485BPOS

                                          1933 Act File No. 2-57181
                                          1940 Act File No. 811-2677

                          SECURITIES AND EXCHANGE COMMISSION
                                 Washington, DC 20549

                                       Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933             X
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    Pre-Effective Amendment No.         ....................
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    Post-Effective Amendment No.   56   ....................        X
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                                        and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940      X
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    Amendment No.   40   ...................................        X
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                       FEDERATED MUNICIPAL SECURITIES FUND, INC.

                  (Exact Name of Registrant as Specified in Charter)

                               Federated Investors Funds
                                 5800 Corporate Drive
                          Pittsburgh, Pennsylvania 15237-7000
                       (Address of Principal Executive Offices)

                                    (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)

It is proposed that this filing will become effective:

    immediately upon filing pursuant to paragraph (b)
 x  on May 29, 2001, pursuant to paragraph (b)
    60 days after filing pursuant to paragraph (a)(i)
 _  on __________________ pursuant to paragraph (a)(i)
    75 days after filing pursuant to paragraph (a)(ii)
    on _________________ pursuant to paragraph (a)(ii) of Rule 485.

If appropriate, check the following box:

    This post-effective amendment designates a new effective date for a previously
filed post-effective amendment.



                                      Copies to:

Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, NW
Washington, DC  20037

Federated Investors
World-Class Investment Manager

Federated Municipal Securities Fund, Inc.

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PROSPECTUS

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May 31, 2001

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CLASS A SHARES
CLASS B SHARES
CLASS C SHARES

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A mutual fund seeking to provide for its shareholders a high level of current income which is exempt from federal regular income tax by investing primarily in a portfolio of long-term, investment grade tax exempt securities.

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As with all mutual funds, the Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.

NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE

CONTENTS

Risk/Return Summary 1

What are the Fund's Fees and Expenses? 3

What are the Fund's Investment Strategies? 4

What are the Principal Securities in Which the Fund Invests? 6

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What are the Specific Risks of Investing in the Fund? 10

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What Do Shares Cost? 11

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How is the Fund Sold? 15

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How to Purchase Shares 15

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How to Redeem and Exchange Shares 17

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Account and Share Information 21

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Who Manages the Fund? 22

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Financial Information 23

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Risk/Return Summary

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

The Fund's investment objective is to provide for its shareholders a high level of current income which is exempt from federal regular income tax. While there is no assurance that the Fund will achieve its investment objective, it endeavors to do so by following the strategies and policies described in this prospectus.

WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?

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The Fund pursues its objective by investing in a portfolio of tax exempt securities so that at least 80% of its annual interest income is exempt from federal regular income tax. Interest income from the Fund's investments may be subject to the federal alternative minimum tax for individuals and corporations (AMT). The Fund invests primarily in long-term, investment grade tax exempt securities.

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WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?

All mutual funds take investment risks. Therefore, it is possible to lose money by investing in the Fund. The primary factors that may reduce the Fund's returns include:

• defaults or an increase in the risk of defaults on portfolio securities; and
• a change in prevailing interest rates.

Other risk factors associated with an investment in the Fund include liquidity risk, call risk, sector risk and leverage risk.

The Shares offered by this prospectus are not deposits or obligations of any bank, are not endorsed or 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.

Risk/Return Bar Chart and Table

The bar chart shows the variability of the Fund's Class A Shares total returns on a calendar year-end basis.

The total returns displayed for the Fund's Class A Shares do not reflect the payment of any sales charges or recurring shareholder account fees. If these charges or fees had been included, the returns shown would have been lower.

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The Fund's Class A Shares total return for the three-month period from January 1, 2001 to March 31, 2001 was 2.11%.

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Within the period shown in the Chart, the Fund's Class A Shares highest quarterly return was 5.53% (quarter ended March 31, 1995). Its lowest quarterly return was (4.13)% (quarter ended March 31, 1994).

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Average Annual Total Return Table

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The following table represents the Fund's Class A, Class B and Class C Shares Average Annual Total Returns, reduced to reflect applicable sales charges, for the calendar periods ended December 31, 2000. The table shows the Fund's total returns averaged over a period of years relative to the Lehman Brothers Municipal Bond Index (LBMBI), a broad-based market index, and the Lipper General Municipal Funds Average (LGMFA), an average of funds with similar investment objectives. The LBMBI is the Fund's total return performance benchmark for the long-term, investment grade market. The LGMFA represents the average of the total returns reported by all the mutual funds designated by Lipper Analytical Services, Inc. as falling in the category indicated. Total returns for the indexes shown do not reflect sales charges, expenses or other fees that the SEC requires to be reflected in the Fund's performance. Indexes are unmanaged, and it is not possible to invest directly in an index.

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Calendar Period	Class A	Class B	Class C	LBMBI	LGMFA
1 Year	6.15%	4.67%	9.18%	11.68%	11.10%
5 Years	2.94%	2.65%	3.00%	5.84%	4.99%
10 Years	5.39%	- --	- --	7.32%	6.79%
Start of Performance1	- --	3.85%	3.43%	NA	NA

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1 The Fund's Class B and C Shares start of performance dates were July 26, 1994 and April 21, 1993, respectively.

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Past performance is no guarantee of future results. This information provides you with historical performance information so that you can analyze wether the Fund's investment risks are balanced by its potential returns.

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What are the Fund's Fees and Expenses?

FEDERATED MUNICIPAL SECURITIES FUND, INC.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold Class A, Class B, or Class C Shares of the Fund.

Shareholder Fees	Class A	Class B	Class C
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)	4.50%	None	None
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, as applicable)	0.00%	5.50%	1.00%
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) (as a percentage of offering price).	None	None	None
Redemption Fee (as a percentage of amount redeemed, if applicable)	None	None	None
Exchange Fee	None	None	None
Annual Fund Operating Expenses (Before Waiver)1
Expenses That are Deducted From Fund Assets (as percentage of average net assets)
Management Fee	0.55%	0.55%	0.55%
Distribution (12b-1) Fee	None	0.75%	0.75%
Shareholder Services Fee2	0.25%	0.25%	0.25%
Other Expenses	0.22%	0.22%	0.22%
Total Annual Fund Operating Expenses	1.02%	1.77%3	1.77%
1 Although not contractually obligated to do so, the shareholder services provider waived certain amounts. These are shown below along with the net expenses the Fund actually paid for the fiscal year ended March 31, 2001.
Total Waiver of Fund Expenses	0.14%	0.00%	0.01%
Total Actual Annual Fund Operating Expenses (after waiver)	0.88%	1.77%	1.76%
2 A portion of the shareholder services fee has been voluntarily waived. This voluntary waiver can be terminated at any time. The shareholder services fee paid by the Fund's Class A Shares and Class C Shares (after the voluntary waiver) was 0.11% and 0.24%, respectively, for the fiscal year ended March 31, 2001.
3 Class B Shares convert to Class A Shares (which pay lower ongoing expenses) approximately eight years after purchase.

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund's Class A, B, and C Shares with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Fund's Class A, B, and C Shares for the time periods indicated and then redeem all of your Shares at the end of those periods. Expenses assuming no redemption are also shown. The Example also assumes that your investment has a 5% return each year and that the Fund's Class A, B, and C Shares operating expenses are before waivers as shown in the table and remain the same. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:

Share Class	1 Year	3 Years	5 Years	10 Years
Class A:
Expenses assuming redemption	$549	$760	$988	$1,642
Expenses assuming no redemption	$549	$760	$988	$1,642
Class B:
Expenses assuming redemption	$730	$957	$1,159	$1,886
Expenses assuming no redemption	$180	$557	$  959	$1,886
Class C:
Expenses assuming redemption	$280	$557	$959	$2,084
Expenses assuming no redemption	$180	$557	$959	$2,084

What are the Fund's Investment Strategies?

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The Fund invests in a portfolio of tax exempt securities so that at least 80% of its annual interest income is exempt from federal regular income tax. Interest income from the Fund's investments may be subject to AMT. The Fund invests primarily in long-term, investment grade tax exempt securities. The Fund's investment adviser (Adviser) actively manages the Fund's portfolio, seeking to manage the interest rate risk and credit risk assumed by the Fund and provide superior levels of after tax total return.

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The Adviser manages the Fund's interest rate risk by adjusting the duration of its portfolio. "Duration" measures the sensitivity of a security's price to changes in interest rates. The greater a portfolio's duration, the greater the change in the portfolio's value in response to a change in market interest rates. The Adviser will increase or reduce the Fund's portfolio duration based on its interest rate outlook. When the Adviser expects interest rates to fall, it will maintain a longer portfolio duration. When the Adviser expects interest rates to increase, it will shorten the portfolio duration. The Adviser considers a variety of factors in formulating its interest rate outlook, including the following:

• current and expected U.S. economic growth;
• current and expected interest rates and inflation;
• the Federal Reserve's monetary policy; and
• supply and demand factors related to the municipal market and the affect they may have on the returns offered for various bond maturities.

The Adviser manages credit risk by performing a fundamental credit analysis on tax exempt securities before the Fund purchases such securities. The Adviser considers various factors, including the following:

• the economic feasibility of revenue bond financings and general purpose financings;
• the financial condition of the issuer or guarantor; and
• political developments that may affect credit quality.

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The Adviser monitors the credit risks of all portfolio securities on an ongoing basis by reviewing periodic financial data and ratings of nationally recognized ratings organizations (NRSROs).

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The Adviser attempts to provide superior levels of after tax total return. After tax total return consists of two components: (1) changes in the market value of the Fund's portfolio securities and attendant increase or decrease in the net asset value (NAV) of Fund shares; and (2) income received from the Fund's portfolio securities. The Adviser seeks total return on an after tax basis, so that it will try to maximize tax exempt income distributions; make no ordinary income distributions; and minimize or eliminate capital gains distributions.

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The Adviser's ability to formulate an accurate interest rate outlook, coupled with effective management of the Fund's duration as described above, is critical to the Adviser's achievement of this component of its strategy. The Adviser will seek to further enhance after tax total return by engaging in a relative value analysis; that is, the Adviser will assess the cost of a tax exempt security compared with other tax exempt securities and taxable securities such as U.S. Treasury obligations. The Adviser may also allocate investments in sectors of the tax exempt market that offer the highest return. Finally, the Adviser will invest a portion of the portfolio in tax exempt securities subject to AMT, which may offer higher returns.

HEDGING

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Hedging transactions are intended to reduce specific risks. For example, to protect the Fund against circumstances that would normally cause the Fund's portfolio securities to decline in value, the Fund may buy or sell a derivative contract that would normally increase in value under the same circumstances. The Fund may also attempt to hedge by using combinations of different derivatives contracts, or derivatives contracts and securities. The Fund's ability to hedge may be limited by the costs of the derivatives contracts. The Fund may attempt to lower the cost of hedging by entering into transactions that provide only limited protection, including transactions that: (1) hedge only a portion of its portfolio; (2) use derivatives contracts that cover a narrow range of circumstances; or (3) involve the sale of derivatives contracts with different terms. Consequently, hedging transactions will not eliminate risk even if they work as intended. In addition, hedging strategies are not always successful, and could result in increased expenses and losses to the Fund.

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Temporary Defensive Investments

The Fund may temporarily depart from its principal investment strategies by investing its assets in cash and shorter-term securities subject to federal income tax. It may do this to minimize potential losses and maintain liquidity to meet shareholder redemptions during adverse market conditions. This may cause the Fund to receive and distribute taxable income to investors. It may also cause the Fund to give up greater investment returns to maintain the safety of principal, that is, the original amount invested by shareholders.

What are the Principal Securities in Which the Fund Invests?

TAX EXEMPT SECURITIES

Tax exempt securities are fixed income securities that pay interest that is not subject to federal regular income taxes. Fixed income securities pay interest, dividends or distributions at a specified rate. The rate may be a fixed percentage of the principal or adjusted periodically.

Typically, states, counties, cities and other political subdivisions and authorities issue tax exempt securities. The market categorizes tax exempt securities by their source of repayment.

Municipal Leases

Municipalities may enter into leases for equipment or facilities. In order to comply with state public financing laws, these leases are typically subject to annual appropriation. In other words, a municipality may end a lease, without penalty, by not providing for the lease payments in its annual budget. After the lease ends, the lessor can resell the equipment or facility but may lose money on the sale.

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The Fund may invest in securities supported by pools of municipal leases. The most common type of lease backed securities is certificates of participation (COPs). However, the Fund may also invest directly in individual leases.

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Inverse Floaters

An inverse floater has a floating or variable interest rate that moves in the opposite direction of market interest rates. When market interest rates go up, the interest rate paid on the inverse floater goes down; when market interest rates go down, the interest rate paid on the inverse floater goes up. Inverse floaters generally respond more rapidly to market interest rates changes than fixed rate tax exempt securities. Inverse floaters are subject to interest rate risks and leverage risks.

Zero Coupon Securities

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Zero coupon securities do not pay interest or principal until final maturity unlike debt securities that provide periodic payments of interest (referred to as a "coupon payment"). Investors buy zero coupon securities at a price below the amount payable at maturity. The difference between the purchase price and the amount paid at maturity represents interest on the zero coupon security. Investors must wait until maturity to receive interest and principal, which increases the interest rate and credit risks of a zero coupon security.

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General Obligation Bonds

General obligation bonds are supported by the issuer's power to exact property or other taxes. The issuer must impose and collect taxes sufficient to pay principal and interest on the bonds. However, the issuer's authority to impose additional taxes may be limited by its charter or state law.

Special Revenue Bonds

Special revenue bonds are payable solely from specific revenues received by the issuer such as specific taxes, assessments, tolls or fees. Bondholders may not collect from the municipality's general taxes or revenues. For example, a municipality may issue bonds to build a toll road, and pledge the tolls to repay the bonds. Therefore, a shortfall in the tolls normally would result in a default on the bonds.

Private Activity Bonds

Private activity bonds are special revenue bonds used to finance private entities. For example, a municipality may issue bonds to finance a new factory to improve its local economy. The municipality would lend the proceeds from its bonds to the company using the factory, and the company would agree to make loan payments sufficient to repay the bonds. The bonds would be payable solely from the company's loan payments, not from any other revenues of the municipality. Therefore, any default on the loan normally would result in a default on the bonds.

The interest on many types of private activity bonds is subject to AMT. The Fund may invest in bonds subject to AMT.

Tax Increment Financing Bonds

Tax increment financing (TIF) bonds are payable from increases in taxes or other revenues attributable to projects financed by the bonds. For example, a municipality may issue TIF bonds to redevelop a commercial area. The TIF bonds would be payable solely from any increase in sales taxes collected from merchants in the area. The bonds could default if merchants' sales, and related tax collections, failed to increase as anticipated.

Variable Rate Demand Instruments

Variable rate demand instruments are tax exempt securities that require the issuer or a third party, such as a dealer or bank, to repurchase the security for its face value upon demand. The securities also pay interest at a variable rate intended to cause the securities to trade at their face value. The Fund treats demand instruments as short-term securities, because their variable interest rate adjusts in response to changes in market rates, even though their stated maturity may extend beyond 13 months.

Credit Enhancement

Credit enhancement consists of an arrangement in which a company agrees to pay amounts due on a fixed income security if the issuer defaults. In some cases the company providing credit enhancement makes all payments directly to the security holders and receives reimbursement from the issuer. Normally, the credit enhancer has greater financial resources and liquidity than the issuer. For this reason, the Adviser usually evaluates the credit risk of a fixed income security based solely upon its credit enhancement.

Futures Contracts

Futures contracts, which are a type of derivative contract, provide for the future sale by one party and purchase by another party of a specified amount of an underlying asset at a specified price, date and time. Entering into a contract to buy an underlying asset is commonly referred to as buying a contract or holding a long position in the asset. Entering into a contract to sell an underlying asset is commonly referred to as selling a contract or holding a short position in the asset. Futures contracts are considered to be commodity contracts.

The Fund may buy and sell interest rate and index financial futures contracts. Depending upon how the Fund uses futures contracts and the relationships between the market value of a futures contract and the underlying asset, futures contracts may increase or decrease the Fund's exposure to interest rate risks, and may also expose the Fund to liquidity and leverage risks.

SPECIAL TRANSACTIONS

Delayed Delivery Transactions

Delayed delivery transactions, including when-issued transactions, are arrangements in which the Fund buys securities for a set price, with payment and delivery of the securities scheduled for a future time. During the period between purchase and settlement, no payment is made by the Fund to the issuer and no interest accrues to the Fund. The Fund records the transaction when it agrees to buy the securities and reflects their value in determining the price of its shares. Settlement dates may be a month or more after entering into these transactions so that the market values of the securities bought may vary from the purchase prices. Therefore, delayed delivery transactions create interest rate risks for the Fund. Delayed delivery transactions also involve credit risks in the event of a counterparty default. These transactions create leverage risks.

Asset Coverage

In order to secure its obligations in connection with derivative contracts or special transactions, the Fund will either own the underlying assets, enter into an offsetting transaction or set aside readily marketable securities with a value that equals or exceeds the Fund's obligations. Unless the Fund has other readily marketable assets to set aside, it cannot trade assets used to secure such obligations without entering into an offsetting derivative contract or terminating a special transaction. This may cause the Fund to miss favorable trading opportunities or to realize losses on derivative contracts or special transactions.

INVESTMENT RATINGS FOR INVESTMENT GRADE SECURITIES

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The Adviser will determine whether a security is investment grade based upon the credit ratings given by one or more NRSROs. For example, Standard & Poor's, a rating service, assigns ratings to investment grade securities (AAA, AA, A, and BBB) based on their assessment of the likelihood of the issuer's inability to pay interest or principal (default) when due on each security. Lower credit ratings correspond to higher credit risk. If a security has not received a rating, the Fund must rely entirely upon the Adviser's credit assessment that the security is comparable to investment grade.

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If a security is downgraded below the minimum quality grade discussed above, the Adviser will reevaluate the security, but will not be required to sell it.

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What are the Specific Risks of Investing in the Fund?

INTEREST RATE RISKS

Prices of fixed income securities rise and fall in response to changes in the interest rate paid by similar securities. Generally, when interest rates rise, prices of fixed income securities fall. However, market factors, such as the demand for particular fixed income securities, may cause the price of certain fixed income securities to fall while the prices of other securities rise or remain unchanged.

Interest rate changes have a greater affect on the price of fixed income securities with longer durations. Duration measures the price sensitivity of a fixed income security to changes in interest rates.

Credit Risks

Credit risk is the possibility that an issuer will default on a security by failing to pay interest or principal when due. If an issuer defaults, the Fund will lose money.

Many fixed income securities receive credit ratings from services such as Standard & Poor's and Moody's Investors Service. These services assign ratings to securities by assessing the likelihood of issuer default. Lower credit ratings correspond to higher credit risk. If a security has not received a rating, the Fund must rely entirely upon the Adviser's credit assessment.

Credit risk includes the possibility that a party to a transaction involving the Fund will fail to meet its obligations. This could cause the Fund to lose the benefit of the transaction or prevent the Fund from selling or buying other securities to implement its investment strategy.

Liquidity Risks

Trading opportunities are more limited for fixed income securities that have not received any credit ratings, have received ratings below investment grade or are not widely held.

Liquidity risk also refers to the possibility that the Fund may not be able to sell a security or close out a derivative contract when it wants to. If this happens, the Fund will be required to continue to hold the security or keep the position open, and the Fund could incur losses.

Call Risks

Call risk is the possibility that an issuer may redeem a fixed income security before maturity (a call) at a price below its current market price. An increase in the likelihood of a call may reduce the security's price.

If a fixed income security is called, the Fund may have to reinvest the proceeds in other fixed income securities with lower interest rates, higher credit risks, or other less favorable characteristics.

Sector Risks

A substantial part of the Fund's portfolio may be comprised of securities credit enhanced by banks, insurance companies or other companies with other similar characteristics. As a result, the Fund will be more susceptible to any economic, business, political, or other developments which generally affect these issuers.

Leverage Risks

Leverage risk is created when an investment exposes the Fund to a level of risk that exceeds the amount invested. Changes in the value of such an investment magnify the Fund's risk of loss and potential for gain.

Investments can have these same results if their returns are based on a multiple of a specified index, security, or other benchmark.

What Do Shares Cost?

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You can purchase, redeem or exchange Shares any day the New York Stock Exchange (NYSE) is open. When the Fund receives your transaction request in proper form (as described in this prospectus) it is processed at the next calculated NAV plus any applicable front-end sales charge (public offering price). NAV is determined at the end of regular trading (normally 4:00 p.m. Eastern time) each day the NYSE is open. The Fund generally values fixed income securities according to the mean between bid and asked prices as furnished by an independent pricing service, except that fixed income securities with remaining maturities of less than 60 days at the time of purchase may be valued at amortized cost

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The Fund's current NAV and public offering price may be found in the mutual funds section of certain local newspapers under "Federated" and the appropriate class designation listing.

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The following table summarizes the minimum required investment amount and the maximum sales charge, if any, that you will pay on an investment in the Fund. Keep in mind that investment professionals may charge you fees for their services in connection with your Share transactions.

Shares Offered	Minimum Initial/Subsequent Investment Amounts1	Maximum Sales Charge
		Front-End Sales Charge2	Contingent Deferred Sales Charge3
Class A	$1,500/$100	4.50%	0.00%
Class B	$1,500/$100	None	5.50%
Class C	$1,500/$100	None	1.00%

1 The minimum subsequent investment amounts for Systematic Investment Programs (SIP) is $50. Investment professionals may impose higher or lower minimum investment requirements on their customers than those imposed by the Fund.

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Orders for $250,000 or more will be invested in Class A Shares instead of Class B Shares to maximize your return and minimize the sales charges and marketing fees. Accounts held in the name of an investment professional may be treated differently. After Class B Shares have been held for eight years from the date of purchase, they will automatically convert to Class A Shares on the 15th of the following month. This conversion is a non-taxable event.

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2 Front-End Sales Charge is expressed as a percentage of public offering price. See "Sales Charge When You Purchase."

3 See "Sales Charge When You Redeem."

SALES CHARGE WHEN YOU PURCHASE

Class A Shares
Purchase Amount	Sales Charge as a Percentage of Public Offering Price	Sales Charge as a Percentage of NAV
Less than $50,000	5.50%	5.82%
$50,000 but less than $100,000	4.50%	4.71%
$100,000 but less than $250,000	3.75%	3.90%
$250,000 but less than $500,000	2.50%	2.56%
$500,000 but less than $1 million	2.00%	2.04%
$1 million or greater1	0.00%	0.00%

1 A contingent deferred sales charge of 0.75% of the redemption amount applies to Class A Shares redeemed up to 24 months after purchase under certain investment programs where an investment professional received an advance payment on the transaction.

If your investment qualifies for a reduction or elimination of the sales charge as described below, you or your investment professional should notify the Fund's Distributor at the time of purchase. If the Distributor is not notified, you will receive the reduced sales charge only on additional purchases, and not retroactively on previous purchases.

The sales charge at purchase may be reduced or eliminated by:

• purchasing Shares in greater quantities to reduce the applicable sales charge;
• combining concurrent purchases of Shares:
  • by you, your spouse, and your children under age 21; or
  • of the same share class of two or more Federated Funds (other than money market funds);
• accumulating purchases (in calculating the sales charge on an additional purchase, include the current value of previous Share purchases still invested in the Fund); or
• signing a letter of intent to purchase a specific dollar amount of Shares within 13 months (call your investment professional or the Fund for more information).

The sales charge will be eliminated when you purchase Shares:

• within 120 days of redeeming Shares of an equal or lesser amount;
• by exchanging shares from the same share class of another Federated Fund (other than a money market fund);
• through wrap accounts or other investment programs where you pay the investment professional directly for services;
• through investment professionals that receive no portion of the sales charge;
• as a Federated Life Member (Class A Shares only) and their immediate family members; or
• as a Director or employee of the Fund, the Adviser, the Distributor and their affiliates, and the immediate family members of these individuals.

SALES CHARGE WHEN YOU REDEEM

Your redemption proceeds may be reduced by a sales charge, commonly referred to as a contingent deferred sales charge (CDSC).

Class A Shares:
A CDSC of 0.75% of the redemption amount applies to Class A Shares redeemed up to 24 months after purchase under certain investment programs where an investment professional received an advance payment on the transaction.
Class B Shares:
Shares Held Up To:	CDSC
1 year	5.50%
2 years	4.75%
3 years	4.00%
4 years	3.00%
5 years	2.00%
6 years	1.00%
7 years or more	0.00%
Class C Shares:
You will pay a 1% CDSC if you redeem Shares within one year of the purchase date.

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If your investment qualifies for a reduction or elimination of the CDSC as described below, you or your investment professional should notify the Distributor at the time of redemption. If the Distributor is not notified, the CDSC will apply.

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You will not be charged a CDSC when redeeming Shares:

• purchased with reinvested dividends or capital gains;
• purchased within 120 days of redeeming Shares of an equal or lesser amount;
• that you exchanged into the same share class of another Federated Fund if the shares were held for the applicable CDSC holding period (other than a money market fund);
• purchased through investment professionals who did not receive advanced sales payments;
• if, after you purchase Shares, you become disabled as defined by the IRS;
• if the Fund redeems your Shares and closes your account for not meeting the minimum balance requirement;
• if your redemption is a required retirement plan distribution; or
• upon the death of the last surviving shareholder of the account.

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To keep the sales charge as low as possible, the Fund redeems your Shares in this order:

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• Shares that are not subject to a CDSC; and
• Shares held the longest (to determine the number of years your Shares have been held, include the time you held shares of other Federated Funds that have been exchanged for Shares of this Fund).

The CDSC is then calculated using the share price at the time of purchase or redemption, whichever is lower.

How is the Fund Sold?

The Fund offers three share classes: Class A, Class B and Class C, each representing interests in a single portfolio of securities.

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The Fund's Distributor, Federated Securities Corp., markets the Shares described in this prospectus to institutions or to individuals, directly or through investment professionals. The Fund may not be a suitable investment for retirement plans.

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When the Distributor receives marketing fees and sales charges, it may pay some or all of them to investment professionals. The Distributor and its affiliates may pay out of their assets other amounts (including items of material value) to investment professionals for marketing and servicing Shares. The Distributor is a subsidiary of Federated Investors, Inc. (Federated).

RULE 12B-1 PLAN

The Fund has adopted a Rule 12b-1 Plan, which allows it to pay marketing fees to the Distributor and investment professionals for the sale, distribution and customer servicing of the Fund's Class B and Class C Shares. Because these Shares pay marketing fees on an ongoing basis, your investment cost may be higher over time than other shares with different sales charges and marketing fees.

How to Purchase Shares

You may purchase Shares through an investment professional, directly from the Fund, or through an exchange from another Federated Fund. The Fund reserves the right to reject any request to purchase or exchange Shares.

Where the Fund offers more than one share class and you do not specify the class choice on your New Account Form or form of payment (e.g., Federal Reserve wire or check) you automatically will receive Class A Shares.

THROUGH AN INVESTMENT PROFESSIONAL

• Establish an account with the investment professional; and
• Submit your purchase order to the investment professional before the end of regular trading on the NYSE (normally 4:00 p.m. Eastern time). You will receive the next calculated NAV if the investment professional forwards the order to the Fund on the same day and the Fund receives payment within three business days. You will become the owner of Shares and receive dividends when the Fund receives your payment.

Investment professionals should send payments according to the instructions in the sections "By Wire" or "By Check."

DIRECTLY FROM THE FUND

• Establish your account with the Fund by submitting a completed New Account Form; and
• Send your payment to the Fund by Federal Reserve wire or check.

You will become the owner of Shares and your Shares will be priced at the next calculated NAV after the Fund receives your wire or your check. If your check does not clear, your purchase will be canceled and you could be liable for any losses or fees incurred by the Fund or Federated Shareholder Services Company, the Fund's transfer agent.

An institution may establish an account and place an order by calling the Fund and the Shares will be priced at the next calculated NAV after the Fund receives the order.

By Wire

Send your wire to:

State Street Bank and Trust Company

Boston, MA

Dollar Amount of Wire

ABA Number 011000028

Attention: EDGEWIRE

Wire Order Number, Dealer Number or Group Number

Nominee/Institution Name

Fund Name and Number and Account Number

You cannot purchase Shares by wire on holidays when wire transfers are restricted.

By Check

Make your check payable to The Federated Funds, note your account number on the check, and mail it to:

Federated Shareholder Services Company

P.O. Box 8600

Boston, MA 02266-8600

If you send your check by a private courier or overnight delivery service that requires a street address, mail it to:

Federated Shareholder Services Company

1099 Hingham Street

Rockland, MA 02370-3317

Payment should be made in U.S. dollars and drawn on a U.S. bank. The Fund will not accept third-party checks (checks originally payable to someone other than you or The Federated Funds).

THROUGH AN EXCHANGE

You may purchase Shares through an exchange from the same Share class of another Federated Fund. You must meet the minimum initial investment requirement for purchasing Shares and both accounts must have identical registrations.

BY SYSTEMATIC INVESTMENT PROGRAM

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Once you have opened an account, you may automatically purchase additional Shares on a regular basis by completing the SIP section of the New Account Form or by contacting the Fund or your investment professional.

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BY AUTOMATED CLEARING HOUSE (ACH)

Once you have opened an account, you may purchase additional Shares through a depository institution that is an ACH member. This purchase option can be established by completing the appropriate sections of the New Account Form.

How to Redeem and Exchange Shares

You should redeem or exchange Shares:

• through an investment professional if you purchased Shares through an investment professional; or
• directly from the Fund if you purchased Shares directly from the Fund.

