10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 ____________________________________________________

FORM 10-Q

____________________________________________________

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number 001-14818

___________________________________________________

Federated Investors, Inc.

(Exact name of registrant as specified in its charter)

____________________________________________________

Pennsylvania	25-1111467
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Federated Investors Tower Pittsburgh, Pennsylvania	15222-3779
(Address of principal executive offices)	(Zip Code)

(Registrant’s telephone number, including area code) 412-288-1900

 ___________________________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  o.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o    No  x.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the last practicable date: As of April 25, 2016, the Registrant had outstanding 9,000 shares of Class A Common Stock and 103,975,987 shares of Class B Common Stock.

Table of Contents

Part I. Financial Information
	Item 1.	Financial Statements
		Consolidated Balance Sheets	3
		Consolidated Statements of Income	4
		Consolidated Statements of Comprehensive Income	5
		Consolidated Statements of Changes in Equity	6
		Consolidated Statements of Cash Flows	7
		Notes to the Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
	Item 4.	Controls and Procedures	36
Part II. Other Information
	Item 1	Legal Proceedings	37
	Item 1A.	Risk Factors	37
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
	Item 5.	Other Information	37
	Item 6.	Exhibits	39
Signatures			40

Special Note Regarding Forward-Looking Information

Certain statements in this report on Form 10-Q constitute forward-looking statements, which involve known and unknown risks, uncertainties, and other factors that may cause the actual results, levels of activity, performance or achievements of Federated Investors, Inc. and its consolidated subsidiaries (Federated), or industry results, to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are typically identified by words or phrases such as "trend," "potential," "opportunity," "believe," "expect," "anticipate," "current," "intention," "estimate," "position," "projection," "assume," "continue," "remain," "maintain," "sustain," "seek," "achieve," and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "may" and similar expressions. Among other forward-looking statements, such statements include certain statements relating to: asset flows, levels and mix; business mix; sources and levels of revenues, expenses, gains, losses, income and earnings; obligations to make additional contingent or other payments pursuant to acquisition agreements or employment agreements; business and market expansion opportunities; debt, future cash needs and cash flows; uses of treasury stock; legal proceedings; the timing and impact of increased laws, regulations and rules, including potential, proposed and final rules by U.S. and foreign regulators and other authorities; the components and level of, and prospect for distribution-related expenses; classification and consolidation of investments; the ability to raise additional capital; availability of officers; management's assessments, beliefs, expectations, assumptions, projections or estimates, including regarding fee rates, the level, degree, continuance, recovery and impact of fee waivers and reimbursements or assumptions of expenses (fee waivers), the effect, and degree of impact, of changes in customer relationships, the level, timing, degree and impact of changes in interest rates, yields or asset levels or mix, legal proceedings, the timing, impact, effects and other consequences of potential, proposed and final laws, regulations and other rules, borrowing, taxes, product and strategy demand, investor preferences, performance, product development and restructuring options and initiatives, including the plans for and timing of such options and initiatives, compliance, and related legal, compliance and other professional services expenses, interest payments or expenses, dedication of resources, indebtedness and certain investments, impairments, recovery of losses, and liquidity; future principal uses of cash; performance indicators; the adoption and impact of accounting policies, new accounting pronouncements and accounting treatment determinations; interest rate, concentration, market and other risks; guarantee and indemnification obligations; and various items set forth under Item 1A - Risk Factors included in Federated's Annual Report on Form 10-K for the year ended December 31, 2015. Among other risks and uncertainties, market conditions may change significantly resulting in changes to Federated's asset flows, asset levels, asset mix and business mix, which may cause a decline in revenues and net income, result in impairments and increase the amount of fee waivers incurred by Federated. The obligation to make contingent payments is based on net revenue levels and will be affected by the achievement of such levels, and the obligation to make additional payments pursuant to employment arrangements is based on satisfaction of certain conditions set forth in those arrangements. Future cash needs, cash flows and future uses of cash will be impacted by a variety of factors, including the number and size of any acquisitions, Federated's success in developing, structuring and distributing its products and strategies, potential changes in assets under management and/or changes in the terms of distribution and shareholder services contracts with intermediaries who offer Federated's products to customers, and potential increased legal, compliance and other professional services expenses stemming from additional regulation or the dedication of such resources to other initiatives. Federated's risks and uncertainties also include liquidity and credit risks in Federated's money market funds and revenue risk, which will be affected by yield levels in money market fund products, changes in fair values of assets under management, investor preferences and confidence, and the ability of Federated to collect fees in connection with the management of such products. Many of these factors may be more likely to occur as a result of the increased scrutiny of the mutual fund industry by domestic or foreign regulators, and any recent or ongoing disruption in global financial markets. As a result, no assurance can be given as to future results, levels of activity, performance or achievements, and neither Federated nor any other person assumes responsibility for the accuracy and completeness of such statements in the future. For more information on these items and additional risks that may impact the forward-looking statements, see Item 1A - Risk Factors included in Federated's Annual Report on Form 10-K for the year ended December 31, 2015.

Part I. Financial Information

Item 1. Financial Statements

Consolidated Balance Sheets

(dollars in thousands)

(unaudited)

	March 31, 2016			December 31, 2015
ASSETS
Current Assets
Cash and cash equivalents	$	147,762		$	172,628
Investments—affiliates	131,980			141,748
Investments—consolidated investment companies	55,133			25,368
Investments—other	7,143			7,071
Receivables, net of reserve of $1 and $59, respectively	41,396			33,524
Prepaid expenses	10,996			10,722
Other current assets	4,180			4,767
Total current assets	398,590			395,828
Long-Term Assets
Goodwill	659,315			659,315
Renewable investment advisory contracts	70,582			70,582
Other intangible assets, net of accumulated amortization of $21,420 and $21,116, respectively	4,291			4,595
Property and equipment, net of accumulated depreciation of $57,924 and $56,034, respectively	37,417			35,743
Other long-term assets	20,419			21,140
Total long-term assets	792,024			791,375
Total assets	$	1,190,614		$	1,187,203
LIABILITIES
Current Liabilities
Short-term debt	$	25,500		$	25,500
Accounts payable and accrued expenses	52,974			43,551
Accrued compensation and benefits	27,435			75,691
Other current liabilities	25,717			14,466
Total current liabilities	131,626			159,208
Long-Term Liabilities
Long-term debt	184,875			191,250
Long-term deferred tax liability, net	168,192			158,895
Other long-term liabilities	17,191			20,144
Total long-term liabilities	370,258			370,289
Total liabilities	501,884			529,497
Commitments and contingencies (Note (12))
TEMPORARY EQUITY
Redeemable noncontrolling interest in subsidiaries	25,905			8,734
PERMANENT EQUITY
Federated Investors, Inc. shareholders’ equity
Common stock:
Class A, no par value, 20,000 shares authorized, 9,000 shares issued and outstanding	189			189
Class B, no par value, 900,000,000 shares authorized, 109,505,456 shares issued	305,812			298,390
Retained earnings	552,263			545,785
Treasury stock, at cost, 5,469,469 and 5,411,429 shares Class B common stock, respectively	(193,700		)	(191,939		)
Accumulated other comprehensive loss, net of tax	(3,182		)	(4,609		)
Total Federated Investors, Inc. shareholders’ equity	661,382			647,816
Nonredeemable noncontrolling interest in subsidiary	1,443			1,156
Total permanent equity	662,825			648,972
Total liabilities, temporary equity and permanent equity	$	1,190,614		$	1,187,203

(The accompanying notes are an integral part of these Consolidated Financial Statements.)

3

Consolidated Statements of Income

(dollars in thousands, except per share data)

(unaudited)

	Three Months Ended
	March 31,
	2016			2015
Revenue
Investment advisory fees, net—affiliates	$	154,777		$	122,035
Investment advisory fees, net—other	27,070			24,524
Administrative service fees, net—affiliates	53,473			53,017
Other service fees, net—affiliates	34,697			18,720
Other service fees, net—other	1,201			1,067
Other, net	891			1,159
Total revenue	272,109			220,522
Operating Expenses
Distribution	88,381			53,495
Compensation and related	76,770			76,498
Professional service fees	8,881			7,882
Systems and communications	7,865			6,870
Office and occupancy	6,888			6,853
Advertising and promotional	3,442			3,471
Travel and related	2,906			2,759
Other	2,421			3,656
Total operating expenses	197,554			161,484
Operating income	74,555			59,038
Nonoperating Income (Expenses)
Investment income, net	1,573			1,144
Gain (loss) on securities, net	1,091			(254		)
Debt expense	(1,059		)	(1,373		)
Other, net	(5		)	(13		)
Total nonoperating income (expenses), net	1,600			(496		)
Income before income taxes	76,155			58,542
Income tax provision	27,381			22,124
Net income including the noncontrolling interests in subsidiaries	48,774			36,418
Less: Net income attributable to the noncontrolling interests in subsidiaries	3,516			111
Net income	$	45,258		$	36,307
Amounts Attributable to Federated Investors, Inc.
Earnings per common share—Basic and Diluted	$	0.44		$	0.35
Cash dividends per share	$	0.25		$	0.25

(The accompanying notes are an integral part of these Consolidated Financial Statements.)

4

Consolidated Statements of Comprehensive Income

(dollars in thousands)

(unaudited)

	Three Months Ended
	March 31,
	2016		2015
Net income including the noncontrolling interests in subsidiaries	$	48,774	$	36,418
Other comprehensive income, net of tax
Permanent equity
Unrealized gain on interest rate swap	0		42
Reclassification adjustment related to interest rate swap	0		227
Unrealized gain on securities available for sale	577		687
Reclassification adjustment related to securities available for sale	824		0
Foreign currency items	26		(440		)
Temporary equity
Foreign currency translation gain	6		0
Other comprehensive income	1,433		516
Comprehensive income including the noncontrolling interests in subsidiaries	50,207		36,934
Less: Comprehensive income (loss) attributable to redeemable noncontrolling interest in subsidiaries	1,021		(85		)
Less: Comprehensive income attributable to nonredeemable noncontrolling interest in subsidiary	2,501		196
Comprehensive income attributable to Federated Investors, Inc.	$	46,685	$	36,823

(The accompanying notes are an integral part of these Consolidated Financial Statements.)

5

Consolidated Statements of Changes in Equity

(dollars in thousands)

(unaudited)

	Federated Investors, Inc. Shareholders' Equity
	Common Stock		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Loss, Net of Tax			Total Shareholders’ Equity			Nonredeemable Noncontrolling Interest in Subsidiary			Total Permanent Equity			Redeemable Noncontrolling Interest in Subsidiaries/ Temporary Equity
Balance at December 31, 2014	$	271,020	$	505,394		$	(165,258	)	$	(1,662	)	$	609,494		$	158		$	609,652		$	3,697
Net income (loss)	0		36,307			0			0			36,307			196			36,503			(85		)
Other comprehensive income, net of tax	0		0			0			516			516			0			516			0
Subscriptions—redeemable noncontrolling interest holders	0		0			0			0			0			0			0			5,785
Stock award activity	9,825		(12,209		)	12,291			0			9,907			0			9,907			0
Dividends declared	0		(26,202		)	0			0			(26,202		)	0			(26,202		)	0
Distributions to noncontrolling interest in subsidiaries	0		0			0			0			0			0			0			(815		)
Purchase of treasury stock	0		0			(9,948		)	0			(9,948		)	0			(9,948		)	0
Balance at March 31, 2015	$	280,845	$	503,290		$	(162,915	)	$	(1,146	)	$	620,074		$	354		$	620,428		$	8,582
Balance at December 31, 2015	$	298,579	$	545,785		$	(191,939	)	$	(4,609	)	$	647,816		$	1,156		$	648,972		$	8,734
Adoption of new accounting pronouncement	0		(831		)	0			831			0			0			0			14,850
Net income	0		45,258			0			0			45,258			2,501			47,759			1,015
Other comprehensive income, net of tax	0		0			0			596			596			0			596			6
Subscriptions—redeemable noncontrolling interest holders	0		0			0			0			0			0			0			5,431
Stock award activity	7,422		(11,959		)	11,959			0			7,422			0			7,422			0
Dividends declared	0		(25,990		)	0			0			(25,990		)	0			(25,990		)	0
Distributions to noncontrolling interest in subsidiaries	0		0			0			0			0			(2,214		)	(2,214		)	(4,131		)
Purchase of treasury stock	0		0			(13,720		)	0			(13,720		)	0			(13,720		)	0
Balance at March 31, 2016	$	306,001	$	552,263		$	(193,700	)	$	(3,182	)	$	661,382		$	1,443		$	662,825		$	25,905

(The accompanying notes are an integral part of these Consolidated Financial Statements.)

6

Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)

	Three Months Ended
	March 31,
	2016			2015
Operating Activities
Net income including the noncontrolling interests in subsidiaries	$	48,774		$	36,418
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities
Amortization of deferred sales commissions	2,904			4,018
Depreciation and other amortization	2,351			2,507
Share-based compensation expense	7,236			6,901
Loss on disposal of assets	1,174			551
Provision for deferred income taxes	9,270			8,415
Adoption of new accounting pronouncement	(2,653		)	0
Net purchases of trading securities	(2,831		)	(3,950		)
Deferred sales commissions paid	(3,012		)	(4,448		)
Contingent deferred sales charges received	578			549
Other changes in assets and liabilities:
Increase in receivables, net	(7,454		)	(646		)
(Increase) decrease in prepaid expenses and other assets	(1,750		)	1,574
Decrease in accounts payable and accrued expenses	(41,722		)	(46,854		)
Increase in other liabilities	12,780			9,628
Net cash provided by operating activities	25,645			14,663
Investing Activities
Purchases of securities available for sale	(823		)	(943		)
Proceeds from redemptions of securities available for sale	50			0
Cash paid for property and equipment	(3,257		)	(1,008		)
Net cash used by investing activities	(4,030		)	(1,951		)
Financing Activities
Dividends paid	(25,990		)	(26,202		)
Purchases of treasury stock	(13,728		)	(10,276		)
Distributions to noncontrolling interest in subsidiaries	(6,345		)	(815		)
Contributions from noncontrolling interest in subsidiaries	5,431			5,785
Proceeds from shareholders for share-based compensation	0			81
Excess tax benefits from share-based compensation	596			1,656
Cash paid for business acquisitions	(70		)	0
Payments on debt	(6,375		)	(6,375		)
Net cash used by financing activities	(46,481		)	(36,146		)
Net decrease in cash and cash equivalents	(24,866		)	(23,434		)
Cash and cash equivalents, beginning of period	172,628			115,267
Cash and cash equivalents, end of period	$	147,762		$	91,833

(The accompanying notes are an integral part of these Consolidated Financial Statements.)

7

Notes to the Consolidated Financial Statements

(unaudited)

(1)Basis of Presentation

The interim Consolidated Financial Statements of Federated Investors, Inc. and its consolidated subsidiaries (collectively, Federated) included herein have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). In the opinion of management, the financial statements reflect all adjustments that are of a normal recurring nature and necessary for a fair presentation of the results for the interim periods presented.

In preparing the financial statements, management is required to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results may differ from those estimates, and such differences may be material to the Consolidated Financial Statements.

These financial statements should be read in conjunction with Federated's Annual Report on Form 10-K for the year ended December 31, 2015. Certain items previously reported have been reclassified to conform with the current period's presentation.

(2)Recent Accounting Pronouncements

(a)Recently Adopted Accounting Guidance

Consolidation

On February 18, 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which affects reporting organizations' evaluation of whether they should consolidate certain legal entities. This includes a scope exception for reporting entities with an interest in legal entities that are required to comply with or operate in accordance with the requirements similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds.

Effective January 1, 2016, Federated adopted ASU 2015-02 using the modified retrospective transition method, which did not require the restatement of prior years. In connection with the adoption of ASU 2015-02, Federated reevaluated all of its sponsored investment companies and other funds (Federated Funds). As a result, certain Federated Funds previously accounted for as variable interest entities (VIEs) now meet the characteristics of voting rights entities (VREs).

The adoption of ASU 2015-02 resulted in the consolidation of one Federated Fund that was not previously consolidated. Upon adoption, this entity was deemed to be a VIE and Federated was deemed to be the primary beneficiary. As a result of this consolidation, Federated recorded $29.4 million in assets, of which $11.5 million was included in Investments—affiliates at December 31, 2015, $0.2 million in liabilities and $17.7 million in Redeemable noncontrolling interest in subsidiaries. Federated also reclassified $0.8 million of unrealized losses from Accumulated other comprehensive loss, net of tax to Retained earnings. The adoption of ASU 2015-02 also resulted in the deconsolidation of one Federated Fund that was previously consolidated. Upon adoption, Federated was no longer deemed to be the primary beneficiary of this VIE. As a result, Federated deconsolidated $5.5 million in assets, $2.7 million in liabilities and $2.8 million in Redeemable noncontrolling interest in subsidiaries. There was no impact to the Consolidated Statements of Income upon adoption of ASU 2015-02. See Note (3) for the updated Principles of Consolidation accounting policy.

Accounting for Fees Paid in a Cloud Computing Arrangement

On January 1, 2016, Federated adopted ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. This update provides guidance about whether a cloud computing arrangement includes a software license. Management elected the prospective transition method and the adoption did not have a material impact on Federated's Consolidated Financial Statements.

Disclosure of Investments in Certain Entities that Calculate Net Asset Value per Share

On January 1, 2016, Federated adopted ASU 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value (NAV) per Share (or Its Equivalent). This update modifies certain disclosure requirements and requires that all investments for which fair value is measured using the NAV practical expedient be excluded from the fair value hierarchy. The ASU required the retrospective adoption approach, which required the restatement of the prior period fair value hierarchy table. As a result, $31.8 million of investments were recategorized into the NAV practical expedient column and are no longer included in Level 2 as of December 31, 2015 (see Note (7)). The adoption did not have a material impact on Federated's Consolidated Financial Statements.

8

Notes to the Consolidated Financial Statements (continued)

(unaudited)

(b)Recently Issued Accounting Guidance Not Yet Adopted

Revenue Recognition

On May 28, 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes virtually all existing revenue recognition guidance under GAAP. The update's core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. On July 9, 2015, the FASB approved a one-year deferral of the effective date of the update, and issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, on August 12, 2015. As a result of the deferral, the update is effective for Federated on January 1, 2018, with early adoption permitted on January 1, 2017. During 2016, the FASB issued ASU 2016-08, which clarifies principal versus agent considerations and ASU 2016-10, which clarifies identifying performance obligations and the licensing implementation guidance. ASU 2014-09 allows for the use of either the retrospective or modified retrospective adoption method. Management is currently evaluating the available transition methods and the potential impact of adoption on Federated's Consolidated Financial Statements.

Deferred Taxes

On November 20, 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The amendments in this update require that deferred tax liabilities and assets be classified as noncurrent on the balance sheet. The update is effective for Federated on January 1, 2017, with early adoption permitted. The update allows for the use of either a prospective or retrospective adoption approach. Management is currently evaluating the available transition methods and does not expect this update to have a material impact on Federated's Consolidated Financial Statements.

Financial Instruments

On January 5, 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The ASU significantly revises an entity's accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments. The update is effective for Federated on January 1, 2018, and, except for certain provisions, does not permit early adoption. An entity should apply the amendments, with certain exceptions, by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. Management is currently evaluating the potential impact of adoption on Federated's Consolidated Financial Statements.

Leases

On February 25, 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The core principal of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases on the balance sheet, but retains a distinction between finance and operating leases. The update is effective for Federated on January 1, 2019, with early adoption permitted. The update requires the modified retrospective adoption approach. Management is currently evaluating the potential impact of adoption on Federated's Consolidated Financial Statements.

Share-Based Compensation

On March 31, 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The areas for simplification in this update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The update is effective for Federated on January 1, 2017. Early adoption is permitted in any interim or annual period. The available transition method is specific to each amendment, and requires either the use of the modified retrospective or prospective adoption method. Management is currently evaluating the potential impact of adoption on Federated's Consolidated Financial Statements.

(3)Significant Accounting Policies

As a result of the adoption of ASU 2015-02, the following Principles of Consolidation accounting policy has been updated to reflect the new guidance. For a complete listing of Federated’s significant accounting policies, please refer to Federated’s Annual Report on Form 10-K for the year ended December 31, 2015.

9

Notes to the Consolidated Financial Statements (continued)

(unaudited)

Principles of Consolidation

Federated performs an analysis for each Federated Fund or other entity in which Federated holds a financial interest to determine if it is a VIE or VRE. Factors considered in this analysis include, but are not limited to, whether (1) it is a legal entity, (2) a scope exception applies, (3) a variable interest exists and (4) shareholders have the power to direct the activities that most significantly impact the economic performance, as well as the equity ownership, and any related party or de facto agent implications of Federated's involvement with the entity. Entities that are determined to be VIEs are consolidated if Federated is deemed to be the primary beneficiary. Entities that are determined to be VREs are generally consolidated if Federated holds the majority voting interest. Federated's conclusion to consolidate a Federated Fund may vary from period to period, most commonly as a result of changes in its percentage interest in the entity.

To the extent Federated's interest in a consolidated entity represents less than 100% of the entity's equity, Federated recognizes noncontrolling interests in subsidiaries. In the case of consolidated Federated Funds, the noncontrolling interests represent equity which is redeemable or convertible for cash or other assets at the option of the equity holder. As such, these noncontrolling interests are deemed to represent temporary equity and are classified as Redeemable noncontrolling interest in subsidiaries in the mezzanine section of the Consolidated Balance Sheets. All other noncontrolling interests in subsidiaries are classified as permanent equity in the Consolidated Balance Sheets. All significant intercompany accounts and transactions have been eliminated.

Consolidation of Variable Interest Entities

Prior to the adoption of ASU 2015-02, Federated considered either a qualitative or quantitative model for identifying whether its interest in a VIE was a controlling financial interest. Considerations of the qualitative model included whether Federated had (1) the ability to direct significant activities of the VIE and (2) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. For the quantitative model, Federated evaluated the extent of its participation in the economic risks and rewards of the entity. In cases where the results indicated that Federated's interest in such an entity absorbed the majority of the variability in the entity's net assets, Federated was deemed to be the primary beneficiary and thus consolidated the entity.

Following the adoption of ASU 2015-02, Federated has a controlling financial interest in a VIE and is, therefore, deemed to be the primary beneficiary of a VIE if it has (1) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and (2) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

Consolidation of Voting Rights Entities

Federated has a controlling financial interest in a VRE if it can exert control over the financial and operating policies of the VRE, which generally occurs when Federated holds the majority voting interest (i.e. greater than 50% of the voting equity interest).

(4)Concentration Risk

(a)Revenue Concentration by Asset Class

The following table summarizes the percentage of total revenue earned from Federated's asset classes for the periods presented:

	Three Months Ended
	March 31,
	2016		2015
Money market assets	47	%	32	%
Equity assets	36	%	46	%
Fixed-income assets	17	%	22	%

The change in the relative proportion of Federated's revenue attributable to money market assets for the first three months of 2016 as compared to the same period in 2015 was primarily the result of the decrease in voluntary waivers (either through fee waivers or reimbursements or assumptions of expenses) in order for certain money market funds to maintain positive or zero net yields (Voluntary Yield-related Fee Waivers) and, to a lesser extent, higher average money market assets.

10

Notes to the Consolidated Financial Statements (continued)

(unaudited)

Current Regulatory Environment

Federated and its investment management business are subject to extensive regulation in the U.S. and abroad.Federated and its products, such as theFederated Funds, and strategies are subject to federal securities laws, principally the Securities Act of 1933 (1933 Act), the Securities Exchange Act of 1934 (1934 Act), the Investment Company Act of 1940 (1940 Act), the Investment Advisers Act of 1940 (Advisers Act), state laws regarding securities fraud, and regulations or other rules, promulgated by various regulatory authorities, self-regulatory organizations or exchanges, as well as foreign laws, regulations or other rules promulgated by foreign regulatory or other authorities.In 2014, among other developments,the Securities and Exchange Commission (SEC) promulgated new money market reform rules (2014 Money Fund Rules).In 2015, among other developments, the SEC staff published the 2014 Money Market Fund Reform Frequently Asked Questions and Valuation Guidance Frequently Asked Questions (the Money Fund Rules Guidance).On May 20, 2015, the SEC proposed rules seeking to modernize investment company reporting requirements and to require investment advisers to maintain additional performance records and provide to clients additional borrowing and derivative information relating to separate accounts.On September 22, 2015, the SEC proposed certain rule amendments under the 1940 Act that, if adopted as proposed, would require open-end mutual funds (other than money market funds) and exchange traded funds to have liquidity risk management programs that contain certain required elements.On December 11, 2015, the SEC proposed new rules that, if adopted as proposed, would enhance the regulation of the use of derivatives by investment companies.On April 6, 2016,the Department of Labor (DOL) released its final rule regarding the definition of "fiduciary" and conflicts of interest in connection with retirement investment advice (DOL Final Fiduciary Rule). Federated is analyzing the potential impact of these reforms.Federated also continues to evaluate the impact of the 2014 Money Fund Rules and Money Fund Rules Guidance on its money market products and strategies, product structuring and development initiatives and business.Internationally, among other developments, European money market fund reforms, similar in some respects to the U.S. reforms, continue to be considered but have not yet been finalized. Federated continues to dedicate internal and external resources to analyze the potential impact of the 2014 Money Fund Rules and Money Fund Rules Guidance, and other regulatory initiatives, on Federated’s business, results of operations, financial condition and/or cash flows.Federated also continues to dedicate resources to planning and implementing product development and restructuring initiatives in response to the 2014 Money Fund Rules and Money Fund Rules Guidance. See Management's Discussion and Analysis for additional information.

Low Short-Term Interest Rates

In December 2015, theFederal Open Market Committee of the Federal Reserve Board (FOMC) increased the federal funds target rate range by 25 basis points to 0.25%-0.50%, slightly raising short-term interest rates late in 2015 and into the first quarter of 2016. The federal funds target rate, which drives short-term interest rates, had been near zero for nearly seven years.As a result of the long-term near-zero interest-rate environment, the gross yield earned by certain money market funds is not sufficient to cover all of the fund's operating expenses.Since the fourth quarter of 2008, Federated has experienced Voluntary Yield-related Fee Waivers. These fee waivers have been partially offset by related reductions in distribution expense and net income attributable to noncontrolling interests as a result of Federated's mutual understanding and agreement with third-party intermediaries to sharethe impact of theVoluntary Yield-related Fee Waivers.

These Voluntary Yield-related Fee Waivers are calculated as a percentage of assets under management (AUM or managed assets) in certain money market funds and thus will vary depending upon the asset levels in such funds. In addition, the level of waivers are dependent on several other factors including, but not limited to, yields on instruments available for purchase by the money market funds, changes in expenses of the money market funds and changes in the mix of money market assets. In any given period, a combination of these factors drives the amount of Voluntary Yield-related Fee Waivers. As an isolated variable, an increase in yields on instruments held by the money market funds will cause the pre-tax impact of fee waivers to decrease. Conversely, as an isolated variable, an increase in expenses of the money market funds would cause the pre-tax impact of fee waivers to increase.

With regard to asset mix, changes in the relative amount of money market fund assets in prime and government money market funds (or between such funds and other money market funds or other products) as well as the mix among certain share classes that vary in pricing structure will impact the level of fee waivers. Generally, prime money market funds waive less than government money market funds as a result of higher gross yields on the underlying investments. As such, as an isolated variable, an increase in the relative proportion of average managed assets invested in prime money market funds as compared to total average money market fund assets should typically result in lower Voluntary Yield-related Fee Waivers. The opposite would also be true.

11

Notes to the Consolidated Financial Statements (continued)

(unaudited)

The impact of such fee waivers on various components of Federated's Consolidated Statements of Income was as follows for the periods presented:

	Three Months Ended
	March 31,
(in millions)	2016			2015
Revenue	$	(37.5	)	$	(94.1	)
Less: Reduction in Distribution expense	27.9			64.6
Operating income	(9.6		)	(29.5		)
Less: Reduction in Noncontrolling interests	0.2			2.5
Pre-tax impact	$	(9.4	)	$	(27.0	)

The negative pre-tax impact of Voluntary Yield-related Fee Waivers decreased for the three-month period ended March 31, 2016 as compared to the same period in 2015 due primarily to higher yields on instruments held by the money market funds.

The FOMC implied in its economic projections that it would continue to raise the federal funds target rate in a measured and gradual way, although the FOMC has reduced the forecasted pace of a rate increase for 2016 and 2017. Federated is unable to predict when, or to what extent, the FOMC will further increase its target for the federal funds rate. As such, Voluntary Yield-related Fee Waivers and the related reduction in distribution expense and net income attributable to noncontrolling interests could continue for the foreseeable future. See Management's Discussion and Analysis under the caption Business Developments - Low Short-Term Interest Rates for additional information on management's expectations regarding fee waivers.

(b)Revenue Concentration by Customer

A significant portion of Federated's total revenue for the three-month period ended March 31, 2016 was derived from services provided to one intermediary customer, the Bank of New York Mellon Corporation, including its Pershing subsidiary, (16%). A significant change in Federated's relationship with this customer could have a material adverse effect on Federated's future revenues and net income.

A listing of Federated’s risk factors is included in Federated’s Annual Report on Form 10-K for the year ended December 31, 2015 under Item 1A - Risk Factors.

(5)Consolidation

The Consolidated Financial Statements include the accounts of Federated, Federated Funds and other entities in which Federated holds a controlling financial interest. Federated is involved with various entities in the normal course of business that may be deemed to be VREs or VIEs. From time to time, Federated invests in Federated Funds for general corporate investment purposes or, in the case of newly launched products, in order to provide investable cash to establish a performance history. Federated's investment in these Federated Funds represents its maximum exposure to loss. The assets of the consolidated Federated Funds are restricted for use by the respective Federated Fund. Generally, neither creditors nor equity investors in the Federated Funds have any recourse to Federated’s general credit. Given that the entities follow investment company accounting, which prescribes fair-value accounting, a deconsolidation generally does not result in gains or losses for Federated. Receivables from all Federated Funds for advisory and other services totaled $23.0 million and $16.9 million at March 31, 2016 and December 31, 2015, respectively.

In the ordinary course of business, Federated may choose to waive certain fees or assume operating expenses of the Federated Funds for competitive, regulatory or contractual reasons. For the three months ended March 31, 2016, Federated waived fees of $118.5 million, of which $90.6 million related to waivers for money market funds which meet the scope exception of ASU 2015-02. Like other sponsors of investment companies, Federated in the ordinary course of business may make capital contributions to certain Federated money market funds in connection with the reorganization of such funds into certain affiliated Federated money market funds. In these instances, such capital contributions typically are intended to either cover realized losses or other permanent impairments to a fund's NAV or increase the market-based NAV per share of the investment company's portfolio that is being reorganized to equal the market-based NAV per share of the acquiring fund. There were no such contributions for the three months ended March 31, 2016. Under new money fund regulations, and SEC staff guidance

12

Notes to the Consolidated Financial Statements (continued)

(unaudited)

issued in 2015, Federated is now required to report these types of capital contributions to the SEC as financial support to the investment company that is being reorganized.

In accordance with Federated’s consolidation accounting policy, Federated first determines whether the entity being evaluated is a VRE or a VIE. Once this determination is made, Federated proceeds with its evaluation of whether to consolidate the entity. The disclosures below represent the results of such evaluations pertaining to March 31, 2016 and December 31, 2015.

(a)Consolidated Voting Rights Entities

Effective January 1, 2016, most of the Federated Funds now meet the definition of a VRE. Federated consolidates certain VREs when it is deemed to have control. As of March 31, 2016, consolidated VREs included on Federated's Consolidated Balance Sheets included $13.2 million in Investments—consolidated investment companies and $2.1 million in Redeemable noncontrolling interest in subsidiaries.

(b)Consolidated Variable Interest Entities

As of March 31, 2016 and December 31, 2015, Federated was deemed to be the primary beneficiary of and therefore consolidated several Federated Funds as a result of its controlling financial interest. Certain of the VIEs consolidated as of December 31, 2015 were deemed to be VREs upon adoption of ASU 2015-02 and have been excluded from the March 31, 2016 balances in the table below. See the Consolidated Voting Rights Entities section above for information on consolidated VREs as of March 31, 2016.

The following table presents the balances related to the consolidated Federated Fund VIEs that were included on the Consolidated Balance Sheets as well as Federated's net interest in the consolidated Federated Fund VIEs for each period presented:

(in millions)	March 31, 2016		December 31, 2015
Cash and cash equivalents	$	0.1	$	3.1
Investments—consolidated investment companies	41.9		25.4
Receivables	1.0		0.2
Less: Liabilities	0.5		3.0
Less: Redeemable noncontrolling interest in subsidiaries	23.8		8.7
Federated's net interest in the consolidated Federated Fund VIEs	$	18.7	$	17.0

Federated's net interest in the consolidated Federated Fund VIEs of $18.7 million and $17.0 million at March 31, 2016 and December 31, 2015, respectively, represents the value of Federated's economic ownership interest in these Federated Funds. The liabilities of the consolidated Federated Fund VIEs primarily represent investments sold short and operating liabilities of the entities. The liabilities as of March 31, 2016 and December 31, 2015 are primarily classified as Accounts payable and accrued expenses and Other current liabilities, respectively, on Federated’s Consolidated Balance Sheets.

In addition to the table above, Federated has a majority interest (50.5%) and acts as the general partner in Passport Research Ltd. (Passport), a limited partnership. Edward D. Jones & Co., L.P. is the limited partner with a 49.5% interest. The partnership is an investment adviser to two sponsored funds and was deemed to be a VIE upon adoption of ASU 2015-02. Assets totaling $5.1 million primarily representing Cash and cash equivalents, liabilities totaling $2.1 million primarily representing operating liabilities and $1.4 million included in Nonredeemable noncontrolling interest in subsidiary are included on the Consolidated Balance Sheets as of March 31, 2016. There was no change to the Consolidated Financial Statements as a result of the adoption of ASU 2015-02 as Passport had been consolidated as a VRE under the previous guidance. See Part II, Item 5 for additional information regarding Passport.

Other than those consolidated or deconsolidated upon the adoption of ASU 2015-02 (see Note (2)), Federated did not newly consolidate or deconsolidate any VIEs during the three months endedMarch 31, 2016.

13

Notes to the Consolidated Financial Statements (continued)

(unaudited)

(c)Non-Consolidated Variable Interest Entities

Federated's involvement with certain Federated Funds that are deemed to be VIEs includes serving as the investment manager, or at times, holding a minority interest or both. Federated’s variable interest is not deemed to absorb losses or receive benefits that could potentially be significant to the VIE. Therefore, Federated is not the primary beneficiary of these VIEs and has not consolidated these entities.

At March 31, 2016, Federated’s investment and maximum risk of loss related to a non-consolidated VIE was entirely related to a Federated Fund and totaled $1.1 million, which was recorded in Investments—affiliates on the Consolidated Balance Sheets. AUM for this non-consolidated Federated Fund totaled $11.9 million at March 31, 2016.

At December 31, 2015, Federated’s investment and maximum risk of loss related to non-consolidated VIEs were entirely related to Federated Funds and totaled $301.5 million. Of this amount, $159.7 million represented investments in money market funds included in Cash and cash equivalents. The remaining $141.8 million is primarily recorded in Investments—affiliates on the Consolidated Balance Sheets as of December 31, 2015. AUM for these non-consolidated Federated Funds totaled $268.0 billion at December 31, 2015.

Upon adoption of ASU 2015-02 effective January 1, 2016, certain of the non-consolidated VIEs included in the balances as of December 31, 2015 were deemed to be VREs or are money market funds which meet the scope exception and have been excluded from the March 31, 2016 balances above. See the Consolidated Voting Rights Entities section above for information on consolidated VREs as of March 31, 2016.

(6)Investments

Investments on the Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015 included available-for-sale and trading securities. At March 31, 2016 and December 31, 2015, Federated held investments totaling $132.0 million and $141.7 million, respectively, in fluctuating-value sponsored mutual funds that were classified as available-for-sale securities and were included in Investments—affiliates on the Consolidated Balance Sheets. The decrease in Investments—affiliates primarily related to a newly consolidated VIE as a result of the adoption of ASU 2015-02 and is now recorded in Investments—consolidated investment companies. See Note (2) for additional information.

Available-for-sale securities were as follows:

	March 31, 2016									December 31, 2015
			Gross Unrealized					Estimated Fair				Gross Unrealized					Estimated Fair
(in thousands)	Cost		Gains		(Losses)			Value		Cost		Gains		(Losses)			Value
Equity mutual funds	$	32,459	$	566	$	(1,996	)	$	31,029	$	32,357	$	342	$	(2,416	)	$	30,283
Fixed-income mutual funds	103,331		123		(2,503		)	100,951		115,396		109		(4,040		)	111,465
Total fluctuating-value mutual funds	$	135,790	$	689	$	(4,499	)	$	131,980	$	147,753	$	451	$	(6,456	)	$	141,748

As of March 31, 2016, unrealized losses of $4.5 million related to investments with a fair value of $113.8 million. Of these, investments with a fair value of $107.4 million with unrealized losses of $4.1 million have been in a continuous unrealized loss position for 12 months or longer. The remaining investments with a fair value of $6.4 million with unrealized losses of $0.4 million have been in a continuous unrealized loss position for less than 12 months. As of December 31, 2015, unrealized losses of $6.5 million related to investments with a fair value of $124.0 million. Of these, investments with a fair value of $92.6 million with unrealized losses of $5.5 million have been in a continuous unrealized loss position for 12 months or longer. The remaining investments with a fair value of $31.4 million with unrealized losses of $1.0 million have been in a continuous unrealized loss position for less than 12 months.

Federated regularly reviews its investments for other-than-temporary impairment using both qualitative and quantitative criteria. This review considers management's ability and intent to hold the security, as well as the near-term prospects of the investment and the duration and severity of the unrealized loss. Management believes the unrealized loss associated with Federated's available-for-sale securities as of March 31, 2016 will be recovered within the foreseeable future and intends to hold these investments. Management does not believe these investments are other-than temporarily impaired.

14

Notes to the Consolidated Financial Statements (continued)

(unaudited)

Federated’s trading securities totaled $62.3 million and $32.4 million at March 31, 2016 and December 31, 2015, respectively. The increase in trading securities primarily related to the aforementioned newly consolidated VIE which was previously recorded in Investments—affiliates on the Consolidated Balance Sheets. See Note (2) for additional information. Federated consolidates certain Federated Funds into its Consolidated Financial Statements as a result of Federated’s controlling financial interest in the Federated Fund (see Note (5)). All investments held by these Federated Funds were included in Investments—consolidated investment companies on Federated’s Consolidated Balance Sheets. Investments—other on the Consolidated Balance Sheets represented other trading investments held in Separate Accounts (which include separately managed accounts, institutional accounts, sub-advised funds and other managed products).

Federated’s trading securities as of March 31, 2016 and December 31, 2015, were primarily composed of domestic debt securities ($43.8 million and $9.0 million, respectively), investments in Federated Funds and other mutual funds ($8.5 million and $11.0 million, respectively), and stocks of large U.S. and international companies ($6.8 million and $10.5 million, respectively).

The following table presents gains and losses recognized in Gain (loss) on securities, net on the Consolidated Statements of Income in connection with Federated's investments as well as economic derivatives held by certain consolidated Federated Funds:

	Three Months Ended
	March 31,
(in thousands)	2016			2015
Unrealized gain (loss)
Trading securities	$	2,156		$	456
Derivatives1	107			(159		)
Realized gains2
Trading securities	116			189
Derivatives1	406			235
Realized losses2
Available-for-sale securities	(17		)	0
Trading securities	(1,297		)	(613		)
Derivatives1	(380		)	(362		)
Gain (loss) on securities, net3	$	1,091		$	(254	)

1  Amounts related to the settlement of economic derivatives held by certain consolidated Federated Funds.

2  Realized gains and losses are computed on a specific-identification basis.

3 Amounts related to consolidated entities, primarily Federated Funds, totaled $1.0 million and $(0.3) millionfor the three months endedMarch 31, 2016, and 2015, respectively.

(7)Fair Value Measurements

Fair value is the price that would be received to sell an asset or the price paid to transfer a liability as of the measurement date. A fair-value reporting hierarchy exists for disclosure of fair value measurements based on the observability of the inputs to the valuation of financial assets and liabilities. The levels are:

Level 1 – Quoted prices for identical instruments in active markets. Level 1 assets may include equity and debt securities that are traded in an active exchange market, including shares of mutual funds.

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 assets and liabilities may include debt and equity securities, purchased loans and over-the-counter derivative contracts whose fair value is determined using a pricing model without significant unobservable market data inputs.

Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable in active markets.

15

Notes to the Consolidated Financial Statements (continued)

(unaudited)

NAV practical expedient – Investments that calculate NAV per share (or its equivalent) as a practical expedient. These investments have been excluded from the fair value hierarchy.

(a)Fair Value Measurements on a Recurring Basis

The following table presents fair value measurements for classes of Federated’s financial assets and liabilities measured at fair value on a recurring basis:

(in thousands)	Level 1		Level 2		Level 3		NAV Practical Expedient3		Total
March 31, 2016
Financial Assets
Cash and cash equivalents	$	147,762	$	0	$	0	$	0	$	147,762
Available-for-sale equity securities	107,191		0		0		24,789		131,980
Trading securities—equity	12,922		117		0		5,409		18,448
Trading securities—debt	0		43,828		0		0		43,828
Other1	0		175		910		0		1,085
Total financial assets	$	267,875	$	44,120	$	910	$	30,198	$	343,103
Financial Liabilities
Acquisition-related future consideration liabilities	$	0	$	0	$	2,090	$	0	$	2,090
Other2	85		0		469		0		554
Total financial liabilities	$	85	$	0	$	2,559	$	0	$	2,644
December 31, 20153
Financial Assets
Cash and cash equivalents	$	172,628	$	0	$	0	$	0	$	172,628
Available-for-sale equity securities	117,422		0		0		24,326		141,748
Trading securities—equity	15,900		65		0		7,433		23,398
Trading securities—debt	0		9,041		0		0		9,041
Other1	4		17		910		0		931
Total financial assets	$	305,954	$	9,123	$	910	$	31,759	$	347,746
Financial Liabilities
Acquisition-related future consideration liabilities	$	0	$	0	$	2,161	$	0	$	2,161
Other2	2,681		59		469		0		3,209
Total financial liabilities	$	2,681	$	59	$	2,630	$	0	$	5,370

1 Amounts include structured trade finance loans held by Federated as well as futures contracts and/or foreign currency forward contracts held within certain consolidated Federated Funds.

