FEDERATED MUNICIPAL OPPORTUNITIES FUND INC, DEF 14A, 1999-01-25

FEDERATED MUNICIPAL OPPORTUNITIES FUND INC
DEF 14A, 1999-01-25

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ [X] ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12

Federated Municipal Opportunities Fund, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.

1. Title of each class of securities to which transaction applies:

2. Aggregate number of securities to which transaction applies:

3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):

4. Proposed maximum aggregate value of transaction:

5. Total fee paid:

[ ] Fee paid previously with preliminary proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule
and the date of its filing.

1) Amount Previously Paid:
------------------------------------------------------------

2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------

3) Filing Party:
------------------------------------------------------------

4) Date Filed:
------------------------------------------------------------

<PAGE>

FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.

Proxy Statement - Please Vote!

TIME IS OF THE ESSENCE ...VOTING ONLY TAKES A FEW MINUTES AND YOUR
PARTICIPATION IS IMPORTANT! ACT NOW TO HELP THE FUND AVOID ADDITIONAL EXPENSE.

Federated Municipal Opportunities Fund, Inc. will hold an annual meeting of
shareholders on March 26, 1999. It is important for you to vote on the issues
described in this Proxy Statement. We recommend that you read the Proxy
Statement in its entirety; the explanations will help you to decide on the
issues.

Following is an introduction to the proposals and the process.

Why am I being asked to vote? Mutual funds are required to obtain
shareholders' votes for certain types of changes, like those included in this
Proxy Statement. You have a right to vote on these changes.

What issues am I being asked to vote on? The proposals include the election
of Directors and changes to the Fund's fundamental investment policies.

Why are individuals recommended for election to the Board of Directors? The
Fund is devoted to serving the needs of its shareholders, and the Board is
responsible for managing the Fund's business affairs to meet those needs. The
Board represents the shareholders and can exercise all of the Fund's powers,
except those reserved only for shareholders.

Directors are selected on the basis of their education and professional
experience. Candidates are chosen based on their distinct interest in, and
capacity for understanding the complexities of, the operation of a mutual fund.
These individuals bring considerable experience to the impartial oversight of a
fund's operation.

The Proxy Statement includes a brief description of each nominee's history
and current position with the Fund, if applicable.

Why am I being asked to vote on the ratification of independent auditors?
The independent auditors conduct a professional examination of certain of the
Fund's accounting documents and supporting data to render an opinion on the
material fairness of the information. Because financial reporting involves
considerable discretion, the auditors' opinion is an important assurance to both
the Fund and its investors.

The Board of Directors approved the selection of Deloitte & Touche LLP,
long-time auditors of the Fund, for the current fiscal year and believes that
the continued employment of this firm is in the Fund's best interests.

Why are the Fund's "fundamental policies" being changed? Every mutual fund
has certain investment policies that can be changed only with the approval of
its shareholders. These are referred to as "fundamental" investment policies.

In some cases, these policies were adopted to reflect regulatory, business,
or industry conditions that no longer exist or no longer are necessary. In other
cases, advances in the securities markets and the economy have created different
procedures and techniques that affect the Fund's operations.

By reducing the number of "fundamental policies," the Fund may be able to
minimize the costs and delays associated with frequent shareholder meetings.
Also, the investment adviser's ability to manage the Fund's assets may be
enhanced and investment opportunities increased.

The proposed amendments will:

o reclassify as operating policies those fundamental policies that are not
required to be fundamental by the Investment Company Act of 1940, as amended
("1940 Act"); and

o simplify and modernize the policies that are required to be "fundamental"
by the 1940 Act.

Federated is a conservative money manager. Our highly trained professionals
are dedicated to making investment decisions in the best interest of the Fund
and its shareholders. The Board believes that the proposed changes will be
applied responsibly by the Fund's investment adviser.

Why are some "fundamental policies" being reclassified as "operating
policies?" As noted above, some "fundamental policies" have been redefined as
"operating policies." Operating policies do not require shareholder approval to
be changed. This gives the Fund's Board additional flexibility to determine
whether to participate in new investment opportunities and to meet industry
changes promptly.

How do I vote my shares? You may vote in person at the annual meeting of
shareholders or complete and return the enclosed Proxy Card. If you sign and
return the Proxy Card without indicating a preference, your vote will be cast
"for" all the proposals.

You may also vote by telephone at 1-800-690-6903, or through the Internet
at www.proxyvote.com. If you choose to help save the Fund time and postage costs
by voting through the Internet or by telephone, please don't return your Proxy
Card. If you do not respond at all, we may contact you by telephone to request
that you cast your vote.

Who do I call if I have questions about the Proxy Statement? Call your
Investment Professional or a Federated Client Service Representative.
Federated's toll-free number is 1-800-341-7400.

After careful consideration, the Board of Directors has unanimously approved
these proposals. The Board recommends that you read the enclosed materials
carefully and vote for all proposals.

<PAGE>

FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 26, 1999

An annual meeting of the shareholders of Federated Municipal Opportunities
Fund, Inc. (the "Fund")["Fund")] will be held at 5800 Corporate Drive,
Pittsburgh, Pennsylvania 15237-7000, at 2:00 p.m. (Eastern time), on March 26,
1999 to consider proposals:

(1) To elect nine Directors.

(2) To ratify the selection of the Fund's independent auditors.

(3) To make changes to the Fund's fundamental investment policies:

(a) To make non-fundamental, and to amend, the Fund's fundamental investment
policy regarding [governing] investments in restricted securities;

(b) To amend the Fund's fundamental investment policy regarding borrowing to
permit the purchase of securities while borrowings are outstanding; and

(c) To make non-fundamental, and to amend, the Fund's fundamental investment
policy to permit the Fund to invest in the securities of other investment
companies.

(4) To eliminate the Funds fundamental investment policy on concentration of its
investments and to reserve freedom to concentrate in the banking industry.

To transact such other business as may properly come before the meeting or any
adjournment thereof.

The Board of Directors has fixed January 12, 1999 as the record date for
determination of shareholders entitled to vote at the meeting.

By Order of the Board of Directors,

John W. McGonigle
Secretary

January 25, 1999

YOU CAN HELP THE FUND AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP
LETTERS TO ENSURE A QUORUM BY PROMPTLY SIGNING AND RETURNING THE ENCLOSED PROXY.
IF YOU ARE UNABLE TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE
ENCLOSED PROXY SO THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE ANNUAL
MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.

