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. 62 .......... X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 36 ......................... X
FEDERATED 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)
on , pursuant to paragraph (b)
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X 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.
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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 15,1996; 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.
CROSS-REFERENCE SHEET
This Amendment to the Registration Statement of FEDERATED AMERICAN
LEADERS FUND, INC., is comprised of four classes of shares, (1) Class A
Shares, (2) Class C Shares, (3) Class F 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.................General Information (1-4); Summary of
Fund Expenses - Class A Shares (1);
Summary of Fund Expenses - Class B
Shares (4); Summary of Fund Expenses -
Class C Shares (2); Summary of Fund
Expenses (3).
Item 3. Condensed Financial
Information..............Financial Highlights - Class A Shares
(1); Financial Highlights - Class B
Shares (4); Financial Highlights - Class
C Shares (2); Financial Highlights (3).
Item 4. General Description of
Registrant...............Performance Information (1-4);
Investment Information (1-4); Investment
Objective (1-4); Investment Policies (1-
4); Investment Limitations (1-4); Other
Classes of Shares (1-4).
Item 5. Management of the Fund...Fund Information (1-4); Management of
the Fund (1-4); Distribution of Shares
(1, 2 and 4); Distribution of Class F
Shares (3); Administration of the Fund
(1-4).
Item 6. Capital Stock and Other
Securities...............Tax Information (1-4); Federal Income
Tax 91-4); State and Local Taxes (1-4).
Item 7. Purchase of Securities Being
Offered..................Net Asset Value (1-4); Investing in the
Fund (1, 2 and 4); Investing in Class A
Shares (1); Investing in Class C Shares
(2); Investing in Class F Shares (3);
Investing in Class B Shares (4); How to
Purchase Shares (1, 2 and 4); Share
Purchases (3); Minimum Investment
Required (3); What Shares Cost (3);
Eliminating the Sales Charge (3);
Systematic Investment Program (3);
Exchange Privilege (1-4); Certificates
and Confirmations (3); Dividends (3);
Capital Gains (3).
Item 8. Redemption or Repurchase.How To Redeem Shares (1, 2 and 4),
Special Redemption Features (1, 2 and
4); Redeeming Class F Shares (3);
Through a Financial Institution (3);
Redeeming Shares by Mail (3); Redeeming
Shares by Telephone (3); Contingent
Deferred Sales Charge (1-4); Elimination
of Contingent Deferred Sales Charge (1,
2 and 4); Account and Share Information
(1, 2 and 4); Systematic Withdrawal
Program (3); Accounts With Low Balances
(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); About Federated Investors (1-4).
Item 13. Investment Objectives and
Policies.................Investment Objectives and Policies (1-
4); Investment Limitations (1-4).
Item 14. Management of the Fund...Federated American Leaders Fund, Inc.
Management (1-4). Directors Compensation
(1-4); Director Liability 91-4).
Item 15. Control Persons and Principal
Holders of Securities....Fund Ownership (1-4).
Item 16. Investment Advisory and Other
Services.................Investment Advisory Services (1-4);
Other Services (1-4).
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 (1-4); Determining Net
Asset Value (1-4); Redeeming Shares (1-
4); Distribution Plan and Shareholder
Services (1-4); Exchange Privilege (1-
4).
Item 20. Tax Status...............Tax Status (1-4).
Item 21. Underwriters.............Not applicable.
Item 22. Calculation of Performance
Data.....................Total Return (1-4); Yield (1-4);
Performance Comparisons (1-4).
Item 23. Financial Statements.....To be filed by amendment.
Federated American Leaders Fund, Inc.
(formerly, American Leaders Fund, Inc.)
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
Prospectus
The shares of Federated 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 Statement of Additional Information for Class A
Shares, Class B Shares, Class C Shares and Class F Shares dated May ,
---
1997, with the Securities and Exchange Commission. The information
contained in the Statement of Additional Information is incorporated by
reference into this prospectus. You may request a copy of the Statement of
Additional Information or a paper copy of this prospectus, if you have
received your prospectus electronically, free of charge by calling
1-800-245-4770. 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 , 1997
---
Table of Contents
To be filed by amendment.
SUMMARY OF FUND EXPENSES
To be filed by amendment.
GENERAL INFORMATION
The Fund was incorporated under the laws of the State of Maryland on July
22, 1968. At a meeting of the Board of Directors (`Directors'') held on
February 26, 1996, the Directors approved an amendment to the Articles of
Incorporation to change the name of American Leaders Fund, Inc. to
Federated American Leaders Fund, Inc. 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
Directors have established four classes of shares for the Fund, known as
Class A Shares, Class B Shares, Class C Shares and Class F 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. 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.
The Fund's current net asset value and offering price may be found in the
mutual funds section of local newspapers under `Federated'' and the
appropriate class designation listing.
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 investment objective and the policies and
limitations described below cannot be changed without approval of
shareholders.
INVESTMENT POLICIES
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.
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:
ocommon stocks;
opreferred stocks;
odomestic issues of corporate debt obligations rated, at the time of
purchase, "Baa" or better by Moody's Investors Service, Inc.
("Moody's") or "BBB" or better by Standard & Poor's Ratings Group
(``Standard & Poor's'') or Fitch Investors Service, Inc. ("Fitch")
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);
owarrants; and
oAmerican depositary receipts.
Bonds rated `BBB'' by Standard & Poor's or Fitch 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.
AMERICAN DEPOSITARY RECEIPTS. The Fund may invest in American
depositary receipts ("ADRs") of foreign-domiciled blue-chip
companies. ADRs are trust receipts issued by U.S. banks or trust
companies representing ownership interests in the equity securities
of these companies. ADRs are U.S. dollar-denominated and traded on
U.S. securities exchanges or over-the-counter. The value of ADRs
could be affected by changes in foreign currency exchange rates.
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 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:
oborrow 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;
oinvest 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;
oinvest more than 5% of its total assets in securities of issuers
that have records of less than three years of continuous operations;
or
opurchase 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 is determined as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on: (i) days on which there are not sufficient changes in the value
of the Fund's portfolio securities that its net asset value might be
materially affected; (ii) days during which no Shares are tendered for
redemption and no orders to purchase Shares are received; or (iii) the
following holidays: New Year's Day, President's Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
INVESTING IN THE FUND
The Fund offers investors three classes of Shares that carry sales charges
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 charge 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
charges. See `Reducing the Sales Charge - Class A Shares.'' Class A Shares
have no conversion feature.
CLASS B SHARES
Class B Shares are sold without an initial sales charge, 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 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 12b-1 fee.
CLASS C SHARES
Class C Shares are sold without an initial sales charge, 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 their 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 charge as follows:
Sales Charge as Sales Charge as Dealer Concession as
a Percentage of a Percentage of a Percentage of
Amount of Transaction Public Offering Price Net Amount Invested
Public Offering Price
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%*
*See sub-section entitled
"Dealer Concession."
No sales charge is imposed for Class A Shares purchased through financial
intermediaries that do not receive a reallowance of a sales charge.
However, investors who purchase Class A Shares through a trust department,
investment adviser, or other financial intermediary may be charged a
service or other fee by the financial intermediary. Additionally, no sales
charge is imposed on shareholders designated as Liberty Life Members or on
Class A Shares purchased through `wrap accounts'' or similar programs,
under which clients pay a fee for services.
DEALER CONCESSION. For sales of Class A Shares, a dealer will normally
receive up to 90% of the applicable sales charge. Any portion of the sales
charge which is not paid to a dealer will be retained by the distributor.
However, the distributor, may offer to pay dealers up to 100% of the sales
charge 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 charge; however, the distributor will make twelve
monthly payments to the dealer totaling 0.25% of the public offering price
over the first year following the purchase. Such payments are based on the
original purchase price of Shares outstanding at each month end.
The sales charge for Shares sold other than through registered
broker/dealers will be retained by Federated Securities Corp. Federated
Securities Corp. may pay fees to banks out of the sales charge in exchange
for sales and/or administrative services performed on behalf of the bank's
customers in connection with the initiation of customer accounts and
purchases of Shares.
REDUCING OR ELIMINATING THE SALES CHARGE
The sales charge can be reduced or eliminated on the purchase of Class A
Shares through:
o quantity discounts and accumulated purchases;
o concurrent purchases;
o signing a 13-month letter of intent;
o using the reinvestment privilege; or
o 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 charge 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 charge. In addition, the sales charge, if applicable,
is reduced for purchases made at one time by a trustee or fiduciary for a
single trust estate or a single fiduciary account.
If an additional purchase of 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 charge on the additional purchase
according to the schedule now in effect would be 3.75%, not 4.50%.
To receive the sales charge reduction, Federated Securities Corp. must be
notified by the shareholder in writing or by his financial institution at
the time the purchase is made that Class A Shares are already owned or that
purchases are being combined. The Fund will reduce the sales charge after
it confirms the purchases.
CONCURRENT PURCHASES. For purposes of qualifying for a sales charge
reduction, a shareholder has the privilege of combining concurrent
purchases of Class A Shares of two or more funds for which affiliates of
Federated Investors serve as investment adviser or principal underwriter
(the `Federated Funds''), the purchase price of which includes a sales
charge. For example, if a shareholder concurrently invested $30,000 in the
Class A Shares of one of the other Federated Funds with a sales charge, and
$20,000 in this Fund, the sales charge would be reduced.
To receive this sales charge reduction, Federated Securities Corp. must be
notified by the shareholder in writing or by his financial institution at
the time the concurrent purchases are made. The Fund will reduce the sales
charge after it confirms the purchases.
