-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HnRG0Y33N6eNOq3+eanL7swt7uKXZ89x0wgJsjJNJqqn6vjGTvF6HIMId7Fb/5Ha gHLVUNE+rkgiVJemxXTo4Q== 0000005352-96-000015.txt : 19961203 0000005352-96-000015.hdr.sgml : 19961203 ACCESSION NUMBER: 0000005352-96-000015 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961202 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FEDERATED AMERICAN LEADERS FUND INC CENTRAL INDEX KEY: 0000005352 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 256109007 STATE OF INCORPORATION: MD FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-01704 FILM NUMBER: 96674644 BUSINESS ADDRESS: STREET 1: FEDERATED INVESTORS TWR CITY: PITTSBURGH STATE: PA ZIP: 15222 BUSINESS PHONE: 4122888127 MAIL ADDRESS: STREET 1: FEDERATED INVESTORS TOWER CITY: PITTSBURG STATE: PA ZIP: 15222-3779 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN LEADERS FUND INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: PENSION CAPITAL GROWTH INC DATE OF NAME CHANGE: 19701130 FORMER COMPANY: FORMER CONFORMED NAME: PENSION CAPITAL GROWTH FUND INC DATE OF NAME CHANGE: 19701120 N-30D 1 Federated American Leaders Fund, Inc. (formerly, American Leaders Fund, Inc.) 27TH SEMI-ANNUAL REPORT SEPTEMBER 30, 1996 ESTABLISHED 1969 GROWTH & INCOME PRESIDENT'S MESSAGE [Graphic] Dear Fellow Shareholder: Federated American Leaders Fund, Inc. was created in 1969, and I am pleased to present the 27th Semi-Annual Report for the fund. This report covers the six-month period from April 1, 1996 to September 30, 1996. First, we present a discussion with the fund's co-managers Peter R. Anderson, Senior Vice President, Federated Advisers, and Scott B. Schermerhorn, Vice President, Federated Advisers. Following their discussion are graphs depicting the fund's long-term investment performance, a complete list of the fund's highly diversified stock holdings, and the fund's financial statements. The portfolio of high-quality common stocks -- which, at the end of the period, included household names like Chrysler, Mattel, Heinz, Avon, Exxon, General Electric, Wal-Mart, Intel, and AT&T -- performed well in the continued favorable stock market environment. The fund's total return performance for the six-month period, which reflects income dividends, realized gain, and capital appreciation, is shown below for each share class.*
NET ASSET CAPITAL TOTAL VALUE INCREASE INCOME GAINS RETURN Class A Shares $19.78 to $20.48 = 4% $0.09 $0.32 5.70% Class B Shares $19.79 to $20.48 = 3% $0.02 $0.32 5.26% Class C Shares $19.80 to $20.48 = 3% $0.02 $0.32 5.20% Class F Shares $19.78 to $20.48 = 4% $0.09 $0.32 5.69%
During the report period, the fund achieved a milestone by topping $1 billion in assets for the first time in its 27-year history. This growth is the result of a sizable increase in the value of fund shares as well as the continued participation of long-time and new shareholders who increased their holdings. * Performance quoted is based on net asset value and reflects past performance. Performance is not indicative of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Total returns for the period (based on offering price) for Class A Shares, Class B Shares, Class C Shares, and Class F Shares were (0.11%), (0.34%), 4.18%, and 3.61%, respectively. Thank you for entrusting a portion of your wealth to our blue-chip stock fund, Federated American Leaders Fund, Inc. The investment concept of selecting and owning 50 to 100 leading American corporations has served our shareholders well. These competitive corporations offer products and services that are in demand throughout the U.S. and the world, and we are putting them all to work for you in one convenient investment. We encourage you to reinvest your dividends and capital gains automatically in additional shares. It is a convenient way to increase your opportunity to participate in the growth and earnings of blue-chip American companies. As always, we welcome your comments and suggestions. Sincerely, [Graphic] John F. Donahue President November 15, 1996 INVESTMENT REVIEW [Graphic] Peter R. Anderson Senior Vice President Federated Advisers [Graphic] Scott B. Schermerhorn Vice President Federated Advisers [Graphic] DURING THE SIX-MONTH REPORT PERIOD ENDED SEPTEMBER 30, 1996, THE STOCK MARKET STUMBLED BRIEFLY BUT STILL MANAGED TO REACH THEIR NEW HIGHS TOWARD THE END OF SEPTEMBER. WHAT IS YOUR REVIEW OF THE SECOND AND THIRD QUARTERS OF 1996? In the second quarter of 1996, the U.S. stock market, as measured by the Standard & Poor's 500 Index* ("S&P 500"), exhibited higher volatility than the first quarter, yet continued its winning ways producing a 4.49% return. The stock market, as measured by the Dow Jones Industrial Average, posted a 3.09% total return for the third quarter boosting the year-to-date (September 30, 1996) return to 13.50%. The economy was very strong in the second quarter, but slowed somewhat in the third quarter to an estimated 2.5% rate of growth (real Gross Domestic Product). Currently, economic signals are mixed and corporate profit growth is slowing to a 5%-6% annual rate. As the stock market has hit new highs, it has also become more sector rotational and stock selective. [Graphic] HOW DID FEDERATED AMERICAN LEADERS FUND, INC. PERFORM FOR ITS SHAREHOLDERS? For the six-month report period, the fund's Class A, B, C, and F Shares produced total returns of 5.70%, 5.26%, 5.20%, and 5.69%, respectively.