(Pittsburgh, PA, September 9, 2002) Reed Smith LLP and Federated Investors, Inc. today announced that Reed Smith is assuming responsibility for the management and execution of most of the day-to-day work performed by Federated’s legal department. Reed Smith is one of the largest law firms in the world with more than 750 attorneys and Federated is one of the nation’s largest investment management companies, managing in excess of $185 billion.

On October 1, more than 50 lawyers, paralegals and support staff from Federated will be joined by Reed Smith partners and associates from the firm’s New York, Philadelphia, Washington, Wilmington and Pittsburgh offices to comprise a newly formed Investment and Asset Management Practice Group. The practice will continue to occupy the 12th floor of the Federated Investors Tower in downtown Pittsburgh. All positions will be retained in the transaction.

"Transitioning Federated’s ’40 Act legal team to Reed Smith instantly makes us one of 10 largest players in the mutual fund legal world," said Gregory B. Jordan, Reed Smith’s firmwide managing partner. "At the same time, we are excited to provide service to Federated, a major leader in the investment management industry. The combination positions the law firm as a leading provider of mutual fund and investment management services, and strengthens Reed Smith’s considerable array of financial services expertise."

J. Christopher Donahue, president and CEO of Federated said, "This alliance is the best way to continue to receive high-quality legal services for Federated’s internal and external clients which include our mutual funds and separate account products. While transparent to Federated and our Mutual Fund Services clients, each will receive the same high-quality service, for no additional cost, from the same location. Additionally, we will benefit from an influx of resources and expertise that comes from a major law firm, such as Reed Smith."

Federated’s general counsel, Steve Keen, his staff and the compliance department remain Federated employees. In addition, Gene Maloney and John McGonigle, Federated directors and experts in fiduciary law and the investment management business, remain part of the Federated executive management team, and will continue to provide services to clients and fund board directors.

Frederick C. Leech, a 21-year veteran of Reed Smith and head of the firm’s Financial Services Practice Group, has been named manager of the new practice, effective immediately.

Leech stated, "The Federated law staff is a high-end operation that has long provided Federated with efficient and excellent legal service. We are fortunate that these individuals will be our colleagues and we are privileged that this arrangement will allow us to strengthen our relationship with Federated." Leech continued, "Going forward, this new expertise will enhance our already powerful financial services practice and allow us to provide to clients a fuller range of solutions. Each of our existing financial services specialty areas - from litigation to ERISA to acquisition work - will be improved as a result of this initiative."

Federated Investors, Inc. (NYSE: FII) is one of the largest investment managers in the United States, managing $185 billion in assets as of June 30, 2002. With more than 135 mutual funds and various separate accounts, Federated provides comprehensive investment management to more than 5,300 institutions and intermediaries including corporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers. In open-end managed fund assets, Federated ranks in the top one percent of money market fund managers in the industry, the top six percent of equity fund managers and the top four percent of fixed-income fund managers . For more information, visit www.federatedinvestors.com.

Reed Smith, a global law firm with more than 750 lawyers located in 11 U.S. and two U.K. cities, represents Fortune 100, as well as mid-market and emerging companies. Clients include technology companies and entrepreneurs, financial services firms, health care providers and insurers, communications companies, manufacturers, universities, nonprofit organizations, real estate developers and municipalities throughout the United States and 40 countries. For more information visit www.reedsmith.com.

Strategic Insight, July 2002. Based on assets in open-end funds.