FEDERATED AMERICAN LEADERS FUND INC, N-30D/A, 1999-05-26

FEDERATED AMERICAN LEADERS FUND INC
N-30D/A, 1999-05-26

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ANNUAL REPORT

[Graphic]

JOHN F. DONAHUE

President

Federated American Leaders Fund, Inc.

President's Message

Dear Fellow Shareholder:

Federated American Leaders Fund, Inc. was created in 1969, and I am pleased to
present its 30th Annual Report. Our fund invests in America's blue-chip
corporations-81 well-known, large-capitalized corporations whose shares are held
by individuals and institutions alike. During the past fiscal year, assets grew
to more than $3.6 billion. This robust growth reflected a sizable increase in
the value of fund shares, as well as the continued confidence of more than
87,000 investors who have purchased shares of this attractive, high-quality,
blue-chip stock fund.

This report covers the 12-month period from April 1, 1998 through March 31,
1999. It begins with an interview with fund portfolio manager Michael P.
Donnelly, Vice President of Federated Investment Management Company. Following
his discussion are three additional items of shareholder interest. First is a
series of graphs showing the fund's long-term investment performance. Second is
a complete listing of the fund's high-quality, blue- chip stocks and third is
the publication of the fund's financial statements.

While the returns of the stock market and Federated American Leaders Fund, Inc.
continued to be positive, the 12-month reporting period reminded us that
volatility is inherent in stock market investing. The first half of the fund's
fiscal year was a very difficult period for stocks, as investor sentiment turned
negative in response to Asian and Russian economic and political difficulties.
The second half of the year saw marked improvement, influenced by a series of
interest rate cuts by the Federal Reserve Board (the "Fed"), a continued strong
economic environment, and revitalized investor confidence. However, as Michael
explains, most of the market's positive performance over the fiscal year was
concentrated among a relatively narrow band of large, growth-oriented stocks.

Federated American Leaders Fund, Inc. gives investors the opportunity to
participate in the growth and income opportunities of a high-quality stock
portfolio representing all 12 major industry groups-including leaders like
Anheuser-Busch, Bristol-Myers Squibb, Deere & Co., Exxon, General Motors, IBM,
Merck, and Wal-Mart. Over the 12-month reporting period, the fund's carefully
selected holdings outperformed the average Lipper Growth & Income Fund, 1 which
in turn lagged the growth stock-influenced returns of the Standard & Poor's 500
Index ("S&P 500").1

Shares of your fund produced moderate capital appreciation, plus quarterly
income dividends and realized capital gains. Individual share class total return
performance for the 12-month reporting period, including income distributions
and realized gains, follows. 2

<TABLE>
<CAPTION>
TOTAL RETURN INCOME CAPITAL GAINS NET ASSET VALUE CHANGE
<S> <C> <C> <C> <C>
Class A Shares 6.31% $0.20 $3.01 $26.64 to $24.90 = (7%)
Class B Shares 5.54% $0.02 $3.01 $26.61 to $24.87 = (7%)
Class C Shares 5.55% $0.02 $3.01 $26.61 to $24.88 = (7%)
Class F Shares 6.36% $0.20 $3.01 $26.61 to $24.88 = (7%)
</TABLE>

Thank you for participating in the growth and income opportunities afforded to
you by the fund's portfolio of reasonably valued stocks. Remember, reinvesting
your earnings is a convenient way to build the value of your account-and help
your shares increase through the benefit of quarterly compounding.

Sincerely,

[Graphic]

John F. Donahue
President
May 15, 1999

1 Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as falling into
the category indicated. These figures do not take sales charges into account.
The S&P 500 is an unmanaged capitalization-weighted index of 500 stocks designed
to measure performance of the broad domestic economy through changes in the
aggregate market value of 500 stocks representing all major industries.
Investments cannot be made in an index.

2 Performance quoted is based on net asset value, reflects past performance and
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 (i.e., less any applicable sales charge), for Class A, B, C, and F Shares
were 0.46%, 0.40%, 4.62%, and 4.36%, respectively.

[Graphic]

MICHAEL P. DONNELLY
Vice President
Federated Investment Management Company

Investment Review

IT WAS BOTH A POSITIVE AND NEGATIVE YEAR FOR EQUITIES, WITH SIGNIFICANT
QUARTER-TO-QUARTER VOLATILITY AND PERFORMANCE THAT WAS CONCENTRATED IN A NARROW
GROUP OF STOCKS IN THE MARKET. WHAT ARE YOUR COMMENTS?

Overall, the fund's fiscal year was a period of positive performance for stocks
as the S&P 500 returned 18.46%. However, this performance masked the weakness of
the broader market. The majority of the S&P 500's return was generated by a
short list of large-capitalization growth stocks including names such as
MICROSOFT, GENERAL ELECTRIC, WAL-MART, INTEL, PFIZER, IBM, and MCI WORLDCOM,
which dominated the Index's weightings. The average stock in the S&P 500, as
measured by the equal weighted S&P 500, returned only 1.10% for the 12-month
reporting period. Small capitalization stocks, as measured by the S&P 600 Small
Cap Index, 1 lost 19.10% of their value during the reporting period.

The cause of this huge disparity in performance was the global economic
uncertainty which caused a "flight-to-quality," liquidity, and perceived
earnings certainty in the equity markets.

1 The S&P 600 Small Cap Index is an unmanaged capitalization- weighted index
representing all major industries in the small-cap range of the U.S. stock
market. Investments cannot be made in an index.

During the first half of the fund's fiscal year, we experienced rekindled fears
about Asia, the political and economic collapse of Russia, and the subsequent
unwinding of hedge fund leverage due to the collapse of Long-Term Capital
Management. These events, combined with the reduction of long-term interest
rates, caused investors to pour money into very large, liquid, leading global
growth franchises. During the second half of the fiscal year, the momentum for
this select list of large-capitalization growth stocks fed upon itself, leading
to one of the most disparate 12-month periods for equity market performance.
This type of environment has not been seen since the "Nifty Fifty" market of the
late 1960s and early 1970s. History has shown that an environment where a
handful of leading growth companies are valued at dramatic premiums to the rest
of the market is not sustainable.

HOW DID FEDERATED AMERICAN LEADERS FUND, INC. PERFORM FOR SHAREHOLDERS DURING
THE 12-MONTH REPORTING PERIOD?

For the 12-month reporting period ended March 31, 1999, the fund's Class A, B,
C, and F Shares produced total returns of 6.31%, 5.54%, 5.55%, and 6.36%,
respectively, based on net asset value. 2 This performance included capital
appreciation, income dividends, and capital gains. These returns compared
favorably to the 5.47% return of the 808 growth and income funds tracked by
Lipper Analytical Services, Inc.3

WHAT IS YOUR PERSPECTIVE ON THE UNDERPERFORMANCE OF INVESTING IN VALUE-ORI ENTED
STOCKS IN THIS MARKET?