<PAGE>

TABLE OF CONTENTS

About the Proxy Solicitation and the Annual Meeting..........................[3]

Election of Nine Directors...................................................[3]

[** 1] About the Election of Directors.......................................[4]

[** 2] Directors Standing for Election.......................................[4]

[** 3] Nominees Not Presently Serving as Directors...........................[5]

Ratification of the Selection of the Independent Auditors....................[6]

Approval or Disapproval of Changes to the Fund's Fundamental Investment Policies
Approval or Disapproval of the Elimination of the Funds
FundamentalInvestment Policy Regarding Concentration and to Reserve
Freedomto Concentrate in the Banking Industry [6]

Information About the Fund...................................................[9]

Proxies, Quorum and Voting at the Annual Meeting.............................[9]

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Previously Elected Directors

Share Ownership of the Directors............................................[10]

Director Compensation.......................................................[11]

Officers of the Fund........................................................[12]

Other Matters and Discretion of Attorneys Named in the Proxy................[13]

<PAGE>

PRELIMINARY [DEFINITIVE]

PROXY STATEMENT

FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000

About the Proxy Solicitation and the Annual Meeting

The enclosed proxy is solicited on behalf of the Board of Directors of the
Fund (the "Board"["Board"] or "Directors")["Directors")]. The proxies will be
voted at the annual meeting of shareholders of the Fund to be held on March 26,
1999, at 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000, at 2:00 p.m.
(such annual meeting and any adjournment or postponement thereof are referred to
as the "Annual Meeting")["Annual Meeting")].

The cost of the solicitation, including the printing and mailing of proxy
materials, will be borne by the Fund. In addition to solicitations through the
mails, proxies may be solicited by officers, employees, and agents of the Fund
or, if necessary, a communications firm retained for this purpose. Such
solicitations may be by telephone, telegraph, through the Internet or otherwise.
Any telephonic solicitations will follow procedures designed to ensure accuracy
and prevent fraud, including requiring identifying shareholder information,
recording the shareholder's instructions, and confirming to the shareholder
after the fact. Shareholders who communicate proxies by telephone or by other
electronic means have the same power and authority to issue, revoke, or
otherwise change their voting instruction shareholders submitting proxies in
written form. The Fund will reimburse custodians, nominees, and fiduciaries for
the reasonable costs incurred by them in connection with forwarding solicitation
materials to the beneficial owners of shares held of record by such persons.

At its meeting on November 17, 1998, the Board reviewed the proposed
changes recommended in the investment policies of the Fund and approved them
subject to shareholder approval. The purposes of the Annual Meeting are set
forth in the accompanying Notice. The Directors know of no business other than
that mentioned in the Notice that will be presented for consideration at the
Annual Meeting. Should other business properly be brought before the Annual
Meeting, proxies will be voted in accordance with the best judgment of the
persons named as proxies. This proxy statement and the enclosed proxy card are
expected to be mailed on or about January 25, 1999, to shareholders of record at
the close of business on January 12, 1999 (the "Record Date")["Record Date")].
On the Record Date, the Fund had outstanding _________[44,112,715.175] shares of
common stock.

The Fund's annual report, which includes audited financial statements for
the fiscal year ended August 31, 1998, was previously mailed to shareholders.
The Fund's principal executive offices are located at Federated Investors Funds,
5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000. The Fund's toll-free
telephone number is 1-800-341-7400.

PROPOSAL #1: ELECTION OF NINE DIRECTORS

The persons named as proxies intend to vote in favor of the election of
Thomas G. Bigley, John T. Conroy, Jr., Nicholas P. Constantakis, John F.
Cunningham, J. Christopher Donahue, Peter E. Madden, Charles F. Mansfield, Jr.,
John E. Murray, Jr. and John S. Walsh (collectively, the
"Nominees")["Nominees")] as Directors of the Fund. Messrs. Bigley, Conroy,
Madden and Murray are presently serving as Directors. If elected by
shareholders, Messrs. Constantakis, Cunningham, Donahue, Mansfield and Walsh
will [are expected to] assume their responsibilities as Directors effective
April 1, 1999. Please see "Information about the Fund"["About the Election of
Directors" below] for current information about the Nominees.

Messrs. Conroy and Madden were appointed Directors on August 21, 1991, to
fill vacancies created by the resignation of Mr. Joseph Maloney and the decision
to expand the size of the Board. Messrs. Bigley and Murray were appointed
Directors on November 15, 1994, and February 14, 1995, respectively, also to
fill vacancies resulting from the decision to expand the size of the Board.
[Messrs. Cunningham, Mansfield and Walsh are being proposed for election as
Directors to fill vacancies anticipated to result from the resignation of three
current Directors. The anticipated resignations will not occur if Messrs.
Cunningham, Mansfield and Walsh are not elected as Directors.]

All Nominees have consented to serve if elected. If elected, the Directors
will hold office without limit in time until death, resignation, retirement, or
removal or until the next meeting of shareholders to elect Directors and the
election and qualification of their successors. Election of a Director is by a
plurality of the votes cast by shareholders of the Fund at the Annual Meeting.
The nine individuals receiving the greatest number of votes at the Annual
Meeting will be deemed to be elected Directors.

If any Nominee for election as a Director named above shall by reason of
death or for any other reason become unavailable as a candidate at the Annual
Meeting, votes pursuant to the enclosed proxy will be cast for a substitute
candidate by the proxies named on the proxy card, or their substitutes, present
and acting at the Annual Meeting. Any such substitute candidate for election as
a Director who is an "interested person"["interested person"] (as such term is
defined in the Investment Company Act of 1940, as amended (the "1940
Act"))["1940 Act"))] of the Fund shall be nominated by the Executive Committee.
The selection of any substitute candidate for election as a Director who is not
an "interested person"["interested person"] shall be made by a majority of the
Directors who are not "interested persons"["interested persons"] of the Fund.
The Board has no reason to believe that any Nominee will become unavailable for
election as a Director.

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE TO ELECT AS DIRECTORS THE NOMINEES FOR ELECTION
TO THE BOARD OF DIRECTORS OF THE FUND

PROPOSAL #2: RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS

The 1940 Act requires that the Funds independent auditors be selected by
the Board, including a majority of those Board members who are not "interested
persons" (as defined in the 1940 Act) of the Fund, and that the employment of
such independent auditors be conditioned on the right of the Fund, by vote of a
majority of its outstanding securities at any meeting called for that purpose,
to terminate such employment forthwith without penalty. The Board of the Fund,
including a majority of its members who are not "interested persons" of the
Fund, approved the selection of Deloitte & Touche LLP (the "Auditors") for the
current fiscal year at a Board meeting held on November 17, 1998.

