SEMI-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 to allow investors to
own securities of high-quality large corporations and to participate in the
growth and income of those very successful corporations. I am pleased to present
its 30th Semi-Annual Report. This high-quality common stock fund has its $3.8
billion in assets invested in over 90 large corporations. These large,
historically successful corporations are easily recognized for their products
and services, and include AT&T, Wal-Mart, General Motors, Nabisco and Exxon.
Simply stated, the fund offers investors a very easy way to have ownership in
many of America's leading companies.
This report covers the first half of the fund's fiscal year, which is the
six-month period from April 1, 1999 through September 30, 1999. It begins with
an interview with the fund's portfolio manager Michael P. Donnelly, Senior 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 excellent long-term investment performance. Second is a
listing of the fund's high-quality stock holdings, and third is the publication
of the fund's financial statements.
Recent months have been volatile for stocks in almost every industrial sector.
We have seen market sentiment shift from a speculative mode to a "show-me" mode.
As a healthy measure of skepticism returned to the market, its extended
valuations in some sectors were exposed. In addition, the market reacted
negatively to inflation concerns and a series of interest rate increases by the
Federal Reserve Board (the "Fed"). Inflation and interest rates are the key
issues on the minds of investors.
Though this report focuses on the past six months, the true measure of the
performance potential of stocks, and of Federated American Leaders Fund, Inc.,
is over the long term. Over time, the fund's approach has rewarded investors
with outstanding long-term performance.
As of September 30, 1999, the average annual total returns, based on net asset
value, 1 for each share class since inception were:
Class A Shares (February 26, 1969), 11.33%;
Class B Shares (July 26, 1994), 18.55%;
Class C Shares (April 22, 1993), 15.94%;
Class F Shares (July 28, 1993), 16.67%.
Federated American Leaders Fund, Inc.'s portfolio of high-quality common stocks
produced a slightly negative total return in the six-month reporting period
ended September 30, 1999. Individual share class total return performance for
the six-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 (1.78%) $0.09 $0.45 $24.90 to $23.96 = (4%)
Class B Shares (2.16%) $0.00 $0.45 $24.87 to $23.92 = (4%)
Class C Shares (2.16%) $0.00 $0.45 $24.88 to $23.93 = (4%)
Class F Shares (1.82%) $0.09 $0.45 $24.88 to $23.93 = (4%)
</TABLE>
Without question, our fund managers believe that corporate earnings do matter.
Federated American Leaders Fund, Inc. is managed with a consistent focus on
attractively valued companies with solid earnings growth strength. As the
Portfolio Manager explains in his discussion, the benefits of this disciplined,
consistent style should be seen as the market broadens and becomes more
valuation-driven and less momentum-driven.
Thank you for owning shares of America's high-quality corporations-in fact, you
own over 90 high-quality U.S. companies through this diversified blue- chip
stock fund. Remember, periods of price declines have often proven to be good
buying opportunities, and I recommend that you consider adding to your account
on a regular basis.
As always, we welcome your comments and suggestions.
Sincerely,
[Graphic]
John F. Donahue
President
November 15, 1999
1 As of September 30, 1999, the average annual total returns, based on offering
price (i.e., less any applicable sales charge), for each share class since
inception were: Class A Shares, 11.13%; Class B Shares, 18.45%; Class C Shares,
15.94%; and Class F Shares, 16.48%.
2 Performance quoted is based on net asset value, reflects past performance and
is no guarantee 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
(7.19%), (7.45%), (3.12%), and (3.75%), respectively.
[Graphic]
Michael P. Donnelly
Senior Vice President
Federated Investment Management Company
Investment Review
IN 1999, AFTER A STRONG SECOND QUARTER, THE STOCK MARKET EXPERIENCED A THIRD
QUARTER DECLINE. WHAT ARE YOUR COMMENTS?
Overall, for the six-month reporting period, the Standard & Poor's ("S&P") 500
Index 1 produced a relatively flat 0.37%. return, which was the result of two
contrasting quarters-one positive and broad, the other negative and narrow.
Sparked by surprisingly strong first quarter earnings, a revival in oil prices
and signs of a global economic recovery, the equity markets provided solid
returns during the second quarter of 1999 with the S&P 500 Index returning
7.05%. The most dramatic development for investors during this three-month
period was the rotation of market leadership to a broader group of cyclical,
commodity and smaller capitalization stocks. After three years of returns being
dominated by a limited list of large-capitalization growth stocks, the perceived
revival of global economic activity benefited areas of the market that had not
been the "safe havens" from the global economic turmoil of the past two years,
and whose earnings should benefit with a marked increase in global growth. Due
to this dramatic improvement in market breadth, the average active equity
manager had the best quarter relative to the S&P 500 Index in quite some time.
