
Participants in a retirement plan under the Federated LifeTrackTM 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.
To the extent that a shareholder exchanges Shares for Class C Shares in other
funds in the Liberty Family of Funds, the time for which the exchanged-for
Shares are to be held will be added to the time for which exchanged-from Shares
were held for purposes of satisfying the applicable holding period. 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
Shares being acquired may be sold. Upon receipt of proper instructions and
required supporting documents, Shares submitted for exchange are redeemed and
proceeds invested in the same class of 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 upon 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, 500
Victory Road--2nd Floor, Quincy, Massachusetts 02171.

Instructions for exchanges for retirement plans participating in the Federated
LifeTrackTM 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.
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 8600, Boston, Massachusetts
02266-8600 and deposited to the shareholder's account before being exchanged.
Telephone exchange instructions are recorded and will be binding upon the
shareholder. 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 begin receiving dividends the
following business day. This privilege may be modified or terminated at any
time.

--------------------------------------------------------------------------------
HOW TO REDEEM SHARES

Shares are redeemed at their net asset value, less any applicable contingent
deferred sales charge, next determined after the Fund 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
as described below. Redemptions of Shares held through retirement plans
participating in the Federated LifeTrackTM Program will be governed by the
requirements of the respective plans.

REDEEMING SHARES THROUGH A
FINANCIAL INSTITUTION

Shares of the Fund may be redeemed by calling your financial institution 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
(such as banks) 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. Customary fees and commissions may be charged by the financial
institution for this service.

REDEEMING SHARES BY TELEPHONE

Shares may be redeemed in any amount by calling the Fund provided the Fund has a
properly completed authorization form. These forms can be obtained from
Federated Securities Corp. Proceeds will be mailed in the form of a check, to
the shareholder's address of record or by wire transfer to the shareholder's
account at a domestic commercial bank that is a member of the Federal Reserve
System. The minimum amount for a wire transfer is $1,000. Proceeds from redeemed
Shares purchased by check or through ACH will not be wired until that method of
payment has cleared.

Telephone instructions will be recorded. 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
this occurs, "Redeeming Shares By Mail" should be considered. If at any time the
Fund shall determine it necessary to terminate or modify the telephone
redemption privilege, shareholders would be promptly notified.

REDEEMING SHARES BY MAIL

Shares may be redeemed in any amount by mailing a written request to: Federated
Services Company, Fund Name, Fund Class, P.O. Box 8600, Boston, MA 02266-8600.

The written request should state: Fund Name and the Class designation; the
account name as registered with the Fund; the account number; and the number of
Shares to be redeemed or the dollar amount requested. All owners of the account
must sign the request exactly as the Shares are registered. It is recommended
that any share certificates be sent by registered or certified mail with the
written request.

If you are requesting a redemption of any amount to be sent to an address other
than that on record with the Fund, or a redemption payable to a third party,
then all signatures appearing on the written request must be guaranteed by a
bank which is a member of the Federal Deposit Insurance Corporation, a trust
company, a member firm of a domestic stock exchange, or any other "eligible
guarantor institution," as defined by the Securities and 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.

SPECIAL REDEMPTION FEATURES

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 Class A
Shares are sold with a sales load, it is not advisable for shareholders to
continue to purchase Class A Shares while participating in this program. A
contingent deferred sales charge may be imposed on Class B Shares and Class C
Shares.

CONTINGENT DEFERRED SALES CHARGE

Shareholders may be subject to a contingent deferred sales charge upon
redemption of their Shares under the following circumstances:

CLASS A SHARES

Class A Shares purchased under a periodic special offering with the proceeds of
a redemption of Shares of an unaffiliated investment company purchased or sold
with a sales load and not distributed by Federated Securities Corp. may be
charged a contingent deferred sales charge of .50 of 1.00% for redemptions made
within one full year of purchase. 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.

CLASS B SHARES

Shareholders redeeming Class B Shares from their Fund accounts within six 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
YEAR OF REDEMPTION DEFERRED
AFTER PURCHASE SALES CHARGE
<S> <C>
First 5.50%
Second 4.75%
Third 4%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and thereafter 0%
</TABLE>

CLASS C SHARES

Shareholders redeeming Class C Shares from their Fund accounts within one full
year of the purchase date of those Shares will be charged a contingent deferred
sales charge by the Fund's distributor of 1.00%. 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. No contingent deferred sales charge
will be charged for redemptions of Class C Shares from the Federated LifeTrackTM
Program.

CLASS A SHARES, CLASS B SHARES,
AND CLASS C SHARES

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 six
full years from the date of purchase with respect to Class B Shares and one full
year from the date of purchase with respect to Class C Shares and applicable
Class A Shares. 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 six full years from the date of purchase with respect to Class B Shares and
one full year from the date of purchase with respect to Class C Shares and
applicable Class A Shares; (3) Shares held for fewer than six years with respect
to Class B Shares and one full year from the date of purchase with respect to
Class C Shares and applicable Class A Shares 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 funds in the Liberty Family of Funds in the
same class (see "Exchange Privilege"). 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").

ELIMINATION OF CONTINGENT DEFERRED SALES CHARGE

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
Federated LifeTrackTM Program funds or redemptions from the Federated
LifeTrackTM Program.

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 representing minimum required distributions from an
Individual Retirement Account or other retirement plan to a shareholder who has
attained the age of 70-1/2; and (3) involuntary redemptions by the Fund of
Shares in shareholder accounts that do not comply with the minimum balance
requirements. 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, as amended, or retirement plans where the third party administrator has
entered into certain arrangements with Federated Securities Corp. or its
affiliates, or any other financial institution, to the extent that no payments
were advanced for purchases made through such entities. The Directors reserve
the right to discontinue elimination of the contingent deferred sales charge.
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.

--------------------------------------------------------------------------------
ACCOUNT AND SHARE INFORMATION

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. Monthly confirmations 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 and distributions 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 contacting 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.

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 Class A Share required
minimum value of $500 or the required minimum value of $1,500 for Class B Shares
and Class C Shares. This requirement does not apply, however, if the balance
falls below the required minimum value because of changes in the net asset value
of the respective Share Class. 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.

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 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 subsidiaries also provide administrative services to a number of
investment companies. With over $72 billion invested across more than 260 funds
under management and/or administration by its subsidiaries, as of December 31,
1994, Federated Investors is one of the largest mutual fund investment managers
in the United States. With more than 1,750 employees, Federated continues to be
led by the management who founded the company in 1955. Federated funds are
presently at work in and through 4,000 financial institutions nationwide. More
than 100,000 investment professionals have selected Federated funds for their
clients.

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.

Timothy E. Keefe has been the Fund's portfolio manager since February, 1995.
Mr. Keefe joined Federated Investors in 1987, and has been an Assistant Vice
President of the Fund's investment adviser since 1993. Mr. Keefe served as an
Investment Analyst of the investment adviser from 1991, until 1993, and from
1987 until 1991, he acted as a Marketing Representative in the Broker Dealer
Department. Mr. Keefe is a Chartered Financial Analyst and received his M.B.A.
in Business Administration from the University of Pittsburgh.

Frederick L. Plautz has been the Fund's portfolio manager since February, 1995.
Mr. Plautz joined Federated Investors in 1990 and has been a Vice President of
the Fund's investment adviser since October, 1994. Prior to this, Mr. Plautz
served as an Assistant Vice President of the investment adviser. Mr. Plautz
received his M.S. in Finance from the University of Wisconsin.

DISTRIBUTION OF 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 distributor may offer to pay financial institutions an amount equal to 1% of
the net asset value of Class C Shares purchased by their clients or customers at
the time of purchase (except for participants in the Federated LifeTrackTM
Program). These payments will be made directly by the distributor from its
assets, and will not be made from assets of the Fund. 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.

The distributor will pay dealers an amount up to 5.5% of the net asset value of
Class B 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. Dealers may voluntarily waive receipt of all or any portion
of these payments. The distributor may pay a portion of the distribution fee
discussed below to financial institutions that waive all or any portion of the
advance payments.

DISTRIBUTION PLAN (CLASS B SHARES AND CLASS C SHARES ONLY) AND SHAREHOLDER
SERVICES PLANS

Under a distribution plan adopted in accordance with Investment Company Act Rule
12b-1 (the "Distribution Plan"), Class B Shares and Class C Shares will pay a
fee to the distributor in an amount computed at an annual rate of .75% of the
average daily net assets of each class of Shares to finance any activity which
is principally intended to result in the sale of Shares subject to the
Distribution Plan. For Class C Shares, the distributor may select financial
institutions such as banks, fiduciaries, custodians for public funds, investment
advisers, and broker/dealers to provide sales support services as agents for
their clients or customers. With respect to Class B Shares, because distribution
fees to be paid by the Fund to the distributor may not exceed an annual rate of
.75% of each class of 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 A Shares, Class B Shares, and Class C Shares to obtain
certain personal services for shareholders and for 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 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 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 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 laws.

OTHER PAYMENTS TO
FINANCIAL INSTITUTIONS

Federated Securities Corp. will pay financial institutions, at the time of
purchase of Class A Shares, an amount equal to .50 of 1% of the net asset value
of Class A Shares purchased by their clients or customers under the Federated
LifeTrackTM Program or by certain qualified plans as approved by Federated
Securities Corp. (Such payments are subject to a reclaim from the financial
institution should the assets leave the program within 12 months after
purchase.)

Furthermore, with respect to Class A Shares, Class B Shares, and Class C Shares,
the distributor may offer to pay a fee from its own assets to financial
institutions as financial assistance for providing substantial marketing and
sales support. 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 financial
institution sells or may sell, and/or upon the type and nature of sales or
marketing support furnished by the financial institution. Any payments made by
the distributor may be reimbursed by the Adviser or its affiliates.

ADMINISTRATION OF THE FUND

ADMINISTRATIVE SERVICES

relates to the average aggregate daily net assets of all Federated Funds as
specified below:

<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE
ADMINISTRATIVE DAILY NET ASSETS
FEE OF THE FEDERATED FUNDS
<C> <S>
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 8600, Boston, Massachusetts
02266-8600, is custodian for the securities and cash of the Fund.

TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT

Federated Services Company, P.O. Box 8600, Boston, Massachusetts 02266-8600, is
transfer agent for the Shares of the Fund, and dividend disbursing agent for the
Fund.

INDEPENDENT PUBLIC ACCOUNTANTS

The independent public accountants for the Fund are Arthur Andersen LLP, 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
Directors.

--------------------------------------------------------------------------------
SHAREHOLDER INFORMATION

VOTING RIGHTS

Each share of the Fund gives the shareholder one vote in Director elections and
other matters submitted to shareholders for vote. All Shares of each portfolio
or class in the Fund have equal voting rights, except that in matters affecting
only a particular portfolio or class, only Shares of that portfolio or class are
entitled to vote.

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, as amended, 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 PERSONAL
PROPERTY TAXES

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 each class
of Shares including Fortress Shares as described under "Other Classes of
Shares."

Total return represents the change, over a specific period of time, in the value
of an investment in each class of 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 each class of Shares is calculated by dividing the net investment
income per share (as defined by the Securities and Exchange Commission) earned
by each class of Shares over a thirty-day period by the maximum offering price
per share of each class 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 each class of 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 maximum sales load or contingent deferred sales charges, 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 higher Shareholder Services 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 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. Depending on the dollar amount invested, and the time period
for which any particular class of Shares is held, the total return for any
particular class may exceed that of another.

From time to time, advertisements for Class A Shares, Class B Shares, Class C
Shares and Fortress Shares of the Fund may refer to ratings, rankings, and other
information in 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 also offers another class of shares called Fortress Shares. Fortress
Shares are sold primarily to customers of financial institutions subject to a
front-end sales load, a contingent deferred sales charge and a minimum initial
investment of $1,500, unless the investment is in a retirement account in which
the minimum investment is $50.

Shares and Fortress Shares are subject to certain of the same expenses. Expense
differences, however, between Shares and Fortress Shares may affect the
performance of each class.

To obtain more information and a prospectus for Fortress Shares, investors may
call 1-800-235-4669 or contact their financial institution.

<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]

AMERICAN LEADERS
FUND, INC.
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES

COMBINED PROSPECTUS

An Open-End, Diversified
Management Investment Company

May 31, 1995

[LOGO] FEDERATED SECURITIES CORP.
---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS

FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
027128107
027128404
027128206
G01085-01 (5/95)

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.

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 May 31, 1995,
with the Securities and Exchange Commission. The information contained in the
Combined Statement of Additional Information is incorporated by reference into
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.

Prospectus dated May 31, 1995

--------------------------------------------------------------------------------
TABLE OF CONTENTS

Summary of Fund Expenses.......................................................1

Financial Highlights...........................................................2

General Information............................................................3

Fortress Investment Program....................................................4

Investment Information.........................................................5
Investment Objective.........................................................5
Investment Policies..........................................................5
Investment Limitations.......................................................6

Net Asset Value................................................................7

Investing in Fortress Shares...................................................7
Share Purchases..............................................................7
Minimum Investment Required..................................................8
What Shares Cost.............................................................8

Eliminating the Sales Load...................................................9

Systematic Investment Program...............................................10
Exchange Privileges.........................................................10
Certificates and Confirmations..............................................11
Dividends...................................................................11
Capital Gains...............................................................11

Redeeming Fortress Shares.....................................................11
Through a Financial Institution.............................................11
Directly By Mail............................................................12
Contingent Deferred Sales Charge............................................12
Systematic Withdrawal Program...............................................13
Accounts with Low Balances..................................................14

Fund Information..............................................................14
Management of the Fund......................................................14
Distribution of Fortress Shares.............................................15
Administration of the Fund..................................................16
Brokerage Transactions......................................................17

Shareholder Information.......................................................17

Voting Rights...............................................................17

Tax Information...............................................................18
Federal Income Tax..........................................................18

Pennsylvania Personal Property Taxes........................................18

Performance Information.......................................................18

Other Classes of Shares.......................................................19

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

SUMMARY OF FUND EXPENSES
AMERICAN LEADERS FUND, INC.

<TABLE>
<S> <C> <C>
FORTRESS SHARES
SHAREHOLDER TRANSACTION EXPENSES
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............................................................................................... 0.68%
12b-1 Fee.................................................................................................... None
Total Other Expenses......................................................................................... 0.62%
Shareholder Services Fee (after waiver) (2).................................................. 0.23%
Total Fortress Shares Operating Expenses (3)....................................................... 1.30%
</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 maximum shareholder services fee is 0.25%.

(3) The total Fortress Shares operating expenses in the table above are based
on expenses expected during the fiscal year ending March 31, 1996. The
total Fortress Shares operating expenses were 1.27% for the fiscal year
ended March 31, 1995.

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 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........ $33 $62 $81 $165
You would pay the following expenses on the same investment, assuming no
redemption................................................................ $23 $51 $81 $165
</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.

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

FINANCIAL HIGHLIGHTS--FORTRESS SHARES
AMERICAN LEADERS FUND, INC.

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

(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.

Further information about the Fund's performance is contained in the Fund's
Annual Report, dated March 31, 1995, 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 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" or "Fortress
Shares," as the context requires) 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 load 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 date.

In addition, the Fund also pays a shareholder services fee at an annual rate not
to exceed 0.25% of average daily net assets.

-------------------------------------------------------------------------------
FORTRESS INVESTMENT PROGRAM

This Fortress Shares class is a member of a family of funds ("Fortress Funds"),
collectively known as the Fortress Investment Program. The other funds in the
Program are:

California Municipal Income Fund, 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;

Liberty Equity Income Fund, Inc., providing above average income and capital
appreciation through income producing equity securities;

Limited Term Fund, providing a high level of current income consistent with
minimum fluctuation in principal value;

Limited Term Municipal Fund, 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, providing current income exempt from federal
regular income tax, New York personal income taxes, and New York City income
taxes;

Ohio Municipal Income Fund, providing current income exempt from federal
regular income tax and Ohio personal income taxes;

Strategic Income Fund, 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, 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 proven, professional investment advisers.

-------------------------------------------------------------------------------
INVESTMENT INFORMATION

INVESTMENT OBJECTIVE

INVESTMENT POLICIES

ACCEPTABLE INVESTMENTS

common stocks;

preferred stocks; and

domestic issues of corporate debt obligations rated, at the time of purchase
BBB, or better by Standard & Poor's Ratings Group ("Standard & Poor's"),
Moody's Investors Service, Inc. ("Moody's"), or Fitch Investors Service, Inc.
or, if not rated, are determined by the Fund's investment adviser to be of
comparable quality. If a security loses its rating or has its rating reduced
after the Fund has purchased it, the Fund is not required to drop the security
from the portfolio, but will consider doing so. (A description of the rating
categories is contained in the Appendix to the Statement of Additional
Information); 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 prices of fixed income securities fluctuate inversely to the direction of
interest rates.

THE LEADERS LIST

ILLIQUID SECURITIES

LENDING OF PORTFOLIO SECURITIES

In order to generate additional income, the Fund may lend its portfolio
securities on a short-term or a long-term basis up to one-third the value of its
total assets 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 Directors and will
receive collateral equal to at least 100% of the value of the securities loaned.

PORTFOLIO TURNOVER

INVESTMENT LIMITATIONS

The Fund will not:

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 a financial institution which has a sales agreement with
the distributor or directly from the distributor, 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").

DIRECTLY 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

mail both to Federated Services Company, P.O. Box 8600, Boston, MA 02266-8600.

Orders by mail are considered received after payment by check is converted by
the transfer agent's bank, State Street Bank, into federal funds. This is
generally the next business day after State Street Bank and Trust Company
("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 the transfer agent's bank, 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 load of 1% of the offering price (which is 1.01% of the
net amount invested). There is no sales load for purchases of $1 million or
more. In addition, no sales load is imposed for Shares purchased through bank
trust departments or investment advisers registered under the Investment
Advisers Act of 1940, as amended, purchasing on behalf of their clients, or by
sales representatives, Directors, 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, or retirement plans where the third party administrator has
entered into certain arrangements with Federated Securities Corp. or its
affiliates. 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 contingent deferred sales charge by the
distributor at the time Shares are redeemed.

DEALER CONCESSION

For sales of Shares, broker/dealers will normally receive 100% of the applicable
sales load. Any portion of the sales load 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 that portion may be paid to a
dealer. The sales load 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 load 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.
ELIMINATING THE SALES LOAD

The sales load 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 load 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 load.

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
sales load 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 the 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 load elimination and/or the contingent deferred sales
charge reduction, Federated Securities Corp. must be notified by the shareholder
in writing or by the shareholder's 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 load 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 load may be reduced by signing a letter of intent to that
effect. This letter of intent includes a provision for a sales load 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 load.

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 load. 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 load. If the shareholder redeems
his Shares, there may be tax consequences.

CONCURRENT PURCHASES
For purposes of qualifying for a sales load 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 load. 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 Fund, plus
the 1.00% sales load for purchases under $1 million. A shareholder may apply for
participation in this program through Federated Securities Corp. or his
financial institution.

EXCHANGE PRIVILEGES

Shares in other Fortress Funds may be exchanged for Shares at net asset value
without a sales load (if previously paid) or a contingent deferred sales charge.
Also, Shares may be exchanged for shares in other Fortress Funds at net asset
value without a contingent deferred sales charge or sales load. The exchange
privilege is available to shareholders residing in any state in which the shares
being acquired may be legally sold.

Shares in certain Federated Funds which are advised by subsidiaries or
affiliates of Federated Investors may also be exchanged for Shares at net asset
value (plus a sales load, if applicable). 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. Shareholders who
desire to automatically exchange Shares of a predetermined amount on a monthly,
quarterly, or annual basis may take advantage of a systematic exchange
privilege. Further information on these exchange privileges is available by
calling Federated Securities Corp. or the shareholder's financial institution.

Before making an exchange, a shareholder must receive a prospectus of the fund
for which the exchange is being made.

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 and distributions 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 Fund 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 written request.

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 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 8600, Boston, MA 02266-8600. 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, 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, 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.

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 distributor of the lesser of the original price or the net
asset value of the Shares redeemed as follows:

<TABLE>
<CAPTION>
Contingent
Amount of Deferred
Purchase Shares Held Sales Charge
<S> <C> <C>
4 years or
Up to $1,999,999 less 1%
2 years or
$2,000,000 to $4,999,999 less .50%
$5,000,000 or more 1 year or less .25%
</TABLE>

To the extent that a shareholder exchanges between or among Fortress Shares in
other funds in the Fortress Investment Program, 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.

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, investment adviser 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, 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.

A contingent deferred sales charge is 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.

-------------------------------------------------------------------------------
FUND INFORMATION

MANAGEMENT OF THE FUND

BOARD OF DIRECTORS

INVESTMENT ADVISER

Investment decisions for the Fund are made by the Fund's investment adviser,
Federated Advisers (the "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 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.

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 Adviser. Mr. Anderson is a Chartered Financial Analyst and
received his M.B.A. in finance from the University of Wisconsin.

Timothy E. Keefe has been the Fund's portfolio manager since February, 1995. Mr.
Keefe joined Federated Investors in 1987, and has been an Assistant Vice
President of the Adviser since 1993. Mr. Keefe served as an Investment Analyst
of the Adviser from 1991, until 1993, and from 1987, until 1991 he acted as a
Marketing Representative in the Broker Dealer Department. Mr. Keefe is a
Chartered Financial Analyst and received his M.B.A. in Business Administration
from the University of Pittsburgh.

Frederick L. Plautz has been the Fund's portfolio manager since February, 1995.
Mr. Plautz joined Federated Investors in 1990 and has been a Vice President of
the Adviser since October, 1994. Prior to this, Mr. Plautz served as an
Assistant Vice President of the Adviser. Mr. Plautz received his M.S. in Finance
from the University of Wisconsin.

DISTRIBUTION OF FORTRESS SHARES

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, distributor may offer to pay a fee from its own assets to financial
institutions as financial assistance for providing substantial marketing and
sales support. The support may include participating in sales, educational and
training seminars at recreational-type facilities, 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 financial
institution sells or may sell, and/or upon the type and nature of sales or
marketing support furnished by the financial institution. Any payments made by
the distributor may be reimbursed by the Adviser or its affiliates.

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 Directors will consider appropriate changes in the services.

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>
MAXIMUM AVERAGE AGGREGATE
ADMINISTRATIVE DAILY NET ASSETS
FEE OF THE FEDERATED FUNDS
<C> <S>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.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.

CUSTODIAN

State Street Bank and Trust Company, P.O. Box 8600, Boston, Massachusetts
02266-8600, is custodian for the securities and cash of the Fund.

TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT

Federated Services Company, P.O. Box 8600, Boston, Massachusetts 02266-8600, is
transfer agent for the Shares of the Fund, and dividend disbursing agent for the
Fund.

INDEPENDENT PUBLIC ACCOUNTANTS

The independent public accountants for the Fund are Arthur Andersen LLP, 2100
One PPG Place, Pittsburgh, Pennsylvania 15222.

BROKERAGE TRANSACTIONS

-------------------------------------------------------------------------------
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 in matters affecting
only a particular portfolio or class, only shares of that portfolio or class are
entitled to vote.

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.

-------------------------------------------------------------------------------
TAX INFORMATION

FEDERAL INCOME TAX

PENNSYLVANIA PERSONAL
PROPERTY TAXES

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, and
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 Shareholder Services 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, advertisements for the Class A Shares, Class B Shares, Class
C Shares and Fortress Shares of the Fund may refer to ratings, rankings, and
other information in 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 also offers other classes of shares called Class A Shares, Class B
Shares and Class C Shares which are all sold primarily to customers of financial
institutions subject to certain differences.

Class A Shares are sold subject to a front-end sales load and a Shareholder
Services Plan. Investments in Class A Shares are subject to a minimum initial
investment of $500, unless the investment is in a retirement account, in which
the minimum investment is $50.

