SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.______)
Filed by the Registrant []
Filed by a Party other than the Registrant [ X ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12
FORTRESS MUNICIPAL INCOME FUND, INC..
(Name of Registrant as Specified In Its Charter)
Federated Investors
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
_______________________________________________________________
2) Form, Schedule or Registration Statement No.:
_______________________________________________________________
3) Filing Party:
_______________________________________________________________
4) Date Filed:
_______________________________________________________________
FORTRESS MUNICIPAL INCOME FUND, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 22, 1996
A special meeting of the shareholders of FORTRESS MUNICIPAL INCOME FUND,
INC. (the "Fund") will be held at the FundOs principal offices on the 19th
Floor of Federated Investors Tower, Grant Street and Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3779 on May 22, 1996 at 2:00 P.M. for the
following purposes:
(1) To approve or disapprove an amendment to and restatement of the
FundOs Articles of Incorporation to permit the Fund to establish and
designate separate portfolios and classes of shares;
(2) To approve or disapprove an amendment to the FundOs Articles of
Incorporation to permit the FundOs Board of Directors to redeem all
outstanding shares of any portfolio or class of the Fund;
(3) To approve or disapprove revisions to the FundOs fundamental
investment limitations to permit the unrestricted acquisition of
certain securities eligible for resale under Rule 144A of the
Securities Act of 1933, as amended;
(4) To elect four Directors; and
(5) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Directors have fixed March 19, 1996 as the record date for
determination of shareholders entitled to vote at this special meeting.
By Order of the Directors
John W. McGonigle
Secretary
April 2, 1996
YOU CAN HELP THE FUND AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP
LETTERS TO ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. IF YOU
ARE UNABLE TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE
ENCLOSED PROXY SO THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE SPECIAL
MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
FORTRESS MUNICIPAL INCOME FUND, INC.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Directors of the
Fund ("Directors"). The proxy is revocable at any time before it is voted by
sending written notice of the revocation to the Fund or by appearing personally
at the May 22, 1996 special meeting of shareholders ("Special Meeting"). The
cost of preparing and mailing the notice of meeting, the proxy card, this proxy
statement and any additional proxy material has been or is to be borne by the
Fund. Proxy solicitations will be made primarily by mail, but may also be made
by telephone, telegraph, or personal interview conducted by certain officers or
employees of the Fund or of Federated Shareholder Services Company (the FundOs
transfer agent) or Federated Administrative Services (the FundOs
administrator). In the event that a shareholder does not indicate a choice as
to an item on the proxy ballot, the Fund will vote those shares in favor of
such proposal.
On March 19, 1996, the Fund had outstanding _______________shares of
capital stock ("Shares"), each Share being entitled to one vote. Only
shareholders of record at the close of business on March 19, 1996, will be
entitled to notice of and vote at the Special Meeting. A majority of the
outstanding Shares of the Fund, represented in person or by proxy, shall be
required to constitute a quorum at the Special Meeting for the purpose of
voting on the proposals offered. For purposes of determining the presence of a
quorum and counting votes on the matters presented, Shares represented by
abstentions and "broker non-votes" will be counted as present, but not as votes
cast, at the Special Meeting. Under the FundOs Articles of Incorporation, the
approval of any action will be determined on the basis of a majority of votes
entitled to be cast at the Special Meeting. Under Maryland law, the vote
required to amend the Articles and adopt the Amended and Restated Articles will
be determined with reference to a percentage of votes entitled to be cast by
shareholders of the Fund, and, under the Investment Company Act of 1940 (the
"1940 Act"), other matters may be determined on the basis of a percentage of
votes present at the Special Meeting, which would have the effect of treating
abstentions and non-votes as if they were votes against the proposal.
The Fund will furnish, without charge, a copy of the annual report, which
includes audited financial statements for the fiscal year ended August 31, 1995
and/or semi annual report for the sixth month period ended February 28, 1996,
to any shareholder of record upon request. To request an annual or semi-annual
report, call 1-800-245-5051, or send a written request to Federated Investors
at Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, Pennsylvania
15222-3779. The FundOs principal executive offices are located at Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779. The Directors propose to
mail this proxy statement and the enclosed notice of meeting and proxy card on
or about April 2, 1996.
APPROVAL OR DISAPPROVAL OF AN AMENDMENT TO AND RESTATEMENT OF THE FUNDOS
ARTICLES OF INCORPORATION TO PERMIT THE FUND TO ESTABLISH AND DESIGNATE
SEPARATE PORTFOLIOS AND CLASSES OF SHARES
Shareholders are being asked to approve an amendment to and restatement of
the Articles of Incorporation ("Articles") to permit the Fund to establish
separate investment portfolios of shares ("portfolios") and to designate
classes of shares within a portfolio. Each investment portfolio would have a
distinct investment objective with assets specifically allocated to that
portfolio. A shareholderOs interest in the Fund would be limited to those
portfolios in which he or she invests. Each portfolio would operate for many
purposes like a separate fund although the portfolios would all be a part of
the same business entity (the Fund) with one board of directors. Currently,
the Fund is constrained by its Articles to establish only one portfolio issuing
only one class of shares.