THROUGH AN INVESTMENT PROFESSIONAL

Submit your redemption or exchange request to your investment professional by the end of regular trading on the NYSE (normally 4:00 p.m. Eastern time). The redemption amount you will receive is based upon the next calculated NAV after the Fund receives the order from your investment professional.

DIRECTLY FROM THE FUND

By Telephone

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You may redeem or exchange Shares by simply calling the Fund at 1-800-341-7400.

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If you call before the end of regular trading on the NYSE (normally 4:00 p.m. Eastern time) you will receive a redemption amount based on that day's NAV.

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By Mail

You may redeem or exchange Shares by mailing a written request to the Fund.

You will receive a redemption amount based on the next calculated NAV after the Fund receives your written request in proper form.

Send requests by mail to:

Federated Shareholder Services Company

P.O. Box 8600

Boston, MA 02266-8600

Send requests by private courier or overnight delivery service to:

Federated Shareholder Services Company

1099 Hingham Street

Rockland, MA 02370-3317

All requests must include:

• Fund Name and Share Class, account number and account registration;
• amount to be redeemed or exchanged;
• signatures of all shareholders exactly as registered; and
• if exchanging, the Fund Name and Share Class, account number and account registration into which you are exchanging.

Call your investment professional or the Fund if you need special instructions.

Signature Guarantees

Signatures must be guaranteed if:

• your redemption will be sent to an address other than the address of record;
• your redemption will be sent to an address of record that was changed within the last 30 days;
• a redemption is payable to someone other than the shareholder(s) of record; or
• if exchanging (transferring) into another fund with a different shareholder registration.

A signature guarantee is designed to protect your account from fraud. Obtain a signature guarantee from a bank or trust company, savings association, credit union or broker, dealer, or securities exchange member. A notary public cannot provide a signature guarantee.

PAYMENT METHODS FOR REDEMPTIONS

Your redemption proceeds will be mailed by check to your address of record. The following payment options are available if you complete the appropriate section of the New Account Form or an Account Service Options Form. These payment options require a signature guarantee if they were not established when the account was opened:

• an electronic transfer to your account at a financial institution that is an ACH member; or
• wire payment to your account at a domestic commercial bank that is a Federal Reserve System member.

Redemption in Kind

Although the Fund intends to pay Share redemptions in cash, it reserves the right to pay the redemption price in whole or in part by a distribution of the Fund's portfolio securities.

LIMITATIONS ON REDEMPTION PROCEEDS

Redemption proceeds normally are wired or mailed within one business day after receiving a request in proper form. Payment may be delayed up to seven days:

• to allow your purchase to clear;
• during periods of market volatility; or
• when a shareholder's trade activity or amount adversely impacts the Fund's ability to manage its assets.

You will not accrue interest or dividends on uncashed checks from the Fund if those checks are undeliverable and returned to the Fund.

EXCHANGE PRIVILEGE

You may exchange Shares of the Fund into Shares of the same class of another Federated Fund. To do this, you must:

• ensure that the account registrations are identical;
• meet any minimum initial investment requirements; and
• receive a prospectus for the fund into which you wish to exchange.

An exchange is treated as a redemption and a subsequent purchase, and is a taxable transaction.

The Fund may modify or terminate the exchange privilege at any time. The Fund's management or investment adviser may determine from the amount, frequency and pattern of exchanges that a shareholder is engaged in excessive trading that is detrimental to the Fund and other shareholders. If this occurs, the Fund may terminate the availability of exchanges to that shareholder and may bar that shareholder from purchasing other Federated Funds.

SYSTEMATIC WITHDRAWAL/EXCHANGE PROGRAM

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You may automatically redeem or exchange Shares in a minimum amount of $100 on a regular basis. Complete the appropriate section of the New Account Form or an Account Service Options Form or contact your investment professional or the Fund. Your account value must meet the minimum initial investment amount at the time the program is established. This program may reduce, and eventually deplete, your account. Payments should not be considered yield or income. Generally, it is not advisable to continue to purchase Class A Shares subject to a sales charge while redeeming Shares using this program.

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Systematic Withdrawal Program (SWP) on Class B Shares

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You will not be charged a CDSC on SWP redemptions if:

• you redeem 12% or less of your account value in a single year;
• you reinvest all dividends and capital gains distributions; and
• your account has at least a $10,000 balance when you establish the SWP. (You cannot aggregate multiple Class B Share accounts to meet this minimum balance.)

You will be subject to a CDSC on redemption amounts that exceed the 12% annual limit. In measuring the redemption percentage, your account is valued when you establish the SWP and then annually at calendar year-end. You can redeem monthly, quarterly or semi-annually.

ADDITIONAL CONDITIONS

Telephone Transactions

The Fund will record your telephone instructions. If the Fund does not follow reasonable procedures, it may be liable for losses due to unauthorized or fraudulent telephone instructions.

Share Certificates

The Fund no longer issues share certificates. If you are redeeming or exchanging Shares represented by certificates previously issued by the Fund, you must return the certificates with your written redemption or exchange request. For your protection, send your certificates by registered or certified mail, but do not endorse them.

Account and Share Information

CONFIRMATIONS AND ACCOUNT STATEMENTS

You will receive confirmation of purchases, redemptions and exchanges (except for systematic transactions). In addition, you will receive periodic statements reporting all account activity, including systematic transactions, dividends and capital gains paid.

DIVIDENDS AND CAPITAL GAINS

The Fund declares any dividends daily and pays them monthly to shareholders. If you purchase Shares by wire, you begin earning dividends on the day your wire is received. If you purchase Shares by check, you begin earning dividends on the business day after the Fund receives your check. In either case, you earn dividends through the day your redemption request is received.

In addition, the Fund pays any capital gains at least annually. Your dividends and capital gains distributions will be automatically reinvested in additional Shares without a sales charge, unless you elect cash payments.

If you purchase Shares just before a Fund declares a capital gain distribution, you will pay the full price for the Shares and then receive a portion of the price back in the form of a taxable distribution, whether or not you reinvest the distribution in Shares. Therefore, you should consider the tax implications of purchasing Shares shortly before the Fund declares a capital gain. Contact your investment professional or the Fund for information concerning when dividends and capital gains will be paid.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, accounts may be closed if redemptions or exchanges cause the account balance to fall below the minimum initial investment amount. Before an account is closed, you will be notified and allowed 30 days to purchase additional Shares to meet the minimum.

TAX INFORMATION

The Fund sends an annual statement of your account activity to assist you in completing your federal, state and local tax returns. It is anticipated that Fund distributions will be primarily dividends that are exempt from federal income tax, although a portion of the Fund's dividends may not be exempt. Dividends may be subject to state and local taxes. Capital gains and non-exempt dividends are taxable whether paid in cash or reinvested in the Fund. Redemptions and exchanges are taxable sales. Please consult your tax adviser regarding your federal, state and local tax liability.

Who Manages the Fund?

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The Board of Directors governs the Fund. The Board selects and oversees the Adviser, Federated Investment Management Company. The Adviser manages the Fund's assets, including buying and selling portfolio securities. The Adviser's address is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779.

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The Adviser and other subsidiaries of Federated advise approximately 190 mutual funds and separate accounts, which totaled approximately $140 billion in assets as of December 31, 2000. Federated was established in 1955 and is one of the largest mutual fund investment managers in the United States with approximately 1,800 employees. More than 4,000 investment professionals make Federated Funds available to their customers.

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THE FUND'S PORTFOLIO MANAGERS ARE:

J. Scott Albrecht

J. Scott Albrecht has been the Fund's Portfolio Manager since 1996. Mr. Albrecht joined Federated in 1989. He has been a Senior Portfolio Manager since 1997 and a Vice President of the Fund's Adviser since 1994. He was a Portfolio Manager from 1994 to 1996. Mr. Albrecht is a Chartered Financial Analyst and received his M.S. in Public Management from Carnegie Mellon University.

Mary Jo Ochson

Mary Jo Ochson has been the Fund's Portfolio Manager since 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.

ADVISORY FEES

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The Adviser receives an annual investment adviser fee of 0.30% of the Fund's average daily net assets plus 4.50% of the Fund's gross income. The Adviser may voluntarily waive a portion of its fee or reimburse the Fund for certain operating expenses.

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Gross income includes, in general, discounts earned on U.S. Treasury bills and agency discount notes, interest earned on all interest-bearing obligations, and dividend income recorded on the ex-dividend date but does not include capital gains or losses or reduction for expenses.

Financial Information

FINANCIAL HIGHLIGHTS

The Financial Highlights will help you understand the Fund's financial performance for its past five fiscal years. Some of the information is presented on a per share basis. Total returns represent the rate an investor would have earned (or lost) on an investment in the Fund, assuming reinvestment of any dividends and capital gains.

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This information has been audited by Ernst & Young LLP, whose report, along with the Fund's audited financial statements, is included in the Annual Report.

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Financial Highlights -- Class A Shares

(For a Share Outstanding Throughout Each Period)

Year Ended March 31		2001			2000	1		1999			1998			1997
Net Asset Value, Beginning of Period		$ 9.90			$10.87			$10.91			$10.31			$10.82
Income From Investment Operations:
Net investment income		0.47	2		0.58			0.53			0.46			0.55
Net realized and unrealized gain (loss) on investments		0.55			(1.02	)		(0.05	)		0.64			(0.36	)
TOTAL FROM INVESTMENT OPERATIONS		1.02			(0.44	)		0.48			1.10			0.19
Less Distributions:
Distributions from net investment income		(0.47	)		(0.50	)		(0.52	)		(0.46	)		(0.55	)
Distributions in excess of net investment income3		--			--			--			(0.01	)		(0.05	)
Total distributions from net investment income		(0.47	)		(0.50	)		(0.52	)		(0.47	)		(0.60	)
Distributions from net realized gain on investments		--			(0.03	)		--			(0.03	)		(0.10	)
TOTAL DISTRIBUTIONS		(0.47	)		(0.53	)		(0.52	)		(0.50	)		(0.70	)
Net Asset Value, End of Period		$10.45			$ 9.90			$10.87			$10.91			$10.31
Total Return4		10.60	%		(4.01	%)		4.46	%		11.28	%		1.84	%
Ratios to Average Net Assets:
Expenses		0.88	%		0.92	%		0.87	%		0.86	%		0.93	%
Net investment income		4.68	%		5.72	%		4.86	%		4.70	%		5.37	%
Expense waiver/reimbursement5		0.14	%		0.14	%		0.14	%		0.14	%		0.14	%
Supplemental Data:
Net assets, end of period (000 omitted)	$461,456			$471,475			$562,883			$591,310			$595,515
Portfolio turnover		28	%		68	%		31	%		64	%		33	%

1 Beginning with the year ended March 31, 2000, the Fund was audited by Ernst & Young LLP. Each of the previous years was audited by other auditors.

2 Per share information is based on average shares outstanding.

3 Distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These distributions do not represent a return of capital for federal income tax purposes.

4 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.

5 This voluntary expense decrease is reflected in both the expense and the net investment income ratios shown above.

Further information about the Fund's performance is contained in the Annual Report, dated March 31, 2001, which can be obtained free of charge.

Financial Highlights -- Class B Shares

(For a Share Outstanding Throughout Each Period)

Year Ended March 31		2001			2000	1		1999			1998			1997
Net Asset Value, Beginning of Period		$ 9.90			$10.87			$10.91			$10.31			$10.82
Income From Investment Operations:
Net investment income		0.38	2		0.48			0.43			0.38			0.47
Net realized and unrealized gain (loss) on investments		0.55			(1.01	)		(0.05	)		0.64			(0.37	)
TOTAL FROM INVESTMENT OPERATIONS		0.93			(0.53	)		0.38			1.02			0.10
Less Distributions:
Distributions from net investment income		(0.38	)		(0.41	)		(0.42	)		(0.38	)		(0.47	)
Distributions in excess of net investment income3		--			--			--			(0.01	)		(0.04	)
Total distributions from net investment income		(0.38	)		(0.41	)		(0.42	)		(0.39	)		(0.51	)
Distributions from net realized gain on investments		--			(0.03	)		--			(0.03	)		(0.10	)
TOTAL DISTRIBUTIONS		(0.38	)		(0.44	)		(0.42	)		(0.42	)		(0.61	)
Net Asset Value, End of Period		$10.45			$ 9.90			$10.87			$10.91			$10.31
Total Return4		9.62	%		(4.85	%)		3.53	%		10.30	%		0.94	%
Ratios to Average Net Assets:
Expenses		1.77	%		1.81	%		1.76	%		1.75	%		1.82	%
Net investment income		3.79	%		4.68	%		3.97	%		3.81	%		4.50	%
Supplemental Data:
Net assets, end of period (000 omitted)	$71,511			$72,095			$88,756			$87,304			$77,536
Portfolio turnover		28	%		68	%		31	%		64	%		33	%

1 Beginning with the year ended March 31, 2000, the Fund was audited by Ernst & Young LLP. Each of the previous years was audited by other auditors.

2 Per share information is based on average shares outstanding.

3 Distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These distributions do not represent a return of capital for federal income tax purposes.

4 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.

Further information about the Fund's performance is contained in the Annual Report, dated March 31, 2001, which can be obtained free of charge.

Financial Highlights -- Class C Shares

(For a Share Outstanding Throughout Each Period)

Year Ended March 31	2001		2000	1	1999		1998		1997
Net Asset Value, Beginning of Period	$ 9.90		$10.87		$10.91		$10.31		$10.82
Income From Investment Operations:
Net investment income	0.38	2	0.48		0.43		0.37		0.46
Net realized and unrealized gain (loss) on investments	0.55		(1.01	)	(0.05	)	0.65		(0.36	)
TOTAL FROM INVESTMENT OPERATIONS	0.93		(0.53	)	0.38		1.02		0.10
Less Distributions:
Distributions from net investment income	(0.38	)	(0.41	)	(0.42	)	(0.37	)	(0.46	)
Distributions in excess of net investment income3	--		--		--		(0.02	)	(0.05	)
Total distributions from net investment income	(0.38	)	(0.41	)	(0.42	)	(0.39	)	(0.51	)
Distributions from net realized gain on investments	--		(0.03	)	--		(0.03	)	(0.10	)
TOTAL DISTRIBUTIONS	(0.38	)	(0.44	)	(0.42	)	(0.42	)	(0.61	)
Net Asset Value, End of Period	$10.45		$ 9.90		$10.87		$10.91		$10.31
Total Return4	9.63	%	(4.85	%)	3.54	%	10.31	%	0.95	%
Ratios to Average Net Assets:
Expenses	1.76	%	1.80	%	1.75	%	1.74	%	1.81	%
Net investment income	3.80	%	4.68	%	3.98	%	3.83	%	4.51	%
Expense waiver/reimbursement5	0.01	%	0.01	%	0.01	%	0.01	%	0.01	%
Supplemental Data:
Net assets, end of period (000 omitted)	$9,620		$10,601		$16,870		$17,616		$20,544
Portfolio turnover	28	%	68	%	31	%	64	%	33	%

1 Beginning with the year ended March 31, 2000, the Fund was audited by Ernst & Young LLP. Each of the previous years was audited by other auditors.

2 Per share information is based on average shares outstanding.

3 Distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These distributions do not represent a return of capital for federal income tax purposes.

4 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.

5 This voluntary expense decrease is reflected in both the expense and the net investment income ratios shown above.

Further information about the Fund's performance is contained in the Annual Report, dated March 31, 2001, which can be obtained free of charge.

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A Statement of Additional Information (SAI) dated May 31, 2001 is incorporated by reference into this prospectus. Additional information about the Fund and its investments is contained in the Fund's SAI, Annual and Semi-Annual Reports to shareholders as they become available. The Annual Report discusses market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year. To obtain the SAI, Annual Report, Semi-Annual Report and other information without charge, and to make inquiries, call your investment professional or the Fund at 1-800-341-7400.

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You can obtain information about the Fund (including the SAI) by writing to or visiting the SEC's Public Reference Room in Washington, DC. You may also access Fund information from the EDGAR Database on the SEC's Internet site at http://www.sec.gov. You can purchase copies of this information by contacting the SEC by email at publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, DC 20549-0102. Call 1-202-942-8090 for information on the SEC's Public Reference Room's operations and copying fees.

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Federated
World-Class Investment Manager
Federated Municipal Securities Fund, Inc.
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
www.federatedinvestors.com
Federated Securities Corp., Distributor

Investment Company Act File No. 811-2677

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Cusip 313913105
Cusip 313913204
Cusip 313913303

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G00322-01 (5/01)

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Federated is a registered mark of Federated Investors, Inc. 2001 ©Federated Investors, Inc.

Federated Municipal Securities Fund, Inc.

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STATEMENT OF ADDITIONAL INFORMATION

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May 31, 2001

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CLASS A SHARES
CLASS B SHARES
CLASS C SHARES

This Statement of Additional Information (SAI) is not a prospectus. Read this SAI in conjunction with the prospectus for Federated Municipal Securities Fund, Inc. (Fund), dated May 31, 2001.

This SAI incorporates by reference the Fund's Annual Report. Obtain the prospectus or the Annual Report without charge by calling 1-800-341-7400.

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Federated
World-Class Investment Manager
Federated Municipal Securities Fund, Inc.
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
www.federatedinvestors.com
Federated Securities Corp., Distributor

8051601B (5/01)

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CONTENTS

How is the Fund Organized? 1

Securities in Which the Fund Invests 1

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What Do Shares Cost? 4

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How is the Fund Sold? 5

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Exchanging Securities for Shares 6

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Subaccounting Services 6

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Redemption in Kind 6

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Account and Share Information 7

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Tax Information 7

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Who Manages and Provides Services to the Fund? 7

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How Does the Fund Measure Performance? 10

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Who is Federated Investors, Inc.? 13

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Financial Information 14

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Investment Ratings 14

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Addresses 16

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How is the Fund Organized?

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The Fund is a diversified open-end, management investment company that was established under the laws of the State of Maryland on September 10, 1976. The Fund changed its name from Liberty Municipal Securities Fund, Inc. to Federated Municipal Securities Fund, Inc. on February 26, 1996.

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The Board of Directors (the Board) has established three classes of shares of the Fund, known as Class A Shares, Class B Shares and Class C Shares (Shares). The SAI relates to all classes of Shares. The Fund's investment adviser is Federated Investment Management Company (Adviser).

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Securities in Which the Fund Invests

In pursuing its investment strategy, the Fund may invest in the following securities, in addition to those described in the prospectus, for any purpose that is consistent with its investment objective.

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SECURITIES DESCRIPTIONS AND TECHNIQUES

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Fixed Income Securities

Fixed income securities pay interest, dividends or distributions at a specified rate. The rate may be a fixed percentage of the principal or adjusted periodically. In addition, the issuer of a fixed income security must repay the principal amount of the security, normally within a specified time. Fixed income securities provide more regular income than equity securities. However, the returns on fixed income securities are limited and normally do not increase with the issuer's earnings. This limits the potential appreciation of fixed income securities as compared to equity securities.

A security's yield measures the annual income earned on a security as a percentage of its price. A security's yield will increase or decrease depending upon whether it costs less (a discount) or more (a premium) than the principal amount. If the issuer may redeem the security before its scheduled maturity, the price and yield on a discount or premium security may change based upon the probability of an early redemption. Securities with higher risks generally have higher yields.

The following describes the types of fixed income securities, in addition to those described in the prospectus, in which the Fund invests.

Tax Exempt Securities

Tax exempt securities are fixed income securities that pay interest that is not subject to federal regular income taxes. Typically, states, counties, cities and other political subdivisions and authorities issue tax exempt securities. The market categorizes tax exempt securities by their source of repayment.

Municipal Notes

Municipal notes are short-term tax exempt securities. Many municipalities issue such notes to fund their current operations before collecting taxes or other municipal revenues. Municipalities may also issue notes to fund capital projects prior to issuing long-term bonds. The issuers typically repay the notes at the end of their fiscal year, either with taxes, other revenues or proceeds from newly issued notes or bonds.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Fund may invest its assets in securities of other investment companies, including the securities of affiliated money market funds, as an efficient means of carrying out its investment policies and managing its uninvested cash.

Derivative Contracts

Derivative contracts are financial instruments that require payments based upon changes in the values of designated (or underlying) securities, currencies, commodities, financial indices or other assets. Some derivative contracts (such as futures, forwards and options) require payments relating to a future trade involving the underlying asset. Other derivative contracts (such as swaps) require payments relating to the income or returns from the underlying asset. The other party to a derivative contract is referred to as a counterparty.

Many derivative contracts are traded on securities or commodities exchanges. In this case, the exchange sets all the terms of the contract except for the price. Investors make payments due under their contracts through the exchange. Most exchanges require investors to maintain margin accounts through their brokers to cover their potential obligations to the exchange. Parties to the contract make (or collect) daily payments to the margin accounts to reflect losses (or gains) in the value of their contracts. This protects investors against potential defaults by the counterparty. Trading contracts on an exchange also allows investors to close out their contracts by entering into offsetting contracts.

For example, the Fund could close out an open contract to buy an asset at a future date by entering into an offsetting contract to sell the same asset on the same date. If the offsetting sale price is more than the original purchase price, the Fund realizes a gain; if it is less, the Fund realizes a loss. Exchanges may limit the amount of open contracts permitted at any one time. Such limits may prevent the Fund from closing out a position. If this happens, the Fund will be required to keep the contract open (even if it is losing money on the contract), and to make any payments required under the contract (even if it has to sell portfolio securities at unfavorable prices to do so). Inability to close out a contract could also harm the Fund by preventing it from disposing of or trading any assets it has been using to secure its obligations under the contract.

Temporary Defensive Investments

The Fund may make temporary defensive investments in the following taxable securities:

CORPORATE DEBT SECURITIES

Corporate debt securities are fixed income securities issued by businesses. Notes, bonds, debentures and commercial paper are the most prevalent types of corporate debt securities. The Fund may also purchase interests in bank loans to companies. The credit risks of corporate debt securities vary widely among issuers.

COMMERCIAL PAPER

Commercial paper is an issuer's obligation with a maturity of less than nine months. Companies typically issue commercial paper to pay for current expenditures. Most issuers constantly reissue their commercial paper and use the proceeds (or bank loans) to repay maturing paper. If the issuer cannot continue to obtain liquidity in this fashion, its commercial paper may default. The short maturity of commercial paper reduces both the market and credit risks as compared to other debt securities of the same issuer.

TREASURY SECURITIES

Treasury securities are direct obligations of the federal government of the United States. Treasury securities are generally regarded as having the lowest credit risks.

AGENCY SECURITIES

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Agency securities are issued or guaranteed by a federal agency or other government sponsored entity acting under federal authority (a "GSE"). The United States supports some GSEs with its full faith and credit. Other GSEs receive support through federal subsidies, loans or other benefits. A few GSEs have no explicit financial support, but are regarded as having implied support because the federal government sponsors their activities. Agency securities are generally regarded as having low credit risks, but not as low as treasury securities.

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BANK INSTRUMENTS

Bank instruments are unsecured interest bearing deposits with banks. Bank instruments include bank accounts, time deposits, certificates of deposit and banker's acceptances. Yankee instruments are denominated in U.S. dollars and issued by U.S. branches of foreign banks. Eurodollar instruments are denominated in U.S. dollars and issued by non-U.S. branches of U.S. or foreign banks.

SPECIAL TRANSACTIONS

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Inter-Fund Borrowing and Lending Arrangements

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The Securities and Exchange Commission (SEC) has granted an exemption that permits the Fund and all other funds advised by subsidiaries of Federated Investors, Inc. ("Federated funds") to lend and borrow money for certain temporary purposes directly to and from other Federated funds. Participation in this inter-fund lending program is voluntary for both borrowing and lending funds, and an inter-fund loan is only made if it benefits each participating fund. Federated administers the program according to procedures approved by the Fund's Board, and the Board monitors the operation of the program. Any inter-fund loan must comply with certain conditions set out in the exemption, which are designed to assure fairness and protect all participating funds.

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For example, inter-fund lending is permitted only: (a) to meet shareholder redemption requests; and (b) to meet commitments arising from "failed" trades. All inter-fund loans must be repaid in seven days or less. The Fund's participation in this program must be consistent with its investment policies and limitations, and must meet certain percentage tests. Inter-fund loans may be made only when the rate of interest to be charged is more attractive to the lending fund than market-competitive rates on overnight repurchase agreements (the "Repo Rate") and more attractive to the borrowing fund than the rate of interest that would be charged by an unaffiliated bank for short-term borrowings (the "Bank Loan Rate"), as determined by the Board. The interest rate imposed on inter-fund loans is the average of the Repo Rate and the Bank Loan Rate.

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Repurchase Agreements

Repurchase agreements are transactions in which the Fund buys a security from a dealer or bank and agrees to sell the security back at a mutually agreed upon time and price. The repurchase price exceeds the sale price, reflecting the Fund's return on the transaction. This return is unrelated to the interest rate on the underlying security. The Fund will enter into repurchase agreements only with banks and other recognized financial institutions, such as securities dealers, deemed creditworthy by the Adviser.

The Fund's custodian or subcustodian will take possession of the securities subject to repurchase agreements. The Adviser or subcustodian will monitor the value of the underlying security each day to ensure that the value of the security always equals or exceeds the repurchase price.

Repurchase agreements are subject to credit risks.

INVESTMENT RATINGS

Investment Ratings for Investment Grade Securities

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The Adviser will determine whether a security is investment grade based upon the credit ratings given by one or more nationally recognized rating services. For example, Standard & Poor's, a rating service, assigns ratings to investment grade securities (AAA, AA, A, and BBB) based on their assessment of the likelihood of the issuer's inability to pay interest or principal (default) when due on each security. Lower credit ratings correspond to higher credit risk. If a security has not received a rating, the Fund must rely entirely upon the Adviser's credit assessment that the security is comparable to investment grade.

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INVESTMENT RISKS

There are many factors which may affect an investment in the Fund. The Fund's principal risks are described in its prospectus. Additional risk factors are outlined below.

Tax Risks

In order to be tax-exempt, municipal securities must meet certain legal requirements. Failure to meet such requirements may cause the interest received and distributed by the Fund to shareholders to be taxable.

Changes or proposed changes in federal tax laws may cause the prices of municipal securities to fall.

Risks Associated with Noninvestment Grade Securities

Securities rated below investment grade, also known as junk bonds, generally entail greater market, credit and liquidity risks than investment grade securities. For example, their prices are more volatile, economic downturns and financial setbacks may affect their prices more negatively, and their trading market may be more limited.

Ordinarily, the Fund will invest in at least 65% of its portfolio in investment grade securities and unrated securities determined to be of equivalent quality. The remainder of the portfolio may be invested in securities rated below investment grade.

FUNDAMENTAL INVESTMENT OBJECTIVE AND POLICY

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The investment objective of the Fund is to provide for its shareholders a high level of current income which is exempt from federal regular income tax.

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The Fund pursues its investment objective by investing its assets so that at least 80% of its annual interest income is exempt from federal regular income tax.

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The objective and policy may not be changed by the Fund's board without shareholders approval.

INVESTMENT LIMITATIONS

Diversification

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 the securities of that issuer, or the Fund would own more than 10% of the outstanding voting securities of that issuer.

Borrowing Money and Issuing Senior Securities

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The Fund may borrow money, directly or indirectly, and issue senior securities to the maximum extent permitted under the Investment Company Act of 1940 (the 1940 Act).

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Investing in Real Estate

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.

Investing in Commodities

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.

Underwriting

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.

Lending

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.

Concentration

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 that 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.

The above limitations cannot be changed unless authorized by the Board and the "vote of a majority of its outstanding voting securities," as defined by the 1940 Act. The following limitations, however, may be changed by the Board without shareholder approval. Shareholders will be notified before any material change in these limitations becomes effective.

Pledging Assets

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.

Purchases on Margin

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.

Restricted Securities

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

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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 as long as the policy of the SEC remains in effect.

The Fund applies its concentration of investments restrictions as follows:

• utility companies will be divided according to their services, for example, gas, gas transmissions, electric and telephone will each be considered a separate industry;
• 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
• asset backed securities will be classified according to the underlying assets securing such securities.

DETERMINING MARKET VALUE OF SECURITIES

Market values of the Fund's portfolio securities are determined as follows:

• futures contracts and options are generally valued at market values established by the exchanges on which they are traded at the close of trading on such exchanges. Options traded in the over-the-counter market are generally valued according to the mean between the last bid and the last asked price for the option as provided by an investment dealer or other financial institution that deals in the option. The Board may determine in good faith that another method of valuing such investments is necessary to appraise their fair market value;
• for fixed income securities, according to the mean between bid and asked prices as furnished by an independent pricing service, except that fixed income securities with remaining maturities of less than 60 days at the time of purchase may be valued at amortized cost; and
• for all other securities at fair value as determined in good faith by the Board.

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Prices provided by independent pricing services may be determined without relying exclusively on quoted prices and may consider institutional trading in similar groups of securities, yield, quality, stability, risk, coupon rate, maturity, type of issue, trading characteristics, and other market data or factors. From time to time, when prices cannot be obtained from an independent pricing service, securities may be valued based on quotes from broker/dealers or other financial institutions that trade the securities.

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What Do Shares Cost?

The Fund's net asset value (NAV) per Share fluctuates and is based on the market value of all securities and other assets of the Fund.

The NAV for each class of Shares may differ due to the variance in daily net income realized by each class. Such variance will reflect only accrued net income to which the shareholders of a particular class are entitled.

REDUCING OR ELIMINATING THE FRONT-END SALES CHARGE

You can reduce or eliminate the applicable front-end sales charge, as follows:

Quantity Discounts

Larger purchases of the same Share class reduce or eliminate the sales charge you pay. You can combine purchases of Shares made on the same day by you, your spouse and your children under age 21. In addition, purchases made at one time by a trustee or fiduciary for a single trust estate or a single fiduciary account can be combined.