For the three-month period ended March 31, 1999, the average stock in the S&P
500 Index returned 13.66%. Value stocks, as measured by the Russell 1000 Value
Index, returned 11.28% and small-capitalization stocks, as measured by the
Russell 2000 Index, returned 15.55%. 1
1 The S&P 500 Index is an unmanaged index of common stocks in industry,
transportation, financial, and public utility companies. Russell 1000 Value
Index comprises 1,000 of the largest capitalized U.S. companies traded on the
major U.S. stock exchanges with a less-than-average growth orientation. Russell
2000 Index is a broadly diversified index consisting of approximately 2,000
small capitalization common stocks that can be used to compare the total returns
of funds whose portfolios are invested primarily in small capitalization common
stocks. Indexes are unmanaged and investments cannot be made in an index.
However, in the third quarter of 1999, the S&P 500 Index recorded a negative
total return of (6.25%), as a result of two rate increases by the Fed and a case
of the summer doldrums. Market breadth deteriorated during the quarter as
technology led the market and was, in fact, the only sector with a positive
return for the period. The raising of interest rates by the Fed was effective in
tempering overall market enthusiasm, but, it did not take the enthusiasm out of
the technology/internet sectors. However, led by the finance sector, value
stocks were hit especially hard, with the Russell 1000 Value Index returning
(9.80%) for the third quarter of 1999.
HOW DID FEDERATED AMERICAN LEADERS FUND, INC. PERFORM DURING THIS FLAT PERIOD
FOR STOCKS?
For the six-month reporting period ended September 30, 1999, the fund's Class A,
B, C, and F Shares produced total returns of (1.78%), (2.16%), (2.16%), and
(1.82%), respectively, based on net asset value. 2 These returns underperformed
the 0.37% return of the S&P 500 Index, and the 0.37% average return of the 859
growth and income funds tracked by Lipper Analytical Services, Inc.3
FROM A PORTFOLIO PERSPECTIVE, WHAT SECTORS WERE POSITIVE AND NEGATIVE
INFLUENCES ON THE FUND'S PERFORMANCE OVER THE SIX-MONTH REPORTING PERIOD
ENDED SEPTEMBER 30, 1999?
Technology was an area of strength in the market for the six-month period, and
some of our best performing stocks were in that sector: SUN MICROSYSTEMS, INC.
up 49%, INTERNATIONAL BUSINESS MACHINES CORP., up 37% and LEXMARK INTERNATIONAL
GROUP, INC., up 44%. Other areas of strength in the portfolio were a number of
our capital goods stocks: TYCO INTERNATIONAL LTD., up 44%, PARKER HANNIFIN
CORP., up 33%, BOEING CO., up 25% and ALLIED SIGNAL, INC., up 22%.
Detracting from the fund's performance was an underweighted position in the
technology sector relative to the S&P 500 Index, as well as unfavorable security
performance in the financials sector. CONSECO, INC., down 38%, BANK ONE
CORPORATION, down 37%, ALLSTATE CORP., down 33% and CIT GROUP, INC., down 33%,
were all hurt by rising interest rates which caused the entire financial sector
to lose over 11% of its value.
2 Performance quoted is based on net asset value, reflects past performance and
is no guarantee 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
(7.19%), (7.45%), (3.12%), and (3.75%), respectively.
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. Lipper returns do not take sales charges into account.
WHAT WAS THE FUND'S SECTOR EXPOSURE AS OF SEPTEMBER 30, 1999?
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
SECTOR NET ASSETS S&P 500 INDEX
<S> <C> <C>
Technology 16.1% 24.6%
Financials 15.4% 14.1%
Capital Goods 12.5% 8.8%
Consumer Staples 11.8% 12.0%
Consumer Cyclicals 8.8% 8.8%
Health Care 8.2% 10.2%
Energy 7.4% 6.3%
Communication Services 7.3% 8.4%
Utilities 6.0% 2.8%
Basic Materials 4.6% 3.2%
Transportation 0.6% 0.8%
Other 1.3% -
</TABLE>
WHAT IS YOUR STRATEGY IN THIS ENVIRONMENT?
Our strategy in managing the fund remains consistent. We continue to add names
to the portfolio that look attractive on our valuation disciplines and have
favorable visible fundamentals, while eliminating those names with diminishing
prospects and unattractive valuations. We believe our disciplined, style-
consistent approach will pay off as the market broadens and becomes more
sensitive to valuation and less driven by momentum strategies.
WITH THAT IN MIND, WHAT WERE SOME OF YOUR RECENT NOTEWORTHY PURCHASES AND SALES?
Our portfolio additions included the following companies:
BANKAMERICA CORP. (1.14% of net assets): Selling at a significant discount to
its peers, this leading national franchise was added to the portfolio to further
build our exposure to the banking industry. The integration of Nations Bank is
progressing well, and a recently announced share buyback should help BankAmerica
to outperform its peers.
