[Graphic]
Federated American Leaders Fund, Inc.
28TH SEMI-ANNUAL REPORT SEPTEMBER 30, 1997
ESTABLISHED 1969
President's Message
[Graphic]
Dear Fellow Shareholder:
I am pleased to present the 28th semi-annual report for Federated American
Leaders Fund, Inc. which began operation in 1969.
This report covers the first half of the fund's fiscal year, which is the
six-month reporting period from April 1, 1997 to September 30, 1997. It begins
with a discussion with fund portfolio manager Scott B. Schermerhorn, Vice
President, Federated Advisers. Following the discussion are graphs showing the
fund's excellent long-term investment performance, a list of the fund's
high-quality stock holdings, and the fund's financial statements.
This diversified portfolio of high-quality common stocks--which, at the end of
the reporting period, included household names like Bristol-Myers Squibb,
Chevron, Dow Chemical, Exxon, General Motors, Hewlett-Packard, ITT, IBM, Intel,
K-Mart, Merck, Pepsico, and Wal-Mart--performed extremely well in what has been
an ideal economic environment for stocks.
The fund's total return performance for the six-month reporting period, which
reflects income dividends, realized gain, and capital appreciation, is shown
below for each share class.* <TABLE> <CAPTION>
CAPITAL
TOTAL INCOME GAINS NET ASSET
RETURN DIVIDENDS DIVIDENDS VALUE INCREASE
<S> <C> <C> <C> <C>
Class A Shares 24.63% $0.10 $1.21 $21.40 to $25.19 = 18%
Class B Shares 24.09% $0.02 $1.21 $21.40 to $25.17 = 18%
Class C Shares 23.99% $0.02 $1.21 $21.40 to $25.15 = 18%
Class F Shares 24.53% $0.10 $1.21 $21.40 to $25.17 = 18%
</TABLE>
I want to extend a warm welcome to former shareholders of Penn Square Mutual
Fund who are now shareholders of Federated American Leaders Fund, Inc. as a
result of a merger with the fund. Fund assets grew from $1.3 billion to $2.3
billion during the reporting period, as a result of the continued participation
of long-time and new shareholders who purchased shares.
* Performance quoted is based on net asset value and reflects past performance.
Performance is not indicative of future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost. Total returns for the
period based on offering price for Class A, B, C, and F Shares were 17.75%,
18.28%, 22.96%, and 22.24%, respectively.
Thank you for entrusting a portion of your wealth to this diversified blue-chip
stock fund. We encourage you to reinvest your dividends and capital gains in
additional shares. It's a convenient way to increase your opportunity to
participate in the growth and earnings potential of over 80 high-quality U.S.
companies.
As always, we welcome your comments and suggestions.
Sincerely,
[Graphic]
John F. Donahue
President
November 15, 1997
Investment Review
[Graphic]
Scott B. Schermerhorn
Vice President
Federated Advisers
[Graphic]
THE ECONOMIC ENVIRONMENT OF CONTINUED GROWTH AND LOW INFLATION DELIGHTED
EQUITY INVESTORS DURING THE REPORTING PERIOD, ALTHOUGH THE MARKET HAS
EXPERIENCED PERIODS OF VOLATILITY. WHAT IS YOUR REVIEW OF THE SECOND AND
THIRD QUARTERS OF 1997?
The U.S. stock market continued to show solid strength in 1997. However, price
fluctuations on a daily basis increased as investors expressed concern about the
direction of the economy and interest rates. Our focus on quality stocks and
strict valuation disciplines offered our shareholders a prudent equity strategy.
The dangers of "market timing," a strategy we studiously avoid, were apparent
during the second quarter of 1997. In early April, the conventional wisdom was
that the economy was too strong, which would force the Federal Reserve Board to
increase interest rates in an effort to thwart inflation. Many investors began
reducing their exposure to U.S. equities. What followed was an apparent slowdown
in the economy, which convinced investors that there would be no need to change
current interest rates. This renewed optimism led to a market increase from the
low single digits to a 20% total return by June 30, 1997.
The third quarter of 1997 was very rewarding for equity investors--and more so
for our shareholders. During this three-month period, the Standard & Poor's 500
Index (the "S&P 500") advanced 7.49%,* while the Class A Shares of Federated
American Leaders Fund, Inc. increased 9.37% (based on net asset value).** This
outperformance was attributable to investor concerns over overvaluation among
large U.S. multinationals (where we have reduced exposure). Conversely, this
created undervaluation among companies that were ignored.
* The S&P is an unmanaged index of common stocks in industry, transportation,
financial, and public utility companies. Investments cannot be made in an
index.
** The fund's total return for the three-month period for Class A Shares based
on offering price was 3.37%. Total returns for other share classes based on
net asset value and offering price, respectively, were: Class B Shares, 9.14%
and 3.64%; Class C Shares, 9.10% and 8.11%; and Class F Shares, 9.33% and
7.26%.
This year has also seen investor shifts between "value" stocks, i.e., stocks
with lower prices and good expectations, to "growth" stocks, i.e., stocks with
higher price/earnings ratios and higher growth rates. Value stocks clearly
outperformed during the first quarter of 1997, while growth stocks outperformed
in the second quarter of 1997. This was due to investor concerns over a slowing
economy. However, with a strong economy and attractive valuations, value
regained investor confidence during the third quarter.
[Graphic]
HOW DID FEDERATED AMERICAN LEADERS FUND, INC. PERFORM FOR ITS SHAREHOLDERS
DURING THE FIRST SIX MONTHS OF ITS FISCAL YEAR?