** This performance is based on net asset value and includes capital appreciation, income dividends, and capital gains. The fund continues to show solid long-term results. For example, annualized total return based on net asset value for Class A Shares for the 1-year, 5-year, and 10-year periods ending September 30, 1996, were 19.17%, 15.52%, and 12.70%, respectively.** * The Standard & Poor's 500 Index is a composite index of common stocks in industry, transportation, and financial and public utility companies that can be used to compare to the total returns of funds whose portfolios are invested primarily in common stocks. This index is unmanaged, and actual investments may not be made in an index. ** Performance quoted 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 six-month period ended September 30, 1996 for Class A Shares, Class B Shares, Class C Shares, and Class F Shares based on offering price, were (0.11%), (0.34%), 4.18%, and 3.61%, respectively. Total returns based on offering price for Class A Shares for the 1-year, 5-year, and 10-year periods ended September 30, 1996, were 12.61%, 14.22%, and 12.07%, respectively. [Graphic] IN THE FUND'S PREVIOUS REPORT, YOU SINGLED OUT FINANCE AND TECHNOLOGY AS SECTORS IN WHICH THE FUND MAINTAINED OVERWEIGHTED POSITIONS RELATIVE TO THE S&P 500 WEIGHTINGS. WHAT WAS THE FUND'S EXPOSURE TO THESE SECTORS ON SEPTEMBER 30, 1996? During the third quarter, we reduced exposure in Technology and Finance to roughly market (S&P 500) weight. Some technology companies have begun to experience earnings disappointments or have become fully valued on an intermediate basis. With the outstanding performance of the Finance sector, many stocks in that group also have moved to levels that offer limited upside in our opinion. Several new positions in the Utilities and Consumer-Non Durable sectors increased the fund's holdings in these sectors to approximately market weight. At the end of the quarter, the fund had no major overweighted or underweighted sectors, which is consistent with our valuation and estimate revision disciplines. Our goal in this blue-chip stock fund is to find opportunities to invest in companies that are leaders in their respective industries, but at the same time avoid stocks that have become clearly overvalued. We believe even the best companies can experience short-term disappointments that provide buying opportunities for long-term investors. The longer term selection themes underlying our investment strategy continue to be corporate restructuring, industry consolidation, technology, globalization, and demographics. [Graphic] WHAT STOCKS HAVE YOU BEEN BUYING AND SELLING? The new names added during the third quarter are stocks of leading companies that had underperformed over the previous six to twelve months. Good examples include: BAUSCH & LOMB, the leading producer of eye-care products; BROWNING-FERRIS, a major provider of environmental services; DOVER CORP., a diversified manufacturing company with an excellent long-term record; MARSH & MCLENNAN, the largest insurance brokerage firm; STANLEY WORKS, a major producer of tools and hardware products. Portfolio sales reflect relative overvaluation and/or deteriorating fundamentals as reflected in our estimate revision work. Examples of overvaluation include: Eastman Kodak, Interpublic Group, Ivax, Microsoft, and Westinghouse. Stock sales based on deteriorating fundamentals include: Applied Materials, Eastman Chemical, Lam Research, Millipore, Philips Electronics, and Comsat. [Graphic] WHAT WERE THE FUND'S TOP 10 HOLDINGS AS OF SEPTEMBER 30, 1996, AND HOW IS THE FUND DIVERSIFIED BY INDUSTRY? The top holdings and sector weightings were as follows: TOP HOLDINGS
NAME % OF NET ASSETS Mobil Corp. 2.7% Unilever, N.V. 2.6% Kimberly-Clark Corp. 2.1% Textron, Inc. 2.1% Rubbermaid, Inc. 2.0% Federal Nat'l. Mortgage Assoc. 2.0% Pacific Gas & Electric Co. 2.0% Marsh & McLennan Cos., Inc. 2.0% CPC International, Inc. 2.0% Wal-Mart Stores, Inc. 2.0%
SECTOR WEIGHTINGS
% OF S&P 500 ASSET CLASS NET ASSETS SECTOR WEIGHTING Consumer Non-Durables 13.4% 12.1% Finance 13.2% 14.1% Health Care 12.8% 10.7% Technology 12.2% 13.6% Utilities 11.3% 11.0% Energy Minerals 10.1% 8.7% Producer Manufacturing 5.3% 7.5% Retail Trade 5.4% 4.9% Basic Industry 4.2% 6.6% Services 3.6% 5.4% Consumer Durables 2.8% 3.9% Transportation 1.2% 1.5% Miscellaneous 3.7% 0.0%