LETTER OF INTENT. If a shareholder intends to purchase at least $50,000 of
Class A Shares of Federated Funds (excluding money market funds) over the
next 13 months, the sales charge may be reduced by signing a letter of
intent to that effect. This letter of intent includes a provision for a
sales charge adjustment depending on the amount actually purchased within
the 13-month period and a provision for the custodian to hold 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 charge.
While this letter of intent will not obligate the shareholder to purchase
Shares, each purchase during the period will be at the sales charge
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 Federated 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 charge. Federated Securities Corp. must be notified by the
shareholder in writing or by his financial institution of the reinvestment
in order to eliminate a sales charge. If the shareholder redeems his 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 charge, with the proceeds from the redemption of shares of
an unaffiliated investment company that were purchased or sold with a sales
charge 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, redemptions of
these Shares will be subject to a contingent deferred sales charge for one
year from the date of purchase. Shareholders will be notified prior to the
implementation of any special offering as described above.
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
charge, 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 fee under the Fund's Distribution Plan (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 charge, fee or other
charge. Class B Shares acquired by exchange from Class B Shares of another
Federated Fund 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 Federal
Reserve 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:
Federated Shareholder Services Company, c/o State Street Bank and Trust
Company, Boston, MA; Attention; EDGEWIRE; For Credit to: (Fund Name) (Fund
Class); (Fund Number - this number can be found on the account statement or
by contacting the Fund); 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. Questions on wire purchases should be directed to
your shareholder services representative at the telephone number listed on
your account statement.
PURCHASING SHARES BY CHECK
Once an account has been established, Shares may be purchased by mailing a
check made payable to the name of the Fund (designate class of Shares and
account number) to: Federated Shareholder 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
SYSTEMATICE 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 charge, 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 Federated Funds at net asset value. Neither the Fund nor
any of the Federated Funds imposes any additional fees on exchanges.
Shareholders in certain other Federated Funds may exchange all or some of
their shares for Class A Shares.
CLASS B SHARES
Class B shareholders may exchange all or some of their Shares for Class B
Shares of other Federated Funds. (Not all Federated Funds currently offer
Class B Shares. Contact your financial institution regarding the
availability of Class B Shares of the Federated 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 of other Federated 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 of other Federated Funds at net asset value without a contingent
deferred sales charge. (Not all Federated Funds currently offer Class C
Shares. Contact your financial institution regarding the availability of
Class C Shares of the Federated Funds.) To the extent that a shareholder
exchanges Shares for Class C Shares of other Federated 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.''
Please contact your financial institution directly or Federated Securities
Corp. at 1-800-245-5051 for information on and prospectus for the Federated
Funds into which your Shares may be exchanged free of charge.
Shareholders of Class A Shares who have been designated Liberty Life
Members are exempt from sales charges on future purchases in and exchanges
between the Class A Shares of any Federated Fund, as long as they maintain
a $500 balance in one of the Federated Funds.
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.
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 exchanging 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 Shareholder
Services Company, 1099 Hingham Street, Rockland, MA 02370-3317.
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 Shareholder 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.
REDEEMING SHARES THROUGH YOUR 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 wire-transfered 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. Proceeds from redemption
requests received on holidays when wire transfers are restricted will be
wired the following business day. Questions about telephone redemptions on
days when wire transfers are restricted should be directed to your
shareholder services representative at the telephone number listed on your
account statement.
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 Shareholder Services Company, Fund Name, Fund Class, P.O. Box
8600, Boston, MA 02266-8600. If share certificates have been issued, they
should be sent unendorsed with the written request by registered or
certified mail to the address noted above.
The written request should state: Fund Name and the Share Class name; 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.
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. Dividends are paid up to and including the day that a
redemption request is processed.
Shareholders requesting 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 their signatures guaranteed by a
commercial or savings bank, trust company or savings association whose
deposits are insured by an organization which is administered by the
Federal Deposit Insurance Corporation; a member firm of a domestic stock
exchange; 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.
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 charge, 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 and 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:
o 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 redeemed with a sales charge 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.
o 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:
Year of Redemption Contingent Deferred
After Purchase Sales Charge
First......................................................................
........... 5.50%
Second.....................................................................
....... 4.75%
Third......................................................................
......... 4.00%
Fourth.....................................................................
........ 3.00%
Fifth......................................................................
........... 2.00%
Sixth......................................................................
.......... 1.00%
Seventh and thereafter.................................................
0.00%
oClass 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.
o 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 for less than 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 Federated 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
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, and their immediate family members;
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 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
o Certificates and Confirmations
As transfer agent for the Fund, Federated Shareholder Services Company
maintains a share account for each shareholder. Share certificates are not
issued unless requested in writing to Federated Shareholder Services
Company.
Detailed confirmations of each purchase and redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid
during that quarter.
o 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 charge, 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.
o Capital Gains
Net long-term capital gains realized by the Fund, if any, will be
distributed at least once every twelve months.
o 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
Shares 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 `Adviser''), the Fund's investment adviser, subject to
direction by the Directors. The Adviser continually conducts investment
research and supervision for the Fund and is responsible for the purchase
or sale of portfolio instruments, for which it receives an annual fee from
the Fund.
ADVISORY FEES. The Adviser receives an annual investment advisory fee
equal to .55 of 1% of the Fund's average daily net assets, plus
4.50% 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 $80 billion invested across
more than 250 funds under management and/or administration by its
subsidiaries, as of December 31, 1995, Federated Investors is one of the
largest mutual fund investment managers in the United States. With more
than 1,800 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 a Vice
President of the Fund's investment adviser since 1995. Mr. Keefe served as
an Assistant Vice President of the Fund's investment adviser between 1993
and 1995, and as an Investment Analyst from 1991 until 1993. Mr. Keefe is a
Chartered Financial Analyst and received his M.B.A. in Business
Administration from the University of Pittsburgh.
Both the Fund and the Adviser have adopted strict codes of ethics governing
the conduct of all employees who manage the Fund and its portfolio
securities. These codes recognize that such persons owe a fiduciary duty to
the Fund's shareholders and must place the interests of shareholders ahead
of the employees' own interest. Among other things, the codes: require
preclearance and periodic reporting of personal securities transactions;
prohibit personal transactions in securities being purchased or sold, or
being considered for purchase or sale, by the Fund; prohibit purchasing
securities in initial public offerings; and prohibit taking profits on
securities held for less than sixty days. Violations of the codes are
subject to review by the Directors, and could result in severe penalties.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for Shares of the
Fund. 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.
State securities laws may require certain financial institutions such as
depository institutions to register as dealers.
The distributor may offer to pay financial institutions an amount up to 1%
of the net asset value of Class C Shares purchased by their clients or
customers at the time of purchase 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 equal to 5.50% 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 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 services or distribution-related 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 sales services and distribution and
distribution-related support services pursuant to the Distribution 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 Distribution Plan.
In addition, the Fund has entered into a Shareholder Services Agreement
with Federated Shareholder Services, a subsidiary of Federated Investors,
under which the Fund 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. Under the Shareholder Services
Agreement, 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.
SUPPLEMENTAL 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 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, in addition to payments made pursuant to the Distribution Plan and
Shareholder Services Agreement, Federated Securities Corp. and Federated
Shareholder Services, from their own assets, may pay financial institutions
supplemental fees for the performance of substantial sales services,
distribution-related support services, or shareholder services. 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. Federated Services Company, a subsidiary of
Federated Investors, provides administrative personnel and services
(including certain legal and financial reporting services) necessary to
operate the Fund. Federated Services Company provides these at an annual
rate which relates to the average aggregate daily net assets of all funds
advised by affiliates of Federated Investors as specified below:
Average Aggregate Daily Net Assets
Maximum Administrative Fee
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
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its
fee.
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
use 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 the Directors or by 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.
As of March 30, 1997, MLPF&S, Jacksonville, FL, for the sole benefit of its
customers owned 36.66% of the voting securities of the Fund's Class C
Shares and, therefore, may, for certain purposes, be deemed to control the
Fund and be able to affect the outcome of certain matters presented for a
vote of shareholders.
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.
STATE AND LOCAL 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 Class F 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 charge and 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 Class F Shares.
From time to time, advertisements for Class A Shares, Class B Shares, Class
C Shares and Class F 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 Class F
Shares to certain indices.
OTHER CLASSES OF SHARES
The Fund also offers another class of shares called Class F Shares. Class F
Shares are sold primarily to customers of financial institutions subject to
a front-end sales charge, a contingent deferred sales charge, a Shareholder
Services Agreement, and a minimum initial 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 Class F Shares are
subject to certain of the same expenses, however, the front-end sales
charge for Class F Shares is lower than that for Class A Shares. Expense
differences between Class A Shares, Class B Shares, Class C Shares and
Class F Shares may affect the performance of each class.
To obtain more information and a prospectus for Class F Shares, investors
may call 1-800-245-5051 or contact their financial institution.
ADDRESSES
Federated American Leaders Fund, Inc.
Class A Shares Federated Investors Tower
Class B Shares Pittsburgh, PA 15222-3779
Class C Shares
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
Investment Adviser
Federated Advisers Federated Investors Tower
Pittsburgh, PA 15222-3779
Custodian
State Street Bank and Trust Company P.O. Box 8600
Boston, MA 02266-8600
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company P.O. Box 8600
Boston, MA 02266-8600
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222
Federated American Leaders Fund, Inc.
(formerly, American Leaders Fund, Inc.)
