-----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, JzRmMxc9A4aoJf9uRKcl9HSb7W/R8/NNtoFMCQX+s88a6x2FfB1/WUreVnK7ewWQ HkTaXbKpNZATCbilEQzlAQ== 0000807607-96-000004.txt : 19960429 0000807607-96-000004.hdr.sgml : 19960429 ACCESSION NUMBER: 0000807607-96-000004 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960229 FILED AS OF DATE: 19960426 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FEDERATED MUNICIPAL OPPORTUNITIES FUND INC CENTRAL INDEX KEY: 0000807607 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 251542736 STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04533 FILM NUMBER: 96551227 BUSINESS ADDRESS: STREET 1: FEDERATED INVESTORS TWR CITY: PITTSBURGH STATE: PA ZIP: 15222 BUSINESS PHONE: 4122881900 MAIL ADDRESS: STREET 1: FEDERATED INVESTORS TOWERS CITY: PITTSBURG STATE: PA ZIP: 15222-3779 FORMER COMPANY: FORMER CONFORMED NAME: FORTRESS MUNICIPAL INCOME FUND INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: FORTRESS HIGH YIELD MUNICIPAL FUND INC DATE OF NAME CHANGE: 19900814 FORMER COMPANY: FORMER CONFORMED NAME: FORTRESS HIGH YIELD TAX FREE FUND INC DATE OF NAME CHANGE: 19881024 N-30D 1 [logo] FEDERATED INVESTORS since 1955 Federated Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) 9th Semi-Annual Report February 29, 1996 Established 1987 President's Message Dear Fellow Shareholder: I am pleased to present the 9th Semi-Annual Report of Federated Municipal Opportunities Fund, Inc., formerly known as Fortress Municipal Income Fund, Inc. The fund's name now begins with ``Federated'' to make it easy for investors to locate all Federated Funds in newspapers and other publications. This report covers the six-month period from September 1, 1995, through February 29, 1996. It begins with a discussion with Jonathan C. Conley, Senior Vice President, Federated Advisers, about the municipal market, the fund's performance, and investment strategy. Following the portfolio manager's discussion are three additional items of shareholder interest. First is a series of graphs that display the fund's performance with income dividends reinvested and the investment results of making additional investment in the fund shares with dividends reinvested. Second is a complete listing of the fund's municipal bond holdings. Third is the publication of the fund's financial statements. During the six-month period, the fund achieved a total return of 4.39% based on net asset value.* This return was the result of dividends totaling $0.32 per share and a modest increase in share price from $10.71 to $10.85. The fund's 30-day SEC yield on February 29, 1996, was 5.49% based on offering price-free of federal regular income tax.* On that date, the fund's total net assets stood at $421.9 million. Since 1987, Federated Municipal Opportunities Fund, Inc. has provided tax-free income from a broadly diversified list of long-term municipal issues.** The fund's portfolio included 123 tax-free securities issued by municipalities in 33 states across our country. The fund's average maturity was 23.9 years. The fund's top five holdings consisted of: 1. Massachusetts-Industrial Finance Agency, Solid Waste Disposal: $20.9 million 2. Minnesota-St. Paul Housing & Redevelopment Authority: $19.1 million 3. Texas-Houston Water & Sewer System: $19.0 million 4. Indiana-Indianapolis Airport Authority: $18.4 million 5. Pennsylvania-EDFA Wastewater: $11.2 million Thank you for selecting Federated Municipal Opportunities Fund, Inc. as a convenient way to invest in a broad list of municipal securities. You can receive income from the fund or increase your wealth by reinvesting your dividends and compounding tax free. Sincerely, Richard B. Fisher President April 15, 1996 * Performance quoted represents past performance. 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 return for the period based on offering price was 2.28%. ** State, local, and federal alternative minimum taxes may apply. Investment Review [PHOTO] Jonathan C. Conley, Senior Vice President Federated Advisers Jonathan, could you please comment on developments in the long-term municipal bond market over the past six months of the fund's current fiscal year? During the past six months, interest rates for fixed-income issues staged overall declines that included ending surges in yields. From August 31, 1995, to December 29, 1995, the 30-year U.S. Treasury bond yield descended from 6.65% to 5.95%. A subsequent rise took that yield to 6.47% by February 29, 1996. As for tax-exempt issues, the yield for the Municipal Bond Index* plummeted from 6.11% to 5.56% from August 31, 1995, to February 13, 1996, then staged a brief retreat to 5.71% by February 29, 1996. With the presidential campaign in full swing, the issue of tax reform-notably a flat tax-continues to make the news. What has been the response of the municipal bond market to such conditions? The municipal bond market experienced much relative improvement to the Treasury issue market over the past six months. As the outlook for agreement on, or passage let alone implementation of a flat tax system waned in the estimation - - of municipal market practitioners, municipal bond values either increased or held their own versus those of Treasury bonds. On August 31, 1995, 30-year municipal issue yields were 91.9% of comparable Treasury issues. At the close of 1995, that figure increased to 93.5%. By February 29, 1996, the relative yield had declined to 88.3%. Confirmation of municipal bond outperformance was offered in the futures market. The ``MOB Spread'' (near-term municipal bond futures contract price less near-term Treasury bond futures contract price, expressed in 32nds of a point) initially fell from ``+41'' on August 31, 1995 to ``-21'' on September 27, 1995, then soared to ``+102'' by February 29, 1996. * Municipal Bond Index consists of 40 actively traded and quoted municipal bonds of long-term maturity with ratings of ``A'' or better. Substitutions are made to issues in the index bi-weekly. The index is published by the Bond Buyer. In this environment, how did shareholders' investments in the fund perform with respect to investment return over the six-month reporting period? For the six-month period ended February 29, 1996, an investor in Federated Municipal Opportunities Fund, Inc. experienced a total return of 4.39% based on a net asset value (NAV), or 2.28% based on offering price.* The NAV per share of the fund grew by 1.31%, from $10.71 to $10.85. Dividends per share totaled $0.32, equating to an annualized income yield of 6.01% on average NAV. There were no capital gains distributions made during the period. In comparison, the Lipper General Municipal Debt Fund Average** total return on an NAV basis for the past six months was 4.98%, while the annualized income yield was 5.03%.* Jonathan, could you describe the primary investment strategies employed by the fund during the past six months? For the past six months, the fund sought to augment its total return potential by lowering the average coupon rate of issues held and by extending the average call protection embodied with the holdings. This goal was pursued at the beginning of the calendar year. From August 31, 1995, to December 31, 1995, the average issue coupon hovered at 7.34%; between the end of 1995 and the end of February 1996, that coupon rate fell to 7.25%. During this time, portfolio duration contracted from 7.16 years to 6.09 years (reflecting bond price appreciation and ``in-the-money'' status of bond call provisions). Recalibration of the portfolio via purchase of new issues took the portfolio duration to 6.58 years by the close of February 1996. In sum, $38.6 million par value of new issues, some with medium coupons and ``original issue discount,'' were purchased with the proceeds from the sale of $21.9 million of premium, short-call/duration issues, and from fund shares issued. Among other considerations, the mix of issues sold was chosen so as to balance realized gains and losses so as to avoid the generation and distribution of net realized capital gains. * Performance quoted represents past performance. 