Accumulated Purchases

If you make an additional purchase of Shares, you can count previous Share purchases still invested in the Fund in calculating the applicable sales charge on the additional purchase.

Concurrent Purchases

You can combine concurrent purchases of the same share class of two or more Federated Funds in calculating the applicable sales charge.

Letter of Intent Class A Shares

You can sign a Letter of Intent committing to purchase a certain amount of the same class of Shares within a 13-month period to combine such purchases in calculating the sales charge. The Fund's custodian will hold Shares in escrow equal to the maximum applicable sales charge. If you complete the Letter of Intent, the Custodian will release the Shares in escrow to your account. If you do not fulfill the Letter of Intent, the Custodian will redeem the appropriate amount from the Shares held in escrow to pay the sales charges that were not applied to your purchases.

Reinvestment Privilege

You may reinvest, within 120 days, your Share redemption proceeds at the next determined NAV without any sales charge.

Purchases by Affiliates of the Fund

The following individuals and their immediate family members may buy Shares at NAV without any sales charge because there are nominal sales efforts associated with their purchases:

• the Directors, employees and sales representatives of the Fund, the Adviser, the Distributor and their affiliates;
• any associated person of an investment dealer who has a sales agreement with the Distributor; and
• trusts, pension or profit-sharing plans for these individuals.

Federated Life Members

Shareholders of the Fund known as "Federated Life Members" are exempt from paying any front-end sales charge. These shareholders joined the Fund originally:

• through the "Liberty Account," an account for Liberty Family of Funds shareholders on February 28, 1987 (the Liberty Account and Liberty Family of Funds are no longer marketed); or
• as Liberty Account shareholders by investing through an affinity group prior to August 1, 1987.

REDUCING OR ELIMINATING THE CONTINGENT DEFERRED SALES CHARGE

These reductions or eliminations are offered because: no sales commissions have been advanced to the investment professional selling Shares; the shareholder has already paid a Contingent Deferred Sales Charge (CDSC); or nominal sales efforts are associated with the original purchase of Shares.

Upon notification to the Distributor or the Fund's transfer agent, no CDSC will be imposed on redemptions:

• following the death or post-purchase disability, as defined in Section 72(m)(7) of the Internal Revenue Code of 1986, of the last surviving shareholder;
• representing minimum required distributions from an Individual Retirement Account or other retirement plan to a shareholder who has attained the age of 70-1/2;
• of Shares that represent a reinvestment within 120 days of a previous redemption;
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• of Shares held by the Directors, employees, and sales representatives of the Fund, the Adviser, the Distributor and their affiliates; employees of any investment professional that sells Shares according to a sales agreement with the Distributor; and the immediate family members of the above persons;
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• of Shares originally purchased through a bank trust department, a registered investment adviser or retirement plans where the third party administrator has entered into certain arrangements with the Distributor or its affiliates, or any other investment professional, to the extent that no payments were advanced for purchases made through these entities; and
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• which are involuntary redemptions processed by the Fund because the accounts do not meet the minimum balance requirements;

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Class B Shares Only

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• which are qualifying redemptions of Class B Shares under a Systematic Withdrawal Program.

How is the Fund Sold?

Under the Distributor's Contract with the Fund, the Distributor (Federated Securities Corp.) offers Shares on a continuous, best-efforts basis.

FRONT-END SALES CHARGE REALLOWANCES

The Distributor receives a front-end sales charge on certain Share sales. The Distributor generally pays up to 90% (and as much as 100%) of this charge to investment professionals for sales and/or administrative services. Any payments to investment professionals in excess of 90% of the front-end sales charge are considered supplemental payments. The Distributor retains any portion not paid to an investment professional.

RULE 12B-1 PLAN (CLASS B SHARES AND CLASS C SHARES)

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As a compensation-type plan, the Rule 12b-1 Plan is designed to pay the Distributor (who may then pay investment professionals such as banks, broker/dealers, trust departments of banks, and registered investment advisers) for marketing activities (such as advertising, printing and distributing prospectuses, and providing incentives to investment professionals) to promote sales of Shares so that overall Fund assets are maintained or increased. This helps the Fund achieve economies of scale, reduce per share expenses, and provide cash for orderly portfolio management and Share redemptions. In addition, the Fund's service providers that receive asset-based fees also benefit from stable or increasing Fund assets.

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The Fund may compensate the Distributor more or less than its actual marketing expenses. In no event will the Fund pay for any expenses of the Distributor that exceed the maximum Rule 12b-1 Plan fee.

For some classes of Shares, the maximum Rule 12b-1 Plan fee that can be paid in any one year may not be sufficient to cover the marketing-related expenses the Distributor has incurred. Therefore, it may take the Distributor a number of years to recoup these expenses.

Federated and its subsidiaries may benefit from arrangements where the Rule 12b-1 Plan fees related to Class B Shares may be paid to third parties who have advanced commissions to investment professionals.

SHAREHOLDER SERVICES

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The Fund may pay Federated Shareholder Services Company, a subsidiary of Federated Investors, Inc. (Federated), for providing shareholder services and maintaining shareholder accounts. Federated Shareholder Services Company may select others to perform these services for their customers and may pay them fees.

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SUPPLEMENTAL PAYMENTS

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Investment professionals (such as broker/dealers or banks) may be paid fees, in significant amounts, out of the assets of the Distributor and/or Federated Shareholder Services Company (these fees do not come out of Fund assets). The Distributor or Federated Shareholder Services Company may be reimbursed by the Adviser or its affiliates.

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Investment professionals receive such fees for providing distribution-related and/or shareholder services, such as advertising, providing incentives to their sales personnel, sponsoring other activities intended to promote sales, and maintaining shareholder accounts. These payments may be based upon such factors as the number or value of Shares the investment professional sells or may sell; the value of client assets invested; and/or the type and nature of sales or marketing support furnished by the investment professional.

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When an investment professional's customer purchases shares, the investment professional may receive:

• an amount up to 5.50% and 1.00%, respectively, of the NAV of Class B and C Shares.

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In addition, the Distributor may pay investment professionals 0.25% of the purchase price of $1 million or more of Class A Shares that its customer has not redeemed over the first year.

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Class A Shares

Investment professionals purchasing Class A Shares for their customers are eligible to receive an advance payment from the Distributor based on the following breakpoints:

Amount	Advance Payments as a Percentage of Public Offering Price
First $1 - $5 million	0.75%
Next $5 - $20 million	0.50%
Over $20 million	0.25%

For accounts with assets over $1 million, the dealer's advance payments reset annually to the first breakpoint on the anniversary of the first purchase.

Class A Share purchases under this program may be made by Letter of Intent or by combining concurrent purchases. The above advance payments will be paid only on those purchases that were not previously subject to a front-end sales charge and dealer advance payments. Certain retirement accounts may not be eligible for this program.

A contingent deferred sales charge of 0.75% of the redemption amount applies to Class A Shares redeemed up to 24 months after purchase. The CDSC does not apply under certain investment programs where the investment professional does not receive an advance payment on the transaction including, but not limited to, trust accounts and wrap programs where the investor pays an account level fee for investment management.

Exchanging Securities for Shares

You may contact the Distributor to request a purchase of Shares in exchange for securities you own. The Fund reserves the right to determine whether to accept your securities and the minimum market value to accept. The Fund will value your securities in the same manner as it values its assets. This exchange is treated as a sale of your securities for federal tax purposes.

Subaccounting Services

Certain investment professionals may wish to use the transfer agent's subaccounting system to minimize their internal recordkeeping requirements. The transfer agent may charge a fee based on the level of subaccounting services rendered. Investment professionals holding Shares in a fiduciary, agency, custodial or similar capacity may charge or pass through subaccounting fees as part of or in addition to normal trust or agency account fees. They may also charge fees for other services that may be related to the ownership of Shares. This information should, therefore, be read together with any agreement between the customer and the investment professional about the services provided, the fees charged for those services, and any restrictions and limitations imposed.

Redemption in Kind

Although the Fund intends to pay Share redemptions in cash, it reserves the right, as described below, to pay the redemption price in whole or in part by a distribution of the Fund's portfolio securities.

Because the Fund has elected to be governed by Rule 18f-1 under the 1940 Act, the Fund is obligated to pay Share redemptions to any one shareholder in cash only up to the lesser of $250,000 or 1% of the net assets represented by such Share class during any 90-day period.

Any Share redemption payment greater than this amount will also be in cash unless the Fund's Board determines that payment should be in kind. In such a case, the Fund will pay all or a portion of the remainder of the redemption in portfolio securities, valued in the same way as the Fund determines its NAV. The portfolio securities will be selected in a manner that the Fund's Board deems fair and equitable and, to the extent available, such securities will be readily marketable.

Redemption in kind is not as liquid as a cash redemption. If redemption is made in kind, shareholders receiving the portfolio securities and selling them before their maturity could receive less than the redemption value of the securities and could incur certain transaction costs.

Account and Share Information

VOTING RIGHTS

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Each share of the Fund gives the shareholder one vote in Director elections and other matters submitted to shareholders for vote. All Shares of the Fund have equal voting rights, except that in matters affecting only a particular class, only Shares of that class are entitled to vote. Directors may be removed by the Board or by shareholders at a special meeting. A special meeting of shareholders will be called by the Board upon the written request of shareholders who own at least 10% of the Fund's outstanding shares.

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As of May 7, 2001, the following shareholders owned of record, beneficially, or both, 5% or more of outstanding Class A Shares: Edward Jones & Co., Maryland Heights, MO, owned approximately 3,295,230 shares (7.31%).

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As of May 7, 2001, the following shareholders owned of record, beneficially, or both, 5% or more of outstanding Class B Shares: MLPF&S, Jacksonville, FL, owned approximately 381,583 shares (5.56%).

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As of May 7, 2001, the following shareholders owned of record, beneficially, or both, 5% or more of outstanding Class C Shares: MLPF&S, Jacksonville, FL, owned approximately 177,368 shares (19.20%); Edward Jones & Co., Maryland Heights, MO, owned approximately 147,341 (15.95%); TRUCOJO, St. Joseph, MO, owned approximately 61,138 shares (6.62%); NFSC FEBO #TNR-155764, New York, NY, owned approximately 54,003 shares (5.85%).

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Tax Information

FEDERAL INCOME TAX

The Fund intends to meet requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies. If these requirements are not met, it will not receive special tax treatment and will pay federal income tax.

Who Manages and Provides Services to the Fund?

BOARD OF DIRECTORS

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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. Information about each Board member is provided below and includes each person's: name; address; birth date; present position(s) held with the Fund; principal occupations for the past five years and positions held prior to the past five years, total compensation received as a Director from the Fund for its most recent fiscal year, if applicable; and the total compensation received from the Federated Fund Complex for the most recent calendar year. The Federated Fund Complex comprises 44 investment companies, whose investment advisers are affiliated with the Fund's Adviser.

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As of May 8, 2001, the Fund's Board and Officers as a group owned less than 1% of the Fund's outstanding Class A, B and C Shares.

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Name Birth Date Address Position With Fund	Principal Occupations for Past Five Years	Aggregate Compensation From Fund	Total Compensation From Fund and Fund Complex
John F. Donahue*†# Birth Date: July 28, 1924 Federated Investors Tower 1001 Liberty Avenue Pittsburgh, PA CHAIRMAN AND DIRECTOR	Chief Executive Officer and Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.; Chairman, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd.; formerly: Trustee, Federated Investment Management Company and Chairman and Director, Federated Investment Counseling.	$0	$0 for the Fund and 43 other investment companies in the Fund Complex
Thomas G. Bigley Birth Date: February 3, 1934 15 Old Timber Trail Pittsburgh, PA DIRECTOR	Director or Trustee of the Federated Fund Complex; Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director and Chairman of Audit Committee, Robroy Industries, Inc. (coated steel conduits/computer storage equipment); formerly: Senior Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc. (physician practice management); Director, Member of Executive Committee, University of Pittsburgh.	$1,493.39	$128,847.72 for the Fund and 43 other investment companies in the Fund Complex
John T. Conroy, Jr. Birth Date: June 23, 1937 Grubb & Ellis/Investment Properties Corporation 3201 Tamiami Trail North Naples, FL DIRECTOR	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; formerly: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation.	$1,493.39	$128,847.66 for the Fund and 43 other investment companies in the Fund Complex
Nicholas P. Constantakis Birth Date: September 3, 1939 175 Woodshire Drive Pittsburgh, PA DIRECTOR	Director or Trustee of the Federated Fund Complex; Director and Chairman of the Audit Committee, Michael Baker Corporation (engineering, construction, operations and technical services); formerly: Partner, Andersen Worldwide SC.	$1,493.39	$126,923.53 for the Fund and 43 other investment companies in the Fund Complex
Name Birth Date Address Position With Fund	Principal Occupations for Past Five Years	Aggregate Compensation From Fund	Total Compensation From Fund and Fund Complex
John F. Cunningham Birth Date: March 5, 1943 353 El Brillo Way Palm Beach, FL DIRECTOR	Director or Trustee of some of the Federated Fund Complex; Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College; Director, Iperia Corp. (communications/software); formerly: Director, Redgate Communications and EMC Corporation (computer storage systems). Previous Positions: Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc.	$1,357.41	$115,368.16 for the Fund and 43 other investment companies in the Fund Complex
Lawrence D. Ellis, M.D.* Birth Date: October 11, 1932 3471 Fifth Avenue Suite 1111 Pittsburgh, PA DIRECTOR	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; Member, National Board of Trustees, Leukemia Society of America.	$1,357.41	$117,117.17 for the Fund and 43 other investment companies in the Fund Complex
Peter E. Madden Birth Date: March 16, 1942 One Royal Palm Way 100 Royal Palm Way Palm Beach, FL DIRECTOR	Director or Trustee of the Federated Fund Complex; formerly: Representative, Commonwealth of Massachusetts General Court; President, State Street Bank and Trust Company and State Street Corporation. Previous Positions: Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange.	$1,357.41	$117,117.14 for the Fund and 43 other investment companies in the Fund Complex
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 80 South Road Westhampton Beach, NY DIRECTOR	Director or Trustee of some of the Federated Fund Complex; Management Consultant. Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Executive Vice President, DVC Group, Inc.; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University.	$1,493.39	$128,847.66 for the Fund and 43 other investment companies in the Fund Complex
John E. Murray, Jr., J.D., S.J.D.# Birth Date: December 20, 1932 President, Duquesne University Pittsburgh, PA DIRECTOR	Director or Trustee of the Federated Fund Complex; President, Law Professor, Duquesne University; Consulting Partner, Mollica & Murray; Director, Michael Baker Corp. (engineering, construction, operations and technical services). Previous Positions: Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law.	$1,357.41	$117,117.14 for the Fund and 43 other investment companies in the Fund Complex
Marjorie P. Smuts Birth Date: June 21, 1935 4905 Bayard Street Pittsburgh, PA DIRECTOR	Director or Trustee of the Federated Fund Complex; Public Relations/Marketing/Conference Planning. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; business owner; conference coordinator.	$1,357.41	$117,117.17 for the Fund and 43 other investment companies in the Fund Complex
John S. Walsh Birth Date: November 28, 1957 2604 William Drive Valparaiso, IN DIRECTOR	Director or Trustee of some 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.; Director, Walsh & Kelly, Inc. (heavy highway contractor); formerly: Vice President, Walsh & Kelly, Inc.	$1,357.41	$117,117.17 for the Fund and 43 other investment companies in the Fund Complex
J. Christopher Donahue*† Birth Date: April 11, 1949 Federated Investors Tower 1001 Liberty Avenue Pittsburgh, PA PRESIDENT AND DIRECTOR	President or Executive Vice 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.; President, Chief Executive Officer and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; President, Chief Executive Officer and Director, Federated Global Investment Management Corp.; President and Chief Executive Officer, Passport Research, Ltd.; Trustee, Federated Shareholder Services Company; Director, Federated Services Company; formerly: President, Federated Investment Counseling.	$0	$0 for the Fund and 43 other investment companies in the Fund Complex
Edward C. Gonzales Birth Date: October 22, 1930 Federated Investors Tower 1001 Liberty Avenue Pittsburgh, PA EXECUTIVE VICE PRESIDENT	President, Executive Vice President and Treasurer of some of the Funds in the Federated Fund Complex; Vice Chairman, Federated Investors, Inc.; Trustee, Federated Administrative Services; formerly: Trustee or Director of some of the Funds in the Federated Fund Complex; CEO and Chairman, Federated Administrative Services; Vice President, Federated Investment Management Company, Federated Investment Counseling, Federated Global Investment Management Corp. and Passport Research, Ltd.; Director and Executive Vice President, Federated Securities Corp.; Director, Federated Services Company; Trustee, Federated Shareholder Services Company.	$0	$0 for the Fund and 37 other investment companies in the Fund Complex
John W. McGonigle Birth Date: October 26, 1938 Federated Investors Tower 1001 Liberty Avenue Pittsburgh, PA EXECUTIVE VICE PRESIDENT AND SECRETARY	Executive Vice President and Secretary of the Federated Fund Complex; Executive Vice President, Secretary and Director, Federated Investors, Inc.; formerly: Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp.	$0	$0 for the Fund and 43 other investment companies in the Fund Complex
Name Birth Date Address Position With Fund	Principal Occupations for Past Five Years	Aggregate Compensation From Fund	Total Compensation From Fund and Fund Complex
Richard J. Thomas Birth Date: June 17, 1954 Federated Investors Tower 1001 Liberty Avenue Pittsburgh, PA TREASURER	Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services; formerly: Vice President, Federated Administrative Services; held various management positions within Funds Financial Services Division of Federated Investors, Inc.	$0	$0 for the Fund and 43 other investment companies in the Fund Complex
Richard B. Fisher Birth Date: May 17, 1923 Federated Investors Tower 1001 Liberty Avenue Pittsburgh, PA VICE PRESIDENT	President or Vice President of some of the Funds in the Federated Fund Complex; Vice Chairman, Federated Investors, Inc.; Chairman, Federated Securities Corp.; formerly: Director or Trustee of some of the Funds in the Federated Fund Complex; Executive Vice President, Federated Investors, Inc. and Director and Chief Executive Officer, Federated Securities Corp.	$0	$0 for the Fund and 36 other investment companies in the Fund Complex
William D. Dawson III Birth Date: March 3, 1949 Federated Investors Tower 1001 Liberty Avenue Pittsburgh, PA CHIEF INVESTMENT OFFICER	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.; Director, Federated Global Investment Management Corp. and Federated Investment Management Company; Registered Representative, Federated Securities Corp.; Portfolio Manager, Federated Administrative Services; Vice President, Federated Investors, Inc.; formerly: Executive Vice President and Senior Vice President, Federated Investment Counseling Institutional Portfolio Management Services Division; Senior Vice President, Federated Investment Management Company and Passport Research, Ltd.	$0	$0 for the Fund and 25 other investment companies in the Fund Complex
Mary Jo Ochson Birth Date: September 12, 1953 Federated Investors Tower 1001 Liberty Avenue Pittsburgh, PA VICE PRESIDENT	Mary Jo Ochson has been the Fund's Portfolio Manager since 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.	$0	$0 for the and 4 other investment companies in the Fund Complex

* An asterisk denotes a Director who is deemed to be an interested person as defined in the 1940 Act.

# A pound sign denotes a Member of the Board's Executive Committee, which handles the Board's responsibilities between its meetings.

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† Mr. Donahue is the father of J. Christopher Donahue, President and Director of the Fund.

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INVESTMENT ADVISER

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The Adviser conducts investment research and makes investment decisions for the Fund.

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The Adviser is a wholly owned subsidiary of Federated.

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The Adviser shall not be liable to the Fund or any Fund shareholder for any losses that may be sustained in the purchase, holding, or sale of any security or for anything done or omitted by it, except acts or omissions involving willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties imposed upon it by its contract with the Fund.

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Other Related Services

Affiliates of the Adviser may, from time to time, provide certain electronic equipment and software to institutional customers in order to facilitate the purchase of Fund Shares offered by the Distributor.

CODE OF ETHICS RESTRICTIONS ON PERSONAL TRADING

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As required by SEC rules, the Fund, its Adviser, and its Distributor have adopted codes of ethics. These codes govern securities trading activities of investment personnel, Fund Directors, and certain other employees. Although they do permit these people to trade in securities, including those that the Fund could buy, they also contain significant safeguards designed to protect the Fund and its shareholders from abuses in this area, such as requirements to obtain prior approval for, and to report, particular transactions.

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BROKERAGE TRANSACTIONS

When selecting brokers and dealers to handle the purchase and sale of portfolio instruments, the Adviser looks for prompt execution of the order at a favorable price. The Adviser will generally use those who are recognized dealers in specific portfolio instruments, except when a better price and execution of the order can be obtained elsewhere. In selecting among firms believed to meet these criteria, the Adviser may give consideration to those firms which have sold or are selling Shares of the Fund and other funds distributed by the Distributor and its affiliates. The Adviser makes decisions on portfolio transactions and selects brokers and dealers subject to review by the Fund's Board.

Investment decisions for the Fund are made independently from those of other accounts managed by the Adviser. When the Fund and one or more of those accounts invests in, or disposes of, the same security, available investments or opportunities for sales will be allocated among the Fund and the account(s) in a manner believed by the Adviser to be equitable. While the coordination and ability to participate in volume transactions may benefit the Fund, it is possible that this procedure could adversely impact the price paid or received and/or the position obtained or disposed of by the Fund.

ADMINISTRATOR

Federated Services Company, a subsidiary of Federated, provides administrative personnel and services (including certain legal and financial reporting services) necessary to operate the Fund. Federated Services Company provides these at the following annual rate of the average aggregate daily net assets of all Federated Funds as specified below:

Maximum Administrative Fee	Average Aggregate Daily Net Assets of the Federated Funds
0.150 of 1%	on the first $250 million
0.125 of 1%	on the next $250 million
0.100 of 1%	on the next $250 million
0.075 of 1%	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. Federated Services Company may voluntarily waive a portion of its fee and may reimburse the Fund for expenses.

Federated Services Company also provides certain accounting and recordkeeping services with respect to the Fund's portfolio investments for a fee based on Fund assets plus out-of-pocket expenses.

CUSTODIAN

State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the securities and cash of the Fund.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

Federated Services Company, through its registered transfer agent subsidiary, Federated Shareholder Services Company, maintains all necessary shareholder records. The Fund pays the transfer agent a fee based on the size, type and number of accounts and transactions made by shareholders.

INDEPENDENT AUDITORS

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The independent auditor for the Fund, Ernst & Young LLP, conducts its audits in accordance with accounting principles generally accepted in the United States of America, which require it to plan and perform its audits to provide reasonable assurance about whether the Fund's financial statements and financial highlights are free of material misstatement.

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FEES PAID BY THE FUND FOR SERVICES

For the Year Ended March 31	2001	2000	1999
Advisory Fee Earned	$2,966,085	$3,369,773	$3,832,697
Advisory Fee Reduction	0	0	0
Advisory Fee Reimbursement	0	0	0
Brokerage Commissions	0	0	0
Administrative Fee	405,789	452,152	517,819
12b-1 Fee:
Class B	525,323	601,120	--
Class C	73,952	104,490	--
Shareholder Services Fee:
Class A	504,947	556,407	--
Class B	175,108	200,373	--
Class C	23,984	33,437	--

Fees are allocated among classes based on their pro rata share of Fund assets, except for marketing (Rule 12b-1) fees and shareholder services fees, which are borne only by the applicable class of Shares.

How Does the Fund Measure Performance?

The Fund may advertise Share performance by using the SEC's standard method for calculating performance applicable to all mutual funds. The SEC also permits this standard performance information to be accompanied by non-standard performance information.

Share performance reflects the effect of non-recurring charges, such as maximum sales charges, which, if excluded, would increase the total return and yield. The performance of Shares depends upon such variables as: portfolio quality; average portfolio maturity; type and value of portfolio securities; changes in interest rates; changes or differences in the Fund's or any class of Shares' expenses; and various other factors.

Share performance fluctuates on a daily basis largely because net earnings fluctuate daily. Both net earnings and offering price per Share are factors in the computation of yield and total return.

AVERAGE ANNUAL TOTAL RETURNS AND YIELD

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Total returns are given for the one-year, five-year and ten-year or Start of Performance periods ended March 31, 2001.

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Yield and Tax-Equivalent Yield are given for the 30-day period ended March 31, 2001.

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Share Class	30-Day Period	1 Year	5 Years	10 Years
Class A:
Total Return	NA	5.59%	3.72%	5.37%
Yield	3.79%	NA	NA	NA
Tax-Equivalent Yield	6.27%	NA	NA	NA
Share Class	30-Day Period	1 Year	5 Years	10 Years	Start of Performance on July 26, 1994
Class B:
Total Return	NA	4.12%	3.42%	NA	3.99%
Yield	3.10%	NA	NA	NA	NA
Tax-Equivalent Yield	5.13%	NA	NA	NA	NA
Share Class	30-Day Period	1 Year	5 Years	10 Years	Start of Performance on April 21, 1993
Class C:
Total Return	NA	8.63%	3.77%	NA	3.56%
Yield	3.10%	NA	NA	NA	NA
Tax-Equivalent Yield	5.13%	NA	NA	NA	NA

TOTAL RETURN

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Total return represents the change (expressed as a percentage) in the value of Shares over a specific period of time, and includes the investment of income and capital gains distributions.

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The average annual total return for Shares is the average compounded rate of return for a given period that would equate a $1,000 initial investment to the ending redeemable value of that investment. The ending redeemable value is computed by multiplying the number of Shares owned at the end of the period by the NAV per Share at the end of the period. The number of Shares owned at the end of the period is based on the number of Shares purchased at the beginning of the period with $1,000, less any applicable sales charge, adjusted over the period by any additional Shares, assuming the annual reinvestment of all dividends and distributions.

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YIELD AND TAX-EQUIVALENT YIELD

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The yield of Shares is calculated by dividing: (i) the net investment income per Share earned by the Shares over a 30-day period; by (ii) the maximum offering price per Share on the last day of the period. This number is then annualized using semi-annual compounding. This means that the amount of income generated during the 30-day period is assumed to be generated each month over a 12-month period and is reinvested every six months. The tax-equivalent yield of Shares is calculated similarly to the yield, but is adjusted to reflect the taxable yield that Shares would have had to earn to equal the actual yield, assuming the maximum combined federal and state tax rate. The yield and tax-equivalent yield do not necessarily reflect income actually earned by Shares because of certain adjustments required by the SEC and, therefore, may not correlate to the dividends or other distributions paid to shareholders.

To the extent investment professionals and broker/dealers charge fees in connection with services provided in conjunction with an investment in Shares, the Share performance is lower for shareholders paying those fees.

TAX EQUIVALENCY TABLE

Set forth below is a sample of a tax-equivalency table that may be used in advertising and sales literature. This table is for illustrative purposes only and is not representative of past or future performance of the Fund. The interest earned by the municipal securities owned by the Fund generally remains free from federal regular income tax and is often free from state and local taxes as well. However, some of the Fund's income may be subject to the federal alternative minimum tax and state and/or local taxes.

Taxable Yield Equivalent for 2001 -- multistate municipal funds
Federal Tax Bracket:	15.00%	28.00%	31.00%	36.00%	39.60%
Joint Return	$1-45,200	$45,201-109,250	$109,251-166,450	$166,451-297,300	OVER $297,300
Single Return	$1-27,050	$27,051-65,550	$65,551-136,750	$136,750-297,300	OVER $297,300
Tax Exempt Yield	Taxable Yield Equivalent:
0.50%	0.59%	0.69%	0.72%	0.78%	0.83%
1.00%	1.18%	1.39%	1.45%	1.56%	1.66%
1.50%	1.76%	2.08%	2.17%	2.34%	2.48%
2.00%	2.35%	2.78%	2.90%	3.13%	3.31%
2.50%	2.94%	3.47%	3.62%	3.91%	4.14%
3.00%	3.53%	4.17%	4.35%	4.69%	4.97%
3.50%	4.12%	4.86%	5.07%	5.47%	5.79%
4.00%	4.71%	5.56%	5.80%	6.25%	6.62%
4.50%	5.29%	6.25%	6.52%	7.03%	7.45%
5.00%	5.88%	6.94%	7.25%	7.81%	8.28%
5.50%	6.47%	7.64%	7.97%	8.59%	9.11%
6.00%	7.06%	8.33%	8.70%	9.38%	9.93%
6.50%	7.65%	9.03%	9.42%	10.16%	10.76%
7.00%	8.24%	9.72%	10.14%	10.94%	11.59%
7.50%	8.82%	10.42%	10.87%	11.72%	12.42%
8.00%	9.41%	11.11%	11.59%	12.50%	13.25%
8.50%	10.00%	11.81%	12.32%	13.28%	14.07%
9.00%	10.59%	12.50%	13.04%	14.06%	14.90%
9.50%	11.18%	13.19%	13.77%	14.84%	15.73%
10.00%	11.76%	13.89%	14.49%	15.63%	16.56%
10.50%	12.35%	14.58%	15.22%	16.41%	17.38%
11.00%	12.94%	15.28%	15.94%	17.19%	18.21%

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Note: The maximum marginal tax rate for each bracket was used in calculating the taxable yield equivalent. Furthermore, additional state and local taxes paid on comparable taxable investments were not used to increase federal deductions.