For the six-month reporting period ended September 30, 1997, the fund's Class A,
B, C, and F Shares produced strong total returns of 24.63%, 24.09%, 23.99%, and
24.53%, respectively.+ These returns were near the S&P 500 total return of
26.24%. This performance is based on net asset value and includes capital
appreciation, income dividends, and capital gains.
[Graphic]
AT THE CURRENT MARKET LEVEL, WHAT INDUSTRY SECTORS ARE YOU FOCUSING ON? WHAT
WAS THE FUND'S SECTOR EXPOSURE AS OF SEPTEMBER 30, 1997?
Our largest underweight industry continues to be TECHNOLOGY because its
valuations continue at all-time highs and its fundamental picture is not as
robust as it was two years ago. Conversely, we remain overweight in ENERGY
because we believe global industrialization will continue to increase demand
while historic underinvestment has kept supply constrained. RETAILING is also an
industry in which we maintain an overweight exposure because its valuations are
extremely attractive.
+ Performance quoted is based on net asset value and reflects past performance.
Performance is not indicative of future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost. Total returns for the
period based on offering price for Class A, B, C, and F Shares were 17.75%,
18.28%, 22.96% and 22.24%, respectively.
At the end of the reporting period, the fund's sector weightings were as
follows:
<TABLE>
<CAPTION>
PERCENTAGE S&P 500
ASSET CLASS OF PORTFOLIO SECTOR WEIGHTING
<S> <C> <C>
Basic Industry 5.9% 5.7%
Consumer Durables 4.8% 3.4%
Consumer Non-Durables 10.1% 11.1%
Energy/Minerals 12.8% 9.1%
Finance 13.3% 15.9%
Health Care 7.7% 10.8%
Producer Manufacturing 7.1% 7.9%
Retail Trade 5.9% 4.7%
Services 6.8% 4.9%
Technology 9.9% 16.1%
Transportation 1.8% 1.3%
Utilities 11.7% 9.0%
Other 2.2% --
</TABLE>
[Graphic]
WHAT STOCKS HAVE YOU ADDED TO THE PORTFOLIO DURING THE REPORTING PERIOD?
Our additions included the following companies:
SUN COMPANY, INC. -- This large U.S. refinery is in the midst of a company
restructuring as well as an improving fundamental outlook for its industry.
Additionally, its yield is 50% greater than the market overall.
LEXMARK INTERNATIONAL GROUP "A" -- This IBM spinoff makes printers for personal
computers. Lexmark, like Hewlett Packard, has been gaining market share in the
laser printer market at the expense of Japanese competitors.
VIACOM, INC. -- As the owner of dominant franchises such as MTV and
Blockbuster Video, Viacom allows us to diversify and do so at unprecedented
low valuations.
READERS DIGEST ASSOCIATION -- Its high-quality, globally recognized products
have been under pressure due to management's flawed strategy of trying to sell
more products to existing clients versus increasing their client base. The stock
currently trades at valuations that, we believe, reflect investor emotions, not
the value of the company. While we admit this is a turnaround situation, the
current yield of 6.3% gives us the incentive to be patient.
DOW CHEMICAL CO. -- Current valuations are extremely low for this dominant
company because it has been shunned by investors concerned about the
"polyethelene cycle." Dow has been behind its competitors in restructuring
efforts, allowing for more future potential.
EASTMAN KODAK -- Short-term competitive issues have created a unique buying
opportunity for the largest film producer in the world with a dominant brand.
JOHNSON CONTROLS -- This company produces the Sears Die-Hard Gold battery, as
well as seats for popular vehicles such as the Ford Expedition.
NEWS CORP. -- Rupert Murdoch's media powerhouse was sold off because
investors feared a major acquisition. It owns valuable franchises such as
FOX Network and is at its lowest valuation in memory, so we have capitalized
on the opportunity.
SARA LEE CORP. -- The results and stock performance of this large, high-quality
company have not kept pace with its peers. Noticing this, their
shareholder-friendly management announced a restructuring shortly after we
purchased the stock.
SEAGATE TECHNOLOGY -- A dominant player in the disk drive business for
personal computers, Seagate also leads in the high-end drive business used
in PC networks. The high-end business not only enjoys higher profitability,
but has a faster growth rate. [Graphic]
WHAT WERE THE FUND'S TOP 10 HOLDINGS AS OF SEPTEMBER 30, 1997?
The top holdings were as follows:
<TABLE>
<CAPTION>
NAME PERCENTAGE OF PORTFOLIO
<S> <C>
Sun Co., Inc. 2.5%
Tele-Communications, Inc. 2.3%
K Mart Corp. 2.2%
USX-Marathon Group 2.1%
News Corp., Ltd., ADR 2.0%
ITT Industries, Inc. 2.0%
MCI Communications Corp. 1.9%
Dayton-Hudson Corp. 1.9%
Marsh & McLennan Cos., Inc. 1.9%
Ingersoll-Rand Co. 1.9%
Total Percent of Portfolio 20.7%
</TABLE>
[Graphic]
AS 1997, THE YEAR THE DOW BROKE 8000, DRAWS TO A CLOSE, WHAT IS YOUR PERSPECTIVE
ON THE MARKET?
While we do believe some industries and numerous stocks are overvalued, we do
not believe market timing is a logical way to protect our shareholders. We
believe our valuation disciplines, which force us to exit overpriced securities
and focus on undervalued situations, are in our shareholders' best interests.
Given current valuations, our recent emphasis has been on high-quality, well-run
companies that, for various reasons, have not participated fully in the
unprecedented bull market of the past 2 1/2 years.