BELLSOUTH CORP. (1.12% of net assets): After performing well in 1998, Bell South
was struggling in 1999, bringing its valuation to two-year relative lows in
comparison to the other Baby Bells. Bell South has strong management and a
faster growth rate than its Baby Bell peers. This addition to the fund's
portfolio helped to reduce our underweighted position in the communication
services sector.
COMPUTER SCIENCES CORP. (1.24% of net assets): This stock was purchased after
mistakenly trading off with enterprise resource planning ("ERP") companies over
Year 2000 ("Y2K") fears. The company is not dependent on ERP sales and continues
to be a high-quality, information technology outsourcing play that has been
winning a number of large outsourcing deals with a healthy pipeline going into
the next year. Margin improvement should continue and valuation is attractive.
PPG INDUSTRIES, INC. (1.04% of net assets): We purchased this well-run, high-
return chemical company after relative valuations contracted over concerns of
mild dilution caused by two acquisitions in their coatings business. We believe
that both acquisitions added significantly to the value of the PPG franchise,
and that they will be integrated more quickly than expected.
TEXTRON, INC. (0.74% of net assets): We purchased the stock of this
multi-industry company after it unduly sold off over concerns about the
commercial aerospace market. We expect this high-quality, high-return company to
meet or exceed its earnings estimates for a 40th straight quarter.
Some of the companies we sold were:
BARRICK GOLD CORP.: We sold this stock on indications of International Monetary
Fund and European Central Bank sales of gold reserves. Fortunately, the
announcement of United Kingdom reserve sales came shortly after Barrick was sold
from the fund.
DOW CHEMICAL CO.: This position was sold due to extreme overvaluation based on
historic and absolute price-to-earnings multiples after the heavy cyclical rally
in April. This large, liquid company seemed to be ahead of itself, and we were
also concerned about excess petrochemical capacity expected to come online in
2000-2001.
TEXACO, INC.: After a strong run induced by takeover speculation with Chevron
and recovering oil prices, we eliminated the stock on strength. The sale also
helped to reduce our overweighted position in the energy sector.
R. J. REYNOLDS TOBACCO HOLDINGS, INC.: Despite its low valuation and attractive
dividend yield, we sold this security, as we remain uncomfortable with the
volatility and uncertainty of the company's cash flows given its declining
market shares, sensitivity to industry promotional levels, and lack of
geographical diversity as compared to industry leader, Philip Morris.
WHAT WERE THE FUND'S TOP 10 HOLDINGS AS OF SEPTEMBER 30, 1999?
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME NET ASSETS
<S> <C>
Sun Microsystems, Inc. 3.5%
GTE Corp. 2.1%
Kimberly-Clark Corp. 1.9%
Tyco International Ltd. 1.8%
Conseco, Inc. 1.7%
UST, Inc. 1.6%
CIGNA Corp. 1.6%
International Business Machines Corp. 1.5%
First Data Corp. 1.5%
Boeing Co. 1.5%
TOTAL 18.7%
</TABLE>
WHAT ARE YOUR THOUGHTS ON THE MARKET AS WE APPROACH THE END OF 1999?
The market appears overvalued by all traditional measures, but no visible
catalyst is positioned to change this. The two Fed tightenings of this summer
have simply taken back some of the liquidity that the Fed provided last summer
during the global financial crisis, and seem prudent given the apparent strength
of the global economy, wage pressures, and oil price increases. The trade
deficit and weak U.S. dollar are visible negatives. However, the market appears
to be able to look through both. Earnings still appear to be accelerating and
computer/technology-led productivity gains are keeping published inflation
figures muted. Given the relative valuation disparities between the largest 30
public companies and the rest of the market, as well as an accelerating earnings
environment, market breadth should improve. Y2K fears leading to general market
uncertainty may be holding back this improvement currently, but we believe that,
as we progress toward year-end, the market will discount these fears and
fundamentals should prevail.
We are optimistic going into the new millennium, as technological investments
made in preparation for Y2K will begin to pay off in increased productivity and
market uncertainty should abate as Y2K concerns are put behind us.
Two Ways You May Seek to Invest for Success:
INITIAL INVESTMENT:
IF YOU HAD MADE AN INITIAL INVESTMENT OF $31,000 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, YOUR ACCOUNT WOULD HAVE BEEN WORTH
$721,184 ON 9/30/99. YOU WOULD HAVE EARNED A 10.84% 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 9/30/99, the Class A Shares' average annual 1-year, 5-year, and 10-year
total returns were 10.16%, 18.50%, and 14.08%, respectively. Class B Shares'
average annual 1-year, 5-year and since inception (7/26/94) total returns were
10.20%, 18.78% and 18.45%, respectively. Class C Shares' average annual 1-year,
5-year, and since inception (4/22/93) total returns were 14.73%, 18.99%, and
15.94%, respectively. Class F Shares' average annual 1-year, 5- year, and since
inception (7/28/93) total returns were 14.43%, 19.57%, and 16.48%, respectively.
