-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, d6qg/ZJ/gSRET6PE9BTsCOdS9g5R3ujZvFY0DcqYhGpMaEdwqxG2p+luaU/IJpiU +Xy4Hs/0ZbUMulkDM4xfhw== 0000807607-95-000003.txt : 19950425 0000807607-95-000003.hdr.sgml : 19950425 ACCESSION NUMBER: 0000807607-95-000003 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950228 FILED AS OF DATE: 19950424 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FORTRESS MUNICIPAL INCOME FUND INC CENTRAL INDEX KEY: 0000807607 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04533 FILM NUMBER: 95530511 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 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 FEDERATED FORTRESS MUNICIPAL INCOME FUND, INC. 8th SEMI-ANNUAL REPORT February 28, 1995 Established 1987 President's Message - ------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present the 8th Semi-Annual Report for Fortress Municipal Income Fund, Inc. (the "Fund") for the six-month period ended February 28, 1995. This report begins with our customary update from the Fund's portfolio manager, Jonathan C. Conley, Vice President of Federated Advisers. Jonathan will discuss municipal bond market activity for the past six months, and then outline the Fund's performance and his management strategies. During the past six months, the Federal Reserve Board raised interest rates twice. However, during January and February of 1995, interest rates declined, so the net asset value ("NAV") per share of the Fund rose from a low of $9.65 on November 21, 1994, to $10.48 on February 28, 1995. The Fund also paid shareholders tax-free dividends amounting to $0.31 per share for the six-month period. Assets were $428 million as of February 28, 1995. I urge you to pay special attention to the share performance charts that follow Jonathan's interview. These charts illustrate the growth of a hypothetical investment in the Fund from April 10, 1987 to February 28, 1995. Because they span a period of eight years, rather than just six months, these charts reflect the Fund's long-term investment performance. The Fund, created in 1987, is designed to pursue competitive monthly income that is free from federal regular income tax.* The Fund invests in a diversified portfolio of municipal securities issued by more than 80 municipalities across the country. Over the past six months, there were many stories in the news about municipalities and their investment techniques. Happily, we are able to report that the Fund did not own issues of the municipalities in California, Florida or Oklahoma that caused such a stir in the press. Thank you for selecting Fortress Municipal Income Fund, Inc. If you have any questions concerning the Fund's portfolio or your account, please do not hesitate to write. Very sincerely yours, Richard B. Fisher President April 15, 1995 *Income may be subject to the federal alternative minimum tax and state and local taxes. Investment Review - ------------------------------------------------------------------------------- Jonathan C. Conley, Vice President Federated Advisers Q. Jonathan, what has occurred in the long-term, fixed-income markets during the six month period ending February 28, 1995? A. Interest rates in the long-term, fixed-income markets exhibited considerable volatility during the past six months. On August 31, 1994, the yield for the current 30-year U.S. Treasury bond (7.50% due November 15, 2024) stood at 7.45%. From there, the yield rose to 8.17% by November 7, 1994 before dropping to 7.51% as of February 28, 1995. As for the long-term municipal market, the Bond Buyer 40 Index, representing on a daily basis "A" to "AAA" long-term municipal issues, registered 6.36% on August 31, 1994.* It then increased to 7.37% by November 22, 1994, and fell thereafter to 6.42% by February 28, 1995. Q. How have these interest rate changes translated to bond price movements? A. From August 31, 1994, to November 7, 1994, the price of the bellwether U.S. Treasury bond declined from $100.53 to $92.56. By February 28, 1995, the price largely recovered, climbing to $99.91. From August 31, 1994, to November 7, 1994, the Municipal Bond Index declined from $91.78 to $82.13, then appreciated to $90.97 by February 28, 1995.* Q. Why was the municipal bond market more volatile than its Treasury counterpart? First, many issues in the secondary market had been quoted at prices representing discounts to face value in excess of Internal Revenue Service provisions allowing for capital gains treatment. Excessive discounts were, and continue to be, treated as ordinary income, taxable at ordinary income rates. Such issues trade at lower nominal prices to allow the incremental investor to strive to acheive a market yield after tax. * This index is unmanaged. Q. What has an investor in the Fund experienced during this period? A. For the six months ended February 28, 1995, an investor in the Fund experienced a total return of 2.30% based on NAV, which does not reflect the sales load or contingent deferred sales charge, and 0.28% based on offering price, which includes all applicable sales charges.* These figures are not annualized. During the past six months, an investor received $0.31 per share in dividends, while the NAV fell from $10.56 on August 31, 1994, to $10.48 on February 28, 1995, a decline of only 0.76%. Q. Jonathan, how do you control the volatility of the net asset value per share? A. I favor, in a variety of interest rate environments, securities which have coupons or yields greater than the Bond Buyer 40 Index.** For equal credit quality and maturity, the bond with the higher coupon rate or market yield will be less price sensitive with respect to market rate changes. The Fund, therefore, would swap into higher coupon (or yield) issues in each municipal market sector during rising rates to secure coupon-price protection, and to seek attractive income distribution to shareholders. Q. In what areas of the municipal market has the Fund invested over the past six months? A. Between August 31, 1994, and February 28, 1995, the Fund purchased $37,300,000 face amount of medium-to-upper grade municipal issues. These transactions were financed by the sale of higher-grade issues. Sectors represented in the Fund's investment activity included: hospital issues, pollution control obligations of investor-owned utilities, industrial development bonds of non-financial corporations, college and university tuition revenue issues, single-family housing mortgage revenue issues, and resource recovery project finance obligations. The average yield on issues bought during the past six months by the Fund was 7.32%. * 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. ** This index is unmanaged. Q. What is the composition of the investments of the Fund by credit quality? A. The credit quality of the portfolio of investments for the Fund at August 31, 1994 and February 28, 1995, is shown below:
August 31, 1994 February 28, 1995 --------------- ----------------- AAA 8.0% 7.4% AA 17.8% 14.1% A 10.5% 8.6% BBB 39.8% 45.3% BB 2.7% 3.5% NR 21.2% 21.1% --------------- ----------------- Total 100.0% 100.0%
Q. Could you explain the rationale for the changes in the portfolio holdings? A. Medium- and lower-grade issues tend to outperform higher-grade issues during periods of economic recovery. As state and local governments receive greater tax revenue from sales, income, business use, and property, and as corporations, on the whole, increase profitability and cashflow generation, the potential for credit rating upgrades increases. This bodes well for medium/lower-grade issues as a class of debt instruments. Over the past six months, the Fund has been investing in what it considers upgrade candidates. Because of their higher than general market coupons (yields) at issue, medium/lower-grade bonds have shorter durations than their higher-grade brethren. Furthermore, medium/lower-grade issues tend to be core holdings; municipal bond portfolio managers typically accommodate shareholder purchases in and redemptions from a Fund through transactions involving higher-grade issues. Consequently, assuming stable credit quality, secondary market pricing for medium/lower-grade bonds is less volatile than that for higher-grade issues. A portfolio which holds a diversified mix of the former types of issues should display the attributes of those issues. Two Ways You May Seek to Invest for Success in Fortress Municipal Income Fund, Inc. - ------------------------------------------------------------------------------- Initial Investment: If you made an initial investment of $8,000 in Fortress Municipal Income Fund, Inc. on April 10, 1987, reinvested your dividends and capital gains, and did not redeem any shares, your account would be worth $14,024 on February 28, 1995. You would have earned a 7.37% average annual total return for the eight-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, 1995, the average annual one-year, five-year and since inception (4/10/87) returns were 4.00%, 7.10%, and 7.41%, 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 load 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. Fortress Municipal Income Fund, Inc. - ------------------------------------------------------------------------------- One Step at a Time: $1,000 invested each year for eight years (reinvesting all dividends and capital gains) grew to $10,921. With this approach, the key is consistency. If you had started investing $1,000 annually in Fortress Municipal Income Fund, Inc. on April 10, 1987, reinvested your dividends and capital gains and did not redeem any shares, you would have invested only $8,000, but your account would have reached a total value of $10,921* by February 28, 1995. You would have earned an average annual total return of 7.13%. 