United States Securities and Exchange Commission Washington, D.C. 20549 Form N-CSR Certified Shareholder Report of Registered Management Investment Companies 811-4533 (Investment Company Act File Number) Federated Municipal Opportunities Fund, Inc. _______________________________________________________________ (Exact Name of Registrant as Specified in Charter) Federated Funds 5800 Corporate Drive Pittsburgh, Pennsylvania 15237-7000 (412) 288-1900 (Registrant's Telephone Number) John W. McGonigle, Esquire Federated Investors Tower 1001 Liberty Avenue Pittsburgh, Pennsylvania 15222-3779 (Name and Address of Agent for Service) (Notices should be sent to the Agent for Service) Date of Fiscal Year End: 8/31/03 Date of Reporting Period: Fiscal year ended 8/31/03 Item 1. Reports to Stockholders
Federated Investors
World-Class Investment Manager
Federated Municipal Opportunities Fund, Inc.
Established 1987
17TH ANNUAL SHAREHOLDER REPORT
August 31, 2003
Class A Shares
Class B Shares
Class C Shares
Class F Shares
FINANCIAL HIGHLIGHTS
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
FINANCIAL STATEMENTS
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
BOARD OF DIRECTORS AND FUND OFFICERS
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
Financial Highlights -- Class A Shares
(For a Share Outstanding Throughout Each Period)
Year Ended August 31 |
| 2003 |
|
| 2002 |
|
| 2001 |
|
| 2000 | 1 |
| 1999 |
|
Net Asset Value, Beginning of Period |
| $9.73 |
|
| $9.91 |
|
| $9.78 |
|
| $10.22 |
|
| $11.04 |
|
Income From Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
| 0.56 |
|
| 0.55 | 2 |
| 0.55 |
|
| 0.56 |
|
| 0.55 |
|
Net realized and unrealized gain (loss) on investments and swap contracts |
| (0.18 | ) |
| (0.19 | )2 |
| 0.15 |
|
| (0.44 | ) |
| (0.82 | ) |
TOTAL FROM INVESTMENT OPERATIONS |
| 0.38 |
|
| 0.36 |
|
| 0.70 |
|
| 0.12 |
|
| (0.27 | ) |
Less Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions from net investment income |
| (0.56 | ) |
| (0.54 | ) |
| (0.57 | ) |
| (0.56 | ) |
| (0.55 | ) |
Net Asset Value, End of Period |
| $9.55 |
|
| $9.73 |
|
| $9.91 |
|
| $ 9.78 |
|
| $10.22 |
|
Total Return3 |
| 4.06 | % |
| 3.79 | % |
| 7.48 | % |
| 1.37 | % |
| (2.58 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios to Average Net Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
| 1.07 | % |
| 1.08 | % |
| 1.09 | % |
| 1.09 | % |
| 1.07 | % |
Net investment income |
| 5.87 | % |
| 5.68 | %2 |
| 5.69 | % |
| 5.74 | % |
| 5.14 | % |
Expense waiver/reimbursement4 |
| -- |
|
| -- |
|
| 0.01 | % |
| -- |
|
| -- |
|
Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
| $117,435 |
|
| $111,642 |
|
| $106,555 |
|
| $92,883 |
|
| $109,297 |
|
Portfolio turnover |
| 25 | % |
| 35 | % |
| 30 | % |
| 18 | % |
| 25 | % |
1 Beginning with the year ended August 31, 2000, the fund was audited by Ernst & Young LLP. The previous year was audited by other auditors.
2 Effective September 1, 2001, the Fund adopted the provisions of the American Institute of Certified Public Accountants (AICPA) Audit and Accounting Guide for Investment Companies and began accreting discount on debt securities. For the year ended August 31, 2002, this change had no effect on the net investment income per share, the net realized and unrealized gain (loss) on investments per share, but increased the ratio of net investment income to average net assets from 5.67% to 5.68%. Per share, ratios and supplemental data for the periods prior to August 31, 2002 have not been restated to reflect this change in presentation.
3 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.
4 This voluntary expense decrease is reflected in both the expense and the net investment income ratios shown above.
See Notes which are an integral part of the Financial Statements
Financial Highlights -- Class B Shares
(For a Share Outstanding Throughout Each Period)
Year Ended August 31 |
| 2003 |
|
| 2002 |
|
| 2001 |
|
| 2000 | 1 |
| 1999 |
|
Net Asset Value, Beginning of Period |
| $9.73 |
|
| $9.90 |
|
| $9.77 |
|
| $10.22 |
|
| $11.03 |
|
Income From Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
| 0.49 |
|
| 0.47 | 2 |
| 0.47 |
|
| 0.49 |
|
| 0.47 |
|
Net realized and unrealized gain (loss) on investments and swap contracts |
| (0.19 | ) |
| (0.17 | )2 |
| 0.16 |
|
| (0.45 | ) |
| (0.81 | ) |
TOTAL FROM INVESTMENT OPERATIONS |
| 0.30 |
|
| 0.30 |
|
| 0.63 |
|
| 0.04 |
|
| (0.34 | ) |
Less Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total distributions from net realized gain on investments |
| (0.49 | ) |
| (0.47 | ) |
| (0.50 | ) |
| (0.49 | ) |
| (0.47 | ) |
Net Asset Value, End of Period |
| $9.54 |
|
| $9.73 |
|
| $9.90 |
|
| $ 9.77 |
|
| $10.22 |
|
Total Return3 |
| 3.18 | % |
| 3.11 | % |
| 6.67 | % |
| 0.51 | % |
| (3.23 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios to Average Net Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
| 1.82 | % |
| 1.83 | % |
| 1.84 | % |
| 1.84 | % |
| 1.82 | % |
Net investment income |
| 5.12 | % |
| 4.94 | %2 |
| 4.94 | % |
| 4.99 | % |
| 4.39 | % |
Expense waiver/reimbursement4 |
| -- |
|
| -- |
|
| 0.01 | % |
| -- |
|
| -- |
|
Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
| $124,736 |
|
| $107,348 |
|
| $91,074 |
|
| $71,512 |
|
| $77,440 |
|
Portfolio turnover |
| 25 | % |
| 35 | % |
| 30 | % |
| 18 | % |
| 25 | % |
1 Beginning with the year ended August 31, 2000, the fund was audited by Ernst & Young LLP. The previous year was audited by other auditors.
2 Effective September 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting discount on debt securities. For the year ended August 31, 2002, this change had no effect on the net investment income per share, the net realized and unrealized gain (loss) on investments per share, but increased the ratio of net investment income to average net assets from 4.93% to 4.94%. Per share, ratios and supplemental data for the periods prior to August 31, 2002 have not been restated to reflect this change in presentation.
3 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.
4 This voluntary expense decrease is reflected in both the expense and the net investment income ratios shown above.
See Notes which are an integral part of the Financial Statements
Financial Highlights -- Class C Shares
(For a Share Outstanding Throughout Each Period)
Year Ended August 31 |
| 2003 |
|
| 2002 |
|
| 2001 |
|
| 2000 | 1 |
| 1999 |
|
Net Asset Value, Beginning of Period |
| $9.73 |
|
| $9.90 |
|
| $9.77 |
|
| $10.22 |
|
| $11.03 |
|
Income From Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
| 0.48 |
|
| 0.48 | 2 |
| 0.47 |
|
| 0.48 |
|
| 0.47 |
|
Net realized and unrealized gain (loss) on investments and swap contracts |
| (0.18 | ) |
| (0.18 | )2 |
| 0.16 |
|
| (0.44 | ) |
| (0.81 | ) |
TOTAL FROM INVESTMENT OPERATIONS |
| 0.30 |
|
| 0.30 |
|
| 0.63 |
|
| 0.04 |
|
| (0.34 | ) |
Less Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions from net investment income |
| (0.49 | ) |
| (0.47 | ) |
| (0.50 | ) |
| (0.49 | ) |
| (0.47 | ) |
Net Asset Value, End of Period |
| $9.54 |
|
| $9.73 |
|
| $9.90 |
|
| $ 9.77 |
|
| $10.22 |
|
Total Return3 |
| 3.17 | % |
| 3.13 | % |
| 6.66 | % |
| 0.51 | % |
| (3.24 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios to Average Net Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
| 1.82 | % |
| 1.83 | % |
| 1.84 | % |
| 1.84 | % |
| 1.82 | % |
Net investment income |
| 5.12 | % |
| 4.93 | %2 |
| 4.94 | % |
| 4.99 | % |
| 4.39 | % |
Expense waiver/reimbursement4 |
| -- |
|
| -- |
|
| 0.01 | % |
| -- |
|
| -- |
|
Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
| $14,083 |
|
| $10,220 |
|
| $10,953 |
|
| $8,858 |
|
| $7,603 |
|
Portfolio turnover |
| 25 | % |
| 35 | % |
| 30 | % |
| 18 | % |
| 25 | % |
1 Beginning with the year ended August 31, 2000, the fund was audited by Ernst & Young LLP. The previous year was audited by other auditors.
2 Effective September 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting discount on debt securities. For the year ended August 31, 2002, this change had no effect on the net investment income per share, the net realized and unrealized gain (loss) on investments per share, but increased the ratio of net investment income to average net assets from 4.92% to 4.93%. Per share, ratios and supplemental data for the periods prior to August 31, 2002 have not been restated to reflect this change in presentation.
3 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.
4 This voluntary expense decrease is reflected in both the expense and the net investment income ratios shown above.
See Notes which are an integral part of the Financial Statements
Financial Highlights -- Class F Shares
(For a Share Outstanding Throughout Each Period)
Year Ended August 31 |
| 2003 |
|
| 2002 |
|
| 2001 |
|
| 2000 | 1 |
| 1999 |
|
Net Asset Value, Beginning of Period |
| $9.73 |
|
| $9.91 |
|
| $9.78 |
|
| $10.22 |
|
| $11.04 |
|
Income From Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
| 0.57 |
|
| 0.55 | 2 |
| 0.55 |
|
| 0.56 |
|
| 0.55 |
|
Net realized and unrealized gain (loss) on investments and swap contracts |
| (0.19 | ) |
| (0.19 | )2 |
| 0.15 |
|
| (0.44 | ) |
| (0.82 | ) |
TOTAL FROM INVESTMENT OPERATIONS |
| 0.38 |
|
| 0.36 |
|
| 0.70 |
|
| 0.12 |
|
| (0.27 | ) |
Less Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions from net investment income |
| (0.56 | ) |
| (0.54 | ) |
| (0.57 | ) |
| (0.56 | ) |
| (0.55 | ) |
Net Asset Value, End of Period |
| $9.55 |
|
| $9.73 |
|
| $9.91 |
|
| $ 9.78 |
|
| $10.22 |
|
Total Return3 |
| 4.06 | % |
| 3.79 | % |
| 7.48 | % |
| 1.37 | % |
| (2.58 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios to Average Net Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
| 1.07 | % |
| 1.08 | % |
| 1.09 | % |
| 1.09 | % |
| 1.07 | % |
Net investment income |
| 5.87 | % |
| 5.68 | %2 |
| 5.69 | % |
| 5.73 | % |
| 5.14 | % |
Expense waiver/reimbursement4 |
| -- |
|
| -- |
|
| 0.01 | % |
| -- |
|
| -- |
|
Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
| $167,097 |
|
| $183,467 |
|
| $197,154 |
|
| $214,913 |
|
| $269,667 |
|
Portfolio turnover |
| 25 | % |
| 35 | % |
| 30 | % |
| 18 | % |
| 25 | % |
1 Beginning with the year ended August 31, 2000, the fund was audited by Ernst & Young LLP. The previous year was audited by other auditors.
2 Effective September 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting discount on debt securities. For the year ended August 31, 2002, this change had no effect on the net investment income per share, the net realized and unrealized gain (loss) on investments per share, but increased the ratio of net investment income to average net assets from 5.67% to 5.68%. Per share, ratios and supplemental data for the periods prior to August 31, 2002 have not been restated to reflect this change in presentation.
3 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.
4 This voluntary expense decrease is reflected in both the expense and the net investment income ratios shown above.
See Notes which are an integral part of the Financial Statements
Management's Discussion of Fund Performance
Over the 12-month reporting period ended August 31, 2003, all share classes of Federated Municipal Opportunities Fund, Inc. outperformed the Lipper High Yield Municipal Debt Funds Average (LHMDA). For the period, the fund's Class A, Class B, Class C, and Class F Shares returned 4.06%, 3.18%, 3.17%, and 4.06%, respectively, based on net asset value, while the LHMDA returned 2.74%.1
As of August 31, 2003, the fund's Class A Shares had a 30-day SEC yield of 5.33% (based on offering price). This performance was even more impressive on a tax-equivalent basis. Tax-equivalent yields for the fund's Class A Shares ranged from 8.20% for an investor in the 35% bracket to 7.40% for an investor in the 28% tax bracket.
The fund's return was positively impacted by its high coupons on moderate-to-lower rated securities,2 as well as an overweight in the Healthcare sector and an underweight in tobacco issues.
During the reporting period, lower quality bonds outperformed the high quality municipal market, according to Lehman Brothers Municipal Bond Index (LBMB)3 and the Lipper, Inc. peer groups. For example, the LHMDA returned 2.74% versus 2.12% for the Lipper General Municipal Debt Funds Average (LGMDA) peer group. The outperformance was primarily due to the high yield funds' higher allocation to high coupons on moderate to lower-rated securities and an overweight in airline bonds.
1 The LHMDA represents the average of the total returns reported by all of the mutual funds designated by Lipper, Inc. as falling into the respective category. Lipper figures do not take sales charges into account.
Performance quoted is based on net asset value, reflects past performance and is no guarantee 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 (i.e., less any applicable sales charge), for Class A, Class B, Class C, and Class F Shares were (0.64)%, (2.21)%, 1.15%, and 2.03%, respectively. Current performance is available by visiting www.federatedinvestors.com or by calling 1-800-341-7400.
2 High-yield, lower-rated securities generally entail greater market, credit and liquidity risks than investment grade securities. Income may be subject to the federal alternative minimum tax (AMT) and state and local taxes.
3 LBMB is a broad market performance benchmark for the tax-exempt bond market. To be included in the LBMB, bonds must have a minimum credit rating of at least Baa. The index is unmanaged and it is not possible to invest directly in an index.
