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            September 30, 2002

                                   OR

     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 (IRS Employer
                        incorporation or organization) 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 ______.


     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock,  as of the last  practicable  date: As of November 6, 2002, the
Registrant had outstanding  9,000 shares of Class A Common Stock and 113,647,571
shares of Class B Common Stock.

Table of Contents
- --------------------------------------------------------------------------------

                                                                           Page
                                                                             No.
Part I.  Financial Information

       Item 1.  Financial Statements

                Consolidated Balance Sheets                                   3

                Consolidated Statements of Income                             4

                Consolidated Statements of Cash Flows                         5

                Notes to Consolidated Financial Statements                    6

       Item 2.     Management's Discussion and Analysis of Financial
       Condition and Results of Operations                                   11

       Item 3.   Quantitative and Qualitative Disclosures About Market       19
       Risk

       Item 4.   Controls and Procedures                                     19

Part II.  Other Information

       Item 6.     Exhibits and Reports on Form 8-K

                (a)   Exhibits required by Item 601 of Regulation S-K        20

                (b)   Reports on Form 8-K                                    20

Signatures                                                                   21

Certifications                                                               22



Special Note Regarding Forward-Looking Information
- --------------------------------------------------------------------------------

     Certain statements under "Management's Discussion and Analysis of Financial
Condition and Results of Operations"  included in Future Cash  Requirements  and
elsewhere in this report, constitute forward-looking  statements,  which involve
known and unknown  risks,  uncertainties,  and other  factors that may cause the
actual  results,  levels of  activity,  performance,  achievements,  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.  For a discussion of such risk factors,  see the section titled Risk
Factors and Cautionary  Statements in Federated's Annual Report on Form 10-K for
the year ended  December 31, 2001, and other reports on file with the Securities
and Exchange Commission.  Many of these factors may be more likely to occur as a
result of the ongoing  threat of  terrorism.  As a result of the  foregoing  and
other  factors,  no  assurance  can be given as to  future  results,  levels  of
activity,  performance  or  achievements,  and  neither we nor any other  person
assumes responsibility for the accuracy and completeness of such statements.



Part I, Item 1.  Financial Statements
Consolidated Balance Sheets
(dollars in thousands)
(unaudited)                                         September 30,   December 31,
                                                         2002         2001
Current Assets:
   Cash and cash equivalents                              $122,738     $73,511
   Marketable securities                                   1,472         4,602
   Receivables, net of reserve of $238 and
   $315, respectively                                     28,657        32,581
   Accrued revenues                                        6,658         6,596
   Prepaid expenses                                        5,456         2,633
   Current deferred tax asset, net                         390           2,025
   Other current assets                                    622             361
               Total current assets                        165,993      122,309

Long-Term Assets:
   Goodwill, net of accumulated
        amortization of $24,862                            164,934     131,867
   Other intangible assets, net                             73,391      80,026
   Deferred sales commissions, net of accumulated
   amortization of $53,924 and $47,222,
                respectively                              58,894        56,875
   Property and equipment, net of accumulated
     depreciation of $51,149 and $47,264, respectively    35,680        34,521
   Other long-term assets                                  3,341         5,955
               Total long-term assets                     336,240      309,244
               Total assets                              $502,233      $431,553

Current Liabilities:
   Cash overdraft                                         $2,804      $5,085
   Current portion of long-term debt - recourse            776        157
   Accrued expenses                                        60,224     58,275
   Accounts payable                                        26,305     29,102
   Income taxes payable                                    1,084      26,543
   Other current liabilities                               4,369      5,946
               Total current liabilities                   95,562     125,108

Long-Term Liabilities:
   Long-term debt - recourse                               1,338      0
   Long-term debt - nonrecourse                            57,152     54,954
   Long-term deferred tax liability, net                   11,757     7,036
   Other long-term liabilities                             7,180      6,995
               Total long-term liabilities                 77,427     68,985
                    Total liabilities                      172,989    194,093

Minority interest                                          455        363

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, 129,505,456 shares issued                  82,506    82,299
Additional paid-in capital from treasury stock
     transactions                                            3,610      3,54
Retained earnings                                          548,000    411,447
Treasury stock, at cost, 15,622,885 and 14,144,515
   shares Class B common stock,
   respectively                                           (305,165)   (259,626)
Employee restricted stock plan                            (290)      (469)
Accumulated other comprehensive loss                      (61)       (286)
               Total shareholders' equity                  328,789    237,097
Total liabilities, minority interest, and
    shareholders' equity                                   $502,233     $431,553

(The  accompanying  notes are an integral part of these  consolidated  financial
statements.)

Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)                         Three Months Ended      Nine Months Ended
                                    September 30,           September 30,
                                      2002        2001        2002      2001
Revenue:
     Investment-advisory fees,
       net-affiliates                   $107,350    $105,968  $333,480 $303,019
     Investment-advisory fees, net-other   3,265      2,647      9,474   7,823
     Administrative-service fees,
         net-affiliates                 30,812    28,072      92,507      79,232
     Administrative-service fees,
       net-other                        3,782      5,184     13,663      15,655
     Other service fees,
         net-affiliates                 20,909    34,521     65,843     100,318
     Other service fees, net-other      5,896     7,105       18,591    20,856
     Commission income                  778       595         2,551     2,422
     Other, net                         443       654         1,127     1,582
          Total revenue               173,235   184,746     537,236    530,907

Operating Expenses:
     Compensation and related        40,473    45,590      136,438    129,126
     Advertising and promotional     19,197    16,630      55,592     50,126
     Systems and communications      6,851     7,196       20,861     21,925
     Office and occupancy             6,563    6,654       19,281     20,264
     Professional service fees        4,946    6,235       16,216     20,384
     Travel and related              3,152     3,146       9,137      9,910
     Amortization of deferred sales
       commissions                   3,460     10,355      11,001     34,559
     Amortization of intangible
         assets                      2,651     6,078       8,655     12,158
     Other                           2,224     2,123       6,578      4,920
          Total operating expenses   89,517    104,007     283,759    303,372

Operating income                     83,718    80,739      253,477    227,535

Nonoperating Income (Expenses):
     Interest and dividends         652        1,408       1,736      8,326
     Loss on securities, net        (640)      0           (793)      (496)
     Debt expense - recourse         (130)     (1,493)     (338)      (5,100)
     Debt expense - nonrecourse      (1,104)   (5,647)     (3,221)    (17,673)
     Other, net                     (1,876)    (4,987)     (1,944)    (5,292)
          Total nonoperating
             expenses, net          (3,098)    (10,719)   (4,560)     (20,235)
Income before minority interest
         and income taxes            80,620    70,020    248,917       207,300
Minority interest                    2,973     2,773       8,274       8,132
Income before income taxes           77,647    67,247      240,643    199,168
Income tax provision                 27,720    24,056      85,782     71,459

Net income                          $49,927    $43,191     $154,861   $127,709
Earnings per share:
     Basic                          $0.45      $0.37       $1.37      $1.11
     Diluted                        $0.43      $0.36       $1.32      $1.06
Cash dividends per share            $0.057     $0.046      $0.160     $0.129

(The  accompanying  notes are an integral part of these  consolidated  financial
statements.)