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PERFORMANCE COMPARISONS

Advertising and sales literature may include:

• <R>
• references to ratings, rankings, and financial publications and/or performance comparisons of Shares to certain indices;
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• charts, graphs and illustrations using the Fund's returns, or returns in general, that demonstrate investment concepts such as tax-deferred compounding, dollar-cost averaging and systematic investment;
• discussions of economic, financial and political developments and their impact on the securities market, including the portfolio manager's views on how such developments could impact the Fund; and
• information about the mutual fund industry from sources such as the Investment Company Institute.

The Fund may compare its performance, or performance for the types of securities in which it invests, to a variety of other investments, including federally insured bank products such as bank savings accounts, certificates of deposit, and Treasury bills.

The Fund may quote information from reliable sources regarding individual countries and regions, world stock exchanges, and economic and demographic statistics.

You may use financial publications and/or indices to obtain a more complete view of Share performance. When comparing performance, you should consider all relevant factors such as the composition of the index used, prevailing market conditions, portfolio compositions of other funds, and methods used to value portfolio securities and compute offering price. The financial publications and/or indices which the Fund uses in advertising may include:

Lipper Analytical Services, Inc.

Lipper Analytical Services, Inc. ranks funds in various fund categories by making comparative calculations using total return. Total return assumes the reinvestment of all capital gains distributions and income dividends and takes into account any change in net asset value over a specific period of time. From time to time, the Fund will quote its Lipper ranking in the general municipal bond funds category in advertising and sales literature.

Lehman Brothers Municipal Bond Index

Lehman Brothers Municipal Bond Index is an unmanaged broad based total return performance benchmark for the long-term, investment grade bond market.

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Morningstar, Inc.

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Morningstar, Inc., an independent rating service, is the publisher of the bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000 NASDAQ-listed mutual funds of all types, according to their risk-adjusted returns. The maximum rating is five stars and ratings are effective for two weeks.

Who is Federated Investors, Inc.?

Federated is dedicated to meeting investor needs by making structured, straightforward and consistent investment decisions. Federated investment products have a history of competitive performance and have gained the confidence of thousands of financial institutions and individual investors.

Federated's disciplined investment selection process is rooted in sound methodologies backed by fundamental and technical research. At Federated, success in investment management does not depend solely on the skill of a single portfolio manager. It is a fusion of individual talents and state-of-the-art industry tools and resources. Federated's investment process involves teams of portfolio managers and analysts, and investment decisions are executed by traders who are dedicated to specific market sectors and who handle trillions of dollars in annual trading volume.

FEDERATED FUNDS OVERVIEW

Municipal Funds

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In the municipal sector, as of December 31, 2000, Federated managed 11 bond funds with approximately $4.0 billion in assets and 22 money market funds with approximately $41.8 billion in total assets. In 1976, Federated introduced one of the first municipal bond mutual funds in the industry and is now one of the largest institutional buyers of municipal securities. The Funds may quote statistics from organizations including The Tax Foundation and the National Taxpayers Union regarding the tax obligations of Americans.

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Equity Funds

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In the equity sector, Federated has more than 31 years' experience. As of December 31, 2000, Federated managed 40 equity funds totaling approximately $20.6 billion in assets across growth, value, equity income, international, index and sector (i.e. utility) styles. Federated's value-oriented management style combines quantitative and qualitative analysis and features a structured, computer-assisted composite modeling system that was developed in the 1970s.

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Corporate Bond Funds

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In the corporate bond sector, as of December 31, 2000, Federated managed 11 money market funds and 30 bond funds with assets approximating $20.9 billion and $9.7 billion, respectively. Federated's corporate bond decision making--based on intensive, diligent credit analysis--is backed by over 29 years of experience in the corporate bond sector. In 1972, Federated introduced one of the first high-yield bond funds in the industry. In 1983, Federated was one of the first fund managers to participate in the asset backed securities market, a market totaling more than $209 billion.

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Government Funds

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In the government sector, as of December 31, 2000, Federated managed 6 mortgage backed, 3 government/agency and 19 government money market mutual funds, with assets approximating $3.3 billion, $1.2 billion and $36.2 billion, respectively. Federated trades approximately $133.4 billion in U.S. government and mortgage backed securities daily and places approximately $28.5 billion in repurchase agreements each day. Federated introduced the first U.S. government fund to invest in U.S. government bond securities in 1969. Federated has been a major force in the short- and intermediate-term government markets since 1982 and currently manages approximately $50 billion in government funds within these maturity ranges.

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Money Market Funds

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In the money market sector, Federated gained prominence in the mutual fund industry in 1974 with the creation of the first institutional money market fund. Simultaneously, the company pioneered the use of the amortized cost method of accounting for valuing shares of money market funds, a principal means used by money managers today to value money market fund shares. Other innovations include the first institutional tax-free money market fund. As of December 31, 2000, Federated managed $99.0 billion in assets across 52 money market funds, including 19 government, 11 prime, 22 municipal and 1 euro-denominated with assets approximating $36.2 billion, $21.0 billion, $41.8 billion and $110 million, respectively.

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The Chief Investment Officers responsible for oversight of the various investment sectors within Federated are: U.S. equity and high yield--J. Thomas Madden; U.S. fixed income--William D. Dawson III; and global equities and fixed income--Henry A. Frantzen. The Chief Investment Officers are Executive Vice Presidents of the Federated advisory companies.

MUTUAL FUND MARKET

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Forty-nine percent of American households are pursuing their financial goals through mutual funds. These investors, as well as businesses and institutions, have entrusted over $7 trillion to the more than 8,157 funds available, according to the Investment Company Institute.

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FEDERATED CLIENTS OVERVIEW

Federated distributes mutual funds through its subsidiaries for a variety of investment purposes. Specific markets include:

Institutional Clients

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Federated meets the needs of approximately 3,031 institutional clients nationwide by managing and servicing separate accounts and mutual funds for a variety of purposes, including defined benefit and defined contribution programs, cash management, and asset/liability management. Institutional clients include corporations, pension funds, tax exempt entities, foundations/endowments, insurance companies, and investment and financial advisers. The marketing effort to these institutional clients is headed by John B. Fisher, President, Institutional Sales Division, Federated Securities Corp.

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Bank Marketing

Other institutional clients include more than 1,600 banks and trust organizations. Virtually all of the trust divisions of the top 100 bank holding companies use Federated Funds in their clients' portfolios. The marketing effort to trust clients is headed by Timothy C. Pillion, Senior Vice President, Bank Marketing & Sales.

Broker/Dealers and Bank Broker/Dealer Subsidiaries

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Federated Funds are available to consumers through major brokerage firms nationwide--we have over 2,000 broker/dealer and bank broker/dealer relationships across the country--supported by more wholesalers than any other mutual fund distributor. Federated's service to financial professionals and institutions has earned it high ratings in several surveys performed by DALBAR, Inc. DALBAR is recognized as the industry benchmark for service quality measurement. The marketing effort to these firms is headed by James F. Getz, President, Broker/Dealer Sales Division, Federated Securities Corp.

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Financial Information

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The Financial Statements for the Fund for the fiscal year ended March 31, 2001 are incorporated herein by reference to the Annual Report to Shareholders of Federated Municipal Securities Fund, Inc. dated March 31, 2001.

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Investment Ratings

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STANDARD & POOR'S SHORT-TERM MUNICIPAL OBLIGATION RATINGS

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A Standard & Poor's (S&P) note rating reflects the liquidity concerns and market access risks unique to notes.

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SP-1--Very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus sign (+) designation.

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SP-2--Satisfactory capacity to pay principal and interest.

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VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS

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S&P assigns dual ratings to all long-term debt issues that have as part of their provisions a variable rate demand feature. The first rating (long-term rating) addresses the likelihood of repayment of principal and interest when due, and the second rating (short-term rating) describes the demand characteristics. Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The definitions for the long-term and the short-term ratings are provided below.)

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COMMERCIAL PAPER (CP) RATINGS

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An S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days.

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A-1--This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+) designation.

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A-2--Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.

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LONG-TERM DEBT RATINGS

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AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong.

AA--Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest-rated issues only in small degree.

A--Debt rated A has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher-rated categories.

MOODY'S INVESTORS SERVICE SHORT-TERM MUNICIPAL OBLIGATION RATINGS

Moody's Investor Service (Moody's) short-term ratings are designated Moody's Investment Grade (MIG or VMIG). (See below.) The purpose of the MIG or VMIG ratings is to provide investors with a simple system by which the relative investment qualities of short-term obligations may be evaluated.

MIG1--This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad based access to the market for refinancing.

MIG2--This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group.

VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS

Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. In this case, two ratings are usually assigned, (for example, Aaa/VMIG-1); the first representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the second representing an evaluation of the degree of risk associated with the demand feature. The VMIG rating can be assigned a 1 or 2 designation using the same definitions described above for the MIG rating.

COMMERCIAL PAPER (CP) RATINGS

P-1--Issuers rated Prime-1 (or related supporting institutions) have a superior capacity for repayment of short-term promissory obligations. Prime-1 repayment capacity will normally be evidenced by the following characteristics: leading market positions in well established industries, high rates of return on funds employed, conservative capitalization structure with moderate reliance on debt and ample asset protection, broad margins in earning coverage of fixed financial charges and high internal cash generation, well-established access to a range of financial markets and assured sources of alternate liquidity.

P-2--Issuers rated Prime-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above, but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained.

LONG-TERM DEBT RATINGS

Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.

Aa--Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group, they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities.

A--Bonds which are rated A possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future.

NR--Indicates that both the bonds and the obligor or credit enhancer are not currently rated by S&P or Moody's with respect to short-term indebtedness. However, management considers them to be of comparable quality to securities rated A-1 or P-1.

NR(1)--The underlying issuer/obligor/guarantor has other outstanding debt rated AAA by S&P or Aaa by Moody's.

NR(2)--The underlying issuer/obligor/guarantor has other outstanding debt rated AA by S&P or Aa by Moody's.

NR(3)--The underlying issuer/obligor/guarantor has other outstanding debt rated A by S&P or Moody's.

FITCH IBCA, INC. SHORT-TERM DEBT RATING DEFINITIONS

F-1+--Exceptionally Strong Credit Quality. Issues assigned this rating are regarded as having the strongest degree of assurance for timely payment.

F-1--Very Strong Credit Quality. Issues assigned this rating reflect an assurance for timely payment, only slightly less in degree than issues rated F-1+.

F-2--Good Credit Quality. Issues carrying this rating have a satisfactory degree of assurance for timely payment, but the margin of safety is not as great as for issues assigned F-1+ and F-1 ratings.

Addresses

FEDERATED MUNICIPAL SECURITIES FUND, INC.

Class A Shares
Class B Shares
Class C Shares
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000

Distributor

Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Investment Adviser

Federated Investment Management Company
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Custodian

State Street Bank and Trust Company
P.O. Box 8600
Boston, MA 02266-8600

Transfer Agent and Dividend Disbursing Agent

Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600

Independent Auditors

Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116-5072

PART C.    OTHER INFORMATION.

Item 23.    Exhibits:

   a)       Conformed Copy of Articles of Restatement of the Registrant (including
            Amendment Nos. 4-13); +
   b)       Copy of By-Laws of the Registrant (including Amendment
            Nos. 11- 13); +
                  c)......................      Copies of Specimen Certificates for Shares
            of Capital Stock of the Registrant's Class A Shares, Class B Shares and Class
            C Shares; (16)
d)       Conformed Copy of Investment Advisory Contract of the
            Registrant;(9)
   e) (i)   Conformed Copy of Distributor's Contract of the Registrant; (12)
(ii) Conformed Copy of Exhibit A to the Distributor's Contract of the Registrant; +
(iii)   Conformed Copy of Exhibit B to the Distributor's Contract of the Registrant; +
      (iv)  Conformed Copy of Distributor's Contract (Class B Shares) including Exhibit 1
            and Schedule A and B; (17)
      (v)   The Registrant hereby incorporates the Conformed Copy of the specimen Mutual
            Funds Sales and Service Agreement; Mutual Funds Service Agreement; and Plan
            Trustee/Mutual Funds Service Agreement from Item 24(b)(6) of the Cash Trust
            Series II Registration Statement on Form N-1A, filed with the Commission on
            July 24, 1995 (File Numbers 33-38550 and 811-6269);
f)       Not applicable;
   g) (i)   Conformed Copy of Custodian Contract of the Registrant; (13)
      (ii)  Conformed Copy of Custodian Fee Schedule; (17)
   h) (i)   Conformed Copy of Amended and Restated Agreement for Fund Accounting Services,
            Administrative Services, Transfer Agency Services and Custodian Services
            Procurement; (15)
      (ii)  The responses described in Item 23(e)(v) are hereby incorporated by reference.
      (iii) The Registrant hereby incorporates by reference the Conformed
            Copy of the Shareholder Services Sub-Contract between Fidelity
            and Federated Shareholder Services from Item 24(b)(9)(iii) of the
            Federated GNMA Trust Registration Statement on Form N-1A, filed
            with the Commission on March 25, 1996. (File Nos. 2-75670 and
            811-3375);
- ---------------------


+     All exhibits have been filed electronically.

9.    Response is incorporated by reference to Registrant's Post-Effective Amendment No.
      36 on Form N-1A filed July 17, 1990.  (File Nos. 2-57181 and 811-2677)
12.   Response is incorporated by reference to Registrant's Post-Effective
      Amendment No. 42 on Form N-1A filed May 25, 1994.  (File Nos. 2-57181 and 811-2677)
13.   Response is incorporated by reference to Registrant's Post-Effective Amendment No.
      45 on Form N-1A filed May 25, 1995. (File Nos. 2-57181 and 811-2677)
15.   Response is incorporated by reference to Registrant's Post-Effective Amendment No.
      48 on Form N-1A filed May 28, 1996. (File Nos. 2-57181 and 811-2677)
16.   Response is incorporated by reference to Registrant's Post-Effective Amendment No.
      50 on Form N-1A filed May 29, 1997. (File Nos. 2-57181 and 811-2677)
17.   Response is incorporated by reference to Registrant's Post-Effective Amendment No.
      51 on Form N-1A filed May 29, 1998. (File Nos. 2-57181 and 811-2677)

(iv) Conformed Copy of Principal Shareholder Servicer's Agreement (Class B Shares)
            including Exhibit 1 and Schedule A and B;
            (17)
      (v)   Conformed Copy of Shareholders Services Agreement (Class B Shares)
including Exhibit 1 and Schedule A; (17)
      (vi)  Conformed Copy of Amended and Restated Shareholder Services
Agreement; (18)
i)       Conformed Copy of Opinion and Consent of Counsel as to
            legality of hares being registered; (2);
   j)       Conformed Copy of Independent Auditors' Consent; +
   k)       Not applicable;
   l)       Conformed Copy of Initial Capital Understanding; (2)
   m) (i)   Conformed Copy of the 12b-1 Distribution Plan of the Registrant; (12)
(ii) Conformed Copy of Exhibit A of the 12b-1 Distribution Plan of the Registrant; +
      (iii) The responses described in Item 23(e)(v) are hereby incorporated by reference.
      (iv) Conformed Copy of Exhibit 1 and Schedule A to the 12b-1 Distribution Plan
            (Class B Shares) of the Registrant; (17)
n)    The Registrant hereby incorporates the Conformed Copy of the      Multiple
      Class Plan from Item(n) of the Federated American
            Leaders Fund, Inc. Registration Statement on Form N-1A,
            filed with the Commission on May 25, 2001. (File Nos.
            2-29786 and 811-1704);
o)          Conformed Copy of Power of Attorney of the Registrant; (20)
   p)       The Registrant hereby incorporates the Conformed Copy of the         Code
            of Ethics for Access Persons from Item 23(p) of the Federated Managed
            Allocation Portfolios Registration Statement on Form N-1A filed with the
            Commission on January 25, 2001. (File Nos. 33-51247 and 811-7129.)

Item 24. Persons Controlled by or Under Common Control with the Fund:
         -----------------------------------------------------------

            None

Item 25. Indemnification: (11)
         ---------------


- ----------------------


+ All exhibits have been filed electronically.

2.    Response is incorporated by reference to Registrant's Post-Effective
      Amendment No. 1 on Form S-5 filed November 29, 1976. (Files Nos.
      2-57181 and 811-2677)
11.   Response is incorporated by reference to Registrant's Post-Effective
      Amendment No. 38 on Form N-1A filed July 22, 1992. (Files Nos. 2-57181
      and 811-2677)
12.   Response is incorporated by reference to Registrant's Post-Effective Amendment No.
      42 on Form N-1A filed May 25, 1994. (File Nos. 2-57181 and 811-2677)
17.   Response is incorporated by reference to Registrant's Post-Effective Amendment No.
      51 on Form N-1A filed May 29, 1998. (File Nos. 2-57181 and 811-2677)
18.   Response is incorporated by reference to Registrant's Post-Effective Amendment No.
      52 on Form N-1A filed July 28, 1998. (File Nos. 2-57181 and 811-2677)
19.   Response is incorporated by reference to Registrant's Post-Effective Amendment No.
      55 on Form N-1A filed May 26, 2000. (File Nos. 2-57181 and 811-2677)

Item 26. Business and Other Connections of Investment Adviser:
         ----------------------------------------------------

         For a description of the other business of the investment adviser, see the
         section entitled "Who Manages the Fund?" in Part A. The affiliations with
         the Registrant of four of the Trustees and one of the Officers of the
         investment adviser are included in Part B of this Registration Statement
         under "Who Manages and Provides Services to the Fund?"  The remaining
         Trustees of the investment adviser and, in parentheses, their principal
         occupations are:  Thomas R. Donahue, (Chief Financial Officer, Federated
         Investors, Inc.), 1001 Liberty Avenue, Pittsburgh, PA, 15222-3779 and Mark
         D. Olson (a principal of the firm  Mark D. Olson & Company, L.L.C. and
         Partner, Wilson, Halbrook & Bayard, P.A.), Suite 301 Little Falls Center
         Two, 2751 Centerville Road, Wilmington, DE  19808.

         The remaining Officers of the investment adviser are:

         Executive Vice Presidents:          William D. Dawson, III
                                             Henry A. Frantzen
                                             J. Thomas Madden

         Senior Vice Presidents:             Stephen F. Auth
                                             Joseph M. Balestrino
                                             David A. Briggs
                                             Jonathan C. Conley
                                             Deborah A. Cunningham
                                             Michael P. Donnelly
                                             Linda A. Duessel
                                             Mark E. Durbiano
                                             James E. Grefenstette
                                             Jeffrey A. Kozemchak
                                             Sandra L. McInerney
                                             Susan M. Nason
                                             Mary Jo Ochson
                                             Robert J. Ostrowski
                                             Bernard A. Picchi
                                             Peter Vutz

         Vice Presidents:                    Todd A. Abraham
                                             J. Scott Albrecht
                                             Arthur J. Barry
                                             Randall S. Bauer
                                             Nancy J.Belz
                                             G. Andrew Bonnewell
                                             Micheal W. Casey
                                             Robert E. Cauley
                                             Fred B. Crutchfield
                                             Lee R. Cunningham, II
                                             Alexandre de Bethmann
B.   Anthony Delserone, Jr.
                                             Donald T. Ellenberger
                                             Eamonn G. Folan
                                             Kathleen M. Foody-Malus
                                             Thomas M. Franks
                                             Marc Halperin
                                             John W. Harris
                                             Patricia L. Heagy
                                             Susan R. Hill
                                             William R. Jamison
                                             Constantine J. Kartsonas
                                             Nathan H. Kehm
                                             John C. Kerber
                                             Robert M. Kowit
         Item 26. Business and Other Connections of Investment Adviser
                  ----------------------------------------------------
                  continued):
                  ----------

         Vice Presidents:                    Richard J. Lazarchic
                                             Steven J. Lehman
                                             Marian R. Marinack
                                             Christopher Matyszewski
                                             Natalie F. Metz
                                             Joseph M. Natoli
                                             Jeffrey A. Petro
                                             John Quartarolo
                                             Keith J. Sabol
                                             Ihab Salib
                                             Frank Semack
                                             Aash M. Shah
                                             Michael W. Sirianni, Jr.
                                             Christopher Smith
                                             Timothy G. Trebilcock
                                             Leonardo A. Vila
                                             Paige M. Wilhelm
                                             Richard Winkowski
                                             Lori A. Wolff
                                             George B. Wright

         Assistant Vice Presidents:          Catherine A. Arendas
                                             Angela Auchey
                                             Nancy J. Belz
                                             Regina Chi
                                             Ross M. Cohen
                                             James R. Crea, Jr.
                                             Karol M. Crummie
                                             Fred B. Crutchfield
                                             James H. Davis, II
                                             Joseph DelVecchio
                                             Paul S. Drotch
                                             Salvatore A. Esposito
                                             John T. Gentry
                                             David Gilmore
                                             Nikola A. Ivanov
                                             Carol Kayworth
                                             Nathan H. Kehm
                                             John C. Kerber
                                             J. Andrew Kirschler
                                             Ted T. Lietz, Sr.
                                             Monica Lugani
                                             Natalie F. Metz
                                             Theresa Miller
                                             Thomas Mitchell
                                             Bob Nolte
                                             Mary Kay Pavuk
                                             Rae Ann Rice
                                             Roberto Sanchez-Dahl, Sr.
                                             Sarath Sathkumara
                                             James W. Schaub
                                             Jennifer G. Setzenfand
                                             John Sidawi
                                             Diane R. Startari
                                             Diane Tolby

                                             Peter Tropaitis
                                             Michael R. Tucker
                                             Steven J. Wagner


         Item 26. Business and Other Connections of Investment Adviser
                  ----------------------------------------------------
                  continued):
                  ----------

         Secretary:                          G. Andrew Bonnewell

         Treasurer:                          Thomas R. Donahue

         Assistant Secretaries:              C. Grant Anderson
                                             Leslie K. Ross

         Assistant Treasurer:                Denis McAuley, III

         The business address of each of the Officers of the investment adviser is
         Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, Pennsylvania
         15222-3779.  These individuals are also officers of a majority of the
         investment advisers to the investment companies in the Federated Fund
         Complex described in Part B of this Registration Statement.


Item 27.  Principal Underwriters:
          -----------------------

          (a)     Federated Securities Corp. the Distributor for shares of the
                  Registrant, acts as principal underwriter for the following
                  open-end investment companies, including the Registrant:

Cash Trust Series II; Cash Trust Series, Inc.; CCMI Funds; Edward D. Jones & Co.
Daily Passport Cash Trust; Federated Limited Duration Government Fund, Inc.;
Federated American Leaders Fund, Inc.; Federated ARMs Fund; Federated Core Trust;
Federated Equity Funds; Federated Equity Income Fund, Inc.; Federated Fixed Income
Securities, Inc.;
Federated Fund for U.S. Government Securities, Inc.; Federated GNMA Trust; Federated
Government Income Securities, Inc.; Federated High Income Bond Fund, Inc.; Federated
High Yield Trust; Federated Income Securities Trust; Federated Income Trust;
Federated Index Trust; Federated Institutional Trust; Federated Insurance Series;
Federated International Series, Inc.; Federated Investment Series Funds, Inc.;
Federated Managed Allocation Portfolios; Federated Municipal Opportunities Fund,
Inc.; Federated Municipal Securities Fund, Inc.; Federated Municipal Securities
Income Trust; Federated Short-Term Municipal Trust; Federated Stock and Bond Fund,
Inc.; Federated Stock Trust; Federated Total Return Series, Inc.; Federated U.S.
Government Bond Fund; Federated U.S. Government Securities Fund: 1-3 Years; Federated
U.S. Government Securities Fund: 2-5 Years; Federated Total Return Government Bond
Fund; Federated Utility Fund, Inc.; Federated World Investment Series, Inc.;
FirstMerit Funds; Hibernia Funds; Independence One Mutual Funds; Intermediate
Municipal Trust; Marshall Funds, Inc.; Money Market Obligations Trust; Regions Funds;
RIGGS Funds; SouthTrust Funds; Wachovia Variable Insurance Funds; The Wachovia Funds;
The Wachovia Municipal Funds; and Vision Group of Funds, Inc.



            (b)

        (1)                          (2)                       (3)
Positions and Offices                                 Positions and Offices
  With Distributor                   Name                With Registrant
- ---------------------         ------------------      ---------------------

Chairman:                     Richard B. Fisher          Vice President

Director:                     Arthur L. Cherry

President-Institutional
Sales and Director:           John B. Fisher

Director, Executive Vice
Vice President and Assistant
Secretary:                    Thomas R. Donahue

President-Broker/Dealer
And Director:                 James F. Getz

Executive Vice President:     David M. Taylor

Senior Vice Presidents:
                              Mark W. Bloss
                              Richard W. Boyd
                              Laura M. Deger
                              Peter W. Eisenbrandt
                              Theodore Fadool, Jr.
                              Bryant R. Fisher
                              Christopher T. Fives
                              James S. Hamilton
                              James M. Heaton
                              Keith Nixon
                              Solon A. Person, IV
                              Ronald M. Petnuch
                              Timothy C. Pillion
                              Thomas E. Territ

Vice Presidents:              Ernest G. Anderson
                              Teresa M. Antoszyk
                              John B. Bohnet
                              Jane E. Broeren-Lambesis
                              David J. Callahan
                              Mark Carroll
                              Steven R. Cohen
                              Mary J. Combs
                              R. Edmond Connell, Jr.
                              Kevin J. Crenny
                              Daniel T. Culbertson
                              G. Michael Cullen
                              Marc C. Danile
                              Robert J. Deuberry
                              William C. Doyle
                              Timothy Franklin
                              Joseph D. Gibbons
                              John K. Goettlicher
                              G. Tad Gullickson
                              Scott Gundersen
                              Dayna C. Haferkamp
                              Raymond J. Hanley
                              Anthony J. Harper
                              Victor L. Harper, Jr.
                              Bruce E. Hastings

        (1)                          (2)                       (3)
Positions and Offices                                 Positions and Offices
  With Distributor                   Name                 With Registrant
- ---------------------         -------------------      ---------------------

Vice Presidents:              Charlene H. Jennings
                              H. Joseph Kennedy
                              Michael W. Koenig
                              Ed Koontz
                              Dennis M. Laffey
                              Christopher A. Layton
                              Michael H. Liss
                              Michael R. Manning
                              Martin J. McCaffrey
                              Maurice W. McKinney
                              Amy Michalisyn
                              Mark J. Miehl
                              Richard C. Mihm
                              Vincent T. Morrow
                              Alec H. Neilly
                              Thomas A. Peter III
                              Raleigh Peters
                              Robert F. Phillips
                              Richard A. Recker
                              Eugene B. Reed
                              Paul V. Riordan
                              John Rogers
                              Brian S. Ronayne
                              Thomas S. Schinabeck
                              Edward J. Segura
                              Edward L. Smith
                              David W. Spears
                              John A. Staley
                              Colin B. Starks
                              Jeffrey A. Stewart
                              William C. Tustin
                              Paul A. Uhlman
                              Richard B. Watts
                              G. Walter Whalen
                              Terence Wiles
                              Edward J. Wojnarowski
                              Michael P. Wolff
                              Scott F. Wright

Assistant Vice Presidents:    Robert W. Bauman
                              Edward R. Bozek
                              Charles L. Davis, Jr.
                              Beth C. Dell
                              Donald C. Edwards
                              Jennifer Fetteroff
                              John T. Glickson
                              Ernest L. Linane
                              Renee L. Martin
                              Lynn Sherwood-Long

Secretary:                    Kirk A. Montgomery

Treasurer:                    Denis McAuley, III

Assistant Secretaries:        Timothy S. Johnson
                              Victor R. Siclari

The business address of each of the Officers of Federated Securities Corp. is
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779.

            (c)  Not applicable



Item 28.    Location of Accounts and Records:
            --------------------------------

All accounts and records required to be maintained by Section 31(a) of the Investment
Company Act of 1940 and Rules 31a-1 through 31a-3 promulgated thereunder are maintained at
one of the following locations:

Registrant                             Federated Investors Tower
                                       1001 Liberty Avenue
                                       Pittsburgh, PA  15222-3779
                                       (Notices should be sent to the Agent for Service at
                                       above address)

                                       Federated Investors Funds
                                       5800 Corporate Drive
                                       Pittsburgh, PA  15237-7000

Federated Shareholder Services
Company                                P.O. Box 8600
("Transfer Agent and Dividend          Boston, MA 02266-8600
Disbursing Agent")

Federated Services Company             Federated Investors Tower
("Administrator")                      1001 Liberty Avenue
                                       Pittsburgh, PA  15222-3779

Federated Investment Management
Company                                Federated Investors Tower
("Adviser")                            1001 Liberty Avenue
                                       Pittsburgh, PA  15222-3779

State Street Bank and Trust Company    P.O. Box 8600
("Custodian")                          Boston, MA 02266-8600

Item 29.    Management Services:  Not applicable.
            -------------------

Item 30.    Undertakings:
            ------------

            Registrant hereby undertakes to comply with the provisions of Section 16(c) of
            the 1940 Act with respect to the removal of Trustees/Directors and the calling
            of special shareholder meetings by shareholders.

                                      SIGNATURES

    Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant, FEDERATED MUNICIPAL SECURITIES FUND, INC.,
certifies that it meets all of the requirements for effectiveness of this Amendment
to its Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Amendment to its Registration Statement to be signed on
its behalf by the undersigned, duly authorized, in the City of Pittsburgh and
Commonwealth of Pennsylvania, on the 25th day of May, 2001.