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. ** 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 respective categories indicated. These figures do not reflect sales charges. Have there been significant changes to portfolio composition or to credit quality over the reporting period? The activity cited on the previous page resulted in a reduction in the portfolio exposure to hospital revenue issues, state housing finance agency single-family mortgage revenue issues, and to university tuition and fee revenue issues. Positions were established or expanded in obligations of Houston, TX Water and Sewer System (FGIC Insured), pollution control revenue financings guaranteed by Weyerhauser, Inc. and by Champion International, Inc. A breakdown of portfolio credit quality follows: February 29, 1996 August 31, 1995 ----------------- --------------- AAA 8.9% 4.5% AA 12.4% 13.4% A 9.1% 8.8% BBB 47.5% 49.7% BB 3.6% 3.3% NR 18.5% 20.3% The use of insured bonds was spurred by narrow market yield spreads between those and uninsured issues, engendered in part by the ongoing market penetration of the municipal bond insurers, who wrote policies on over 43% of new issuance in 1995. Two Ways You May Seek to Invest for Success in Federated Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) Initial Investment: If you made an initial investment of $9,000 in Federated Municipal Opportunities Fund, Inc. on April 10, 1987, reinvested your dividends and capital gains, and did not redeem any shares, your account would be worth $17,343 on February 29, 1996. You would have earned a 7.66% average annual total return for the nine-year investment life span.* One key to investing wisely is to reinvest all tax-free distributions in fund shares. This increases the number of shares on which you can earn future tax-free dividends, and you gain the benefit of compounding tax-free. As of March 31, 1996, the average annual one-year, five-year, and since inception (4/10/87) returns were 5.68%, 6.98%, and 7.47%, respectively.* Graphic representation "A" omitted. See Appendix. * Total return represents the change in the value of an investment after reinvesting all income and capital gains, and takes into account the 1% sales charge and the 1% contingent deferred sales charge. Data quoted represent past performance and do not guarantee future results. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Federated Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) One Step at a Time: $1,000 invested each year for nine years (reinvesting all dividends and capital gains) grew to $13,083. With this approach, the key is consistency. If you had started investing $1,000 annually in Federated Municipal Opportunities Fund, Inc. on April 10, 1987, reinvested your dividends and capital gains and did not redeem any shares, you would have invested only $9,000, but your account would have reached a total value of $13,083* by February 29, 1996. You would have earned an average annual total return of 7.56%. A practical investment plan helps you pursue a high level of income through tax-free municipal bonds. Through systematic investing, you buy shares on a regular basis and reinvest all tax-free earnings. An investment plan works for you even if 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 Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) Investing for Tax-Free Monthly Income Fred and Margie Potter both work, and have no children. At the peak of their careers, this tax- sensitive couple was seeking a way to keep more of what they earn. On April 10, 1987, they invested $5,000 in Federated Municipal Opportunities Fund, Inc., and continue to invest $500 in the fund on the first of every month. As this chart shows, since that time, their investment has grown on a tax-free - basis to $83,608.* This represents a 7.46% average annual total return.+ For - the Potters, the decision to invest tax-free has made the future worth waiting for. * Income may be subject to the federal alternative minimum tax and state and local taxes. 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 Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) Portfolio of Investments - -------------------------------------------------------------------------------- February 29, 1996 (unaudited)
PRINCIPAL CREDIT AMOUNT RATING* VALUE LONG-TERM MUNICIPAL SECURITIES--102.7% - ------------------------------------------------------------------------------------- ALABAMA--2.2% ---------------------------------------------------------------------- $ 6,000,000 Courtland, AL IDB, Solid Waste Disposal Revenue Bonds (Series A), 6.375% (Champion International Corp.)/(Original Issue Yield: 6.52%), 3/1/2029 Baa1 $ 6,024,420 ---------------------------------------------------------------------- 3,000,000 Courtland, AL IDB, Solid Waste Disposal Revenue Bonds (Series A), 6.50% (Champion International Corp.)/(Original Issue Yield: 6.654%), 9/1/2025 Baa1 3,088,170 ---------------------------------------------------------------------- -------------- Total 9,112,590 ---------------------------------------------------------------------- -------------- ARKANSAS--2.0% ---------------------------------------------------------------------- 2,920,000 Conway, AR Hospital Authority, Revenue Bonds, 7.125% (Conway Regional Hospital), 2/1/2013 BBB 3,010,461 ---------------------------------------------------------------------- 3,000,000 Conway, AR Hospital Authority, Revenue Refunding Bonds, 8.125% (Conway Regional Hospital), 7/1/2005 BBB 3,245,130 ---------------------------------------------------------------------- 1,000,000 Conway, AR Hospital Authority, Revenue Refunding Bonds, 8.375% (Conway Regional Hospital), 7/1/2011 BBB 1,089,470 ---------------------------------------------------------------------- 1,000,000 Little Rock, AR Health Facilities Board, Revenue Refunding Bonds, 7.00% (Baptist Medical Center, AR), 10/1/2017 A+ 1,077,810 ---------------------------------------------------------------------- -------------- Total 8,422,871 ---------------------------------------------------------------------- -------------- CALIFORNIA--0.7% ---------------------------------------------------------------------- 3,000,000 Foothill/Eastern Transportation Corridor Agency, CA, (Series 1995A) Senior Lien Toll Road Revenue Bonds, 6.50% (Original Issue Yield: 6.78%), 1/1/2032 BBB- 3,061,650 ---------------------------------------------------------------------- -------------- COLORADO--2.2% ---------------------------------------------------------------------- 780,000 Colorado HFA, SFM Revenue Bonds (Series A-2), 7.70% (FHA GTD), 2/1/2023 AA 828,859 ---------------------------------------------------------------------- 2,930,000 Colorado HFA, SFM Revenue Bonds (Series C-2), 7.375% (FHA GTD), 8/1/2023 AA 3,094,725 ---------------------------------------------------------------------- $ 5,000,000 Colorado Health Facilities Authority, (Series 1995A) Revenue Bonds, 6.60% (Vail Valley Medical Center)/(Original Issue Yield: 6.625%), 1/15/2020 BBB $ 5,114,400 ----------------------------------------------------------------------
Federated Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- COLORADO--CONTINUED ---------------------------------------------------------------------- 315,000 El Paso County, CO HFA, SFM Revenue Bonds, 8.00% (GNMA COL), 9/1/2022 AAA 334,625 ---------------------------------------------------------------------- -------------- Total 9,372,609 ---------------------------------------------------------------------- -------------- FLORIDA--1.0% ---------------------------------------------------------------------- 2,835,000 Dade County, FL HFA, SFM Revenue Bonds (Series B), 8.75% (GNMA COL), 7/1/2017 AAA 2,972,186 ---------------------------------------------------------------------- 1,120,000 Jacksonville, FL Health Facilities Authority, Industrial Development Revenue Bonds, 6.40% (National Benevolent Association), 12/1/2016 Baa1 1,121,064 ---------------------------------------------------------------------- -------------- Total 4,093,250 ---------------------------------------------------------------------- -------------- GEORGIA--0.5% ---------------------------------------------------------------------- 2,000,000 Fulco, GA Hospital Authority, Revenue Bonds (Series A), 6.25% (Georgia Baptist Health Care)/(Original Issue Yield: 6.486%), 9/1/2013 Baa1 1,980,080 ---------------------------------------------------------------------- -------------- IDAHO--1.1% ---------------------------------------------------------------------- 1,250,000 Idaho Housing Agency, SFM Revenue Bonds (Series A), 7.50% (FHA GTD), 7/1/2024 AA 1,321,662 ---------------------------------------------------------------------- 2,975,000 Idaho Housing Agency, SFM Revenue Bonds (Series F-2), 7.80% (FHA GTD), 1/1/2023 AA 3,153,441 ---------------------------------------------------------------------- -------------- Total 4,475,103 ---------------------------------------------------------------------- -------------- ILLINOIS--4.3% ---------------------------------------------------------------------- 4,500,000 Granite City, IL Hospital Facilities Authority, Revenue Refunding Bonds (Series A), 8.125% (St. Elizabeth Medical Center)/(Original Issue Yield: 8.167%), 6/1/2008 BB+ 4,675,680 ---------------------------------------------------------------------- 3,000,000 Illinois Development Finance Authority, Housing Revenue Bonds, 6.10% (Catholic Charities Housing Development Corp), 1/1/2020 NR 2,917,170 ----------------------------------------------------------------------