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THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERSVOTE FOR THE PROPOSAL

PROPOSAL #3: APPROVAL OF CHANGES TO THE FUNDS

FUNDAMENTAL INVESTMENT POLICIES

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The proposed amendments would:

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PROPOSAL #3(a): TO MAKE NON-FUNDAMENTAL AND TO AMEND THE FUNDS FUNDAMENTAL
INVESTMENT POLICY GOVERNING INVESTMENTS IN RESTRICTED SECURITIES

The Funds current policy on restricted securities reads as follows:

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"The Fund may invest in restricted securities. Restricted securities are
any securities in which the Fund may invest pursuant to its investment objective
and policies but which are subject to restrictions on resale under federal
securities law. Under criteria established by the Directors, certain restricted
securities are determined to be liquid. To the extent that restricted securities
are not determined to be liquid, the Fund will limit their purchase, together
with other illiquid securities, to 15% of its net assets."

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THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS

VOTE FOR THE PROPOSAL

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The Funds current investment policy on borrowing states that:

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THE BOARD OF DIRECTORS RECOMMENDS THATSHAREHOLDERS VOTE FOR THE PROPOSAL

PROPOSAL #3(c): TO MAKE NON-FUNDAMENTAL AND TO AMEND THE FUNDS POLICY TO
PERMIT THE FUND TO INVEST IN THE SECURITIES OF OTHER INVESTMENT COMPANIES

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The money market funds in which the Fund plans to invest pay an advisory
fee. However, the Funds investment adviser and the Directors believe that the
benefits derived from having the cash invested outweigh any reduction in the
amount earned as a result of such a fee. The ability to purchase shares of money
market funds would be beneficial because it would provide the Fund with
additional investment opportunities late in each business day, when
opportunities to acquire money market instruments are limited. Otherwise, the
Fund would be forced to hold some of its cash uninvested, resulting in little or
no investment income.

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(a) "Investing in Securities of Other Investment Companies

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(b) "Investing in Securities of Other Investment Companies

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THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS

VOTE FOR THE PROPOSAL

PROPOSAL #4: REMOVAL OF THE FUNDS FUNDAMENTAL INVESTMENT POLICY ON
CONCENTRATION AND RESERVING FREEDOM TO CONCENTRATE INVESTMENTS IN THE DOMESTIC
BANKING INDUSTRY

The 1940 Act requires every investment company to state a fundamental
policy regarding its intention to concentrate portfolio investments in one
industry. Investments of more than 25% of the value of an investment companys
assets in any one industry represent a "concentration" in that particular
industry. However, if an investment company does not intend to concentrate its
investments, this must also be stated.

The Funds current concentration policy states that:

"The Fund may invest more than 25% of the value of its assets in private
activity bonds which may result in more than 25% of the Funds assets being
invested in one industry. It is also possible that the Fund may from time to
time invest more than 25% of its assets in health care facilities revenue
obligations, housing agency revenue obligations or electric utility
obligations."

Since the Fund adopted its policy reserving freedom to concentrate
investments in the obligations discussed above, the investment focus of the
Funds investment adviser and the types of securities in which it would like to
invest the Funds assets have changed. Therefore, the Funds investment adviser
has proposed to amend the concentration policy to eliminate the policy discussed
above, and would like to reserve the freedom to concentrate the Funds
investments in instruments and obligations of U.S. banks and bank holding
companies. By modifying this policy, the investment adviser believes it will
reduce the risk to the Funds portfolio and the Fund will have greater
flexibility to invest in a broader array of the securities which are acceptable
investments for the Fund in seeking to achieve its investment objective of
providing a high level of current income which is generally exempt from the
federal regular income tax.

Therefore, the Directors have recommended that the Funds fundamental
investment policy be eliminated, and that it be replaced with the following
operating policy:

"The Fund will not invest 25% or more of its total assets in any one
industry. However, investing in U.S. government securities and domestic bank
instruments shall not be considered investments in any one industry."

THE BOARD OF DIRECTORS RECOMMENDS THATSHAREHOLDERS VOTE FOR THE PROPOSAL

INFORMATION ABOUT THE FUND

Proxies, Quorum and Voting at the Annual Meeting

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About the Election of Directors

When elected, the Directors will hold office during the lifetime of the
Fund except that: (a) any Director may resign; (b) any Director may be removed
by written instrument signed by at least two-thirds of the number of Directors
prior to such removal; (c) any Director who requests to be retired or who has
become mentally or physically incapacitated may be retired by written instrument
signed by a majority of the other Directors; and (d) a Director may be removed
at any special meeting of the shareholders by a vote of two-thirds of the
outstanding shares of the Fund. In case a vacancy shall exist for any reason,
the remaining Directors will fill such vacancy by appointment of another
Director. The Directors will not fill any vacancy by appointment if, immediately
after filling such vacancy, less than two-thirds of the Directors then holding
office would have been elected by the shareholders. If, at any time, less than a
majority of the Directors holding office have been elected by the shareholders,
the Directors then in office will call a shareholders' meeting for the purpose
of electing Directors to fill vacancies. Otherwise, there will normally be no
meeting of shareholders called for the purpose of electing Directors.

Set forth below is a listing of: (i) Directors standing for election, [and]
(ii) Nominees standing for election who are not presently serving as Directors,
and (iii) Directors previously elected by shareholders, along with their
addresses, birthdates, present positions with the Fund, if applicable, and
principal occupations during the past five years:

Directors Standing for Election

Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA

Birthdate: February 3, 1934

Director

Chairman of the Board [Director or Trustee of the Federated Fund Complex;
Director and Member of the Executive Committee], Children's Hospital of
Pittsburgh; formerly, Senior Partner, Ernst & Young LLP; Director, MED 3000
Group, Inc.; Director, [and] Member of Executive Committee, University of
Pittsburgh; Director or Trustee of the Funds.

John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL

Birthdate: June 23, 1937

Director

[Director or Trustee of the Federated Fund Complex;] President, Investment
Properties Corporation; Senior Vice -President, John R. Wood and Associates,
Inc., Realtors; Partner or Trustee in private real estate ventures in Southwest
Florida; formerly, President, Naples Property Management, Inc. and Northgate
Village Development Corporation; Director or Trustee of the Funds.

Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL

Birthdate: March 16, 1942

Director

Consultant; Former State [Director or Trustee of the Federated Fund
Complex; formerly,] Representative, Commonwealth of Massachusetts [General
Court]; formerly, President, State Street Bank and Trust Company and State
Street Boston Corporation; Director or Trustee of the Funds.

John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA

Birthdate: December 20, 1932

Director

[Director or Trustee of the Federated Fund Complex;] President, Law
Professor, Duquesne University; Consulting Partner, Mollica & Murray; Director
or Trustee of theFunds.

Nominees Not Presently Serving as Directors

Nicholas P. Constantakis
175 Woodshire Drive
Pittsburgh, PA

Birthdate: September 3, 1939

Formerly, Partner, Andersen Worldwide SC; Director or Trustee of the Funds.
[Federated Fund Complex; formerly, Partner, Andersen Worldwide SC.]

John F. Cunningham
353 El Brillo Way
Palm Beach, FL

Birthdate: March 5, 1943

Chairman, President and Chief Executive Officer, Cunningham & Co.,
Inc.(consulting organization to high technology and computer companies in the
financial community); [; Trustee Associate, Boston College;] Director, EMC
Corporation[; formerly, Director, Redgate Communications].

J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA

Birthdate: April 11, 1949

Executive Vice President

President and Trustee [or Executive Vice President of the Federated Fund
Complex; Director or Trustee of some of the Funds in the Federated Fund Complex;
President and Director], Federated Investors, [Inc.; President and Trustee,]
Federated Advisers, Federated Management, and Federated Research; President and
Director, Federated Research Corp. and Federated Global Research Corp.;
President, Passport Research, Ltd.; Trustee, Federated Shareholder Services
Company and Federated Shareholder Services; Director, Federated Services
Company; President or Executive Vice President of the Funds; Director or Trustee
of some of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and
Director of the Fund.

Charles F. Mansfield, Jr.
54 Pine Street [80 South Road]
Garden City, [Westhampton Beach,] NY

Birthdate: April 10, 1945

Management consultant.

John S. Walsh
2007 Sherwood Drive
Valparaiso, IN

Birthdate: November 28, 1957

President [and Director], Heat Wagon, Inc.[; President and Director],
Manufacturers Products, Inc.("MPI") and the[; President,] Portable Heater
Parts[, a division of Manufacturers Products, Inc.; Director, Walsh & Kelly,]
division of MPI (engineering, manufacturing and distribution of portable,
temporary heating equipment) (1996-present); Director, Walsh & Kelly, Inc.,
asphalt road construction business; formerly, Vice President, Walsh & Kelly,
Inc. (1984- 1996).

Previously Elected Directors

John F. Donahue#*

Federated Investors Tower

Pittsburgh, PA

Birthdate: July 28, 1924

Chairman and Director

Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp. and Federated Global Research Corp.; Chairman, Passport Research, Ltd.;
Chief Executive Officer and Director or Trustee of the Funds. Mr. Donahue is the
father of J.Christopher Donahue, Executive Vice President of the Fund and
Nominee for Director.

William J. Copeland

One PNC Plaza - 23rd Floor

Pittsburgh, PA

Birthdate: July 4, 1918

Director

Director and Member of the Executive Committee, Michael Baker, Inc.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.;
Director, Ryan Homes, Inc.; Director or Trustee of the Funds. [President, Walsh
& Kelly, Inc.]

James E. Dowd [PROPOSAL #2: RATIFICATION OF THE SELECTION OF INDEPENDENT
AUDITORS]

571 Hayward Mill Road

Concord, MA

Birthdate: May 18, 1922

Director

Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or
Trustee of the Funds.

Lawrence D. Ellis, M.D.*

3471 Fifth Avenue, Suite 1111

Pittsburgh, PA

Birthdate: October 11, 1932

Director

Professor of Medicine, University of Pittsburgh; Medical Director,
University of Pittsburgh Medical CenterDowntown; Member, Board of Directors,
University of Pittsburgh Medical Center; formerly, Hematologist, Oncologist, and
Internist, Presbyterian and Montefiore Hospitals; Director or Trustee of the
Funds.

Richard B. Fisher

Federated Investors Tower

Pittsburgh, PA

Birthdate: May 17, 1923

President and Director

Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of the
Funds; Director or Trustee of some of the Funds.

Edward L. Flaherty, Jr.#

Miller, Ament, Henny & Kochuba

205 Ross Street

Pittsburgh, PA

Birthdate: June 18, 1924

Director

Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, EatN Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western Region;
Director or Trustee of the Funds.

Wesley W. Posvar

1202 Cathedral of Learning

University of Pittsburgh

Pittsburgh, PA

Birthdate: September 14, 1925

Director

Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., National Defense University and U.S. Space Foundation; President
Emeritus, University of Pittsburgh; Founding Chairman, National Advisory Council
for Environmental Policy and Technology, Federal Emergency Management Advisory
Board and Czech Management Center, Prague; Director or Trustee of the Funds.

Marjorie P. Smuts

4905 Bayard Street

Pittsburgh, PA

Birthdate: June 21, 1935

Director

Public Relations/Marketing/Conference Planning; Director or Trustee
of the Funds.

* This Director is deemed to be an "interested person" as defined in the
1940 Act.

# Member of the Executive Committee. The Executive Committee of the Board
of Directors handles the responsibilities of the Board between meetings of the
Board. [The 1940 Act requires that the Fund's independent auditors be selected
by the Board, including a majority of those Board members who are not
"interested persons" (as defined in the 1940 Act) of the Fund, and submitted for
ratification or rejection at the next succeeding meeting of shareholders. The
Board of Directors of the Fund, including a majority of its members who are not
"interested persons" of the Fund, approved the selection of Deloitte & Touche
LLP (the "Auditors") for the current fiscal year at a Board meeting held on
November 17, 1998.]

[** 4] The selection by the Board of the Auditors as independent auditors
for the current fiscal year is submitted to the shareholders for ratification.
Apart from their fees as independent auditors and certain consulting fees,
neither the Auditors nor any of their partners have a direct, or material
indirect, financial interest in the Fund or its investment adviser. The Auditors
are a major international independent accounting firm. The Board believes that
the continued employment of the services of the Auditors for the current fiscal
year would be in the Fund's best interests.