2 Amounts may include investments sold short, foreign currency forward contracts and/or futures contracts held within certain consolidated Federated Funds, as well as certain liabilities attributable to structured trade finance loans held by Federated.

3 Investments that calculate NAV as a practical expedient were recategorized and are no longer included in Level 2 as of December 31, 2015 (see Note (2) for additional information).

The following is a description of the valuation methodologies used for financial assets and liabilities measured at fair value on a recurring basis. Federated did not hold any nonfinancial assets or liabilities measured at fair value on a recurring basis at March 31, 2016 or December 31, 2015.

Cash and cash equivalents

Cash and cash equivalents include investments in money market funds and deposits with banks. Investments in Federated money market funds totaled $140.9 million and $162.2 million at March 31, 2016 and December 31, 2015, respectively. Cash

16

Notes to the Consolidated Financial Statements (continued)

(unaudited)

investments in money market funds are valued under the market approach through the use of quoted market prices in an active market, which is the NAV of the funds, and are classified within Level 1 of the valuation hierarchy.

Available-for-sale equity securities

Available-for-sale equity securities include investments in sponsored fluctuating-value mutual funds and are included in Investments—affiliates on the Consolidated Balance Sheets. For investments in mutual funds that are publicly available, the securities are valued under the market approach through the use of quoted market prices available in an active market, which is the NAV of the funds, and are classified within Level 1 of the valuation hierarchy. For certain investments in funds that are not publicly available but for which the NAV is calculated daily and for which there are no redemption restrictions, the securities are valued using NAV as a practical expedient and are excluded from the fair value hierarchy. These investments are included in the NAV practical expedient column in the table above.

Trading securities—equity

Trading securities - equity primarily represent the equity securities held by consolidated Federated Funds (included in Investments—consolidated investment companies on the Consolidated Balance Sheets) as well as certain equity investments held in separate accounts (included in Investments—other on the Consolidated Balance Sheets). For publicly traded equity securities available in an active market, the fair value of these securities is classified as Level 1 when the fair value is based on unadjusted quoted market prices. From time to time, the fair value of certain equity securities traded principally in foreign markets and held by consolidated Federated Funds may be determined by a third party pricing service (Level 2).

For certain investments in funds that are not publicly available but for which the NAV is calculated daily and for which there are no redemption restrictions, the securities are valued using NAV as a practical expedient and are excluded from the fair value hierarchy. These investments are included in the NAV practical expedient column in the table above.

Trading securities—debt

Trading securities - debt primarily represent domestic bonds held by consolidated Federated Funds. The fair value of these securities may include observable market data such as valuations provided by independent pricing services after considering factors such as the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions (Level 2).

Acquisition-related future consideration liabilities

From time to time, pursuant to purchase and sale agreements entered into in connection with certain business combinations, Federated may be required to make future consideration payments if certain contingencies are met. See Note (12) for additional information regarding the nature and timing of these payments. Federated records a liability as of the acquisition date representing the estimated fair value of future consideration payments. The liability is subsequently re-measured at fair value on a recurring basis with changes in fair value recorded in earnings. As of March 31, 2016, acquisition-related future consideration liabilities were recorded in Other current liabilities ($0.7 million) and Other long-term liabilities ($1.4 million) on the Consolidated Balance Sheets. Management estimated the fair value of future consideration payments based primarily upon expected future cash flows using an income approach valuation methodology with unobservable market data inputs (Level 3).

(b)Fair Value Measurements on a Nonrecurring Basis

Federated did not hold any assets or liabilities measured at fair value on a nonrecurring basis at March 31, 2016.

(c)Fair Value Measurements of Other Financial Instruments

The fair value of Federated’s debt is estimated by management based upon expected future cash flows utilizing a discounted cash flow methodology under the income approach. The fair value of the liability is estimated using observable market data (Level 2) in estimating inputs including the discount rate. Based on this fair value estimate, the carrying value of debt appearing on the Consolidated Balance Sheets approximates fair value.

17

Notes to the Consolidated Financial Statements (continued)

(unaudited)

(8)Debt

Debt consisted of the following:

	Interest Rates
	March 31,	December 31,
(dollars in thousands)	2016	2015	March 31, 2016		December 31, 2015
Term Loan	1.565%	1.555%	$	210,375	$	216,750
Less: Short-term debt			25,500		25,500
Long-term debt			$	184,875	$	191,250

On June 24, 2014, Federated entered into an unsecured Second Amended and Restated Credit Agreement by and among Federated, certain of its subsidiaries as guarantors party thereto, a syndicate of 13 banks as Lenders party thereto led by PNC Bank, National Association as administrative agent, PNC Capital Markets LLC as sole bookrunner and joint lead arranger, Citigroup Global Markets, Inc. as joint lead arranger, Citibank, N.A. as syndication agent, and TD Bank, N.A. as documentation agent (Credit Agreement). The Credit Agreement amended and restated Federated's prior unsecured Amended and Restated Credit Agreement, which was dated June 10, 2011 and scheduled to mature on June 10, 2016 (Prior Credit Agreement). The borrowings under the Credit Agreement's term loan facility of $255 million (Term Loan) equaled the remaining principal balance from the Prior Credit Agreement's term loan facility. The Term Loan facility bears interest based on the London Interbank Offering Rate (LIBOR) plus a spread, currently 112.5 basis points. The Credit Agreement qualified for modification accounting treatment.

The Credit Agreement also refinanced the $200 million revolving credit facility under the Prior Credit Agreement. Federated had no borrowings outstanding on the previous revolving credit facility at the time of refinancing. As of March 31, 2016, the entire $200 million revolving credit facility was available for borrowings. Similar to the Prior Credit Agreement, certain subsidiaries entered into an Amended and Restated Continuing Agreement of Guaranty and Suretyship whereby these subsidiaries guarantee payment of all obligations incurred through the Credit Agreement. Federated pays an annual facility fee, currently 12.5 basis points. Borrowings under the Credit Agreement's revolving credit facility bear interest at LIBOR plus a spread, currently 100 basis points.

The Credit Agreement matures on June 24, 2019 and, with respect to the Term Loan, requires quarterly principal payments totaling $25.5 million in each of the years 2016 and 2017, $55.8 million in 2018 and $110.0 million in 2019. During the three months endedMarch 31, 2016, Federated repaid $6.4 million of its borrowings on the Term Loan.

The Credit Agreement includes representations and warranties, affirmative and negative financial covenants, including an interest coverage ratio covenant and a leverage ratio covenant, reporting requirements and other non-financial covenants. Federated was in compliance with all covenants at and during the three months ended March 31, 2016 (see the Liquidity and Capital Resources section of Management's Discussion and Analysis for additional information). The Credit Agreement also has certain stated events of default and cross default provisions which would permit the lenders/counterparties to accelerate the repayment of the debt if not cured within the applicable grace periods. The events of default generally include breaches of contract, failure to make required loan payments, insolvency, cessation of business, deterioration in credit rating to below investment grade, notice of lien or assessment, and other proceedings, whether voluntary or involuntary, that would require the repayment of amounts borrowed.

(9)Share-Based Compensation Plans

(a)Restricted Stock

During the first three months of 2016, Federated awarded 464,660 shares of restricted Federated Class B common stock, all of which was granted in connection with a bonus program in which certain key employees received a portion of their bonus in the form of restricted stock under Federated’s Stock Incentive Plan. This restricted stock, which was granted on the bonus payment date and issued out of treasury, will generally vest over a three-year period.

18

Notes to the Consolidated Financial Statements (continued)

(unaudited)

Federated awarded 863,137 shares of restricted Federated Class B common stock under its Stock Incentive Plan during 2015. Of this amount, 373,137 shares were awarded in connection with the aforementioned bonus program in 2015. The remaining shares were awarded to certain key employees and generally vest over a ten-year period.

(b)Stock Options

During the three months ended March 31, 2016, there were no stock options exercised or granted. During the year ended December 31, 2015, there were 3,000 stock options exercised and no stock options granted.

(c)Non-Management Director Stock Award

There were no shares of Federated Class B common stock awarded to non-management directors during the first quarter of 2016. Federated awarded 5,700 shares of Federated Class B common stock to non-management directors during 2015.

(10)Equity

In 2015, the board of directors authorized a share repurchase program that allows Federated to buy back up to4 millionshares of Federated Class B common stock with no stated expiration date. The program authorizes executive management to determine the timing and the amount of shares for each purchase. The repurchased stock is held in treasury for employee share-based compensation plans, potential acquisitions and other corporate activities. During the first three months of 2016, Federated repurchased 0.5 million shares of Class B common stock for $13.7 million which were repurchased in the open market. At March 31, 2016, 2.2 million shares remained available to be purchased under Federated's buyback program.

(11)Earnings Per Share Attributable to Federated Investors, Inc. Shareholders

The following table sets forth the computation of basic and diluted earnings per share using the two-class method for amounts attributable to Federated:

	Three Months Ended
	March 31,
(in thousands, except per share data)	2016			2015
Numerator – Basic and Diluted
Net income attributable to Federated Investors, Inc.	$	45,258		$	36,307
Less: Total income available to participating unvested restricted shareholders1	(1,821		)	(1,478		)
Total net income attributable to Federated Common Stock2	$	43,437		$	34,829
Denominator
Basic weighted-average common shares outstanding	99,802			100,641
Dilutive potential shares from stock options	1			1
Diluted weighted-average common shares outstanding	99,803			100,642
Earnings per share
Net income attributable to Federated Common Stock – Basic and Diluted2	$	0.44		$	0.35

1 Income available to participating unvested restricted shareholders includes dividends paid on unvested restricted shares and their proportionate share of undistributed earnings.

2 Federated Common Stock excludes unvested restricted stock which are deemed participating securities in accordance with the two-class method of computing earnings per share.

(12)Commitments and Contingencies

(a)Contractual

Pursuant to various acquisition agreements, Federated has made and may be required to make additional purchase price payments based on a percentage of revenue less certain direct expenses attributable to eligible AUM. The payments could occur through 2019. As of March 31, 2016, liabilities totaling $2.1 million, representing the estimated fair value of future

19

Notes to the Consolidated Financial Statements (continued)

(unaudited)

consideration payments, were recorded in Other current liabilities ($0.7 million) and Other long-term liabilities ($1.4 million) (see Note (7) for a discussion regarding the valuation methodology). The liabilities are re-measured at each reporting date with changes in the fair value recognized in Operating Expenses - Other on the Consolidated Statements of Income.

Federated may be required to make certain compensation-related payments through 2019 in connection with various significant employment and incentive arrangements. Based on asset levels as of March 31, 2016 and performance goals, payments could total up to $29 million over the remaining terms of the arrangements, including incentive compensation opportunities related to the Federated Kaufmann Large Cap Fund.

(b)Guarantees and Indemnifications

On an intercompany basis, various wholly owned subsidiaries of Federated guarantee certain financial obligations of Federated Investors, Inc., and Federated Investors, Inc. guarantees certain financial and performance-related obligations of various wholly owned subsidiaries. In addition, in the normal course of business, Federated has entered into contracts that provide a variety of indemnifications. Typically, obligations to indemnify third parties arise in the context of contracts entered into by Federated, under which Federated agrees to hold the other party harmless against losses arising out of the contract, provided the other party's actions are not deemed to have breached an agreed upon standard of care. In each of these circumstances, payment by Federated is contingent on the other party making a claim for indemnity, subject to Federated's right to challenge the other party's claim. Further, Federated's obligations under these agreements may be limited in terms of time and/or amount. It is not possible to predict the maximum potential amount of future payments under these or similar agreements due to the conditional nature of Federated's obligations and the unique facts and circumstances involved in each particular agreement. As of March 31, 2016, management does not believe that a material loss related to any of these matters is reasonably possible.

(c)Legal Proceedings

CCM Rochester, Inc. (CCM). In December 2008, Federated completed the acquisition of certain assets of CCM (f/k/a Clover Capital Management, Inc.), an investment manager that specialized in value investing. The purchase was consummated in the midst of the financial crisis. The payment terms under the Asset Purchase Agreement, dated September 12, 2008 (APA), included an upfront payment of $30 million paid by Federated Investors, Inc. at closing and the opportunity for contingent payments over a five year earn-out period following the acquisition date based on the growth in revenue associated with the acquired assets. Under the APA, in order to reach the maximum contingent payments totaling approximately $55 million, the revenue associated with the acquired assets would have had to have grown at a 30% compound annual growth rate. Under the APA, Federated Investors, Inc. paid CCM an additional $18 million, in the aggregate, in contingent payments for the last three years of the earn-out period.

On May 20, 2014, shortly after the final contingent payment was paid to CCM, Federated Investors, Inc. was named as the defendant in a case filed by CCM in the U.S. District Court for the Southern District of New York (CCM Rochester, Inc., f/k/a Clover Capital Management, Inc. v. Federated Investors, Inc., Case No. 14-cv-3600 (S.D.N.Y.)). In this lawsuit, CCM has asserted claims against Federated Investors, Inc. for fraudulent inducement, breach of contract (including CCM’s allegations relating to implied duties of best efforts and good faith and fair dealing) and indemnification based on Federated’s alleged failure to effectively market and distribute the investment products associated with the acquired assets and to pay CCM the maximum contingent payments. CCM seeks approximately $37 million in alleged damages plus attorneys’ fees from Federated Investors, Inc.

Federated filed a Motion to Dismiss the lawsuit on the basis that, among other reasons, CCM's claims are implausible, have no factual support, and are contrary to the express terms of the APA and to settled law. On November 25, 2014, the Court issued an order granting Federated's Motion to Dismiss in part and denying Federated's Motion to Dismiss in part. The Court dismissed CCM's claim for breach of contract and for breach of an implied obligation to use best efforts. Under the strict standards applicable to Motions to Dismiss that require the Court to accept the allegations of the Complaint as true and draw all inferences in CCM's favor, the Court concluded that CCM's "claim of fraud is at the edge of plausibility" but specifically noted that "[w]hether CCM can successfully prove facts necessary to support that artfully-pled theory remains to be seen."

Federated continues to believe that CCM's claims are meritless and without factual support and intends to continue to vigorously defend this lawsuit as it proceeds through summary judgment. Fact discovery and expert discovery have concluded. Briefing also has been concluded on an evidentiary motion filed by Federated seeking to exclude expert testimony presented by CCM. Federated's evidentiary motion is currently pending before the Court and the Court previously indicated that it would rule on the evidentiary motion before entertaining Federated's motion for summary judgment. A schedule for the filing of Federated's motion for summary judgment has not been set. Federated continues to believe that at all times it acted in good faith and complied with its contractual obligations contained in the APA.

20

Notes to the Consolidated Financial Statements (continued)

(unaudited)

As of March 31, 2016, Federated believes a material loss related to this lawsuit is remote, and as such, does not believe this pending lawsuit is material to Federated or its consolidated financial statements. Based on this assessment of the status and nature of CCM's claims, and the current stage of the lawsuit, no loss is estimable.

Other Litigation. Federated also has claims asserted and threatened against it in the ordinary course of business. As of March 31, 2016, Federated does not believe that a material loss related to these claims is reasonably possible.

See Item 1A - Risk Factors included in Federated's Annual Report on Form 10-K for the year ended December 31, 2015 for additional information regarding risks related to claims asserted or threatened against Federated.

(13)Accumulated Other Comprehensive Loss Attributable to Federated Investors, Inc. Shareholders

The components of Accumulated other comprehensive loss, net of tax attributable to Federated shareholders are as follows:

(in thousands)	Unrealized Loss on Interest Rate Swap1			Unrealized  Gain (Loss) on Securities Available for Sale2				Foreign Currency Translation Loss			Total
Balance at December 31, 2014	$	(269	)		$	(1,126	)	$	(267	)	$	(1,662	)
Other comprehensive income (loss) before reclassifications and tax	67				1,086			(677		)	476
Tax impact	(25		)		(399		)	237			(187		)
Reclassification adjustments, before tax	358				0			0			358
Tax impact	(131		)		0			0			(131		)
Net current-period other comprehensive income (loss)	269				687			(440		)	516
Balance at March 31, 2015	$	0			$	(439	)	$	(707	)	$	(1,146	)
Balance at December 31, 2015	$	0			$	(3,795	)	$	(814	)	$	(4,609	)
Other comprehensive income before reclassifications and tax	0				908			40			948
Tax impact	0				(331		)	(14		)	(345		)
Reclassification adjustments, before tax3	0				1,295			0			1,295
Tax impact3	0				(471		)	0			(471		)
Net current-period other comprehensive income	0				1,401			26			1,427
Balance at March 31, 2016	$	0			$	(2,394	)	$	(788	)	$	(3,182	)

 1 Federated entered into an interest rate swap in 2010 to hedge its interest-rate risk associated with its original term loan facility. The interest rate swap expired on April 1, 2015. Amounts reclassified from Accumulated other comprehensive loss, net of tax were recorded in Debt expense on the Consolidated Statements of Income.

 2 Other than as described in note 3 below, amounts reclassified from Accumulated other comprehensive loss, net of tax were recorded in Gain (loss) on securities, net on the Consolidated Statements of Income.

3 Amount includes reclassification of $0.8 million, net of tax from Accumulated other comprehensive loss, net of tax to Retained earnings on the Consolidated Balance Sheets as a result of the adoption of ASU 2015-02 (see Note (2) for additional information).

(14)Subsequent Events

OnApril 28, 2016, the board of directors declared a$0.25per share dividend to shareholders of record as ofMay 6, 2016to be paid onMay 13, 2016.

21

Part I, Item 2. Management’s Discussion and Analysis

of Financial Condition and Results of Operations (unaudited)

The discussion and analysis below should be read in conjunction with the consolidated financial statements appearing elsewhere in this report. Management has presumed that the readers of this interim financial information have read or have access to Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in Federated’s Annual Report on Form 10-K for the year ended December 31, 2015.

General

Federated is one of the largest investment managers in the U.S. with $369.7 billion in managed assets as of March 31, 2016. The majority of Federated’s revenue is derived from advising Federated Funds and Separate Accounts in both domestic and international markets. Federated also derives revenue from providing administrative and other mutual fund-related services, including distribution and shareholder servicing.

Federated’s investment products and strategies are distributed in four markets. These markets and the relative percentage of managed assets at March 31, 2016 attributable to such markets are as follows: wealth management and trust (42%), broker/dealer (33%), institutional (21%) and international (4%).

Investment advisory fees, administrative service fees and certain fees for other services, such as distribution and shareholder service fees, are contract-based fees that are generally calculated as a percentage of the net assets of managed investment portfolios. Federated’s revenue is primarily dependent upon factors that affect the value of managed assets including market conditions and the ability to attract and retain assets. Nearly all managed assets in Federated’s investment products and strategies can be redeemed or withdrawn at any time with no advance notice requirement. Fee rates for Federated's services generally vary by asset and service type and may vary based on changes in asset levels. Generally, management-fee rates charged for advisory services provided to equity products and strategies are higher than management-fee rates charged on money market and fixed-income products and strategies. Likewise, mutual funds typically have a higher management-fee rate than Separate Accounts. Accordingly, revenue is also dependent upon the relative composition of average AUM across both asset and product types. Federated may waive certain fees for competitive reasons such as to maintain certain mutual fund expense ratios, to maintain positive or zero net yields on money market funds, to meet regulatory requirements or to meet contractual requirements. Since Federated’s products are largely distributed and serviced through financial intermediaries, Federated pays a portion of fees earned from sponsored products to the financial intermediaries that sell these products. These payments are generally calculated as a percentage of net assets attributable to the applicable financial intermediary and represent the vast majority of Distribution expense on the Consolidated Statements of Income. Certain components of Distribution expense can vary depending upon the asset type, distribution channel and/or the size of the customer relationship. Federated generally pays out a larger portion of revenue earned from managed assets in money market funds than revenue earned from managed assets in equity or fixed-income funds.

Federated’s most significant operating expenses are Distribution expense, as described above, and Compensation and related expense. Compensation and related expense includes base salary and wages, incentive compensation and other employee expenses including payroll taxes and benefits. Incentive compensation, which includes stock-based compensation, can vary depending on various factors including, but not limited to, overall results of operations of Federated, investment management performance and sales performance.

The discussion and analysis of Federated’s financial condition and results of operations are based on Federated’s Consolidated Financial Statements. Federated operates in a single operating segment, the investment management business. Management evaluates Federated’s performance at the consolidated level. Management analyzes all expected revenue and expenses and considers market demands in determining an overall fee structure for services provided and in evaluating the addition of new business. Federated’s growth and profitability are dependent upon its ability to attract and retain AUM and upon the profitability of those assets, which is impacted, in part, by management’s decisions regarding Voluntary Yield-related Fee Waivers. Fees for fund-related services are ultimately subject to the approval of the independent directors or trustees of the mutual funds. Management believes that meaningful indicators of Federated’s financial performance include AUM, gross and net product sales, total revenue and net income, both in total and per diluted share.

22

Management's Discussion and Analysis (continued)

of Financial Condition and Results of Operations (unaudited)

Business Developments

Money Market Fund Matters

For the three-month periods ended March 31, 2016 and 2015, approximately 47% and 32%, respectively, of Federated’s total revenue was attributable to money market assets. A significant change in Federated’s investment management business (such as its money market business) or a significant reduction in AUM (such as money market assets) due to regulatory changes, changes in the financial markets, such as significant and rapid increases in interest rates over a short period of time causing certain investors to prefer direct investments in interest-bearing securities, the availability, supply and/or market interest in repurchase agreements and other investments, significant deterioration in investor confidence, further persistent declines in or additional prolonged periods of low short-term interest rates and resulting fee waivers, investor preferences for deposit products, other FDIC-insured products or passive investment products, changes in relationships with financial intermediaries, or other circumstances, could have a material adverse effect on Federated’s business, results of operations, financial condition and/or cash flows.

(a)Current Regulatory Environment

Domestic

Increased regulation and oversight of the investment management industry in the United States continues in 2016. This increased regulation and oversight has required, and is expected to continue to require, additional internal and external resources to be devoted to technology, legal, compliance, operations and other efforts to address regulatory-related matters, and has caused, and may continue to cause, product structure, pricing, offering and development effort adjustments, as well as changes in assets flows and customer relationships. The current regulatory environment has affected, and is expected to continue to affect, to varying degrees, Federated's business, results of operations, financial condition and/or cash flows.

The implementation of changes in response to the amendments to Rule 2a-7 under the 1940 Act (Rule 2a-7), and certain other laws and regulations, adopted by the SEC as part of the 2014 Money Fund Rules, and the related Money Fund Rules Guidance, that was last revised by the SEC staff on March 18, 2016, continues in 2016. The 2014 Money Fund Rules built on initial money market fund reforms adopted by the SEC in 2010. Under the 2014 Money Fund Rules, compliance with certain current event and related website disclosure requirements was required on July 14, 2015. In addition to compliance with certain diversification, stress testing, and disclosure requirements, which was required by April 14, 2016, compliance with the 2014 Money Fund Rules is required by October 14, 2016 with respect to the floating NAV requirements for institutional prime and municipal (or tax-exempt) money market funds. These requirements will require such funds to utilize market-based valuations to calculate a floating NAV rather than using the amortized cost method for valuing securities maturing in more than 60 days to seek to maintain a stable NAV. Government or retail money market funds will be allowed to continue using the amortized cost method (and/or the penny rounding method of pricing) in calculating their NAVs. Compliance by October 14, 2016 also is required with respect to the provisions of the 2014 Money Fund Rules regarding the liquidity fees and redemption limits (gates) permitted, or in certain cases required, for money market funds (other than government money market funds), as well as related disclosure requirements.

On May 20, 2015, the SEC proposed new rules relating to the modernization of investment company reporting. In addition to other requirements, these proposed rules, if adopted as proposed, would require additional or enhanced reporting relating to portfolio-wide and individual position levels, fund census data, and derivatives and securities lending activities, impose certain data format requirements, and permit website disclosure of fund shareholder reports in lieu of mailing them to shareholders. Management currently believes these modernization proposals are likely to be finalized in 2016 with an extended compliance period into the first quarter of 2019. On May 20, 2015, the SEC also proposed amendments to Form ADV that, if adopted as proposed, would require, among other amendments, additional performance records to be maintained, and additional disclosure of borrowing and derivative information, relating to separately managed accounts. On September 16, 2015, the SEC issued final rules, which became effective on October 26, 2015, that removed all references to credit ratings from Rule 2a-7 and created a uniform credit quality standard under Rule 2a-7 under which a money market fund may invest in a security only if the fund determines that the security presents minimal credit risk after analyzing certain prescribed factors. These amendments also require a money market fund to adopt certain procedures related to an ongoing review of the credit quality of each of the fund's portfolio securities, clarify stress testing requirements for an event indicating or evidencing a credit deterioration of a portfolio security, and subject certain additional securities to the issuer diversification requirements under Rule 2a-7.

On September 22, 2015, the SEC proposed certain rule amendments under the 1940 Act that, if adopted as proposed, would require open-end mutual funds (other than money market funds) and exchange traded funds to have liquidity risk management programs that contain certain required elements, including (among others): (1) classification of fund portfolio assets based on

23

Management's Discussion and Analysis (continued)

of Financial Condition and Results of Operations (unaudited)

how quickly they could be liquidated; (2) assessment, periodic review and management of a fund's liquidity risk; (3) the establishment of a minimum percentage of assets that could be liquidated in three days; and (4) fund board review and approval. The proposed rules also would provide a framework under which covered mutual funds could elect to use "swing pricing" to effectively pass on the costs stemming from shareholder purchase and redemption transactions to the shareholders transacting in the funds' shares. In a comment letter, dated January 13, 2016, Federated indicated that, while understanding certain objectives of the proposed rule amendments, Federated strongly opposes the proposed amendments in their current form as being, among other reasons, unworkable, overly burdensome and difficult to implement. Comments are available at http://www.sec.gov/comments/s7-16-15/s71615.shtml. On December 11, 2015, the SEC proposed new rules that, if adopted as proposed, would enhance the regulation of the use of derivatives by investment companies. Under these proposed rules, a fund would be required (among other requirements) to (1) comply with one of two alternative portfolio limitations designed to limit the amount of leverage the fund may obtain through derivatives and certain other transactions, (2) manage the risks associated with the fund's derivatives transactions by segregating certain assets in an amount designed to enable the fund to meet its obligations, including under stressed conditions, (3) establish a formalized derivatives risk management program if the fund engages in more than a limited amount of derivatives transactions or uses certain complex derivatives, and (4) segregate certain assets to cover the fund's obligations if a fund uses certain financial commitment transactions, such as reverse repurchase agreements and short sales. In a comment letter, dated March 23, 2016, Federated acknowledged certain constructive elements of the proposed rules, but opposed elements of the proposed rules in their current form, including, among other points, the adoption of a rules-based regime that employs fixed limits on notional exposure and disallows netting of most hedges, the proposed requirement that eligible coverage assets are limited to cash and cash equivalents, and the ability of advisers to adopt lesser standards for derivatives risk management programs where notional derivatives exposure is less than 50% of fund assets. Comments are available at http://www.sec.gov/comments/s7-24-15/s72415.shtml.

The SEC staff also has engaged, and continues to engage, in a series of investigations, enforcement actions and/or examinations involving investment management industry participants, including certain sweep examinations of investment management companies involving various topics, such as fixed-income and high yield liquidity, liquidity controls, liquid alternatives, cybersecurity, side-by-side management of private funds, private placements, separately managed or wrap-fee accounts, excessive trading, "distribution in guise," and intermediary and other payments and related disclosures. The SEC staff also has continued to focus its attention on liquidity and redemption risks, leverage, information security, vendor risk management and other operational risks, and the failure/closing of investment industry participants. These investigations, actions and examinations have led, and may lead, to further regulation and scrutiny of the investment management industry. For example, on September 21, 2015, the SEC announced a settlement of an enforcement action brought against a third-party mutual fund investment adviser and distributor relating to alleged improper payments to intermediaries. In 2015, the SEC staff also issued guidance statements on (among other topics) cybersecurity and, in January 2016, issued a guidance statement on mutual fund distribution and sub-accounting fees, which provided guidance based, in part, on the SEC staff's "distribution in guise" sweep examination and outlined the SEC staff's views on issues that may arise when mutual funds make payments to financial intermediaries that provide shareholder and recordkeeping services to shareholders, particularly regarding whether a portion of those payments may be viewed as being used to finance distribution of fund shares. On March 2, 2016, the SEC staff also issued a guidance statement on revising fund disclosure in light of changing market conditions.

Regulation or potential regulation by other regulators, in addition to the SEC, also continues to affect investment management industry participants, including Federated. Among other regulatory changes, at the time the 2014 Money Fund Rules were adopted, the U.S. Treasury Department (Treasury Department) and Internal Revenue Service (IRS) issued certain rules aimed at, among other things, addressing for investors in an institutional prime or municipal (or tax-exempt) money market fund with a fluctuating NAV the application of wash sale rules and relief from the tax burdens derived from small capital gains and losses for shareholders that frequently purchase or redeem shares (such as through a broker/dealer or bank "sweep arrangement"). On July 31, 2014, the Financial Stability Oversight Counsel (FSOC) indicated that it intended to monitor the effectiveness of the 2014 Money Fund Rules, which prompted concerns that the FSOC may recommend new or heightened regulation for "non-bank financial companies" under Section 120 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which the Board of Governors of the Federal Reserve System (Governors) have indicated can include open-end investment companies, such as money market funds and other mutual funds. Management continues to respectfully disagree with this position and does not believe that asset managers and management products, such as money market funds, create systemic risk. More recently, the FSOC has moved away from potential systemically important financial institution designations of asset managers or investment products, in favor of studying the financial stability implications of the asset management sector. At its September 2015 meeting, the FSOC indicated that it was engaged in an ongoing process of evaluating the asset management industry. On April 18, 2016, the FSOC released its Update on Review of Asset Management Products and Activities (Update), which discusses FSOC's views on potential risks to financial stability arising from certain asset management products and activities, including mutual funds, other pooled investment vehicles and separately managed accounts. In the Update, the FSOC focused on potential risks arising from liquidity/redemptions and leverage, as well as

24

Management's Discussion and Analysis (continued)

of Financial Condition and Results of Operations (unaudited)

securities lending, operational risks of service provider concentrations and resolvability and transition planning. FSOC also indicated that, among other additional analysis, the FSOC would continue to review and monitor the SEC's proposed rules on modernization, liquidity management and derivatives and their implications for financial stability. Certain proposed legislation currently pending in Congress also seeks to address, among other items relating to the FSOC's authority, the transparency of the FSOC's decision making process.

Finally, on April 6, 2016, the DOL issued its Final Fiduciary Rule, which imposes a modified fiduciary standard for retirement plan advisers. The DOL's Final Fiduciary Rule modifies the definition of "fiduciary" under the Employee Retirement Income Security Act of 1974 and addresses conflicts of interest raised by the receipt of compensation (such as Rule 12b-1 fees) by retirement plan advisers by requiring such advisers to (among other requirements) put their clients' interests before their own profits, acknowledge their fiduciary status, enter into customer contracts addressing standards of impartial conduct (subject to certain exceptions), provide disclosure regarding investment fees and costs, adopt certain policies and procedures to address conflicts of interest and retain certain records. Federated is still analyzing the Final Fiduciary Rule, and its potential impact on Federated’s business, results of operations, financial condition and/or cash flows, including with respect to the fees Federated and retirement plan advisers will be able to earn on investment products and services sold to retirement plan clients.

Management believes that the floating NAV under the 2014 Money Fund Rules will be detrimental to Federated's money market fund business and could materially and adversely affect Federated's business, results of operations, financial condition and/or cash flows. Federated continues to dedicate internal and external resources to analyzing and addressing the evolving changes to these various regulations applicable to Federated, including the 2014 Money Fund Rules, Money Fund Rules Guidance, and the investment company modernization, uniform credit standard, liquidity, derivative, fiduciary and other final and proposed regulations, guidance, initiatives and actions referred to above (Other Regulatory Developments), and their effect on Federated's business, results of operations, financial condition and/or cash flows. For example, as appropriate, Federated participated, and will continue to participate, either individually or with industry groups, in the comment process for proposed regulations. Federated also continues to expend legal and compliance resources to adopt, revise and/or implement policies and procedures and to respond to examinations, inquiries and other matters involving its regulators, including the SEC, customers or other third parties. Federated continues to devote resources to technology and system investment, and the development of other investment management and compliance tools, to enable Federated to, among other things, be in a position to address new regulatory requirements. The 2014 Money Fund Rules, Money Fund Rules Guidance, and Other Regulatory Developments, and related regulatory oversight, also impacted, and/or may impact, Federated's customers and vendors, their preferences and their businesses, which has caused, and may cause, certain money market fund products to be less attractive to institutional and other investors, reductions in AUM and revenues, and/or adjustments to product structures and pricing, offerings and development efforts, as well as asset flows and customer relationships. Federated also continues to dedicate resources to planning and implementing product development and restructuring initiatives in response to the 2014 Money Fund Rules, Money Fund Rules Guidance and Other Regulatory Developments. Federated's analysis, planning and implementation efforts have included, and are expected to continue to include, consideration of Federated's legislative, regulatory, product structure and development, information system development, reporting capability, business and other options that have been or may be available in an effort to minimize the potential impact of any adverse consequences.

While significant steps in Federated's efforts to adjust its product line, in response to the 2014 Money Fund Rules, Money Fund Rules Guidance, and Other Regulatory Developments, have been completed, Federated's plans are not finalized or completed, continue to evolve and remain subject to fund board and, in certain cases, fund shareholder and other review and approvals. Federated has taken, and continues to take, steps to adjust its product line to address the liquidity management needs of its broad array of customers. Federated will continue to offer Treasury and government money market funds without the liquidity fees or gates as permitted by the 2014 Money Fund Rules. Federated's Treasury and government money market funds will continue to seek a $1.00 NAV per share. Federated has designated a subset of its prime and municipal money market funds as retail money market funds under the 2014 Money Fund Rules, and Federated's retail money market funds will continue to seek to maintain an NAV of $1.00 per share and have the required provisions for liquidity fees and gates under the 2014 Money Fund Rules. Federated plans to offer four institutional prime money market funds and one institutional national municipal (or tax-exempt) money market fund, that will, beginning on or about October 14, 2016, have an NAV extended to four decimal places that will fluctuate, provide either a single-strike NAV or multi-strike intraday pricing and have the required provisions for liquidity fees and gates. Federated has filed a registration statement for an institutional 60-day maximum maturity fund, and continues to evaluate converting certain existing Federated Funds to 60-day maximum maturity funds, while other existing funds will remain 397-day maximum maturity funds. Other steps in Federated's product line adjustments have included, or may include, for example, reorganizing, renaming, modifying, making pricing adjustments or adding share classes to certain existing Federated Funds, modifying fund disclosures and developing new products and strategies. For example, Federated continues to explore investment options for certain customers and anticipates launching in 2016 one or more private funds and collective

25

Management's Discussion and Analysis (continued)

of Financial Condition and Results of Operations (unaudited)

funds that mirror existing Federated money market funds as investment options for qualified investors. Federated anticipates that the adjustments to Federated's product line will offer investors a full menu of product choices for liquidity management.

Federated will announce any further plans relating to adjustments to its product line periodically in advance of the October 14, 2016 final mandatory compliance date under the 2014 Money Fund Rules to give customers the opportunity to plan for their liquidity management needs. Subject to Federated Fund board and, in certain cases, shareholder and other approvals and disclosure, Federated expects to implement the remaining adjustments to its product line prior to the final mandatory compliance date. Further analysis and planning, or additional refinements to Federated's product line, may be required in response to market, customer or regulatory changes, such as further updates to the Money Fund Rules Guidance, the Other Regulatory Developments or any additional regulation or guidance issued by the SEC or other regulators.

On a cumulative basis, Federated's regulatory, product development and restructuring, and other efforts in response to the 2014 Money Fund Rules, Money Fund Rules Guidance, and Other Regulatory Developments, including the internal and external resources dedicated to such efforts, have had, and may continue to have, a material impact on Federated's expenses and, in turn, financial performance. As of March 31, 2016, given the 2014 Money Fund Rules, Money Fund Rules Guidance and Other Regulatory Developments, and the potential for future additional regulation or guidance, Federated is unable at this time to fully assess the degree of the impact of these regulatory requirements and developments, and Federated's related efforts, on its business, results of operations, financial condition and/or cash flows. These regulatory changes and developments, and Federated's efforts in responding to them, could have a material and adverse effect on Federated's business, results of operations, financial condition and/or cash flows. Federated also is unable to assess whether, or the degree to which, any of the Federated Funds, including money market funds or any of its other products, could ultimately be designated a systemically important non-bank financial company by the FSOC. In management's view, the issuance of final regulations pertaining to systemically important non-bank financial companies is, and any reforms ultimately put into effect would be, detrimental to Federated's money market fund business and could materially and adversely affect Federated's business, results of operations, financial condition and/or cash flows. Federated also is unable to assess at this time whether, or the degree to which, any potential options being evaluated in connection with these regulatory requirements and developments ultimately may be successful.

Members of Congress and political candidates also have been discussing proposals to enact a Financial Transactions Tax (FTT) on securities transactions in the United States. Proposals being discussed involve, among other matters being considered, taxing stock, bond, derivative and certain other transactions at varying rates, and providing credits to lower income individuals and married couples. The enactment of a FTT on a broad basis in the United States would be detrimental to Federated's fund business and could materially and adversely affect Federated's business, results of operations, financial condition and/or cash flows. Federated is unable to assess the degree of any potential impact that a United States FTT may have on its business, results of operations, financial condition and/or cash flows until such a proposal is enacted. Management does not anticipate a FTT will be enacted in the United States in 2016.

International

European Union money market fund reform efforts continue in 2016 without reforms being adopted. European-based money market funds face regulatory reform pressure in Europe similar to that faced in the U.S. On September 4, 2013, the European Commission released its money market fund reform proposal, which would have permitted either floating NAV money market funds or constant NAV (CNAV) money market funds that would have had to either build a capital buffer of 3% or convert to a floating NAV money market fund. On April 29, 2015, the European Parliament approved its version of money market fund reform, which, if adopted as proposed, would provide for (1) retail CNAV funds (to include charity, not for profit, public body and public foundation investors); (2) government CNAV funds that invest at least 99.5% of assets in government and government-guaranteed securities (and by 2020 in European Union government and government-guaranteed securities only); and (3) institutional funds constituting either (a) low volatility NAV (LVNAV) funds, which would be open to all investors, and could use amortized cost accounting for portfolio securities maturing within 90 days and mark-to-market prices for portfolio securities maturing after 90 days and that are subject to sunset within five years or at the European Commission's review, or (b) variable NAV (VNAV) money market funds (subject to new independent pricing rules not previously applied to VNAV funds in Europe and mark-to-market prices for all their portfolio securities). Under the European Parliament's proposal the retail CNAV, government CNAV and LVNAV funds would be required to have certain triggers in place for liquidity fees and gates, ratings would be permitted for money market funds, and there would be a nine month implementation period starting after the final regulation is promulgated.

The next step in the European reform process is for the European Council, which is made up of representatives from each Member State, to adopt its own version of money market fund reform and to then negotiate at a trialogue with European Parliament to form a final European text. Formal discussions of the money market fund reform file commenced under the

26

Management's Discussion and Analysis (continued)

of Financial Condition and Results of Operations (unaudited)

Italian Presidency (July 1, 2014 - December 31, 2014). The European reform process continues to progress with the Dutch Presidency expected to commence discussions at the European Council during the first half of 2016. The proposed money market fund reform could vary materially from that proposed by the European Parliament. While there are no certainties, management currently expects that the European reform process will move forward to a trialogue under the Slovakian Presidency during the second half of 2016, with a possible resolution by the end of 2016.

Discussions regarding a European FTT also continue without such an FTT being adopted. Notwithstanding challenges to its legality, discussions have continued regarding the scope, application and allocation of the FTT. Proponents of the FTT have sought the widest possible application of the FTT with low tax rates. On December 8, 2015, after one of the 11 participating European Union Member States, Estonia, dropped out of the discussions, and despite opposition by the United Kingdom, the remaining 10 participating Member States agreed on certain fundamental aspects of the tax, including that: (1) the FTT should apply to all (including intra-day) share transactions, except transactions of agents and clearing members when acting as facilitators and, possibly, certain narrowly-defined market making transactions; and (2) the FTT should apply to derivatives based on the principle of the widest possible base and low rates, without impacting the cost of sovereign borrowing, and be determined based on the type of derivative involved in a transaction (e.g., for option-type derivatives, preferably the option premium; for other types of derivatives coming with a maturity, preferably a term-adjusted notional amount or, where available, market value; and for other types of derivatives not coming with a maturity, the notional amount or, where available, market value), with adjustments to the tax base in some cases to avoid distortions and no market making exception. While the remaining participating Member States generally agreed that the jurisdictional scope of the FTT should be based on the location of the parties to the transaction and the share issuer, and that the impact of the FTT on the real economy and pension schemes should be minimized, additional analysis and discussions will be conducted on the FTT's impact, the financial viability of the FTT for each country and certain other issues. The participating Member States agreed to target mid-2016 for a final agreement on the FTT. The Netherlands Presidency of the European Council, however, did not include the FTT among the topics due for political agreement during its six-month term ending June 30, 2016. In late January 2016, Johan Van Overtveldt, the Finance Minister of Belgium, one of the remaining 10 participating Member States, announced that the present drafts of the FTT proposal were unacceptable. A February meeting of ministers from the Member States supporting the FTT also was canceled. Management does not anticipate an agreement on the FTT until the second half of 2016 at the earliest. The time needed to implement any agreement is not known at this time.

