FEDERATED MUNICIPAL SECURITIES FUND, INC.

SUPPLEMENT  TO  PROSPECTUS  AND  STATEMENT OF  ADDITIONAL  INFORMATION,  AS
APPROPRIATE, DATED JULY 31, 1998

    At the June 30, 1999 shareholder meeting, shareholders approved the
following changes to become effective July 1, 1999:

    (1) Elected three Directors.

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

    (3) Made the following changes to the Fund's fundamental investment
policies:

         (a) Amended the Fund's fundamental investment policy regarding
diversification to read as follows:

           "With respect to securities comprising 75% of the value of its total
           assets, the Fund will not purchase securities of any one issuer
           (other than cash; cash items; securities issued or guaranteed by the
           government of the United States or its agencies or instrumentalities
           and repurchase agreements collateralized by such U.S. government
           securities; and securities of other investment companies) if, as a
           result, more than 5% of the value of its total assets would be
           invested in securities of that issuer, or the Fund would own more
           than 10% of the outstanding voting securities of that issuer."

         (b) Amended the Fund's fundamental investment policy regarding
borrowing money and issuing senior securities to read as follows:

           "The Fund may borrow money, directly or indirectly, and issue senior
securities to the maximum extent permitted under the 1940 Act."

         (c) Amended the Fund's fundamental investment policy regarding
investments in real estate to read as follows:

           "The Fund may not purchase or sell real estate, provided that this
           restriction does not prevent the Fund from investing in issuers which
           invest, deal, or otherwise engage in transactions in real estate or
           interests therein, or investing in securities that are secured by
           real estate or interests therein. The Fund may exercise its rights
           under agreements relating to such securities, including the right to
           enforce security interests and to hold real estate acquired by reason
           of such enforcement until that real estate can be liquidated in an
           orderly manner."

        (d) Amended the Fund's fundamental investment policy regarding
investments in commodities to read as follows:

           "The Fund may not purchase or sell physical commodities, provided
           that the Fund may purchase securities of companies that deal in
           commodities. For purposes of this restriction, investments in
           transactions involving futures contracts and options, forward
           currency contracts, swap transactions and other financial contracts
           that settle by payment of cash are not deemed to be investments in
           commodities."

         (e) Amended the Fund's fundamental investment policy regarding
underwriting securities to read as follows:

           "The Fund may not underwrite the securities of other issuers, except
           that the Fund may engage in transactions involving the acquisition,
           disposition or resale of its portfolio securities, under
           circumstances where it may be considered to be an underwriter under
           the Securities Act of 1933."





         (f) Amended the Fund's fundamental investment policy regarding lending
to read as follows:

           "The Fund may not make loans, provided that this restriction does not
           prevent the Fund from purchasing debt obligations, entering into
           repurchase agreements, lending its assets to broker/dealers or
           institutional investors and investing in loans, including assignments
           and participation interests."

        (g)Amended the Fund's fundamental investment policy regarding
           concentration of the Fund's investments in securities of companies in
           the same industry to read as follows:

           "The Fund will not make investments that will result in the
           concentration of its investments in the securities of issuers
           primarily engaged in the same industry, provided that the Fund may
           invest more than 25% of the value of its assets in industrial
           development bonds. Government securities, municipal securities and
           bank instruments will not be deemed to constitute an industry. As to
           industrial development bonds, the Fund may purchase securities of an
           issuer resulting in the ownership of more than 25% of the Fund's
           assets in one industry, and the Fund reserves the right to invest
           more than 25% of its assets in industrial development bonds in the
           same state."

        (h) Amended the Fund's fundamental investment policy regarding
investments in municipal securities to read as follows:

           "The Fund will invest its assets so that at least 80% of its annual
interest income is exempt from federal regular income tax."

         (i) Amended, and made non-fundamental, the Fund's fundamental
investment policy regarding buying securities on margin to read as follows:

           "The Fund will not purchase securities on margin, provided that the
           Fund may obtain short-term credits necessary for the clearance of
           purchases and sales of securities, and further provided that the Fund
           may make margin deposits in connection with its use of financial
           options and futures, forward and spot currency contracts, swap
           transactions and other financial contracts or derivative
           instruments."

         (j) Amended, and made non-fundamental, the Fund's fundamental
investment policy on pledging assets to read as follows:

           "The Fund will not mortgage, pledge, or hypothecate any of its
           assets, provided that this shall not apply to the transfer of
           securities in connection with any permissible borrowing or to
           collateral arrangements in connection with permissible activities."

        (k) Made non-fundamental the Fund's current fundamental investment
policies regarding permissible investments.

         (l) Made non-fundamental the Fund's current fundamental investment
           policy regarding temporary investments and eliminated the Fund's
           current non-fundamental investment limitation that prohibits the Fund
           from investing more than 20% of its assets in temporary investments.

        (m)Made non-fundamental the Fund's current fundamental investment
           policy regarding engaging in when-issued and delayed delivery
           transactions and eliminated the Fund's current non-fundamental
           investment policy that prohibits the Fund from engaging in such
           transactions to the extent that would cause the segregation of more
           than 20% of the value of the Fund's total assets.

         (n) Made non-fundamental the Fund's current fundamental investment
policy regarding investing in securities other investment companies.





    (4) Eliminated the following fundamental investment policies of the Fund:

        (a) The fundamental investment policy on investments in oil, gas and
minerals.

        (b) The fundamental investment policy on selling securities short.

        (c) The fundamental investment policy regarding trading portfolio
securities.

     (5) Amended the Fund's non-fundamental investment policy regarding illiquid
securities to read as follows:

        "The Fund will not purchase securities for which there is no readily
        available market, or enter into repurchase agreements or purchase time
        deposits maturing in more than seven days, if immediately after and as a
        result, the value of such securities would exceed, in the aggregate, 15%
        of the Fund's net assets."

    (6) Adopted the following non-fundamental investment policy:

       "The Fund may engage in reverse repurchase agreements."

    (7) Adopted the following non-fundamental investment policy:

        "In applying the Fund's concentration restriction: (a) utility companies
        will be divided according to their services, for example, gas, gas
        transmission, electric and telephone will each be considered a separate
        industry; (b) financial service companies will be classified according
        to the end users of their services, for example, automobile finance,
        bank finance and diversified finance will each be considered a separate
        industry; and (c) asset-backed securities will be classified according
        to the underlying assets securing such securities. To conform to the
        current view of the SEC staff that only domestic bank instruments may be
        excluded from industry concentration limitations, as a matter of
        non-fundamental policy, the Fund will not exclude foreign bank
        instruments from industry concentration tests so long as the policy of
        the SEC remains in effect.

    (8)Approved amendments to the Fund's Articles of Incorporation to permit
       the Board of Directors to liquidate assets of a series or class without
       seeking shareholder approval to the extent permitted under Maryland law.

                                                                    July 2, 1999

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Federated Securities Corp., Distributor
Cusip 313913105

Cusip 313913204
Cusip 313913303

G02620-03 (7/99)