Federated Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- ILLINOIS--CONTINUED ---------------------------------------------------------------------- $ 10,000,000 Illinois Health Facilities Authority, Hospital Revenue Bonds (Series A), 9.25% (Edgewater Hospital & Medical Center), 7/1/2024 NR $ 10,426,800 ---------------------------------------------------------------------- -------------- Total 18,019,650 ---------------------------------------------------------------------- -------------- INDIANA--10.1% ---------------------------------------------------------------------- 3,000,000 Indiana Port Commission, Port Facility Revenue Refunding Bonds, 6.875% (Cargill, Inc.), 5/1/2012 Aa3 3,267,570 ---------------------------------------------------------------------- 920,000 Indiana State HFA, SFM Revenue Bonds (Series A), 8.20% (GNMA COL), 7/1/2020 Aaa 980,407 ---------------------------------------------------------------------- 2,785,000 Indiana State HFA, SFM Revenue Home Mortgage Program (Series F-2), 7.75% (GNMA COL), 7/1/2022 Aaa 2,962,460 ---------------------------------------------------------------------- 17,100,000 Indianapolis, IN Airport Authority, Special Facilities Revenue Bonds, 7.10% (Federal Express Corp.)/(Original Issue Yield: 7.178%), 1/15/2017 BBB 18,474,156 ---------------------------------------------------------------------- 4,350,000 Kokomo, IN Hospital Authority, Revenue Refunding Bonds, 6.35% (St. Joseph Hospital, IN)/(Original Issue Yield: 6.40%), 8/15/2013 BBB 4,354,437 ---------------------------------------------------------------------- 2,750,000 LaPorte County, IN Hospital Authority, Hospital Facilities Revenue Refunding Bond, 8.75% (LaPorte Hospital, Inc.)/ (United States Treasury PRF)/(Original Issue Yield: 8.848%), 3/1/1997 (@102) Aaa 2,950,805 ---------------------------------------------------------------------- 5,000,000 LaPorte County, IN Hospital Authority, Hospital Facility Revenue Refunding Bonds, 6.00% (LaPorte Hospital, Inc.)/ (Original Issue Yield: 6.35%), 3/1/2023 BBB 4,665,700 ---------------------------------------------------------------------- 5,000,000 LaPorte County, IN Hospital Authority, Hospital Facility Revenue Refunding Bonds, 6.25% (LaPorte Hospital, Inc.)/ (Original Issue Yield: 6.35%), 3/1/2012 BBB 4,910,850 ---------------------------------------------------------------------- -------------- Total 42,566,385 ---------------------------------------------------------------------- --------------
Federated Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- IOWA--0.3% ---------------------------------------------------------------------- $ 1,000,000 Davenport, IA PCA, PCR Refunding Bonds, Nicols-Homeshield Project, 8.375% (Quanex Corp.), 12/1/2005 NR $ 1,075,670 ---------------------------------------------------------------------- -------------- KENTUCKY--0.9% ---------------------------------------------------------------------- 3,500,000 Kenton County, KY Airport Board, Special Facilities Revenue Bonds (Series A), 7.50% (Delta Air Lines, Inc.)/(Original Issue Yield: 7.60%), 2/1/2020 BB 3,796,590 ---------------------------------------------------------------------- -------------- LOUISIANA--6.5% ---------------------------------------------------------------------- 3,000,000 De Soto Parish, LA Environmental Improvement Authority, Revenue Bonds, 7.70% (International Paper Co.), 11/1/2018 A- 3,447,030 ---------------------------------------------------------------------- 5,000,000 Lake Charles, LA Harbor & Terminal District, Port Facilities Revenue Refunding Bond, Trunkline Lining Co Project, 7.75% (Panhandle Eastern Corp.), 8/15/2022 Baa3 5,666,300 ---------------------------------------------------------------------- 1,650,000 St. Charles Parish, LA, Environmental Improvement Revenue Bonds (Series A), 6.20% (Louisiana Power & Light Co.)/(Original Issue Yield: 6.25%), 5/1/2023 BBB+ 1,593,158 ---------------------------------------------------------------------- 5,645,000 St. Charles Parish, LA, PCR Bonds, 7.50% (Louisiana Power & Light Co.)/(Original Issue Yield: 7.542%), 6/1/2021 BBB+ 6,035,239 ---------------------------------------------------------------------- 1,400,000 St. Charles Parish, LA, PCR Bonds, 8.00% (Louisiana Power & Light Co.), 12/1/2014 Baa3 1,570,744 ---------------------------------------------------------------------- 2,100,000 St. Charles Parish, LA, PCR Bonds, 8.25% (Louisiana Power & Light Co.)/(Original Issue Yield: 8.273%), 6/1/2014 NR 2,344,608 ---------------------------------------------------------------------- 3,650,000 St. Charles Parish, LA, Solid Waste Disposal Revenue Bonds (Series A), 7.00% (Louisiana Power & Light Co.)/ (Original Issue Yield: 7.04%), 12/1/2022 BBB+ 3,816,951 ---------------------------------------------------------------------- 3,000,000 St. James Parish, LA, Solid Waste Disposal Revenue Bonds, 7.70% (Freeport McMoRan, Inc.)/(Original Issue Yield: 7.75%), 10/1/2022 NR 3,098,430 ---------------------------------------------------------------------- -------------- Total 27,572,460 ---------------------------------------------------------------------- --------------
Federated Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- MAINE--1.1% ---------------------------------------------------------------------- $ 4,200,000 Maine State Housing Authority , Revenue Bonds (Series D-3), 8.20%, 11/15/2019 A+ $ 4,466,153 ---------------------------------------------------------------------- -------------- MARYLAND--0.7% ---------------------------------------------------------------------- 900,000 Gaithersburg, MD, First Mortgage Economic Development Revenue Refunding Bonds, 5.50% (Asbury Methodist Homes, Inc.)/(Original Issue Yield: 6.05%), 1/1/2020 A 821,484 ---------------------------------------------------------------------- 2,550,000 Maryland State Health & Higher Educational Facilities, Revenue Bonds, 5.50% (Howard County General Hospital)/ (Original Issue Yield: 5.80%), 7/1/2025 Baa1 2,286,228 ---------------------------------------------------------------------- -------------- Total 3,107,712 ---------------------------------------------------------------------- -------------- MASSACHUSETTS--5.8% ---------------------------------------------------------------------- 380,000 Massachusetts State HFA, Residential Housing Revenue Bonds (Series B), 8.10% (Original Issue Yield: 8.186%), 8/1/2023 A+ 399,920 ---------------------------------------------------------------------- 1,110,000 Massachusetts State HFA, Revenue Bonds (Series 21), 6.30%, 6/1/2025 Aa 1,112,697 ---------------------------------------------------------------------- 2,000,000 Massachusetts State HFA, SFM Revenue Bonds (Series 9), 8.10% (FHA GTD), 12/1/2021 Aa 2,092,560 ---------------------------------------------------------------------- 21,000,000 (a)Massachusetts, IFA, Solid Waste Disposal Sr. Lien Revenue Bonds (Series A), 9.00% (Massachusetts Recycling Association), 8/1/2016 NR 20,861,610 ---------------------------------------------------------------------- -------------- Total 24,466,787 ---------------------------------------------------------------------- -------------- MICHIGAN--0.4% ---------------------------------------------------------------------- 1,500,000 Western Townships MI, Utilities Authority, LT GO Sewer Disposal System Bonds, 8.20%, 1/1/2018 BBB+ 1,679,085 ---------------------------------------------------------------------- -------------- MINNESOTA--6.1% ---------------------------------------------------------------------- 1,700,000 Minnesota State HFA, SFM Revenue Bonds (Series A), 7.95% (FHA GTD), 7/1/2022 AA 1,803,717 ---------------------------------------------------------------------- 635,000 Minnesota State HFA, SFM Revenue Bonds (Series D), 8.05% (FHA GTD), 8/1/2018 Aa 658,044 ----------------------------------------------------------------------