After publishing an initial consultative document on "Assessment Methodologies for Identifying Non-Bank Non-Insurer Global Systemically Important Financial Institutions" in January 2014, the Financial Stability Board (FSB) and International Organization of Securities Commissions (IOSCO) published for comment on March 6, 2015 a second consultative document on "Assessment Methodologies for Identifying Non-Bank Non-Insurer Global Systemically Important Financial Institutions" (Second Consultation). In the Second Consultation, the FSB and IOSCO took a more inclusive approach setting forth revised methodologies for assessing the systemic risk of investment funds with an increased focus on leverage, and a new methodology for asset managers that focuses on activities that are conducted by a particular asset manager and may have the potential to generate systemic risk and warrant consideration. Each methodology contemplated the application of a materiality threshold to determine an assessment pool and requires assessment of global systemic importance for entities selected for further analysis by reviewing "impact factors" (e.g., size, interconnectedness, complexity, substitutability, and cross jurisdictional activities) based on sector-specific indicators relating to each of the relevant impact factors. As noted in its May 29, 2015 comment letter submitted to the FSB and IOSCO on the Second Consultation, Federated believes that the application of Second Consultation's criteria should generally result in the exclusion of funds and asset managers that do not make significant use of leverage or derivatives from being designated as non-bank, non-insurance company global systemically important financial institutions under the Second Consultation. Management believes that money market funds should not be designated as non-bank, non-insurance company global systemically important financial institutions. On June 17, 2015, IOSCO announced that its risk analysis will initially focus on industry activities and managers in the broader global financial context in identifying potential systemic risks, rather than on the size of asset managers, but that after that review is complete, work on methodologies for the identification of individual entities should be reassessed. On July 30, 2015, the FSB announced that it has decided to wait to finalize the assessment methodologies for non-bank non-insurance company global systemically important financial institutions until after its current work on financial stability risks stemming from asset management activities is completed. The FSB indicated that, after discussing its initial findings in September 2015, it will develop activities-based policy recommendations by spring 2016. At that time, it is expected that the FSB, together with IOSCO, will conduct further analyses and attempt to finalize the asset management methodology.

European money market reform and the imposition of the FTT, particularly if enacted with broad application, would each be detrimental to Federated's fund business and could materially and adversely affect Federated's business, results of operations, financial condition and/or cash flows. Federated is unable to assess the degree of any potential impact that European money market reform proposals or the FTT may have on its business, results of operations, financial condition and/or cash flows until

27

Management's Discussion and Analysis (continued)

of Financial Condition and Results of Operations (unaudited)

such proposals are finalized and approved or the FTT is enacted. Federated also is unable to assess whether, or the degree to which Federated, any of its investment management subsidiaries or any of the Federated Funds, including money market funds, or any of its other products, could ultimately be determined to be a non-bank, non-insurance company global systemically important financial institution at this time.

(b)Low Short-Term Interest Rates

In December 2015, theFOMCincreased the federal funds target rate range by 25 basis points to 0.25%-0.50%, slightly raising short-term interest rates late in 2015 and into the first quarter of 2016. The federal funds target rate, which drives short-term interest rates, had been near zero for nearly seven years.As a result of the long-term near-zero interest-rate environment, the gross yield earned by certain money market funds is not sufficient to cover all of the fund's operating expenses.Since the fourth quarter of 2008, Federated has experienced Voluntary Yield-related Fee Waivers. These fee waivers have been partially offset by related reductions in distribution expense and net income attributable to noncontrolling interests as a result of Federated's mutual understanding and agreement with third-party intermediaries to sharethe impact of theVoluntary Yield-related Fee Waivers. See Note (4) to the Consolidated Financial Statements for additional information on Voluntary Yield-related Fee Waivers.

Assuming asset levels and mix remain constant and based on recent market conditions, Voluntary Yield-related Fee Waivers for the second quarter of 2016 may result in a negative pre-tax impact on income of approximately $6 million. Any potential waiver recovery may be offset by changes in customer relationships or arrangements, among other potential factors. An expected change in a customer relationship may reduce pre-tax income by approximately $6 million per quarter beginning in late 2016. See Part II, Item 5 for additional information. While the level of these fee waivers are impacted by various factors, increases in short-term interest rates that result in higher yields on securities purchased in money market fund portfolios would likely reduce the negative pre-tax impact of these waivers. Excluding the possible impact of this customer relationship change, management estimates that an increase of 25 basis points in gross yields on securities purchased in money market fund portfolios will likely reduce the negative pre-tax impact of these waivers to approximately $2 million per quarter and an increase of 50 basis points could nearly eliminate these waivers. The actual amount of future fee waivers, the resulting negative impact of these waivers and Federated's ability to recover the net pre-tax impact of such waivers (that is, the ability to capture the pre-tax impact going forward, not re-capture previously waived amounts) could vary significantly from management's estimates as they are contingent on a number of variables including, but not limited to, changes in assets within the money market funds, yields on instruments available for purchase by the money market funds, actions by the Governors, the FOMC, the Treasury Department, the SEC, FSOC and other governmental entities, changes in fees and expenses of the money market funds, changes in the mix of money market customer assets, changes in customer relationships, changes in money market product structures and offerings, demand for competing products, changes in distribution models, changes in the distribution fee arrangements with third parties, Federated's willingness to continue the fee waivers and changes in the extent to which the impact of the waivers is shared by any one or more third parties.

28

Management's Discussion and Analysis (continued)

of Financial Condition and Results of Operations (unaudited)

Asset Highlights

Managed Assets at Period End

	March 31,				Percent Change
(in millions)	2016		2015
By Asset Class
Money market	$	262,030	$	248,160	6	%
Equity	56,485		54,037		5
Fixed-income	51,178		53,562		(4	)
Total managed assets	$	369,693	$	355,759	4	%
By Product Type
Mutual Funds:
Money market	$	224,681	$	214,310	5	%
Equity	34,935		34,951		0
Fixed-income	37,826		41,039		(8	)
Total mutual fund assets	297,442		290,300		2
Separate Accounts:
Money market	37,349		33,850		10
Equity	21,550		19,086		13
Fixed-income	13,352		12,523		7
Total separate account assets	72,251		65,459		10
Total managed assets	$	369,693	$	355,759	4	%

Average Managed Assets

	Three Months Ended
	March 31,				Percent Change
(in millions)	2016		2015
By Asset Class
Money market	$	260,203	$	253,261	3	%
Equity	52,786		52,784		0
Fixed-income	50,880		53,405		(5	)
Total average managed assets	$	363,869	$	359,450	1	%
By Product Type
Mutual Funds:
Money market	$	221,848	$	218,168	2	%
Equity	32,921		34,162		(4	)
Fixed-income	37,776		41,013		(8	)
Total average mutual fund assets	292,545		293,343		0
Separate Accounts:
Money market	38,355		35,093		9
Equity	19,865		18,622		7
Fixed-income	13,104		12,392		6
Total average separate account assets	71,324		66,107		8
Total average managed assets	$	363,869	$	359,450	1	%

29

Management's Discussion and Analysis (continued)

of Financial Condition and Results of Operations (unaudited)

Changes in Equity and Fixed-Income Fund and Separate Account Assets

	Three Months Ended
	March 31,
(in millions)	2016			2015
Equity Funds
Beginning assets	$	34,125		$	33,141
Sales	3,439			2,805
Redemptions	(2,520		)	(1,914		)
Net sales	919			891
Net exchanges	(37		)	39
Market gains and losses/reinvestments1	(72		)	880
Ending assets	$	34,935		$	34,951
Equity Separate Accounts
Beginning assets	$	19,431		$	18,285
Sales2	2,350			1,693
Redemptions2	(1,229		)	(954		)
Net sales2	1,121			739
Market gains and losses3	998			62
Ending assets	$	21,550		$	19,086
Total Equity Assets
Beginning assets	$	53,556		$	51,426
Sales2	5,789			4,498
Redemptions2	(3,749		)	(2,868		)
Net sales2	2,040			1,630
Net exchanges	(37		)	39
Market gains and losses/reinvestments1	926			942
Ending assets	$	56,485		$	54,037
Fixed-income Funds
Beginning assets	$	37,989		$	40,456
Sales	3,334			4,491
Redemptions	(4,080		)	(4,193		)
Net (redemptions) sales	(746		)	298
Net exchanges	(49		)	(37		)
Market gains and losses/reinvestments1	632			322
Ending assets	$	37,826		$	41,039
Fixed-income Separate Accounts
Beginning assets	$	13,130		$	12,251
Sales2	197			239
Redemptions2	(328		)	(204		)
Net (redemptions) sales 2	(131		)	35
Market gains and losses3	353			237
Ending assets	$	13,352		$	12,523
Total Fixed-income Assets
Beginning assets	$	51,119		$	52,707
Sales2	3,531			4,730
Redemptions2	(4,408		)	(4,397		)
Net (redemptions) sales2	(877		)	333
Net exchanges	(49		)	(37		)
Market gains and losses/reinvestments1	985			559
Ending assets	$	51,178		$	53,562

1 Reflects the approximate changes in the fair value of the securities held by the portfolios and, to a lesser extent, reinvested dividends, distributions, net investment income and the impact of changes in foreign exchange rates.

2 For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of Market gains and losses.

3 Reflects the approximate changes in the fair value of the securities held by the portfolios.

30

Management's Discussion and Analysis (continued)

of Financial Condition and Results of Operations (unaudited)

Total Changes in Equity and Fixed-Income Assets

	Three Months Ended
	March 31,
(in millions)	2016			2015
Funds
Beginning assets	$	72,114		$	73,597
Sales	6,773			7,296
Redemptions	(6,600		)	(6,107		)
Net sales	173			1,189
Net exchanges	(86		)	2
Market gains and losses/reinvestments1	560			1,202
Ending assets	$	72,761		$	75,990
Separate Accounts
Beginning assets	$	32,561		$	30,536
Sales2	2,547			1,932
Redemptions2	(1,557		)	(1,158		)
Net sales2	990			774
Market gains and losses3	1,351			299
Ending assets	$	34,902		$	31,609
Total Assets
Beginning assets	$	104,675		$	104,133
Sales2	9,320			9,228
Redemptions2	(8,157		)	(7,265		)
Net sales2	1,163			1,963
Net exchanges	(86		)	2
Market gains and losses/reinvestments1	1,911			1,501
Ending assets	$	107,663		$	107,599

1 Reflects the approximate changes in the fair value of the securities held by the portfolios and, to a lesser extent, reinvested dividends, distributions, net investment income and the impact of changes in foreign exchange rates.

2 For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of Market gains and losses.

3 Reflects the approximate changes in the fair value of the securities held by the portfolios.

31

Management's Discussion and Analysis (continued)

of Financial Condition and Results of Operations (unaudited)

Changes in Federated’s average asset mix period-over-period across both asset class and product type have a direct impact on Federated’s operating income. Asset mix impacts Federated’s total revenue due to the difference in the fee rates earned on each asset class and product type per invested dollar and certain components of distribution expense can vary depending upon the asset class, distribution channel and/or the size of the customer relationship. The following table presents the relative composition of average managed assets and the percent of total revenue derived from each asset class and product type for the periods presented:

	Percent of Total Average Managed Assets				Percent of Total Revenue
	Three Months Ended March 31,				Three Months Ended March 31,
	2016		2015		2016		2015
By Asset Class
Money market assets	72	%	70	%	47	%	32	%
Equity assets	14	%	15	%	36	%	46	%
Fixed-income assets	14	%	15	%	17	%	22	%
By Product Type
Mutual Funds:
Money market assets	61	%	60	%	46	%	30	%
Equity assets	9	%	10	%	30	%	38	%
Fixed-income assets	10	%	11	%	14	%	20	%
Separate Accounts:
Money market assets	11	%	10	%	1	%	2	%
Equity assets	5	%	5	%	6	%	8	%
Fixed-income assets	4	%	4	%	3	%	2	%

Total managed assets represent the balance of AUM at a point in time. By contrast, average managed assets represent the average balance of AUM during a period of time. Because substantially all revenue and certain components of distribution expense are generally calculated daily based on AUM, changes in average managed assets are typically a key indicator of changes in revenue earned and asset-based expenses incurred during the same period.

As of March 31, 2016, total managed assets increased4% from March 31, 2015 primarily as a result of increases in money market and equity assets, partially offset by a decrease in fixed-income assets. Average managed assets increased1% for the three months endedMarch 31, 2016 as compared to the same period in 2015. Period-end money market assets increased6% at March 31, 2016 compared to March 31, 2015. Average money market assets increased3% for the three months endedMarch 31, 2016 as compared to the same period in 2015. The FOMC raised the benchmark rate in December 2015 for the first time in nearly ten years by 25 basis points to a still accommodative range of 0.25% to 0.50%, and policymakers have suggested additional increases may be made during the current year. Period-end equity assets increased5% at March 31, 2016 compared to March 31, 2015 primarily due to net sales, partially offset by market depreciation. Average equity assets remained flat for the three months endedMarch 31, 2016 compared to the same period in 2015. Period-end fixed-income assets decreased4% at March 31, 2016 compared to March 31, 2015, primarily as a result of net redemptions. Average fixed-income assets decreased5% for the three months endedMarch 31, 2016 as compared to the same period in 2015. Both equity and fixed-income assets were impacted by a volatile investing environment led by a sharp sell-off in equity assets during the first six weeks of the quarter as a slowing economy in China and the collapsing of oil and other commodity prices raised concerns about a possible global recession. However, the markets reversed in the back half of the quarter as oil prices bounced off their lows, news on the U.S., European and Chinese economies improved and global central banks added stimulus or, in the case of the Federal Reserve, put off tightening. Two key indicators of equity-market performance, the S&P 500 and Dow Jones Industrial Average, closed slightly up for the three-month period. In fixed income, yields as reflected by ten-year Treasuries rose off their mid-February lows, but still ended the quarter significantly lower than where they started, while credit sectors as measured by their respective indices mimicked equities and closed the quarter with positive returns after declining significantly early in the period.

32

Management's Discussion and Analysis (continued)

of Financial Condition and Results of Operations (unaudited)

Results of Operations

Revenue. Revenue increased$51.6 million for the three-month period ended March 31, 2016 as compared to the same period in 2015 primarily due to a decrease of $56.6 million in Voluntary Yield-related Fee Waivers and an increase of $2.5 million due to higher average money market assets. The increase in revenue was partially offset by a decrease of $4.8 million from lower average fixed-income assets and a decrease of $3.7 million due to a change in the mix of average equity assets.

See the previous section under the caption Business Developments - Low Short-Term Interest Rates and Note (4) to the Consolidated Financial Statements for additional information on Voluntary Yield-related Fee Waivers, including the offsetting decreases in distribution expense and net income attributable to noncontrolling interests and the net pre-tax impact on income.

For the three-month period ended March 31, 2016, Federated’s ratio of revenue from managed assets to average managed assets was 0.30% as compared to 0.25% for the same period of 2015. The increase in the rate was primarily due to the decrease in Voluntary Yield-related Fee Waivers.

Operating Expenses.Total operating expenses for the three-month period ended March 31, 2016increased$36.1 million compared to the same period in 2015. The increase is primarily related to Distribution expense, which increased$34.9 million in the first quarter of 2016 compared to the same period in 2015 primarily due to decreased Voluntary Yield-related Fee Waivers.

Nonoperating Income (Expenses). Nonoperating income (expenses), net increased $2.1 million for the three-month period ended March 31, 2016 as compared to the same period in 2015. The change is primarily due to (1) an increase in Gain (loss) on securities, net of $1.3 million due primarily to an increase in the market value of trading securities, (2) an increase in Investment income, net of $0.4 million and (3) a decrease in Debt expense of $0.3 million primarily due to a lower average interest rate resulting from the Term Loan no longer being covered by an interest rate swap that expired on April 1, 2015.

Income Taxes. The income tax provision increased$5.3 million for the three-month period ended March 31, 2016 as compared to the same period in 2015 primarily due to higher income before income taxes. The effective tax rate was 36.0% for the three-month period ended March 31, 2016 as compared to 37.8% for the same period in 2015. The decrease in the effective tax rate is primarily due to an increase in net income from noncontrolling interests in the first quarter of 2016 compared to the same period in 2015, which is not taxable to Federated but is included in Income before income taxes.

Net Income Attributable to the Noncontrolling Interests in Subsidiaries. Net income attributable to the noncontrolling interests in subsidiaries increased$3.4 million in the first quarter of 2016 compared to the same period in 2015 primarily due a decrease of $2.3 million in Voluntary Yield-related Fee Waivers and $1.1 million primarily related to a newly consolidated VIE.

Net Income Attributable to Federated Investors, Inc. Net income increased$9.0 million for the three-months ended March 31, 2016 as compared to the same period in 2015, primarily as a result of the changes in revenues and expenses noted above. Diluted earnings per share for the three-months ended March 31, 2016increased$0.09 as compared to the same period of 2015 primarily due to increased net income.

Liquidity and Capital Resources

Liquid Assets. At March 31, 2016, liquid assets, net of noncontrolling interests, consisting of cash and cash equivalents, investments and receivables, totaled $354.7 million as compared to $367.4 million at December 31, 2015. The change in liquid assets is primarily related to the decrease in Cash and cash equivalents and summarized in the discussion below in the sections Cash Provided by Operating Activities, Cash Used by Investing Activities and Cash Used by Financing Activities. This is partially offset by an increase in Receivables due primarily to increased revenue.

At March 31, 2016, Federated's liquid assets included investments in certain Federated-sponsored money market and fluctuating-value funds that may have direct and/or indirect exposures to international sovereign debt and currency risks. Federated continues to actively monitor its money market, fixed-income and equity portfolios to manage sovereign debt and currency risks with respect to certain eurozone countries, China and surrounding countries, and countries subject to economic sanctions. Federated's experienced portfolio managers and analysts work to evaluate credit risk through quantitative and fundamental analysis. Further, regarding international exposure, for cash invested in certain money market funds

33

Management's Discussion and Analysis (continued)

of Financial Condition and Results of Operations (unaudited)

(approximately $141 million), only indirect short-term exposures exist primarily to high-quality international bank names that are subject to Federated's credit analysis process and that meet the requirements of Rule 2a-7.

Cash Provided by Operating Activities. Net cash provided by operating activities totaled $25.6 million for the three months ended March 31, 2016 as compared to $14.7 million for the same period in 2015. The increase of $10.9 million was primarily due to a $51.6 million increase in revenue previously discussed, partially offset by the $34.9 million increase in distribution-related expense previously discussed.

Cash Used by Investing Activities. During the three-month period ended March 31, 2016, cash used by investing activities was $4.0 million which primarily represented cash paid for property and equipment (including technology).

Cash Used by Financing Activities. During the three-month period ended March 31, 2016, cash used by financing activities was $46.5 million. During the first three months of 2016, Federated (1) paid $26.0 million or $0.25 per share in dividends to holders of its common shares, (2) paid $13.7 million to purchase treasury stock and (3) repaid $6.4 million in connection with its long-term debt obligations (see Note (8) to the Consolidated Financial Statements for additional information).

Borrowings. In 2014, Federated entered into an unsecured Second Amended and Restated Credit Agreement with a syndicate of banks that refinanced both a $255 million Term Loan and a $200 million revolving credit facility (collectively, as amended, Credit Agreement). The original proceeds were used for general corporate purposes including cash payments related to acquisitions, dividends, investments and share repurchases. During each of the three-month periods ended March 31, 2016 and 2015, Federated made principal payments on the Term Loan of $6.4 million. As of March 31, 2016, the entire $200 million revolving credit facility was available for borrowings.

The Credit Agreement includes an interest coverage ratio covenant (consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) to consolidated interest expense) and a leverage ratio covenant (consolidated debt to consolidated EBITDA) as well as other customary terms and conditions. Federated was in compliance with all of its covenants, including its interest coverage and leverage ratios at and during the three months ended March 31, 2016. An interest coverage ratio of at least 4 to 1 is required and, as of March 31, 2016, the interest coverage ratio was 102 to 1. A leverage ratio of no more than 3 to 1 is required and, as of March 31, 2016, the leverage ratio was 0.6 to 1. The Credit Agreement has certain stated events of default and cross default provisions which would permit the lenders/counterparties to accelerate the repayment of the debt if not cured within the applicable grace periods. The events of default generally include breaches of contract, failure to make required loan payments, insolvency, cessation of business, deterioration in credit rating to below investment grade, notice of lien or assessment and other proceedings, whether voluntary or involuntary, that would require the repayment of amounts borrowed.

Future Cash Needs. In addition to the contractual obligations and contingent liabilities described below, management expects that principal uses of cash will include funding distribution expenditures, paying incentive and base compensation, paying shareholder dividends, repaying debt obligations, funding business acquisitions and global expansion, paying taxes, repurchasing company stock, developing and seeding new products, restructuring existing money market products and relationships and funding property and equipment (including technology). As a result of the highly regulated nature of the investment management business, management anticipates that aggregate expenditures for compliance and investment management personnel, compliance systems and related professional and consulting fees may continue to increase.

OnApril 28, 2016, the board of directors declared a$0.25per share dividend to shareholders of record as ofMay 6, 2016to be paid onMay 13, 2016.

After evaluating Federated’s existing liquid assets, expected continuing cash flow from operations, its borrowing capacity under the revolving credit facility of the Credit Agreement and its ability to obtain additional financing arrangements and issue debt or stock, management believes it will have sufficient liquidity to meet its present and reasonably foreseeable cash needs. Although management currently is not projecting to draw on the availability under the revolving credit facility for the next twelve months, management may choose to borrow additional amounts up to the maximum available under the revolving credit facility which, subsequent to the $6.4 million debt payment made in early April 2016, could cause total outstanding borrowings to total as much as $404 million.

34

Management's Discussion and Analysis (continued)

of Financial Condition and Results of Operations (unaudited)

Financial Position

The following discussion summarizes significant changes on the Consolidated Balance Sheets that are not discussed elsewhere in Management’s Discussion and Analysis of Financial Condition and Results of Operations as well as the status of Federated’s goodwill as of March 31, 2016.

For balances at March 31, 2016 as compared to December 31, 2015, Investments—consolidated investment companiesincreased$29.8 million and Redeemable noncontrolling interest in subsidiariesincreased$17.2 million due primarily to the impact of a newly consolidated VIE as a result of the adoption of ASU 2015-02. See Note (2) to the Consolidated Financial Statements for additional information.

Accrued compensation and benefits at March 31, 2016decreased$48.3 million from December 31, 2015 primarily due to the 2015 accrued annual incentive compensation being paid in the first quarter of 2016 ($67.6 million), partially offset by certain 2016 incentive compensation accruals recorded at March 31, 2016 ($21.3 million).

Other current liabilities at March 31, 2016increased$11.3 million from December 31, 2015 primarily due to the accrual for federal taxes at March 31, 2016 which was paid in the second quarter of 2016.

There were no indicators of goodwill impairment as of March 31, 2016 as Federated’s market capitalization exceeded the book value of equity by more than 350%.

Contractual Obligations and Contingent Liabilities

Contingent Payments. Pursuant to various acquisition- and employee-related agreements, Federated is required to make certain periodic contingent payments. See Note (12) to the Consolidated Financial Statements for more information.

Legal Proceedings. Federated has claims asserted against it from time to time. See Note (12) to the Consolidated Financial Statements for additional information.

Recent Accounting Pronouncements

For a complete list of new accounting standards, see Note (2) to the Consolidated Financial Statements.

Critical Accounting Policies

Federated’s Consolidated Financial Statements have been prepared in accordance with GAAP. In preparing the financial statements, management is required to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Management continually evaluates the accounting policies and estimates it uses to prepare the Consolidated Financial Statements. In general, management's estimates are based on historical experience, information from third-party professionals and various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results may differ from those estimates made by management and those differences may be material.

Of the significant accounting policies described in Federated’s Annual Report on Form 10-K for the year ended December 31, 2015, management believes that its policy regarding accounting for intangible assets involves a higher degree of judgment and complexity. See Federated’s Annual Report on Form 10-K for the year ended December 31, 2015, Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations under the section Critical Accounting Policies for a complete discussion of this policy.

35

Part I, Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have not been any material changes to Federated’s exposures to market risk during the three months ended March 31, 2016 that would require an update to the disclosures provided in Federated’s Annual Report on Form 10-K for the year ended December 31, 2015.

Part I, Item 4. Controls and Procedures

(a) Federated carried out an evaluation, under the supervision and with the participation of management, including Federated’s President and Chief Executive Officer and Chief Financial Officer, of the effectiveness of Federated’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2016. Based upon that evaluation, the President and Chief Executive Officer and the Chief Financial Officer concluded that Federated’s disclosure controls and procedures were effective at March 31, 2016.

(b) There has been no change in Federated’s internal control over financial reporting that occurred during the quarter ended March 31, 2016 that has materially affected, or is reasonably likely to materially affect, Federated’s internal control over financial reporting.

36

Part II. Other Information

(unaudited)

Item 1. Legal Proceedings

Information regarding this Item is contained in Note (12) to the Consolidated Financial Statements.

Item 1A. Risk Factors

There are no material changes to the risk factors included in Federated’s Annual Report on Form 10-K for the year ended December 31, 2015.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(c) The following table summarizes stock repurchases under Federated’s share repurchase programs during the first quarter of 2016.

	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs1	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs1
January	80,000	$	27.73	80,000	2,679,616
February	242,700	24.44		242,700	2,436,916
March	200,000	27.84		200,000	2,236,916
Total	522,700	$	26.25	522,700	2,236,916

1 In 2015, the board of directors authorized a share repurchase program that allows Federated to buy back up to4.0 millionshares of Federated Class B common stock with no stated expiration date. See Note (10) to the Consolidated Financial Statements for additional information on this program.

Item 5. Other Information

ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

As previously disclosed in Federated's Form 10-K for the fiscal year ended December 31, 2015, on February 18, 2016, the Board of Directors of Federated approved the transfer by its wholly owned subsidiary, Federated Investment Management Company (FIMCO), of FIMCO's general partnership interest in Passport Research, Ltd. (Passport) to a wholly owned subsidiary of The Jones Financial Companies, L.L.L.P. (Jones Financial). FIMCO has entered into a definitive Agreement, dated as of April 27, 2016, by and among FIMCO, Passport, Jones Financial, for itself and on behalf of Edward D. Jones & Co., L.P. (EDJones) and Passport Holdings LLC (as the Buyer). The transfer is expected to be consummated in the fourth quarter of 2016, after completion of certain related transactions in the third and fourth quarters of 2016.

FIMCO is currently the general partner of Passport, and EDJones is currently the limited partner of Passport. FIMCO and Passport are registered investment advisers under the Investment Advisers Act of 1940, and EDJones is a registered broker-dealer under the Securities Exchange Act of 1934 and a member of FINRA. Passport currently serves as the investment adviser for two registered investment companies (Funds), the Federated Tax-Free Money Market Fund (TFMMF), a tax-exempt money market fund with approximately $4.0 billion in net assets as of March 31, 2016, and the Edward Jones Money Market Fund (EJMMF), a government money market fund with approximately $14.0 billion in net assets as of March 31, 2016. Jones currently serves as the co-transfer agent for TFMMF and the transfer agent for EJMMF, and serves as an intermediary for both Funds.

Prior to the partnership interest transfer, it is anticipated that customers of EDJones with accounts in TFMMF will be given the opportunity to transition from TFMMF to EJMMF during the third quarter of 2016 and, thereafter, TFMMF will either be liquidated or reorganized into another Federated-sponsored tax-exempt money market fund prior to the transfer being consummated. In connection with the transfer, and subject to the contingencies described below, the Board of Trustees of, and certain service providers to, EJMMF will be replaced. In addition to the transfer and related transactions described above, the definitive Agreement contemplates that, after the transfer and subject to the contingencies described below, (1) Passport, as a subsidiary of Jones Financial, will remain the investment adviser for EJMMF, (2) FIMCO will become the sub-adviser for EJMMF and (3) Federated Administrative Services (FAS), a wholly owned subsidiary of Federated Investors, Inc. and an affiliate of FIMCO, will continue to provide certain administrative services with respect to EJMMF. The definitive Agreement

37

also includes customary representations, warranties and covenants, including certain mutual covenants relating to non-solicitation of certain employees and indemnification.

The partnership interest transfer, and related transactions, are subject to various approvals, consents and other contingencies, such as Fund board and regulator approvals, Fund shareholder consents and approvals, and other conditions to consummation. Given these contingencies, there is no assurance that the transfer, or related transactions, will occur in the manner described above.

OTHER EVENTS - APPOINTMENT OF CHAIRMAN EMERITUS AND CHAIRMAN

At an April 28, 2016 meeting of Federated's Board of Directors (Board), the Board appointed Mr. John F. Donahue as Chairman Emeritus. Mr. Donahue was formerly Federated's Chairman. In the position of Chairman Emeritus, Mr. Donahue's wealth of business, industry and management experience as a co-founder of Federated will continue to be available to Federated's Board and senior management. Mr. Donahue will continue to serve Federated at his current salary, bonus and benefits levels. The Board also appointed Mr. J. Christopher Donahue as Chairman, President and Chief Executive Officer (CEO) of Federated. Mr. J. Christopher Donahue previously served as President and CEO of Federated. Given Mr. J. Christopher Donahue's knowledge, experience, and strategic vision, and the evolving investment management industry, the Board determined that combining the role of Chairman with President and CEO would best serve the interests of Federated and its shareholders.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

At the Annual Meeting of Shareholders of Federated held on Thursday, April 28, 2016 in Pittsburgh, Pennsylvania, the holder of Federated's Class A Common Stock, which constituted all of the shares entitled to vote at the meeting, approved the following proposals, both of which are described in more detail in Federated's Information Statement to shareholders dated March 16, 2016.

Proposal I

The holder of Federated's Class A Common Stock elected seven individuals to the Board as set forth below:

Director	Shares Voted For	Shares Voted Against	Shares Withheld
J. Christopher Donahue	9,000	—	—
Thomas R. Donahue	9,000	—	—
Michael J. Farrell	9,000	—	—
John B. Fisher	9,000	—	—
Marie Milie Jones	9,000	—	—
David M. Kelly	9,000	—	—
John W. McGonigle	9,000	—	—

Proposal II

The holder of Federated's Class A Common stock also re-approved the Federated Stock Incentive Plan (Plan): 9,000 shares were voted for the Plan, with no shares being voted against or withheld.

38

Part II. Other Information

(unaudited)

Item 6. Exhibits

The following exhibits required to be filed or furnished by Item 601 of Regulation S-K are filed or furnished herewith and incorporated by reference herein:

Exhibit 10.1 – Agreement, dated as of April 27, 2016, by and among Federated Investment Management Company, Passport Research Ltd., The Jones Financial Companies, L.L.L.P. for itself and on behalf of Edward D. Jones & Co., L.P., and Passport Holdings LLC (filed herewith)

Exhibit 31.1 – Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

Exhibit 31.2 – Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

Exhibit 32 – Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

The following XBRL documents are filed herewith:

Exhibit 101.INS – XBRL Instance Document

Exhibit 101.SCH – XBRL Taxonomy Extension Schema Document

Exhibit 101.CAL – XBRL Taxonomy Extension Calculation Linkbase Document

Exhibit 101.DEF – XBRL Taxonomy Extension Definition Linkbase Document

Exhibit 101.LAB – XBRL Taxonomy Extension Label Linkbase Document

Exhibit 101.PRE – XBRL Taxonomy Extension Presentation Linkbase Document

39

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			Federated Investors, Inc.
			(Registrant)
Date	April 29, 2016	By:	/s/ J. Christopher Donahue
			J. Christopher Donahue
			President and
			Chief Executive Officer
Date	April 29, 2016	By:	/s/ Thomas R. Donahue
			Thomas R. Donahue
			Chief Financial Officer

40

EX-10.1

Exhibit 10.1            

Execution Copy

AGREEMENT

DATED AS OF APRIL 27, 2016

BY AND AMONG

FEDERATED INVESTMENT MANAGEMENT COMPANY,

PASSPORT RESEARCH LTD.,

THE JONES FINANCIAL COMPANIES, L.L.L.P.,

EDWARD D. JONES & CO. L.P.,

AND

PASSPORT HOLDINGS LLC

Exhibit 10.1            

Execution Copy

Table of Contents

1.Definitions        2

2.The Transactions.    10

2.1General.    10

2.2The TFMMF Transition.    10

2.3Post-Transition TFMMF Reorganization/Liquidation    10

2.4The Passport Transfer.    11

2.5EJMMF Adoption.    12

2.6Efforts to Consummate Transactions    12

3.Payments; Fees; Expenses    13

3.1Consideration    13

3.2Pre-Closing Distribution    13

3.3Sub-Advisory/Administration Fee    14

3.4Early Termination of, or Adjustment of Allocable Share under,    New Sub-Advisory Agreement    15

3.5Expenses.    16

4.Confidentiality.    18

4.1Disclosure of Confidential Information.    18

4.2Treatment of Confidential Information.    19

4.3Customer Information.    19

4.4Compelled Disclosures    20

4.5Return of Confidential Information    20

4.6Non-Solicitation of Employees    20

4.7Non-Exclusive Equitable Remedy.    21

5.The Closing; Termination.    21

5.1Closing.    21

6.Representations and Warranties.    22

6.1Mutual Representations and Warranties    22

6.2Representations and Warranties of Federated    23

6.3Representations and Warranties of Jones and Buyer    26

6.4Disclaimers        27

6.5No Other Representations and Warranties    28

7.Covenants        29

i

Exhibit 10.1            

Execution Copy

7.1Mutual Covenants    29

7.2Taxes.            31

7.3Covenants of Federated.    31

7.4Covenants of Buyer and Jones.    32

8.Conditions Precedent to Obligations    32

8.1Conditions Precedent for all Transactions    32

8.2Conditions Precedent for the TFMMF Transition    34

8.3Conditions Precedent for the Passport Transfer    35

8.4Conditions Precedent for the EJMMF Adoption    37

9.Liability and Indemnification    37

9.1Liability.        37

9.2Indemnification.    38

9.3Limitations.        40

10.Miscellaneous Provisions.    41

10.1Notices    41

10.2Entire Agreement    42

10.3Amendment; Waiver.    43

10.4Severability    43

10.5Binding Effect.    43

10.6Assignment    43

10.7Representation By Counsel; Interpretation    43

10.8Applicable Law; Venue    44

10.9Multiple Counterparts    45

10.10    Waiver of Jury Trial    45

10.11    Further Assurances    45

10.12    Third Parties    45

10.13    Announcements; Publicity    45

ii

Exhibit 10.1            

Execution Copy

ExhibitsExhibit A        Form of New Advisory Agreement
Exhibit B-1        Form of New Custodian Agreement
Exhibit B-2        Form of New Administration (Fund Accounting) Agreement
Exhibit C        Form of New Distribution Agreement
Exhibit D        Form of New 12b-1 Plan
Exhibit E        Form of New 18f-3 Plan
Exhibit F        Form of New Sub-Advisory Agreement
Exhibit G        Form of New Shareholder Services Plan
Exhibit H        Form of New Shareholder Services AgreementExhibit I        Form of New Transfer Agent Agreement
Exhibit J        Form of Assignment and Cross ReceiptExhibit K        Form of Assignment and Substitution Agreement and Consent

SchedulesSchedule 1.58        Passport Records
Schedule 6.1(d)    Litigation and Other Proceedings
Schedule 6.1(g)    Required Notices, Consents and Approvals
Schedule 6.1(h)    Affiliated Transactions
Schedule 6.2(j)    Passport Known Liabilities
Schedule 6.2(l)    Relevant Passport Contracts

iii

Exhibit 10.1            

Execution Copy

AGREEMENT

This AGREEMENT (as amended, modified, supplemented or restated from time to time, the “Agreement”) is made as of this 27^th day of April, 2016, by and among Federated Investment Management Company (“Federated”), Passport Research Ltd. (“Passport”), The Jones Financial Companies, L.L.L.P. (“Jones Financial”), for itself and for and on behalf of Edward D. Jones & Co., L.P. (“EDJones” and, together with The Jones Financial Companies, L.L.L.P., “Jones”), and Passport Holdings LLC (“Buyer”) (each of Federated, Passport, EDJones, Jones and Buyer being a “Party” and, collectively, as applicable, the “Parties”).

RECITALS

WHEREAS, Federated is the sole general partner of Passport and EDJones is the sole limited partner of Passport;

WHEREAS, Passport is an investment adviser registered with the SEC (as defined below), and serves as the investment adviser to two money market mutual funds registered under the 1940 Act (as defined below), the Edward Jones Money Market Fund (“EJMMF”), a Massachusetts business trust, and the Tax-Fee Money Market Fund (“TFMMF”), a series of the Money Market Obligations Trust (“MMOT”), a Massachusetts business trust;

WHEREAS, the Parties desire that Passport will be restructured by Federated transferring its general partnership interest in Passport to Buyer, such that Buyer shall become the sole general partner of Passport and EDJones will assign its interest as limited partner to Jones Financial so that Jones Financial shall be the sole limited partner of Passport (the “PassportTransfer”);

WHEREAS, prior to the Passport Transfer, EDJones desires that shareholder accounts in TFMMF for which EDJones, or an Affiliate, are broker/intermediary of record (collectively, as applicable, “Jones TFMMF Shareholders”), and related redemption proceeds, will be transitioned to the EJMMF in stages through a series of redemption and reinvestment transactions (the “TFMMF Transition”);

WHEREAS, after the TFMMF Transition and prior to the Passport Transfer, Federated and Passport (pre-Closing) desire to seek to cause TFMMF to either (a) be reorganized with and into Federated Municipal Obligations Fund (“MOF”), another series of MMOT, or (b) liquidated and, to the extent possible, remaining shareholder accounts given the opportunity to transition to MOF or another money market fund advised by Federated or its Affiliates (the “Post-Transition TFMMF Reorganization/Liquidation”);

WHEREAS, prior to the Passport Transfer (a) the Board of Trustees of the EJMMF (the “EJMMF Board”) will be asked to approve the EJMMF Board Approval Items (as defined below) and recommend certain of them as EJMMF Shareholder Approval Items (as defined below) for approval by the shareholders of the EJMMF, and (b) the shareholders of the EJMMF will be asked to approve the EJMMF Shareholder Approval Items (as defined below) at a duly convened special meeting of the shareholders of the EJMMF (the “EJMMF Shareholder Meeting”);

1

Exhibit 10.1            

Execution Copy

WHEREAS, the Passport Transfer will constitute a change of control and automatically terminate the investment advisory agreement between the EJMMF and Passport; and

WHEREAS, immediately after the Passport Transfer, as approved by shareholders of the EJMMF at the EJMMF Shareholder Meeting, (a) the existing members of the EJMMF Board will resign and be replaced by a new Board of Trustees, (b) Passport will be the investment adviser of the EJMMF pursuant to the New Advisory Agreement (as defined below), (c) Federated will be the investment sub-adviser, and Federated (through its Affiliate, Federated Administrative Services) will provide certain administrative services, to the EJMMF pursuant to the New Sub-Advisory Agreement (as defined below), and (d) the other changes contemplated by the EJMMF Board Approval Items and EJMMF Shareholder Approval Items (as defined below) will become effective (the “EJMMF Adoption”).

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

2

Exhibit 10.1            

Execution Copy

1.Definitions. Unless otherwise indicated, terms used in this Agreement shall have the following meanings:

1.1“1940 Act” means the Investment Company Act of 1940, as amended, and the rules and regulations thereunder, as amended.

1.2“Advisers Act” means the Investment Advisers Act of 1940, as amended, and the rules and regulations thereunder, as amended.

1.3“Affiliate” of a Person means a Person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with, the first Person, including a subsidiary of the first Person, a Person of which the first Person is a subsidiary, or another subsidiary of a Person of which the first Person is also a subsidiary. For purposes of this definition, “Control” (and “controlled by” and “under common control with”) means (a) owning, directly or indirectly, 50% of the voting securities of a Person or (b) otherwise having the power, directly or indirectly, to exercise a controlling influence over, or to direct or cause the direction of, a Person’s management or policies through owning voting securities, by contract or credit arrangement, as trustee or executor, or otherwise. For purposes of this Agreement and the Ancillary Closing Documents, Jones and Buyer, and their respective Affiliates, shall not be considered “Affiliates” of Federated or Passport (pre-Closing), and Federated and Passport (pre-Closing), and their respective Affiliates, shall not be considered “Affiliates” or Jones or Buyer, by virtue of EDJones’ and Federated’s Respective Ownership Interests in Passport (pre-Closing).

1.4“Affiliated Person” means, with respect to any Person, an “affiliated person” of such Person as such term is defined in Section 2(a)(3) of the 1940 Act.

1.5“Agreement” has the meaning set forth in the preamble.

1.6“Allocable Share Reduction” has the meaning set forth in Section 3.4(b).

1.7“Ancillary Closing Documents” means each consent, amendment to agreement, certificate, instrument or other ancillary document expressly required by this Agreement, or as the Parties may agree is necessary or appropriate, in connection with the Transactions, other than the Post-Closing EJMMF-Related Documents.

1.8“Business Day” means any day other than Saturday, Sunday or any day on which the New York Stock Exchange is closed.

1.9“Buyer” has the meaning set forth in the preamble.

1.10“Closing” has the meaning set forth in Section 5.1.