Class B Shares are sold at net asset value subject to a contingent deferred
sales charge, a Rule 12b-1 Plan and a Shareholder Services Plan. 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 the minimum investment is $50.

Class C Shares are sold at net asset value subject to a contingent deferred
sales charge, a Rule 12b-1 Plan and a Shareholder Services Plan. Investments in
Class C Shares are subject to a minimum investment of $1,500, unless the
investment is in a retirement account, in which the minimum investment is $50.

Class A Shares, Class B Shares, Class C Shares and Fortress Shares are subject
to certain of the same expenses. Expense differences, however, between Class A
Shares, Class B Shares, Class C Shares, and Fortress Shares may affect the
performance of each class.

To obtain more information and a combined prospectus for Class A Shares, Class B
Shares and Class C Shares, investors may call 1-800-235-4669 or contact their
financial institution.

<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]

AMERICAN LEADERS
FUND, INC.
FORTRESS SHARES

PROSPECTUS

An Open-End, Diversified
Management Investment Company

May 31, 1995

[LOGO] FEDERATED SECURITIES CORP.
---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS

FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779

027128305
8062808A-FS (5/95)

American Leaders Fund, Inc.
Class A Shares
Class B Shares
Class C Shares
Fortress Shares
Combined Statement of Additional Information

This Combined Statement of Additional Information should be read with
the combined prospectus for Class A Shares, Class B
Shares, and Class C Shares, and the prospectus for
Fortress Shares of American Leaders Fund, Inc. (the "Fund") each dated
May 31, 1995. This Statement is not a prospectus itself.
To receive a copy of any of the prospectuses, write or call the Fund.

Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Statement dated May 31, 1995

Federated
Securities Corp.
Distributor
A subsidiary of FEDERATED INVESTORS

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
American Leaders Fund, Inc.
Management 3
Fund Ownership 7
Directors Compensation 8
Investment Advisory Services 8
Adviser to the Fund 8
Advisory Fees 9

Administrative Services 9
Transfer Agent and Dividend
Disbursing Agent 9
Brokerage Transactions 9
Purchasing Shares 10
Distribution (Class B Shares and
Class C Shares only) and
Shareholder Services Plans10
Purchases by Sales
Representatives, Fund Directors,
and Employees10
Exchanging Securities for Fund
Shares 10
Determining Net Asset Value 11
Determining Market Value of
Securities 11
Reduced Sales Load 11
Requirements for Exchange 11
Tax Consequences 12
Making an Exchange 12
Redeeming Shares 12
Redemption in Kind 12
Tax Status 13
The Fund's Tax Status 13
Shareholders' Tax Status 13
Total Return 13
Yield 14
Performance Comparisons 14
About Federated Investors 15
Mutual Fund Market 15
Institutional 15
Trust Organizations 16
Broker/dealers and bank
broker/dealer subsidiaries16
Financial Statements 16
Appendix 17

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 classes of
Shares of the Fund.
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 (the "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, 1995 and 1994, the portfolio turnover rates
were 34% and 27%, 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."

American Leaders Fund, Inc. Management
Officers and Directors are listed with their addresses, principal
occupations, and present positions.

John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
President and Director
Manage
Management, and Federated Research; Chairman and Director, Federated Research
Corp.; Chairman, Passport Research, Ltd.; Director, AEtna Life and Casualty
Company; Chief Executive Officer and Director, Trustee, or Managing General
Partner of the Funds. Mr. Donahue is the father of J. Christopher Donahue,
Vice President and Director of the Company.

Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Director
Director, Oberg Manufacturing Co.; Chairman of the Board, Children's Hospital
of Pittsburgh; Director, Trustee, or Managing General Partner of the Funds;
formerly, Senior Partner, Ernst & Young LLP.

John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Director
President, Investment Properties Corporation; Senior Vice-President, John R.
Wood and Associates, Inc., Realtors; President, Northgate Village Development
Corporation; Partner or Trustee in private real estate ventures in Southwest
Florida; Director, Trustee, or Managing General Partner of the Funds;
formerly, President, Naples Property Management, Inc.

William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Director
Director and Member of the Executive Committee, Michael Baker, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Vice Chairman and
Director, PNC Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes, Inc.

J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Vice President and Director
Presi
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, President and Director of the Company.

James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Director
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director, Trustee,
or Managing General Partner of the Funds.

Lawrence D. Ellis, M.D. *
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Director
Professor of Medicine and Member, Board of Trustees, University of Pittsburgh;
Medical Director, University of Pittsburgh Medical Center - Downtown; Member,
Board of Directors, University of Pittsburgh Medical Center; formerly,
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
Hospitals; Director, Trustee, or Managing General Partner of the Funds.

Edward L. Flaherty, Jr.@
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: June 18, 1924
Director
Attorney-at-law; Partner, Henny, Kochuba, Meyer and Flaherty; Director, Eat'N
Park Restaurants, Inc., and Statewide Settlement Agency, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Counsel, Horizon
Financial, F.A., Western Region.

Peter E. Madden
70 Westcliff Road
Westin, MA
Birthdate: March 16, 1942
Director
Consultant; State Representative, Commonwealth of Massachusetts; Director,
Trustee, or Managing General Partner of the Funds; formerly, President, State
Street Bank and Trust Company and State Street Boston Corporation.

Gregor F. Meyer
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: October 6, 1926
Director
Attorney-at-law; Partner, Henny, Kochuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or
Managing General Partner of the Funds; formerly, Vice Chairman, Horizon
Financial, F.A.

John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Director
President, Law Professor, Duquesne University; Consulting Partner, Mollica,
Murray and Hogue; Director, Trustee or Managing General Partner of the Funds.

Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Director
Professor, Foreign Policy and Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., and U.S. Space Foundation; 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
4905 Bayard Street
Pittsburgh, PA
Birthdate: July 21, 1935
Director
Public relations/marketing consultant; Director, Trustee, or Managing General
Partner of the Funds.

Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
R
Research Corp.; Chairman and Director, Federated Securities Corp.; President
or Vice President of some of the Funds; Director or Trustee of some of the
Funds.

Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Vice President and Treasurer
Vice President, Treasurer, and Trustee, Federated Investors; Vice President
and Treasurer, Federated Advisers, Federated Management, Federated Research,
Federated Research Corp., and Passport Research, Ltd.; Executive Vice
President, Treasurer, and Director, Federated Securities Corp.; Trustee,
Federated Services Company and Federated Shareholder Services; 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
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated Investors;
Vice President, Secretary, and Trustee, Federated Advisers, Federated
Management, and Federated Research; Vice President and Secretary, Federated
Research Corp. and Passport Research, Ltd.; Trustee, Federated Services
Company; Executive Vice President, Secretary, and Trustee, Federated
Administrative Services; Secretary and Trustee, Federated Shareholder
Services;Executive Vice President and Director, Federated Securities
Corp.;Vice President and Secretary of the Funds.

* This Director is deemed to be an "interested person" as defined in
the Investment Company Act of 1940, as amended.
@ Member of the Executive Committee. The Executive Committee of the
Board of Directors handles the responsibilities of the Board of
Directors between meetings of the Board.
Officers and Directors own less than 1% of the Fund's outstanding Shares.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: American Leaders Fund, Inc.; Annuity Management Series;
Arrow Funds; 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 Institutional 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; 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; Money Market
Management, Inc.; Money Market Obligations Trust; Money Market Trust;
Municipal Securities Income Trust; Newpoint Funds; New York Municipal Cash
Trust; 111 Corcoran Funds; Peachtree Funds; The Planters Funds; RIMCO Monument
Funds; The Shawmut Funds; Short-Term Municipal Trust; 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; The Virtus Funds; and World Investment Series, Inc.
Fund Ownership
As of May 5, 1995, no shareholder of record owned 5% or more of the
outstanding Class A Shares of the Fund:
As of May 5, 1995, no shareholder of record owned 5% or more of the
outstanding Class B Shares of the Fund:
As of May 5, 1995, the following shareholder of record owned 5% or more of the
outstanding Class C Shares of the Fund: Merrill Lynch, Pierce, Fenner & Smith,
Jacksonville, FL, as record owner holding Fund Shares for its clients, owned
approximately 504,115 Shares (38.02%).
As of May 5, 1995, the following shareholders of record owned 5% or more of
the outstanding Fortress Shares of the Fund: Merrill Lynch, Pierce, Fenner &
Smith, Jacksonville, FL, as record owner holding Fund Shares for its clients,
owned approximately 474,792 Shares (25.44%).
Directors Compensation

AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
FUND FUND* FROM FUND COMPLEX +

John F. Donahue, $ 0 $0 for the Fund and
President and Director 68 other investment companies in the
Fund Complex
Thomas G. Bigley, $ 640 $20,688 for the Fund and
Director 49 other investment companies in the Fund
Complex
John T. Conroy, Jr., $ 1,390 $117,202 for the Fund and
Director 64 other investment companies in the Fund
Complex
William J. Copeland, $ 1,390 $117,202 for the Fund and
Director 64 other investment companies in the Fund
Complex
James E. Dowd, $ 1,390 $117,202 for the Fund and
Director 64 other investment companies in the Fund
Complex
Lawrence D. Ellis, M.D., $ 1,261 $106,460 for the Fund and
Director 64 other investment companies in the Fund
Complex
Edward L. Flaherty, Jr., $ 1,390 $117,202 for the Fund and
Director 64 other investment companies in the Fund
Complex
Peter E. Madden, $ 1,071 $90,563 for the Fund and
Director 64 other investment companies in the Fund
Complex
Gregor F. Meyer, $ 1,261 $106,460 for the Fund and
Director 64 other investment companies in the Fund
Complex
John E. Murray, Jr., $ 323 $0.00 for the Fund and
Director 64 other investment companies in the Fund
Complex
Wesley W. Posvar, $ 1,261 $106,460 for the Fund and
Director 64 other investment companies in the Fund
Complex
Marjorie P. Smuts, $ 1,261 $106,460 for the Fund and
Director 64 other investment companies in the Fund
Complex

*Information is furnished for the fiscal year ended March 31, 1995.
+The information is provided for the last calendar year.
Investment Advisory Services
Adviser to the Fund
The Fund's investment adviser is Federated Advisers (the "Adviser"). It
is a subsidiary of Federated Investors. All the voting securities of
Federated Investors are owned by a trust, the trustees of which are John F.
Donahue, his wife, and his son, J. Christopher Donahue.
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, the Adviser receives an annual investment
advisory fee as described in the respective prospectuses. During the
fiscal years ended March 31, 1995, 1994, and 1993, the Adviser
earned $2,010,685, $1,549,057, and $1,254,834,
respectively, which were reduced by $0, $0, and $104,310,
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.

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 respective prospectuses . Prior to March
1, 1994, Federated Administrative 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, 1995, Federated
Administrative Services earned $223,061, none of which were voluntarily
waived. For the fiscal year ended March 31, 1994, the Administrators
collectively earned $441,948, none of which were voluntarily waived. For the
fiscal year ended March 31, 1993, Federated Administrative
Services, Inc., earned $369,702, none of which were voluntarily
waived. Dr. Henry J. Gailliot, an officer of Federated Advisers, the
adviser to the Fund, holds approximately 20%, of the outstanding common stock
and serves as a director of Commercial Data Services, Inc., a company
which provides computer processing services to Federated Administrative
Services, Inc., and Federated Administrative Services.
Transfer Agent and Dividend Disbursing Agent
Federated Services Company serves as transfer agent and dividend disbursing
agent for the Fund. The fee paid to the transfer agent is based upon the
size, type and number of accounts and transactions made by shareholders.
Federated Services Company also maintains the Fund's accounting records. The
fee paid for this service is based upon the level of the Fund's average net
assets for the period plus out-of-pocket expenses.
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. The
Adviser makes decisions on portfolio transactions and selects brokers and
dealers subject to review by the 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 persons 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, 1995, 1994, and 1993,
the Fund paid total brokerage commissions of $277,942,
$140,868, and $158,973, respectively.

Purchasing Shares
Except under certain circumstances described in the respective
prospectuses, Shares are sold at their net asset value (plus a sales
load 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 prospectuses under "How to
Purchase Shares" and "Investing in Fortress Shares."
Distribution (Class B Shares and Class C Shares only) and
Shareholder Services Plans
These arrangements permit the payment of fees to financial institutions, the
distributor, and Federated Shareholder Services, 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 Shares and Class C Shares
only) the Directors expect 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 servicing 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; (3)
enhancing shareholder recordkeeping systems; and (4) responding promptly to
shareholders' requests and inquiries concerning their accounts.
For the fiscal period from July 25, 1994 to March 31, 1995, the
Fund incurred $109,518 in distribution services fees on behalf of Class B
Shares, all of which were paid to financial institutions. For the fiscal year
ended March 31, 1995, the Fund incurred $118,850 in distribution services fees
on behalf of Class C Shares, all of which were paid to financial institutions.
In addition, for the fiscal year ended March 31, 1995, payments of $511,729
were made pursuant to the Shareholder Services Plan, of which $17,522 were
waived on behalf of Class B Shares.
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 load. Shares may also be sold without a sales
load to trusts or pension or profit-sharing plans for these
persons.
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 and Trust Company. 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
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
This section relates only to Fortress Shares of the Fund. For information
regarding the Exchange Privilege for Class A Shares, Class B Shares, and Class
C Shares of the Fund, please see the combined prospectus for these classes of
Shares.
The Securities and Exchange Commission has issued an order
exempting the Fund from certain provisions of the Investment Company Act of
1940. As a result, Fund shareholders are allowed to exchange all or some of
their Fortress Shares for shares in other Fortress Funds (which are sold with
a sales load different from that of the Fund or with no sales load and which
are advised by subsidiaries or affiliates of Federated Investors) without the
assessment of a contingent deferred sales charge on the exchanged Shares.

Reduced Sales Load
If a shareholder making such an exchange qualifies for a reduction or
elimination of the sales load, 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 between 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. (Eastern time) for shares to be
exchanged that day. If reasonable procedures are not followed by the
Fund, it may be liable for losses due to unauthorized or fraudulent
telephone instructions.
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 "How to Redeem 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 Shares redeemed within six years of purchase, Class C Shares redeemed
within one year of purchase, and Fortress Shares redeemed within 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 SEC rules,
taking such securities at the same value employed in determining net asset
value and selecting the securities in a manner the 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, as amended,
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, 1995, were 5.71%, 10.57%,
and 11.47%, respectively.
The Fund's average annual total returns for Class C Shares for the fiscal
year ended March 31, 1995, and for the period from April 21, 1993 to March 31,
1995, were 10.16% and 7.56%, respectively.
The Fund's average annual total returns for Fortress Shares for the fiscal
year ended March 31, 1995, and for the period from July 27, 1993 to March 31,
1995, were 9.60% and 5.45%, 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 offering price 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
contingent deferred sales charge is deducted from the ending
value of the investment based on the lesser of the original purchase price or
the offering price 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 B Shares, for the
period from July 25, 1994 to March 31, 1995 was 1.67%.

Cumulative total return reflects Class B Shares' total
performance over a specified period of time. This total return assumes and is
reduced by the payment of maximum sales load and contingent
deferred sales charge. The Fund's total return is representative of only
8 months of activity for the Class B Shares.
Yield
The Fund's yields for Class A Shares, Class B Shares, Class C Shares,
and Fortress Shares were 1.37%, 0.77%, 0.64%, and 1.36%,
respectively, for the thirty-day period ended March 31, 1995.
The yield for each class of Shares of the Fund is determined by dividing the
net investment income per share (as defined by the SEC) 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 SEC 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 compositions of other funds, and
methods used to value portfolio securities and compute offering price. The
financial publications and/or indices which the Fund uses in advertising may
include:
- Lipper Analytical Services, Inc. --ranks funds in various fund
categories by making comparative calculations using total return. Total
return assumes the reinvestment of all capital gains distributions and
income dividends and takes into account any change in 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 Ratings Group 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 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 various sales loads on Class A
Shares, Class B Shares, Class C Shares, and Fortress Shares.
About Federated Investors
Federated is dedicated to meeting investor needs which is
reflected in its investment decision making structured,
straightforward, and consistent. This has resulted in a history
of competitive performance with a range of competitive investment
products that have gained the confidence of thousands of clients
and their customers.
The company's disciplined security selection process is firmly
rooted in sound methodologies backed by fundamental and technical
research. Investment decisions are made and executed by teams of
portfolio managers, analysts, and traders dedicated to specific
market sectors.
In the equity sector, Federated has more than 25 years'
experience. As of December 31, 1994, Federated managed 15 equity
funds totaling approximately $4 billion in assets across growth,
value, equity income, international, index and sector (i.e.
utility) styles. Federated's value-oriented management style
combines quantitative and qualitative analysis and features a
structured, computer-assisted composite modeling system that was
developed in the 1970s.
J. Thomas Madden, Executive Vice President, oversees Federated's
equity and high yield corporate bond management while William D.
Dawson, Executive Vice President, oversees Federated's domestic
fixed income management. Henry A. Frantzen, Executive Vice
President, oversees the management of Federated's international
portfolios.
Mutual Fund Market
Twenty-seven percent of American households are pursuing their
financial goals through mutual funds. These investors, as well as
businesses and institutions, have entrusted over $2 trillion to
the more than 5,500 funds available.*
Federated Investors, through its subsidiaries, distributes mutual
funds for a variety of investment applications. Specific markets
include:
Institutional
Federated meets the needs of more than 4,000 institutional
clients nationwide by managing and servicing separate accounts
and mutual funds for a variety of applications, including defined
benefit and defined contribution programs, cash management, and
asset/liability management. Institutional clients include
corporations, pension funds, tax-exempt entities,
foundations/endowments, insurance companies, and investment and
financial advisors. The marketing effort to these institutional
clients is headed by John B. Fisher, President, Institutional
Sales Division.

*source: Investment Company Institute

Trust Organizations
Other institutional clients include close relationships with more
than 1,500 banks and trust organizations. Virtually all of the
trust divisions of the top 100 bank holding companies use
Federated funds in their clients' portfolios. The marketing
effort to trust clients is headed by Mark R. Gensheimer,
Executive Vice President, Bank Marketing & Sales.
Broker/dealers and bank broker/dealer subsidiaries
Federated mutual funds are available to consumers through major brokerage
firms nationwide--including 200 New York Stock Exchange firms--supported by
more wholesalers than any other mutual fund distributor. The marketing effort
to these firms is headed by James F. Getz, President, Broker/Dealer
Division.
Financial Statements
<The Financial Statements for the fiscal year ended March 31,
1995, are incorporated herein by reference to the Annual Report
of the Fund dated March 31, 1995 (File Nos. 2-29786 and 811-
1704). A copy of the Report may be obtained without charge by contacting the
Fund.
Appendix
Standard & Poor's Ratings Group Corporate Bond Ratings
Definitions
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's
Ratings Group. Capacity to pay interest and repay principal is
extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effect of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
Moody's Investors Service, Inc. Corporate Bond Ratings Definitions
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium-grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Fitch Investor Service, Inc. Investment Grade Bond Rating Definitions
AAA--Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA--Bonds considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated AAA. Because bonds rated in the
AAA and AA categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered strong,
but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these bonds,
and therefore impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.
027128107
027128404
027128206
027128305
8062808B (5/95)

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, 1995;
(b) Exhibits:
(1) Conformed copy of Articles of Incorporation of the
Registrant as restated; +
(i) Conformed copy of the Registrant's Articles
Supplementary; +
(2) Copy of By-Laws of the Registrant as amended; +
(3) Not applicable;
(4) Copy of Specimen Certificate for Shares of Capital Stock of
the Registrant (1.);
(5) Conformed copy of the Investment Advisory Contract of the
Registrant; +
(6) Conformed copy of Distributor's Contract of the
Registrant (2);
(i) Conformed Copy of exhibit D to the Distributor's
Contract of the Registrant; +
(7) Not applicable;
(8) Conformed copy of Custodian Agreement of the Registrant; +
(9) (i) Conformed copy of Shareholder Services Plan of the
Registrant (2);
(ii) Conformed copy of Agreement for Fund Accounting,
Shareholder Recordkeeping, and Custody Services
Procurement of the Registrant; +
(iii) Conformed copy of Shareholder Services Agreement
of the Registrant; +
(iv) Copy of Shareholder Services Sub-Contract of the
Registrant; +
(v) Conformed copy of Aministrative Services Agreement
of the Registrant; +
(10) Not applicable;
(11) Conformed copy of Consent of Independent Public
Accountants; +
(i) Opinion of Dickstein, Shapiro & Morin, L.L.P.
regarding tax consequences of acquisition of
Fortress High Quality Stock Fund assets; +
(12) Not applicable;
(13) Not applicable;
(14) Not applicable;
(15) Copy of Rule 12-b-1 Plan of the Registrant (2);
(i) Conformed copy of Exhibit A to the Rule 12-b-1
Plan of the Registrant; +
(ii) Conformed copy of Exhibit B to the Rule 12-b-1
Plan of the Registrant; +

+ 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.)

2. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 59 on Form N-1 filed May 26, 1994.(File Nos.2-29786 and 811-
1704)

(16) Copy of Schedules for Computation of Fund Performance
Data; +
(17) Copy of Financial Data Schedules; +
(18) Not applicable;
(19) Conformed copy of the Power of Attorney. +

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 5, 1995

Shares of Capital Stock
($.20 per Share par value)

Class A Shares 26,580

Class B Shares 5,269

Class C Shares 1,833

Fortress Shares 2,398

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, and J. Alan Minteer, Senior Vice Presidents; J.
Scott Albrecht, Randall A. Bauer, David A. Briggs, Jonathan C. Conley,
Deborah A. Cunningham, Michael P. Donnelly, Mark E. Durbiano, Kathleen
M. Foody-Malus, Thomas M. Franks, Edward C. Gonzales, Jeff A.
Kozemchak, Marian R. Marinack, Gregory M. Melvin; Susan M. Nason, Mary
Jo Ochson, Robert J. Ostrowski,

+ All Exhibits have been filed electronically.
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)

Frederick L. Plautz, Jr., Charles A. Ritter, James D. Roberge,
Christopher H. Wiles and John W. McGonigle, Vice Presidents; Joseph
Balestrino, Linda Anne Duessel, James Grefenstette, Susan R. Hill,
Timothy Keefe, Paige Wilhelm, Thomas F. Woodhouse, Assistant 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.

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; Arrow Funds;
Automated Cash Management Trust; Automated Government Money Trust;
BayFunds; The Biltmore Funds; The Biltmore Municipal Funds;
California Municipal Cash 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 Institutional 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; Marshall
Funds, Inc.; Money Market Management, Inc.; The Medalist Funds;
Money Market Obligations Trust; Money Market Trust; The Monitor
Funds; Municipal Securities Income Trust; Newpoint Funds; New York
Municipal Cash Trust; 111 Corcoran Funds; Peachtree Funds; The
Planters Funds; RIMCO Monument Funds; The Shawmut Funds; Short-
Term Municipal Trust; 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.

Federated Securities Corp. also acts as principal underwriter for
the following closed-end investment company: Liberty Term Trust,
Inc.- 1999.

(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 and
Federated Investors Tower President, and Treasurer, 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 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

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

Solon A. Person, IV 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

Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

John B. Bohnet 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

Kevin J. Crenny Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Daniel T. Culbertson 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

Joseph L. Epstein 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

Michael D. Fitzgerald 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

Craig S. Gonzales 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

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

Stephen A. LaVersa 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

Richard C. Mihm 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

Robert D. Oehlschlager 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

John C. Shelar, Jr. Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

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

Jamie M. Teschner 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

Paul A. Uhlman 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

Michael P. Wolff 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

Charlene H. Jennings 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, Assistant
Federated Investors Tower Federated Securities Corp. Secretary
Pittsburgh, PA 15222-3779

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 02266-8600

Item 31. Management Services: Not applicable.