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 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. Fortress Municipal Income Fund, Inc. Investing for Tax-Free Monthly Income - ------------------------------------------------------------------------------- Fred and Margie 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 Fortress Municipal Income 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 $70,392.* This represents a 6.94% 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. 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. Fortress Municipal Income Fund, Inc. Portfolio of Investments - -------------------------------------------------------------------------------- February 28, 1995 (unaudited)
CREDIT RATING: PRINCIPAL MOODY'S, AMOUNT OR S&P* VALUE SECURITIES-1.0% -------------------------------------------------------------------- ALABAMA--0.2% ---------------------------------------------------------------------- $ 900,000 Birmingham, AL, Medical Clinic Board Daily VRDNs (University of Alabama Health System)/(Morgan Guaranty Trust Co. LOC) A-1+ $ 900,000 ---------------------------------------------------------------------- -------------- MARYLAND--0.4% ---------------------------------------------------------------------- 1,800,000 Montgomery County, MD, EDA Weekly VRDNs (U.S. Pharmacopeial Convention Facility)/(Chemical Bank LOC) VMIG1 1,800,000 ---------------------------------------------------------------------- -------------- PUERTO RICO--0.3% ---------------------------------------------------------------------- 1,400,000 Government Development Bank of Puerto Rico Weekly VRDNs (Credit Suisse and Sumitomo Bank Ltd. LOCs) A-1 1,400,000 ---------------------------------------------------------------------- -------------- TEXAS--0.1% ---------------------------------------------------------------------- 300,000 Harris County, TX, HFDC Daily VRDNs (Series 1994)/ (Methodist Hospital Guaranty) A-1+ 300,000 ---------------------------------------------------------------------- -------------- TOTAL SHORT-TERM MUNICIPAL SECURITIES (AT AMORTIZED COST) 4,400,000 ---------------------------------------------------------------------- -------------- LONG-TERM MUNICIPAL SECURITIES--97.3% - ------------------------------------------------------------------------------------- ALABAMA--1.3% ---------------------------------------------------------------------- 6,000,000 Courtland, AL, IDB, 6.375% Solid Waste Disposal Revenue Bonds (Series A)/(Champion International Corporation)/ (Original Issue Yield: 6.52%)/(Subject to AMT), 3/1/2029 BBB 5,574,120 ---------------------------------------------------------------------- -------------- ARKANSAS--1.9% ---------------------------------------------------------------------- 2,920,000 Conway, AR, 7.125% Hospital Revenue Bonds (Series 1992), 2/1/2013 BBB 2,918,277 ---------------------------------------------------------------------- 3,000,000 Conway, AR, 8.125% Hospital Revenue Bonds (Series 1990), 7/1/2005 BBB 3,194,880 ---------------------------------------------------------------------- 1,000,000 Conway, AR, 8.375% Hospital Revenue Bonds (Series 1990), 7/1/2011 BBB 1,073,180 ----------------------------------------------------------------------
Fortress Municipal Income Fund, Inc. - --------------------------------------------------------------------------------
CREDIT RATING: PRINCIPAL MOODY'S, AMOUNT OR S&P* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- ARKANSAS--CONTINUED ---------------------------------------------------------------------- $ 1,000,000 Little Rock, AR, 7.00% Refunding Revenue Bonds Arkansas Health Facility Board (Baptist Medical Center)/(Series 1992)/(Parkway Village Project), 10/1/2017 A+ $ 1,033,410 ---------------------------------------------------------------------- -------------- Total 8,219,747 ---------------------------------------------------------------------- -------------- COLORADO--1.1% ---------------------------------------------------------------------- 3,135,000 Colorado HFA, 7.375% SFM Revenue Bonds (Subject to AMT), 8/1/2023 AA 3,205,099 ---------------------------------------------------------------------- 910,000 Colorado HFA, 7.70% SFM Revenue Bonds (Subject to AMT), 2/1/2023 AA 907,973 ---------------------------------------------------------------------- 580,000 El Paso County, CO, HFA, 8.00% SFM Revenue Bonds (Series 1990A)/(GNMA Collateralized)/(Subject to AMT), 9/1/2022 AAA 370,167 ---------------------------------------------------------------------- -------------- Total 4,483,239 ---------------------------------------------------------------------- -------------- CONNECTICUT--1.3% ---------------------------------------------------------------------- 6,400,000 Connecticut State Health And Education Facility Authority 6.80% Revenue Bonds (University of Hartford)/(Original Issue Yield: 6.84%), 7/1/2022 Baa 5,732,544 ---------------------------------------------------------------------- -------------- FLORIDA---1.0% ---------------------------------------------------------------------- 2,835,000 Dade County, FL, HFA, 8.75% SFM Revenue Bonds (GNMA Collateralized)/(Subject to AMT), 7/1/2017 AAA 3,036,512 ---------------------------------------------------------------------- 1,120,000 Jacksonville, Fl, Health Facilities Authority, 6.40% Revenue Bonds (National Benevolent Association), 12/1/2016 Baa1 1,028,989 ---------------------------------------------------------------------- -------------- Total 4,065,501 ---------------------------------------------------------------------- -------------- GEORGIA--0.4% ---------------------------------------------------------------------- 2,000,000 Fulco County, GA, Hospital Authority, 6.25% Revenue Anticipation Certificates (Georgia Baptist Health Care)/ (Series 1992A)/(Original Issue Yield: 6.27%), 9/1/2013 Baa 1,786,760 ---------------------------------------------------------------------- --------------
Fortress Municipal Income Fund, Inc. - --------------------------------------------------------------------------------
CREDIT RATING: PRINCIPAL MOODY'S, AMOUNT OR S&P* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- IDAHO--1.1% ---------------------------------------------------------------------- $ 1,300,000 Idaho HFA, 7.50% SFM Revenue Bonds (Subject to AMT), 7/1/2024 AA $ 1,366,599 ---------------------------------------------------------------------- 3,310,000 Idaho HFA, 7.80% SFM Revenue Bonds (Subject to AMT), 1/1/2023 AA 3,483,742 ---------------------------------------------------------------------- -------------- Total 4,850,341 ---------------------------------------------------------------------- -------------- ILLINOIS--5.2% ---------------------------------------------------------------------- 4,500,000 Granite City, IL, 8.125% Hospital Revenue Bonds (St. Elizabeth's Medical Centre), 6/1/2008 Baa1 4,615,065 ---------------------------------------------------------------------- 3,000,000 Illinois Development Finance Authority, 6.10% Revenue Bonds (Series 1993C)/(Catholic Charities Housing Development Corp.)/(Archdiocese of Chicago Guaranty), 1/1/2020 NR 2,658,120 ---------------------------------------------------------------------- 1,000,000 Illinois HFA, 5.95% Revenue Refunding Bonds (Series 1994)/(Passavant Memorial Area Hospital Association), 10/1/2011 A- 909,210 ---------------------------------------------------------------------- 4,500,000 Illinois HFA, 6.125% Revenue Bonds 8/15/2020 NR 3,726,720 ---------------------------------------------------------------------- 10,000,000 Illinois HFA, 9.25% Revenue Refunding Bonds (Series 1994A)/(Edgewater Hospital & Medical Center), 7/1/2024 NR 10,262,500 ---------------------------------------------------------------------- -------------- Total 22,171,615 ---------------------------------------------------------------------- -------------- INDIANA--9.5% ---------------------------------------------------------------------- 2,785,000 Indiana HFA, 7.75% SFM Revenue Bonds (GNMA Collateralized)/(Subject to AMT), 7/1/2022 AAA 2,968,921 ---------------------------------------------------------------------- 1,065,000 Indiana HFA, 8.20% SFM Revenue Bonds (GNMA Collateralized)/(Subject to AMT), 7/1/2020 AAA 1,136,919 ---------------------------------------------------------------------- 3,000,000 Indiana Port Commission, 6.875% Refunding Revenue Bonds (Series 1992)/(Cargill, Inc. Project), 5/1/2012 Aa3 3,182,790 ---------------------------------------------------------------------- 17,100,000 Indianapolis, IN, Airport Authority, 7.10% Special Facility Revenue Bonds (Series 1994)/(Federal Express Corp.)/ (Original Issue Yield: 7.178%)/(Subject to AMT), 1/15/2017 BBB 17,398,395 ----------------------------------------------------------------------