Although positive, the past year was a relatively difficult one for active value
managers versus the S&P 500. The S&P Barra Value Index, 4 which measures the
performance of leading value stocks, returned 5.68% for the 12-month reporting
period. As mentioned earlier, the S&P 500's returns were dominated by a handful
of ultra-large, growth-oriented technology, pharmaceutical and telephone
companies. The degree of disparity between the average stock and the market
itself is something the market has not experienced in the last 25 years.

While the performance of Federated American Leaders Fund, Inc. compared
favorably with the average Lipper Growth & Income Fund, we are obviously not
pleased with our relative performance versus the S&P 500. However, given our
value investment style and market conditions, the fund's returns are not
unreasonable. It is worth noting that historically, after periods of extremely
narrow market leadership dominated by a handful of growth stocks, active value
management can provide superior returns.

3 Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as falling into
the category indicated. These figures do not take sales charges into account.

4 The S&P Barra Value Index is an unmanaged, market capitalization-weighted
index of stocks with lower price-to-book ratios. Investments cannot be made in
an index.

WHAT WAS THE FUND'S SECTOR EXPOSURE AS OF MARCH 31, 1999?

<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF OF S&P 500
SECTOR NET ASSETS INDEX
<S> <C> <C>
Finance 16.6% 16.1%
Capital Goods 12.1% 7.9%
Technology 11.8% 20.6%
Consumer Cyclicals 11.1% 9.2%
Consumer Staples 11.0% 13.6%
Energy Minerals 8.8% 5.6%
Health Care 7.8% 12.0%
Utilities 7.1% 2.6%
Basic Materials 5.5% 3.0%
Communication Services 4.7% 8.5%
Transportation 1.6% 0.9%
Cash/Miscellaneous 1.6% 0.0%
</TABLE>

WHAT WERE SOME OF YOUR NOTEWORTHY PURCHASES AND SALES DURING THE REPORTING
PERIOD?

Our portfolio additions included the following companies:

BANK ONE CORP. (0.98% of net assets): Despite possessing one of the largest
credit card businesses in the banking industry, this national franchise trades
at a significant discount to the banking group. The successful integration of
First Chicago NBD and better business line disclosure by management should serve
as the catalysts to bring valuation in line with the group.

KING WORLD PRODUCTIONS, INC. (1.02% of net assets): Selling at a price per
earnings ratio of less than 13 times and generating tremendous free cash flow
this company possesses a valuable programming franchise anchored by Oprah
Winfrey. A consolidating entertainment industry and a new stable of shows led by
The New Hollywood Squares make this an attractive addition to the portfolio.

SUN MICROSYSTEMS, INC. (2.47% of net assets): We purchased this high-quality
computer systems company right near the market's low in early October 1998.
Valued at a significant discount to the market, this Unix-based company is
thriving as a leading "pick and shovel" manufacturer for the explosion of the
Internet. Its recent joint venture with Netscape and America On-Line further
solidifies this company as a "franchise" technology company.

U.S. WEST, INC. (0.88% of net assets): An overreaction to the company's
announcement to increase capital spending to accelerate the pace of its high-
speed Internet service provided a buying opportunity for this well-run
telephone company. U.S. West is the most attractively valued Bell operating
company based on earnings, cash flow, and yield potential.

WASHINGTON MUTUAL, INC. (0.99% of net assets): After falling from its 52-week
high, this leading savings and loan was added to the portfolio. Selling at less
than 11 times earnings, fears about its ability to absorb HF Ahmanson and a
flattening yield curve provided an excellent buying opportunity.

Some of the companies we sold during the period were:

CNF TRANSPORTATION, INC.: After a strong year-to-date run, the stock no longer
appeared attractive on our valuation disciplines. Uncertainty about the progress
of the restructuring at Emery Worldwide also tempered our enthusiasm for this
name.

COASTAL CORP.: This natural gas stock was sold due to its valuation looking less
favorable in light of weak commodity prices and a mild winter. This stock had
performed quite well relative to the natural gas group.

COLUMBIA ENERGY GROUP: This stock held up well as the natural gas business began
to deteriorate. We took profits before the stock price caught up with
fundamentals. This sale also helped reduce our overweighted position in the
utilities sector and provided us with funds to increase our finance sector
exposure.

READERS DIGEST ASSOCIATION, INC.: After a strong bounce off the lows caused by a
change in management, we eliminated this position due to concerns about the
long-term viability of their business model.

SEQUENT COMPUTER SYSTEMS, INC.: Although this computer systems company appeared
extremely attractive on our valuation models, we lost confidence in the
fundamentals of this stock. Although a potential take-out play, the near-term
outlook for this company was very disappointing.

WHAT WERE THE FUND'S TOP 10 HOLDINGS AS OF MARCH 31, 1999?

PERCENTAGE OF
NAME NET ASSETS
Sun Microsystems, Inc. 2.5%
Conseco, Inc. 2.2%
First Data Corp. 1.9%
Pharmacia & Upjohn, Inc. 1.9%
United Healthcare Corp. 1.8%
Kimberly-Clark Corp. 1.8%
Electronic Data Systems Corp. 1.8%
CIGNA Corp. 1.8%
GTE Corp. 1.7%
CIT Group, Inc., Class A 1.7%
TOTAL 19.1%

WHAT IS YOUR OUTLOOK FOR THIS UNUSUALLY VALUED MARKET?

Our market outlook remains basically unchanged. The market appears overvalued by
all traditional measures, but no visible catalyst is positioned to derail this
bull move. Confidence in the demographically led "cult of equities" and the
nirvana of low inflation seem to have lulled investors into a dangerous state of
complacency. Given the recent uptick in interest rates, it is surprising to see
the market hold so strongly. The dividend discount models maintained by the Fed
and leading market strategists show that the S&P 500 is now more than 20%
overvalued given the increase in interest rates. Given the strength apparent in
the economy, the market is betting on continued earnings strength offsetting
these higher interest rates. Despite market narrowness, money flows and
sentiment are extremely strong.

WHAT DOES THE MARKET'S VALUATION MEAN TO SHAREHOLDERS OF FEDERATED AMERICAN
LEADERS FUND, INC.?

In this type of environment, we believe that our value disciplines-identifying
leading companies that are temporarily out of favor and appear inexpensive
relative to their history to the market as well as to their expected growth-will
provide a more reasonable ride as rationality works its way back into the equity
market. In addition, we believe that value portfolios should do well given the
style's recent dramatic underperformance and the apparent strength that the
economy is showing, benefiting the more cyclically exposed companies that
inhabit the universe of value stocks.