Consolidated Statements of Cash Flows

(in thousands)
(unaudited)

Nine Months Ended September 30,                   2002            2001
Operating Activities:
   Net income                                     $154,861        $127,709
   Adjustments to reconcile net income to net cash provided by
     operating activities:
     Amortization of intangible assets              8,655           12,158
     Depreciation and other amortization            5,768           6,632
     Amortization of deferred sales commissions     11,001          34,559
     Minority interest                              8,274           8,132
     Net gain on disposal of assets                 (2,585)         (2,611)
     Provision (benefit) for deferred income taxes   5,357          (1,583)
     Tax benefit from exercise of stock options     82              6,703
     Deferred sales commissions paid                (61,534)        (53,772)
     Purchases of trading securities                (16,053)           0
     Proceeds from redemptions of trading
        securities                                  14,662             0
     Contingent deferred sales charges received     587             25,034
     Proceeds from sale of certain future revenues  51,340          46,179
     Other changes in assets and liabilities:
       Decrease (increase) in receivables, net       4,029         (366)
       Decrease in other assets                      696            2,617
       Decrease in accounts payable and accrued
                expenses                             (997)         (4,396)
       (Decrease) increase in income taxes payable   (25,459)      15,498
       (Decrease) increase in other current
                 liabilities                         (4,182)       1,632
       Decrease in other long-term liabilities       (835)         (2,480)

     Net cash provided by operating activities        153,667      221,645

Investing Activities:
   Additions to property and equipment                (5,013)       (5,220)
   Proceeds from disposal of property and equipment      18          43
   Business acquisitions                             (33,657)       (172,606)
   Purchases of securities available for sale         (113)         (25,504)
   Proceeds from redemptions of securities
                 available for sale                   4,530         53,297

     Net cash used by investing activities        (34,235)        (149,990)

Financing Activities:
   Distributions to minority interest             (8,182)         (8,430)
   Dividends paid                                 (18,308)        (15,108)
   Proceeds from exercise of options              218             1,087
   Purchase of treasury stock                     (45,690)        (48,529)
   Proceeds from new borrowings - nonrecourse     10,515          9,458
   Payments on debt - nonrecourse                 (8,317)         (56,838)
   Payments on debt - recourse                    (441)           (14,224)

     Net cash used by financing activities        (70,205)        (132,584)

Net increase (decrease) in cash and cash equivalents 49,227      (60,929)
Cash and cash equivalents, beginning of period       73,511          149,920

Cash and cash equivalents, end of period            $122,738        $88,991

(The  accompanying  notes are an integral part of these  consolidated  financial
statements.)


Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
(unaudited)


(1) Summary of Significant Accounting Policies

(a)  Basis of Presentation

The unaudited interim consolidated  financial statements of Federated Investors,
Inc.   (Federated)  included  herein  have  been  prepared  in  accordance  with
accounting principles generally accepted in the United States. In the opinion of
management,  the financial  statements  reflect all  adjustments  which are of a
normal  recurring  nature and necessary for a fair  statement of the results for
the interim periods presented.

In preparing the unaudited interim consolidated financial statements, management
is required to make estimates and assumptions  that affect the amounts  reported
in the financial  statements.  Actual results may differ from such estimates and
such differences may be material to the 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,  2001.  Certain  items
previously  reported have been  reclassified  to conform with the current year's
presentation.

(b)  Marketable Securities

Marketable securities include  available-for-sale and trading securities held by
Federated.  An  investment  is  classified  as a  trading  security  when  it is
management's  intent at the time of purchase to sell the security within a short
period of time.  Trading  securities  are  carried at fair value based on quoted
market  prices.  The  unrealized  and  realized  gains  and  losses  on  trading
securities  are  recognized  in "Loss on  securities,  net" in the  Consolidated
Statements of Income. At September 30, 2002, "Marketable  securities" included a
$0.6 million investment in a restricted  corporate bond, which was classified as
a trading security.  There were no trading securities held at December 31, 2001.
"Loss on securities,  net" for the three- and nine-month periods ended September
30,  2002  included  a $0.4  million  charge  for  unrealized  losses on trading
securities.

(c)  Recent Accounting Pronouncements

In April 2002, the Financial  Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 145, "Rescission of FASB Statements No. 4,
44, and 62,  Amendment of FASB  Statement  No. 13, and  Technical  Corrections."
Among  other  things,  Statement  145  eliminates  the  requirement  under  FASB
Statement No. 4,  "Reporting  Gains and Losses from  Extinguishment  of Debt" to
report gains and losses from  extinguishment  of debt as extraordinary  items in
the income statement. Similarly, FASB Statement No. 64, "Extinguishments of Debt
Made to Satisfy  Sinking-Fund  Requirements"  has been  rescinded.  Accordingly,
gains or losses from  extinguishments  of debt for fiscal years  beginning after
May  15,  2002  shall  not  be  reported  as  extraordinary   items  unless  the
extinguishment  qualifies  as an  extraordinary  item  under the  provisions  of
Accounting Principles Board Opinion No. 30, "Reporting the Results of Operations
- -  Reporting  the  Effects  of  Disposal  of  a  Segment  of  a  Business,   and
Extraordinary,  Unusual and  Infrequently  Occurring  Events and  Transactions."
Statement  145 also  amends  FASB  Statement  No.  13 to  require  that  certain
modifications to capital leases be treated as a sale-leaseback  and modifies the
accounting for sub-leases when the original  lessee remains a secondary  obligor
(or guarantor). The adoption of Statement 145 is not expected to have a material
impact on Federated's results of operations or financial position.

In June 2002, the FASB issued  Statement of Financial  Accounting  Standards No.
146,  "Accounting  for  Costs  Associated  with  Exit or  Disposal  Activities."
Statement 146 nullifies  Emerging  Issues Task Force Issue No. 94-3,  "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity  (including Certain Costs Incurred in a Restructuring)."  The principal
difference  between Statement 146 and Issue No. 94-3 relates to its requirements
for  recognition of a liability for a cost  associated  with an exit or disposal
activity.  Statement 146 requires  that such a liability be recognized  when the
liability  is incurred as opposed to the date of an  entity's  commitment  to an
exit plan,  as defined in Issue No. 94-3.  The  provisions  of Statement 146 are
effective for exit or disposal  activities that are initiated after December 31,
2002, with early  application  encouraged.  The adoption of Statement 146 is not
expected  to have a material  impact on  Federated's  results of  operations  or
financial position.