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
Prospectus
An Open-End, Diversified
Management Investment Company
May , 1997
---
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated Investors
Liberty Center
Federated Investors Tower
Pittsburgh, PA 15222-3779
027128107
027128404
027128206
G01085-01 (5/97)
Federated American Leaders Fund, Inc.
(formerly, American Leaders Fund, Inc.)
Class F Shares
(formerly, Fortress Shares)
Prospectus
The Class F Shares of Federated 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 F Shares of the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Statement of Additional Information for Class A
Shares, Class B Shares, Class C Shares and Class F Shares dated May ,
---
1997, with the Securities and Exchange Commission. The information
contained in the Statement of Additional Information is incorporated by
reference into this prospectus. You may request a copy of the Statement of
Additional Information, or a paper copy of this prospectus, if you have
received your prospectus electronically, free of charge by calling
1-800-245-5051. 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 , 1997
---
Table of Contents
To be filed by amendment.
SUMMARY OF FUND EXPENSES
To be filed by amendment.
GENERAL INFORMATION
The Fund was incorporated under the laws of the State of Maryland on July
22, 1968. At a meeting of the Board of Directors (`Directors'') held on
February 26, 1996, the Directors approved an amendment to the Articles of
Incorporation to change the name of American Leaders Fund, Inc. to
Federated American Leaders Fund, Inc. and to change the name of Fortress
Shares to Class F Shares. The Articles of Incorporation permit the Fund to
offer separate series of shares of beneficial interest representing
interests in separate portfolios of securities. The shares in any one
portfolio may be offered in separate classes. With respect to this Fund, as
of the date of this prospectus, the Directors have established four classes
of shares, known as Class A Shares, Class B Shares, Class C Shares and
Class F Shares. This prospectus relates only to the Class F Shares
(`Shares'' or ``Class F Shares,'' as the context requires) of the Fund.
Class F Shares of the Fund are designed for individuals as a convenient
means of accumulating an interest in a professionally managed, diversified
portfolio of common stocks and other securities of high quality companies.
A minimum initial investment of $1,500 is required, unless the investment
is in a retirement account, in which case the minimum initial investment is
$50.
Shares are sold at net asset value plus an applicable sales charge and are
redeemed at net asset value. However, a contingent deferred sales charge is
imposed on Shares, other than Shares purchased through reinvestment of
dividends, which are redeemed within one to four years of their purchase
dates.
The Fund's current net asset value and offering price may be found in the
mutual funds section of local newspapers under `Federated'' and the
appropriate class designation listing.
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 investment objective and the policies and
limitations described below cannot be changed without approval of
shareholders.
INVESTMENT POLICIES
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.
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:
ocommon stocks;
opreferred stocks;
odomestic issues of corporate debt obligations rated, at the time of
purchase, "Baa" or better by Moody's Investors Service, Inc.
("Moody's") or "BBB" or better by Standard & Poor's Ratings Group
(``Standard & Poor's'') or Fitch Investors Service, Inc. ("Fitch")
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);
owarrants; and
oAmerican depositary receipts.
Bonds rated `BBB'' by Standard & Poor's or Fitch 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.
AMERICAN DEPOSITARY RECEIPTS. The Fund may invest in American
depositary receipts ("ADRs") of foreign-domiciled blue-chip
companies. ADRs are trust receipts issued by U.S. banks or trust
companies representing ownership interests in the equity securities
of these companies. ADRs are U.S. dollar-denominated and traded on
U.S. securities exchanges or over-the-counter. The value of ADRs
could be affected by changes in foreign currency exchange rates.
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 or 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.
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:
oborrow 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;
oinvest 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;
oinvest more than 5% of its total assets in securities of issuers
that have records of less than three years of continuous operations;
or
opurchase restricted securities if immediately thereafter more than
15% of the net assets of the Fund would be invested in such
securities.
NET ASSET VALUE
The Fund's net asset value per Share fluctuates. The net asset value for
Shares is determined by adding the interest of the Class F Shares in the
market value of all securities and other assets of the Fund, subtracting
the interest of the Class F Shares in the liabilities of the Fund and those
attributable to the Class F Shares, and dividing the remainder by the total
number of Class F Shares outstanding. The net asset value for Class 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.
The net asset value is determined as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on: (i) days on which there are not sufficient changes in the value
of the Fund's portfolio securities that its net asset value might be
materially affected; (ii) days during which no Shares are tendered for
redemption and no orders to purchase Shares are received; or (iii) the
following holidays: New Year's Day, President's Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
INVESTING IN CLASS F SHARES
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open.
Shares 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 $1,500. Additional investments can be made
for as little as $100. The minimum initial and subsequent investment for
retirement plans in only $50. (Financial institutions may impose different
minimum investment requirements on their customers.)
In connection with the sale of Shares, Federated Securities Corp. may, from
time to time, offer certain items of nominal value to any shareholder or
investor. The Fund reserves the right to reject any purchase request. 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.
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. Financial institutions may charge additional fees for their
services.
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 `Supplemental Payments to Financial
Institutions').
DIRECTLY BY MAIL. To purchase Shares by mail directly from Federated
Securities Corp.:
ocomplete and sign the new account form available from the Fund;
oenclose a check made payable to Federated American Leaders Fund,
Inc. -- Class F Shares; and
omail both to Federated Shareholder 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 and Trust Company, (`State
Street Bank'), into federal funds. This is generally the next business day
after State Street Bank receives the check.
DIRECTLY BY WIRE. Once an account has been established, Shares may be
purchased by Federal Reserve 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: Federated Shareholder Services Company, c/o
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. Questions on wire
purchases should be directed to your shareholder services representative at
the telephone number listed on your account statement.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares is $1,500, except for an IRA
account, which requires a minimum initial investment of $50. Subsequent
investments must be in amounts of at least $100, except for an IRA account,
which must be in amounts of at least $50.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received, plus a sales charge of 1% of the offering price (which is 1.01%
of the net amount invested). There is no sales charge for purchases of $1
million or more. In addition, no sales charge is imposed for Shares
purchased through bank trust departments or investment advisers registered
under the Investment Advisers Act of 1940 purchasing on behalf of their
clients, or by sales representatives, Directors, and employees of the Fund,
Federated Advisers, and Federated Securities Corp., or their affiliates and
their immediate family members, 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.
Under certain circumstances, described under `Redeeming Class F 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 charge. Any portion of the sales
charge which is not paid to a broker/dealer will be retained by the
distributor. However, from time to time, and at the sole discretion of the
distributor, all or part of that portion may be paid to a dealer. The sales
charge for Shares sold other than through registered broker/dealers will be
retained by Federated Securities Corp. Federated Securities Corp. may pay
fees to banks out of the sales charge in exchange for sales and/or
administrative services performed on behalf of the bank's customers in
connection with the initiation of customer accounts and purchases of
Shares.
ELIMINATING THE SALES CHARGE
The sales charge can be eliminated on the purchase of Shares through:
oquantity discounts and accumulated purchases;
osigning a 13-month letter of intent;
ousing the reinvestment privilege; or
oconcurrent purchases.
QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES. There is no sales charge for
purchases of $1 million or more. The Fund will combine purchases made on
the same day by the investor, his spouse, and his children under age 21
when it calculates the sales charge. In addition, the sales charge, if
applicable, is reduced for purchases made at one time by a trustee or
fiduciary for a single trust estate or a single fiduciary account.
If an additional purchase of Shares is made, the Fund will consider the
previous purchases still invested in the Fund. For example, if a
shareholder already owns Shares having 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 charge on the additional purchase.
The Fund will also combine purchases for the purpose of reducing the
contingent deferred sales charge imposed on some Share redemptions. For
example, if a shareholder already owns Shares having current value at 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 charge 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 charge and/or reduce
the contingent deferred sales charge after it confirms the purchases.
LETTER OF INTENT. If a shareholder intends to purchase at least $1 million
of Class F Shares over the next 13 months, the sales charge may be reduced
by signing a letter of intent to that effect. This letter of intent
includes a provision for a sales charge elimination depending on the amount
actually purchased within the 13-month period and a provision for the
Fund's custodian to hold 1.00% of the total amount intended to be purchased
in escrow (in Shares) until such purchase is completed.
The 1.00% held in escrow will be applied to the shareholder's account at
the end of the 13-month period unless the amount specified in the letter of
intent, which must be $1 million or more of Shares, is not purchased. In
this event, an appropriate number of escrowed Shares may be redeemed in
order to realize the 1.00% sales charge.
This letter of intent also includes a provision for reductions in the
contingent deferred sales charge and holding period depending on the amount
actually purchased within the 13-month period. For more information on the
various levels of contingent deferred sales charges and holding periods,
see the section entitled `Contingent Deferred Sales Charge.''
This letter of intent will not obligate the shareholder to purchase Class F
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 charge on such purchases will not be adjusted to reflect a lower
sales charge).
REINVESTMENT PRIVILEGE. If Shares have been redeemed, the shareholder has a
one-time right, within 120 days, to reinvest the redemption proceeds at the
next-determined net asset value without any sales charge. Federated
Securities Corp. must be notified by the shareholder in writing or by his
financial institution of the reinvestment in order to receive this
elimination of the sales load. If the shareholder redeems his Shares, there
may be tax consequences.