The fund's Class A Shares returned 4.06% at NAV, outperforming its peers in the LHMDA over the reporting period. The fund also provided an above-average level of federal regular income tax-exempt income versus its Lipper, Inc. peers. Sectors that did particularly well in the fund during the reporting period were A and BBB-rated Hospital, Airline, and Industrial Development bonds.
During the reporting period, investment strategy integrated fund management's views on both the interest rate and credit cycle. Income was the primary driver of total return. Strategy was focused on making selective purchases of lower investment grade and high yield credits. Credit spreads were wide enough to provide attractive potential returns. Revenue bonds with dedicated revenue streams were emphasized while exposure to general obligation debt was reduced. Premium coupons were emphasized because of their lower volatility and sensitivity to changes in interest rates as a result of the income cushion they provide. The fund maintained a neutral duration4 target relative to its benchmark.
4 Duration is a measure of a security's price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter durations.
GROWTH OF $10,000 INVESTMENT -- CLASS A SHARES
The graph below illustrates the hypothetical investment of $10,0001 in the Federated Municipal Opportunities Fund, Inc. (Class A Shares) (the "Fund") from August 5, 1996 (start of performance) to August 31, 2003 compared to the Lehman Brothers Municipal Bond Index (LBMB)2 and the Lipper High Yield Municipal Debt Funds Average (LHMDA).3
Average Annual Total Return4 for the Period Ended 8/31/2003 | ||
1 Year |
| (0.64)% |
5 Years |
| 1.83% |
Start of Performance (8/5/1996) |
| 3.65% |
![](https://capedge.com/proxy/N-CSR/0001056288-03-000608/fmofg01091011.gif)
Past performance is no guarantee of future results. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. For after-tax returns, visit www.federatedinvestors.com. Investment return and principal value will fluctuate so that an investors' shares, when redeemed, may be worth more or less than original cost. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.
1 Represents a hypothetical investment of $10,000 in the Fund after deducting the maximum sales charge of 4.50% ($10,000 investment minus $450 sales charge = $9,550). The Fund's performance assumes the reinvestment of all dividends and distributions. The LBMB and LHMDA have been adjusted to reflect reinvestment of dividends on securities in the index and average.
2 The LBMB returns do not reflect taxes, sales changes, expenses and other fees that the Securities and Exchange Commission (SEC) requires to be reflected in the Fund's performance. The index is unmanaged, and it is not possible to invest directly in an index.
3 The LHMDA represents the average of the total returns reported by all mutual funds designated by Lipper, Inc. as falling into the respective category. These total returns are reported net of expenses and other fees that the SEC requires to be reflected in a mutual fund's performance.
4 Total returns quoted reflect all applicable sales charges.
GROWTH OF $10,000 INVESTMENT -- CLASS B SHARES
The graph below illustrates the hypothetical investment of $10,0001 in the Federated Municipal Opportunities Fund, Inc. (Class B Shares) (the "Fund") from August 5, 1996 (start of performance) to August 31, 2003 compared to the Lehman Brothers Municipal Bond Index (LBMB)2 and the Lipper High Yield Municipal Debt Funds Average (LHMDA).3
Average Annual Total Return4 for the Period Ended 8/31/2003 | ||
1 Year |
| (2.21)% |
5 Years |
| 1.68% |
Start of Performance (8/5/1996) |
| 3.54% |
![](https://capedge.com/proxy/N-CSR/0001056288-03-000608/fmofg01091012.gif)
Past performance is no guarantee of future results. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. For after-tax returns, visit www.federatedinvestors.com. Investment return and principal value will fluctuate so that an investors' shares, when redeemed, may be worth more or less than original cost. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.
1 Represents a hypothetical investment of $10,000 in the Fund. The ending value of the Fund does not reflect a contingent deferred sales charge on any redemption less than seven years from the purchase date. The maximum contingent deferred sales charge is 5.50% on any redemption less than one year from the purchase date. The Fund's performance assumes the reinvestment of all dividends and distributions. The LBMB and LHMDA have been adjusted to reflect reinvestment of dividends on securities in the index and average.
2 The LBMB returns do not reflect taxes, sales changes, expenses and other fees that the SEC requires to be reflected in the Fund's performance. The index is unmanaged, and it is not possible to invest directly in an index.
3 The LHMDA represents the average of the total returns reported by all mutual funds designated by Lipper, Inc. as falling into the respective category. These total returns are reported net of expenses and other fees that the SEC requires to be reflected in a mutual fund's performance.
4 Total returns quoted reflect all applicable sales charges and contingent deferred sales charges.
GROWTH OF $10,000 INVESTMENT -- CLASS C SHARES
The graph below illustrates the hypothetical investment of $10,0001 in the Federated Municipal Opportunities Fund, Inc. (Class C Shares) (the "Fund") from August 5, 1996 (start of performance) to August 31, 2003 compared to the Lehman Brothers Municipal Bond Index (LBMB)2 and the Lipper High Yield Municipal Debt Funds Average (LHMDA).3
Average Annual Total Return4 for the Period Ended 8/31/2003 | ||
1 Year |
| 1.15% |
5 Years |
| 1.79% |
Start of Performance (8/5/1996) |
| 3.38% |
![](https://capedge.com/proxy/N-CSR/0001056288-03-000608/fmofg01091013.gif)
Past performance is no guarantee of future results. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. For after-tax returns, visit www.federatedinvestors.com. Investment return and principal value will fluctuate so that an investors' shares, when redeemed, may be worth more or less than original cost. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.
1 Represents a hypothetical investment of $10,000 in the Fund after deducting the maximum sales charge of 1.00% ($10,000 investment minus $100 sales charge = $9,900). A 1.00% contingent deferred sales charge would be applied on any redemption less than one year from the purchase date. The Fund's performance assumes the reinvestment of all dividends and distributions. The LBMB and LHMDA have been adjusted to reflect reinvestment of dividends on securities in the index and average.
2 The LBMB returns do not reflect taxes, sales changes, expenses and other fees that the SEC requires to be reflected in the Fund's performance. The index is unmanaged, and it is not possible to invest directly in an index.
3 The LHMDA represents the average of the total returns reported by all mutual funds designated by Lipper, Inc. as falling into the respective category. These total returns are reported net of expenses and other fees that the SEC requires to be reflected in a mutual fund's performance..
4 Total returns quoted reflect all applicable sales charges and contingent deferred sales charges.
GROWTH OF $10,000 INVESTMENT -- CLASS F SHARES
The graph below illustrates the hypothetical investment of $10,0001 in the Federated Municipal Opportunities Fund, Inc. (Class F Shares) (the "Fund") from August 31, 1993 to August 31, 2003 compared to the Lehman Brothers Municipal Bond Index (LBMB)2 and the Lipper High Yield Municipal Debt Funds Average (LHMDA).3
Average Annual Total Return4 for the Period Ended 8/31/2003 | ||
1 Year |
| 2.03% |
5 Years |
| 2.57% |
10 Years |
| 3.95% |
Start of Performance (4/10/1987) |
| 5.94% |
![](https://capedge.com/proxy/N-CSR/0001056288-03-000608/fmofg01091014.gif)
Past performance is no guarantee of future results. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. For after-tax returns, visit www.federatedinvestors.com. Investment return and principal value will fluctuate so that an investors' shares, when redeemed, may be worth more or less than original cost. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.
1 Represents a hypothetical investment of $10,000 in the Fund after deducting the maximum sales charge of 1.00% ($10,000 investment minus $100 sales charge = $9,900). A contingent deferred sales charge of 1.00% would be applied on any redemption less than four years from the purchase date. The Fund's performance assumes the reinvestment of all dividends and distributions. The LBMB and LHMDA have been adjusted to reflect reinvestment of dividends on securities in the index and average.
2 The LBMB returns do not reflect taxes, sales changes, expenses and other fees that the SEC requires to be reflected in the Fund's performance. The index is unmanaged, and is not possible to invest directly in an index.
3 The LHMDA represents the average of the total returns reported by all mutual funds designated by Lipper, Inc. as falling into the respective category. These total returns are reported net of expenses and other fees that the SEC requires to be reflected in a mutual fund's performance.
4 Total returns quoted reflect all applicable sales charges and contingent deferred sales charges.
Portfolio of Investments
August 31, 2003
Principal |
|
| Credit | 1 | Value | |||
|
|
| LONG-TERM MUNICIPALS--95.7% |
|
|
|
|
|
|
|
| Alabama--0.0% |
|
|
|
|
|
$ | 150,000 | 2 | West Jefferson Amusement & Public Park Authority, AL, First Mortgage Revenue Bonds, 6.375% (Visionland, AL Project)/(Original Issue Yield: 6.528%), 2/1/2029 |
| NR |
| $ | 7,125 |
|
|
| Alaska--0.3% |
|
|
|
|
|
| 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 |
| NR |
|
| 1,110,859 |
| 80,000 |
| Alaska State Housing Finance Corp., Collateralized Home Mortgage Revenue Bonds, (Series B-1), 6.90% (GNMA LOC), 6/1/2032 |
| AAA/Aaa |
|
| 80,254 |
|
|
| TOTAL |
|
|
|
| 1,191,113 |
|
|
| Arizona--1.6% |
|
|
|
|
|
| 500,000 |
| Arizona Health Facilities Authority, Hospital System Revenue Bonds, 6.375% (John C. Lincoln Health Network), 12/1/2037 |
| BBB/NR |
|
| 507,835 |
| 4,985,000 |
| Gilbert, AZ IDA, Revenue Bonds (Series 1999A), 5.85% (Southwest Student Services Corp.)/(Original Issue Yield: 5.90%), 2/1/2019 |
| NR |
|
| 4,745,172 |
| 2,285,000 | 3 | Maricopa County, AZ, IDA, Solid Waste Disposal Revenue Bonds (Series 1999A), 7.50% (Rainbow Valley Landfill Project), 12/1/2020 |
| NR |
|
| 1,590,886 |
|
|
| TOTAL |
|
|
|
| 6,843,893 |
|
|
| Arkansas--0.5% |
|
|
|
|
|
| 2,000,000 |
| Arkansas Development Finance Authority, Hospital Revenue Bonds (Series 2000), 7.375% (Washington Regional Medical Center)/(Original Issue Yield: 7.50%), 2/1/2029 |