(2) Intangible Assets and Goodwill

On January 1, 2002,  Federated  adopted the provisions of Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS 142).
SFAS 142 states that goodwill and other intangible assets with indefinite useful
lives  should no longer be  amortized  but rather  tested at least  annually for
impairment.  This  statement  requires  that  goodwill be tested for  impairment
annually  or when  indicators  of  potential  impairment  exist using a two-step
process that begins with an  estimation  of the fair value of a reporting  unit.
This first step is a screen for  potential  impairment,  and if  impairment  has
occurred,  the second step  measures the amount of  impairment.  Management  has
identified  and  determined the fair value of its reporting unit for purposes of
completing this first step of the transitional impairment test and has concluded
that no impairment has occurred.

Federated  continues  to  amortize  identifiable  intangible  assets,  including
investment  advisory  contracts  and  noncompete  agreements,  over their useful
lives,  which  range  from  one to 14  years.  Federated  reverses  the cost and
accumulated amortization balances for all fully amortized intangible assets. The
following  table shows the  balances  of  identifiable  intangible  assets as of
September 30, 2002 and December 31, 2001,  and the related cost and  accumulated
amortization:




                                                                            

                               September 30, 2002                     December 31, 2001
                                 Accumulated       Carrying                   Accumulated  Carrying
in thousands            Cost     Amortization      Value        Cost          Amortization   Value
Investment advisory
 contracts             $71,803   $(10,539)      $61,264         $78,920         $(13,511)  $65,409
Noncompete agreements  15,400     (4,449)       10,951          15,400          (2,139)    13,261
Other                  1,795      (619)         1,176           1,780           (424)      1,356

Total identifiable intangible assets

                       $88,998    $15,607)      $73,391         $96,100         $(16,074)    $80,026




Following is a schedule of expected  aggregate annual  amortization  expense for
intangible assets in each of the five years following December 31, 2002 assuming
no new acquisitions or impairments:

 in thousands
 2003                                                              $10,557
 2004                                                              $10,427
 2005                                                              $10,204
 2006                                                              $7,843
 2007                                                              $6,876

     The balance representing goodwill at September 30, 2002, was $164.9 million
as compared to $131.9 million at December 31, 2001.  The $33.0 million  increase
in  goodwill  reflects  the first  contingent  purchase  price  payment  for the
acquisition of  substantially  all of the business of Edgemont Asset  Management
Corporation  completed in the second quarter 2001. The first contingent purchase
price payment was made on May 8, 2002, and represented  approximately 20% of the
total amount of contingent  purchase  price  available to be paid over the first
six years  following  the  closing  date of the  acquisition,  provided  certain
revenue targets are met.

     Amortization expense for identifiable  intangible assets for the three- and
nine-month  periods ended September 30, 2002, was $2.7 million and $8.7 million,
respectively as compared to $4.1 million and $8.1 million,  respectively for the
same periods last year. The following table presents adjusted net income for the
three- and nine-month periods ended

     September 30, 2002 and 2001, reflecting prior year net income and basic and
diluted  earnings per share as though  Federated  had adopted the  provisions of
SFAS 142 on January 1, 2001:

                                      Three Months Ended       Nine Months Ended
                                         September 30,           September 30,
 in thousands, except per share data    2002    2001       2002      2001
 Net income                             $49,927 $43,191    $154,861  $127,709
 Add back:  Goodwill amortization,
   net of tax                              0      1,480         0       3,241
 Adjusted net income                 $49,927    $44,671    $154,861  $130,950

 Basic earnings per share            $0.45      $0.37      $1.37       $1.11
 Add back:  Goodwill amortization,
           net of tax                 0.00        0.02        0.00     0.03
 Adjusted basic earnings per share   $0.45      $0.39      $1.37       $1.14

 Diluted earnings per share          $0.43      $0.36      $1.32       $1.06
 Add back:  Goodwill amortization,
                net of tax            0.00       0.01        0.00       0.03
 Adjusted diluted earnings per share $0.43      $0.37      $1.32       $1.09


(3) Long-Term Debt - Recourse

     During the first quarter 2002, Federated repaid all outstanding liabilities
on the capital leases held as of December 31, 2001.  Federated  entered into two
new capital  leases for computer  hardware  during the first nine months of 2002
and recorded  recourse  debt which has a balance of $2.1 million as of September
30, 2002. These leases had an average interest rate of 4.40% for the nine months
ended September 30, 2002, and will expire in 2006.

(4)  B-Share Programs and Long-Term Debt - Nonrecourse

     Federated  sells its rights to future  cash flow  streams  associated  with
B-share deferred sales  commissions  [distribution and servicing fees as well as
contingent  deferred sales charges  (CDSCs)] to an independent  third party. For
accounting  purposes,  sales of these distribution fees and CDSCs from inception
of the first  program  in 1997  through  September  2000 were  accounted  for as
financings  as a result of  Federated's  retained  interest in any residual cash
flows in this program. Sales of servicing fees under the first program were also
accounted  for as  financings  due to the  same  retained  interest  as  well as
Federated's ongoing involvement in performing shareholder-servicing  activities.
Accordingly,  nonrecourse debt was recorded.  As a result,  "Other service fees,
net  -  affiliates"  in  the   Consolidated   Statements  of  Income   reflected
distribution and servicing fees earned on B shares sold through  September 2000.
In addition,  debt expense associated with the nonrecourse debt, amortization of
deferred sales commissions and other program-related  expenses were recorded for
sales through September 2000.

     Beginning in October 2000,  pursuant to the terms of a second sales program
with an independent third party, Federated accounted for the sales of its rights
to future  distribution fees and CDSCs as sales.  Sales of Federated's rights to
future  servicing  fees  continued  to be  accounted  for as  financings  due to
Federated's ongoing involvement in performing shareholder-servicing  activities.
Accordingly,  nonrecourse  debt has been  recorded.  Total  nonrecourse  debt at
September 30, 2002,  and December 31, 2001, was $57.2 million and $55.0 million,
respectively.  The nonrecourse debt carries interest rates ranging from 5.80% to
8.60% with weighted  average  interest rates of 7.46% and 7.79% at September 30,
2002 and December 31, 2001,  respectively.  The current  B-share  program allows
Federated to sell its rights to future cash flow streams associated with B-share
deferred sales commissions through December 2003.