                       FEDERATED MUNICIPAL SECURITIES FUND, INC.
                  BY: /s/ Leslie K. Ross
                  Leslie K. Ross, Assistant Secretary
                  Attorney in Fact for John F. Donahue
                  May 25, 2001

    Pursuant to the requirements of the Securities Act of 1933, this Amendment to its
Registration Statement has been signed below by the following person in the capacity
and on the date indicated:

    NAME                            TITLE                   DATE
    ----                            -----                   ----

By: /s/ Leslie K. Ross            Attorney In Fact          May 25, 2001
    Leslie K. Ross                For the Persons
    ASSISTANT SECRETARY           Listed Below

John F. Donahue*                  Chairman and Director
                                  (Chief Executive Officer)

J. Christopher Donahue*           President and Director

John W. McGonigle*                Executive Vice
                                  President and Secretary

Richard J. Thomas*                Treasurer
                                  (Principal Financial and
                                  Accounting Officer)

William D. Dawson*                Chief Investment
                                  Officer

Thomas G. Bigley*                      Director

John T. Conroy, Jr.*                   Director

Nicholas P. Constantakis*              Director

John F. Cunningham*                    Director

Lawrence D. Ellis, M.D.*               Director

Peter E. Madden*                       Director

Charles F. Mansfield, Jr.*             Director

John E. Murray, Jr., J.D., S.J.D.*     Director

Marjorie P. Smuts*                     Director

John S. Walsh*                         Director

* By Power of Attorney

EX-99.ARTICLESINC

                                          Exhibit (a) under form N-1A
                                          Exhibit 3(i) under Item 601/Reg. S-K


                                                   (Amd. #4) file stamped 5/4/93
                            ARTICLES OF RESTATEMENT

                                       OF

                    LIBERTY MUNICIPAL SECURITIES FUND, INC.

      Liberty Municipal Securities Fund, Inc., a Maryland Corporation (the
"Corporation", having its principal office in Baltimore, Maryland, hereby
certifies to the State Department of Assessments and Taxation that:

      FIRST:            The Corporation desires to restate its Charter as
currently in effect.  The Charter as restated is as follows:

FIRST:            The undersigned, John W. McGonigle, whose post office address
is 421 Seventh Avenue, Pittsburgh, Pennsylvania, 15219, being at least
twenty-one years of age, does under and by virtue of the General Laws of the
State of Maryland authorizing the formation of corporations, hereby form a
corporation.

SECOND:           The name of the corporation is Liberty Municipal Securities
Fund, Inc.

THIRD:            The purpose for which the Corporation is formed is to act as
an open-end investment company of the management type registered as such with
the Securities and Exchange Commission pursuant to the Investment Company Act
of 1940 and to exercise and generally to enjoy all of the powers, rights and
privileges granted to, or conferred upon, corporations by the General Laws of
the State of Maryland now or hereafter in force.

FOURTH:           The post office address of the principal office and the
office of the resident agent of the Corporation in the State of Maryland is 32
South Street, Baltimore, Maryland 21202.  The resident agent of the Corporation
in the state of Maryland is THE CORPORATION TRUST INCORPORATED, which is a
corporation organized and existing under the laws of the State of Maryland.

FIFTH:            (a)  The Corporation is authorized to issue 1,000,000,000
shares of common stock, par value $.01 per share.  The aggregate par value of
all shares which the Corporation is authorized to issue is $10,000,000.
Subject to the following paragraph, the authorized shares are classified as
separate classes of common stock, with 375,000,000 classified into each of
Class A and Class C shares, and 250,000,000 unclassified shares.

                  (b)  The Board of Directors is authorized to classify or to
reclassify (i.e., into series and classes of series), from time to time, any
unissued shares of stock of the Corporation, whether now or hereafter
authorized, by setting, changing or eliminating the preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of or rights to require redemption of the
stock.

      Unless otherwise provided by the Board of Directors prior to the issuance
of the stock, the shares of each class or series of stock shall be subject to
the following:

                        (i)  The Board of Directors may redesignate a class or
series of stock whether or not share of such class or series are issued and
outstanding, provided that such redesignation does not affect the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications or terms or conditions of redemption of such class or
series of stock.

                        (ii)  The assets attributable to each class or series
may be invested in a common investment portfolio.  The assets and liabilities
and the income and expenses of each class or series of the Corporation's stock
shall be determined separately and, accordingly, the net asset value of shares
of Capital Stock of the Corporation's stock may vary among classes or series.
The income or gain and the expenses or liabilities of the Corporation shall be
allocated to each class or series of stock as determined by or under the
direction of the Board of Directors.

                        (iii)  Shares of each class or series of stock shall be
entitled to such dividends or distributions, in stock or in cash or both, as
may be declared from time to time by the Board of Directors with respect to
such class or series.  Dividends or distributions shall be paid on shares of a
class or series of stock only out of the assets belonging to that class or
series.

                        (iv)  In the event of the liquidation or dissolution of
the Corporation, the stockholders of a class or series of the Corporation's
stock shall be entitled to receive, as a class or series, out of the assets of
the Corporation available for distribution to stockholders, the assets
belonging to that class or series less the liabilities allocated to that class
or series.  The assets so distributable to the stockholders of a class or
series shall be distributed among such stockholders in proportion to the number
of shares of that class or series held by them and recorded on the books of the
Corporation.  In the event that there are any assets available for distribution
that are not attributable to any particular class or series of stock, such
assets shall be allocated to all classes and series in proportion to the net
asset value of the respective classes or series.

                        (v)  All holders of shares of stock vote as a single
class or series except with respect to any matter which affects only one or
more classes or series of stock, in which case only the holders of shares of
the classes or series affected shall be entitled to vote.

                  (c)   The Corporation may issue fractional shares.  Any
fractional shares shall carry proportionately all the rights of a whole share,
except any right to receive a certificate evidencing such fractional share, but
including, without limitation, the right to vote and the right receive
dividends.

SIXTH:            (1)   The number of Directors of the Corporation shall be
three, or such other number as may be from time to time fixed in the manner
provided by the By-Laws of the Corporation but shall never be less than three
(3).

                  (b)   The names of the Directors who are currently in office
are:

                        John F. Donahue         Edward L. Flaherty, Jr.
                        John T. Conroy, Jr.     Peter E. Madden
                        William J. Copeland     Gregor F. Meyer
                        J. Christopher Donahue  Wesley W. Posvar
                        James E. Dowd           Marjorie P. Smuts
                        Lawrence D. Ellis, M.D.

SEVENTH:    The Board of Directors is empowered to authorize the issuance from
time to time of Shares of Capital Stock of the Corporation, whether now or
hereafter authorized; provided, however, that the consideration per Shares to
be received by the Corporation upon the issuance or sale of any shares of its
Capital Stock shall be the net asset value per Share determined in accordance
with the requirements of the Investment Company Act of 1940 and the applicable
rules and regulations of the Securities and Exchange Commission (or any
succeeding governmental authority) and in conformity with generally accepted
accounting practices and principles.

EIGHTH:           (a)   To the extent the Corporation has funds or property
legally available therefor, each Stockholder of the Corporation shall have the
right at such times as may be permitted by the Corporation, but no less
frequently than once a week, to require the Corporation to redeem all or any
part of its Shares at a redemption price equal to the net asset value per Share
of the Capital Stock next determined after the Shares are tendered for
redemption; said determination of the net asset value per Share to be made in
accordance with the requirements of the Investment Company Act of 1940 and the
applicable rules and regulations of the Securities and Exchange Commission (or
any succeeding government authority) and in conformity with generally accepted
accounting practices and principles.

                  Notwithstanding the foregoing, the Corporation may postpone
payment or deposit of the redemption price and may suspend the right of the
holders of Capital Stock to require the Corporation to redeem such Capital
Stock during any period when (i) the New York Stock Exchange is closed for
other than weekends and holidays; (ii)  the Securities and Exchange Commission
has by order permitted such suspension; (iii) an emergency as defined by rules
of the Securities and Exchange Commission exists, making disposal of portfolio
securities or valuation of net assets of the Corporation not reasonably
practicable; or (iv) trading on the New York Stock Exchange is restricted under
the conditions set forth in the rules and regulations of the Securities and
Exchange Commission.

                  (b)   The Corporation shall have the right, exercisable at
the discretion of the Board of Directors, to redeem Shares of any Stockholder
for their then current net asset value per Share if at such time the
Stockholder owns Shares having an aggregate net asset value of less than
$1,000.00

                  (c)   Each Share of Capital Stock of the Corporation is
subject to redemption by the Corporation at the redemption price computed in
the manner set forth in subparagraph (a) of Article EIGHTH of these Articles of
Incorporation at any time if the Board of Directors, in its sole discretion,
determines that failure to do so may result in the Corporation being classified
as a personal holding company as defined in the Internal Revenue Code.

                  (d)   Transfer of Capital Stock will be recorded on the stock
transfer records of the Corporation at the request of the holders thereof at
any time during normal business hours of the Corporation unless the Board of
Directors of the Corporation determines, in its sole discretion, that allowing
such transfer may result in the Corporation being classified as a personal
holding company as defined in the Internal Revenue Code.

NINTH:      The following provisions are hereby adopted for the purpose of
defining, limiting, and regulating the powers of the Corporation and of the
Directors and Stockholders:

                  (1)   No Stockholder of the Corporation shall have any
pre-emptive or preferential right of subscription to any Shares of any class of
the stock of the Corporation whether now or hereafter authorized.  The Board of
Directors may issue Shares of the Capital Stock of the Corporation without
offering the same either in whole or in part to the Stockholders.

                  (2)   Capital Stock of the Corporation may be purchased, held
and disposed of by the Officers and Directors of the Corporation, by
partnerships of which any such officer or director may be a member and by
corporations of which any Officer or Director of the Corporation may be an
officer or director.  Except as above set forth, or authorized by the
Securities and Exchange Commission, the Officers and Directors of the
Corporation and partnerships or corporations which are affiliates of the
Officers and Directors may not deal with the Corporation as principals in the
purchase or sale of any securities or other property.

                  (3)   The Corporation may enter into exclusive or
non-exclusive underwriting contracts or contracts for the sale of its Shares
and may also enter into contracts for investment advisory, management and
administrative services.  The terms and conditions, methods of authorization,
renewal, amendment and termination of the aforesaid contracts shall be as
determined at the discretion of the Board of Directors; subject, however, to
the provisions of the Charter of the Corporation, the By-Laws of the
Corporation, applicable state law, and the Investment Company Act of 1940 and
the rules and regulations of the Securities and Exchange Commission.

                  (4)   Except as otherwise provided by law or by the Charter
of the Corporation, no contract or other transaction between the Corporation
and any person, partnership or corporation and no act of the Corporation shall
in any way be affected or invalidated by the fact that any Officer or Director
of the Corporation is pecuniarily or otherwise interested therein or is such
person or a member, officer or director of such partnership or other
corporation, provided, that the fact of such interest shall be known to the
Board of Directors of the Corporation.  Specifically, but without limitation of
the foregoing, the Corporation may:

                        (a)   Enter into a written underwriting contract,
management contracts for research and advisory services with Federated Research
Corp. or its parent, affiliates or subsidiaries thereof, or their respective
successors, or otherwise do business with such corporation, notwithstanding the
fact that one or more of the Directors of the Corporation and some or all of
its Officers are, have been, or may become Directors, Officers, Employees or
Stockholders of Federated Research Corp. or its parent, affiliates or
subsidiaries or successors, and in the absence of actual fraud the Corporation
may deal freely with Federated Research Corp. or its parent, affiliates,
subsidiaries or successors, and neither such underwriting contract, management
contract or contract for research or advisory services nor any other contract
or transaction between the Corporation and Federated Research Corp. or its
parent, affiliates, subsidiaries or successors shall be invalidated or in
anyway affected thereby, nor shall any Director or Officer of the Corporation
be liable to the Corporation or any Stockholder or creditor of the corporation
or to any other person for any loss incurred under or by reason of any such
contract or transaction.  Anything in the foregoing notwithstanding, no Officer
or Director or underwriter or investment adviser of the Corporation shall be
protected against any liability to the Corporation or to its security holders
to which he would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of this office;

                  (5)   No Officer or Director of the Corporation or of any
investment advisory company or management company, nor the Corporation itself,
nor such investment advisory or management company or underwriter of the
Corporation shall take long or short positions in respect of any Shares issued
by the Corporation; provided, however, that such prohibition shall not prevent:

                        (a)   Any underwriter from purchasing from the
Corporation Shares issued by the Corporation, provided that orders to purchase
from the Corporation are entered with the Corporation by such underwriter
either for investment or upon receipt by it of purchase orders for Shares of
Stock of the Corporation, and provided such purchases are not in excess of
purchase orders received by such underwriter;

                        (b)   The Corporation or any distributor or underwriter
from maintaining a market for Shares of Capital Stock issued by the Corporation;

                        (c)   The purchase from the Corporation of Shares by
the Officers or Directors of the Corporation or of any investment advisory,
management company or underwriter or distributor of the Corporation at the
prices available to the public or as authorized by the Securities Exchange
Commission at the moment of such purchase.

                  6.    The Corporation shall indemnify its Officers,
Directors, employees and agents and any person who serves at the request of the
Corporation as a Director, Officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise to the extent permitted
by Maryland law as amended from time to time provided, however, that no Officer
or Director shall be protected against any liability to the Corporation or its
Stockholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.  In addition, the Corporation may
purchase and maintain insurance on behalf of any person who is or was a
Director, Officer, employee or agent of the Corporation, or who, while a
Director, Officer, employee or agent of the Corporation, is or was serving at
the request of the Corporation as a director, officer, partner, trustee,
employee or agent of another foreign or domestic corporation, partnership,
joint venture, trust, other enterprise, or employee benefit plan against any
liability asserted against and incurred by such person in any such capacity or
arising out of such person's position, whether or not the Corporation would
have the power to indemnify against liability under the provisions of this
paragraph.

                  7.    The Board of Directors shall, subject to the laws of
Maryland, have the power to determine, from time to time, whether and to what
extent and at what times and places and under what conditions and regulations
any accounts and books of the Corporation, or any of them, shall be open to the
inspection of the Stockholders.

                  8.    Notwithstanding any provision of law requiring a
greater proportion than a majority of the votes of all classes or of any class
of stock entitled to be cast, to take or authorize any action, the Corporation
may take or authorize any such action upon the concurrence of a majority of the
aggregate number of the votes entitled to be cast thereon.

                  9.    The Corporation reserves the right from time to time to
make any amendment of its Charter now or hereafter authorized by law, including
any amendment which alters the contract rights, as expressly set forth in its
Charter, of any outstanding capital stock, except that no action affecting the
validity or assessibility of such Shares shall be taken without the unanimous
approval of the outstanding shares of Capital Stock.

                  10.   In addition to the powers and authority conferred upon
them by the Charter of the Corporation or By-Laws, the Board of Directors may
exercise all such powers and authority and do all such acts and things as may
be exercised or done by the Corporation, subject, nevertheless, to the
provisions of applicable state law and the Charter and By-Laws of the
Corporation.

                  11.   The Board of Directors is expressly authorized to
determine in accordance with generally accepted accounting principles and
practices what constitutes net profits, earning, surplus or net assets in
excess of capital, and to determine what accounting periods shall be used by
the Corporation for any purpose, whether annual or any other period, including
daily; to set apart out of any funds of the Corporation such reserves for such
purposes as it shall determine and to abolish the same; to declare and pay
dividends and distributions in cash, securities or other property from surplus
or any funds legally available therefor, at such intervals (which may be as
frequently as daily) or on such other periodic basis, as it shall determine; to
declare such dividends or distributions by means of a formula or other method
of determination, at meeting held less frequently than the frequency of the
effectiveness of such declarations; to establish payment dates for dividends or
any other distributions on any basis, including dates occurring less frequently
than the effectiveness of declarations thereof; and to provide for the payment
of declared dividends on a date earlier or later than the specified payment
date in the case of Stockholders redeeming their entire ownership of Shares.

TENTH:      The Corporation acknowledges that it is adopting its corporate name
through permission of Federated Investors, Inc., a Pennsylvania corporation,
and agrees that Federated Investors, Inc. reserves to itself and any successor
to its business the right to withdraw from the Corporation the name "Federated"
and reserves to itself and any successor to its business the right to grant the
non-exclusive right to use the name "Federated" or any similar name to any
other investment company or business enterprise.

ELEVENTH:   In addition to the powers and authority conferred upon them by the
Charter of the Corporation or by law, the Board of directors may exercise all
such powers and authority and do all such acts and things as may be exercised
or done by the Corporation, suject, nevertheless, to the provisioins of
applicable state law and the Charter and By-Laws of the Corporaiton.

TWELFTH:    The duration of the Corporation shall be perpetual.

      SECOND:     The restatement of the Charter was approved by a majority of
the entire Board of Directors.

      THIRD:      The provisions set forth in these Articles of Restatement are
all the provisions of the Charter currently in effect.  The current address of
the principal office of the Corporation, the name and address of the
Corporation's current resident agent and the number of directors of the
Corporation and the names of those currently in office are as stated above.

      FOURTH:     The Charter is not amended by these Articles of Restatement.

      IN WITNESS WHEREOF, Liberty Municipal Securities Fund, Inc. has caused
these Articles of Restatement to be signed in its name and on its behalf by its
President and attested by its Assistant Secretary on April 30, 1993.  The
undersigned President acknowledges these Articles of Restatement to be the
corporate act of the Corporation and states to the best of his knowledge,
information and belief that the matters and facts set forth herein with respect
to authorization and approval are true in all material respects and that this
statement is made under the penalties of perjury.

WITNESS:                      LIBERTY MUNICIPAL SECURITIES
                                          FUND, INC.


/s/ Charles H. Field          By:  /s/ Richard B. Fisher
- ------------------------         ----------------------------------

                                                  (Amd. #5) file stamped 1/10/94

                    LIBERTY MUNICIPAL SECURITIES FUND, INC.

                             ARTICLES SUPPLEMENTARY



      LIBERTY MUNICIPAL SECURITIES FUND, INC., a Maryland corporation having
its principal offices in Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies:

      FIRST:  The Board of Directors hereby reclassifies 250,000,000 of the
      authorized but unissued shares of common stock of the Corporation as
      250,000,000 shares of Select Shares.

      SECOND:  The shares of Common Stock reclassified hereby shall have the
      preferences, conversion and other rights, voting powers, restrictions,
      limitations as to dividends, qualifications, and terms and conditions of
      redemption as set forth in Article FIFTH, paragraph (b) of the
      Corporation's charter and shall be subject to all provisions of the
      charter relating to stock of the Corporation generally.

      THIRD:  The stock has been reclassified by the Board of Directors under
      the authority contained in the charter of the Corporation.

      IN WITNESS WHEREOF, Liberty Municipal Securities Fund, Inc. has caused
these presents to be signed in its name and on its behalf by its President and
witnessed by its Assistant Secretary on November 30, 1993.

      The undersigned, J. Christopher Donahue, President of the Corporation,
hereby acknowledges in the name and on behalf of the Corporation the foregoing
Articles Supplementary to be its corporate act and further certifies to the
best of his knowledge, information and belief, that the matters and facts set
forth herein with respect to the authorization and approval hereof are true in
all material respects and that this statement is made under the penalties of
perjury.

ATTEST:                             LIBERTY MUNICIPAL SECURITIES
                                    FUND, INC.



                                    By:
- ------------------------------         ---------------------------
S. Elliott Cohan                    J. Christopher Donahue
Assistant Secretary                       President

                                                   (Amd. #6) file stamped 8/3/94

                    LIBERTY MUNICIPAL SECURITIES FUND, INC.

                             ARTICLES SUPPLEMENTARY



      LIBERTY MUNICIPAL SECURITIES FUND, INC., a Maryland corporation having
its principal offices in Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies:

      FIRST:  The Board of Directors hereby reclassifies 550,970 of the
      authorized shares of Select Shares of the Corporation as 550,970 shares
      of Class B Shares.

      SECOND:  The shares of Common Stock reclassified hereby shall have the
      preferences, conversion and other rights, voting powers, restrictions,
      limitations as to dividends, qualifications, and terms and conditions of
      redemption as set forth in Article FIFTH, paragraph (b) of the
      Corporation's charter and shall be subject to all provisions of the
      charter relating to stock of the Corporation generally.

      THIRD:  The stock has been reclassified by the Board of Directors under
      the authority contained in the charter of the Corporation.

      IN WITNESS WHEREOF, Liberty Municipal Securities Fund, Inc. has caused
these presents to be signed in its name and on its behalf by its President and
witnessed by its Assistant Secretary on August 1, 1994.

      The undersigned, J. Christopher Donahue, President of the Corporation,
hereby acknowledges in the name and on behalf of the Corporation the foregoing
Articles Supplementary to be its corporate act and further certifies to the
best of his knowledge, information and belief, that the matters and facts set
forth herein with respect to the authorization and approval hereof are true in
all material respects and that this statement is made under the penalties of
perjury.

ATTEST:                             LIBERTY MUNICIPAL
                                    SECURITIES FUND, INC.



/s/ Charles H. Field                By:/s/ J. Christopher Donahue
- ------------------------------         ---------------------------
Charles H. Field                    J. Christopher Donahue
Assistant Secretary                       President

                                                  (Amd. #7) file stamped 9/16/94

                    LIBERTY MUNICIPAL SECURITIES FUND, INC.

                             ARTICLES SUPPLEMENTARY



      LIBERTY MUNICIPAL SECURITIES FUND, INC., a Maryland corporation having
its principal offices in Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies:

      FIRST:  The Board of Directors hereby reclassifies 249,449,030 of the
      authorized but unissued shares of Select Shares of the Corporation as
      249,449,030 shares of Class B Shares.

      SECOND:  The shares of Common Stock reclassified hereby shall have the
      preferences, conversion and other rights, voting powers, restrictions,
      limitations as to dividends, qualifications, and terms and conditions of
      redemption as set forth in Article FIFTH, paragraph (b) of the
      Corporation's charter and shall be subject to all provisions of the
      charter relating to stock of the Corporation generally.

      THIRD:  The stock has been reclassified by the Board of Directors under
      the authority contained in the charter of the Corporation.

      IN WITNESS WHEREOF, Liberty Municipal Securities Fund, Inc. has caused
these presents to be signed in its name and on its behalf by its President and
witnessed by its Assistant Secretary on June 15, 1994.

      The undersigned, J. Christopher Donahue, President of the Corporation,
hereby acknowledges in the name and on behalf of the Corporation the foregoing
Articles Supplementary to be its corporate act and further certifies to the
best of his knowledge, information and belief, that the matters and facts set
forth herein with respect to the authorization and approval hereof are true in
all material respects and that this statement is made under the penalties of
perjury.

ATTEST:                             LIBERTY MUNICIPAL
                                    SECURITIES FUND, INC.



/s/ Charles H. Field                By:/s/ J. Christopher Donahue
- ------------------------------         ---------------------------
Charles H. Field                    J. Christopher Donahue
Assistant Secretary                       President

                                                   (Amd. #8) file stamped 4/4/96

                    LIBERTY MUNICIPAL SECURITIES FUND, INC.

                             ARTICLES OF AMENDMENT

LIBERTY MUNICIPAL SECURITIES FUND, INC., a Maryland corporation having post
office addresses in the City of Pittsburgh, Pennsylvania and the City of
Baltimore, Maryland (hereinafter called the "Corporation"), hereby certifies to
the State Department of Assessments and Taxation of Maryland that:

      FIRST:  The Articles of Incorporation of the Corporation are hereby
amended by striking Article SECOND and inserting the following in its place:

            "FIRST:  The name of the Corporation is Federated Municipal
            Securities Fund, Inc."

      SECOND:  The Board of Directors, in accordance with the authority granted
under subparagraph (b) of paragraph FIFTH of the Corporation's Articles of
Restatement, dated April 30, 1993, hereby redesignates the classes of
authorized shares of common stock of the Corporation as:

            Federated Municipal Securities Fund, Inc.  Class A Shares
            Federated Municipal Securities Fund, Inc.  Class B Shares
            Federated Municipal Securities Fund, Inc.  Class C Shares

      THIRD:  The foregoing amendment to the charter of the Corporation was
approved by a majority of the entire Board of Directors of the Corporation; the
charter amendment is limited to a change expressly permitted by Section 2-605
of the Maryland General Corporation Law to be made without action by
stockholders; and the Corporation is registered as an open-end company under
the Investment Company Act of 1940, as amended.

      FOURTH:  These Articles of Amendment will become effective immediately
upon filing with the State Department of Assessments and Taxation of Maryland.

      IN WITNESS WHEREOF, Liberty Municipal Securities Fund, Inc. has caused
these presents to be signed in its name and on its behalf by its Secretary and
witnessed by its Assistant Secretary on March 29, 1996.


      The undersigned, John W. McGonigle, Executive Vice President and
Secretary of the Corporation, hereby acknowledges in the name and on behalf of
the Corporation the foregoing Articles of Amendment to be its corporate act and
further certifies to the best of his knowledge, information and belief, that
the matters and facts set forth herein with respect to the authorization and
approval hereof are true in all material respects and that this statement is
made under the penalties of perjury.

                                    LIBERTY MUNICIPAL
ATTEST                              SECURITIES FUND, INC.



/s/ Charles H. Field                /s/ John W. McGonigle
- ------------------------------      ---------------------------------
Charles H. Field                    John W. McGonigle
Assistant Secretary                 Executive Vice President and Secretary



                                                 (Amd. #9) file stamped 11/18/96

                             ARTICLES SUPPLEMENTARY

                                       OF

                   FEDERATED MUNICIPAL SECURITIES FUND, INC.

      FEDERATED MUNICIPAL SECURITIES FUND, INC., a Maryland corporation having
its principal office in the State of Maryland in Baltimore, Maryland
(hereinafter called the "Corporation"), hereby certifies to the State
Department of Assessments and Taxation of Maryland that:

      FIRST:  The Board of Directors has classified and reclassified all of the
      authorized but unissued shares of common stock of the Corporation such
      that the authorized shares are classified into separate classes of common
      stock, as follows:

                        CLASSES                             SHARES

      Federated Municipal Securities Fund, Inc. Class A Shares       375,000,000
      Federated Municipal Securities Fund, Inc. Class B Shares       250,000,000
      Federated Municipal Securities Fund, Inc. Class C Shares       375,000,000
                                                                     -----------
                              Aggregate Authorized Shares   1,000,000,000

      SECOND:  The shares of common stock so classified and reclassified shall
      have the preferences, conversion and other rights, voting powers,
      restrictions, limitations as to dividends, qualifications, and terms and
      conditions of redemption as set forth in Article FIFTH, paragraph (b) of
      the Corporation's charter and as set forth below, and shall be subject to
      all provisions of the charter relating to stock of the Corporation
      generally.

            At such times as may be determined by the Board of Directors (or
      with the authorization of the Board of Directors, by the Officers of the
      Corporation) in accordance with the Investment Company Act of 1940, as
      amended, applicable rules and regulations thereunder, and applicable
      rules and regulations of the National Association of Securities Dealers,
      Inc., and reflected in the pertinent registration statement of the
      Corporation, Federated Municipal Securities Fund, Inc., Class B Shares
      may be automatically converted into Federated Municipal Securities fund,
      Inc., Class A Shares based on the relative net asset values of such
      classes at the time of the conversion, subject, however, to any
      conditions of conversion that may be imposed by the Board of Directors
      (or with the authorization of the Board of Directors, by the Officers of
      the Corporation) and reflected in the pertinent registration statement of
      the Corporation as aforesaid.

            THIRD:  The stock has been classified and reclassified by the Board
      of Directors under the authority contained in the charter of the
      Corporation.

            IN WITNESS WHEREOF, the Corporation has caused these presents to be
      signed in its name and on its behalf by its President and witnessed by
      its Assistant Secretary on November 15, 1996.

            The undersigned, J. Christopher Donahue, President of the
      Corporation, hereby acknowledges in the name and on behalf of the
      Corporation the foregoing Articles Supplementary to be its corporate act
      and further certifies to the best of his knowledge, information and
      belief, that the matters and facts set forth herein with respect to the
      authorization and approval hereof are true in all material respects and
      that this statement is made under the penalties of perjury.

ATTEST:                       FEDERATED MUNICIPAL SECURITIES
                                        FUND, INC.


/s/ S. Elliott Cohan          By:  /s/ J. Christopher Donahue
- ------------------------         ----------------------------------
S. Elliott Cohan              J. Christopher Donahue
Assistant Secretary           President



                                                 (Amd. #10) file stamped 3/10/97

                   FEDERATED MUNICIPAL SECURITIES FUND, INC.

                           CERTIFICATE OF CORRECTION

      Federated Municipal Securities Fund, Inc., a Maryland corporation (the
"Corporation"), hereby certifies that:

      FIRST:            The title of the document being corrected is "Articles
of
Amendment".

      SECOND:     The only party to the document being corrected is Federated
Municipal Securities Fund, Inc. (formerly Liberty Municipal Securities Fund,
Inc.).

      THIRD:      The Articles of Amendment were filed on May 3, 1993.

      FOURTH:     The provisions of the Articles of Amendment which are to be
corrected are set forth in Exhibit A attached hereto.

      FIFTH:      The corrected provisions of the Articles of Amendment are set
forth in Exhibit B attached hereto.

      IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Executive Vice President and
attested to by its Assistant Secretary on  this 28th day of February, 1997.

      The undersigned Executive Vice President acknowledges this Certificate of
Correction to be the corporate act of the Corporation and as to all matters or
facts required to be verified under oath, the undersigned Executive Vice
President acknowledges that to the best of his knowledge, information and
belief, these matters and facts are true in all material respects and that this
statement is made under the penalties for perjury.

                                    FEDERATED MUNICIPAL
                                    SECURITIES FUND, INC.

                                    By:/s/ J. Christopher Donahue
                                       ---------------------------
                                    J. Christopher Donahue
                                    Executive Vice President
WITNESSED:

/s/ S. Elliott Cohan
S. Elliott Cohan
Assistant Secretary

                                                                       Exhibit A

                             ARTICLES OF AMENDMENT
                                       OF
                    LIBERTY MUNICIPAL SECURITIES FUND, INC.