Item 32. Undertakings:

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.

Registrant 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.,
certifies that it meets all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485 (b) under the
Securities Act of 1933 and has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Pittsburgh and Commonwealth of Pennsylvania, on the
25th day of May, 1995.
AMERICAN LEADERS FUND, INC.

BY: /s/Charles H. Field
Charles H. Field, Assistant Secretary
Attorney in Fact for John F. Donahue
May 25,1995

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 25,1995
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)

Thomas G. Bigley* Director

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

John E. Murray, Jr. Director

Wesley W. Posvar* Director

Marjorie P. Smuts* Director

* By Power of Attorney

Exhibit 11 under N-1A
Exhibit 23 under Item 601/Reg SK

ARTHUR ANDERSEN LLP

Pittsburgh, Pennsylvania

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use in Post-
Effective Amendment No. 60 to Form N-1A Registration Statement of American
Leadres Fund, Inc. of our report dated May 12, 1995, on the financial
statements as of March 31, 1995, included in or made part of this registration
statement.

By: ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP

Pittsburgh, Pennsylvania,
May 22, 1995

Exhibit 19 under Form N-1A
Exhibit 24 under Item 601/Reg. S-K

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretary of American Leaders Fund, Inc.
and the Assistant General Counsel of Federated Investors, and each of them,
their true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for them and in their names, place and stead,
in any and all capacities, to sign any and all documents to be filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, the
Securities Exchange Act of 1934 and the Investment Company Act of 1940, by
means of the EDGAR; and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agents, and each of them,
full power and authority to sign and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as each of them might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue thereof.

SIGNATURES TITLE DATE

/s/John F. Donahue President and Director April 28, 1995
John F. Donahue (Chief Executive Officer)

/s/Edward C. Gonzales Vice President and TreasurerApril 28, 1995
Edward C. Gonzales (Principal Financial and
Accounting Officer)

/s/Thomas G. Bigley Director April 28, 1995
Thomas G. Bigley

/s/John T. Conroy, Jr. Director April 28, 1995
John T. Conroy, Jr.

/s/William J. Copeland Director April 28, 1995
William J. Copeland

/s/J. Christopher Donahue Director April 28, 1995
J. Christopher Donahue

SIGNATURES TITLE DATE

/s/James E. Dowd Director April 28, 1995
James E. Dowd

/s/Lawrence D. Ellis, M.D. Director April 28, 1995
Lawrence D. Ellis, M.D.

/s/Edward L. Flaherty, Jr. Director April 28, 1995
Edward L. Flaherty, Jr.

/s/Peter E. Madden Director April 28, 1995
Peter E. Madden

/s/Gregor F. Meyer Director April 28, 1995
Gregor F. Meyer

/s/John E. Murray, Jr. Director April 28, 1995
John E. Murray, Jr.

/s/Wesley W. Posvar Director April 28, 1995
Wesley W. Posvar

/s/Marjorie P. Smuts Director April 28, 1995
Marjorie P. Smuts

Sworn to and subscribed before me this 28th day of April, 1995

/s/Marie M. Hamm
Marie M. Hamm
Notary Public

Exhibit 1 under Form N-1A
Exhibit 3(a) under Item 601/Reg. S-K

ARTICLES OF RESTATEMENT

AMERICAN LEADERS FUND, INC.

American Leaders Fund, Inc., a Maryland Corporation (the "Corporation"),
having its principal office in Baltimore, Maryland, hereby certifies to the
State of Department of Assessments and Taxation that:

FIRST: The Corporation desires to restate its Charter as currently
in effect. The Charter as restated is as follows:

FIRST: We, the undersigned, Miriam Casley, Fred C. Houston, Jr.,
and Thomas J. Donnelly, each of whose post office address is 1128 Union Trust
Building, Pittsburgh, Pennsylvania 15219, each being at least twenty-one years
of age, do under and by virtue of the General Laws of the State of Maryland
authorizing the formation of corporations, associate ourselves as
incorporators with the intention of forming a corporation.

SECOND: The name of the corporation is American Leaders Fund, Inc.

THIRD: The purposes for which the Corporation is formed are:

1. To purchase or otherwise acquire, hold for investment or
otherwise, sell, exchange, or otherwise dispose of securities (which term
"securities" shall for the purposes of this Article, without limitation of the
generality thereof, be deemed to include any stocks, shares, bonds,
debentures, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive,
purchase or subscribe for the same or representing any other rights or
interest therein or in any property or assets) created or issued by any
persons, firms, associations, corporations, syndicates, combinations,
organizations, governments or sub-divisions thereof and generally to deal in
any such securities; and to exercise as owner or holder of any securities, all
rights, powers and privileges in respect thereof.

2. To sell, exchange, issue, dispose of, purchase or otherwise
acquire, hold, resell, transfer, reissue or cancel (all without the vote or
consent of the Stockholders of the Corporation) shares of its capital stock in
any manner and to the extent now or hereafter permitted by the laws of the
State of Maryland and the Charter of the Corporation.

3. To have one or more offices and to carry on all or any of its
operations and business in any of the States, Districts, Territories, and
possessions of the United States and in any and all foreign countries,
subject, in each case, to the laws thereof.

4. To carry out all or any of the objects and purposes set forth in
this Article THIRD as principal or agent, or otherwise, either alone or
through or in conjunction with any corporation, joint stock company,
syndicate, association, firm, trust or person, public or private, and in
carrying on its business and for the purpose of attaining or furthering any of
its objects and purposes, to exercise any powers suitable, convenient or
proper for the accomplishment of any of the objects and purposes herein
enumerated or incidental to the powers herein specified, or which at any time
may appear conducive to or expedient for the accomplishment of any such
objects and purposes.

5. Anything in this Article THIRD or elsewhere in the Charter of the
Corporation to the contrary notwithstanding the Corporation may not and shall
not:

(a) borrow money except from banks as a temporary measure for
extraordinary or emergency purposes and then (1) only in amounts not in excess
of 5% of the value of its total assets or (2) in an amount up to one-third of
the value of its total assets including the amount borrowed in order to meet
redemption requests without immediately selling any portfolio instruments.
The Corporation may also enter into reverse repurchase agreements in an amount
not in excess of one-third of its total assets in order to meet redemption
requests without immediately selling any portfolio instruments. The use of
repurchase agreements and the borrowing provision in (2) above, is not for
investment leverage but solely to facilitate management of the portfolio by
enabling the Corporation to meet redemption requests where the liquidation of
portfolio instruments is deemed to be inconvenient or disadvantageous.
Interest paid by the Corporation on borrowed funds will not be available for
investment. Interest paid on borrowings will reduce net income. While any
such borrowings under (1) or (2) above are outstanding, no portfolio
instruments may be purchased by the Corporation.

(b) Purchase securities on margin, but it may obtain such short-
term credits as may be necessary for clearance of purchase and sales of
securities.

(d) Lend any assets except portfolio securities. (This shall
not prevent the purchase or holding of U.S. Government securities, repurchase
agreements covering U.S. Government securities or other transactions which are
permitted by the Fund's investment objective and policies.)

(e) Mortgage, pledge, or hypothecate securities.

(f) Engage in underwriting or agency distribution of securities
issued by others; provided, however, that this sub-paragraph shall not be
construed to prevent or limit in any manner the power of the Corporation to
purchase securities for investment as herein provided.

(g) Invest in commodities, commodity contracts or real estate.

(h) Purchase the securities of any issuer if such purchase at
the time thereof would cause more than five percent (5%) of the total assets
of the Corporation (taken at market value) to be invested in securities of
such issuer. The foregoing limitation shall not apply to investments in
"Government securities" as defined in the Investment Company Act of 1940.

(i) The Corporation will not purchase more than ten percent
(10%) of any class of voting securities of any one issuer.

(j) Purchase securities issued by any other investment company
or investment trust except by purchase in the open market where no commission
or profit to a sponsor or dealer results from such purchase other than the
customary broker's commission or except when such purchase, though not made in
the open market, is part of a plan of merger or consolidation.

(k) Invest more than five percent (5%) of the total assets of
the Corporation (taken at market value) in securities of issuers which have a
record of less than three (3) years continuous operation including, however,
in such three (3) years, the operation of any predecessor company or
companies, partnership, or individual enterprise if the issuer whose
securities are proposed as investment for funds of the Corporation has come
into existence as a result of the merger, consolidation, reorganization or the
purchase of substantially all of the assets of such predecessor company or
companies, partnership or individual enterprise.

(l) Purchase or retain in its portfolio any securities issued by
an issuer any of whose officers, directors, trustees or security holders is an
officer or director of the Corporation, or is a member, officer, director or
trustee of the Investment Adviser of the Corporation, if at the time of or
after the purchase of the securities of such issuer by the Corporation one or
more of such persons owns beneficially more than one-half of one percent
(1/2%) of the shares or securities, or both (all taken at market value) of
such issuer and such persons owning more than one-half of one percent (1/2%)
of such shares or securities together own beneficially more than five percent
(5%) of such shares or securities, or both (all taken at market value).

The foregoing objects and purposes shall, except as otherwise expressly
provided, by in no way limited or restricted by reference to or inference from
the terms of any other clause or provision of the Charter, and each shall be
regarded as independent and construed as powers as well as objects and
purposes and the enumeration of specific purposes, objects and powers shall
not be construed to limit or restrict in any manner the meaning of general
terms or general powers of the Corporation now or hereafter conferred by the
laws of the State of Maryland, nor shall the expression of one thing be deemed
to exclude another though it be of like nature, not expressed.

FOURTH: The post office address of the principal office and the
office of the resident agent of the Corporation in the State of Maryland is 32
South Street, Baltimore, Maryland 21202. The resident agent of the
Corporation in the state of Maryland is THE CORPORATION TRUST INCORPORATED,
which is a corporation organized and existing under the laws of the State of
Maryland.

FIFTH: (a) The Corporation is authorized to issue 100,000,000
shares of common stock, par value #.20 per share. The aggregate par value of
all shares which the Corporation is authorized to issue is $20,000,000.
Subject to the following paragraph, the authorized shares are classified as
separate classes of common stock, with 30,000,000 classified into each of
Class A, Class C and Fortress Shares, and 10,000,000 unclassified shares.

(b) The Board of Directors is authorized to classify or to
reclassify (i.e., into series and classes of series), from time to time, any
unissued shares of stock of the Corporation, whether now or hereafter
authorized, by setting, changing or eliminating the preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of or rights to require redemption of
the stock.

Unless otherwise provided by the Board of Directors prior to the
issuance of the stock, the shares of each class or series of stock shall be
subject to the following:

(i) The Board of Directors may redesignate a class
or series of stock whether or not shares of such class or series are issued
and outstanding, provided that such redesignation does not affect the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications or terms or conditions of
redemption of such class or series of stock.

(ii) The assets attributable to each class or series
may be invested in a common investment portfolio. The assets and liabilities
and the income and expenses of each class or series of the Corporation's stock
shall be determined separately and, accordingly, the net asset value of shares
of the Corporation's stock may vary among classes or series. The income or
gain and the expenses or liabilities of the Corporation shall be allocated to
each class or series of stock as determined by or under the direction of the
Board of Directors.

(iii) Shares of each class or series of stock shall be
entitled to such dividends or distributions, in stock or in cash or both, as
may be declared from time to time by the Board of Directors with respect to
such class or series. Dividends or distributions shall be paid on shares of a
class or series of stock only out of the assets belonging to that class or
series.

(iv) In the event of the liquidation or dissolution
of the Corporation, the stockholders of a class or series of the Corporation's
stock shall be entitled to receive, as a class or series, out of the assets of
the Corporation available for distribution to stockholders, the assets
belonging to that class or series less the liabilities allocated to that class
or series. The assets so distributable to the stockholders of a class or
series shall be distributed among such stockholders in proportion to the
number of shares of that class or series held by them and recorded on the
books of the Corporation. In the event that there are any assets available
for distribution that are not attributable to any particular class or series
of stock, such assets shall be allocated to all classes and series in
proportion to the net asset value of the respective classes or series.

(v) All holders of shares of stock shall vote as a
single class or series except with respect to any matter which affects only on
or more classes or series of stock, in which case only the holders of shares
of the classes or series affected shall be entitled to vote.

(c) The Corporation may issue fractional shares. Any
fractional share shall carry proportionately all the rights of a whole share,
excepting any right to receive a certificate evidencing such fractional share,
but including, without limitation, the right to vote and the right to receive
dividends.

SIXTH: Each Stockholder of the Corporation shall be entitled to one
vote or fraction thereof for each share of capital stock or fraction thereof
standing in his name on the books of the Corporation.

SEVENTH: 1. (a). Each Stockholder of the Corporation shall be entitled
to require the Corporation to redeem all or part of the shares of such
Stockholder at the next asset value thereof (as hereinafter defined in Section
2 of this Article SEVENTH) as determined by or on behalf of the Board of
Directors. Certificates representing shares to be so redeemed shall be
deposited at the office of the Custodian, duly endorsed or accompanied by
proper instruments of transfer, together with a request that the Corporation
redeem the shares represented thereby. If the date of deposit is a day other
than Saturday upon which a determination of net asset value as of the close of
business is required by Section 2 of this Article SEVENTH to be made, or is
made, and if such shares are deposited prior to the close of business on the
New York Stock Exchange on that day, the redemption price shall be the net
asset value as of the close of business on such day. If the day of deposit is
not such a day, or shares are deposited after the close of business on the New
York Stock Exchange, then the redemption price shall be the net asset value as
of the close of business on the first day upon which a determination of the
net asset value is so made or required to be made next succeeding the date on
which such shares are so deposited. If the determination of the redemption
price is postponed beyond the date on which it would normally occur by reason
of a declaration by the Board of Directors suspending determination of the net
asset value pursuant to Section 3 of this Article SEVENTH the right of the
Stockholder to have his shares redeemed by the Corporation shall be similarly
suspended and he may withdraw his certificate or certificates from deposit if
he so elects; or if he does not so elect the redemption price shall be the net
asset value of the shares deposited determined as of the close of business
upon the first day after the suspension upon which such a determination is
made. Payment for such shares may, at the option of the Board of Directors or
such Officer or Officers as the Board may duly authorize for the purpose, in
their complete discretion be made in cash, or in kind, or partially in cash or
partially in kind. In case of payment in kind the Board of Directors or their
delegate shall have absolute discretion as to what security or securities
shall be distributed in kind and the amount of the same, and the securities
shall be valued for purposes of distribution at the figure at which they were
appraised in computing net asset value of the Corporation's shares, provided,
that any Stockholder who can not legally acquire securities so distributed in
kind by reason of the prohibitions of the Investment Company Act of 1940 shall
receive cash.

(b) Notwithstanding the foregoing, the Corporation may,
however, redeem shares of the Corporation by agreement with the owner thereof
(i) at a price not exceeding the net asset value per share at the time the
redemption or contract of redemption is made, or (ii) at a price not exceeding
the net asset value per share to become effective at some later time.

2. The term "net asset value" of the Corporation shall mean the
amount by which the assets of the Corporation, taken at fair market values,
exceed its liabilities, all as determined by or under the direction of the
Board of Directors, in accordance with the requirements of the Investment
Company Act of 1940 and in conformity with generally accepted accounting
practices and principles. The net asset value of the Corporation thus
obtained divided by the number of shares of capital stock of the Corporation
then issued and outstanding shall be the net asset value per share. Such
values will be determined at least once on each business day that the New York
Stock Exchange is open. The Board of Directors may delegate any of the powers
and duties under this Section 2 with respect to appraisal of assets and
liabilities to the Executive Committee, to an Officer or Officers of the
Corporation, the Investment Adviser, the administrative services agent or to
the Custodian of its securities, or to such other person or persons as may be
deemed qualified in the judgment of the Board of Directors.

3. The Corporation may suspend the determination of the net
asset value during any period when trading on the New York Stock Exchange is
restricted or such Exchange is closed (other than weekends or holidays) or the
Securities and Exchange Commission has by order permitted such suspension, or
an emergency exists making disposal of securities or determination of the net
asset value of shares of capital stock not reasonably practicable.

4. The Corporation shall have the right, exercisable at the
discretion of the Board of Directors, to redeem shares of any shareholder for
their then current net asset value per share if at such time the shareholder
owns shares having an aggregate net asset value of less than $1,000.

EIGHTH: (1) The number of Directors of the Corporation shall be
three, or such other number as may be from time to time fixed in the manner
provided by the By-Laws of the Corporation but shall never be less than three
(3). The By-Laws of the Corporation shall also specify the number of
Directors which shall constitute a quorum; provided, however, that in no case
shall a quorum be less than one-third of the total number of Directors, nor
less than three (3) Directors. Unless otherwise provided by the By-Laws of
the Corporation, Directors need not be Stockholders thereof. The number may
be changed by the By-Laws of the Corporation or by the Board of Directors
pursuant to the By-Laws.

(2) Unless otherwise provided by the By-Laws of the
Corporation and except as otherwise provided by law, any vacancy occurring in
the Board of Directors for any cause other than by reason an increase in the
number of Directors may be filled by a majority of the remaining members of
the Board of Directors and any vacancy occurring by reason of an increase in
the number of Directors may be filled by a majority of the entire Board of
Directors.

(3) The names of the Directors who are currently in office
are:

John F. Donahue Edward L. Flaherty, Jr.
John T. Conroy, Jr. Peter E. Madden
William J. Copeland Gregor F. Meyer
J. Christohper Donahue Wesley W. Posvar
James E. Dowd Marjorie P. Smuts
Lawrence D. Ellis, M.D.

NINTH: The following provisions are hereby adopted for the purpose
of defining, limiting and regulating the powers of the Corporation and of the
Directors and Stockholders:

1. No Stockholder of the Corporation shall have any
preemptive or preferential right of subscription to any shares of any class of
the stock of the Corporation whether now of hereafter authorized other than
such, if any, and at such price as the Board of Directors in its discretion,
from time to time, may determine and the Board of Directors may issue shares
of the capital stock of the Corporation without offering the same ether in
whole or in part to the Stockholders.

2. Capital stock of the Corporation may be purchased,
held or disposed of by the Officers and Directors of the Corporation, by
partnerships of which any such Officer of Director may be a member and by
corporations of which any Officer or Director of the Corporation may be an
officer of director. Except as above set forth the Officers and Directors of
the Corporation and partnerships or corporations with which they are connected
or identified may not deal with the Corporation as principals in the purchase
or sale of any securities or other property unless authorized to do so by the
Securities and Exchange Commission.

3. The Corporation may enter into exclusive or non-
exclusive underwriting contracts or contracts for the sale of its shares and
may also enter into contracts for investment advisory, management and
administrative services. The terms and conditions, methods of authorization,
renewal, amendment and termination of the aforesaid contracts shall be as
determined at the discretion of the Board of Directors; subject, however, to
the provisions of the Chapter of the Corporation, the By-Laws of the
Corporation, applicable state law, and the Investment Company Act of 1940, and
the rules and regulations of the Securities and Exchange Commission.

4. Except as otherwise provided by law or by the Charter
of the Corporation, no contract or other transaction between the Corporation
and any person, partnership or corporation and no act of the Corporation shall
in any way be affected or invalidated by the fact that any Officer or Director
of the Corporation is pecuniarily or otherwise interested herein or is such
person or a member, officer or director of such partnership or other
corporation, provided, that the fact of such interest shall be known to the
Board of Directors of the Corporation. Specifically, but without limitation
of the foregoing, the Corporation may:

(a) Enter into a management contract or contract for
research and advisory services with Federated Research Corp., or an
underwriting contract or a contract for distribution of its capital stock with
Federated Investors, Inc., or enter into such contracts or other contracts or
otherwise do business with any of such corporations, or any subsidiaries
thereof, or their respective successors, notwithstanding the fact that one or
more Directors of the Corporation and some or all of its Officers are, have
been, or may become Directors, Officers, Employees or Stockholders of
Federated Research Corp., or Federated Investors, Inc., or any of their
subsidiaries of successors and in the absence of actual fraud the Corporation
may deal freely with Federated Research Corp., and Federated Investors, Inc.,
or any of their subsidiaries or successors, and neither such management
contract or contract for research and advisory services nor such underwriting
contract or contract for the distribution of the capital stock of the
Corporation nor any other contract or transaction between the Corporation and
Federated Research Corp. or Federated Investors, Inc., or any of their
subsidiaries or successors shall be invalidated or in anywise affected
thereby, nor shall any Director or Officer of the Corporation be liable to the
Corporation nor to any Stockholder or creditor of the Corporation or to any
other person for any loss incurred under or by reason of any such contract or
transaction. Notwithstanding the foregoing, no officer or directors of or
investment adviser of or principal underwriter for the Corporation shall be
protected against any liability to the Corporation or to its security holders
to which he would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office;

(b) Employ any person, partnership or corporation as
counsel, registrar, transfer agent, dividend disbursing agent or custodian,
whether or not such person, partnership or corporation is or has a member,
officer, director, or stockholder who is an Officer or Director of the
Corporation so long as only customary fees shall be charged for the services
rendered to or for the benefit of the Corporation;

(c) Purchase or sell securities for or from the
investment portfolio of the Corporation from, to or throughout any person,
partnership or corporation which is or has a member, officer, director or
Stockholder who is an Officer or Director of the Corporation so long as such
person, partnership or corporation (unless otherwise authorized by the
Securities and Exchange Commission) shall act only as agent or broker and not
as principal and the commission or other compensation paid by the Corporation
shall not exceed customary brokerage charges for such services.

5. No Officer or Director of the Corporation or of any
investment advisory company or management company, nor the Corporation itself,
nor such investment advisory or management company or underwriter of the
Corporation shall take long or short positions in respect of any shares of the
capital stock issued by the Corporation; provided, however, that such
prohibition shall not prevent:

(a) The Corporation or any underwriter from
purchasing from the Corporation shares of capital stock issued by the
Corporation, provided that orders to purchase from the Corporation are entered
with the Corporation by the Corporation or such underwriter upon receipt by it
of purchase orders for shares of stock of the Corporation, provided such
purchases are not in excess of purchase orders received by such Corporation or
underwriter;

(b) The Corporation or any distributor or
underwriter from maintaining a market for shares of capital stock issued by
the Corporation in the capacity of agent for the Corporation;

(c) The purchase form the Corporation of shares of
capital stock of the Corporation by the Officers or Directors of the
Corporation or of any investment advisory, management company or underwriter
or distributor of the Corporation at the prices available to the public at the
moment of such purchase or to the extent that any such person is a Stockholder
at the price available to Stockholders of the Corporation generally at the
moment of such purchase.

6. The Corporation shall at all times cause its
securities to be held by a Custodian, which shall be a Bank or Trust Company,
having an aggregate capital surplus and undivided profit (as shown in its last
published report) of at least Two Million ($2,000,000) Dollars. The Custodian
shall also receive all monies due to the Corporation and shall deposit same in
its banking department or elsewhere as the Board of Directors may direct. The
Board of Directors may, in its discretion, enter into agreements with the
Custodian authorizing it to act as agent for the Corporation in the
disbursement of dividends, purchase and sale of securities, redemption of the
Corporation's securities, delivery of proxies, maintenance of books and
accounts and the performance of such other service as the Board may deem
advisable. All agreements with the Custodian shall be subject to applicable
state law, the Charter and By-Laws of the Corporation, and the Investment
Company Act of 1940, as amended, and the rules and regulations of the
Securities and Exchange Commission. In the event of the resignation, removal
or inability of the Custodian to serve, the Corporation shall use its best
efforts to obtain a successor Custodian and the cash and securities of the
Corporation hereabove mentioned shall be delivered directly to such successor
Custodian. In the event no such successor Custodian can be found, the Board
of Directors of the Corporation shall call a Special Meeting of Stockholders
to determine whether the Corporation shall be liquidated or shall function
without a Custodian.