[** 5] Representatives of the Auditors are not expected to be present at
the Annual Meeting. If a representative is present, he or she will have the
opportunity to make a statement and would be available to respond to appropriate
questions. The ratification of the selection of the Auditors will require the
affirmative vote of a majority of the shares present and voting at the Annual
Meeting.

[THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE TO RATIFY THE SELECTION OF THE INDEPENDENT AUDITORS

PROPOSAL #3: APPROVAL OF CHANGES TO THE FUND'S
FUNDAMENTAL INVESTMENT POLICIES]

[** 6] The 1940 Act requires investment companies such as the Fund to adopt
certain specific investment policies that can be changed only by shareholder
vote. An investment company may also elect to designate other policies that may
be changed only by shareholder vote. Both types of policies are often referred
to as "fundamental policies."["fundamental policies."] Certain of the Fund's
fundamental policies had been adopted in the past to reflect regulatory,
business or industry conditions that are no longer in effect. Accordingly, the
Directors have authorized the submission to the Fund's shareholders for their
approval, and recommend that shareholders approve, the amendment and/or
reclassification of certain of the Fund's fundamental policies.

[The proposed amendments would:]

[** 7] (i) simplify and modernize the fundamental policies that
are required to be stated under the 1940 Act; and
======

[** 8] (ii) reclassify as operating policies those fundamental policies
that are not required to be fundamental under the 1940 Act.

[** 9] By reducing to a minimum those policies that can be changed only by
shareholder vote, the Directors believe that the Fund would be able to minimize
the costs and delay associated with holding future shareholder meetings to
revise fundamental policies that become outdated or inappropriate. The Directors
also believe that the investment adviser's ability to manage the Fund's assets
in a changing investment environment will be enhanced and that investment
management opportunities will be increased by these changes. The recommended
changes are specified below. Each sub-item will be voted on separately, and the
approval of any item will require the approval of a majority of the outstanding
shares of the Fund. [voting shares of the Fund as defined in the 1940 Act. (See
"Proxies, Quorum and Voting at the Annual Meeting" below.)]

[PROPOSAL #3(a): TO MAKE NON-FUNDAMENTAL, AND TO AMEND,
THE FUND'S FUNDAMENTAL INVESTMENT POLICY GOVERNING
INVESTMENTS IN RESTRICTED SECURITIES

The Fund's current policy on restricted securities reads as follows:] [**
10] "The["The] Fund will not invest more than 10% of its net assets in
securities subject to restrictions on resale under the Securities Act of 1933,
except for certain restricted securities which meet the criteria for liquidity
as established by the Directors."[Directors."]

[** 11] This policy was adopted because historically, restricted securities
were viewed as illiquid since they could not be sold within seven days.
Investment companies, such as the Fund, are required to meet a shareholder's
redemption request at the current net asset value within seven days of receiving
the request for redemption. In order to do this, some portion of the securities
in the Fund's portfolio must be "liquid"["liquid"] so that the securities can be
sold in sufficient time to obtain the necessary cash to meet redemption
requests. It is important to note that many restricted securities are, in fact,
quite liquid and can be purchased without jeopardizing the liquidity of the
Fund's portfolio.

[** 12] Certain state securities regulators previously required mutual
funds to have a fundamental policy limiting investment in restricted securities.
Since the enactment of the National Securities Markets Improvement Act in
October, 1996, states no longer have the jurisdiction to impose such
requirements. Furthermore, rules adopted by the U.S. Securities and Exchange
Commission (the "SEC"["SEC"] or the "Commission")["Commission")] have
substantially increased the number of restricted securities that can now be
considered liquid and, in addition, have given to the Directors the ability to
determine, under specific guidelines, that a security is liquid. The Directors
may delegate this duty to the investment adviser provided the investment
adviser's determination of liquidity is made in accordance with the guidelines
established and monitored by the Directors.

[** 13] The Fund's current policy prevents the Fund from acquiring a
restricted security that may be viewed by the [Fund's investment] adviser as
liquid. If this proposal is approved, the Fund will be able to invest to an
unlimited extent in restricted securities as long as they meet the Directors'
guidelines for liquidity and the Fund's operating policy on restricted
securities would read substantially as follows:

["The Fund may invest in restricted securities. Restricted securities are
any securities that are subject to restrictions on resale under federal
securities law. Under criteria established by the Directors, certain restricted
securities are determined to be liquid. To the extent that restricted securities
are not determined to be liquid, the Fund will limit their purchase, together
with other illiquid securities, to 15% of its net assets."]

[** 14] Under the Fund's current policy on investing in illiquid
securities, if a restricted security is determined not to be liquid, the
purchase of that security, together with other illiquid securities, may not
exceed 10% of the Fund's net assets.

[** 15] If shareholders do not approve the removal of the policy on
restricted securities, the Fund will continue to invest no more than 10% of the
value of its net assets in restricted securities of any kind.

[THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL]

[** 16] PROPOSAL #3(b): TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT POLICY
REGARDING BORROWING TO PERMIT THE PURCHASE OF
SECURITIES WHILE BORROWINGS ARE OUTSTANDING

[The Fund's current investment policy on borrowing states that:]

[** 17] "The["The] Fund will not issue senior securities except that the
Fund may borrow money and engage in reverse repurchase agreements in amounts up
to one-third of the value of its total assets, including the amounts borrowed.

[** 18] The Fund will not borrow money or engage in reverse agreements for
investment leverage, but rather as a temporary, extraordinary, or emergency
measure or to facilitate management of the portfolio by enabling the Fund to
meet redemption requests when the liquidation of portfolio securities is deemed
to be inconvenient or disadvantageous. The Fund will not purchase any securities
while borrowings are outstanding. During the period any reverse repurchase
agreements are outstanding, but only to the extent necessary to assure
completion of the reverse repurchase agreements, the Fund will restrict the
purchase of portfolio instruments to money market instruments maturing on or
before the expiration date of the reverse repurchase agreements."[agreements."]

[** 19] The Fund's investment adviser has recommended that the Directors
consider approving a revision to the fundamental policy that would permit the
Fund to purchase securities while its borrowings are outstanding, as the adviser
believes the current policy unnecessarily constrains the Fund's investments. Any
such purchases could not exceed 5% of the Fund's outstanding borrowings. Subject
to shareholder approval, the policy will be revised to delete the sentence
"The["The] Fund will not purchase any securities while borrowings are
outstanding."[outstanding."] The Fund would continue to be subject to the same
percentage limitation on its borrowings - 5% of the value of the Fund's total
assets - if the proposed change is approved.

