Financial Astrology of Federated Investors, Inc.

FINANCIAL ASTROLOGY

First Trade Date for Federated Investors, Inc.

Company Name	First Trade Date (yyyy-mm-dd)
Federated Investors, Inc.	1998-05-14

Company Name	Symbol
Federated Investors, Inc.	FII
History and Business of Company (this information may include date of incorporation)
Federated Investors, Inc., a Pennsylvania corporation, together with its consolidated subsidiaries (collectively, "Federated"), is a leading provider of investment management products and related financial services. Federated has been in the asset management business since 1955 and is one of the largest mutual fund managers in the United States with $197.9 billion in assets under management at December 31, 2003. Federated sponsors, markets and provides investment-related services to various investment products, including mutual funds and separately managed accounts. Federated's principal source of revenue is investment advisory fee income earned by various subsidiaries of Federated pursuant to investment advisory contracts with the investment products. These subsidiaries are registered as investment advisers under the Investment Advisers Act of 1940. Investment advisers are compensated for their services in the form of investment advisory fees based upon the net assets of the fund or separately managed account. Federated provided investment advisory services to 136 Federated-sponsored funds as of December 31, 2003. Federated markets these funds to banks, broker/dealers and other financial intermediaries who use them to meet the needs of their customers, including retail investors, corporations and retirement plans. The funds sponsored by Federated are domiciled in the U.S., with the exception of Federated International Funds Plc and Federated Unit Trust, which are domiciled in Dublin, Ireland. Federated's U.S.-domiciled funds (with the exception of a collective investment trust) are registered under the Investment Company Act of 1940 ("Investment Company Act") and under applicable federal and state laws. Each of the funds enters into an advisory agreement that is subject to annual approval by the fund directors or trustees, including a majority of the directors who are not "interested persons" of the funds or Federated as defined under the Investment Company Act. In general, amendments to such advisory agreements must be approved by the funds' shareholders. A significant portion of Federated's revenue is derived from these advisory agreements, which generally are terminable upon 60 days notice. Of the 136 mutual funds sponsored by Federated (the "Federated Funds"), Federated's investment advisory subsidiaries managed 52 money market funds (and cash equivalents) totaling $128.9 billion in assets, 48 fixed-income funds with $24.0 billion in assets and 36 equity funds with $22.8 billion in assets. Appendix "A" hereto lists all of these funds, including asset levels and dates of inception. As of December 31, 2003, Federated provided investment advisory services to $22.2 billion in separately managed account assets. These separate accounts (together with the Federated Funds, "Managed Assets") represented assets from government entities, pension and other employee benefit plans, corporations, trusts, foundations, endowments, mutual funds sponsored by third parties, and other investors. Fees for separate accounts are typically based on the value of assets under management pursuant to investment advisory agreements that may be terminated at any time. Certain funds sponsored by Federated have adopted distribution plans that, subject to applicable law, provide for payment to Federated for marketing expenses, including sales commissions paid to broker/dealers. These distribution plans are implemented through a distribution agreement between Federated and each respective fund. Although the specific terms of each such agreement vary, the basic terms of the agreements are similar. Pursuant to the agreements, Federated acts as underwriter for the funds and distributes shares of the funds primarily through unaffiliated dealers. Each distribution plan and agreement is initially approved by the directors or trustees of the respective fund and is reviewed for approval annually. Federated also provides a broad range of services to support the operation, administration and distribution of Federated-sponsored funds. These services, for which Federated receives fees pursuant to agreements with the Federated Funds, include administrative services, transfer agency services, shareholder servicing, accounting and general support. Effective January 1, 2004, Federated is no longer responsible for providing accounting services to the Federated-sponsored funds. Rather the funds began contracting directly with an independent third-party provider of portfolio accounting services. As a result, beginning in 2004, Federated no longer recognizes revenue or third-party expenses in the Consolidated Statements of Income for portfolio accounting services provided to the Federated-sponsored funds. In addition, on February 3, 2004, Federated announced its intent to outsource its transfer agency function to an independent third-party provider of these services by June 30, 2004. Negotiations are in the preliminary stages and, as such, management cannot reasonably estimate the total impact this transaction will have on Federated's results of operations or financial condition.

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