Federated Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- MINNESOTA--CONTINUED ---------------------------------------------------------------------- $ 795,000 Minnesota State HFA, SFM Revenue Bonds (Series D), 8.25% (FHA GTD), 8/1/2020 Aa $ 843,503 ---------------------------------------------------------------------- 3,000,000 Minnesota State HFA, SFM Revenue Bonds (Series E), 6.85%, 1/1/2024 AA 3,121,200 ---------------------------------------------------------------------- 19,000,000 St. Paul, MN Housing & Redevelopment Authority , Hospital Revenue Refunding Bonds (Series A), 6.625% (Healtheast)/(Original Issue Yield: 6.687%), 11/1/2017 BBB- 19,132,430 ---------------------------------------------------------------------- -------------- Total 25,558,894 ---------------------------------------------------------------------- -------------- MISSISSIPPI--0.9% ---------------------------------------------------------------------- 2,000,000 Columbus, MS IDA, Revenue Bonds, 8.25% (Baldor Electric Co.), 5/1/2004 NR 2,053,180 ---------------------------------------------------------------------- 1,725,000 Mississippi Housing Finance Corp., SFM Revenue Bond, 8.25% (FGIC INS), 10/15/2018 Aaa 1,827,482 ---------------------------------------------------------------------- -------------- Total 3,880,662 ---------------------------------------------------------------------- -------------- MONTANA--0.5% ---------------------------------------------------------------------- 850,000 Montana State Board of Housing, SFM Revenue Bonds (Series A-2), 8.30% (FHA GTD), 10/1/2020 AA 889,109 ---------------------------------------------------------------------- 1,150,000 Montana State Board of Housing, SFM Revenue Bonds (Series B-2), 7.50% (FHA GTD), 4/1/2023 NR 1,211,663 ---------------------------------------------------------------------- -------------- Total 2,100,772 ---------------------------------------------------------------------- -------------- NEW HAMPSHIRE--5.8% ---------------------------------------------------------------------- 10,000,000 New Hampshire Higher Educational & Health Facilities Authority, Hospital Revenue Bonds, 6.00% (Nashua Memorial Hospital, NH)/(Original Issue Yield: 6.40%), 10/1/2023 A- 10,104,600 ---------------------------------------------------------------------- 1,185,000 New Hampshire State HFA, SFM Revenue Bond, 7.90% (FHA GTD)/(Original Issue Yield: 7.942%), 7/1/2022 Aa 1,252,142 ---------------------------------------------------------------------- 1,310,000 New Hampshire State HFA, SFM Revenue Bonds (Series B), 7.75%, 7/1/2023 Aa 1,394,613 ---------------------------------------------------------------------- $ 6,735,000 New Hampshire State HFA, SFM Revenue Bonds (Series D), 7.25%, 7/1/2015 Aa $ 7,068,921 ----------------------------------------------------------------------
Federated Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- NEW HAMPSHIRE--CONTINUED ---------------------------------------------------------------------- 2,865,000 New Hampshire State IDA, PCR Bonds (Series A), 8.00% (United Illuminating Co.), 12/1/2014 BBB- 3,121,016 ---------------------------------------------------------------------- 1,500,000 New Hampshire State IDA, PCR Bonds (Series B), 10.75% (United Illuminating Co.), 10/1/2012 BBB- 1,678,560 ---------------------------------------------------------------------- -------------- Total 24,619,852 ---------------------------------------------------------------------- -------------- NEW YORK--0.6% ---------------------------------------------------------------------- 2,500,000 New York State Energy Research & Development Authority, Electric Facilities Revenue Bonds (Series A), 7.50% (Consolidated Edison Co.)/(Original Issue Yield: 7.65%), 1/1/2026 Aa2 2,730,800 ---------------------------------------------------------------------- -------------- NORTH CAROLINA--2.3% ---------------------------------------------------------------------- 3,500,000 Haywood Cnty, NC Industrial Facilities & Pollution Control Financing Authority, (Series A) Revenue Bonds, 5.75% (Champion International Corp.)/(Original Issue Yield: 5.975%), 12/1/2025 Baa1 3,412,045 ---------------------------------------------------------------------- 6,000,000 Martin County, NC IFA, (Series 1995) Solid Waste Disposal Revenue Bonds, 6.00% (Weyerhauser Co.), 11/1/2025 A 6,100,140 ---------------------------------------------------------------------- -------------- Total 9,512,185 ---------------------------------------------------------------------- -------------- NORTH DAKOTA--0.7% ---------------------------------------------------------------------- 2,740,000 North Dakota State HFA, SFM Revenue Bonds (Series C), 7.30%, 7/1/2024 Aa 2,869,903 ---------------------------------------------------------------------- -------------- OHIO--2.5% ---------------------------------------------------------------------- 2,400,000 Hamilton County, OH Hospital Facilities Authority, Revenue Refunding & Improvement Bonds, 7.00% (Deaconess Hospital)/(Original Issue Yield: 7.046%), 1/1/2012 A 2,590,080 ---------------------------------------------------------------------- 1,400,000 Lucas County, OH HFA, Revenue Refunding Bonds, 7.625% (Riverside Hospital, OH), 6/1/2015 BBB+ 1,435,546 ---------------------------------------------------------------------- $ 1,700,000 Ohio HFA, SFM Revenue Bonds (Series A), 7.65% (GNMA COL)/(Original Issue Yield: 7.669%), 3/1/2029 AAA $ 1,800,742 ----------------------------------------------------------------------
Federated Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- OHIO--CONTINUED ---------------------------------------------------------------------- 1,390,000 Ohio HFA, SFM Revenue Bonds (Series B), 8.25% (GNMA COL), 12/15/2019 AAA 1,466,672 ---------------------------------------------------------------------- 500,000 Ohio State Water Development Authority, PCR Bonds (Series A), 8.10% (Ohio Edison Co.)/(Original Issue Yield: 8.142%), 10/1/2023 BBB- 536,560 ---------------------------------------------------------------------- 1,250,000 Ohio State Water Development Authority, PCR Bonds (Series A-1), 9.75% (Cleveland Electric Illuminating Co.), 11/1/2022 BBB 1,332,150 ---------------------------------------------------------------------- 1,350,000 Trumbull County, OH Hospital Authority, Hospital Revenue Refunding Bonds, 7.75% (St. Joseph Riverside Hospital)/(United States Treasury PRF)/(Original Issue Yield: 7.795%), 11/1/1997 (@102) AAA 1,465,695 ---------------------------------------------------------------------- -------------- Total 10,627,445 ---------------------------------------------------------------------- -------------- OKLAHOMA--1.9% ---------------------------------------------------------------------- 1,250,000 Tulsa, OK Municipal Airport, Revenue Bonds, 7.375% (American Airlines), 12/1/2020 Baa2 1,342,400 ---------------------------------------------------------------------- 6,200,000 Tulsa, OK Municipal Airport, Revenue Bonds, 7.60% (American Airlines)/(Original Issue Yield: 7.931%), 12/1/2030 Baa2 6,772,632 ---------------------------------------------------------------------- -------------- Total 8,115,032 ---------------------------------------------------------------------- -------------- PENNSYLVANIA--15.5% ---------------------------------------------------------------------- 3,000,000 Allegheny County, PA HDA, Health & Education Revenue Bonds, 7.00% (Rehabilitation Institute of Pittsburgh)/(Original Issue Yield: 7.049%), 6/1/2010 BBB 3,102,960 ---------------------------------------------------------------------- 4,000,000 Allegheny County, PA HDA, Health & Education Revenue Bonds, 7.00% (Rehabilitation Institute of Pittsburgh)/(Original Issue Yield: 7.132%), 6/1/2022 BBB 4,088,560 ---------------------------------------------------------------------- $ 2,850,000 Allegheny County, PA HDA, Health Facilities Revenue Refunding Bonds, 6.00% (South Hills Health System)/ (Original Issue Yield: 6.40%), 5/1/2020 A $ 2,815,686 ----------------------------------------------------------------------
Federated Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- PENNSYLVANIA--CONTINUED ---------------------------------------------------------------------- 3,500,000 Allegheny County, PA HDA, Revenue Refunding Bonds, 5.875% (Ohio Valley General Hospital)/(Original Issue Yield: 6.125%), 4/1/2011 Baa1 3,450,265 ---------------------------------------------------------------------- 5,545,000 Allegheny County, PA Higher Education, Bldg Auth Revenue Bonds, 7.375% (La Roche College), 7/15/2012 NR 5,770,737 ---------------------------------------------------------------------- 1,690,000 Allegheny County, PA IDA, Revenue Bonds, 8.75% (United Parcel Service), 2/15/2009 NR 1,806,306 ---------------------------------------------------------------------- 665,000 Allegheny County, PA Residential Finance Agency, Mortgage Revenue Bonds (Series G), 9.50% (GNMA COL), 12/1/2018 Aaa 706,848 ---------------------------------------------------------------------- 500,000 Allegheny County, PA Residential Finance Agency, SFM Revenue Bonds (Series K), 7.75% (GNMA COL), 12/1/2022 Aaa 531,570 ---------------------------------------------------------------------- 1,495,000 Allegheny County, PA Residential Finance Agency, SFM Revenue Bonds (Series M), 7.95% (GNMA COL)/(Original Issue Yield: 7.97%), 6/1/2023 Aaa 1,593,535 ---------------------------------------------------------------------- 3,000,000 Delaware County Authority, PA, College Revenue Bonds, 7.25% (Eastern College)/(Original Issue Yield: 7.875%), 3/1/2012 NR 3,160,680 ---------------------------------------------------------------------- 2,055,000 Erie County, PA Hospital Authority, Revenue Bonds, 7.50% (Erie Infants & Youth Home , Inc.), 10/1/2011 NR 2,147,043 ---------------------------------------------------------------------- 1,925,000 Erie, PA Municipal Airport Authority, Parking Revenue Bonds, 8.25%, 7/1/2009 NR 2,002,501 ---------------------------------------------------------------------- 1,000,000 Montgomery County, PA IDA, PCR Bonds, 8.875% (Philadelphia Electric Co.), 6/1/2016 BBB 1,026,920 ---------------------------------------------------------------------- 1,730,000 Northeastern, PA Hospital & Education Authority, College Revenue Refunding Bonds (Series B), 6.00% (Kings College)/(Original Issue Yield: 6.174%), 7/15/2018 BBB 1,683,186 ---------------------------------------------------------------------- $ 10,000,000 Pennsylvania EDFA, Wastewater Treatment Revenue Bonds (Series A), 7.60% (Sun Co., Inc.)/(Original Issue Yield: 7.653%), 12/1/2024 Baa1 $ 11,202,600 ----------------------------------------------------------------------