| BBB-/Baa3 |
|
| 2,133,800 |
|
|
| California--4.3% |
|
|
|
|
|
| 6,000,000 |
| California State, UT GO Bonds, 5.00% (MBIA INS), 6/1/2012 |
| AAA/Aaa |
|
| 6,405,000 |
| 1,341,000 | 3,4 | California Statewide Communities Development Authority, Multifamily Housing Revenue Bonds (Series 1999X), 6.65% (Magnolia City Lights Project), 7/1/2029 |
| NR |
|
| 1,232,138 |
| 1,000,000 | 3,4 | California Statewide Communities Development Authority, Revenue Bonds, 6.625% (Tehiyah Day School), 11/1/2031 |
| NR |
|
| 996,080 |
| 4,000,000 |
| Golden State Tobacco Securitization Corp., CA, Tobacco Settlement Asset-Backed Bonds (Series 2003A-3), 7.875%, 6/1/2042 |
| BBB/Baa2 |
|
| 3,809,760 |
| 2,825,000 |
| Golden State Tobacco Securitization Corp., CA, Tobacco Settlement Asset-Backed Revenue Bonds (Series 2003A-1), 6.75% (Original Issue Yield: 7.00%), 6/1/2039 |
| BBB/Baa2 |
|
| 2,329,834 |
| 750,000 |
| Golden State Tobacco Securitization Corp., CA, Tobacco Settlement Revenue Bonds (Series 2003A-2), 7.90%, 6/1/2042 |
| BBB/Baa2 |
|
| 716,497 |
Principal |
|
| Credit | 1 | Value | |||
|
|
| LONG-TERM MUNICIPALS--continued |
|
|
|
|
|
|
|
| California--continued |
|
|
|
|
|
$ | 1,000,000 |
| Los Angeles, CA, Regional Airport Improvement Corp., Facilities Sublease Refunding Revenue Bonds (Series 2002B), 7.50% (American Airlines, Inc.)/ (Original Issue Yield: 7.929%), 12/1/2024 |
| B-/Caa2 |
| $ | 820,010 |
| 350,000 |
| San Bernardino County, CA, Housing Authority, Subordinated Revenue Bonds, 7.25% (Glen Aire Park & Pacific Palms), 4/15/2042 |
| NR |
|
| 333,074 |
| 500,000 |
| San Dimas, CA, Housing Authority, Mobile Home Park Revenue Bonds (Series 1998A), 5.70% (Charter Oak Mobile Home Estates Acquisition Project)/(Original Issue Yield: 5.90%), 7/1/2028 |
| NR |
|
| 467,280 |
| 1,000,000 |
| Western Hills Water District, CA, Special Tax Revenue Bonds, 6.875% (Diablo Grande Community Facilities No. 1)/(Original Issue Yield: 6.954%), 9/1/2031 |
| NR |
|
| 1,013,480 |
|
|
| TOTAL |
|
|
|
| 18,123,153 |
|
|
| Colorado--4.5% |
|
|
|
|
|
| 1,500,000 |
| Aspen Grove, CO Business Improvement District, LT GO Bonds (Series 2001), 7.625%, 12/1/2025 |
| NR |
|
| 1,557,150 |
| 1,500,000 |
| Colorado Educational & Cultural Facilities Authority, Charter School Revenue Bonds (Series 2001), 7.625% (Peak to Peak Charter School Project)/(Original Issue Yield: 8.00%), 8/15/2031 |
| NR/Ba2 |
|
| 1,558,725 |
| 1,000,000 |
| Colorado Educational & Cultural Facilities Authority, Charter School Revenue Bonds, 7.25% (Platte River Academy)/(Original Issue Yield: 7.40%), 3/1/2022 |
| NR/Ba2 |
|
| 1,011,040 |
| 500,000 |
| Colorado Educational & Cultural Facilities Authority, Charter School Revenue Bonds, 7.25% (Platte River Academy)/(Original Issue Yield: 7.50%), 3/1/2032 |
| NR/Ba2 |
|
| 502,355 |
| 1,000,000 |
| Colorado Educational & Cultural Facilities Authority, Charter School Revenue Bonds, 7.375% (Frontier Academy)/(Original Issue Yield: 7.50%), 6/1/2031 |
| NR/Ba1 |
|
| 1,029,520 |
| 1,710,000 |
| Colorado HFA, SFM Revenue Bonds (Series 1997C-2), 6.875%, 11/1/2028 |
| NR/Aa2 |
|
| 1,726,245 |
| 1,000,000 |
| Conservatory Metropolitan District, CO, LT GO Bonds, 7.55%, 12/1/2032 |
| NR |
|
| 967,280 |
| 600,000 |
| Deer Creek Metropolitan District, CO, UT GO Bonds, 7.625% (United States Treasury GTD), 12/1/2019 |
| AAA/NR |
|
| 755,742 |
| 5,000,000 | 3,4 | Denver, CO, City & County Airport Authority, RITES (Series PA-1186), 12.899%, 11/15/2009 |
| NR |
|
| 6,580,850 |
| 500,000 |
| Denver, CO, Health & Hospital Authority, Healthcare Revenue Bonds (Series 2001A), 6.00% (Original Issue Yield: 6.05%), 12/1/2031 |
| BBB/Baa2 |
|
| 491,595 |
| 1,000,000 |
| Maher Ranch, CO, Metropolitan District No. 4, LT GO Bonds, 7.875%, 12/1/2033 |
| NR |
|
| 971,250 |
| 2,000,000 |
| Sterling Hills West Metropolitan District, LT GO Bonds (Series 2110B), 8.00%, 12/1/2021 |
| NR |
|
| 1,972,280 |
|
|
| TOTAL |
|
|
|
| 19,124,032 |
Principal |
|
| Credit | 1 | Value | |||
|
|
| LONG-TERM MUNICIPALS--continued |
|
|
|
|
|
|
|
| Connecticut--0.8% |
|
|
|
|
|
$ | 3,000,000 |
| Connecticut Development Authority, PCR Refunding Revenue Bonds (Series A), 5.85% (Connecticut Light & Power Co.), 9/1/2028 |
| BBB/A3 |
| $ | 3,125,400 |
|
|
| District of Columbia--3.4% |
|
|
|
|
|
| 14,000,000 |
| District of Columbia, Revenue Bonds, 5.625% (American University)/(AMBAC INS)/(Original Issue Yield: 5.90%), 10/1/2026 |
| AAA/Aaa |
|
| 14,552,440 |
|
|
| Florida--7.3% |
|
|
|
|
|
| 2,000,000 |
| Capital Projects Finance Authority, FL, Continuing Care Retirement Community Revenue Bonds, 8.00% (Glenridge on Palmer Ranch)/(Original Issue Yield: 8.125%), 6/1/2032 |
| NR |
|
| 2,010,620 |
| 6,000,000 | 3,4 | Capital Trust Agency, FL, Revenue Bonds (Series 2001), 10.00% (Seminole Tribe of Florida Convention and Resort Hotel Facilities), 10/1/2033 |
| NR |
|
| 7,049,520 |
| 1,000,000 | 3,4 | Capital Trust Agency, FL, Revenue Bonds (Series 2003A), 8.95% (Seminole Tribe of Florida Convention and Resort Hotel Facilities), 10/1/2033 |
| NR |
|
| 1,103,050 |
| 5,375,000 | 3,4 | Florida State Department of Environmental Protection, RITES (PA-967), 9.223% (FSA INS), 7/1/2013 |
| NR |
|
| 6,232,312 |
| 1,895,000 |
| Harbor Bay, FL, Community Development District, Special Assessment Capital Improvement Revenue Bonds (Series 2001B), 6.35%, 5/1/2010 |
| NR |
|
| 1,911,676 |
| 1,000,000 |
| Highlands County, FL, Health Facilities Authority, Hospital Revenue Bonds (Series 2001A), 6.00% (Adventist Health System)/(Original Issue Yield: 6.026%), 11/15/2031 |
| A/A3 |
|
| 1,042,690 |
| 725,000 |
| Lee County, FL, HFA, SFM Step Coupon Revenue Bonds, 6.85% (GNMA Collateralized Home Mortgage Program COL), 3/1/2029 |
| NR/Aaa |
|
| 739,029 |
| 2,000,000 |
| Lee County, FL, IDA, Health Care Facilities Revenue Bond (Series A), 6.75% (Cypress Cove at Healthpark)/(Original Issue Yield: 6.98%), 10/1/2032 |
| NR |
|
| 1,991,500 |
| 970,000 |
| Mediterra North Community Development District, FL, Capital Improvement Revenue Bonds (Series A), 6.80%, 5/1/2031 |
| NR |
|
| 986,053 |
| 1,000,000 |
| Miami Beach, FL, Health Facilities Authority, Hospital Revenue Bonds (Series 2001A), 6.70% (Mt. Sinai Medical Center, FL)/(Original Issue Yield: 6.80%), 11/15/2019 |
| BB/Ba3 |
|
| 940,840 |
| 1,460,000 | 3,4 | Orange County, FL, HFA, Multifamily Housing Revenue Bonds (Series 1999B), 6.50% (Palm West Apartments Project), 3/1/2034 |
| NR |
|
| 1,306,598 |
| 1,000,000 |
| Orlando, FL, Urban Community Development District, Capital Improvement Revenue Bonds (Series 2001A), 6.95% (Original Issue Yield: 7.00%), 5/1/2033 |
| NR |
|
| 1,013,170 |
| 805,000 |
| Orlando, FL Urban Community Development District, Capital Improvement Revenue Bonds (Series 2001B), 6.40% (Original Issue Yield: 6.50%), 5/1/2010 |
| NR |
|
| 809,025 |
| 1,000,000 |
| Reunion East Community Development District, FL, Special Assessment Bonds (Series 2002A), 7.375%, 5/1/2033 |
| NR |
|
| 1,010,160 |
Principal |
|
| Credit | 1 | Value | |||
|
|
| LONG-TERM MUNICIPALS--continued |
|
|
|
|
|
|
|
| Florida--continued |
|
|
|
|
|
$ | 2,000,000 |
| St. Johns County, FL, IDA, Health Care Revenue Bonds (Series 1999), 8.00% (Glenmoor at St. Johns Project)/(Original Issue Yield: 8.10%), 1/1/2030 |
| NR |
| $ | 1,986,400 |
| 800,000 |
| Verandah West, FL, Community Development District, Capital Improvement Revenue Bonds (Series 2003A), 6.625% (Original Issue Yield: 6.75%), 5/1/2033 |
| NR |
|
| 783,640 |
|
|
| TOTAL |
|
|
|
| 30,916,283 |
|
|
| Georgia--1.9% |
|
|
|
|
|
| 2,000,000 |
| Atlanta, GA, Tax Allocation Bonds (Series 2001), 7.75% (Atlantic Station Project)/(Original Issue Yield: 7.90%), 12/1/2014 |
| NR |
|
| 2,041,260 |
| 4,100,000 |
| Augusta, GA, HFA, Multifamily Housing Refunding Revenue Bonds, 6.55% (Forest Brook Apartments), 12/1/2030 |
| NR |
|
| 3,895,328 |
| 1,640,000 |
| Forsyth County, GA, Hospital Authority, Revenue Anticipation Certificates (Series 1998), 6.375% (Georgia Baptist Health Care System)/(Original Issue Yield: 6.45%), 10/1/2028 |
| NR |
|
| 1,897,152 |
|
|
| TOTAL |
|
|
|
| 7,833,740 |
|
|
| Hawaii--0.6% |
|
|
|
|
|
| 1,000,000 |
| Hawaii State Department of Budget & Finance, Special Purpose Revenue Bonds (Series A), 7.00% (Kahala Nui)/(Original Issue Yield: 7.00%), 11/15/2012 |
| NR |
|
| 1,003,350 |
| 1,000,000 |
| Hawaii State Department of Budget & Finance, Special Purpose Revenue Bonds (Series A), 8.00% (Kahala Nui)/(Original Issue Yield: 8.175%), 11/15/2033 |
| NR |
|
| 983,490 |
| 470,000 |
| Hawaii State Department of Transportation, Special Facility Refunding Revenue Bonds (Series 2000), 7.00% (Continental Airlines, Inc.)/(Original Issue Yield: 7.20%), 6/1/2020 |
| B/Caa2 |
|
| 376,324 |
|
|
| TOTAL |
|
|
|
| 2,363,164 |
|
|
| Idaho--0.6% |
|
|
|
|
|
| 2,000,000 |
| Idaho Health Facilities Authority, Refunding Revenue Bonds (Series 1999A), 7.875% (Valley Vista Care Corp. Obligated Group)/(Original Issue Yield: 8.10%), 11/15/2029 |
| NR |
|
| 1,921,700 |
| 240,000 |
| Idaho Housing Agency, SFM Revenue Bonds (Series A), 7.50% (FHA GTD), 7/1/2024 |
| AA/NR |
|
| 240,823 |
| 500,000 |
| Idaho Housing Agency, SFM Revenue Bonds (Series F-2), 7.80% (FHA GTD), 1/1/2023 |
| AA/NR |
|
| 500,760 |
|
|
| TOTAL |
|
|
|
| 2,663,283 |
|
|
| Illinois--0.1% |
|
|
|
|
|
| 415,000 |
| Chicago, IL, Collateralized SFM Revenue Bonds (Series A), 7.25% (GNMA COL), 9/1/2028 |
| NR/Aaa |
|
| 423,756 |
|
|
| Indiana--5.3% |
|
|
|
|
|
| 495,000 |
| Beech Grove, IN, Economic Development Revenue Bond, 8.75% (Westvaco Corp.), 7/1/2010 |
| BBB/Baa2 |
|
| 503,093 |
| 1,000,000 |
| Goshen, IN, Revenue Bonds (Series 1998), 5.75% (Greencroft Obligated Group)/(Original Issue Yield: 5.87%), 8/15/2028 |
| NR |
|
| 877,890 |
Principal |
|
| Credit | 1 | Value | |||
|
|
| LONG-TERM MUNICIPALS--continued |
|
|
|
|
|
|
|
| Indiana--continued |
|
|
|
|
|
$ | 3,000,000 |
| Indiana Health Facility Financing Authority, Hospital Revenue Bonds (Series 2001A), 6.375% (Community Foundation of Northwest Indiana)/(Original Issue Yield: 6.68%), 8/1/2031 |
| BBB-/NR |
| $ | 2,949,510 |
| 2,000,000 |
| Indiana Health Facility Financing Authority, Revenue Refunding Bonds (Series 1998), 5.625% (Greenwood Village South Project)/(Original Issue Yield: 5.802%), 5/15/2028 |
| NR |
|
| 1,683,800 |
| 3,000,000 | 3,4 | Indiana Port Commission, Port Facility Revenue Refunding Bonds, 6.875% (Cargill, Inc.), 5/1/2012 |
| NR/A1 |
|
| 3,057,660 |
| 12,000,000 |
| Indianapolis, IN, Airport Authority, Special Facilities Revenue Bonds, 7.10% (FedEx Corp.)/(Original Issue Yield: 7.178%), 1/15/2017 |
| BBB/Baa2 |
|
| 12,633,600 |
| 1,000,000 |
| South Bend, IN, Economic Development Revenue Bonds (Series 1999A), 6.25% (Southfield Village)/(Original Issue Yield: 6.375%), 11/15/2029 |
| NR |
|