At a meeting held on February 29, 1996 the Directors unanimously approved,
subject to ratification by the shareholders of the Fund, the proposed amendment
to the Articles which would empower the Fund to establish separate portfolios
and to designate classes of shares within a portfolio. The proposed amendment
to the Articles would permit the Directors to take such actions at a future
date without first seeking additional shareholder ratification. As discussed
further below, these actions are being recommended because they may be
advantageous for the Fund and its shareholders.
The Directors believe that the added flexibility provided by the proposed
amendment to the Articles to permit the creation of separate portfolios and
classes of shares may enhance the marketing opportunities for the Fund and
provide investors with purchasing options best suited to their individual
situations. This may attract more investment dollars, resulting in greater
investment opportunities for the Fund. In addition, an increased asset size of
the Fund may result in economies of scale and a reduction in the FundOs overall
expense ratio. A reduction in the overall expense ratio may have a favorable
effect on the FundOs net yield for all classes of shares.
GENERAL CHARACTERISTICS OF PORTFOLIOS AND CLASSES
Each share within a class of a portfolio of the Fund would represent an
equal and proportionate interest in the assets owned by such portfolio. Each
share within a class of a portfolio would have identical voting rights with
each other share of the Fund outstanding for purposes of voting on issues that
affect the Fund as a whole, such as the election of Directors. All shares of
all classes of each portfolio of the Fund would have equal voting rights on
matters affecting that entire portfolio, such as changes in investment
policies. On matters affecting only a particular class, such as certain
distribution arrangements, only shareholders of that class would be entitled to
vote.
All classes of shares would have the same rights and privileges, except
that the amendment to the Articles would authorize the Directors to allocate
expenses among the classes related to shareholder services and distribution
methods. Different expenses borne by the classes would result in different
dividends among the classes. This structure would cause classes having higher
expense ratios to pay lower dividends than classes with lower expense ratios
within a portfolio.
Holders of shares would pay their allocable portion of Fund and portfolio
expenses. The Fund expenses for which holders of shares would pay their
allocable portion include, but are not limited to: the cost of organizing the
Fund and continuing its existence; registering the Fund with federal and state
securities authorities; DirectorsO fees; auditorsO fees; the cost of meetings
of Directors; legal fees of the Fund; association membership dues; and such non-
recurring and extraordinary items as may arise. The portfolio expenses for
which holders of shares pay their allocable portion include, but are not
limited to: registering the portfolio and shares of the portfolio; investment
advisory services; taxes and commissions; custodian fees; insurance premiums;
auditors fees and such non-recurring and extraordinary items as may arise.
The Directors would reserve the right to allocate certain expenses to
holders of shares on class-by-class basis as they deem appropriate ("Class
Expenses"). In any case, Class Expenses may include: expenses under a
distribution plan adopted by the Fund with respect to that class of shares
pursuant to Rule 12b-1 of the 1940 Act ("12b-1 Plan"); fees pursuant to a
Shareholder Services Agreement with respect to that class; transfer agent fees
as identified by the transfer agent as attributable to holders of a class of
shares; printing and postage expenses related to preparing and distributing
materials such as shareholder reports, prospectuses, and proxies to current
shareholders; registration fees paid to the Securities and Exchange Commission
and state securities commissions; expenses related to administrative personnel
and services as required to support holders of a class of shares; legal fees
related solely to a class of shares; and DirectorsO fees incurred as a result
of issues relating solely to a class of shares.
THE PROPOSED AMENDMENT WOULD NOT ALTER THE RIGHTS AND PRIVILEGES OF CURRENT
FUND SHAREHOLDERS.
If the proposal to amend the Articles is adopted, the Fund currently
intends to create three new classes of shares, which will be designated as
"Class A Shares," "Class B Shares" and "Class C Shares." The existing shares
would be re-designated "Class F Shares." The characteristics of the existing
class of shares will not change. The rights and privileges of current Fund
shareholders will not be affected by the proposed amendment.
Class A Shares would be sold subject to a maximum front-end sales charge
of 4.50%. Class A Shares would be subject to a shareholder services fee of
0.25% of the Class A SharesO average daily net assets.
Class B Shares would be sold at net asset value. A contingent deferred
sales charge will be imposed on certain Class B Shares which are redeemed
within six full years of purchase. Class B Shares will be distributed pursuant
to a Rule 12b-1 Plan to be adopted by the Fund whereby the distributor is paid
a fee of 0.75 of 1% of the Class B SharesO average daily net assets, in
addition to a shareholder services fee of 0.25 of 1% of the Class B SharesO
average daily net assets.