Fortress Municipal Income Fund, Inc. - --------------------------------------------------------------------------------
CREDIT RATING: PRINCIPAL MOODY'S, AMOUNT OR S&P* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- INDIANA--CONTINUED ---------------------------------------------------------------------- $ 4,350,000 Kokomo, IN, 6.35% Hospital Revenue Bonds (Original Issue Yield: 6.40%), 8/15/2013 Baa $ 3,991,951 ---------------------------------------------------------------------- 5,000,000 Laporte County, IN, 6.25% Hospital Revenue Bonds (Original Issue Yield: 6.35%), 3/1/2012 Baa 4,630,450 ---------------------------------------------------------------------- 5,000,000 Laporte County, IN, 6.25% Hospital Revenue Bonds (Original Issue Yield: 6.35%), 3/1/2023 Baa 4,255,150 ---------------------------------------------------------------------- 2,750,000 Laporte County, IN, 8.75% Hospital Revenue Bonds (LaPorte Hospital, Inc.) Refunded, 3/1/2012 Aaa 3,005,035 ---------------------------------------------------------------------- -------------- Total 40,569,611 ---------------------------------------------------------------------- -------------- IOWA--0.3% ---------------------------------------------------------------------- 1,000,000 Davenport, IA, IDA, 8.375% Revenue Bonds (Nichols-Homeshield/Quanex Corp.), 12/1/2005 NR 1,058,050 ---------------------------------------------------------------------- -------------- KENTUCKY--0.8% ---------------------------------------------------------------------- 3,500,000 Kenton County, KY, 7.50% Airport Revenue Bonds (Delta Airlines Project)/(Original Issue Yield: 7.60%)/(Subject to AMT), 2/1/2020 A3 3,542,735 ---------------------------------------------------------------------- -------------- LOUISIANA--6.2% ---------------------------------------------------------------------- 5,000,000 Lake Charles Harbor, LA, 7.75% Port Facilities Revenue Bonds (Series 1992)/(Trunkline LNG Company Project)/ (Panhandler Eastern Corp.), 8/15/2022 Ba2 5,347,450 ---------------------------------------------------------------------- 3,000,000 Louisiana State, Parish of De Soto, 7.70% Environmental Improvement Revenue Bonds (Series 1994A)/(International Paper Company)/(Subject to AMT), 11/1/2018 A- 3,271,590 ---------------------------------------------------------------------- 3,650,000 Louisiana State, Parish of St. Charles, 7.00% Revenue Bonds (Louisiana Power & Light Co.)/(Original Issue Yield: 7.04%)/(Subject to AMT), 12/1/2022 BBB+ 3,672,484 ---------------------------------------------------------------------- 1,650,000 Louisiana State, Parish of St. James, 6.20% Revenue Bonds (Series 1993A)/(Louisiana Power & Light Co.)/(Original Issue Yield: 6.25%)/(Subject to AMT), 5/1/2023 BBB+ 1,479,093 ----------------------------------------------------------------------
Fortress Municipal Income Fund, Inc. - --------------------------------------------------------------------------------
CREDIT RATING: PRINCIPAL MOODY'S, AMOUNT OR S&P* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- LOUISIANA--CONTINUED ---------------------------------------------------------------------- $ 3,000,000 Louisiana State, Parish of St. James, 7.70% Revenue Bonds (Freeport McMoran)/(Original Issue Yield: 7.75%)/(Subject to AMT), 10/1/2022 NR $ 3,013,770 ---------------------------------------------------------------------- 5,645,000 St. Charles Parish, LA, 7.50% PCR Bonds (Louisiana Power & Light Co.), 6/1/2021 Baa3 5,786,859 ---------------------------------------------------------------------- 1,400,000 St. Charles Parish, LA, 8.00% PCR Bonds (Louisiana Power & Light Co.), 12/1/2014 Baa3 1,512,532 ---------------------------------------------------------------------- 2,100,000 St. Charles Parish, LA, 8.25% PCR Bonds (Louisiana Power & Light Co.), 6/1/2014 Baa3 2,274,237 ---------------------------------------------------------------------- -------------- Total 26,358,015 ---------------------------------------------------------------------- -------------- MAINE--1.1% ---------------------------------------------------------------------- 4,200,000 Maine State Housing Authority, 8.20% SFM Revenue Bonds (Series 1988D)/(Subject to AMT), 11/15/2019 A1 4,503,534 ---------------------------------------------------------------------- -------------- MARYLAND--0.6% ---------------------------------------------------------------------- 900,000 Gaithersburg, MD, 5.50% First Mortgage EDR Bonds (Asbury Methodist Homes)/(Original Issue Yield: 6.05%), 1/1/2020 NR 747,459 ---------------------------------------------------------------------- 2,550,000 Maryland State HEFA, 5.50% Revenue Bonds (Series 1993)/ (Howard General Hospital Issue)/(Original Issue Yield: 5.80%), 7/1/2025 BBB 1,994,890 ---------------------------------------------------------------------- -------------- Total 2,742,349 ---------------------------------------------------------------------- -------------- MASSACHUSETTS--5.9% ---------------------------------------------------------------------- 1,110,000 Massachusetts HFA, 6.30% SFM Revenue Bonds (Series 21)/(Subject to AMT), 6/1/2025 Aa 1,069,274 ---------------------------------------------------------------------- 2,000,000 Massachusetts HFA, 8.10% SFM Revenue Bonds (Subject to AMT), 12/1/2021 A 2,129,440 ---------------------------------------------------------------------- 380,000 Massachusetts HFA, 8.10% SFM Revenue Bonds (Subject to AMT), 8/1/2023 A 399,498 ----------------------------------------------------------------------
Fortress Municipal Income Fund, Inc. - --------------------------------------------------------------------------------
CREDIT RATING: PRINCIPAL MOODY'S, AMOUNT OR S&P* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- MASSACHUSETTS--CONTINUED ---------------------------------------------------------------------- $ 21,000,000 Massachusetts State, IFA, 9.00% Solid Waste Disposal Revenue Bonds (Series 1994A)/(Sr. Lien--Massachusetts Recycling Association)/(Subject to AMT), 8/1/2016 NR $ 21,827,820 ---------------------------------------------------------------------- -------------- Total 25,426,032 ---------------------------------------------------------------------- -------------- MICHIGAN--1.7% ---------------------------------------------------------------------- 6,150,000 Dickinson County, MI, Economic Development Corp., PCR 5.85% Refunding Revenue Bonds (Series 1993)/(Champion International Corp.), 10/1/2018 BBB 5,554,249 ---------------------------------------------------------------------- 1,500,000 Western Townships Utility Authority, MI, 8.20% System Revenue Bonds 1/1/2018 BBB+ 1,671,000 ---------------------------------------------------------------------- -------------- Total 7,225,249 ---------------------------------------------------------------------- -------------- MINNESOTA--5.3% ---------------------------------------------------------------------- 3,000,000 Minnesota HFA, 6.85%, SFM Revenue Bonds (Series 1992E)/(Subject to AMT), 1/1/2024 AA 3,080,730 ---------------------------------------------------------------------- 1,830,000 Minnesota HFA, 7.95% SFM Revenue Bonds (Series 1990A)/(Subject to AMT), 7/1/2022 AA 1,952,537 ---------------------------------------------------------------------- 715,000 Minnesota HFA, 8.05% SFM Revenue Bonds (Series 1989D)/(Subject to AMT), 8/1/2018 AA 737,594 ---------------------------------------------------------------------- 795,000 Minnesota HFA, 8.25% SFM Revenue Bonds (Series 1990D)/(Subject to AMT), 8/1/2020 AA 832,667 ---------------------------------------------------------------------- 17,000,000 Saint Paul MN, Housing & Redevelopment Authority, 6.625% Refunding Revenue Bonds (Series A)/(Healtheast Project)/(Original Issue Yield: 6.50%), 11/1/2017 BBB- 16,094,070 ---------------------------------------------------------------------- -------------- Total 22,697,598 ---------------------------------------------------------------------- -------------- MISSISSIPPI--1.0% ---------------------------------------------------------------------- 2,000,000 Columbus, MS, IDA, 8.25% Revenue Bonds (Baldor Electric)/(Subject to AMT), 5/1/2004 NR 2,076,480 ----------------------------------------------------------------------
