FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
11TH SEMI-ANNUAL REPORT FEBRUARY 28, 1998
ESTABLISHED 1987
Dear Fellow Shareholder:
Federated Municipal Opportunities Fund, Inc. was created in 1987, and I am
pleased to present its 11th Semi-Annual Report. This $457.4 million fund has a
four-star Morningstar rating overall out of 1,525 municipal funds as of March
31, 1998.* As of February 28, 1998, over 40% of the fund's assets were invested
in AAA-rated municipal bonds. The fund's portfolio consisted of 152 issues, and
had an effective duration of 6.4 years and an average coupon rate of 6.6%.
This report covers the first half of the fund's fiscal year, which is the
six-month period from September 1, 1997 through February 28, 1998. It begins
with a discussion with Mary Jo Ochson, Senior Vice President, Federated
Advisers, who co-manages the fund with J. Scott Albrecht, Vice President,
Federated Advisers.
Their comments cover the fund's performance and investment strategy and
following their discussion are three additional items of shareholder interest.
First is a series of graphs that display the results of lump sum and systematic
investments in the fund 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.
Here is a sobering fact about taxes: according to the Tax Foundation, May 9 is
Tax Freedom Day -- the day on which Americans have earned enough money to pay
taxes for the entire year. That means everything that the average American earns
from January through early May--the first five months of the year--goes to
taxes!
* Morningstar proprietary ratings reflect historical risk-adjusted performance
as of March 31, 1998. They are subject to change every month. Ratings are
calculated from the fund's 3-, 5-, and 10-year average annual returns in
excess of 90-day Treasury bill returns with appropriate fee adjustments, and a
risk factor that reflects fund performance below 90-day T-bill returns. The
fund received 5, 4, and 4 stars for the 3-, 5-, and 10-year periods and was
rated among 1,525; 782; and 345 municipal funds, respectively, for those
periods. The top 10% of funds in a rating universe receive 5 stars, the next
22.5% receive 4 stars, and the next 35% receive 3 stars. Ratings quoted are
for Class F Shares. Star ratings for other classes may vary and are available
only for classes with 3 years of performance history.
With Federated Municipal Opportunities Fund, Inc., every day is a Tax Freedom
Day. This fund is in its 11th year of providing monthly, tax-free income from a
broadly diversified portfolio of long-term municipal bonds with an average
quality rating of A.* Overall, it was a strong six-month period for the fund, as
declining interest rates caused the fund's holdings--and its share price--to
increase in value. Performance for the fund's share classes follows.+
TOTAL RETURN INCOME NET ASSET VALUE INCREASE
Class A Shares 5.32% $0.28 $10.67 to $10.95 = 2%
Class B Shares 5.01% $0.24 $10.66 to $10.95 = 2%
Class C Shares 5.02% $0.24 $10.66 to $10.95 = 2%
Class F Shares 5.32% $0.28 $10.67 to $10.95 = 2%
At the end of the reporting period, the fund's top five holdings consisted of:
ISSUER MATURITY COUPON RATE VALUE
Indianapolis, Indiana
Airport Authority (FDX Corp.) 1/15/2017 7.178% $19.2 million
District of Columbia
(American University) 10/01/2026 5.900% $17.7 million
Intermountain Power Agency, 7/01/2023 5.687% $15.2 million
Utah
Illinois Health Facilities
Authority
(Edgewater Hospital & Medical 7/01/2004 9.250% $11.9 million
Center)
Chicago O'Hare Airport, 1/01/2009 5.567% $10.2 million
Illinois
These five holdings comprise 16% of the fund's total assets.
Thank you for selecting Federated Municipal Opportunities Fund, Inc. as a
convenient, diversified way to pursue tax-free income. Of course, you have the
option of receiving any income from the fund or building your account by
reinvesting your dividends and compounding tax-free.
Sincerely,
Richard B. Fisher
President
April 15, 1998
* State, local, and federal alternative minimum taxes may apply.
+ Performance quoted is based on net asset value, represents past performance,
and is not indicative of future results. Investment return and principal value
will fluctuate, so that an investor's shares, when redeemed, may be worth more
or less than their original cost. Total returns for the period based on
offering price for Class A, B, C, and F shares were 0.61%, (0.64%), 3.97%, and
3.20%, respectively.
HOW DID FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC. PERFORM WITH RESPECT TO
TOTAL RETURN FOR THE SIX-MONTH REPORTING PERIOD ENDED FEBRUARY 28, 1998?
The fund performed very well over the reporting period. Shareholders of Class A,
B, C, and F Shares received competitive annualized total returns of 5.32%,
5.01%, 5.02%, and 5.32%, respectively, based on net asset value.* These results
exceeded or virtually matched the Lehman Brothers Municipal Bond Index's return
of 5.04%.** The returns of all share classes exceeded the Lipper General
Municipal Fund category return of 4.99%.***
WHAT ACCOUNTED FOR THE FUND'S PERFORMANCE?
Several factors were responsible. First, there was a general decline in interest
rates and thus an overall increase in bond prices during the reporting period.
Municipal interest rates, as represented by the Bond Buyer 40 Index,+ declined
from 5.53% on September 1, 1997, to 5.24% on February 28, 1998. The increase in
prices in the fund's portfolio was most notable in the fund's holdings of zero
coupon securities. Zero coupon bonds outperform when interest rates decline
because of their call protection and duration characteristics. The fund's share
price performance also benefited from its allocation to low investment-grade
securities (BBB-rated). The yield spread between AAA-rated bonds and BBB-rated
bonds narrowed over the period from 35 basis points to 25 basis points.
* Performance quoted represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their
original cost. Total returns for the period based on offering price for Class
A, B, C, and F Shares were 0.61%, (0.64%), 3.97%, and 3.20%, respectively.
** The Lehman Brothers Municipal Bond Index is a broad based total return
performance benchmark for the long-term, investment grade bond market.
Indices are unmanaged and investments cannot be made in an index.
*** The Lipper figure represents the average of the total returns reported by
all of the mutual funds designated by Lipper Analytical Services, Inc. as
falling into the General Municipal Fund Category. Lipper figures do not
reflect sales charges.
+ The Bond Buyer 40 Index is an unmanaged index composed of 40 long-term,
actively traded bonds. They have a maturity of at least 19 years, but there is
no limit as to how long the maturity can be. The bonds are fixed rate, term
bonds which are tax-exempt, although they may be subject to alternative
minimum tax. The bonds are either non-callable or have a first call date
between 7 and 16 years. They have a par call date. No deep discount or high
premium bonds are included; all the bonds are priced between 85 and 105. All
the bonds are rated at least A3 (Moody's Investors Services, Inc.) or A-
(Standard & Poor's).
HOW DID THE FUND PERFORM IN TERMS OF INCOME AND YIELD?
The fund's 30-day current net yield, or SEC yield, on February 28, 1998, was
4.07% for Class A Shares based on net asset value.+ The yield based on offering
price, declined from 4.30% at the beginning of the reporting period as a result
of a general decline in market interest rates and positive cash flows into the
fund. The fund's monthly dividend was slightly reduced from $0.047/share to
$0.046/share in February 1998.
WITH A FAVORABLE PERIOD BEHIND US, WHAT IS YOUR OUTLOOK FOR INTEREST RATES
THROUGH THE BALANCE OF 1998, AND DO YOU ANTICIPATE FUND STRATEGY CHANGES AS A
RESULT?
We believe economic growth will moderate in the second half of 1998 from its
robust pace over the last few months. The effects on the U.S. economy from the
turmoil in Asia should be evident within the next few months. This fact,
combined with a potentially balanced federal budget and diminished expectations
concerning inflation, should result in a favorable environment for fixed-income
securities later this year. Interest rates in the municipal bond market have
been in a narrow trading range for several months and should continue to be
range bound until economic data begins to signal a change in the economy's
direction. Our portfolio strategy will include maintaining a neutral duration
target relative to the fund's benchmark while looking for opportunities to
improve portfolio yield, and as a result, income distributed to shareholders.