CONCURRENT PURCHASES. For purposes of qualifying for a sales charge
elimination, a shareholder has the privilege of combining concurrent
purchases of Class F Shares of two or more funds for which affiliates of
Federated Investors serve as investment adviser or prinicipal underwriter
(the "Federated Funds"), the purchase prices of which include a sales
charge. For example, if a shareholder concurrently invested $400,000 in
Class F Shares of one of the other Federated Funds and $600,000 in Shares,
the sales charge would be eliminated.. (Not all Federated Funds currently
offer Class F Shares. Contact your financial institution regarding the
availability of other Federated Class F Shares).
To receive this sales charge 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 charge after it confirms the purchases.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their
investment on a regular basis. 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 charge for purchases
under $1 million. A shareholder may apply for participation in this program
through Federated Securities Corp. or his financial institution.
EXCHANGE PRIVILEGES
Class F Shareholders may exchange all or some of their Shares, at net asset
value for Class F Shares of other Federated 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 F Shares of other Federated 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.
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 Class F 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. The
exchange privilege is available to shareholders residing in any state in
which the shares being acquired may be legally sold.
Before making an exchange, a shareholder must receive a prospectus of the
fund for which the exchange is being made.
An exercise of the exchange privilege is treated as a sale for federal
income tax purposes. Depending on the circumstances, a capital gain or loss
may be realized.
Please contact your financial institution directly or Federated Securities
Corp. at 1-800-245-5051 for information on and prospectses for the
Federated Funds into which your Shares may be exchanged free of charge.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Shareholder Services Company
maintains a share account for each shareholder. Share certificates are not
issued unless requested on the application or by contacting Federated
Shareholder Services Company.
Detailed confirmations of each purchase and redemption are sent to each
shareholder. Quarterly statements are sent to report dividends paid during
that quarter.
DIVIDENDS
Dividends are declared and paid quarterly to all shareholders invested in
the Fund on the record date. Dividends 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 charge, unless shareholders
request cash payments on the new account form or by writing to the transfer
agent. All shareholders on the record date are entitled to the dividend. If
Shares are redeemed or exchanged prior to the record date or purchased
after the record date, those Shares are not entitled to that 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 CLASS F 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 through a financial institution or directly
from the Fund by written request.
THROUGH A FINANCIAL INSTITUTION
Shares of the Fund may be redeemed by calling your 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 (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 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 `Redeeming Shares 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.
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 an Automated
Clearing House will not be wired until that method of payment has cleared.
Proceeds from redemption requests received on holidays when wire transfers
are restricted will be wired the following business day. Questions about
telephone redemptions on days when wire transfers are restricted should be
directed to your shareholder services representative at the telephone
number listed on your account statement.
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 Shareholder Services Company, P.O. Box 8600, Boston, MA 02266-
8600. If share certificates have been issued, they should be sent
unendorsed with the written request by registered or certified mail to the
address noted above.
The written request should state: the Fund name and the Share Class name;
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.
Normally, a check for the proceeds is mailed within one business day, but
in no event more than seven days, after the receipt of a proper written
redemption request. Dividends are paid up to and including the day that a
redemption request is processed.
Shareholders requesting 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 their signatures guaranteed by a
commercial or savings bank, trust company or savings association whose
deposits are insured by an organization which is administered by the
Federal Deposit Insurance Corporation; a member firm of a domestic stock
exchange; or any other `eligible guarantor institution,'' as defined in
the Securities Exchange Act of 1934. The Fund does not accept signatures
guaranteed by a notary public. The Fund and its transfer agent have
adopted standards for accepting signature guarantees from the above
institutions. The Fund may elect in the future to limit eligible signature
guarantors to institutions that are members of a signature guarantee
program. The Fund and its transfer agent reserve the right to amend these
standards at any time without notice.
CONTINGENT DEFERRED SALES CHARGE
Shareholders redeeming Class F Shares from their Fund account 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:
Contingent Deferred
Amount of Shares Held Sales Charge
Up to $1,999,999 4 years or less 1%
$2,000,000 to $4,999,999 2 years or less .50%
$5,000,000 or more 1 year or less .25%
To the extent that a shareholder exchanges between or among Class F Shares
in other Federated Funds the time for which the exchanged-for Shares were
held will be added, or `tacked,'' to the time for which the exchanged-from
Shares were held for purposes of satisfying the one-year holding period.
In instances in which Shares have been acquired in exchange for Class F
Shares in other Federated 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 Federated 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 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 charge
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. 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 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.
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 $80 billion invested across
more than 250 funds under management and/or administration by its
subsidiaries, as of December 31, 1995, Federated Investors is one of the
largest mutual fund investment managers in the United States. With more
than 1,800 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 a Vice
President of the Fund's investment adviser since 1995. Mr. Keefe served as
an Assistant Vice President of the Fund's investment adviser between 1993
and 1995, and as an Investment Analyst from 1991 until 1993. Mr. Keefe is a
Chartered Financial Analyst and received his M.B.A. in Business
Administration from the University of Pittsburgh.
Both the Fund and the Adviser have adopted strict codes of ethics governing
the conduct of all employees who manage the Fund and its portfolio
securities. These codes recognize that such persons owe a fiduciary duty to
the Fund's shareholders and must place the interests of shareholders ahead
of the employees' own interest. Among other things, the codes: require
preclearance and periodic reporting of personal securities transactions;
prohibit personal transactions in securities being purchased or sold, or
being considered for purchase or sale, by the Fund; prohibit purchasing
securities in initial public offerings; and prohibit taking profits on
securities held for less than sixty days. Violations of the codes are
subject to review by the Directors, and could result in severe penalties.
DISTRIBUTION OF CLASS F SHARES
Federated Securities Corp. is the principal distributor for Class F Shares
of the Fund. 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.
State securities laws may require certain financial institutions such as
depository institutions to register as dealers.
SHAREHOLDER SERVICES. The Fund has entered into a Shareholder Services
Agreement with Federated Shareholder Services, a subsidiary of Federated
Investors, under which the Fund may make payments up to 0.25 of 1% of the
average daily net asset value of the Fund on behalf of Class F Shares to
obtain certain personal services for shareholders and to provide the
maintenance of shareholder accounts (`shareholder services''). Under the
Shareholder Services Agreement, 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.
SUPPLEMENTAL 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 charge on purchases of less than $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, in addition to payments made pursuant to the Shareholder
Services Agreement, Federated Securities Corp. and Federated Shareholder
Services, from their own accounts, may pay financial institutions
supplemenal fees for the performance of substantial sales services,
distribution-related support services, or shareholder services. 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. Federated Services Company, a subsidiary of
Federated Investors, provides administrative personnel and services
(including certain legal and financial reporting services) necessary to
operate the Fund. Federated Services Company provides these at an annual
rate which relates to the average aggregate daily net assets of all funds
advised by affiliates of Federated Investors as specified below:
Average Aggregate Daily Net Assets
Maximum Administrative Fee
.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
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its
fee.
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
use 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
particular 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 the Directors or by 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.
As of March 30, 1997, MLPF&S, Jacksonville, FL, for the sole benefit of its
customers owned 36.66% of the voting securities of the Fund's Class C
Shares and, therefore, may, for certain purposes, be deemed to control the
Fund and be able to affect the outcome of certain matters presented for a
vote of shareholders.
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.
STATE AND LOCAL 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 Class
F Shares.
Total return represents the change, over a specific period of time, in the
value of an investment in Class F Shares after reinvesting all income and
capital gains distributions. It is calculated by dividing that change by
the initial investment and is expressed as a percentage.
The yield of Class F Shares is calculated by dividing the net investment
income per share (as defined by the Securities and Exchange Commission)
earned by Class F Shares over a thirty-day period by the maximum offering
price per share of Class F Shares on the last day of the period. This
number is then annualized using semi-annual compounding. The yield does not
necessarily reflect income actually earned by Class F 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 charge
and 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 Class F Shares.
From time to time, advertisements for the Class A Shares, Class B Shares,
Class C Shares and Class F 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 Class F 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 charge and a
Shareholder Services Agreement. 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 and are subject to a 12b-1 Plan,
a Shareholder Services Agreement and a minimum initial investment of
$1,500, unless the investment is in a retirement account, in which the
minimum investment is $50. A contingent deferred sales charge is imposed on
certain Shares which are redeemed within six full years of purchase.
Class C Shares are sold at net asset value and are subject to a 12b-1 Plan,
a Shareholder Services Agreement and a minimum initial investment of
$1,500, unless the investment is in a retirement account, in which the
minimum investment is $50. A contingent deferred sales charge of 1.00% is
imposed on assets redeemed within the first full 12 months following
purchase.
Class A Shares, Class B Shares, Class C Shares, and Class F Shares are
subject to certain of the same expenses; however, the front-end sales
charge for Class F Shares is lower than that for Class A Shares. Expense
differences between Class A Shares, Class B Shares Class C Shares and Class
F Shares may affect the performance of each class.
To obtain more information and a prospectus for Class A Shares , Class B
Shares and Class C Shares, investors may call 1-800-245-4770 or contact
their financial institution.
ADDRESSES
Federated American Leaders Fund, Inc.
Class F Shares Federated Investors Tower
Pittsburgh, PA 15222-3779
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
Investment Adviser
Federated Advisers Federated Investors Tower
Pittsburgh, PA 15222-3779
Custodian
State Street Bank and Trust Company P.O. Box 8600
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company P.O. Box 8600
Boston, MA 02266-8600
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222
Federated
American Leaders
Fund, Inc.
(formerly, American Leaders Fund, Inc.)
Class F Shares
(formerly, Fortress Shares)
Prospectus
An Open-End, Diversified
Management Investment Company
May , 1997
---
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Cusip 027128305
8062808A-FS (5/97)
FEDERATED AMERICAN LEADERS FUND, INC.