Fortress Municipal Income Fund, Inc. - --------------------------------------------------------------------------------
CREDIT RATING: PRINCIPAL MOODY'S, AMOUNT OR S&P* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- MISSISSIPPI--CONTINUED ---------------------------------------------------------------------- $ 1,910,000 Mississippi HFDC, 8.25% SFM Revenue Bonds (GNMA Collateralized/FGIC Insured)/(Subject to AMT), 10/15/2018 AAA $ 2,043,070 ---------------------------------------------------------------------- -------------- Total 4,119,550 ---------------------------------------------------------------------- -------------- MISSOURI--0.2% ---------------------------------------------------------------------- 1,150,000 Missouri HEFA, 6.00% Revenue Bonds (National Benevolent Association)/(Original Issue Yield: 6.15%), 2/1/2024 Baa2 975,695 ---------------------------------------------------------------------- -------------- MONTANA--0.5% ---------------------------------------------------------------------- 1,195,000 Montana Board of Housing, 7.50% SFM Revenue Bonds (Series B2)/(Subject to AMT), 4/1/2023 Aa 1,257,666 ---------------------------------------------------------------------- 955,000 Montana Board of Housing, 8.30% SFM Revenue Bonds (Subject to AMT), 10/1/2020 Aa 987,470 ---------------------------------------------------------------------- -------------- Total 2,245,136 ---------------------------------------------------------------------- -------------- NEW HAMPSHIRE--5.5% ---------------------------------------------------------------------- 7,075,000 New Hampshire HFA, 7.25% SFM Revenue Bonds (Subject to AMT), 7/1/2015 AA 7,353,967 ---------------------------------------------------------------------- 1,420,000 New Hampshire HFA, 7.75% SFM Revenue Bonds (Subject to AMT), 7/1/2023 AA 1,501,835 ---------------------------------------------------------------------- 1,275,000 New Hampshire HFA, 7.90% SFM Revenue Bonds (Subject to AMT), 7/1/2022 AA 1,342,754 ---------------------------------------------------------------------- 1,500,000 New Hampshire IDA, 10.75% PCR Bonds (United Illuminating, Inc.)/(Subject to AMT), 10/1/2012 BBB 1,695,465 ---------------------------------------------------------------------- 2,865,000 New Hampshire IDA, 8.00% PCR Bonds (United Illuminating, Inc.)/(Subject to AMT), 12/1/2014 BBB 2,992,005 ---------------------------------------------------------------------- 10,000,000 New Hampshire, 6.00% Higher Educational & Hospital Revenue Bonds (Nashua Memorial Hospital)/(Original Issue Yield: 6.40%), 10/1/2023 A- 8,781,500 ---------------------------------------------------------------------- -------------- Total 23,667,526 ---------------------------------------------------------------------- --------------
Fortress Municipal Income Fund, Inc. - --------------------------------------------------------------------------------
CREDIT RATING: PRINCIPAL MOODY'S, AMOUNT OR S&P* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- NEW YORK--0.6% ---------------------------------------------------------------------- $ 2,500,000 New York State Energy Research & Development Authority Electric Facility, 7.50% Revenue Bonds (Series 1991A)/(Consolidated Edison)/(Subject to AMT), 1/1/2026 Aa2 $ 2,617,275 ---------------------------------------------------------------------- -------------- NORTH DAKOTA--1.0% ---------------------------------------------------------------------- 2,965,000 North Dakota HFA, 7.20% SFM Revenue Bonds (Subject to AMT), 7/1/2024 Aa 3,068,093 ---------------------------------------------------------------------- 370,000 North Dakota HFA, 8.375% SFM Revenue Bonds (Subject to AMT), 7/1/2019 AA 390,805 ---------------------------------------------------------------------- 635,000 North Dakota HFA, 8.375% SFM Revenue Bonds (Subject to AMT), 7/1/2021 AA 664,369 ---------------------------------------------------------------------- -------------- Total 4,123,267 ---------------------------------------------------------------------- -------------- OHIO--2.8% ---------------------------------------------------------------------- 1,000,000 Franklin County, OH, 7.60% Hospital Facility Refunding and Improvement Revenue Bonds (Riverside United Methodist Hospital)/(Prerefunded @102), 5/15/2000 Aa 1,129,440 ---------------------------------------------------------------------- 2,400,000 Hamilton County, OH, 7.00% Hospital Facility Revenue Refunding and Improvement Bonds (Deaconess Hospital of Cincinnati)/(Series 1992)/(Original Issue Yield: 7.046%), 1/1/2012 A 2,521,896 ---------------------------------------------------------------------- 1,400,000 Lucas County, OH, 7.625% Hospital Revenue Bonds (Riverside Hospital), 6/1/2015 BBB+ 1,435,644 ---------------------------------------------------------------------- 1,770,000 Ohio HFA, 7.65% SFM Revenue Bonds (Series 1989A)/ (GNMA Collateralized)/(Subject to AMT), 3/1/2029 AAA 1,876,377 ---------------------------------------------------------------------- 1,575,000 Ohio HFA, 8.25% SFM Revenue Bonds (Series B)/(GNMA Collateralized)/(Subject to AMT), 12/15/2019 AAA 1,694,952 ---------------------------------------------------------------------- 500,000 Ohio Water Development Authority, 8.10% PCR Bonds (Ohio Edison Company)/(Subject to AMT), 10/1/2023 Baa3 523,190 ---------------------------------------------------------------------- 1,250,000 Ohio Water Development Authority, 9.75% PCR Bonds (Cleveland Electric Illuminating, Inc.)/(Subject to AMT), Optional Tender, 11/1/97 Baa2 1,371,175 ----------------------------------------------------------------------
Fortress Municipal Income Fund, Inc. - --------------------------------------------------------------------------------
CREDIT RATING: PRINCIPAL MOODY'S, AMOUNT OR S&P* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- OHIO--CONTINUED ---------------------------------------------------------------------- $ 1,350,000 Trumbull County, OH, 7.75% Hospital Revenue Bonds (St. Joseph Riverside Hospital, 11/1/2013 BBB+ $ 1,473,579 ---------------------------------------------------------------------- -------------- Total 12,026,253 ---------------------------------------------------------------------- -------------- OKLAHOMA--1.8% ---------------------------------------------------------------------- 1,250,000 Tulsa, OK, Municipal Airport, 7.375% Revenue Bonds (American Airlines Corp.)/(Original Issue Yield: 7.375%)/ (Subject to AMT), 12/1/2020 Baa2 1,254,538 ---------------------------------------------------------------------- 6,200,000 Tulsa, OK, Municipal Airport, 7.60% Revenue Bonds (American Airlines Corp.)/(Original Issue Yield: 7.392%)/ (Subject to AMT), 12/1/2030 Baa2 6,308,934 ---------------------------------------------------------------------- -------------- Total 7,563,472 ---------------------------------------------------------------------- -------------- PENNSYLVANIA--16.1% ---------------------------------------------------------------------- 3,500,000 Allegheny County, PA, HDA, 5.875% Revenue Bonds (Ohio Valley General Hospital)/(Original Issue Yield: 6.125%), 4/1/2011 Baa1 3,151,190 ---------------------------------------------------------------------- 5,850,000 Allegheny County, PA, HDA, 6.00% Revenue Bonds (Series 1992)/(South Hills Health System)/(Original Issue Yield: 6.40%), 5/1/2020 A 5,427,981 ---------------------------------------------------------------------- 3,000,000 Allegheny County, PA, HDA, 7.00% Revenue Bonds (Series 1992)/(The Rehabilitation Institute of Pittsburgh)/(Original Issue Yield: 7.049%), 6/1/2010 BBB 3,032 070 ---------------------------------------------------------------------- 4,000,000 Allegheny County, PA, HDA, 7.282% OID Revenue Bonds (Series 1992)/(The Rehabilitation Institute of Pittsburgh), 6/1/2022 BBB 3,913,760 ---------------------------------------------------------------------- 1,595,000 Allegheny County, PA, HFA, 7.95% SFM Revenue Bonds (GNMA Collateralized)/(Subject to AMT), 6/1/2023 AAA 1,709,744 ---------------------------------------------------------------------- 665,000 Allegheny County, PA, HFA, 9.50% SFM Revenue Bonds (GNMA Collateralized)/(Subject to AMT), 12/1/2018 AAA 715,354 ---------------------------------------------------------------------- 5,710,000 Allegheny County, PA, Higher Education Building Authority, 7.375% Revenue Bonds (La Roche College), 7/15/2012 NR 5,995,214 ----------------------------------------------------------------------