7. Each person who is or has been a Director and Officer
(and his heirs, executors and administrators) shall be indemnified by the
Corporation against reasonable costs and expenses incurred by him in
connection with any claim or in connection with any action, suit or proceeding
whether judicial, administrative or otherwise, to which he may be a made a
party by reason of his being or having been a Director of Officer of the
Corporation, except in relation to any action, suit or proceeding, in which he
has been adjudged liable because of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office. In the absence of an adjudication which expressly absolves the
Director or Officer of liability to the Corporation or its stockholders for
willful misfeasance, bad faith, gross negligence and reckless disregard of the
duties involved in the conduct of his office, or in the event of a settlement,
each Director and Officer (and his heirs, executors and administrators) shall
be indemnified by the Corporation against payments made, including reasonable
costs and expenses, provided that such indemnify shall be conditioned upon the
prior determination by a resolution of two-thirds of those members of the
Board of Directors of the Corporation who are not involved in the action, suit
or proceeding that the Director or Officer has no liability by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office, and provided further that if a
majority of the members of the Board of Directors of the Corporation are
involved in the action, suit or proceeding, such determination shall have been
made by a written opinion of independent counsel. Such a determination by the
Board of Directors, or by independent counsel, and the payments by the
Corporation on the basis thereof shall not prevent a Stockholder from
challenging such indemnification by appropriate legal proceedings on the
grounds that the person indemnified was liable to the Corporation or its
security holders by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his office.
The foregoing rights and indemnification shall not be exclusive of any other
rights to which the Officers and Directors may be entitled according to law.

8. Securities of other corporations entitling the holder
thereof to vote shall be voted by such Officer or Officers of the Corporation
as the Board of Directors shall designate for the purpose, or by a proxy or
proxies thereunder duly authorized by the Board of Directors.

9. The Board of Directors shall, subject to the laws of
Maryland, have power to determine, from time to time, whether and to what
extent and at what times and places and under what conditions and regulations
any accounts and books of the Corporation, or any of them, shall be open to
the inspection of Stockholders.

10. Notwithstanding any provision of law requiring a
greater proportion than a majority of the votes of all classes or of any class
of stock entitled to be case, to take or authorize any action, the Corporation
may take or authorize any such action upon the concurrence of a majority of
the aggregate number of the votes entitled to be cast thereon.

11. The Corporation reserves the right from time to time
make any amendment of its Charter now or hereafter authorized by law including
any amendment which alters the contract rights, as expressly set forth in its
Charter of any outstanding capital stock.

12. In addition to the powers and authority conferred upon
them by the Charter of the Corporation or by law, the Board of Directors may
exercise all such powers and authority and do all such acts and things as may
be exercised or done by the Corporation, subject, nevertheless, to the
provisions of applicable state law and the Charter and By-Laws of the
Corporation.

TENTH: The duration of the Corporation shall be perpetual.

SECOND: The restatement of the Charter was approved by a majority of
the entire Board of Directors.

THIRD: The provisions set forth in these Articles of Restatement
are all the provisions of the Charter currently in effect. The current
address of the principal office of the Corporation, the name and address of
the Corporation's current resident agent and the number of directors of the
Corporation and the names of those currently in office are as stated above.

FOURTH: The Charter is not amended by these Articles of Restatement.

IN WITNESS WHEREOF, American Leaders Fund, Inc. has caused these
Articles of Restatement to be signed in its name and on its behalf by its Vice
President and attested by its Assistant Secretary on April 30, 1993. The
undersigned Vice President acknowledges these Articles of Restatement to be
the corporate act of the Corporation and states to the best of his knowledge,
information and belief that the matters and facts set forth herein with
respect to authorization and approval are true in all material respects and
that this statement is made under the penalties of perjury.

WITNESS: AMERICAN LEADERS FUND, INC.

/s/Charles H. Field By: /s/Richard B. Fisher

Exhibit 1(i) under Form N-1A
Exhibit 3(a) under Item 601/Reg. S-K

AMERICAN LEADERS FUND, INC.

ARTICLES SUPPLEMENTARY

AMERICAN LEADERS FUND, INC., a Maryland corporation having its principal
offices in Baltimore, Maryland (hereinafter called the "Corporation"), hereby
certifies:

FIRST: The Board of Directors hereby reclassifies 5,000,000 shares of
Class C Shares, 5,000,000 shares of Fortress Shares and 10,000,000 of
the authorized but unissued shares of common stock of the Corporation as
20,000,000 shares of Class B Shares.

SECOND: The shares of Common Stock reclassified hereby shall have the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption as set forth in Article FIFTH, paragraph (b) of the
Corporation's charter and shall be subject to all provisions of the
charter relating to stock of the Corporation generally.

THIRD: The stock has been reclassified by the Board of Directors under
the authority contained in the charter of the Corporation.

IN WITNESS WHEREOF, American Leaders Fund, Inc. has caused these
presents to be signed in its name and on its behalf by its Vice President and
witnessed by its Assistant Secretary on May 25, 1994.

The undersigned, J. Christopher Donahue, Vice President of the
Corporation, hereby acknowledges in the name and on behalf of the Corporation
the foregoing Articles Supplementary to be its corporate act and further
certifies to the best of his knowledge, information and belief, that the
matters and facts set forth herein with respect to the authorization and
approval hereof are true in all material respects and that this statement is
made under the penalties of perjury.

ATTEST: AMERICAN LEADERS FUND, INC.

/s/Charles H. Field By: /s/J. Christopher Donahue
Charles H. Field J. Christopher Donahue
Assistant Secretary Vice President

Exhibit 2 under Form N-1A
Exhibit 3(b) under Item 601/Reg. S-K
AMERICAN LEADERS FUND, INC.

BY-LAWS

ARTICLE I

MEETING OF SHAREHOLDERS

Section 1. ANNUAL MEETINGS. The Corporation is not required to hold an
annual meeting of Shareholders in any year in which the election of Directors
is not required to be acted upon under the Investment Company Act of 1940. If
the Corporation is required to hold a meeting of Shareholders to elect
Directors, the meeting shall be designated the annual meeting of Shareholders
for that year. If an annual meeting of Shareholders is held, it shall be held
at a date and time determined by the Board of Directors within 120 days after
the occurrence of the event requiring the meeting. Any other business may be
considered at the meeting.

Section 2. SPECIAL MEETINGS. Special Meetings of Shareholders of the
Company or of a particular Series or Class may be called by the Chairman, or
by the Board of Directors; and shall be called by the Secretary whenever
ordered by the Chairman, any Director, or as requested in writing by
shareholders entitled to cast at least 10% of the vote shares entitled to be
cast at the meetings. Such request shall state the purpose of such meeting
and the matters proposed to be acted on thereat, and no other business shall
be transacted at any such special meeting. The Secretary shall inform such
Shareholders of the reasonably estimated costs of preparing and mailing the
notice of the meeting, and upon payment to the Corporation of such costs, the
Secretary shall give not less than ten nor more than 90 days' notice of the
meeting. Unless required by Shareholders entitled to cast a majority of all
the votes entitled to be cast at the meeting, a special meeting need not be
called to consider any matter which is substantially the same as a matter
voted on at by special meeting of the Shareholders held during the preceding
12 months.

Section 3. PLACE OF MEETINGS. All meetings of the Shareholders of the
Corporation or a particular Series or Class, shall be held at the office of
the Corporation in Pittsburgh, Pennsylvania, or at such other place within or
without the State of Maryland as may be fixed by the Board of Directors.

Section 4. NOTICE. Not less than ten or more than ninety days before
the date of every Annual or Special Meeting of Shareholders the Secretary or
an Assistant Secretary shall give to each Shareholder or record of the
Corporation or of the relevant Series or Class written notice of such meeting.
Such notice shall be deemed to have been given when mailed to the Shareholder
at his address appearing on the books of the Corporation, which shall be
maintained separately for the shares of each Series or Class. It shall not be
necessary to set forth the business proposed to amend the Charter of the
Corporation shall be set forth in such notice. Notice of a Special Meeting
shall state the purpose or purposes for which it is called.

Section 5. QUORUM. The present in person or by proxy of holders of one-
third of the shares of stock of the Corporation entitled to vote without
regard to class shall constitute a quorum at any meeting of the shareholders,
except with respect to any matter which by law requires the approval of one or
more classes of stock, in which case the presence in person or by proxy of the
holders of one-third of the shares of stock of each class entitled to vote on
the matter shall constitute a quorum.

In the absence of a quorum at any meeting, a majority of those
Shareholders present in person or by proxy may adjourn the meeting from time
to time to a date not later than 120 days after the original record date
without further notice than by announcement to be given at the meeting until a
quorum, as above defined, shall be present. Any business may be transacted at
the adjourned meeting which might have been transacted at the meeting
originally called had the same been held at the time so called.

Section 6. VOTING. At all meetings of Shareholders each Shareholder
shall be entitled to one vote or fraction thereof for each Share or fraction
thereof standing in his name on the books of the Corporation on the date for
the determination of Shareholders entitled to vote at such meeting. All
shares of each portfolio or class in the Corporation have equal voting rights,
except that in matters affecting only a particular portfolio or class, only
shares of that portfolio or class are entitled to vote.

Section 7. PROXIES. Any Shareholder entitled to vote at any meeting of
Shareholders may vote either in person or by proxy, but no proxy which is
dated more than eleven months before the meeting named therein shall be
accepted. Every proxy shall be in writing and signed by the Shareholder or
his duly authorized attorney in fact and dated, but need not be sealed,
witnessed or acknowledged.

Section 8. INFORMAL ACTION BY SHAREHOLDERS. Any action required or
permitted to be taken at any meeting of Shareholders may be taken without a
meeting, if a consent in writing, setting forth such action, is signed by all
the Shareholders entitled to vote on the subject matter thereof, and such
consent is filed with the records of the Corporation.

ARTICLE II

BOARD OF DIRECTORS

Section 1. POWERS. The business and affairs of the Corporation shall
be managed under the direction of its Board of Directors. All powers of the
Corporation may be exercised by or under the authority of the Board of
Directors except as conferred on or reserved to the Shareholders by law, by
the Charter or by these By-Laws.

Section 2. NUMBER, QUALIFICATIONS, MANNER OF ELECTION AND TERM OF
OFFICE. The number of Directors of the Corporation can be changed from time
to time to not less than three or the number of Shareholders, whichever is
less, nor more than twenty. Directors need not be Shareholders. The term of
office of a Director shall not be affected by any decrease in the number of
Directors made by the Board pursuant to the foregoing authorization. Each
Director shall hold office until the Annual Meeting next held after he becomes
a director and until the election and qualification of his successor.

Section 3. PLACE OF MEETING. The Board of Directors may hold its
meetings at such place or places within or without the State of Maryland as
the Board or as the person or persons requesting said meeting to be called may
from time to time determine.

Section 4. ANNUAL MEETINGS. The Board of Directors shall meet annually
for the election of Officers and any other business.

Section 5. REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held at such intervals and on such dates as the Board may
from time to time designate, provided that any Director who is absent when
such designation is made shall be given notice of the designation.

Section 6. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be held at such times and at such places as may be designated at
the call of such meeting. Special meetings shall be called by the Secretary
or Assistant Secretary at the request of the Chairman or any Director. If the
Secretary when so requested refuses or fails for more than twenty-four hours
to call such meeting, the Chairman or such Director may in the name of the
Secretary call such meeting by giving due notice in the manner required when
notice is given by the Secretary.

Section 7. NOTICE. The Secretary or Assistant Secretary shall give, at
least two days before the meeting, notice of each meeting of the Board of
Directors, whether Annual, Regular or Special, to each member of the Board by
mail, telegram or telephone to his last known address. It shall not be
necessary to state the purpose or business to be transacted in the notice of
any meeting. Personal attendance at any meeting by a Director other than to
protest the validity of said meeting shall constitute a waiver of the
foregoing requirement of notice. In addition, notice of a meeting need not be
given if a written waiver of notice executed by such Director before or after
the Meeting is filed with the records of the meeting.

Section 8. CONDUCT OF MEETINGS AND BUSINESS. The Board of Directors
may adopt such rules and regulations for the conduct of their meetings and the
management of the affairs of the Corporation as they may deem proper and not
inconsistent with applicable law, the Charter of the Corporation or these By-
Laws.

Section 9. QUORUM. One-third of the entire Board of Directors but not
less than two directors shall constitute a quorum at any meeting of the Board
of Directors. The action of a majority of Directors present at any meeting at
which a quorum is present shall be the action of the Board of Directors unless
the concurrence of a greater proportion is required for such action by
statute, the Charter of the Corporation, or these By-Laws. In the absence of
a quorum at any meeting a majority of Directors present may adjourn the
meeting form day to day or for such longer periods as they may designate until
a quorum shall be present. Notice of any adjourned meeting need not be given
other than by announcement at the meeting.

Section 10. RESIGNATIONS. Any Director of the Corporation may resign
at any time by written notice to the Chairman of the Board of Directors or to
the Secretary of the Corporation. The resignation of any Director shall take
effect at the time specified therein or, if no time is specified, when
received by the Corporation. Unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.

Section 11. REMOVAL. At any meeting of Shareholders duly called for
the purpose, any Director may by the vote of a majority of all of the Shares
entitled to vote be removed from office. At the same meeting, the vacancy in
the Board of Directors may be filed by the election of a Director to serve
until the next annual meeting of Shareholders and the election and
qualification of his successor.

Section 12. VACANCIES. Except as otherwise provided by law, any
vacancy occurring in the Board of Directors for any cause other than by reason
of an increase in the number of Directors may be filled by a majority of the
remaining members of the Board of Directors although such majority is less
than a quorum and any vacancy occurring by reason of an increase in the number
of Directors may be filled by action of a majority of the entire Board of
Directors. A Director elected by the Board to fill a vacancy shall be elected
to hold office until the next Annual Meeting of Shareholders and until his
successor is duly elected and qualifies.

Section 13. COMPENSATION OF DIRECTORS. The Directors may receive
compensation for their services as Directors as determined by the Board of
Directors and expenses of attendance at each Meeting. Nothing herein
contained shall be construed to preclude any Director from serving the
Corporation in any other capacity, as an Officer, Agent or otherwise, and
receiving compensation therefor.

Section 14. INFORMAL ACTION BY DIRECTORS. Any action required or
permitted to be taken at any Annual, Regular or Special Meeting of the Board
of Directors may be taken without a meeting if a written consent to such
action is signed by all members of the Board and such written consent is filed
with the minutes of proceedings of the Board.

Section 15. TELEPHONE CONFERENCE. Members of the Board of Directors or
any committee thereof may participate in a meeting of the Board or such
committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other at the same time and participation by such means shall constitute
presence in person at the meeting.

ARTICLE III

EXECUTIVE AND OTHER COMMITTEES

Section 1. APPOINTMENT AND TERM OF OFFICE OF EXECUTIVE COMMITTEE. The
Board of Directors may appoint an Executive Committee, which shall consist of
two (2) or more Directors.

Section 2. VACANCIES IN EXECUTIVE COMMITTEE. Vacancies occurring in
the Executive Committee from any cause may be filled by the Board of
Directors.

Section 3. EXECUTIVE COMMITTEE TO REPORT TO BOARD. All action by the
Executive Committee shall be reported to the Board of Directors at its Meeting
next succeeding such action.

Section 4. PROCEDURE OF EXECUTIVE COMMITTEE. The Executive Committee
shall fix its own rules of procedure not inconsistent with these By-Laws or
with any directions of the Board of Directors. It shall meet at such times
and places and upon such notice as shall be provided by such rules or by
resolution of the Board of Directors. The presence of a majority shall
constitute a quorum for the transaction of business, and in every case the
affirmative vote of a majority of the members of the Committee present shall
be necessary for the taking of any action.

Section 5. POWERS OF EXECUTIVE COMMITTEE. During the intervals between
the Meetings of the Board of Directors the Executive Committee, except as
limited by law or by specific directions of the Board of Directors, shall
posses and may exercise all the powers of the Board of Directors in the
management and direction of the business and conduct of the affairs of the
Corporation.

Section 6. OTHER COMMITTEES. From time to time the Board of Directors
may appoint any other Committee or Committees which shall have such powers as
shall be specified in the resolution of appointment and may be delegated by
law.

Section 7. COMPENSATION. The members of any duly appointed Committee
shall receive such compensation as from time to time may be fixed by the Board
of Directors and reimbursement of expenses.

Section 8. INFORMAL ACTION BY EXECUTIVE COMMITTEE OR OTHER COMMITTEES.
Any action required or permitted to be taken at any meeting of the Executive
Committee or any other duly appointed Committee may be taken without a meeting
if written consent to such action is signed by all Members of such Committee
and such written consent is filed with the minutes of the proceedings of such
Committee.

Section 9. ADVISORY BOARD. The Directors may appoint an Advisory Board
to consist in the first instance of not less than three (3) members. Members
of such Advisory Board shall not be Directors or Officers and need not be
Shareholders. Members of this Board shall hold office for such period as the
Directors may by resolution provide. Any Member of such Board may resign
therefrom by written instrument signed by him which shall take effect upon
delivery to the Directors. The Advisory Board shall have no legal powers and
shall not perform functions of Directors in any manner, said Board being
intended to act merely in an advisory capacity. Such Advisory Board shall
meet at such times and upon such notice as the Board of Directors may by
resolution provide. The compensation of the Members of the Advisory Board, if
any, shall be determined by the Board of Directors.

ARTICLE IV

OFFICERS

Section 1. GENERAL PROVISIONS. The Officers of the Corporation shall
be a Chairman, a President, one or more Vice Presidents, a Treasurer, and a
Secretary. The Board of Directors may elect or appoint other Officers or
agents, including one or more Assistant Vice Presidents, one or more Assistant
Secretaries and one or more Assistant Treasurers. The same person may hold
any two offices except those of President and Vice President.

Section 2. ELECTION, TERM OF OFFICE AND QUALIFICATIONS. The Officers
shall be elected annually by the Board of Directors at its Annual Meeting.
Each Officer shall hold office for one year and until the election and
qualification of his successor. Any vacancy in any of the office may be
filled for the unexpired portion of the term by the Board of Directors at any
Regular or Special Meeting of the Board. The Board of Directors may elect or
appoint additional Officers or agents at any Regular or Special Meeting of the
Board.

Section 3. REMOVAL. Any Officer elected by the Board of Directors may
be removed with or without cause at any time by the Board of Directors. Any
other employee of the Corporation may be removed or dismissed at any time by
the President.

Section 4. RESIGNATIONS. Any Office may resign at any time by giving
written notice to the Board of Directors. Any such resignation shall take
effect at the time specified therein or, if not time is specified, at the time
of receipt. Unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.

Section 5. VACANCIES. A vacancy in any Office because of death,
resignation, removal, disqualification or any other cause shall be filled for
the unexpired portion of the term in the manner prescribed in these By-Laws
for regular election or appointment to such Office.

Section 6. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the
Board of Directors, if there by a Chairman, shall preside at the meetings of
Shareholders and of the Board of Directors. He shall receive such information
and reports as he may request from the Officers of the Corporation. He shall
counsel and advise the President on matters of major importance.

Section 7. PRESIDENT. The Chairman for American Leaders Fund, Inc.
shall be the chief executive officer of the Corporation. He shall, unless
other provisions are made therefor by the Board or Executive Committee, employ
and define the duties of all employees of the Corporation, shall have the
power to discharge any such employees, shall exercise general supervision over
the affairs of the Corporation and shall perform such other duties as may be
assigned to him from time to time by the Board of Directors. In the absence
of the Chairman of the Board of Directors, the President or an officer or
Director appointed by the President, shall preside at all meetings of
Shareholders.

Section 8. VICE PRESIDENT. The Vice President (or if more than one,
the senior Vice President) in the absence of the President shall perform all
duties and may exercise any of the powers of the President subject to the
control of the Board. Each Vice President shall perform such other duties as
may be assigned to him from time to time by the Board of Directors, the
Executive Committee, or the President.

Section 9. SECRETARY. The Secretary shall keep or cause to be kept in
books provided for the purpose the Minutes of the Meetings of the
Shareholders, and of the Board of Directors; shall see that all Notices are
duly given in accordance with the provisions of these By-Laws and as required
by Law; shall be custodian of the records and of the Seal of the Corporation
and see that the Seal is affixed to all documents the execution of which on
behalf of the Corporation under its seal is duly authorized; shall keep
directly or through a transfer agent a register of the post office address of
each Shareholder, and make all proper changes in such register, retaining and
filing has authority for such entries; shall see that the books, reports,
statements, certificates and all other documents and record required by law
are properly kept and filed; and in general shall perform all duties incident
to the Office of Secretary and such other duties as may, from time to time, be
assigned to him by the Board of Directors, the Executive Committee, or the
President.

Section 10. TREASURER. The Treasurer shall have supervision of the
custody of all funds and securities of the Corporation, subject to applicable
law. He shall perform such other duties as may be from time to time assigned
to him by the Board of Directors, the Executive Committee, or the President.

Section 11. ASSISTANT VICE PRESIDENT. The Assistant Vice President or
Vice Presidents of the Corporation shall have such authority and perform such
duties as may be assigned to them by the Board of Directors, the Executive
Committee, or the President of the Corporation.

Section 12. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The
Assistant Secretary or Secretaries and the Assistant Treasurer or Treasurers
shall perform the duties of the Secretary and of the Treasurer respectively,
in the absence of those Officers and shall have such further powers and
perform such other duties as may be assigned to them respectively by the Board
of Directors or the Executive Committee or by the President.

Section 13. SALARIES. The salaries of the Officers shall be fixed from
time to time by the Board of Directors. No Officer shall be prevented from
receiving such salary by reason of the fact that he is also a Director of the
Corporation.

ARTICLE V

SHARES AND THEIR TRANSFER

Section 1. CERTIFICATES. All share certificates shall be signed by the
Chairman, the President, or any Vice President and by the Treasurer or
Secretary or any Assistant Treasurer or Assistant Secretary and may be sealed
with the seal of the Corporation. The signatures may be either manual or
facsimile signatures and the seal may be either facsimile or any other form of
Seal. Certificates for shares for which the Corporation has appointed an
independent Transfer Agent and Registrar shall not be valid unless
countersigned by such Transfer Agent and registered by such Registrar. In
case any Officer who has signed any certificate is issued, the certificate may
nevertheless by issued by the Corporation with the same effect as if the
Officer had not ceased to be such Officer as of the date of its issuance.
Share certificates shall be in such form not inconsistent with law and these
By-Laws as may be determined by the Board of Directors.

Section 2. TRANSFER OF SHARES. Shares of each Series and Class shall
be transferable on the books of the Corporation by the holder thereof in
person or by duly authorized attorney upon surrender of the certificate
representing the shares to be transferred properly endorsed.

Section 3. CLOSING OF TRANSFER BOOKS AND FIXING RECORD DATE. The Board
of Directors may fix in advance a date as the record date for the purpose of
determining Shareholders of a Series or Class entitled to notice of or to vote
at any Meeting of Shareholders or Shareholders to receive payment of any
dividend. Such date shall in any case not be more than 90 days and in case of
a Meeting of Shareholders not less than 10 days prior to the date on which the
particular action requiring such determination of Shareholders is to be taken.
Only Shareholders of record on the record date shall be entitled to notice of
and to vote at such meeting or to receive such dividends or rights, as the
case may be. In lieu of fixing a record date the Board of Directors may
provide that the share transfer books of the Corporation shall be closed for a
stated period not to exceed in any case 20 days. If the share transfer books
are closed for the purpose of determining Shareholders entitled to notice of
or to vote at a Meeting of Shareholders such books shall be closed for at
least 10 days immediately preceding such meeting.