1.11“Closing Date” has the meaning set forth in Section 5.1.

1.12“Code” means Internal Revenue Code of 1986, as amended, and the rules and regulations thereunder, as amended.

3

Exhibit 10.1            

Execution Copy

1.13“Confidential Information” means (i) all trade secrets, proprietary information, and material of the Disclosing Party (defined below), including (a) source and object code, prices, trade secrets, mask works, databases, hardware, software, designs and techniques, programs, engine protocols, models, displays and manuals, and the selection, coordination, and arrangement of the contents of such materials, and (b) any unpublished information concerning research activities and plans, customers, marketing or sales plans, sales forecasts or results of marketing efforts, pricing or pricing strategies, costs, operational techniques, strategic plans, and unpublished financial information, including information concerning revenues, profits and profit margins; (ii) customer information; (iii) any other information that is specifically identified or marked as “confidential” or “proprietary”; and (iv) any notification delivered pursuant to Section 10.1 and the contents thereof.

Confidential Information shall not include any information or material, or any element thereof, whether or not such information or material is otherwise Confidential Information for the purposes of this Agreement, to the extent any such information or material, or any element thereof: (i) has previously become or is generally known to the public, unless it has become generally known through a breach of this Agreement or another confidentiality or non-disclosure agreement (to the extent the Recipient knew or reasonably should have known of such other confidentiality or non-disclosure agreement when the information becomes known to the public); (ii) was already rightfully known to the Receiving Party prior to being disclosed by or obtained from the Disclosing Party, as evidenced by written records of or by proof of actual use by the Receiving Party; (iii) has been or is rightfully received by the Receiving Party from a third Person (other than the Disclosing Party) without restriction or disclosure and without breach of a duty of confidentiality (that was known to the Receiving Party at the time received) to the Disclosing Party; or (iv) has been independently developed by the Receiving Party irrespective of access to Confidential Information of the Disclosing Party. It shall be presumed that any Confidential Information in a Receiving Party’s possession is not within exceptions (ii), (iii) or (iv) above, and the burden shall be upon the Receiving Party to prove otherwise.

1.14“Consequential Damages” has the meaning set forth in Section 9.3(d).

1.15“Disclosing Party” has the meaning set forth in Section 4.1.

1.16“EDJones” has the meaning set forth in the preamble.

1.17“EJMMF” has the meaning set forth in the recitals.

1.18“EJMMF Adoption” has the meaning set forth in the recitals.

1.19“EJMMF Board” has the meaning set forth in the recitals, with each member of such EJMMF Board being an “EJMMF Trustee”.

1.20“EJMMF Board Approval Items” has the meaning set forth in Section 2.5(a).

1.21“EJMMF Proxy” has the meaning set forth in Section 2.5(c).

4

Exhibit 10.1            

Execution Copy

1.22“EJMMF Shareholder Approval Items” has the meaning set forth in Section 2.5(b).

1.23“EJMMF Shareholder Meeting” has the meaning set forth in the recitals.

1.24“Federated” has the meaning set forth in the preamble.

1.25“Federated Indemnification Cap” has the meaning set forth in Section 9.3(a)(i).

1.26“GAAP” means U.S. generally accepted accounting principles, consistently applied.

1.27“Good Standing” has the meaning set forth in Section 3.4(d).

1.28“Governing Documents” means (a) with respect to any corporation, its articles or certificate of incorporation, by-laws and other organizational documents, as amended, (b) with respect to any limited partnership, its certificate of limited partnership, limited partnership agreement, or other organizational documents, as amended, (c) with respect to any business trust, its declaration of trust, trust agreement and other organizational documents, as amended, and (d) with respect to any other Person, its comparable governing agreements and other organizational documents, as amended.

1.29“Governmental Body” means any domestic or foreign, federal, state, territorial, county or municipal, or other local government or multi-national body, any subdivision, agency, commission or authority thereof, any court, or any quasi-governmental or private body exercising any judicial, regulatory or taxing authority thereunder.

1.30“Guaranteed Amount” has the meaning set forth in Section 3.4(b).

1.31“Indemnification Deductible” has the meaning set forth in Section 9.3(c).

1.32“Indemnified Parties” has the meaning set forth in Section 9.2(a).

1.33“Involuntary Reduction” has the meaning set forth in Section 3.4(b).

1.34“Jones” has the meaning set forth in the preamble.

1.35“Jones Financial” has the meaning set forth in the preamble.

1.36“Jones Indemnification Cap” has the meaning set forth in Section 9.3(a)(ii).

1.37“Jones TFMMF Shareholders” has the meaning set forth in the recitals.

1.38“Liabilities” means liability of any kind, including any claim, debt, loss, cost, expense, duty, charge, commitment, assessment, obligation or other liability of any kind whatsoever, whether or not accrued or fixed, known or unknown, assessed or assessable, absolute or contingent, determined or determinable, or when due or to become due, or otherwise.

5

Exhibit 10.1            

Execution Copy

1.39“Losses” means any and all claims, demands, obligations, losses, taxes, fines, penalties, costs, expenses, royalties, litigation, deficiencies, damages or other Liabilities (whether or not resulting from third party claims), including interest and penalties with respect thereto and out-of-pocket expenses and reasonable attorneys’ and accountants’ fees and expenses incurred in the investigation or defense of any of the same or in asserting, preserving or enforcing any respective rights under this Agreement or any Ancillary Closing Document.

1.40 “Material Adverse Change” means:

(a)    with respect to EDJones, Jones, Buyer or, from and after the Closing, Passport or the EJMMF, subject to clause (c) below, (i) any event, occurrence, fact, circumstance, condition, change or effect (or series of events, occurrences, facts, conditions, changes or effects arising from the same cause) that is (are) materially adverse to EDJones, Jones, Buyer or, from and after the Closing, Passport or the EJMMF, or to the financial condition, business or results of operations of any of them, either individually or taken as a whole, or (ii) any event, occurrence, fact, circumstance, condition, change or effect (or series of events, occurrences, facts, conditions, changes or effects arising from the same cause) affecting EDJones, Jones, Buyer or, from and after the Closing, Passport or the EJMMF which does or would reasonably be expected to prevent or materially delay the consummation of the Transactions or does or would reasonably be expected to materially and adversely affect the ability of EDJones, Jones, Buyer or, from and after the Closing, Passport or the EJMMF, to perform any of their respective obligations under this Agreement or any Ancillary Closing Document;

(b)    with respect to Federated and, prior to the Closing, Passport and the EJMMF and TFMMF, subject to clause (c) below, (i) any event, occurrence, fact, circumstance, condition, change or effect (or series of events, occurrences, facts, conditions, changes or effects arising from the same cause) that is (are) materially adverse to Federated or, prior to the Closing, Passport or the EJMMF or TFMMF, or to the financial condition, business or results of operations of any of them, either individually or taken as a whole, or (ii) any event, occurrence, fact, circumstance, condition, change or effect (or series of events, occurrences, facts, conditions, changes or effects arising from the same cause) affecting Federated or, prior to the Closing, Passport or the EJMMF or TFMMF which does or would reasonably be expected to prevent or materially delay the consummation of the Transactions or does or would reasonably be expected to materially and adversely affect the ability of Federated or, prior to the Closing, Passport or the EJMMF or TFMMF, to perform any of their respective obligations under this Agreement or any Ancillary Closing Document;

(c)    Notwithstanding clauses (a) and (b) above, none of the following shall be deemed to constitute, and none of the following shall be taken into account in determining whether there has been, a Material Adverse Change:

(i)    any adverse change, event, development, or effect arising from or relating to (1) changes or conditions affecting the investment advisory and asset management industries generally, so long as such condition does not have a materially disproportionate effect on the relevant Party or the EJMMF or the TFMMF, as applicable, relative to other businesses in the investment advisory and asset management industries or other money market

6

Exhibit 10.1            

Execution Copy

mutual funds registered under the 1940 Act, as applicable; (2) any changes in applicable law, rule or regulation or GAAP; or (3) the execution of, the taking of any actions required to be taken under, or contemplated by, this Agreement or any Ancillary Closing Document, or the taking of any action at the request or direction of, or consented to by, the other Parties, including the public disclosure of a Party’s intention to enter into, or entering into, this Agreement or the consummation of the Transactions;

(ii)    any event, occurrence, or circumstance existing as of the date of this Agreement specifically concerning the relevant Party or the EJMMF or the TFMMF, as applicable, of which the other Parties have actual knowledge as of the date hereof through due diligence or the negotiation of this Agreement or otherwise or that is disclosed on any Schedule to this Agreement by a Party; and

(iii)    any adverse change in or effect on the relevant Party or the EJMMF or the TFMMF, as applicable, that is cured (if capable of being cured) to Federated’s or Jones’ (as applicable) reasonable satisfaction before the earlier of (1) the Closing Date (or, as applicable, any other date on which a Transaction is consummated) and (2) the date on which the Agreement is terminated pursuant to its terms.

1.41“MMOT” has the meaning set forth in the recitals.

1.42“MOF” has the meaning set forth in the recitals.

1.43“NAV” has the meaning set forth in 3.5(b)(iii).

1.44“NAV Stability Condition” means, with respect to either the TFMMF or EJMMF, that, as of the time of determination, the NAV of such fund shall not have fallen below $1.00 per share by more than $0.005 (i.e., such fund shall not have “broken the buck”) and no redeeming shareholder of such fund shall have received less than $1.00 in value per share upon redeeming.

1.45“New Advisory Agreement” means a new Investment Management and Administration Agreement by and between Passport and the EJMMF in substantially the form attached hereto as Exhibit A (with such changes as may be mutually agreed upon by the Parties).

1.46“New Custodian Agreement and New Administration (Fund Accounting) Agreement” means: (a) an agreement by and between the EJMMF and State Street Bank and Trust Company pursuant to which such Person shall serve as the custodian of the assets of the EJMMF post-Closing substantially in the form attached hereto as Exhibit B-1 (with such changes as may be mutually agreed upon by the Parties), and (b) an agreement by and between the EJMMF and State Street Bank and Trust Company pursuant to which such Person shall provide certain administrative (including fund accounting) services to the EJMMF post-Closing substantially in the form attached hereto as Exhibit B-2 (with such changes as may be mutually agreed upon by the Parties).

7

Exhibit 10.1            

Execution Copy

1.47“New Distribution Agreement” means an agreement by and between EJMMF and EDJones pursuant to which such Person shall serve as distributor and/or principal underwriter of the shares of the EJMMF substantially in the form attached hereto as Exhibit C (with such changes as may be mutually agreed upon by the Parties).

1.48“New EJMMF Trustees” means one or more individuals recommended by Jones (i) each of whom is legally eligible to serve as a trustee of the EJMMF under applicable law, rule or regulation, including the 1940 Act, and (ii) all but one of whom would not be an “interested person” of the EJMMF within the meaning of Section 2(a)(19) of the 1940 Act.

1.49“New Multi-Manager Exemption” means an application for an exemptive order from the SEC in order to permit the entry into an amendment of investment sub-advisory agreements without the need for shareholder approval as otherwise required under Section 15 of the 1940 Act.

1.50“New Rule 12b-1 Plan” means a plan adopted pursuant to Rule 12b-1 under the 1940 Act pursuant to which the EJMMF may compensate third parties for providing distribution and shareholder services substantially in the form attached hereto as Exhibit D (with such changes as may be mutually agreed upon by the Parties).

1.51“New Rule 18f-3 Plan” means a multi-class plan adopted (or amended) pursuant to Rule 18f-3 under the 1940 Act providing for distribution and service characteristics of shares of the EJMMF substantially in the form attached hereto as Exhibit E (with such changes as may be mutually agreed upon by the Parties).

1.52“New Shareholder Services Plan and New Shareholder Services Agreement” means: (a) a plan, which may or may not be adopted under Rule 12b-1 under the 1940 Act, providing for a fee payable by the EJMMF to Jones (or a wholly-owned subsidiary of Jones) for provision of shareholder/administrative services in connection with the EJMMF, including, as applicable, with respect to the use of the EJMMF as a sweep investment vehicle with respect to customer accounts maintained at Jones or its Affiliates, substantially in the form attached hereto as Exhibit G (with such changes as may be mutually agreed upon by the Parties), and (b) the agreement, which may or may not be adopted under Rule 12b-1 under the 1940 Act, providing for a fee payable by the EJMMF to Jones (or a wholly-owned subsidiary of Jones) for the provision of shareholder services in connection with the EJMMF substantially in the form attached hereto as Exhibit H (with such changes as may be mutually agreed upon by the Parties).

1.53“New Sub-Advisory Agreement” means a new Sub-Advisory and Sub-Administration Agreement by and between Passport and Federated providing for Federated to provide investment sub-advisory services, and Federated (or its Affiliate, Federated Administrative Services) to provide sub-administration services, solely with respect to the EJMMF, subject to the general supervision of Passport, substantially in the form attached hereto as Exhibit F (with such changes as may be mutually agreed upon by the Parties).

1.54“New Transfer Agent Agreement” means a new Transfer Agent Agreement by and between the EJMMF and EDJones substantially in the form attached hereto as Exhibit I (with such changes as may be mutually agreed upon by the Parties) .

8

Exhibit 10.1            

Execution Copy

1.55“Non-Definitive Agreement Related Post-Closing Liabilities” means any Post-Closing Liability of Passport (post-Closing), Jones or Buyer, or of any of their respective Indemnified Parties (including of Jones or Buyer as partners of Passport (post-Closing)) other than Liabilities for which indemnification by Jones and Buyer is contemplated under Section 9.2(a).

1.56“Party” or “Parties” has the meaning set forth in the preamble.

1.57“Passport” has the meaning set forth in the preamble.

1.58“Passport Records” means those books and records of Passport identified on Schedule 1.58 that consist solely of information regarding Passport or its business of providing investment advisory services to the EJMMF and that Federated and Buyer agree will be transferred to Buyer in connection with the Passport Transfer.

1.59“Passport Transfer” has the meaning set forth in the recitals.

1.60“Person” means any individual, corporation, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated organization or any other entity, whether acting in an individual, fiduciary or other capacity.

1.61“post-Closing”, when used in reference to any Person, or any act or action taken or not taken, or to be taken or not to be taken, as the case may be, refers to such Person as existing and owned, or such act or action taken or not taken, or to be taken or not to be taken, from and after the Closing.

1.62“Post-Closing EJMMF-Related Document” means any agreement relating to the performance of services to the EJMMF post-Closing, including the New Advisory Agreement, the New Sub-Advisory Agreement, the New Distribution Agreement, the New Transfer Agent Agreement and the New Custodian Agreement and New Administration (Fund Accounting) Agreement.

1.63“Post-Closing Liabilities” has the meaning set forth in Section 9.1(c).

1.64“Post-Transition TFMMF Reorganization/Liquidation” has the meaning set forth in the recitals.

1.65“pre-Closing”, when used in reference to any Person, or any act or action taken or not taken, or to be taken or not to be taken, as the case may be, refers to such Person as existing and owned, or such act or action taken or not taken, or to be taken or not to be taken, prior to the Closing.

1.66“Pre-Closing Distribution” has the meaning set forth in Section 3.2(b).

1.67“Pre-Closing Liabilities” has the meaning set forth in Section 9.1(b)

1.68“Pre-Existing Required Contribution” has the meaning set forth in Section 3.5(b)(iii).

9

Exhibit 10.1            

Execution Copy

1.69“Proceeding” has the meaning set forth in Section 6.1(d).

1.70“Realized Losses” has the meaning set forth in Section 3.5(d).

1.71“Receiving Party” has the meaning set forth in Section 4.1.

1.72“Regulated Investment Company” is defined under Subchapter M of the Code.

1.73“Respective Ownership Interests” has the meaning set forth in Section 3.2(b).

1.74“SEC” means the U.S. Securities and Exchange Commission and any successor thereto.

1.75“Tax(es)” means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, custom, duty, stamp, occupation, premium, profits, windfall profits, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, ad valorem, transfer, registration, value added, general service, alternative or add-on minimum, estimated or other tax, or similar fees, assessments or charges of any kind whatsoever, together with any interest and penalties, additions to tax or additional amounts imposed by any Governmental Body.

1.76“Tax Return” means anyreturn, declaration, report, claim for refund, or information return or statement filed with any Governmental Body, domestic, foreign, or otherwise, relating to Taxes, including any form, schedule or attachment thereto and any amendment or supplement thereof.

1.77“Termination” has the meaning set forth in Section 3.4(b).

1.78“TFMMF” has the meaning set forth in the recitals.

1.79“TFMMF Transition” has the meaning set forth in the recitals.

1.80“Transactions” means, as applicable, the TFMMF Transition, the Post-Transition TFMMF Reorganization/Liquidation, the Passport Transfer and the EJMMF Adoption.

1.81“Unitary Fee” has the meaning set forth in Section 3.3.

2.The Transactions.

2.1    General. The Parties agree that the Transactions shall be consummated in the following order in accordance with the terms and conditions of this Agreement: (a) the TFMMF Transition; (b) the Post-Transition TFMMF Reorganization/Liquidation; (c) the Passport Transfer; and (d) the EJMMF Adoption (immediately following the Passport Transfer). For the avoidance of doubt, notwithstanding any other provision of this Agreement or any Ancillary Closing Document, while the Parties intend to utilize commercially reasonable efforts to effect the Transactions in a timely manner in accordance with the terms and conditions of this Agreement, (i) the Transactions shall be subject to the fiduciary duties to the TFMMF, the EJMMF and their respective shareholders,

10

Exhibit 10.1            

Execution Copy

and the legitimate business interests, of Passport (pre-Closing) and Federated, and the fiduciary duties to the TFMMF, the EJMMF and their respective shareholders of the TFMMF’s and the EJMMF’s Board of Trustees (pre-Closing), including with respect to the timing and manner of effecting such Transactions; and (ii) except to the extent contemplated in Section 3 (with respect to expenses), unless Passport (pre-Closing), Federated, or their respective Affiliates specifically agree otherwise, nothing shall require Passport (pre-Closing), Federated nor any of their respective Affiliates (without their prior agreement) to make any contributions, or otherwise make any payment, waiver, reimbursement or concession, in connection with effecting such Transactions. For example, and without limiting the foregoing, if a credit event occurs with respect to one or more portfolio securities in the middle of the TFMMF Transition, or if a significant loss to the TFMMF would be realized in connection with selling a portfolio security in connection with the TFMMF Transition, Passport (pre-Closing), Federated, or the Board of Trustees of the TFMMF, may determine to: (1) delay or stop the TFMMF Transition to protect their respective interests or shareholder interests or, unless Passport (pre-Closing) or Federated otherwise specifically agree at such time; (2) not make a capital contribution to the TFMMF or the EJMMF; provided that any such determination shall not affect the right of any Person to redeem shares of the TFMMF or the EJMMF in a manner that contravenes the 1940 Act.

2.2    The TFMMF Transition. Jones shall use commercially reasonable efforts to cause the Jones TFMMF Shareholders’ accounts in TFMMF to redeem all shares of TFMMF held by such Jones TFMMF Shareholders and to reinvest all redemption proceeds in the EJMMF in stages through a coordinated series of redemption and reinvestment transactions, subject to the right of any shareholder to object to such redemption and reinvestment or to direct reinvestment into another available investment. Notwithstanding the prior provisions of this Section 2.2, Jones may cause redemption proceeds to be reinvested in an investment other than EJMMF to the extent that Jones reasonably and in good faith determines that an investment in EJMMF would not be in the best interests of or otherwise suitable for any Jones TFMMF Shareholder. Jones shall use commercially reasonable efforts to effect the transfers and to take such other actions, as required in connection with the consummation of the TFMMF Transition before October 14, 2016. Federated shall use commercially reasonable efforts to provide information, and to take such other actions, as reasonably requested by Jones in connection with the consummation of the TFMMF Transition.

2.3    Post-Transition TFMMF Reorganization/Liquidation. Promptly after the consummation of the TFMMF Transition, Federated and Passport (pre-Closing) shall use commercially reasonable efforts to cause the Post-Transition TFMMF Reorganization/Liquidation to be consummated prior to the consummation of the Passport Transfer. The Post-Transition TFMMF Reorganization/Liquidation may, in Federated’s and Passport’s (pre-Closing) sole discretion, be structured as either: (a) a liquidation of the TFMMF, with remaining shareholder accounts (to the extent possible) being given the opportunity to transition to MOF or another money market fund advised by Federated or its Affiliates; or (b) a tax-free reorganization under Section 368(a) of the Code or a taxable reorganization, which would be accomplished by TFMMF transferring all or substantially all of its assets and stated Liabilities to MOF in exchange for shares of MOF, which shall then be distributed to the shareholders of TFMMF in complete liquidation and termination of the TFMMF. Federated shall endeavor to consummate the Post-Transition TFMMF Reorganization/Liquidation on or before December 16, 2016 (or such later date as may be mutually

11

Exhibit 10.1            

Execution Copy

agreed upon by the Parties). Federated shall use commercially reasonable efforts to amend the Declaration of Trust of MMOT, and to make any other necessary filings or to take any other necessary actions, to terminate the existence of the TFMMF promptly after the consummation of the Post-Transition TFMMF Reorganization/Liquidation.

2.4    The Passport Transfer.

(a)    Federated shall sell, transfer, convey and deliver its general partnership interest in Passport, and the Passport Records, to Buyer by executing and delivering at Closing the Assignment and Cross Receipt relating to the general partnership interest in Passport substantially in the form attached hereto as Exhibit J (with such changes as may be mutually agreed upon by the Parties). Buyer shall accept such general partnership interest in Passport, and the Passport Records, by executing and delivering at Closing such Assignment and Cross Receipt. To the extent not previously delivered to Jones or Buyer, any Passport Records that the Parties agree are to be transferred will be delivered by Federated to Passport (post-Closing) or Buyer within sixty (60) calendar days after the Closing Date.

The Parties agree that they shall reasonably cooperate for a period of five (5) years after the Closing Date to promptly provide reasonable access to the other Parties to (and, as necessary to respond to regulatory requests or legal process, copies of (at the requesting Party’s expense)) any books and records of or relating to Passport, or the EJMMF or the TFMMF, that remain in such Parties’ possession or control post-Closing (and that have not been destroyed in accordance with the possessing/controlling Party’s document retention policies as in effect from time to time consistent with applicable law). For the avoidance of doubt, Federated shall provide Buyer, Jones and Passport (post-Closing) with such access to (and, as applicable, copies of) such books and records in its possession or control (including any Passport Records not delivered as contemplated above), and Buyer, Jones and Passport (post-Closing) will provide Federated with such access to (and, as applicable, copies of) such books and records in its possession or control (including any Passport Records delivered as contemplated above where Federated did not retain or cannot locate copies of such Passport Records), in each case consistent with the preceding sentence.

(b)    The Parties shall cooperate as necessary to take all action necessary in furtherance of the Passport Transfer, including execution and delivery of any amendments to, or consents under or in connection with, the Agreement of Limited Partnership of Passport. The Parties also shall use commercially reasonable efforts to seek any approvals, provide any notices, prepare and file any filings, and take such other actions, as required in connection with the consummation of the Passport Transfer.

(c)    The Parties agree to endeavor to consummate the Passport Transfer on or before December 31, 2016 (or such later date as may be mutually agreed upon by the Parties).

2.5    EJMMF Adoption.

(a)    The Parties shall use commercially reasonable efforts to seek approval by the EJMMF Board (subject to their fiduciary duties) of: (i) the New Advisory Agreement; (ii) the New Sub-Advisory Agreement; (iii) the New Distribution Agreement; (iv) the New Rule 12b-1

12

Exhibit 10.1            

Execution Copy

Plan; (v) the New Shareholder Services Plan and New Shareholder Services Agreement; (vi) the New Transfer Agency Agreement; (vii) the New Custodian Agreement and New Administration (Fund Accounting) Agreement; (viii) the New Multi-Manager Exemption; (ix) the nomination of the New EJMMF Trustees; (x) the New Rule 18f-3 Plan; and (xi) such other agreements, amendments to agreements, or other documents or actions required to be approved by such EJMMF Board reasonably necessary in order to accomplish the EJMMF Adoption (collectively, as applicable, the “EJMMF Board Approval Items”), in each case contingent, to the extent legally required, upon the approval of the shareholders of the EJMMF and to take effect (or, in the case of the New EJMMF Trustees, to commence their terms) immediately after the consummation of the Passport Transfer as part of the Closing.

(b)    The Parties shall use commercially reasonable efforts to seek to have the EJMMF Board convene the EJMMF Shareholders Meeting for the purpose of approving (in accordance with the recommendation of the EJMMF Board): (i) the New Advisory Agreement; (ii) the New Sub-Advisory Agreement; (iii) the New Rule 12b-1 Plan; (iv) the New Shareholder Services Plan and New Shareholder Services Agreement (only if adopted under Rule 12b-1 under the 1940 Act); (v) the New Multi-Manager Exemption; (vi) the New Distribution Agreement; (vii) the nomination of the New EJMMF Trustees; and (viii) such other agreements, amendments to agreements, or other documents or actions required to be approved by shareholders of the EJMMF reasonably necessary in order to accomplish the EJMMF Adoption (collectively, as applicable, the “EJMMF Shareholder Approval Items”).

(c)    The Parties shall use commercially reasonable efforts to seek to cause (i) the EJMMF to prepare, file and mail a proxy statement on Schedule 14A seeking approval of the EJMMF Shareholder Approval Items (including any attachments thereto, the “EJMMF Proxy”) at the EJMMF Shareholder Meeting, and (ii) the shareholders of the EJMMF to approve the EJMMF Shareholder Approval Items.

(d)    The Parties agree to endeavor to consummate the EJMMF Adoption on or before December 31, 2016 (or such later date as may be mutually agreed upon by the Parties).

2.6    Efforts to Consummate Transactions. The Parties shall use commercially reasonable efforts to seek and obtain any other consents and approvals, prepare and file any other required filings, and take any other actions and complete such other tasks, as may be reasonably required or necessary in connection with the consummation of the Transactions. Without limiting the foregoing:

(a)    Jones or Buyer has performed or shall perform prior to the Closing Date the following:    

(i)    Provide Federated with all information reasonably requested for preparation of materials for, and presentation to, the EJMMF Board in relation to the EJMMF Adoption, including information related to Jones, Buyer and their Affiliates;

(ii)    Subject to the direction and approval of the EJMMF Board, after consultation with and review by Federated and counsel

13

Exhibit 10.1            

Execution Copy

to the independent EJMMF Trustees, draft and prepare for filing with the SEC the EJMMF Proxy, provided that Buyer or its counsel shall not respond to any SEC comments other than in the presence of or with the approval of the counsel of Federated and the independent EJMMF Trustees; and

(iii)    Provide information and otherwise use commercially reasonable efforts to facilitate the EJMMF Adoption.

(b)    Federated has performed or shall perform prior to the Closing Date the following:

(i)    Recommend to the EJMMF Board, and use commercially reasonable efforts to obtain, the requisite approvals of the EJMMF Board and the shareholders of the EJMMF with regard to the EJMMF Adoption;

(ii)    Provide reasonable assistance with the preparation of the EJMMF Proxy and shall use commercially reasonable efforts to seek to have the drafts of the EJMMF Proxy reviewed by counsel to the independent EJMMF Trustees within reasonable times after the delivery of such drafts to Federated and such counsel; and

(iii)    Reasonably cooperate with Buyer and counsel to the independent EJMMF Trustees in reviewing and responding to comments of the SEC on the EJMMF Proxy and furnish or make available to Buyer information relating to itself, Passport and the EJMMF required by applicable law, rule or regulation to be set forth in the EJMMF Proxy.

3.Payments; Fees; Expenses.

3.1Consideration. While no actual cash purchase price shall be paid for the Passport Transfer, the mutual covenants provided herein have been acknowledged by the Parties as sufficient consideration for this Agreement, the Ancillary Closing Documents and the Transactions.

3.2Pre-Closing Distribution. Subject to the conditions precedent to Closing being satisfied (or waived by the applicable Parties):

(a)All known, non-contingent Liabilities of Passport shall be satisfied (or provision made therefor) by Passport immediately prior to Closing. Passport shall prepare an itemization of such known, non-contingent Liabilities that have been satisfied (or provided for) in preparation for the Closing and provide the same to Jones at the Closing.

(b) All net assets of Passport shall be distributed to Federated and Jones pursuant to their respective ownership interests in Passport (i.e., Federated: 50.5%; and EDJones: 49.5%) (“Respective Ownership Interests”) immediately prior to the Closing (together with any additional distribution contemplated in Section 3.2(c) below, each a “Pre-Closing Distribution”). Any

14

Exhibit 10.1            

Execution Copy

amounts payable to Jones shall be paid in immediately available funds to an account designated in writing in advance by Jones. Passport (pre-Closing) shall prepare an itemization of such net assets and the amounts to be distributed to Federated and Jones and provide the same to Jones at the Closing.

(c)For 105-calender days post-Closing, the Parties shall, on a monthly basis, address and pay-out, in accordance with Federated’s and Jones’ Respective Ownership Interests, any distributions of additional net assets of Passport that are received or identified post-Closing that relate to periods prior to the Closing. Within fifteen (15) calendar days after each calendar month-end during such 105-calendar day period, Federated shall prepare an itemization of any such additional net assets and any amounts to be distributed to Federated and Jones and provide the same to Jones. Jones may raise questions regarding any itemization (whether delivered under Section 3.2(b) or this Section 3.2(c)) within ten (10) calendar days after Federated delivers the itemization to Jones by providing a written notice to Federated reasonably identifying such questions and the basis therefor. Any such itemization shall become final and binding for all purposes ten (10) calendar days after delivery to Jones, unless Jones raises questions by timely providing the written notice contemplated above. If Jones properly raises questions regarding an itemization, the Parties shall work in good faith to resolve such questions promptly and, upon such questions being resolved, such itemization (as modified as agreed between the Parties) shall become final and binding for all purposes. Any final pay-out shall be made on the 135^th calendar day post-Closing (or such other date as mutually agreed by the Parties). Any payments pursuant to this Section 3.2(c) shall be made either (1) by wire transfer of immediately available funds to an account designated in advance in writing by the Party receiving the payment or (2) by such other means, as mutually agreed between the Parties.

(d)Immediately prior to Closing, Jones shall make an additional payment to Federated in the amount of $25,500 (representing the return of Federated’s original capital contribution to Passport). Such payment may be made by Jones and satisfied either (i) (A) by wire transfer of immediately available funds to an account designated in writing in advance by Federated, or (B) by such other means, as mutually agreed between the Parties, or (ii) by a reduction in the amount of the Pre-Closing Distribution payable to Jones and reallocation of such amount to Federated. So long as the amount of the Pre-Closing Distribution payable to Jones pursuant to Section 3.2(b) is $25,500 or more, Jones may elect how to make and satisfy such payment obligation in its sole discretion.

(e)The Parties shall (and shall cause their respective accountants and other representatives to) reasonably cooperate with each other in preparing and reviewing any itemizations and otherwise fulfilling the obligations under this Section 3.2.

3.3Sub-Advisory/Administration Fee. The compensation payable to Federated under the New Sub-Advisory Agreement based on management of all of the assets (i.e., 100% allocable share) of the EJMMF (the “Unitary Fee”) shall not be adjusted, including, without limitation, based on either (a) the yield on the EJMMF or its portfolio securities, or (b) waivers or reimbursements by Passport (post-Closing) to maintain any minimum yield on the EJMMF.

15

Exhibit 10.1            

Execution Copy

3.4Early Termination of, or Adjustment of Allocable Share under, New Sub-Advisory Agreement:

(a)    Jones, Buyer and Passport (post-Closing) shall recommend, and shall cause any applicable Affiliates to recommend, Federated (or an Affiliate of Federated) to act as sub-advisor for, and Federated (or its Affiliate, Federated Administrative Services) to act as sub-administrator for, and not recommend another third-party to act as sub-advisor or sub-administrator for or to otherwise perform services being provided by Federated as sub-advisor and Federated (or its Affiliate, Federated Administrative Services) as sub-administrator for, the EJMFF, including any successor fund, for an initial two (2) year term after Closing.

(b)    If, during the initial two (2) year term of the New Sub-Advisory Agreement, (i) the New Sub-Advisory Agreement is terminated (in whole or in part) and Federated (or an Affiliate of Federated) is not appointed on substantially identical terms to continue to manage assets of, or Federated (or its Affiliate, Federated Administrative Services) is not appointed on substantially identical terms to continue to provide sub-administrative services to, the EJMMF or a successor Regulated Investment Company to the EJMMF registered under the 1940 Act or if the EJMMF is liquidated (collectively, as applicable, a “Termination”); provided, however, Termination shall not include any voluntary resignation or voluntary (without cause) termination of the New Sub-Advisory Agreement by Federated, or (ii) without the consent of Federated (which consent may be withheld for any reason in Federated’s sole discretion), the allocable share of net assets of the EJMMF (including any successor Regulated Investment Company registered under the 1940 Act) for which Federated is responsible for management under the New Sub-Advisory Agreement and on which the Unitary Fee is calculated is reduced below 100% (an “Allocable Share Reduction”), or (iii) without the consent of Federated (which consent may be withheld for any reason in Federated’s sole discretion), the Unitary Fee is reduced below four (4) basis points of the net assets of the EJMMF, or services performed by Federated (or its Affiliate, Federated Administrative Services) curtailed as to not reasonably justify the Unitary Fee payable to Federated (“Involuntary Reduction”), in each case other than as a result of Federated failing to remain in Good Standing, then Jones shall pay Federated out of its own assets/resources (and not out of the advisory fee earned by Passport) a payment determined as follows (any of the following payments being a “Guaranteed Amount”):

(i)in the case of a Termination, an amount equal to $2 million; and

(ii)in the case of an Allocable Share Reduction or Involuntary Reduction, an amount equal to the product of (1) the Guaranteed Amount that would have become payable for a Termination as if the Allocable Share Reduction or Involuntary Reduction were a Termination (i.e., $2 million),

16

Exhibit 10.1            

Execution Copy

multiplied by (2) the percentage reduction in (a) the allocable share in the case of a Allocable Share Reduction, or (b) the Unitary Fee received by Federated in the case of an Involuntary Reduction.

(c)    In the event a Guaranteed Amount becomes payable to Federated, Jones shall pay such Guaranteed Amount to Federated within thirty (30) calendar days of the date on which it became payable, and such Guaranteed Amount shall be paid either (1) by wire transfer of immediately available funds to an account designated in advance in writing by Federated or (2) by such other means, as mutually agreed between the Parties.

(d)    Federated shall not be entitled to any Guaranteed Amount unless as of the date such Guaranteed Amount became payable, Federated was in Good Standing. Federated shall be considered to be in “Good Standing”so long as (1) Federated (or, as applicable, its Affiliate, Federated Administrative Services) does not materially breach the New Sub-Advisory Agreement based on a violation of the Standard of Care (as defined in the New Sub-Advisory Agreement) for which Federated (or, as applicable, its Affiliate, Federated Administrative Services) would be liable under the New Sub-Advisory Agreement, and (2) Federated is not disqualified from acting as a sub-adviser to a registered investment company under Section 9(a) of the 1940 Act.

(e)    The EJMMF Board shall at all times be free to exercise its fiduciary obligations under applicable law, rule or regulation and rights under the New Sub-Advisory Agreement (it being understood that such exercise may result in Jones having an obligation to pay any Guaranteed Amount.

(f)    The Parties shall agree upon appropriate disclosure to the EJMMF Board and to be included in the EJMMF Proxy and any registration statement of the EJMMF disclosing this arrangement.

3.5Expenses.

(a)Except as set forth in this Agreement or otherwise agreed between the Parties: (i) Federated and Passport (pre-Closing) shall be responsible for their own, and their Affiliates, respective fees, costs and expenses, including employee costs, counsel fees and accountant/auditor fees, incurred or paid in connection with the Transactions; and (ii) Jones, Passport (post-Closing) and Buyer shall be responsible for their, and their Affiliates, respective fees, costs and expenses, including employee costs, counsel fees and accountant/auditor fees, paid or incurred in connection with the Transactions (other than the Post-Transition TFMMF Reorganization/Liquidation), in each case, including in connection with due diligence, drafting, reviewing, negotiating, executing and delivering this Agreement (including exhibits hereto), the Ancillary Closing Documents, the Post-Closing EJMMF-Related Documents, and consummating the Transactions.

(b)Notwithstanding Section 3.5(a) above:

17

Exhibit 10.1            

Execution Copy

(i) Jones and Buyer shall be responsible, as agreed between them, for all reasonable, out of pocket fees, costs and expenses, including counsel fees and accountant/auditor fees, incurred or paid by any of the Parties or their respective Affiliates in connection with effecting the TFMMF Transition, including the fees, costs and expenses of preparing, reviewing, printing and mailing any negative consent letters (and any attachments thereto), or other documents or materials, sent to shareholders of TFMMF in connection with the TFMMF Transition; provided that, for the avoidance of doubt, Federated shall be responsible for fees, costs and expenses of Federated and Passport (pre-Closing) relating solely to the Post-Transition TFMMF Reorganization/Liquidation, but not the TFMMF Transition.

(ii)Jones and Buyer shall be responsible, as agreed between them, for all reasonable, out of pocket fees, costs and expenses, including counsel fees and accountant/auditor fees, incurred or paid by any of the Parties or their respective Affiliates in connection with effecting: (1) any records transfer (including the Passport Records) necessary in connection with the Passport Transfer and the post-Closing operation of Passport; and (2) the EJMMF Adoption, including the fees, costs and expenses of preparing, reviewing, printing and mailing the EJMMF Proxy, or other documents or materials, sent to shareholders of the EJMMF, and of proxy solicitors, in connection with the EJMMF Adoption; provided, that Federated shall be responsible for its legal fees related to seeking the approval of the EJMMF Board.

(iii)Subject to the last sentence of this Section 3.5(b)(iii), Federated shall be responsible for contributing as a capital contribution (and without receiving additional shares in return) approximately $50,326 to the TFMMF prior to the consummation of the Post-Transition TFMMF Reorganization/Liquidation to address a pre-existing permanent impairment to the net asset value per share calculated using available market quotations or an appropriate substitute that reflects current market conditions (“NAV”) of the TFMMF relating to periods prior to Passport becoming the investment adviser for the TFMMF (“Pre-Existing Required Contribution”); and, unless Federated determines otherwise, (ii) with respect to any other transaction that causes a permanent impairment to the TFMMF’s NAV, or any other amounts necessary to avoid the NAV of the TFMMF being less than $1.00 per share by more than $0.005 or any redeeming or reorganizing shareholder of the TFMMF not receiving at least $1.00 in value per share upon redeeming or reorganizing or to prevent material dilution of shareholders, Passport (pre-Closing), Federated, Jones and the Board of Trustees of TFMMF shall mutually agree at that time upon the actions (if any) to be taken in response thereto and Passport (pre-Closing), Federated and Jones shall mutually agree at such time upon the extent to which each Party shall be responsible for bearing the costs of such actions (if any). If the TFMMF is liquidated, rather than reorganized, Federated (or an Affiliate) may, in lieu of making the Pre-Existing Required Contribution, make an investment in the TFMMF in a similar amount. If Federated (or any

18

Exhibit 10.1            

Execution Copy

Affiliate) makes such an investment in the TFMMF, Federated (or its Affiliate) shall be the last shareholder to be redeemed from the TFMMF in connection with its liquidation.

(iv)Any reasonable, out of pocket fees, costs or expenses incurred or paid by Passport, and that are not ordinarily paid by the TFMMF or EJMMF, up through the Closing that relate to customary or routine annual or other periodic audits or filings for the fiscal year of Passport in which the Closing occurs shall be the responsibility of Passport; provided, however, to the extent that Passport (pre-Closing) does not have sufficient assets to satisfy such fees, costs or expenses, such fees, costs and expenses shall be borne by Federated and Jones in accordance with their Respective Ownership Interests (it being understood that payment by Passport will reduce Passport’s profit/income available for distribution by Passport to Federated and Jones in accordance with their Respective Ownership Interests and that, therefore, Federated and Jones will still indirectly bear such fees, costs and expenses).

(c)As among the Parties, Federated shall be responsible for all reasonable, out of pocket fees, costs and expenses, including counsel fees and accountant/auditor fees, incurred or paid by Federated and Passport (pre-Closing) or their respective Affiliates relating to the Post-Transition TFMMF Reorganization, including the fees, costs and expenses of preparing, reviewing, printing and mailing any information statement/prospectus on Form N-14, and any attachments thereto, or other documents or materials, sent to shareholders of TFMMF or MOF in connection with the Post-Transition TFMMF Reorganization/Liquidation.

(d)For the avoidance of doubt, any Realized Losses in, or permanent impairments to, the NAV of the EJMMF are not being addressed as the EJMMF is continuing its existence. For purposes of this provision, “Realized Losses” means such accumulated net realized loss, as adjusted for all net gains and losses realized by the EJMMF through and as of the Closing Date. Notwithstanding Section 3.5(a) above, if, prior to Closing, any amounts are necessary to avoid the NAV of the EJMMF being below $1.00 per share by more than $0.005 or any redeeming shareholder of the EJMMF not receiving at least $1.00 in value per share upon redeeming or reorganizing, Passport (pre-Closing), Federated, Jones and the EJMMF Board shall mutually agree at that time upon the actions (if any) to be taken in response thereto and Passport (pre-Closing), Federated and Jones shall mutually agree at such time upon the extent to which each Party shall be responsible for bearing the costs of such actions (if any).

(e)    Each of the Parties shall reasonably cooperate in causing any required filings to be made in connection with the Pre-Existing Required Contribution and any other actions (if any) taken with respect to either the TFMMF or EJMMF.