     On December 31, 2001,  Federated sold its retained interest in the residual
cash flows under its first B-share  program to an independent  third party. As a
result,  Federated  recognized sale treatment  accounting for B-share 12b-1 fees
and CDSCs sold under this program. The recognition of sale treatment resulted in
the  reversal  of certain  asset and  liability  balances  associated  with this
program as of December 31, 2001.  Beginning January 1, 2002, Federated no longer
recognizes  revenue and expense items in its  Consolidated  Statements of Income
for these sold 12b-1 fees and CDSCs or the related asset and liability balances.
Federated  continues to account for the prior sale of rights to future servicing
fees as  financings.  "Other  service fees,  net-affiliates,"  "Amortization  of
deferred sales  commissions"  and "Debt expense - nonrecourse" for the three and
nine months ended September 30, 2001,  included $11.5 million and $37.5 million,
$6.3 million and $20.6 million and $4.6 million and $14.7 million, respectively,
recorded in connection with the financing  accounting  treatment of future 12b-1
fees and CDSCs sold under this B-share program.


(5) Common Stock

(a)  Cash Dividends and Stock Repurchases

     Federated's  Second Amended and Restated Credit Agreement (Credit Facility)
contains  restrictions  on cash  payments of dividends and purchases of treasury
stock.  The Credit  Facility  limits cash  payments for  dividends to 50% of net
income  earned  during the period from  January 1, 2000,  to and  including  the
payment date, less certain payments for dividends and stock  repurchases.  As of
September 30, 2002,  approximately $175.3 million was available to pay dividends
under this  restriction.  The Credit Facility limits cash payments for purchases
of treasury  stock to $125.0  million  plus the amount  allowable  for  dividend
payments less certain  additional stock  repurchases.  As of September 30, 2002,
approximately  $176.1  million  was  available  to  repurchase  stock under this
restriction.

     Federated  paid cash  dividends  of $5.3 million or $0.046 per share in the
first  quarter  of 2002 and $6.5  million or $0.057 per share in both the second
and third quarters of 2002 to holders of common shares. Additionally, on October
22, 2002, the board of directors of Federated  declared a dividend of $0.057 per
share to be paid on November 15, 2002 to  shareholders  of record as of November
7, 2002.

     Under Federated's share buyback programs,  Federated  purchased 1.5 million
shares of Class B common stock for $45.7 million during the first nine months of
2002.  As of September  30, 2002,  Federated can  repurchase  approximately  5.5
million  additional  shares  subject to the cash  payment  limit  imposed by its
Credit Facility.

(b)  Employee Stock Purchase Plan

     Federated  offers an Employee Stock Purchase Plan which allows employees to
purchase a maximum  of 750,000  shares of Class B common  stock.  Employees  may
contribute up to 10% of their salary to purchase  shares of Federated's  Class B
common stock on a quarterly basis at the market price. The shares under the plan
may be newly  issued  shares,  treasury  shares or shares  purchased on the open
market. As of September 30, 2002, a total of 54,318 shares had been purchased by
employees in this plan.


(6) Earnings Per Share

     The  following  table  sets  forth the  computation  of basic  and  diluted
earnings per share:

                                           Three Months Ended  Nine Months Ended
                                               September 30,       September 30,
in thousands, except per share data        2002     2001       2002      2001
Numerator
    Net income                            $49,927  $43,191    $154,861  $127,709

Denominator
 Basic weighted-average shares outstanding 112,161  115,297   112,649  115,281
 Dilutive potential shares from
   stock-based compensation                 5,016    4,876      5,041    5,033
 Diluted weighted-average shares
      outstanding                         117,177  120,173   117,690   120,314

Basic earnings per share                   $ 0.45   $0.37      $1.37     $1.11
Diluted earnings per share                 $ 0.43   $0.36      $1.32     $1.06

(7) Comprehensive Income

Comprehensive  income was $49.9  million and $42.8  million for the  three-month
periods ended September 30, 2002 and 2001, respectively,  and $155.1 million and
$125.9  million for the  nine-month  periods ended  September 30, 2002 and 2001,
respectively.




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. We have
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, 2001.

  General

     Federated  is a leading  provider of  investment  management  products  and
related  financial  services.  The  majority  of our  revenue  is  derived  from
advising,  distributing and servicing Federated mutual funds, separately managed
accounts and other related products, in both domestic and international markets.
We also derive revenue through servicing third-party mutual funds.

     Investment  advisory,  distribution  and the majority of our servicing fees
are  based on the net asset  value of  investment  portfolios  that we manage or
administer.  As such, these revenues are dependent upon factors including market
conditions and the ability to attract and maintain assets. Accordingly, revenues
will  fluctuate  with changes in the total value and  composition  of the assets
under management or administration.


Asset Highlights

 Managed Assets at Period End
                                                                    Percent
 in millions as of September 30, 2002              2001             Change
 By Asset Class
           Money market          $138,552          $123,203         12%
           Fixed-income            25,277            19,945         27%
           Equity                   17,097           20,497         (17%)
Total managed assets             $180,926          $163,645         11%
 By Product Type
      Mutual Funds:
           Money market          $126,292          $122,263         3%
           Fixed-income            21,310            16,410         30%
           Equity                   15,506           18,840         (18%)
Total mutual fund assets         $163,108          $157,513         4%

      Separate Accounts:
           Money market          $12,260           $940             1,204%
           Fixed-income            3,967            3,535           12%
           Equity                  1,591            1,657           (4%)
Total separate account assets    $17,818           $6,132           191%
Total managed assets             $180,926          $163,645         11%



 Average Managed Assets
                             Three Months Ended         Nine Months Ended
                              September 30,  Percent  September 30,     Percent
 in millions               2002       2001   Change   2002     2001    Change
 By Asset Class
           Money market    $147,174  $120,811 22%     $144,074 $113,765  27%
           Fixed-income    24,333    19,536   25%     23,008   18,966    21%
           Equity           18,515   22,705   (18%)   21,028   22,729    (7%)
Total average managed
 assets                    $190,022 $163,052   17%   $188,110 $155,460     21%
 By Product Type
      Mutual Funds:
           Money market    $134,747  $119,892 12%     $135,367 $112,969  20%
           Fixed-income    20,461    15,959   28%     19,196   15,373    25%
           Equity           16,838   20,841   (19%)   19,210   20,895    (8%)
Total average mutual
        fund assets        $172,046  $156,692 10%     $173,773 $149,237    16%

 Separate Accounts:
           Money market    $12,427   $919     1,252%  $8,707   $796      994%
           Fixed-income    3,872     3,577    8%      3,812    3,593     6%
           Equity           1,677    1,864    (10%)   1,818    1,834     (1%)
Total average separate
  account assets          $17,976   $6,360     183%  14,337    $6,223    130%
Total average managed
   assets                 $190,022  $163,052   17%   $188,110  $155,460    21%


Period-End and Average Administered Assets

                             Three Months Ended          Nine Months Ended
                              September 30,   Percent      September 30, Percent
 in millions               2002      2001     Change  2002      2001     Change
 Period-end assets         $31,485  $40,070   (21%)   $31,485  $40,070   (21%)
 Average assets            $32,319  $41,400   (22%)   $38,412  $41,892    (8%)


Components of Changes in Equity Mututal Fund Managed Assets

                                         Three Months Ended    Nine Months Ended
                                            September 30,    September 30,
in millions                              2002    2001     2002      2001
Equity Funds
      Beginning assets                   $19,034 $22,461  $20,760   $20,641
         Sales                           1,380   1,033    4,470     4,038
         Redemptions                     (1,604) (1,387)  (4,299)   (4,571)
               Net (redemptions) sales   (224)    (354)     171      (533)
         Net exchanges                   (177)   (117)    (207)     (154)
         Acquisition related             41      -        41        3,235
         Other*                          (3,168) (3,150)  (5,259)   (4,349)
      Ending assets                      $15,506 $18,840  $15,506   $18,840

     * Includes  changes in the market  value of  securities  held by the funds,
reinvested dividends and distributions and net investment income.