We also continue to believe 1997 will be viewed as a "stock pickers' year" with
actively managed funds outperforming the overall averages. We repeat: VALUATION
IS THE KEY VARIABLE TO SUCCESSFUL INVESTING. While short-term euphoria over
investment concepts such as indexing may currently distort this, in the long
run, valuation is always the key.
TWO WAYS YOU MAY SEEK TO INVEST FOR SUCCESS IN FEDERATED AMERICAN LEADERS FUND,
INC.
INITIAL INVESTMENT:
IF YOU HAD MADE AN INITIAL INVESTMENT OF $29,000 IN THE CLASS A SHARES OF
FEDERATED AMERICAN LEADERS FUND, INC. ON 2/26/69, REINVESTED DIVIDENDS AND
CAPITAL GAINS, AND DIDN'T REDEEM ANY SHARES, YOUR ACCOUNT WOULD BE WORTH
$606,799 ON 9/30/97. YOU WOULD HAVE EARNED A 11.22%* AVERAGE ANNUAL TOTAL RETURN
FOR THE 28-YEAR INVESTMENT LIFE SPAN.
One key to investing wisely is to reinvest all distributions in fund shares.
This increases the number of shares on which you can earn future dividends, and
you gain the benefit of compounding.
As of 9/30/97, the Class A Shares' average annual one-year, five-year, and
ten-year total returns were 30.83%, 18.76%, and 13.09%, respectively. Class B
Shares' average annual one-year and since inception (7/25/94) total returns were
31.17% and 24.28%, respectively. Class C Shares' average annual one-year and
since inception (4/21/93) total returns were 36.11% and 19.19%, respectively.
Class F Shares' average annual one-year and since inception (7/27/93) total
returns were 35.82% and 19.83%, respectively.**
[Graphic representation "A1" omitted - see appendix.]
* Total return represents the change in the value of an investment in Class A
Shares after reinvesting all income and capital gains, and takes into account
the 5.50% sales charge applicable to an initial investment in Class A Shares.
Data quoted represents past performance and does not guarantee future results.
Investment return and principal value will fluctuate, so an investor's shares,
when redeemed, may be worth more or less than their original cost.
** The total returns stated take into account the 5.50% sales charge for Class A
Shares, the 5.50% contingent deferred sales charge for Class B Shares, the
1.00% contingent deferred sales charge for Class C Shares and the 1.00% sales
charge for Class F Shares.
FEDERATED AMERICAN LEADERS FUND, INC.
ONE STEP AT A TIME:
$1,000 INVESTED EACH YEAR FOR 28 YEARS (REINVESTING ALL DIVIDENDS AND
CAPITAL GAINS) GREW TO $301,288.
With this approach, the key is consistency.
If you had started investing $1,000 annually in the Class A Shares of Federated
American Leaders Fund, Inc. on 2/26/69, reinvested your dividends and capital
gains, and didn't redeem any shares, you would have invested only $29,000, but
your account would have reached a total value of $301,288* by 9/30/97. You would
have earned an average annual total return of 13.42%.
A practical investment plan helps you pursue long-term performance from
blue-chip stocks. Through systematic investing, you buy shares on a regular
basis and reinvest all earnings. An investment plan works for you when you
invest only $1,000 annually. You can take it one step at a time. Put time,
money, and compounding to work.
[Graphic representation "A2" omitted - see appendix.]
* This chart assumes that the subsequent annual investments are made on the last
day of each anniversary month. No method of investing can guarantee a profit
or protect against loss in down markets. However, by investing regularly over
time and buying shares at various prices, investors can purchase more shares
at lower prices, and all accumulated shares have the ability to pay income to
the investor.
Because such a plan involves continuous investment, regardless of changing price
levels, the investor should consider whether or not to continue purchases
through periods of low price levels.
FEDERATED AMERICAN LEADERS FUND, INC.
HYPOTHETICAL INVESTOR PROFILE: INVESTING FOR COLLEGE EDUCATION
David and Joan Rice are a fictional couple who, like many shareholders, are
searching for a way to make their money grow over time.
David and Joan are planning for the college education of their children. On
September 30, 1982, they invested $5,000 in Class A Shares of Federated American
Leaders Fund, Inc. Since then, David and Joan have made additional investments
of $250 every month.
As this chart shows, over 15 years, the original $5,000 investment along with
their additional monthly $250 investments totaling $50,000 has grown to
$211,829. This represents a 15.97% average annual total return.* For the Rices,
a dedicated program of monthly investment really paid off.
[Graphic representation "A3" omitted - see appendix.]
* This chart assumes that the subsequent annual investments are made on the last
day of each anniversary month. This hypothetical scenario is provided for
illustrative purposes only and does not represent the results obtained by any
particular shareholder. Past performance does not guarantee future results.
FEDERATED AMERICAN LEADERS FUND, INC.
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS--97.2%
BASIC INDUSTRY--5.9%
281,000 Arco Chemical Co. $ 12,785,500
410,000 Betz Laboratories, Inc. 28,033,750
250,000 Canadian Pacific Ltd. 7,390,625
254,700 Consolidated Papers, Inc. 14,135,850
272,900 Dow Chemical Co. 24,748,619
197,900 (a) Ispat International NV 5,664,887
522,500 Louisiana-Pacific Corp. 13,062,500
828,000 USX-U.S. Steel Group, Inc. 28,773,000
Total 134,594,731
CONSUMER DURABLES--4.7%
401,500 Borg-Warner Automotive, Inc. 22,835,313
410,000 Centex Corp. 23,933,750
300,000 Eastman Kodak Co. 19,481,250
284,300 General Motors Corp. 19,030,331
900,000 Rubbermaid, Inc. 23,006,250
Total 108,286,894
CONSUMER NON-DURABLES--10.0%
300,700 CPC International, Inc. 27,852,338
455,300 Kimberly-Clark Corp. 22,281,244
985,800 PepsiCo, Inc. 39,986,512
363,000 Philip Morris Cos., Inc. 15,087,188
494,900 RJR Nabisco Holdings Corp. 17,012,188
1,040,000 Russell Corp. 30,615,000
800,000 Sara Lee Corp. 41,200,000
165,900 Unilever N.V., ADR 35,274,488
Total 229,308,958
</TABLE>
FEDERATED AMERICAN LEADERS FUND, INC.