Federated Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- PENNSYLVANIA--CONTINUED ---------------------------------------------------------------------- 6,000,000 Pennsylvania HFA, SFM Revenue Bonds (Series 34-B), 7.00% (FHA and FHA GTDs), 4/1/2024 AA 6,285,720 ---------------------------------------------------------------------- 2,660,000 Pennsylvania HFA, SFM Revenue Bonds (Series 28), 7.65% (FHA GTD), 10/1/2023 AA 2,835,507 ---------------------------------------------------------------------- 1,740,000 Pennsylvania State HEFA, College & University Revenue Bonds, 6.75% (Thiel College), 9/1/2017 NR 1,838,014 ---------------------------------------------------------------------- 3,250,000 Pennsylvania State HEFA, College & University Revenue Refunding Bonds (Series A), 6.10% (Allegheny College)/ (Original Issue Yield: 6.23%), 11/1/2008 BBB+ 3,346,558 ---------------------------------------------------------------------- 3,875,000 Pennsylvania State HEFA, Revenue Bonds (Series A), 7.375% (Medical College of Pennsylvania)/(Original Issue Yield: 7.45%), 3/1/2021 Baa1 4,022,598 ---------------------------------------------------------------------- 1,750,000 Pennsylvania State HEFA, Revenue Bonds (Series A), 8.375% (Medical College of Pennsylvania)/(Original Issue Yield: 8.448%), 3/1/2011 Baa1 1,897,840 ---------------------------------------------------------------------- -------------- Total 65,315,634 ---------------------------------------------------------------------- -------------- SOUTH CAROLINA--0.5% ---------------------------------------------------------------------- 1,250,000 Charleston County, SC Resource Recovery, Revenue Bonds (Series A), 9.25% (Foster Wheeler Corp.), 1/1/2010 A 1,378,200 ---------------------------------------------------------------------- 810,000 South Carolina State Housing Finance & Development Authority, Homeownership Mortgage Revenue Bonds (Series A), 7.40% (FHA GTD), 7/1/2023 AA 851,917 ---------------------------------------------------------------------- -------------- Total 2,230,117 ---------------------------------------------------------------------- -------------- TENNESSEE--4.0% ---------------------------------------------------------------------- 2,475,000 Memphis-Shelby County, TN, Airport Refunding Revenue Bonds, 6.75% (Federal Express Corp.), 9/1/2012 BBB 2,629,069 ---------------------------------------------------------------------- $ 3,100,000 Springfield, TN Health & Educational Facilities Board, Hospital Revenue Bonds, 8.25% (Jesse Holman Jones Hospital Corp.)/(Original Issue Yield: 8.50%), 4/1/2012 NR $ 3,288,697 ----------------------------------------------------------------------
Federated Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- TENNESSEE--CONTINUED ---------------------------------------------------------------------- 7,800,000 Springfield, TN Health & Educational Facilities Board, Hospital Revenue Bonds, 8.50% (Jesse Holman Jones Hospital Corp.)/(Original Issue Yield: 8.875%), 4/1/2024 NR 8,143,824 ---------------------------------------------------------------------- 2,825,000 Tennessee Housing Development Agency, Homeownership Program, Issue V Revenue Bonds, 7.65%, 7/1/2022 AA 3,000,546 ---------------------------------------------------------------------- -------------- Total 17,062,136 ---------------------------------------------------------------------- -------------- TEXAS--16.3% ---------------------------------------------------------------------- 2,500,000 Brazos River Authority, TX, PCR Revenue Bonds (Series A), 7.875% (Texas Utilities Electric Co.), 3/1/2021 BBB 2,786,700 ---------------------------------------------------------------------- 1,800,000 Brazos River Authority, TX, PCR Revenue Bonds (Series A), 8.125% (Texas Utilities Electric Co.), 2/1/2020 BBB 1,997,694 ---------------------------------------------------------------------- 7,320,000 Dallas-Fort Worth, TX International Airport Facilities, Revenue Bonds, 7.125% (Delta Air Lines, Inc.)/(Original Issue Yield: 7.55%), 11/1/2026 BB 7,681,535 ---------------------------------------------------------------------- 3,000,000 Dallas-Fort Worth, TX International Airport Facilities, Revenue Bonds, 7.25% (American Airlines)/(Original Issue Yield: 7.428%), 11/1/2030 Baa2 3,254,160 ---------------------------------------------------------------------- 2,370,000 Dallas-Fort Worth, TX International Airport Facilities, Revenue Bonds, 7.50% (American Airlines)/(Original Issue Yield: 8.20%), 11/1/2025 Baa2 2,554,694 ---------------------------------------------------------------------- 2,500,000 Dallas-Fort Worth, TX International Airport Facilities, Revenue Bonds, 7.625% (Delta Air Lines, Inc.)/(Original Issue Yield: 7.65%), 11/1/2021 BB 2,727,075 ---------------------------------------------------------------------- 1,000,000 Guadalupe-Blanco River Authority TX, Industrial Development Corp. PCR Bonds, 8.60% (A.P. Green Industries), 4/1/2009 NR 1,063,130 ---------------------------------------------------------------------- $ 2,500,000 Guadalupe-Blanco River Authority TX, Industrial Development Corp., PCR Bonds, 8.60% (A.P. Green Industries), 4/1/2009 NR $ 2,741,875 ----------------------------------------------------------------------
Federated Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- TEXAS--CONTINUED ---------------------------------------------------------------------- 5,000,000 Gulf Coast, TX Waste Disposal Authority, Revenue Bonds (Series A), 6.875% (Champion International Corp.)/(Original Issue Yield: 7.15%), 12/1/2028 Baa1 5,292,450 ---------------------------------------------------------------------- 20,000,000 Houston, TX Water & Sewer System, Junior Lien Refunding Revenue Bonds (Series A), 5.25% (FGIC INS)/ (Original Issue Yield: 5.60%), 12/1/2025 Aaa 18,990,600 ---------------------------------------------------------------------- 9,095,000 Richardson, TX Hospital Authority, Hospital Refunding & Improvement Bonds, 6.50% (Richardson Medical Center)/ (Original Issue Yield: 6.72%), 12/1/2012 BBB- 9,110,098 ---------------------------------------------------------------------- 7,630,000 Richardson, TX Hospital Authority, Hospital Refunding & Improvement Bonds, 6.75% (Richardson Medical Center)/ (Original Issue Yield: 6.82%), 12/1/2023 BBB- 7,664,106 ---------------------------------------------------------------------- 1,000,000 Texarkana, TX Health Facilities, Refunding and Improvement Revenue Bond, 8.50% (Wadley Regional Medical Center)/(Original Issue Yield: 8.645%), 10/1/2012 A- 1,066,710 ---------------------------------------------------------------------- 1,700,000 Tyler, TX Health Facilities Development Corp., Revenue Bonds, 6.75% (East Texas Medical Center)/(Original Issue Yield: 7.00%), 11/1/2025 NR 1,687,930 ---------------------------------------------------------------------- -------------- Total 68,618,757 ---------------------------------------------------------------------- -------------- UTAH--1.4% ---------------------------------------------------------------------- 1,030,000 Utah State HFA, SFM Revenue Bonds (Series B-3), 7.10%, 7/1/2024 AA 1,079,296 ---------------------------------------------------------------------- 1,575,000 Utah State HFA, SFM Revenue Bonds (Series E-2), 7.15% (FHA GTD)/(Original Issue Yield: 7.169%), 7/1/2024 AA 1,651,577 ---------------------------------------------------------------------- 2,210,000 Utah State HFA, Single Family Mortgage Revenue Bonds, 7.55% (FHA GTD), 7/1/2023 AA 2,349,650 ----------------------------------------------------------------------