Class C Shares would be sold with no up-front sales charge. Class C Shares
will be distributed pursuant to a Rule 12b-1 Plan also, whereby the distributor
is paid a fee of 0.75 of 1% of the Class C SharesO average daily net assets, in
addition to a shareholder services fee of 0.25 of 1% of the Class C SharesO
average daily net assets. Class C Shares may be subject to certain contingent
deferred sales charges.
Shareholders of each class of shares would have exchange privileges with
like classes of other funds for which affiliates of Federated Investors serve
as investment adviser or distributor ("Federated Funds"). The specific
criteria for exchanges among like classes of different Federated Funds is set
forth in the prospectuses of funds which offer this privilege. Instructions
for making an exchange in the Fund will be set forth the prospectus.
Generally, the privilege is available to shareholders resident in any state in
which the shares being acquired may be sold.
BOARD OF DIRECTORS RECOMMENDATION
The Board of Directors has reviewed and unanimously approved the proposed
amendment to the FundOs Articles to allow the Fund to establish and designate
separate portfolios and classes of shares and has directed that the amendment
be submitted to shareholders for their ratification. In the event that the
amendment is not approved by shareholders, the Fund will continue to have
authority to establish only one portfolio issuing only one class of shares.
Approval requires the affirmative vote of a majority of the aggregate number of
votes entitled to be cast thereon.
THE BOARD OF DIRECTORS OF THE FUND UNANIMOUSLY RECOMMENDS
APPROVAL OF THE PROPOSED AMENDMENT TO AND RESTATEMENT OF THE FUNDOS ARTICLES TO
PERMIT THE FUND TO ESTABLISH AND DESIGNATE
SEPARATE PORTFOLIOS AND CLASSES OF SHARES
APPROVAL OR DISAPPROVAL OF AN AMENDMENT TO THE FUNDOS
ARTICLES TO PERMIT THE BOARD OF DIRECTORS TO
REDEEM ALL OUTSTANDING SHARES OF A PORTFOLIO OR CLASS OF THE FUND
Shareholders are being asked to approve an amendment to the FundOs Articles
to permit the FundOs Directors to sell and convert into money all the assets of
the Fund and then redeem all outstanding shares of any portfolio or class of the
Fund. Currently, the Directors are not authorized by the Articles to redeem
all the outstanding shares of a portfolio or class without shareholder approval;
however, such action is, under certain circumstances, authorized by Maryland
law. The Directors have determined that the current restriction presents a
cumbersome structure under which the best interest of all of the FundOs
shareholders may not be served. By requiring the Directors to solicit a
shareholder vote, by means of a proxy solicitation and special meeting of
shareholders, the Articles greatly hinder the DirectorsO ability to react
quickly to market conditions and developments that may impact the economic
viability of the entire Fund.
If the Articles are amended , the Directors will have the ability to act
quickly upon their decision to sell assets of the Fund and redeem all the
outstanding shares of any portfolio or class of the Fund. The Directors will
have the option to sell the assets of the Fund to an independent third party,
to another investment company registered under the Investment Company Act of
1940, or to another portfolio or class within the Fund.
Although the Directors may determine that the redemption of all shares of
a particular portfolio or class is appropriate, the shareholders should
consider the income tax effect of the redemption. If the Directors redeem all
shares of a particular portfolio or class, the shareholders of that portfolio
or class will recognize a gain or loss on their investment for federal income
tax purposes. The redemption will be treated as a sale or exchange of shares.
A redemption may occur at a time that may not meet the tax planning needs of an
individual shareholder. Any redemption will occur without further notice to
shareholders and, therefore, the timing of such redemption may have a negative
impact on the tax planning of a shareholder for a particular tax year or may
leave a shareholder with insufficient time in a tax year to do any additional
tax planning. A redemption could also occur at a time that leaves the
shareholder with limited options to conduct personal investment portfolio tax
planning. The redemption of shares may also have a state income tax effect.
The taxable effect to a shareholder will be in the taxable year in which the
redemption occurs. Shareholders are urged to consult with their tax advisers
regarding federal, state and local tax issues.
In the event that the amendment to the Articles to allow the Directors to
redeem all outstanding shares of any portfolio or class of the Fund is not
approved by the shareholders, the Articles will remain as they currently exist
and the Directors will consider what action, if any, should be taken. Approval
requires the affirmative vote of a majority of the aggregate number of votes
entitled to be cast thereon.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF AN AMENDMENT TO THE FUNDOS
ARTICLES TO PERMIT THE BOARD OF DIRECTORS TO REDEEM ALL OUTSTANDING SHARES OF
ANY PORTFOLIO OR CLASS OF THE FUND
APPROVAL OR DISAPPROVAL OF REVISIONS TO THE FUNDOS FUNDAMENTAL INVESTMENT
LIMITATIONS TO PERMIT THE UNRESTRICTED ACQUISITION OF CERTAIN SECURITIES
ELIGIBLE FOR RESALE UNDER RULE 144A OF THE SECURITIES ACT OF 1933
One of the FundOs fundamental investment limitations currently provides
that the Fund will not "invest more than 10% of its total assets in securities
subject to restrictions on resale under the Securities Act of 1933." The
Securities and Exchange Commission (the "Commission") maintains an interpretive
position that, in order to maintain sufficient liquidity to meet shareholder
redemptions, mutual funds such as the Fund should not invest more than 15% of
their total assets in illiquid securities and that restricted securities are
generally illiquid. The FundOs current investment limitation reflects the
CommissionOs earlier position.