| 867,590 |
|
|
| TOTAL |
|
|
|
| 22,573,143 |
|
|
| Iowa--0.4% |
|
|
|
|
|
| 1,785,000 |
| Wapello County, IA, Revenue Bonds, 6.25% (Ottumwa Regional Health Center)/(Original Issue Yield: 6.40%), 10/1/2022 |
| BBB/NR |
|
| 1,826,715 |
|
|
| Kansas--1.3% |
|
|
|
|
|
| 1,335,000 | 3 | Kansas Development Finance Authority, Multifamily Housing Revenue Bonds, Series 1998K, 6.375% (Pioneer Olde Town Apartments), 10/1/2017 |
| NR |
|
| 1,215,317 |
| 50,000 |
| Manhattan, KS, Industrial Revenue Bonds (Series 1999), 6.25% (Farrar Corporation Project), 8/1/2006 |
| NR |
|
| 48,782 |
| 1,625,000 |
| Manhattan, KS, Industrial Revenue Bonds (Series 1999), 7.00% (Farrar Corporation Project), 8/1/2014 |
| NR |
|
| 1,513,769 |
| 1,000,000 |
| Olathe, KS, Senior Living Facility Revenue Bonds (Series 2000A), 8.00% (Aberdeen Village, Inc.)/(Original Issue Yield: 8.25%), 5/15/2030 |
| NR |
|
| 1,023,690 |
| 1,565,000 |
| Sedgwick & Shawnee Counties, KS, SFM Revenue Bonds (Series 1997A-1), 6.95% (GNMA COL), 6/1/2029 |
| NR/Aaa |
|
| 1,673,971 |
|
|
| TOTAL |
|
|
|
| 5,475,529 |
|
|
| Kentucky--1.6% |
|
|
|
|
|
| 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 |
| B/B3 |
|
| 3,120,740 |
| 2,000,000 |
| Kentucky EDFA, Hospital System Refunding Revenue Bonds, 5.875% (Appalachian Regional Health Center)/(Original Issue Yield: 5.92%), 10/1/2022 |
| BB-/NR |
|
| 1,738,180 |
| 2,000,000 |
| Kentucky EDFA, Revenue Bonds (Series 2000A), 6.625% (Norton Healthcare, Inc.)/(Original Issue Yield: 6.97%), 10/1/2028 |
| NR |
|
| 2,048,820 |
|
|
| TOTAL |
|
|
|
| 6,907,740 |
Principal |
|
| Credit | 1 | Value | |||
|
|
| LONG-TERM MUNICIPALS--continued |
|
|
|
|
|
|
|
| Louisiana--5.0% |
|
|
|
|
|
$ | 3,000,000 |
| De Soto Parish, LA, Environmental Improvement Authority, Revenue Bonds, 7.70% (International Paper Co.), 11/1/2018 |
| BBB/Baa2 |
| $ | 3,196,050 |
| 2,000,000 |
| Louisiana Local Government Environmental Facilities Community Development Authority, Housing Bond Anticipation Notes, 6.25% (Kingston Point), 12/15/2003 |
| NR |
|
| 1,998,240 |
| 1,980,000 | 3,4 | Louisiana Public Facilities Authority Hospital Revenue, Revenue Bonds, 8.625% (Lake Charles Memorial Hospital)/(Original Issue Yield: 8.75%), 12/1/2030 |
| NR |
|
| 1,726,283 |
| 5,645,000 |
| St. Charles Parish, LA, PCR Bonds, 7.50% (Entergy Louisiana, Inc.)/(Original Issue Yield: 7.542%), 6/1/2021 |
| BBB+/Baa2 |
|
| 5,732,497 |
| 3,650,000 |
| St. Charles Parish, LA, Solid Waste Disposal Revenue Bonds (Series A), 7.00% (Entergy Louisiana, Inc.)/(Original Issue Yield: 7.04%), 12/1/2022 |
| BBB+/Baa2 |
|
| 3,728,731 |
| 3,000,000 |
| St. James Parish, LA, Solid Waste Disposal Revenue Bonds, 7.70% (IMC Phosphates Co.)/(Original Issue Yield: 7.75%), 10/1/2022 |
| NR |
|
| 2,836,080 |
| 2,000,000 |
| West Feliciana Parish, LA, PCR Refunding Bonds (Series 1999B), 6.60% (Entergy Gulf States, Inc.), 9/1/2028 |
| BB+/Ba1 |
|
| 2,020,540 |
|
|
| TOTAL |
|
|
|
| 21,238,421 |
|
|
| Maine--0.5% |
|
|
|
|
|
| 1,000,000 |
| Maine Health & Higher Educational Facilities Authority, Health Facilities Revenue Bond, Series A, 7.50% (Piper Shores), 1/1/2019 |
| NR |
|
| 1,020,480 |
| 1,000,000 |
| Maine Health & Higher Educational Facilities Authority, Health Facilities Revenue Bonds, (Series A), 7.55% (Piper Shores), 1/1/2029 |
| NR |
|
| 1,013,820 |
|
|
| TOTAL |
|
|
|
| 2,034,300 |
|
|
| Maryland--0.4% |
|
|
|
|
|
| 2,000,000 |
| Maryland State Economic Development Corp., Senior Lien Revenue Bonds (Series 1999B), 7.75% (Chesapeake Bay Conference Center Project), 12/1/2031 |
| NR |
|
| 1,732,420 |
|
|
| Massachusetts--2.6% |
|
|
|
|
|
| 2,000,000 |
| Massachusetts HEFA, Revenue Bonds (Series 1999A), 5.75% (Caritas Christi Obligated Group)/(Original Issue Yield: 5.80%), 7/1/2028 |
| BBB/Baa3 |
|
| 1,670,120 |
| 2,000,000 |
| Massachusetts HEFA, Revenue Bonds (Series 2002B), 9.20% (Civic Investments), 12/15/2031 |
| NR |
|
| 2,251,620 |
| 1,000,000 |
| Massachusetts HEFA, Revenue Bonds (Series 2003E), 6.75% (Jordan Hospital)/(Original Issue Yield: 7.00%), 10/1/2033 |
| BBB-/NR |
|
| 959,770 |
| 500,000 | 3,4 | Massachusetts Water Resources Authority, RITES (PA 999-R-B), 9.776%, 8/1/2015 |
| NR |
|
| 590,945 |
| 1,305,000 | 3,4 | Massachusetts Water Resources Authority, RITES (PA 999-R-A), 9.776%, 8/1/2014 |
| NR |
|
| 1,559,592 |
Principal |
|
| Credit | 1 | Value | |||
|
|
| LONG-TERM MUNICIPALS--continued |
|
|
|
|
|
|
|
| Massachusetts--continued |
|
|
|
|
|
$ | 1,715,000 | 3,4 | Massachusetts Water Resources Authority, RITES (Series 999-R-C), 9.776%, 8/1/2019 |
| NR |
| $ | 1,960,965 |
| 1,805,000 | 3,4 | Massachusetts Water Resources Authority, RITES (Series 999-R-D), 9.776%, 8/1/2020 |
| NR |
|
| 2,035,535 |
|
|
| TOTAL |
|
|
|
| 11,028,547 |
|
|
| Michigan--0.3% |
|
|
|
|
|
| 1,000,000 |
| Delta County, MI, Economic Development Corp., Environmental Improvement Refunding Revenue Bonds (Series 2002B), 6.45% (MeadWestvaco Corp.), 4/15/2023 |
| BBB/Baa2 |
|
| 1,029,200 |
| 1,000,000 | 2 | Michigan Strategic Fund, Resource Recovery Limited Obligation Revenue Bonds, 6.90% (Central Wayne Energy Recovery LP), 7/1/2019 |
| NR |
|
| 80,000 |
| 1,000,000 | 2 | Michigan Strategic Fund, Resource Recovery Limited Obligation Revenue Bonds, 7.00% (Central Wayne Energy Recovery LP), 7/1/2027 |
| NR |
|
| 80,000 |
|
|
| TOTAL |
|
|
|
| 1,189,200 |
|
|
| Minnesota--3.9% |
|
|
|
|
|
| 4,000,000 |
| Becker, MN, PCR Bonds (Series 2000-A), 8.50% (Northern States Power Co., MN), 4/1/2030 |
| BBB+/A3 |
|
| 4,578,600 |
| 25,000 |
| Dakota County, MN, Housing & Redevelopment Authority, SFM Revenue Bonds, 7.20% (GNMA GTD), 12/1/2009 |
| AAA/NR |
|
| 25,061 |
| 2,000,000 |
| Minneapolis, MN, Health Care System, Revenue Bonds (Series 2002A), 5.75% (Allina Health System, MN), 11/15/2014 |
| NR/A3 |
|
| 2,134,580 |
| 1,000,000 |
| Minneapolis/St. Paul, MN, Airport Commission, Special Facilities Revenue Bonds (Series B), 6.50% TOBs (Northwest Airlines, Inc.), Mandatory Tender 4/1/2005 |
| NR |
|
| 892,510 |
| 5,765,000 |
| St. Paul, MN, Housing & Redevelopment Authority, Hospital Revenue Refunding Bonds (Series A), 6.625% (Healtheast, MN)/(Original Issue Yield: 6.687%), 11/1/2017 |
| BB-/Ba2 |
|
| 5,745,457 |
| 2,000,000 |
| St. Paul, MN, Housing & Redevelopment Authority, Revenue Bonds (Series 2002B), 7.00% (Upper Landing Project)/(Original Issue Yield: 7.05%), 3/1/2029 |
| NR |
|
| 1,943,360 |
| 1,000,000 |
| St. Paul, MN, Port Authority, Hotel Facility Revenue Bonds (Series 2), 7.375% (Radisson Kellogg Project)/(Original Issue Yield: 7.50%), 8/1/2029 |
| NR |
|
| 1,014,370 |
|
|
| TOTAL |
|
|
|
| 16,333,938 |
|
|
| Mississippi--0.6% |
|
|
|
|
|
| 2,500,000 |
| Mississippi Business Finance Corp., PCR Bonds, 5.875% (System Energy Resources, Inc.)/(Original Issue Yield: 5.934%), 4/1/2022 |
| BBB-/Ba1 |
|
| 2,459,625 |
Principal |
|
| Credit | 1 | Value | |||
|
|
| LONG-TERM MUNICIPALS--continued |
|
|
|
|
|
|
|
| Missouri--0.9% |
|
|
|
|
|
$ | 2,445,000 | 3 | Kansas City, MO, IDA, Multifamily Housing Revenue Bonds, 6.90% (Woodbridge Apartments Project), 8/1/2030 |
| NR |
| $ | 2,280,672 |
| 1,000,000 |
| St. Joseph, MO, IDA, Healthcare Revenue Bonds, 7.00% (Living Community St. Joseph Project), 8/15/2032 |
| NR |
|
| 980,280 |
| 500,000 |
| West Plains, MO, IDA, Hospital Revenue Bonds, 6.75% (Ozarks Medical Center)/(Original Issue Yield: 6.78%), 11/15/2024 |
| BB+/NR |
|
| 500,920 |
|
|
| TOTAL |
|
|
|
| 3,761,872 |
|
|
| Multi State--3.4% |
|
|
|
|
|
| 1,500,000 | 3,4 | Charter Mac Equity Issuer Trust, Pfd., 7.60%, 11/30/2010 |
| NR |
|
| 1,673,070 |
| 10,030,000 | 3,4 | Merrill Lynch Puttable RITES Trust, Tax Exempt Receipts (Series PPT-33), 12.765%, 1/1/2032 |
| NR |
|
| 10,455,773 |
| 2,000,000 | 3,4 | Muni Mae TE Bond Subsidiary LLC, Pfd., 7.75%, 6/30/2050 |
| NR |
|
| 2,227,440 |
|
|
| TOTAL |
|
|
|
| 14,356,283 |
|
|
| Nevada--0.7% |
|
|
|
|
|
| 995,000 |
| Clark County, NV Improvement District, Local Improvement Bonds (Series 2001), 6.875% (Special Improvement District No. 132 (Summerlin South Area))/(Original Issue Yield: 6.92%), 2/1/2021 |
| NR |
|
| 1,023,736 |
| 1,800,000 |
| Director of the State of Nevada Department of Business and Industry, 2nd Tier Revenue Bonds (Series 2000), 7.375% (Las Vegas Monorail Project)/(Original Issue Yield: 7.75%), 1/1/2040 |
| NR |
|
| 1,681,200 |
|
|
| TOTAL |
|
|
|
| 2,704,936 |
|
|
| New Jersey--1.8% |
|
|
|
|
|
| 2,000,000 |
| New Jersey EDA, Retirement Community Revenue Bonds (Series 2001A), 7.25% (Cedar Crest Village, Inc.)/(Original Issue Yield: 7.625%), 11/15/2031 |
| NR |
|
| 2,035,940 |
| 1,250,000 |
| New Jersey EDA, Retirement Community Revenue Bonds (Series A), 8.25% (Seabrook Village)/(Original Issue Yield: 8.50%), 11/15/2030 |
| NR |
|
| 1,302,950 |
| 2,550,000 |
| New Jersey EDA, Revenue Bonds (Series 1997A), 5.875% (Host Marriott Corp.), 12/1/2027 |
| NR |
|
| 2,126,292 |
| 1,000,000 |
| New Jersey EDA, Special Facilities Revenue Bonds (Series 2000), 7.20% (Continental Airlines, Inc.)/(Original Issue Yield: 7.25%), 11/15/2030 |
| B/Caa2 |
|
| 849,830 |
| 400,000 |
| New Jersey Health Care Facilities Financing Authority, Revenue Bonds, 6.50% (Pascack Valley Hospital Association)/(Original Issue Yield: 6.72%), 7/1/2023 |
| BB+/NR |
|
| 400,040 |
| 1,000,000 |
| New Jersey Health Care Facilities Financing Authority, Revenue Bonds, 6.625% (Palisades Medical Center)/ (Original Issue Yield: 6.67%), 7/1/2031 |
| BBB-/Baa3 |
|
| 1,028,990 |
|
|
| TOTAL |
|
|
|
| 7,744,042 |
Principal |
|
| Credit | 1 | Value | |||
|
|
| LONG-TERM MUNICIPALS--continued |
|
|
|
|
|
|
|
| New Mexico--2.0% |
|
|
|
|
|
$ | 850,000 |
| Bernalillo County, NM, Multifamily, Refunding Housing Revenue Bonds (Series 2001C), 7.50% (Valencia Retirement)/(SunAmerica, Inc. GTD), 12/1/2021 |
| NR |
| $ | 874,973 |
| 2,595,000 |
| Dona Ana County, NM, Multifamily Housing Revenue Bonds (Series 2001A), 7.00% (Montana Meadows Apartments), 12/1/2030 |
| NR |
|
| 2,509,002 |
| 2,000,000 |
| Farmington, NM, PCR Refunding Bonds (Series 1997), 6.375% (Public Service Co., NM), 4/1/2022 |
| BBB-/Baa3 |
|
| 2,051,220 |
| 2,000,000 |
| Farmington, NM, Refunding Revenue Bonds (Series 2002A), 6.375% TOBs (El Paso Electric Co.), Mandatory Tender 8/1/2005 |
| BB+/Ba1 |
|
| 2,068,980 |
| 1,250,000 |
| Santa Fe County, NM, Project Revenue Bonds (Series 1998A), 5.625% (El Castillo Retirement Residences)/(Original Issue Yield: 5.828%), 5/15/2025 |
| NR |
|
| 1,013,063 |
|
|
| TOTAL |
|
|
|
| 8,517,238 |
|
|
| New York--5.8% |
|
|
|
|
|
| 2,500,000 |
| Brookhaven, NY, IDA, Senior Residential Housing Revenue Bonds, 6.25% (Woodcrest Estates), 12/1/2023 |
| NR |
|
| 2,395,425 |
| 5,000,000 | 3,4 | Metropolitan Transportation Authority, NY, RITES (PA-1042R), 9.72274% (MBIA INS), 1/1/2010 |
| NR |
|
| 5,733,300 |
| 695,000 |