2
[Graphic]
Please see Appendix A1
1 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 is no guarantee of 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.
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 $342,705.
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 $342,705 1 by 9/30/99. You
would have earned an average annual total return of 12.80%.
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 can work 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]
Please see Appendix A2
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 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 three children.
On September 30, 1983, 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 16 years, the original $5,000 investment along with
their additional monthly $250 investments totaling $53,000 has grown to
$207,078. 1 For the Rices, a dedicated program of monthly investments really
paid off.
[Graphic]
Please see Appendix A3
1 This chart assumes that the subsequent investments are made on the last day of
each 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.
Portfolio of Investments
SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-98.7%
BASIC MATERIALS-4.6%
3,581,471 Archer-Daniels-Midland Co. $ 43,649,175
1,316,100 Corn Products
International, Inc. 40,058,794
1,100,000 Nucor Corp. 52,387,500
661,300 PPG Industries, Inc. 39,678,000
TOTAL 175,773,469
CAPITAL GOODS-12.5%
872,100 Allied-Signal, Inc. 52,271,494
1,347,000 Boeing Co. 57,415,875
592,200 Crown Cork & Seal Co., Inc. 14,360,850
955,000 Deere & Co. 36,946,563
656,700 Ingersoll-Rand Co. 36,077,456
587,000 Johnson Controls, Inc. 38,925,438
473,708 Koninklijke Philips
Electronics NV, ADR 47,844,508
1,008,700 Parker-Hannifin Corp. 45,202,369
1,720,200 Tenneco, Inc. 29,243,400
363,000 Textron, Inc. 28,087,125
673,132 Tyco International Ltd. 69,500,879
1,083,200 Waste Management, Inc. 20,851,600
TOTAL 476,727,557
COMMUNICATION SERVICES-
7.3%
1,307,200 AT&T Corp. 56,863,200
948,100 BellSouth Corp. 42,664,500
1,046,500 GTE Corp. 80,449,687
897,000 SBC Communications, Inc. 45,803,063
907,000 U.S. West, Inc. 51,755,687
TOTAL 277,536,137
CONSUMER CYCLICALS-8.8%
786,000 Block (H&R), Inc. 34,141,875
1,033,000 Brunswick Corp. 25,695,875
957,600 Cooper Tire & Rubber Co. 16,877,700
1,045,724 Delphi Auto Systems Corp. 16,796,942
1,461,400 Dillards, Inc., Class A 29,684,687
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-continued
CONSUMER CYCLICALS-
CONTINUED
640,300 General Motors Corp. $ 40,298,881
2,184,400 1 K Mart Corp. 25,530,175
1,087,900 Liz Claiborne, Inc. 33,724,900
1,396,200 Sherwin-Williams Co. 29,232,937
2,712,400 1 Toys 'R' Us, Inc. 40,686,000
909,600 Wal-Mart Stores, Inc. 43,262,850
TOTAL 335,932,822
CONSUMER STAPLES-11.8%
511,800 Anheuser-Busch Cos., Inc. 35,857,987
1,361,100 Kimberly-Clark Corp. 71,457,750
1,220,400 1 King World Productions,
Inc. 45,765,000
1,716,600 Nabisco Group Holdings
Corp. 25,749,000
1,890,900 News Corp. Ltd., ADR 50,463,394
1,053,500 Philip Morris Cos., Inc. 36,016,531
1,883,000 Sara Lee Corp. 44,132,812
727,800 1 Tricon Global Restaurants,
Inc. 29,794,312
2,040,300 UST, Inc. 61,591,556
1,135,000 1 Viacom, Inc., Class A 49,088,750
TOTAL 449,917,092
ENERGY-7.4%
1,168,700 Ashland, Inc. 39,297,537
1,031,000 Diamond Offshore Drilling,
Inc. 34,409,625
419,300 Exxon Corp. 31,840,594
360,000 Mobil Corp. 36,270,000
785,500 Royal Dutch Petroleum Co.,
ADR 46,393,594
671,000 Schlumberger Ltd. 41,811,687
892,400 Sunoco, Inc. 24,429,450
949,700 USX Corp. 27,778,725
TOTAL 282,231,212
FINANCIALS-15.4%
570,345 ABB Ltd., ADR 55,192,286
382,700 ABB AB, ADR 5,441,994
1,424,800 Allstate Corp. 35,530,950
732,800 Bank One Corporation 25,510,600
782,700 BankAmerica Corp. 43,586,606
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-continued
FINANCIALS-CONTINUED
984,747 Bear Stearns Cos., Inc. $ 37,851,213
772,500 CIGNA Corp. 60,061,875