      Liberty Municipal Securities Fund, Inc., a Maryland Corporation (the
"Corporation"), having its principal office in Baltimore, Maryland, hereby
certifies to the State Department of Assessments and Taxation that:

      FIRST:            The Charter of the Corporation is hereby amended by
deleting Article FIFTH of the Charter and substituting in lieu thereof the
following:

FIFTH:            (a)  The Corporation is authorized to issue 1,000,000,000
shares of common stock, par value $.01 per share.  The aggregate par value of
all shares which the Corporation is authorized to issue is $10,000,000.
Subject to the following paragraph, the authorized shares are classified as
separate classes of common stock, with 375,000,000 classified into each of
Class A and Class C shares, and 250,000,000 unclassified shares.

                  (b)  The Board of Directors is authorized to classify or to
reclassify (i.e., into series and classes of series), from time to time, any
unissued shares of stock of the Corporation, whether now or hereafter
authorized, by setting, changing or eliminating the preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of or rights to require redemption of the
stock.

      Unless otherwise provided by the Board of Directors prior to the issuance
of the stock, the shares of each class or series of stock shall be subject to
the following:

                        (i)  The Board of Directors may redesignate a class or
series of stock whether or not shares of such class or series are issued and
outstanding, provided that such redesignation does not affect the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications or terms or conditions of redemption of such class or
series of stock.

                        (ii)  The assets attributable to each class or series
may be invested in a common investment portfolio.  The assets and liabilities
and the income and expenses of each class or series of the Corporation's stock
shall be determined separately and, accordingly, the net asset value of shares
of the Corporation's stock may vary among classes or series.  The income or
gain and the expenses or liabilities of the Corporation shall be allocated to
each class or series of stock as determined by or under the direction of the
Board of Directors.

                        (iii)  Shares of each class or series of stock shall be
entitled to such dividends or distributions, in stock or in cash or both, as
may be declared from time to time by the Board of Directors with respect to
such class or series.  Dividends or distributions shall be paid on shares of a
class or series of stock only out of the assets belonging to that class or
series.

                        (iv)  In the event of the liquidation or dissolution of
the Corporation, the stockholders of a class or series of the Corporation's
stock shall be entitled to receive, as a class or series, out of the assets of
the Corporation available for distribution to stockholders, the assets
belonging to that class or series less the liabilities allocated to that class
or series.  The assets so distributable to the stockholders of a class or
series shall be distributed among such stockholders in proportion to the number
of shares of that class or series held by them and recorded on the books of the
Corporation.  In the event that there are any assets available for distribution
that are not attributable to any particular class or series of stock, such
assets shall be allocated to all classes and series in proportion to the net
asset value of the respective classes or series.

                        (v)  All holders of shares of stock shall vote as a
single class or series except with respect to any matter which affects only one
or more classes or series of stock, in which case only the holders of shares of
the classes or series affected shall be entitled to vote.

                  (c)  The Corporation may issue fractional shares.  Any
fractional share shall carry proportionately all the rights of a whole share,
excepting any right to receive a certificate evidencing such fractional share,
but including, without limitation, the right to vote and the right to receive
dividends.

      SECOND:     The amendment was advised by the Board of Directors and
approved by the shareholders.

      IN WITNESS WHEREOF, Liberty Municipal Securities Fund, Inc. has caused
these Articles of Amendment to be signed in its name and on its behalf by its
Vice President and attested by its Assistant Secretary on April 30, 1993.  The
undersigned Vice President acknowledges these Articles of Amendment to be the
corporate act of the Corporation and states to the best of his knowledge,
information and belief that the matters and facts set forth herein with respect
to authorization and approval are true in all material respects and that this
statement is made under the penalties of perjury.

                                                                       Exhibit B


                             ARTICLES OF AMENDMENT

                             ARTICLES SUPPLEMENTARY

      Liberty Municipal Securities Fund, Inc., a Maryland Corporation (the
"Corporation"), having its principal office in Baltimore, Maryland, hereby
certifies to the State Department of Assessments and Taxation that:

      FIRST A:    The Charter of the Corporation is hereby amended by deleting
Article FIFTH of the Charter and substituting in lieu thereof the following:

FIFTH:            (a) The Corporation is authorized to issue 1,000,000,000
shares of common stock, par value $.01 per share.  The aggregate par value of
all shares which the Corporation is authorized to issue is $10,000,000.

                  (b)  The Board of Directors is authorized to classify or to
reclassify (i.e., into series and classes of series), from time to time, any
unissued shares of stock of the Corporation, whether now or hereafter
authorized, by setting, changing or eliminating the preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of or rights to require redemption of the
stock.

      Unless otherwise provided by the Board of Directors prior to the issuance
of the stock, the shares of each class or series of stock shall be subject to
the following:

                        (i)  The Board of Directors may redesignate a class or
series of stock whether or not shares of such class or series are issued and
outstanding, provided that such redesignation does not affect the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications or terms or conditions of redemption of such class or
series of stock.

                        (ii)  The assets attributable to each class or series
may be invested in a common investment portfolio.  The assets and liabilities
and the income and expenses of each class or series of the Corporation's stock
shall be determined separately and, accordingly, the net asset value of shares
of the Corporation's stock may vary among classes or series.  The income or
gain and the expenses or liabilities of the Corporation shall be allocated to
each class or series of stock as determined by or under the direction of the
Board of Directors.

                        (iii)  Shares of each class or series of stock shall be
entitled to such dividends or distributions, in stock or in cash or both, as
may be declared from time to time by the Board of Directors with respect to
such class or series.  Dividends or distributions shall be paid on shares of a
class or series of stock only out of the assets belonging to that class or
series.

                        (iv)  In the event of the liquidation or dissolution of
the Corporation, the stockholders of a class or series of the Corporation's
stock shall be entitled to receive, as a class or series, out of the assets of
the Corporation available for distribution to stockholders, the assets
belonging to that class or series less the liabilities allocated to that class
or series.  The assets so distributable to the stockholders of a class or
series shall be distributed among such stockholders in proportion to the number
of shares of that class or series held by them and recorded on the books of the
Corporation.  In the event that there are any assets available for distribution
that are not attributable to any particular class or series of stock, such
assets shall be allocated to all classes and series in proportion to the net
asset value of the respective classes or series.

                        (v)  All holders of shares of stock shall vote as a
single class or series except with respect to any matter which affects only one
or more classes or series of stock, in which case only the holders of shares of
the classes or series affected shall be entitled to vote.

                  (c)  The Corporation may issue fractional shares.  Any
fractional share shall carry proportionately all the rights of a whole share,
excepting any right to receive a certificate evidencing such fractional share,
but including, without limitation, the right to vote and the right to receive
dividends.


      FIRST B:    The Board of Directors hereby classifies and reclassifies all
of the authorized but unissued shares of common stock of the Corporation so
that the Corporation has 375,000,000 shares of common stock without further
designation, 375,000,000 Class C Shares, and 250,000,000 unclassified shares.
The shares of common stock classified and reclassified hereby shall be subject
to all provisions of the charter relating to stock of the Corporation generally
and shall have the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption as set forth in Article FIFTH, paragraph (b) of the
Corporation's charter.

      SECOND:     The charter amendment in Article FIRST A was advised by the
Board of Directors and approved by the shareholders.  The stock classified and
reclassified in Article FIRST B has been classified and reclassified by the
Board of Directors under the authority contained in the charter of the
Corporation as herein amended.

      IN WITNESS WHEREOF, Liberty Municipal Securities Fund, Inc. has caused
these Articles of Amendment - Articles Supplementary to be signed in its name
and on its behalf by its Vice President and attested by its Assistant Secretary
on April 30, 1993.  The undersigned Vice President acknowledges these Articles
of Amendment - Articles Supplementary to be the corporate act of the
Corporation and states to the best of his knowledge, information and belief
that the matters and facts set forth herein with respect to authorization and
approval are true in all material respects and that this statement is made
under the penalties of perjury.

                                                 (Amd. #11) file stamped 3/10/97

                   FEDERATED MUNICIPAL SECURITIES FUND, INC.

                           CERTIFICATE OF CORRECTION

      Federated Municipal Securities Fund, Inc., a Maryland corporation (the
"Corporation"), hereby certifies that:

      FIRST:            The title of the document being corrected is "Articles
of
Restatement".

      SECOND:     The only party to the document being corrected is Federated
Municipal Securities Fund, Inc. (formerly Liberty Municipal Securities Fund,
Inc.).

      THIRD:      The Articles of Restatement were filed on May 4, 1993.

      FOURTH:     The provisions of the Articles of Restatement which are to be
corrected are set forth in Exhibit A attached hereto.

      FIFTH:      The corrected provisions of the Articles of Restatement are
set forth in Exhibit B attached hereto.

      IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Executive Vice President and
attested to by its Assistant Secretary on  this 28th day of February, 1997.

      The undersigned Executive Vice President acknowledges this Certificate of
Correction to be the corporate act of the Corporation and as to all matters  or
facts required to be verified under oath, the undersigned Executive Vice
President acknowledges that to the best of his knowledge, information and
belief, these matters and facts are true in all material respects and that this
statement is made under the penalties for perjury.

                                    FEDERATED MUNICIPAL
                                    SECURITIES FUND, INC.

                                    By:/s/ J. Christopher Donahue
                                       ---------------------------
                                    J. Christopher Donahue
                                    Executive Vice President
WITNESSED:

/s/ S. Elliott Cohan
S. Elliott Cohan
Assistant Secretary

                                                                       Exhibit A

                            ARTICLES OF RESTATEMENT
                                       OF
                    LIBERTY MUNICIPAL SECURITIES FUND, INC.


      Liberty Municipal Securities Fund, Inc., a Maryland corporation (the
"Corporation"), having its principal office in Baltimore, Maryland, hereby
certifies to the State Department of Assessments and Taxation that:

      FIRST:      The Corporation desires to restate its Charter as currently
in effect.  The Charter as restated is as follows:

FIRST:            The undersigned, John W. McGonigle, whose post office address
is 421 Seventh Avenue, Pittsburgh, Pennsylvania, 15219, being at least
twenty-one years of age, does under and by virtue of the General Laws of the
State of Maryland authorizing the formation of corporations, hereby form a
corporation.

SECOND:           The name of the Corporation is Liberty Municipal Securities
Fund, Inc.

THIRD:            The purpose for which the corporation is formed is to act as
an open-end investment company of the management type registered as such with
the Securities and Exchange Commission pursuant to the Investment Company Act
of 1940 and to exercise and generally to enjoy all of the powers, rights and
privileges granted to, or conferred upon, corporations by the General Laws of
the State of Maryland now or hereafter in force.

FOURTH:           The post office address of the principal office and the
office of the resident agent of the Corporation in the State of Maryland is 32
South Street, Baltimore, Maryland 21202.  The resident agent of the Corporation
in the state of Maryland is THE CORPORATION TRUST INCORPORATED, which is a
corporation organized and existing under the laws of the State of Maryland.

FIFTH:            (a)   The Corporation is authorized to issue 1,000,000,000
shares of common stock, par value $.01 per share.  The aggregate par value of
all shares which the Corporation is authorized to issue is $10,000,000.
Subject to the following paragraph, the authorized shares are classified as
separate classes of common stock, with 375,000,000 classified into each of
Class A and Class C shares, and 250,000,000 unclassified shares.

                  (b)   The Board of Directors is authorized to classify or to
reclassify (i.e., into series and classes of series), from time to time, any
unissued shares of stock of the Corporation, whether now or hereafter
authorized, by setting, changing or eliminating the preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of or rights to require redemption of the
stock.
                  Unless otherwise provided the Board of Directors prior to the
issuance of the stock, the shares of each class or series of stock shall be
subject to the following:

                        (i)   The Board of Directors may redesignate a class or
series of stock whether or not shares of such class or series are issued and
outstanding, provided that such redesignation does not affect the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications or terms or conditions of redemption of such class or
series of stock.

                        (ii)  The assets attributable to each class or series
may be invested in a common investment portfolio.  The assets and liabilities
and the income and expenses of each class or series of the Corporation's stock
shall be determined separately and, accordingly, the net asset value of shares
of the Corporation's stock may vary among classes or series.  The income or
gain and the expenses or liabilities of the Corporation shall be allocated to
each class or series of stock as determined by or under the direction of the
Board of Directors.

                        (iii) Shares of each class or series of stock shall be
entitled to such dividends or distributions, in stock or in cash or both, as
may be declared from time to time by the Board of Directors with respect to
such class or series.  Dividends or distributions shall be paid on shares of a
class or series of stock only out of the assets belonging to that class or
series.

                        (iv)  In the event of the liquidation or dissolution of
the Corporation, the stockholders of a class or series of the Corporation's
stock shall be entitled to receive, as a class or series, out of the assets of
the Corporation available for distribution to stockholders, the assets
belonging to that class or series less the liabilities allocated to that class
or series.  The assets so distributable to the stockholders of a class or
series shall be distributed among such stockholders in proportion to the number
of shares of that class or series held by them and recorded on the books of the
Corporation.  In the event that there are any assets available for distribution
that are not attributable to any particular class or series of stock, such
assets shall be allocated to all classes and series in proportion to the net
asset value of the respective classes or series.

                        (v)   All holders of shares of stock shall vote as a
single class or series except with respect to any matter which affects only one
or more classes or series of stock, in which case only the holders of shares of
the classes or series affected shall be entitled to vote.

                  (c)   The Corporation may issue fractional shares.  Any
fractional share shall carry proportionately all the rights of a whole share,
excepting any right to receive a certificate evidencing such fractional shares,
but including, without limitation, the right to vote and the right to receive
dividends.

SIXTH:            (a)   The number of Directors of the Corporation shall be
eleven, or such other number as may be from time to time fixed in the manner
provided by the By-Laws of the Corporation but shall never be less than three
(3).

                  (b)   The names of the Directors who are currently in office
are:

                  John F. Donahue               Edward L. Flaherty, Jr.
                  John T. Conroy, Jr.                 Peter E. Madden
                  William J. Copeland           Gregor F. Meyer
                  J. Christopher Donahue        Wesley W. Posvar
                  James E. Dowd     .           Marjorie P. Smuts
                  Lawrence D. Ellis, M.D.


SEVENTH:          The Board of Directors is empowered to authorize the issuance
from time to time of shares of Capital Stock of the Corporation, whether now or
hereafter authorized; provided, however, that the consideration per share to be
received by the Corporation upon the issuance or sale of any shares of its
Capital Stock shall be the net asset value per share determined in accordance
with the requirements of the Investment Company Act of 1940 and the applicable
rules and regulations of the Securities and Exchange Commission (or any
succeeding governmental authority) and in conformity with generally accepted
accounting practices and principles.

EIGHTH:           (a)   To the extent the Corporation has funds or property
legally available therefor, each stockholder of the Corporation shall have the
right at such times as may be permitted by the Corporation, but no less
frequently than once each week, to require the Corporation to redeem all or any
part of its Shares at a redemption price equal to the net asset value per share
of the Capital Stock next determined after the shares are tendered for
redemption; said determination of the net asset value per share to be made in
accordance with the requirements of the Investment Company Act of 1940 and the
applicable rules and regulations of the Securities and Exchange Commission (or
any succeeding governmental authority) and in conformity with generally
accepted accounting practices and principles.

                  Notwithstanding the foregoing, the Corporation may postpone
payment or deposit of the redemption price and may suspend the right of the
holders of Capital Stock to require the Corporation to redeem shares of such
Capital Stock during any period when (i) the New York Stock Exchange is closed
for other than weekends and holidays; (ii) the Securities and Exchange
Commission has by order permitted such suspension; (iii) an emergency as
defined by rules of the Securities and Exchange Commission exists, making
disposal of portfolio securities or valuation of net assets of the Corporation
not reasonably practicable; or (iv) trading on the New York Stock Exchange is
restricted under the conditions set forth in the rules and regulations of the
Securities and Exchange Commission.

                  (b)   The Corporation shall have the right, exercisable at
the discretion of the Board of Directors, to redeem shares of any Stockholder
for their current net asset value per Ssare if at such time the Stockholder
owns sares having an aggregate net asset value of less than $1,000.00.

                  (c)   Each share of Capital Stock is subject to redemption by
the Corporation at the redemption price computed in the manner set forth in
subparagraph (a) of Article EIGHTH of these Articles of Incorporation at any
time if the Board of Directors, in its sole discretion, determines that failure
to so redeem may result in the Corporation being classified as a personal
holding company as defined in the Internal Revenue Code.

                  (d)   Transfer of Capital Stock will be recorded on the stock
transfer records of the Corporation at the request of the holders thereof at
any time during normal business hours of the Corporation unless the Board of
Directors of the Corporation determines, in its sole discretion, that allowing
such transfer may result in the Corporation being classified as a personal
holding company as defined in the Internal Revenue Code.

NINTH:            The following provisions are hereby adopted for the purpose
of defining, limiting, and regulating the powers of the Corporation and of the
Directors and Stockholders:

                  (1)   No Stockholder of the Corporation shall have any
pre-emptive or preferential right of subscription to any  shares of any class
of the stock of the Corporation whether now or hereafter authorized.  The Board
of Directors may issue shares of the Capital Stock of the Corporation without
offering the same either in whole or in part to the Stockholders.

                  (2)   Capital Stock of the Corporation may be purchased, held
and disposed of by the Officers and Directors of the Corporation, by
partnerships of which any such Officer or Director may be a member and by
corporations of which any Officer or Director of the Corporation may be an
officer or director.  Except as above set forth, or authorized by the
Securities and Exchange Commission, the Officers and Directors of the
Corporation and partnerships or corporations which are affiliates of the
Officers or Directors may not deal with the Corporation as principals in the
purchase or sale of any securities or other property.

                  (3)   The Corporation may enter into exclusive or
non-exclusive underwriting contracts or contracts for the sale of its shares
and may also enter into contracts for investment advisory, management and
administrative services.  The terms and conditions, methods of authorization,
renewal, amendment and termination of the aforesaid contracts shall be as
determined at the discretion of the Board of Directors; subject, however, to
the provisions of the Charter of the Corporation, the By-Laws of the
Corporation, applicable state law, and the Investment Company Act of 1940 and
the rules and regulations of the Securities and Exchange Commission.

                  (4)   Except as otherwise provided by law or by the Charter
of the Corporation, no contract or other transaction between the Corporation
and any person, partnership or corporation and no act of the Corporation shall
in any way be affected or invalidated by the fact that any Officer or Director
of the Corportaion is pecuniarily or otherwise interested therein or is such
person or a member, officer or director of such partnership or other
corporation, provided that the fact of such interest shall be known to the
Board of Directors of the Corporation.  Specifically, but without limitation of
the foregoing, the Corporation may:

                  (a)   Enter into a written underwriting contract, management
contract or contracts for research and advisory services with Federated
Research Corp., or its parent, affiliates or subsidiaries thereof, or their
respective successors, or otherwise do business with such corporation,
notwithstanding the fact that one or more of the Directors of the Corporation
and some or all of its Officers are, have been, or  may become Directors,
Officers, Employees or Stockholders of Federated Research Corp. or its parent,
affiliates or subsidiaries or successors, and in the absence of actual fraud
the Corporation may deal freely with Federated Research Corp. or its parent,
affiliates, subsidiaries or successors, and neither such underwriting contract,
management contract or contract for research and advisory services nor any
other contract or transaction between the Corporation and Federated Research
Corp. or its parent, affiliates, subsidiaries or successors shall be
invalidated or in anyway affected thereby, nor shall any Director or Officer of
the Corporation be liable to the Corporation or to any Stockholder or creditor
of the Corporation or to any other person for any loss incurred under or by
reason of any such contract or transaction.  Anything in the foregoing
notwithstanding, no officer or director or underwriter or investment adviser of
the Corporation shall be protected against any liability to the Corporation or
to its security holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.

                  (5)   No Officer or Director of the Corporation or of any
investment advisory company or management company, nor the Corporation itself,
nor such investment advisory or management company or underwriter of the
Corporation shall take long or short positions in respect of any shares issued
by the Corporation; provided, however, that such prohibition shall not prevent:

                        (a)   Any underwriter from purchasing from the
Corporation shares of capital stock issued by the Corporation, provided that
orders to purchase from the Corporation are entered with the Corporation by
such underwriter either for investment or upon receipt by it of purchase orders
for shares of stock of the Corporation, and provided such purchases are not in
excess of purchase orders received by such underwriter;

                        (b)   The Corporation or any distributor or underwriter
from maintaining a market for shares of capital stock isued by the Corporation;

                        (c)   The purchase from the Corporation of shares of
capital stock of the Corporation by the Officers or Directors of the
Corporation or of any investment advisory, management company or underwriter or
distributor of the Corporation at the prices available to the public or
authorized by the Securities and Exchange Commission at the moment of such
purchase.

                  6.    The Corporation shall indemnify its officers,
directors, employees and agents and any person who serves at the request of the
Corporation as a Director, Officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise to the extent permitted
by Maryland law as amended from time to time, provided, however, that no
officer or director shall be protected against any liability to the Corporation
or its stockholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.

                  7.    The Board of Directors shall, subject to the laws of
Maryland, have power to determine, from time to time, whether and to what
extent and at what times and places and under what conditions and regulations
any accounts and books of the Corporation, or any of them, shall be open to the
inspection of Stockholders.

                  8.    Notwithstanding any provision of law requiring a
greater proportion than a majority of the votes of all classes of stock
entitled to be cast, to take or authorize any action, the Corporation may take
or authorize any such action upon the concurrence of a majority of the
aggregate number of the votes entitled to be cast thereon.

                  9.    The Corporation reserves the right from time to time to
make any amendment of its Charter now or hereafter authorized by law, including
any amendment which alters the contract rights, as expressly set forth in its
Charter, of any outstanding capital stock, except that no action affecting the
validity or assessibility of such shares shall be taken without the unanimous
approval of the outstanding shares of Capital Stock.

                  10.   In addition to the powers and authority conferred upon
them by the Charter of the Corporation or by law, the Board of  Directors may
exercise all such powers and authority and do all such acts and things as may
be exercised or done by the Corporation, subject, nevertheless, to the
provisions of applicable state law and the Charter and By-Laws of the
Corporation.

                  11.   The Board of Directors is expressly authorized to
determine in accordance with generally accepted accounting principles and
practices what constitutes net profits, earnings, surplus or net assets in
excess of capital, and to determine what accounting periods shall be used by
the Corporation for any purpose, whether annual or any other period, including
daily; to set apart out of any funds of the Corporation such reserves for such
purposes as it shall determine and to abolish the same; to declare and pay
dividends and distributions in cash, securities or other property from surplus
or any funds legally available therefor, at such intervals (which may be as
frequently as daily) or on such other periodic basis, as it shall determine; to
declare such dividends or distributions by means of a formula or other method
of determination, at meetings held less frequently than the frequency of the
effectiveness of such declarations; to establish payment dates for dividends or
any other distributions on any basis, including dates occurring less frequently
than the effectiveness of declarations thereof; and to provide for the payment
of declared dividends on a date earlier or later than the specified payment
date in the case of Stockholders of the Corporation redeeming their entire
ownership of shares of the Corporation.

TENTH:            The  Corporation acknowledges that is adopting its corporate
name through permission of Federated Investors, Inc., a Pennsylvania
corporation, and agrees that Federated Investors, Inc. reserves to itself and
any successor to its business the right to withdraw from the Corporation the
name "Federated" and reserves to itself and any successor to it business the
right to grand the non-exclusive right to use the name "Federated" or any
similar name to any other investment company business enterprise.

ELEVENTH:   In addition to the powers and authority conferred upon them by the
Charter of the Corporation or by law, the Board of Directors may exercise all
such powers and authority and do all such acts and things as may be exercised
or done by the Corporation, subject, nevertheless, to the provisions of
applicable state law and the charter and By-Laws of the Corporation.

TWELFTH:          The duration of the Corporation shall be perpetual.

      SECOND:     The restatement of the Charter was approved by a majority of
the entire Board of Directors.

      THIRD:      The provisions set forth in these Articles of Restatement are
all the provisions of the Charter currently in effect.  The current address of
the principal office of the Corporation, the name and address of the
Corporation's current resident agent and the number of directors of the
Corporation and the names of those currently in office are as stated above.

      FOURTH:     The Charter is not amended by these Articles of Restatement.

      IN WITNESS WHEREOF, Liberty Municipal Securities Fund, Inc. has caused
these Articles of Restatement to be signed in is name and on its behalf by its
Vice President and attested by its Assistant Secretary on April 30, 1993.  The
undersigned President acknowledges these Articles of Restatement to be the
corporate act of the Corporation and states to the best of his knowledge,
information and belief that the mattes and facts set forth herein with respect
to authorization and approval are true in all material respects and that this
statement is made under the penalties of perjury.

                                                                       Exhibit B

                            ARTICLES OF RESTATEMENT
                                       OF
                    LIBERTY MUNICIPAL SECURITIES FUND, INC.


      Liberty Municipal Securities Fund, Inc., a Maryland corporation (the
"Corporation"), having its principal office in Baltimore, Maryland, hereby
certifies to the State Department of Assessments and Taxation that:

      FIRST:      The Corporation desires to restate its Charter as currently
in effect.  The Charter as restated is as follows:

FIRST:            The undersigned, John W. McGonigle, whose post office address
is 421 Seventh Avenue, Pittsburgh, Pennsylvania, 15219, being at least
twenty-one years of age, does under and by virtue of the General Laws of the
State of Maryland authorizing the formation of corporations, hereby form a
corporation.

SECOND:           The name of the Corporation is Liberty Municipal Securities
Fund, Inc.

THIRD:            The purpose for which the corporation is formed is to act as
an open-end investment company of the management type registered as such with
the Securities and Exchange Commission pursuant to the Investment Company Act
of 1940 and to exercise and generally to enjoy all of the powers, rights and
privileges granted to, or conferred upon, corporations by the General Laws of
the State of Maryland now or hereafter in force.

FOURTH:           The post office address of the principal office and the
office of the resident agent of the Corporation in the State of Maryland is 32
South Street, Baltimore, Maryland 21202.  The resident agent of the Corporation
in the state of Maryland is THE CORPORATION TRUST INCORPORATED, which is a
corporation organized and existing under the laws of the State of Maryland.

FIFTH:            (a)   The Corporation is authorized to issue 1,000,000,000
shares of common stock, par value $.01 per share.  The aggregate par value of
all shares which the Corporation is authorized to issue is $10,000,000.
Subject to the following paragraph, the authorized shares are classified as
separate classes of common stock, with 375,000,000 classified into shares of
common stock without further designation, 375,000,000 Class C Shares, and
250,000,000 unclassified shares.

                  (b)   The Board of Directors is authorized to classify or to
reclassify (i.e., into series and classes of series), from time to time, any
unissued shares of stock of the Corporation, whether now or hereafter
authorized, by setting, changing or eliminating the preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of or rights to require redemption of the
stock.

                  Unless otherwise provided the Board of Directors prior to the
issuance of the stock, the shares of each class or series of stock shall be
subject to the following:

                        (i)   The Board of Directors may redesignate a class or
series of stock whether or not shares of such class or series are issued and
outstanding, provided that such redesignation does not affect the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications or terms or conditions of redemption of such class or
series of stock.

                        (ii)  The assets attributable to each class or series
may be invested in a common investment portfolio.  The assets and liabilities
and the income and expenses of each class or series of the Corporation's stock
shall be determined separately and, accordingly, the net asset value of shares
of the Corporation's stock may vary among classes or series.  The income or
gain and the expenses or liabilities of the Corporation shall be allocated to
each class or series of stock as determined by or under the direction of the
Board of Directors.

                        (iii) Shares of each class or series of stock shall be
entitled to such dividends or distributions, in stock or in cash or both, as
may be declared from time to time by the Board of Directors with respect to
such class or series.  Dividends or distributions shall be paid on shares of a
class or series of stock only out of the assets belonging to that class or
series.

                        (iv)  In the event of the liquidation or dissolution of
the Corporation, the stockholders of a class or series of the Corporation's
stock shall be entitled to receive, as a class or series, out of the assets of
the Corporation available for distribution to stockholders, the assets
belonging to that class or series less the liabilities allocated to that class
or series.  The assets so distributable to the stockholders of a class or
series shall be distributed among such stockholders in proportion to the number
of shares of that class or series held by them and recorded on the books of the
Corporation.  In the event that there are any assets available for distribution
that are not attributable to any particular class or series of stock, such
assets shall be allocated to all classes and series in proportion to the net
asset value of the respective classes or series.

                        (v)   All holders of shares of stock shall vote as a
single class or series except with respect to any matter which affects only one
or more classes or series of stock, in which case only the holders of shares of
the classes or series affected shall be entitled to vote.

                  (c)   The Corporation may issue fractional shares.  Any
fractional share shall carry proportionately all the rights of a whole share,
excepting any right to receive a certificate evidencing such fractional shares,
but including, without limitation, the right to vote and the right to receive
dividends.

SIXTH:            (a)   The number of Directors of the Corporation shall be
eleven, or such other number as may be from time to time fixed in the manner
provided by the By-Laws of the Corporation but shall never be less than three
(3).

                  (b)   The names of the Directors who are currently in office
are:

                  John F. Donahue               Edward L. Flaherty, Jr.
                  John T. Conroy, Jr.                 Peter E. Madden
                  William J. Copeland           Gregor F. Meyer
                  J. Christopher Donahue        Wesley W. Posvar
                  James E. Dowd     .           Marjorie P. Smuts
                  Lawrence D. Ellis, M.D.