+ The 30-day current SEC yield is calculated by dividing the investment income
per share for the prior 30 days by the maximum offering price per share on
that date. The SEC yields are compounded and annualized. The SEC yields for
Class B, C, and F Shares were 3.32%, 3.32%, and 4.07%, based on net asset
value, respectively. Based on offering price, the SEC yields were 3.89%,
3.32%, 3.32%, and 4.03% for Class A, B, C, and F Shares, respectively.
TWO WAYS YOU MAY SEEK TO INVEST FOR SUCCESS IN FEDERATED
MUNICIPAL OPPORTUNITIES FUND, INC.
INITIAL INVESTMENT:
IF YOU MADE AN INITIAL INVESTMENT OF $11,000 IN CLASS F SHARES OF FEDERATED
MUNICIPAL OPPORTUNITIES FUND, INC. ON 4/10/87, REINVESTED YOUR DIVIDENDS AND
CAPITAL GAINS, AND DID NOT REDEEM ANY SHARES, YOUR ACCOUNT WOULD BE WORTH
$23,664 ON 2/28/98. YOU WOULD HAVE EARNED A 7.29% AVERAGE ANNUAL TOTAL RETURN
FOR THE 11-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 3/31/98, the average annual 1-year, 5-year, and 10-year total returns for
Class F Shares were 9.08%, 5.73%, and 7.65%, respectively. Class A Shares'
average annual 1-year and since inception (8/5/96) total returns were 6.13% and
5.69%, respectively. Class B Shares' average annual 1-year and since inception
(8/5/96) total returns were 4.53%, and 4.88%, respectively. Class C Shares'
average annual 1-year and since inception (8/5/96) total returns were 9.30% and
7.85%, respectively.**
[GRAPHIC REPRESENTATION IS OMITTED. SEE APPENDIX A1]
* Total return represents the change in the value of an investment after
reinvesting all income and capital gains, and takes into account the 1.00%
sales charge and the 1.00% contingent deferred sales charge for Class F
Shares.
Data quoted represents past performance and does not guarantee future results.
Investment return and principal value will fluctuate, so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
** The total returns stated take into account the 4.50% sales charge for Class A
Shares, the 5.50% contingent deferred sales charge for Class B Shares, the
1.00% contingent deferred sales charge for Class C Shares and the 1.00% sales
charge and 1.00% contingent deferred sales charge for Class F Shares.
FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
ONE STEP AT A TIME:
$1,000 INVESTED EACH YEAR FOR ELEVEN YEARS (REINVESTING ALL DIVIDENDS AND
CAPITAL GAINS) GREW TO $16,820.
With this approach, the key is consistency.
If you had started investing $1,000 annually in Federated Municipal
Opportunities Fund, Inc. Class F Shares, on 4/10/87, reinvested your dividends
and capital gains and did not redeem any shares, you would have invested only
$11,000, but your account would have reached a total value of $16,820* by
2/28/98. You would have earned an average annual total return of 7.05%.
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 IS OMITTED. SEE APPENDIX A2]
* This chart assumes that the subsequent annual investments are made on the last
day of each anniversary month. No method of investing can guarantee a profit
or protect against loss in down markets. 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.
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 Class F Shares of 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 $106,686.* This represents a 7.31% average annual total
return for investors in the 36% Federal tax bracket.+ For the Potters, the
decision to invest tax-free has made the future worth waiting for.
[GRAPHIC REPRESENTATION IS OMITTED. SEE APPENDIX A3]
* This chart assumes that the subsequent annual investments are made on the last
day of each anniversary month. Income may be subject to the federal
alternative minimum tax and state and local taxes.
+ 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.
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <S> <C>
SHORT-TERM MUNICIPALS--0.8%
HAWAII--0.2%
$ 800,000 Hawaii St. Department of Budget & Finance, (Series 1988)
Weekly VRDNs (G.N. Wilcox Memorial Hospital)/
(Fuji Bank, Ltd., Tokyo LOC) A3 $ 800,000
MICHIGAN--0.1%
700,000 Michigan Strategic Fund, Limited Obligation PCR Bonds
(Series 1993) Weekly VRDNs (Allied-Signal, Inc.) A 700,000
NORTH CAROLINA--0.4%
2,000,000 Person County, NC Industrial Facilities & Pollution Control
Financing Authority Daily VRDNs (Carolina Power
& Light Co.) A-1 2,000,000
VIRGINIA--0.1%
300,000 Virginia Peninsula Port Authority, (Series 1997) Daily VRDNs
(Ziegler Coal Holding Co.)/(Bank of America NT and SA,
San Francisco LOC) A-1+ 300,000
TOTAL SHORT-TERM MUNICIPALS (AT AMORTIZED COST) 3,800,000
LONG-TERM MUNICIPALS--97.8%
ALASKA--1.4%
1,440,000 Alaska Industrial Development and Export Authority, Power
Revenue Bonds, 5.875% (Upper Lynn Canal Regional Power
Supply System)/(Original Issue Yield: 6.00%), 1/1/2032 BB+ 1,453,205
180,000 Alaska State Housing Finance Corp., Collateralized Home
Mortgage Revenue Bonds, Series A-l, 7.625%, 12/1/2013 AAA 185,051
555,000 Alaska State Housing Finance Corp., Collateralized Home
Mortgage Revenue Bonds, Series B-1, 6.90% (GNMA LOC),
6/1/2032 AAA 590,648
4,000,000 Alaska State Housing Finance Corp., Mortgage Revenue Bonds (Series
1997 A-2), 5.75% (Original Issue Yield:
5.778%),
6/1/2024 AAA 4,095,840
Total 6,324,744
</TABLE>
FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <S> <C>
LONG-TERM MUNICIPALS-- CONTINUED
ARKANSAS--1.8%
$ 2,920,000 Conway, AR Hospital Authority, Revenue Bonds, 7.125%
(Conway Regional Hospital), 2/1/2013 BBB+ $ 3,171,470
2,770,000 Conway, AR Hospital Authority, Revenue Refunding Bonds,
8.125% (Conway Regional Hospital), 7/1/2005 BBB+ 3,006,724
1,000,000 Conway, AR Hospital Authority, Revenue Refunding Bonds,
8.375% (Conway Regional Hospital), 7/1/2011 BBB+ 1,090,920
1,000,000 Little Rock, AR Health Facilities Board, Revenue Refunding
Bonds, 7.00% (Baptist Medical Center, AR), 10/1/2017 A 1,092,230
Total 8,361,344
CALIFORNIA--4.6%
8,000,000 California Statewide Communities Development Authority,
Special Facilities Revenue Bonds, 5.625% (United Air Lines)/
(Original Issue Yield: 5.75%), 10/1/2034 BB+ 8,132,480
5,000,000 Foothill/Eastern Transportation Corridor Agency, CA,
Sr. Lien Toll Road Capital Appreciation Revenue Bonds
(Series A) (Original Issue Yield: 7.30%), 1/1/2026 BBB- 1,120,300
24,000,000 San Joaquin Hills, CA Transportation Corridor Agency, Toll