Fortress Municipal Income Fund, Inc. - --------------------------------------------------------------------------------
CREDIT RATING: PRINCIPAL MOODY'S, AMOUNT OR S&P* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- PENNSYLVANIA--CONTINUED ---------------------------------------------------------------------- $ 1,750,000 Allegheny County, PA, IDA, 8.75% Revenue Bonds (Air Cargo III: United Parcel Services/Federal Express)/ (Subject to AMT), 2/15/2009 NR $ 1,851,762 ---------------------------------------------------------------------- 500,000 Allegheny County, PA, Residential Finance Authority, 7.75% SFH Mortgage Revenue Bonds (Series K)/(GNMA Collateralized)/(Subject to AMT), 12/1/2022 Aaa 529,695 ---------------------------------------------------------------------- 3,000,000 Delaware County, PA, 7.875% OID Revenue Bonds (Eastern College)/(Series 1992A) 3/1/2012 NR 3,189,390 ---------------------------------------------------------------------- 2,055,000 Erie County, PA, Hospital Authority, 7.50% Revenue Bonds (Erie Infants and Youth Home)/(Marine Bank, LOC), 10/1/ 2011 NR 2,128,343 ---------------------------------------------------------------------- 2,000,000 Erie, PA, Municipal Airport Parking Authority, 8.25% Revenue Bonds (Subject to AMT), 7/1/2009 NR 2,148,220 ---------------------------------------------------------------------- 1,000,000 Montgomery County, PA, IDA, 8.875% PCR Bonds, (Philadelphia Electric), 6/1/2016 Baa3 1,056,260 ---------------------------------------------------------------------- 1,730,000 Northeastern, PA, Hospital & Education Authority, 6.00% (Series 1993B)/(Kings College)/(Original Issue Yield: 6.174%), 7/15/2018 BBB 1,642,497 ---------------------------------------------------------------------- 10,000,000 Pennsylvania EDA, 7.60% Wastewater Treatment Revenue Bonds (Series 1994A)/(Sun Company)/(Original Issue Yield: 7.653%)/(Subject to AMT), 12/1/2024 BBB- 10,548,800 ---------------------------------------------------------------------- 3,875,000 Pennsylvania HEFA, 7.375% OID Revenue Bonds (Medical College of Pennsylvania)/(Original Issue Yield: 7.45%), 3/1/2021 Baa1 3,887,671 ---------------------------------------------------------------------- 1,750,000 Pennsylvania HEFA, 8.375% Revenue Bonds (Medical College of Pennsylvania), 3/1/2011 Baa1 1,841,840 ---------------------------------------------------------------------- 6,000,000 Pennsylvania HFA, 7.00% SFM Revenue Bonds (Series 1992B34)/(Subject to AMT), 4/1/2024 Aa 6,190,560 ---------------------------------------------------------------------- 2,660,000 Pennsylvania HFA, 7.65% SFM Revenue Bonds (Series 28)/ (Subject to AMT), 10/1/2023 Aa 2,833,299 ---------------------------------------------------------------------- $ 435,000 Pennsylvania HFA, 8.15% SFM Revenue Bonds (Series X)/ (Subject to AMT), 4/1/2024 Aa $ 458,085 ----------------------------------------------------------------------
Fortress Municipal Income Fund, Inc. - --------------------------------------------------------------------------------
CREDIT RATING: PRINCIPAL MOODY'S, AMOUNT OR S&P* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- PENNSYLVANIA--CONTINUED ---------------------------------------------------------------------- 1,740,000 Pennsylvania Higher Educational Facilities Agency 6.75% (Thiel College), 9/1/2017 NR 1,782,038 ---------------------------------------------------------------------- 1,640,000 Pennsylvania State Higher Educational Facilities Authority, 6.00% College Revenue Bonds (Allegheny College)/(Series 1993B)/(Original Issue Yield: 6.30%), 11/1/2022 BBB+ 1,553,211 ---------------------------------------------------------------------- 3,250,000 Pennsylvania State Higher Educational Facilities Authority, 6.10% College Revenue Bonds (Allegheny College)/(Series 1993A)/(Original Issue Yield: 6.23%), 11/1/2008 BBB+ 3,321,273 ---------------------------------------------------------------------- -------------- Total 68,908,257 ---------------------------------------------------------------------- -------------- SOUTH CAROLINA--0.5% ---------------------------------------------------------------------- 1,250,000 Charleston County, SC, 9.25% Resource Recovery Revenue Bonds (Foster-Wheeler, Inc.)/(Subject to AMT), 1/1/2010 A 1,398,450 ---------------------------------------------------------------------- 810,000 South Carolina State Housing Finance and Development Authority, 7.40% Homeownership Mortgage Revenue Bonds (Subject to AMT), 7/1/2023 Aa 843,583 ---------------------------------------------------------------------- -------------- Total 2,242,033 ---------------------------------------------------------------------- -------------- TENNESSEE--4.1% ---------------------------------------------------------------------- 2,475,000 Memphis-Shelby County, TN, Airport Authority, 6.75% Special Facilities Revenue Bonds (Series 1992)/(Federal Express Corp.), 9/1/2012 Baa3 2,496,533 ---------------------------------------------------------------------- 3,100,000 Springfield, TN, HEFA, 8.25% Revenue Bonds (Jesse Holman Jones Hospital)/(Original Issue Yield: 8.50%), 4/1/2012 NR 3,159,272 ---------------------------------------------------------------------- 7,800,000 Springfield, TN, HEFA, 8.50% Revenue Bonds (Jesse Holman Jones Hospital)/(Original Issue Yield: 8.875%), 4/1/2024 NR 7,817,238 ---------------------------------------------------------------------- 2,825,000 Tennessee HDA, 7.65% SFM Revenue Bonds (Subject to AMT), 7/1/2022 A 2,993,992 ---------------------------------------------------------------------- $ 935,000 Tennessee HDA, 8.25% SFM Revenue Bonds (Home Ownership Program)/(Subject to AMT), 7/1/2020 A $ 962,620 ----------------------------------------------------------------------
Fortress Municipal Income Fund, Inc. - --------------------------------------------------------------------------------
CREDIT RATING: PRINCIPAL MOODY'S, AMOUNT OR S&P* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- TENNESSEE--CONTINUED ---------------------------------------------------------------------- 300,000 Tennessee HDA, 8.375% SFM Revenue Bonds (Subject to AMT), 7/1/2019 A 310,566 ---------------------------------------------------------------------- -------------- Total 17,740,221 ---------------------------------------------------------------------- -------------- TEXAS--13.2% ---------------------------------------------------------------------- 2,500,000 Brazos River Authority, TX, 7.875% PCR Bonds (Texas Utilities Electric Company)/(Subject to AMT), 3/1/2021 Baa2 2,674,400 ---------------------------------------------------------------------- 1,800,000 Brazos River Authority, TX, 8.125% PCR Bonds (Houston Power & Light)/(Subject to AMT), 2/1/2020 Baa2 1,940,616 ---------------------------------------------------------------------- 2,260,000 Brazos River Authority, TX, 8.25% PCR Bonds (Texas Utilities Electric Company)/(Subject to AMT), 12/1/2016 Baa2 2,367,418 ---------------------------------------------------------------------- 1,250,000 Brazos River Authority, TX, 9.875% PCR Bonds (Texas Utilities Electric Company)/(Subject to AMT), 10/1/2017 BBB 1,393,012 ---------------------------------------------------------------------- 7,320,000 Dallas-Fort Worth, TX International Airport, 7.125% Revenue Bonds (Delta Airlines)/(Original Issue Yield: 7.55%)/(Subject to AMT), 11/1/2026 Baa3 7,152,738 ---------------------------------------------------------------------- 2,500,000 Dallas-Fort Worth, TX, International Airport, 7.25% Revenue Bonds (Delta Airlines)/(Original Issue Yield: 7.625%)/(Subject to AMT), 11/1/2021 Baa3 2,549,550 ---------------------------------------------------------------------- 3,000,000 Dallas-Fort Worth, TX, International Airport Facilities Improvement Corp., 7.25% Revenue Bonds (American Airlines, Inc.)/(Original Issue Yield: 7.428%)/(Subject to AMT), 11/1/2030 Baa2 2,976,810 ---------------------------------------------------------------------- 2,370,000 Dallas-Fort Worth, TX, International Airport Facilities Improvement Corp., 7.50% Revenue Bonds (American Airlines Corp.)/(Original Issue Yield: 8.20%)/(Subject to AMT), 11/1/2025 Baa2 2,395,714 ---------------------------------------------------------------------- 1,000,000 Guadalupe-Blanco River Authority, TX, IDA, 8.60% Revenue Pollution Control Bonds (A.P. Green Industries, 4/1/2009 NR 1,049,840 ---------------------------------------------------------------------- $ 2,500,000 Guadalupe-Blanco River Authority, TX, IDA, 8.60% Revenue Pollution Control Bonds (A.P. Green Industries, Inc.), 4/1/2009 NR $ 2,651,225 ----------------------------------------------------------------------