[THE BOARD OF DIRECTORS RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE PROPOSAL

PROPOSAL #3(c): TO MAKE NON-FUNDAMENTAL AND TO AMEND THE FUND'S
FUNDAMENTAL INVESTMENT POLICY TO PERMIT THE FUND TO INVEST
IN THE SECURITIES OF OTHER INVESTMENT COMPANIES]

[** 20] The Fund currently has a fundamental investment policy prohibiting
investment in the securities issued by any other investment company, except as
part of a merger, consolidation or other acquisition. The Fund's investment
adviser believes, and the Board has concluded, that this prohibition
unnecessarily limits the Fund's investments. Amending this policy would expand
the investment opportunities available to the Fund by allowing the Fund to
invest in other investment companies. Investments in other investment companies
are limited under the 1940 Act. The 1940 Act limits [and, in the case of the
Fund, by an exemptive order issued by the Commission (the "Order"). The 1940 Act
and the Order limit] both the portion of the Fund's assets which may be so
invested in a particular fund, and the portfolio of such a fund which may be
owned by the Fund. Normally, each investment company in which the Fund invests
will have its own operating expenses, including advisory fees[; however, the
Fund's adviser will waive the portion of its advisory fee attributable to assets
invested in other investment companies]. It is expected that the [other]
duplicative expenses are justified by the benefit of having access to the
markets in which such a fund invests, or in the investment techniques or
advisers of such funds.

[** 21] At the present time, the Board expects to utilize the authority
provided by this proposal to invest the Fund's temporary cash reserves in shares
of money market funds. These cash reserves typically arise from the receipt of
dividend and interest income from portfolio securities, the receipt of payment
for sale of portfolio securities, defensive cash positions and the decision to
hold cash to meet redemptions or make anticipated dividend payments. Further, by
changing the policy from fundamental to an operating policy, the Directors
believe that maximum flexibility will be afforded to the Fund to amend the
policy as appropriate in the future without the burden and delay to the Fund and
its shareholders of holding a special meeting.

[The ability to purchase shares of money market funds would be beneficial
because it would provide the Fund with additional investment opportunities late
in each business day, when opportunities to acquire money market instruments are
limited. Otherwise, the Fund would be forced to hold some of its cash
uninvested, resulting in little or no investment income.]

[** 22] If shareholders approve this item, the new operating policy will
read as follows in: (a) the Prospectus, and (b) the Statement of Additional
Information:

[(a)....."Investing in Securities of Other Investment Companies]

[** 23] The Fund may invest its assets in securities of other
investment companies as an efficient means of carrying out its
investment policies. It should be noted that investment companies
incur certain expenses, such as management fees, and, therefore,
any investment by the Fund in shares of other investment
companies may be subject to such duplicate expenses. At the
present time, the Fund expects that its investments in other
investment companies will be limited to shares of money market
funds, including funds affiliated with the Fund's investment
adviser."[adviser."]

[(b)....."Investing in Securities of Other Investment Companies]

[** 24] The Fund may invest in the securities of affiliated money
market funds as an efficient means of managing the Fund's
uninvested cash."[cash."]

[THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL

INFORMATION ABOUT THE FUND

Proxies, Quorum and Voting at the Annual Meeting]

[** 25] The favorable vote of: (a) the holders of 67% or more of the
outstanding voting securities present at the Annual Meeting, if the holders of
50% or more of the outstanding voting securities of the Fund are present or
represented by proxy; or (b) the vote of the holders of more than 50% of the
outstanding voting securities, whichever is less, is required to approve all of
the proposals, except the election of Directors and the ratification of the
selection of the Auditors.

[** 26] Only shareholders of record on the Record Date will be entitled to
vote at the Annual Meeting. Each share of the Fund is entitled to one vote.
Fractional shares are entitled to proportionate shares of one vote.

[** 27] Any person giving a proxy has the power to revoke it any time prior
to its exercise by executing a superseding proxy or by submitting a written
notice of revocation to the Secretary of the Fund. In addition, although mere
attendance at the Annual Meeting will not revoke a proxy, a shareholder present
at the Annual Meeting may withdraw his or her proxy and vote in person. All
properly executed and unrevoked proxies received in time for the Annual Meeting
will be voted in accordance with the instructions contained in the proxies. If
no instruction is given on the proxy, the persons named as proxies will vote the
shares represented thereby in favor of the matters set forth in the attached
Notice.

[** 28] In order to hold the Annual Meeting, a "quorum"["quorum"] of
shareholders must be present. Holders of one-third of the total number of
outstanding shares of the Fund, present in person or by proxy, shall be required
to constitute a quorum for the purpose of voting on the proposals made.

[** 29] For purposes of determining a quorum for transacting business at
the Annual Meeting, abstentions and broker "non-votes"["non-votes"] (that is,
proxies from brokers or nominees indicating that such persons have not received
instructions from the beneficial owner or other persons entitled to vote shares
on a particular matter with respect to which the brokers or nominees do not have
discretionary power) will be treated as shares that are present but which have
not been voted. For this reason, abstentions and broker non-votes will have the
effect of a "no"["no"] vote for purposes of obtaining the requisite approval of
some of the proposals.

[** 30] If a quorum is not present, the persons named as proxies may vote those
proxies that have been received to adjourn the Annual Meeting to a later date.
In the event that a quorum is present but sufficient votes in favor of one or
more of the proposals have not been received, the persons named as proxies may
propose one or more adjournments of the Annual Meeting to permit further
solicitations of proxies with respect to such proposal(s). All such adjournments
will require the affirmative vote of a majority of the shares present in person
or by proxy at the session of the Annual Meeting to be adjourned. The persons
named as proxies will vote AGAINST an adjournment those proxies that they are
required to vote against the proposal, and will vote in FAVOR of such an
adjournment all other proxies that they are authorized to vote. A shareholder
vote may be taken on the proposals in this proxy statement prior to any such
adjournment if sufficient votes have been received for approval.