[Graphic] AS WE APPROACH THE CLOSE OF 1996, WHAT IS YOUR OUTLOOK FOR THE MARKET? Basically, our outlook is constructive. The stock market tends to be driven by three factors: earnings, interest rates, and liquidity. We foresee reasonable earnings growth over the next 6 to 12 months, with interest rates fairly stable. Liquidity appears ample as investors continue to pour money into stock funds. The stock market itself is a better forecaster of the future than most economists, and, currently, the market appears to view the next 6 to 12 months fairly positively. TWO WAYS YOU MAY SEEK TO INVEST FOR SUCCESS IN FEDERATED AMERICAN LEADERS FUND, INC. (FORMERLY, AMERICAN LEADERS FUND, INC.) INITIAL INVESTMENT: IF YOU HAD MADE AN INITIAL INVESTMENT OF $28,000 IN THE CLASS A SHARES OF FEDERATED AMERICAN LEADERS FUND, INC. ON 2/26/69, REINVESTED DIVIDENDS AND CAPITAL GAINS, AND DIDN'T REDEEM ANY SHARES, YOUR ACCOUNT WOULD BE WORTH $423,305 ON 9/30/96. YOU WOULD HAVE EARNED A 10.34%* AVERAGE ANNUAL TOTAL RETURN FOR THE 27-YEAR INVESTMENT LIFE SPAN. One key to investing wisely is to reinvest all distributions in fund shares. This increases the number of shares on which you can earn future dividends, and you gain the benefit of compounding. As of 9/30/96, the Class A Shares' average annual one-year, five-year, and ten-year total returns were 12.61%, 14.22%, and 12.07%, respectively. Class B Shares' average annual one-year and since inception (7/25/94) total returns were 12.48% and 18.08%, respectively. Class C Shares' average annual one-year and since inception (4/21/93) total returns were 17.25% and 14.41%, respectively. Class F Shares' average annual one-year and since inception (7/27/93) total returns were 16.93% and 14.27%, respectively. "Graphic representation "A" omitted. See Appendix." * Total return represents the change in the value of an investment in Class A Shares after reinvesting all income and capital gains, and takes into account the 5.5% sales charge applicable to an initial investment in Class A Shares. Data quoted represents past performance and does not guarantee future results. Investment return and principal value will fluctuate, so an investor's shares, when redeemed, may be worth more or less than their original cost. FEDERATED AMERICAN LEADERS FUND, INC. (FORMERLY, AMERICAN LEADERS FUND, INC.) ONE STEP AT A TIME: $1,000 INVESTED EACH YEAR FOR 27 YEARS (REINVESTING ALL DIVIDENDS AND CAPITAL GAINS) GREW TO $218,453. With this approach, the key is consistency. If you had started investing $1,000 annually in the Class A Shares of Federated American Leaders Fund, Inc. on 2/26/69, reinvested your dividends and capital gains, and didn't redeem any shares, you would have invested only $28,000, but your account would have reached a total value of $218,453* by 9/30/96. You would have earned an average annual total return of 12.37%. 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 "B" omitted. See Appendix." * No method of investing can guarantee a profit or protect against loss in down markets. However, by investing regularly over time and buying shares at various prices, investors can purchase more shares at lower prices, and all accumulated shares have the ability to pay income to the investor. Because such a plan involves continuous investment, regardless of changing price levels, the investor should consider whether or not to continue purchases through periods of low price levels. FEDERATED AMERICAN LEADERS FUND, INC. (FORMERLY, AMERICAN LEADERS FUND, INC.) 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 are planning for the college education of their child. On September 30, 1981, 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 $184,039. This represents a 14.50% average annual total return.* For the Rices, a dedicated program of monthly investment really paid off. "Graphic representation "C" omitted. See Appendix." * This hypothetical scenario is provided for illustrative purposes only and does not represent the results obtained by any particular shareholder. Past performance does not guarantee future results. FEDERATED AMERICAN LEADERS FUND, INC. (FORMERLY, AMERICAN LEADERS FUND, INC.) PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1996 (UNAUDITED)
SHARES VALUE COMMON STOCKS -- 95.5% BASIC INDUSTRY -- 4.2% 200,000 Betz Laboratories, Inc. $ 10,500,000 185,000 Consolidated Papers, Inc. 9,620,000 300,000 Monsanto Co. 10,950,000 275,000 Morton International, Inc. 10,931,250 34,000 Sigma-Aldrich Corp. 1,938,000 Total 43,939,250 CONSUMER DURABLES -- 2.8% 200,000 Chrysler Corp. 5,725,000 45,300 Mattel, Inc. 1,172,138 865,000 Rubbermaid, Inc. 21,192,500 30,500 Stanley Works 857,813 Total 28,947,451 CONSUMER NON-DURABLES -- 13.4% 246,400 Avon Products, Inc. 12,227,600 272,100 CPC International, Inc. 20,373,487 480,000 Heinz (H.J.) Co. 16,200,000 625,000 IBP, Inc. 14,531,250 248,500 Kimberly-Clark Corp. 21,899,062 197,000 Philip Morris Cos., Inc. 17,680,750 225,000 Tambrands, Inc. 9,478,125 169,300 Unilever N.V., ADR 26,685,913 Total 139,076,187 ENERGY MINERALS -- 10.1% 166,100 Chevron Corp. 10,402,012 120,000 Exxon Corp. 9,990,000 240,000 Mobil Corp. 27,780,000
FEDERATED AMERICAN LEADERS FUND, INC. (FORMERLY, AMERICAN LEADERS FUND, INC.)
