Federated Investors, Inc. Launches Federated Institutional High Yield Bond Fund.

Business Editors

PITTSBURGH--(BUSINESS WIRE)--Nov. 4, 2002

Federated Investors, Inc. (NYSE:FII) one of the nation's largest investment management firms announced today the launch of Federated Institutional High Yield Bond Fund (FIHBX). The announcement was made by William D. Dawson III, CIO of Global Fixed Income at Federated.

Federated Institutional High Yield Bond Fund will seek to provide high current income by investing primarily in lower-rated corporate fixed-income securities. In an effort to provide a more stable shareholder base, a two percent redemption fee will be paid to the fund for all shares redeemed or exchanged within 90 days of purchase. The fund will offer a 50 basis point target expense ratio after expense waivers.(1)

"We believe this product leverages the expertise of one of the most knowledgeable high-yield teams in the industry and demonstrates Federated's commitment to providing investment products that effectively meet the high standards of the institutional investment community," said Dawson.

The portfolio management team for the fund will be led by Mark E. Durbiano, senior portfolio manager and Nathan H. Kehm, portfolio manager. Durbiano, a 20 year veteran in high-yield portfolio management, is one of the industry's most experienced professionals. Kehm has 14 years of investment experience and joined Federated in 1997. Federated currently manages over $4 billion in high-yield securities.

"The improving outlook for the economy coupled with the features of this new fund should give confidence to the institutional investment community to diversify their portfolios with high yield," said Durbiano. "At this point in the economic cycle, with historically high yield spreads and the potential for a material decline in default rates during the next 12-18 months, we see considerable return opportunity in the high-yield sector for long-term investors."

The primary benchmark for Federated Institutional High Yield Bond Fund will be the Lehman Brothers High Yield Bond Index, an unmanaged index that includes all fixed-income securities having a maximum quality rating of Ba1, a minimum amount outstanding of $150 million and at least one year to maturity. A minimum investment of $1 million is required with subsequent investments of $100.

Federated Investors, Inc. is one of the largest investment managers in the United States, managing $180.9 billion in assets as of September 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 three percent of fixed-income fund managers and the top five percent of equity fund managers.(2) For more information visit www.federatedinvestors.com.

(1) The Fund's total annual fund operating expenses before waivers is estimated to be 0.70%.

(2) Strategic Insight, August 31, 2002.

Securities rated below investment grade generally entail greater market, credit and liquidity risks than investment grade securities.

For more complete information on Federated funds call [phone] for prospectuses, which investors should read carefully before investing. Federated Securities Corp., Distributor.

-- Not FDIC Insured -- No Bank Guarantee -- May Lose Value