Federated Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- UTAH--CONTINUED ---------------------------------------------------------------------- $ 580,000 Utah State HFA, Single Family Mortgage Revenue Bonds, 7.75% (FHA GTD), 1/1/2023 AA $ 616,314 ---------------------------------------------------------------------- -------------- Total 5,696,837 ---------------------------------------------------------------------- -------------- WASHINGTON--2.9% ---------------------------------------------------------------------- 4,250,000 Pierce County, WA Economic Development Corp., Solid Waste Revenue Bond, 5.80% (Occidental Petroleum Corp.)/ (Original Issue Yield: 5.90%), 9/1/2029 BBB 3,872,728 ---------------------------------------------------------------------- 4,075,000 Pilchuck Development Public Corp., WA, Special Facilities Airport Revenue Bonds (Series 1993),Tramco, Inc. Project, 6.00% (Goodrich (B.F.) Co.), 8/1/2023 Baa1 3,917,135 ---------------------------------------------------------------------- 4,300,000 Port of Camas-Washougal, Washington, PCR Refunding Bonds (Series 1993), 6.70% (James River Project)/(Original Issue Yield: 6.75%), 4/1/2023 BBB+ 4,387,548 ---------------------------------------------------------------------- -------------- Total 12,177,411 ---------------------------------------------------------------------- -------------- WEST VIRGINIA--1.0% ---------------------------------------------------------------------- $ 5,000,000 (a)Marion County, WV County Commission, Solid Waste Facility Revenue Bonds (Series 1993), 7.75% (American Power Paper Recycling), 12/1/2011 NR $ 4,296,650 ---------------------------------------------------------------------- -------------- WISCONSIN--0.2% ---------------------------------------------------------------------- 715,000 Wisconsin Housing & Economic Development Authority, Homeownership Revenue Bonds (Series E), 8.00% (FHA GTD)/(Original Issue Yield: 8.044%), 3/1/2021 Aa 756,970 ---------------------------------------------------------------------- -------------- TOTAL INVESTMENTS (IDENTIFIED COST $416,798,580)(B) $ 433,438,702 ---------------------------------------------------------------------- --------------
Federated Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) - -------------------------------------------------------------------------------- * Please refer to the Appendix of the Statement of Additional Information for an explanation of the credit ratings. (a) Denotes a restricted security which is subject to restrictions on resale under Federal Securities laws. At the end of the period, these securities amounted to $25,158,260 which represents 6% of net assets. (b) The cost of investments for federal tax purposes amounts to $416,798,580. The net unrealized appreciation of investments on a federal tax basis amounts to $16,640,122 which is comprised of $18,615,438 appreciation and $1,975,316 depreciation at February 29, 1996. Note: The categories of investments are shown as a percentage of net assets ($421,964,415) at February 29, 1996. The following acronyms are used throughout this portfolio: COL -- Collateralized FGIC -- Financial Guaranty Insurance Company FHA -- Federal Housing Administration GNMA -- Government National Mortgage Association GO -- General Obligation GTD -- Guaranty HDA -- Hospital Development Authority HEFA -- Higher Education Facilities Authority HFA -- Housing Finance Authority IDA -- Industrial Development Authority IDB -- Industrial Development Bond IFA -- Industrial Finance Authority INS -- Insured LT -- Limited Tax PCA -- Pollution Control Authority PCR -- Pollution Control Revenue PRF -- Prerefunded SFM -- Single Family Mortgage (See Notes which are an integral part of the Financial Statements) Federated Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) Statement of Assets and Liabilities - -------------------------------------------------------------------------------- February 29, 1996 (unaudited) ASSETS: - ------------------------------------------------------------------------------------------------- Total investments in securities, at value (identified and tax cost $416,798,580) $ 433,438,702 - ------------------------------------------------------------------------------------------------- Cash 90,137 - ------------------------------------------------------------------------------------------------- Income receivable 7,877,347 - ------------------------------------------------------------------------------------------------- Receivable for shares sold 183,520 - ------------------------------------------------------------------------------------------------- -------------- Total assets 441,589,706 - ------------------------------------------------------------------------------------------------- -------------- LIABILITIES: - ---------------------------------------------------------------------------------- Payable for investments purchased $ 19,130,600 - ---------------------------------------------------------------------------------- Payable for shares redeemed 380,151 - ---------------------------------------------------------------------------------- Accrued expenses 114,540 - ---------------------------------------------------------------------------------- ------------- Total liabilities 19,625,291 - ------------------------------------------------------------------------------------------------- -------------- NET ASSETS for 38,903,357 shares outstanding $ 421,964,415 - ------------------------------------------------------------------------------------------------- -------------- NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------------------------- Paid in capital $ 415,963,260 - ------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments 16,640,122 - ------------------------------------------------------------------------------------------------- Accumulated net realized loss on investments (11,768,460) - ------------------------------------------------------------------------------------------------- Undistributed net investment income 1,129,493 - ------------------------------------------------------------------------------------------------- -------------- Total Net Assets $ 421,964,415 - ------------------------------------------------------------------------------------------------- -------------- NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share: - ------------------------------------------------------------------------------------------------- Net Asset Value Per Share ($421,964,415 / 38,903,357 shares outstanding) $10.85 - ------------------------------------------------------------------------------------------------- -------------- Offering Price Per Share (100/99.00 of $10.85)* $10.96 - ------------------------------------------------------------------------------------------------- -------------- Redemption Proceeds Per Share (99.00/100 of $10.85)** $10.74 - ------------------------------------------------------------------------------------------------- --------------
* See "What Shares Cost" in the Prospectus. ** See "Contingent Deferred Sales Charge" in the Prospectus. (See Notes which are an integral part of the Financial Statements) Federated Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) Statement of Operations - -------------------------------------------------------------------------------- Six Months Ended February 29, 1996 (unaudited) INVESTMENT INCOME: - --------------------------------------------------------------------------------------------------- Interest $ 14,768,846 - --------------------------------------------------------------------------------------------------- EXPENSES: - --------------------------------------------------------------------------------------------------- Investment advisory fee $ 1,270,513 - ------------------------------------------------------------------------------------- Administrative personnel and services fee 160,194 - ------------------------------------------------------------------------------------- Custodian fees 29,987 - ------------------------------------------------------------------------------------- Transfer and dividend disbursing agent fees and expenses 136,654 - ------------------------------------------------------------------------------------- Directors'/Trustees' fees 7,231 - ------------------------------------------------------------------------------------- Auditing fees 7,763 - ------------------------------------------------------------------------------------- Legal fees 6,923 - ------------------------------------------------------------------------------------- Portfolio accounting fees 52,328 - ------------------------------------------------------------------------------------- Shareholder services fee 529,380 - ------------------------------------------------------------------------------------- Share registration costs 13,601 - ------------------------------------------------------------------------------------- Printing and postage 27,349 - ------------------------------------------------------------------------------------- Insurance premiums 4,186 - ------------------------------------------------------------------------------------- Taxes 41,132 - ------------------------------------------------------------------------------------- Miscellaneous 4,669 - ------------------------------------------------------------------------------------- ------------ Total expenses 2,291,910 - ------------------------------------------------------------------------------------- Deduct--Waiver of shareholder services fee (21,175) - ------------------------------------------------------------------------------------- ------------ Net expenses 2,270,735 - --------------------------------------------------------------------------------------------------- ------------- Net investment income 12,498,111 - --------------------------------------------------------------------------------------------------- ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: - --------------------------------------------------------------------------------------------------- Net realized loss on investments (883,452) - --------------------------------------------------------------------------------------------------- Net change in unrealized appreciation of investments 6,436,396 - --------------------------------------------------------------------------------------------------- ------------- Net realized and unrealized gain on investments 5,552,944 - --------------------------------------------------------------------------------------------------- ------------- Change in net assets resulting from operations $ 18,051,055 - --------------------------------------------------------------------------------------------------- -------------