Last Meeting of Shareholders

The Annual Meeting of Shareholders of Federated American Leaders Fund, Inc. (the
"Fund") was held on March 26, 1999. The following items were submitted to
shareholders for approval. The meeting was adjourned to May 12, 1999, where all
items were approved as follows:

1. ELECTION OF DIRECTORS:

SHARES VOTED SHARES
AFFIRMATIVELY WITHHELD
Thomas G. Bigley 120,607,014 2,471,631
John T. Conroy, Jr. 120,635,777 2,442,868
John F. Cunningham 120,656,795 2,421,850
Peter E. Madden 120,688,447 2,390,198
Charles F. Mansfield, Jr. 120,695,438 2,383,207
John E. Murray, Jr., J.D., S.J.D. 120,701,739 2,376,906
John S. Walsh 120,711,125 2,367,520

2. TO RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP AS THE FUND'S INDEPENDENT
PUBLIC ACCOUNTANTS:

SHARES VOTED SHARES VOTED SHARES
AFFIRMATIVELY NEGATIVELY ABSTAINING
117,788,701 806,394 4,483,549

3. TO MAKE CHANGES TO THE FUND'S FUNDAMENTAL INVESTMENT POLICIES:

a. To approve the Fund's fundamental investment policy with regard to
diversification of its investments:

SHARES VOTED SHARES VOTED SHARES
AFFIRMATIVELY NEGATIVELY ABSTAINING
75,911,773 2,529,684 5,120,040

b. To approve making non-fundamental, and amending, the Fund's fundamental
investment policy regarding investing in restricted securities:

SHARES VOTED SHARES VOTED SHARES
AFFIRMATIVELY NEGATIVELY ABSTAINING
74,006,884 3,863,559 5,691,054

c. To approve amending the Fund's fundamental investment policy regarding
borrowing to permit the purchase of securities while borrowings are outstanding:

SHARES VOTED SHARES VOTED SHARES
AFFIRMATIVELY NEGATIVELY ABSTAINING
72,927,044 5,028,999 5,605,454

d. To approve making non-fundamental, and amending, the Fund's fundamental
investment policy to permit the Fund to invest in the securities of other
investment companies:

SHARES VOTED SHARES VOTED SHARES
AFFIRMATIVELY NEGATIVELY ABSTAINING
75,062,530 3,208,164 5,290,803

e. To approve making non-fundamental the Fund's fundamental investment policy
prohibiting investment in securities to exercise control of an issuer:

SHARES VOTED SHARES VOTED SHARES
AFFIRMATIVELY NEGATIVELY ABSTAINING
73,830,385 3,523,754 6,207,358

f. To approve making non-fundamental the Fund's fundamental investment policy
regarding the description of "The Leaders List":

SHARES VOTED SHARES VOTED SHARES
AFFIRMATIVELY NEGATIVELY ABSTAINING
74,708,685 3,019,564 5,833,248

g. To approve amending the Fund's fundamental investment policy regarding
investment in real estate:

SHARES VOTED SHARES VOTED SHARES
AFFIRMATIVELY NEGATIVELY ABSTAINING
73,024,510 5,014,449 5,522,538

4. TO ELIMINATE CERTAIN OF THE FUND'S FUNDAMENTAL INVESTMENT POLICIES:

a. To approve removing the Fund's fundamental investment policy on investing in
new issuers:

SHARES VOTED SHARES VOTED SHARES
AFFIRMATIVELY NEGATIVELY ABSTAINING
73,454,822 4,487,304 5,619,371

b. To approve removing the Fund's fundamental investment policy on investing in
issuers whose securities are owned by Officers and Directors:

SHARES VOTED SHARES VOTED SHARES
AFFIRMATIVELY NEGATIVELY ABSTAINING
71,619,124 6,139,297 5,803,076

Two Ways You May Seek to Invest for Success:

INITIAL INVESTMENT

IF YOU MADE AN INITIAL INVESTMENT OF $31,000 IN THE CLASS A SHARES OF FEDER ATED
AMERICAN LEADERS FUND, INC. ON 2/26/69, REINVESTED DIVIDENDS AND CAPITAL GAINS,
AND DID NOT REDEEM ANY SHARES, YOUR ACCOUNT WOULD HAVE BEEN WORTH $734,309 ON
3/31/99. YOU WOULD HAVE EARNED AN 11.39% 1 AVERAGE ANNUAL TOTAL RETURN FOR THE
INVESTMENT LIFE SPAN.

One key to investing wisely is to reinvest all distributions in fund shares.
This increases the number of shares on which you can earn future dividends, and
you gain the benefit of compounding.

As of 3/31/99, the Class A Shares' average annual 1-year, 5-year, and 10-year
total returns were 0.46%, 20.18%, and 15.42%, respectively. Class B Shares'
average annual 1-year and since inception (7/25/94) total returns were 0.40% and
21.08%, respectively. Class C Shares' average annual 1-year, 5-year, and since
inception (4/22/93) total returns were 4.62%, 20.67%, and 17.83%, respectively.
Class F Shares' average annual 1-year, 5-year, and since inception (7/28/93)
total returns were 4.36%, 21.26%, and 18.45%, respectively.2

[Graphic representation "A1" omitted. See Appendix.]

1 Total return represents the change in the value of an investment 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 that an investor's shares, when
redeemed, may be worth more or less than their original cost.

2 The total returns stated take into account all applicable sales charges. The
maximum sales charges and contingent deferred sales charges for the fund are as
follows: Class A Shares, 5.50% sales charge; Class B Shares, 5.50% contingent
deferred sales charge; Class C Shares, 1.00% contingent deferred sales charge;
Class F Shares, 1.00% sales charge and 1.00% contingent deferred sales charge.

ONE STEP AT A TIME

$1,000 INITIAL INVESTMENT AND SUBSEQUENT INVESTMENTS OF $1,000 EACH YEAR FOR 30
YEARS (REINVESTING ALL DIVIDENDS AND CAPITAL GAINS) GREW TO $348,941.

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 did not redeem any shares, you would have invested only $31,000, but
your account would have reached a total value of $348,941 1 by 3/31/99. You
would have earned an average annual total return of 13.19%.

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.]

1 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.

Hypothetical Investor Profile-

Investing for a 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 have been planning for the college education of their three
children. On March 31, 1984, they invested $5,000 in the 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
$196,357. This represents a 15.18% average annual total return. For the Rices, a
dedicated program of monthly investments really paid off.

[Graphic representation "A3" omitted. See Appendix.]

This hypothetical scenario is provided for illustrative purposes only and
does not represent the result obtained by any particular shareholder. Past
performance does not guarantee future results.