SEVENTH:          The Board of Directors is empowered to authorize the issuance
from time to time of shares of Capital Stock of the Corporation, whether now or
hereafter authorized; provided, however, that the consideration per share to be
received by the Corporation upon the issuance or sale of any shares of its
Capital Stock shall be the net asset value per share determined in accordance
with the requirements of the Investment Company Act of 1940 and the applicable
rules and regulations of the Securities and Exchange Commission (or any
succeeding governmental authority) and in conformity with generally accepted
accounting practices and principles.

EIGHTH:           (a)   To the extent the Corporation has funds or property
legally available therefor, each stockholder of the Corporation shall have the
right at such times as may be permitted by the Corporation, but no less
frequently than once each week, to require the Corporation to redeem all or any
part of its Shares at a redemption price equal to the net asset value per share
of the Capital Stock next determined after the shares are tendered for
redemption; said determination of the net asset value per share to be made in
accordance with the requirements of the Investment Company Act of 1940 and the
applicable rules and regulations of the Securities and Exchange Commission (or
any succeeding governmental authority) and in conformity with generally
accepted accounting practices and principles.

                  Notwithstanding the foregoing, the Corporation may postpone
payment or deposit of the redemption price and may suspend the right of the
holders of Capital Stock to require the Corporation to redeem shares of such
Capital Stock during any period when (i) the New York Stock Exchange is closed
for other than weekends and holidays; (ii) the Securities and Exchange
Commission has by order permitted such suspension; (iii) an emergency as
defined by rules of the Securities and Exchange Commission exists, making
disposal of portfolio securities or valuation of net assets of the Corporation
not reasonably practicable; or (iv) trading on the New York Stock Exchange is
restricted under the conditions set forth in the rules and regulations of the
Securities and Exchange Commission.

                  (b)   The Corporation shall have the right, exercisable at
the discretion of the Board of Directors, to redeem shares of any Stockholder
for their current net asset value per Ssare if at such time the Stockholder
owns sares having an aggregate net asset value of less than $1,000.00.

                  (c)   Each share of Capital Stock is subject to redemption by
the Corporation at the redemption price computed in the manner set forth in
subparagraph (a) of Article EIGHTH of these Articles of Incorporation at any
time if the Board of Directors, in its sole discretion, determines that failure
to so redeem may result in the Corporation being classified as a personal
holding company as defined in the Internal Revenue Code.

                  (d)   Transfer of Capital Stock will be recorded on the stock
transfer records of the Corporation at the request of the holders thereof at
any time during normal business hours of the Corporation unless the Board of
Directors of the Corporation determines, in its sole discretion, that allowing
such transfer may result in the Corporation being classified as a personal
holding company as defined in the Internal Revenue Code.

NINTH:            The following provisions are hereby adopted for the purpose
of defining, limiting, and regulating the powers of the Corporation and of the
Directors and Stockholders:

                  (1)   No Stockholder of the Corporation shall have any
pre-emptive or preferential right of subscription to any  shares of any class
of the stock of the Corporation whether now or hereafter authorized.  The Board
of Directors may issue shares of the Capital Stock of the Corporation without
offering the same either in whole or in part to the Stockholders.

                  (2)   Capital Stock of the Corporation may be purchased, held
and disposed of by the Officers and Directors of the Corporation, by
partnerships of which any such Officer or Director may be a member and by
corporations of which any Officer or Director of the Corporation may be an
officer or director.  Except as above set forth, or authorized by the
Securities and Exchange Commission, the Officers and Directors of the
Corporation and partnerships or corporations which are affiliates of the
Officers or Directors may not deal with the Corporation as principals in the
purchase or sale of any securities or other property.

                  (3)   The Corporation may enter into exclusive or
non-exclusive underwriting contracts or contracts for the sale of its shares
and may also enter into contracts for investment advisory, management and
administrative services.  The terms and conditions, methods of authorization,
renewal, amendment and termination of the aforesaid contracts shall be as
determined at the discretion of the Board of Directors; subject, however, to
the provisions of the Charter of the Corporation, the By-Laws of the
Corporation, applicable state law, and the Investment Company Act of 1940 and
the rules and regulations of the Securities and Exchange Commission.

                  (4)   Except as otherwise provided by law or by the Charter
of the Corporation, no contract or other transaction between the Corporation
and any person, partnership or corporation and no act of the Corporation shall
in any way be affected or invalidated by the fact that any Officer or Director
of the Corportaion is pecuniarily or otherwise interested therein or is such
person or a member, officer or director of such partnership or other
corporation, provided that the fact of such interest shall be known to the
Board of Directors of the Corporation.  Specifically, but without limitation of
the foregoing, the Corporation may:

                  (a)   Enter into a written underwriting contract, management
contract or contracts for research and advisory services with Federated
Research Corp., or its parent, affiliates or subsidiaries thereof, or their
respective successors, or otherwise do business with such corporation,
notwithstanding the fact that one or more of the Directors of the Corporation
and some or all of its Officers are, have been, or  may become Directors,
Officers, Employees or Stockholders of Federated Research Corp. or its parent,
affiliates or subsidiaries or successors, and in the absence of actual fraud
the Corporation may deal freely with Federated Research Corp. or its parent,
affiliates, subsidiaries or successors, and neither such underwriting contract,
management contract or contract for research and advisory services nor any
other contract or transaction between the Corporation and Federated Research
Corp. or its parent, affiliates, subsidiaries or successors shall be
invalidated or in anyway affected thereby, nor shall any Director or Officer of
the Corporation be liable to the Corporation or to any Stockholder or creditor
of the Corporation or to any other person for any loss incurred under or by
reason of any such contract or transaction.  Anything in the foregoing
notwithstanding, no officer or director or underwriter or investment adviser of
the Corporation shall be protected against any liability to the Corporation or
to its security holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.

                  (5)   No Officer or Director of the Corporation or of any
investment advisory company or management company, nor the Corporation itself,
nor such investment advisory or management company or underwriter of the
Corporation shall take long or short positions in respect of any shares issued
by the Corporation; provided, however, that such prohibition shall not prevent:

                        (a)   Any underwriter from purchasing from the
Corporation shares of capital stock issued by the Corporation, provided that
orders to purchase from the Corporation are entered with the Corporation by
such underwriter either for investment or upon receipt by it of purchase orders
for shares of stock of the Corporation, and provided such purchases are not in
excess of purchase orders received by such underwriter;

                        (b)   The Corporation or any distributor or underwriter
from maintaining a market for shares of capital stock isued by the Corporation;

                        (c)   The purchase from the Corporation of shares of
capital stock of the Corporation by the Officers or Directors of the
Corporation or of any investment advisory, management company or underwriter or
distributor of the Corporation at the prices available to the public or
authorized by the Securities and Exchange Commission at the moment of such
purchase.

                  6.    The Corporation shall indemnify its officers,
directors, employees and agents and any person who serves at the request of the
Corporation as a Director, Officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise to the extent permitted
by Maryland law as amended from time to time, provided, however, that no
officer or director shall be protected against any liability to the Corporation
or its stockholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.

                  7.    The Board of Directors shall, subject to the laws of
Maryland, have power to determine, from time to time, whether and to what
extent and at what times and places and under what conditions and regulations
any accounts and books of the Corporation, or any of them, shall be open to the
inspection of Stockholders.

                  8.    Notwithstanding any provision of law requiring a
greater proportion than a majority of the votes of all classes of stock
entitled to be cast, to take or authorize any action, the Corporation may take
or authorize any such action upon the concurrence of a majority of the
aggregate number of the votes entitled to be cast thereon.

                  9.    The Corporation reserves the right from time to time to
make any amendment of its Charter now or hereafter authorized by law, including
any amendment which alters the contract rights, as expressly set forth in its
Charter, of any outstanding capital stock, except that no action affecting the
validity or assessibility of such shares shall be taken without the unanimous
approval of the outstanding shares of Capital Stock.

                  10.   In addition to the powers and authority conferred upon
them by the Charter of the Corporation or by law, the Board of  Directors may
exercise all such powers and authority and do all such acts and things as may
be exercised or done by the Corporation, subject, nevertheless, to the
provisions of applicable state law and the Charter and By-Laws of the
Corporation.

                  11.   The Board of Directors is expressly authorized to
determine in accordance with generally accepted accounting principles and
practices what constitutes net profits, earnings, surplus or net assets in
excess of capital, and to determine what accounting periods shall be used by
the Corporation for any purpose, whether annual or any other period, including
daily; to set apart out of any funds of the Corporation such reserves for such
purposes as it shall determine and to abolish the same; to declare and pay
dividends and distributions in cash, securities or other property from surplus
or any funds legally available therefor, at such intervals (which may be as
frequently as daily) or on such other periodic basis, as it shall determine; to
declare such dividends or distributions by means of a formula or other method
of determination, at meetings held less frequently than the frequency of the
effectiveness of such declarations; to establish payment dates for dividends or
any other distributions on any basis, including dates occurring less frequently
than the effectiveness of declarations thereof; and to provide for the payment
of declared dividends on a date earlier or later than the specified payment
date in the case of Stockholders of the Corporation redeeming their entire
ownership of shares of the Corporation.

TENTH:            The  Corporation acknowledges that is adopting its corporate
name through permission of Federated Investors, Inc., a Pennsylvania
corporation, and agrees that Federated Investors, Inc. reserves to itself and
any successor to its business the right to withdraw from the Corporation the
name "Federated" and reserves to itself and any successor to it business the
right to grand the non-exclusive right to use the name "Federated" or any
similar name to any other investment company business enterprise.

ELEVENTH:   In addition to the powers and authority conferred upon them by the
Charter of the Corporation or by law, the Board of Directors may exercise all
such powers and authority and do all such acts and things as may be exercised
or done by the Corporation, subject, nevertheless, to the provisions of
applicable state law and the charter and By-Laws of the Corporation.

TWELFTH:          The duration of the Corporation shall be perpetual.

      SECOND:     The restatement of the Charter was approved by a majority of
the entire Board of Directors.

      THIRD:      The provisions set forth in these Articles of Restatement are
all the provisions of the Charter currently in effect.  The current address of
the principal office of the Corporation, the name and address of the
Corporation's current resident agent and the number of directors of the
Corporation and the names of those currently in office are as stated above.

      FOURTH:     The Charter is not amended by these Articles of Restatement.

      IN WITNESS WHEREOF, Liberty Municipal Securities Fund, Inc. has caused
these Articles of Restatement to be signed in is name and on its behalf by its
Vice President and attested by its Assistant Secretary on April 30, 1993.  The
undersigned President acknowledges these Articles of Restatement to be the
corporate act of the Corporation and states to the best of his knowledge,
information and belief that the mattes and facts set forth herein with respect
to authorization and approval are true in all material respects and that this
statement is made under the penalties of perjury.


                                                 (Amd. #12) file stamped 3/10/97

                   FEDERATED MUNICIPAL SECURITIES FUND, INC.

                           CERTIFICATE OF CORRECTION

      Federated Municipal Securities Fund, Inc., a Maryland corporation (the
"Corporation"), hereby certifies that:

 FIRST:     The title of the document being corrected is "Articles
 Supplementary".

 SECOND:    The only party to the document being corrected is Federated
 Municipal Securities Fund, Inc. (formerly Liberty Municipal Securities Fund,
 Inc.).

 THIRD:     The Articles Supplementary were filed on August 3, 1994.

 FOURTH:    The provisions of the Articles Supplementary which are to be
 corrected are set forth in Exhibit A attached hereto.

 FIFTH:     The corrected provisions of the Articles Supplementary are set
 forth in Exhibit B attached hereto.

      IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Executive Vice President and
attested to by its Assistant Secretary on  this 28th day of February, 1997.

      The undersigned Executive Vice President acknowledges this Certificate of
Correction to be the corporate act of the Corporation and as to all matters or
acts required to be verified under oath the undersigned Executive Vice
President  acknowledges that to the best of his knowledge, information and
belief, these matters and facts are true in all material respects and that this
statement is made under the penalties for perjury.

                                    FEDERATED MUNICIPAL
                                    SECURITIES FUND, INC.

                                    By:/s/ J. Christopher Donahue
                                       ---------------------------
                                    J. Christopher Donahue
                                    Executive Vice President
WITNESSED:

/s/ S. Elliott Cohan
S. Elliott Cohan
Assistant Secretary

                                                                       Exhibit A

                    LIBERTY MUNICIPAL SECURITIES FUND, INC.

                             ARTICLES SUPPLEMENTARY



      LIBERTY MUNICIPAL SECURITIES FUND, INC., a Maryland corporation having
its principal offices in Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies

      FIRST:  The Board of Directors hereby reclassifies 249,449,030 of the
      authorized but unissued shares of Select Shares of the Corporation as
      249,449,030 shares of Class B Shares.

      SECOND:  The shares of Common Stock reclassified hereby shall have the
      preferences, conversion and other rights, voting powers, restrictions,
      limitations as to dividends, qualifications, and terms and conditions of
      redemption as set forth in Article FIFTH, paragraph (b) of the
      Corporation's charter and shall be subject to all provisions of the
      charter relating to stock of the Corporation generally.

      THIRD:  The stock has been reclassified by the Board of Directors under
      the authority contained in the charter of the Corporation.

      IN WITNESS WHEREOF, Liberty Municipal Securities Fund, Inc. has caused
these presents to be signed in its name and on its behalf by its President and
witnessed by its Assistant Secretary on June 15, 1994.

      The undersigned, J. Christopher Donahue, President of the Corporation,
hereby acknowledges in the name and on behalf of the Corporation the foregoing
Articles Supplementary to be its corporate act and further certifies to the
best of his knowledge, information and belief, that the matters and facts set
forth herein with respect to the authorization and approval hereof are true in
all material respects and that this statement is made under the penalties of
perjury.




                                                                       Exhibit B

                    LIBERTY MUNICIPAL SECURITIES FUND, INC.

                             ARTICLES SUPPLEMENTARY



      LIBERTY MUNICIPAL SECURITIES FUND, INC., a Maryland corporation having
its principal offices in Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies:

      FIRST:  The Board of Directors hereby reclassifies 249,449,030 of the
      authorized but unissued shares of Select Shares of the Corporation as
      249,449,030 shares of Class B Shares.

      SECOND:  The shares of common stock reclassified hereby shall have the
      preferences, conversion and other rights, voting powers, restrictions,
      limitations as to dividends, qualifications, and terms and conditions of
      redemption as set forth in Article FIFTH, paragraph (b) of the
      Corporation's charter and shall be subject to all provisions of the
      charter relating to stock of the Corporation generally and to the
      following:

            At such times as may be determined by the Board of Directors (or
      with the authorization of the Board of Directors, by the Officers of the
      Corporation) in accordance with the Investment Company Act of 1940, as
      amended, applicable rules and regulations thereunder, and applicable
      rules and regulations of the National Association of Securities Dealers,
      Inc., and reflected in the pertinent registration statement of the
      Corporation, Class B Shares of the Corporation may be automatically
      converted into shares of common stock of the Corporation without further
      designation based on the relative net asset values of such classes at the
      time of the conversion, subject, however, to any conditions of conversion
      that may be imposed by the Board of Directors (or with the authorization
      of the Board of Directors, by the Officers of the Corporation) and
      reflected in the pertinent registration statement of the Corporation as
      aforesaid.


THIRD:  The stock has been reclassified by the Board of Directors under the
authority contained in the charter of the Corporation.


      IN WITNESS WHEREOF, Liberty Municipal Securities Fund, Inc. has caused
these presents to be signed in its name and on its behalf by its President and
witnessed by its Assistant Secretary on June 15, 1994.

      The undersigned, J. Christopher Donahue, President of the Corporation,
hereby acknowledges in the name and on behalf of the Corporation the foregoing
Articles Supplementary to be its corporate act and further certifies to the
best of his knowledge, information and belief, that the matters and facts set
forth herein with respect to the authorization and approval hereof are true in
all material respects and that this statement is made under the penalties of
perjury.

                                                 (Amd. #13) file stamped 3/10/97

                   FEDERATED MUNICIPAL SECURITIES FUND, INC.

                           CERTIFICATE OF CORRECTION

      Federated Municipal Securities Fund, Inc., a Maryland corporation (the
"Corporation"), hereby certifies that:

      FIRST:            The title of the document being corrected is "Articles
Supplementary".

      SECOND:     The only party to the document being corrected is Federated
Municipal Securities Fund, Inc. (formerly Liberty Municipal Securities Fund,
Inc.).

      THIRD:      The Articles Supplementary were filed on September 16, 1994.

      FOURTH:     The provisions of the Articles Supplementary which are to be
corrected are set forth in Exhibit A attached hereto.

      FIFTH:      The corrected provisions of the Articles Supplementary are
set forth in Exhibit B attached hereto.

      IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Executive Vice President and
attested to by its Assistant Secretary on  this 28th day of February, 1997.

      The undersigned Executive Vice President acknowledges this Certificate of
Correction to be the corporate act of the Corporation and as to all matters or
facts required to be verified under oath the undersigned Executive Vice
President acknowledges that to the best of his knowledge, information and
belief, these matters and facts are true in all material respects and that this
statement is made under the penalties for perjury.

                                    FEDERATED MUNICIPAL
                                    SECURITIES FUND, INC.

                                    By:/s/ J. Christopher Donahue
                                       ---------------------------
                                    J. Christopher Donahue
                                    Executive Vice President
WITNESSED:

/s/ S. Elliott Cohan
S. Elliott Cohan
Assistant Secretary

                                                                       Exhibit A

                    LIBERTY MUNICIPAL SECURITIES FUND, INC.

                             ARTICLES SUPPLEMENTARY


      LIBERTY MUNICIPAL SECURITIES FUND, INC., a Maryland corporation having
its principal offices in Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies:

      FIRST:  The Board of Directors hereby reclassifies 550,970 of the
      authorized shares of Select Shares of the Corporation as 550,970 shares
      of Class B Shares.

      SECOND:  The shares of Common Stock reclassified hereby shall have the
      preferences, conversion and other rights, voting powers, restrictions,
      limitations as to dividends, qualifications, and terms and conditions of
      redemption as set forth in Article FIFTH, paragraph (b) of the
      Corporation's charter and shall be subject to all provisions of the
      charter relating to stock of the Corporation generally.

      THIRD:  The stock has been reclassified by the Board of Directors under
      the authority contained in the charter of the Corporation.

      IN WITNESS WHEREOF, Liberty Municipal Securities Fund, Inc. has caused
these presents to be signed in its name and on its behalf by its President and
witnessed by its Assistant Secretary on August 1, 1994.

      The undersigned, J. Christopher Donahue, President of the Corporation,
hereby acknowledges in the name and on behalf of the Corporation the foregoing
Articles Supplementary to be its corporate act and further certifies to the
best of his knowledge, information and belief, that the matters and facts set
forth herein with respect to the authorization and approval hereof are true in
all material respects and that this statement is made under the penalties of
perjury.


                                                                       Exhibit B

                    LIBERTY MUNICIPAL SECURITIES FUND, INC.

                             ARTICLES SUPPLEMENTARY


      LIBERTY MUNICIPAL SECURITIES FUND, INC., a Maryland corporation having
its principal offices in Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies:

      FIRST:  The Board of Directors hereby reclassifies 550,970 of the
      authorized shares of Select Shares of the Corporation as 550,970 shares
      of Class B Shares.

      SECOND:  The shares of Common Stock reclassified hereby shall have the
      preferences, conversion and other rights, voting powers, restrictions,
      limitations as to dividends, qualifications, and terms and conditions of
      redemption as set forth in Article FIFTH, paragraph (b) of the
      Corporation's charter and shall be subject to all provisions of the
      charter relating to stock of the Corporation generally and to the
      following:

            At such times as may be determined by the Board of Directors (or
      with the authorization of the Board of Directors, by the Officers of the
      Corporation) in accordance with the Investment Company Act of 1940, as
      amended, applicable rules and regulations thereunder, and applicable
      rules and regulations of the National Association of Securities Dealers,
      Inc., and reflected in the pertinent registration statement of the
      Corporation, Class B Shares of the Corporation may be automatically
      converted into shares of common stock of the Corporation without further
      designation based on the relative net asset values of such classes at the
      time of the conversion, subject, however, to any conditions of conversion
      that may be imposed by the Board of Directors (or with the authorization
      of the Board of Directors, by the Officers of the Corporation) and
      reflected in the pertinent registration statement of the Corporation as
      aforesaid.


      THIRD:  The stock has been reclassified by the Board of Directors under
      the authority contained in the charter of the Corporation.

      IN WITNESS WHEREOF, Liberty Municipal Securities Fund, Inc. has caused
these presents to be signed in its name and on its behalf by its President and
witnessed by its Assistant Secretary on August 1, 1994.

      The undersigned, J. Christopher Donahue, President of the Corporation,
hereby acknowledges in the name and on behalf of the Corporation the foregoing
Articles Supplementary to be its corporate act and further certifies to the
best of his knowledge, information and belief, that the matters and facts set
forth herein with respect to the authorization and approval hereof are true in
all material respects and that this statement is made under the penalties of
perjury.

EX-99.BYLAWS

                                      -1-
                                                Exhibit (b) under Form N-1A
                                                Exhibit 3(ii) under Item
601/Reg. S-K



                    LIBERTY MUNICIPAL SECURITIES FUND, INC.

                                    BY-LAWS

                                   ARTICLE I

                            MEETING OF SHAREHOLDERS



      Section 1.  ANNUAL MEETINGS.  The Corporation is not required to hold an
annual meeting of Shareholders in any year in which the election of Directors
is not required to be acted upon under the Investment Company Act of 1940.  If
the Corporation is required to hold a meeting of Shareholders to elect
Directors, the meeting shall be designated the annual meeting of Shareholders
for that year.  If an annual meeting of Shareholders is held, it shall be held
at a date and time determined by the Board of Directors within 120 days after
the occurrence of the event requiring the meeting.  Any other business may be
considered at the meeting.

      Section 2.  SPECIAL MEETINGS.  Special Meetings of Shareholders of the
Company or of a particular Series or Class may be called by the Chairman, or by
the Board of Directors; and shall be called by the Secretary whenever ordered
by the Chairman, any Director, or as requested in writing by shareholders
entitled to cast at least 10% of the voter shares entitled to be cast at the
meetings.  Such request shall state the purpose of such meeting and the matters
proposed to be acted on thereat, and no other business shall be transacted at
any such special meeting.  The Secretary shall inform such Shareholders of the
reasonably estimated costs of preparing and mailing the notice of the meeting,
and upon payment to the Corporation of such costs, the Secretary shall give not
less than ten nor more than 90 days' notice of the meeting.  Unless required by
Shareholders entitled to cast a majority of all the votes entitled to be cast
at the meeting, a special meeting need not be called to consider any matter
which is substantially the same as a matter voted on at by special meeting of
the Shareholders held during the preceding 12 months.

      Section 3.  PLACE OF MEETINGS.  All meetings of the Shareholders of the
Corporation or a particular Series or Class, shall be held at the office of the
Corporation in Pittsburgh, Pennsylvania, or at such other place within or
without the State of Maryland as may be fixed by the Board of Directors.  See
Amd. #13, dated 5/12/98.

      Section 4.  NOTICE.  Not less than ten nor more than ninety days before
the date of every Annual or Special Meeting of Shareholders the Secretary or an
Assistant Secretary shall give to each Shareholder of record of the Corporation
or of the relevant Series or Class written notice of such meeting.  Such notice
shall be deemed to have been given when mailed to the Shareholder at his
address appearing on the books of the Corporation, which shall be maintained
separately for the shares of each Series or Class.  It shall not be necessary
to set forth the business proposed to be transacted in the notice of any Annual
Meeting except that any proposal to amend the Charter of the Corporation shall
be set forth in such notice.  Notice of a Special Meeting shall state the
purpose or purposes for which it is called.

      Section 5.  QUORUM.  The presence in person or by proxy of holders of
one-third of the shares of stock of the Corporation entitled to vote without
regard to class shall constitute a quorum at any meeting of the shareholders,
except with respect to any matter which by law requires the approval of one or
more classes of stock, in which case the presence in person or by proxy of the
holders of one-third of the shares of stock of each class entitled to vote on
the matter shall constitute a quorum.

      In the absence of a quorum at any meeting, a majority of those
Shareholders present in person or by proxy may adjourn the meeting from time to
time to a date not later than 120 days after the original record date without
further notice than by announcement to be given at the meeting until a quorum,
as above defined, shall be present.  Any business may be transacted at the
adjourned meeting which might have been transacted at the meeting originally
called had the same been held at the time so called.

      Section 6.  VOTING.  At all meetings of Shareholders each Shareholder
shall be entitled to one vote or fraction thereof for each Share or fraction
thereof standing in his name on the books of the Corporation on the date for
the determination of Shareholders entitled to vote at such meeting.  All shares
of each portfolio or class in the Corporation have equal voting rights, except
that in matters affecting only a particular portfolio or class, only shares of
that portfolio or class are entitled to vote.

      Section 7.  PROXIES.  Any Shareholder entitled to vote at any meeting of
Shareholders may vote either in person or by proxy, but no proxy which is dated
more than eleven months before the meeting named therein shall be accepted.
Every proxy shall be in writing and signed by the Shareholder or his duly
authorized attorney in fact and dated, but need not be sealed, witnessed or
acknowledged.  See Amd. #12, dated 2/27/98

      Section 8.  INFORMAL ACTION BY SHAREHOLDERS.  Any action required or
permitted to be taken at any meeting of Shareholders may be taken without a
meeting, if a consent in writing, setting forth such action, is signed by all
the Shareholders entitled to vote on the subject matter thereof, and such
consent is filed with the records of the Corporation.


                                   ARTICLE II

                               BOARD OF DIRECTORS

      Section 1.  POWERS.  The business and affairs of the Corporation shall be
managed under the direction of its Board of Directors.  All powers of the
Corporation may be exercised by or under the authority of the Board of
Directors except as conferred on or reserved to the Shareholders by law, by the
Charter or by these By-Laws.

      Section 2.  NUMBER, QUALIFICATIONS, MANNER OF ELECTION AND TERM OF
OFFICE.  The number of Directors of the Corporation can be changed from time to
time to not less than three or the number of Shareholders, whichever is less,
nor more than twenty.  Directors need not be Shareholders.  The term of office
of a Director shall not be affected by any decrease in the number of Directors
made by the Board pursuant to the foregoing authorization.  Each Director shall
hold office until the Annual Meeting next held after he becomes a director and
until the election and qualification of his successor.

      Section 3.  PLACE OF MEETING.  The Board of Directors may hold its
meetings at such place or places within or without the State of Maryland as the
Board or as the person or persons requesting said meeting to be called may from
time to time determine.

      Section 4.  ANNUAL MEETINGS.  The Board of Directors shall meet annually
for the election of Officers and any other business.

      Section 5.  REGULAR MEETINGS.  Regular meetings of the Board of Directors
shall be held at such intervals and on such dates as the Board may from time to
time designate, provided that any Director who is absent when such designation
is made shall be given notice of the designation.

      Section 6.  SPECIAL MEETINGS.  Special meetings of the Board of Directors
may be held at such times and at such places as may be designated at the call
of such meeting.  Special meetings shall be called by the Secretary or
Assistant Secretary at the request of the Chairman or any Director.  If the
Secretary when so requested refuses or fails for more than twenty-four hours to
call such meeting, the Chairman or such Director may in the name of the
Secretary call such meeting by giving due notice in the manner required when
notice is given by the Secretary.

      Section 7.  NOTICE.  The Secretary or Assistant Secretary shall give, at
least two days before the meeting, notice of each meeting of the Board of
Directors, whether Annual, Regular or Special, to each member of the Board by
mail, telegram or telephone to his last known address.  It shall not be
necessary to state the purpose or business to be transacted in the notice of
any meeting.  Personal attendance at any meeting by a Director other than to
protest the validity of said meeting shall constitute a waiver of the foregoing
requirement of notice.  In addition, notice of a meeting need not be given if a
written waiver of notice executed by such Director before or after the Meeting
is filed with the records of the meeting.

      Section 8.  CONDUCT OF MEETINGS AND BUSINESS.  The Board of Directors may
adopt such rules and regulations for the conduct of their meetings and the
management of the affairs of the Corporation as they may deem proper and not
inconsistent with applicable law, the Charter of the Corporation or these
By-Laws.

      Section 9.  QUORUM.  One-third of the entire Board of Directors but not
less than two directors shall constitute a quorum at any meeting of the Board
of Directors.  The action of a majority of Directors present at any meeting at
which a quorum is present shall be the action of the Board of Directors unless
the concurrence of a greater proportion is required for such action by statute,
the Charter of the Corporation, or these By-Laws.  In the absence of a quorum
at any meeting a majority of Directors present may adjourn the meeting from day
to day or for such longer periods as they may designate until a quorum shall be
present. Notice of any adjourned meeting need not be given other than by
announcement at the meeting.

      Section 10.  RESIGNATIONS.  Any Director of the Corporation may resign at
any time by written notice to the Chairman of the Board of Directors or to the
Secretary of the Corporation.  The resignation of any Director shall take
effect at the time specified therein or, if no time is specified, when received
by the Corporation.  Unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.

      Section 11.  REMOVAL.  At any meeting of Shareholders duly called for the
purpose, any Director may by the vote of a majority of all of the Shares
entitled to vote be removed from office.  At the same meeting, the vacancy in
the Board of Directors may be filled by the election of a Director to serve
until the next annual meeting of Shareholders and the election and
qualification of his successor.