(FORMERLY, AMERICAN LEADERS FUND, INC.)
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
CLASS F SHARES
(FORMERLY, FORTRESS SHARES)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus for Class A Shares, Class B Shares, and Class C Shares, the
prospectus for Class F Shares, and the stand-alone prospectus for Class
A Shares of Federated American Leaders Fund, Inc. (the ``Fund') each
dated May , 1997. This Statement is not a prospectus itself. You may
---
request a copy of either prospectus or a paper copy of this Statement,
if you have received it electronically, free of charge by calling 1-
800-245-4770.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Statement dated May , 1997
---
Federated Securities Corp is the distributor of the Fund and is a
subsidiary of Federated Investors
CUSIP 027128107
CUSIP 027128404
CUSIP 027128206
CUSIP 027128305
8062808B (5/97)
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 2
INVESTMENT LIMITATIONS 2
FEDERATED AMERICAN LEADERS FUND, INC. MANAGEMENT 4
Fund Ownership 8
Directors Compensation 9
Director Liability 9
INVESTMENT ADVISORY SERVICES 10
Adviser to the Fund 10
Advisory Fees 10
BROKERAGE TRANSACTIONS 10
OTHER SERVICES 11
Fund Administration 11
Custodian and Portfolio Accountant 11
Transfer Agent 11
Independent Public Accountants 11
PURCHASING SHARES 11
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES 11
Purchases by Sales Representatives, Fund Directors,
and Employees 12
Exchanging Securities for Fund Shares 12
DETERMINING NET ASSET VALUE 13
Determining Market Value of Securities 13
EXCHANGE PRIVILEGE 13
Reduced Sales Charge 13
Requirements for Exchange 13
Tax Consequences 13
Making an Exchange 13
REDEEMING SHARES 14
Redemption in Kind 14
TAX STATUS 14
The Fund's Tax Status 14
Shareholders' Tax Status 14
TOTAL RETURN 15
YIELD 15
PERFORMANCE COMPARISONS 15
Economic and Market Information 16
ABOUT FEDERATED INVESTORS 16
Mutual Fund Market 17
Institutional Clients 17
Trust Organizations 17
Broker/Dealers and Bank Broker/Dealer Subsidiaries17
FINANCIAL STATEMENTS 17
APPENDIX 18
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. At a meeting of
the Board of Directors (the `Directors'') held on February 26, 1996, the
Directors approved an amendment to the Articles of Incorporation to change
the name of American Leaders Fund, Inc. to Federated American Leaders Fund,
Inc. and to change the name of Fortress Shares to Class F Shares.
Shares of the Fund are offered in four classes known as Class A Shares,
Class B Shares, Class C Shares and Class F Shares (individually and
collectively referred to as `Shares'' as the context may require). This
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 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, 1996 and 1995, the portfolio
turnover rates were 46% and 34%, 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,
to be included within the overall 5% limit on investments in warrants,
may be warrants which are not listed on the New York Stock Exchange or
the American 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.''
FEDERATED AMERICAN LEADERS FUND, INC. MANAGEMENT
Officers and Directors are listed with their addresses, birthdates, present
positions with Federated American Leaders Fund, Inc., and principal
occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
President and Director
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp. and Federated Global Research Corp.; Chairman, Passport
Research, Ltd.; Chief Executive Officer and Director or Trustee of the
Funds. Mr. Donahue is the father of J. Christopher Donahue, Executive 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 or Trustee 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 or Trustee 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 or Trustee 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
Executive Vice President and Director
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated
Research Corp. and Federated Global Research Corp.; President, Passport
Research, Ltd.; Trustee, Federated Shareholder Services Company, and
Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee 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 or
Trustee 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 or Trustee 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; Shareholder, Henny, Kochuba, Meyer and Flaherty; Director,
Eat'N Park Restaurants, Inc., and Statewide Settlement Agency, Inc.;
Director or Trustee of the Funds; formerly, Counsel, Horizon Financial,
F.A., Western Region.
Peter E. Madden
Seacliff
562 Bellevue Avenue
Newport, RI
Birthdate: March 16, 1942
Director
Consultant; State Representative, Commonwealth of Massachusetts; Director
or Trustee 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; Shareholder, Henny, Kochuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director or
Trustee of the Funds.
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 or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Director
Professor, International Politics and Management Consultant; Trustee,
Carnegie Endowment for International Peace, RAND Corporation, Online
Computer Library Center, Inc., and U.S. Space Foundation; Chairman, Czecho
Management Center; Director or Trustee of the Funds; President Emeritus,
University of Pittsburgh; founding Chairman, National Advisory Council for
Environmental Policy and Technology and Federal Emergency Management
Advisory Board.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Director
Public relations/marketing consultant; Conference Coordinator, Non-profit
entities; Director or Trustee of the Funds.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated
Research Corp., Federated Global Research Corp. and Passport Research,
Ltd.; Executive Vice President and Director, Federated Securities Corp.;
Trustee, Federated Shareholder Services Company; Trustee or Director of
some of the Funds; President, Executive Vice President and Treasurer of
some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President and Secretary
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.;
Trustee, Federated Shareholder Services Company; Director, Federated
Services Company; President and Trustee, Federated Shareholder Services;
Director, Federated Securities Corp.; Executive Vice President and
Secretary of the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some
of the Funds; Director or Trustee of some of the Funds.
David M. Taylor
Federated Investors Tower
Pittsburgh, PA
Birthdate: January 13, 1947
Treasurer
Senior Vice President and Trustee, Federated Investors; Vice President,
Federated Shareholder Services; Executive Vice President, Federated
Securities Corp.; Treasurer of some of the Funds.
* This Director is deemed to be an `interested person'' as defined in
the Investment Company Act of 1940.
@ Member of the Executive Committee. The Executive Committee of the
Board of Directors handles the responsibilities of the Board between
meetings of the Board.
As used in the table above, `The Funds'' and ``Funds'' mean the following
investment companies: 111 Corcoran Funds; Annuity Management Series; Arrow
Funds; Automated Government Money Trust; Blanchard Funds; Blanchard
Precious Metals Fund, Inc.; Cash Trust Series II; Cash Trust Series, Inc. ;
DG Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust;
Federated Adjustable Rate U.S. Government Fund, Inc.; Federated ARMs Fund;
Federated Equity Funds; Federated Equity Income Fund, Inc.; Federated Fund
for U.S. Government Securities, Inc.; Federated GNMA Trust; Federated
Government Income Securities, Inc.; Federated Government Trust; Federated
High Income Bond Fund, Inc.; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index Trust; Federated
Institutional Trust; Federated Insurance Series; Federated Master Trust;
Federated Municipal Opportunities Fund, Inc.; Federated Municipal
Securities Fund, Inc.; Federated Municipal Trust; Federated Short-Term
Municipal Trust; Federated Short-Term U.S. Government Trust; Federated
Stock and Bond Fund, Inc.; Federated Stock Trust; Federated Tax-Free Trust;
Federated Total Return Series, Inc.; Federated U.S. Government Bond Fund;
Federated U.S. Government Securities Fund: 1-3 Years; Federated U.S.
Government Securities Fund: 2-5 Years; Federated U.S. Government Securities
Fund: 5-10 Years; Federated Utility Fund, Inc.; First Priority Funds; Fixed
Income Securities, Inc.; Fortress Utility Fund, Inc.; High Yield Cash
Trust; Intermediate Municipal Trust; International Series, Inc.; Investment
Series Funds, Inc.; Investment Series Trust; Liberty Term Trust, Inc. -
1999; Liberty U.S. Government Money Market Trust; Liquid Cash Trust;
Managed Series Trust; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; Peachtree Funds; RIMCO Monument Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; The Planters Funds; The Starburst Funds;
The Starburst Funds II; The Virtus Funds; Trust for Financial Institutions;
Trust for Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; and World Investment
Series, Inc.
FUND OWNERSHIP
Officers and Directors own less than 1% of the Fund's outstanding Shares.
As of March 30, 1997, no shareholder of record owned 5% or more of the
outstanding Class A Shares of the Fund.
As of March 30, 1997, no shareholder of record owned 5% or more of the
outstanding Class B Shares of the Fund.
As of March 30, 1997, the following shareholder of record owned 5% or more
of the outstanding Class C Shares of the Fund: MLPF&S for the sole benefit
of its customers, Jacksonville, FL, owned approximately 1,193,547 Shares
(36.66%).
As of March 30, 1997, the following shareholder of record owned 5% or more
of the outstanding Class F Shares of the Fund: MLPF&S for the sole benefit
of its customers, Jacksonville, FL, owned approximately 976,415 Shares
(24.49%).
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 54 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
THOMAS G. BIGLEY,++ $1,401.95 $86,331 FOR THE FUND AND
DIRECTOR 54 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
JOHN T. CONROY, JR., $1,523.24 $115,760 FOR THE FUND AND
DIRECTOR 54 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
WILLIAM J. COPELAND, $1,523.24 $115,760 FOR THE FUND AND
DIRECTOR 54 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
J. CHRISTOPHER DONAHUE, $ 0 $0 FOR THE FUND AND
EXECUTIVE VICE PRESIDENT 16 OTHER INVESTMENT COMPANIES
IN THE FUND COMPLEX
AND DIRECTOR
JAMES E. DOWD, $1,523.24 $115,760 FOR THE FUND AND
DIRECTOR 54 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
LAWRENCE D. ELLIS, M.D., $1,401.95 $104,898 FOR THE FUND AND
DIRECTOR 54 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
EDWARD L. FLAHERTY, JR., $1,523.24 $115,760 FOR THE FUND AND
DIRECTOR 54 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
PETER E. MADDEN, $1,401.95 $104,898 FOR THE FUND AND
DIRECTOR 54 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
GREGOR F. MEYER, $1,401.95 $104,898 FOR THE FUND AND
DIRECTOR 54 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
JOHN E. MURRAY, JR., $1,401.95 $104,898 FOR THE FUND AND
DIRECTOR 54 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
WESLEY W. POSVAR, $1,401.95 $104,898 FOR THE FUND AND
DIRECTOR 54 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
MARJORIE P. SMUTS, $1,401.95 $104,898 FOR THE FUND AND
DIRECTOR 54 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
* Information is furnished for the fiscal year ended March 31, 1996.