SHARES VALUE COMMON STOCKS -- CONTINUED ENERGY MINERALS -- CONTINUED 89,000 Royal Dutch Petroleum Co., ADR $ 13,895,125 110,000 Texaco, Inc. 10,120,000 558,700 USX Corp. 12,081,888 377,000 Union Pacific Resources Group, Inc. 10,556,000 284,500 Unocal Corp. 10,242,000 Total 105,067,025 FINANCE -- 13.2% 290,500 Aflac, Inc. 10,312,750 211,500 Allstate Corp. 10,416,375 126,200 Chase Manhattan Corp. 10,111,775 112,500 CIGNA Corp. 13,485,937 120,000 Citicorp 10,875,000 200,000 Dean Witter, Discover & Co. 11,000,000 106,700 Federal Home Loan Mortgage Corp. 10,443,262 593,200 Federal National Mortgage Association 20,687,850 211,000 Marsh & McLennan Cos., Inc. 20,493,375 248,500 National City Corp. 10,468,063 166,800 Travelers Group, Inc. 8,194,050 Total 136,488,437 HEALTH CARE -- 12.8% 354,000 Abbott Laboratories 17,434,500 225,000 American Home Products Corp. 14,343,750 270,000 Bausch & Lomb, Inc. 9,922,500 320,000 Becton, Dickinson & Co. 14,160,000 620,000 (a)Biomet, Inc. 10,152,500 186,500 Bristol-Myers Squibb Co. 17,973,937 274,000 Columbia/HCA Healthcare Corp. 15,583,750
FEDERATED AMERICAN LEADERS FUND, INC. (FORMERLY, AMERICAN LEADERS FUND, INC.)
SHARES VALUE COMMON STOCKS -- CONTINUED HEALTH CARE -- CONTINUED 720,400 (a) Healthsource, Inc. $ 10,625,900 149,000 Merck & Co., Inc. 10,485,875 275,000 United Healthcare Corp. 11,446,875 Total 132,129,587 PRODUCER MANUFACTURING -- 5.3% 12,200 Dover Corp. 582,550 142,500 General Electric Co. 12,967,500 223,800 Ingersoll-Rand Co. 10,630,500 120,000 Loews Corp. 9,285,000 250,000 Textron, Inc. 21,250,000 Total 54,715,550 RETAIL TRADE -- 5.4% 312,000 Dayton-Hudson Corp. 10,296,000 453,000 Dillard Department Stores, Inc., Class A 14,609,250 250,000 Sears, Roebuck & Co. 11,187,500 765,000 Wal-Mart Stores, Inc. 20,176,875 Total 56,269,625 SERVICES -- 3.6% 800,000 Browning-Ferris Industries, Inc. 20,000,000 100,000 Disney (Walt) Co. 6,337,500 150,000 Gannett Co., Inc. 10,556,250 Total 36,893,750 TECHNOLOGY -- 12.2% 92,800 Automatic Data Processing, Inc. 4,048,400 201,700 Computer Associates International, Inc. 12,051,575 296,000 (a)Electronic Data Systems Corp. 18,167,000 226,600 Hewlett-Packard Co. 11,046,750
FEDERATED AMERICAN LEADERS FUND, INC. (FORMERLY, AMERICAN LEADERS FUND, INC.)
SHARES OR PRINCIPAL AMOUNT VALUE COMMON STOCKS -- CONTINUED TECHNOLOGY -- CONTINUED 200,200 Intel Corp. $ 19,106,587 71,200 International Business Machines Corp. 8,864,400 112,600 Lockheed Martin Corp. 10,148,075 132,200 Lucent Technologies, Inc. 6,064,675 244,300 (a)Oracle Corp. 10,398,019 185,500 Rockwell International Corp. 10,457,563 334,400 (a)Solectron Corp. 16,385,600 Total 126,738,644 TRANSPORTATION -- 1.2% 176,600 Union Pacific Corp. 12,935,950 UTILITIES -- 11.3% 300,000 AT&T Corp. 15,675,000 243,700 Columbia Gas System, Inc. 13,647,200 425,000 Enron Corp. 17,318,750 233,000 FPL Group, Inc. 10,077,250 266,000 GTE Corp. 10,241,000 737,500 MCI Communications Corp. 18,898,438 948,000 Pacific Gas & Electric Co. 20,619,000 464,000 Southern Co. 10,498,000 Total 116,974,638 TOTAL COMMON STOCKS (IDENTIFIED COST $808,717,763) 990,176,094 (B)REPURCHASE AGREEMENT -- 3.7% $ 38,210,000 BT Securities Corporation, 5.72%, dated 9/30/1996, due 10/1/1996 (AT AMORTIZED COST) 38,210,000 TOTAL INVESTMENTS (IDENTIFIED COST $846,927,763)(C) $1,028,386,094
(a) Non-income producing security. (b) The repurchase agreement is fully collateralized by U.S. government and/or agency obligations based on market prices at the date of the portfolio. The investment in the repurchase agreement is through participation in a joint account with other Federated funds. (c) The cost of investments for federal tax purposes amounts to $846,927,763. The net unrealized appreciation of investments on a federal tax basis amounts to $181,458,331 which is comprised of $188,592,971 appreciation and $7,134,640 depreciation at September 30, 1996. Note: The categories of investments are shown as a percentage of net assets ($1,036,551,566) at September 30, 1996. The following acronym is used throughout this portfolio: ADR -- American Depositary Receipt (See Notes which are an integral part of the Financial Statements) FEDERATED AMERICAN LEADERS FUND, INC. -- (FORMERLY, AMERICAN LEADERS FUND, INC.) STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1996 (UNAUDITED) ASSETS: Total investments in securities, at value (identified and tax cost $846,927,763) $ 1,028,386,094 Cash 14,967 Income receivable 2,439,792 Receivable for investments sold 6,933,929 Receivable for shares sold 4,297,853 Total assets 1,042,072,635 LIABILITIES: Payable for investments purchased $ 4,652,792 Payable for shares redeemed 480,725 Accrued expenses 387,552 Total liabilities 5,521,069 Net Assets for 50,609,559 shares outstanding $ 1,036,551,566 NET ASSETS CONSIST OF: Paid in capital $ 810,558,567 Net unrealized appreciation of investments 181,458,331 Accumulated net realized gain on investments 43,211,183 