2,030,000 CIT Group, Inc., Class A 41,741,875
3,347,904 Conseco, Inc. 64,656,396
985,200 Lincoln National Corp. 37,006,575
498,500 Loews Corp. 34,988,469
605,900 MBIA, Inc. 28,250,088
705,750 Marsh & McLennan Cos., Inc. 48,343,875
452,000 Republic New York Corp. 27,769,750
1,437,100 Washington Mutual, Inc. 42,035,175
TOTAL 587,967,727
HEALTH CARE-8.2%
1,001,000 Abbott Laboratories 36,786,750
665,500 Baxter International, Inc. 40,096,375
582,600 Bristol-Myers Squibb Co. 39,325,500
4,162,400 1 Healthsouth Corp. 25,234,550
603,200 Merck & Co., Inc. 39,094,900
2,089,700 1 Oxford Health Plans, Inc. 26,121,250
1,102,500 Pharmacia & Upjohn, Inc. 54,711,563
1,029,200 United Healthcare Corp. 50,109,175
TOTAL 311,480,063
TECHNOLOGY-16.1%
674,800 1 Computer Sciences Corp. 47,446,875
430,000 Eastman Kodak Co. 32,438,125
1,067,100 Electronic Data Systems
Corp. 56,489,606
1,323,600 First Data Corp. 58,072,950
1,100,300 Galileo International,
Inc. 44,287,075
484,000 International Business
Machines Corp. 58,745,500
673,600 1 Lexmark International
Group, Inc., Class A 54,224,800
546,300 Motorola, Inc. 48,074,400
1,282,000 1 Seagate Technology, Inc. 39,501,625
2,111,200 1 Storage Technology Corp. 40,640,600
1,452,000 1 Sun Microsystems, Inc. 135,036,000
TOTAL 614,957,556
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
COMMON STOCKS-continued
TRANSPORTATION-0.6%
1,112,500 Ryder Systems, Inc. $ 22,667,188
UTILITIES-6.0%
1,300,000 Entergy Corp. 37,618,750
707,200 FPL Group, Inc. 35,625,200
1,205,000 P G & E Corp. 31,179,375
1,223,900 Peco Energy Co. 45,896,250
992,900 Public Service Enterprises
Group, Inc. 38,350,763
1,530,900 Reliant Energy, Inc. 41,429,981
TOTAL 230,100,319
TOTAL COMMON STOCKS
(IDENTIFIED COST
$3,287,364,283) 3,765,291,142
REPURCHASE AGREEMENT-1.3%
2
$ 51,065,000 ABN AMRO, Inc., 5.45%,
dated 9/30/1999, due
10/1/1999 (AT AMORTIZED
COST) 51,065,000
TOTAL INVESTMENTS
(IDENTIFIED COST
$3,338,429,283) 3 $ 3,816,356,142
</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 $3,338,429,283.
The net unrealized appreciation of investments on a federal tax basis amounts to
$477,926,859 which is comprised of $833,317,770 appreciation and $355,390,911
depreciation at September 30, 1999.
Note: The categories of investments are shown as a percentage of net assets
($3,815,431,285) at September 30, 1999.
The following acronyms are used throughout this portfolio:
ADR -American Depositary Receipt
MBIA -Municipal Bond Investors Assurance
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at value
(identified and tax cost
$3,338,429,283) $ 3,816,356,142
Cash 287
Income receivable 6,974,035
Receivable for investments
sold 4,339,213
Receivable for shares sold 7,026,603
TOTAL ASSETS 3,834,696,280
LIABILITIES:
Payable for investments
purchased $ 16,003,912
Payable for shares
redeemed 2,087,109
Payable for taxes withheld 82,148
Accrued expenses 1,091,826
TOTAL LIABILITIES 19,264,995
Net assets for 159,376,683
shares outstanding $ 3,815,431,285
NET ASSETS CONSIST OF:
Paid in capital $ 3,310,126,951
Net unrealized
appreciation of
investments 477,926,859
Accumulated net realized
gain on investments 25,794,301
Undistributed net
investment income 1,583,174
TOTAL NET ASSETS $ 3,815,431,285
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
CLASS A SHARES:
Net Asset Value Per Share
($1,640,269,048 /
68,457,621 shares
outstanding) $23.96
Offering Price Per Share
(100/94.50 of $23.96) 1 $25.35
Redemption Proceeds Per
Share (100.00/100 of
$23.96) 1 $23.96
CLASS B SHARES:
Net Asset Value Per Share
($1,856,121,840 /
77,586,178 shares
outstanding) $23.92
Offering Price Per Share
(100/100.00 of $23.92) 1 $23.92
Redemption Proceeds Per
Share (94.50/100 of
$23.92) 1 $22.60
CLASS C SHARES:
Net Asset Value Per Share
($186,221,702 / 7,782,959
shares outstanding) $23.93
Offering Price Per Share
(100/100.00 of $23.93) 1 $23.93
Redemption Proceeds Per
Share (99.00/100 of
$23.93) 1 $23.69
CLASS F SHARES:
Net Asset Value Per Share
($132,818,695 / 5,549,925
shares outstanding) $23.93
Offering Price Per Share
(100/99.00 of $23.93) 1 $24.17
Redemption Proceeds Per
Share (99.00/100 of
$23.93) 1 $23.69
</TABLE>
1 See "What Do Shares Cost?" in the Prospectus.
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign
taxes withheld of
$297,110) $ 34,968,286
Interest 2,362,807
TOTAL INCOME 37,331,093
EXPENSES:
Investment advisory fee $ 12,476,116
Administrative personnel
and services fee 1,517,181
Custodian fees 102,362
Transfer and dividend
disbursing agent fees and
expenses 2,349,216
Directors'/Trustees' fees 16,097
Auditing fees 8,049
Legal fees 6,097
Portfolio accounting fees 176,691
Distribution services fee-
Class B Shares 7,243,034
Distribution services fee-
Class C Shares 732,381
Shareholder services fee-
Class A Shares 2,192,040
Shareholder services fee-
Class B Shares 2,414,345
Shareholder services fee-
Class C Shares 244,127
Shareholder services fee-
Class F Shares 179,929
Share registration costs 167,620
Printing and postage 350,895
Insurance premiums 4,146
Taxes 149,388
Miscellaneous 24,055
TOTAL EXPENSES 30,353,769
EXPENSES REDUCED BY
DIRECTED BROKERAGE
AGREEMENTS:
Total expenses reduced by
directed brokerage
arrangements (55,427)
NET EXPENSES 30,298,342
Net investment income 7,032,751
REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on
investments 25,720,738
Net change in unrealized
appreciation of
investments (126,409,679)
Net realized and
unrealized gain (loss) on
investments (100,688,941)
Change in net assets
resulting from operations $ (93,656,190)
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited) YEAR ENDED
SEPTEMBER 30, MARCH 31,
1999 1999
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 7,032,751 $ 16,069,315
Net realized gain on
investments ($25,720,738
and $279,325,542,
respectively, as computed
for federal tax purposes) 25,720,738 279,325,386
Net change in unrealized
appreciation of
investments (126,409,679) (90,333,825)
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS (93,656,190) 205,060,876
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Class A Shares (6,037,785) (12,269,937)
Class B Shares - (1,639,307)
Class C Shares - (131,274)
Class F Shares (495,488) (1,055,791)
Distributions from net
realized gains
Class A Shares (29,939,613) (174,322,085)
Class B Shares (32,812,319) (168,304,148)
Class C Shares (3,309,288) (17,835,525)
Class F Shares (2,474,312) (15,130,507)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (75,068,805) (390,688,574)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 644,475,246 1,361,055,422
Net asset value of shares
issued to shareholders in
payment of
distributions declared 68,227,672 352,843,676
Cost of shares redeemed (399,362,354) (781,014,882)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 313,340,564 932,884,216
Change in net assets 144,615,569 747,256,518
NET ASSETS:
Beginning of period 3,670,815,716 2,923,559,198
End of period (including
undistributed net
investment income of
$1,583,174 and $1,083,696,
respectively) $ 3,815,431,285 $ 3,670,815,716
</TABLE>
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>
SIX MONTHS
ENDED
(unaudited)
SEPTEMBER 30, YEAR ENDED MARCH 31,
1999 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $24.90 $26.64 $21.40 $19.78 $15.66 $14.58
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.10 0.21 0.29 0.23 0.22 0.25
Net realized and
unrealized gain (loss) on
investments and foreign
currency transactions (0.50) 1.26 8.39 3.11 4.70 1.42
TOTAL FROM
INVESTMENT OPERATIONS (0.40) 1.47 8.68 3.34 4.92 1.67
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.09) (0.20) (0.21) (0.21) (0.17) (0.24)
Distributions from net
realized gain on
investments and foreign
currency transactions (0.45) (3.01) (3.23) (1.51) (0.63) (0.35)
TOTAL DISTRIBUTIONS (0.54) (3.21) (3.44) (1.72) (0.80) (0.59)
NET ASSET VALUE, END
OF PERIOD $23.96 $24.90 $26.64 $21.40 $19.78 $15.66
TOTAL RETURN 1 (1.78) 6.31% 43.95% 17.40% 32.00% 11.87%
RATIOS TO AVERAGE
NET ASSETS:
Expenses 2 1.12% 3 1.11% 1.14% 1.20% 1.23% 1.23%
Net investment income 2 0.74% 3 0.87% 0.84% 0.92% 1.00% 1.71%
Expenses (after waivers) 1.12% 3 1.11% 1.14% 1.17% 1.16% 1.23%
Net investment income
(after waivers) 0.74% 3 0.87% 0.84% 0.95% 1.07% 1.71%
SUPPLEMENTAL DATA:
Net assets,
end of period
(000 omitted) $1,640,269 $1,621,527 $1,457,925 $638,082 $455,867 $268,470
Portfolio turnover 9% 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 During the period, certain fees were voluntarily waived and expenses reduced
by directed brokerage agreements. If such voluntary waivers and expense
reductions had not occurred, the ratios would have been as indicated.