Federated American Leaders Fund, Inc.-

Class A Shares

GROWTH OF $10,000 INVESTMENT

The graph below illustrates the hypothetical investment of $10,000 1 in
Federated American Leaders Fund, Inc. (Class A Shares) (the "Fund") from March
31, 1989 to March 31, 1999, compared to the Standard & Poor's 500 Index (S&P
500) and the Lipper Growth and Income Funds Average (LGIFA).2

AVERAGE ANNUAL TOTAL RETURN 3 AS OF MARCH 31, 1999
1 Year 0.46%
5 Years 20.18%
10 Years 15.42%
Start of Performance (2/26/69) 11.39%

[Graphic representation "A4" omitted. See Appendix.]

PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE, SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.

1 Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 4.50% ($10,000 investment minus $450 sales charge =
$9,550) that was in effect prior to October 1, 1994. As of October 1, 1994, the
maximum sales charge was 5.50%. The Fund's performance assumes the reinvestment
of all dividends and distributions. The S&P 500 and the LGIFA have been adjusted
to reflect reinvestment of dividends on securities in the index and average.

2 The S&P 500 is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission ("SEC") requires to be reflected in
the Fund's performance. The index is unmanaged. The LGIFA represents the average
of the total returns reported by all of the mutual funds designated by Lipper
Analytical Services, Inc. as falling in the category indicated, and is not
adjusted to reflect any sales charges. However, these total returns are reported
net of expenses or other fees that the SEC requires to be reflected in a fund's
performance.

3 Total returns quoted reflect all applicable sales charges.

Federated American Leaders Fund, Inc.-

Class B Shares

GROWTH OF $10,000 INVESTMENT

The graph below illustrates the hypothetical investment of $10,000 1 in
Federated American Leaders Fund, Inc. (Class B Shares) (the "Fund") from July
25, 1994 (start of performance) to March 31, 1999, compared to the Standard &
Poor's 500 Index (S&P 500) and the Lipper Growth and Income Funds Average
(LGIFA).2

AVERAGE ANNUAL TOTAL RETURN 3 AS OF MARCH 31, 1999
1 Year 0.40%
Start of Performance (7/25/94) 21.08%

[Graphic representation "A5" omitted. See Appendix.]

1 Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a 2.00% contingent deferred sales charge on any redemption
less than four years from the purchase date. The maximum contingent deferred
sales charge is 5.50% on any redemption less than one year from the purchase
date. The Fund's performance assumes the reinvestment of all dividends and
distributions. The S&P 500 and the LGIFA have been adjusted to reflect
reinvestment of dividends on securities in the index and average.

3 Total returns quoted reflect all applicable sales charges and contingent
deferred sales charges.

Federated American Leaders Fund, Inc.-

Class C Shares

GROWTH OF $10,000 INVESTMENT

The graph below illustrates the hypothetical investment of $10,000 1 in
Federated American Leaders Fund, Inc. (Class C Shares) (the "Fund") from April
22, 1993 (start of performance) to March 31, 1999, compared to the Standard &
Poor's 500 Index (S&P 500) and the Lipper Growth and Income Funds Average
(LGIFA).2

AVERAGE ANNUAL TOTAL RETURN 3 AS OF MARCH 31, 1999
1 Year 4.62%
5 Years 20.67%
Start of Performance (4/22/93) 17.83%

[Graphic representation "A6" omitted. See Appendix.]

1 Represents a hypothetical investment of $10,000 in the Fund. The maximum
contingent deferred sales charge is 1.00% on any redemption less than one year
from the purchase date. The Fund's performance assumes the reinvestment of all
dividends and distributions. The S&P 500 and the LGIFA have been adjusted to
reflect reinvestment of dividends on securities in the index and average.

2 The S&P 500 is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission (the "SEC") requires to be reflected
in the Fund's performance. The index is unmanaged. The LGIFA represents the
average of the total returns reported by all of the mutual funds designated by
Lipper Analytical Services, Inc. as falling in the category indicated, and is
not adjusted to reflect any sales charges. However, these total returns are
reported net of expenses or other fees that the SEC requires to be reflected in
a fund's performance.

3 Total returns quoted reflect all applicable sales charges and contingent
deferred sales charges.

Federated American Leaders Fund, Inc.-

Class F Shares

GROWTH OF $10,000 INVESTMENT

The graph below illustrates the hypothetical investment of $10,000 1 in
Federated American Leaders Fund, Inc. (Class F Shares) (the "Fund") from July
28, 1993 (start of performance) to March 31, 1999, compared to the Standard &
Poor's 500 Index (S&P 500) and the Lipper Growth and Income Funds Average
(LGIFA).2

AVERAGE ANNUAL TOTAL RETURN 3 AS OF MARCH 31, 1999
1 Year 4.36%
5 Years 21.26%
Start of Performance (7/28/93) 18.45%

[Graphic representation "A7" omitted. See Appendix.]

1 Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 1.00% ($10,000 investment minus $100 sales charge =
$9,900). A contingent deferred sales charge of 1.00% would be charged on any
redemption less than four year from the purchase date. The Fund's performance
assumes the reinvestment of all dividends and distributions. The S&P 500 and the
LGIFA have been adjusted to reflect reinvestment of dividends on securities in
the index and average.