Undistributed net investment income 1,323,485 Total Net Assets $ 1,036,551,566 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: CLASS A SHARES: Net Asset Value Per Share ($510,464,473 / 24,921,010 shares outstanding) $20.48 Offering Price Per Share (100/94.50 of $20.48)* $21.67 Redemption Proceeds Per Share** $20.48 CLASS B SHARES: Net Asset Value Per Share ($396,077,509 / 19,340,768 shares outstanding) $20.48 Offering Price Per Share* $20.48 Redemption Proceeds Per Share (94.50/100 of $20.48)** $19.35 CLASS C SHARES: Net Asset Value Per Share ($57,924,578 / 2,827,793 shares outstanding) $20.48 Offering Price Per Share* $20.48 Redemption Proceeds Per Share (99.00/100 of $20.48)** $20.28 CLASS F SHARES: Net Asset Value Per Share ($72,085,006 / 3,519,988 shares outstanding) $20.48 Offering Price Per Share (100/99.00 of $20.48)*** $20.69 Redemption Proceeds Per Share (99.00/100 of $20.48)** $20.28
* See "How to Purchase Shares" in the Prospectus. ** See "Contingent Deferred Sales Charge" in the Prospectus. *** See "What Shares Cost" in the Prospectus. (See Notes which are an integral part of the Financial Statements) FEDERATED AMERICAN LEADERS FUND, INC. -- (FORMERLY, AMERICAN LEADERS FUND, INC.) STATEMENT OF OPERATIONS SIX MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED) INVESTMENT INCOME: Dividends $ 8,184,750 Interest 1,584,439 Total income 9,769,189 EXPENSES: Investment advisory fee $ 2,886,909 Administrative personnel and services fee 349,048 Custodian fees 56,173 Transfer and dividend disbursing agent fees and expenses 591,567 Directors'/Trustees' fees 6,793 Auditing fees 10,019 Legal fees 2,391 Portfolio accounting fees 87,856 Distribution services fee -- Class B Shares 1,235,559 Distribution services fee -- Class C Shares 191,597 Shareholder services fee -- Class A Shares 598,845 Shareholder services fee -- Class B Shares 411,853 Shareholder services fee -- Class C Shares 63,866 Shareholder services fee -- Class F Shares 79,697 Share registration costs 105,542 Printing and postage 79,398 Insurance premiums 1,669 Taxes 22,016 Miscellaneous 1,365 Total expenses 6,782,163 Waivers -- Waiver of shareholder services fee -- Class A Shares $ (87,657) Waiver of shareholder services fee -- Class F Shares (5,231) Total waivers (92,888) Net expenses 6,689,275 Net investment income 3,079,914 REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain on investments 43,236,764 Net change in unrealized appreciation of investments 6,065,198 Net realized and unrealized gain on investments 49,301,962 Change in net assets resulting from operations $ 52,381,876
(See Notes which are an integral part of the Financial Statements) FEDERATED AMERICAN LEADERS FUND, INC. -- (FORMERLY, AMERICAN LEADERS FUND, INC.) STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED SEPTEMBER 30, MARCH 31, 1996 1996 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS -- Net investment income $ 3,079,914 $ 4,745,714 Net realized gain on investments ($43,236,764 and $29,467,435 net gains, respectively, as computed for federal tax purposes) 43,236,764 29,467,435 Net change in unrealized appreciation 6,065,198 112,788,561 Change in net assets resulting from operations 52,381,876 147,001,710 NET EQUALIZATION CREDITS (DEBITS) -- 402,371 797,978 DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income: Class A Shares (2,249,995) (3,449,876) Class B Shares (358,797) (300,834) Class C Shares (50,922) (50,556) Class F Shares (306,441) (370,222) Distributions from net realized gains Class A Shares (7,749,906) (12,685,641) Class B Shares (5,247,621) (4,534,699) Class C Shares (818,012) (1,056,763) Class F Shares (1,028,228) (1,393,014) Change in net assets resulting from distributions to shareholders (17,809,922) (23,841,605) SHARE TRANSACTIONS (EXCLUSIVE OF AMOUNTS ALLOCATED TO NET INVESTMENT INCOME) -- Proceeds from sale of shares 230,078,978 396,144,022 Net asset value of shares issued to shareholders in payment of distributions declared 16,147,876 19,738,904 Cost of shares redeemed (61,303,373) (86,878,884) Change in net assets resulting from share transactions 184,923,481 329,004,042 Change in net assets 219,897,806 452,962,125 NET ASSETS: Beginning of period 816,653,760 363,691,635 End of period (including undistributed net investment income of $1,323,485 and $807,355, respectively) $1,036,551,566 $ 816,653,760