| Nassau County, NY, IDA, Civic Facility Refunding Revenue Bonds (Series 2001B), 5.875% (North Shore-Long Island Jewish Obligated Group)/(Original Issue Yield: 5.92%), 11/1/2011 |
| NR/A3 |
|
| 741,433 |
| 1,500,000 |
| New York City, NY, IDA, Industrial Development Revenue Refunding Bonds (Series 1998), 6.00% (Field Hotel Associates LP- JFK Project), 11/1/2028 |
| NR |
|
| 861,615 |
| 1,500,000 |
| New York City, NY, IDA, Special Facility Revenue Bonds (Series 2002), 7.625% (British Airways)/(Original Issue Yield: 7.976%), 12/1/2032 |
| BB+/Ba2 |
|
| 1,324,005 |
| 2,000,000 |
| New York City, NY, GO Bonds (Series 2002B), 5.375% (Original Issue Yield: 5.48%), 12/1/2020 |
| A/A2 |
|
| 2,035,840 |
| 2,800,000 | 3,4 | New York City, NY, RITES (PA-1075), 12.00747%, 6/1/2018 |
| A/NR |
|
| 3,138,912 |
| 5,000,000 |
| New York City, NY, UT GO Bonds (Series A), 5.50%, 8/1/2022 |
| A/A2 |
|
| 5,144,200 |
| 1,500,000 |
| New York State Dormitory Authority, Revenue Bonds (Series 2000C), 6.00% (Mt. Sinai NYU Health Obligated Group), 7/1/2026 |
| BB/Ba1 |
|
| 1,516,170 |
| 1,500,000 |
| Triborough Bridge & Tunnel Authority, NY, General Purpose Revenue Refunding Bonds (Series 2002B), 5.00%, 11/15/2022 |
| AA-/Aa3 |
|
| 1,505,940 |
|
|
| TOTAL |
|
|
|
| 24,396,840 |
|
|
| North Carolina--0.6% |
|
|
|
|
|
| 500,000 |
| North Carolina Medical Care Commission, Health Care Facilities First Mortgage Revenue Bonds, 6.375% (Arbor Acres Community)/(Original Issue Yield: 6.55%), 3/1/2032 |
| NR |
|
| 502,400 |
| 1,990,000 |
| North Carolina Medical Care Commission, Health Care Facilities First Mortgage Revenue Bonds, 7.625% (Depaul Community Facilities)/(Original Issue Yield: 7.625%), 11/1/2029 |
| NR |
|
| 2,009,502 |
|
|
| TOTAL |
|
|
|
| 2,511,902 |
Principal |
|
| Credit | 1 | Value | |||
|
|
| LONG-TERM MUNICIPALS--continued |
|
|
|
|
|
|
|
| Ohio--2.5% |
|
|
|
|
|
$ | 1,500,000 |
| Cleveland-Cuyahoga County, OH, Port Authority, Special Assessment Tax-Increment Revenue Bonds, 7.35% (University Heights, OH Public Parking Garage), 12/1/2031 |
| NR |
| $ | 1,544,910 |
| 500,000 |
| Franklin County, OH, Health Care Facilities, Revenue Bonds (Series 2001A), 7.125% (Ohio Presbyterian Retirement Services)/(Original Issue Yield: 7.35%), 7/1/2029 |
| BBB/NR |
|
| 526,135 |
| 1,680,000 | 3 | Franklin County, OH, Multifamily Housing Revenue Refunding Bonds (Series 1998B), 6.25% (Jefferson Chase Apartments Project), 11/1/2015 |
| NR |
|
| 1,440,869 |
| 2,500,000 | 3,4 | Lorain County, OH, RITES (PA-894R-A), 9.961% (Catholic Healthcare Partners), 10/1/2012 |
| NR |
|
| 2,890,300 |
| 2,500,000 | 3,4 | Lorain County, OH, RITES (PA-894R-B), 9.961% (Catholic Healthcare Partners), 10/1/2013 |
| NR |
|
| 2,841,650 |
| 1,500,000 |
| Ohio State Air Quality Development Authority, PCR Refunding Bonds (Series 1997A), 6.10% (Cleveland Electric Illuminating Co.), 8/1/2020 |
| BBB/Baa2 |
|
| 1,473,540 |
|
|
| TOTAL |
|
|
|
| 10,717,404 |
|
|
| Oklahoma--1.1% |
|
|
|
|
|
| 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/NR |
|
| 4,347,589 |
| 500,000 |
| Langston, OK, EDA, Student Housing Revenue Bonds (Series 2000A), 7.75% (Langston Community Development Corp.)/(Original Issue Yield: 7.90%), 8/1/2030 |
| NR |
|
| 485,410 |
|
|
| TOTAL |
|
|
|
| 4,832,999 |
|
|
| Oregon--0.2% |
|
|
|
|
|
| 1,000,000 |
| Yamhill County, OR, Hospital Authority, Revenue Bonds, 7.00% (Friendsview Retirement Community)/(Original Issue Yield: 7.125%), 12/1/2034 |
| NR |
|
| 955,330 |
|
|
| Pennsylvania--8.9% |
|
|
|
|
|
| 1,330,000 |
| Allegheny County, PA, HDA, Health Care Facilities Revenue Bonds (Series 1998), 5.875% (Villa St. Joseph of Baden, Inc.)/(Original Issue Yield: 6.02%), 8/15/2018 |
| NR |
|
| 1,160,784 |
| 4,500,000 |
| Allegheny County, PA, HDA, Health System Revenue Bonds (Series 2000B), 9.25% (West Penn Allegheny Health System)/(Original Issue Yield: 9.70%), 11/15/2030 |
| B/B2 |
|
| 4,368,600 |
| 1,000,000 |
| Allegheny County, PA, HDA, Revenue Bonds, Series A, 8.75% (Covenant at South Hills)/(Original Issue Yield: 8.80%), 2/1/2031 |
| NR |
|
| 1,043,490 |
| 2,000,000 | 3,4 | Allegheny County, PA, IDA, Cargo Facilities Lease Revenue Bonds (Series 1999), 6.625% (AFCO Cargo PIT LLC Project)/(Original Issue Yield: 6.75%), 9/1/2024 |
| NR |
|
| 1,809,520 |
| 1,500,000 |
| Allegheny County, PA, IDA, Lease Revenue Bonds (Series 2001), 6.60% (Residential Resources Inc. Project)/ (Original Issue Yield: 6.75%), 9/1/2031 |
| NR |
|
| 1,440,945 |
Principal |
|
| Credit | 1 | Value | |||
|
|
| LONG-TERM MUNICIPALS--continued |
|
|
|
|
|
|
|
| Pennsylvania--continued |
|
|
|
|
|
$ | 1,000,000 |
| Bucks County, PA, IDA, First Mortgage Health Care Facilities Revenue Bonds (Series 1999), 6.30% (Chandler Hall Health Services Obligated Group)/(Original Issue Yield: 6.40%), 5/1/2029 |
| NR |
| $ | 924,900 |
| 1,500,000 |
| Chartiers Valley, PA, Industrial & Commercial Development Authority, First Mortgage Revenue Refunding Bonds (Series 1999), 6.375% (Asbury Health Center)/(Original Issue Yield: 6.52%), 12/1/2024 |
| NR |
|
| 1,425,450 |
| 2,000,000 |
| Commonwealth of Pennsylvania, UT GO Bonds (Second Series 2001), 5.00%, 9/15/2018 |
| AA/Aa2 |
|
| 2,077,600 |
| 2,000,000 |
| Cumberland County, PA, Municipal Authority, Retirement Community Revenue Bonds (Series 2002A), 7.25% (Wesley Affiliated Services, Inc. Obligated Group)/(Original Issue Yield: 7.50%), 1/1/2035 |
| NR |
|
| 1,968,120 |
| 2,785,000 |
| Delaware County, PA, Authority, College Revenue Bonds, 7.25% (Eastern College)/(United States Treasury PRF)/(Original Issue Yield: 7.875%), 3/1/2012 |
| NR |
|
| 2,871,948 |
| 1,000,000 |
| Lancaster, PA, IDA, Revenue Bonds (Series 2000A), 7.625% (Garden Spot Villiage Project)/(Original Issue Yield: 7.84%), 5/1/2031 |
| NR |
|
| 1,030,380 |
| 1,000,000 |
| Lawrence County, PA, IDA, Senior Health and Housing Facilities Revenue Bonds, 7.50% (Shenango Presbyterian SeniorCare Obligated Group)/(Original Issue Yield: 7.75%), 11/15/2031 |
| NR |
|
| 948,420 |
| 2,000,000 |
| Montgomery County, PA, Higher Education & Health Authority Hospital, Revenue Bonds, 7.375% (Philadelphia Geriatric Center)/(Original Issue Yield: 7.50%), 12/1/2030 |
| NR |
|
| 1,969,440 |
| 500,000 |
| Pennsylvania EDFA, Exempt Facilities Revenue Bonds (Series 1997B), 6.125% (National Gypsum Co.), 11/1/2027 |
| NR |
|
| 465,195 |
| 2,000,000 |
| Pennsylvania EDFA, Exempt Facilities Revenue Bonds, 6.25% (National Gypsum Co.), 11/1/2027 |
| NR |
|
| 1,890,460 |
| 1,500,000 |
| Pennsylvania EDFA, Resource Recovery Revenue Bonds (Series A), 6.40% (Northampton Generating), 1/1/2009 |
| BBB-/NR |
|
| 1,535,820 |
| 7,500,000 |
| Pennsylvania EDFA, Wastewater Treatment Revenue Bonds (Series A), 7.60% (Sun Co., Inc.)/(Original Issue Yield: 7.653%), 12/1/2024 |
| BBB/Baa2 |
|
| 7,892,475 |
| 1,015,000 |
| Pennsylvania State Higher Education Facilities Authority, Revenue Bonds (Series 1996), 7.15% (Thiel College), 5/15/2015 |
| NR |
|
| 1,171,351 |
| 1,500,000 |
| Scranton, PA, UT GO Bonds (Series 2001C), 7.10% (Original Issue Yield: 7.35%)/(United States Treasury PRF), 9/1/2031 |
| NR |
|
| 1,817,925 |
|
|
| TOTAL |
|
|
|
| 37,812,823 |
|
|
| Puerto Rico--0.6% |
|
|
|
|
|
| 1,000,000 | 3,4 | Puerto Rico Highway and Transportation Authority, RITES (Series PA 331A), 9.723% (AMBAC INS), 1/1/2010 |
| NR |
|
| 1,250,590 |
| 1,000,000 | 3,4 | Puerto Rico Highway and Transportation Authority, RITES (Series PA 331B), 9.723% (AMBAC INS), 1/1/2011 |
| NR |
|
| 1,256,950 |
|
|
| TOTAL |
|
|
|
| 2,507,540 |
Principal |
|
| Credit | 1 | Value | |||
|
|
| LONG-TERM MUNICIPALS--continued |
|
|
|
|
|
|
|
| Rhode Island--0.2% |
|
|
|
|
|
$ | 1,000,000 |
| Rhode Island State Health and Educational Building Corp., Hospital Financing Revenue Bonds (Series 2002), 6.50% (Lifespan Obligated Group)/(Original Issue Yield: 6.70%), 8/15/2032 |
| BBB/Baa2 |
| $ | 1,000,300 |
|
|
| South Carolina--1.2% |
|
|
|
|
|
| 6,000,000 |
| Connector 2000 Association, Inc., SC, Capital Appreciation Senior Revenue Bonds (Series 1998B) (Original Issue Yield: 5.80%), 1/1/2025 |
| B-/NR |
|
| 445,920 |
| 15,550,000 |
| Connector 2000 Association, Inc., SC, Toll Road Capital Appreciation Revenue Bonds (Series 1998A) (Original Issue Yield: 5.85%), 1/1/2034 |
| B-/NR |
|
| 511,750 |
| 1,500,000 |
| South Carolina Jobs-EDA, First Mortgage Health Facilities Revenue Refunding Bonds (Series 1998), 5.70% (The Lutheran Homes of South Carolina, Inc.)/(Original Issue Yield: 5.80%), 5/1/2026 |
| NR |
|
| 1,256,025 |
| 1,500,000 |
| South Carolina Jobs-EDA, Hospital Facilities Improvement Revenue Bonds, Series 2000A, 7.375% (Palmetto Health Alliance)/(Original Issue Yield: 7.55%), 12/15/2021 |
| BBB/Baa2 |
|
| 1,873,215 |
| 1,000,000 |
| Tobacco Settlement Revenue Management Authority, SC, Tobacco Settlement Asset-Backed Bonds (Series 2001B), 6.375% (Original Issue Yield: 6.532%), 5/15/2028 |
| A-/Baa2 |
|
| 800,320 |
|
|
| TOTAL |
|
|
|
| 4,887,230 |
|
|
| South Dakota--0.5% |
|
|
|
|
|
| 2,000,000 |
| Minnehaha County, SD Health Facilities, Revenue Bonds (Series 2002A), 7.00% (Bethany Lutheran Home)/(Original Issue Yield: 7.198%), 12/1/2035 |
| NR |
|
| 1,935,720 |
|
|
| Tennessee--3.8% |
|
|
|
|
|
| 1,215,000 |
| Chattanooga, TN IDB, Industrial Development Refunding Revenue Bonds (Series 1999), 7.00% (Market Street, Ltd. Project), 12/15/2012 |
| NR |
|
| 1,090,657 |
| 1,110,000 |
| Chattanooga, TN IDB, Industrial Development Refunding Revenue Bonds (Series 1999), 7.00% (Warehouse Row Ltd. Project), 12/15/2012 |
| NR |
|
| 996,403 |
| 3,000,000 |
| Elizabethton, TN Health & Educational Facilities Board, First Mortgage Hospital Revenue Refunding & Improvement Bonds (Series 2000B), 8.00% (Mountain States Health Alliance), 7/1/2033 |
| NR/Baa2 |
|
| 3,337,830 |
| 1,000,000 |
| Knox County, TN Health Education & Housing Facilities Board, Revenue Bonds, 6.375% (Baptist Health System of East Tennessee)/(Original Issue Yield: 6.50%), 4/15/2022 |
| NR/Baa2 |
|
| 1,013,320 |
| 2,500,000 |
| Springfield, TN Health & Educational Facilities Board, Hospital Revenue Bonds, 8.25% (NorthCrest Medical Center)/(Original Issue Yield: 8.50%), 4/1/2012 |
| NR/#Aaa |
|
| 2,821,475 |
Principal |
|
| Credit | 1 | Value | |||
|
|
| LONG-TERM MUNICIPALS--continued |
|
|
|
|
|
|
|
| Tennessee--continued |
|
|
|
|
|
$ | 5,000,000 |
| Springfield, TN Health & Educational Facilities Board, Hospital Revenue Bonds, 8.50% (NorthCrest Medical Center)/(Original Issue Yield: 8.875%), 4/1/2024 |
| NR/#Aaa |
| $ | 5,934,750 |
| 1,000,000 |
| Sullivan County, TN Health Educational & Housing Facilities Board, Hospital Revenue Bonds, 6.25% (Wellmont Health System)/(Original Issue Yield: 6.45%), 9/1/2022 |
| BBB+/NR |
|
| 1,030,580 |
|
|
| TOTAL |
|
|
|
| 16,225,015 |
|
|
| Texas--8.3% |
|
|
|
|
|
| 2,000,000 |