+ The information is provided for the last calendar year.
++ Mr. Bigley served on 39 investment companies in the Federated Funds
Complex from January 1 through September 30, 1995. On October 1, 1995, he
was appointed a Director or Trustee on 15 additional Federated Funds.
DIRECTOR LIABILITY
The Articles of Incorporation provide that the Directors will not be liable
for errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasence, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
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, 1996, 1995, and 1994, the Adviser earned $3,637,755,
$2,010,685, and $1,549,057, respectively, which were reduced by $0, $0, and
$0, 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.
BROKERAGE TRANSACTIONS
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. Research services provided by brokers and dealers may be used by
the Adviser or its affiliates in advising the Fund 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. 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. During the
fiscal years ended March 31, 1996, 1995, and 1994, the Fund paid total
brokerage commissions of $677,135, $277,942, and $140,868, respectively.
Although investment decisions for the Fund are made independently from
those of the other accounts managed by the Adviser, investments of the type
the Fund may make may also be made by those other accounts. When the Fund
and one or more other accounts managed by the Adviser are prepared to
invest in, or desire to dispose of, the same security, available
investments or opportunities for sales will be allocated in a manner
believed by the Adviser to be equitable to each. In some cases, this
procedure may adversely affect the price paid or received by the Fund or
the size of the position obtained or disposed of by the Fund. In other
cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for a fee as described in
the respective prospectuses. From March 1, 1994, to March 1, 1996,
Federated Adminstrative Services served as the Fund's Adminstrator. Prior
to March 1, 1994, Federated Administrative Services, Inc. served as the
Fund's administrator. Both former Administrators are subsidiaries of
Federated Investors. For purposes of this Statement of Additional
Information, Federated Services Company, Federated Administrative Services
and Federated Administrative Services, Inc. may hereinafter collectively be
referred to as the `Administrators.'' For the fiscal years ended March 31,
1996, 1995, and 1994, the Administrators earned $423,163, $223,061, and
$441,948, respectively. 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 Services Company.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company, Boston, MA, is custodian for the
securities and cash of the Fund. Federated Services Company, Pittsburgh,
PA, provides certain accounting and recordkeeping services with respect to
the Fund's portfolio investments. 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.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent,
Federated Shareholder Services Company, maintains all necessary shareholder
records. For its services, the transfer agent receives a fee based on the
size, type and number of accounts and transactions made by shareholders.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accounts for the Fund are Arthur Andersen LLP,
Pittsburgh, PA.
PURCHASING SHARES
Except under certain circumstances described in the respective
prospectuses, Shares are sold at their net asset value (plus a sales charge
on Class A Shares and Class F 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 Class F Shares.''
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES
With respect to Class B Shares and Class C Shares, the Fund has adopted a
Distribution Plan in accordance with Investment Company Act Rule 12b-1.
Additionally, the Fund has adopted a Shareholder Services Agreement with
respect to all classes of Shares.
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 year ended March 31, 1996 the Class B Shares and Class C
Shares incurred $971,408 and $226,754, respectively, in distribution
services fees, none of which were waived. In addition, for the fiscal year
ended March 31, 1996, the Class A Shares, Class B Shares, Class C Shares
and Class F Shares paid shareholder services fees in the amount of
$898,781, $323,803, $75,585, and $100,110, respectively, of which $243,794,
$70,191, $4,805, and $8,009, respectively, were waived.
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 and their
immediate family members, or any investment dealer who has a sales
agreement with Federated Securities Corp., and their spouses and children
under 21, may buy Shares at net asset value without a sales charge. Shares
may also be sold without a sales charge to trusts or pension or profit-
sharing plans for these 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:
oaccording to the last sale price on a national securities exchange,
if available;
oin 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
ofor 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 Class F 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 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
Class F Shares for Class F Shares in other Federated Funds (which are sold
with a sales charge different from that of the Fund or with no sales charge
and which are advised by subsidiaries or affiliates of Federated Investors)
without the assessment of a contingent deferred sales charge on the
exchanged Shares.
The order also allows certain other funds that are not advised by
susidiaries or affiliates of Federated Investors, which do not have a sales
charge, to exchange their shares for Class F Shares on a basis other than
their current offering price. These exchanges may be made to the extent
that such shares were acquired in a prior exchange, at net asset value, for
shares of a Federated Fund carrying a sales charge.
REDUCED SALES CHARGE
If a shareholder making such an exchange qualifies for a reduction or
elimination of the sales charge, the shareholder must notify Federated
Securities Corp.
REQUIREMENTS FOR EXCHANGE
Shareholders using this privilege must exchange Class F Shares having a net
asset value equal to the minimum investment requirements of the fund into
which the exchange is being made. Before the exchange, the shareholder must
receive a prospectus of the fund for which the exchange is being made.
This privilege is available to shareholders resident in any state in which
the fund shares being acquired may be sold. Upon receipt of proper
instructions and required supporting documents, shares submitted for
exchange are redeemed and the proceeds invested in shares of the other
fund.
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 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
Class F 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.
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.
Redemption in kind is not as liquid as a cash redemption. If redemption is
made in kind, shareholders receiving their securities and selling them
before their maturity could receive less than the redemption value of their
securities and could incur certain transaction costs.
TAX STATUS
THE FUND'S TAX STATUS
The Fund will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment
afforded to such companies. To qualify for this treatment, the Fund must,
among other requirements:
oderive at least 90% of its gross income from dividends, interest,
and gains from the sale of securities;
oderive less than 30% of its gross income from the sale of securities
held less than three months;
oinvest in securities within certain statutory limits; and
odistribute 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, 1996, were 24.75%,
13.81% and 11.48%, respectively.
The Fund's average annual total returns for Class B Shares for the one-year
period ended March 31, 1996, and for the period from July 24, 1994 (date of
initial public offering) to March 31, 1996, were 25.40% and 19.85%,
respectively.
The Fund's average annual total returns for Class C Shares for the one-year
period ended March 31, 1996, and for the period from April 21, 1993 (date
of initial public offering) to March 31, 1996, were 30.08% and 15.06%,
respectively.
The Fund's average annual total returns for Class F Shares for the one-year
period ended March 31, 1996, and for the period from July 27, 1993 (date of
initial public offering) to March 31, 1996, were 29.56% and 14.75%,
respectively.
The average annual total return for each class of Shares of the Fund is the
average compounded rate of return for a given period that would equate a
$1,000 initial investment to the ending redeemable value of that
investment. The ending redeemable value is computed by multiplying the
number of Shares owned at the end of the period by the net asset value per
Share at the end of the period. The number of Shares owned at the end of
the period is based on the number of Shares purchased at the beginning of
the period with $1,000, less any applicable sales charge, 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 charge may be quoted in advertising.
YIELD
The Fund's yields for Class A Shares, Class B Shares, Class C Shares, and
Class F Shares were 0.92%, 0.20%, 0.19% and 0.95 %, respectively, for the
thirty-day period ended March 31, 1996.
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:
oportfolio quality;
oaverage portfolio maturity;
otype of instruments in which the portfolio is invested;
ochanges in interest rates and market value of portfolio securities;
ochanges in the Fund's or a class of Shares' expenses; and
ovarious 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:
oLIPPER 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.
oDOW 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.
oSTANDARD & 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.
oMORNINGSTAR, 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 charges on Class A Shares, Class B Shares, Class C
Shares, and Class F Shares.
Advertising and other promotional literature may include charts,
graphs and other illustrations using the Fund's returns, or returns
in general, that demonstrate basic investment concepts such as tax-
deferred compounding, dollar-cost averaging and systematic
investment. In addition, the Fund can compare its performance, or
performance for the types of securities in which it invests, to a
variety of other investments, such as bank savings accounts,
certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions
of economic, financial and political developments and their effect
on the securities market. Such discussions may take the form of
commentary on these developments by Fund portfolio managers and
their views and analysis on how such developments could affect the
Funds. In addition, advertising and sales literature may quote
statistics and give general information about the mutual fund
industry, including the growth of the industry, from sources such as
the Investment Company Institute.
ABOUT FEDERATED INVESTORS
Federated Investors 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. These traders
handle trillions of dollars in annual trading volume.
In the equity sector, Federated Investors has more than 25 years
experience. As of December 31, 1995, Federated Investors managed 22 equity
funds totaling approximately $5.4 billion in assets across growth, value,
equity income, international, index and sector (i.e. utility) styles.
Federated Investor'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 Investors'
equity and high yield corporate bond management while William D. Dawson,
Executive Vice President, oversees Federated Investors' domestic fixed
income management. Henry A. Frantzen, Executive Vice President, oversees
the management of Federated Investors' 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 CLIENTS
Federated Investors 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.