Fortress Municipal Income Fund, Inc. - --------------------------------------------------------------------------------
CREDIT RATING: PRINCIPAL MOODY'S, AMOUNT OR S&P* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- TEXAS--CONTINUED ---------------------------------------------------------------------- 9,445,000 Richardson, TX, 6.50% Hospital Authority Revenue Refunding & Improvement Bonds (Richardson Medical Center)/(Original Issue Yield: 6.72%), 12/1/2012 Baa 8,876,694 ---------------------------------------------------------------------- 7,630,000 Richardson, TX, 6.75% Hospital Authority Revenue Refunding & Improvement Bonds (Richardson Medical Center)/(Original Issue Yield: 6.82%), 12/1/2023 Baa 7,135,729 ---------------------------------------------------------------------- 11,915,000 Sabine River Authority, TX, 5.85% PCR Refunding Bonds (Texas Utilities Electric Co.)/(Original Issue Yield: 5.875%), 5/1/2022 AAA 10,559,669 ---------------------------------------------------------------------- 1,000,000 Texarkana, TX, HFDC, 8.50% Hospital Revenue Bonds (Wadley Regional Medical Centre), 10/1/2012 A- 1,093,160 ---------------------------------------------------------------------- 1,700,000 Tyler, TX, HFDC, 6.75% Revenue Bonds (Series A)/(East Texas Medical Center)/(Original Issue Yield: 7.00%), 1/11/2025 Baa 1,564,595 ---------------------------------------------------------------------- -------------- Total 56,381,170 ---------------------------------------------------------------------- -------------- UTAH 1.4% ---------------------------------------------------------------------- 1,095,000 Utah, HFA, 7.10% SFM Revenue Bonds (Subject to AMT), 7/1/2024 AA 1,124,904 ---------------------------------------------------------------------- 1,675,000 Utah HFA, 7.15% SFM Revenue Bonds (Series 1991E-2)/ (Original Issue Yield: 7.179%)/(Subject to AMT), 7/1/2024 AA 1,725,585 ---------------------------------------------------------------------- 2,455,000 Utah HFA, 7.55% SFM Revenue Bonds (Series 1991D)/ (Subject to AMT), 7/1/2023 AA 2,587,963 ---------------------------------------------------------------------- 680,000 Utah HFA, 7.75% SFM Revenue Bonds (Series A2)/(Subject to AMT), 1/1/2023 AA 727,981 ---------------------------------------------------------------------- -------------- Total 6,166,433 ---------------------------------------------------------------------- -------------- WASHINGTON 2.6% ---------------------------------------------------------------------- $ 4,250,000 Pierce County, WA, Economic Development Corp., 5.80% Revenue Bonds (Occidental Petroleum)/(Original Issue Yield: 5.90%)/(Subject to AMT), 9/1/2029 BBB $ 3,627,843 ----------------------------------------------------------------------
Fortress Municipal Income Fund, Inc. - --------------------------------------------------------------------------------
CREDIT RATING: PRINCIPAL MOODY'S, AMOUNT OR S&P* VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------- WASHINGTON 2.6%--CONTINUED ---------------------------------------------------------------------- 4,075,000 Pilchuck Public Development Corp., WA, 6.00% Revenue Bonds (Special Facilities Airport)/(Tramco Inc.)/(BF Goodrich Guaranty)/(Subject to AMT), 8/1/2023 BBB 3,517,051 ---------------------------------------------------------------------- 4,300,000 Port Camas Washougal, WA, Public Industrial Corp., 6.70% Revenue Bonds (James River Corp. Project)/(Original Issue Yield: 6.75%), 4/1/2023 Baa 4,141,975 ---------------------------------------------------------------------- -------------- Total 11,286,869 ---------------------------------------------------------------------- -------------- WEST VIRGINIA--1.1% ---------------------------------------------------------------------- 5,000,000 Marion County, WV, 7.75% Solid Waste Disposal Revenue Bonds (Series 1993)/(American Power Paper Recycling)/ (Subject to AMT), 12/1/2011 NR 4,902,800 ---------------------------------------------------------------------- -------------- WISCONSIN--0.2% ---------------------------------------------------------------------- 775,000 Wisconsin State Housing and Economic Development Authority, 8.00% SFM Revenue Bonds (Subject to AMT), 3/1/2021 Aa 824,546 ---------------------------------------------------------------------- -------------- TOTAL LONG-TERM MUNICIPAL SECURITIES (IDENTIFIED COST, $416,915,980) 416,797,543 ---------------------------------------------------------------------- -------------- TOTAL MUNICIPAL SECURITIES (IDENTIFIED COST, $421,315,980)(A) $ 421,197,543 ---------------------------------------------------------------------- --------------
* Please refer to the Appendix of the Statement of Additional Information for an explanation of the credit ratings. (a) The cost of investments for federal tax purposes amounts to $421,315,980. The net unrealized depreciation on a federal tax cost basis amounts to $118,437, and is comprised of $11,092,050 appreciation and $11,210,487 depreciation at February 28, 1995. Note: The categories of investments are shown as a percentage of net assets ($428,487,492) at February 28, 1995. Fortress Municipal Income Fund, Inc. - -------------------------------------------------------------------------------- The following abbreviations are used in this portfolio: AMT -- Alternative Minimum Tax EDA -- Economic Development Authority EDR -- Economic Development Revenue FGIC -- Financial Guaranty Insurance Corporation GNMA -- Government National Mortgage Association HDA -- Hospital Development Authority HEFA -- Health and Education Facilities Authority HFA -- Housing Finance Authority HFDC -- Health Facility Development Corporation IDA -- Industrial Development Authority IDB -- Industrial Development Bond IFA -- Industrial Finance Authority LOC(s) -- Letter(s) of Credit OID -- Original Issue Discount PCR -- Pollution Control Revenue SFH -- Single Family Housing SFM -- Single Family Mortgage VRDNs -- Variable Rate Demand Notes (See Notes which are an integral part of the Financial Statements) Fortress Municipal Income Fund, Inc. Statement of Assets and Liabilities - -------------------------------------------------------------------------------- February 28, 1995 (unaudited) ASSETS: - ------------------------------------------------------------------------------------------------- Investments in securities, at value (identified and tax cost: $421,315,980) $ 421,197,543 - ------------------------------------------------------------------------------------------------- Cash 37,723 - ------------------------------------------------------------------------------------------------- Income receivable 8,106,557 - ------------------------------------------------------------------------------------------------- Receivable for shares sold 139,723 - ------------------------------------------------------------------------------------------------- -------------- Total assets 429,481,546 - ------------------------------------------------------------------------------------------------- LIABILITIES: - ------------------------------------------------------------------------------------------------- Payable for shares redeemed $ 901,912 - ------------------------------------------------------------------------------------- Accrued expenses 92,142 - ------------------------------------------------------------------------------------- ---------- Total liabilities 994,054 - ------------------------------------------------------------------------------------------------- -------------- NET ASSETS for 40,869,398 shares outstanding $ 428,487,492 - ------------------------------------------------------------------------------------------------- -------------- NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------------------------- Paid-in capital $ 436,951,621 - ------------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) of investments (118,437) - ------------------------------------------------------------------------------------------------- Accumulated net realized gain (loss) on investments (9,761,742) - ------------------------------------------------------------------------------------------------- Undistributed net investment income 1,416,050 - ------------------------------------------------------------------------------------------------- -------------- Total Net Assets $ 428,487,492 - ------------------------------------------------------------------------------------------------- -------------- NET ASSET VALUE, Offering Price and Redemption Proceeds Per Shares: - ------------------------------------------------------------------------------------------------- Net Asset Value Per Share ($428,487,492 / 40,869,398 shares outstanding) $10.48 - ------------------------------------------------------------------------------------------------- -------------- Offering Price Per Share (100/99.00 of $10.48)* $10.59 - ------------------------------------------------------------------------------------------------- -------------- Redemption Proceeds Per Share (99.00/100 of $10.48)* $10.38 - ------------------------------------------------------------------------------------------------- --------------