On April 23, 1990, the Commission promulgated Rule 144A under the
Securities Act of 1933. Rule 144A provides a safe harbor for the resale of
certain restricted securities to "qualified institutional buyers" without
compliance with the registration requirements of the Securities Act of 1933. A
"qualified institutional buyer" is generally defined as a broker/dealer which
owns and manages $10 million or more of securities and any other entity that
owns and manages $100 million or more of securities.
In its release adopting Rule 144A, the Commission noted that it was
modifying its position as to mutual funds with respect to securities eligible
for resale under Rule 144A ("Rule 144A Securities"). The Commission stated that
"[t]he determination of the liquidity of Rule 144A securities in the portfolio
of [a mutual fund] is a question of fact for the directors to determine, based
upon the trading markets for the specific security." Under the CommissionOs
modified position, if the investment adviser determines, in accordance with
guidelines established and monitored by the directors of the fund, that a Rule
144A security is liquid, the security will not count toward the FundOs
limitation on illiquid investments or restricted securities.
In accordance with the CommissionOs modified position, the Directors have
adopted the guidelines under which the investment adviser may determine the
liquidity of Rule 144A securities. The guidelines require the investment
adviser to consider the following factors in making this determination:
1. The frequency of trades and quotes for the security;
2. The volatility of quotations and trade prices for the security;
3. The number of dealers willing to purchase or sell the security and
the number of potential purchasers;
4. Dealer undertakings to make a market in the security;
5. The nature of the security and the nature of the marketplace trades
(e.g., the time needed to dispose of the security, the method of
soliciting offers, and the mechanics of transfer);
6. The rating of the security and the financial condition and prospects
of the issuer of the security; and
7. Such other factors as may be relevant to the FundOs ability to
dispose of the security.
The Directors believe that, as the market for Rule 144A securities
continues to develop, the FundOs current investment limitation regarding
restricted securities could prevent the Fund from investing in some types of
Rule 144A securities which are as liquid as other publicly traded securities.
This could adversely affect the Fund by restricting investments that could
enhance the performance and diversification of the FundOs portfolio. The
Directors may change the guidelines and factors for determining the liquidity
of Rule 144A securities without the approval of, or any notice to, the FundOs
shareholders. This will allow the Fund the flexibility to respond quickly to
developments in the market for Rule 144A securities.
The Directors, therefore, have unanimously approved, subject to
shareholder approval, the restatement of the FundOs investment limitation
regarding restricted securities to provide that the Fund will not "invest more
than 10% of the value of its total assets in securities subject to restrictions
on resale under the Securities Act of 1933 except for certain restricted
securities which meet the criteria for liquidity as established by the
Directors." Approval of this change in the FundOs investment limitation
requires the affirmative vote of: (a) 67% or more of the shares of the Fund
present at the Special Meeting, if the holders of more than 50% of the
outstanding shares are present or represented by proxy; or (b) more than 50% of
the outstanding shares of the Fund, whichever is less. If the shareholders fail
to approve the change in this limitation, the Fund will continue to invest no
more than 10% of the value of its total assets in restricted securities of any
kind.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THE APPROVAL OF REVISIONS TO THE
FUNDOS FUNDAMENTAL INVESTMENT LIMITATION TO PERMIT THE UNRESTRICTED ACQUISITION
OF CERTAIN SECURITIES ELIGIBLE FOR RESALE UNDER RULE 144A OF THE SECURITIES ACT
OF 1933
ELECTION OF DIRECTORS
The persons named as proxies intend to vote in favor of the election of
Thomas G. Bigley, John T. Conroy, Peter E. Madden and John E. Murray, Jr. as
Directors of the Fund. All of the nominees are presently serving as Directors.
Messrs. Conroy and Madden were elected by the Directors on August 21, 1991
to fill vacancies resulting from the decision to expand the size of the Board.
Messrs. Murray and Bigley were elected by the Directors on November 15, 1994
and February 14, 1995, respectively, also to fill vacancies resulting from the
decision to expand the size of the Board.
All nominees have consented to serve if elected. In accordance with recent
changes in Maryland law permitting Maryland corporations to refrain from
holding annual shareholder meetings except to consider certain specified
actions, there will normally be no annual meetings of shareholders for the
purpose of electing Directors. If elected, the Directors will hold office
without limit in time until death, resignation, retirement, or removal or until
the next meeting of shareholders to elect Directors and the election and
qualification of their successors. Election of a Director requires the
affirmative vote of a majority of the votes cast by shareholders of the Fund at
the Special Meeting.