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS--CONTINUED
ENERGY MINERALS--12.8%
348,500 Amerada-Hess Corp. $ 21,498,094
271,100 Chevron Corp. 22,552,131
416,900 Exxon Corp. 26,707,656
360,000 Mobil Corp. 26,640,000
823,300 Occidental Petroleum Corp. 21,354,344
388,000 Royal Dutch Petroleum Co., ADR 21,534,000
1,300,500 Sun Co., Inc. 56,978,156
365,800 Texaco, Inc. 22,473,838
1,253,400 USX Corp. 46,610,813
675,000 YPF Sociedad Anonima, ADR 24,890,625
Total 291,239,657
FINANCE--13.2%
248,500 Allstate Corp. 19,973,187
572,755 Bear Stearns Cos., Inc. 25,201,220
652,100 (a) Boston Properties, Inc. 21,397,031
219,500 CIGNA Corp. 40,881,875
376,000 Federal National Mortgage Association 17,672,000
556,500 Marsh & McLennan Cos., Inc. 42,641,812
471,000 Morgan Stanley, Dean Witter, Discover & Co. 25,463,437
318,800 National City Corp. 19,626,125
680,500 Nationwide Financial Services, Inc., Class A 18,968,937
226,000 Republic New York Corp. 25,679,250
633,200 Ryder Systems, Inc. 22,755,625
163,500 (a) Security Capital Group, Inc. 5,620,313
222,400 Travelers Group, Inc. 15,178,800
Total 301,059,612
HEALTH CARE--7.7%
393,000 Abbott Laboratories 25,127,437
</TABLE>
FEDERATED AMERICAN LEADERS FUND, INC.
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS--CONTINUED
HEALTH CARE--CONTINUED
306,200 American Home Products Corp. $ 22,352,600
734,200 Biomet, Inc. 17,620,800
503,100 Bristol-Myers Squibb Co. 41,631,525
199,000 Merck & Co., Inc. 19,887,562
730,500 (a) Perrigo Co. 11,505,375
385,500 United Healthcare Corp. 19,275,000
424,000 (a) Vencor, Inc. 17,490,000
Total 174,890,299
PRODUCER MANUFACTURING--7.1%
1,335,300 ITT Industries, Inc. 44,315,269
982,650 Ingersoll-Rand Co. 42,315,366
626,000 Johnson Controls, Inc. 31,026,125
759,600 (a) Lexmark Intl. Group, Class A 25,066,800
169,200 Loews Corp. 19,109,025
Total 161,832,585
RETAIL TRADE--5.8%
718,200 Dayton-Hudson Corp. 43,047,112
3,607,000 (a) K Mart Corp. 50,498,000
1,081,700 Wal-Mart Stores, Inc. 39,617,263
Total 133,162,375
SERVICES--6.8%
571,500 Block (H&R), Inc. 22,074,188
742,000 Browning-Ferris Industries, Inc. 28,242,375
2,496,000 News Corp., Ltd., ADR 45,197,000
1,008,900 Readers Digest Association, Inc., Class A 30,267,000
567,500 (a) Viacom, Inc., Class A 17,840,781
361,000 (a) Viacom, Inc., Class B 11,416,625
Total 155,037,969
</TABLE>
FEDERATED AMERICAN LEADERS FUND, INC.
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS--CONTINUED
TECHNOLOGY--9.8%
602,000 AMP, Inc. $ 32,244,625
492,300 (a) Cabletron Systems, Inc. 15,753,600
373,400 General Motors Corp., Class H 24,691,075
185,000 Hewlett-Packard Co. 12,869,062
109,000 Intel Corp. 10,062,062
208,300 International Business Machines Corp. 22,066,781
253,000 Lucent Technologies, Inc. 20,587,875
2,616,200 (a) Novell, Inc. 23,464,044
835,500 (a) Seagate Technology, Inc. 30,182,438
680,300 (a) Storage Technology Corp. 32,526,844
Total 224,448,406
TRANSPORTATION--1.8%
135,500 (a) AMR Corp. 14,998,156
581,300 CNF Transportation, Inc. 25,322,881
Total 40,321,037
UTILITIES--11.6%
372,900 Coastal Corp. 22,840,125
247,000 Columbia Gas System, Inc. 17,290,000
321,800 GTE Corp. 14,601,675
920,000 Houston Industries, Inc. 20,010,000
1,476,000 MCI Communications Corp. 43,357,500
1,205,000 P G & E Corp. 27,940,937
823,000 Public Service Enterprises Group, Inc. 21,192,250
395,200 SBC Communications, Inc. 24,255,400
2,488,600 (a) Tele-Communications, Inc., Class A 51,129,478
</TABLE>
FEDERATED AMERICAN LEADERS FUND, INC.