* See "What Shares Cost" in the Prospectus. (See Notes which are an integral part of the Financial Statements) Fortress Municipal Income Fund, Inc. Statement of Operations - -------------------------------------------------------------------------------- Six months ended February 28, 1995 (unaudited) INVESTMENT INCOME: - --------------------------------------------------------------------------------------------------- Interest $ 15,952,771 - --------------------------------------------------------------------------------------------------- EXPENSES: - --------------------------------------------------------------------------------------------------- Investment advisory fee $ 1,282,977 - ------------------------------------------------------------------------------------- Administrative personnel and services fee 161,869 - ------------------------------------------------------------------------------------- Custodian fees 48,639 - ------------------------------------------------------------------------------------- Transfer agent and dividend disbursing agent fees and expenses 123,214 - ------------------------------------------------------------------------------------- Trustees/Directors fees 5,973 - ------------------------------------------------------------------------------------- Auditing fees 9,231 - ------------------------------------------------------------------------------------- Legal fees 7,240 - ------------------------------------------------------------------------------------- Portfolio accounting fees 54,736 - ------------------------------------------------------------------------------------- Shareholder services fee 534,574 - ------------------------------------------------------------------------------------- Share registration costs 20,453 - ------------------------------------------------------------------------------------- Printing and postage 13,394 - ------------------------------------------------------------------------------------- Insurance premiums 5,792 - ------------------------------------------------------------------------------------- Taxes 27,693 - ------------------------------------------------------------------------------------- Miscellaneous 5,068 - ------------------------------------------------------------------------------------- ------------ Total expenses 2,300,853 - --------------------------------------------------------------------------------------------------- ------------- Net investment income 13,651,918 - --------------------------------------------------------------------------------------------------- ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: - --------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments (4,632,110) - --------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on investments (928,000) - --------------------------------------------------------------------------------------------------- ------------- Net realized and unrealized gain (loss) on investments (5,560,110) - --------------------------------------------------------------------------------------------------- ------------- Change in net assets resulting from operations $ 8,091,808 - --------------------------------------------------------------------------------------------------- -------------
(See Notes which are an integral part of the Financial Statements) Fortress Municipal Income Fund, Inc. Statement of Changes in Net Assets - --------------------------------------------------------------------------------
SIX MONTHS ENDED FEBRUARY 28, 1995 YEAR ENDED (UNAUDITED) AUGUST 31, 1994 INCREASE (DECREASE) IN NET ASSETS: - ---------------------------------------------------------------------- OPERATIONS-- - ---------------------------------------------------------------------- Net investment income $ 13,651,918 $ 26,933,085 - ---------------------------------------------------------------------- Net realized gain/(loss) on investments ($4,632,110 net loss and $556,193 net loss, respectively, as computed for federal income tax purposes) (4,632,110) (3,581,669) - ---------------------------------------------------------------------- Net change in unrealized appreciation/(depreciation) (928,000) (29,837,590) - ---------------------------------------------------------------------- --------------------- ------------------- Change in net assets resulting from operations 8,091,808 (6,486,174) - ---------------------------------------------------------------------- --------------------- ------------------- NET EQUALIZATION CREDITS/DEBITS (56,345) 18,561 - ---------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS-- - ---------------------------------------------------------------------- Distributions from net investment income (13,121,174) (26,673,902) - ---------------------------------------------------------------------- SHARE TRANSACTIONS-- - ---------------------------------------------------------------------- Proceeds from sale of Shares 21,428,220 116,065,745 - ---------------------------------------------------------------------- Net asset value of Shares issued to shareholders in payment of distributions declared 5,851,895 11,587,689 - ---------------------------------------------------------------------- Cost of shares redeemed (65,938,489) (80,611,519) - ---------------------------------------------------------------------- --------------------- ------------------- Change in net assets from share transactions (38,658,374) 47,041,915 - ---------------------------------------------------------------------- --------------------- ------------------- Change in net assets (43,744,085) 13,900,400 - ---------------------------------------------------------------------- NET ASSETS: - ---------------------------------------------------------------------- Beginning of period 472,231,577 458,331,177 - ---------------------------------------------------------------------- --------------------- ------------------- End of period (including undistributed net investment income of $1,416,050 and $941,652, respectively) $ 428,487,492 $ 472,231,577 - ---------------------------------------------------------------------- --------------------- -------------------
(See Notes which are an integral part of the Financial Statements) Fortress Municipal Income Fund, Inc. Financial Highlights - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED FEBRUARY 28, 1995 YEARS ENDED AUGUST 31, (UNAUDITED) 1994 1993 1992 1991 1990 1989 1988 NET ASSET VALUE, BEGINNING OF PERIOD $ 10.56 $ 11.28 $ 10.78 $ 10.39 $ 10.00 $ 10.23 $ 9.76 $ 10.07 - ---------------------------------- INCOME FROM INVESTMENT OPERATIONS - ---------------------------------- Net investment income 0.32 0.61 0.62 0.66 0.70 0.72 0.74 0.78 - ---------------------------------- Net realized and unrealized gain (loss) on investments (0.09) (0.73) 0.51 0.39 0.40 (0.23) 0.49 (0.36) - ---------------------------------- ----- --------- --------- --------- --------- --------- --------- --------- Total from investment operations 0.23 (0.12) 1.13 1.05 1.10 0.49 1.23 0.42 - ---------------------------------- ----- --------- --------- --------- --------- --------- --------- --------- LESS DISTRIBUTIONS - ---------------------------------- Distributions from net investment income (0.31) (0.60) (0.63) (0.66) (0.71) (0.72) (0.76) (0.73) - ---------------------------------- ----- --------- --------- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 10.48 $ 10.56 $ 11.28 $ 10.78 $ 10.39 $ 10.00 $ 10.23 $ 9.76 - ---------------------------------- ----- --------- --------- --------- --------- --------- --------- --------- TOTAL RETURN (B) 2.30% (1.06%) 10.86% 10.45% 11.37% 4.98% 13.09% 4.43% - ---------------------------------- RATIOS TO AVERAGE NET ASSETS - ---------------------------------- Expenses 1.08%(c) 1.09% 1.09% 1.05% 1.02% 1.01% 0.90% 1.02% - ---------------------------------- Net investment income 6.38%(c) 5.56% 5.65% 6.18% 6.86% 7.07% 7.27% 8.03% - ---------------------------------- Expense waiver/reimbursement (d) 0.00%(c) 0.00% 0.00% 0.14% 0.33% 0.39% 0.83% 0.70% - ---------------------------------- SUPPLEMENTAL DATA - ---------------------------------- Net assets, end of period (000 omitted) $428,487 $472,232 $458,331 $248,768 $135,628 $89,907 $62,50 $25,151 - ---------------------------------- Portfolio Turnover 8 % 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%(c) - ---------------------------------- Net investment income 7.14%(c) - ---------------------------------- Expense waiver/reimbursement (d) 0.29%(c) - ---------------------------------- SUPPLEMENTAL DATA - ---------------------------------- Net assets, end of period (000 omitted) $22,829 - ---------------------------------- Portfolio Turnover 0 % - ----------------------------------