(See Notes which are an integral part of the Financial Statements) FEDERATED AMERICAN LEADERS FUND, INC. -- (FORMERLY, AMERICAN LEADERS FUND, INC.) FINANCIAL HIGHLIGHTS -- CLASS A SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) SEPTEMBER 30, YEAR ENDED MARCH 31, 1996 1996 1995 1994 1993 1992 1991 1990 1989 1988 NET ASSET VALUE, BEGINNING OF PERIOD $19.78 $15.66 $14.58 $14.90 $13.88 $13.18 $12.21 $13.04 $12.55 $14.21 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.10 0.22 0.25 0.23 0.29 0.29 0.37 0.55 0.50 0.45 Net realized and unrealized gain (loss) on investments 1.01 4.70 1.42 0.18 2.05 1.34 1.28 0.36 1.08 (1.21) Total from investment operations 1.11 4.92 1.67 0.41 2.34 1.63 1.65 0.91 1.58 (0.76) LESS DISTRIBUTIONS Distributions from net investment income (0.09) (0.17) (0.24) (0.24) (0.28) (0.28) (0.38) (0.56) (0.50) (0.43) Distributions from net realized gain on investments (0.32) (0.63) (0.35) (0.49) (1.04) (0.65) (0.30) (1.18) (0.59) (0.47) Total distributions (0.41) (0.80) (0.59) (0.73) (1.32) (0.93) (0.68) (1.74) (1.09) (0.90) NET ASSET VALUE, END OF PERIOD $20.48 $19.78 $15.66 $14.58 $14.90 $13.88 $13.18 $12.21 $13.04 $12.55 TOTAL RETURN(A) 5.70% 32.00% 11.87% 2.76% 18.31% 12.91% 14.17% 7.13% 13.23% (5.32%) RATIOS TO AVERAGE NET ASSETS Expenses 1.13%* 1.16% 1.23% 1.18% 1.13% 1.02% 1.02% 1.01% 1.01% 1.00% Net investment income 0.99%* 1.07% 1.71% 1.48% 2.07% 2.12% 3.06% 4.23% 3.85% 3.35% Expense waiver/ reimbursement(b) 0.04%* 0.07% -- -- 0.06% 0.16% 0.30% 0.35% 0.12% 0.11% SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $510,464 $455,867 $268,470 $226,857 $202,866 $171,210 $149,360 $147,235 $149,049 $158,818 Average commission rate paid $0.0511 -- -- -- -- -- -- -- -- -- Portfolio turnover 51% 46% 34% 27% 39% 67% 57% 50% 27% 65%
* Computed on an annualized basis. (a) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (b) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) FEDERATED AMERICAN LEADERS FUND, INC. -- (FORMERLY, AMERICAN LEADERS FUND, INC.) FINANCIAL HIGHLIGHTS -- CLASS B SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED SEPTEMBER 30, MARCH 31, 1996 1996 1995(A) NET ASSET VALUE, BEGINNING OF PERIOD $19.79 $15.67 $14.97 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.02 0.06 0.13 Net realized and unrealized gain on investments 1.01 4.74 0.92 Total from investment operations 1.03 4.80 1.05 LESS DISTRIBUTIONS Distributions from net investment income (0.02) (0.05) (0.12) Distributions from net realized gain on investments (0.32) (0.63) (0.23) Total distributions (0.34) (0.68) (0.35) NET ASSET VALUE, END OF PERIOD $20.48 $19.79 $15.67 TOTAL RETURN(B) 5.26% 31.14% 7.28% RATIOS TO AVERAGE NET ASSETS Expenses 1.92%* 1.93% 1.95%* Net investment income 0.21%* 0.32% 1.09%* Expense waiver/reimbursement(c) -- -- 0.12%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $396,078 $261,024 $46,671 Average commission rate paid $0.0511 -- -- Portfolio turnover 51% 46% 34%
* Computed on an annualized basis. (a) Reflects operations for the period from July 25, 1994 (date of initial public investment) to March 31, 1995. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) FEDERATED AMERICAN LEADERS FUND, INC. -- (FORMERLY, AMERICAN LEADERS FUND, INC.) FINANCIAL HIGHLIGHTS -- CLASS C SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED SEPTEMBER 30, MARCH 31, 1996 1996 1995 1994(A) NET ASSET VALUE, BEGINNING OF PERIOD $19.80 $15.66 $14.55 $14.70 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.02 0.05 0.14 0.12 Net realized and unrealized gain on investments 1.00 4.75 1.45 0.35 Total from investment operations 1.02 4.80 1.59 0.47 LESS DISTRIBUTIONS Distributions from net investment income (0.02) (0.03) (0.13) (0.13) Distributions from net realized gain on investments (0.32) (0.63) (0.35) (0.49) Total distributions (0.34) (0.66) (0.48) (0.62) NET ASSET VALUE, END OF PERIOD $20.48 $19.80 $15.66 $14.55 TOTAL RETURN(B) 5.20% 31.14% 11.23% 3.16% RATIOS TO AVERAGE NET ASSETS Expenses 1.92%* 1.96% 2.04% 2.11%* Net investment income 0.21%* 0.27% 0.91% 0.71%* Expense waiver/reimbursement(c) -- 0.02% -- -- SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $57,925 $44,434 $20,055 $11,895 Average commission rate paid $0.0511 -- -- -- Portfolio turnover 51% 46% 34% 27%
* Computed on an annualized basis. (a) Reflects operations for the period from April 21, 1993 (date of initial public investment) to March 31, 1994. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) FEDERATED AMERICAN LEADERS FUND, INC. -- (FORMERLY, AMERICAN LEADERS FUND, INC.) FINANCIAL HIGHLIGHTS -- CLASS F SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED SEPTEMBER 30, MARCH 31, 1996 1996 1995 1994(A) NET ASSET VALUE, BEGINNING OF PERIOD $19.78 $15.66 $14.58 $14.95 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.10 0.19 0.25 0.16 Net realized and unrealized gain on investments 1.01 4.72 1.42 (0.20) Total from investment operations 1.11 4.91 1.67 (0.04) LESS DISTRIBUTIONS Distributions from net investment income (0.09) (0.16) (0.24) (0.16) Distributions from net realized gain on investments (0.32) (0.63) (0.35) (0.17) Total distributions (0.41) (0.79) (0.59) (0.33) NET ASSET VALUE, END OF PERIOD $20.48 $19.78 $15.66 $14.58 TOTAL RETURN(B) 5.69% 31.95% 11.80% (0.30%) RATIOS TO AVERAGE NET ASSETS Expenses 1.15%* 1.21% 1.27% 1.35%* Net investment income 0.95%* 1.02% 1.69% 1.51%* Expense waiver/reimbursement(c) 0.01%* 0.02% -- -- SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $72,085 $55,329 $28,495 $15,282 Average commission rate paid $0.0511 -- -- -- Portfolio turnover 51% 46% 34% 27%