(f)    Notwithstanding the foregoing provisions in this Section 3.5, unless specifically agreed otherwise between the Parties, whenever Passport (pre-Closing) is responsible for any fees, costs or expenses, such fees, costs and expenses shall be borne by Federated and Jones in accordance with their Respective Ownership Interests, but only to the extent that Passport does not have sufficient assets to satisfy such fees, costs and expenses (it being understood that payment

19

Exhibit 10.1            

Execution Copy

by Passport will reduce Passport’s profit/income available for distribution by Passport to Federated and Jones in accordance with their Respective Ownership Interests and that, therefore, Federated and Jones will still indirectly bear such fees, costs and expenses).

(g)    The above expense provisions in no way affect the responsibility for fees, costs and expenses relating to post-Closing periods under the New Sub-Advisory Agreement, which generally shall be customary for sub-advisory and sub-administration services involving money market funds as agreed upon in the New Sub-Advisory Agreement.

4.Confidentiality.

4.1Disclosure of Confidential Information.The Confidential Information supplied by or on behalf of one Party and its Affiliates and agents (collectively, as applicable, the “Disclosing Party”) to the other Party or its Affiliates or agents (collectively, as applicable, the “Receiving Party”) shall be deemed confidential and proprietary to the Disclosing Party, regardless of whether such information was disclosed intentionally.

4.2Treatment of Confidential Information.Each Party recognizes the importance of the other’s Confidential Information. In particular, each Party recognizes and agrees that the Confidential Information of the other is critical to its respective businesses and that no Party would enter into this Agreement without assurance that such information and the value thereof shall be protected as provided in this Section 4. Accordingly, each Party agrees as follows: (i) the Receiving Party shall hold any and all Confidential Information it obtains in strictest confidence and shall use and permit the use of Confidential Information solely for the purposes of this Agreement, the New Advisory Agreement, the New Sub-Advisory Agreement, any other Post-Closing EJMMF-Related Document or any Ancillary Closing Document (without limiting the foregoing, the Receiving Party shall use at least the same degree of care, but no less than reasonable care, to avoid disclosure or use of the Disclosing Party’s Confidential Information as the Receiving Party employs with respect to its own Confidential Information); (ii) the Receiving Party may disclose or provide access to its responsible directors, trustees, managers, officers, employees, agents or service providers who reasonably have a need to know and may make copies of Confidential Information only to the extent reasonably necessary to carry out its obligations hereunder or under the New Advisory Agreement, the New Sub-Advisory Agreement, any other Post-Closing EJMMF-Related Document or any Ancillary Closing Document or conduct its business as contemplated hereby or thereby; (iii) the Receiving Party currently has, and in the future shall maintain in effect and enforce, rules and policies to protect against access to or use or disclosure of Confidential Information other than in accordance with this Agreement, the New Advisory Agreement, the New Sub-Advisory Agreement, any other Post-Closing EJMMF-Related Document or any Ancillary Closing Document, including written instruction to and agreements or other obligations with directors, trustees, managers, officers, employees, agents and service providers who are bound by an obligation of confidentiality no less stringent than as set forth in this Agreement to ensure that such directors, trustees, managers, officers, employees, agents and service providers protect the confidentiality of Confidential Information; (iv) the Receiving Party shall instruct its directors, trustees, managers, officers, employees, agents and service providers not to disclose Confidential Information to third parties, including customers, subcontractors or consultants, without the Disclosing Party’s prior written consent, unless permitted

20

Exhibit 10.1            

Execution Copy

under (and disclosed in accordance with), or required by, this Agreement, the New Advisory Agreement, the New Sub-Advisory Agreement, any other Post-Closing EJMMF-Related Document, any Ancillary Closing Document or applicable law, rule or regulation; and (v) the Receiving Party shall notify the Disclosing Party immediately of any unauthorized disclosure or use, and shall reasonably cooperate with the Disclosing Party to protect, all proprietary rights in and ownership of the Disclosing Party’s Confidential Information. Notwithstanding any other provision of this Section 4, nothing in this Section 4 shall prohibit Federated and its Affiliates from using or disclosing any information regarding customers of Federated or its Affiliates (other than the EJMMF post-Closing) or any information relating to the services provided by, or business of, Federated and its Affiliates. Moreover, to the extent that any information regarding the EJMMF or Passport is the same as information of Federated or its Affiliates (other than Passport) or other funds sponsored or advised by Federated or its Affiliates (for example, and without limitation, credit research or the names of common securities held in multiple fund portfolios), then Federated and its Affiliates shall be able to use and disclose such information without restriction by this Section 4.

4.3Customer Information. As between Jones and its Affiliates and Buyer, customer information constituting Confidential Information is and shall remain the sole and exclusive property of Buyer and, as applicable, its third party institutional investment advisors and third party plan administrators. This Agreement shall not be construed as granting any of Buyer’s ownership rights in such customer information to Federated. Customer information (other than with respect to the EJMMF post-Closing) of Federated or its Affiliates (other than Passport) shall remain the sole and exclusive property of Federated and its Affiliates (as applicable). This Agreement shall not be construed as granting any of Federated’s or its Affiliates’ (other than Passport) ownership rights in such customer information to Jones or Buyer.

4.4Compelled Disclosures. To the extent required by applicable law, rule or regulation, or by lawful order or requirement of a court or Governmental Authority having competent jurisdiction over the Receiving Party, the Receiving Party may disclose Confidential Information in accordance with such law, rule, regulation, order or requirement, subject to the following conditions. Unless prohibited by applicable law, rule or regulation, as soon as possible after becoming aware of such law, rule, regulation, order or requirement and, to the extent reasonably practicable, prior to disclosing any Confidential Information pursuant thereto, the Receiving Party shall notify the Disclosing Party thereof in writing and, to the extent reasonably practicable, the Receiving Party shall provide the Disclosing Party notice of not less than five (5) Business Days prior to the required disclosure. The Receiving Party shall use commercially reasonable efforts not to release Confidential Information pending the outcome of any measures taken by the Disclosing Party to contest, otherwise oppose or seek to limit such disclosure by the Receiving Party and any subsequent disclosure or use of Confidential Information that may result from such disclosure. The Receiving Party shall reasonably cooperate with and provide reasonable assistance to the Disclosing Party regarding such measures. Notwithstanding any such compelled disclosure by the Receiving Party, such compelled disclosure will not otherwise affect the Receiving Party’s obligations hereunder with respect to Confidential Information so disclosed.

21

Exhibit 10.1            

Execution Copy

4.5Return of Confidential Information. On a Party’s written request or upon termination of this Agreement for any reason, another Party shall promptly: (a) return or destroy, at the requesting Party’s option, all originals and copies of all documents and materials it has received containing the requesting Party’s Confidential Information; and (b) deliver or destroy, at the requesting Party’s option, all originals and copies of all summaries, records, descriptions, modifications, negatives, drawings, adoptions and other documents or materials, whether in writing or in machine-readable form, prepared by the other Party, prepared under its direction, or at its request from the documents and materials referred to in clause (a), and provide a written statement to the requesting Party certifying that all documents and materials referred to in clauses (a) and (b) have been delivered to the requesting Party or destroyed, as requested by the requesting Party; provided that a Party may retain a copy of any Confidential Information as necessary to comply with such Party’s obligations under applicable law, rule or regulation or, in the case of customer information constituting Confidential Information retained by Federated, as may be reasonably determined by Federated to be necessary in connection with its obligations hereunder or under the New Advisory Agreement, New Sub-Advisory Agreement, any other Post-Closing EJMMF-Related Document, or any Ancillary Closing Document.

4.6Non-Solicitation of Employees. From and after the date hereof and for a period of five (5) years after the Closing, no Party (and no Party’s Affiliate) shall directly or indirectly: (a) induce or attempt to induce any investment management, investment management administration, administrative services or sales employee of another Party (or its Affiliates) to terminate his or her employment; or (b) hire or participate in the hiring or interviewing of any such employee of another Party (or its Affiliates) for any Person; or (c) provide names or other information about any such employee of another Party (or its Affiliates) for the purpose of assisting others to hire such employee; or (d) provide information to any such employee of another Party (or its Affiliates) about such Party or any Affiliate of such Party for the purpose of assisting that employee in finding employment with such Party or other Person. For purposes of the foregoing, any such employee of another Party (or its Affiliates) means any individual engaged in investment management, investment management administration, administrative services or sales at such other Party (or its Affiliates) who is a current employee of such other Party (or its Affiliates) or was employed by such other Party (or its Affiliates) within six (6) months of the date of any action of such Party (or its Affiliates) that violates the foregoing. The foregoing will not prohibit use of an employment agency or employment advertisements in a non-targeted, non-specific manner or responding to or hiring such an employee of another Party (or its Affiliates) that approaches a Party (or its Affiliates) of his or her own volition without any encouragement or breach of the foregoing by such Party (or its Affiliates) leading to such volitional approach by such employee.

4.7Non-Exclusive Equitable Remedy. Each Party acknowledges and agrees that due to the unique nature of Confidential Information, and personal services provided by relevant employees, there can be no adequate remedy at law for any breach of its obligations under this Section 4, that any such breach or threatened breach may allow a Party or third parties to unfairly compete with the other Party resulting in irreparable harm to such Party, and, therefore, that upon any such breach or any threat thereof, in addition to any other rights and remedies existing its favor under this Agreement or any Ancillary Closing Document, each Party shall be entitled to seek

22

Exhibit 10.1            

Execution Copy

appropriate temporary equitable and injunctive relief from a court of competent jurisdiction without the necessity of proving actual loss or posting any bond or security.

5.The Closing; Termination.

5.1    Closing. Subject to the satisfaction or, as applicable, waiver of all other conditions to the consummation of the Transactions contemplated by this Agreement (other than those conditions which can only be fulfilled at the Closing), the consummation of the Passport Transfer, immediately followed by the consummation of the EJMMF Adoption, (the “Closing”) shall take place within five (5) Business Days after the EJMMF Shareholder Approval Items are approved by shareholders at the EFMMF Shareholder Meeting or such other date as the Parties may agree (the “Closing Date”). The Closing shall take place on the Closing Date at such location, by such means and at such time as the Parties may agree. Subject to Section 5.2 below, the failure to consummate the Transactions contemplated by this Agreement on the date, time and place determined pursuant to this Section 5.1 shall not result in the termination of this Agreement and shall not relieve any Party of any obligation under this Agreement; provided, that (a) such failure occurred despite good faith efforts of the Parties to this Agreement, and (b) the Closing occurs promptly after the date of such failure to close.

5.2    Termination. Federated or Jones may terminate this Agreement by written notice to the other after 5:00 p.m., Pittsburgh time, on March 31, 2017 if the Closing shall not have occurred, unless such date is extended by the mutual agreement of the Parties on or prior to such date. Such termination shall be without Liability of any Party to the others, except as provided below. This Agreement may be terminated prior to the Closing Date (i) by the written consent of the Parties, (ii) by Federated if Jones or Buyer are in material breach of any representation, warranty or covenant set forth herein and such breach is not cured within thirty (30) calendar days of receipt of notice identifying such breach, or (iii) by Jones or Buyer if Federated or Passport is in material breach of any representation, warranty or covenant set forth herein and such breach is not cured within thirty (30) calendar days of receipt of notice identifying such breach. Any such termination shall be without prejudice to the non-breaching Parties’ rights to seek damages for such breach.

    5.3    Non-Exclusive Equitable Remedy. The Parties acknowledge that the Transactions are unique and recognize that, in the event of an unlawful termination or material breach of this Agreement by a Party, money damages would be inadequate and the other Parties may have no adequate remedy at law. Accordingly, each of the Parties hereto agrees that each of the other Parties shall have the right, in addition to any other rights and remedies existing in its favor under this Agreement or any Ancillary Closing Document, to enforce their rights and the obligations of the other Parties, as applicable, not only by an action for damages but also by an action or actions for specific performance, injunction, and/or other equitable relief, without the necessity of proving actual loss or posting any bond or security.

5.4    Survival. Sections 1, 2.4(a) (second paragraph), 4, 5, 6.4, 6.5, 9 and 10 shall survive any termination of this Agreement, except as stated otherwise in the relevant Sections of this Agreement.

23

Exhibit 10.1            

Execution Copy

6.Representations and Warranties.

6.1Mutual Representations and Warranties. Each Party, severally, hereby represents and warrants to the other Parties as follows:

(b)Due Organization. Such Party has been duly organized and is validly existing and in good standing under the laws of the jurisdiction of its organization. Such Party has the corporate/partnership/trust power and authority to own its property and assets and to carry on its business as currently being conducted, except where the lack of such power or authority would not reasonably be expected to result in a Material Adverse Change with respect to such Party.

(c)No Conflict. Neither the execution and delivery by such Party of this Agreement, nor the performance by such Party of its duties and obligations hereunder, shall (i) conflict with, result in a breach of the terms, conditions or provisions of, or constitute a default (or an event which with notice, or lapse of time, or both, would become a default) under (1) the Governing Documents of such Party, or (ii) any indenture, mortgage, lease, agreement or other instrument to which such Party is a party, to or by which such Party is bound, or to which its assets or property are subject, or (ii) violate any provision of any applicable law or regulation to which such Party is subject or by which such Party is bound, except where such conflict, breach, default or violation would not reasonably be expected to result in a Material Adverse Change with respect to such Party.

(d)Due Authority. Such Party has full corporate/partnership/trust power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions (as applicable). The execution and delivery of this Agreement, the performance of obligations hereunder and the consummation of the Transactions (as applicable) have been duly and validly authorized by all necessary corporate/partnership/trust action on the part of such Party, and no other corporate/partnership action on the part of such Party is necessary to authorize this Agreement, perform obligations hereunder or consummate the Transactions (as applicable).

(e)Litigation. Except as set forth on Schedule 6.1(d), there is no action, suit, claim, investigation, arbitration, mediation or proceeding (collectively, as applicable, “Proceeding”) pending or, to such Party’s actual knowledge, threatened, which questions the validity or propriety of this Agreement or any action taken or to be taken by such Party in connection with this Agreement, or which would reasonably be expected to result in a Material Adverse Change with respect to such Party.

(f)Validity. This Agreement has been duly and validly executed by such Party and constitutes the legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms, subject to bankruptcy, insolvency, moratorium and other similar laws affecting creditors’ rights generally, general principles of equity and public policy.

(g)Compliance with Laws, etc. Such Party has complied with all laws and regulations of any applicable jurisdiction with which it is or was required to comply, and such Party is not subject to any conviction or sanction, except for any non-compliance or violation, conviction

24

Exhibit 10.1            

Execution Copy

or sanction that would not reasonably be expected to result in a Material Adverse Change with respect to such Party.

(h)Notices/Consents/Approvals. Except for the notices, consents and approvals identified on Schedule 6.1(g) to this Agreement, no authorization, notice, consent or approval or other order or action of or to, or filing or registration with, any Governmental Body or other Person is required for the execution and delivery of this Agreement by such Party, performance of obligations under this Agreement or consummation of the Transactions.

(i)Affiliated Transactions. Except as set forth on Schedule 6.1(h), neither (i) such Party, (ii) any of such Party's Affiliates, nor (iii) any officer, director, trustee, or beneficial owner of such Party is a party to any material agreement, contract, commitment, arrangement, or transaction with Passport.

6.2Representations and Warranties of Federated. Federated hereby represents and warrants to Jones and Buyer as follows:

(e)Litigation. Except as disclosed to Buyer, there is no Proceeding pending or, to Federated’s actual knowledge, threatened, against Federated, Passport or its Affiliates in, by or before any Governmental Body that would reasonably be expected to result in a Material Adverse Change with respect to Federated, Passport or the EJMMF. None Federated, Passport nor the EJMFF is subject to any order, ruling or similar restriction of any Governmental Body directed to or against it as a result of or in connection with Federated, Passport or the EJMMF, or Federated’s or Passport’s management of the EJMFF as now conducted or conducted within the past five (5) years, which would reasonably be expected to result in a Material Adverse Change with respect to Federated, Passport or the EJMMF, and except for any Proceeding that is no longer pending, no Governmental Body has at any time commenced or given notice of intention to commence any investigation directed to or against Federated, Passport or the EJMMF that would reasonably be expected to lead to the issuance of any such order, ruling or similar restriction.

(f)Brokers. None of Federated, Passport nor any of its Affiliates has engaged any broker, finder or investment adviser on its behalf or incurred any Liability for any brokerage or finder’s fee or commission in connection with the Transactions.

(g)Compliance with Laws, etc. Federated, Passport and the EJMFF are in material compliance with, and for the past five (5) years have materially complied with, all laws and regulations of any applicable jurisdiction with which Federated, Passport or the EJMMF is, or was within the past five (5) years, required to comply.

(h)Books and Records. Federated or Passport has maintained in all material respects all books and records as required under the Advisers Act, including Rule 204-2(a)(16) thereunder, including as required to substantiate the performance of the EJMMF; provided, that such data and its calculation has not been subject to review by the SEC. Such books and records are correct and complete in all material respects and contain no material misstatements or material omissions with respect to the operation of the EJMMF. All advertisements (as defined under the Advisers Act), including any marketing materials, performance history or track record currently

25

Exhibit 10.1            

Execution Copy

being used, disseminated, provided, presented or made available by Federated or Passport or any Affiliate thereof regarding the EJMMF to any customer or potential customer, or to any investor or potential investor, in the EJMMF comply and, when used, disseminated, provided, presented or made available have complied, in all material respects, with the Advisers Act and the regulations thereunder (including applicable SEC guidance). No Person has claimed, or, to Federated’s actual knowledge, threatened to claim, a security interest in or lien on the foregoing books and records or the proceeds therefrom (excluding liens for taxes not yet due, warehouseman’s liens, landlord liens and other customary liens and encumbrances arising by operation of law).

(i)Securities Laws.

(i)Passport is duly and validly registered as an investment adviser under the Advisers Act, and has made notice filings as an investment adviser in any states in which it is required to do so, and such registrations and notices are in full force and effect on the date hereof, except to the extent that a failure to so register or make such notice filings or to maintain such registration or notice filings in full force and effect would not be reasonably expected to result in a Material Adverse Change with respect to Passport.

(ii)    Neither Passport, nor any Affiliated Person of Passport (including Federated), has been convicted of any felony or misdemeanor described in Section 9(a)(1) of the 1940 Act, nor has any Affiliated Person of Passport (including Federated) been subject within the past five (5) years, or is presently subject, to any injunction or SEC order that would prevent such Person from acting or serving as an investment adviser, underwriter, broker-dealer, employee, officer, trustee or director of an investment company under Sections 9(a)(2) or 9(b) of the 1940 Act, and there is no Proceeding or investigation pending or, to Federated’s actual knowledge, threatened, that would be reasonably likely to become the basis for any such injunction or SEC order.

(j)Right to Transfer. Federated has full right, title and interest to the general partnership interest in Passport, and has the due corporate/partnership/trust authority and power to transfer its general partnership interest in the Passport in connection with the Passport Transfer as contemplated in this Agreement.

(g)    Registration Statement for the EJMMF. Federated has furnished or made available to Buyer the Registration Statement of the EJMMF, including the Prospectus, Statement of Additional Information and Exhibits dated as of April 30, 2015, as applicable for the EJMMF, each as amended and supplemented to date. As of the date of this Agreement, such Prospectus and Statement of Additional Information do not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except as may have been corrected by supplements thereto that have been filed with the SEC since the last post-effective amendment of the EJMMF’s registration statement; provided, that this Section 6.2(g) shall not apply to, and Federated is not making any representation or warranty regarding, any language included in, or other changes incorporated into, the Registration

26

Exhibit 10.1            

Execution Copy

Statement of the EJMMF (or any supplements or post-effective amendments thereto) at the request or upon the recommendation of Jones or that relates to Jones or any of its Affiliates.

(h)    Financial Information. Federated has furnished or made available to Buyer an audited balance sheet of Passport as of, and audited statement of income, statement of changes in partners’ capital, and statement of cash flows of Passport for the year ended, December 31, 2015, together with notes to financial statements, and such audited financial statements, as qualified by such notes to financial statements, are correct and complete in all material respects. Such audited financial statements of Passport, as qualified by such notes to financial statements, also fairly present in all material respects the financial position of Passport as of the date or for the periods (as applicable) stated therein and were prepared in accordance with GAAP, except as noted therein.

(i)    Distribution. The itemizations relating to Pre-Closing Distributions provided or made available by Passport (pre-Closing) or Federated as contemplated in Section 3.2 shall be prepared in good faith and, to Federated’s actual knowledge, shall be correct and complete in all material respects when provided or made available by Passport (pre-Closing) or Federated (subject to review by Jones and Buyer as contemplated in Section 3.2).

(j)    Liabilities. Other than as set forth on Schedule 6.2(j) or as included in any itemization delivered pursuant to Section 3.2, Passport (pre-Closing) has no known, non-contingent Liabilities that may reasonably be expected to result in a Material Adverse Change with respect to Passport.

(k)    Tax Returns and Tax Liabilities. Passport has filed (or caused to be filed), or shall file (or cause to be filed), or has obtained, or shall obtain, extensions to file, all federal, state and local Tax Returns which are required to be filed by it, and has paid (or caused to be paid) or has obtained extensions to pay, all Taxes shown on said returns to be due and owing and all assessments received by it, up to and including the taxable year ending on the Closing Date. All material Tax Liabilities of Passport have been adequately provided for on its books, and no Tax deficiency or Liability of Passport has been asserted and no question with respect thereto has been raised by the Internal Revenue Service or by any state or local tax authority for Taxes in excess of those already paid, up to and including the taxable year in which the Closing Date occurs. Such Tax Returns of Passport are true, accurate and complete in all material respects. No other Taxes are due and owing on the part of Passport.

(l)    Other Contracts. All of the material agreements to which Passport is a party (and that are not terminated (or to be terminated) with respect to Passport or amended (or to be amended) to remove Passport as a party prior to Closing) are set forth on Schedule 6.2(l), and copies of such material agreements have been provided or made available to Buyer.

27

Exhibit 10.1            

Execution Copy

6.3    Representations and Warranties of Jones and Buyer. Jones and Buyer, jointly, represent and warrant to Federated as follows:

(a)    Litigation. Except as disclosed to Federated, there is no Proceeding pending or, to Jones’ or Buyer’s actual knowledge, threatened, against Jones, Buyer or their Affiliates in, by or before any Governmental Body that, upon the Closing occurring, would reasonably be expected to result in a Material Adverse Change with respect to Passport or the EJMMF.

(b)    Brokers. Neither Jones, Buyer nor any of their respective Affiliates has engaged any broker, finder or investment adviser on its behalf or incurred any Liability for any brokerage or finder’s fee or commission in connection with the Transactions.

(c)    Compliance with Laws. Jones and Buyer are in material compliance with, and for the past five (5) years have materially complied with, all laws and regulations of any applicable jurisdiction with which Jones or Buyer is, or was within the past five (5) years, required to comply.

(d)    Securities Laws.

(i)Upon the Closing occurring, nothing arising from the ownership of Passport (post-Closing) by Buyer and Jones shall result in Passport (post-Closing) being prevented from continuing to be duly and validly registered as an investment adviser under the Advisers Act, or from being able to continue to make notice filings as an investment adviser in any states in which it is required to do so, nor shall anything arising from the ownership of Passport (post-Closing) by Buyer and Jones cause such registrations and notices to be suspended or terminated, except to the extent that a failure to so register or make such notice filings or to maintain such registration or notice filings in full force and effect would not be reasonably expected to result in a Material Adverse Change with respect to Passport (post-Closing).

(ii)    Neither Jones or Buyer, nor any Affiliated Person of Jones or Buyer, has been convicted of any felony or misdemeanor described in Section 9(a)(1) of the 1940 Act, nor has any Affiliated Person of Jones or Buyer been subject within the past five (5) years, or is presently subject, to any injunction or SEC order that would prevent such Person or Passport (post-Closing) from acting or serving as an investment adviser, underwriter, broker-dealer, employee, officer, trustee or director of an investment company under Sections 9(a)(2) or 9(b) of the 1940 Act, and there is no Proceeding or investigation pending or, to Jones’ or Buyer’s actual knowledge, threatened, that would be reasonably likely to become the basis for any such injunction or SEC order.

(e)    Completion of Due Diligence. Jones and Buyer have completed before the execution of this Agreement all due diligence in connection with the Transactions, including with respect to the Passport Transfer, the EJMMF Adoption and Federated’s engagement as sub-advisor and Federated’s (or its Affiliate, Federated Administrative Services’) engagement as sub-

28

Exhibit 10.1            

Execution Copy

administrator to Passport (post-Closing) and the EJMMF pursuant to the New Sub-Advisory Agreement.

6.4    Disclaimers. EACH PARTY ACKNOWLEDGES AND AGREES THAT:

(a)    EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SPECIFICALLY INCLUDED IN THIS AGREEMENT OR IN ANY CERTIFICATE, INSTRUMENT OR OTHER ANCILLARY CLOSING DOCUMENT DELIVERED IN CONNECTION WITH THE CONSUMMATION OF THE TRANSACTIONS BY OR ON BEHALF OF A PARTY, OR ANY AFFILIATE THEREOF, NO PARTY, OR ANY AFFILIATE OR REPRESENTATIVE THEREOF, MAKES ANY OTHER REPRESENTATION OR WARRANTY OF ANY KIND OR NATURE WHATSOEVER (WHETHER WRITTEN, ORAL, EXPRESS OR IMPLIED), WITH RESPECT TO OR REGARDING SUCH PARTY, THE EJMMF OR TFMMF, OR ANY OF THEIR RESPECTIVE AFFILIATES OR THIS AGREEMENT OR ANY ANCILLARY CLOSING DOCUMENT OR THE TRANSACTIONS; AND

(b)    EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SPECIFICALLY INCLUDED IN THIS AGREEMENT OR IN ANY CERTIFICATE, INSTRUMENT OR OTHER ANCILLARY CLOSING DOCUMENT DELIVERED IN CONNECTION WITH THE CONSUMMATION OF THE TRANSACTIONS BY OR ON BEHALF OF A PARTY, OR ANY AFFILIATE THEREOF, (I) EACH PARTY DISCLAIMS, ON BEHALF OF ITSELF, ITS AFFILIATES AND ITS REPRESENTATIVES, ANY OTHER REPRESENTATIONS OR WARRANTIES, WHETHER MADE BY OR REGARDING SUCH PARTY, THE EJMMF OR TFMMF, OR ANY OF ITS AFFILIATES OR REPRESENTATIVES, OR ANY OTHER PERSON, AND (II) EACH PARTY DISCLAIMS, ON BEHALF OF ITSELF, ITS AFFILIATES AND ITS REPRESENTATIVES, ALL LIABILITY AND RESPONSIBILITY FOR ANY OTHER REPRESENTATION, WARRANTY, OPINION, ADVICE, STATEMENT OR INFORMATION MADE, COMMUNICATED, MADE AVAILABLE OR FURNISHED (ORALLY OR IN WRITING) TO ANY OTHER PARTY, OR ANY OF THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES (INCLUDING ANY OPINION, ADVICE, STATEMENT OR INFORMATION THAT MAY HAVE BEEN OR MAY HAVE BEEN OR MAY BE PROVIDED OR MADE AVAILABLE TO ANY OTHER PARTY, OR THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES BY ANY REPRESENTATIVE OF SUCH PARTY, OR ANY OF ITS AFFILIATES).

6.5    No Other Representations and Warranties. EACH PARTY ACKNOWLEDGES AND AGREES THAT:

(a)    THE REPRESENTATIONS AND WARRANTIES OF OR REGARDING A PARTY, THE EJMMF OR THE TFMMF,

29

Exhibit 10.1            

Execution Copy

SPECIFICALLY INCLUDED IN THIS AGREEMENT OR IN ANY CERTIFICATE, INSTRUMENT OR OTHER ANCILLARY CLOSING DOCUMENT DELIVERED IN CONNECTION WITH THE CONSUMMATION OF THE TRANSACTIONS BY OR ON BEHALF OF A PARTY, OR ANY AFFILIATE THEREOF, CONSTITUTE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF SUCH PARTY, OR OF OR REGARDING ANY OF ITS AFFILIATES, IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS;

(b)    EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SPECIFICALLY INCLUDED IN THIS AGREEMENT OR IN ANY CERTIFICATE, INSTRUMENT OR OTHER ANCILLARY CLOSING DOCUMENT DELIVERED IN CONNECTION WITH THE CONSUMMATION OF THE TRANSACTIONS BY OR ON BEHALF OF A PARTY, OR ANY AFFILIATE THEREOF, EACH PARTYHEREBY SPECIFICALLY DISCLAIMS AND MAY NOT (HAS NOT AND SHALL NOT) RELY ON (INCLUDING AS TO VERACITY), AND IRREVOCABLY AND UNCONDITIONALLY WAIVES AND RELEASES ANY CLAIMS (WHETHER FOR BREACH OF CONTRACT, TORT, FRAUD OR OTHERWISE) BASED ON, ARISING FROM OR RELATING TO, ANY REPRESENTATION, WARRANTY, OR STATEMENT (WHETHER WRITTEN, ORAL, EXPRESSED OR IMPLIED) MADE OR SUPPLIED BY, OR ON BEHALF OF, ANY OTHER PARTY, OR ANY AFFILIATE OR REPRESENTATIVE OF ANY OTHER PARTY, OR ANY OFFICER, DIRECTOR, MEMBER, MANAGER, PARTNER, TRUSTEE, EMPLOYEE OR REPRESENTATIVE OF ANY OTHER PARTY, IN OR IN CONNECTION WITH ANY PROPOSAL, NON-BINDING LETTER OF INTENT OR OTHER DOCUMENT RELATING TO, OR MADE IN CONNECTION WITH ANY DISCUSSIONS, INVESTIGATION, DUE DILIGENCE OR NEGOTIATION RELATING TO, THIS AGREEMENT, ANY ANCILLARY CLOSING DOCUMENT OR ANY TRANSACTION OR THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR ANY ANCILLARY CLOSING DOCUMENT, INCLUDING ANY REPRESENTATION, WARRANTY, OR STATEMENT (WHETHER WRITTEN, ORAL, EXPRESSED OR IMPLIED) RELATING TO THE ACCURACY OR COMPLETENESS OF ANY INFORMATION PROVIDED OR MADE AVAILABLE, THE TIMING OR SUCCESS OF ANY TRANSACTION, INTEGRATION PLANS OR EFFORTS, FUTURE RESULTS OF OPERATIONS OR PROFITABILITY, OR ANY PAYMENTS CONTEMPLATED HEREUNDER;

(c)    ANY CLAIMS A PARTY, OR ANY AFFILIATE THEREOF, MAY HAVE FOR A BREACH OF REPRESENTATION OR WARRANTY SHALL BE BASED SOLELY ON THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT OR IN ANY CERTIFICATE, INSTRUMENT OR OTHER ANCILLARY CLOSING DOCUMENT DELIVERED IN CONNECTION WITH THE CONSUMMATION

30

Exhibit 10.1            

Execution Copy

OF THE TRANSACTIONS BY OR ON BEHALF OF A PARTY, OR ANY AFFILIATE THEREOF; AND        

(d)    EACH PARTY ACKNOWLEDGES AND AGREES THAT (I) IT AND ITS AFFILIATES HAVE MADE THEIR OWN INQUIRY AND INVESTIGATION INTO THE OTHER PARTIES, THE EJMMF AND THE TFMMF, AS WELL AS THE TRANSACTIONS, AND, BASED THEREON, IT HAS FORMED AN INDEPENDENT JUDGMENT CONCERNING SUCH TRANSACTIONS, AND (II) IT HAS BEEN FURNISHED WITH, OR GIVEN ADEQUATE ACCESS TO, SUCH INFORMATION ABOUT THE OTHER PARTIES, AND SUCH TRANSACTIONS, AS IT HAS REQUESTED.

7.Covenants.

7.1Mutual Covenants. Each Party, severally, hereby covenants as follows:

(k)Access to Materials. Between the date of this Agreement and the earlier of the Closing Date or the termination of this Agreement, each Party shall (i) give reasonable access to the other Parties and their attorneys, accountants and other representatives, during reasonable business hours, under such Disclosing Party’s supervision, and upon reasonable notice, to all books, records and files (other than those describing the Disclosing Party’s proprietary credit research or investment methodologies) related to Passport Records or the books and records and the business of the EJMMF that other Parties reasonably request, and (ii) request (and make commercially reasonable efforts to cause) the disclosing Party’s officers, managers, employees, agents and service providers to furnish the other Parties with (or make available to the other Parties) such operating data of the Disclosing Party with respect to the Passport Records or business of the EJMMF as the other Parties may from time to time reasonably request.

(l)Notice of Change of Condition. Between the date of this Agreement and the earlier of the Closing Date or the termination of this Agreement, promptly after gaining actual knowledge of any of the following, each Party shall notify the other Parties of any fact, condition, event, or other matter occurring with respect to such Party or the EJMMF or TFMMF that would reasonably be expected to: (i) have a Material Adverse Change with respect to such Party or the EJMMF or TFMMF; or (ii) cause any of the conditions precedent set forth in Section 8 not to be satisfied.

(m)Cooperation. Between the date of this Agreement and the earlier of the Closing Date or the termination of this Agreement, each Party shall use commercially reasonable efforts to provide the other Parties or other Persons with required notices, to make required filings and to obtain any authorizations, consents or approvals required in connection with this Agreement, any Ancillary Closing Document or the Transactions, and to take such other action as may be required for the consummation of the Transactions.

(d)    Material Misrepresentations/Omissions. Each Party covenants that any information or data that describes such Party or its Affiliates, or any of their respective Affiliates,

31

Exhibit 10.1            

Execution Copy

or any of their business operations or plans, which is included in any registration statement, information statement/prospectus on Form N-14, proxy statement on Schedule 14A, or negative consent (including any attachments), or any post-effective or other amendment or supplement thereto, or any other documents or materials, in each case filed with the SEC or other Governmental Body in connection with obtaining shareholder approval or sent to shareholders of the TFMMF or the EJMMF or any other Person in connection with the consummation of the Transactions, shall not contain, at the time any such registration statement, information statement/prospectus on Form N-14, proxy statement on Schedule 14A, or negative consent (including any attachments), or any such post-effective or other amendment or supplement thereto, or any such other documents or materials become effective or are furnished to the SEC or other Governmental Body, shareholders or any other Person, or at the time of any applicable shareholder meeting, any untrue statement of material fact or omit to state any material fact required to be stated therein, or necessary in order to make the statements made therein not misleading in the light of the circumstances under which they are made.

(e)    Notification of Litigation. Between the date of this Agreement and the earlier of the Closing Date or the termination of this Agreement, each Party shall promptly notify the other Parties of any Proceeding in, by or before any Governmental Body commenced or, to such Party’s actual knowledge, overtly threatened against such Party, which, if adversely decided, would reasonably be expected to result in a Material Adverse Change with respect to that Party.

(f)    Application of 15(f) Safe Harbor. Each Party acknowledges that the Parties intend that the Transactions shall satisfy any applicable requirements of Section 15(f) of the 1940 Act (to the extent available/applicable with respect to the Transactions). In this regard, from and after the date of this Agreement and after the Closing, in order to facilitate the Transactions, to the extent that the safe harbor provisions of Section 15(f) of the 1940 Act can be applicable or available to the Transactions, each Party shall use commercially reasonable efforts to ensure that the Transactions comply with the safe harbor provisions of Section 15(f) of the 1940 Act in the manner and for so long as required under the 1940 Act. Federated may elect, in lieu of the covenants set forth in this Section 7.1(f), to apply for and obtain an exemptive order under Section 6(c) of the 1940 Act from the provisions of Section 15(f) of the 1940 Act, in form and substance reasonably acceptable to the Parties.

(g)    Exclusivity. Each Party agrees that until the earlier of the Closing or termination of this Agreement, such Party shall not directly or indirectly solicit, initiate, encourage, entertain or discuss (and shall use commercially reasonable efforts to not permit any Affiliate, employee, officer, director, trustee, manager, agent or other Person acting on their behalf to solicit, initiate, encourage, entertain or discuss) any inquiries, proposals or offers involving any transaction with or relating to Passport, the TFMMF or the EJMMF that would prevent or prohibit or materially impair or delay the ability to consummate the Transactions with any other Person or provide any information to any other Person, other than information which is provided or made available in the ordinary course of business where such Party has no reason to believe that such information may

32

Exhibit 10.1            

Execution Copy

be utilized to evaluate such a transaction. Each Party further agrees to promptly notify the other Parties should such Party receive or become aware of any such inquiries, proposals or offers from any other Person.

7.2    Taxes.        

(a)    Federated or Passport (pre-Closing) shall file (or cause to be filed) any and all Tax Returns and reports required to be filed on behalf of Passport and the EJMMF with respect to any period ending on or prior to the Closing Date. Each of Federated and Passport (pre-Closing) also agrees to take commercially reasonable efforts to ensure that all Taxes, fees, assessments, or charges of any kind whatsoever, if any, together with any interest, penalties, additions to Tax, or additional amounts imposed by any taxing authority shall have been paid so far as due or provision has been made for the payment thereof. Federated and Passport (pre-Closing) also agree to take commercially reasonable efforts to ensure that all federal and other Tax Returns and reports of Passport and the EJMMF required by applicable law, rule or regulation to have been filed by the Closing Date shall have been so filed, and all required or reasonably necessary records relating to Taxes with respect to or covering Passport and the EJMMF have been maintained.

(b)    Each of Jones, Buyer and Passport (post-Closing) agrees that it shall: (i) file (or cause to be filed) any and all Tax Returns and reports required to be filed on behalf of Passport and the EJMMF with respect to any period ending after the Closing Date; and (ii) take commercially reasonable efforts to ensure that (1) all Taxes shown as payable on such Tax Returns are timely paid by Passport and the EJMMF and (2) the EJMMF continues to qualify as a Regulated Investment Company after the Closing Date.

(c)    Each Party shall assist the others, as may reasonably be requested by any of them, with the preparation of any Tax Return, any Tax or financial audit, or any judicial or administrative proceedings or other litigation relating to any Tax in respect of Passport or the EJMMF. In addition, each Party shall retain and provide the other with access upon reasonable notice and during normal business hours to such records or information in respect of Passport and the EJMMF as may be relevant to such Tax Return, Tax or financial audit, proceeding, determination or other litigation.

7.3    Covenants of Federated.

33

Exhibit 10.1            

Execution Copy

(a)    Preserve the Business. Between the date of this Agreement and the earlier of the Closing Date or the termination of this Agreement, except as otherwise contemplated by this Agreement or any Ancillary Closing Document:

(i)Federated shall use commercially reasonable efforts to continue operation of Passport and the EJMMF in the ordinary course of business; and

(ii)Federated shall not, without the prior written consent of the Buyer, (1) sell, pledge, assign, lease, give a security interest in or option to purchase or otherwise encumber the general partnership interest in Passport; (2) enter into any commitment with respect to the operation of Passport other than in the ordinary course of the business; or (3) subject to any fiduciary duties, voluntarily incur or become subject to, any obligation or Liability in connection with the business of Passport, except current Liabilities incurred and obligations under contracts entered into in the ordinary course of business.

Nothing in this Section 7.3(a) shall prevent Federated, Passport or the EJMMF from taking any action necessary to comply with applicable law, rule or regulation or obligations under existing agreements to which Federated, Passport or the EJMMF are parties.

(b)    Tax Liabilities. Federated shall promptly notify the other Parties of any notification received regarding any pre-Closing material Tax Liabilities of Passport or the EJMMF or any notice of a pre-Closing Tax deficiency or Liability of Passport or the EJMMF.

7.4    Covenants of Buyer and Jones.

(a)    Cooperation; Consents. Jones and Buyer shall use commercially reasonable efforts to assist the EJMMF in obtaining all authorizations, consents or approvals necessary to the consummation of the TFMMF Transition and EJMMF Adoption and to otherwise use commercially reasonable efforts to cause the consummation of the TFMMF Transition and EJMMF Adoption. Jones and Buyer shall recommend to the EJMMF Board that Federated be engaged as investment sub-adviser to the EJMMF.

(b)    Re-appointment in Case of an Assignment. Subject to Passport’s (post-Closing) fiduciary obligations, for a period of two (2) years following Closing, Jones, Buyer and Passport (post-Closing) shall recommend to the EJMMF Board that Federated, and shall use commercially reasonable efforts to cause Federated (or its assignee) to, be re-appointed as sub-adviser (and, as applicable, sub-administrator) to the EJMMF following any “assignment” (as defined under the 1940 Act) on substantially the same terms (in all material respects) as in effect prior to such “assignment,” unless Passport (post-

34

Exhibit 10.1            

Execution Copy

Closing) reasonably and in good faith determines that the “assignment” results in a material adverse impact on EJMMF’s investment process.

(c)    Tax Liabilities. Buyer and Jones shall promptly notify the other Parties of any notification received regarding any post-Closing material Tax Liabilities of the EJMMF or notice of post-Closing Tax deficiency or Liability of the EJMMF.

(d)    Request for Proposal. Buyer and Jones shall include Federated (or an Affiliate of Federated) (or cause Federated (or an Affiliate of Federated) to be included) in any “request for proposal” or similar process for identifying or recommending a sub-advisor for the EJMMF (or any successor) at any time from and after the signing of this Agreement.

8.Conditions Precedent to Obligations.

The Parties’ obligations to consummate any Transaction shall be subject to the satisfaction of the following conditions (as applicable to such Transaction), any one or more of which may be waived by the Party with the right to enforce such condition, in writing, in whole or in part, on or prior to such Transaction being consummated:

8.1Conditions Precedent for all Transactions.

(a)No Material Adverse Change. Federated’s and Passport’s (pre-Closing) obligations to consummate any Transaction shall be subject to the condition that there shall have been no Material Adverse Change with respect to Jones or Buyer, or the TFMMF or EJMMF (as applicable), from the date of this Agreement through the date(s) on which such Transaction is consummated. Jones’ and Buyer’s obligations to consummate any Transaction shall be subject to the condition that there shall have been no Material Adverse Change with respect to Federated or Passport (pre-Closing), or the TFMMF or EJMMF (as applicable), from the date of this Agreement through the date(s) on which such Transaction is consummated.