(See Notes which are an integral part of the Financial Statements) Federated Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) Statement of Changes in Net Assets - --------------------------------------------------------------------------------
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED FEBRUARY 29, 1996 AUGUST 31, 1995 INCREASE (DECREASE) IN NET ASSETS: - --------------------------------------------------------------------- Operations-- - --------------------------------------------------------------------- Net investment income $ 12,498,111 $ 26,526,286 - --------------------------------------------------------------------- Net realized gain (loss) on investments ($883,452 and $5,647,830 net losses, respectively, as computed for federal tax purposes) (883,452) (5,755,376) - --------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) 6,436,396 9,394,163 - --------------------------------------------------------------------- ---------------------- ------------------- Change in net assets resulting from operations 18,051,055 30,165,073 - --------------------------------------------------------------------- ---------------------- ------------------- NET EQUALIZATION CREDITS (DEBITS)-- (20,481) (83,189) - --------------------------------------------------------------------- ---------------------- ------------------- DISTRIBUTIONS TO SHAREHOLDERS-- - --------------------------------------------------------------------- Distributions from net investment income (12,757,262) (25,975,624) - --------------------------------------------------------------------- ---------------------- ------------------- SHARE TRANSACTIONS-- - --------------------------------------------------------------------- Proceeds from sale of shares 12,116,380 37,161,759 - --------------------------------------------------------------------- Net asset value of shares issued to shareholders in payment of distributions declared 7,669,863 11,961,548 - --------------------------------------------------------------------- Cost of shares redeemed (29,104,781) (99,451,503) - --------------------------------------------------------------------- ---------------------- ------------------- Change in net assets resulting from share transactions (9,318,538) (50,328,196) - --------------------------------------------------------------------- ---------------------- ------------------- Change in net assets (4,045,226) (46,221,936) - --------------------------------------------------------------------- NET ASSETS: - --------------------------------------------------------------------- Beginning of period 426,009,641 472,231,577 - --------------------------------------------------------------------- ---------------------- ------------------- End of period (including undistributed net investment income of $1,129,493 and $1,409,125, respectively) $ 421,964,415 $ 426,009,641 - --------------------------------------------------------------------- ---------------------- -------------------
(See Notes which are an integral part of the Financial Statements) Federated Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) Financial Highlights - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) FEBRUARY 29, YEAR ENDED AUGUST 31, 1996 1995 1994 1993 1992 1991 1990 1989 1988 NET ASSET VALUE, BEGINNING OF PERIOD $ 10.71 $ 10.56 $ 11.28 $ 10.78 $ 10.39 $ 10.00 $ 10.23 $ 9.76 $10.07 - -------------------------- INCOME FROM INVESTMENT OPERATIONS - -------------------------- Net investment income 0.31 0.63 0.61 0.62 0.66 0.70 0.72 0.74 0.78 - -------------------------- Net realized and unrealized gain (loss) on investments 0.15 0.15 (0.73) 0.51 0.39 0.40 (0.23) 0.49 (0.36) - -------------------------- ----- --------- --------- --------- --------- --------- --------- --------- --------- Total from investment operations 0.46 0.78 (0.12) 1.13 1.05 1.10 0.49 1.23 0.42 - -------------------------- ----- --------- --------- --------- --------- --------- --------- --------- --------- LESS DISTRIBUTIONS - -------------------------- Distributions from net investment income (0.32) (0.63) (0.60) (0.63) (0.66) (0.71) (0.72) (0.76) (0.73) - -------------------------- ----- --------- --------- --------- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 10.85 $ 10.71 $ 10.56 $ 11.28 $ 10.78 $ 10.39 $ 10.00 $ 10.23 $9.76 - -------------------------- ----- --------- --------- --------- --------- --------- --------- --------- --------- TOTAL RETURN (B) 4.39% 7.73% (1.06%) 10.86% 10.45% 11.37% 4.98% 13.09% 4.43% - -------------------------- RATIOS TO AVERAGE NET ASSETS - -------------------------- Expenses 1.08%* 1.08% 1.09% 1.09% 1.05% 1.02% 1.01% 0.90% 1.02% - -------------------------- Net investment income 5.90%* 6.18% 5.56% 5.65% 6.18% 6.86% 7.07% 7.27% 8.03% - -------------------------- Expense waiver/ reimbursement (c) 0.01%* -- -- -- 0.14% 0.33% 0.39% 0.83% 0.70% - -------------------------- SUPPLEMENTAL DATA - -------------------------- Net assets, end of period (000 omitted) $421,964 $426,010 $472,232 $458,331 $248,768 $135,628 $89,907 $62,501 25,151 - -------------------------- Portfolio turnover 6% 13% 27% 7% 14% 18% 24% 24% 34% - -------------------------- 1987(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00 - -------------------------- INCOME FROM INVESTMENT OPERATIONS - -------------------------- Net investment income 0.26 - -------------------------- Net realized and unrealized gain (loss) on investments 0.07 - -------------------------- ----- Total from investment operations 0.33 - -------------------------- ----- LESS DISTRIBUTIONS - -------------------------- Distributions from net investment income (0.26) - -------------------------- ----- NET ASSET VALUE, END OF PERIOD $ 10.07 - -------------------------- ----- TOTAL RETURN (B) 3.48% - -------------------------- RATIOS TO AVERAGE NET ASSETS - -------------------------- Expenses 0.86%* - -------------------------- Net investment income 7.14%* - -------------------------- Expense waiver/ reimbursement (c) 0.29%* - -------------------------- SUPPLEMENTAL DATA - -------------------------- Net assets, end of period (000 omitted) $2,829 - -------------------------- Portfolio turnover 0% - --------------------------
* Computed on an annualized basis. (a) Reflects operations for the period from April 10, 1987, (date of initial public investment) to August 31, 1987. For the peroid from the start of business, April 1, 1987 to April 9, 1987, net investment aggregating $0.01 per share was distributed to the Fund's investment adviser. Such distribution represented the net investment income of the Fund prior to the initial public offering of the Fund shares which commenced on April 10, 1987. (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 Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) Notes to Financial Statements - -------------------------------------------------------------------------------- February 29, 1996 (unaudited) (1) ORGANIZATION Federated Municipal Opportunities 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. Effective March 31, 1996, the Fund changed its name from Fortress Muncipal Income Fund, Inc. to Federated Municipal Opportunities Fund, Inc. Also, effective March 31, 1996, the Board of Trustees (the "Trustees") established four classes of shares for the Fund, known as Class A Shares, Class B Shares, Class C Shares and Class F Shares. Class F Shares maintain the historical performance of Federated Municipal Opportunities Fund, Inc. (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--Municipal bonds are valued by an independent pricing service, taking into consideration yield, liquidity, risk, credit quality, coupon, maturity, type of issue, and any other factors or market data the pricing service deems relevant. 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. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. At August 31, 1995, the Fund, for federal tax purposes, had a capital loss carryforward of $8,718,466, which will reduce the Fund's taxable income arising from future net realized gain on investments, if any, to the extent permitted by the Code, and thus will reduce the amount of the distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal tax. Pursuant to the Code, such capital loss carryforward will expire as follows: Federated Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) - --------------------------------------------------------------------------------