Road Capital Appreciation Refunding Revenue Bonds
(MBIA INS)/(Original Issue Yield: 5.625%), 1/15/2025 AAA 5,921,520
21,625,000 San Joaquin Hills, CA Transportation Corridor Agency,
Toll Road Capital Appreciation Refunding Revenue Bonds
(Series A) (MBIA INS)/(Original Issue Yield: 5.60%),
1/15/2023 AAA 5,938,225
Total 21,112,525
COLORADO--3.5%
485,000 Colorado HFA, SFM Revenue Bonds (Series A-2), 7.70%
(FHA GTD), 2/1/2023 AA+ 514,507
2,215,000 Colorado HFA, SFM Revenue Bonds (Series C-2), 7.375%
(FHA GTD), 8/1/2023 AA+ 2,353,349
140,000 Colorado HFA, SFM Revenue Bonds, Series A, 8.00%
(Original Issue Yield: 8.133%), 3/1/2017 A 142,356
</TABLE>
FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <S> <C>
LONG-TERM MUNICIPALS-- CONTINUED
COLORADO-- CONTINUED
$ 5,000,000 Colorado HFA, Single Family Mortgage Revenue Bonds
(Series 1997C-2), 6.875%, 11/1/2028 Aa2 $ 5,529,450
10,000,000 E-470 Public Highway Authority, CO, Capital Appreciation
Revenue Bonds (Series B) (MBIA INS)/(Original Issue
Yield: 5.50%), 9/1/2021 AAA 2,984,200
9,700,000 E-470 Public Highway Authority, CO, Capital Appreciation
Revenue Bonds (Series B) (MBIA INS)/(Original Issue
Yield: 5.52%), 9/1/2022 AAA 2,749,562
5,000,000 E-470 Public Highway Authority, CO, Capital Appreciation
Revenue Bonds (Series B) (MBIA INS)/(Original Issue
Yield: 5.52%), 9/1/2023 AAA 1,346,250
185,000 El Paso County, CO HFA, SFM Revenue Bonds, 8.00%
(GNMA COL), 9/1/2022 AAA 195,634
Total 15,815,308
DISTRICT OF COLUMBIA--3.9%
17,000,000 District of Columbia, Revenue Bonds, 5.625% (American
University)/(AMBAC INS)/(Original Issue Yield: 5.90%),
10/1/2026 AAA 17,760,410
FLORIDA--0.7%
2,780,000 Lee County, FL HFA, Single Family Mortgage Step Coupon
Revenue Bonds, 5.60% (GNMA Collateralized Home
Mortgage Program COL), 3/1/2029 Aaa 3,072,150
IDAHO--0.7%
845,000 Idaho Housing Agency, SFM Revenue Bonds (Series A),
7.50% (FHA GTD), 7/1/2024 AA 899,215
2,155,000 Idaho Housing Agency, SFM Revenue Bonds (Series F-2),
7.80% (FHA GTD), 1/1/2023 AA 2,272,641
Total 3,171,856
ILLINOIS--9.3%
10,000,000 Chicago O'Hare International Airport, Revenue Bonds
(Series A), 5.50% (AMBAC INS)/(Original Issue
Yield: 6.00%), 1/1/2016 AAA 10,274,800
</TABLE>
FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <S> <C>
LONG-TERM MUNICIPALS-- CONTINUED
ILLINOIS-- CONTINUED
$ 2,500,000 Chicago, IL, Collateralized SFM Revenue Bonds (Series A),
7.25% (GNMA COL), 9/1/2028 Aaa $ 2,826,350
1,100,000 Chicago, IL, Gas Supply Revenue Bonds, 7.50% (Peoples Gas
Light & Coke Company), 3/1/2015 AA- 1,187,318
1,480,000 Chicago, IL, Gas Supply Revenue Bonds, 7.50% (Peoples Gas
Light & Coke Company), 3/1/2015 AA- 1,597,482
2,000,000 Chicago, IL, Water Revenue Bond, 7.20% (Prerefunded PRF)/
(Original Issue Yield: 7.35%), 11/15/2016 NR 2,150,180
3,315,000 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+ 3,484,231
3,000,000 Illinois Development Finance Authority, Housing Revenue
Bonds, 6.10% (Catholic Charities Housing Development
Corp), 1/1/2020 NR 3,061,860
2,500,000 Illinois Development Finance Authority, Mortgage Revenue
Refunding Bonds, Series A, 5.80% (MBIA INS)/(FHA LOC),
7/1/2028 AAA 2,585,950
10,000,000 Illinois Health Facilities Authority, Hospital Revenue Bonds
(Series A), 9.25% (Edgewater Hospital & Medical Center, IL),
7/1/2024 NR 11,997,700
1,050,000 Illinois State University, Auxilary Facilities System
Revenue Bonds, 7.40% (Prerefunded PRF)/(Original Issue
Yield: 7.444%), 4/1/2014 A+ 1,128,771
2,000,000 Rolling Meadows, IL, Multifamily Mortgage Revenue
Refunding Bonds, 7.75% (Woodfield Garden Apartments)/
(Banque Paribas, Paris LOC), 2/1/2004 A- 2,122,220
Total 42,416,862
INDIANA--5.8%
550,000 Beech Grove, IN, Economic Development Revenue Bond,
8.75% (Westvaco Corp.), 7/1/2010 A 558,058
3,000,000 Indiana Port Commission, Port Facility Revenue Refunding
Bonds, 6.875% (Cargill, Inc.), 5/1/2012 Aa3 3,294,060
</TABLE>
FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <S> <C>
LONG-TERM MUNICIPALS-- CONTINUED
INDIANA-- CONTINUED
$ 685,000 Indiana State HFA, SFM Revenue Bonds (Series A), 8.20%
(GNMA COL), 7/1/2020 Aaa $ 717,736
2,720,000 Indiana State HFA, SFM Revenue Home Mortgage Program
(Series F-2), 7.75% (GNMA COL), 7/1/2022 Aaa 2,892,856
17,100,000 Indianapolis, IN Airport Authority, Special Facilities
Revenue Bonds, 7.10% (FDX Corp.)/(Original Issue Yield:
7.178%), 1/15/2017 BBB 19,270,161
Total 26,732,871
IOWA--0.2%
1,000,000 Davenport, IA PCA, PCR Refunding Bonds,
Nicols-Homeshield Project, 8.375% (Quanex Corp.),
12/1/2005 NR 1,030,150
KANSAS--0.6%
2,500,000 Sedgwick & Shawnee Counties, KS, Single Family Mortgage
Revenue Bonds (Series 1997A-1), 5.50% (GNMA
Collateralized Home Mortgage Program COL), 6/1/2029 Aaa 2,733,975
KENTUCKY--1.8%
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 BBB- 3,900,575
4,000,000 Kentucky Economic Development Finance Authority,
Hospital System Refunding Revenue Bonds, 5.875%
(Appalachian Regional Health Center)/
(Original Issue Yield: 5.92%), 10/1/2022 BBB 4,125,640
Total 8,026,215
LOUISIANA--6.3%
3,000,000 De Soto Parish, LA Environmental Improvement Authority,
Revenue Bonds, 7.70% (International Paper Co.), 11/1/2018 A- 3,543,600
2,800,000 Lake Charles, LA Harbor & Terminal District, Port Facilities
Revenue Refunding Bond, Trunkline Lining Co Project,
7.75% (Panhandle Eastern Corp.), 8/15/2022 A3 3,234,560
</TABLE>
FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <S> <C>
LONG-TERM MUNICIPALS-- CONTINUED
LOUISIANA-- CONTINUED
$ 3,900,000 Louisiana HFA, Single Family Mortgage Revenue Bonds
(Series C-1), 5.75% (GNMA Collateralized Home Mortgage
Program COL), 12/1/2028 Aaa $ 3,993,444
750,000 Rapides Parish, LA Housing & Mortgage Finance Authority,
SFM Revenue Bonds, 7.25% (United States Treasury PRF),
8/1/2010 AA- 867,623
5,645,000 St. Charles Parish, LA, PCR Bonds, 7.50% (Louisiana Power &
Light Co.)/(Original Issue Yield: 7.542%), 6/1/2021 BBB 6,203,742
1,400,000 St. Charles Parish, LA, PCR Bonds, 8.00% (Louisiana Power &
Light Co.), 12/1/2014 Baa3 1,519,462
2,100,000 St. Charles Parish, LA, PCR Bonds, 8.25% (Louisiana Power &
Light Co.)/(Original Issue Yield: 8.273%), 6/1/2014 Baa3 2,253,069
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 3,990,947
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 3,270,630