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
COMMON STOCKS--CONTINUED
UTILITIES--CONTINUED
582,500 U.S. West, Inc. $ 22,426,250
Total 265,043,615
TOTAL COMMON STOCKS (IDENTIFIED COST $1,670,213,550) 2,219,226,138
(B)REPURCHASE AGREEMENT--2.2%
$ 50,455,000 BT Securities Corp., 6.07%, dated 9/30/1997, due 10/1/1997
(AT AMORTIZED COST) 50,455,000
TOTAL INVESTMENTS (IDENTIFIED COST $1,720,668,550)(C) $2,269,681,138
</TABLE>
(a) Non-income producing security.
(b) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated funds.
(c) The cost of investments for federal tax purposes amounts to $1,720,668,550.
The net unrealized appreciation of investments on a federal tax basis
amounts to $549,012,588 which is comprised of $555,114,642 appreciation and
$6,102,054 depreciation at September 30, 1997.
Note: The categories of investments are shown as a percentage of net assets
($2,282,337,655) at September 30, 1997.
The following acronym is used throughout this portfolio:
ADR --American Depository Receipt
(See Notes which are an integral part of the Financial Statements)
FEDERATED AMERICAN LEADERS FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in securities, at value (identified and tax cost $ 2,269,681,138
$1,720,668,550)
Income receivable 3,422,486
Receivable for investments sold 5,399,180
Receivable for shares sold 6,310,088
Total assets 2,284,812,892
LIABILITIES:
Payable for shares redeemed $ 940,835
Payable to Bank 91,804
Accrued expenses 1,442,598
Total liabilities 2,475,237
NET ASSETS for 90,654,954 shares outstanding $ 2,282,337,655
NET ASSETS CONSIST OF:
Paid in capital $ 1,603,413,852
Net unrealized appreciation of investments* 549,012,663
Accumulated net realized gain on investments 126,824,637
Undistributed net investment income 3,086,503
Total Net Assets $ 2,282,337,655
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
CLASS A SHARES:
Net Asset Value Per Share ($1,219,003,687 / 48,400,882 shares outstanding) $25.19
Offering Price Per Share (100/94.50 of $25.19)** $26.66
Redemption Proceeds Per Share $25.19
CLASS B SHARES:
Net Asset Value Per Share ($848,828,720 / 33,728,618 shares outstanding) $25.17
Offering Price Per Share $25.17
Redemption Proceeds Per Share (94.50/100 of $25.17)** $23.79
CLASS C SHARES:
Net Asset Value Per Share ($103,714,975 / 4,123,717 shares outstanding) $25.15
Offering Price Per Share $25.15
Redemption Proceeds Per Share (99/100 of $25.15)** $24.90
CLASS F SHARES:
Net Asset Value Per Share ($110,790,273 / 4,401,737 shares outstanding) $25.17
Offering Price Per Share (100/99 of $25.17)** $25.42
Redemption Proceeds Per Share (99/100 of $25.17)** $24.92
</TABLE>
* $80,795,828 of unrealized appreciation was acquired in connection with the
acquisition of the Penn Square Mutual Fund on June 2, 1997.
** See "Investing In The Fund" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
FEDERATED AMERICAN LEADERS FUND, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 17,085,242
Interest 2,419,959
Total income 19,505,201
EXPENSES:
Investment advisory fee $ 5,877,168
Administrative personnel and services fee 705,766
Custodian fees 47,611
Transfer and dividend disbursing agent fees and expenses 1,128,653
Directors'/Trustees' fees 13,336
Auditing fees 10,137
Legal fees 14,666
Portfolio accounting fees 89,364
Distribution services fee--Class B Shares 2,618,225
Distribution services fee--Class C Shares 327,860
Shareholder services fee--Class A Shares 1,231,347
Shareholder services fee--Class B Shares 872,742
Shareholder services fee--Class C Shares 109,287
Shareholder services fee--Class F Shares 123,597
Share registration costs 200,870
Printing and postage 128,293
Insurance premiums 6,003
Taxes 53,739
Miscellaneous 10,284
Total expenses 13,568,948
Net investment income 5,936,253
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 126,855,896
Net change in unrealized appreciation of investments 338,362,618
Net realized and unrealized gain on investments 465,218,514
Change in net assets resulting from operations $ 471,154,767
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED AMERICAN LEADERS FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(UNAUDITED) ENDED
SEPTEMBER 30, MARCH 31,
1997 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 5,936,253 $ 6,625,505
Net realized gain on investments ($126,855,896 net
gain and $141,874,167
net gain, respectively, as computed for federal tax 126,855,896 141,874,167
purposes)
Net change in unrealized appreciation 338,362,618 35,256,912
Change in net assets resulting from operations 471,154,767 183,756,584
NET EQUALIZATION CREDITS (DEBITS)-- 2,001,538 1,030,846
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Class A Shares (4,018,493) (5,317,770)
Class B Shares (518,634) (1,076,234)
Class C Shares (60,771) (143,909)
Class F Shares (426,462) (721,875)
Distributions from net realized gains on investments
Class A Shares (36,881,131) (37,762,270)
Class B Shares (33,422,419) (29,990,344)
Class C Shares (4,180,341) (4,292,692)
Class F Shares (4,915,652) (5,278,763)
Change in net assets resulting from distributions (84,423,903) (84,583,857)
to shareholders
SHARE TRANSACTIONS (EXCLUSIVE OF AMOUNTS ALLOCATED
TO NET INVESTMENT INCOME)--
Proceeds from sale of shares 295,932,269 464,456,064
Proceeds from shares issued in connection with the 336,495,867(a) 48,460,181(b)
acquisition
Net asset value of shares issued to shareholders in 77,075,017 77,137,909
payment of distributions declared
Cost of shares redeemed (150,116,352) (172,693,035)
Change in net assets resulting from share 559,386,801 417,361,119
transactions
Change in net assets 948,119,203 517,564,692
NET ASSETS:
Beginning of period 1,334,218,452 816,653,760
End of period (including undistributed net
investment income
of $3,086,503 and $173,072, respectively) $ 2,282,337,655 $ 1,334,218,452
</TABLE>
(a) Includes $80,295,577 and $500,251 of unrealized appreciation on Class A
Shares and Class C Shares, respectively.