| ABIA Development Corp., TX, Airport Facilities Revenue Bonds (Series 1999), 7.25% (Aero Austin LP)/(Original Issue Yield: 7.50%), 1/1/2025 |
| NR |
|
| 1,929,420 |
| 800,000 |
| Abilene, TX Health Facilites Development Corp., Retirement Facilities Revenue Bonds (Series 2003A), 7.00% (Sears Methodist Retirement)/(Original Issue Yield: 7.25%), 11/15/2033 |
| NR |
|
| 774,168 |
| 1,000,000 |
| Austin, TX Convention Center Enterprises, Inc., First Tier Hotel Revenue Bonds (Series 2001A), 6.70% (Original Issue Yield: 6.75%), 1/1/2032 |
| BBB-/Baa3 |
|
| 1,022,100 |
| 1,000,000 |
| Brazos River Authority, TX, PCR Refunding Bonds (Series 2003A), 6.75% TOBs (TXU Energy), Mandatory Tender 4/1/2013 |
| BBB/Baa2 |
|
| 1,069,060 |
| 1,000,000 |
| Brazos River Authority, TX, PCR Refunding Bonds, 7.70% (TXU Energy), 4/1/2033 |
| BBB/Baa2 |
|
| 1,102,020 |
| 3,000,000 |
| Brazos River Authority, TX, Refunding PCR Bonds (Series 2001C), 5.75% TOBs (TXU Energy), Mandatory Tender 11/1/2011 |
| BBB/Baa2 |
|
| 3,124,680 |
| 1,000,000 |
| Brazos River Authority, TX, Revenue Refunding Bonds (Series 1999C), 7.75% (CenterPoint Energy, Inc.), 12/1/2018 |
| BBB-/Ba1 |
|
| 1,080,550 |
| 2,500,000 |
| Dallas-Fort Worth, TX International Airport Facility Improvement Corp., Revenue Bonds, 7.625% (Delta Air Lines, Inc.)/(Original Issue Yield: 7.65%), 11/1/2021 |
| B/B3 |
|
| 1,979,050 |
| 1,500,000 |
| El Paso, TX HFDC, Senior Care Facilities Revenue Bonds, 7.75% (Bienvivir Senior Health Services), 8/15/2031 |
| NR |
|
| 1,469,745 |
| 3,000,000 |
| Gulf Coast, TX Waste Disposal Authority, Revenue Bonds (Series A), 6.875% (Champion International Corp.)/(Original Issue Yield: 7.15%), 12/1/2028 |
| BBB/Baa2 |
|
| 3,078,240 |
| 500,000 |
| Gulf Coast, TX Waste Disposal Authority, Waste Disposal Revenue Bonds (Series 2001), 6.65% (Valero Energy Corp.), 4/1/2032 |
| BBB/Baa3 |
|
| 507,135 |
| 1,000,000 |
| Houston, TX Airport System, Special Facilities Revenue Bonds (Series 2001), 7.00% (Continental Airlines, Inc.), 7/1/2029 |
| B-/Caa2 |
|
| 802,550 |
| 1,000,000 |
| Mesquite, TX Health Facilities Development Corp., Retirement Facility Revenue Bonds, 7.625% (Christian Care Centers, Inc.- Greenway Village)/(Original Issue Yield: 7.75%), 2/15/2028 |
| BBB-/NR |
|
| 1,035,860 |
| 2,000,000 |
| North Central Texas HFDC, Retirement Facility Revenue Bonds (Series 1999), 7.50% (Northwest Senior Housing Corp. Edgemere Project)/(Original Issue Yield: 7.75%), 11/15/2029 |
| NR |
|
| 2,048,820 |
| 4,200,000 |
| North Central, TX Housing Finance Corp., Housing Revenue Bonds (Series 1999A), 7.00% (Tiffany Square Apartments), 12/1/2031 |
| NR |
|
| 4,069,002 |
Principal |
|
| Credit | 1 | Value | |||
|
|
| LONG-TERM MUNICIPALS--continued |
|
|
|
|
|
|
|
| Texas--continued |
|
|
|
|
|
$ | 2,000,000 |
| Port of Corpus Christi, TX Authority, PCR Refunding Bonds, 6.70% (CNA Holdings, Inc. (Celanese Project)), 11/1/2030 |
| BBB/Baa2 |
| $ | 2,092,920 |
| 1,000,000 |
| Tarrant County, TX HFDC, Revenue Bonds (Series 1998C), 5.75% (Bethesda Living Center)/ (Original Issue Yield: 5.89%), 8/15/2018 |
| NR |
|
| 878,450 |
| 1,000,000 |
| Tarrant County, TX HFDC, Revenue Bonds (Series 1998C), 5.75% (Bethesda Living Center)/ (Original Issue Yield: 5.97%), 8/15/2028 |
| NR |
|
| 820,150 |
| 2,000,000 |
| Tarrant County, TX Housing Finance Corp., Multifamily Housing Revenue Bonds (Series 2002A), 6.25% (Quail Ridge Apartments Project), 3/1/2004 |
| NR |
|
| 2,000,080 |
| 2,000,000 |
| Texas State Affordable Housing Corp., Multifamily Housing Revenue Bonds (Junior Series 2002B), 8.00% (American Housing Foundation)/(Original Issue Yield: 8.365%), 3/1/2032 |
| BBB-/NR |
|
| 1,893,300 |
| 1,485,000 | 3,4 | Texas State Affordable Housing Corp., Multifamily Housing Revenue Bonds (Series 2001B), 7.25% (NHT/GTEX Project), 10/1/2031 |
| BBB-/NR |
|
| 1,441,608 |
| 1,000,000 |
| Tom Green County, TX HFDC, Hospital Revenue Bonds, 6.75% (Shannon Health System)/(Original Issue Yield: 6.85%), 5/15/2021 |
| NR/Baa3 |
|
| 1,034,980 |
|
|
| TOTAL |
|
|
|
| 35,253,888 |
|
|
| Virginia--2.2% |
|
|
|
|
|
| 675,000 |
| Broad Street Community Development Authority, VA, Revenue Bonds, 7.10% (Original Issue Yield: 7.15%), 6/1/2016 |
| NR |
|
| 659,171 |
| 1,000,000 |
| Broad Street Community Development Authority, VA, Revenue Bonds, 7.50% (Original Issue Yield: 7.625%), 6/1/2033 |
| NR |
|
| 959,190 |
| 2,000,000 |
| HeNR/ NRico County, VA EDA, Residential Care Facility Revenue Refunding Bonds, 6.70% (Virginia United Methodist Homes, Inc.)/(Original Issue Yield: 6.80%), 6/1/2027 |
| NR |
|
| 1,975,380 |
| 1,500,000 |
| Peninsula Port Authority, VA, Residential Care Facility Revenue Bonds (Series 2003A), 7.375% (Virginia Baptist Homes Obligated Group)/(Original Issue Yield: 7.625%), 12/1/2032 |
| NR |
|
| 1,516,290 |
| 7,500,000 |
| Pocohontas Parkway Association, VA, Toll Road Capital Appreciation Revenue Bonds (Series B) (Original Issue Yield: 5.75%), 8/15/2017 |
| BB/NR |
|
| 2,403,300 |
| 16,000,000 |
| Pocohontas Parkway Association, VA, Toll Road Revenue Bonds (Series 1998B) (Original Issue Yield: 5.90%), 8/15/2029 |
| BB/NR |
|
| 1,922,880 |
|
|
| TOTAL |
|
|
|
| 9,436,211 |
|
|
| Washington--0.2% |
|
|
|
|
|
| 1,000,000 |
| Port of Seattle, WA IDC, Special Facilities Revenue Bonds (Series 2001), 7.25% (Northwest Airlines, Inc.)/(Original Issue Yield: 7.50%), 4/1/2030 |
| NR |
|
| 840,000 |
Principal |
|
| Credit | 1 | Value | |||
|
|
| LONG-TERM MUNICIPALS--continued |
|
|
|
|
|
|
|
| Wisconsin--2.7% |
|
|
|
|
|
$ | 3,000,000 |
| Badger, WI Tobacco Asset Securitization Corp., Refunding Revenue Bonds, 6.125%, 6/1/2027 |
| BBB/Baa2 |
| $ | 2,506,320 |
| 1,250,000 |
| Wisconsin State HEFA, Revenue Bonds (Series 1998), 5.70% (United Lutheran Program For The Aging, Inc.)/(Original Issue Yield: 5.778%), 3/1/2028 |
| NR |
|
| 1,039,325 |
| 1,000,000 |
| Wisconsin State HEFA, Revenue Bonds (Series 2002A), 7.375% (Divine Savior Healthcare), 5/1/2026 |
| NR |
|
| 991,160 |
| 880,000 |
| Wisconsin State HEFA, Revenue Bonds (Series 2002A), 7.50% (Divine Savior Healthcare), 5/1/2032 |
| NR |
|
| 871,675 |
| 2,000,000 |
| Wisconsin State HEFA, Revenue Bonds (Series B), 6.75% (Grant Regional Health Center, Inc.)/(Original Issue Yield: 6.90%), 10/1/2022 |
| NR |
|
| 1,909,220 |
| 1,250,000 |
| Wisconsin State HEFA, Revenue Bonds, 5.80% (Beaver Dam Community Hospitals, Inc.), 8/15/2028 |
| NR |
|
| 999,900 |
| 500,000 |
| Wisconsin State HEFA, Revenue Bonds, 6.625% (Tomah Memorial Hospital, Inc.)/(Original Issue Yield: 6.875%), 7/1/2028 |
| NR |
|
| 484,800 |
| 1,630,000 |
| Wisconsin State HEFA, Revenue Bonds, 6.00% (Agnesian Healthcare, Inc.)/(Original Issue Yield: 6.15%), 7/1/2030 |
| A-/A3 |
|
| 1,668,175 |
| 1,000,000 |
| Wisconsin State HEFA, Revenue Bonds, (Series 1998), 5.75% (Attic Angel Obligated Group)/(Original Issue Yield: 6.00%), 11/15/2027 |
| NR |
|
| 839,810 |
|
|
| TOTAL |
|
|
|
| 11,310,385 |
|
|
| Wyoming--0.3% |
|
|
|
|
|
| 1,500,000 |
| Teton County, WY, Hospital District, Hospital Revenue Bonds, 6.75% (St. John's Medical Center)/(Original Issue Yield: 7.00%), 12/1/2027 |
| NR |
|
| 1,449,525 |
|
|
| TOTAL LONG-TERM MUNICIPALS (IDENTIFIED COST $411,787,143) |
|
|
|
| 405,258,243 |
Principal |
|
| Credit | 1 | Value | |||
|
|
| SHORT-TERM MUNICIPALS--1.0% |
|
|
|
|
|
|
|
| Alaska--0.5% |
|
|
|
|
|
$ | 1,900,000 |
| Valdez, AK, Marine Terminal, (Series 2003A) Daily VRDNs (BP Pipelines (Alaska) Inc.)/(BP Amoco PLC GTD) |
| A-1+/VMIG1 |
| $ | 1,900,000 |
|
|
| Texas--0.5% |
|
|
|
|
|
| 2,300,000 |
| Harris County, TX, HFDC, (Series 2002) Daily VRDNs (Methodist Hospital, Harris County, TX) |
| A-1+/NR |
|
| 2,300,000 |
|
|
| TOTAL SHORT-TERM MUNICIPALS (IDENTIFIED COST $4,200,000) |
|
|
|
| 4,200,000 |
|
|
| TOTAL INVESTMENTS--96.7% (IDENTIFIED COST $415,987,143)5 |
|
|
|
| 409,458,243 |
|
|
| OTHER ASSETS AND LIABILITIES - NET--3.3% |
|
|
|
| 13,892,511 |
|
|
| TOTAL NET ASSETS--100% |
|
|
| $ | 423,350,754 |
Securities that are subject to the federal alternative minimum tax (AMT) represent 26.3% of the portfolio as calculated based upon total portfolio market value (unaudited).
1 Please refer to the "Investment Ratings" in the Statement of Additional Information for an explanation of the credit ratings. Current credit ratings are unaudited.
2 Non-income producing security.
3 Denotes a restricted security which is subject to restrictions on resale under federal securities laws. At August 31, 2003, these securities amounted to $76,678,385 which represents 18.1% of net assets. Included in these amounts, securities which have been deemed liquid amounted to $70,150,641 which represents 16.6% of net assets.
4 Denotes a restricted security that has been deemed liquid by criteria approved by the Fund's Board of Directors.
5 The cost of investments for federal tax purposes is $415,937,824.
Note: The categories of investments are shown as a percentage of total net assets at August 31, 2003.
The following acronyms are used throughout this portfolio:
AMBAC | - --American Municipal Bond Assurance Corporation |
COL | - --Collateralized |
EDA | - --Economic Development Authority |
EDFA | - --Economic Development Financing Authority |
FHA | - --Federal Housing Administration |
FSA | - --Federal Security Assurance |
GNMA | - --Government National Mortgage Association |
GO | - --General Obligation |
GTD | - --Guaranteed |
HDA | - --Hospital Development Authority |
HEFA | - --Health and Education Facilities Authority |
HFA | - --Housing Finance Authority |
HFDC | - --Health Facility Development Corporation |
IDA | - --Industrial Development Authority |
IDB | - --Industrial Development Bond |
IDC | - --Industrial Development Corporation |
INS | - --Insured |
LOC | - --Letter of Credit |
LT | - --Limited Tax |
MBIA | - --Municipal Bond Insurance Association |
PCR | - --Pollution Control Revenue |
PRF | - --Prerefunded |
RITES | - --Residual Interest Tax-Exempt Securities |
SFM | - --Single Family Mortgage |
TOBs | - --Tender Option Bonds |
UT | - --Unlimited Tax |
VRDNs | - --Variable Rate Demand Notes |
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
August 31, 2003
Assets: |
|
|
|
|
|
|
|
Total investments in securities, at value (identified cost $415,987,143) |
|
|
|
| $ | 409,458,243 |
|
Cash |
|
|
|
|
| 41,425 |
|
Income receivable |
|
|
|
|
| 7,887,791 |
|
Receivable for investments sold |
|
|
|
|
| 5,361,000 |
|
Receivable for shares sold |
|
|
|
|
| 736,191 |
|
Net receivable for swap contracts |
|
|
|
|
| 404,698 |
|
TOTAL ASSETS |
|
|
|
|
| 423,889,348 |
|
Liabilities: |
|
|
|
|
|
|
|
Payable for shares redeemed |
| $ | 294,534 |
|
|
|
|
Payable for portfolio accounting fees (Note 6) |
|
| 16,430 |
|
|
|
|
Payable for transfer agent and dividend disbursing agent fees and expense (Note 6) |