Total 28,877,077
MASSACHUSETTS--1.8%
21,000,000 (a) Massachusetts IFA, Solid Waste Disposal Sr. Lien Revenue
Bonds (Series A), 9.00% (Massachusetts Recycling
Association), 8/1/2016 NR 8,400,000
MICHIGAN--0.5%
870,000 Michigan State Housing Development Authority, Single
Family Mortgage Revenue Bonds (Series B), 6.95%,
12/1/2020 AA+ 921,243
1,500,000 Western Townships MI, Utilities Authority, LT GO Sewer
Disposal System Bonds, 8.20%, 1/1/2018 BBB+ 1,579,785
Total 2,501,028
</TABLE>
FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <S> <C>
LONG-TERM MUNICIPALS-- CONTINUED
MINNESOTA--6.1%
$ 900,000 Burnsville, MN, Multifamily Housing Revenue Refunding
Bonds, Coventry Court Apartments, 7.50% (FHA/VA mtgs
COL)/(Original Issue Yield: 7.56%), 9/1/2027 AAA $ 941,148
250,000 Centennial Independent School District No. 012, MN,
UT GO Bonds, Series A, 7.15% (FSA INS)/
(Prerefunded PRF), 2/1/2011 AAA 265,250
115,000 Dakota County, MN Housing & Redevelopment Authority,
SFM Revenue Bonds, 7.20% (GNMA GTD), 12/1/2009 AAA 117,674
165,000 Hennepin Co. MN, Lease Revenue Certificates of
Participation, Series A, 6.80%, 5/15/2017 AA 178,957
200,000 Minneapolis, MN Multifamily Housing Authority,
Multifamily Housing Revenue Bonds, 7.125%
(Seward Towers)/(GNMA COL), 12/20/2010 AAA 211,294
300,000 Minneapolis, MN Multifamily Housing Authority,
Multifamily Housing Revenue Bonds, Churchill Project,
7.05% (FHA GTD), 10/1/2022 AAA 319,947
250,000 Minnesota Public Facilities Authority, Water Pollution
Control Revenue Bonds, Series A, 6.95% (Prerefunded PRF),
3/1/2013 AAA 275,133
1,495,000 Minnesota State HFA, SFM Revenue Bonds (Series A), 7.95%
(FHA GTD), 7/1/2022 AA+ 1,579,049
450,000 Minnesota State HFA, SFM Revenue Bonds (Series D), 8.05%
(FHA GTD), 8/1/2018 AA+ 467,276
3,000,000 Minnesota State HFA, SFM Revenue Bonds (Series E), 6.85%,
1/1/2024 AA+ 3,180,210
35,000 Minnesota State HFA, Single Family Mortgage Revenue
Bonds, Series B, 7.25% (Original Issue Yield: 7.311%),
7/1/2016 AA+ 35,630
205,000 Minnesota State HFA, Single Family Mortgage Revenue
Bonds, Series B, 7.30% (FHA/VA mtgs LOC)/
(Original Issue Yield: 7.342%), 1/1/2017 AA+ 213,872
</TABLE>
FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <S> <C>
LONG-TERM MUNICIPALS-- CONTINUED
MINNESOTA-- CONTINUED
$ 195,000 Minnesota State HFA, Single Family Mortgage Revenue
Bonds, Series C, 7.10% (FHA/VA mtgs COL), 7/1/2011 AA+ $ 207,657
80,000 Minnesota State HFA, Single Family Mortgage Revenue
Bonds, Series C, 7.65% (FHA/VA mtgs COL), 7/1/2008 AA+ 84,198
100,000 Minnetonka, MN, Multifamily Housing Revenue Bonds,
Cedare Hills East Project, 7.50% (FHA COL), 12/1/2017 A+ 103,900
9,000,000 St. Paul, MN Housing & Redevelopment Authority, Hospital
Revenue Refunding Bonds ( Series A), 6.625%
(Healtheast, MN)/(Original Issue Yield: 6.687%), 11/1/2017 BBB 9,699,480
8,000,000 VRDC/IVRC Trust, GO Inverse Variable Rate Certificates,
7.473% (Regents of University of Minnesota), 5/18/2012 AA 9,640,000
200,000 Western Minnesota Municipal Power Agency, MN,
Transmission Revenue Refunding Bonds, 6.75%
(AMBAC INS)/(Original Issue Yield: 7.00%), 1/1/2016 AAA 216,348
Total 27,737,023
MONTANA--0.5%
1,000,000 Lewis & Clark County, MT, Environmental Refunding
Revenue Bonds, 5.60% (ASARCO, Inc.), 1/1/2027 BBB 1,022,090
1,095,000 Montana State Board of Housing, SFM Revenue Bonds
(Series B-2), 7.50% (FHA GTD), 4/1/2023 Aa2 1,159,868
Total 2,181,958
NEVADA--2.1%
3,000,000 Clark County, NV, Industrial Development Refunding
Revenue Bonds (Series 1995B), 5.90% (Nevada Power Co.),
10/1/2030 BBB- 3,075,930
5,110,000 Clark County, NV, Industrial Development Revenue Bonds
(Series 1997A), 5.90% (Nevada Power Co.), 11/1/2032 BBB- 5,245,160
1,000,000 Humboldt County, NV, Pollution Control Revenue Bonds,
8.30% (Idaho Power Co.), 12/1/2014 AA- 1,197,790
Total 9,518,880
</TABLE>
FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <S> <C>
LONG-TERM MUNICIPALS-- CONTINUED
NEW HAMPSHIRE--2.3%
$ 1,185,000 New Hampshire State HFA, SFM Revenue Bonds (Series B),
7.75%, 7/1/2023 A+ $ 1,267,429
5,975,000 New Hampshire State HFA, SFM Revenue Bonds (Series D),
7.25%, 7/1/2015 A+ 6,301,295
2,865,000 New Hampshire State IDA, PCR Bonds ( Series A), 8.00%
(United Illuminating Co.), 12/1/2014 BBB- 3,069,103
Total 10,637,827
NEW MEXICO--0.5%
2,000,000 Farmington, NM, PCR Refunding Bonds (Series 1997),
6.375% (Public Service Co. New Mexico), 4/1/2022 BB+ 2,182,860
NEW YORK--4.3%
3,000,000 New York City, NY IDA, Industrial Development Revenue
Bonds (Series 1997), 5.75% (Brooklyn Navy Yard
Cogeneration Partners, L.P. Project)/(Original Issue
Yield: 5.81%), 10/1/2036 BBB- 3,102,090
5,000,000 New York City, NY, Residual Interest Tax-Exempt Securities
(Series PA-147), 8.10019%, 8/1/2007 NR 5,568,750
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 A+ 2,655,975
280,000 New York State Environmental Facilities Corp., PCR State
Water Revolving Fund, 7.25% (Original Issue Yield: 7.334%),
6/15/2010 NR 309,546
2,620,000 New York State Environmental Facilities Corp., PCR State
Water Revolving Fund, 7.25% (United States Treasury PRF),
6/15/2001 (@102) NR 2,925,256
5,000,000 New York State Environmental Facilities Corp., Solid Waste
Disposal Revenue Bonds, 6.10% (Occidental Petroleum
Corp)/(Original Issue Yield: 6.214%), 11/1/2030 BBB 5,282,700
Total 19,844,317
</TABLE>
FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <S> <C>
LONG-TERM MUNICIPALS-- CONTINUED
NORTH CAROLINA--0.7%
$ 3,000,000 Martin County, NC IFA, (Series 1995) Solid Waste Disposal
Revenue Bonds, 6.00% (Weyerhaeuser Co.), 11/1/2025 A $ 3,173,430
NORTH DAKOTA--0.8%
2,275,000 North Dakota State HFA, SFM Revenue Bonds (Series C),
7.30%, 7/1/2024 A+ 2,404,789
1,340,000 North Dakota State HFA, SFM Revenue Bonds, Series A,
6.75% (FHA/VA mtgs COL), 7/1/2012 A+ 1,422,316
Total 3,827,105
OHIO--0.9%
2,000,000 Cleveland, OH, Airport Special Refunding Revenue Bonds
(Series 1999), 5.70% (Continental Airlines, Inc.)/
(Original Issue Yield: 5.80%), 12/1/2019 BB- 1,981,880
500,000 Ohio State Water Development Authority, PCR Bonds
(Series A), 8.10% (Ohio Edison Co.)/(Original Issue
Yield: 8.142%), 10/1/2023 BB- 535,570
1,500,000 Ohio State Water Development Authority, PCR Refunding
Revenue Bonds (Series 1997A), 6.10% (Cleveland Electric
Illuminating Co.), 8/1/2020 BB+ 1,576,830