(b)    Required Notices, Consents and Approvals. All notices, consents and approvals (including, as applicable, any necessary Board of Trustees/Directors, shareholder and governmental notices, consents or approvals (such as the approval of the EJMMF Board Approval Items and EJMMF Shareholder Approval Items)) required for the consummation of the Transaction shall have been delivered or obtained and remain in effect as and when necessary to consummate the Transaction, including any necessary notices to, or consents or approvals of, the Board of Trustees/Directors of Federated (or its ultimate parent company), Passport, Jones or Buyer.

(c)    Status as Reverse Repo Counterparty. With respect to the Passport Transfer and EJMMF Adoption, Federated and Jones shall have a reasonable belief, based on communications with the Federal Reserve Bank of New York, that the EJMMF shall continue to be eligible to participate in reverse

35

Exhibit 10.1            

Execution Copy

repurchase agreements with the Federal Reserve Bank of New York post-Closing.     

(d)    Books and Records. Federated’s and Passport’s (pre-Closing) obligations to consummate any Transaction shall be subject to the condition that Jones and Buyer shall have taken any necessary steps to provide Federated and Passport (pre-Closing) the access to books and records (including those of relevant service providers) required under this Agreement as necessary for the consummation of the Transaction. Jones’ and Buyer’s obligations to consummate any Transaction shall be subject to the condition that Federated and Passport (pre-Closing) shall have taken any necessary steps to provide Jones and Buyer the access to books and records (including those of relevant service providers) required under this Agreement as necessary for the consummation of the Transaction.

(e)    No Breach of Representations and Warranties and Covenants. Federated’s and Passport’s (pre-Closing) obligations to consummate any Transaction shall be subject to the condition that there shall have been no material breach in the performance of any covenant of Jones or Buyer set forth herein or in any Ancillary Closing Document, and each of the representations and warranties of Jones or Buyer contained in this Agreement or in any Ancillary Closing Document shall be true and correct in all material respects as of the date(s) on which the Transaction is consummated, except for representations and warranties that are made by their terms as of a specified date, which shall be true and correct in all material respects as of the specified date, and except for representations and warranties that already contain a materiality qualifier, which shall be true and correct in all respects. Jones’ and Buyer’s obligations to consummate any Transaction shall be subject to the condition that there shall have been no material breach in the performance of any covenant of Federated or Passport (pre-Closing) set forth herein or in any Ancillary Closing Document, and each of the representations and warranties of Federated or Passport (pre-Closing) contained in this Agreement or in any Ancillary Closing Document shall be true and correct in all material respects as of the date(s) on which the Transaction is consummated, except for representations and warranties that are made by their terms as of a specified date, which shall be true and correct in all material respects as of the specified date, and except for representations and warranties that already contain a materiality qualifier, which shall be true and correct in all respects. With respect to the Closing of the Passport Transfer and EJMMF Adoption, each Party shall have delivered to the other Parties a written certificate executed by an authorized executive officer of such Party certifying, in reasonable detail, the fulfillment of the foregoing conditions as applicable to such Party.

(f)    No Legal Obstruction; Litigation. No injunction, restraining order or order of any nature shall have been issued by or be pending before any court of competent jurisdiction or any other Governmental Body

36

Exhibit 10.1            

Execution Copy

challenging the validity or legality of the Transaction or restraining or prohibiting the consummation of the Transaction. Federated’s and Passport’s (pre-Closing) obligations to consummate any Transaction also shall be subject to: (1) the condition that there is no Proceeding or investigation pending or, to Jones’ and Buyer’s actual knowledge, threatened, that would be reasonably likely to become the basis for any such injunction or SEC order; and (2) the condition that no Proceeding by or before any Governmental Body shall have been instituted or threatened in writing against Jones or Buyer, or any of their respective Affiliates, which, if adversely decided, would reasonably be expected to prevent or prohibit, materially impair the consummation of, or invalidate any material aspect of the Transaction or result in any Material Adverse Change with respect to Federated, Passport (pre-Closing) or the TFMMF or EJMMF (as applicable). Jones’ and Buyer’s obligations to consummate any Transaction also shall be subject to: (A) the condition that there is no Proceeding or investigation pending or, to Federated’s or Passport’s actual knowledge, threatened, that would be reasonably likely to become the basis for any such injunction or SEC order; and (B) the condition that no Proceeding by or before any Governmental Body shall have been instituted or threatened in writing against Federated or Passport (pre-Closing), or any of their respective Affiliates, which, if adversely decided, would reasonably be expected to prevent or prohibit, materially impair the consummation of, or invalidate any material aspect of the Transaction or result in any Material Adverse Change with respect to Jones, Buyer, Passport (post-Closing) or the EJMMF.

(g)    No Proceeding Effecting Federated’s Good Standing. There shall have been no regulatory or other Proceeding instituted against Federated which would reasonably be expected to cause Federated to no longer be considered in Good Standing.

(h)    Ancillary Closing Documents; Other Customary Certificates and Other Documents. All Parties shall have received a countersigned copy of each Ancillary Closing Document required for the Transaction to be consummated, and such agreements shall be in full force and effect. Federated’s and Passport’s (pre-Closing) obligations to consummate any Transaction also shall be subject to the condition that Jones and Buyer shall have delivered such other customary certificates and instruments as may be reasonably requested by Federated or Passport (pre-Closing). Jones’ and Buyer’s obligations to consummate any Transaction also shall be subject to the condition that Federated and Passport (pre-Closing) shall have delivered such other customary certificates and instruments as may be reasonably requested by Jones and Buyer.

8.2Conditions Precedent for the TFMMF Transition. In addition to satisfaction of the applicable conditions set forth in Section 8.1 above, the Parties’ obligations to consummate the TFMMF Transition (or any stage thereof) shall be subject to the satisfaction of the following conditions, any one or more of which may be waived by the Party with the right to enforce such

37

Exhibit 10.1            

Execution Copy

condition, in writing, in whole or in part, on or prior to any date on which the TFMMF Transaction (or any stage thereof) is consummated:

(a)    Required Notices and Actions. Federated’s and Passport’s (pre-Closing) obligations to consummate the TFMMF Transition (or any stage thereof) shall be subject to the condition that Jones and Buyer shall have given such notices or obtained such consents (including negative consent letters to Jones TFMMF Shareholders), and taken any other required actions, necessary to effect the TFMMF Transition (or any stage thereof), and any notice/consent period required under applicable law, rule or regulations shall have expired.        

(b)    Board Notices. All required or necessary notices to the Board of Trustees of TFMMF or MMOT, or to the EJMMF Board (pre-Closing), shall have been provided.

(c)    Net Asset Value. TFMMF shall have been, and shall be, in compliance with the NAV Stability Condition both prior to, and immediately after, the TFMMF Transition (or any stage thereof) is consummated.

(d)    Account Documentation. Any shareholder account documentation required for Jones TFMMF Shareholders to invest in the EJMFF shall have been received.

8.3Conditions Precedent for the Passport Transfer. In addition to satisfaction of the applicable conditions set forth in Section 8.1 above, the Parties’ obligations to consummate the Passport Transfer shall be subject to the satisfaction of the following conditions, any one or more of which may be waived by the Party with the right to enforce such condition, in writing, in whole or in part, on or prior to the Closing Date:

(a)TFMMF Transition. The TFMMF Transition shall have been consummated in its entirety.

(b)Execution of New Agreements; Termination of Certain Agreements.

(i)Passport and the EJMMF shall have executed the New Advisory Agreement to be delivered upon consummation of the EJMMF Adoption, and provided a copy thereof to Federated;

(ii)Passport and Federated (and, as applicable, Federated’s Affiliate, Federated Administrative Services) shall have executed the New Sub-Advisory Agreement to be delivered upon consummation of the EJMMF Adoption;

(iii)The other Post-Closing EJMMF-Related Documents shall have been executed to be delivered upon consummation of the EJMMF Adoption;

(iv)Federated shall have caused Passport (pre-Closing) to terminate with respect to Passport, or amend to remove Passport from, any

38

Exhibit 10.1            

Execution Copy

agreements under which Passport (pre-Closing) receives shared services with Federated or its Affiliates, Federated shall have caused to be terminated with respect to the TFMMF or EJMMF, or amended to remove the TFMMF and EJMMF from, any agreements to which the TFMMF or EJMMF are a party with other funds sponsored or advised by Federated or its Affiliates, and Federated shall have caused any agreement to which the EJMMF is a party and which is being replaced by a Post-Closing EJMMF-Related Document to be terminated with respect to the EJMMF (or such agreement shall terminate in accordance with its terms upon the consummation of the Passport Transfer); and

(v)Jones Financial and EDJones shall have executed and delivered the Assignment and Substitution Agreement, and Federated shall have executed and delivered the Consent to Assignment and Substitution Agreement, in each case substantially in the form attached hereto as Exhibit K (with such changes as may be mutually agreed upon by the Parties).

(c)No Liens; Notice under Credit Agreement. Jones’ and Buyer’s obligations to consummate the Passport Transfer shall be subject to the conditions that: (i) any lien or other encumbrance on Federated’s general partnership interest in Passport shall have been released (other than liens for taxes not yet due, warehouseman’s liens, landlord liens and other customary liens and encumbrances arising by operation of law); and (ii) any necessary notices to lenders under any credit agreement to which Federated (or its ultimate parent company) are parties, or are subject, shall have been provided and remain in effect.

(d)    Receipt of Consents. Federated’s and Passport’s (pre-Closing) obligations to consummate the Passport Transfer shall be subject to the condition that all notices, consents and approvals of the Board of Directors/Trustees of Jones or Buyer required for the Passport Transfer and EJMMF Adoption shall have been provided or obtained and remain in effect, as applicable. Jones’ and Buyer’s obligations to consummate the Passport Transfer shall be subject to the condition that all notices, consents and approvals of the Board of Directors/Trustees of Federated or, as applicable, its ultimate parent company, or Passport (pre-Closing) required for the Passport Transfer and EJMMF Adoption shall have been provided or obtained and remain in effect, as applicable.

(e)    Contribution. The Pre-Existing Required Contribution (or, if the TFMMF is liquidated, rather than reorganized, the investment) contemplated by Section 3.5(b)(iii) shall have been paid and the additional actions (if any) agreed to between Passport (pre-Closing), Federated, Jones and the EJMMF Board (pre-Closing) as contemplated in this Agreement shall have been taken.

(f)    Post-Transition TFMMF Reorganization/Liquidation. The Post-Transition TFMMF Reorganization/Liquidation shall have been consummated.

39

Exhibit 10.1            

Execution Copy

(g)    Net Asset Value. The EJMMF shall have been, and shall be, in compliance with the NAV Stability Condition both prior to, and immediately after, the Passport Transfer being consummated.

(h)    Distribution. The Pre-Closing Distribution required to be made prior to the Closing shall have been made.

(i)    Board Approvals. The EJMFF Board Approval Items shall have been approved by the EJMFF Board and such approvals shall remain in effect.

(j)    Proxy. The EJMMF Proxy shall have been prepared, reviewed, filed, declared effective, printed and mailed (as applicable) to shareholders of EJMMF and the EJMFF Shareholder Approval Items shall have been approved by such shareholders at the EJMMF Shareholder Meeting and such approvals shall remain in effect.

8.4Conditions Precedent for the EJMMF Adoption. In addition to satisfaction of the applicable conditions set forth in Section 8.1 above, the Parties’ obligations to consummate the EJMMF Adoption shall be subject to, unless waived by such Party in writing on or prior to the Closing Date, the Passport Transfer having been consummated immediately prior to the EJMMF Adoption and the conditions to the Passport Transfer set forth in Section 8.3 above remaining satisfied.

9.Liability and Indemnification.

Nothing in this Section has any application to or effect on: (1) the expense arrangements described Section 3.5 above; or (2) the Liabilities or indemnification obligations under the New Advisory Agreement or the New Sub-Advisory Agreement.

9.1Liability.

(a)Non-Assumption of Liabilities. All Liabilities of Passport that exist at or prior to Closing that have not been discharged shall remain Liabilities of Passport after Closing. Federated and its Affiliates shall not expressly assume any Liabilities of Passport in connection with the Transactions.

(b)Pre-Closing Liabilities. Except as expressly set forth in this Agreement, none of the Transactions shall affect the respective Liabilities of the Parties, or their respective Affiliates, or of the TFMMF or EJMMF, arising from acts taken, or omissions made, or periods of time, at or prior to Closing (collectively, as applicable, the “Pre-Closing Liabilities”); provided, however:

(i)All known Pre-Closing Liabilities for which Passport (pre-Closing) is responsible, including any relating to the TFMMF or EJMMF (pre-Closing), shall be borne by Federated and Jones in accordance with their Respective Ownership Interests, but only to the extent Passport (pre-Closing) does not have

40

Exhibit 10.1            

Execution Copy

sufficient assets to satisfy such Pre-Closing Liabilities (it being understood that payment by Passport of such Pre-Closing Liabilities will reduce Passport’s profit/income available for distribution by Passport to Federated and Jones in accordance with their Respective Ownership Interests and that, therefore, Federated and Jones shall indirectly bear such fees, costs and expenses);

(ii)Federated’s and its Indemnified Parties’ responsibility and Liability from and after Closing for all Pre-Closing Liabilities for which Federated or Passport (pre-Closing), or any other Indemnified Party of Federated, may be responsible or liable (including any such Pre-Closing Liabilities relating to the TFMMF or EJMMF (pre-Closing), or any such Pre-Closing Liabilities for which Federated could be responsible/liable as general partner of Passport (pre-Closing) but for the Passport Transfer), shall be based on Federated’s Respective Ownership Interest and limited to the Federated Indemnification Cap; and

(iii)Jones’, Buyer’s and their respective Indemnified Parties’ responsibility and Liability from and after Closing for all Pre-Closing Liabilities for which Jones or Passport (post-Closing), or any other respective Indemnified Party of Jones or Passport, may be responsible or liable (including any such Pre-Closing Liabilities relating to TFMMF or EJMMF (pre-Closing)) shall be based on Jones’ Respective Ownership Interest and limited to the Jones Indemnification Cap, except that (for the avoidance of doubt) the Jones Indemnification Cap shall not apply to (A) any Pre-Closing Liability of or relating to Passport for which Federated and its Indemnified Parties are not responsible or liable because of the Federated Indemnification Cap or the other limitations under this Agreement (including Section 9.3 below), or (b) any Non-Definitive Agreement Post-Closing Liabilities of Passport (post-Closing), or of Jones or Buyer as partners of Passport (post-Closing), or of any of their respective Indemnified Parties.

(c)Post-Closing Liabilities. Notwithstanding Section 9.1(b), with respect to any Liability of Passport (post-Closing), or of Jones or Buyer (including as partners of Passport (post-Closing)), or in either case relating to the EJMMF (post-Closing) (collectively, as applicable, the “Post-Closing Liabilities”), Passport (post-Closing), Jones and Buyer shall be responsible for such Post-Closing Liabilities, as may be agreed between them. For the avoidance of doubt, and without limiting the foregoing, Post-Closing Liabilities include Liabilities arising from acts taken, or omissions made, or periods of time, from and after the Closing. Neither Federated, nor any of its Indemnified Parties, shall assume or be liable for any Post-Closing Liabilities of Jones, Buyer or Passport (post-Closing), or any of their Indemnified Parties, pursuant to this Agreement or any Ancillary Closing Document.

9.2Indemnification.

(d)Jones and Buyer (jointly and severally), Federated, and Passport shall indemnify, defend and hold harmless each other Party, and its Affiliates and Affiliated Persons, and their respective shareholders, controlling persons, trustees, directors, managers, officers, employees, agents, service providers and representatives, and their respective successors and assigns,

41

Exhibit 10.1            

Execution Copy

(collectively, as applicable, “Indemnified Parties”) for any and all actual Losses that any of them may become subject to, or shall incur or suffer, that arise out of, result from, or relate to (i) such Party’s material breach of any covenant or obligation in, or material inaccuracy of any representation or warranty in, this Agreement or any Ancillary Closing Document; (ii) any Pre-Closing Liabilities of such Party (or of the TFMMF or EJMMF arising from the acts or omissions of such Party); and (iii) any untrue or allegedly untrue statement of a material fact, or any omission to state a material fact required to be stated or necessary to make the statements therein not misleading, relating to such Party and its Affiliates and contained in any registration statement, information statement/prospectus on Form N-14, proxy statement on Schedule 14A, or negative consent (including any attachments), or any post-effective or other amendment or supplement thereto, or any other documents or materials, in each case filed with the SEC in connection with obtaining shareholder approval or sent to shareholders of the TFMMF or EJMMF in connection with the consummation of the Transactions; provided, however, that such indemnification under clause (iii) shall relate only to information regarding such Party and its Affiliates included in any of the foregoing or to any omission to state a material fact required to be stated or necessary to make any of such statements not misleading. With respect to Passport’s (pre-Closing) obligations under this Section 9.2(a) relating to acts or omissions by Passport at or prior to Closing, Federated and Jones shall be responsible for such obligations of Passport in accordance with their Respective Ownership Interests (subject to the other provisions of this Section 9).

(e)Jones, Passport (post-Closing) and Buyer, jointly and severally, shall indemnify, defend and hold harmless Federated and its Indemnified Parties for any and all actual Losses that any of them may become subject to, or shall incur or suffer, that arise out of, result from, or relate to any Post-Closing Liabilities of any of them (or of the TFMMF or EJMMF arising from the acts or omissions of any of them).

(f)In the case of any claim asserted by a third party against a Person entitled to indemnification under this Agreement, notice shall be given by such indemnified Person to the Party required to provide indemnification promptly after such indemnified Person has actual knowledge of any claim as to which indemnity may be sought, and the indemnified Person shall permit the indemnifying Party (at the expense of such indemnifying Party) to assume the defense of any claim or any Proceeding resulting therefrom, provided, that (i) counsel for the indemnifying Party who shall conduct the defense of such claim or Proceeding shall be reasonably satisfactory to the indemnified Person, and the indemnified Person may participate in such defense at such indemnified Person’s expense, and (ii) the failure of any indemnified Person to give notice as provided herein shall not relieve the indemnifying Party of its indemnification obligation under this Agreement except to the extent that such failure results in a lack of actual notice to the indemnifying Party and such indemnifying Party is materially prejudiced as a result of such failure to give notice.  Except with the prior written consent of the indemnified Person, no indemnifying Party, in the defense of any such claim or Proceeding, shall consent to entry of any judgment or enter into any settlement that provides for injunctive or other nonmonetary relief affecting the indemnified Person or that does not include as an unconditional term thereof the giving by each claimant or plaintiff to such indemnified Person of a release from all Liability with respect to such claim or Proceeding.  In the event that the indemnified Person shall in good faith determine that the conduct of the defense of any claim or Proceeding subject to indemnification hereunder or any proposed settlement of any

42

Exhibit 10.1            

Execution Copy

such claim or Proceeding by the indemnifying Party would reasonably be expected to affect adversely the indemnified Person’s Tax Liability or, in the case of an indemnified Person that is a Federated Indemnified Party, the ability of Federated or any of its Affiliates to conduct its business, or that the indemnified Person may have available to it one or more defenses or counterclaims that are inconsistent with one or more of those that may be available to the indemnifying Party in respect of such claim or any Proceeding relating thereto, the indemnified Person shall have the right at all times to take over and assume control over the defense, settlement, negotiations or Proceeding relating to any such claim or Proceeding at the sole cost of the indemnifying Party, provided, that if the indemnified Person does so take over and assume control, the indemnified Person shall not settle such claim or Proceeding without the written consent of the indemnifying Party, such consent not to be unreasonably withheld or delayed.  In the event that the indemnifying Party does not accept the defense of any matter as above provided, the indemnified Person shall have the full right to defend against any such claim or Proceeding, and shall be entitled to settle or agree to pay in full such claim or Proceeding.  In any event, subject to entering into a mutually acceptable joint defense agreement, the Parties shall cooperate in the defense of any claim or Proceeding subject to this Section 9.2(c) and make available to the others their respective applicable books and records in connection with such defense.

(g)If an indemnified Person recovers any amount under this Section 9 in respect of Losses, the indemnifying Party shall be subrogated, to the extent of this recovery, to the indemnified Person’s rights against any third party with respect to such Losses.

9.3Limitations. Notwithstanding Sections 9.1 and 9.2 above, the Liability and indemnification obligations of the Parties shall be subject to the following limits, which, for the avoidance of doubt, shall not affect any Liability or indemnification obligations under the New Advisory Agreement or New Sub-Advisory Agreement):

(a)Limitations as to Amount:

(vi)The aggregate Liability of (i) Federated, Passport (pre-Closing), and their respective Affiliates, and (ii) other Federated-related Indemnified Parties, for (1) any Pre-Closing Liabilities, or (2) any Losses or indemnification obligation, shall not exceed $2 million in the aggregate (“Federated Indemnification Cap”).

(vii)The aggregate Liability of Jones, Buyer and their respective Affiliates, and other Jones- and Buyer-related Indemnified Parties, for (1) any Pre-Closing Liabilities, or (2) any Losses or indemnification obligation, shall not exceed $2 million in the aggregate (“Jones Indemnification Cap”), except for amounts not subject to the Jones Indemnification Cap pursuant to Section 12.1(b)(iii).

(b)Survival. The representations and warranties and covenants made in this Agreement, or in any Ancillary Closing Document, shall survive Closing for, and any claims arising out of, resulting from, or relating thereto must be brought within, two (2) years after Closing; provided, that, with respect to the covenants in Section 2.4(a) (second paragraph) and Section 4

43

Exhibit 10.1            

Execution Copy

hereof that require performance beyond two (2) years after the Closing, such covenants shall survive for, and claims for equitable relief may be brought with respect to breaches of such covenants within, five (5) years after Closing.

(c)Deductible (not a threshold). No claims by Federated or Passport (pre-Closing), on the one hand, or Jones, Passport (post-Closing) or Buyer, on the other hand, shall be asserted under this Section 9 unless and until the aggregate amount of Losses asserted by Federated and Passport (pre-Closing), on the one hand, or Jones, Passport (post-Closing) and Buyer, on the other hand, that would otherwise be payable hereunder exceeds on a cumulative basis an amount equal to $50,000 (the “Indemnification Deductible”), and then only to the extent such Losses exceed the Indemnification Deductible.

(d)Limitation on Consequential Damages. No Party shall have any Liability to any other Party for any consequential, incidental, indirect, punitive, exemplary or special damages of any nature (“Consequential Damages”); provided, however, that the foregoing shall not preclude any claim for or recovery of any Liability or other Losses incurred or suffered by any Party (or any other Indemnified Party of such Party) in a third-party claim that includes claims for Consequential Damages.

(e)No “Double Materiality”. For the sole purpose of determining Liability or other Losses under the indemnification obligations under this Agreement (but not for determining whether or not any inaccuracy or breach of representations, warranties or covenants has occurred), any representation, warranty or covenant that contains a “materiality” qualifier shall not be deemed qualified by any such “materiality” qualifier so as to avoid “double materiality.”

(f)Jones’ and Buyers’ Knowledge. Neither Jones, Buyer nor Passport (post-Closing) shall have any claim for breach of representations, warranties or covenants, nor shall Federated or Passport (pre-Closing) have any Liability for any Pre-Closing Liabilities, or other Liability, Losses or other indemnification obligations, arising out of, resulting from or relating to any fact, event or circumstance of which Jones or Buyer had actual knowledge prior to the execution and delivery of this Agreement, including as a result of any due diligence conducted by Jones and Buyer or any matters disclosed on any disclosure schedules to this Agreement.

(g)Exclusive Remedy. Except for any equitable remedies, indemnification under this Section 9 of this Agreement shall constitute the sole and exclusive remedy for any claims made for any Pre-Closing Liabilities, or other Liabilities or Losses, in connection with, and including breach of, this Agreement or any Ancillary Closing Document or the Transactions. Each Party hereby waives any provision of applicable law, rule or regulation to the extent that it would limit or restrict the foregoing.

10.Miscellaneous Provisions.

10.1Notices. Any notices or other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given or delivered when delivered by hand (including by Federal Express or similar express courier) or three (3) calendar days after being

44

Exhibit 10.1            

Execution Copy

mailed by prepaid registered or certified mail, return receipt requested, to the Parties at the following addresses:

If to Jones, Buyer or Passport (post-Closing), to:

Edward D. Jones & Co., L.P.                12555 Manchester Road                St. Louis, MO 63131                Attention: General Counsel

with copies to:

Morgan, Lewis & Bockius, LLP

1701 Market Street

Philadelphia, PA 19103

Attention: Timothy W. Levin, Esq.

If to Federated or Passport (pre-Closing), to:

Federated Investment Management Companyc/o Federated Investors, Inc.

Federated Investors Tower

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Attention: Chief Financial Officer     and Chuck Davis

with copies to:

Federated Investors, Inc.

Federated Investors Tower

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Attention: George F. Magera, Esq.

and

K&L Gates LLP        70 West Madison Street, Suite 3100

45

Exhibit 10.1            

Execution Copy

        Chicago, IL 60602-4207        Attention: D. Mark McMillan

Any Party may change the addresses specified above by notice to the other Party in accordance with this Section. Notices shall be effective when actually received.

10.2Entire Agreement. Except as specifically stated in this Section 10.2, this Agreement, including any Exhibits and Schedules hereto and the Ancillary Closing Documents, constitute the entire agreement and contain all understandings, covenants, representations, warranties, statements, courses of dealing or conduct, duties and obligations made by or of the Parties, represent the exclusive statement of all agreements, understandings, covenants, representations, warranties, statements, courses of dealing or conduct, duties and obligations of the Parties, and supersede all prior agreements, understandings, covenants, representations, warranties, statements, courses of dealing or conduct, duties and obligations (written or oral, expressed or implied) of, made by or among the Parties, with respect to the Transactions. For the avoidance of doubt, and without limiting the foregoing, EXCEPT AS SET FORTH IN THIS AGREEMENT, INCLUDING ANY EXHIBITS AND SCHEDULES HERETO OR THE ANCILLARY CLOSING DOCUMENTS, NO PAST OR FUTURE ACTION (INCLUDING ANY REPRESENTATIONS, WARRANTIES OR OTHER STATEMENTS), COURSE OF CONDUCT OR DEALING, OR FAILURE TO ACT RELATING TO THE PERFORMANCE OF THIS AGREEMENT OR ANY ANCILLARY CLOSING DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, OR THE DISCUSSION OR NEGOTIATION OF THE TERMS OF THIS AGREEMENT OR ANY ANCILLARY CLOSING DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, SHALL GIVE RISE TO OR SERVE AS A BASIS FOR ANY DUTY, OBLIGATION OR OTHER LIABILITY ON THE PART OF ANY PARTY.

10.3Amendment; Waiver. Neither this Agreement nor any Ancillary Closing Document may be amended, modified, supplemented or restated except pursuant to an instrument in writing executed and delivered on behalf of each of the Parties hereto, which instrument, when so executed and delivered, shall thereupon become a part of this Agreement or any such Ancillary Closing Document. Any agreement on the part of the Parties to waive any term or provision of this Agreement or any Ancillary Closing Document shall be valid only if set forth in an instrument in writing signed on behalf of the Party or Parties against whom the waiver is to be effective. No such waiver shall constitute a waiver of, or estoppel with respect to, any subsequent or other inaccuracy, breach or failure to strictly comply with the provisions of this Agreement or any Ancillary Closing Document.

10.4Severability. Any term or provision of this Agreement or any Ancillary Closing Document which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or any such Ancillary Closing Document or affecting the validity or enforceability of any of the terms or provisions of this Agreement or any such Ancillary Closing Document in any other jurisdiction so long as the economic or legal substance of the Transactions contemplated by this Agreement and the Ancillary Closing Documents are not affected in any manner materially adverse to any Party. If any provision of this Agreement or any Ancillary Closing Document is so broad as to be unenforceable, the provision

46

Exhibit 10.1            

Execution Copy

shall be interpreted to be only so broad as is enforceable. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the Parties hereto shall negotiate in good faith to modify this Agreement or any such Ancillary Closing Document so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the Transactions contemplated hereby and thereby be consummated as originally contemplated to the greatest extent possible.

10.5Binding Effect. This Agreement and the terms and provisions hereof shall inure to the benefit of, and be binding upon, the Parties hereto and each of their respective permitted successors and permitted assigns.

10.6Assignment. No Party shall delegate its obligations under this Agreement or any Ancillary Closing Document without the prior written consent of all Parties. No Party shall assign or otherwise transfer its rights under this Agreement or any Ancillary Closing Document (whether by operation of law or otherwise) without the prior written consent of the other Parties, which shall not be unreasonably withheld. Any purported assignment, transfer or delegation other than as permitted by the express terms of this Agreement shall be void and unenforceable.

10.7Representation By Counsel; Interpretation. Each Party hereto acknowledges that such Party has been represented by counsel in connection with this Agreement, the Ancillary Closing Documents and the Transactions. This Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision in this Agreement. Accordingly, any rule of law, or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the Party that drafted it has no application and is expressly waived. The section headings in this Agreement and any Ancillary Closing Document are inserted for convenience only and are not intended to affect the interpretation of this Agreement or any Ancillary Closing Document. Any reference in this Agreement or any Ancillary Closing Document to any Section refers to the corresponding Section of this Agreement or such Ancillary Closing Document. Any reference in this Agreement or any Ancillary Closing Document to any Schedule or Exhibit refers to the corresponding Schedule or Exhibit attached to this Agreement or such Ancillary Closing Document and all such Schedules and Exhibits are incorporated herein or therein by reference. The words “include” and “including” in this Agreement or any Ancillary Closing Document are to be construed as being followed by “without limitation.” Unless the context requires otherwise, any reference to any applicable law, rule or regulation in this Agreement or any Ancillary Closing Document shall be deemed also to refer to all amendments thereto, in each case as in effect as of the date hereof or as of the Closing Date (as applicable). All accounting terms not specifically defined in this Agreement or any Ancillary Closing Document shall be construed in accordance with GAAP. The word “or” in this Agreement or any Ancillary Closing Document is disjunctive but not necessarily exclusive (and should be construed, accordingly, as “and/or”). All words in this Agreement or any Ancillary Closing Document shall be construed to be of such gender or number, as the circumstances require. Unless specifically provided otherwise in this Agreement or any Ancillary Closing Document, any reference to “days” shall mean calendar days.

47

Exhibit 10.1            

Execution Copy

10.8Applicable Law; Venue. THIS AGREEMENT, AND EACH ANCILLARY CLOSING DOCUMENT, SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING AS TO VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICT OF LAWS THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. EACH OF THE PARTIES HERETO SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK (NEW YORK COUNTY). NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY ANCILLARY CLOSING DOCUMENT, AGREES THAT ALL CLAIMS UNDER ANY THEORY OF LIABILITY IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND AGREES NOT TO BRING ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY ANCILLARY CLOSING DOCUMENT IN ANY OTHER COURT. EACH PARTY WAIVES ANY DEFENSE OF INCONVENIENT FORUM TO THE MAINTENANCE OF ANY ACTION OR PROCEEDING SO BROUGHT AND WAIVES ANY BOND, SURETY OR OTHER SECURITY THAT MIGHT BE REQUIRED OF ANY OTHER PARTY WITH RESPECT THERETO. EACH PARTY AGREES THAT SERVICE OF SUMMONS AND COMPLAINT OR ANY OTHER PROCESS THAT MIGHT BE SERVED IN ANY ACTION OR PROCEEDING MAY BE MADE ON SUCH PARTY BY SENDING OR DELIVERING A COPY OF THE PROCESS TO THE PARTY TO BE SERVED AT THE ADDRESS OF THE PARTY AND IN THE MANNER PROVIDED FOR THE GIVING OF NOTICES IN SECTION 10.1. NOTHING IN THIS SECTION 10.8, HOWEVER, SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW, RULE OR REGULATION. EACH PARTY AGREES THAT A FINAL, NON‑APPEALABLE JUDGMENT IN ANY ACTION OR PROCEEDING SO BROUGHT SHALL BE CONCLUSIVE AND MAY BE ENFORCED BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY APPLICABLE LAW, RULE OR REGULATION.

10.9Multiple Counterparts. This Agreement and any Ancillary Closing Document may be executed in multiple counterparts, each of which shall be deemed an original for all purposes and all of which shall be deemed, collectively, one agreement. Once each Party to this Agreement or any Ancillary Closing Document has executed a copy of this Agreement or such Ancillary Closing Document (whether in original, by facsimile or .pdf signature or electronic signature), this Agreement or such Ancillary Closing Document shall be considered fully executed and effective, notwithstanding that all Parties have not executed the same copy.

10.10Waiver of Jury Trial. EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, RULE OR REGULATION, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT OR ANY ANCILLARY CLOSING DOCUMENT OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES IN RESPECT OF THIS AGREEMENT, ANY ANCILLARY CLOSING DOCUMENT OR ANY OF THE TRANSACTIONS, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE.

48

Exhibit 10.1            

Execution Copy

THE PARTIES EACH HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION, IF NOT DETERMINED BY THE COURT PURSUANT TO JUDICIAL PROCEDURE OR SETTLED BY THE PARTIES PRIOR TO TRIAL, SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN EXECUTED COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

10.11    Further Assurances. Each Party shall cooperate and take such actions as may be reasonably requested by any other Party in order to carry out the provisions and purposes of this Agreement and the Ancillary Closing Documents and to consummate the Transactions.

10.12    Third Parties. Nothing in this Agreement, whether express or implied, is intended to confer any rights or remedies under or by reason of this Agreement, any Ancillary Closing Document or any other instrument, agreement or document, on any Person other than the Parties to this Agreement and their respective legal representatives and permitted successors and permitted assigns, nor shall any provision give any third party any right or subrogation or action over or against any Party to this Agreement.

10.13    Announcements; Publicity. Each Party (and its Affiliates) shall not make any public announcements or disclosure prior to the Closing relating to this Agreement, the Ancillary Closing Documents, any Post-Closing EJMMF-Related Document, or any Transaction until after such Party has submitted, reasonably in advance, the text of such announcement or disclosure to the other Parties and each other Party has had a reasonable opportunity to comment thereon and has consented to the release of such public announcement or disclosure (which consent may not be unreasonably withheld or delayed); provided, however, that any Party may make such disclosures as are required by applicable law, rule or regulation after making reasonable efforts under the circumstances to consult in advance with the other Parties. To avoid unnecessary delays, the Parties shall agree upon a schedule for, and the content of, public disclosures regarding the Transactions.

10.11[Signature Page Follows]

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written.

FEDERATED INVESTMENT MANAGEMENT COMPANY

By:    /s/ John B. Fisher            

Title:    President and Chief Executive Officer

PASSPORT RESEARCH LTD.

By:    /s/ John B. Fisher            

49

Exhibit 10.1            

Execution Copy

Title:    President and Chief Executive Officer

PASSPORT HOLDINGS LLC

By:    /s/ James A. Tricarico, Jr.        
Title:    Secretary                

EDWARD D. JONES & CO., L.P.
By:    EDJ Holding Co., Inc.    Its General Partner

By:    /s/ James A. Tricarico, Jr.        
Title:    Secretary                

THE JONES FINANCIAL COMPANIES, L.L.L.P.

By:    /s/ James A. Tricarico, Jr.        
Title:    Secretary                

[Signature Page to Agreement]

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, J. Christopher Donahue, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Federated Investors, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date	April 29, 2016	By:	/s/ J. Christopher Donahue
			J. Christopher Donahue
			President and
			Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Thomas R. Donahue, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Federated Investors, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date	April 29, 2016	By:	/s/ Thomas R. Donahue
			Thomas R. Donahue
			Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Federated Investors, Inc. (the “Company”) on Form 10‑Q for the quarterly period ended March 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date	April 29, 2016	By:	/s/ J. Christopher Donahue
			J. Christopher Donahue
			President and
			Chief Executive Officer
Date	April 29, 2016	By:	/s/ Thomas R. Donahue
			Thomas R. Donahue
			Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	Apr. 25, 2016
Entity Registrant Name	FEDERATED INVESTORS INC /PA/
Entity Central Index Key	0001056288
Trading Symbol	FII
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2016
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Amendment Flag	false
Class A [Member]
Entity Common Stock, Shares Outstanding		9,000
Class B [Member]
Entity Common Stock, Shares Outstanding		103,975,987

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Current Assets
Cash and cash equivalents	$ 147,762	$ 172,628
Investments—affiliates	131,980	141,748
Investments—consolidated investment companies	55,133	25,368
Investments—other	7,143	7,071
Receivables, net of reserve of $1 and $59, respectively	41,396	33,524
Prepaid expenses	10,996	10,722
Other current assets	4,180	4,767
Total current assets	398,590	395,828
Long-Term Assets
Goodwill	659,315	659,315
Renewable investment advisory contracts	70,582	70,582
Other intangible assets, net of accumulated amortization of $21,420 and $21,116, respectively	4,291	4,595
Property and equipment, net of accumulated depreciation of $57,924 and $56,034, respectively	37,417	35,743
Other long-term assets	20,419	21,140
Total long-term assets	792,024	791,375
Total assets	1,190,614	1,187,203
Current Liabilities
Short-term debt	25,500	25,500
Accounts payable and accrued expenses	52,974	43,551
Accrued compensation and benefits	27,435	75,691
Other current liabilities	25,717	14,466
Total current liabilities	131,626	159,208
Long-Term Liabilities
Long-term debt	184,875	191,250
Long-term deferred tax liability, net	168,192	158,895
Other long-term liabilities	17,191	20,144
Total long-term liabilities	370,258	370,289
Total liabilities	$ 501,884	$ 529,497
Commitments and contingencies (Note (12))
TEMPORARY EQUITY
Redeemable noncontrolling interest in subsidiaries	$ 25,905	$ 8,734
PERMANENT EQUITY
Retained earnings	552,263	545,785
Treasury stock, at cost, 5,469,469 and 5,411,429 shares Class B common stock, respectively	(193,700)	(191,939)
Accumulated other comprehensive loss, net of tax	(3,182)	(4,609)
Total Federated Investors, Inc. shareholders’ equity	661,382	647,816
Nonredeemable noncontrolling interest in subsidiary	1,443	1,156
Total permanent equity	662,825	648,972
Total liabilities, temporary equity and permanent equity	1,190,614	1,187,203
Class A [Member]
PERMANENT EQUITY
Common stock	189	189
Class B [Member]
PERMANENT EQUITY
Common stock	$ 305,812	$ 298,390

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Receivables, reserve	$ 1	$ 59
Other intangible assets, accumulated amortization	21,420	21,116
Property and equipment, accumulated depreciation	$ 57,924	$ 56,034
Treasury stock, shares	5,469,469	5,411,429
Class A [Member]
Common stock, no par value	$ 0	$ 0
Common stock, shares authorized	20,000	20,000
Common stock, shares issued	9,000	9,000
Common stock, shares outstanding	9,000	9,000
Class B [Member]
Common stock, no par value	$ 0	$ 0
Common stock, shares authorized	900,000,000	900,000,000
Common stock, shares issued	109,505,456	109,505,456

XML

Consolidated Statements of Income - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2016	Mar. 31, 2015
Revenue
Investment advisory fees, net—affiliates		$ 154,777	$ 122,035
Investment advisory fees, net—other		27,070	24,524
Administrative service fees, net—affiliates		53,473	53,017
Other service fees, net—affiliates		34,697	18,720
Other service fees, net—other		1,201	1,067
Other, net		891	1,159
Total revenue		272,109	220,522
Operating Expenses
Distribution		88,381	53,495
Compensation and related		76,770	76,498
Professional service fees		8,881	7,882
Systems and communications		7,865	6,870
Office and occupancy		6,888	6,853
Advertising and promotional		3,442	3,471
Travel and related		2,906	2,759
Other		2,421	3,656
Total operating expenses		197,554	161,484
Operating income		74,555	59,038
Nonoperating Income (Expenses)
Investment income, net		1,573	1,144
Gain (loss) on securities, net	[1]	1,091	(254)
Debt expense		(1,059)	(1,373)
Other, net		(5)	(13)
Total nonoperating income (expenses), net		1,600	(496)
Income before income taxes		76,155	58,542
Income tax provision		27,381	22,124
Net income including the noncontrolling interests in subsidiaries		48,774	36,418
Less: Net income attributable to the noncontrolling interests in subsidiaries		3,516	111
Net income		$ 45,258	$ 36,307
Amounts Attributable to Federated Investors, Inc.
Earnings per common share—Basic and Diluted	[2]	$ 0.44	$ 0.35
Cash dividends per share		$ 0.25	$ 0.25

[1] Amounts related to consolidated entities, primarily Federated Funds, totaled $1.0 million and $(0.3) million for the three months ended March 31, 2016, and 2015, respectively.

[2] Federated Common Stock excludes unvested restricted stock which are deemed participating securities in accordance with the two-class method of computing earnings per share.