* Computed on an annualized basis. (a) Reflects operations for the period from July 27, 1993 (date of initial public investment) to March 31, 1994. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) FEDERATED AMERICAN LEADERS FUND, INC. -- (FORMERLY, AMERICAN LEADERS FUND, INC.) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 (UNAUDITED) 1. ORGANIZATION Federated American Leaders Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a diversified, open-end management investment company. The Fund offers four classes of shares: Class A Shares, Class B Shares, Class C Shares, and Class F Shares. The investment objective of the Fund is to seek growth of capital and of income by concentrating the area of investment decision in the securities of high quality companies. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. INVESTMENT VALUATIONS -- Listed equity securities are valued at the last sale price reported on a national securities exchange. Short-term securities are valued at the prices provided by an independent pricing service. However, short-term securities with remaining maturities of sixty days or less at the time of purchase may be valued at amortized cost, which approximates fair market value. REPURCHASE AGREEMENTS -- It is the policy of the Fund to require the custodian bank to take possession, to have legally segregated in the Federal Reserve Book Entry System, or to have segregated within the custodian bank's vault, all securities held as collateral under repurchase agreement transactions. Additionally, procedures have been established by the Fund to monitor, on a daily basis, the market value of each repurchase agreement's collateral to ensure that the value of collateral at least equals the repurchase price to be paid under the repurchase agreement transaction. The Fund will only enter into repurchase agreements with banks and other recognized financial institutions, such as broker/dealers, which are deemed by the Fund's adviser to be creditworthy pursuant to the guidelines and/or standards reviewed or established by the Board of Directors (the "Directors"). Risks may arise from the potential inability of counterparties to honor the terms of the repurchase agreement. Accordingly, the Fund could receive less than the repurchase price on the sale of collateral securities. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). 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. EQUALIZATION -- The Fund follows the accounting practice known as equalization, in which a portion of the proceeds from sales and costs of redemptions of fund shares equivalent, on a per share basis, to the amount of undistributed net investment income on the date of the transaction, is credited or charged to undistributed net investment income. As a result, undistributed net investment income per share is unaffected by sales or redemptions of fund shares. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. USE OF ESTIMATES -- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER -- Investment transactions are accounted for on the trade date. 3. CAPITAL STOCK At September 30, 1996, par value shares ($ 0.20 per share) authorized were as follows:
NUMBER OF PAR VALUE CAPITAL CLASS NAME 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
Transactions in capital stock were as follows:
SIX MONTHS ENDED YEAR ENDED SEPTEMBER 30, 1996 MARCH 31, 1996 CLASS A SHARES SHARES AMOUNT SHARES AMOUNT Shares sold 3,353,366 $ 65,927,503 8,582,300 $ 153,778,904 Shares issued to shareholders in payment of distributions declared 442,756 8,816,773 745,456 13,448,166 Shares redeemed (1,922,091) (37,509,349) (3,425,166) (61,354,945) Net change resulting from Class A Share transactions 1,874,031 $ 37,234,927 5,902,590 $ 105,872,125 SIX MONTHS ENDED YEAR ENDED SEPTEMBER 30, 1996 MARCH 31, 1996 CLASS B SHARES SHARES AMOUNT SHARES AMOUNT Shares sold 6,799,155 $ 134,483,713 10,810,661 $ 198,757,682 Shares issued to shareholders in payment of distributions declared 263,802 5,280,634 236,916 4,339,389 Shares redeemed (908,727) (17,970,892) (839,484) (15,534,728) Net change resulting from Class B Share transactions 6,154,230 $ 121,793,455 10,208,093 $ 187,562,343 SIX MONTHS ENDED YEAR ENDED SEPTEMBER 30, 1996 MARCH 31, 1996 CLASS C SHARES SHARES AMOUNT SHARES AMOUNT Shares sold 691,126 $ 13,651,098 1,191,221 $ 21,813,090 Shares issued to shareholders in payment of distributions declared 40,422 808,925 36,162 655,726 Shares redeemed (148,369) (2,928,527) (263,447) (4,771,458) Net change resulting from Class C Share transactions 583,179 $ 11,531,496 963,936 $ 17,697,358 SIX MONTHS ENDED YEAR ENDED SEPTEMBER 30, 1996 MARCH 31, 1996 CLASS F SHARES SHARES AMOUNT SHARES AMOUNT Shares sold 808,453 $ 16,016,664 1,201,769 $ 21,794,346 Shares issued to shareholders in payment of distributions declared 62,070 1,241,544 71,470 1,295,623 Shares redeemed (147,747) (2,894,605) (295,842) (5,217,753) Net change resulting from Class F Share transactions 722,776 $ 14,363,603 977,397 $ 17,872,216 Net change resulting from share transactions 9,334,216 $ 184,923,481 18,052,016 $ 329,004,042