Total 4,094,280
OKLAHOMA--2.9%
4,585,000 Jackson County, OK Hospital Authority, Hospital Revenue
Refunding Bonds, 7.30% (Jackson County Memorial
Hospital, OK)/(Original Issue Yield: 7.40%), 8/1/2015 BB 4,989,672
1,250,000 Tulsa, OK Municipal Airport, Revenue Bonds, 7.375%
(American Airlines), 12/1/2020 BBB- 1,363,300
6,200,000 Tulsa, OK Municipal Airport, Revenue Bonds, 7.60%
(American Airlines)/(Original Issue Yield: 7.931%), BBB- 6,854,596
12/1/2030
Total 13,207,568
</TABLE>
FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<S> <S> <S> <C>
LONG-TERM MUNICIPALS-- CONTINUED
PENNSYLVANIA--11.2%
$ 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 $ 3,377,760
2,500,000 Allegheny County, PA HDA, Health & Education Revenue
Bonds, 7.00% (Rehabilitation Institute of Pittsburgh)/
(United States Treasury PRF)/(Original Issue
Yield: 7.132%), 6/1/2002 (@102) BBB 2,814,800
5,185,000 Allegheny County, PA Higher Education, Bldg Auth
Revenue Bonds, 7.375% (La Roche College), 7/15/2012 NR 5,606,800
1,555,000 Allegheny County, PA IDA, Revenue Bonds, 8.75% (United
Parcel Service), 2/15/2009 NR 1,622,518
620,000 Allegheny County, PA Residential Finance Agency, Mortgage
Revenue Bonds (Series G), 9.50% (GNMA COL), 12/1/2018 Aaa 633,969
3,000,000 Delaware County Authority, PA, College Revenue Bonds,
7.25% (Eastern College)/(United States Treasury PRF)/
(Original Issue Yield: 7.875%), 3/1/2012 NR 3,460,110
2,055,000 Erie County, PA Hospital Authority, Revenue Bonds, 7.50%
(Erie Infants & Youth Home, Inc.), 10/1/2011 NR 2,186,068
400,000 Erie County, PA IDA, Pollution Control Revenue Refunding
Bonds, 7.15% (International Paper Co.), 9/1/2013 NR 435,048
3,500,000 Pennsylvania EDFA, Resource Recovery Revenue Bonds
(Series A), 6.40% (Northampton Generating), 1/1/2009 NR 3,714,200
8,000,000 Pennsylvania EDFA, Wastewater Treatment Revenue Bonds
(Series A), 7.60% (Sun Co., Inc.)/(Original Issue
Yield: 7.653%), 12/1/2024 BBB 9,377,760
6,000,000 Pennsylvania Housing Finance Authority, SFM Revenue
Bonds (Series 34-B), 7.00% (FHA GTD), 4/1/2024 AA+ 6,380,700
2,095,000 Pennsylvania Housing Finance Authority, SFM Revenue
Bonds (Series 28), 7.65% (FHA GTD), 10/1/2023 AA+ 2,205,448
1,740,000 Pennsylvania State Higher Education Facilities Authority,
College & University Revenue Bonds, 6.75% (Thiel College),
9/1/2017 NR 1,856,006
</TABLE>
FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <S> <C>
LONG-TERM MUNICIPALS-- CONTINUED
PENNSYLVANIA-- CONTINUED
$ 1,200,000 Pennsylvania State Higher Education Facilities Authority,
Revenue Bonds (Series 1996), 7.15% (Thiel College),
5/15/2015 NR $ 1,333,740
3,875,000 Pennsylvania State Higher Education Facilities Authority,
Revenue Bonds (Series A), 7.375% (Medical College of
Pennsylvania)/(United States Treasury PRF)/
(Original Issue Yield: 7.45%), 3/1/2021 AAA 4,305,706
1,750,000 Pennsylvania State Higher Education Facilities Authority,
Revenue Bonds (Series A), 8.375% (Medical College of
Pennsylvania)/(United States Treasury PRF)/
(Original Issue Yield: 8.448%), 3/1/2011 AAA 1,865,255
Total 51,175,888
SOUTH CAROLINA--0.4%
15,550,000 Connector 2000 Association, Inc., SC, Toll Road Capital
Appreciation Revenue Bonds (Series 1998A) (Original Issue
Yield: 5.85%), 1/1/2034 BBB- 1,979,671
TENNESSEE--3.6%
1,000,000 Shelby County, TN Health Education & Housing Facilities
Board, Health Care Facilities Revenue Bonds (Series 1997A),
6.375% (Kirby Pines Retirement Community)/
(Original Issue Yield: 6.50%), 11/15/2025 NR 1,017,300
3,100,000 Springfield, TN Health & Educational Facilities Board,
Hospital Revenue Bonds, 8.25% (NorthCrest Medical Center)/
(Original Issue Yield: 8.50%), 4/1/2012 NR 3,571,572
7,800,000 Springfield, TN Health & Educational Facilities Board,
Hospital Revenue Bonds, 8.50% (NorthCrest Medical
Center)/(Original Issue Yield: 8.875%), 4/1/2024 NR 9,109,932
2,485,000 Tennessee Housing Development Agency, Homeownership
Program, Issue V Revenue Bonds, 7.65%, 7/1/2022 AA 2,638,747
Total 16,337,551
</TABLE>
FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <S> <C>
LONG-TERM MUNICIPALS-- CONTINUED
TEXAS--10.5%
$ 2,500,000 Brazos River Authority, TX, PCR Revenue Bonds (Series A),
7.875% (Texas Utilities Electric Co.), 3/1/2021 BBB+ $ 2,759,675
1,800,000 Brazos River Authority, TX, PCR Revenue Bonds (Series A),
8.125% (Texas Utilities Electric Co.), 2/1/2020 BBB+ 1,948,770
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 BBB- 7,889,423
3,000,000 Dallas-Fort Worth, TX International Airport Facilities,
Revenue Bonds, 7.25% (American Airlines)/
(Original Issue Yield: 7.428%), 11/1/2030 BBB- 3,374,010
2,370,000 Dallas-Fort Worth, TX International Airport Facilities,
Revenue Bonds, 7.50% (American Airlines)/
(Original Issue Yield: 8.20%), 11/1/2025 BBB- 2,580,527
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 BBB- 2,782,650
1,000,000 Guadalupe-Blanco River Authority TX, Industrial
Development Corp PCR Bonds, 8.60% (A.P. Green
Industries), 4/1/2009 NR 1,061,130
2,500,000 Guadalupe-Blanco River Authority TX, Industrial
Development Corp., PCR Bonds, 8.60% (A.P. Green
Industries), 4/1/2009 NR 2,846,975
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 BBB 5,546,150
1,000,000 Gulf Coast, TX Waste Disposal Authority, Revenue Bonds,
5.60% (Valero Energy Corporation), 4/1/2032 BBB- 1,000,000
7,630,000 Richardson, TX Hospital Authority, Hospital Refunding &
Improvement Bonds, 6.75% (Richardson Medical Center, TX)/
(Original Issue Yield: 6.82%), 12/1/2023 BBB- 8,315,020
</TABLE>
FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <S> <C>
LONG-TERM MUNICIPALS-- CONTINUED
TEXAS-- CONTINUED
$ 7,500,000 West Side Calhoun County, TX Navigation District, Solid
Waste Revenue Bond, 6.40% (Union Carbide Corp.)/
(Original Issue Yield: 6.437%), 5/1/2023 BBB $ 7,975,650
Total 48,079,980
UTAH--4.3%
865,000 Hildale, UT, Electric Revenue Bonds (Series 1995), 7.00%,
9/1/2002 NR 891,858
16,000,000 Intermountain Power Agency, UT, Refunding Revenue Bonds
(Series A), 5.00% (Original Issue Yield: 5.687%), 7/1/2023 A+ 15,290,880
735,000 Utah State HFA, SFM Revenue Bonds (Series B-3), 7.10%,
7/1/2024 AAA 777,674
970,000 Utah State HFA, SFM Revenue Bonds (Series E-2), 7.15%
(FHA GTD)/(Original Issue Yield: 7.169%), 7/1/2024 AAA 1,024,175