      Section 12.  VACANCIES.  Except as otherwise provided by law, any vacancy
occurring in the Board of Directors for any cause other than by reason of an
increase in the number of Directors may be filled by a majority of the
remaining members of the Board of Directors although such majority is less than
a quorum and any vacancy occurring by reason of an increase in the number of
Directors may be filled by action of a majority of the entire Board of
Directors.  A Director elected by the Board to fill a vacancy shall be elected
to hold office until the next Annual Meeting of Shareholders and until his
successor is duly elected and qualifies.

      Section 13.  COMPENSATION OF DIRECTORS.  The Directors may receive
compensation for their services as Directors as determined by the Board of
Directors and expenses of attendance at each Meeting.  Nothing herein contained
shall be construed to preclude any Director from serving the Corporation in any
other capacity, as an Officer, Agent or otherwise, and receiving compensation
therefor.

      Section 14.  INFORMAL ACTION BY DIRECTORS.  Any action required or
permitted to be taken at any Annual, Regular or Special Meeting of the Board of
Directors may be taken without a meeting if a written consent to such action is
signed by all members of the Board and such written consent is filed with the
minutes of proceedings of the Board.

      Section 15.  TELEPHONE CONFERENCE.  Members of the Board of Directors or
any committee thereof may participate in a meeting of the Board or such
committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other at the same time and participation by such means shall constitute
presence in person at the meeting.

                                  ARTICLE III

                         EXECUTIVE AND OTHER COMMITTEES

      Section 1.  APPOINTMENT AND TERM OF OFFICE OF EXECUTIVE COMMITTEE.  The
Board of Directors may appoint an Executive Committee, which shall consist of
two (2) or more Directors.

      Section 2.  VACANCIES IN EXECUTIVE COMMITTEE.  Vacancies occurring in the
Executive Committee from any cause may be filled by the Board of Directors.

      Section 3.  EXECUTIVE COMMITTEE TO REPORT TO BOARD.  All action by the
Executive Committee shall be reported to the Board of Directors at its Meeting
next succeeding such action.

      Section 4.  PROCEDURE OF EXECUTIVE COMMITTEE.  The Executive Committee
shall fix its own rules of procedure not inconsistent with these By-Laws or
with any directions of the Board of Directors.  It shall meet at such times and
places and upon such notice as shall be provided by such rules or by resolution
of the Board of Directors.  The presence of a majority shall constitute a
quorum for the transaction of business, and in every case the affirmative vote
of a majority of the members of the Committee present shall be necessary for
the taking of any action.

      Section 5.  POWERS OF EXECUTIVE COMMITTEE.  During the intervals between
the Meetings of the Board of Directors the Executive Committee, except as
limited by law or by specific directions of the Board of Directors, shall
possess and may exercise all the powers of the Board of Directors in the
management and direction of the business and conduct of the affairs of the
Corporation.

      Section 6.  OTHER COMMITTEES.  From time to time the Board of Directors
may appoint any other Committee or Committees which shall have such powers as
shall be specified in the resolution of appointment and may be delegated by
law.

      Section 7.  COMPENSATION.  The members of any duly appointed Committee
shall receive such compensation as from time to time may be fixed by the Board
of Directors and reimbursement of expenses.

      Section 8.  INFORMAL ACTION BY EXECUTIVE COMMITTEE OR OTHER COMMITTEES.
Any action required or permitted to be taken at any meeting of the Executive
Committee or any other duly appointed Committee may be taken without a meeting
if written consent to such action is signed by all Members of such Committee
and such written consent is filed with the minutes of the proceedings of such
Committee.

      Section 9.  ADVISORY BOARD.  The Directors may appoint an Advisory Board
to consist in the first instance of not less than three (3) members.  Members
of such Advisory Board shall not be Directors or Officers and need not be
Shareholders.  Members of this Board shall hold office for such period as the
Directors may by resolution provide.  Any Member of such Board may resign
therefrom by written instrument signed by him which shall take effect upon
delivery to the Directors.  The Advisory Board shall have no legal powers and
shall not perform functions of Directors in any manner, said Board being
intended to act merely in an advisory capacity.  Such Advisory Board shall meet
at such times and upon such notice as the Board of Directors may by resolution
provide.  The compensation of the Members of the Advisory Board, if any, shall
be determined by the Board of Directors.


                                   ARTICLE IV

                                    OFFICERS

      Section 1.  GENERAL PROVISIONS.  The Officers of the Corporation shall be
a Chairman, a President, one or more Vice Presidents, a Treasurer, and a
Secretary.  The Board of Directors may elect or appoint other Officers or
agents, including one or more Assistant Vice Presidents, one or more Assistant
Secretaries and one or more Assistant Treasurers.  The same person may hold any
two offices except those of President and Vice President.

      Section 2.  ELECTION, TERM OF OFFICE AND QUALIFICATIONS.  The Officers
shall be elected annually by the Board of Directors at its Annual Meeting.
Each Officer shall hold office for one year and until the election and
qualification of his successor.  Any vacancy in any of the offices may be
filled for the unexpired portion of the term by the Board of Directors at any
Regular or Special Meeting of the Board.  The Board of Directors may elect or
appoint additional Officers or agents at any Regular or Special Meeting of the
Board.

      Section 3.  REMOVAL.  Any Officer elected by the Board of Directors may
be removed with or without cause at any time by the Board of Directors.  Any
other employee of the Corporation may be removed or dismissed at any time by
the President.

      Section 4.  RESIGNATIONS.  Any Officer may resign at any time by giving
written notice to the Board of Directors.  Any such resignation shall take
effect at the time specified therein or, if no time is specified, at the time
of receipt.  Unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.

      Section 5.  VACANCIES.  A vacancy in any Office because of death,
resignation, removal, disqualification or any other cause shall be filled for
the unexpired portion of the term in the manner prescribed in these By-Laws for
regular election or appointment to such Office.  See Amd. #11, dated 2/23/98.

      Section 6.  CHAIRMAN OF THE BOARD OF DIRECTORS.  The Chairman of the
Board of Directors, if there be a Chairman, shall preside at the meetings of
Shareholders and of the Board of Directors.  He shall receive such information
and reports as he may request from the Officers of the Corporation.  He shall
counsel and advise the President on matters of major importance.

      Section 7.  PRESIDENT.  The Chairman for Liberty Municipal Securities
Fund, Inc. shall be the chief executive officer of the Corporation.  He shall,
unless other provisions are made therefor by the Board or Executive Committee,
employ and define the duties of all employees of the Corporation, shall have
the power to discharge any such employees, shall exercise general supervision
over the affairs of the Corporation and shall perform such other duties as may
be assigned to him from time to time by the Board of Directors.  In the absence
of the Chairman of the Board of Directors, the President or an officer or
Director appointed by the President, shall preside at all meetings of
Shareholders.

      Section 8.  VICE PRESIDENT.  The Vice President (or if more than one, the
senior Vice President) in the absence of the President shall perform all duties
and may exercise any of the powers of the President subject to the control of
the Board.  Each Vice President shall perform such other duties as may be
assigned to him from time to time by the Board of Directors, the Executive
Committee, or the President.

      Section 9.  SECRETARY.  The Secretary shall keep or cause to be kept in
books provided for the purpose the Minutes of the Meetings of the Shareholders,
and of the Board of Directors; shall see that all Notices are duly given in
accordance with the provisions of these By-Laws and as required by Law; shall
be custodian of the records and of the Seal of the Corporation and see that the
Seal is affixed to all documents the execution of which on behalf of the
Corporation under its seal is duly authorized; shall keep directly or through a
transfer agent a register of the post office address of each Shareholder, and
make all proper changes in such register, retaining and filing his authority
for such entries; shall see that the books, reports, statements, certificates
and all other documents and records required by law are properly kept and
filed; and in general shall perform all duties incident to the Office of
Secretary and such other duties as may, from time to time, be assigned to him
by the Board of Directors, the Executive Committee, or the President.

      Section 10.  TREASURER.  The Treasurer shall have supervision of the
custody of all funds and securities of the Corporation, subject to applicable
law.  He shall perform such other duties as may be from time to time assigned
to him by the Board of Directors, the Executive Committee, or the President.

      Section 11.  ASSISTANT VICE PRESIDENT.  The Assistant Vice President or
Vice Presidents of the Corporation shall have such authority and perform such
duties as may be assigned to them by the Board of Directors, the Executive
Committee, or the President of the Corporation.

      Section 12.  ASSISTANT SECRETARIES AND ASSISTANT TREASURERS.  The
Assistant Secretary or Secretaries and the Assistant Treasurer or Treasurers
shall perform the duties of the Secretary and of the Treasurer respectively, in
the absence of those Officers and shall have such further powers and perform
such other duties as may be assigned to them respectively by the Board of
Directors or the Executive Committee or by the President.

      Section 13.  SALARIES.  The salaries of the Officers shall be fixed from
time to time by the Board of Directors.  No Officer shall be prevented from
receiving such salary by reason of the fact that he is also a Director of the
Corporation.

                                   ARTICLE V

                           SHARES AND THEIR TRANSFER

      Section 1.  CERTIFICATES.  All share certificates shall be signed by the
Chairman, the President, or any Vice President and by the Treasurer or
Secretary or any Assistant Treasurer or Assistant Secretary and may be sealed
with the seal of the Corporation.  The signatures may be either manual or
facsimile signatures and the seal may be either facsimile or any other form of
Seal.  Certificates for shares for which the Corporation has appointed an
independent Transfer Agent and Registrar shall not be valid unless
countersigned by such Transfer Agent and registered by such Registrar.  In case
any Officer who has signed any certificate ceases to be an Officer of the
Corporation before the certificate is issued, the certificate may nevertheless
be issued by the Corporation with the same effect as if the Officer had not
ceased to be such Officer as of the date of its issuance.  Share certificates
shall be in such form not inconsistent with law and these By-Laws as may be
determined by the Board of Directors.

      Section 2.  TRANSFER OF SHARES.  Shares of each Series and Class shall be
transferable on the books of the Corporation by the holder thereof in person or
by duly authorized attorney upon surrender of the certificate representing the
shares to be transferred properly endorsed.

      Section 3.  CLOSING OF TRANSFER BOOKS AND FIXING RECORD DATE.  The Board
of Directors may fix in advance a date as the record date for the purpose of
determining Shareholders of a Series or Class entitled to notice of or to vote
at any Meeting of Shareholders or Shareholders to receive payment of any
dividend.  Such date shall in any case not be more than 90 days and in case of
a Meeting of Shareholders not less than l0 days prior to the date on which the
particular action requiring such determination of Shareholders is to be taken.
Only Shareholders of record on the record date shall be entitled to notice of
and to vote at such meeting or to receive such dividends or rights, as the case
may be.  In lieu of fixing a record date the Board of Directors may provide
that the share transfer books of the Corporation shall be closed for a stated
period not to exceed in any case 20 days.  If the share transfer books are
closed for the purpose of determining Shareholders entitled to notice of or to
vote at a Meeting of Shareholders such books shall be closed for at least l0
days immediately preceding such meeting.

      Section 4.  LOST, DESTROYED OR MUTILATED CERTIFICATES.  In case any Share
certificate is lost, mutilated or destroyed the Board of Directors may issue a
new certificate in place thereof upon indemnity to the relevant Series or Class
against loss and upon such other terms and conditions as the Board may deem
advisable.

      Section 5.  TRANSFER AGENT AND REGISTRAR:  REGULATIONS.  The Board of
Directors shall have power and authority to make all such rules and regulations
as they may deem expedient concerning the issuance, transfer and registration
of Share certificates and may appoint a Transfer Agent and/or Registrar of
Share certificates of each Series or Class, and may require all such Share
certificates to bear the signature of such Transfer Agent and/or of such
Registrar.

                                   ARTICLE VI

                 AGREEMENTS, CHECKS, DRAFTS, ENDORSEMENTS, ETC.

      Section 1.  AGREEMENTS, ETC.  The Board of Directors or the Executive
Committee may authorize any Officer or Officers, or Agent or Agents of the
Corporation to enter into any Agreement or execute and deliver any instrument
in the name of the Corporation and such authority may be general or confined to
specific instances; and, unless so authorized by the Board of Directors or by
the Executive Committee or by these By-Laws, no Officer, Agent or Employee
shall have any power or authority to bind the Corporation by any Agreement or
engagement or to pledge its credit or to render it liable pecuniarily for any
purpose or to any amount.

      Section 2.  CHECKS, DRAFTS, ETC.  All checks, drafts, or orders for the
payment of money, notes and other evidences of indebtedness shall be signed by
such Officer or Officers, Employee or Employees, or Agent or Agents as shall be
from time to time designated by the Board of Directors or the Executive
Committee, or as may be specified in or pursuant to the agreement between the
Corporation on behalf of any Series or Class and the Bank or Trust Company
appointed as custodian.

      Section 3.  ENDORSEMENTS, ASSIGNMENTS AND TRANSFER OF SECURITIES.  All
endorsements, assignments, stock powers or other instruments of transfer of
securities standing in the name of the Corporation or its nominee or directions
for the transfer of securities belonging to the Corporation shall be made by
such Officer or Officers, Employee or Employees, or Agent or Agents as may be
authorized by the Board of Directors or the Executive Committee.

                                  ARTICLE VII

                               BOOKS AND RECORDS

      Section 1.  LOCATION.  The books and records of the Corporation,
including the Stock ledger or ledgers, may be kept in or outside the State of
Maryland at such office or agency of the Corporation as may be from time to
time determined by the Board of Directors.


                                  ARTICLE VIII

                                 MISCELLANEOUS

      Section 1.  SEAL.  The Seal of the Corporation shall consist of a
flat-faced die with the word "Maryland," together with the name of the
Corporation and the year of its organization cut or engraved thereon, but
unless otherwise required by the Directors, the Seal shall not be necessary to
be placed on, and its absence shall not impair the validity of, any document,
instrument or other paper executed and delivered by or on behalf of the
Corporation.

      Section 2.  FISCAL YEAR.  The Fiscal Year of the Corporation shall be
designated from time to time by the Board of Directors.

                                   ARTICLE IX


                                INDEMNIFICATION

      Section 1.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.  The Corporation
shall indemnify its directors to the fullest extent that indemnification of
directors is permitted by the Maryland General Corporation Law.  The
Corporation shall indemnify its officers to the same extent as its directors
and to such further extent as is consistent with law.  The Corporation shall
indemnify its directors and officers who while serving as directors or officers
also serve at the request of the Corporation as a director, officer, partner,
trustee, employee, agent or fiduciary of another corporation, partnership joint
venture, trust, other enterprise or employee benefit plan to the fullest extent
consistent with law.  The indemnification and other rights provided by this
Article shall continue as to a person who has ceased to be a director of
officer and shall inure to the benefit of the heirs, executors and
administrators of such a person.  This Article shall not protect any such
person against any liability to the Corporation or any Shareholder thereof to
which such person would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office ("disabling conduct").

      Section 2.  ADVANCES.  Any current or former director or officer of the
Corporation seeking indemnification within the scope of this Article shall be
entitled to advances from the Corporation for payment of the reasonable
expenses incurred by him in connection with the matter as to which he is
seeking indemnification in the manner and to fullest extent permissible under
the Maryland General Corporation Law.  The person seeking indemnification shall
provide to the Corporation a written affirmation of his good faith belief that
the standard of conduct necessary for indemnification by the Corporation has
been met and a written undertaking to repay any such advance if it should
ultimately be determined that the standard of conduct has not been met.  In
addition, at least one of the following additional conditions shall be met:
(a) the person seeking indemnification shall provide a security in form and
amount acceptable to the Corporation for his undertaking; (b) the Corporation
is insured against losses arising by reason of the advance, or (c) a majority
of a quorum of directors of the Corporation who are neither 'interested
persons' as defined in Section 2(a)(19) of the Investment Company Act of 1940,
as amended, nor parties to the proceeding ("disinterested non-party
directors"), or independent legal counsel, in a written opinion, shall be
determined, based on a review of facts readily available to the Corporation at
the time the advance is proposed to be made, that there is reason to believe
that the person seeking indemnification will ultimately be found to be entitled
to indemnification.

      Section 3.  PROCEDURE.  At the request of any person claiming
indemnification under this Article, the Board of Directors shall determine, or
cause to be determined, in a manner consistent with the Maryland General
Corporation Law, whether the standards required by this Article have been met.
Indemnification shall be made only following:  (a) a final decision on the
merits by a court or other body before whom the proceeding was brought that the
person to be indemnified was not liable by reason of disabling conduct or (b)
in the absence of such a decision, a reasonable determination, based upon a
review of the facts, that the person to be indemnified was not liable by reason
of disabling conduct by (i) the vote of a majority of a quorum of disinterested
non-party directors or (ii) an independent legal counsel in a written opinion.

      Section 4.  INDEMNIFICATION OF EMPLOYEES AND AGENTS.  Employees and
agents who are not officers or directors of the Corporation may be indemnified,
and reasonable expenses may be advanced to such employees or agents, as may be
provided by action of the Board of Directors or by contract, subject to any
limitations imposed by the Investment Company Act of 1940.

      Section 5.  OTHER RIGHTS.  The Board of Directors may make further
provisions consistent with law for indemnification and advance of expenses to
directors, officers, employees and agents by resolution, agreement or
otherwise.  The indemnification provided by this Article IX shall not be deemed
exclusive of any other right, with respect to indemnification or otherwise, to
which those seeking indemnification may be entitled under any insurance or
other agreement or resolution of Shareholders or disinterested directors or
otherwise.

      Section 6.  AMENDMENTS.  References in this Article are to the Maryland
General Corporation Law and to the Investment Company Act of 1940, as from time
to time amended.  No amendment of these By-Laws shall affect any right of any
person under this Article based on any event, omission or proceeding prior to
the amendment.

                                   ARTICLE X

                                   AMENDMENTS

      Section 1.  The Board of Directors shall have the power to alter, amend
or repeal any By-Laws of the Corporation and to make new By-Laws.

                   FEDERATED MUNICIPAL SECURITIES FUND, INC.

              (formerly: Liberty Municipal Securities Fund, Inc.)

                                 Amendment #11
                                 to the By-Laws

                         (effective February 23, 1998)


Delete Sections 1, 2, 3, 4 & 5 from Article IV, OFFICERS, and replace with the
following:

      Section 1.  GENERAL PROVISIONS.  The Officers of the Corporation
      shall be a President, one or more Vice Presidents, a Treasurer, and
      a Secretary.  The Board of Directors, in its discretion, may elect
      or appoint a Chairman of the Board of Directors and other Officers
      or agents, including one or more Assistant Vice Presidents, one or
      more Assistant Secretaries, and one or more Assistant Treasurers.
      A Vice President, the Secretary or the Treasurer may appoint an
      Assistant Vice President, an Assistant Secretary or an Assistant
      Treasurer, respectively, to serve until the next election of
      Officers.  Two or more offices may be held by a single person
      except the offices of President and Vice President may not be held
      by the same person concurrently.  It shall not be necessary for any
      Director or any Officer to be a holder of shares in any Series or
      Class of the Corporation.

      Section 2.  ELECTION, TERM OF OFFICE AND QUALIFICATIONS.  The
      Officers shall be elected annually by the Board of Directors at its
      Annual Meeting.  Each Officer shall hold office for one year and
      until the election and qualification of his successor, or until
      earlier resignation or removal.  The Chairman of the Board of
      Directors, if there is one, shall be elected annually by and from
      the Directors, and serve until a successor is so elected and
      qualified, or until earlier resignation or removal.

      Section 3.  REMOVAL.  Any Officer elected by the Board of Directors
      or whose appointment has been ratified by the Board of Directors
      may be removed with or without cause at any time by a majority vote
      of all of the Directors.  Any other employee of the Corporation may
      be removed or dismissed at any time by the President.

      Section 4.  RESIGNATIONS.  Any Officer may resign at any time by
      giving written notice to the Board of Directors.  Any such
      resignation shall take effect at the time specified therein or, if
      no time is specified, at the time of receipt.  Unless otherwise
      specified , the acceptance of such resignation shall not be
      necessary to make it effective.

      Section 5.  VACANCIES.  Any vacancy in any of the offices, whether
      by resignation, removal or otherwise, may be filled for the
      unexpired portion of the term by the President.  A vacancy in the
      office of Assistant Vice President may be filled by a Vice
      President; in the office of by the Secretary; or in the office of
      Assistant Treasurer by the Treasurer.  Any appointment to fill any
      vacancy shall serve subject to ratification by the Board of
      Directors at its next Regular Meeting.

                   Federated Municipal Securities Fund, Inc.

                                 Amendment #12
                                 to the By-Laws

                         (effective February 27, 1998)


Delete Section 7 Proxies of Article I, Meetings of Shareholders, and replace
with the following:


      Section 7.  PROXIES.  Any Shareholder entitled to vote at any
      meeting of Shareholders may vote either in person or by proxy, but
      no proxy which is dated more than eleven months before the meeting
      named therein shall be accepted unless otherwise provided in the
      proxy.  Every proxy shall be in writing and signed by the
      Shareholder or his duly authorized agent or be in such other form
      as may be permitted by the Maryland General Corporation Law,
      including electronic transmissions from the shareholder or his
      authorized agent.  Authorization may be given orally, in writing,
      by telephone, or by other means of communication.  A copy,
      facsimile transmission or other reproduction of the writing or
      transmission may be substituted for the original writing or
      transmission for any purpose for which the original transmission
      could be used.  Every proxy shall be dated, but need not be sealed,
      witnessed or acknowledged.  Where Shares are held of record by more
      than one person, any co-owner or co-fiduciary may appoint a proxy
      holder, unless the Secretary of the Corporation is notified in
      writing by any co-owner or co-fiduciary that the joinder of more
      than one is to be required.  All proxies shall be filed with and
      verified by the Secretary or an Assistant Secretary of the
      Corporation, or the person acting as Secretary of the Meeting.
      Unless otherwise specifically limited by their term, all proxies
      shall entitle the holders thereof to vote at any adjournment of
      such meeting but shall not be valid after the final adjournment of
      such meeting.



                 Federated Municipal Securities Fund, Inc.

                               Amendment #13
                              to the By-Laws

                         (effective May 12, 1998)



Strike Section 3 - Place of Meetings from Article I - Meeting of Shareholder
and replace it with the following:

      Section 3.  PLACE OF MEETINGS.  All meetings of the Shareholders of
      the Corporation or a particular Series or Class, shall be held at
      such place within or without the State of Maryland as may be fixed
      by the Board of Directors.

EX-99.DISTRIBK

                                          Exhibit (e)(ii) under Form N-1A
                                          Exhibit (1) under Item 601/Reg.
S-K


                                 Exhibit A
                                  to the
                          Distributor's Contract

                  Liberty Municipal Securities Fund, Inc.

                              Class A Shares


     In consideration of the mutual covenants set forth in the
Distributor's Contract dated March 1, 1993, between Liberty Municipal
Securities Fund, Inc. and Federated Securities Corp., Liberty Municipal
Securities Fund, Inc. executes and delivers this Exhibit on behalf of the
Funds, and with respect to the Class of Shares thereof, first set forth in
this Exhibit.


     Witness the due execution hereof this 1st day of March, 1993.



ATTEST:                             LIBERTY MUNICIPAL SECURITIES
                                               FUND, INC.



/s/ John W. McGonigle               By: /s/J. Christopher Donahue
- -----------------------------          ------------------------------
                     Secretary                               President
(SEAL)

ATTEST:                             FEDERATED SECURITIES CORP.


/s/ S. Elliott Cohan                By: /s/ John A. Staley, IV
- -----------------------------          ------------------------------
                     Secretary                 Executive Vice President
(SEAL)

EX-99.DISTRIBK

                                  -1-
                                          Exhibit (e)(iii) under Form
N-1A
                                          Exhibit (1) under Item
601/Reg. S-K

                               Exhibit B
                                 to the
                         Distributor's Contract

                LIBERTY MUNICIPAL SECURITIES FUND, INC.

                             Class C Shares

      The following provisions are hereby incorporated and made part of
the Distributor's Contract dated the 1st day of March, 1993, between
Liberty Municipal Securities Fund, Inc. and Federated Securities Corp.
with respect to Class of the Fund set forth above.

      1.    The Corporation hereby appoints FSC to engage in activities
principally intended to result in the sale of shares of the
above-listed Classes ("Shares").  Pursuant to this appointment, FSC is
authorized to select a group of brokers ("Brokers") to sell Shares at
the current offering price thereof as described and set forth in the
respective prospectuses of the Corporation, and to render
administrative support services to the Corporation and its
shareholders.  In addition, FSC is authorized to select a group of
administrators ("Administrators") to render administrative support
services to the Corporation and its shareholders.

      2.    Administrative support services may include, but are not
limited to, the following functions:  1) account openings:  the Broker
or Administrator communicates account openings via computer terminals
located on the Broker's or Administrator's premises; 2) account
closings:  the Broker or Administrator communicates account closings
via computer terminals; 3) enter purchase transactions:  purchase
transactions are entered through the Broker's or Administrator's own
personal computer or through the use of a toll-free telephone number;
4) enter redemption transactions:  Broker or Administrator enters
redemption transactions in the same manner as purchases; 5) account
maintenance:  Broker or Administrator provides or arranges to provide
accounting support for all transactions.  Broker or Administrator also
wires funds and receives funds for Corporation share purchases and
redemptions, confirms and reconciles all transactions, reviews the
activity in the Corporation's accounts, and provides training and
supervision of its personnel; 6) interest posting:  Broker or
Administrator posts and reinvests dividends to the Corporation's
accounts; 7) prospectus and shareholder reports:  Broker or
Administrator maintains and distributes current copies of prospectuses
and shareholder reports; 8) advertisements:  the Broker or
Administrator continuously advertises the availability of its services
and products; 9) customer lists:  the Broker or Administrator
continuously provides names of potential customers; 10) design
services:  the Broker or Administrator continuously designs material to
send to customers and develops methods of making such materials
accessible to customers; and 11) consultation services:  the Broker or
Administrator continuously provides information about the product needs
of customers.

      3.    During the term of this Agreement, the Corporation will pay
FSC for services pursuant to this Agreement, a monthly fee computed at
the annual rate of  .75 of 1% of the average aggregate net asset value
of the shares of the Class C Shares held during the month.  For the
month in which this Agreement becomes effective or terminates, there
shall be an appropriate proration of any fee payable on the basis of
the number of days that the Agreement is in effect during the month.

      4.    FSC may from time-to-time and for such periods as it deems
appropriate reduce its compensation to the extent any Classes' expenses
exceed such lower expense limitation as FSC may, by notice to the
Corporation, voluntarily declare to be effective.

       5.   FSC will enter into separate written agreements with
various firms to provide certain of the services set forth in Paragraph
1 herein.  FSC, in its sole discretion, may pay Brokers and
Administrators a periodic fee in respect of Shares owned from time to
time by their clients or customers.  The schedules of such fees and the
basis upon which such fees will be paid shall be determined from time
to time by FSC in its sole discretion.

      6.    FSC will prepare reports to the Board of Directors of the
Corporation on a quarterly basis showing amounts expended hereunder
including amounts paid to Brokers and Administrators and the purpose
for such payments.


      In consideration of the mutual covenants set forth in the
Distributor's Contract dated March 1, 1993, between Liberty Municipal
Securities Fund, Inc. and Federated Securities Corp., Liberty Municipal
Securities Fund, Inc. executes and delivers this Exhibit on behalf of
the Funds, and with respect to the Class of Shares thereof, first set
forth in this Exhibit.

      Witness the due execution hereof this 4th day of May, 1993.


ATTEST:                             LIBERTY MUNICIPAL SECURITIES
                                               FUND, INC.



/s/ John W. McGonigle               By: /s/J. Christopher Donahue
- -----------------------------          ------------------------------
                     Secretary                               President
(SEAL)

ATTEST:                             FEDERATED SECURITIES CORP.


/s/ S. Elliott Cohan                By: /s/ John A. Staley, IV
- -----------------------------          ------------------------------
                     Secretary                 Executive Vice President
(SEAL)

EX-99.AUDITCONSENT

                                        Exhibit (j) under Form N-1A
                                                               Exhibit
(23) under Item 601/Reg. S-K

           Consent of Ernst & Young LLP, Independent Auditors


We consent to the  references  to our firm under the caption  "Financial
Highlights"  in  the  Prospectus,  and  "Independent  Auditors"  in  the
Statement of Additional  Information  and to the use of our report dated
May  15,  2001,  in  the  Post-Effective  Amendment  Number  56  to  the
Registration   Statement  (Form  N-1A  No.  2-57181)  of  the  Federated
Municipal Securities Fund, Inc. dated May 31, 2001.



                                                /s/ Ernst & Young LLP
                                                ERNST & YOUNG LLP


Boston, Massachusetts
May 24, 2001

EX-99.12B1PLAN

                                          Exhibit (m) (ii) under Form N-1A
                                          Exhibit (1) under Item 601/Reg. S-K

                                       EXHIBIT A
                                         to the
                                       12b-1 Plan

                        LIBERTY MUNICIPAL SECURITIES FUND, INC.

                                     Class C Shares


     This Plan is  adopted by  Liberty  Municipal  Securities  Fund,  Inc.  with
respect to the Class of Shares of the Corporation set forth above.

     In compensation for the services  provided  pursuant to this Plan, FSC will
be paid a monthly  fee  computed  at the annual rate of .75 of 1% of the average
aggregate net asset value of the Class C Shares of Liberty Municipal  Securities
Fund, Inc. held during the month.

      Witness the due execution hereof this 4th day of May, 1993.


                                    LIBERTY MUNICIPAL SECURITIES
                                              FUND, INC.


                                    By: /s/ J. Christopher Donahue
                                       -------------------------------
                                                            President