Consolidation

Federated is involved with various entities in the normal course of business that may be deemed to be voting rights entities (VREs) or VIEs. 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 or not to consolidate the entity. The disclosures below represent the results of such evaluations pertaining to 2015 and 2014.

(a) Consolidated Voting Rights Entities

Federated has a majority interest (50.5%) and acts as the general partner in Passport Research Ltd., 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. Noncontrolling interests in this subsidiary are included in Nonredeemable noncontrolling interest in subsidiary on the Consolidated Balance Sheets.

(b) Consolidated Variable Interest Entities

From time to time, Federated invests in investment companies that meet the definition of a VIE for general corporate investment purposes or, in the case of newly launched products, in order to provide investable cash to establish a performance history. Most of Federated's sponsored investment companies meet the definition of a VIE primarily due to their typical series fund structure in which the shareholders of each participating portfolio underlying the series fund generally lack the ability as an individual group to make decisions through voting rights regarding the board of directors/trustees of the fund. Federated's investment in investment companies represents its maximum exposure to loss. Federated's conclusion to consolidate an investment company may vary from period to period, most commonly as a result of changes in its percentage interest in the entity resulting from changes in the number of shares held by either Federated or third parties. 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.

As of December 31, 2015 and 2014, Federated was deemed to be the primary beneficiary of and therefore consolidated several investment companies as a result of its majority ownership interest in the investment companies. The following table presents the balances related to the consolidated investment companies that were included on the Consolidated Balance Sheets as well as Federated's net interest in the investment companies at December 31:



in millions	2015			2014
Cash and cash equivalents		$	3.1		$	1.9
Investments—consolidated investment companies		25.4			31.9
Receivables		0.2			0.3
Less: Liabilities		3.0			2.7
Less: Redeemable noncontrolling interest in subsidiaries		8.7			3.7
Federated's net interest in consolidated investment companies		$	17.0		$	27.7

Federated's net interest in the consolidated investment companies of $17.0 million and $27.7 million at December 31, 2015 and 2014, respectively, represents the value of Federated's economic ownership interest in these sponsored investment companies. The assets of the consolidated investment companies are restricted for use by the respective investment company. The liabilities of the consolidated investment companies primarily represent investments sold short for one fund, and otherwise represent operating liabilities of the entities. The liabilities are primarily classified as Other current liabilities on Federated's Consolidated Balance Sheets.

During the third quarter of 2015, Federated deconsolidated an investment company. The decision to deconsolidate was based on a determination that Federated was no longer the primary beneficiary of the investment company as a result of new subscriptions in fund shares by unrelated third parties. Accordingly, Federated deconsolidated $13.8 million from Investments—consolidated investment companies, $0.2 million from Cash and cash equivalents and $7.1 million from Redeemable noncontrolling interest in subsidiaries on the Consolidated Balance Sheets as of the date of deconsolidation. There was no impact to the Consolidated Statements of Income as a result of this deconsolidation. There were no other material deconsolidations or any material new consolidations during 2015.

Neither creditors nor equity investors in the investment companies have any recourse to Federated's general credit. In the ordinary course of business, from time to time, Federated may choose to waive certain fees or assume operating expenses of sponsored investment companies for competitive, regulatory or contractual reasons (see Note (1)(o) for information regarding fee waivers). Federated has not provided financial support to any of these entities outside the ordinary course of business.

Federated's involvement with certain investment companies 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 the majority of the entity's expected losses or receive the majority of the entity's expected residual returns. Therefore, Federated is not the primary beneficiary of these VIEs and has not consolidated these entities.

At December 31, 2015 and 2014, Federated's investment and maximum risk of loss related to unconsolidated VIEs were entirely related to investment companies and totaled $301.5 million and $252.1 million, respectively. Of these amounts, $159.7 million and $107.3 million, respectively, represented investments in money market funds included in Cash and cash equivalents. The remaining $141.8 million and $144.8 million are primarily recorded in Investments—affiliates on the Consolidated Balance Sheets as of December 31, 2015 and 2014, respectively. AUM for these unconsolidated investment companies totaled $268.0 billion and $273.5 billion at December 31, 2015 and 2014, respectively. Receivables from sponsored investment companies for advisory and other services totaled $16.9 million and $12.4 million at December 31, 2015 and 2014, respectively.

In the ordinary course of business, from time to time, Federated may choose to waive certain fees or assume operating expenses of these sponsored investment companies for competitive, regulatory or contractual reasons (see Note (1)(o) for information regarding fee waivers). Like other sponsors of investment companies, Federated in the ordinary course of business made, and in the future from time to time may make, capital contributions to certain investment companies in connection with the reorganization of such investment companies into certain affiliated investment companies. In these instances, such capital contributions typically are intended to increase the market-based net asset value per share of the investment company's portfolio that is being reorganized to equal the market-based net asset value per share of the acquiring fund. 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. Federated has not provided financial support to any of these entities outside the ordinary course of business.