3 Total returns quoted reflect all applicable sales charges and contingent
deferred sales charges.

Portfolio of Investments

MARCH 31, 1999

<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-98.1%
BASIC MATERIALS-5.5%
3,410,925 Archer-Daniels-Midland
Co. $ 50,097,961
1,460,000 Barrick Gold Corp. 24,911,250
2,187,400 Corn Products
International, Inc. 52,360,888
272,900 Dow Chemical Co. 25,430,868
1,100,000 Nucor Corp. 48,468,750
TOTAL 201,269,717
CAPITAL GOODS-12.1%
896,673 AMP, Inc. 48,140,132
872,100 Allied-Signal, Inc. 42,896,419
1,761,800 Boeing Co. 60,121,425
1,278,800 Crown Cork & Seal Co., Inc. 36,525,725
955,000 Deere & Co. 36,886,875
580,500 Ingersoll-Rand Co. 28,807,312
517,500 Johnson Controls, Inc. 32,279,062
514,900 Koninklijke (Royal)
Philips Electronics NV, ADR 42,447,069
1,008,700 Parker-Hannifin Corp. 34,547,975
1,340,400 Tenneco, Inc. 37,447,425
999,500 Waste Management, Inc. 44,352,813
TOTAL 444,452,232
COMMUNICATION SERVICES-4.7%
542,800 AT&T Corp. 43,322,225
1,046,500 GTE Corp. 63,313,250
703,200 SBC Communications, Inc. 33,138,300
589,700 U.S. West, Inc. 32,470,356
TOTAL 172,244,131
CONSUMER CYCLICALS-11.1%
1,033,000 Brunswick Corp. 19,691,562
957,600 Cooper Tire & Rubber Co. 17,595,900
1,461,400 Dillards, Inc., Class A 37,083,025
640,300 General Motors Corp. 55,626,063
2,184,400 1 K Mart Corp. 36,725,225
1,335,600 Liz Claiborne, Inc. 43,573,950
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-continued
CONSUMER CYCLICALS-CONTINUED
2,020,800 News Corp. Ltd., ADR $ 55,572,000
1,396,200 Sherwin-Williams Co. 39,268,125
3,168,800 1 Toys 'R' Us, Inc. 59,613,050
454,800 Wal-Mart Stores, Inc. 41,926,875
TOTAL 406,675,775
CONSUMER STAPLES-11.0%
511,800 Anheuser-Busch Cos., Inc. 38,992,762
1,361,100 Kimberly-Clark Corp. 65,247,731
1,220,400 1 King World Productions, Inc. 37,298,475
1,053,500 Philip Morris Cos., Inc. 37,070,031
1,716,600 RJR Nabisco Holdings Corp. 42,915,000
1,220,300 Sara Lee Corp. 30,202,425
739,800 1 Tricon Global Restaurants, Inc. 51,970,950
2,040,300 UST, Inc. 53,302,838
567,500 1 Viacom, Inc., Class A 47,279,844
TOTAL 404,280,056
ENERGY MINERALS-8.8%
1,168,700 Ashland, Inc. 47,843,656
1,211,000 Diamond Offshore Drilling, Inc. 38,297,875
419,300 Exxon Corp. 29,586,856
360,000 Mobil Corp. 31,680,000
785,500 Royal Dutch Petroleum Co., ADR 40,846,000
931,800 Schlumberger Ltd. 56,082,713
892,400 Sunoco, Inc. 32,182,175
365,800 Texaco, Inc. 20,759,150
949,700 USX Corp. 26,116,750
TOTAL 323,395,175
FINANCE-16.6%
3,566,200 ABB AB, ADR 44,354,612
1,424,800 Allstate Corp. 52,806,650
656,300 Bank One Corporation 36,137,519
984,747 Bear Stearns Cos., Inc. 44,005,882
772,500 CIGNA Corp. 64,745,156
2,030,000 CIT Group, Inc., Class A 62,041,875
2,667,604 Conseco, Inc. 82,362,284
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-continued
FINANCE-CONTINUED
437,000 Lincoln National Corp. $ 43,208,375
460,100 Loews Corp. 34,334,962
605,900 MBIA Insurance Corp. 35,142,200
705,750 Marsh & McLennan Cos., Inc. 52,357,828
452,000 Republic New York Corp. 20,848,500
893,300 Washington Mutual, Inc. 36,513,638
TOTAL 608,859,481
HEALTH CARE-7.8%
764,200 Abbott Laboratories 35,774,112
582,600 Bristol-Myers Squibb Co. 37,468,462
481,000 Merck & Co., Inc. 38,570,188
2,470,400 1 Oxford Health Plans, Inc. 38,600,000
1,102,500 Pharmacia & Upjohn, Inc. 68,768,438
1,284,800 United Healthcare Corp. 67,612,600
TOTAL 286,793,800
TECHNOLOGY-11.8%
430,000 Eastman Kodak Co. 27,466,250
1,340,100 Electronic Data Systems Corp. 65,246,119
1,645,200 First Data Corp. 70,332,300
242,000 International Business Machines Corp. 42,894,500
176,400 1 Lexmark Intl. Group, Class A 19,712,700
546,300 Motorola, Inc. 40,016,475
1,282,000 1 Seagate Technology, Inc. 37,899,125
1,400,200 1 Storage Technology Corp. 39,030,575
726,000 1 Sun Microsystems, Inc. 90,704,625
TOTAL 433,302,669
TRANSPORTATION-1.6%
552,000 Canadian National Railway 30,705,000
1,112,500 Ryder Systems, Inc. 30,732,813
TOTAL 61,437,813
UTILITIES-7.1%
784,800 Consolidated Natural Gas Co. 38,209,950
1,300,000 Entergy Corp. 35,750,000
631,500 FPL Group, Inc. 33,627,375
1,205,000 P G & E Corp. 37,430,312
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
COMMON STOCKS-continued
UTILITIES-CONTINUED
1,223,900 Peco Energy Co. $ 56,605,375
823,000 Public Service Enterprises
Group, Inc. 31,428,313
1,030,700 Reliant Energy, Inc. 26,862,619
TOTAL 259,913,944
TOTAL COMMON STOCKS
(IDENTIFIED COST
$2,998,288,255) 3,602,624,793
REPURCHASE AGREEMENT-1.6% 2
$ 58,860,000 ABN AMRO, Inc., 5.05%,
dated 3/31/1999, due 4/1/1999 $ 58,860,000
TOTAL INVESTMENTS (IDENTIFIED
COST $3,057,148,255) 3 $ 3,661,484,793
</TABLE>

1 Non-income producing security.

2 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.

3 The cost of investments for federal tax purposes amounts to $3,057,148,255.
The net unrealized appreciation of investments on a federal tax basis amounts to
$604,336,538 which is comprised of $773,499,874 appreciation and $169,163,336
depreciation at March 31, 1999.

Note: The categories of investments are shown as a percentage of net assets
($3,670,815,716) at March 31, 1999.

The following acronym is used throughout this portfolio:

ADR -American Depositary Receipt

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

MARCH 31, 1999
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in
securities, at value
(identified and tax cost
$3,057,148,255) $ 3,661,484,793
Cash 6,063
Income receivable 7,367,715
Receivable for
investments sold 1,289,567
Receivable for shares
sold 12,773,839
TOTAL ASSETS 3,682,921,977
LIABILITIES:
Payable for shares
redeemed $ 10,307,528
Income distribution
payable 1,040
Payable for taxes
withheld 226,337
Accrued expenses 1,571,356
TOTAL LIABILITIES 12,106,261
Net assets for
147,495,848 shares
outstanding $ 3,670,815,716
NET ASSETS CONSIST OF:
Paid in capital $ 2,996,786,387
Net unrealized
appreciation of
investments 604,336,538
Accumulated net realized
gain on investments and
foreign currency
transactions 68,609,095
Undistributed net
investment income 1,083,696
TOTAL NET ASSETS $ 3,670,815,716
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PROCEEDS PER
SHARE:
CLASS A SHARES:
Net Asset Value Per Share
($1,621,527,279 /
65,109,552 shares
outstanding) $24.90
Offering Price Per Share
(100/94.50 of $24.90) 1 $26.35
Redemption Proceeds Per
Share $24.90
CLASS B SHARES:
Net Asset Value Per Share
($1,738,564,403 /
69,895,833 shares
outstanding) $24.87
Offering Price Per Share $24.87
Redemption Proceeds Per
Share (94.50/100 of
$24.87) 1 $23.50
CLASS C SHARES:
Net Asset Value Per Share
($175,843,296 /
7,068,205 shares
outstanding) $24.88
Offering Price Per Share $24.88
Redemption Proceeds Per
Share (99.00/100 of
$24.88) 1 $24.63
CLASS F SHARES:
Net Asset Value Per Share
($134,880,738 /
5,422,258 shares
outstanding) $24.88
Offering Price Per Share
(100/99.00 of $24.88) 1 $25.13
Redemption Proceeds Per
Share (99.00/100 of
$24.88) 1 $24.63
</TABLE>