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 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. Federated's service to
financial professionals and institutions has earned it high rankings in
several DALBAR Surveys. 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, 1996, are
incorporated herein by reference to the Annual Report of the Fund dated
March 31, 1996 (File Nos. 2-29786 and 811-1704). A copy of the Report may
be obtained without charge by contacting the Fund.
*source: Investment Company Institute
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 Investors 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.
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements. To be filed by amendment.
(b) Exhibits:
(1) Conformed copy of Articles of Incorporation of the
Registrant as restated (4);
(i) Conformed copy of the Registrant's Articles
Supplementary (4);
(2) Copy of By-Laws of the Registrant as amended (4);
(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 (4);
(6) Conformed copy of Distributor's Contract of the
Registrant (3);
(i) Conformed Copy of exhibit D to the Distributor's
Contract of the Registrant (4);
(ii) The Registrant hereby incorporates the
conformed coy of the specimen Mutual Funds
Sales and Service Agreement; Mutual Funds
Service Agreement; and Plan Trustee/Mutual
Funds Service Agreement from Item 4(b)(6) of the
Cash Trust Series II Registration
Statement on Form N-1A, filed with the
Commission on July 24, 1995. (File Nos. 33-
38550 and 811-6269);
(7) Not applicable;
(8) Conformed copy of Custodian Agreement of the Registrant
(4);
(9) (i) Conformed copy of Agreement for Fund
Accounting Services, Administrative Services,
Shareholder Recordkeeping Services, and Custody
Services Procurement (5);
(ii) The responses described in Item 24(b)(6) are
hereby incorporated by reference;
(iii) The Registrant hereby incorporates the conformed
copy of the Shareholder Services Sub-Contract between
National Pensions Alliance, Ltd. and Federated
Shareholder Services from Item 24(b)(9)(ii) of the
Federated GNMA Trust Registration Statement on Form N-
1A, filed with the Commission on March 25, 1996. (File
Nos. 2-75670 and 811-3375);
+ All Exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's Initial
Registration Statement on Form S-5 filed August 5, 1968. (File Nos.
2-29786 and 811-1704.)
3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 59 on Form N-1A filed May 26, 1994. (File Nos. 2-29786
and 811-1704).
4. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 60 on Form N-1A filed May 25, 1995. (File Nos. 2-29786
and 811-1704).
5. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 60 on Form N-1A filed May 29, 1996. (File Nos. 2-29786
and 811-1704).
(vii) The Registrant hereby incorporates the
conformed copy of the Shareholder Services Sub-Contract
between Fidelity and Federated Shareholder Services
from Item 24(b)(9) (iii) of the Federated GNMA Trust
Registration Statement on Form N-1A, filed with the
Commissioin on March 25, 1996. (File Nos. 2-75670 and
811-3375);
(10) Not applicable;
(11) Not applicable
(i) Opinion of Dickstein, Shapiro & Morin, L.L.P.
regarding tax consequences of acquisition of
Fortress High Quality Stock Fund assets (4);
(12) Not applicable;
(13) Not applicable;
(14) Not applicable;
(15) Copy of Rule 12-b-1 Plan of the Registrant (3);
(i)Conformed copy of Exhibit A to the Rule 12-b-1
Plan of the Registrant (4);
(ii)Conformed copy of Exhibit B to the Rule 12-b-1
Plan of the Registrant (4);
(iii)The responses described in Item 24(b)(6) are
hereby incorporated by reference;
+ All Exhibits have been filed electronically.
3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 59 on Form N-1A filed May 26, 1994. (File Nos. 2-29786
and 811-1704).
4. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 60 on Form N-1A filed May 25, 1995. (File Nos. 2-29786
and 811-1704).
(16) Copy of Schedules for Computation of Fund Performance
Data (4);
(17) Copy of Financial Data Schedules; +
(18) The Registrant hereby incorporates the conformed copy
of the specimen Multiple Class Plan from Item 24(b)(18)
of the World Investment Series, Inc. Registration
Statement on Form N-1A, filed with the Commission on
January 26, 1996. (File Nos. 33-52149 and 811-07141);
(19) Conformed copy of 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 March 30, 1997
Shares of Capital Stock
($.20 per Share par value)
Class A Shares 44,667
Class B Shares 43,175
Class C Shares 4,148
Class F Shares 4,727
Item 27. Indemnification: (2)
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 B of this Registration Statement
under "Federated American Leaders Fund, Inc. Management." 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.
+ All Exhibits have been filed electronically.
2. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 47 on Form N-1A filed July 26, 1989. (File Nos 2-29786
and 811-1704).
4. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 60 on Form N-1A filed May 25, 1995. (File Nos. 2-29786
and 811-1704).
The remaining Officers of the investment adviser are: William D.
Dawson,III, Henry A. Frantzen, J. Thomas Madden, and Mark L.
Mallon, Executive Vice Presidents; Peter R. Anderson, Drew J.
Collins, Jonathan C. Conley, Deborah A. Cunningham, Mark E.
Durbiano, J. Alan Minteer, and Mary Jo Ochson, Senior Vice
Presidents; J. Scott Albrecht, Joseph M. Balestrino, Randall S.
Bauer, David F. Belton, Christine A. Bosio, David A. Briggs,
Kenneth J. Cody, Alexandre de Bethmann, Linda A. Duessel, Michael
J. Donnelly, Michael P. Donnelly, Kathleen M. Foody-Malus, Thomas
M. Franks; Edward C. Gonzales, James E. Grefenstette, Susan R.
Hill, Stephen A. Keen, Robert M. Kowit, Mark S. Kopinski, Jeff A.
Kozemchak, Marian R. Marinack, Sandra L. McInerney, Susan M.
Nason, Robert J. Ostrowski, Charles A. Ritter, Frank Semack, Aash
M. Shah, Scott B. Schermerhorn, William F. Stotz, Tracy
P.Stouffer, Edward J. Tiedge, Paige M. Wilhelm, Jolanta M.
Wysocka, Vice Presidents; Todd A. Abraham, Stafanie L. Bachhuber,
Michael W. Casey, William R. Jamison, Constantine Kartsonsas,
Robert M. March, Joseph M. Natoli, Keith J. Sabol, and Michael W.
Sirianni, Assistant Vice Presidents; Stephen A. Keen, Secretary;
Thomas R. Donahue, Treasurer and Assistant Secretary; Richard B.
Fisher, Assistant Secretary and Assistant Treasurer; Christine I.
McGonigle, Assistant Secretary. The business address of each of
the Officers of the investment adviser is Federated Investors
Tower, Pittsburgh, Pennsylvania 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)111 Corcoran Funds; Arrow Funds; Automated Government Money
Trust; BayFunds; Blanchard Funds; Blanchard Precious Metals
Fund, Inc.; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash
Trust; Federated Adjustable Rate U.S. Government Fund, Inc.;
Federated American Leaders Fund, Inc.; Federated ARMs Fund;
Federated Equity Funds; Federated Equity Income Fund, Inc.;
Federated Fund for U.S. Government Securities, Inc.;
Federated GNMA Trust; Federated Government Income Securities,
Inc.; Federated Government Trust; Federated High Income Bond
Fund, Inc.; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Insurance
Series; Federated Investment Portfolios; Federated Investment
Trust; Federated Master Trust; Federated Municipal
Opportunities Fund, Inc.; Federated Municipal Securities
Fund, Inc.; Federated Municipal Trust; Federated Short-Term
Municipal Trust; Federated Short-Term U.S. Government Trust;
Federated Stock and Bond Fund, Inc.; Federated Stock Trust;
Federated Tax-Free Trust; Federated Total Return Series,
Inc.; Federated U.S. Government Bond Fund; Federated U.S.
Government Securities Fund: 1-3 Years; Federated U.S.
Government Securities Fund: 2-5 Years; Federated U.S.
Government Securities Fund: 5-10 Years; Federated Utility
Fund, Inc.; First Priority Funds; Fixed Income Securities,
Inc.; High Yield Cash Trust; Independence One Mutual Funds;
Intermediate Municipal Trust; International Series, Inc.;
Investment Series Funds, Inc.; Investment Series Trust;
Liberty U.S. Government Money Market Trust; Liquid Cash
Trust; Managed Series Trust; Marshall Funds, Inc.; Money
Market Management, Inc.; Money Market Obligations Trust;
Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; Peachtree Funds; RIMCO Monument Funds;
SouthTrust Vulcan Funds; Star Funds; Targeted Duration Trust;
Tax-Free Instruments Trust; The Biltmore Funds; The Biltmore
Municipal Funds; The Monitor Funds; The Planters Funds; The
Starburst Funds; The Starburst Funds II; The Virtus Funds;
Tower Mutual 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 Group of Funds, Inc.; Wesmark Funds; 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)
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, Asst.
Secretary, and Asst.
Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive ViceExecutive Vice
Federated Investors Tower President, Federated, President
Pittsburgh, PA 15222-3779 Securities Corp.