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Net income including the noncontrolling interests in subsidiaries	$ 48,774	$ 36,418
Permanent equity
Unrealized gain on interest rate swap	0	42
Reclassification adjustment related to interest rate swap	0	227
Unrealized gain on securities available for sale	577	687
Reclassification adjustment related to securities available for sale	824	0
Foreign currency items	26	(440)
Temporary equity
Foreign currency translation gain	6	0
Other comprehensive income	1,433	516
Comprehensive income including the noncontrolling interests in subsidiaries	50,207	36,934
Less: Comprehensive income (loss) attributable to redeemable noncontrolling interest in subsidiaries	1,021	(85)
Less: Comprehensive income attributable to nonredeemable noncontrolling interest in subsidiary	2,501	196
Comprehensive income attributable to Federated Investors, Inc.	$ 46,685	$ 36,823

XML

Consolidated Statements of Changes in Equity - USD ($) $ in Thousands	Total	Common Stock [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive Loss, Net of Tax [Member]	Total Shareholders' Equity [Member]	Nonredeemable Noncontrolling Interest in Subsidiary [Member]	Redeemable Noncontrolling Interest in Subsidiaries/Temporary Equity [Member]
Balance at Dec. 31, 2014	$ 609,652	$ 271,020	$ 505,394	$ (165,258)	$ (1,662)	$ 609,494	$ 158	$ 3,697
Net income	36,503		36,307			36,307	196	(85)
Other comprehensive income, net of tax	516				516	516		0
Subscriptions—redeemable noncontrolling interest holders	0							5,785
Stock award activity	9,907	9,825	(12,209)	12,291		9,907
Dividends declared	(26,202)		(26,202)			(26,202)
Distributions to noncontrolling interest in subsidiaries	0						0	(815)
Purchase of treasury stock	(9,948)			(9,948)		(9,948)
Balance at Mar. 31, 2015	620,428	280,845	503,290	(162,915)	(1,146)	620,074	354	8,582
Balance at Dec. 31, 2015	648,972	298,579	545,785	(191,939)	(4,609)	647,816	1,156	8,734
Adoption of new accounting pronouncement	0		(831)		831	0		14,850
Net income	47,759		45,258			45,258	2,501	1,015
Other comprehensive income, net of tax	596				596	596		6
Subscriptions—redeemable noncontrolling interest holders	0							5,431
Stock award activity	7,422	7,422	(11,959)	11,959		7,422
Dividends declared	(25,990)		(25,990)			(25,990)
Distributions to noncontrolling interest in subsidiaries	(2,214)						(2,214)	(4,131)
Purchase of treasury stock	(13,720)			(13,720)		(13,720)
Balance at Mar. 31, 2016	$ 662,825	$ 306,001	$ 552,263	$ (193,700)	$ (3,182)	$ 661,382	$ 1,443	$ 25,905

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Operating Activities
Net income including the noncontrolling interests in subsidiaries	$ 48,774	$ 36,418
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities
Amortization of deferred sales commissions	2,904	4,018
Depreciation and other amortization	2,351	2,507
Share-based compensation expense	7,236	6,901
Loss on disposal of assets	1,174	551
Provision for deferred income taxes	9,270	8,415
Adoption of new accounting pronouncement	(2,653)	0
Net purchases of trading securities	(2,831)	(3,950)
Deferred sales commissions paid	(3,012)	(4,448)
Contingent deferred sales charges received	578	549
Other changes in assets and liabilities:
Increase in receivables, net	(7,454)	(646)
(Increase) decrease in prepaid expenses and other assets	(1,750)	1,574
Decrease in accounts payable and accrued expenses	(41,722)	(46,854)
Increase in other liabilities	12,780	9,628
Net cash provided by operating activities	25,645	14,663
Investing Activities
Purchases of securities available for sale	(823)	(943)
Proceeds from redemptions of securities available for sale	50	0
Cash paid for property and equipment	(3,257)	(1,008)
Net cash used by investing activities	(4,030)	(1,951)
Financing Activities
Dividends paid	(25,990)	(26,202)
Purchases of treasury stock	(13,728)	(10,276)
Distributions to noncontrolling interest in subsidiaries	(6,345)	(815)
Contributions from noncontrolling interest in subsidiaries	5,431	5,785
Proceeds from shareholders for share-based compensation	0	81
Excess tax benefits from share-based compensation	596	1,656
Cash paid for business acquisitions	(70)	0
Payments on debt	(6,375)	(6,375)
Net cash used by financing activities	(46,481)	(36,146)
Net decrease in cash and cash equivalents	(24,866)	(23,434)
Cash and cash equivalents, beginning of period	172,628	115,267
Cash and cash equivalents, end of period	$ 147,762	$ 91,833

XML

Basis of Presentation

3 Months Ended

Mar. 31, 2016

Basis of Accounting [Abstract]

Basis of Accounting

Basis of Presentation

The interim Consolidated Financial Statements of Federated Investors, Inc. and its consolidated subsidiaries (collectively, Federated) included herein have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). In the opinion of management, the financial statements reflect all adjustments that are of a normal recurring nature and necessary for a fair presentation of the results for the interim periods presented.

In preparing the financial statements, management is required to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results may differ from those estimates, and such differences may be material to the Consolidated Financial Statements.

These financial statements should be read in conjunction with Federated's Annual Report on Form 10-K for the year ended December 31, 2015. Certain items previously reported have been reclassified to conform with the current period's presentation.

XML

Recent Accounting Pronouncements Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2016

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

(a)Recently Adopted Accounting Guidance

Consolidation

On February 18, 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which affects reporting organizations' evaluation of whether they should consolidate certain legal entities. This includes a scope exception for reporting entities with an interest in legal entities that are required to comply with or operate in accordance with the requirements similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds.

Effective January 1, 2016, Federated adopted ASU 2015-02 using the modified retrospective transition method, which did not require the restatement of prior years. In connection with the adoption of ASU 2015-02, Federated reevaluated all of its sponsored investment companies and other funds (Federated Funds). As a result, certain Federated Funds previously accounted for as variable interest entities (VIEs) now meet the characteristics of voting rights entities (VREs).

The adoption of ASU 2015-02 resulted in the consolidation of one Federated Fund that was not previously consolidated. Upon adoption, this entity was deemed to be a VIE and Federated was deemed to be the primary beneficiary. As a result of this consolidation, Federated recorded $29.4 million in assets, of which $11.5 million was included in Investments—affiliates at December 31, 2015, $0.2 million in liabilities and $17.7 million in Redeemable noncontrolling interest in subsidiaries. Federated also reclassified $0.8 million of unrealized losses from Accumulated other comprehensive loss, net of tax to Retained earnings. The adoption of ASU 2015-02 also resulted in the deconsolidation of one Federated Fund that was previously consolidated. Upon adoption, Federated was no longer deemed to be the primary beneficiary of this VIE. As a result, Federated deconsolidated $5.5 million in assets, $2.7 million in liabilities and $2.8 million in Redeemable noncontrolling interest in subsidiaries. There was no impact to the Consolidated Statements of Income upon adoption of ASU 2015-02. See Note (3) for the updated Principles of Consolidation accounting policy.

Accounting for Fees Paid in a Cloud Computing Arrangement

On January 1, 2016, Federated adopted ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. This update provides guidance about whether a cloud computing arrangement includes a software license. Management elected the prospective transition method and the adoption did not have a material impact on Federated's Consolidated Financial Statements.

Disclosure of Investments in Certain Entities that Calculate Net Asset Value per Share

On January 1, 2016, Federated adopted ASU 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value (NAV) per Share (or Its Equivalent). This update modifies certain disclosure requirements and requires that all investments for which fair value is measured using the NAV practical expedient be excluded from the fair value hierarchy. The ASU required the retrospective adoption approach, which required the restatement of the prior period fair value hierarchy table. As a result, $31.8 million of investments were recategorized into the NAV practical expedient column and are no longer included in Level 2 as of December 31, 2015 (see Note (7)). The adoption did not have a material impact on Federated's Consolidated Financial Statements.

(b)Recently Issued Accounting Guidance Not Yet Adopted

Revenue Recognition

On May 28, 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes virtually all existing revenue recognition guidance under GAAP. The update's core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. On July 9, 2015, the FASB approved a one-year deferral of the effective date of the update, and issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, on August 12, 2015. As a result of the deferral, the update is effective for Federated on January 1, 2018, with early adoption permitted on January 1, 2017. During 2016, the FASB issued ASU 2016-08, which clarifies principal versus agent considerations and ASU 2016-10, which clarifies identifying performance obligations and the licensing implementation guidance. ASU 2014-09 allows for the use of either the retrospective or modified retrospective adoption method. Management is currently evaluating the available transition methods and the potential impact of adoption on Federated's Consolidated Financial Statements.

Deferred Taxes

On November 20, 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The amendments in this update require that deferred tax liabilities and assets be classified as noncurrent on the balance sheet. The update is effective for Federated on January 1, 2017, with early adoption permitted. The update allows for the use of either a prospective or retrospective adoption approach. Management is currently evaluating the available transition methods and does not expect this update to have a material impact on Federated's Consolidated Financial Statements.

Financial Instruments

On January 5, 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The ASU significantly revises an entity's accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments. The update is effective for Federated on January 1, 2018, and, except for certain provisions, does not permit early adoption. An entity should apply the amendments, with certain exceptions, by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. Management is currently evaluating the potential impact of adoption on Federated's Consolidated Financial Statements.

Leases

On February 25, 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The core principal of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases on the balance sheet, but retains a distinction between finance and operating leases. The update is effective for Federated on January 1, 2019, with early adoption permitted. The update requires the modified retrospective adoption approach. Management is currently evaluating the potential impact of adoption on Federated's Consolidated Financial Statements.

Share-Based Compensation

On March 31, 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The areas for simplification in this update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The update is effective for Federated on January 1, 2017. Early adoption is permitted in any interim or annual period. The available transition method is specific to each amendment, and requires either the use of the modified retrospective or prospective adoption method. Management is currently evaluating the potential impact of adoption on Federated's Consolidated Financial Statements.

XML

Significant Accounting Policies

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

Significant Accounting Policies

As a result of the adoption of ASU 2015-02, the following Principles of Consolidation accounting policy has been updated to reflect the new guidance. For a complete listing of Federated’s significant accounting policies, please refer to Federated’s Annual Report on Form 10-K for the year ended December 31, 2015.

Principles of Consolidation

Federated performs an analysis for each Federated Fund or other entity in which Federated holds a financial interest to determine if it is a VIE or VRE. Factors considered in this analysis include, but are not limited to, whether (1) it is a legal entity, (2) a scope exception applies, (3) a variable interest exists and (4) shareholders have the power to direct the activities that most significantly impact the economic performance, as well as the equity ownership, and any related party or de facto agent implications of Federated's involvement with the entity. Entities that are determined to be VIEs are consolidated if Federated is deemed to be the primary beneficiary. Entities that are determined to be VREs are generally consolidated if Federated holds the majority voting interest. Federated's conclusion to consolidate a Federated Fund may vary from period to period, most commonly as a result of changes in its percentage interest in the entity.

To the extent Federated's interest in a consolidated entity represents less than 100% of the entity's equity, Federated recognizes noncontrolling interests in subsidiaries. In the case of consolidated Federated Funds, the noncontrolling interests represent equity which is redeemable or convertible for cash or other assets at the option of the equity holder. As such, these noncontrolling interests are deemed to represent temporary equity and are classified as Redeemable noncontrolling interest in subsidiaries in the mezzanine section of the Consolidated Balance Sheets. All other noncontrolling interests in subsidiaries are classified as permanent equity in the Consolidated Balance Sheets. All significant intercompany accounts and transactions have been eliminated.

Consolidation of Variable Interest Entities

Prior to the adoption of ASU 2015-02, Federated considered either a qualitative or quantitative model for identifying whether its interest in a VIE was a controlling financial interest. Considerations of the qualitative model included whether Federated had (1) the ability to direct significant activities of the VIE and (2) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. For the quantitative model, Federated evaluated the extent of its participation in the economic risks and rewards of the entity. In cases where the results indicated that Federated's interest in such an entity absorbed the majority of the variability in the entity's net assets, Federated was deemed to be the primary beneficiary and thus consolidated the entity.

Following the adoption of ASU 2015-02, Federated has a controlling financial interest in a VIE and is, therefore, deemed to be the primary beneficiary of a VIE if it has (1) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and (2) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

Consolidation of Voting Rights Entities

Federated has a controlling financial interest in a VRE if it can exert control over the financial and operating policies of the VRE, which generally occurs when Federated holds the majority voting interest (i.e. greater than 50% of the voting equity interest).

XML

Concentration Risk

3 Months Ended

Mar. 31, 2016

Risks and Uncertainties [Abstract]

Concentration Risk

Concentration Risk

(a)Revenue Concentration by Asset Class

The following table summarizes the percentage of total revenue earned from Federated's asset classes for the periods presented:

	Three Months Ended
	March 31,
	2016		2015
Money market assets	47	%	32	%
Equity assets	36	%	46	%
Fixed-income assets	17	%	22	%

The change in the relative proportion of Federated's revenue attributable to money market assets for the first three months of 2016 as compared to the same period in 2015 was primarily the result of the decrease in voluntary waivers (either through fee waivers or reimbursements or assumptions of expenses) in order for certain money market funds to maintain positive or zero net yields (Voluntary Yield-related Fee Waivers) and, to a lesser extent, higher average money market assets.

Current Regulatory Environment

Federated and its investment management business are subject to extensive regulation in the U.S. and abroad.Federated and its products, such as theFederated Funds, and strategies are subject to federal securities laws, principally the Securities Act of 1933 (1933 Act), the Securities Exchange Act of 1934 (1934 Act), the Investment Company Act of 1940 (1940 Act), the Investment Advisers Act of 1940 (Advisers Act), state laws regarding securities fraud, and regulations or other rules, promulgated by various regulatory authorities, self-regulatory organizations or exchanges, as well as foreign laws, regulations or other rules promulgated by foreign regulatory or other authorities.In 2014, among other developments,the Securities and Exchange Commission (SEC) promulgated new money market reform rules (2014 Money Fund Rules).In 2015, among other developments, the SEC staff published the 2014 Money Market Fund Reform Frequently Asked Questions and Valuation Guidance Frequently Asked Questions (the Money Fund Rules Guidance).On May 20, 2015, the SEC proposed rules seeking to modernize investment company reporting requirements and to require investment advisers to maintain additional performance records and provide to clients additional borrowing and derivative information relating to separate accounts.On September 22, 2015, the SEC proposed certain rule amendments under the 1940 Act that, if adopted as proposed, would require open-end mutual funds (other than money market funds) and exchange traded funds to have liquidity risk management programs that contain certain required elements.On December 11, 2015, the SEC proposed new rules that, if adopted as proposed, would enhance the regulation of the use of derivatives by investment companies.On April 6, 2016,the Department of Labor (DOL) released its final rule regarding the definition of "fiduciary" and conflicts of interest in connection with retirement investment advice (DOL Final Fiduciary Rule). Federated is analyzing the potential impact of these reforms.Federated also continues to evaluate the impact of the 2014 Money Fund Rules and Money Fund Rules Guidance on its money market products and strategies, product structuring and development initiatives and business.Internationally, among other developments, European money market fund reforms, similar in some respects to the U.S. reforms, continue to be considered but have not yet been finalized. Federated continues to dedicate internal and external resources to analyze the potential impact of the 2014 Money Fund Rules and Money Fund Rules Guidance, and other regulatory initiatives, on Federated’s business, results of operations, financial condition and/or cash flows.Federated also continues to dedicate resources to planning and implementing product development and restructuring initiatives in response to the 2014 Money Fund Rules and Money Fund Rules Guidance. See Management's Discussion and Analysis for additional information.

Low Short-Term Interest Rates

In December 2015, theFederal Open Market Committee of the Federal Reserve Board (FOMC) increased the federal funds target rate range by 25 basis points to 0.25%-0.50%, slightly raising short-term interest rates late in 2015 and into the first quarter of 2016. The federal funds target rate, which drives short-term interest rates, had been near zero for nearly seven years.As a result of the long-term near-zero interest-rate environment, the gross yield earned by certain money market funds is not sufficient to cover all of the fund's operating expenses.Since the fourth quarter of 2008, Federated has experienced Voluntary Yield-related Fee Waivers. These fee waivers have been partially offset by related reductions in distribution expense and net income attributable to noncontrolling interests as a result of Federated's mutual understanding and agreement with third-party intermediaries to sharethe impact of theVoluntary Yield-related Fee Waivers.

These Voluntary Yield-related Fee Waivers are calculated as a percentage of assets under management (AUM or managed assets) in certain money market funds and thus will vary depending upon the asset levels in such funds. In addition, the level of waivers are dependent on several other factors including, but not limited to, yields on instruments available for purchase by the money market funds, changes in expenses of the money market funds and changes in the mix of money market assets. In any given period, a combination of these factors drives the amount of Voluntary Yield-related Fee Waivers. As an isolated variable, an increase in yields on instruments held by the money market funds will cause the pre-tax impact of fee waivers to decrease. Conversely, as an isolated variable, an increase in expenses of the money market funds would cause the pre-tax impact of fee waivers to increase.

With regard to asset mix, changes in the relative amount of money market fund assets in prime and government money market funds (or between such funds and other money market funds or other products) as well as the mix among certain share classes that vary in pricing structure will impact the level of fee waivers. Generally, prime money market funds waive less than government money market funds as a result of higher gross yields on the underlying investments. As such, as an isolated variable, an increase in the relative proportion of average managed assets invested in prime money market funds as compared to total average money market fund assets should typically result in lower Voluntary Yield-related Fee Waivers. The opposite would also be true.

The impact of such fee waivers on various components of Federated's Consolidated Statements of Income was as follows for the periods presented:

	Three Months Ended
	March 31,
(in millions)	2016			2015
Revenue	$	(37.5	)	$	(94.1	)
Less: Reduction in Distribution expense	27.9			64.6
Operating income	(9.6		)	(29.5		)
Less: Reduction in Noncontrolling interests	0.2			2.5
Pre-tax impact	$	(9.4	)	$	(27.0	)

The negative pre-tax impact of Voluntary Yield-related Fee Waivers decreased for the three-month period ended March 31, 2016 as compared to the same period in 2015 due primarily to higher yields on instruments held by the money market funds.

The FOMC implied in its economic projections that it would continue to raise the federal funds target rate in a measured and gradual way, although the FOMC has reduced the forecasted pace of a rate increase for 2016 and 2017. Federated is unable to predict when, or to what extent, the FOMC will further increase its target for the federal funds rate. As such, Voluntary Yield-related Fee Waivers and the related reduction in distribution expense and net income attributable to noncontrolling interests could continue for the foreseeable future. See Management's Discussion and Analysis under the caption Business Developments - Low Short-Term Interest Rates for additional information on management's expectations regarding fee waivers.

(b)Revenue Concentration by Customer

A significant portion of Federated's total revenue for the three-month period ended March 31, 2016 was derived from services provided to one intermediary customer, the Bank of New York Mellon Corporation, including its Pershing subsidiary, (16%). A significant change in Federated's relationship with this customer could have a material adverse effect on Federated's future revenues and net income.

A listing of Federated’s risk factors is included in Federated’s Annual Report on Form 10-K for the year ended December 31, 2015 under Item 1A - Risk Factors.

XML

Consolidation

3 Months Ended

Mar. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Consolidation

Consolidation

The Consolidated Financial Statements include the accounts of Federated, Federated Funds and other entities in which Federated holds a controlling financial interest. Federated is involved with various entities in the normal course of business that may be deemed to be VREs or VIEs. From time to time, Federated invests in Federated Funds for general corporate investment purposes or, in the case of newly launched products, in order to provide investable cash to establish a performance history. Federated's investment in these Federated Funds represents its maximum exposure to loss. The assets of the consolidated Federated Funds are restricted for use by the respective Federated Fund. Generally, neither creditors nor equity investors in the Federated Funds have any recourse to Federated’s general credit. Given that the entities follow investment company accounting, which prescribes fair-value accounting, a deconsolidation generally does not result in gains or losses for Federated. Receivables from all Federated Funds for advisory and other services totaled $23.0 million and $16.9 million at March 31, 2016 and December 31, 2015, respectively.

In the ordinary course of business, Federated may choose to waive certain fees or assume operating expenses of the Federated Funds for competitive, regulatory or contractual reasons. For the three months ended March 31, 2016, Federated waived fees of $118.5 million, of which $90.6 million related to waivers for money market funds which meet the scope exception of ASU 2015-02. Like other sponsors of investment companies, Federated in the ordinary course of business may make capital contributions to certain Federated money market funds in connection with the reorganization of such funds into certain affiliated Federated money market funds. In these instances, such capital contributions typically are intended to either cover realized losses or other permanent impairments to a fund's NAV or increase the market-based NAV per share of the investment company's portfolio that is being reorganized to equal the market-based NAV per share of the acquiring fund. There were no such contributions for the three months ended March 31, 2016. Under new money fund regulations, and SEC staff guidance issued in 2015, Federated is now required to report these types of capital contributions to the SEC as financial support to the investment company that is being reorganized.

In accordance with Federated’s consolidation accounting policy, Federated first determines whether the entity being evaluated is a VRE or a VIE. Once this determination is made, Federated proceeds with its evaluation of whether to consolidate the entity. The disclosures below represent the results of such evaluations pertaining to March 31, 2016 and December 31, 2015.

(a)Consolidated Voting Rights Entities

Effective January 1, 2016, most of the Federated Funds now meet the definition of a VRE. Federated consolidates certain VREs when it is deemed to have control. As of March 31, 2016, consolidated VREs included on Federated's Consolidated Balance Sheets included $13.2 million in Investments—consolidated investment companies and $2.1 million in Redeemable noncontrolling interest in subsidiaries.

(b)Consolidated Variable Interest Entities

As of March 31, 2016 and December 31, 2015, Federated was deemed to be the primary beneficiary of and therefore consolidated several Federated Funds as a result of its controlling financial interest. Certain of the VIEs consolidated as of December 31, 2015 were deemed to be VREs upon adoption of ASU 2015-02 and have been excluded from the March 31, 2016 balances in the table below. See the Consolidated Voting Rights Entities section above for information on consolidated VREs as of March 31, 2016.

The following table presents the balances related to the consolidated Federated Fund VIEs that were included on the Consolidated Balance Sheets as well as Federated's net interest in the consolidated Federated Fund VIEs for each period presented:

(in millions)	March 31, 2016		December 31, 2015
Cash and cash equivalents	$	0.1	$	3.1
Investments—consolidated investment companies	41.9		25.4
Receivables	1.0		0.2
Less: Liabilities	0.5		3.0
Less: Redeemable noncontrolling interest in subsidiaries	23.8		8.7
Federated's net interest in the consolidated Federated Fund VIEs	$	18.7	$	17.0

Federated's net interest in the consolidated Federated Fund VIEs of $18.7 million and $17.0 million at March 31, 2016 and December 31, 2015, respectively, represents the value of Federated's economic ownership interest in these Federated Funds. The liabilities of the consolidated Federated Fund VIEs primarily represent investments sold short and operating liabilities of the entities. The liabilities as of March 31, 2016 and December 31, 2015 are primarily classified as Accounts payable and accrued expenses and Other current liabilities, respectively, on Federated’s Consolidated Balance Sheets.

In addition to the table above, Federated has a majority interest (50.5%) and acts as the general partner in Passport Research Ltd. (Passport), a limited partnership. Edward D. Jones & Co., L.P. is the limited partner with a 49.5% interest. The partnership is an investment adviser to two sponsored funds and was deemed to be a VIE upon adoption of ASU 2015-02. Assets totaling $5.1 million primarily representing Cash and cash equivalents, liabilities totaling $2.1 million primarily representing operating liabilities and $1.4 million included in Nonredeemable noncontrolling interest in subsidiary are included on the Consolidated Balance Sheets as of March 31, 2016. There was no change to the Consolidated Financial Statements as a result of the adoption of ASU 2015-02 as Passport had been consolidated as a VRE under the previous guidance. See Part II, Item 5 for additional information regarding Passport.

Other than those consolidated or deconsolidated upon the adoption of ASU 2015-02 (see Note (2)), Federated did not newly consolidate or deconsolidate any VIEs during the three months endedMarch 31, 2016.

(c)Non-Consolidated Variable Interest Entities

Federated's involvement with certain Federated Funds that are deemed to be VIEs includes serving as the investment manager, or at times, holding a minority interest or both. Federated’s variable interest is not deemed to absorb losses or receive benefits that could potentially be significant to the VIE. Therefore, Federated is not the primary beneficiary of these VIEs and has not consolidated these entities.

At March 31, 2016, Federated’s investment and maximum risk of loss related to a non-consolidated VIE was entirely related to a Federated Fund and totaled $1.1 million, which was recorded in Investments—affiliates on the Consolidated Balance Sheets. AUM for this non-consolidated Federated Fund totaled $11.9 million at March 31, 2016.

At December 31, 2015, Federated’s investment and maximum risk of loss related to non-consolidated VIEs were entirely related to Federated Funds and totaled $301.5 million. Of this amount, $159.7 million represented investments in money market funds included in Cash and cash equivalents. The remaining $141.8 million is primarily recorded in Investments—affiliates on the Consolidated Balance Sheets as of December 31, 2015. AUM for these non-consolidated Federated Funds totaled $268.0 billion at December 31, 2015.

Upon adoption of ASU 2015-02 effective January 1, 2016, certain of the non-consolidated VIEs included in the balances as of December 31, 2015 were deemed to be VREs or are money market funds which meet the scope exception and have been excluded from the March 31, 2016 balances above. See the Consolidated Voting Rights Entities section above for information on consolidated VREs as of March 31, 2016.

XML

Investments

3 Months Ended

Mar. 31, 2016

Investments, Debt and Equity Securities [Abstract]

Investments

Investments

Investments on the Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015 included available-for-sale and trading securities. At March 31, 2016 and December 31, 2015, Federated held investments totaling $132.0 million and $141.7 million, respectively, in fluctuating-value sponsored mutual funds that were classified as available-for-sale securities and were included in Investments—affiliates on the Consolidated Balance Sheets. The decrease in Investments—affiliates primarily related to a newly consolidated VIE as a result of the adoption of ASU 2015-02 and is now recorded in Investments—consolidated investment companies. See Note (2) for additional information.

Available-for-sale securities were as follows:

	March 31, 2016									December 31, 2015
			Gross Unrealized					Estimated Fair				Gross Unrealized					Estimated Fair
(in thousands)	Cost		Gains		(Losses)			Value		Cost		Gains		(Losses)			Value
Equity mutual funds	$	32,459	$	566	$	(1,996	)	$	31,029	$	32,357	$	342	$	(2,416	)	$	30,283
Fixed-income mutual funds	103,331		123		(2,503		)	100,951		115,396		109		(4,040		)	111,465
Total fluctuating-value mutual funds	$	135,790	$	689	$	(4,499	)	$	131,980	$	147,753	$	451	$	(6,456	)	$	141,748

As of March 31, 2016, unrealized losses of $4.5 million related to investments with a fair value of $113.8 million. Of these, investments with a fair value of $107.4 million with unrealized losses of $4.1 million have been in a continuous unrealized loss position for 12 months or longer. The remaining investments with a fair value of $6.4 million with unrealized losses of $0.4 million have been in a continuous unrealized loss position for less than 12 months. As of December 31, 2015, unrealized losses of $6.5 million related to investments with a fair value of $124.0 million. Of these, investments with a fair value of $92.6 million with unrealized losses of $5.5 million have been in a continuous unrealized loss position for 12 months or longer. The remaining investments with a fair value of $31.4 million with unrealized losses of $1.0 million have been in a continuous unrealized loss position for less than 12 months.

Federated regularly reviews its investments for other-than-temporary impairment using both qualitative and quantitative criteria. This review considers management's ability and intent to hold the security, as well as the near-term prospects of the investment and the duration and severity of the unrealized loss. Management believes the unrealized loss associated with Federated's available-for-sale securities as of March 31, 2016 will be recovered within the foreseeable future and intends to hold these investments. Management does not believe these investments are other-than temporarily impaired.

Federated’s trading securities totaled $62.3 million and $32.4 million at March 31, 2016 and December 31, 2015, respectively. The increase in trading securities primarily related to the aforementioned newly consolidated VIE which was previously recorded in Investments—affiliates on the Consolidated Balance Sheets. See Note (2) for additional information. Federated consolidates certain Federated Funds into its Consolidated Financial Statements as a result of Federated’s controlling financial interest in the Federated Fund (see Note (5)). All investments held by these Federated Funds were included in Investments—consolidated investment companies on Federated’s Consolidated Balance Sheets. Investments—other on the Consolidated Balance Sheets represented other trading investments held in Separate Accounts (which include separately managed accounts, institutional accounts, sub-advised funds and other managed products).

Federated’s trading securities as of March 31, 2016 and December 31, 2015, were primarily composed of domestic debt securities ($43.8 million and $9.0 million, respectively), investments in Federated Funds and other mutual funds ($8.5 million and $11.0 million, respectively), and stocks of large U.S. and international companies ($6.8 million and $10.5 million, respectively).

The following table presents gains and losses recognized in Gain (loss) on securities, net on the Consolidated Statements of Income in connection with Federated's investments as well as economic derivatives held by certain consolidated Federated Funds:

	Three Months Ended
	March 31,
(in thousands)	2016			2015
Unrealized gain (loss)
Trading securities	$	2,156		$	456
Derivatives1	107			(159		)
Realized gains2
Trading securities	116			189
Derivatives1	406			235
Realized losses2
Available-for-sale securities	(17		)	0
Trading securities	(1,297		)	(613		)
Derivatives1	(380		)	(362		)
Gain (loss) on securities, net3	$	1,091		$	(254	)

1  Amounts related to the settlement of economic derivatives held by certain consolidated Federated Funds.

2  Realized gains and losses are computed on a specific-identification basis.

3 Amounts related to consolidated entities, primarily Federated Funds, totaled $1.0 million and $(0.3) millionfor the three months endedMarch 31, 2016, and 2015, respectively.

XML

Fair Value Measurements

3 Months Ended

Mar. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair value is the price that would be received to sell an asset or the price paid to transfer a liability as of the measurement date. A fair-value reporting hierarchy exists for disclosure of fair value measurements based on the observability of the inputs to the valuation of financial assets and liabilities. The levels are:

Level 1 – Quoted prices for identical instruments in active markets. Level 1 assets may include equity and debt securities that are traded in an active exchange market, including shares of mutual funds.

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 assets and liabilities may include debt and equity securities, purchased loans and over-the-counter derivative contracts whose fair value is determined using a pricing model without significant unobservable market data inputs.

Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable in active markets.

NAV practical expedient – Investments that calculate NAV per share (or its equivalent) as a practical expedient. These investments have been excluded from the fair value hierarchy.

(a)Fair Value Measurements on a Recurring Basis

The following table presents fair value measurements for classes of Federated’s financial assets and liabilities measured at fair value on a recurring basis:

(in thousands)	Level 1		Level 2		Level 3		NAV Practical Expedient3		Total
March 31, 2016
Financial Assets
Cash and cash equivalents	$	147,762	$	0	$	0	$	0	$	147,762
Available-for-sale equity securities	107,191		0		0		24,789		131,980
Trading securities—equity	12,922		117		0		5,409		18,448
Trading securities—debt	0		43,828		0		0		43,828
Other1	0		175		910		0		1,085
Total financial assets	$	267,875	$	44,120	$	910	$	30,198	$	343,103
Financial Liabilities
Acquisition-related future consideration liabilities	$	0	$	0	$	2,090	$	0	$	2,090
Other2	85		0		469		0		554
Total financial liabilities	$	85	$	0	$	2,559	$	0	$	2,644
December 31, 20153
Financial Assets
Cash and cash equivalents	$	172,628	$	0	$	0	$	0	$	172,628
Available-for-sale equity securities	117,422		0		0		24,326		141,748
Trading securities—equity	15,900		65		0		7,433		23,398
Trading securities—debt	0		9,041		0		0		9,041
Other1	4		17		910		0		931
Total financial assets	$	305,954	$	9,123	$	910	$	31,759	$	347,746
Financial Liabilities
Acquisition-related future consideration liabilities	$	0	$	0	$	2,161	$	0	$	2,161
Other2	2,681		59		469		0		3,209
Total financial liabilities	$	2,681	$	59	$	2,630	$	0	$	5,370

1 Amounts include structured trade finance loans held by Federated as well as futures contracts and/or foreign currency forward contracts held within certain consolidated Federated Funds.

2 Amounts may include investments sold short, foreign currency forward contracts and/or futures contracts held within certain consolidated Federated Funds, as well as certain liabilities attributable to structured trade finance loans held by Federated.

3 Investments that calculate NAV as a practical expedient were recategorized and are no longer included in Level 2 as of December 31, 2015 (see Note (2) for additional information).

The following is a description of the valuation methodologies used for financial assets and liabilities measured at fair value on a recurring basis. Federated did not hold any nonfinancial assets or liabilities measured at fair value on a recurring basis at March 31, 2016 or December 31, 2015.

Cash and cash equivalents

Cash and cash equivalents include investments in money market funds and deposits with banks. Investments in Federated money market funds totaled $140.9 million and $162.2 million at March 31, 2016 and December 31, 2015, respectively. Cash investments in money market funds are valued under the market approach through the use of quoted market prices in an active market, which is the NAV of the funds, and are classified within Level 1 of the valuation hierarchy.

Available-for-sale equity securities

Available-for-sale equity securities include investments in sponsored fluctuating-value mutual funds and are included in Investments—affiliates on the Consolidated Balance Sheets. For investments in mutual funds that are publicly available, the securities are valued under the market approach through the use of quoted market prices available in an active market, which is the NAV of the funds, and are classified within Level 1 of the valuation hierarchy. For certain investments in funds that are not publicly available but for which the NAV is calculated daily and for which there are no redemption restrictions, the securities are valued using NAV as a practical expedient and are excluded from the fair value hierarchy. These investments are included in the NAV practical expedient column in the table above.

Trading securities—equity

Trading securities - equity primarily represent the equity securities held by consolidated Federated Funds (included in Investments—consolidated investment companies on the Consolidated Balance Sheets) as well as certain equity investments held in separate accounts (included in Investments—other on the Consolidated Balance Sheets). For publicly traded equity securities available in an active market, the fair value of these securities is classified as Level 1 when the fair value is based on unadjusted quoted market prices. From time to time, the fair value of certain equity securities traded principally in foreign markets and held by consolidated Federated Funds may be determined by a third party pricing service (Level 2).

For certain investments in funds that are not publicly available but for which the NAV is calculated daily and for which there are no redemption restrictions, the securities are valued using NAV as a practical expedient and are excluded from the fair value hierarchy. These investments are included in the NAV practical expedient column in the table above.

Trading securities—debt

Trading securities - debt primarily represent domestic bonds held by consolidated Federated Funds. The fair value of these securities may include observable market data such as valuations provided by independent pricing services after considering factors such as the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions (Level 2).

Acquisition-related future consideration liabilities

From time to time, pursuant to purchase and sale agreements entered into in connection with certain business combinations, Federated may be required to make future consideration payments if certain contingencies are met. See Note (12) for additional information regarding the nature and timing of these payments. Federated records a liability as of the acquisition date representing the estimated fair value of future consideration payments. The liability is subsequently re-measured at fair value on a recurring basis with changes in fair value recorded in earnings. As of March 31, 2016, acquisition-related future consideration liabilities were recorded in Other current liabilities ($0.7 million) and Other long-term liabilities ($1.4 million) on the Consolidated Balance Sheets. Management estimated the fair value of future consideration payments based primarily upon expected future cash flows using an income approach valuation methodology with unobservable market data inputs (Level 3).

(b)Fair Value Measurements on a Nonrecurring Basis

Federated did not hold any assets or liabilities measured at fair value on a nonrecurring basis at March 31, 2016.

(c)Fair Value Measurements of Other Financial Instruments

The fair value of Federated’s debt is estimated by management based upon expected future cash flows utilizing a discounted cash flow methodology under the income approach. The fair value of the liability is estimated using observable market data (Level 2) in estimating inputs including the discount rate. Based on this fair value estimate, the carrying value of debt appearing on the Consolidated Balance Sheets approximates fair value.

XML

Debt

3 Months Ended

Mar. 31, 2016

Debt Disclosure [Abstract]

Debt Disclosure

Debt

Debt consisted of the following:

	Interest Rates
	March 31,	December 31,
(dollars in thousands)	2016	2015	March 31, 2016		December 31, 2015
Term Loan	1.565%	1.555%	$	210,375	$	216,750
Less: Short-term debt			25,500		25,500
Long-term debt			$	184,875	$	191,250

On June 24, 2014, Federated entered into an unsecured Second Amended and Restated Credit Agreement by and among Federated, certain of its subsidiaries as guarantors party thereto, a syndicate of 13 banks as Lenders party thereto led by PNC Bank, National Association as administrative agent, PNC Capital Markets LLC as sole bookrunner and joint lead arranger, Citigroup Global Markets, Inc. as joint lead arranger, Citibank, N.A. as syndication agent, and TD Bank, N.A. as documentation agent (Credit Agreement). The Credit Agreement amended and restated Federated's prior unsecured Amended and Restated Credit Agreement, which was dated June 10, 2011 and scheduled to mature on June 10, 2016 (Prior Credit Agreement). The borrowings under the Credit Agreement's term loan facility of $255 million (Term Loan) equaled the remaining principal balance from the Prior Credit Agreement's term loan facility. The Term Loan facility bears interest based on the London Interbank Offering Rate (LIBOR) plus a spread, currently 112.5 basis points. The Credit Agreement qualified for modification accounting treatment.

The Credit Agreement also refinanced the $200 million revolving credit facility under the Prior Credit Agreement. Federated had no borrowings outstanding on the previous revolving credit facility at the time of refinancing. As of March 31, 2016, the entire $200 million revolving credit facility was available for borrowings. Similar to the Prior Credit Agreement, certain subsidiaries entered into an Amended and Restated Continuing Agreement of Guaranty and Suretyship whereby these subsidiaries guarantee payment of all obligations incurred through the Credit Agreement. Federated pays an annual facility fee, currently 12.5 basis points. Borrowings under the Credit Agreement's revolving credit facility bear interest at LIBOR plus a spread, currently 100 basis points.

The Credit Agreement matures on June 24, 2019 and, with respect to the Term Loan, requires quarterly principal payments totaling $25.5 million in each of the years 2016 and 2017, $55.8 million in 2018 and $110.0 million in 2019. During the three months endedMarch 31, 2016, Federated repaid $6.4 million of its borrowings on the Term Loan.

The Credit Agreement includes representations and warranties, affirmative and negative financial covenants, including an interest coverage ratio covenant and a leverage ratio covenant, reporting requirements and other non-financial covenants. Federated was in compliance with all covenants at and during the three months ended March 31, 2016 (see the Liquidity and Capital Resources section of Management's Discussion and Analysis for additional information). The Credit Agreement also has certain stated events of default and cross default provisions which would permit the lenders/counterparties to accelerate the repayment of the debt if not cured within the applicable grace periods. The events of default generally include breaches of contract, failure to make required loan payments, insolvency, cessation of business, deterioration in credit rating to below investment grade, notice of lien or assessment, and other proceedings, whether voluntary or involuntary, that would require the repayment of amounts borrowed.

XML

Share-Based Compensation Plans

3 Months Ended

Mar. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation Plans

Share-Based Compensation Plans

(a)Restricted Stock

During the first three months of 2016, Federated awarded 464,660 shares of restricted Federated Class B common stock, all of which was granted in connection with a bonus program in which certain key employees received a portion of their bonus in the form of restricted stock under Federated’s Stock Incentive Plan. This restricted stock, which was granted on the bonus payment date and issued out of treasury, will generally vest over a three-year period.

Federated awarded 863,137 shares of restricted Federated Class B common stock under its Stock Incentive Plan during 2015. Of this amount, 373,137 shares were awarded in connection with the aforementioned bonus program in 2015. The remaining shares were awarded to certain key employees and generally vest over a ten-year period.

(b)Stock Options

During the three months ended March 31, 2016, there were no stock options exercised or granted. During the year ended December 31, 2015, there were 3,000 stock options exercised and no stock options granted.

(c)Non-Management Director Stock Award

There were no shares of Federated Class B common stock awarded to non-management directors during the first quarter of 2016. Federated awarded 5,700 shares of Federated Class B common stock to non-management directors during 2015.

XML

Equity

3 Months Ended

Mar. 31, 2016

Equity [Abstract]

Equity

Equity

In 2015, the board of directors authorized a share repurchase program that allows Federated to buy back up to4 millionshares of Federated Class B common stock with no stated expiration date. The program authorizes executive management to determine the timing and the amount of shares for each purchase. The repurchased stock is held in treasury for employee share-based compensation plans, potential acquisitions and other corporate activities. During the first three months of 2016, Federated repurchased 0.5 million shares of Class B common stock for $13.7 million which were repurchased in the open market. At March 31, 2016, 2.2 million shares remained available to be purchased under Federated's buyback program.

XML

Earnings Per Share Attributable to Federated Investors, Inc. Shareholders

3 Months Ended

Mar. 31, 2016

Earnings Per Share [Abstract]

Earnings Per Share Attributable to Federated Investors, Inc. Shareholders

Earnings Per Share Attributable to Federated Investors, Inc. Shareholders

The following table sets forth the computation of basic and diluted earnings per share using the two-class method for amounts attributable to Federated:

	Three Months Ended
	March 31,
(in thousands, except per share data)	2016			2015
Numerator – Basic and Diluted
Net income attributable to Federated Investors, Inc.	$	45,258		$	36,307
Less: Total income available to participating unvested restricted shareholders1	(1,821		)	(1,478		)
Total net income attributable to Federated Common Stock2	$	43,437		$	34,829
Denominator
Basic weighted-average common shares outstanding	99,802			100,641
Dilutive potential shares from stock options	1			1
Diluted weighted-average common shares outstanding	99,803			100,642
Earnings per share
Net income attributable to Federated Common Stock – Basic and Diluted2	$	0.44		$	0.35

1 Income available to participating unvested restricted shareholders includes dividends paid on unvested restricted shares and their proportionate share of undistributed earnings.

2 Federated Common Stock excludes unvested restricted stock which are deemed participating securities in accordance with the two-class method of computing earnings per share.