3 Computed on an annualized basis.
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>
SIX MONTHS
ENDED
(unaudited)
SEPTEMBER 30, YEAR ENDED MARCH 31,
1999 1999 1998 1997 1996 1995 1
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $24.87 $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 (loss) on
investments and foreign
currency transactions (0.50) 1.26 8.41 3.12 4.70 0.92
TOTAL FROM
INVESTMENT OPERATIONS (0.50) 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 (0.45) (3.01) (3.23) (1.51) (0.63) (0.23)
TOTAL DISTRIBUTIONS (0.45) (3.03) (3.26) (1.56) (0.68) (0.35)
NET ASSET VALUE, END OF
PERIOD $23.92 $24.87 $26.61 $21.40 $19.79 $15.67
TOTAL RETURN 2 (2.16) 5.54% 42.78% 16.49% 31.10% 7.28%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 3 1.87% 4 1.86% 1.89% 1.95% 1.98% 2.07% 3
Net investment income 3 (0.01%) 4 0.13% 0.11% 0.18% 0.27% 0.97% 3
Expenses (after waivers) 1.87% 4 1.86% 1.89% 1.95% 1.93% 1.95% 3
Net investment income
(after waivers) (0.01%) 4 0.13% 0.11% 0.18% 0.32% 1.09% 3
SUPPLEMENTAL DATA:
Net assets,
end of period
(000 omitted) $1,856,122 $1,738,564 $1,201,402 $540,995 $261,024 $46,671
Portfolio turnover 9% 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 During the period, certain fees were voluntarily waived and expenses reduced
by directed brokerage arrangements. If such voluntary waivers and expense
reductions had not occurred, the ratios would have been as indicated.
4 Computed on an annualized basis.
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>
SIX MONTHS
ENDED
(unaudited)
SEPTEMBER 30, YEAR ENDED MARCH 31,
1999 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $24.88 $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 (loss) on
investments and foreign
currency transactions (0.50) 1.27 8.42 3.12 4.75 1.45
TOTAL FROM
INVESTMENT OPERATIONS (0.50) 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 (0.45) (3.01) (3.23) (1.51) (0.63) (0.35)
TOTAL DISTRIBUTIONS (0.45) (3.03) (3.26) (1.56) (0.66) (0.48)
NET ASSET VALUE, END OF
PERIOD $23.93 $24.88 $26.61 $21.40 $19.80 $15.66
TOTAL RETURN 1 (2.16) 5.55% 42.78% 16.42% 31.14% 11.23%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 2 1.87% 3 1.86% 1.89% 1.95% 1.98% 2.04%
Net investment income 2 (0.01%) 3 0.12% 0.11% 0.18% 0.25% 0.91%
Expenses (after waivers) 1.87% 3 1.86% 1.89% 1.95% 1.96% 2.04%
Net investment income
(after waivers) (0.01%) 3 0.12% 0.11% 0.18% 0.27% 0.91%
SUPPLEMENTAL DATA:
Net assets,
end of period
(000 omitted) $186,222 $175,843 $134,773 $69,990 $44,434 $20,055
Portfolio turnover 9% 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 During the period, certain fees were voluntarily waived and expenses reduced
by directed brokerage arrangements. If such voluntary waivers and expense
reductions had not occurred, the ratios would have been as indicated.
3 Computed on an annualized basis.
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>
SIX MONTHS
ENDED
(unaudited)
SEPTEMBER 30, YEAR ENDED MARCH 31,
1999 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $24.88 $26.61 $21.40 $19.78 $15.66 $14.58
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.10 0.21 0.22 0.20 0.19 0.25
Net realized and
unrealized gain (loss) on
investments and foreign
currency transactions (0.51) 1.27 8.43 3.13 4.72 1.42
TOTAL FROM
INVESTMENT OPERATIONS (0.41) 1.48 8.65 3.33 4.91 1.67
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.09) (0.20) (0.21) (0.20) (0.16) (0.24)
Distributions from net
realized gain on
investments and foreign
currency transactions (0.45) (3.01) (3.23) (1.51) (0.63) (0.35)
TOTAL DISTRIBUTIONS (0.54) (3.21) (3.44) (1.71) (0.79) (0.59)
NET ASSET VALUE, END OF
PERIOD $23.93 $24.88 $26.61 $21.40 $19.78 $15.66
TOTAL RETURN 1 (1.82) 6.36% 43.80% 17.39% 31.95% 11.80%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 2 1.12% 3 1.11% 1.14% 1.20% 1.23% 1.27%
Net investment income 2 0.74% 3 0.87% 0.86% 0.93% 1.00% 1.69%
Expenses (after waivers) 1.12% 3 1.11% 1.14% 1.19% 1.21% 1.27%
Net investment income
(after waivers) 0.74% 3 0.87% 0.86% 0.94% 1.02% 1.69%
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $132,819 $134,881 $129,458 $85,151 $55,329 $28,495
Portfolio turnover 9% 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 During the period, certain fees were voluntarily waived and expenses reduced
by directed brokerage arrangements. If such voluntary waivers and expense
reductions had not occurred, the ratios would have been as indicated.