1,395,000 Utah State HFA, Single Family Mortgage Revenue Bonds,
7.55% (FHA GTD), 7/1/2023 AAA 1,479,328
255,000 Utah State HFA, Single Family Mortgage Revenue Bonds,
7.75% (FHA GTD), 1/1/2023 AAA 266,368
Total 19,730,283
VIRGINIA--0.1%
500,000 Virginia State Housing Development Authority,
Commonwealth Mortgage, Series C, Subseries C-10, 6.50%,
7/1/2007 AA+ 531,455
WASHINGTON--1.0%
4,300,000 Port of Camas-Washougal, WA, PCR Refunding Bonds
(Series 1993), 6.70% (James River Project, WA)/(Original
Issue Yield: 6.75%), 4/1/2023 BBB- 4,600,011
WEST VIRGINIA--0.5%
2,056,897 Marion County, WV County Commission, Refunding
Revenue Bonds, 8.00% (Adirondack Recycling), 12/1/2025 NR 2,010,617
</TABLE>
FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <S> <C>
LONG-TERM MUNICIPALS-- CONTINUED
WEST VIRGINIA-- CONTINUED
$ 287,469 Marion County, WV County Commission, Refunding
Revenue Bonds, 10.00% (Adirondack Recycling), 12/1/2025 NR $ 277,406
Total 2,288,023
WISCONSIN--2.2%
2,000,000 Wisconsin Health and Educational Facilities Authority,
Revenue Bonds (Series B), 6.75% (Grant Regional Health
Center, Inc)/(Original Issue Yield: 6.90%), 10/1/2022 NR 2,025,860
6,595,000 Wisconsin Housing & Economic Development Authority,
Home Ownership Revenue Bonds (Series H), 5.75%,
9/1/2028 Aa2 6,739,825
935,000 Wisconsin Housing & Economic Development Authority,
Homeownership Revenue Bond, Series A, 7.10%, 3/1/2023 AA 993,840
265,000 Wisconsin Housing & Economic Development Authority,
Homeownership Revenue Bonds (Series E), 8.00%
(FHA GTD)/(Original Issue Yield: 8.044%), 3/1/2021 AA 272,121
Total 10,031,646
TOTAL LONG-TERM MUNICIPALS (IDENTIFIED COST
$425,479,629) 447,496,271
TOTAL INVESTMENTS (IDENTIFIED COST
$429,279,629)(B) $451,296,271
</TABLE>
Securities that are subject to the Alternative Minimum Tax represent 50.6% of
the portfolio as calculated upon total portfolio market value.
* Please refer to the Appendix of the Statement of Additional Information for an
explanation of the credit ratings. Current credit ratings are unaudited.
(a) Non-income producing.
(b) The cost of investments for federal tax purposes amounts to $429,279,629.
The net unrealized appreciation of investments on a federal tax basis
amounts to $22,016,642 which is comprised of $35,159,844 appreciation and
$13,143,202 depreciation at February 28, 1998.
Note: The categories of investments are shown as a percentage of net assets
($457,402,213) at February 28, 1998.
The following acronyms are used throughout this portfolio:
AMBAC --American Municipal Bond Assurance Corporation COL --Collateralized EDFA
- --Economic Development Financing Authority FHA --Federal Housing Administration
FHA/VA --Federal Housing Administration/Veterans Administration FSA --Financial
Security Assurance GNMA --Government National Mortgage Association GO --General
Obligation GTD --Guaranty HDA --Hospital Development Authority HFA --Housing
Finance Authority IDA --Industrial Development Authority IFA --Industrial
Finance Authority INS --Insured LOC --Letter of Credit LT --Limited Tax MBIA
- --Municipal Bond Investors Assurance PCA --Pollution Control Authority PCR
- --Pollution Control Revenue PRF --Prerefunded SA --Support Agreement SFM
- --Single Family Mortgage UT --Unlimited Tax VRDNs --Variable Rate Demand Notes
MASSACHUSETTS IFA, SOLID WASTE DISPOSAL SR. LIEN REVENUE BONDS (SERIES A),
9.00% (MASSACHUSETTS RECYCLING ASSOCIATION)
There are $173 million face amount of these Senior Lien Revenue Bonds currently
outstanding. On August 12, 1997, the obligor filed a petition for relief under
Chapter 11 of the Federal Bankruptcy Code. Pursuant to a Bankruptcy Court
approved settlement on October 24, 1997, a new owner acquired the facility
subject to a portion of the Senior Lien Revenue Bonds. The new owner then
entered into a fifteen-year lease guaranteed by the company that built the
facility and pledged the lease and guarantee as additional collateral for the
Senior Lien Revenue Bonds. The settlement also anticipates that the Senior Lien
Revenue Bonds may be replaced with refunding bonds in the face amount of $56.3
million by July 31, 1998. The Senior Lien Revenue Bonds will not produce any
income until exchanged for such refunding bonds.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in securities, at value (identified and tax cost $ 451,296,271
$429,279,629)
Cash 99,477
Income receivable 7,250,615
Receivable for investments sold 15,000
Receivable for shares sold 2,215,903
Total assets 460,877,266
LIABILITIES:
Payable for investments purchased $ 2,978,629
Payable for shares redeemed 311,450
Accrued expenses 184,974
Total liabilities 3,475,053
NET ASSETS for 41,768,432 shares outstanding $ 457,402,213
NET ASSETS CONSIST OF:
Paid in capital $ 442,612,637
Net unrealized appreciation of investments 22,016,642
Accumulated net realized loss on investments (6,537,833)
Distributions in excess of net investment income (689,233)
Total Net Assets $ 457,402,213
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
CLASS A SHARES:
Net Asset Value Per Share ($99,272,410 / 9,065,138 shares outstanding) $10.95
Offering Price Per Share (100/95.50 of $10.95)* $11.47
Redemption Proceeds Per Share $10.95
CLASS B SHARES:
Net Asset Value Per Share ($29,796,243 / 2,721,804 shares outstanding) $10.95
Offering Price Per Share $10.95
Redemption Proceeds Per Share (94.50/100 of $10.95)** $10.35
CLASS C SHARES:
Net Asset Value Per Share ($2,888,893 / 263,891 shares outstanding) $10.95
Offering Price Per Share $10.95
Redemption Proceeds Per Share (99.00/100 of $10.95)** $10.84
CLASS F SHARES:
Net Asset Value Per Share ($325,444,667 / 29,717,599 shares outstanding) $10.95
Offering Price Per Share (100/99.00 of $10.95)* $11.06
Redemption Proceeds Per Share (99.00/100 of $10.95)** $10.84
</TABLE>
* 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.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 28, 1998 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 13,497,012
EXPENSES:
Investment advisory fee $ 1,331,692
Administrative personnel and services fee 167,460
Custodian fees 15,987
Transfer and dividend disbursing agent fees and expenses 149,967
Directors'/Trustees' fees 7,108
Auditing fees 10,061
Legal fees 13,232
Portfolio accounting fees 74,201
Distribution services fee--Class B Shares 78,126