Section 4. LOST, DESTROYED OR MUTILATED CERTIFICATES. In case any
Share certificate is lost, mutilated or destroyed the Board of Directors may
issue a new certificate in place thereof upon indemnity to the relevant Series
or Class against loss and upon such other terms and conditions as the Board
may deem advisable.

Section 5. TRANSFER AGENT AND REGISTRAR: REGULATIONS. The Board of
Directors shall have power and authority to make all such rules and
regulations as they may deem expedient concerning the issuance, transfer and
registration of Share certificates and may appoint a Transfer Agent and/or
Registrar of Share certificates of each Series or Class, and may require all
such Share certificates to bear the signature of such Transfer Agent and/or of
such Registrar.

ARTICLE VI

AGREEMENTS, CHECKS, DRAFTS, ENDORSEMENTS, ETC.

Section 1. AGREEMENTS, ETC. The Board of Directors or the Executive
Committee may authorize any Officer or Officers, or Agent or Agents of the
Corporation to enter into any Agreement or execute and deliver any instrument
in the name of the Corporation and such authority may be general or confined
to specific instances; and, unless so authorized by the Board of Directors or
by the Executive Committee or by these By-Laws, no Officer, Agent or Employee
shall have any power or authority to bind the Corporation by any Agreement or
engagement or to pledge its credit or to render it liable pecuniarily for any
purpose or to any amount.

Section 2. CHECKS, DRAFTS, ETC. All checks, drafts, or orders for the
payment of money, notes and other evidences of indebtedness shall be signed by
such Officer or Officers, Employee or Employees, or Agent or Agents as shall
be from time to time designated by the Board of Directors or the Executive
Committee, or as may be specified in or pursuant to the agreement between the
Corporation on behalf of any Series or Class and the Bank or Trust Company
appointed as custodian.

Section 3. ENDORSEMENTS, ASSIGNMENTS AND TRANSFER OF SECURITIES. All
endorsements, assignments, stock powers or other instruments of transfer of
securities standing in the name of the Corporation or its nominee or
directions for the transfer of securities belonging to the Corporation shall
be made by such Officer or Officers, Employee or Employees, or Agent or Agents
as may be authorized by the Board of Directors or the Executive Committee.

ARTICLE VII

BOOKS AND RECORDS

Section 1. LOCATION. The books and records of the Corporation,
including the Stock ledger or ledgers, may be kept in or outside the State of
Maryland at such office or agency of the Corporation as may be from time to
time determined by the Board of Directors.

ARTICLE XIII

MISCELLANEOUS

Section 1. SEAL. The Seal of the Corporation shall consist of a flat-
faced die with the word "Maryland," together with the name of the Corporation
and the year of its organization cut or engraved thereon, but unless otherwise
required by the Directors, the Seal shall not be necessary to be placed on,
and its absence shall not impair the validity of , any document, instrument or
other paper executed and delivered by or on behalf of the Corporation.

Section 2. FISCAL YEAR. The Fiscal year of the Corporation shall be
designated from time to time by the Board of Directors.

ARTICLE IX

INDEMNIFICATION

Section 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Corporation
shall indemnify its directors to the fullest extent that indemnification of
directors is permitted by the Maryland General Corporation Law. The
Corporation shall indemnify its officers to the same extent as its directors
and to such further extent as is consistent with law. The Corporation shall
indemnify its directors and officers who while serving as directors or
officers also serve at the request of the Corporation as a director, officer,
partner, trustee, employee, agent or fiduciary of another corporation,
partnership joint venture, trust other enterprise or employee benefit plan to
the fullest extent consistent with law. The indemnification and other rights
provided by this Article shall continue as to a person who has ceased to be a
director of officer and shall inure to the benefit of the heirs, executors and
administrators of such a person. This Article shall not protect any such
person against any liability to the Corporation or any Shareholder thereof to
which such person would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in
the conduct of his office ("disabling conduct").

Section 2. ADVANCES. Any current or former director or officer of the
Corporation seeking indemnification within the scope of this Article shall be
entitled to advances from the Corporation for payment of the reasonable
expenses incurred by him in connection with the matter as to which he is
seeking indemnification in the manner and to fullest extent permissible under
the Maryland General Corporation Law. The person seeking indemnification
shall provide to the Corporation a written affirmation of his good faith
belief that the standard of conduct necessary for indemnification by the
Corporation has been met and a written undertaking to repay any such advance
if it should ultimately be determined that the standard of conduct has not
been met. In addition, at least one of the following additional conditions
shall be met: (a) the person seeking indemnification shall provide a security
in form and amount acceptable to the Corporation for his undertaking; (b) the
Corporation is insured against losses arising by reason of the advance, or (c)
a majority of a quorum of directors of the Corporation who are neither
'interested persons' as defined in Section 2(a)(19) of the Investment Company
Act of 1940, as amended, nor parties to the proceeding ("disinterested non-
party directors"), or independent legal counsel, in a written opinion, shall
be determined, based on a review of facts readily available to the Corporation
at the time the advance is proposed to be made, that there is reason to
believe that the person seeking indemnification will ultimately be found to be
entitled to indemnification.

Section 3. PROCEDURE. At the request of any person claiming
indemnification under this Article, the Board of Directors shall determine, or
cause to be determined, in a manner consistent with the Maryland General
Corporation law, whether the standards required by this Article have been met.
Indemnification shall be made only following: (a) a final decision on the
merits by a court or other body before whom the proceeding was brought that
the person to be indemnified was not liable by reason of disabling conduct or
(b) in the absence of such a decision, a reasonable determination, based upon
a review of the facts, that the person to be indemnified was not liable by
reason of disabling conduct or (c) in the absence of such a decision, a
reasonable determination, based upon a review of the facts, that the person to
be indemnified was not liable by reason of disabling conduct by (i) the vote
of a majority of a quorum of disinterested non-party directors or (ii) an
independent legal counsel in a written opinion.

Section 4. INDEMNIFICATION OF EMPLOYEES AND AGENTS. Employees and
agents who are not officers or directors of the Corporation may be
indemnified, and reasonable expenses may be advanced to such employees or
agents, as may be provided by action of the Board of Directors or by contract,
subject to any limitations imposed by the Investment Company Act of 1940.

Section 5. OTHER RIGHTS. The Board of Directors may make further
provisions consistent with law for indemnification and advance of expenses to
directors, officers, employees and agents by resolution, agreement or
otherwise. The indemnification provided by this Article IX shall not be
deemed exclusive of any other right, with respect to indemnification or
otherwise, to which those seeking indemnification may be entitled under any
insurance or other agreement or resolution of Shareholders or disinterested
directors or otherwise.

Section 6. AMENDMENTS. References in this Article are to the Maryland
General Corporation law and to the Investment Company Act of 1940, as from
time to time amended. No amendment of these By-Laws shall affect any right of
any person under this Article based on any event, omission or proceeding prior
to the amendment.

ARTICLE X

AMENDMENTS

Section 1. The Board of Directors shall have the power to alter, amend
or repeal any By-Laws of the Corporation and to make new By-Laws.

Exhibit 5 under Form N-1A
Exhibit 10 under Item 601/Reg. S-K

AMERICAN LEADERS FUND, INC.
INVESTMENT ADVISORY CONTRACT

This Contract is made between FEDERATED ADVISERS, a Delaware business
trust having its principal place of business in Pittsburgh, Pennsylvania
(hereinafter referred to as 'Adviser'), and AMERICAN LEADERS FUND, INC., a
Maryland corporation having its principal place of business in Pittsburgh,
Pennsylvania (hereinafter referred to as the 'Fund'), and is based on the
following premises:

(a) That the Fund is an open-end management investment company as that
term is defined in the Investment Company Act of 1940 and is registered
as such with the Securities and Exchange Commission;

(b) That Adviser is engaged in the business of rendering investment
advisory services.

NOW, THEREFORE, the parties hereto, intending to be legally bound hereby
agree as follows:

1. The Fund hereby appoints Adviser as investment adviser and Adviser
accepts the appointment. Subject to the direction of the Directors of the
Fund, Adviser shall provide investment research and supervision of the
investments of the Fund and conduct a continuous program of investment
evaluation and of appropriate sale or other disposition and reinvestment of
the Fund portfolio.

2. Adviser in its supervision of the investments of the Fund will be
guided by the Fund's fundamental investment policies and the provisions and
restrictions contained in the Charter and By-Laws of the Fund and as set forth
in the Registration Statements of the Fund and exhibits thereto as may be on
file with the Securities and Exchange Commission.

3. The Fund shall pay or cause to be paid all of its operating
expenses, including, without limitation, the expenses of continuing the Fund's
existence; fees and expenses of disinterested Directors; fees for investment
advisory services and administrative personnel and services; fees and expenses
of preparing and printing amendments to its Registration Statements under the
Securities Act of 1933 and the Investment Company Act of 1940; expenses of
continuing the registration of the Fund and its shares under Federal and state
laws and regulations; expenses of preparing, printing and distributing
prospectuses and any amendments to shareholders; interest expense, taxes, fees
and commissions of every kind; expenses of issue (including cost of share
certificates), repurchase and redemption of shares, including expenses
attributable to a program of periodic issue; charges and expenses of
custodians, transfer agents, dividend disbursing agents, shareholder servicing
agents and registrars; printing and mailing costs; auditing, accounting and
legal expenses; reports to shareholders and governmental officers and
commissions; expenses of meetings of Directors and shareholders and proxy
solicitations therefor; insurance expenses; association membership dues and
such nonrecurring items as may arise, including all losses and liabilities
incurred in administering the Fund. The Fund will also pay such extraordinary
expenses as may arise including expenses incurred in connection with
litigation, proceedings and claims and the legal obligations of the Fund to
indemnify its officers and Directors and agents with respect thereto.

4. For all services rendered by Adviser hereunder, the Fund shall pay
to Adviser and Adviser agrees to accept as full compensation for all services
rendered hereunder, an annual investment advisory fee equal to 0.55% of the
average daily net assets of the Fund, plus 4.5% of the gross income of the
Fund. Gross income includes, in general, discount earned on U.S. Treasury
bills and agency discount notes, interest received or receivable on all
interest-bearing obligations and dividend income recorded on the ex-dividend
date, but does not include capital gains or losses or a reduction for
expenses.

5. The portion of the fee based upon the average daily net assets of
the Fund shall be accrued daily at the rate of 1/365th of 0.55% of the daily
net assets of the Fund, computed as of the close of the New York Stock
Exchange on each day on which the Exchange is open and in the case of Sundays
and other days on which such Exchange shall not be open, as of the close of
the last preceding day on which the Exchange shall have been open.

The portion of the fee based upon gross income shall be accrued daily at
the rate of 4.5% of the gross income of the Fund.

The fee so accrued shall be paid to Adviser daily.

6. The net asset value of Fund shares as used herein will be
calculated to the nearest 1/10th of one cent.

7. The Adviser may from time to time and for such periods as it deems
appropriate reduce its compensation (and, if appropriate, assume expenses of
the Fund) to the extent that the Fund's expenses exceed such lower expense
limitation as the Adviser may, by notice to the Fund, voluntarily declare to
be effective.

8. The term of this Contract shall begin on the date of its execution
and shall continue in effect for a period of two years from its execution and
from year to year thereafter, subject to the provisions for termination and
all of the other terms and conditions hereof if: (a) such continuation shall
be approved at least annually by the vote of a majority of Directors of the
Fund, including a majority of the Directors who are not parties to this
Contract or interested persons of any such party (other than as Directors of
the Fund), cast in person at a meeting called for that purpose, and (b)
Adviser shall not have notified the Fund in writing at least sixty (60) days
prior to the anniversary date of this Contract in any year thereafter that it
does not desire such continuation.

9. Notwithstanding any provision in this Contract, it may be
terminated at any time, without the payment of any penalty, by the Directors
of the Fund or by a vote of the majority of the outstanding voting securities
of the Fund on sixty (60) days' written notice to Adviser.

10. This Contract may not be assigned by Adviser and shall
automatically terminate in the event of any assignment. Adviser may employ or
contract with any such other person, persons, corporation or corporations at
its own cost and expense as it shall determine in order to assist it in
carrying out this Contract.

11. Adviser is not to be liable to the Fund 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 on it by
this Contract.

12. This Contract may be amended at any time by agreement of the
parties provided that the amendment shall be approved both by the vote of a
majority of Directors of the Fund, including a majority of Directors who are
not parties to this Contract or interested persons of any such party to this
Contract (other than as Directors of the Fund), cast in person at a meeting
called for that purpose, and by the holders of a majority of the outstanding
voting securities of the Fund.

13. The Fund is hereby expressly put on notice of the limitation of
liability as set forth in the Declaration of Trust of the Adviser and agrees
that the obligations assumed by the Adviser pursuant to this Contract shall be
limited in any case to the Adviser and its assets and, except to the extent
expressly permitted by the Investment Company Act of 1940, the Fund shall not
seek satisfaction of any such obligation from the shareholders of the Adviser,
the Trustees, officers, employees or agents of the Adviser, or any of them.

14. This Contract shall be construed in accordance with and governed
by the laws of the Commonwealth of Pennsylvania.

IN WITNESS WHEREOF, the parties have caused this Contract to be executed
on their behalf by their duly authorized officers and their corporate seals to
be affixed hereto this 1rst day of August, 1989.

Attest: FEDERATED ADVISERS

_/s/ John W. McGonigle By:/s/ Edward C. Gonzales
Secretary Vice President

Attest: AMERICAN LEADERS FUND, INC.

/s/ John W. McGonigle By:/s/ John F. Donahue
Secretary President

Exhibit 6(i) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K

Exhibit D
to the
Distributor's Contract

American Leaders Fund, Inc.

Class B 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 B
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 1st day of June, 1994.

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 Executive Vice President
(SEAL)

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 December 1, 1994, 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 may desire 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") if so
indicated on Exhibit 1, and the Company is willing to furnish such services;
and
WHEREAS, the Trust may desire to appoint the Company as its transfer
agent, dividend disbursing agent if so indicated on Exhibit 1, and agent in
connection with certain other activities, and the Company desires to accept
such appointment; and
WHEREAS, the Trust may desire to appoint the Company as its agent to
select, negotiate and subcontract for custodian services from an approved
list of qualified banks if so indicated on Exhibit 1, 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's 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 using: primarily, market quotations,
including the use of matrix pricing, supplied by the independent
pricing services selected by the Company in consultation with the
adviser, or sources selected by the adviser, and reviewed by the
board; secondarily, if a designated pricing service does not provide
a price for a security which the Company believes should be
available by market quotation, the Company may obtain a price by
calling brokers designated by the investment adviser of the fund
holding the security, or if the adviser does not supply the names of
such brokers, the Company will attempt on its own to find brokers to
price those securities; thirdly, for securities for which no market
price is available, the Pricing Committee of the Board will
determine a fair value in good faith. Consistent with Rule 2a-4 of
the 40 Act, estimates may be used where necessary or appropriate.
The Company's obligations with regard to the prices received from
outside pricing services and designated brokers or other outside
sources, is to exercise reasonable care in the supervision of the
pricing agent. The Company is not the guarantor of the securities
prices received from such agents and the Company is not liable to
the Fund for potential errors in valuing a Fund's assets or
calculating the net asset value per share of such Fund or Class when
the calculations are based upon such prices. All of the above
sources of prices used as described are deemed by the Company to be
authorized sources of security prices. The Company provides daily to
the adviser the securities prices used in calculating the net asset
value of the fund, for its use in preparing exception reports for
those prices on which the adviser has comment. Further, upon receipt
of the exception reports generated by the adviser, the Company
diligently pursues communication regarding exception reports with
the designated pricing agents.
B. 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;
C. Calculate the net income of each of the Funds, if any;
D. Calculate capital gains or losses of each of the Funds resulting from
sale or disposition of assets, if any;
E. 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;
F. 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;
G. At the request of the Trust, prepare various reports or other
financial documents required by federal, state and other applicable
laws and regulations; and
H. 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 agreed upon from time to time between the parties hereto. 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 agreed upon between the parties
from time to time.
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 compensation and out-of-pocket expenses shall be accrued by the
Fund and shall be paid to the Company no less frequently than
monthly, and shall be paid daily upon request of the Company. The
Company will maintain detailed information about the compensation
and out-of-pocket expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be 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
conformable 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 agreed upon
between the parties and as may be added to 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 same fees 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 agreed upon between
the parties, as may be added to 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 compensation and out-of-pocket expenses shall be accrued by the
Fund and shall be paid to the Company no less frequently than
monthly, and shall be paid daily upon request of the Company. The
Company will maintain detailed information about the compensation
and out-of-pocket expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Trust and/or the Funds and a duly authorized officer
of the Company.
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.
A. This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
B. 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
C. 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:
A. evaluate the nature and the quality of the custodial services
provided by the Eligible Custodian;
B. 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;
C. 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;
D. establish procedures to monitor the nature and the quality of the
services provided by the Custodians;
E. continuously monitor the nature and the quality of services provided
by the Custodians; and
F. 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 agreed upon between the parties.
B. Reimbursements
In addition to the fee paid under Section 11A 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 agreed
upon between the parties, as may be added to 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 compensation and out-of-pocket expenses shall be accrued by the
Fund and shall be paid to the Company no less frequently than
monthly, and shall be paid daily upon request of the Company. The
Company will maintain detailed information about the compensation
and out-of-pocket expenses by Fund.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Trust and/or the Funds and a duly authorized officer
of the Company.
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. Standard of Care and Indemnification.
A. Standard of Care
The Company shall be held to a standard of reasonable care in
carrying out the provisions of this Contract. The Company shall be
entitled to rely on and may act upon advice of counsel (who may be
counsel for the Trust) on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to
such advice, provided that such action is not in violation of
applicable federal or state laws or regulations, and is in good
faith and without negligence.
B. 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, Adviser, Sub-adviser or
other party contracted by or approved by the Trust or Fund,
(2) 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;
(b) are received by the Company from independent pricing
services or sources for use in valuing the assets of the
Funds; or
(c) are received by the Company or its agents or
subcontractors from Advisers, Sub-advisers or other
third parties contracted by or approved by the Trust of
Fund for use in the performance of services under this
Agreement;
(d) have been prepared and/or maintained by the Fund or its
affiliates or any other person or firm on behalf of the
Trust.
(3) The reliance on, or the carrying out by the Company or its
agents or subcontractors of Proper Instructions of the Trust
or the Fund.
(4) 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,
negligence or reckless disregard of its duties of failure to
meet the standard of care set forth in 15.A. above.
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

EXHIBIT 1
<TABLE>
<S> <C>
CONTRACT
DATE INVESTMENT COMPANY

12/1/93 AMERICAN LEADERS FUND, INC.
Class A Shares
Class B Shares
Class C Shares
Fortress Shares

FEDERATED SERVICES COMPANY provides the following services:
Fund Accounting
Shareholder Recordkeeping
Custody Services Procurement

</TABLE>

Exhibit 8 under Form N-1A
Exhibit 10 under Item 601/Reg. S-K

CUSTODIAN CONTRACT
Between
FEDERATED INVESTMENT COMPANIES
and
STATE STREET BANK AND TRUST COMPANY
and
FEDERATED SERVICES COMPANY

TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held by It 1
2. Duties of the Custodian With Respect to Property of the Funds Held
by the Custodian 2
2.1 Holding Securities 2
2.2 Delivery of Securities 2
2.3 Registration of Securities 5
2.4 Bank Accounts 6
2.5 Payments for Shares 7
2.6 Availability of Federal Funds 7
2.7 Collection of Income 7
2.8 Payment of Fund Moneys 8
2.9 Liability for Payment in Advance of Receipt of securities
Purchased. 9
2.10 Payments for Repurchases or Redemptions of Shares of a Fund 9
2.11 Appointment of Agents 10
2.12 Deposit of Fund Assets in Securities System 10
2.13 Segregated Account 12
2.14 Joint Repurchase Agreements 13
2.15 Ownership Certificates for Tax Purposes 13
2.16 Proxies 13
2.17 Communications Relating to Fund Portfolio Securities 13
2.18 Proper Instructions 14
2.19 Actions Permitted Without Express Authority 14
2.20 Evidence of Authority 15
2.21 Notice to Trust by Custodian Regarding Cash Movement. 15
3. Duties of Custodian With Respect to the Books of Account and
Calculation of Net Asset Value and Net Income 15
4. Records 16
5. Opinion of Funds' Independent Public Accountants/Auditors 16
6. Reports to Trust by Independent Public Accountants/Auditors 17
7. Compensation of Custodian 17
8. Responsibility of Custodian 17
9. Effective Period, Termination and Amendment 19
10. Successor Custodian 20
11. Interpretive and Additional Provisions 21
12. Massachusetts Law to Apply 22
13. Notices 22
14. Counterparts 22
15. Limitations of Liability 22

CUSTODIAN CONTRACT

This Contract between those INVESTMENT COMPANIES listed on Exhibit 1, as it
may be amended from time to time, (the "Trust"), which may be Massachusetts
business trusts or Maryland corporations or have such other form of
organization as may be indicated, on behalf of the portfolios (hereinafter
collectively called the "Funds" and individually referred to as a "Fund") of
the Trust, having its principal place of business at Federated Investors
Tower, Pittsburgh, Pennsylvania, 15222-3779, and STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company, having its principal place of business
at 225 Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian", and FEDERATED SERVICES COMPANY, a Delaware business trust
company, having its principal place of business at Federated Investors Tower,
Pittsburgh, Pennsylvania, 15222-3779, hereinafter called ("Company").

WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Trust hereby employs the Custodian as the custodian of the assets of
each of the Funds of the Trust. Except as otherwise expressly provided
herein, the securities and other assets of each of the Funds shall be
segregated from the assets of each of the other Funds and from all other
persons and entities. The Trust will deliver to the Custodian all
securities and cash owned by the Funds and all payments of income,
payments of principal or capital distributions received by them with
respect to all securities owned by the Funds from time to time, and the
cash consideration received by them for shares ("Shares") of beneficial
interest/capital stock of the Funds as may be issued or sold from time
to time. The Custodian shall not be responsible for any property of the
Funds held or received by the Funds and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Section
2.18), the Custodian shall from time to time employ one or more sub-
custodians upon the terms specified in the Proper Instructions, provided
that the Custodian shall have no more or less responsibility or
liability to the Trust or any of the Funds on account of any actions or
omissions of any sub-custodian so employed than any such sub-custodian
has to the Custodian.
2. Duties of the Custodian With Respect to Property of the Funds Held
by the Custodian
2.1 Holding Securities. The Custodian shall hold and physically
segregate for the account of each Fund all non-cash property,
including all securities owned by each Fund, other than securities
which are maintained pursuant to Section 2.12 in a clearing agency
which acts as a securities depository or in a book-entry system
authorized by the U.S. Department of the Treasury, collectively
referred to herein as "Securities System", or securities which are
subject to a joint repurchase agreement with affiliated funds
pursuant to Section 2.14. The Custodian shall maintain records of
all receipts, deliveries and locations of such securities, together
with a current inventory thereof, and shall conduct periodic
physical inspections of certificates representing stocks, bonds and
other securities held by it under this Contract in such manner as
the Custodian shall determine from time to time to be advisable in
order to verify the accuracy of such inventory. With respect to
securities held by any agent appointed pursuant to Section 2.11
hereof, and with respect to securities held by any sub-custodian
appointed pursuant to Section 1 hereof, the Custodian may rely upon
certificates from such agent as to the holdings of such agent and
from such sub-custodian as to the holdings of such sub-custodian, it
being understood that such reliance in no way relieves the Custodian
of its responsibilities under this Contract. The Custodian will
promptly report to the Trust the results of such inspections,
indicating any shortages or discrepancies uncovered thereby, and
take appropriate action to remedy any such shortages or
discrepancies.
2.2 Delivery of Securities. The Custodian shall release and deliver
securities owned by a Fund held by the Custodian or in a Securities
System account of the Custodian only upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
(1) Upon sale of such securities for the account of a Fund and
receipt of payment therefor;
(2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Trust;
(3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.12 hereof;
(4) To the depository agent in connection with tender or other
similar offers for portfolio securities of a Fund, in
accordance with the provisions of Section 2.17 hereof;
(5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
(6) To the issuer thereof, or its agent, for transfer into the name
of a Fund or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent
appointed pursuant to Section 2.11 or into the name or nominee
name of any sub-custodian appointed pursuant to Section 1; or
for exchange for a different number of bonds, certificates or
other evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the new
securities are to be delivered to the Custodian;
(7) Upon the sale of such securities for the account of a Fund, to
the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery custom";
provided that in any such case, the Custodian shall have no
responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for
such securities except as may arise from the Custodian's own
failure to act in accordance with the standard of reasonable
care or any higher standard of care imposed upon the Custodian
by any applicable law or regulation if such above-stated
standard of reasonable care were not part of this Contract;
(8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash,
if any, are to be delivered to the Custodian;
(9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
(10) For delivery in connection with any loans of portfolio
securities of a Fund, but only against receipt of adequate
collateral in the form of (a) cash, in an amount specified by
the Trust, (b) certificated securities of a description
specified by the Trust, registered in the name of the Fund or
in the name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for transfer, or (c)
securities of a description specified by the Trust,
transferred through a Securities System in accordance with
Section 2.12 hereof;
(11) For delivery as security in connection with any borrowings
requiring a pledge of assets by a Fund, but only against
receipt of amounts borrowed, except that in cases where
additional collateral is required to secure a borrowing
already made, further securities may be released for the
purpose;
(12) For delivery in accordance with the provisions of any agreement
among the Trust or a Fund, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934, as
amended, (the "Exchange Act") and a member of The National
Association of Securities Dealers, Inc. ("NASD"), relating to
compliance with the rules of The Options Clearing Corporation
and of any registered national securities exchange, or of any
similar organization or organizations, regarding escrow or
other arrangements in connection with transactions for a Fund;
(13) For delivery in accordance with the provisions of any agreement
among the Trust or a Fund, the Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any Contract Market, or any
similar organization or organizations, regarding account
deposits in connection with transaction for a Fund;
(14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for a Fund, for delivery to such Transfer Agent or to
the holders of shares in connection with distributions in
kind, in satisfaction of requests by holders of Shares for
repurchase or redemption; and
(15) For any other proper corporate purpose, but only upon receipt
of, in addition to Proper Instructions, a certified copy of a
resolution of the Executive Committee of the Trust on behalf
of a Fund signed by an officer of the Trust and certified by
its Secretary or an Assistant Secretary, specifying the
securities to be delivered, setting forth the purpose for
which such delivery is to be made, declaring such purpose to
be a proper corporate purpose, and naming the person or
persons to whom delivery of such securities shall be made.
2.3 Registration of Securities. Securities held by the Custodian (other
than bearer securities) shall be registered in the name of a
particular Fund or in the name of any nominee of the Fund or of any
nominee of the Custodian which nominee shall be assigned exclusively
to the Fund, unless the Trust has authorized in writing the
appointment of a nominee to be used in common with other registered
investment companies affiliated with the Fund, or in the name or
nominee name of any agent appointed pursuant to Section 2.11 or in
the name or nominee name of any sub-custodian appointed pursuant to
Section 1. All securities accepted by the Custodian on behalf of a
Fund under the terms of this Contract shall be in "street name" or
other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a separate
bank account or accounts in the name of each Fund, subject only to
draft or order by the Custodian acting pursuant to the terms of this
Contract, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account
of each Fund, other than cash maintained in a joint repurchase
account with other affiliated funds pursuant to Section 2.14 of this
Contract or by a particular Fund in a bank account established and
used in accordance with Rule 17f-3 under the Investment Company Act
of 1940, as amended, (the "1940 Act"). Funds held by the Custodian
for a Fund may be deposited by it to its credit as Custodian in the
Banking Department of the Custodian or in such other banks or trust
companies as it may in its discretion deem necessary or desirable;
provided, however, that every such bank or trust company shall be
qualified to act as a custodian under the 1940 Act and that each
such bank or trust company and the funds to be deposited with each
such bank or trust company shall be approved by vote of a majority
of the Board of Trustees/Directors ("Board") of the Trust. Such
funds shall be deposited by the Custodian in its capacity as
Custodian for the Fund and shall be withdrawable by the Custodian
only in that capacity. If requested by the Trust, the Custodian
shall furnish the Trust, not later than twenty (20) days after the
last business day of each month, an internal reconciliation of the
closing balance as of that day in all accounts described in this
section to the balance shown on the daily cash report for that day
rendered to the Trust.
2.5 Payments for Shares. The Custodian shall make such arrangements with
the Transfer Agent of each Fund, as will enable the Custodian to
receive the cash consideration due to each Fund and will deposit
into each Fund's account such payments as are received from the
Transfer Agent. The Custodian will provide timely notification to
the Trust and the Transfer Agent of any receipt by it of payments
for Shares of the respective Fund.
2.6 Availability of Federal Funds. Upon mutual agreement between the
Trust and the Custodian, the Custodian shall make federal funds
available to the Funds as of specified times agreed upon from time
to time by the Trust and the Custodian in the amount of checks,
clearing house funds, and other non-federal funds received in
payment for Shares of the Funds which are deposited into the Funds'
accounts.
2.7 Collection of Income.
(1) The Custodian shall collect on a timely basis all income and
other payments with respect to registered securities held
hereunder to which each Fund shall be entitled either by law
or pursuant to custom in the securities business, and shall
collect on a timely basis all income and other payments with
respect to bearer securities if, on the date of payment by the
issuer, such securities are held by the Custodian or its agent
thereof and shall credit such income, as collected, to each
Fund's custodian account. Without limiting the generality of
the foregoing, the Custodian shall detach and present for
payment all coupons and other income items requiring
presentation as and when they become due and shall collect
interest when due on securities held hereunder. The
collection of income due the Funds on securities loaned
pursuant to the provisions of Section 2.2 (10) shall be the
responsibility of the Trust. The Custodian will have no duty
or responsibility in connection therewith, other than to
provide the Trust with such information or data as may be
necessary to assist the Trust in arranging for the timely
delivery to the Custodian of the income to which each Fund is
properly entitled.
(2) The Custodian shall promptly notify the Trust whenever income
due on securities is not collected in due course and will
provide the Trust with monthly reports of the status of past
due income unless the parties otherwise agree.
2.8 Payment of Fund Moneys. Upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the
parties, the Custodian shall pay out moneys of each Fund in the
following cases only:
(1) Upon the purchase of securities, futures contracts or options
on futures contracts for the account of a Fund but only (a)
against the delivery of such securities, or evidence of title
to futures contracts, to the Custodian (or any bank, banking
firm or trust company doing business in the United States or
abroad which is qualified under the 1940 Act to act as a
custodian and has been designated by the Custodian as its
agent for this purpose) registered in the name of the Fund or
in the name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for transfer, (b) in the
case of a purchase effected through a Securities System, in
accordance with the conditions set forth in Section 2.12
hereof or (c) in the case of repurchase agreements entered
into between the Trust and any other party, (i) against
delivery of the securities either in certificate form or
through an entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii) against
delivery of the receipt evidencing purchase for the account of
the Fund of securities owned by the Custodian along with
written evidence of the agreement by the Custodian to
repurchase such securities from the Fund;
(2) In connection with conversion, exchange or surrender of
securities owned by a Fund as set forth in Section 2.2 hereof;
(3) For the redemption or repurchase of Shares of a Fund issued by
the Trust as set forth in Section 2.10 hereof;
(4) For the payment of any expense or liability incurred by a Fund,
including but not limited to the following payments for the
account of the Fund: interest; taxes; management, accounting,
transfer agent and legal fees; and operating expenses of the
Fund, whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
(5) For the payment of any dividends on Shares of a Fund declared
pursuant to the governing documents of the Trust;
(6) For payment of the amount of dividends received in respect of
securities sold short;
(7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a
resolution of the Executive Committee of the Trust on behalf
of a Fund signed by an officer of the Trust and certified by
its Secretary or an Assistant Secretary, specifying the amount
of such payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a proper
purpose, and naming the person or persons to whom such payment
is to be made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased.
In any and every case where payment for purchase of securities for
the account of a Fund is made by the Custodian in advance of receipt
of the securities purchased, in the absence of specific written
instructions from the Trust to so pay in advance, the Custodian
shall be absolutely liable to the Fund for such securities to the
same extent as if the securities had been received by the Custodian.
2.10Payments for Repurchases or Redemptions of Shares of a Fund. From
such funds as may be available for the purpose of repurchasing or
redeeming Shares of a Fund, but subject to the limitations of the
Declaration of Trust/Articles of Incorporation and any applicable
votes of the Board of the Trust pursuant thereto, the Custodian
shall, upon receipt of instructions from the Transfer Agent, make
funds available for payment to holders of shares of such Fund who
have delivered to the Transfer Agent a request for redemption or
repurchase of their shares including without limitation through bank
drafts, automated clearinghouse facilities, or by other means. In
connection with the redemption or repurchase of Shares of the Funds,
the Custodian is authorized upon receipt of instructions from the
Transfer Agent to wire funds to or through a commercial bank
designated by the redeeming shareholders.
2.11Appointment of Agents. The Custodian may at any time or times in
its discretion appoint (and may at any time remove) any other bank
or trust company which is itself qualified under the 1940 Act and
any applicable state law or regulation, to act as a custodian, as
its agent to carry out such of the provisions of this Section 2 as
the Custodian may from time to time direct; provided, however, that
the appointment of any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
2.12Deposit of Fund Assets in Securities System. The Custodian may
deposit and/or maintain securities owned by the Funds in a clearing
agency registered with the Securities and Exchange Commission
("SEC") under Section 17A of the Exchange Act, which acts as a
securities depository, or in the book-entry system authorized by the
U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities System" in accordance
with applicable Federal Reserve Board and SEC rules and regulations,
if any, and subject to the following provisions:
(1) The Custodian may keep securities of each Fund in a Securities
System provided that such securities are represented in an
account ("Account") of the Custodian in the Securities System
which shall not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise for
customers;
(2) The records of the Custodian with respect to securities of the
Funds which are maintained in a Securities System shall
identify by book-entry those securities belonging to each
Fund;
(3) The Custodian shall pay for securities purchased for the
account of each Fund upon (i) receipt of advice from the
Securities System that such securities have been transferred
to the Account, and (ii) the making of an entry on the records
of the Custodian to reflect such payment and transfer for the
account of the Fund. The Custodian shall transfer securities
sold for the account of a Fund upon (i) receipt of advice from
the Securities System that payment for such securities has
been transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such transfer
and payment for the account of the Fund. Copies of all
advices from the Securities System of transfers of securities
for the account of a Fund shall identify the Fund, be
maintained for the Fund by the Custodian and be provided to
the Trust at its request. Upon request, the Custodian shall
furnish the Trust confirmation of each transfer to or from the
account of a Fund in the form of a written advice or notice
and shall furnish to the Trust copies of daily transaction
sheets reflecting each day's transactions in the Securities
System for the account of a Fund.
(4) The Custodian shall provide the Trust with any report obtained
by the Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding
securities deposited in the Securities System;
(5) The Custodian shall have received the initial certificate,
required by Section 9 hereof;
(6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Trust for any loss or damage
to a Fund resulting from use of the Securities System by
reason of any negligence, misfeasance or misconduct of the
Custodian or any of its agents or of any of its or their
employees or from failure of the Custodian or any such agent
to enforce effectively such rights as it may have against the
Securities System; at the election of the Trust, it shall be
entitled to be subrogated to the rights of the Custodian with
respect to any claim against the Securities System or any
other person which the Custodian may have as a consequence of
any such loss or damage if and to the extent that a Fund has
not been made whole for any such loss or damage.
(7) The authorization contained in this Section 2.12 shall not
relieve the Custodian from using reasonable care and diligence
in making use of any Securities System.
2.13Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts
for and on behalf of each Fund, into which account or accounts may
be transferred cash and/or securities, including securities
maintained in an account by the Custodian pursuant to Section 2.12
hereof, (i) in accordance with the provisions of any agreement among
the Trust, the Custodian and a broker-dealer registered under the
Exchange Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act), relating to
compliance with the rules of The Options Clearing Corporation and of
any registered national securities exchange (or the Commodity
Futures Trading Commission or any registered contract market), or of
any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions for a Fund, (ii) for
purpose of segregating cash or government securities in connection
with options purchased, sold or written for a Fund or commodity
futures contracts or options thereon purchased or sold for a Fund,
(iii) for the purpose of compliance by the Trust or a Fund with the
procedures required by any release or releases of the SEC relating
to the maintenance of segregated accounts by registered investment
companies and (iv) for other proper corporate purposes, but only, in
the case of clause (iv), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the Board or of
the Executive Committee signed by an officer of the Trust and
certified by the Secretary or an Assistant Secretary, setting forth
the purpose or purposes of such segregated account and declaring
such purposes to be proper corporate purposes.
2.14Joint Repurchase Agreements. Upon the receipt of Proper
Instructions, the Custodian shall deposit and/or maintain any assets
of a Fund and any affiliated funds which are subject to joint
repurchase transactions in an account established solely for such
transactions for the Fund and its affiliated funds. For purposes of
this Section 2.14, "affiliated funds" shall include all investment
companies and their portfolios for which subsidiaries or affiliates
of Federated Investors serve as investment advisers, distributors or
administrators in accordance with applicable exemptive orders from
the SEC. The requirements of segregation set forth in Section 2.1
shall be deemed to be waived with respect to such assets.
2.15Ownership Certificates for Tax Purposes. The Custodian shall
execute ownership and other certificates and affidavits for all
federal and state tax purposes in connection with receipt of income
or other payments with respect to securities of a Fund held by it
and in connection with transfers of securities.
2.16Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of
such securities, if the securities are registered otherwise than in
the name of a Fund or a nominee of a Fund, all proxies, without
indication of the manner in which such proxies are to be voted, and
shall promptly deliver to the Trust such proxies, all proxy
soliciting materials and all notices relating to such securities.
2.17Communications Relating to Fund Portfolio Securities. The Custodian
shall transmit promptly to the Trust all written information
(including, without limitation, pendency of calls and maturities of
securities and expirations of rights in connection therewith and
notices of exercise of call and put options written by the Fund and
the maturity of futures contracts purchased or sold by the Fund)
received by the Custodian from issuers of the securities being held
for the Fund. With respect to tender or exchange offers, the
Custodian shall transmit promptly to the Trust all written
information received by the Custodian from issuers of the securities
whose tender or exchange is sought and from the party (or his
agents) making the tender or exchange offer. If the Trust desires
to take action with respect to any tender offer, exchange offer or
any other similar transaction, the Trust shall notify the Custodian
in writing at least three business days prior to the date on which
the Custodian is to take such action. However, the Custodian shall
nevertheless exercise its best efforts to take such action in the
event that notification is received three business days or less
prior to the date on which action is required.
2.18Proper Instructions. Proper Instructions as used throughout this
Section 2 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 Custodian 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 promptly causes such oral
instructions to be confirmed in writing. Upon receipt of a
certificate of the Secretary or an Assistant Secretary as to the
authorization by the Board of the Trust accompanied by a detailed
description of procedures approved by the Board, Proper Instructions
may include communications effected directly between electro-
mechanical or electronic devices provided that the Board and the
Custodian are satisfied that such procedures afford adequate
safeguards for a Fund's assets.
2.19Actions Permitted Without Express Authority. The Custodian may in
its discretion, without express authority from the Trust:
(1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, provided that all such payments
shall be accounted for to the Trust in such form that it may
be allocated to the affected Fund;
(2) surrender securities in temporary form for securities in
definitive form;
(3) endorse for collection, in the name of a Fund, checks, drafts
and other negotiable instruments; and
(4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of each Fund except as otherwise directed by the Trust.
2.20Evidence of Authority. The Custodian shall be protected in acting
upon any instructions, notice, request, consent, certificate or
other instrument or paper reasonably believed by it to be genuine
and to have been properly executed on behalf of a Fund. The
Custodian may receive and accept a certified copy of a vote of the
Board of the Trust as conclusive evidence (a) of the authority of
any person to act in accordance with such vote or (b) of any
determination of or any action by the Board pursuant to the
Declaration of Trust/Articles of Incorporation as described in such
vote, and such vote may be considered as in full force and effect
until receipt by the Custodian of written notice to the contrary.
2.21Notice to Trust by Custodian Regarding Cash Movement. The Custodian
will provide timely notification to the Trust of any receipt of
cash, income or payments to the Trust and the release of cash or
payment by the Trust.
3. Duties of Custodian With Respect to the Books of Account and Calculation
of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of the Trust to keep the
books of account of each Fund and/or compute the net asset value per
share of the outstanding Shares of each Fund or, if directed in writing
to do so by the Trust, shall itself keep such books of account and/or
compute such net asset value per share. If so directed, the Custodian
shall also calculate daily the net income of a Fund as described in the
Fund's currently effective prospectus and Statement of Additional
Information ("Prospectus") and shall advise the Trust and the Transfer
Agent daily of the total amounts of such net income and, if instructed
in writing by an officer of the Trust to do so, shall advise the
Transfer Agent periodically of the division of such net income among its
various components. The calculations of the net asset value per share
and the daily income of a Fund shall be made at the time or times
described from time to time in the Fund's currently effective
Prospectus.
4. Records.
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will
meet the obligations of the Trust and the Funds under the 1940 Act, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder, and specifically including identified cost records used for
tax purposes. All such records shall be the property of the Trust and
shall at all times during the regular business hours of the Custodian be
open for inspection by duly authorized officers, employees or agents of
the Trust and employees and agents of the SEC. In the event of
termination of this Contract, the Custodian will deliver all such
records to the Trust, to a successor Custodian, or to such other person
as the Trust may direct. The Custodian shall supply daily to the Trust
a tabulation of securities owned by a Fund and held by the Custodian and
shall, when requested to do so by the Trust and for such compensation as
shall be agreed upon between the Trust and the Custodian, include
certificate numbers in such tabulations.
5. Opinion of Funds' Independent Public Accountants/Auditors.
The Custodian shall take all reasonable action, as the Trust may from
time to time request, to obtain from year to year favorable opinions
from each Fund's independent public accountants/auditors with respect to
its activities hereunder in connection with the preparation of the
Fund's registration statement, periodic reports, or any other reports to
the SEC and with respect to any other requirements of such Commission.
6. Reports to Trust by Independent Public Accountants/Auditors.
The Custodian shall provide the Trust, at such times as the Trust may
reasonably require, with reports by independent public
accountants/auditors for each Fund on the accounting system, internal
accounting control and procedures for safeguarding securities, futures
contracts and options on futures contracts, including securities
deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian for the Fund under this Contract;
such reports shall be of sufficient scope and in sufficient detail, as
may reasonably be required by the Trust, to provide reasonable assurance
that any material inadequacies would be disclosed by such examination
and, if there are no such inadequacies, the reports shall so state.
7. Compensation of Custodian.
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time
between Company and the Custodian.
8. Responsibility of Custodian.
The Custodian shall be held to a standard of reasonable care in carrying
out the provisions of this Contract; provided, however, that the
Custodian shall be held to any higher standard of care which would be
imposed upon the Custodian by any applicable law or regulation if such
above stated standard of reasonable care was not part of this Contract.
The Custodian shall be entitled to rely on and may act upon advice of
counsel (who may be counsel for the Trust) on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to
such advice, provided that such action is not in violation of applicable
federal or state laws or regulations, and is in good faith and without
negligence. Subject to the limitations set forth in Section 15 hereof,
the Custodian shall be kept indemnified by the Trust but only from the
assets of the Fund involved in the issue at hand and be without
liability for any action taken or thing done by it in carrying out the
terms and provisions of this Contract in accordance with the above
standards.
In order that the indemnification provisions contained in this Section 8
shall apply, however, it is understood that if in any case the Trust may
be asked to indemnify or save the Custodian harmless, the Trust shall be
fully and promptly advised of all pertinent facts concerning the
situation in question, and it is further understood that the Custodian
will use all reasonable care to identify and notify the Trust promptly
concerning any situation which presents or appears likely to present the
probability of such a claim for indemnification. The Trust shall have
the option to defend the Custodian against any claim which may be the
subject of this indemnification, and in the event that the Trust so
elects it will so notify the Custodian and thereupon the Trust shall
take over complete defense of the claim, and the Custodian shall in such
situation initiate no further legal or other expenses for which it shall
seek indemnification under this Section. The Custodian shall in no case
confess any claim or make any compromise in any case in which the Trust
will be asked to indemnify the Custodian except with the Trust's prior
written consent.
Notwithstanding the foregoing, the responsibility of the Custodian with
respect to redemptions effected by check shall be in accordance with a
separate Agreement entered into between the Custodian and the Trust.
If the Trust requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action
may, in the reasonable opinion of the Custodian, result in the Custodian
or its nominee assigned to a Fund being liable for the payment of money
or incurring liability of some other form, the Custodian may request the
Trust, as a prerequisite to requiring the Custodian to take such action,
to provide indemnity to the Custodian in an amount and form satisfactory
to the Custodian.
Subject to the limitations set forth in Section 15 hereof, the Trust
agrees to indemnify and hold harmless the Custodian and its nominee from
and against all taxes, charges, expenses, assessments, claims and
liabilities (including counsel fees) (referred to herein as authorized
charges) incurred or assessed against it or its nominee in connection
with the performance of this Contract, except such as may arise from it
or its nominee's own failure to act in accordance with the standard of
reasonable care or any higher standard of care which would be imposed
upon the Custodian by any applicable law or regulation if such above-
stated standard of reasonable care were not part of this Contract. To
secure any authorized charges and any advances of cash or securities
made by the Custodian to or for the benefit of a Fund for any purpose
which results in the Fund incurring an overdraft at the end of any
business day or for extraordinary or emergency purposes during any
business day, the Trust hereby grants to the Custodian a security
interest in and pledges to the Custodian securities held for the Fund by
the Custodian, in an amount not to exceed 10 percent of the Fund's gross
assets, the specific securities to be designated in writing from time to
time by the Trust or the Fund's investment adviser. Should the Trust
fail to make such designation, or should it instruct the Custodian to
make advances exceeding the percentage amount set forth above and should
the Custodian do so, the Trust hereby agrees that the Custodian shall
have a security interest in all securities or other property purchased
for a Fund with the advances by the Custodian, which securities or
property shall be deemed to be pledged to the Custodian, and the written
instructions of the Trust instructing their purchase shall be considered
the requisite description and designation of the property so pledged for
purposes of the requirements of the Uniform Commercial Code. Should the
Trust fail to cause a Fund to repay promptly any authorized charges or
advances of cash or securities, subject to the provision of the second
paragraph of this Section 8 regarding indemnification, the Custodian
shall be entitled to use available cash and to dispose of pledged
securities and property as is necessary to repay any such advances.
9. Effective Period, Termination and Amendment.
This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may
be terminated by either party by an instrument in writing delivered or
mailed, postage prepaid to the other party, such termination to take
effect not sooner than sixty (60) days after the date of such delivery
or mailing; provided, however that the Custodian shall not act under
Section 2.12 hereof in the absence of receipt of an initial certificate
of the Secretary or an Assistant Secretary that the Board of the Trust
has approved the initial use of a particular Securities System as
required in each case by Rule 17f-4 under the 1940 Act; provided
further, however, that the Trust shall not amend or terminate this
Contract in contravention of any applicable federal or state
regulations, or any provision of the Declaration of Trust/Articles of
Incorporation, and further provided, that the Trust may at any time by
action of its Board (i) substitute another bank or trust company for the
Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the appropriate banking
regulatory agency or upon the happening of a like event at the direction
of an appropriate regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Trust shall pay to the Custodian
such compensation as may be due as of the date of such termination and
shall likewise reimburse the Custodian for its costs, expenses and
disbursements.
10. Successor Custodian.
If a successor custodian shall be appointed by the Board of the Trust,
the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form
for transfer, all securities then held by it hereunder for each Fund and
shall transfer to separate accounts of the successor custodian all of
each Fund's securities held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board
of the Trust, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board shall have been delivered to the
Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank
or trust company, which is a "bank" as defined in the 1940 Act, (delete
"doing business ... Massachusetts" unless SSBT is the Custodian) doing
business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $100,000,000, all securities, funds
and other properties held by the Custodian and all instruments held by
the Custodian relative thereto and all other property held by it under
this Contract for each Fund and to transfer to separate accounts of
such successor custodian all of each Fund's securities held in any
Securities System. Thereafter, such bank or trust company shall be the
successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing
to failure of the Trust to procure the certified copy of the vote
referred to or of the Board to appoint a successor custodian, the
Custodian shall be entitled to fair compensation for its services during
such period as the Custodian retains possession of such securities,
funds and other properties and the provisions of this Contract relating
to the duties and obligations of the Custodian shall remain in full
force and effect.
11. Interpretive and Additional Provisions.
In connection with the operation of this Contract, the Custodian and the
Trust may from time to time agree on such provisions interpretive of or
in addition to the provisions of this Contract as may in their joint
opinion be consistent with the general tenor of this Contract. 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 Declaration of
Trust/Articles of Incorporation. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to
be an amendment of this Contract.
12. Massachusetts Law to Apply.
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
13. 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
Custodian at address for SSBT only: 225 Franklin Street, Boston,
Massachusetts, 02110, or to such other address as the Trust or the
Custodian may hereafter specify, shall be deemed to have been properly
delivered or given hereunder to the respective address.
14. Counterparts.
This Contract may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
15. Limitations of Liability.
The Custodian is expressly put on notice of the limitation of liability
as set forth in Article XI of the Declaration of Trust of those Trusts
which are business trusts and agrees that the obligations and
liabilities assumed by the Trust and any Fund pursuant to this Contract,
including, without limitation, any obligation or liability to indemnify
the Custodian pursuant to Section 8 hereof, shall be limited in any case
to the relevant Fund and its assets and that the Custodian shall not
seek satisfaction of any such obligation from the shareholders of the
relevant Fund, from any other Fund or its shareholders or from the
Trustees, Officers, employees or agents of the Trust, or any of them.
In addition, in connection with the discharge and satisfaction of any
claim made by the Custodian against the Trust, for whatever reasons,
involving more than one Fund, the Trust shall have the exclusive right
to determine the appropriate allocations of liability for any such claim
between or among the Funds.

IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed effective as of the 1st day of December, 1993.

ATTEST: INVESTMENT COMPANIES

/s/John G. McGonigle_________ By /s/John G. Donahue_____________
John G. McGonigle John F. Donahue
Secretary Chairman

ATTEST: STATE STREET BANK AND TRUST
COMPANY

/s/ Ed McKenzie______________ By /s/ F. J. Sidoti, Jr.___________
(Assistant) Secretary Typed Name: Frank J. Sidoti, Jr.
Typed Name: Ed McKenzie Title: Vice President

ATTEST: FEDERATED SERVICES COMPANY

/s/ Jeannette Fisher-Garber______ By /s/ James J. Dolan________________
Jeannette Fisher-Garber James J. Dolan
Secretary President

EXHIBIT 1
<TABLE>
<S> <C>
CONTRACT
DATE INVESTMENT COMPANY

7/25/94 American Leaders Fund, Inc.
Class A Shares
Class B Shares
Class C Shares
Fortress Shares

</TABLE>

Exhibit 9(iii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K

SHAREHOLDER SERVICES AGREEMENT

AGREEMENT made as of the first day of March, 1994, 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 and who have approved a Shareholder Services
Plan (the "Plan") and this form of Agreement (individually referred to herein
as a "Fund" and collectively as "Funds") and Federated Shareholder Services, a
Delaware business trust, having its principal office and place of business at
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779 ("FSS").

1. The Funds hereby appoint FSS to render or cause to be rendered
personal services to shareholders of the Funds and/or the maintenance of
accounts of shareholders of the Funds ("Services"). In addition to providing
Services directly to shareholders of the Funds, FSS is hereby appointed the
Funds' agent to select, negotiate and subcontract for the performance of
Services. FSS hereby accepts such appointments. FSS agrees to provide or
cause to be provided Services which, in its best judgment (subject to
supervision and control of the Funds' Boards of Trustees or Directors, as
applicable), are necessary or desirable for shareholders of the Funds. FSS
further agrees to provide the Funds, upon request, a written description of
the Services which FSS is providing hereunder.

2. During the term of this Agreement, each Fund will pay FSS and FSS
agrees to accept as full compensation for its services rendered hereunder a
fee at an annual rate, calculated daily and payable monthly, up to 0.25% of 1%
of average net assets of each Fund.

For the payment period in which this Agreement becomes effective or
terminates with respect to any Fund, there shall be an appropriate proration
of the monthly fee on the basis of the number of days that this Agreement is
in effect with respect to such Fund during the month. To enable the Funds to
comply with an applicable exemptive order, FSS represents that the fees
received pursuant to this Agreement will be disclosed to and authorized by any
person or entity receiving Services, and will not result in an excessive fee
to FSS.

3. This Agreement shall continue in effect for one year from the date
of its execution, and thereafter for successive periods of one year only if
the form of this Agreement is approved at least annually by the Board of each
Fund, including a majority of the members of the Board of the Fund who are not
interested persons of the Fund and have no direct or indirect financial
interest in the operation of the Funds' Plan or in any related documents to
the Plan ("Independent Board Members") cast in person at a meeting called for
that purpose.

4. Notwithstanding paragraph 3, this Agreement may be terminated as
follows:

(a) at any time, without the payment of any penalty, by the
vote of a majority of the Independent Board Members of any Fund or by
a vote of a majority of the outstanding voting securities of any Fund
as defined in the Investment Company Act of 1940 on sixty (60) days'
written notice to the parties to this Agreement;

(b) automatically in the event of the Agreement's assignment
as defined in the Investment Company Act of 1940; and

(c) by any party to the Agreement without cause by giving the
other party at least sixty (60) days' written notice of its intention
to terminate.

5. FSS agrees to obtain any taxpayer identification number
certification from each shareholder of the Funds to which it provides Services
that is required under Section 3406 of the Internal Revenue Code, and any
applicable Treasury regulations, and to provide each Fund or its designee with
timely written notice of any failure to obtain such taxpayer identification
number certification in order to enable the implementation of any required
backup withholding.

6. FSS shall not be liable for any error of judgment or mistake of
law or for any loss suffered by any Fund in connection with the matters to
which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of
its duties or from reckless disregard by it of its obligations and duties
under this Agreement. FSS shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for such Fund) on all matters, and shall
be without liability for any action reasonably taken or omitted pursuant to
such advice. Any person, even though also an officer, trustee, partner,
employee or agent of FSS, who may be or become a member of such Fund's Board,
officer, employee or agent of any Fund, shall be deemed, when rendering
services to such Fund or acting on any business of such Fund (other than
services or business in connection with the duties of FSS hereunder) to be
rendering such services to or acting solely for such Fund and not as an
officer, trustee, partner, employee or agent or one under the control or
direction of FSS even though paid by FSS.

This Section 6 shall survive termination of this Agreement.

7. No provision of this Agreement may be changed, waived, discharged
or terminated orally, but only by an instrument in writing signed by the party
against which an enforcement of the change, waiver, discharge or termination
is sought.

8. FSS is expressly put on notice of the limitation of liability as
set forth in the Declaration of Trust of each Fund that is a Massachusetts
business trust and agrees that the obligations assumed by each such Fund
pursuant to this Agreement shall be limited in any case to such Fund and its
assets and that FSS shall not seek satisfaction of any such obligations from
the shareholders of such Fund, the Trustees, Officers, Employees or Agents of
such Fund, or any of them.

9. The execution and delivery of this Agreement have been authorized
by the Trustees of FSS and signed by an authorized officer of FSS, 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 FSS, but bind only the trust property of FSS as provided in
the Declaration of Trust of FSS.

10. Notices of any kind to be given hereunder shall be in writing
(including facsimile communication) and shall be duly given if delivered to
any Fund and to such Fund at the following address: Federated Investors
Tower, Pittsburgh, PA 15222-3779, Attention: President and if delivered to
FSS at Federated Investors Tower, Pittsburgh, PA 15222-3779, Attention:
President.

11. 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. If any provision of this Agreement shall be
held or made invalid by a court or regulatory agency decision, statute, rule
or otherwise, the remainder of this Agreement shall not be affected thereby.
Subject to the provisions of Sections 3 and 4, hereof, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and shall be governed by Pennsylvania law; provided,
however, that nothing herein shall be construed in a manner inconsistent with
the Investment Company Act of 1940 or any rule or regulation promulgated by
the Securities and Exchange Commission thereunder.

12. This Agreement may be executed by different parties on separate
counterparts, each of which, when so executed and delivered, shall be an
original, and all such counterparts shall together constitute one and the same
instrument.

13. This Agreement shall not be assigned by any party without the
prior written consent of FSS in the case of assignment by any Fund, or of the
Funds in the case of assignment by FSS, except that any party may assign to a
successor all of or a substantial portion of its business to a party
controlling, controlled by, or under common control with such party. Nothing
in this Section 14 shall prevent FSS from delegating its responsibilities to
another entity to the extent provided herein.

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.

Investment Companies (listed
on Exhibit 1)

By: /s/ John F. Donahue
John F. Donahue
Chairman

Attest: /s/ John W. McGonigle
John W. McGonigle

Federated Shareholder Services

By: /s/ James J. Dolan

Title: President

Attest: /s/ John W. McGonigle
John W. McGonigle

Exhibit 1

American Leaders Fund, Inc.

Class A Shares
Class B Shares
Class C Shares
Fortress Shares

Exhibit 9(iv) under Form N-1A
Exhibit 10 under Item 601/Reg S-K

SHAREHOLDER SERVICES SUB-CONTRACT

This Agreement is made between the Financial Institution executing this
Agreement ("Provider") and Federated Shareholder Services ("FSS") on behalf of
the investment companies listed in Exhibit A hereto (the "Funds"), for whom
FSS administers the Shareholder Services Plan ("Plan") and who have approved
this form of Agreement. In consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:

1. FSS hereby appoints Provider to render or cause to be rendered
personal services to shareholders of the Funds and/or the maintenance of
accounts of shareholders of the Funds ("Services"). Provider agrees to
provide Services which, in its best judgment, are necessary or desirable for
its customers who are investors in the Funds. Provider further agrees to
provide FSS, upon request, a written description of the Services which
Provider is providing hereunder.

2. During the term of this Agreement, the Funds will pay the Provider
fees as set forth in a written schedule delivered to the Provider pursuant to
this Agreement. The fee schedule for Provider may be changed by FSS sending a
new fee schedule to Provider pursuant to Paragraph 9 of this Agreement. For
the payment period in which this Agreement becomes effective or terminates,
there shall be an appropriate proration of the fee on the basis of the number
of days that this Agreement is in effect during the quarter. To enable the
Funds to comply with an applicable exemptive order, Provider represents that
the fees received pursuant to this Agreement will be disclosed to its
customers, will be authorized by its customers, and will not result in an
excessive fee to the Provider.

3. The Provider understands that the Department of Labor views ERISA
as prohibiting fiduciaries of discretionary ERISA assets from receiving
shareholder service fees or other compensation from funds in which the
fiduciary's discretionary ERISA assets are invested. To date, the Department
of Labor has not issued any exemptive order or advisory opinion that would
exempt fiduciaries from this interpretation. Without specific authorization
from the Department of Labor, fiduciaries should carefully avoid investing
discretionary assets in any fund pursuant to an arrangement where the
fiduciary is to be compensated by the fund for such investment. Receipt of
such compensation could violate ERISA provisions against fiduciary self-
dealing and conflict of interest and could subject the fiduciary to
substantial penalties.

4. The Provider agrees not to solicit or cause to be solicited
directly, or indirectly at any time in the future, any proxies from the
shareholders of a Fund in opposition to proxies solicited by management of the
Fund, unless a court of competent jurisdiction shall have determined that the
conduct of a majority of the Board of Trustees or Directors of the Fund
constitutes willful misfeasance, bad faith, gross negligence or reckless
disregard of their duties. This paragraph 4 will survive the term of this
Agreement.

5. This Agreement shall continue in effect for one year from the date
of its execution, and thereafter for successive periods of one year if the
form of this Agreement is approved at least annually by the Board of each
Fund, including a majority of the members of the Board of the Fund who are not
interested persons of the Fund and have no direct or indirect financial
interest in the operation of the Fund's Plan or in any related documents to
the Plan ("Disinterested Board Members") cast in person at a meeting called
for that purpose.

6. Notwithstanding paragraph 5, this Agreement may be terminated as
follows:

(a) at any time, without the payment of any penalty, by the
vote of a majority of the Disinterested Board Members of the Fund or
by a vote of a majority of the outstanding voting securities of the
Fund as defined in the Investment Company Act of 1940 on not more than
sixty (60) days' written notice to the parties to this Agreement;

(b) automatically in the event of the Agreement's assignment
as defined in the Investment Company Act of 1940; and

(c) by either party to the Agreement without cause by giving
the other party at least sixty (60) days' written notice of its
intention to terminate.

7. The Provider agrees to obtain any taxpayer identification number
certification from its customers required under Section 3406 of the Internal
Revenue Code, and any applicable Treasury regulations, and to provide the Fund
or its designee with timely written notice of any failure to obtain such
taxpayer identification number certification in order to enable the
implementation of any required backup withholding.

8. The execution and delivery of this Agreement have been authorized
by the Trustees of FSS and signed by an authorized officer of FSS, 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 FSS, but bind only the trust property of FSS as provided in
the Declaration of Trust of FSS.

9. Notices of any kind to be given hereunder shall be in writing
(including facsimile communication) and shall be duly given if delivered to
Provider at the address set forth below and if delivered to FSS at Federated
Investors Tower, Pittsburgh, PA 15222-3779, Attention: President.

10. 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. If any provision of this Agreement shall be
held or made invalid by a court or regulatory agency decision, statute, rule
or otherwise, the remainder of this Agreement shall not be affected thereby.
Subject to the provisions of Sections 5 and 6, hereof, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and shall be governed by Pennsylvania law; provided,
however, that nothing herein shall be construed in a manner inconsistent with
the Investment Company Act of 1940 or any rule or regulation promulgated by
the Securities and Exchange Commission thereunder.

11. This Agreement may be executed by different parties on separate
counterparts, each of which, when so executed and delivered, shall be an
original, and all such counterparts shall together constitute one and the same
instrument.

12. This Agreement shall not be assigned by any party without the
prior written consent of FSS in the case of assignment by Provider, or of
Provider in the case of assignment by FSS, except that any party may assign to
a successor all of or a substantial portion of its business to a party
controlling, controlled by, or under common control with such party.

13. This Agreement may be amended by FSS from time to time by the
following procedure. FSS will mail a copy of the amendment to the Provider's
address, as shown below. If the Provider does not object to the amendment
within thirty (30) days after its receipt, the amendment will become part of
the Agreement. The Provider's objection must be in writing and be received by
FSS within such thirty days.

14. This Agreement may be terminated with regard to a particular Fund
or Class at any time, without the payment of any penalty, by FSS or by the
vote of a majority of the Disinterested Trustees or Directors, as applicable,
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 the Provider.
This Agreement may be terminated by Provider on sixty (60) days' written
notice to FSS.

15. The Provider acknowledges and agrees that FSS has entered into
this Agreement solely in the capacity of agent for the Funds and administrator
of the Plan. The Provider agrees not to claim that FSS is liable for any
responsibilities or amounts due by the Funds hereunder.

[Provider]

Address

City State Zip Code

Dated: By:
Authoried Signature

Title

Print Name of Authorized Signature

FEDERATED SHAREHOLDER SERVICES
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

By:
Vice President

EXHIBIT A to Shareholder Services Sub-Contract with

Funds covered by this Agreement:

American Leaders Fund, Inc.
Class A Shares
Class B Shares
Class C Shares
Fortress Shares

Shareholder Service Fees

1. During the term of this Agreement, FSS will pay Provider a
quarterly fee. This fee will be computed at the annual rate of ______ of the
average net asset value of shares of the Funds held during the quarter in
accounts for which the Provider provides Services under this Agreement, so
long as the average net asset value of Shares in the Funds during the quarter
equals or exceeds such minimum amount as FSS shall from time to time determine
and communicate in writing to the Provider.

2. For the quarterly period in which the 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
quarter.

Exhibit 9(v) under Form N-1A
Exhibit 10 under Item 601/Reg. S-
K

ADMINISTRATIVE SERVICES AGREEMENT

This Administrative Services Agreement is made as of this first day of
March, 1994, 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
(individually referred to herein as "Fund" and collectively referred to as
"Funds), on behalf of the portfolios of the Funds, and Federated
Administrative Services, a Delaware business trust (herein called "FAS").

WHEREAS, the Funds desire to retain FAS as their Administrator to
provide them with Administrative Services (as herein defined), and FAS is
willing to render such services;

WHEREAS, the Funds are registered as open-end management investment
companies 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

NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties hereto agree as follows:

1. Appointment of Administrator. The Funds hereby appoint FAS as
Administrator of the Funds on the terms and conditions set forth in this
Agreement; and FAS hereby accepts such appointment and agrees to perform the
services and duties set forth in Section 2 of this Agreement in consideration
of the compensation provided for in Section 4 hereof.

2. Services and Duties. As Administrator, and subject to the
supervision and control of the Funds' Boards of Trustees or Directors, as
applicable (the "Boards"), FAS will provide facilities, equipment, and
personnel to carry out the following administrative services for operation of
the business and affairs of the Funds and each of their portfolios:

(a) prepare, file, and maintain the Funds'
governing documents and any amendments thereto, including the
Declaration of Trust or Articles of Incorporation, as
appropriate,(which has already been prepared and filed), the By-
laws and minutes of meetings of their Boards, Committees, and
shareholders;

(b) prepare and file with the Securities
and Exchange Commission and the appropriate state securities
authorities the registration statements for the Funds and the
Funds' shares and all amendments thereto, reports to regulatory
authorities and shareholders, prospectuses, proxy statements,
and such other documents all as may be necessary to enable the
Funds to make continuous offerings of their shares, as
applicable;

(c) prepare, negotiate, and administer
contracts on behalf of the Funds with, among others, each Fund's
investment adviser, distributor, custodian, and transfer agent,
subject to any applicable restrictions of the Boards or the 1940
Act;

(d) supervise the Funds' custodians in the
maintenance of the Funds' general ledgers and in the preparation
of the Funds' financial statements, including oversight of
expense accruals and payments, the determination of the net
asset value of the Funds and the declaration and payment of
dividends and other distributions to shareholders;

(e) calculate performance data of the
Funds for dissemination to information services covering the
investment company industry;

(f) prepare and file the Funds' tax
returns;

(g) examine and review the operations of
the Funds' custodians and transfer agents;

(h) coordinate the layout and printing of
publicly disseminated prospectuses and reports;

(i) perform internal audit examinations in
accordance with a charter to be adopted by FAS and the Funds;

(j) assist with the design, development,
and operation of the Funds;

(k) provide individuals reasonably
acceptable to the Funds' Boards for nomination, appointment, or
election as officers of the Funds, who will be responsible for
the management of certain of the Funds' affairs as determined by
the Funds' Boards; and

(l) consult with the Funds and their
Boards of Trustees or Directors, as appropriate, on matters
concerning the Funds and their affairs.

The foregoing, along with any additional services that FAS shall agree
in writing to perform for the Funds hereunder, shall hereafter be referred to
as "Administrative Services." Administrative Services shall not include any
duties, functions, or services to be performed for any Fund by such Fund's
investment adviser, distributor, custodian, transfer agent, or shareholder
service agent, pursuant to their respective agreements with such Fund.

3. Expenses. FAS shall be responsible for expenses incurred in
providing office space, equipment, and personnel as may be necessary or
convenient to provide the Administrative Services to the Fund, including the
compensation of FAS employees who serve on the Funds' Boards, or as officers
of the Funds. Each Fund shall be responsible for all other expenses incurred
by FAS on behalf of such Fund, including without limitation postage and
courier expenses, printing expenses, travel expenses, registration fees,
filing fees, fees of outside counsel and independent auditors, insurance
premiums, fees payable to members of such Fund's Board who are not FAS
employees, and trade association dues.

4. Compensation. For the Administrative Services provided, each
Fund hereby agrees to pay and FAS hereby agrees to accept as full
compensation for its services rendered hereunder an administrative fee at an
annual rate, payable daily, as specified below, based upon the total assets
of all of the Funds:

Maximum Administrative Average Daily Net Assets
Fee of the Funds

.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% on assets in excess of
$750 million

However, in no event shall the administrative fee received during any
year of this Agreement be less than, or be paid at a rate less than would
aggregate, $125,000, per individual Fund, with an additional $30,000 for each
class of shares added to any such Fund after the date hereof.

5. Standard of Care.

(a) FAS shall not be liable for any error
of judgment or mistake of law or for any loss suffered by any
Fund in connection with the matters to which this Agreement
relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and
duties under this Agreement. FAS shall be entitled to rely on
and may act upon advice of counsel (who may be counsel for such
Fund) on all matters, and shall be without liability for any
action reasonably taken or omitted pursuant to such advice. Any
person, even though also an officer, trustee, partner, employee
or agent of FAS, who may be or become a member of such Fund's
Board, officer, employee or agent of any Fund, shall be deemed,
when rendering services to such Fund or acting on any business
of such Fund (other than services or business in connection with
the duties of FAS hereunder) to be rendering such services to or
acting solely for such Fund and not as an officer, trustee,
partner, employee or agent or one under the control or direction
of FAS even though paid by FAS.

(b) This Section 5 shall survive
termination of this Agreement.

6. Duration and Termination. The initial term of this Agreement
with respect to each Fund shall commence on the date hereof, and extend for a
period of one year, renewable annually by the approval of the Board of
Directors/Trustees of each Fund.

7. Amendment. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which an enforcement of the change, waiver,
discharge or termination is sought.

8. Limitations of Liability of Trustees or Officers, Employees,
Agents and Shareholders of the Funds. FAS is expressly put on notice of the
limitation of liability as set forth in the Declaration of Trust of each Fund
that is a Massachusetts business trust and agrees that the obligations
assumed by each such Fund pursuant to this Agreement shall be limited in any
case to such Fund and its assets and that FAS shall not seek satisfaction of
any such obligations from the shareholders of such Fund, the Trustees,
Officers, Employees or Agents of such Fund, or any of them.

9. Limitations of Liability of Trustees and Shareholders of FAS.
The execution and delivery of this Agreement have been authorized by the
Trustees of FAS and signed by an authorized officer of FAS, 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 FAS, but bind only the trust property of FAS as provided in
the Declaration of Trust of FAS.

10. Notices. Notices of any kind to be given hereunder shall be
in writing (including facsimile communication) and shall be duly given if
delivered to any Fund at the following address: Federated Investors Tower,
Pittsburgh, PA 15222-3779, Attention: President and if delivered to FAS at
Federated Investors Tower, Pittsburgh, PA 15222-3779, Attention: President.