Components of Changes in Fixed-Income Mututal Fund Managed Assets

                                        Three Months Ended     Nine Months Ended
                                            September 30,        September 30,
in millions                              2002    2001     2002      2001
Fixed-Income Funds
      Beginning assets                   $19,472 $15,179  $17,378   $14,268
         Sales                           4,325   2,261    10,629    5,851
         Redemptions                     (2,788) (1,230)  (7,310)   (4,018)
                   Net sales             1,537   1,031    3,319     1,833
         Net exchanges                   68      66       202       24
         Other*                          233     134      411       285
      Ending assets                      $21,310 $16,410  $21,310   $16,410

     * Includes  changes in the market  value of  securities  held by the funds,
reinvested dividends and distributions and net investment income.

     The  September  30, 2002,  period-end  managed  assets  increased  11% over
period-end  managed assets at September 30, 2001. Average managed assets for the
three months ended  September 30, 2002 grew 17% over average  managed assets for
the three months ended September 30, 2001.  These increases in total and average
assets primarily  reflect strong money market and fixed-income fund sales in the
fourth  quarter 2001 and strong  fixed-income  sales in the first nine months of
2002 as well as the  additions  of the  Federated  Kaufmann  Fund in the  second
quarter 2001 and TexPool,  a local  government  investment pool in Texas, in the
second  quarter 2002. As interest rates have  decreased,  yields on money market
funds have decreased  leading to increased use of short-term bond funds.  Equity
market fluctuations have also contributed to higher use of bond and money market
products.  Federated benefited from the quality and performance of its products,
the strength of its relationships  with  intermediaries  and institutions and an
increase  in  cash-management  relationships  with  corporations,  universities,
government entities and broker/dealer organizations.

     Changes in Federated's average asset mix period over period,  which reflect
shifts in investor  demands,  have a direct impact on Federated's  total revenue
per dollar of assets managed as money market and fixed-income products generally
carry lower  management  fees per  invested  dollar than  equity  products.  The
following  table shows the percent of total revenue derived from each asset type
for the three and nine months ended September 30:

 Relative Contribution to Total Revenue
                                    Three Months Ended    Nine Months Ended
                                       September 30,          September 30,
                              2002        2001         2002          2001
Money market assets           48%         41%          47%           40%
Equity assets                 27%         35%          30%           36%
Fixed-income assets           19%         17%          17%           18%
Other activities              6%          7%           6%            6%

     The increase in revenue derived from money market and  fixed-income  assets
and  decrease  in  revenue  from  equity  assets for the third  quarter  2002 as
compared  to  2001,   reflect  not  only  strong  growth  in  money  market  and
fixed-income  assets  experienced  during the fourth  quarter 2001 and the first
nine months of 2002, but also a change to  sale-treatment  accounting  beginning
January  1, 2002 for the 12b-1  cash  flows  associated  with  Class B shares of
Federated mutual funds (see "B-Share Programs" for a detailed explanation).

Results of Operations

     The table below  presents the  highlights of our  operations for the three-
and  nine-month  periods  ended  September  30,  2002 and  2001.  The  operating
highlights  for the third  quarter  2001 and first nine months of 2001 have been
adjusted as footnoted to reflect the change in Federated's  B-share program (see
"B-Share Programs" for a detailed  explanation) and for the change in accounting
for goodwill (see footnote (2) to the Consolidated  Financial  Statements) as if
these changes were effective at the beginning of 2001.



                                                      


                           Three Months                   Nine Months
                               Ended                      Ended
                           September 30,       Percent   September 30,      Percent
                         ----------------------       ---------------------
 dollars in millions,       2002  2001  Change Change   2002   2001 Change  Change
except per share data
 Net income1               $49.9  $44.3 $5.6    13%  $154.9     $129.7   $25.2    19%

 Earnings per share1
 Basic                     $0.45  $0.38 $0.07    18%   $1.37    $1.13   $0.24    21%
 Diluted                   $0.43  $0.37 $0.06    16%   $1.32    $1.08   $0.24    22%

 Revenue
 Revenue from managed
   assets2                 $163.1  $160.3 $2.8    2%    $503.8   $455.3   $48.5    11%
 Service-related revenue from
   sources other than managed
   assets
                           10.1     12.9    (2.8)  (22%)  33.4    38.1   (4.7)    (12%)
 Total Revenue             $173.2   $173.2  $0.0    0%   $537.2   $493.4  $43.8    9%

 Operating expenses
 Compensation and related  $40.5  $45.6    $(5.1)  (11%) $136.4  $129.1  $7.3      6%
 Advertising and promotional
                           19.2    16.6    2.6      16%   55.6   50.1     5.5     11%
 Amortization of deferred
  sales commissions2        3.5    4.1     (0.6)   (15%)   11.0    13.9  (2.9)    (21%)
 Amortization of
        intangible assets3 2.7    4.1     (1.4)  (34%)     8.7    8.1      0.6      7%
 All other                 23.6   25.3     (1.7)  (7%)    72.1    77.1    (5.0)    (6%)
 Total Operating Expenses  $89.5  $95.7$   (6.2)  (6%)   $283.8  $278.3   $5.5      2%

 Operating margin          48.3%  44.8%     3.5%   8%     47.2%    43.6%   3.6%     8%

 Nonoperating Expenses,
    Net2                  $3.1     $6.1    (3.0)  (49%)    $4.6     $5.5   (0.9)   (16%)




1    Net income and  earnings  per share  reflect  the  after-tax  effect of the
     adjustments described in footnotes 2 and 3 below.

2    "Other  service  fees,  net-affiliates,"  "Amortization  of deferred  sales
     commissions" and "Debt expense - nonrecourse" for the three and nine months
     ended  September 30, 2001,  have been adjusted to exclude $11.5 million and
     $37.5 million,  $6.3 million and $20.6 million,  and $4.6 million and $14.7
     million, respectively, recorded in connection with the financing accounting
     treatment of future 12b-1 fees and CDSCs sold under the B-share program.