Distribution services fee--Class C Shares 8,895
Shareholder services fee--Class A Shares 119,922
Shareholder services fee--Class B Shares 26,042
Shareholder services fee--Class C Shares 2,965
Shareholder services fee--Class F Shares 405,942
Share registration costs 22,919
Printing and postage 27,750
Insurance premiums 3,152
Taxes 19,335
Miscellaneous 9,183
Total expenses 2,493,939
Net investment income 11,003,073
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 3,107,460
Net change in unrealized appreciation of investments 9,045,244
Net realized and unrealized gain on investments 12,152,704
Change in net assets resulting from operations $ 23,155,777
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(UNAUDITED) ENDED
FEBRUARY 28, AUGUST 31,
1998 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 11,003,073 $ 22,714,689
Net realized gain (loss) on
investments ($3,107,460 and
$2,206,486,
respectively, as computed for federal 3,107,460 2,206,486
tax purposes)
Net change in unrealized 9,045,244 16,489,543
appreciation/depreciation
Change in net assets resulting from 23,155,777 41,410,718
operations
NET EQUALIZATION CREDITS (DEBITS)-- 18,788 21,898
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Class A Shares (2,501,367) (3,383,555)
Class B Shares (449,871) (342,071)
Class C Shares (52,528) (63,260)
Class F Shares (8,502,293) (19,546,786)
Change in net assets resulting from (11,506,059) (23,335,672)
distributions to shareholders
SHARE TRANSACTIONS (EXCLUSIVE OF
AMOUNTS ALLOCATED TO NET
INVESTMENT INCOME)--
Proceeds from sale of shares 27,946,087 130,839,872
Net asset value of shares issued to
shareholders in payment of
distributions declared 7,018,373 14,141,468
Cost of shares redeemed (32,706,069) (102,632,146)
Change in net assets resulting from 2,258,391 42,349,194
share transactions
Change in net assets 13,926,897 60,446,138
NET ASSETS:
Beginning of period 443,475,316 383,029,178
End of period $ 457,402,213 $443,475,316
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
FINANCIAL HIGHLIGHTS -- CLASS A SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
FEBRUARY 28, AUGUST 31,
1998 1997 1996(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.67 $10.33 $10.42
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.27 0.58 0.08
Net realized and unrealized gain (loss) on investments 0.29 0.33 (0.12)
Total from investment operations 0.56 0.91 (0.04)
LESS DISTRIBUTIONS
Distributions from net investment income (0.28) (0.57) (0.05)
NET ASSET VALUE, END OF PERIOD $10.95 $10.67 $10.33
TOTAL RETURN(B) 5.32% 9.07% (0.36%)
RATIOS TO AVERAGE NET ASSETS
Expenses 1.08%* 1.09% 0.84%*
Net investment income 5.00%* 5.29% 6.15%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $99,272 $94,941 $296
Portfolio turnover 10% 20% 22%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from August 5, 1996 (date of initial
public offering) to August 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
FINANCIAL HIGHLIGHTS -- CLASS B SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
FEBRUARY 28, AUGUST 31,
1998 1997 1996(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.66 $10.33 $10.42
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.23 0.51 0.08
Net realized and unrealized gain (loss) on investments 0.30 0.31 (0.12)
Total from investment operations 0.53 0.82 (0.04)
LESS DISTRIBUTIONS
Distributions from net investment income (0.24) (0.49) (0.05)
NET ASSET VALUE, END OF PERIOD $10.95 $10.66 $10.33
TOTAL RETURN(B) 5.01% 8.17% (0.36%)
RATIOS TO AVERAGE NET ASSETS
Expenses 1.84%* 1.84% 0.84%*
Net investment income 4.26%* 4.55% 6.15%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $29,796 $14,997 $296
Portfolio turnover 10% 20% 22%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from August 5, 1996 (date of initial
public offering) to August 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
FINANCIAL HIGHLIGHTS -- CLASS C SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
FEBRUARY 28, AUGUST 31,
1998 1997 1996(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.66 $10.33 $10.42
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.22 0.50 0.08
Net realized and unrealized gain (loss) on investments 0.31 0.32 (0.12)
Total from investment operations 0.53 0.82 (0.04)
LESS DISTRIBUTIONS
Distributions from net investment income (0.24) (0.49) (0.05)
NET ASSET VALUE, END OF PERIOD $10.95 $10.66 $10.33
TOTAL RETURN(B) 5.02% 8.17% (0.36%)
RATIOS TO AVERAGE NET ASSETS
Expenses 1.84%* 1.86% 0.84%*
Net investment income 4.25%* 4.51% 6.15%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $2,889 $1,950 $296
Portfolio turnover 10% 20% 22%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from August 5, 1996 (date of initial
public offering) to August 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
FINANCIAL HIGHLIGHTS -- CLASS F SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
FEBRUARY 28, YEAR ENDED AUGUST 31,
<S> <C> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994 1993
NET ASSET VALUE, BEGINNING OF $10.67 $10.33 $10.71 $10.56 $11.28 $10.78
PERIOD
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.27 0.54 0.69 0.63 0.61 0.62
Net realized and unrealized
gain
(loss) on investments 0.29 (0.37) (0.42) 0.15 (0.73) 0.51
Total from investment 0.56 0.91 0.27 0.78 (0.12) 1.13
operations
LESS DISTRIBUTIONS
Distributions from net
investment
income (0.28) (0.57) (0.65) (0.63) (0.60) (0.63)
NET ASSET VALUE, END OF $10.95 $10.67 $10.33 $10.71 $10.56 $11.28
PERIOD
TOTAL RETURN(A) 5.32% 9.07% 2.47% 7.73% (1.06%) 10.86%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.08%* 1.08% 1.08% 1.08% 1.09% 1.09%
Net investment income 4.99%* 5.23% 5.91% 6.18% 5.56% 5.65%
Expense -- 0.01% 0.01% -- -- --
waiver/reimbursement(b)
SUPPLEMENTAL DATA
Net assets, end of period $325,445 $331,588 $383,028 $426,010 $472,232 $458,331
(000 omitted)
Portfolio turnover 10% 20% 22% 13% 27% 7%
</TABLE>
* Computed on an annualized basis.
(a) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1998 (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. The Fund offers four classes of shares:
Class A Shares, Class B Shares, Class C Shares, and Class F Shares. The
investment objective is to provide a high level of current income which is
generally exempt from federal regular income tax.