|
| 28,161 |
|
|
|
|
Payable for distribution services fee (Note 6) |
|
| 89,122 |
|
|
|
|
Payable for shareholder services fee (Note 6) |
|
| 90,307 |
|
|
|
|
Accrued expenses |
|
| 20,040 |
|
|
|
|
TOTAL LIABILITIES |
|
|
|
|
| 538,594 |
|
Net assets for 44,338,842 shares outstanding |
|
|
|
| $ | 423,350,754 |
|
Net Assets Consist of: |
|
|
|
|
|
|
|
Paid in capital |
|
|
|
| $ | 471,111,960 |
|
Net unrealized depreciation of investments and swap contracts |
|
|
|
|
| (6,124,202 | ) |
Accumulated net realized loss on investments and swap contracts |
|
|
|
|
| (43,200,514 | ) |
Undistributed net investment income |
|
|
|
|
| 1,563,510 |
|
TOTAL NET ASSETS |
|
|
|
| $ | 423,350,754 |
|
Net Asset Value, Offering Price and Redemption Proceeds Per Share |
|
|
|
|
|
|
|
Class A Shares: |
|
|
|
|
|
|
|
Net asset value per share ($117,435,047 ÷ 12,297,649 shares outstanding) |
|
|
|
|
| $9.55 |
|
Offering price per share (100/95.50 of $9.55)1 |
|
|
|
|
| $10.00 |
|
Redemption proceeds per share |
|
|
|
|
| $9.55 |
|
Class B Shares: |
|
|
|
|
|
|
|
Net asset value per share ($124,735,895 ÷ 13,068,345 shares outstanding) |
|
|
|
|
| $9.54 |
|
Offering price per share |
|
|
|
|
| $9.54 |
|
Redemption proceeds per share (94.50/100 of $9.54)1 |
|
|
|
|
| $9.02 |
|
Class C Shares: |
|
|
|
|
|
|
|
Net asset value per share ($14,082,681 ÷ 1,475,415 shares outstanding) |
|
|
|
|
| $9.54 |
|
Offering price per share (100/99.00 of $9.54)1 |
|
|
|
|
| $9.64 |
|
Redemption proceeds per share (99.00/100 of $9.54)1 |
|
|
|
|
| $9.44 |
|
Class F Shares: |
|
|
|
|
|
|
|
Net asset value per share ($167,097,131 ÷ 17,497,433 shares outstanding) |
|
|
|
|
| $9.55 |
|
Offering price per share (100/99.00 of $9.55)1 |
|
|
|
|
| $9.65 |
|
Redemption proceeds per share (99.00/100 of $9.55)1 |
|
|
|
|
| $9.45 |
|
1 See "What Do Shares Cost?" in the Prospectus.
See Notes which are an integral part of the Financial Statements
Statement of Operations
Year Ended August 31, 2003
Investment Income: |
|
|
|
|
|
|
|
Interest |
|
|
|
| $ | 29,201,580 |
|
Expenses: |
|
|
|
|
|
|
|
Investment adviser fee (Note 6) |
| $ | 2,522,111 |
|
|
|
|
Administrative personnel and services fee (Note 6) |
|
| 316,105 |
|
|
|
|
Custodian fees |
|
| 22,175 |
|
|
|
|
Transfer and dividend disbursing agent fees and expenses (Note 6) |
|
| 238,837 |
|
|
|
|
Directors'/Trustees' fees |
|
| 13,274 |
|
|
|
|
Auditing fees |
|
| 16,424 |
|
|
|
|
Legal fees |
|
| 6,871 |
|
|
|
|
Portfolio accounting fees (Note 6) |
|
| 152,594 |
|
|
|
|
Distribution services fee--Class B Shares (Note 6) |
|
| 884,366 |
|
|
|
|
Distribution services fee--Class C Shares (Note 6) |
|
| 85,931 |
|
|
|
|
Shareholder services fee--Class A Shares (Note 6) |
|
| 291,257 |
|
|
|
|
Shareholder services fee--Class B Shares (Note 6) |
|
| 294,788 |
|
|
|
|
Shareholder services fee--Class C Shares (Note 6) |
|
| 28,644 |
|
|
|
|
Shareholder services fee--Class F Shares (Note 6) |
|
| 436,190 |
|
|
|
|
Share registration costs |
|
| 78,464 |
|
|
|
|
Printing and postage |
|
| 51,163 |
|
|
|
|
Insurance premiums |
|
| 1,391 |
|
|
|
|
Taxes |
|
| 31,341 |
|
|
|
|
Miscellaneous |
|
| 11,900 |
|
|
|
|
TOTAL EXPENSES |
|
| 5,483,826 |
|
|
|
|
Net investment income |
|
|
|
|
| 23,717,754 |
|
Realized and Unrealized Gain (Loss) on Investments and Swap Contracts: |
|
|
|
|
|
|
|
Net realized loss on investments |
|
|
|
|
| (1,640,664 | ) |
Net realized loss on swap contracts |
|
|
|
|
| (741,668 | ) |
Net change in unrealized depreciation on investments |
|
|
|
|
| (6,320,793 | ) |
Net change in unrealized appreciation on swap contracts |
|
|
|
|
| 404,698 |
|
Net realized and unrealized loss on investments and swap contracts |
|
|
|
|
| (8,298,427 | ) |
Change in net assets resulting from operations |
|
|
|
| $ | 15,419,327 |
|
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
Year Ended August 31 |
|
| 2003 |
|
|
| 2002 |
|
Increase (Decrease) in Net Assets |
|
|
|
|
|
|
|
|
Operations: |
|
|
|
|
|
|
|
|
Net investment income |
| $ | 23,717,754 |
|
| $ | 22,130,972 |
|
Net realized loss on investments and swap contracts |
|
| (2,382,332 | ) |
|
| (4,569,180 | ) |
Net change in unrealized appreciation/depreciation of investments and swap contracts |
|
| (5,916,095 | ) |
|
| (3,098,164 | ) |
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS |
|
| 15,419,327 |
|
|
| 14,463,628 |
|
Distributions to Shareholders: |
|
|
|
|
|
|
|
|
Distributions from net investment income |
|
|
|
|
|
|
|
|
Class A Shares |
|
| (6,788,515 | ) |
|
| (6,029,330 | ) |
Class B Shares |
|
| (5,990,071 | ) |
|
| (4,620,640 | ) |
Class C Shares |
|
| (576,157 | ) |
|
| (497,513 | ) |
Class F Shares |
|
| (10,211,668 | ) |
|
| (10,420,766 | ) |
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS |
|
| (23,566,411 | ) |
|
| (21,568,249 | ) |
Share Transactions: |
|
|
|
|
|
|
|
|
Proceeds from sale of shares |
|
| 84,659,633 |
|
|
| 68,278,715 |
|
Net asset value of shares issued to shareholders in payment of distributions declared |
|
| 12,791,100 |
|
|
| 11,969,409 |
|
Cost of shares redeemed |
|
| (78,629,480 | ) |
|
| (66,202,475 | ) |
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS |
|
| 18,821,253 |
|
|
| 14,045,649 |
|
Change in net assets |
|
| 10,674,169 |
|
|
| 6,941,028 |
|
Net Assets: |
|
|
|
|
|
|
|
|
Beginning of period |
|
| 412,676,585 |
|
|
| 405,735,557 |
|
End of period (including undistributed net investment income of $1,563,510 and $1,444,777, respectively) |
| $ | 423,350,754 |
|
| $ | 412,676,585 |
|
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
August 31, 2003
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 investment objective is to provide a high level of current income which is generally exempt from federal regular income tax. The Fund offers four classes of shares: Class A, Class B, Class C and Class F Shares.
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 ("GAAP") in the United States of America.
Investment Valuation
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 60 days or less at the time of purchase may be valued at amortized cost, which approximates fair market value. Securities for which no quotations are readily available are valued at fair value as determined in good faith using methods approved by the Board of Directors (the "Directors").
Investment Income, Expenses and Distributions
Interest income and expenses are accrued daily. Distributions to shareholders are recorded on the ex-dividend date. Non-cash dividends included in the dividend income, if any, are recorded at fair value. The Fund offers multiple classes of shares, which differ in their respective distribution and service fees. All shareholders bear the common expenses of the Fund based on average daily net assets of each class without distinction between share classes. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.
Premium and Discount Amortization
All premiums and discounts on fixed income securities are amortized/accreted for financial statement purposes.
Federal Taxes
It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal tax is necessary.
Other Taxes
As an open-end management investment company incorporated in the state of Maryland but domiciled in Pennsylvania, the Fund is subject to the Pennsylvania Franchise Tax. This franchise tax is assessed annually on the value of the Fund, as represented by average net assets for the tax year.
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. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
Restricted Securities
Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. In some cases, the issuer of restricted securities has agreed to register such securities for resale, at the issuer's expense, either upon demand by the Fund or in connection with another registered offering of the securities. Many restricted securities may be resold in the secondary market in transactions exempt from registration. Such restricted securities may be determined to be liquid under criteria established by the Directors. The Fund will not incur any registration costs upon such resales. The Fund's restricted securities are valued at the price provided by dealers in the secondary market or, if no market prices are available, at the fair value as determined in good faith using methods approved by the Directors.
Additional information on each restricted illiquid security held at August 31, 2003 is as follows:
Security |
| Acquisition Date |
| Acquisition Cost |
Franklin County, OH, Multifamily Housing Revenue Refunding Bonds |
| 11/20/1998 |
| $1,680,000 |
Kansas City, MO, IDA, Multifamily Housing Revenue Bonds |
| 7/27/1999 |
| 2,445,000 |
Kansas Development Finance Authority, Multifamily Housing Revenue Bonds |
| 10/19/1998 |
| 1,335,000 |
Maricopa County, AZ, IDA, Solid Waste Disposal Revenue Bonds |
| 6/4/1999 |
| 2,285,000 |
Swap Contracts
The Fund may enter into swap contracts. A swap is an exchange of cash payments between the Fund and another party, which is based on a specific financial index. The value of the swap is adjusted daily and the change in value is recorded as unrealized appreciation or depreciation. When a swap contract is closed, the Fund recognizes a realized gain or loss. The swap contracts entered into by the Fund are on a forward settling basis. For the year ended August 31, 2003, the Fund had realized losses of $741,668 on swap contracts.
Risks may arise upon entering into these agreements from the potential inability of the counterparties to meet the terms of their contract and from unanticipated changes in the value of the financial index on which the swap agreement is based. The Fund uses swaps for hedging purposes to reduce its exposure to interest rate fluctuations.
At August 31, 2003, the Fund has the following open swap contract:
Expiration |
|
|
| Swap |
| Current Market |
| Unrealized |
4/28/2014 |
| $45,000,000 |
| 4.08% Fixed |
| 3.97% |
| $404,698 |
Use of Estimates
The preparation of financial statements in conformity with GAAP 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 a trade date basis.
3. CHANGE IN ACCOUNTING POLICY
Effective September 1, 2001, the Fund adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies (the "Guide"). For financial statement purposes, the revised Guide requires the Fund to amortize premium and discount on all fixed income securities and to classify gains and losses realized on principal payments received on mortgage-backed securities (pay-down gains and losses) as part of investment income.
Upon initial adoption, the Fund adjusted its cost of fixed income securities by the cumulative amount of amortization that would have been recognized had amortization been in effect from the purchase date of each holding with a corresponding reclassification between unrealized appreciation/depreciation on investments and undistributed net investment income. Adoption of these accounting principles does not affect the Fund's net asset value or distributions, but changes the classification of certain amounts between investment income and realized and unrealized gain/loss on the Statement of Operations. The cumulative effect to the Fund resulting from the adoption of premium and discount amortization and recognition of paydown gains and losses as part of investment income on the financial statements is as follows:
| As of 9/1/2001 |
| For the Period Ended | |||||||
| Cost of |
| Undistributed |
| Net |
| Net Unrealized |
| Net | |
Increase (Decrease) |
| $84,637 |
| $84,637 |
| $37,156 |
| $(28,818) |
| $(8,338) |
The Statements of Changes in Net Assets and Financial Highlights for prior periods have not been restated to reflect this change in presentation.
4. CAPITAL STOCK
At August 31, 2003, par value shares ($0.001 per share) authorized were as follows:
Share Class |
| Number of Par Value |
Class A |
| 500,000,000 |
Class B |
| 500,000,000 |
Class C |
| 500,000,000 |
Class F |
| 500,000,000 |
TOTAL |
| 2,000,000,000 |
Transactions in capital stock were as follows:
Year Ended August 31 |
| 2003 |
| 2002 | ||||||||||
Class A Shares: |
| Shares |
| Amount |
| Shares |
| Amount | ||||||
Shares sold |
| 3,425,757 |
|
| $ | 33,021,524 |
|
| 1,582,994 |
|
| $ | 15,326,788 |
|
Shares issued to shareholders in payment of distributions declared |
| 513,880 |
|
|
| 4,943,487 |
|
| 444,043 |
|
|
| 4,293,208 |
|
Shares redeemed |
| (3,113,807 | ) |
|
| (29,931,486 | ) |
| (1,311,878 | ) |
|
| (12,686,398 | ) |
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS |
| 825,830 |
|
| $ | 8,033,525 |
|
| 715,159 |
|
| $ | 6,933,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended August 31 | 2003 | 2002 | ||||||||||||
Class B Shares: |
| Shares |
| Amount |
| Shares |
| Amount | ||||||
Shares sold |
| 3,830,526 |
|
| $ | 36,992,585 |
|
| 3,433,371 |
|
| $ | 33,234,342 |
|
Shares issued to shareholders in payment of distributions declared |
| 269,080 |
|
|
| 2,587,750 |
|
| 205,433 |
|
|
| 1,986,016 |
|
Shares redeemed |
| (2,066,612 | ) |
|
| (19,860,489 | ) |
| (1,801,434 | ) |
|
| (17,412,153 | ) |
NET CHANGE RESULTING FROM CLASS B SHARE TRANSACTIONS |
| 2,032,994 |
|
| $ | 19,719,846 |
|
| 1,837,370 |
|
| $ | 17,808,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended August 31 | 2003 | 2002 | ||||||||||||
Class C Shares: |
| Shares |
| Amount |
| Shares |
| Amount | ||||||
Shares sold |
| 721,169 |
|
| $ | 6,967,509 |
|
| 236,339 |
|
| $ | 2,291,672 |
|
Shares issued to shareholders in payment of distributions declared |
| 31,128 |
|
|
| 299,414 |
|
| 27,542 |
|
|
| 266,455 |
|
Shares redeemed |
| (327,554 | ) |
|
| (3,138,256 | ) |
| (319,445 | ) |
|
| (3,075,349 | ) |
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS |
| 424,743 |
|
| $ | 4,128,667 |
|
| (55,564 | ) |
| $ | (517,222 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended August 31 | 2003 | 2002 | ||||||||||||
Class F Shares: |
| Shares |
| Amount |
| Shares |
| Amount | ||||||
Shares sold |
| 796,653 |
|
| $ | 7,678,015 |
|
| 1,796,794 |
|
| $ | 17,425,913 |
|
Shares issued to shareholders in payment of distributions declared |
| 515,683 |
|
|
| 4,960,449 |
|
| 560,309 |
|
|
| 5,423,730 |
|
Shares redeemed |
| (2,667,136 | ) |
|
| (25,699,249 | ) |
| (3,407,022 | ) |
|
| (33,028,575 | ) |
NET CHANGE RESULTING FROM CLASS F SHARE TRANSACTIONS |
| (1,354,800 | ) |
| $ | (13,060,785 | ) |
| (1,049,919 | ) |
| $ | (10,178,932 | ) |
NET CHANGE RESULTING FROM SHARE TRANSACTIONS |
| 1,928,767 |
|
| $ | 18,821,253 |
|
| 1,447,046 |
|
| $ | 14,045,649 |
|
5. FEDERAL TAX INFORMATION
The timing and character of income and capital gain distributions are determined in accordance with income tax regulations which may differ from GAAP. These differences are due in part to differing treatments for discount accretion/premium amortization of debt securities and defaulted interest on securities sold.