3    "Amortization  of  intangible  assets" for the third quarter and first nine
     months of 2001 have been  adjusted to exclude $2.0 million and $4.1 million
     in goodwill amortization expense, respectively.

Net Income. Net income for the three- and nine-month periods ended September 30,
2002  increased 13% and 19%,  respectively,  compared to adjusted net income for
the same periods last year. The increases  primarily reflect improved  operating
margins.  Diluted earnings per share for the three- and nine-month periods ended
September  30, 2002  increased 16% and 22%,  respectively,  compared to adjusted
diluted  earnings per share for the same  periods of 2001 due to  increased  net
income and reduced  weighted-average  diluted shares outstanding  resulting from
stock repurchases during 2001 and the first nine months of 2002.

Revenue.  Total  revenue for the  three-month  period ended  September  30, 2002
remained  unchanged as compared to adjusted total revenue for the same period of
2001. Federated's managed assets experienced a change in composition period over
period.  Equity  assets  declined  18% on average  largely as a result of market
depreciation.  Money market and fixed income assets each increased  quarter over
quarter as a result of strong sales  growth.  Revenue  from managed  assets grew
period  over  period,  but to a lesser  degree  than the  overall  17% growth in
average  assets due to a higher  composition  of money  market and  fixed-income
products,  which earn,  on average,  lower fees per invested  dollar than equity
products.  Total  revenue for the third  quarter 2002 was also impacted by a 22%
reduction in average administered assets.

Total revenue for the nine-month period ended September 30, 2002 increased $43.8
million as compared to adjusted total revenue for the prior year period. Revenue
from managed  assets in the first nine months of 2002  increased  over  adjusted
revenue from managed assets for the prior year period as  significant  asset and
sales  growth  in money  market  and  fixed-income  products  more  than  offset
decreases in equity assets resulting from market declines.  Revenue from managed
assets grew period over  period,  but to a lesser  degree than the 21% growth in
average  assets  due once  again to a higher  composition  of money  market  and
fixed-income products.

Service-related  revenue from sources other than managed  assets  decreased $2.8
million and $4.7 million for the three- and nine-month  periods ended  September
30, 2002, respectively, as compared to the same periods last year. The decreases
were due largely to the  internalization  of  administrative  services and other
changes  in  services  provided  to  certain  bank  customers.   These  revenues
represented 1.5% of Federated's total revenue in 2001.

Operating  Expenses.  Total operating  expenses for the three-month period ended
September  30,  2002,  decreased  $6.2  million or 6% as  compared  to  adjusted
operating  expenses  for the same  period  last year.  Compensation  and related
expense for third  quarter  2002  decreased  as compared to the same period last
year as a result of  decreased  variable-based  compensation.  The  increase  in
advertising and promotional  expense reflects increases in marketing  allowances
due  primarily to  significant  asset and sales  growth,  partially  offset by a
decrease in costs associated with Federated's advertising campaign. Amortization
of deferred  sales  commissions  decreased for third quarter 2002 as compared to
adjusted  amortization  of deferred sales  commissions  for the same period last
year primarily as a result of a decrease in B-share  assets and associated  cash
flows.  Amortization  of intangible  assets  decreased for third quarter 2002 as
compared to adjusted  amortization of intangible  assets for 2001 as a result of
the full amortization of certain assets during 2001 and 2002. All other expenses
decreased in the third quarter 2002 as compared to 2001 primarily as a result of
reductions to professional  service fees due to the change in services  provided
to certain bank customers.

Total  operating  expenses for the nine-month  period ended  September 30, 2002,
increased $5.5 million or 2% as compared to adjusted  operating expenses for the
same  period  last year.  Compensation  and  related  expense for the first nine
months of 2002 increased as compared to the same period last year as a result of
increased  variable-based  compensation  due to higher  sales and assets and the
acquisition of  substantially  all of the business of Edgemont Asset  Management
Corporation in the second quarter 2001 (the Kaufmann Acquisition).  The increase
in  advertising  and  promotional   expense  reflects   increases  in  marketing
allowances due primarily to significant asset and sales growth, partially offset
by a  decrease  in  costs  associated  with  Federated's  advertising  campaign.
Amortization of deferred sales  commissions  decreased for the nine-month period
ended September 30, 2002 as compared to adjusted  amortization of deferred sales
commissions for the same period last year primarily as a result of a decrease in
B-share  assets and associated  cash flows.  Amortization  of intangible  assets
increased for the first nine months of 2002 as compared to adjusted amortization
expense for 2001 as a result of the  amortization of intangible  assets acquired
in connection  with the Kaufmann  Acquisition in 2001,  partially  offset by the
full  amortization  of certain  assets during 2001 and 2002.  All other expenses
decreased  for 2002 as compared to 2001  primarily as a result of  reductions to
professional service fees due to the change in services provided to certain bank
customers and a general reduction in consulting and legal fees.

Nonoperating  Income  (Expenses).  Net nonoperating  expenses for the three- and
nine-months  ended September 30, 2002,  decreased $3.0 million and $0.9 million,
respectively,  compared  to  adjusted  net  nonoperating  expenses  for the same
periods last year.  Interest and dividend income  decreased in 2002 due to lower
investment  yields  and,  for  the  year-to-date  comparison,  lower  investment
balances  as a result of cash used for the  Kaufmann  Acquisition  in the second
quarter  2001.  Recourse  debt  expense  decreased  in 2002 as a result of lower
levels of  outstanding  debt due to the early  retirement of  Federated's  7.96%
Senior Secured Notes in the fourth quarter of 2001.  "Other,  net" for the third
quarter and first nine months of 2002 included a $1.8 million non-cash charge to
write-down the carrying value of Federated's mortgage-backed collateralized bond
obligation (CBO)  investment to $0.7 million.  The fair value of this investment
decreased  as a result of  significant  declines in the value of the  underlying
securities held by the CBO. "Other,  net" for the three- and nine-month  periods
ended September 30, 2001,  included  non-cash  charges equal to $5.0 million and
$5.2 million,  respectively,  to write-down  the carrying  values of Federated's
investments  in high-yield CBO products and certain  Federated-sponsored  mutual
funds also as a result of depreciated fair values.

Income Taxes.  The income tax provision  for the three- and  nine-month  periods
ended  September  30, 2002 were $27.7  million and $85.8  million as compared to
$24.1 million and $71.5 million, respectively, for the same periods in 2001. The
effective tax rate was 35.7% and 35.8% for the third  quarters of 2002 and 2001,
respectively,  and 35.6% and 35.9% for the first  nine  months of 2002 and 2001,
respectively.