(a) Reflects operations for the period from April 10, 1987 (date of initial public investment) to August 31, 1987. For the period from the start of business, April 1, 1987, to April 29, 1987, net investment income 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 fund shares which commenced on April 10, 1987. (b) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (c) Computed on an annualized basis. (d) 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) Fortress Municipal Income Fund, Inc. Notes to Financial Statements - -------------------------------------------------------------------------------- February 28, 1995 (unaudited) (1) ORGANIZATION Fortress Municipal Income 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. (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. A. 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 in determining valuations for normal institutional size trading units of debt securities. The independent pricing service does not rely exclusively on quoted prices. 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. B. 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. C. 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. D. OTHER--Investment transactions are accounted for on the trade date. E. 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, 1994, the Fund, for federal tax purposes, had a capital loss carryforward of $1,559,308, 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 in 1996 ($661,371), 1998 ($168,972), 1999 ($47,025), 2000 ($68,565), 2001 ($57,182) and 2002 ($556,193). Additionally, net capital losses of $3,544,487 attributable to security transactions incurred after October 31, 1993, are treated as arising on September 1, 1994, the first day of the Fund's next taxable year. F. EQUALIZATION--The Fund follows the accounting practice known as equalization in which a portion of the proceeds from sales and costs of redemptions of capital stock 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 capital stock. (3) CAPITAL STOCK At February 28, 1995, 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 28, AUGUST 31, 1995 1994 Shares sold 2,127,304 10,474,491 - --------------------------------------------------------------------------------- Shares issued to shareholders in payment of dividends declared 577,995 1,069,132 - --------------------------------------------------------------------------------- Shares redeemed (6,557,335) (7,469,095) - --------------------------------------------------------------------------------- --------------- -------------- Net change resulting from capital stock transactions (3,852,036) 4,074,528 - --------------------------------------------------------------------------------- --------------- --------------
(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 .60 of 1% of the Fund's average daily net assets. ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The FAS fee 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. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with Federated Services Company, the Fund will pay Federated Services Company up to .25 of 1% of average net assets of the Fund for the period. This fee is to obtain certain personal services for shareholders and to maintain the shareholder accounts. TRANSFER AGENT FEES--Federated Services Company serves as transfer and dividend disbursing agent for the Fund. The fee is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--Federated Services Company maintains the Fund's accounting records. The fee is based on the level of the Fund's average net assets for the period plus out-of-pocket expenses. INTERFUND TRANSACTIONS--During the six months ended February 28, 1995, the Fund engaged in purchase and sale transactions with funds at current market value pursuant to Rule 17a-7 under the Act amounting to $24,300,000 and $36,800,000, respectively. GENERAL--Certain of the Officers and Directors of the Fund are Officers, Directors and/or Trustees of the above companies. (5) INVESTMENT TRANSACTIONS Purchases and sales of investments, excluding short-term securities, for the period ended February 28, 1995, were as follows: - --------------------------------------------------------------------------------------------------- PURCHASES $ 35,025,063 - --------------------------------------------------------------------------------------------------- ------------- SALES $ 79,011,369 - --------------------------------------------------------------------------------------------------- -------------
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. Vice President Richard B. Fisher Edward C. Gonzales Edward L. Flaherty, Jr. Vice President and Treasurer Peter E. Madden John W. McGonigle Gregor F. Meyer Vice President and Secretary John E. Murray, Jr. David M. Taylor Wesley W. Posvar Assistant 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 SECURITIES CORP. ---------------------------------------------------------------------- Distributor A subsidiary of FEDERATED INVESTORS FEDERATED INVESTORS TOWER PITTSBURGH, PA 15222-3779 349557108 8040407 (4/95) FORTRESS MUNICIPAL INCOME FUND, INC. APPENDIX A. The graphic representation here displayed consists of a legend in the top left hand corner indicating the components of the corresponding line graph. The line graph is a visual representation which illustrates the growth of a hypothetical initial investment of $8,000 in the Fund from April 10, 1987 to February 28, 1995. The principal value of the $8,000 investment is represented by black shading. Reinvested income is represented by gray shading. The "y" axis reflects the cost of investment. The "x" axis reflects computation periods from the Fund's inception, April 10, 1987, through February 28, 1995. The right margin reflects the ending value of the hypothetical investment in the Fund ; the ending value is $14,024. B. The graphic representation here displayed consists of a legend in the top left hand corner indicating the components of the corresponding line graph. The line graph is a visual representation which illustrates the growth of hypothetical annual investments of $1,000 in the Fund from April 10, 1987 to February 28, 1995. The principal value of annual $1,000 investments is represented by black shading. Reinvested income is represented by gray shading. The "y" axis reflects the cost of investment. The "x" axis reflects computation periods from the Fund's inception, April 10, 1987, through February 28, 1995. The right margin reflects the ending value of the hypothetical investment in the Fund ; the ending value is $10,921. B. The graphic representation here displayed consists of a legend in the top left hand corner indicating the components of the corresponding line graph. The line graph is a visual representation which illustrates the growth of a hypothetical initial investment of $5,000 in the Fund in addition to monthly investments of $500 from April 10, 1987 to February 28, 1995. The principal value of continuing investments is represented by black shading. Reinvested income is represented by gray shading. The "y" axis reflects the cost of investment. The "x" axis reflects computation periods from the Fund's inception, April 10, 1987, through February 28, 1995. The right margin reflects the ending value of the hypothetical investment in the Fund ; the ending value is $70,392. -----END PRIVACY-ENHANCED MESSAGE-----