DIRECTORS STANDING FOR ELECTION:
Principal Occupations During
Name and Position Past Five Years, Affiliations and
with the Fund Address Age
Thomas G. Bigley Director, Oberg Manufacturing Co.; 62
Director Chairman of the Board, ChildrenOs
Hospital of Pittsburgh; Director or Trustee
of the Funds; formerly, Senior Partner,
Ernst & Young LLP. 28th Floor, One
Oxford Centre, Pittsburgh, PA
John T. Conroy, Jr. President, Investment Properties 58
Director Corporation; Senior Vice-President,
John R. Wood and Associates, Inc.,
Realtors; President, Northgate Village
Development Corporation; Partner or
Trustee in private real estate ventures in
Southwest Florida; Director or Trustee of
the Funds; formerly, President, Naples Property
Management, Inc., Naples, FL
Peter E. Madden Consultant; State Representative, 54
Director Commonwealth of Massachusetts;
Director or Trustee of the Funds; formerly,
President, State Street Bank and Trust
Company and State Street Boston Corporation.
562 Bellevue Avenue, Newport, RI
John E. Murray, Jr., J.D., S.J.D.
President, Law Professor, Duquesne 63
Director University; Consulting Partner, Mollica,
Murray and Hogue; Director or Trustee
the Funds.
Duquesne University, Pittsburgh, PA
PREVIOUSLY ELECTED DIRECTORS:
Principal Occupations During
Name and Position Past Five Years, Affiliations and
with the Fund Address Age
John F. Donahue@* Chairman and Trustee, Federated 71
Chairman and Director Investors, Federated Advisers, Federated
Management, and Federated Research;
Chairman and Director, Federated
Research Corp. and Federated Global
Research Corp.; Chairman, Passport Research,
Ltd.; Chief Executive Officer and Director or Trustee
of the Funds. Mr.EDonahue is the father of
J. Christopher Donahue, Executive Vice President
of the Company. Federated Investors Tower,
Pittsburgh, PA
William J. Copeland Director and Member of the Executive 77
Director Committee, Michael Baker, Inc.;
Director or Trustee of the Funds;
formerly, Vice Chairman and Director,
PNC Bank, N.A.,and PNC Bank Corp.
and Director, Ryan Homes, Inc.
One PNC Plaza-23rd Floor, Pittsburgh,
PA
James E. Dowd Attorney-at-law; Director, The 73
Director Emerging Germany Fund, Inc.; Director
or Trustee of the Funds. 571 Hayward
Mill Road, Concord, MA
Lawrence D. Ellis, M.D.* Professor of Medicine and Member, 63
Director Board of Trustees, University of
Pittsburgh; Medical Director, University
of Pittsburgh Medical Center -
Downtown; Member, Board of Directors,
University of Pittsburgh Medical Center;
formerly, Hematologist, Oncologist, and
Internist, Presbyterian and Montefiore
Hospitals; Director or Trustee of
the Funds. 3471 Fifth Avenue, Suite 1111,
Pittsburgh, PA
Principal Occupations During
Name and Position Past Five Years, Affiliations and
with the Fund Address Age
Richard B. Fisher * Executive Vice President and Trustee, 72
President and Director Federated Investors; Chairman and
Director, Federated Securities Corp.;
President or Vice President of some of
the Funds; Director or Trustee of some
of the Funds. Federated Investors
Tower, Pittsburgh, PA
Edward L. Flaherty, Jr.@ Attorney-at-law; Shareholder, Henny, 71
Director Kochuba, Meyer and Flaherty; Director,
Eat'N Park Restaurants, Inc., and
Statewide Settlement Agency, Inc.;
Director or Trustee of the Funds;
formerly, Counsel, Horizon Financial,
F.A., Western Region. Two Gateway
Center, Suite 674, Pittsburgh, PA
Gregor F. Meyer Attorney-at-law; Shareholder, Henny, 69
Director Kochuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park
Restaurants, Inc.; Director or Trustee
of the Funds. Two Gateway Center, Suite
674, Pittsburgh, PA
Wesley W. Posvar Professor, International Politics and 70
Director Management Consultant; Trustee,
Carnegie Endowment for International
Peace, RAND Corporation, Online
Computer Library Center, Inc., and U.S.
Space Foundation; Chairman, Czecho
Management Center; Director or
Trustee of the Funds; President Emeritus,
University of Pittsburgh; founding
Chairman, National Advisory Council for
Environmental Policy and Technology
and Federal Emergency Management
Advisory Board. 1202 Cathedral of Learning,
Pittsburgh, PA
Principal Occupations During
Name and Position Past Five Years, Affiliations and
with the Fund Address Age
Marjorie P. Smuts Public relations/marketing consultant; 60
Director Conference Coordinator, Non-profit
entities; Director or Trustee of the Funds.