As referred to above, "The Funds" or "Funds"[in this Proxy Statement, the
"Federated Fund Complex," "The Funds" or "Funds"] includes the following
investment companies: Automated Government Money Trust; Cash Trust Series II;
Cash Trust Series, Inc.; CCB Funds; DG Investor Series; Edward D. Jones & Co.
Daily Passport Cash Trust; Federated Adjustable Rate U.S. Government Fund, Inc.;
Federated American Leaders Fund, Inc.; Federated ARMs Fund; Federated Core
Trust; Federated Equity Funds; Federated Equity Income Fund, Inc.; Federated
Fund for U.S. Government Securities, Inc.; Federated GNMA Trust; Federated
Government Income Securities, Inc.; Federated Government Trust; Federated High
Income Bond Fund, Inc.; Federated High Yield Trust; Federated Income Securities
Trust; Federated Income Trust; Federated Index Trust; Federated Institutional
Trust; Federated Insurance Series; Federated Master Trust; Federated Municipal
Opportunities Fund, Inc.; Federated Municipal Securities Fund, Inc.; Federated
Municipal Trust; Federated Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock and Bond Fund, Inc.; Federated Stock Trust;
Federated Tax-Free Trust; Federated Total Return Series, Inc.; Federated U.S.
Government Bond Fund; Federated U.S. Government Securities Fund: 1-3 Years;
Federated U.S. Government Securities Fund: 2-5 Years; Federated U.S. Government
Securities Fund: 5-10 Years; Federated Utility Fund, Inc.; Fixed Income
Securities, Inc.; Intermediate Municipal Trust; International Series, Inc.;
Investment Series Funds, Inc.; Liberty Term Trust, Inc. - 1999; Liberty U.S.
Government Money Market Trust; Liquid Cash Trust; Managed Series Trust; Money
Market Management, Inc.; Money Market Obligations Trust; Money Market
Obligations Trust II; Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; Regions Funds; RIGGS Funds; Tax-Free Instruments Trust; The
Planters Funds; Trust for Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations; WesMark Funds; WCT
Funds; World Investment Series, Inc.; Blanchard Funds; Blanchard Precious Metals
Fund, Inc.; High Yield Cash Trust; Investment Series Trust; Targeted Duration
Trust; The Virtus Funds; and Trust for Financial Institutions.

Share Ownership of the Fund [Directors]
Officers and Directors of the Fund own less than 1% of the Fund's outstanding
shares.

At the close of business on the Record Date, the following persons owned, to the
knowledge of management, more than 5% of the outstanding shares of the Fund:
[INSERT 5% HOLDERS] [Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL,
acting in various capacities on behalf of its customers, owned approximately
294,095.9380 Class B Shares (5.44%); 83,234.1090 Class C Shares (11.93%); and
7,273,228.3410 Class F Shares (26.07%). Lloyd W. Cannon and Patricia M. Cannon,
Edmonds, WA, owned approximately 145,097.6420 Class C Shares (20.79%). U.S.
Bancorp Investments Inc., Minneapolis, MN, acting in various capacities on
behalf of its customers, owned approximately 90,991.8110 Class C Shares
(13.04%). National Financial Service Corp., West Jefferson, NC, acting in
various capacities on behalf of its customers, owned approximately 54,744.5260
Class C Shares (7.84%).]

Director Compensation

Aggregate
Name, Compensation
Position With From Total Compensation Paid
Fund Fund*[Fund1]# From Fund Complex+

John F. Donahue[*@] $0 $0 for the Fund and
====
Chairman and Director 56 other investment companies in the Fund Complex

Thomas G. Bigley $1,327.69 $_______[$113,860.22] for the Fund and
=============
Director 56 other investment companies in the Fund Complex

John T. Conroy, Jr. $1,460.66 $_______[$125,264.48] for the Fund and
=============
Director 56 other investment companies in the Fund Complex

William J. Copeland $1,460.66 $_______[$125,264.48] for the Fund and
=============
Director 56 other investment companies in the Fund Complex

James E. Dowd $1,460.66 $_______[$125,264.48] for the Fund and
=============
Director 56 other investment companies in the Fund Complex

Lawrence D. Ellis, M.D.[*] $1,327.69 $_______[$113,860.22] for the Fund and
=== =============
Director 56 other investment companies in the Fund Complex

Richard B. Fisher $0 $0 for the Fund and
President and Director 56 other investment companies in the Fund Complex

Edward L. Flaherty, Jr.[@] $1,460.66 $_______[$125,264.48] for the Fund and
=== =============
Director 56 other investment companies in the Fund Complex

Peter E. Madden $1,327.69 $_______[$113,860.22] for the Fund and
=============
Director 56 other investment companies in the Fund Complex

John E. Murray, Jr. $1,327.69 $_______[$113,860.22] for the Fund and
=============
Director 56 other investment companies in the Fund Complex

Wesley W. Posvar $1,327.69 $_______[$113,860.22] for the Fund and
=============
Director 56 other investment companies in the Fund Complex

Marjorie P. Smuts $1,327.69 $_______[$113,860.22] for the Fund and
=============
Director 56 other investment companies in the Fund Complex
</TABLE>

*[1] Information is furnished for the fiscal year ended August 31, 1998.

# The aggregate compensation is provided for the Fund which is comprised of one
portfolio.

+The[+ The] information is provided for the last calendar year.

[* This Director is deemed to be an "interested person" as defined in the 1940
Act.

@ Member of the Executive Committee.]

During the fiscal year ended August 31, 1998, there were four meetings of
the Board of Directors. The interested Directors, other than Dr. Ellis, do not
receive fees from the Fund. Dr. Ellis is an interested person by reason of the
employment of his son-in-law by Federated Securities Corp. All Directors were
reimbursed for expenses for attendance at Board of Directors meetings.

[The Executive Committee of the Board of Directors handles the
responsibilities of the Board between meetings of the Board.] Other than its
Executive Committee, the Fund has one Board committee, the Audit Committee.
Generally, the function of the Audit Committee is to assist the Board of
Directors in fulfilling its duties relating to the Fund's accounting and
financial reporting practices and to serve as a direct line of communication
between the Board of Directors and the independent auditors. The specific
functions of the Audit Committee include recommending the engagement or
retention of the independent auditors, reviewing with the independent auditors
the plan and the results of the auditing engagement, approving professional
services provided by the independent auditors prior to the performance of such
services, considering the range of audit and non-audit fees, reviewing the
independence of the independent auditors, reviewing the scope and results of the
Fund's procedures for internal auditing, and reviewing the Fund's system of
internal accounting controls.

Messrs. Flaherty, Conroy, Copeland, and Dowd serve on the Audit Committee.
These Directors are not interested Directors of the Fund. During the fiscal year
ended August 31, 1998, there were four meetings of the Audit Committee. All of
the members of the Audit Committee were present for each meeting. Each member of
the Audit Committee receives an annual fee of $100 plus $25 for attendance at
each meeting and is reimbursed for expenses of attendance.