3 Computed on an annualized basis.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
SEPTEMBER 30, 1999 (UNAUDITED)
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 income by
concentrating on the area of investment decision in the securities of
high-quality companies.
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.
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.
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 September 30, 1999, par value shares ($0.20 per share) authorized were as
follows:
NUMBER OF PAR VALUE
CLASS NAME CAPITAL STOCK 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
TOTAL 100,000,000
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1999 MARCH 31, 1999
CLASS A SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 10,599,096 $ 278,639,091 23,860,472 $ 592,015,541
Shares issued to
shareholders in payment of
distributions declared 1,193,081 31,396,804 6,671,760 160,839,562
Shares redeemed (8,444,108) (221,748,132) (20,151,161) (497,963,928)
NET CHANGE RESULTING FROM
CLASS A
SHARE TRANSACTIONS 3,348,069 $ 88,287,763 10,381,071 $ 254,891,175
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1999 MARCH 31, 1999
CLASS B SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 12,114,906 $ 317,988,595 27,415,116 $ 682,194,308
Shares issued to
shareholders in payment of
distributions declared 1,172,474 30,906,356 6,634,213 159,886,480
Shares redeemed (5,597,035) (146,249,755) (9,306,496) (227,618,837)
NET CHANGE RESULTING FROM
CLASS B
SHARE TRANSACTIONS 7,690,345 $ 202,645,196 24,742,833 $ 614,461,951
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1999 MARCH 31, 1999
CLASS C SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 1,477,125 $ 38,795,078 2,821,388 $ 70,046,322
Shares issued to
shareholders in payment of
distributions declared 119,400 3,147,323 701,366 16,918,449
Shares redeemed (881,771) (22,945,286) (1,519,177) (37,222,724)
NET CHANGE RESULTING FROM
CLASS C
SHARE TRANSACTIONS 714,754 $ 18,997,115 2,003,577 $ 49,742,047
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1999 MARCH 31, 1999
CLASS F SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 344,013 $ 9,052,482 670,331 $ 16,799,251
Shares issued to
shareholders in payment of
distributions declared 105,655 2,777,189 630,147 15,199,185
Shares redeemed (322,001) (8,419,181) (744,093) (18,209,393)
NET CHANGE RESULTING FROM
CLASS F
SHARE TRANSACTIONS 127,667 $ 3,410,490 556,385 $ 13,789,043
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 11,880,835 $ 313,340,564 37,683,866 $ 932,884,216
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Investment Management Company, 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, 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
SHARE CLASS DAILY NET ASSETS 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 Shareholder
Services Company ("FSSC"), the Fund will pay 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.
EXPENSE REDUCTION
The Fund directs certain portfolio trades to a broker that, in turn, pays a
portion of the Fund's operating expenses. For the six-month period ended
September 30, 1999, the Fund's expenses were reduced by $55,427 under these
arrangements.
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 September 30, 1999, were as follows:
Purchases $ 613,716,694
Sales $ 348,152,543
YEAR 2000
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.
Directors
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
NICHOLAS P. CONSTANTAKIS
JOHN F. CUNNINGHAM
J. CHRISTOPHER DONAHUE
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
Officers
JOHN F. DONAHUE
President
J. THOMAS MADDEN
Chief Investment Officer
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
RICHARD B. FISHER
Vice President
MICHAEL P. DONNELLY
Vice President
RICHARD J. THOMAS
Treasurer
C. GRANT ANDERSON
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
Federated American Leaders Fund, Inc.
Established 1969
30TH SEMI-ANNUAL REPORT
SEMI-ANNUAL REPORT
AS OF SEPTEMBER 30, 1999
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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
8110101 (11/99)
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APPENDIX
A1. The graphic presentation 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 9/30/99. 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 $721,184 on 9/30/99.
A2. The graphic presentation 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 9/30/99. 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 $342,705 on 9/30/99.
A3. The graphic presentation 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 9/30/83 to 9/30/99.
The "y" axis is measured in increments of $50,000 ranging from $0 to $250,000
and indicates that the ending value of hypothetical initial investment of $5,000
in the fund's Class A Shares and subsequent monthly investments of $250 over 16
years in the fund's Class A Shares would have grown to $207,078 on 9/30/99.