(b) Includes $15,368,160 of unrealized appreciation.
(See Notes which are an integral part of the Financial Statements)
FEDERATED AMERICAN LEADERS FUND, INC.
FINANCIAL HIGHLIGHTS--CLASS A SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
SEPTEMBER 30, YEAR ENDED MARCH 31,
1997 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $21.40 $19.78 $15.66 $14.58 $14.90 $13.88
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.15 0.23 0.22 0.25 0.23 0.29
Net realized and unrealized gain
(loss) on investments 4.95 3.11 4.70 1.42 0.18 2.05
Total from investment operations 5.10 3.34 4.92 1.67 0.41 2.34
LESS DISTRIBUTIONS
Distributions from net investment
income (0.10) (0.21) (0.17) (0.24) (0.24) (0.28)
Distributions from net realized
gain on investments (1.21) (1.51) (0.63) (0.35) (0.49) (1.04)
Total distributions (1.31) (1.72) (0.80) (0.59) (0.73) (1.32)
NET ASSET VALUE, END OF PERIOD $25.19 $21.40 $19.78 $15.66 $14.58 $14.90
TOTAL RETURN(A) 24.63% 17.40% 32.00% 11.87% 2.76% 18.31%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.14%* 1.17% 1.16% 1.23% 1.18% 1.13%
Net investment income 0.94%* 0.95% 1.07% 1.71% 1.48% 2.07%
Expense waiver/reimbursement(b) -- 0.03% 0.07% -- -- 0.06%
SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted) $1,219,004 $638,082 $455,867 $268,470 $226,857 $202,866
Average commission rate paid(c) $0.0491 $0.0500 -- -- -- --
Portfolio turnover 21% 88% 46% 34% 27% 39%
</TABLE>
* Computed on an annualized basis.
(a) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(c) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged.
(See Notes which are an integral part of the Financial Statements)
FEDERATED AMERICAN LEADERS FUND, INC.
FINANCIAL HIGHLIGHTS--CLASS B SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
SEPTEMBER 30, YEAR ENDED MARCH 31,
1997 1997 1996 1995(A)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $21.40 $19.79 $15.67 $14.97
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.05 0.10 0.13
Net realized and unrealized gain (loss)
on investments 4.97 3.12 4.70 0.92
Total from investment operations 5.00 3.17 4.80 1.05
LESS DISTRIBUTIONS
Distributions from net investment income (0.02) (0.05) (0.05) (0.12)
Distributions from net realized gain on
investments (1.21) (1.51) (0.63) (0.23)
Total distributions (1.23) (1.56) (0.68) (0.35)
NET ASSET VALUE, END OF PERIOD $25.17 $21.40 $19.79 $15.67
TOTAL RETURN(B) 24.09% 16.49% 31.10% 7.28%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.89%* 1.95% 1.93% 1.95%*
Net investment income 0.21%* 0.18% 0.32% 1.09%*
Expense waiver/reimbursement(c) -- -- 0.05% 0.12%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $848,829 $540,995 $261,024 $46,671
Average commission rate paid(d) $0.0491 $0.0500 -- --
Portfolio turnover 21% 88% 46% 34%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from July 25, 1994 (date of initial
public investment) to March 31, 1995.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(d) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged.
(See Notes which are an integral part of the Financial Statements)
FEDERATED AMERICAN LEADERS FUND, INC.
FINANCIAL HIGHLIGHTS--CLASS C SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
SEPTEMBER 30, YEAR ENDED MARCH 31,
1997 1997 1996 1995 1994(A)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $21.40 $19.80 $15.66 $14.55 $14.70
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.04 0.05 0.14 0.12
Net realized and unrealized gain (loss)
on investments 4.95 3.12 4.75 1.45 0.35
Total from investment operations 4.98 3.16 4.80 1.59 0.47
LESS DISTRIBUTIONS
Distributions from net investment income (0.02) (0.05) (0.03) (0.13) (0.13)
Distributions from net realized gain
on investments (1.21) (1.51) (0.63) (0.35) (0.49)
Total distributions (1.23) (1.56) (0.66) (0.48) (0.62)
NET ASSET VALUE, END OF PERIOD $25.15 $21.40 $19.80 $15.66 $14.55
TOTAL RETURN(B) 23.99% 16.42% 31.14% 11.23% 3.16%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.89%* 1.95% 1.96% 2.04% 2.11%*
Net investment income 0.21%* 0.18% 0.27% 0.91% 0.71%*
Expense waiver/reimbursement(c) -- -- 0.02% -- --
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $103,715 $69,990 $44,434 $20,055 $11,895
Average commission rate paid(d) $0.0491 $0.0500 -- -- --
Portfolio turnover 21% 88% 46% 34% 27%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from April 21, 1993 (date of initial
public investment) to March 31, 1994.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(d) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged.
(See Notes which are an integral part of the Financial Statements)
FEDERATED AMERICAN LEADERS FUND, INC.