B-Share Programs.  Federated funds upfront commissions paid to broker/dealers on
the sale of Class B shares of Federated mutual funds (B shares) through the sale
of the rights to future cash flow streams associated with B-share commissions to
an independent third party.  Rights to future 12b-1 fees and contingent deferred
sales  charges  (CDSCs)  sold  through  September  2000  were  accounted  for as
financings for financial reporting purposes as a result of Federated's  retained
interest  in the  residual  cash  flows  under  this  program.  Rights to future
shareholder  service fees were also  accounted for as financings due to the same
retained  interest as well as  Federated's  ongoing  involvement  in  performing
shareholder-servicing  activities.  Accordingly,  sales  commissions  paid  were
capitalized and nonrecourse debt was recorded.

On December 31, 2001,  Federated sold its retained interest in the residual cash
flows under this B-share  program to an  independent  third party.  As a result,
Federated  recognized sale treatment accounting for B-share 12b-1 fees and CDSCs
sold under this  program.  The  recognition  of sale  treatment  resulted in the
reversal of certain asset and liability balances associated with this program as
of December 31, 2001.  Beginning January 1, 2002, Federated no longer recognizes
revenue and expense  items in its  Consolidated  Statements  of Income for these
sold 12b-1 fees and CDSCs or the related asset and liability balances. Federated
continues to account for the prior sale of rights to future shareholder  service
fees as financings as a result of Federated's  ongoing involvement in performing
shareholder-servicing activities.

Rights  to  future  B-share-related  12b-1  fees and CDSCs  sold  subsequent  to
September  2000 have been and continue to be accounted for as sales and gains on
these  sales  are  recorded  in  "Other  service  fees,  net-affiliates"  in the
Consolidated  Statements  of  Income.  The sale of rights to future  shareholder
service fees continues to be accounted for as financings.


Liquidity and Capital Resources

At September 30, 2002,  liquid assets,  consisting of cash and cash equivalents,
the current  portion of marketable  securities and  receivables,  totaled $152.9
million as compared to $110.7 million at December 31, 2001.

Operating  Activities.  Net cash provided by operating activities totaled $153.7
million for the  nine-month  period ended  September  30,  2002,  as compared to
$221.6  million  for  the  same  period  of  2001.   This  decrease  is  largely
attributable to increased  income taxes paid in the first nine months of 2002 as
compared to 2001 due to a one-time  extension  in the third  quarter 2001 of the
federal government's deadline for paying quarterly tax estimates, the effects of
certain cash payments made in the first nine months of 2002 and the  elimination
of 12b-1 fees and CDSCs received on Class B shares of  Federated's  mutual funds
as a result of the fourth quarter 2001 sale of Federated's  retained interest in
residual cash flows  associated with the B shares (see "B-Share  Programs" for a
detailed  explanation).  Cash  payments  made in the first  nine  months of 2002
included taxes paid on the sale of Federated's retained interest in the residual
cash flows and the payment of normal operating expenses accrued as of the end of
2001.

Investing  Activities.  During the first nine months of 2002,  Federated  made a
$33.1 million contingent payment related to the Kaufmann Acquisition,  paid $5.0
million  to  acquire  property  and  equipment  and to  develop  internally-used
software  and  received  $4.5 million  from  redemptions  of  available-for-sale
securities.

Financing Activities. During the nine months ended September 30, 2002, Federated
used $70.2 million for financing  activities.  Of this amount, $45.7 million was
used to repurchase 1.5 million  shares of Class B common stock.  As of September
30, 2002,  Federated can repurchase an additional 5.5 million shares through its
authorized   programs.   Repurchases   under  these   programs  are  subject  to
restrictions  under  Federated's  Second Amended and Restated Credit  Agreement,
which limit cash payments for  additional  stock  repurchases  to $160.4 million
after considering earnings through September 30, 2002, certain stock repurchases
through October 31, 2002, and the planned  dividend payment on November 15, 2002
(see Note (5) to the Consolidated Financial Statements).

Federated  paid  dividends  of $5.3  million  or  $0.046  per share in the first
quarter  2002 and $6.5  million or $0.057 per share in both the second and third
quarters of 2002. In October  2002,  Federated's  board of directors  declared a
dividend  of  $0.057  per share  that  will be paid on  November  15,  2002,  to
shareholders  of record as of  November  7,  2002.  After  considering  earnings
through September 30, 2002, certain stock repurchases  through October 31, 2002,
and the planned dividend payment on November 15, 2002, Federated,  given current
debt  covenants,  has the  ability  to pay  dividends  of  approximately  $164.2
million.

Payments on  debt-nonrecourse  were  significantly  lower  during the first nine
months of 2002 than in the first  nine  months of 2001 as a result of the fourth
quarter  2001 sale of  Federated's  retained  interest  in  residual  cash flows
associated   with  the  B  shares  (see   "B-Share   Programs"  for  a  detailed
explanation).  Payments on debt-recourse were lower during the first nine months
of 2002 than amounts for the same period in 2001 due to the early  retirement of
Federated's 7.96% Senior Secured Notes in the fourth quarter 2001.

Future Cash  Requirements.  Management  expects that the principal  uses of cash
will be to advance sales  commissions,  fund  marketing  allowances,  repurchase
company stock, fund strategic business acquisitions,  including potential future
contingent  payments  relating  to the  Kaufmann  Acquisition,  pay  shareholder
dividends, pay incentive compensation,  fund property and equipment acquisitions
and initiatives to develop internally-used software, fund minimum lease payments
and  seed new  products.  Federated  has  experienced  increases  in the cost of
insurance and management  expects these  increases,  including the assumption of
additional  risk, to be  significant  going  forward.  Management  believes that
Federated's  existing liquid assets,  together with the expected continuing cash
flow from operations,  its borrowing capacity under the current credit facility,
the B-share  program and its ability to issue stock will be  sufficient  to meet
its present and reasonably foreseeable cash needs.


Alternative Products

Federated acts as the investment manager for two high-yield  collateralized bond
obligation  (CBO)  products and a  mortgage-backed  CBO product  pursuant to the
terms of an investment  management agreement between Federated and each CBO. The
CBO  products are  structured  using  special-purpose  entities.  The  financial
condition  and  results  of  operations  of  these  CBOs  are  not  included  in
Federated's  Consolidated  Financial  Statements  as of and for the  three-  and
nine-month  periods ended  September 30, 2002, or for any prior period.  In each
case, there exists a majority  owner(s) that is an independent  third party from
Federated  owning at least three  percent  equity in the CBO.  Federated has not
guaranteed nor has any recourse  related to any of the notes issued by the CBOs.
As of September 30, 2002,  assets  managed by Federated in the CBOs totaled $1.0
billion.