XML

Commitments and Contingencies

3 Months Ended

Mar. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

(a)Contractual

Pursuant to various acquisition agreements, Federated has made and may be required to make additional purchase price payments based on a percentage of revenue less certain direct expenses attributable to eligible AUM. The payments could occur through 2019. As of March 31, 2016, liabilities totaling $2.1 million, representing the estimated fair value of future consideration payments, were recorded in Other current liabilities ($0.7 million) and Other long-term liabilities ($1.4 million) (see Note (7) for a discussion regarding the valuation methodology). The liabilities are re-measured at each reporting date with changes in the fair value recognized in Operating Expenses - Other on the Consolidated Statements of Income.

Federated may be required to make certain compensation-related payments through 2019 in connection with various significant employment and incentive arrangements. Based on asset levels as of March 31, 2016 and performance goals, payments could total up to $29 million over the remaining terms of the arrangements, including incentive compensation opportunities related to the Federated Kaufmann Large Cap Fund.

(b)Guarantees and Indemnifications

On an intercompany basis, various wholly owned subsidiaries of Federated guarantee certain financial obligations of Federated Investors, Inc., and Federated Investors, Inc. guarantees certain financial and performance-related obligations of various wholly owned subsidiaries. In addition, in the normal course of business, Federated has entered into contracts that provide a variety of indemnifications. Typically, obligations to indemnify third parties arise in the context of contracts entered into by Federated, under which Federated agrees to hold the other party harmless against losses arising out of the contract, provided the other party's actions are not deemed to have breached an agreed upon standard of care. In each of these circumstances, payment by Federated is contingent on the other party making a claim for indemnity, subject to Federated's right to challenge the other party's claim. Further, Federated's obligations under these agreements may be limited in terms of time and/or amount. It is not possible to predict the maximum potential amount of future payments under these or similar agreements due to the conditional nature of Federated's obligations and the unique facts and circumstances involved in each particular agreement. As of March 31, 2016, management does not believe that a material loss related to any of these matters is reasonably possible.

(c)Legal Proceedings

CCM Rochester, Inc. (CCM). In December 2008, Federated completed the acquisition of certain assets of CCM (f/k/a Clover Capital Management, Inc.), an investment manager that specialized in value investing. The purchase was consummated in the midst of the financial crisis. The payment terms under the Asset Purchase Agreement, dated September 12, 2008 (APA), included an upfront payment of $30 million paid by Federated Investors, Inc. at closing and the opportunity for contingent payments over a five year earn-out period following the acquisition date based on the growth in revenue associated with the acquired assets. Under the APA, in order to reach the maximum contingent payments totaling approximately $55 million, the revenue associated with the acquired assets would have had to have grown at a 30% compound annual growth rate. Under the APA, Federated Investors, Inc. paid CCM an additional $18 million, in the aggregate, in contingent payments for the last three years of the earn-out period.

On May 20, 2014, shortly after the final contingent payment was paid to CCM, Federated Investors, Inc. was named as the defendant in a case filed by CCM in the U.S. District Court for the Southern District of New York (CCM Rochester, Inc., f/k/a Clover Capital Management, Inc. v. Federated Investors, Inc., Case No. 14-cv-3600 (S.D.N.Y.)). In this lawsuit, CCM has asserted claims against Federated Investors, Inc. for fraudulent inducement, breach of contract (including CCM’s allegations relating to implied duties of best efforts and good faith and fair dealing) and indemnification based on Federated’s alleged failure to effectively market and distribute the investment products associated with the acquired assets and to pay CCM the maximum contingent payments. CCM seeks approximately $37 million in alleged damages plus attorneys’ fees from Federated Investors, Inc.

Federated filed a Motion to Dismiss the lawsuit on the basis that, among other reasons, CCM's claims are implausible, have no factual support, and are contrary to the express terms of the APA and to settled law. On November 25, 2014, the Court issued an order granting Federated's Motion to Dismiss in part and denying Federated's Motion to Dismiss in part. The Court dismissed CCM's claim for breach of contract and for breach of an implied obligation to use best efforts. Under the strict standards applicable to Motions to Dismiss that require the Court to accept the allegations of the Complaint as true and draw all inferences in CCM's favor, the Court concluded that CCM's "claim of fraud is at the edge of plausibility" but specifically noted that "[w]hether CCM can successfully prove facts necessary to support that artfully-pled theory remains to be seen."

Federated continues to believe that CCM's claims are meritless and without factual support and intends to continue to vigorously defend this lawsuit as it proceeds through summary judgment. Fact discovery and expert discovery have concluded. Briefing also has been concluded on an evidentiary motion filed by Federated seeking to exclude expert testimony presented by CCM. Federated's evidentiary motion is currently pending before the Court and the Court previously indicated that it would rule on the evidentiary motion before entertaining Federated's motion for summary judgment. A schedule for the filing of Federated's motion for summary judgment has not been set. Federated continues to believe that at all times it acted in good faith and complied with its contractual obligations contained in the APA.

As of March 31, 2016, Federated believes a material loss related to this lawsuit is remote, and as such, does not believe this pending lawsuit is material to Federated or its consolidated financial statements. Based on this assessment of the status and nature of CCM's claims, and the current stage of the lawsuit, no loss is estimable.

Other Litigation. Federated also has claims asserted and threatened against it in the ordinary course of business. As of March 31, 2016, Federated does not believe that a material loss related to these claims is reasonably possible.

See Item 1A - Risk Factors included in Federated's Annual Report on Form 10-K for the year ended December 31, 2015 for additional information regarding risks related to claims asserted or threatened against Federated.

XML

Accumulated Other Comprehensive (Loss) Income Attributable to Federated Investors, Inc. Shareholders

3 Months Ended

Mar. 31, 2016

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive (Loss) Income attributable to Federated Investors, Inc. Shareholders

Accumulated Other Comprehensive Loss Attributable to Federated Investors, Inc. Shareholders

The components of Accumulated other comprehensive loss, net of tax attributable to Federated shareholders are as follows:

(in thousands)	Unrealized Loss on Interest Rate Swap1			Unrealized  Gain (Loss) on Securities Available for Sale2				Foreign Currency Translation Loss			Total
Balance at December 31, 2014	$	(269	)		$	(1,126	)	$	(267	)	$	(1,662	)
Other comprehensive income (loss) before reclassifications and tax	67				1,086			(677		)	476
Tax impact	(25		)		(399		)	237			(187		)
Reclassification adjustments, before tax	358				0			0			358
Tax impact	(131		)		0			0			(131		)
Net current-period other comprehensive income (loss)	269				687			(440		)	516
Balance at March 31, 2015	$	0			$	(439	)	$	(707	)	$	(1,146	)
Balance at December 31, 2015	$	0			$	(3,795	)	$	(814	)	$	(4,609	)
Other comprehensive income before reclassifications and tax	0				908			40			948
Tax impact	0				(331		)	(14		)	(345		)
Reclassification adjustments, before tax3	0				1,295			0			1,295
Tax impact3	0				(471		)	0			(471		)
Net current-period other comprehensive income	0				1,401			26			1,427
Balance at March 31, 2016	$	0			$	(2,394	)	$	(788	)	$	(3,182	)

 1 Federated entered into an interest rate swap in 2010 to hedge its interest-rate risk associated with its original term loan facility. The interest rate swap expired on April 1, 2015. Amounts reclassified from Accumulated other comprehensive loss, net of tax were recorded in Debt expense on the Consolidated Statements of Income.

 2 Other than as described in note 3 below, amounts reclassified from Accumulated other comprehensive loss, net of tax were recorded in Gain (loss) on securities, net on the Consolidated Statements of Income.

3 Amount includes reclassification of $0.8 million, net of tax from Accumulated other comprehensive loss, net of tax to Retained earnings on the Consolidated Balance Sheets as a result of the adoption of ASU 2015-02 (see Note (2) for additional information).

XML

Subsequent Events

3 Months Ended

Mar. 31, 2016

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

OnApril 28, 2016, the board of directors declared a$0.25per share dividend to shareholders of record as ofMay 6, 2016to be paid onMay 13, 2016.

XML

Significant Accounting Policies Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

Federated performs an analysis for each Federated Fund or other entity in which Federated holds a financial interest to determine if it is a VIE or VRE. Factors considered in this analysis include, but are not limited to, whether (1) it is a legal entity, (2) a scope exception applies, (3) a variable interest exists and (4) shareholders have the power to direct the activities that most significantly impact the economic performance, as well as the equity ownership, and any related party or de facto agent implications of Federated's involvement with the entity. Entities that are determined to be VIEs are consolidated if Federated is deemed to be the primary beneficiary. Entities that are determined to be VREs are generally consolidated if Federated holds the majority voting interest. Federated's conclusion to consolidate a Federated Fund may vary from period to period, most commonly as a result of changes in its percentage interest in the entity.

To the extent Federated's interest in a consolidated entity represents less than 100% of the entity's equity, Federated recognizes noncontrolling interests in subsidiaries. In the case of consolidated Federated Funds, the noncontrolling interests represent equity which is redeemable or convertible for cash or other assets at the option of the equity holder. As such, these noncontrolling interests are deemed to represent temporary equity and are classified as Redeemable noncontrolling interest in subsidiaries in the mezzanine section of the Consolidated Balance Sheets. All other noncontrolling interests in subsidiaries are classified as permanent equity in the Consolidated Balance Sheets. All significant intercompany accounts and transactions have been eliminated.

Consolidation of Variable Interest Entities

Prior to the adoption of ASU 2015-02, Federated considered either a qualitative or quantitative model for identifying whether its interest in a VIE was a controlling financial interest. Considerations of the qualitative model included whether Federated had (1) the ability to direct significant activities of the VIE and (2) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. For the quantitative model, Federated evaluated the extent of its participation in the economic risks and rewards of the entity. In cases where the results indicated that Federated's interest in such an entity absorbed the majority of the variability in the entity's net assets, Federated was deemed to be the primary beneficiary and thus consolidated the entity.

Following the adoption of ASU 2015-02, Federated has a controlling financial interest in a VIE and is, therefore, deemed to be the primary beneficiary of a VIE if it has (1) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and (2) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

Consolidation of Voting Rights Entities

Federated has a controlling financial interest in a VRE if it can exert control over the financial and operating policies of the VRE, which generally occurs when Federated holds the majority voting interest (i.e. greater than 50% of the voting equity interest).

XML

Concentration Risk (Tables)

3 Months Ended

Mar. 31, 2016

Risks and Uncertainties [Abstract]

Schedule of Revenue Concentration

The following table summarizes the percentage of total revenue earned from Federated's asset classes for the periods presented:

	Three Months Ended
	March 31,
	2016		2015
Money market assets	47	%	32	%
Equity assets	36	%	46	%
Fixed-income assets	17	%	22	%

Voluntary Fee Waivers

The impact of such fee waivers on various components of Federated's Consolidated Statements of Income was as follows for the periods presented:

	Three Months Ended
	March 31,
(in millions)	2016			2015
Revenue	$	(37.5	)	$	(94.1	)
Less: Reduction in Distribution expense	27.9			64.6
Operating income	(9.6		)	(29.5		)
Less: Reduction in Noncontrolling interests	0.2			2.5
Pre-tax impact	$	(9.4	)	$	(27.0	)

XML

Variable Interest Entities (Tables)

3 Months Ended

Mar. 31, 2016

Variable Interest Entities [Abstract]

Consolidated Federated Funds VIEs

The following table presents the balances related to the consolidated Federated Fund VIEs that were included on the Consolidated Balance Sheets as well as Federated's net interest in the consolidated Federated Fund VIEs for each period presented:

(in millions)	March 31, 2016		December 31, 2015
Cash and cash equivalents	$	0.1	$	3.1
Investments—consolidated investment companies	41.9		25.4
Receivables	1.0		0.2
Less: Liabilities	0.5		3.0
Less: Redeemable noncontrolling interest in subsidiaries	23.8		8.7
Federated's net interest in the consolidated Federated Fund VIEs	$	18.7	$	17.0

XML

Investments (Tables)

3 Months Ended

Mar. 31, 2016

Investments, Debt and Equity Securities [Abstract]

Available-For-Sale Securities

Available-for-sale securities were as follows:

	March 31, 2016									December 31, 2015
			Gross Unrealized					Estimated Fair				Gross Unrealized					Estimated Fair
(in thousands)	Cost		Gains		(Losses)			Value		Cost		Gains		(Losses)			Value
Equity mutual funds	$	32,459	$	566	$	(1,996	)	$	31,029	$	32,357	$	342	$	(2,416	)	$	30,283
Fixed-income mutual funds	103,331		123		(2,503		)	100,951		115,396		109		(4,040		)	111,465
Total fluctuating-value mutual funds	$	135,790	$	689	$	(4,499	)	$	131,980	$	147,753	$	451	$	(6,456	)	$	141,748

Gains and losses on investments

The following table presents gains and losses recognized in Gain (loss) on securities, net on the Consolidated Statements of Income in connection with Federated's investments as well as economic derivatives held by certain consolidated Federated Funds:

	Three Months Ended
	March 31,
(in thousands)	2016			2015
Unrealized gain (loss)
Trading securities	$	2,156		$	456
Derivatives1	107			(159		)
Realized gains2
Trading securities	116			189
Derivatives1	406			235
Realized losses2
Available-for-sale securities	(17		)	0
Trading securities	(1,297		)	(613		)
Derivatives1	(380		)	(362		)
Gain (loss) on securities, net3	$	1,091		$	(254	)

1  Amounts related to the settlement of economic derivatives held by certain consolidated Federated Funds.

2  Realized gains and losses are computed on a specific-identification basis.

3 Amounts related to consolidated entities, primarily Federated Funds, totaled $1.0 million and $(0.3) millionfor the three months endedMarch 31, 2016, and 2015, respectively.

XML

Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2016

Fair Value Disclosures [Abstract]

Classes of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table presents fair value measurements for classes of Federated’s financial assets and liabilities measured at fair value on a recurring basis:

(in thousands)	Level 1		Level 2		Level 3		NAV Practical Expedient3		Total
March 31, 2016
Financial Assets
Cash and cash equivalents	$	147,762	$	0	$	0	$	0	$	147,762
Available-for-sale equity securities	107,191		0		0		24,789		131,980
Trading securities—equity	12,922		117		0		5,409		18,448
Trading securities—debt	0		43,828		0		0		43,828
Other1	0		175		910		0		1,085
Total financial assets	$	267,875	$	44,120	$	910	$	30,198	$	343,103
Financial Liabilities
Acquisition-related future consideration liabilities	$	0	$	0	$	2,090	$	0	$	2,090
Other2	85		0		469		0		554
Total financial liabilities	$	85	$	0	$	2,559	$	0	$	2,644
December 31, 20153
Financial Assets
Cash and cash equivalents	$	172,628	$	0	$	0	$	0	$	172,628
Available-for-sale equity securities	117,422		0		0		24,326		141,748
Trading securities—equity	15,900		65		0		7,433		23,398
Trading securities—debt	0		9,041		0		0		9,041
Other1	4		17		910		0		931
Total financial assets	$	305,954	$	9,123	$	910	$	31,759	$	347,746
Financial Liabilities
Acquisition-related future consideration liabilities	$	0	$	0	$	2,161	$	0	$	2,161
Other2	2,681		59		469		0		3,209
Total financial liabilities	$	2,681	$	59	$	2,630	$	0	$	5,370

1 Amounts include structured trade finance loans held by Federated as well as futures contracts and/or foreign currency forward contracts held within certain consolidated Federated Funds.

2 Amounts may include investments sold short, foreign currency forward contracts and/or futures contracts held within certain consolidated Federated Funds, as well as certain liabilities attributable to structured trade finance loans held by Federated.

3 Investments that calculate NAV as a practical expedient were recategorized and are no longer included in Level 2 as of December 31, 2015 (see Note (2) for additional information).

XML

Debt (Tables)

3 Months Ended

Mar. 31, 2016

Debt Disclosure [Abstract]

Debt

Debt consisted of the following:

	Interest Rates
	March 31,	December 31,
(dollars in thousands)	2016	2015	March 31, 2016		December 31, 2015
Term Loan	1.565%	1.555%	$	210,375	$	216,750
Less: Short-term debt			25,500		25,500
Long-term debt			$	184,875	$	191,250

XML

Earnings Per Share Attributable to Federated Investors, Inc. Shareholders (Tables)

3 Months Ended

Mar. 31, 2016

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share using the two-class method for amounts attributable to Federated:

	Three Months Ended
	March 31,
(in thousands, except per share data)	2016			2015
Numerator – Basic and Diluted
Net income attributable to Federated Investors, Inc.	$	45,258		$	36,307
Less: Total income available to participating unvested restricted shareholders1	(1,821		)	(1,478		)
Total net income attributable to Federated Common Stock2	$	43,437		$	34,829
Denominator
Basic weighted-average common shares outstanding	99,802			100,641
Dilutive potential shares from stock options	1			1
Diluted weighted-average common shares outstanding	99,803			100,642
Earnings per share
Net income attributable to Federated Common Stock – Basic and Diluted2	$	0.44		$	0.35

1 Income available to participating unvested restricted shareholders includes dividends paid on unvested restricted shares and their proportionate share of undistributed earnings.

2 Federated Common Stock excludes unvested restricted stock which are deemed participating securities in accordance with the two-class method of computing earnings per share.

XML

Accumulated Other Comprehensive (Loss) Income Attributable to Federated Investors, Inc. Shareholders (Tables)

3 Months Ended

Mar. 31, 2016

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Accumulated Other Comprehensive (Loss) Income

The components of Accumulated other comprehensive loss, net of tax attributable to Federated shareholders are as follows:

(in thousands)	Unrealized Loss on Interest Rate Swap1			Unrealized  Gain (Loss) on Securities Available for Sale2				Foreign Currency Translation Loss			Total
Balance at December 31, 2014	$	(269	)		$	(1,126	)	$	(267	)	$	(1,662	)
Other comprehensive income (loss) before reclassifications and tax	67				1,086			(677		)	476
Tax impact	(25		)		(399		)	237			(187		)
Reclassification adjustments, before tax	358				0			0			358
Tax impact	(131		)		0			0			(131		)
Net current-period other comprehensive income (loss)	269				687			(440		)	516
Balance at March 31, 2015	$	0			$	(439	)	$	(707	)	$	(1,146	)
Balance at December 31, 2015	$	0			$	(3,795	)	$	(814	)	$	(4,609	)
Other comprehensive income before reclassifications and tax	0				908			40			948
Tax impact	0				(331		)	(14		)	(345		)
Reclassification adjustments, before tax3	0				1,295			0			1,295
Tax impact3	0				(471		)	0			(471		)
Net current-period other comprehensive income	0				1,401			26			1,427
Balance at March 31, 2016	$	0			$	(2,394	)	$	(788	)	$	(3,182	)

 1 Federated entered into an interest rate swap in 2010 to hedge its interest-rate risk associated with its original term loan facility. The interest rate swap expired on April 1, 2015. Amounts reclassified from Accumulated other comprehensive loss, net of tax were recorded in Debt expense on the Consolidated Statements of Income.

 2 Other than as described in note 3 below, amounts reclassified from Accumulated other comprehensive loss, net of tax were recorded in Gain (loss) on securities, net on the Consolidated Statements of Income.

3 Amount includes reclassification of $0.8 million, net of tax from Accumulated other comprehensive loss, net of tax to Retained earnings on the Consolidated Balance Sheets as a result of the adoption of ASU 2015-02 (see Note (2) for additional information).

XML

Recent Accounting Pronouncements Recent Accounting Pronouncements (Policies)

3 Months Ended

Mar. 31, 2016

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

Consolidation

On February 18, 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which affects reporting organizations' evaluation of whether they should consolidate certain legal entities. This includes a scope exception for reporting entities with an interest in legal entities that are required to comply with or operate in accordance with the requirements similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds.

Effective January 1, 2016, Federated adopted ASU 2015-02 using the modified retrospective transition method, which did not require the restatement of prior years. In connection with the adoption of ASU 2015-02, Federated reevaluated all of its sponsored investment companies and other funds (Federated Funds). As a result, certain Federated Funds previously accounted for as variable interest entities (VIEs) now meet the characteristics of voting rights entities (VREs).

The adoption of ASU 2015-02 resulted in the consolidation of one Federated Fund that was not previously consolidated. Upon adoption, this entity was deemed to be a VIE and Federated was deemed to be the primary beneficiary. As a result of this consolidation, Federated recorded $29.4 million in assets, of which $11.5 million was included in Investments—affiliates at December 31, 2015, $0.2 million in liabilities and $17.7 million in Redeemable noncontrolling interest in subsidiaries. Federated also reclassified $0.8 million of unrealized losses from Accumulated other comprehensive loss, net of tax to Retained earnings. The adoption of ASU 2015-02 also resulted in the deconsolidation of one Federated Fund that was previously consolidated. Upon adoption, Federated was no longer deemed to be the primary beneficiary of this VIE. As a result, Federated deconsolidated $5.5 million in assets, $2.7 million in liabilities and $2.8 million in Redeemable noncontrolling interest in subsidiaries. There was no impact to the Consolidated Statements of Income upon adoption of ASU 2015-02. See Note (3) for the updated Principles of Consolidation accounting policy.

Accounting for Fees Paid in a Cloud Computing Arrangement

On January 1, 2016, Federated adopted ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. This update provides guidance about whether a cloud computing arrangement includes a software license. Management elected the prospective transition method and the adoption did not have a material impact on Federated's Consolidated Financial Statements.

Disclosure of Investments in Certain Entities that Calculate Net Asset Value per Share

On January 1, 2016, Federated adopted ASU 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value (NAV) per Share (or Its Equivalent). This update modifies certain disclosure requirements and requires that all investments for which fair value is measured using the NAV practical expedient be excluded from the fair value hierarchy. The ASU required the retrospective adoption approach, which required the restatement of the prior period fair value hierarchy table. As a result, $31.8 million of investments were recategorized into the NAV practical expedient column and are no longer included in Level 2 as of December 31, 2015 (see Note (7)). The adoption did not have a material impact on Federated's Consolidated Financial Statements.

Description of New Accounting Pronouncements Not yet Adopted [Text Block]

Revenue Recognition

On May 28, 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes virtually all existing revenue recognition guidance under GAAP. The update's core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. On July 9, 2015, the FASB approved a one-year deferral of the effective date of the update, and issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, on August 12, 2015. As a result of the deferral, the update is effective for Federated on January 1, 2018, with early adoption permitted on January 1, 2017. During 2016, the FASB issued ASU 2016-08, which clarifies principal versus agent considerations and ASU 2016-10, which clarifies identifying performance obligations and the licensing implementation guidance. ASU 2014-09 allows for the use of either the retrospective or modified retrospective adoption method. Management is currently evaluating the available transition methods and the potential impact of adoption on Federated's Consolidated Financial Statements.

Deferred Taxes

On November 20, 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The amendments in this update require that deferred tax liabilities and assets be classified as noncurrent on the balance sheet. The update is effective for Federated on January 1, 2017, with early adoption permitted. The update allows for the use of either a prospective or retrospective adoption approach. Management is currently evaluating the available transition methods and does not expect this update to have a material impact on Federated's Consolidated Financial Statements.

Financial Instruments

On January 5, 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The ASU significantly revises an entity's accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments. The update is effective for Federated on January 1, 2018, and, except for certain provisions, does not permit early adoption. An entity should apply the amendments, with certain exceptions, by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. Management is currently evaluating the potential impact of adoption on Federated's Consolidated Financial Statements.

Leases

On February 25, 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The core principal of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases on the balance sheet, but retains a distinction between finance and operating leases. The update is effective for Federated on January 1, 2019, with early adoption permitted. The update requires the modified retrospective adoption approach. Management is currently evaluating the potential impact of adoption on Federated's Consolidated Financial Statements.

Share-Based Compensation

On March 31, 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The areas for simplification in this update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The update is effective for Federated on January 1, 2017. Early adoption is permitted in any interim or annual period. The available transition method is specific to each amendment, and requires either the use of the modified retrospective or prospective adoption method. Management is currently evaluating the potential impact of adoption on Federated's Consolidated Financial Statements.

XML

Recent Accounting Pronouncements Recent Accounting Pronouncements Narrative (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Jan. 01, 2016	Dec. 31, 2015
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Investments—affiliates	$ 131,980		$ 141,748
Redeemable noncontrolling interest in subsidiaries	25,905		8,734
Total financial assets	343,103		347,746
Accounting Standards Update 2015-02 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Investments—affiliates			11,500
Investments Measured Using NAV Practical Expedient [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Investments—affiliates	24,789		24,326	[1]
Total financial assets	$ 30,198		31,759
Investments Measured Using NAV Practical Expedient [Member] | Accounting Standards Update 2015-07 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total financial assets			$ 31,759
Retained Earnings [Member] | Accounting Standards Update 2015-02 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reclassification adjustment from accumulated other comprehensive loss, net of tax to retained earnings		$ 831
Consolidated Entities [Member] | Accounting Standards Update 2015-02 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Consolidated assets, investment companies		29,400
Consolidated liabilities		200
Redeemable noncontrolling interest in subsidiaries		17,700
Deconsolidation [Member] | Accounting Standards Update 2015-02 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Consolidated assets, investment companies		5,500
Consolidated liabilities		2,700
Redeemable noncontrolling interest in subsidiaries		$ 2,800

[1] Investments that calculate NAV as a practical expedient were recategorized and are no longer included in Level 2 as of December 31, 2015 (see Note (2) for additional information).

XML

Concentration Risk Narrative (Details)	3 Months Ended
	Mar. 31, 2016
Customer Concentration Risk [Member]
Concentration Risk, Percentage	16.00%

XML

Concentration Risk Schedule of Revenue Concentration (Details) - Revenue Concentration by Asset Class [Member]	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Money market assets [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	47.00%	32.00%
Equity assets [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	36.00%	46.00%
Fixed-income assets [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	17.00%	22.00%

XML

Concentration Risk Voluntary Fee Waivers (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Concentration Risk [Line Items]
Revenue	$ (37.5)	$ (94.1)
Less: Reduction in Distribution expense	27.9	64.6
Operating income	(9.6)	(29.5)
Less: Reduction in Noncontrolling interests	0.2	2.5
Pre-tax impact	$ (9.4)	$ (27.0)

XML

Consolidation Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Variable Interest Entities [Line Items]
Accounts receivable from Federated Funds	$ 23,000	$ 16,900
Total waived fees	118,500
Redeemable noncontrolling interest in subsidiaries	25,905	8,734
Federated's net interest in consolidated Federated Fund VIEs	$ 18,700	17,000
Noncontrolling interest, ownership percentage by parent	50.50%
Noncontrolling interest, ownership percentage by noncontrolling owners	49.50%
Nonredeemable noncontrolling interest in subsidiary	$ 1,443	1,156
Non-Consolidated Variable Interest Entity, Not Primary Beneficiary [Member]
Variable Interest Entities [Line Items]
Nonconsolidated VIE maximum risk of loss	1,100	301,500
Carrying value of investment of nonconsolidated VIEs	1,100	301,500
AUM for nonconsolidated investment companies	11,900	268,000,000
Investments [Member] | Non-Consolidated Variable Interest Entity, Not Primary Beneficiary [Member]
Variable Interest Entities [Line Items]
Carrying value of investment of nonconsolidated VIEs		141,800
Cash and Cash Equivalents [Member] | Money Market Funds [Member] | Non-Consolidated Variable Interest Entity, Not Primary Beneficiary [Member]
Variable Interest Entities [Line Items]
Carrying value of investment of nonconsolidated VIEs		$ 159,700
Consolidated Voting Rights Entities [Member]
Variable Interest Entities [Line Items]
Redeemable noncontrolling interest in subsidiaries	2,100
Consolidated Voting Rights Entities [Member] | Investments [Member]
Variable Interest Entities [Line Items]
Investments - consolidated investment companies, VREs	13,200
General Partnership [Member]
Variable Interest Entities [Line Items]
Consolidated liabilities	2,100
Nonredeemable noncontrolling interest in subsidiary	1,400
General Partnership [Member] | Cash and Cash Equivalents [Member]
Variable Interest Entities [Line Items]
Consolidated assets, partnership	5,100
Financial Support Waived Fees [Member]
Variable Interest Entities [Line Items]
Total waived fees, money market funds subject to scope exception of ASU 2015-02	90,600
Financial Support, Capital Contributions [Member]
Variable Interest Entities [Line Items]
Capital contributions	$ 0

XML

Consolidation Consolidated Federated Fund VIEs (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Variable Interest Entity [Line Items]
Less: Redeemable noncontrolling interest in subsidiaries	$ 25,905	$ 8,734
Federated's net interest in consolidated Federated Fund VIEs	18,700	17,000
Investment Company [Member]
Variable Interest Entity [Line Items]
Less: Liabilities	500	3,000
Less: Redeemable noncontrolling interest in subsidiaries	23,800	8,700
Investment Company [Member] | Cash and Cash Equivalents [Member]
Variable Interest Entity [Line Items]
Consolidated assets, investment companies	100	3,100
Investment Company [Member] | Receivables [Member]
Variable Interest Entity [Line Items]
Consolidated assets, investment companies	1,000	200
Investment Company [Member] | Investments [Member]
Variable Interest Entity [Line Items]
Consolidated assets, investment companies	$ 41,900	$ 25,400

XML

Investments Narrative (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Schedule of Investments [Line Items]
Available-for-sale equity securities	$ 131,980	$ 141,748
Gross unrealized losses	4,499	6,456
Available-for-sale securities, continuous unrealized losses, fair value	113,800	124,000
Available-for-sale securities, continuous unrealized losses, 12 months or longer, fair value	107,400	92,600
Available-for-sale securities, continuous unrealized accumulated losses, 12 months or longer	4,100	5,500
Available-for-sale securities, continuous unrealized losses, 12 months or less, fair value	6,400	31,400
Available-for-sale securities, continuous unrealized accumulated losses, 12 months or less	400	1,000
Trading Securities	62,300	32,400
Domestic Debt Securities [Member]
Schedule of Investments [Line Items]
Trading Securities	43,800	9,000
Investments in Federated Funds and other mutual funds [Member]
Schedule of Investments [Line Items]
Trading Securities	8,500	11,000
Stocks of large U.S. and international companies [Member]
Schedule of Investments [Line Items]
Trading Securities	$ 6,800	$ 10,500

XML

Investments Available-For-Sale Securities (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Cost	$ 135,790	$ 147,753
Gross unrealized gains	689	451
Gross unrealized losses	(4,499)	(6,456)
Available-for-sale equity securities	131,980	141,748
Equity Mutual Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost	32,459	32,357
Gross unrealized gains	566	342
Gross unrealized losses	(1,996)	(2,416)
Available-for-sale equity securities	31,029	30,283
Fixed-Income Mutual Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost	103,331	115,396
Gross unrealized gains	123	109
Gross unrealized losses	(2,503)	(4,040)
Available-for-sale equity securities	$ 100,951	$ 111,465

XML

Investments (Loss) Gain on Securities, Net of Investment Income (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2016	Mar. 31, 2015
Gain (Loss) on Investments [Line Items]
Gain (loss) on securities, net	[1]	$ 1,091	$ (254)
Consolidated Federated Funds [Member]
Gain (Loss) on Investments [Line Items]
Gain (loss) on securities, net		1,000	(300)
Trading Securities [Member]
Gain (Loss) on Investments [Line Items]
Unrealized gain on trading securities		2,156	456
Realized gains	[2]	116	189
Realized losses	[2]	(1,297)	(613)
Derivatives [Member]
Gain (Loss) on Investments [Line Items]
Unrealized gain (loss) on derivatives	[3]	107	(159)
Realized gains	[2],[3]	406	235
Realized losses	[2],[3]	(380)	(362)
Available-for-sale Securities [Member]
Gain (Loss) on Investments [Line Items]
Realized losses	[2]	$ (17)	$ 0

[1] Amounts related to consolidated entities, primarily Federated Funds, totaled $1.0 million and $(0.3) million for the three months ended March 31, 2016, and 2015, respectively.

[2] Realized gains and losses are computed on a specific-identification basis.

[3] Amounts related to the settlement of economic derivatives held by certain consolidated Federated Funds.

XML

Fair Value Measurements Narrative (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Cash and cash equivalents	$ 147,762	$ 172,628
Acquisition-related future consideration liabilities	2,090	2,161
Other Current Liabilities [Member]
Acquisition-related future consideration liabilities	700
Other Noncurrent Liabilities [Member]
Acquisition-related future consideration liabilities	1,400
Money Market Funds [Member]
Cash and cash equivalents	$ 140,900	$ 162,200

XML

Fair Value Measurements Classes of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands		Mar. 31, 2016	Dec. 31, 2015
Cash and cash equivalents		$ 147,762	$ 172,628
Available-for-sale equity securities		131,980	141,748
Trading securities—equity		18,448	23,398
Trading securities—debt		43,828	9,041
Other assets	[1]	1,085	931
Total financial assets		343,103	347,746
Acquisition-related future consideration liabilities		2,090	2,161
Other liabilities	[2]	554	3,209
Total financial liabilities		2,644	5,370
Level 1 [Member]
Cash and cash equivalents		147,762	172,628
Available-for-sale equity securities		107,191	117,422
Trading securities—equity		12,922	15,900
Trading securities—debt		0	0
Other assets	[1]	0	4
Total financial assets		267,875	305,954
Acquisition-related future consideration liabilities		0	0
Other liabilities	[2]	85	2,681
Total financial liabilities		85	2,681
Level 2 [Member]
Cash and cash equivalents		0	0
Available-for-sale equity securities		0	0
Trading securities—equity		117	65
Trading securities—debt		43,828	9,041
Other assets	[1]	175	17
Total financial assets		44,120	9,123
Acquisition-related future consideration liabilities		0	0
Other liabilities	[2]	0	59
Total financial liabilities		0	59
Level 3 [Member]
Cash and cash equivalents		0	0
Available-for-sale equity securities		0	0
Trading securities—equity		0	0
Trading securities—debt		0	0
Other assets		910	910
Total financial assets		910	910
Acquisition-related future consideration liabilities		2,090	2,161
Other liabilities		469	469
Total financial liabilities		2,559	2,630
Investments Measured Using NAV Practical Expedient [Member]
Available-for-sale equity securities		24,789	24,326	[3]
Trading securities—equity		5,409	7,433	[3]
Total financial assets		$ 30,198	$ 31,759

[1] Amounts include structured trade finance loans held by Federated as well as futures contracts and/or foreign currency forward contracts held within certain consolidated Federated Funds.

[2] Amounts may include investments sold short, foreign currency forward contracts and/or futures contracts held within certain consolidated Federated Funds, as well as certain liabilities attributable to structured trade finance loans held by Federated.

[3] Investments that calculate NAV as a practical expedient were recategorized and are no longer included in Level 2 as of December 31, 2015 (see Note (2) for additional information).

XML

Debt Narrative (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($)	Mar. 31, 2015 USD ($)	Dec. 31, 2015 USD ($)	Jun. 24, 2014 USD ($)
Borrowings under Term Loan				$ 255,000
Term loan spread basis points	112.5
Line of credit facility, maximum borrowing capacity				200,000
Line of credit, outstanding borrowings				$ 0
Line of credit facility, current borrowing capacity	$ 200,000
Line of credit facility, facility fee basis points	12.5
Line of credit facility spread basis points	100
Term loan quarterly payments, next twelve months			$ 25,500
Term loan quarterly payments, year two			25,500
Term loan quarterly payments, year three			55,800
Term loan quarterly payments, year four			$ 110,000
Repayments on borrowings	$ 6,375	$ 6,375

XML

Debt Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Debt Disclosure [Abstract]
Term loan, weighted average interest rate	1.565%	1.555%
Term Loan	$ 210,375	$ 216,750
Less: Short-term debt	25,500	25,500
Long-term debt	$ 184,875	$ 191,250

XML

Share-Based Compensation Plans (Details) - shares	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Restricted Stock Granted in Period	464,660	863,137
Stock Options, Exercises in Period	0	3,000
Stock Options, Issued in Period	0	0
Shares of Federated Class B Common Stock Granted to Non-Management Directors	0	5,700
Class B Common Stock Bonus [Member]
Restricted Stock Granted in Period	464,660	373,137
Restricted stock requisite service period	3 years
Class B Common Stock Key Employees [Member]
Restricted stock requisite service period		10 years

XML

Equity (Details) - USD ($) $ in Thousands, shares in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Feb. 28, 2015
Amount paid for repurchase of common stock	$ 13,720	$ 9,948
Class B [Member]
Number of shares authorized under share repurchase program			4.0
Repurchased shares	1.0
Remaining number of shares authorized to be repurchased	2.2

XML

Earnings Per Share Attributable to Federated Investors, Inc. Shareholders Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands		3 Months Ended
		Mar. 31, 2016	Mar. 31, 2015
Net income attributable to Federated Investors, Inc.		$ 45,258	$ 36,307
Less: Total income available to participating unvested restricted shareholders, basic	[1]	(1,821)	(1,478)
Less: Total income available to participating unvested restricted shareholders, diluted	[1]	(1,821)	(1,478)
Total net income attributable to Federated Common Stock (Basic)	[2]	43,437	34,829
Total net income attributable to Federated Common Stock (Diluted)	[2]	$ 43,437	$ 34,829
Basic weighted-average common shares outstanding		99,802	100,641
Dilutive potential shares from stock options		1	1
Diluted weighted-average common shares outstanding		99,803	100,642
Net income attributable to Federated Common Stock - Basic and Diluted	[2]	$ 0.44	$ 0.35

[1] Income available to participating unvested restricted shareholders includes dividends paid on unvested restricted shares and their proportionate share of undistributed earnings.

[2] Federated Common Stock excludes unvested restricted stock which are deemed participating securities in accordance with the two-class method of computing earnings per share.

XML

Commitments and Contingencies (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended	25 Months Ended
	Dec. 31, 2008	Mar. 31, 2016	Jan. 31, 2014	Dec. 31, 2015	Dec. 01, 2008
Fair value of future consideration payments liability		$ 2,090		$ 2,161
Compensation-related payments in connection with significant employment and incentive arrangements		29,000
Prior Business Acquisition Required Compound Annual Growth Rate to Have Earned Contingent Payments	30.00%
Alleged damages sought		37,000
Other Current Liabilities [Member]
Fair value of future consideration payments liability		700
Other Noncurrent Liabilities [Member]
Fair value of future consideration payments liability		1,400
Clover Capital Acquisition [Member]
Contingent purchase price payments			$ 18,000
Business Acquisition Cost Of Acquired Entity Upfront Cash Paid	$ 30,000
Maximum contingent payments under acquisition agreement					$ 55,000
Series of Individually Immaterial Business Acquisitions [Member] | Other Liabilities [Member]
Fair value of future consideration payments liability		2,100
Series of Individually Immaterial Business Acquisitions [Member] | Other Current Liabilities [Member]
Fair value of future consideration payments liability		700
Series of Individually Immaterial Business Acquisitions [Member] | Other Noncurrent Liabilities [Member]
Fair value of future consideration payments liability		$ 1,400

XML

Accumulated Other Comprehensive (Loss) Income Attributable to Federated Investors, Inc. Shareholders (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2016		Mar. 31, 2015	Jan. 01, 2016
Accumulated other comprehensive loss, net of tax		$ (4,609)		$ (1,662)
Other comprehensive income before reclassifications and tax		948		476
Other comprehensive income, before reclassifications, tax total		(345)		(187)
Reclassification adjustments, before tax		1,295		358
Reclassification adjustment, tax total		(471)		(131)
Net current-period other comprehensive income		1,427		516
Accumulated other comprehensive loss, net of tax		(3,182)		(1,146)
Unrealized Loss on Interest Rate Swap [Member]
Accumulated other comprehensive loss, net of tax	[1]	0		(269)
Other comprehensive income before reclassifications and tax	[1]	0		67
Other comprehensive income, before reclassifications, tax total	[1]	0		(25)
Reclassification adjustments, before tax	[1]	0		358
Reclassification adjustment, tax total	[1]	0		(131)
Net current-period other comprehensive income	[1]	0		269
Accumulated other comprehensive loss, net of tax	[1]	0		0
Unrealized Gain (Loss) on Securities Available for Sale [Member]
Accumulated other comprehensive loss, net of tax	[2]	(3,795)		(1,126)
Other comprehensive income before reclassifications and tax	[2]	908		1,086
Other comprehensive income, before reclassifications, tax total	[2]	(331)		(399)
Reclassification adjustments, before tax	[2]	1,295	[3]	0
Reclassification adjustment, tax total	[2]	(471)		0
Net current-period other comprehensive income	[2]	1,401		687
Accumulated other comprehensive loss, net of tax	[2]	(2,394)		(439)
Foreign Currency Translation Loss [Member]
Accumulated other comprehensive loss, net of tax		(814)		(267)
Other comprehensive income before reclassifications and tax		40		(677)
Other comprehensive income, before reclassifications, tax total		(14)		237
Reclassification adjustments, before tax		0		0
Reclassification adjustment, tax total		0		0
Net current-period other comprehensive income		26		(440)
Accumulated other comprehensive loss, net of tax		$ (788)		$ (707)
Accounting Standards Update 2015-02 [Member] | Retained Earnings [Member]
Reclassification adjustment from accumulated other comprehensive loss, net of tax to retained earnings					$ 831

[1] Federated entered into an interest rate swap in 2010 to hedge its interest-rate risk associated with its original term loan facility. The interest rate swap expired on April 1, 2015. Amounts reclassified from Accumulated other comprehensive loss, net of tax were recorded in Debt expense on the Consolidated Statements of Income.

[2] Other than as described in note 3 below, amounts reclassified from Accumulated other comprehensive loss, net of tax were recorded in Gain (loss) on securities, net on the Consolidated Statements of Income.

[3] Amount includes reclassification of $0.8 million, net of tax from Accumulated other comprehensive loss, net of tax to Retained earnings on the Consolidated Balance Sheets as a result of the adoption of ASU 2015-02 (see Note (2) for additional information).

XML

Subsequent Events (Details)	Apr. 28, 2016 $ / shares
Subsequent Event [Member]
Dividend declared	$ 0.25