FEDERATED GOVERNMENT INCOME SECURITIES, INC.
SUPPLEMENT TO PROSPECTUS DATED APRIL 30, 1999
I. At a special meeting of shareholders to be held on November 30, 1999,
shareholders of the above-named Fund will be asked to vote on the
changes described below. If approved by shareholders, these changes will
take effect on or after December 1, 1999. Shareholders will be notified
if any of these changes are not approved at the special meeting or any
adjournment thereof. Please keep this supplement for your records.
Shareholders will be asked to consider the following proposals:
(1) To elect five Directors.
(2) To make changes to the fundamental investment policies of the Fund:
(a) To amend the Fund's fundamental investment policy regarding
borrowing money and issuing senior securities to read as follows:
"The Fund may borrow money, directly or indirectly, and
issue senior securities to the maximum extent permitted under the 1940 Act."
(b) To amend the Fund's fundamental investment policy regarding
investments in real estate to read as follows:
"The Fund may not purchase or sell real estate, provided
that this restriction does not prevent the Fund from
investing in issuers which invest, deal, or otherwise
engage in transactions in real estate or interests
therein, or investing in securities that are secured by
real estate or interests therein. The Fund may exercise
its rights under agreements relating to such securities,
including the right to enforce security interests and to
hold real estate acquired by reason of such enforcement
until that real estate can be liquidated in an orderly
manner."
(c) To amend the Fund's fundamental investment policy regarding
investments in commodities to read as follows:
"The Fund may not purchase or sell physical commodities,
provided that the Fund may purchase securities of companies that deal in
commodities."
(d) To amend the Fund's fundamental investment policy regarding
underwriting securities to read as follows:
"The Fund may not underwrite the securities of other
issuers, except that the Fund may engage in transactions
involving the acquisition, disposition or resale of its
portfolio securities, under circumstances where it may be
considered to be an underwriter under the Securities Act
of 1933."
(e) To amend the Fund's fundamental investment policy regarding
lending by the Fund to read as follows:
"The Fund may not make loans, provided that this
restriction does not prevent the Fund from purchasing debt
obligations, entering into repurchase agreements, lending
its assets to broker/dealers or institutional investors
and investing in loans, including assignments and
participation interests."
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(f) To amend, and to make non-fundamental, the Fund's fundamental
investment policy regarding buying securities on margin to read as follows:
"The Fund will not purchase securities on margin, provided
that the Fund may obtain short-term credits necessary for
the clearance of purchases and sales of securities, and
further provided that the Fund may make margin deposits in
connection with its use of financial options and futures,
forward and spot currency contracts, swap transactions and
other financial contracts or derivative instruments."
(g) To amend, and to make non-fundamental, the Fund's fundamental
investment policy regarding pledging assets to read as follows:
"The Fund will not mortgage, pledge, or hypothecate any of
its assets, provided that this shall not apply to the
transfer of securities in connection with any permissible
borrowing or to collateral arrangements in connection with
permissible activities."
(h) To amend, and to make non-fundamental, the Fund's fundamental
investment policy regarding investing in restricted securities to read as
follows:
"The Fund may invest in restricted securities. Restricted
securities are any securities in which the Fund may invest
pursuant to its investment objective and policies but
which are subject to restrictions on resale under federal
securities law. Under criteria established by the
Directors, certain restricted securities are determined to
be liquid. To the extent that restricted securities are
not determined to be liquid, the Fund will limit their
purchase, together with other illiquid securities, to 15%
of its net assets."
(3) To eliminate the Fund's fundamental investment policy regarding
selling securities short.
II. The following actions have been taken by the Board of Directors with regard
to certain non-fundamental investment policies and limitations of the Fund:
(1) Approved the elimination of the Fund's non-fundamental investment
policy regarding writing call options and purchasing put options.
(2) Approved the elimination of the following undertakings for the Fund:
"The Fund did not engage in reverse repurchase agreements or
borrow money in excess of 5% of the value of its total assets
during the last fiscal year, and has no present intent to do so
in the coming fiscal year."
(3) Approved revisions to the Fund's non-fundamental investment
policy regarding investments in illiquid securities to read as
follows:
"The Fund will not purchase securities for which there is no
readily available market, or enter into repurchase agreements or
purchase time deposits maturing in more than seven days, if
immediately after and as a result, the value of such securities
would exceed, in the aggregate, 15% of the Fund's net assets."
<PAGE>
(4) Approved the adoption of the following non-fundamental investment
limitation for the Fund when applying its commodities restriction:
"As a matter of non-fundamental policy, for purposes of the
commodities policy, 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."
October 6, 1999
Federated Investors
Federated Securities Corp., Distributor
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Cusip 313912107
Cusip 313912206
Cusip 313912305
Cusip 313912404
G02719-02