FINANCIAL HIGHLIGHTS--CLASS F SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
SEPTEMBER 30, YEAR ENDED MARCH 31,
1997 1997 1996 1995 1994(A)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $21.40 $19.78 $15.66 $14.58 $14.95
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.11 0.20 0.19 0.25 0.16
Net realized and unrealized gain (loss)
on investments 4.97 3.13 4.72 1.42 (0.20)
Total from investment operations 5.08 3.33 4.91 1.67 (0.04)
LESS DISTRIBUTIONS
Distributions from net investment income (0.10) (0.20) (0.16) (0.24) (0.16)
Distributions from net realized gain
on investments (1.21) (1.51) (0.63) (0.35) (0.17)
Total distributions (1.31) (1.71) (0.79) (0.59) (0.33)
NET ASSET VALUE, END OF PERIOD $25.17 $21.40 $19.87 $15.66 $14.58
TOTAL RETURN(B) 24.53% 17.39% 31.95% 11.80% (0.30%)
RATIOS TO AVERAGE NET ASSETS
Expenses 1.14%* 1.19% 1.21% 1.27% 1.35%*
Net investment income 0.95%* 0.94% 1.02% 1.69% 1.51%*
Expense waiver/reimbursement(c) -- 0.01% 0.02% -- --
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $110,790 $85,151 $55,329 $28,495 $15,282
Average commission rate paid(d) $0.0491 $0.0500 -- -- --
Portfolio turnover 21% 88% 46% 34% 27%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from July 27, 1993 (date of initial
public investment) to March 31, 1994.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(d) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged.
(See Notes which are an integral part of the Financial Statements)
FEDERATED AMERICAN LEADERS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997 (UNAUDITED)
1. ORGANIZATION
Federated American Leaders Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The Fund offers four classes of shares:
Class A Shares, Class B Shares, Class C Shares, and Class F Shares. 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.
On June 2, 1997, the Fund's Class A Shares and Class C Shares acquired all the
net assets of Penn Square Mutual Fund's Class A Shares and Class C Shares (the
"Acquired Class A Shares and Acquired Class C Shares") pursuant to a plan of
reorganization approved by the Acquired Class A Shares' and Acquired Class C
Shares' shareholders. The acquisition was accomplished by a tax-free exchange of
14,929,279 and 92,816 shares, respectively, of the Fund's Class A Shares and
Class C Shares (valued at $334,415,853 and $2,080,014, respectively) for
27,592,067 and 171,902 shares, respectively, of the Acquired Class A Shares and
Acquired Class C Shares outstanding on June 1, 1997. The Acquired Class A
Shares' and Acquired Class C Shares' net assets of $334,415,853 and $2,080,014,
respectively, which consisted of $80,295,577 and $500,251, respectively, of
unrealized appreciation, were combined at that date with those of the Fund's
Class A Shares and Class C Shares. The aggregate net assets of the Fund's Class
A Shares and Class C Shares and the Acquired Class A Shares and Acquired Class C
Shares immediately before the acquisition were $716,179,581 and $79,736,654,
respectively, and $334,415,853 and $2,080,014, respectively.
On December 13, 1996, the Fund acquired all the net assets of The State Bond
Diversified Fund ("Acquired Fund") pursuant to a plan of reorganization approved
by the Acquired Fund's shareholders. The acquisition was accomplished by a
tax-free exchange of 2,358,160 shares of the Fund (valued at $48,460,181) for
the 4,535,346 shares of the Acquired Fund outstanding on December 13, 1996. The
Acquired Fund's net assets of 48,460,181, which consisted of $33,092,021 of Paid
in Capital and $15,368,160 of unrealized appreciation, were combined at that
date with those of the Fund. The aggregate net assets of the Fund and the
Acquired Fund immediately before the acquisition were $548,433,731 and
$48,460,181, respectively.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS -- Listed equity securities are valued at the last sale
price reported on a national securities exchange. Short-term securities are
valued at the prices provided by an independent pricing service. However,
short-term securities with remaining maturities of sixty days or less at the
time of purchase may be valued at amortized cost, which approximates fair market
value.
REPURCHASE AGREEMENTS -- It is the policy of the Fund to require the custodian
bank to take possession, to have legally segregated in the Federal Reserve Book
Entry System, or to have segregated within the custodian bank's vault, all
securities held as collateral under repurchase agreement transactions.
Additionally, procedures have been established by the Fund to monitor, on a
daily basis, the market value of each repurchase agreement's collateral to
ensure that the value of collateral at least equals the repurchase price to be
paid under the repurchase agreement transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Directors (the "Directors").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less than
the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS -- Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized as
required by the Internal Revenue Code, as amended (the "Code"). Distributions to
shareholders are recorded on the ex-dividend date.
FEDERAL TAXES -- It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
EQUALIZATION -- The Fund follows the accounting practice known as equalization.
With equalization, a portion of the proceeds from sales and costs of redemptions
of Fund shares (equivalent, on a per share basis, to the amount of undistributed
net investment income on the date of the transaction) is credited or charged to
undistributed net investment income. As a result, undistributed net investment
income per share is unaffected by sales or redemptions of Fund shares.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis are
marked to market daily and begin earning interest on the settlement date.
USE OF ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results could differ from
those estimated.
OTHER -- Investment transactions are accounted for on the trade date.