For the year ended August 31, 2003, permanent differences identified and reclassified among the components of net assets were as follows:
Increase (Decrease) | ||||
Paid-In Capital |
| Undistributed |
| Accumulated |
$1,594 |
| $(32,610) |
| $31,016 |
Net investment income, net realized gains (losses) and net assets were not affected by this reclassification.
The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended August 31, 2003 and 2002 was as follows:
| 2003 |
| 2002 | |
Tax-exempt income |
| $23,566,411 |
| $21,568,249 |
As of August 31, 2003, the components of distributable earnings on a tax basis were as follows:
Undistributed tax-exempt income |
| $ 1,653,521 |
Unrealized depreciation |
| $ 6,074,883 |
Capital loss carryforward |
| $41,886,380 |
At August 31, 2003, the cost of investments for federal tax purposes was $415,937,824. The net unrealized depreciation of investments for federal tax purposes was $6,479,581. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $13,275,587 and net unrealized depreciation from investments for those securities having an excess of cost over value of $19,755,168.
The difference between book-basis and tax-basis unrealized appreciation/depreciation is attributable in part to the tax deferral of losses on wash sales and the differing treatments for discount accretion/premium amortization of debt securities.
At August 31, 2003, the Fund had a capital loss carryforward of $41,886,380 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code and thus will reduce the amount of 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 |
2004 |
| $ 3,648,711 |
2008 |
| $24,259,223 |
2009 |
| $ 4,968,940 |
2010 |
| $ 3,907,651 |
2011 |
| $ 5,101,855 |
Under current tax regulations, capital losses realized after October 31 may be deferred and treated as occurring on the first day of the following year. As of August 31, 2003, for federal income tax purposes, post October losses of $1,453,465 were deferred to September 1, 2003.
6. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
Federated Investment Management Company, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment adviser fee equal to 0.60% of the Fund's average daily net assets. The adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion.
Administrative Fee
Federated Services Company ("FServ"), under the Administrative Services Agreement ("Agreement"), provides the Fund with administrative personnel and services. The fee paid to FServ is based on the aggregate daily net assets of all Federated funds as specified below:
Maximum Administrative Fee |
| Average Aggregate Daily |
0.150% |
| on the first $250 million |
0.125% |
| on the next $250 million |
0.100% |
| on the next $250 million |
0.075% |
| on assets in excess of $750 million |
The administrative fee received during any fiscal year shall be at least $125,000 per portfolio and $30,000 per each additional class of Shares.
On August 22, 2003 the Directors'/Trustees' approved a new Agreement. Effective November 1, 2003, the fee paid to FServ will be based on the aggregate daily net assets of all Federated funds as specified below:
Maximum Administrative Fee |
| Average Aggregate Daily |
0.150% |
| on the first $5 billion |
0.125% |
| on the next $5 billion |
0.100% |
| on the next $10 billion |
0.075% |
| on assets in excess of $20 billion |
The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares.
FServ may voluntarily choose to waive any portion of its fee. FServ can modify or terminate this voluntary waiver at any time at its sole discretion.
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., ("FSC"), 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 according to the following schedule annually, to reimburse FSC. FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion.
Share Class |
| Percentage of Average |
Class A Shares |
| 0.25% |
Class B Shares |
| 0.75% |
Class C Shares |
| 0.75% |
Class F Shares |
| 0.25% |
For the year ended August 31, 2003, 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 Federated Shareholder Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily net assets of the Fund for the period. The fee paid to FSSC is used to finance certain services for shareholders and to maintain shareholder accounts. FSSC may voluntarily choose to waive any portion of its fee. FSSC can modify or terminate this voluntary waiver at any time at its sole discretion.
Transfer and Dividend Disbursing Agent Fees and Expenses
FServ, through its subsidiary 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. FSSC may voluntarily choose to waive any portion of its fee. FSSC can modify or terminate this voluntary waiver at any time at its sole discretion.
Portfolio Accounting Fee
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. FServ may voluntarily choose to waive any portion of its fee. FServ can modify or terminate this voluntary waiver at any time at its sole discretion.
Interfund Transactions
During the year ended August 31, 2003, 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 complied with Rule 17a-7 under the Act and amounted to $139,455,000 and $120,613,696, respectively.
General
Certain of the Officers and Directors of the Fund are Officers and Directors or Trustees of the above companies.
7. INVESTMENT RISK
Although the Fund has a diversified portfolio, the Fund has 51.9% of its portfolio invested in lower rated and comparable quality unrated high-yield securities. Investments in higher yield securities may be subject to a greater degree of credit risk and the risk tends to be more sensitive to economic conditions than higher rated securities. The risk of loss due to default by the issuer may be significantly greater for the holders of high yielding securities because such securities are generally unsecured and often subordinated to other creditors of the issuer.
8. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations (and in-kind contributions), for the year ended August 31, 2003, were as follows:
Purchases |
| $ | 117,726,122 |
Sales |
| $ | 98,767,254 |
9. FEDERAL TAX INFORMATION (UNAUDITED)
At August 31, 2003, 100% of the distributions from net investment income is exempt from federal income tax, other than the federal AMT.
Report of Ernst & Young LLP, Independent Auditors
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF FEDERATED MUNICIPAL OPPORTUNITIES FUND, INC.:
We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Federated Municipal Opportunities Fund, Inc. (the "Fund") as of August 31, 2003, the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the year ended August 31, 1999 were audited by other auditors whose report, dated October 15, 1999, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of August 31, 2003, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Federated Municipal Opportunities Fund, Inc. at August 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended, in conformity with accounting principles generally accepted in the United States.
Ernst & Young LLP
Boston, Massachusetts
October 13, 2003
Board of Directors and Fund Officers
The Board is responsible for managing the Fund's business affairs and for exercising all the Fund's powers except those reserved for the shareholders. The following tables give information about each Board member and the senior officers of the Fund. Where required, the tables separately list Board members who are "interested persons" of the Fund (i.e., "Interested" Board members) and those who are not (i.e., "Independent" Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA. The Federated Fund Complex consists of 44 investment companies (comprising 138 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member oversees all portfolios in the Federated Fund Complex; serves for an indefinite term; and also serves as a Board member of the following investment company complexes: Banknorth Funds--four portfolios; Golden Oak® Family of Funds--seven portfolios; and WesMark Funds--five portfolios. The Fund's Statement of Additional Information includes additional information about Fund Directors and is available, without charge and upon request, by calling 1-800-341-7400.
INTERESTED DIRECTORS BACKGROUND
|
|
|
Name |
| Principal Occupation(s), Other Directorships Held and Previous Position(s) |
John F. Donahue* |
| Principal Occupations: Chairman and Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc. |
|
|
|
J. Christopher Donahue* |
| Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc. |
|
|
|
Lawrence D. Ellis, M.D.* |
| Principal Occupations: Director or Trustee of the Federated Fund Complex; Professor of Medicine, University of Pittsburgh; Medical Director, University of Pittsburgh Medical Center Downtown; Hematologist, Oncologist and Internist, University of Pittsburgh Medical Center. |
|
|
|
* Family relationships and reasons for "interested" status: John F. Donahue is the father of J. Christopher Donahue; both are "interested" due to the positions they hold with Federated Investors, Inc. and its subsidiaries. Lawrence D. Ellis, M.D. is "interested" because his son-in-law is employed by the Fund's principal underwriter, Federated Securities Corp.
INDEPENDENT DIRECTORS BACKGROUND
|
|
|
Name |
| Principal Occupation(s), Other Directorships Held and Previous Position(s) |
Thomas G. Bigley |
| Principal Occupation: Director or Trustee of the Federated Fund Complex. |
|
|
|
John T. Conroy, Jr. |
| Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida. |
|
|
|
Nicholas P. Constantakis |
| Principal Occupations: Director or Trustee of the Federated Fund Complex. |
|
|
|
John F. Cunningham |
| Principal Occupation: Director or Trustee of the Federated Fund Complex. |
|
|
|
Peter E. Madden |
| Principal Occupation: Director or Trustee of the Federated Fund Complex; Management Consultant. |
|
|
|
|
|
|
Name |
| Principal Occupation(s), Other Directorships Held and Previous Position(s) |
Charles F. Mansfield, Jr. |
| Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant; Executive Vice President, DVC Group, Inc. (marketing communications and technology) (prior to 9/1/00). |
|
|
|
John E. Murray, Jr., J.D., S.J.D. |
| Principal Occupations: Director or Trustee of the Federated Fund Complex; Chancellor and Law Professor, Duquesne University; Consulting Partner, Mollica & Murray. |
|
|
|
Marjorie P. Smuts |
| Principal Occupations: Director or Trustee of the Federated Fund Complex; Public Relations/Marketing Consultant/Conference Coordinator. |
|
|
|
John S. Walsh |
| Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. |
|
|
|
OFFICERS
|
|
|
Name |
| Principal Occupation(s) and Previous Position(s) |
Edward C. Gonzales |
| Principal Occupations: Executive Vice President of some of the Funds in the Federated Fund Complex; Vice Chairman, Federated Investors, Inc.; Trustee, Federated Administrative Services. |
|
|
|
John W. McGonigle |
| Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Executive Vice President, Secretary and Director, Federated Investors, Inc. |
|
|
|
Richard J. Thomas |
| Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services. |
|
|
|
Richard B. Fisher |
| Principal Occupations: Vice Chairman or President of some of the Funds in the Federated Fund Complex; Vice Chairman, Federated Investors, Inc.; Chairman, Federated Securities Corp. |
|
|
|
William D. Dawson III |
| Principal Occupations: Chief Investment Officer of this Fund and various other Funds in the Federated Fund Complex; Executive Vice President, Federated Investment Counseling, Federated Global Investment Management Corp., Federated Investment Management Company and Passport Research, Ltd. |
|
|
|
Mary Jo Ochson |
| Mary Jo Ochson has been the Fund's Portfolio Manager since May 1996. She is Vice President of the Fund. Ms. Ochson joined Federated in 1982 and has been a Senior Portfolio Manager and a Senior Vice President of the Fund's Adviser since 1996. From 1988 through 1995, Ms. Ochson served as a Portfolio Manager and a Vice President of the Fund's Adviser. Ms. Ochson is a Chartered Financial Analyst and received her M.B.A. in Finance from the University of Pittsburgh. |
|
|
|
Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including the 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.
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. This information is also available from the EDGAR database on the SEC's Internet site at http://www.sec.gov.
Federated Investors
World-Class Investment Manager
Federated Municipal Opportunities Fund, Inc.
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
www.federatedinvestors.com
Contact us at 1-800-341-7400 or
www.federatedinvestors.com/contact
Federated Securities Corp., Distributor
Cusip 313910200
Cusip 313910309
Cusip 313910408
Cusip 313910101
Federated is a registered mark of Federated Investors, Inc. 2003 ©Federated Investors, Inc.
G01091-01 (10/03)
Item 2. Code of Ethics As of the end of the period covered by this report, the registrant has adopted a code of ethics (the "Section 406 Standards for Investment Companies - Ethical Standards for Principal Executive and Financial Officers") that applies to the registrant's Principal Executive Officer and Principal Financial Officer; the registrant's Principal Financial Officer also serves as the Principal Accounting Officer. The registrant hereby undertakes to provide any person, without charge, upon request, a copy of the code of ethics. To request a copy of the code of ethics, contact the registrant at 1-800-341-7400, and ask for a copy of the Section 406 Standards for Investment Companies - Ethical Standards for Principal Executive and Financial Officers. Item 3. Audit Committee Financial Expert The registrant's Board has determined that each member of the Board's Audit Committee is an "audit committee financial expert," and that each such member is "independent," for purposes of this Item. The Audit Committee consists of the following Board members: Thomas G. Bigley, John T. Conroy, Jr., Nicholas P. Constantakis and Charles F. Mansfield, Jr. Item 4. Principal Accountant Fees and Services Not Applicable Item 5 Audit Committee of Listed Registrants Not Applicable Item 6 [Reserved] Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies Not Applicable Item 8. [Reserved] Item 9. Controls and Procedures (a) The registrant's President and Treasurer have concluded that the registrant's disclosure controls and procedures (as defined in rule 30a-3(c) under the Act) are effective in design and operation and are sufficient to form the basis of the certifications required by Rule 30a-(2) under the Act, based on their evaluation of these disclosure controls and procedures within 90 days of the filing date of this report on Form N-CSR. (b) There were no changes in the registrant's internal control over financial reporting (as defined in rule 30a-3(d) under the Act), or the internal control over financial reporting of its service providers during the last fiscal half year (the registrant's second half year in the case of an annual report) that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 10. Exhibits SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant Federated Municipal Opportunities Fund, Inc. By /S/ Richard J. Thomas, Principal Financial Officer Date _October 23, 2003 _____________________ Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /S/ J. Christopher Donahue, Principal Executive Officer____ Date _October 23, 2003 __________________________ By /S/ _Richard J. Thomas, Principal Financial Officer______ Date October 23, 2003 ___________________________