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE -- Federated Advisers, the Fund's investment adviser, (the "Adviser"), receives for its services an annual investment advisory fee equal to (a) a maximum of 0.55% of the average daily net assets of the Fund, and (b) 4.50% of the gross income of the Fund, excluding capital gains or losses. ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. DISTRIBUTION SERVICES FEE -- The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. ("FSC"), the principal distributor, from the net assets of the Fund to finance activities intended to result in the sale of the Fund's Class B 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 SHARE CLASS NAME NET ASSETS Class B 0.75% Class C 0.75%
SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets of each class of shares of the Fund for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive a portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES -- FServ, through its subsidiary, Federated Shareholder Services Company ("FSSC") serves as transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES -- FServ maintains the Fund's accounting records for which it receives a fee. The fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. GENERAL -- Certain of the Officers and Directors of the Corporation are Officers and Directors or Trustees of the above companies. 5. INVESTMENT TRANSACTIONS Purchases and sales of investments, excluding short-term securities, for the period ended September 30, 1996, were as follows: PURCHASES $ 697,334,706 SALES $ 436,472,477
DIRECTORS John F. Donahue Thomas G. Bigley John T. Conroy, Jr. William J. Copeland J. Christopher Donahue James E. Dowd Lawrence D. Ellis, M.D. Edward L. Flaherty, Jr. Peter E. Madden Gregor F. Meyer John E. Murray, Jr. Wesley W. Posvar Marjorie P. Smuts OFFICERS John F. Donahue President J. Christopher Donahue Executive Vice President Edward C. Gonzales Executive Vice President John W. McGonigle Executive Vice President, Treasurer, and Secretary Richard B. Fisher Vice President S. Elliott Cohan 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 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 Investors Federated Investors Tower Pittsburgh, PA 15222-3779 Federated Securities Corp. is the distributor of the fund and is a subsidiary of Federated Investors. 027128107 027128206 027128305 027128404 8110101 (11/96) A. The graphic presentation here displayed consists of a boxed legend in the upper left quadrant indicating the components of the corresponding mountain chart. The color-coded mountain chart is a visual representation of the narrative text above it, which shows that an initial investment in the Class A Shares of Federated American Leaders Fund, Inc. on February 26, 1969, would have grown to $423,305 on September 30, 1996. The `y'' axis reflects the cost of the investment. The ``x'' axis reflects computation periods from February 26, 1969 to September 30, 1996. The chart further indicates the ending market value attributable to principal, as well as the ending market value attributable to capital gains and reinvested dividends. B. The graphic presentation here displayed consists of a boxed legend in the upper left quadrant indicating the components of the corresponding mountain chart. The color-coded mountain chart is a visual representation of the narrative text above it, which shows that yearly investments of $1,000 in the Class A Shares of Federated American Leaders Fund, Inc. on February 26, 1969, would have grown to $218,453 on September 30, 1996. The `y'' axis reflects the cost of the investment. The ``x'' axis reflects computation periods from February 26, 1969 to September 30, 1996. The chart further indicates the ending market value attributable to principal, as well as the ending market value attributable to capital gains and reinvested dividends. C. The graphic presentation here displayed consists of a boxed legend in the upper left quadrant indicating the components of the corresponding mountain chart. The color-coded mountain chart is a visual representation of the narrative text above it, which shows that an investment of $5,000 in the Class A shares of Federated American Leaders Fund, Inc. on September 30, 1981, would have grown to $184,039. The `y''axis reflects the cost of the investment. The `x'' axis reflects computation periods from September 30, 1981 to September 30, 1996. The chart further indicates the ending market value attributable to principal, as well as the ending market value attributable to capital gains and reinvested dividends. -----END PRIVACY-ENHANCED MESSAGE-----