3. CAPITAL STOCK
At September 30, 1997, par value shares ($0.20 per share) authorized were as
follows:
<TABLE>
<CAPTION>
NUMBER OF PAR
VALUE CAPITAL
CLASS NAME STOCK AUTHORIZED
<S> <C>
Class A Shares 30,000,000
Class B Shares 20,000,000
Class C Shares 25,000,000
Class F Shares 25,000,000
</TABLE>
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1997 MARCH 31, 1997
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 5,973,196 $ 56,979,281 7,706,275 $144,256,344
Shares issued to shareholders in connection
with the Acquisition 14,929,279 334,415,853 2,358,160 48,460,181
Shares issued to shareholders in payment of
distributions declared 1,625,697 36,278,864 1,877,620 38,245,728
Shares redeemed (3,950,414) (92,469,633) (5,165,910) (107,679,833)
Net change resulting from Class A Share
transactions 18,577,758 $335,204,365 6,776,145 $123,282,420
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1997 MARCH 31, 1997
CLASS B SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 8,775,682 $204,691,773 12,996,770 $268,480,862
Shares issued to shareholders in payment of
distributions declared 1,428,220 31,875,015 1,425,508 29,165,525
Shares redeemed (1,760,560) (41,175,361) (2,323,540) (48,574,439)
Net change resulting from Class B Share
transactions 8,443,342 $195,391,427 12,098,738 $249,071,948
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1997 MARCH 31, 1997
CLASS C SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 1,074,087 $24,625,415 1,226,661 $25,200,316
Shares issued to shareholders in connection
with the Acquisition 92,816 2,080,014 -- --
Shares issued to shareholders in payment of
distributions declared 175,338 3,913,143 201,317 4,118,193
Shares redeemed (489,743) (11,444,692) (401,373) (8,350,604)
Net change resulting from Class C Share
transactions 852,498 $19,173,880 1,026,605 $20,967,905
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1997 MARCH 31, 1997
CLASS F SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 414,506 $ 9,635,800 1,296,525 $26,518,542
Shares issued to shareholders in payment of
distributions declared 223,912 5,007,995 274,107 5,608,463
Shares redeemed (216,505) (5,026,666) (388,020) (8,088,159)
Net change resulting from Class F Share
transactions 421,913 $ 9,617,129 1,182,612 $24,038,846
Net change resulting from share
transactions 28,295,511 $559,386,801 21,084,100 $417,361,119
</TABLE>
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE -- Federated Advisers, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to (a) a maximum of 0.55% of the average daily net assets of the Fund, and
(b) 4.50% of the gross income of the Fund, excluding capital gains or losses.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of Federated
Investors for the period. The administrative fee received during the period of
the Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE -- The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the
Fund will compensate Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Fund to finance activities intended to
result in the sale of the Fund's Class B Shares and Class C Shares. The Plan
provides that the Fund may incur distribution expenses according to the
following schedule annually, to compensate FSC.
PERCENTAGE OF AVERAGE
DAILY NET ASSETS OF THE
SHARE CLASS SHARE CLASS
Class B Shares 0.75%
Class C Shares 0.75%
The distributor may voluntarily choose to waive any portion of its fee. The
distributor can modify or terminate this voluntary waiver at any time at its
sole discretion.
SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25%
of average daily net assets of the Fund for the period. The fee paid to FSS is
used to finance certain services for shareholders and to maintain shareholder
accounts. FSS can modify or terminate this voluntary waiver at any time at its
sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through its
subsidiary, Federated Shareholder Services Company ("FSSC"), serves as transfer
and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL -- Certain of the Officers and Directors of the Fund are Officers and
Directors or Trustees of the above companies.
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended September 30, 1997, were as follows:
PURCHASES $689,654,815
SALES $380,077,200
Federated American Leaders Fund, Inc.
DIRECTORS
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
William Copeland
J. Christopher Donahue
James E. Dowd
Lawrence D. Ellis, M.D.
Edward L. Flaherty, Jr.
Peter E. Madden
Gregor F. Meyer
John E. Murray, Jr.
Wesley W. Posvar
Marjorie P. Smuts
OFFICERS
John F. Donahue
President
J. Christopher Donahue
Executive Vice President
Edward C. Gonzales
Executive Vice President
John W. McGonigle
Executive Vice President, Treasurer, and Secretary
Richard B. Fisher
Vice President
J. Crilley Kelly
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves risk, including possible
loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the trust's prospectuses which contain facts
concerning its objective and policies, management fees, expenses and other
information.
[Graphic]
Federated Securities Corp., Distributor
Federated Investors Tower
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
027128107
027128206
027128305
027128404
8110101 (11/97)
[Graphic]
A1. The graphic presentation here displayed consists of a boxed legend in the
upper left quadrant indicating the components of the corresponding mountain
chart. The color coded mountain chart is a visual representation of the
narrative text above it. The "x" axis reflects computation periods from 10/4/76
to 9/30/97. The "y" axis is measured in increments of $15,000 ranging from $0 to
$90,000 and indicates that the ending value of hypothetical initial investment
of $21,000 in the fund's Class A Shares, assuming the reinvestment of capital
gains and dividends,would have grown to $76,178 on 9/30/97.
A2. The graphic presentation here displayed consists of a boxed legend in the
upper left quadrant indicating the components of the corresponding mountain
chart. The color coded mountain chart is a visual representation of the
narrative text above it. The "x" axis reflects computation periods from 10/4/76
to 9/30/97. The "y" axis is measured in increments of $10,000 ranging from $0 to
$60,000 and indicates that the ending value of hypothetical yearly investments
of $1,000 in the fund's Class A Shares, assuming the reinvestment of capital
gains and dividends,would have grown to $49,921 on 9/30/97.
A3. The graphic presentation here displayed consists of a boxed legend in the
upper left quadrant indicating the components of the corresponding mountain
chart. The color-coded mountain chart is a visual representation of the
narrative text beneath it. The "x" axis reflects computation periods from
10/31/87 to 9/30/97. The "y" axis is measured in increments of $10,000 ranging
from $0 to $60,000 and indicates that the ending value of a hypothetical initial
investment of $25,000 in the fund's Class A Shares would have grown to $50,674
on 9/30/97.