1 See "What Do Shares Cost?" in the Prospectus.

See Notes which are an integral part of the Financial Statements

Statement of Operations

YEAR ENDED MARCH 31, 1999

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 61,575,862
Interest 2,117,207
TOTAL INCOME 63,693,069
EXPENSES:
Investment advisory fee $ 20,575,888
Administrative personnel
and services fee 2,424,668
Custodian fees 205,528
Transfer and dividend
disbursing agent fees
and expenses 2,863,894
Directors'/Trustees'
fees 31,846
Auditing fees 31,961
Legal fees 12,321
Portfolio accounting
fees 317,069
Distribution services
fee-Class B Shares 10,850,463
Distribution services
fee-Class C Shares 1,156,234
Shareholder services
fee-Class A Shares 3,714,740
Shareholder services
fee-Class B Shares 3,616,821
Shareholder services
fee-Class C Shares 385,411
Shareholder services
fee-Class F Shares 322,379
Share registration costs 165,124
Printing and postage 809,224
Insurance premiums 8,923
Taxes 88,938
Miscellaneous 42,322
TOTAL EXPENSES 47,623,754
Net investment income 16,069,315
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain on
investments and foreign
currency transactions 279,325,386
Net change in unrealized
appreciation
(depreciation) of
investments (90,333,825)
Net realized and
unrealized gain (loss)
on investments and
foreign
currency transactions 188,991,561
Change in net assets
resulting from
operations $ 205,060,876
</TABLE>

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS
OPERATIONS:
Net investment income $ 16,069,315 $ 11,455,050
Net realized gain on
investments and foreign
currency transactions
($279,325,542 and
$354,467,088,
respectively, as
computed for federal tax
purposes) 279,325,386 354,458,500
Net change in unrealized
appreciation/depreciation
of investments (90,333,825) 484,020,318
CHANGE IN NET ASSETS
RESULTING FROM
OPERATIONS 205,060,876 849,933,868
NET EQUALIZATION CREDITS - 2,869,258
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Class A Shares (12,269,937) (9,470,939)
Class B Shares (1,639,307) (1,019,987)
Class C Shares (131,274) (115,071)
Class F Shares (1,055,791) (911,279)
Distributions from net
realized gains
Class A Shares (174,322,085) (136,036,451)
Class B Shares (168,304,148) (106,307,915)
Class C Shares (17,835,525) (12,719,363)
Class F Shares (15,130,507) (13,912,321)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (390,688,574) (280,493,326)
SHARE TRANSACTIONS
(EXCLUSIVE OF AMOUNTS
ALLOCATED TO NET
INVESTMENT INCOME):
Proceeds from sale of
shares 1,361,055,422 799,421,022
Proceeds from shares
issued in connection
with the acquisition of
Penn Square Mutual
Fund's Class A and Class
C Shares - 336,495,867 1
Net asset value of shares
issued to shareholders
in payment of
distributions declared 352,843,676 251,515,083
Cost of shares redeemed (781,014,882) (370,401,026)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 932,884,216 1,017,030,946
Change in net assets 747,256,518 1,589,340,746
NET ASSETS:
Beginning of period 2,923,559,198 1,334,218,452
End of period (including
undistributed net
investment income of
$1,083,696 and $110,846,
respectively) $ 3,670,815,716 $ 2,923,559,198
</TABLE>

1 Includes $80,295,577 and $500,251 of unrealized appreciation on Class A Shares
and Class C Shares, respectively.

See Notes which are an integral part of the Financial Statements

Financial Highlights-Class A Shares

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31 1999 1998 1997 1996
1995
<S> <C> <C> <C> <C>
<C>
NET ASSET VALUE,
BEGINNING OF PERIOD $26.64 $21.40 $19.78 $15.66
$14.58
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.21 0.29 0.23 0.22
0.25
Net realized and unrealized gain
on investments and foreign
currency transactions 1.26 8.39 3.11 4.70
1.42
TOTAL FROM
INVESTMENT OPERATIONS 1.47 8.68 3.34 4.92
1.67
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.20) (0.21) (0.21) (0.17)
(0.24)
Distributions from net realized gain
on investments and foreign
currency transactions (3.01) (3.23) (1.51) (0.63)
(0.35)
TOTAL DISTRIBUTIONS (3.21) (3.44) (1.72) (0.80)
(0.59)
NET ASSET VALUE, END OF PERIOD $24.90 $26.64 $21.40 $19.78
$15.66
TOTAL RETURN 1 6.31% 43.95% 17.40% 32.00%
11.87%

RATIOS TO AVERAGE NET ASSETS:
Expenses 1.11% 1.14% 1.17% 1.16%
1.23%
Net investment income 0.87% 0.84% 0.95% 1.07%
1.71%
Expense waiver/reimbursement 2 - - 0.03% 0.07%
- -
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $1,621,527 $1,457,925 $638,082 $455,867
$268,470
Portfolio turnover 44% 63% 88% 46%
34%

</TABLE>

1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

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

See Notes which are an integral part of the Financial Statements

Financial Highlights-Class B Shares

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31 1999 1998 1997 1996
1995 1
<S> <C> <C> <C> <C>
<C>
NET ASSET VALUE, BEGINNING OF PERIOD $26.61 $21.40 $19.79 $15.67
$14.97
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.06 0.05 0.10
0.13
Net realized and unrealized gain
on investments and foreign
currency transactions 1.26 8.41 3.12 4.70
0.92
TOTAL FROM INVESTMENT OPERATIONS 1.29 8.47 3.17 4.80
1.05
LESS DISTRIBUTIONS:
Distributions from net investment income (0.02) (0.03) (0.05) (0.05)
(0.12)
Distributions from net realized gain
on investments (3.01) (3.23) (1.51) (0.63)
(0.23)
TOTAL DISTRIBUTIONS (3.03) (3.26) (1.56) (0.68)
(0.35)
NET ASSET VALUE, END OF PERIOD $24.87 $26.61 $21.40 $19.79
$15.67
TOTAL RETURN 2 5.54% 42.78% 16.49% 31.10%
7.28%