4905 Bayard Street, Pittsburgh, PA
*This Director is deemed to be an "interested person" as defined in the
Investment Company Act of 1940. Dr. Ellis is an interested person by reason of
the employment of his son-in-law by Federated Securities Corp.
@Member of the Executive Committee. The Executive Committee of the Board of
Directors handles the responsibilities of the Board between meetings of the
Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: American Leaders Fund, Inc.; Annuity Management Series;
Arrow Funds; Automated Government Money Trust; Blanchard Funds; Blanchard
Precious Metals Fund, Inc.; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust; FTI Funds;
Federated ARMs Fund; Federated Equity Funds; Federated GNMA Trust; Federated
Government Trust; Federated High Yield Trust; Federated Income Securities
Trust; Federated Income Trust; Federated Index Trust; Federated Institutional
Trust; Federated Master Trust; Federated Municipal Trust; Federated Short-Term
Municipal Trust; Federated Short-Term U.S. Government Trust; Federated Stock
Trust; Federated Tax-Free Trust; Federated Total Return Series, Inc.; Federated
U.S. Government Bond Fund; Federated U.S. Government Securities Fund: 1-3
Years; Federated U.S. Government Securities Fund: 3-5 Years; Federated U.S.
Government Securities Fund: 5-10 Years; First Priority Funds; Fixed Income
Securities, Inc.; Fortress Adjustable Rate U.S. Government Fund, Inc.; Fortress
Municipal Income Fund, Inc.; Fortress Utility Fund, Inc.; Fund for U.S.
Government Securities, Inc.; Government Income Securities, Inc.; High Yield
Cash Trust; Insurance Management Series; Intermediate Municipal Trust;
International Series, Inc.; Investment Series Funds, Inc.; Investment Series
Trust; Liberty Equity Income Fund, Inc.; Liberty High Income Bond Fund, Inc.;
Liberty Municipal Securities Fund, Inc.; Liberty U.S. Government Money Market
Trust; Liberty Term Trust, Inc. - 1999; Liberty Utility Fund, Inc.; Liquid Cash
Trust; Managed Series Trust; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; 111 Corcoran Funds; Peachtree Funds; The Planters Funds; RIMCO
Monument Funds; Star Funds; The Starburst Funds; The Starburst Funds II; Stock
and Bond Fund, Inc.; Targeted Duration Trust; Tax-Free Instruments Trust; Trust
for Financial Institutions; Trust For Government Cash Reserves; Trust for Short-
Term U.S. Government Securities; Trust for U.S. Treasury Obligations; The
Virtus Funds; World Investment Series, Inc.
DIRECTORSO COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
CORPORATION CORPORATION *# FROM FUND COMPLEX +
John F. Donahue $-0- $0 for the Corporation and
Chairman and Director 54 other investment companies in the
Fund Complex
Thomas G. Bigley++ $1,407 $86,331 for the Corporation and
Director 54 other investment companies in the
Fund Complex
John T. Conroy, Jr. $1,526 $115,760 for the Corporation and
Director 54 other investment companies in the
Fund Complex
William J. Copeland $1,526 $115,760 for the Corporation and
Director 54 other investment companies in the
Fund Complex
James E. Dowd $1,526 $115,760 for the Corporation and
Director 54 other investment companies in the
Fund Complex
Lawrence D. Ellis, M.D. $1,407 $104,898 for the Corporation and
Director 54 other investment companies in the
Fund Complex
Richard B. Fisher $-0- $0 for the Corporation and
President and Director 6 other investment companies in the
Fund Complex
Edward L. Flaherty, Jr. $1,526 $115,760 for the Corporation and
Director 54 other investment companies in the
Fund Complex
Peter E. Madden $1,407 $104,898 for the Corporation and
Director 54 other investment companies in the
Fund Complex
Gregor F. Meyer $1,407 $104,898 for the Corporation and
Director 54 other investment companies in the
Fund Complex
John E. Murray, Jr. $1,407 $104,898 for the Corporation and
Director 54 other investment companies in the
Fund Complex
Wesley W. Posvar $1,407 $104,898 for the Corporation and
Director 54 other investment companies in the
Fund Complex
Marjorie P. Smuts $1,407 $104,898 for the Corporation and
Director 54 other investment companies in the
Fund Complex
* Information is furnished for the fiscal year ended August 31, 1995.
# The aggregate compensation is provided for the Corporation, which was
comprised of 1 portfolio, as of August 31, 1995.
+ The information is provided for the last calendar year end.
++ Mr. Bigley served on 39 investment companies in the Federated Funds
Complex from January 1 through September 30, 1995. On October 1, 1995, he
was appointed a Trustee/Director on 15 additional Federated Funds.