On December 13, 1996, the Fund acquired all the net assets of State Bond
Minnesota Tax-Free Income Fund and State Bond Tax-Exempt Fund pursuant to a plan
of reorganization approved by State Bond Minnesota Tax-Free Income Fund and
State Bond Tax-Exempt Fund shareholders on December 12, 1996. The acquisition
was accomplished by a tax-free exchange of 9,405,099 of the Fund's Class A
Shares (valued at $93,815,812) for 1,733,291 shares of State Bond Minnesota
Tax-Free Income Fund and 7,388,723 shares of State Bond Tax-Exempt Fund net
assets at that date ($18,351,963 and $79,930,763, respectively), including
unrealized appreciation of $584,534 and $3,882,941, respectively, were combined
with those of the Fund. The aggregate net assets at that date of the Fund, State
Bond Minnesota Tax-Free Income Fund, and State Bond Tax-Exempt Fund immediately
before acquisition were $384,839,379, $18,351,963, and $79,930,763,
respectively. Immediately after the acquisition, the combined aggregate net
assets of the Fund were $483,122,105.
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, 1997, the Fund, for federal tax purposes, had a capital loss
carryforward of $9,645,293, 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:
EXPIRATION YEAR EXPIRATION AMOUNT
2002 $ 944,580
2003 4,906,029
2004 3,794,684
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.
USE OF ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results could differ from
those estimated.
OTHER -- Investment transactions are accounted for on the trade date.
3. CAPITAL STOCK
At February 28, 1998, par value shares ($0.001 per share) authorized were as
follows:
NUMBER OF PAR VALUE
CLASS NAME CAPITAL STOCK AUTHORIZED
Class A Shares 500,000,000
Class B Shares 500,000,000
Class C Shares 500,000,000
Class F Shares 500,000,000
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
FEBRUARY 28, AUGUST 31,
1998 1997
<S> <C> <C> <C> <C>
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
Shares sold 694,695 $ 7,509,753 654,338 $ 6,738,299
Shares issued in connection
with the acquisition -- -- 9,405,099 93,815,812
Shares issued to
shareholders in payment of
distributions declared 160,916 1,736,044 226,565 2,371,090
Shares redeemed (689,207) (7,437,272) (1,387,296) (14,487,278)
Net change resulting from Class A
Share transactions 166,404 $ 1,808,525 8,898,706 $ 88,437,923
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
FEBRUARY 28, AUGUST 31,
1998 1997
<S> <C> <C> <C> <C>
CLASS B SHARES SHARES AMOUNT SHARES AMOUNT
Shares sold 1,342,747 $ 14,534,957 1,566,410 $ 16,385,580
Shares issued to shareholders
in payment of distributions
declared 19,538 210,644 16,534 172,989
Shares redeemed (46,829) (508,427) (176,625) (1,853,974)
Net change resulting from
Class B Share transactions 1,315,456 $ 14,237,174 1,406,319 $ 14,704,595
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
FEBRUARY 28, AUGUST 31,
1998 1997
<S> <C> <C> <C> <C>
CLASS C SHARES SHARES AMOUNT SHARES AMOUNT
Shares sold 114,584 $ 1,239,239 183,002 $ 1,913,194
Shares issued to shareholders in
payment of distributions
declared 3,964 42,797 5,466 57,137
Shares redeemed (37,541) (407,329) (5,613) (58,379)
Net change resulting from
Class C Share transactions 81,007 $ 874,707 182,855 $ 1,911,952
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
FEBRUARY 28, AUGUST 31,
1998 1997
<S> <C> <C> <C> <C>
CLASS F SHARES SHARES AMOUNT SHARES AMOUNT
Shares sold 429,323 $ 4,662,139 1,147,025 $ 11,986,987
Shares issued to shareholders
in payment of distributions
declared 465,754 5,028,888 1,104,524 11,540,251
Shares redeemed (2,256,741) (24,353,042) (8,247,527) (86,232,515)
Net change resulting
from Class F Share transactions (1,361,664) $ (14,662,015) (5,995,978) $ (62,705,277)
Net change resulting
from share transactions 201,203 $ 2,258,391 4,491,902 $ 42,349,194
</TABLE>
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
Investors for the period. The administrative fee received during the period of
the Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE -- The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the
Fund will reimburse Federated Securities Corp., the principal distributor, from
the net assets of the Fund to finance activities intended to result in the sale
of the Fund's shares. The Plan provides that the Fund may incur distribution
expenses of the average daily net assets of ech class as follows:
PERCENTAGE OF
AVERAGE DAILY NET
SHARE CLASS NAME ASSETS OF CLASS
Class A Shares 0.25%
Class B Shares 0.75%
Class C Shares 0.75%
Class F Shares 0.25%
For the period ended February 28, 1998, Class A Shares and Class F Shares did
not incur a distribution services fee.
SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services Agreement
with Federarated 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.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through its
subsidiary, Federated Shareholder Services Company ("FSSC") serves as transfer
and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
INTERFUND TRANSACTIONS -- During the period ended February 28, 1998, the Fund
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 $45,480,000 and $70,680,000, respectively.
GENERAL -- Certain of the Officers and Directors of the Fund 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 28, 1998, were as follows:
PURCHASES $43,463,339
SALES $63,983,790
6. INVESTMENT RISK
INVESTMENT RISK -- Although the Fund has a diversified portfolio, the Fund has
23.5% 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 issuers 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 issuers. The Fund held defaulted
securities with a value aggregating $8,400,000 representing 1.9% of the Fund's
net assets at February 28, 1998.
DIRECTORS
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
William J. Copeland
James E. Dowd
Lawrence D. Ellis, M.D.
Richard B. Fisher
Edward L. Flaherty, Jr.
Peter E. Madden
John E. Murray, Jr.
Wesley W. Posvar
Marjorie P. Smuts
OFFICERS
John F. Donahue
Chairman
Richard B. Fisher
President
J. Christopher Donahue
Executive Vice President
Edward C. Gonzales
Executive Vice President
John W. McGonigle
Executive Vice President,
Treasurer, and Secretary
Matthew S. Hardin
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 risk, including possible
loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
[Graphic]
Federated Securities Corp., Distributor
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
Cusip 313910200
Cusip 313910309
Cusip 313910408
Cusip 313910101
8040407 (4/98)
APPENDIX
A1. The graphic presentation here displayed consists of a boxed legend in the
upper left quadrant indicating the components of the corresponding mountain
chart. The color coded mountain chart is a visual representation of the
narrative text above it. The "x" axis reflects computation periods from 4/10/87
to 2/28/98. The "y" axis is measured in increments of $4,000 ranging from $0 to
$28,000 and indicates that the ending value of hypothetical initial investment
of $11,000 in the fund's Class F Shares, assuming the reinvestment of capital
gains and dividends, would have grown to $23,664 on 2/28/98.
A2: The graphic presentation here displayed consists of a boxed legend in the
upper left quadrant indicating the components of the corresponding mountain
chart. The color coded mountain chart is a visual representation of the
narrative text above it. The "x" axis reflects computation periods from 4/10/87
to 2/28/98. The "y" axis is measured in increments of $4,000 ranging from $0 to
$20,000 and indicates that the ending value of hypothetical yearly investments
of $1,000 in the fund's Class F Shares, assuming the reinvestment of capital
gains and dividends, would have grown to $16,820 on 2/28/98.
A3: The graphic presentation here displayed consists of a boxed legend in the
upper left quadrant indicating the components of the corresponding mountain
chart. The color-coded mountain chart is a visual representation of the
narrative text beneath it. The "x" axis reflects computation periods from
4/10/87 to 2/28/98. The "y" axis is measured in increments of $20,000 ranging
from $0 to $120,000 and indicates that the ending value of a hypothetical
initial investment of $5,000 and subsequent monthly investments of $500 in the
fund's Class F Shares would have grown to $106,686 on 2/28/98.