RATIOS TO AVERAGE NET ASSETS:
Expenses 1.86% 1.89% 1.95% 1.93%
1.95% 3
Net investment income 0.13% 0.11% 0.18% 0.32%
1.09% 3
Expense waiver/reimbursement 4 - - - 0.05%
0.12% 3
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $1,738,564 $1,201,402 $540,995 $261,024
$46,671
Portfolio turnover 44% 63% 88% 46%
34%

</TABLE>

1 Reflects operations for the period from July 25, 1994 (date of initial public
investment) to March 31,1995.

2 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

3 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Financial Highlights-Class C Shares

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $26.61 $21.40 $19.80 $15.66 $14.55
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.03 0.05 0.04 0.05 0.14
Net realized and
unrealized gain on
investments and foreign
currency transactions 1.27 8.42 3.12 4.75 1.45
TOTAL FROM INVESTMENT
OPERATIONS 1.30 8.47 3.16 4.80 1.59
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.02) (0.03) (0.05) (0.03) (0.13)
Distributions from net
realized gain on
investments and foreign
currency transactions (3.01) (3.23) (1.51) (0.63) (0.35)
TOTAL DISTRIBUTIONS (3.03) (3.26) (1.56) (0.66) (0.48)
NET ASSET VALUE, END OF
PERIOD $24.88 $26.61 $21.40 $19.80 $15.66
TOTAL RETURN 1 5.55% 42.78% 16.42% 31.14% 11.23%

RATIOS TO AVERAGE NET
ASSETS:
Expenses 1.86% 1.89% 1.95% 1.96% 2.04%
Net investment income 0.12% 0.11% 0.18% 0.27% 0.91%
Expense
waiver/reimbursement 2 - - - 0.02% -
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $175,843 $134,773 $69,990 $44,434 $20,055
Portfolio turnover 44% 63% 88% 46% 34%
</TABLE>

1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

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

See Notes which are an integral part of the Financial Statements

Financial Highlights-Class F Shares

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $26.61 $21.40 $19.78 $15.66 $14.58
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.21 0.22 0.20 0.19 0.25
Net realized and
unrealized gain on
investments and foreign
currency transactions 1.27 8.43 3.13 4.72 1.42
TOTAL FROM INVESTMENT
OPERATIONS 1.48 8.65 3.33 4.91 1.67
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.20) (0.21) (0.20) (0.16) (0.24)
Distributions from net
realized gain on
investments and foreign
currency transactions (3.01) (3.23) (1.51) (0.63) (0.35)
TOTAL DISTRIBUTIONS (3.21) (3.44) (1.71) (0.79) (0.59)
NET ASSET VALUE, END OF
PERIOD $24.88 $26.61 $21.40 $19.78 $15.66
TOTAL RETURN 1 6.36% 43.80% 17.39% 31.95% 11.80%

RATIOS TO AVERAGE NET
ASSETS:
Expenses 1.11% 1.14% 1.19% 1.21% 1.27%
Net investment income 0.87% 0.86% 0.94% 1.02% 1.69%
Expense
waiver/reimbursement 2 - - 0.01% 0.02% -
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $134,881 $129,458 $85,151 $55,329 $28,495
Portfolio turnover 44% 63% 88% 46% 34%
</TABLE>

1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

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

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

MARCH 31, 1999

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 on 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.

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"). Dividend income and distributions to shareholders are recorded on
the ex-dividend date.

Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign currency
transactions and have been reclassified as follows:

INCREASE(DECREASE)
ACCUMULATED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS AND UNDISTRIBUTED
FOREIGN CURRENCY NET INVESTMENT
PAID IN CAPITAL TRANSACTIONS INCOME
($25,084) $25,240 ($156)

Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.

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

Effective April 1, 1998, the Fund discontinued its use of equalization.
Equalization is an accounting practice whereby a portion of the proceeds of
sales and costs of redemptions of Fund shares is credited or charged to
undistributed net investment income on a per share basis, as determined on the
date of transaction. This change in accounting policy does not effect the Fund's
net assets, net asset value per share, or net investment income.

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.

CAPITAL STOCK

At March 31, 1999, par value shares ($0.20 per share) authorized were as
follows:

NUMBER OF
PAR VALUE
CAPITAL STOCK
CLASS NAME AUTHORIZED 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>
<CAPTION>
YEAR ENDED MARCH 31 1999 1998
CLASS A SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 23,860,472 $ 592,015,541 14,199,455 $ 257,444,031
Shares issued to
shareholders in
connection with the
acquisition of Penn
Square Mutual Fund's
Class A Shares - - 14,929,279 334,415,853
Shares issued to
shareholders in payment
of
distributions declared 6,671,760 160,839,562 5,489,537 124,963,822
Shares redeemed (20,151,161) (497,963,928) (9,712,914) (234,846,738)
NET CHANGE RESULTING
FROM CLASS A
SHARE TRANSACTIONS 10,381,071 $ 254,891,175 24,905,357 $ 481,976,968

<CAPTION>
YEAR ENDED MARCH 31 1999 1998
CLASS B SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 27,415,116 $ 682,194,308 19,476,886 $ 468,919,793
Shares issued to
shareholders in payment
of
distributions declared 6,634,213 159,886,480 4,423,479 100,689,615
Shares redeemed (9,306,496) (227,618,837) (4,032,641) (97,137,007)
NET CHANGE RESULTING
FROM CLASS B
SHARE TRANSACTIONS 24,742,833 $ 614,461,951 19,867,724 $ 472,472,401

<CAPTION>
YEAR ENDED MARCH 31 1999 1998
CLASS C SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 2,821,388 $ 70,046,322 2,272,169 $ 54,279,888
Shares issued to
shareholders in
connection with
acquisition of Penn
Square Mutual Fund's
Class C Shares - - 92,816 2,080,014
Shares issued to
shareholders in payment
of distributions
declared 701,366 16,918,449 524,098 11,922,133
Shares redeemed (1,519,177) (37,222,724) (1,095,674) (26,166,756)
NET CHANGE RESULTING
FROM CLASS C
SHARE TRANSACTIONS 2,003,577 $ 49,742,047 1,793,409 $ 42,115,279

<CAPTION>
YEAR ENDED MARCH 31 1999 1998
CLASS F SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 670,331 $ 16,799,251 787,209 $ 18,777,310
Shares issued to
shareholders in payment
of distributions
declared 630,147 15,199,185 612,048 13,939,513
Shares redeemed (744,093) (18,209,393) (513,208) (12,250,525)
NET CHANGE RESULTING
FROM CLASS F
SHARE TRANSACTIONS 556,385 $ 13,789,043 886,049 $ 20,466,298
NET CHANGE RESULTING
FROM SHARE TRANSACTIONS 37,683,866 $ 932,884,216 47,452,539 $ 1,017,030,946
</TABLE>

INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISORY FEE

Effective March 31, 1999, Federated Advisers changed its name to Federated
Investment Management Company. Federated Investment Management Company, the
Fund's investment 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, Inc. 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
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
SHARE CLASS OF 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 Share holder
Services, the Fund will pay Federated Shareholder Services Company ("FSSC") up
to 0.25% of average daily net assets of the Fund for the period. The fee paid to
FSSC is used to finance certain services for shareholders and to maintain
shareholder accounts. FSSC 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, 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.

INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding short-term securities, for the
period ended March 31, 1999, were as follows:

Purchases $1,930,975,440
Sales $1,401,164,815

YEAR 2000 (UNAUDITED)

Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.

Report of Independent Public Accountants

TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF

FEDERATED AMERICAN LEADERS FUND, INC.:

We have audited the accompanying statement of assets and liabilities of
Federated American Leaders Fund, Inc. (a Maryland corporation), including the
portfolio of investments, as of March 31, 1999, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended and the financial high lights for
each of the periods presented. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1999, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated American Leaders Fund, Inc. as of March 31, 1999, and the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for each
of the periods presented, in conformity with generally accepted accounting
principles.

Arthur Andersen LLP

Boston, Massachusetts

May 20, 1999

Directors

JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
WILLIAM J. COPELAND
J. CHRISTOPHER DONAHUE
JAMES E. DOWD, ESQ.
LAWRENCE D. ELLIS, M.D.
EDWARD L. FLAHERTY, JR., ESQ.
PETER E. MADDEN
JOHN E. MURRAY, JR., J.D., S.J.D.
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 and Secretary

RICHARD J. THOMAS
Treasurer

RICHARD B. FISHER
Vice President

NICHOLAS J. SEITANAKIS
Assistant Secretary

Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including the possible loss of principal.

This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.

[Graphic]
Federated
World-Class Investment Manager
ANNUAL REPORT

AS OF MARCH 31, 1999

Federated American Leaders Fund, Inc.

30TH ANNUAL REPORT

[Graphic]
Federated
Federated American Leaders Fund, Inc.
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor

Cusip 313914103
Cusip 313914202
Cusip 313914301
Cusip 313914400
8042504 (5/99)

[Graphic]

A1. The graphic representation here displayed consists of a legend in the upper
left quadrant indicating the components of the corresponding mountain chart. The
color coded mountain chart is a visual representation of the narrative text
above it. The "x" axis reflects computation periods from 2/26/69 to 3/31/99. The
"y" axis is measured in increments of $100,000 ranging from $0 to $800,000 and
indicates that the ending value of hypothetical initial investment of $31,000 in
the fund's Class A Shares, assuming the reinvestment of capital gains and
dividends, would have grown to $734,309 on 3/31/99.

A2. The graphic representation here displayed consists of a legend in the upper
left quadrant indicating the components of the corresponding mountain chart. The
color coded mountain chart is a visual representation of the narrative text
above it. The "x" axis reflects computation periods from 2/26/69 to 3/31/99. The
"y" axis is measured in increments of $50,000 ranging from $0 to $350,000 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 $348,941 on 3/31/99.

A3. The graphic representation here displayed consists of a legend in the upper
left quadrant indicating the components of the corresponding mountain chart. The
color-coded mountain chart is a visual representation of the narrative text
beneath it. The "x" axis reflects computation periods from 3/31/84 to 3/31/99.
The "y" axis is measured in increments of $50,000 ranging from $0 to $200,000
and indicates that the ending value of a hypothetical initial investment of
$5,000 and subsequent monthly investments of $250 over 15 years in the fund's
Class A Shares would have grown to $196,357 on 3/31/99.

A4. The graphic representation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class A
Shares of Federated American Leaders Fund, Inc., (the "Fund") based on a 4.50%
sales charge are represented by a solid line. The Standard & Poor's 500 Index
(the "S&P 500") is represented by a dotted line and the Lipper Growth and Income
Funds Average (the "LGIFA") is represented by a dashed line. The line graph is a
visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class A Shares of the Fund, the S&P 500 and the
LGIFA. The "x" axis reflects computation periods from 3/31/89 to 3/31/99. The
"y" axis reflects the cost of the investment. The right margin reflects the
ending value of the hypothetical investment in the Fund's Class A Shares, based
on a 4.50% sales charge, as compared to the S&P 500 and the LGIFA. The ending
values were $42,420, $56,820, and $41,405, respectively.

A5. The graphic representation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class B
Shares of Federated American Leaders Fund, Inc. (the "Fund") based on a 2.00%
contingent deferred sales charge are represented by a solid line. The Standard &
Poor's 500 Index (the "S&P 500") is represented by a dotted line and the Lipper
Growth and Income Funds Average (the "LGIFA") is represented by a dashed line.
The line graph is a visual representation of a comparison of change in value of
a $10,000 hypothetical investment in the Class B Shares of the Fund, the S&P 500
and the LGIFA. The "x" axis reflects computation periods from 7/25/94 to
3/31/99. The "y" axis reflects the cost of the investment. The right margin
reflects the ending value of the hypothetical investment in the Fund's Class B
Shares, based on a 2.00% contingent deferred sales charge, as compared to the
S&P 500 and the LGIFA. The ending values were $24,221, $32,073, and $24,337,
respectively.

A6. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class C
Shares of Federated American Leaders Fund, Inc. (the "Fund") based on a 1.00%
contingent deferred sales charge are represented by a solid line. The Standard &
Poor's 500 Index (the "S&P 500") is represented by a dotted line and the Lipper
Growth and Income Funds Average (the "LGIFA") is represented by a dashed line.
The line graph is a visual representation of a comparison of change in value of
a $10,000 hypothetical investment in the Class C Shares of the Fund, the S&P 500
and the LGIFA. The "x" axis reflects computation periods from 4/22/93 to
3/31/99. The "y" axis reflects the cost of the investment. The right margin
reflects the ending value of the hypothetical investment in the Fund's Class C
Shares, based on a 1.00% contingent deferred sales charge, as compared to the
S&P 500 and the LGIFA. The ending values were $23,864, $32,539, and $25,243,
respectively.

A7. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class F
Shares of Federated American Leaders Fund, Inc. (the "Fund") based on a 1.00%
sales charge are represented by a solid line. The Standard & Poor's 500 Index
(the "S&P 500") is represented by a dotted line and the Lipper Growth and Income
Funds Average (the "LGIFA") is represented by a dashed line. The line graph is a
visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class F Shares of the Fund, the S&P 500 and the
LGIFA. The "x" axis reflects computation periods from 7/28/93 to 3/31/99. The
"y" axis reflects the cost of the investment. The right margin reflects the
ending value of the hypothetical investment in the Fund's Class F Shares as
compared to the S&P 500 and the LGIFA. The ending values were $26,143, $32,539,
and $25,243, respectively.