If any nominee for election as a Director named above shall by reason of
death or for any other reason become unavailable as a candidate at the Special
Meeting, votes pursuant to the enclosed proxy will be cast for a substitute
candidate by the attorneys named therein, or their substitutes, present and
acting at the Special Meeting. Any such substitute candidate for election as
an interested Director shall be nominated by the Executive Committee. The
selection of any substitute candidate for election as a Director who is not an
interested person shall be made by a majority of the Directors who are not
interested persons of the Fund. The Directors has no reason to believe that
any nominee will become unavailable for election as a Director.
During the fiscal year ended August 31, 1995, there were 4 meetings of the
Directors. The Directors who are not interested persons of the Fund as a group
received fees totaling $15,953. The interested Directors do not receive fees
from the Fund. All Directors were reimbursed for expenses for attendance at
meetings.
Other than its Executive Committee, the Fund has one Board committee, the
Audit Committee. Generally, the function of the Audit Committee is to assist
the Directors in fulfilling its duties relating to the FundOs accounting and
financial reporting practices and to serve as a direct line of communication
between the Directors and the independent auditors. The specific functions of
the Audit Committee include recommending the engagement or retention of the
independent auditors, reviewing with the independent auditors the plan and the
results of the auditing engagement, approving professional services provided by
the independent auditors prior to the performance of such services, considering
the range of audit and non-audit fees, reviewing the independence of the
independent auditors, reviewing the scope and results of the FundOs procedures
for internal auditing, and reviewing the FundOs system of internal accounting
controls.
Messrs. Flaherty, Copeland and Dowd serve on the Audit Committee. These
Directors are not interested persons of the Fund. During the fiscal year ended
August 31, 1995, there were 4 meetings of the Audit Committee. All of the
members of the Audit Committee were present for each meeting. Each member of
the Audit Committee receives an annual fee of $100 plus $25 for attendance at
each meeting and is reimbursed for expenses of attendance.
The executive officers of the Fund are elected annually by the Directors.
Each officer holds the office until qualification of his successor. The names
and ages (in parentheses) of the executive officers of the Fund who are not
listed above under "Election of Directors" and their principal occupations
during the past five years are as follows: J. Christopher Donahue, (46)
Executive Vice President of the Fund, is President and Trustee, Federated
Investors, Federated Advisers, Federated Management, and Federated Research;
President and Director, Federated Research Corp. and Federated Global Research
Corp.; President, Passport Research, Ltd.; Trustee, Federated Administrative
Services, Federated Services Company, and Federated Shareholder Services;
President or Executive Vice President of the Funds; Director or Trustee of some
of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and Director
of the Fund. Edward C. Gonzales (65) Executive Vice President of the Fund, is
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated
Research Corp., Federated Global Research Corp. and Passport Research, Ltd.;
Executive Vice President and Director, Federated Securities Corp.; Trustee,
Federated Services Company; Chairman, Treasurer, and Trustee, Federated
Administrative Services; Trustee or Director of some of the Funds; and
President, Executive Vice President and Treasurer of some of the Funds. John W.
McGonigle (57), Executive Vice President and Secretary of the Fund is
Executive Vice President, Secretary, and Trustee, Federated Investors; Trustee,
Federated Advisers, Federated Management, and Federated Research; Director,
Federated Research Corp. and Federated Global Research Corp.; Trustee,
Federated Services Company; President and Trustee, Federated Shareholder
Services; Director, Federated Securities Corp.; and Executive Vice president
and Secretary of the Funds. Messrs. McGonigle and Gonzales have been officers
of the Fund since September 24, 1981. Mr. Fisher has been an officer of the
Fund since January 29, 1986. Mr. J. Christopher Donahue has been an officer
of the Fund since April 25, 1989.
Officers and Directors own less than 1% of the Funds outstanding Shares.
Federated Administrative Services is the FundOs administrator. During the
fiscal year ended August 31, 1995, the Fund paid $325,090 for these services.
In addition, Dr. Henry J. Gailliot, an officer of Federated Advisers, the
Adviser to the Fund, holds approximately 20% of the outstanding common stock
and serves as a director of Commercial Data Services, Inc., a company which
provides computer processing services to Federated Administrative Services.
Federated Securities Corp., the principal underwriter for the Fund, and
Federated Administrative Services are both wholly-owned subsidiaries of
Federated Investors. Their address is Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779.
OTHER MATTERS AND DISCRETION OF PERSONS NAMED IN THE PROXY
While the Special Meeting is called to act upon any other business that
may properly come before it, at the date of this proxy statement the only
business which the management intends to present or knows that others will
present is the business mentioned in the Notice of Meeting. If any other
matters lawfully come before the Special Meeting, and in all procedural matters
at said Special Meeting, it is the intention that the enclosed proxy shall be
voted in accordance with the best judgment of the persons named therein, or
their substitutes, present and acting at the Special Meeting.