The Financial  Accounting  Standards Board is currently  deliberating  new rules
regarding the consolidation of certain special purpose entities.  As of the date
of this report,  it is unclear  what effect,  if any, the new rules will have on
Federated's  accounting for the CBOs. Management will explore all of its options
relating to its relationship  with the CBOs in the event that application of the
final rules,  which are expected to be issued in the fourth quarter 2002,  would
require the  consolidation  of the CBOs in  Federated's  Consolidated  Financial
Statements.


Critical Accounting Policies

Federated's  Consolidated  Financial Statements have been prepared in accordance
with accounting principles generally accepted in the United States. 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.  Of the  significant  accounting  policies
described in Federated's  Annual Report on Form 10-K for the year ended December
31, 2001,  management  believes that its policy  regarding  the  identification,
valuation and impairment of intangible assets involves a high degree of judgment
and  complexity  due  to  the  significant   use  of  assumptions.   Significant
differences between actual results and the assumptions used in the valuation and
impairment analyses could have a significant impact on the carrying value of the
assets.  (See Note (1) to the  Consolidated  Financial  Statements  included  in
Federated's Annual Report on Form 10-K for the year ended December 31, 2001, and
Note (2) to the Consolidated Financial Statements included herein).


Part I, Item 3. Quantitative and Qualitative Disclosures About Market Risk
- --------------------------------------------------------------------------------
(unaudited)

In the normal course of our  business,  Federated is exposed to the risk of loss
due to fluctuations in the securities market and general economy.  Management is
responsible  for  identifying,  assessing  and managing  market and other risks.
Federated's  investments  are primarily money market funds and mutual funds with
investments  which have a duration of two years or less.  Federated also invests
in mutual funds sponsored by Federated  (performance  seeds) in order to provide
investable  cash to the  fund  allowing  the  fund to  establish  a  performance
history.  Federated  may use  derivative  financial  instruments  to hedge these
investments.  At September  30, 2002,  Federated  was exposed to price risk with
regard to its $0.1 million of performance seed investments in  fluctuating-value
mutual funds. Price risk is the risk that the fair value of the investments will
decline  and  ultimately  result  in the  recognition  of a loss for  Federated.
Federated did not hold any derivative investments to hedge its performance seeds
at September 30, 2002.

At September 30, 2002,  Federated  held an investment in a restricted  corporate
bond with a carrying value of $0.6 million. This investment exposes Federated to
interest rate and credit risk. In order to limit its exposure  relative to these
risks,  Federated completed a short sale of a similar  unrestricted bond with an
independent  third party during the third quarter 2002.  This hedge was recorded
in  "Other  current  liabilities"  on the  Consolidated  Balance  Sheets  with a
carrying value of $0.7 million as of September 30, 2002.

During  the third  quarter  2002,  Federated  recorded  a $1.8  million  pre-tax
impairment charge related to an  other-than-temporary  decline in the fair value
of its  investment in its  mortgage-backed  CBO product.  Federated's  remaining
investment in this product, which totaled $0.7 million at September 30, 2002, is
subject to interest  rate risk and may be  adversely  affected by  increases  in
interest rates.

It is also important to note that a significant  portion of Federated's  revenue
is based on the market value of managed and administered assets. Declines in the
market  values of assets as a result of  changes  in market or other  conditions
will therefore negatively impact revenue and net income.


Part I, Item 4. Controls and Procedures
- --------------------------------------------------------------------------------
(unaudited)

Within  90 days  prior  to the date of this  report,  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 the  design  and  operation  of  Federated's
disclosure  controls and procedures.  Based upon that evaluation,  the President
and Chief  Executive  Officer and the Chief  Financial  Officer  concluded  that
Federated's  disclosure  controls and  procedures are effective in ensuring that
information  required to be disclosed by the  registrant in the reports filed or
submitted  under the  Securities  Exchange Act of 1934 is  recorded,  processed,
summarized and reported within the time periods  specified in the Securities and
Exchange Commission's rules and forms. During the period covered by this report,
there have not been any  significant  changes in  internal  controls or in other
factors that could significantly affect internal controls subsequent to the date
of the evaluation,  including any corrective  actions with regard to significant
deficiencies and material weaknesses.

Part II, Item 6.  Exhibits and Reports on Form 8-K
- --------------------------------------------------------------------------------


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

            None

(b)  Reports on Form 8-K:  No  reports on Form 8-K were filed  during the period
     subject to this Quarterly Report on Form 10-Q.

                                        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      November 8, 2002              By:   /s/  J. Christopher Donahue
                                                J. Christopher Donahue
                                                President and
                                                Chief Executive Officer


   Date         November 8, 2002              By:   /s/  Thomas R. Donahue
                                                Thomas R. Donahue
                                                Chief Financial Officer





                                       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  quarterly  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 quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  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
     quarterly 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-14 and 15d-14) for the registrant and have:

a)   designed such  disclosure  controls and  procedures 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  quarterly  report is being
     prepared;

b)   evaluated the  effectiveness  of the registrant's  disclosure  controls and
     procedures  as of a date  within 90 days prior to the  filing  date of this
     quarterly report (the "Evaluation Date"); and

c)   presented in this quarterly report our conclusions  about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  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  in the  design  or  operation  of  internal
     controls which could adversely affect the  registrant's  ability to record,
     process,  summarize and report  financial data and have  identified for the
     registrant's auditors any material weaknesses in internal controls; and

b)   any fraud,  whether or not  material,  that  involves  management  or other
     employees  who  have  a  significant  role  in  the  registrant's  internal
     controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date        November 8, 2002              By:   /s/  J. Christopher Donahue
                                          J. Christopher Donahue
                                          President and
                                          Chief Executive Officer

                                       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  quarterly  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 quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  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
     quarterly 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-14 and 15d-14) for the registrant and have:

a)   designed such  disclosure  controls and  procedures 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  quarterly  report is being
     prepared;

b)   evaluated the  effectiveness  of the registrant's  disclosure  controls and
     procedures  as of a date  within 90 days prior to the  filing  date of this
     quarterly report (the "Evaluation Date"); and

c)   presented in this quarterly report our conclusions  about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  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  in the  design  or  operation  of  internal
     controls which could adversely affect the  registrant's  ability to record,
     process,  summarize and report  financial data and have  identified for the
     registrant's auditors any material weaknesses in internal controls; and

b)   any fraud,  whether or not  material,  that  involves  management  or other
     employees  who  have  a  significant  role  in  the  registrant's  internal
     controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date        November 8, 2002              By:   /s/  Thomas R. Donahue
                                          Thomas R. Donahue
                                          Chief Financial Officer

                                     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  September 30, 2002 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 operation of the Company.



    Date            November 8, 2002        By:   /s/  J. Christopher Donahue
                                                J. Christopher Donahue
                                                President and
                                                Chief Executive Officer


   Date            November 8, 2002         By:   /s/  Thomas R. Donahue
                                                Thomas R. Donahue
                                                Chief Financial Officer