11. Miscellaneous. 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. The captions in this Agreement
are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction
or effect. If any provision of this Agreement shall be held or made invalid
by a court or regulatory agency decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. Subject to the
provisions of Section 5, hereof, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and shall be governed by Pennsylvania law; provided, however, that
nothing herein shall be construed in a manner inconsistent with the
Investment Company Act of 1940 or any rule or regulation promulgated by the
Securities and Exchange Commission thereunder.

12. Counterparts. This Agreement may be executed by different
parties on separate counterparts, each of which, when so executed and
delivered, shall be an original, and all such counterparts shall together
constitute one and the same instrument.

13. Assignment; Successors. This Agreement shall not be assigned by
any party without the prior written consent of FAS, in the case of assignment
by any Fund, or of the Funds, in the case of assignment by FAS, except that
any party may assign to a successor all of or a substantial portion of its
business to a party controlling, controlled by, or under common control with
such party. Nothing in this Section 14 shall prevent FAS from delegating its
responsibilities to another entity to the extent provided herein.

IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.

Investment Companies (listed
on Exhibit 1)

By: /s/ John F. Donahue
John F. Donahue
Chairman

Attest: /s/ John W. McGonigle
John W. McGonigle

Federated Administrative Services

By: /s/ Edward C. Gonzales
Edward C. Gonzales
Chairman

Attest: /s/ John W. McGonigle
John W. McGonigle

Exhibit 1

American Leaders Fund, Inc.
Class A Shares
Class B Shares
Class C Shares
Fortress Shares

Exhibit 11 under N-1A
Exhibit 23 under Item 601/Reg SK

ARTHUR ANDERSEN LLP

Pittsburgh, Pennsylvania

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

By: ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP

Pittsburgh, Pennsylvania,
May 22, 1995

Exhibit 11 (i) under Form N-1A
Exhibit 8 under Item 601/Reg. S-K

DICKSTEIN, SHAPIRO & MORIN

2101 L STREET, N.W.

WASHINGTON, D.C. 20032
VIRGINIA OFFICE NEW YORK OFFICE
8300 BOONE BOULEVARD 202-785-9700 598 MADISON AVENUE
SUITE 800 NEW YORK, N.Y. 1002
VIENNA, VIRGINIA 22182 FAX 202-887-0689

TELEX 892608 DSM WSH

March 6, 1992

American Leaders Fund, Inc.
Federated Investors Tower
Pittsburgh, Pennsylvania 1522203779

Fortress High Quality Stock Fund
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

Gentlemen:

We have acted as special tax counsel in connection with, and you have
requested our opinion concerning the federal income tax consequences of, a
transaction in which substantially all of the assets of Fortress High Quality
Stock Fund ("the Acquired Fund") will be acquired by American Leaders Fund,
Inc. ("the Acquiring Fund") in exchange for voting shares of common stock of
the Acquiring Fund (the "Acquiring Fund Shares"). The terms and conditions of
this transaction are set forth in an Agreement and Plan of Reorganization
dated December 12, 1991 between Acquired Fund and Acquiring Fund
("Reorganization Agreement"). This opinion is rendered to you pursuant to
paragraph 8.5 of the Reorganization Agreement, and all capitalized terms used
herein have the meanings assigned to them in the Reorganization Agreement.

The Acquiring Fund is organized as a Maryland corporation and the
Acquired Fund is a Massachusetts business trust. Both the Acquired Fed and
the Acquiring Fund are open-end, diversified investment companies which
qualify as regulated investment companies described in Section 851(a) of the
Internal Revenue Code of 1986, as amended (the "Code"). Both the Acquiring
Fund and the Acquired Fund are engaged in the business of investing in a
professionally managed portfolio of securities.

On the Closing Date under the Reorganization Agreement, the Acquired
Fund will transfer its entire investment portfolio to the Acquiring Fund. In
exchange, the Acquiring Fund will transfer to the Acquired Fund shares of
common stock in the Acquiring Fund in an amount equal in value to the assets
transferred by the Acquired Fund to the Acquiring Fund. The Acquired Fund
will thereupon liquidate and distribute its Acquiring Fund Shares pro rata to
its shareholders.

We have reviewed and relied upon the representations contained in the
Reorganization Agreement and in such other documents and instruments as we
have deemed necessary for the purposes of this opinion, and have reviewed the
applicable provisions of the Code, current regulations and administrative
rules thereunder and pertinent case law.

Based upon the foregoing, we are of the opinion that, for Federal income
tax purposes:

(a) The transfer of all or substantially all of the Acquired
Fund assets in exchange for the Acquiring Fund Shares and the distribution of
the Acquiring Fund Shares to the shareholders of the Acquired Fund in
liquidation of the Acquired Fund will constitute a "reorganization" within the
meaning of Section 368(a)(1)(C) of the Code;

(b) No gain or loss will be recognized by the Acquiring Fund
upon the receipt of the assets of the Acquired Fund solely in exchange for the
Acquiring Fund Shares;

(c) No gain or loss will be recognized by the Acquired Fund upon
the transfer of the Acquired Fund assets to the Acquiring Fund in exchange for
the Acquiring Fund Shares or upon the distribution (whether actual or
constructive) of the Acquiring Fund Shares to Acquired Fund Shareholders in
exchange for their shares of the Acquired Fund;

(d) No gain or loss will be recognized by the Acquired Fund
Shareholders upon the exchange of their Acquired Fund shares for the Acquiring
Fund Shares;

(e) The tax basis of the Acquired Fund assets acquired by the
Acquiring Fund will be the same as the tax basis of such assets to the
Acquired Fund immediately prior to the Reorganization;

(f) The tax basis of the Acquiring Fund Shares received by each
of the Acquired Fund Shareholders pursuant to the Reorganization will be the
same as the tax basis of the Acquired Fund Shares held by such shareholder
immediately prior to the Reorganization;

(g) The holding period of the assets of the Acquired Fund in the
hands of the Acquiring Fund will include the period during which those assets
were held by the Acquired Fund; and

(h) The holding period of the Acquiring Fund Shares to be
received by each Acquired Fund Shareholder will include the period during
which the Acquired Fund shares exchanged therefor were held by such
shareholder (provided the Acquired Fund shares were held as capital assets on
the date of the Reorganization).

We hereby consent to the filing of a copy of this opinion with the
Securities and Exchange Commission as an exhibit to the Registration Statement
on Form N-14 filed by the Acquiring Fund in connection with the
Reorganization, and to the references to this firm and this opinion in the
Prospectus/Proxy Statement which is contained in such Registration Statement.

Very truly yours,

/s/Dickstein, Shapiro & Morin
DICKSTEIN, SHAPIRO & MORIN

Exhibit 15 (i) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K

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 15 (ii) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K

EXHIBIT B
to the
12b-1 Plan

AMERICAN LEADERS FUND, INC.

Class B Shares

This Plan is adopted by AMERICAN LEADERS FUND, INC. with respect to the
Class of Shares of the Corporation set forth above.

Witness the due execution hereof this 1st day of June, 1994.

AMERICAN LEADERS FUND, INC.

By:/s/ John F. Donahue
President

Exhibit 16 under Form N-1A
Exhibit 99 under Item 601/Reg. S-K
<TABLE>
<CAPTION>
DECLARED: QUARTERLY Schedule for Computation FUND: AMERICAN LEADERS FUND, INC.
PAID; QUARTERLY of Fund Performance Data Performance ONE YEAR ending 3-31-88
------------------------ FYE: MARCH 31
Average Total Return
--------- ----------

ONE YEAR Ending 3-31-88
Initial Investment of: $1,000.00 on 3-31-87
Offering Price/Shares = $14.88
NAV = $14.21

<S> <C> <C> <C> <C> <C> <C> <C>
BEGINNING REINVESTMENT ENDING PERIOD TOTAL
REINVESTMENT PERIOD DIVIDEND CAPITAL GAIN PRICE PERIOD END INVESTMENT
DATES SHARE BASE PER SHARE PER SHARE PER SHARE SHARE BASE PRICE VALUE
--------------------------------------------------------------------------------------------------
3-31-87 67.204 0.000000000 0.00000 $14.21 67.204 $14.21 $954.97
5-29-87 67.204 0.100000000 0.19930 $13.81 68.661 $13.81 $948.21
8-31-87 68.661 0.110000000 0.00000 $15.08 69.162 $15.080 $1,042.96
11-30-87 69.162 0.120000000 0.23000 $11.5 71.257 $11.55 $823.02
12-23-87 71.257 0.000000000 0.04200 $12.36 71.500 $12.36 $883.73
2-29-88 71.500 0.100000000 0.00000 $13.15 72.043 $13.15 $947.37
3-31-88 72.043 0.000000000 0.00000 $12.55 72.043 $12.55 $904.20

$1,000 (1+T) = Ending Redeemable Value
T = -9.58%

(1+T) = Average Annual Total Return (A)
A = -9.58%
</TABLE>
<TABLE>
<CAPTION>
DECLARED: QUARTERLY Schedule for Computation FUND: AMERICAN LEADERS FUND, INC.
PAID; QUARTERLY of Fund Performance Data Performance ONE YEAR ending 3-31-88
------------------------ FYE: MARCH 31
Average Total Return
--------- ----------

ONE YEAR Ending 3-31-88
Initial Investment of: $1,000.00 on 3-31-87
Offering Price/Shares = $11.48
NAV = $10.96

<S> <C> <C> <C> <C> <C> <C> <C>
BEGINNING REINVESTMENT ENDING TOTAL
REINVESTMENT PERIOD DIVIDEND CAPITAL GAIN PRICE PERIOD PERIOD END INVESTMENT
DATES SHARE BASE PER SHARE PER SHARE PER SHARE SHARE BASE PRICE VALUE

----------------------------------------------------------------------------------------------
3-31-83 87.108 0.000000000 0.00000 $10.96 87.108 $10.96 $954.70
5-31-83 87.108 0.100000000 0.85600 $10.65 94.952 $10.65 $1,011.24
8-31-83 94.952 0.150000000 0.00000 $11.07 96.238 $11.07 $1,065.36
11-30-83 96.238 0.160000000 0.00000 $11.30 97.601 $11.30 $1,102.89
2-28-84 97.601 0.160000000 0.00000 $10.98 99.023 $10.98 $1,087.28
5-31-84 99.023 0.100000000 0.00000 $10.68 99.951 $10.68 $1,067.47
6-29-84 99.951 0.000000000 1.34600 $9.65 113.892 $9.65 $1,099.06
8-31-84 113.892 0.160000000 0.00000 $10.50 115.627 $10.50 $1,214.09
11-30-84 115.627 0.130000000 0.00000 $10.60 117.045 $10.60 $1,240.68
2-27-85 117.045 0.130000000 0.00000 $11.55 118.363 $11.55 $1,367.09
5-31-85 118.363 0.130000000 0.84000 $11.44 128.399 $11.44 $1,468.88
8-30-85 128.399 0.130000000 0.00000 $11.42 129.860 $11.42 $1,483.01
11-29-85 129.860 0.130000000 0.00000 $12.04 131.263 $12.04 $1,580.40
2-28-86 131.263 0.130000000 0.00000 $13.19 132.556 $13.19 $1,748.42
5-30-86 132.556 0.130000000 0.61300 $13.07 140.092 $13.07 $1,831.00
8-31-86 140.092 0.120000000 0.00000 $13.49 141.338 $13.49 $1,906.65
11-28-86 141.338 0.120000000 0.00000 $13.45 142.599 $13.45 $1,917.96
12-12-86 142.599 0.000000000 0.62100 $12.72 149.561 $12.72 $1,902.41
2-27-87 149.561 0.100000000 0.00000 $14.03 150.627 $14.03 $2,113.29
5-29-87 150.627 0.100000000 0.19930 $13.81 153.891 $13.81 $2,125.24
8-31-87 153.891 0.110000000 0.00000 $15.08 155.014 $15.08 $2,337.61
11-30-87 155.014 0.120000000 0.23000 $11.55 159.711 $11.55 $1,844.66
12-23-87 159.711 0.000000000 0.04200 $12.36 160.254 $12.36 $1,980.74
2-29-88 160.254 0.100000000 0.00000 $13.15 161.473 $13.15 $2,123.36
3-31-88 161.473 0.000000000 0.00000 $12.55 161.473 $12.55 $2,026.50

$1,000 (1+T) = Ending Redeemable Value
T = 102.65%

(1+T) = Average Annual Total Return (A)
A = 15.17%
</TABLE>
<TABLE>
<CAPTION>
DECLARED: QUARTERLY Schedule for Computation FUND: AMERICAN LEADERS FUND, INC.
PAID; QUARTERLY of Fund Performance Data Performance ONE YEAR ending 3-31-88
------------------------ FYE: MARCH 31
Average Total Return
--------- ----------

ONE YEAR Ending 3-31-88
Initial Investment of: $1,000.00 on 3-31-87
Offering Price/Shares = $7.69
NAV = $7.34

3-31-78 130.039 0.000000000 0.00000 $7.34 130.039 $7.34 $954.49
5-31-78 130.039 0.080000000 0.00000 $7.73 131.385 $7.73 $1,015.60
8-30-78 131.385 0.080000000 0.00000 $7.98 132.702 $7.98 $1,058.96
11-30-78 132.702 0.080000000 0.00000 $7.51 134.116 $7.51 $1,007.21
2-27-79 134.116 0.080000000 0.00000 $7.61 135.525 $7.61 $1,031.35
4-03-79 135.525 0.130000000 0.18100 $7.72 140.985 $7.72 $1,088.40
5-31-79 140.985 0.030000000 0.00000 $7.64 141.539 $7.64 $1,081.36
8-31-79 141.539 0.090000000 0.00000 $8.23 143.087 $8.23 $1,177.60
11-30-79 143.087 0.110000000 0.00000 $7.93 145.071 $7.93 $1,150.42
2-28-80 145.071 0.110000000 0.00000 $8.03 147.059 $8.03 $1,180.88
5-30-80 147.059 0.050000000 0.07000 $8.30 149.185 $8.30 $1,238.23
8-29-80 149.185 0.120000000 0.00000 $8.82 151.214 $8.82 $1,333.71
11-30-80 151.214 0.250000000 0.00000 $9.08 155.378 $9.08 $1,410.83
2-27-81 155.378 0.180000000 0.00000 $9.12 158.445 $9.12 $1,445.01
6-01-81 158.445 0.180000000 0.00000 $9.18 161.551 $9.18 $1,483.04
8-31-81 161.551 0.180000000 0.00000 $8.45 164.993 $8.45 $1,394.19
11-30-81 164.993 0.180000000 0.00000 $8.84 168.352 $8.84 $1,488.23
2-25-82 168.352 0.160000000 0.00000 $8.26 171.613 $8.26 $1,417.53
5-28-82 171.613 0.160000000 0.14400 $8.32 177.804 $8.32 $1,479.99
8-31-82 177.884 0.160000000 0.00000 $8.93 181.071 $8.93 $1,616.96
11-30-82 181.071 0.160000000 0.00000 $10.14 183.928 $10.14 $1,865.03
2-25-83 183.928 0.150000000 0.00000 $10.69 186.509 $10.69 $1,993.78
5-31-83 186.509 0.100000000 0.85900 $10.65 203.303 $10.65 $2,165.18
8-31-83 203.303 0.150000000 0.00000 $11.07 206.058 $11.07 $2,281.06
11-30-83 206.058 0.160000000 0.00000 $11.30 208.976 $11.30 $2,361.43
2-28-84 208.976 0.160000000 0.00000 $10.98 212.021 $10.98 $2,327.99
5-31-84 212.021 0.100000000 0.00000 $10.68 214.006 $10.68 $2,285.59
6-29-84 214.006 0.000000000 1.34600 $9.65 243.856 $9.65 $2,353.21
8-31-84 243.856 0.160000000 0.00000 $10.50 247.572 $10.50 $2,599.51
11-30-84 247.572 0.130000000 0.00000 $10.60 250.608 $10.60 $2,656.45
2-27-85 250.608 0.130000000 0.00000 $11.55 253.429 $11.55 $2,927.11
5-31-85 253.429 0.130000000 0.84000 $11.44 274.917 $11.44 $3,145.06
8-30-85 274.917 0.130000000 0.00000 $11.42 278.047 $11.42 $3,175.30
11-29-85 278.047 0.130000000 0.00000 $12.04 281.049 $12.04 $3,383.83
2-28-86 281.049 0.130000000 0.00000 $13.19 283.819 $13.19 $3,743.57
5-30-86 283.819 0.130000000 0.61300 $13.07 299.954 $13.07 $3,920.39
8-31-86 299.954 0.120000000 0.00000 $13.49 302.622 $13.49 $4,082.37
11-28-86 302.622 0.120000000 0.00000 $13.45 305.322 $13.45 $4,106.58
12-12-86 305.322 0.000000000 0.62100 $12.72 320.228 $12.72 $4,073.30
2-27-87 320.228 0.100000000 0.00000 $14.03 322.510 $14.03 $4,524.82
5-29-87 322.510 0.100000000 0.19930 $13.81 329.500 $13.81 $4,550.39
8-31-87 329.500 0.110000000 0.00000 $15.08 331.904 $15.08 $5,005.10
11-30-87 331.904 0.120000000 0.23000 $11.55 341.961 $11.55 $3,949.65
12-23-87 341.961 0.000000000 0.04200 $12.36 343.123 $12.36 $4,241.00
2-29-88 343.123 0.100000000 0.00000 $13.15 345.732 $13.15 $4,546.38
3-31-88 345.732 0.000000000 0.00000 $12.55 345.732 $12.55 $4,338.70

$1,000 (1+T) = Ending Redeemable Value
T = 333.87%

(1+T) = Average Annual Total Return (A)
A = 15.81%
</TABLE>

STOCK FUND
AMERICAN LEADERS FUND
Computation of Yield
AS OF 7/13/88

Dividend and Interest Income for the 30 Days
Ended 7/13/88.........................................$590,478.00

Net Expenses for the Period..............................$133,258.00

Average Daily Shares Outstanding and Entitled
to Receive Dividends................................12,319,990.000

Maximum Offering Price per Share Reduced by
Undeclared Investment Income as of 7/13/88.................$13.50

Undistributed Net Income....................................$0.0467

YIELD = 2[{ $590,478.00 - $133,258.00 ) +1 ) 6 -1] + 3.33%
----------------------------
12,319,990.000 / $13.4533

Exhibit 19 under Form N-1A
Exhibit 24 under Item 601/Reg. S-K

POWER OF ATTORNEY

SIGNATURES TITLE DATE

/s/John F. Donahue President and Director April 28, 1995
John F. Donahue (Chief Executive Officer)

/s/Edward C. Gonzales Vice President and TreasurerApril 28, 1995
Edward C. Gonzales (Principal Financial and
Accounting Officer)

/s/Thomas G. Bigley Director April 28, 1995
Thomas G. Bigley

/s/John T. Conroy, Jr. Director April 28, 1995
John T. Conroy, Jr.

/s/William J. Copeland Director April 28, 1995
William J. Copeland

/s/J. Christopher Donahue Director April 28, 1995
J. Christopher Donahue

SIGNATURES TITLE DATE

/s/James E. Dowd Director April 28, 1995
James E. Dowd

/s/Lawrence D. Ellis, M.D. Director April 28, 1995
Lawrence D. Ellis, M.D.

/s/Edward L. Flaherty, Jr. Director April 28, 1995
Edward L. Flaherty, Jr.

/s/Peter E. Madden Director April 28, 1995
Peter E. Madden

/s/Gregor F. Meyer Director April 28, 1995
Gregor F. Meyer

/s/John E. Murray, Jr. Director April 28, 1995
John E. Murray, Jr.

/s/Wesley W. Posvar Director April 28, 1995
Wesley W. Posvar

/s/Marjorie P. Smuts Director April 28, 1995
Marjorie P. Smuts

Sworn to and subscribed before me this 28th day of April, 1995

/s/Marie M. Hamm
Marie M. Hamm
Notary Public

<S> <C>

<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> American Leaders Fund, Inc.
Class A Shares

<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Mar-31-1995
<PERIOD-END> Mar-31-1995
<INVESTMENTS-AT-COST> 298,036,949
<INVESTMENTS-AT-VALUE> 360,641,521
<RECEIVABLES> 7,626,299
<ASSETS-OTHER> 893
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 368,268,713
<PAYABLE-FOR-SECURITIES> 3,867,726
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 709,352
<TOTAL-LIABILITIES> 4,577,078
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 294,419,883
<SHARES-COMMON-STOCK> 17,144,389
<SHARES-COMMON-PRIOR> 15,560,982
<ACCUMULATED-NII-CURRENT> 1,646,312
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,020,868
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 62,604,572
<NET-ASSETS> 268,469,981
<DIVIDEND-INCOME> 7,436,560
<INTEREST-INCOME> 1,233,334
<OTHER-INCOME> 0
<EXPENSES-NET> 3,860,068
<NET-INVESTMENT-INCOME> 4,809,826
<REALIZED-GAINS-CURRENT> 9,972,646
<APPREC-INCREASE-CURRENT> 20,096,284
<NET-CHANGE-FROM-OPS> 34,878,756
<EQUALIZATION> 200,306
<DISTRIBUTIONS-OF-INCOME> 3,982,898
<DISTRIBUTIONS-OF-GAINS> 5,729,133
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,930,179
<NUMBER-OF-SHARES-REDEEMED> 2,880,782
<SHARES-REINVESTED> 534,011
<NET-CHANGE-IN-ASSETS> 109,657,448
<ACCUMULATED-NII-PRIOR> 1,313,328
<ACCUMULATED-GAINS-PRIOR> 2,109,691
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,010,685
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,877,590
<AVERAGE-NET-ASSETS> 296,629,681
<PER-SHARE-NAV-BEGIN> 0.000
<PER-SHARE-NII> 0.000
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 0.000
<EXPENSE-RATIO> 123
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000

</TABLE>

<S> <C>

<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> American Leaders Fund, Inc.
Class B, C and FS Shares

<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Mar-31-1995
<PERIOD-END> Mar-31-1995
<INVESTMENTS-AT-COST> 298,036,949
<INVESTMENTS-AT-VALUE> 360,641,521
<RECEIVABLES> 7,626,299
<ASSETS-OTHER> 893
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 368,268,713
<PAYABLE-FOR-SECURITIES> 3,867,726
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 709,352
<TOTAL-LIABILITIES> 4,577,078
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 294,419,883
<SHARES-COMMON-STOCK> 6,078,938
<SHARES-COMMON-PRIOR> 1,865,335
<ACCUMULATED-NII-CURRENT> 1,646,312
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,020,868
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 62,604,572
<NET-ASSETS> 95,221,654
<DIVIDEND-INCOME> 7,436,560
<INTEREST-INCOME> 1,233,334
<OTHER-INCOME> 0
<EXPENSES-NET> 3,860,068
<NET-INVESTMENT-INCOME> 4,809,826
<REALIZED-GAINS-CURRENT> 9,972,646
<APPREC-INCREASE-CURRENT> 20,096,284
<NET-CHANGE-FROM-OPS> 34,878,756
<EQUALIZATION> 200,306
<DISTRIBUTIONS-OF-INCOME> 694,252
<DISTRIBUTIONS-OF-GAINS> 1,332,336
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,862,060
<NUMBER-OF-SHARES-REDEEMED> 751,146
<SHARES-REINVESTED> 102,690
<NET-CHANGE-IN-ASSETS> 109,657,448
<ACCUMULATED-NII-PRIOR> 1,313,328
<ACCUMULATED-GAINS-PRIOR> 2,109,691
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,010,685
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,877,590
<AVERAGE-NET-ASSETS> 296,629,681
<PER-SHARE-NAV-BEGIN> 0.000
<PER-SHARE-NII> 0.000
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 0.000
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000

</TABLE>