Officers of the Fund

The executive officers of the Fund are elected annually by the Board of
Directors. Each officer holds the office until qualification of his successor.
The names and birthdates of the executive officers of the Fund and their
principal occupations during the last five years are as follows:

John F. Donahue
Federated Investors Tower
Pittsburgh, PA

Birthdate: July 28, 1924

Chairman and Director

Chairman and Trustee [Chief Executive Officer and Director or Trustee of
the Federated Fund Complex; Chairman and Director], Federated Investors, [Inc.;
Chairman and Trustee,] Federated Advisers, Federated Management, and Federated
Research; Chairman and Director, Federated Research Corp. and Federated Global
Research Corp.; Chairman, Passport Research, Ltd. ; Chief Executive Officer and
Director or Trustee of the Funds. Mr. Donahue is the father of J.Christopher [J.
Christopher] Donahue, Executive Vice President of the Fund and Nominee for
Director.

Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA

Birthdate: May 17, 1923

President and Director

[President or Vice President of some of the Funds in the Federated Fund
Complex; Director or Trustee of some of the Funds in the Federated Fund
Complex;] Executive Vice President and Trustee, Federated Investors[, Inc.];
Chairman and Director, Federated Securities Corp.; President or Vice President
of some of the Funds; Director or Trustee of some of the Funds.

J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA

Birthdate: April 11, 1949

Executive Vice President

Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA

Birthdate: October 22, 1930

Executive Vice President

Vice Chairman, Treasurer, and Trustee, Federated Investors [Trustee or
Director of some of the Funds in the Federated Fund Complex; President,
Executive Vice President and Treasurer of some of the Funds in the Federated
Fund Complex; Vice Chairman, Federated Investors, Inc.]; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated Research
Corp., Federated Global Research Corp. and Passport Research, Ltd.; Executive
Vice President and Director, Federated Securities Corp.; Trustee, Federated
Shareholder Services Company; Trustee or Director of some of the Funds;
President, Executive Vice President and Treasurer of some of the Funds.

John W. McGonigle
Federated Investors Tower
Pittsburgh, PA

Birthdate: October 26, 1938

Executive Vice President, Secretary, and Treasurer

[Executive Vice President and Secretary of the Federated Fund Complex;]
Executive Vice President, Secretary, and Trustee, [Director,] Federated
Investors[, Inc.]; Trustee, Federated Advisers, Federated Management, and
Federated Research; Director, Federated Research Corp. and Federated Global
Research Corp.; Trustee, Federated Shareholder Services Company; Director,
Federated Services Company; President and Trustee, Federated Shareholder
Services; Director, Federated Securities Corp.; Executive Vice President and
Secretary of the Funds; Treasurer of some of the Funds.

None of the Officers of the Fund received salaries from the Fund during the
fiscal year ended August 31, 1998.

Federated Services Company, a subsidiary of Federated Investors, is the
Funds administrator and provides administrative personnel and services to the
Fund for a fee as described in the prospectus. For the fiscal year ended August
31, 1998, Federated Services Company earned $343,950.

Federated Securities Corp., a subsidiary of Federated Investors, Inc., is
the principal distributor of the Funds shares. Federated Securities Corp.
receives no compensation from the Fund for its services.

OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY

The Fund is not required, and does not intend, to hold regular annual
meetings of shareholders. Shareholders wishing to submit proposals for
consideration for inclusion in a proxy statement for the next meeting of
shareholders should send their written proposals to Federated Municipal
Opportunities Fund, Inc., Federated Investors Funds, 5800 Corporate Drive,
Pittsburgh, Pennsylvania 15237-7000, so that they are received within a
reasonable time before any such meeting.

No business other than the matters described above is expected to come
before the Annual Meeting, but should any other matter requiring a vote of
shareholders arise, including any question as to an adjournment or postponement
of the Annual Meeting, the persons named on the enclosed proxy card will vote on
such matters according to their best judgment in the interests of the Fund.

SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
CARD AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN
THE UNITED STATES.

By Order of the Board of Directors,

John W. McGonigle
Secretary
January 25, 1999

<PAGE>

FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.

Investment Adviser
FEDERATED ADVISERS
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

Distributor
FEDERATED SECURITIES CORP.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

Administrator
FEDERATED SERVICES COMPANY
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

Cusip
(_____/99)

<PAGE>

KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of
Federated Municipal Opportunities Fund, Inc. (the "Fund")["Fund")] hereby
appoint Patricia F. Conner, Gail Cagney, Susan M. Jones, and Ann M. Scanlon, or
any one of them, true and lawful attorneys, with the power of substitution of
each, to vote all shares of the Fund which the undersigned is entitled to vote
at the Annual Meeting of Shareholders to be held on March 26, 1999, at 5800
Corporate Drive, Pittsburgh, Pennsylvania, at 2:00 p.m., and at any adjournment
thereof.

The attorneys named will vote the shares represented by this proxy in accordance
with the choices made on this ballot. If no choice is indicated as to the item,
this proxy will be voted affirmatively on the matters. Discretionary authority
is hereby conferred as to all other matters as may properly come before the
Annual Meeting or any adjournment thereof.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FEDERATED
MUNICIPAL OPPORTUNITIES FUND, INC. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE
VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED "FOR"["FOR"] THE PROPOSALS.

By checking the box "FOR"["FOR"] below, you will vote to approve each of the
proposed items in this proxy, and to elect each of the nominees as Directors of
the Fund

For [ ]

Proposal 1 To elect Thomas G. Bigley, John T. Conroy Jr., Nicholas P.
Constantakis, John F. Cunningham, J. Christopher Donahue, Peter
E. Madden, Charles F. Mansfield, Jr., John E. Murray, Jr. and
John S. Walsh as Directors of the Fund

FOR [ ]
AGAINST [ ]
WITHHOLD AUTHORITY
TO VOTE [ ]
FOR ALL EXCEPT [ ]

If you do not wish your shares to be voted "FOR"["FOR"] a
particular nominee, mark the "For["For] All Except"[Except"] box
and strike a line through the name of each nominee for whom you
are NOT voting. Your shares will be voted for the remaining
nominees.

Proposal 2 To ratify the selection of Deloitte & Touche, LLP as the
Fund's independent auditors