EXPIRATION YEAR EXPIRATION AMOUNT 1996 $ 661,371 1998 168,972 1999 47,025 2000 68,565 2001 57,182 2002 2,067,521 2003 5,647,830
Additionally, net capital losses of $3,677,871 attributable to security transactions incurred after October 31, 1994 are treated as arising on the first day of the Fund's next taxable year. EQUALIZATION--The Fund follows the accounting practice known as equalization. With equalization, a portion of the proceeds from sales and costs of redemptions of fund shares (equivalent, on a per share basis, to the amount of undistributed net investment income on the date of the transaction) is credited or charged to undistributed net investment income. As a result, undistributed net investment income per share is unaffected by sales or redemptions of fund shares. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. RESTRICTED SECURITIES--Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. In some cases, the issuer of restricted securities has agreed to register such securities for resale, at the issuer's expense either upon demand by the Fund or in connection with another registered offering of the securities. Many restricted securities may be resold in the secondary market in transactions exempt from registration. Such restricted securities may be determined to be liquid under criteria established by the Board of Directors. The Fund will not incur any registration costs upon such resales. The Fund's restricted securities are valued at the price provided by dealers in the secondary market or, if no market prices are available, at the fair value as determined by the Fund's pricing committee. Additional information on each restricted security held at February 29, 1996 is as follows: Federated Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) - --------------------------------------------------------------------------------
SECURITY ACQUISITION DATE ACQUISITION COST Massachusetts, IFA, Solid August 3, 1994 $ 21,183,750 Waste Disposal Sr. Lien Revenue Bonds - -------------------------------------------------------------- Marion County, WV County December 17, 1993 $ 5,034,445 Commission, Solid Waste Facility Revenue Bonds - --------------------------------------------------------------
INVESTMENT RISK--Although the Fund has a diversified portfolio, the Fund has 36% of its portfolio invested in lower rated and comparable quality unrated high yield securities. Investments in higher yield securities are accomplished by a greater degree of credit risk and the risk tends to be more sensitive to economic conditions than higher rated securities. The risk of loss due to default by the issuer may be significantly greater for the holders of high yielding securities because such securities are generally unsecured and are often subordinated to other creditors of the issuer. The Fund held no defaulted securities at February 29, 1996. OTHER--Investment transactions are accounted for on the trade date. (3) CAPITAL STOCK At February 29, 1996, there were 2,000,000,000 shares of $.001 par value capital stock authorized. Transactions in capital stock were as follows:
SIX MONTHS ENDED YEAR ENDED FEBRUARY 29, 1996 AUGUST 31, 1995 Shares sold 1,119,179 3,617,186 - ---------------------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 710,610 1,156,534 - ---------------------------------------------------------------------- Shares redeemed (2,692,989) (9,728,597) - ---------------------------------------------------------------------- --------------------- ------------------- Net change resulting from share transactions (863,200) (4,954,877) - ---------------------------------------------------------------------- --------------------- -------------------
(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 0.60% of the Fund's average daily net assets. 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 Municipal Opportunities Fund, Inc. (formerly, Fortress Municipal Income Fund, Inc.) - -------------------------------------------------------------------------------- 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. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets of the Fund for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its registered transfer and dividend disbursing agent, Federated Shareholder Services Company, maintains all necessary shareholder records and receives a fee 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. INTERFUND TRANSACTIONS--During the period ended February 29, 1996, the Corporation engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These purchase and sale transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $18,300,000 and $33,200,000, respectively. 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 February 29, 1996, were as follows: - --------------------------------------------------------------------------------------------------- PURCHASES $ 33,472,445 - --------------------------------------------------------------------------------------------------- ------------- SALES $ 23,673,648 - --------------------------------------------------------------------------------------------------- -------------
Directors Officers - -------------------------------------------------------------------------------- John F. Donahue John F. Donahue Thomas G. Bigley Chairman John T. Conroy, Jr. Richard B. Fisher William J. Copeland President James E. Dowd J. Christopher Donahue Lawrence D. Ellis, M.D. Executive Vice President Richard B. Fisher Edward C. Gonzales Edward L. Flaherty, Jr. Executive Vice President Peter E. Madden John W. McGonigle Gregor F. Meyer Executive Vice President and Secretary John E. Murray, Jr. David M. Taylor Wesley W. Posvar Treasurer Marjorie P. Smuts Charles H. Field 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. [logo] FEDERATED INVESTORS Since 1955 Federated Investors Tower Pittsburgh, PA 15222-3779 Federated Securities Corp. is the distributor of the fund and is a subsidiary of Federated Investors. Cusip 313910101 8040407 (4/96) APPENDIX A. The graphic presentation here displayed consists of a legend in the upper left quadrant of the chart indicating the components of the corresponding line graph. The color-coded line graph is a visual representation of the narrative text above it, which shows that an initial investment of $9,000 on 04/10/87 in Federated Municipal Opportunities Fund, Inc. would have grown to $17,343 by 02/29/96. The "x" axis reflects the cost of the investment, the "y" axis reflects computation periods from 1987 through 1996, and the right margin of the chart reflects a total investment range from $0 to $18,000. The chart further indicates the ending value attributable to principal, as well as the ending value attributable to reinvested income. B. The graphic presentation here displayed consists of a legend in the upper left quadrant of the chart indicating the components of the corresponding line graph. The color-coded line graph is a visual representation of the narrative text above it, which shows that, beginning on 04/10/87, nine annual investments of $1,000 in Federated Municipal Opportunities Fund, Inc. would have grown to $13,083 by 02/29/96. The "x" axis reflects the cost of the investment, the "y" axis reflects computation periods from 1987 through 1996, and the right margin of the chart reflects a total investment range from $0 to $14,000. The chart further indicates the ending value attributable to principal, as well as the ending value attributable to reinvested income. C. The graphic presentation here displayed consists of a legend in the upper left quadrant of the chart indicating the components of the corresponding line graph. The color-coded line graph is a visual representation of the narrative text above it, which shows that an initial investment of $5,000 on 04/10/87 in Federated Municipal Opportunities Fund, Inc., with continuing monthly investments of $500, would have grown to $83,608 by 02/29/96. The "x" axis reflects the cost of the investment, the "y" axis reflects computation periods from 1987 through 1996, and the right margin of the chart reflects a total investment range from $0 to $84,000. The chart further indicates the ending value attributable to principal, as well as the ending value attributable to reinvested income. -----END PRIVACY-ENHANCED MESSAGE-----