If, at the time any session of the Special Meeting is called to order, a
quorum is not present in person or by proxy, the persons named as proxies may
vote those proxies which have been received to adjourn the Special Meeting to a
later date. In the event that a quorum is present but sufficient votes in favor
of one or more of the proposals have not been received, the persons named as
proxies may propose one or more adjournments of the Special Meeting to permit
further solicitation of proxies with respect to any such proposal. All such
adjournments will require the affirmative vote of a majority of the Shares
present in person or by proxy at the session of the Special Meeting to be
adjourned. The persons named as proxies will vote those proxies which they are
entitled to vote in favor of the proposal, in favor of such an adjournment, and
will vote those proxies required to be voted against the proposal, against any
such adjournment.
The following list indicates the beneficial ownership of shareholders who,
to the best knowledge of the Fund, are the beneficial owners of more than 5% of
the outstanding shares of the Fund as of March 19, 1996:
No Director owns more than 1% of the FundOs outstanding shares. Officers
and Directors as a group own less than 1% of the FundOs outstanding shares.
If you do not expect to attend the Special Meeting. Please sign your proxy
and return it in the enclosed envelope to avoid unnecessary expense and delay.
No postage is necessary.
By Order of the Directors
John W. McGonigle
Secretary
April 2, 1996
G01628-01
FORTRESS MUNICIPAL INCOME FUND, INC. SPECIAL MEETING OF SHAREHOLDERS
MAY 22, 1996
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of FORTRESS
MUNICIPAL INCOME FUND, INC. hereby appoint S.EElliott Cohan, Charles H. Field,
Jennifer Connor, Steve Newcamp, Colleen Conley or Patricia Conner, or any one of
them, true and lawful attorneys, with the power of substitution of each, to vote
all Shares of FORTRESS MUNICIPAL INCOME FUND, INC. which the undersigned is
entitled to vote at the Special Meeting of Shareholders to be held on May 22,
1996, at Federated Investors Tower, Pittsburgh, Pennsylvania, at 2:00 p.m., and
at any adjournment thereof.
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Special Meeting.
PROPOSAL(S)
1) APPROVAL OF AN AMENDMENT TO AND RESTATEMENT OF THE FUNDOS ARTICLES OF
INCORPORATION TO PERMIT THE FUND TO ESTABLISH AND DESIGNATE SEPARATE
PORTFOLIOS AND CLASSES OF SHARES;
2) APPROVAL OF AN AMENDMENT TO THE FUNDOS ARTICLES OF INCORPORATION TO PERMIT
THE FUNDOS BOARD OF DIRECTORS TO REDEEM ALL OUTSTANDING SHARES OF ANY
PORTFOLIO OR CLASS OF THE FUND;
3) APPROVAL OF REVISIONS TO THE FUNDOS FUNDAMENTAL INVESTMENT LIMITATIONS TO
PERMIT THE UNRESTRICTED ACQUISTION OF CERTAIN SECURITIES ELIGIBLE FOR RESALE
UNDER RULE 144A OF THE SECURITIES ACT OF 1933, AS AMENDED; AND
4) TO ELECT FOUR DIRECTORS.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The attorneys
named will vote the Shares represented by this proxy in accordance with the
choices made on this ballot. IF NO CHOICE IS INDICATED AS TO ANY MATTER, THIS
PROXY WILL BE VOTED AFFIRMATIVELY ON THAT MATTER. THE APPROVAL OF EACH PROPOSAL
IS NOT CONTINGENT ON THE APPROVAL OF ANY OTHER MATTER.
PLEASE RETURN BOTTOM PORTION WITH YOUR VOTE IN THE ENCLOSED ENVELOPE AND RETAIN
THE TOP PORTION. PLACE THE MAIL-IN STUB SO THAT THE RETURN ADDRESS, LOCATED ON
THE REVERSE SIDE OF THE BALLOT, APPEARS THROUGH THE WINDOW OF THE ENVELOPE.
FORTRESS MUNICIPAL INCOME FUND, INC.PROXY VOTING MAIL-IN STUB
RECORD DATE SHARES
Please sign EXACTLY as your name(s) appear below. When signing as attorney,
executor, administrator, guardian, trustee, custodian, etc., please give your
full title as such. If a corporation or partnership, please sign the full name
by an authorized officer or partner. If stock is owned jointly, all parties
should sign.
PROPOSALS:
1) FOR ____ AGAINST ____ ABSTAIN ____
2) FOR ____ AGAINST ____ ABSTAIN ____
3) FOR ____ AGAINST ____ ABSTAIN ____
PROPOSAL 4: ELECTION OF DIRECTORS. To with-
hold authority to vote for a nominee, strike a line
through the nominee's name below:
____ FOR all nominees listed below
____ Vote withheld for all nominees listed below
____ FOR all nominees listed below (except as
marked to the contrary below)
T. G. Bigley J. T. Conroy, Jr. P. E. Madden J. E. Murray, Jr.
Dated______________________1996
_______________________________
_______________________________
Signature(s) of Shareholder(s)