Thomas R. Donahue Director, Assistant Secretary,
Federated Investors Tower Assistant Treasurer
Pittsburgh, PA 15222-3779 Federated Securities Corp
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust, Federated
Pittsburgh, PA 15222-3779 Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd 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
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
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
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
Byron F. Bowman Vice President, Secretary, --
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
Dale R. Browne 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
R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
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
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securites Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John K. Goettlicher 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
James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Steven A. La Versa 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
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
J. Michael Miller 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
Thomas A. Peters III 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
Edward L. Smith 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
Richard Suder 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
Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward J. Wojnarowski 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
Edward R. Bozek 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
J. Timothy Radcliff Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Leslie K. Platt Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(c) Not applicable
Item 30. Location of Accounts and Records:
All accounts and records required to be maintained by Section
31(a) of the Investment Company Act of 1940 and Rules 31a-1
through 31a-3 promulgated thereunder are maintained at one of the
following locations:
Registrant............... Federated Investors Tower
......................... Pittsburgh, PA 15222-3779
Federated Shareholder Services P.O. Box 8600
Company.................. Boston, MA 02266-8600
(`Transfer Agent and Dividend
Disbursing Agent')
Federated Services Company 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 8600
(`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, FEDERATED 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 31rst day of March, 1997.
FEDERATED AMERICAN LEADERS FUND, INC.
BY: /s/S. Elliott Cohan
S. Elliott Cohan, Assistant Secretary
Attorney in Fact for John F. Donahue
March 31,1997
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/ S. Elliott Cohan
S. Elliott Cohan Attorney In Fact March 31,1997
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* President and Director
(Chief Executive Officer)
J. Christopher Donahue* Executive Vice President and Director
John W. McGonigle* Treasurer, Executive Vice President
and Secretary
(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
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> Federated American Leaders Fund, Inc.
Class A
<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Mar-31-1996
<PERIOD-END> Mar-31-1996
<INVESTMENTS-AT-COST> 635,355,534
<INVESTMENTS-AT-VALUE> 810,748,667
<RECEIVABLES> 9,658,245
<ASSETS-OTHER> 132,590
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 820,539,502
<PAYABLE-FOR-SECURITIES> 2,614,812
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,270,930
<TOTAL-LIABILITIES> 3,885,742
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 625,635,086
<SHARES-COMMON-STOCK> 23,046,979
<SHARES-COMMON-PRIOR> 17,144,389
<ACCUMULATED-NII-CURRENT> 807,355
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 14,818,186
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 175,393,133
<NET-ASSETS> 455,866,640
<DIVIDEND-INCOME> 10,436,184
<INTEREST-INCOME> 2,042,570
<OTHER-INCOME> 0
<EXPENSES-NET> 7,733,040
<NET-INVESTMENT-INCOME> 4,745,714
<REALIZED-GAINS-CURRENT> 29,467,435
<APPREC-INCREASE-CURRENT> 112,788,561
<NET-CHANGE-FROM-OPS> 147,001,710
<EQUALIZATION> 797,978
<DISTRIBUTIONS-OF-INCOME> 3,449,876
<DISTRIBUTIONS-OF-GAINS> 12,685,641
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,582,300
<NUMBER-OF-SHARES-REDEEMED> 3,425,166
<SHARES-REINVESTED> 745,456
<NET-CHANGE-IN-ASSETS> 452,962,125
<ACCUMULATED-NII-PRIOR> 1,646,312
<ACCUMULATED-GAINS-PRIOR> 5,020,868
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,637,755
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8,059,839
<AVERAGE-NET-ASSETS> 562,990,903
<PER-SHARE-NAV-BEGIN> 15.660
<PER-SHARE-NII> 0.220
<PER-SHARE-GAIN-APPREC> 4.700
<PER-SHARE-DIVIDEND> 0.170
<PER-SHARE-DISTRIBUTIONS> 0.630
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 19.780
<EXPENSE-RATIO> 1.16
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 002
<NAME> Federated American Leaders Fund, Inc.
Class B
<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Mar-31-1996
<PERIOD-END> Mar-31-1996
<INVESTMENTS-AT-COST> 635,355,534
<INVESTMENTS-AT-VALUE> 810,748,667
<RECEIVABLES> 9,658,245
<ASSETS-OTHER> 132,590
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 820,539,502
<PAYABLE-FOR-SECURITIES> 2,614,812
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,270,930
<TOTAL-LIABILITIES> 3,885,742
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 625,635,086
<SHARES-COMMON-STOCK> 13,186,538
<SHARES-COMMON-PRIOR> 2,978,445
<ACCUMULATED-NII-CURRENT> 807,355
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 14,818,186
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 175,393,133
<NET-ASSETS> 261,024,343
<DIVIDEND-INCOME> 10,436,184
<INTEREST-INCOME> 2,042,570
<OTHER-INCOME> 0
<EXPENSES-NET> 7,733,040
<NET-INVESTMENT-INCOME> 4,745,714
<REALIZED-GAINS-CURRENT> 29,467,435
<APPREC-INCREASE-CURRENT> 112,788,561
<NET-CHANGE-FROM-OPS> 147,001,710
<EQUALIZATION> 797,978
<DISTRIBUTIONS-OF-INCOME> 300,834
<DISTRIBUTIONS-OF-GAINS> 4,534,699
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,810,661
<NUMBER-OF-SHARES-REDEEMED> 839,484
<SHARES-REINVESTED> 236,916
<NET-CHANGE-IN-ASSETS> 452,962,125
<ACCUMULATED-NII-PRIOR> 1,646,312
<ACCUMULATED-GAINS-PRIOR> 5,020,868
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,637,755
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8,059,839
<AVERAGE-NET-ASSETS> 562,990,903
<PER-SHARE-NAV-BEGIN> 15.670
<PER-SHARE-NII> 0.100
<PER-SHARE-GAIN-APPREC> 4.700
<PER-SHARE-DIVIDEND> 0.050
<PER-SHARE-DISTRIBUTIONS> 0.630
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 19.790
<EXPENSE-RATIO> 1.93
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 003
<NAME> Federated American Leaders Fund, Inc.
Class C
<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Mar-31-1996
<PERIOD-END> Mar-31-1996
<INVESTMENTS-AT-COST> 635,355,534
<INVESTMENTS-AT-VALUE> 810,748,667
<RECEIVABLES> 9,658,245
<ASSETS-OTHER> 132,590
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 820,539,502
<PAYABLE-FOR-SECURITIES> 2,614,812
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,270,930
<TOTAL-LIABILITIES> 3,885,742
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 625,635,086
<SHARES-COMMON-STOCK> 2,244,614
<SHARES-COMMON-PRIOR> 1,280,678
<ACCUMULATED-NII-CURRENT> 807,355
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 14,818,186
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 175,393,133
<NET-ASSETS> 44,433,642
<DIVIDEND-INCOME> 10,436,184
<INTEREST-INCOME> 2,042,570
<OTHER-INCOME> 0
<EXPENSES-NET> 7,733,040
<NET-INVESTMENT-INCOME> 4,745,714
<REALIZED-GAINS-CURRENT> 29,467,435
<APPREC-INCREASE-CURRENT> 112,788,561
<NET-CHANGE-FROM-OPS> 147,001,710
<EQUALIZATION> 797,978
<DISTRIBUTIONS-OF-INCOME> 50,556
<DISTRIBUTIONS-OF-GAINS> 1,056,763
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,191,221
<NUMBER-OF-SHARES-REDEEMED> 263,447
<SHARES-REINVESTED> 36,162
<NET-CHANGE-IN-ASSETS> 452,962,125
<ACCUMULATED-NII-PRIOR> 1,646,312
<ACCUMULATED-GAINS-PRIOR> 5,020,868
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,637,755
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8,059,839
<AVERAGE-NET-ASSETS> 562,990,903
<PER-SHARE-NAV-BEGIN> 15.660
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 4.750
<PER-SHARE-DIVIDEND> 0.030
<PER-SHARE-DISTRIBUTIONS> 0.630
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 19.800
<EXPENSE-RATIO> 1.96
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 004
<NAME> Federated American Leaders Fund, Inc.
Class F
<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Mar-31-1996
<PERIOD-END> Mar-31-1996
<INVESTMENTS-AT-COST> 635,355,534
<INVESTMENTS-AT-VALUE> 810,748,667
<RECEIVABLES> 9,658,245
<ASSETS-OTHER> 132,590
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 820,539,502
<PAYABLE-FOR-SECURITIES> 2,614,812
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,270,930
<TOTAL-LIABILITIES> 3,885,742
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 625,635,086
<SHARES-COMMON-STOCK> 2,797,212
<SHARES-COMMON-PRIOR> 1,819,815
<ACCUMULATED-NII-CURRENT> 807,355
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 14,818,186
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 175,393,133
<NET-ASSETS> 55,329,135
<DIVIDEND-INCOME> 10,436,184
<INTEREST-INCOME> 2,042,570
<OTHER-INCOME> 0
<EXPENSES-NET> 7,733,040
<NET-INVESTMENT-INCOME> 4,745,714
<REALIZED-GAINS-CURRENT> 29,467,435
<APPREC-INCREASE-CURRENT> 112,788,561
<NET-CHANGE-FROM-OPS> 147,001,710
<EQUALIZATION> 797,978
<DISTRIBUTIONS-OF-INCOME> 370,222
<DISTRIBUTIONS-OF-GAINS> 1,393,014
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,201,769
<NUMBER-OF-SHARES-REDEEMED> 295,842
<SHARES-REINVESTED> 71,470
<NET-CHANGE-IN-ASSETS> 452,962,125
<ACCUMULATED-NII-PRIOR> 1,646,312
<ACCUMULATED-GAINS-PRIOR> 5,020,868
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,637,755
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8,059,839
<AVERAGE-NET-ASSETS> 562,990,903
<PER-SHARE-NAV-BEGIN> 15.660
<PER-SHARE-NII> 0.190
<PER-SHARE-GAIN-APPREC> 4.720
<PER-SHARE-DIVIDEND> 0.160
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<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 19.780
<EXPENSE-RATIO> 1.21
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
