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Federated Investors, Inc. Announces Strategic Acquisition Involving the Prudent Bear Funds and the Hire of Key Investment Professionals

2008-07-15 07:00:00

    PITTSBURGH, July 15 /EMWNews-FirstCall/ -- Federated Investors, Inc.

(NYSE: FII), one of the nation's largest investment managers, today

announced that it reached a definitive agreement to acquire certain assets

of David W. Tice & Associates LLC that relate to the management of the $1.2

billion Prudent Bear Fund and the $507 million Prudent Global Income Fund.

The purchase price of the transaction includes a $43.0 million initial

payment and future contingent payments of up to $99.5 million over the next

four years. The announcement was made by J. Christopher Donahue, president

and chief executive officer of Federated and David W. Tice, president and

founder of David W. Tice & Associates.

    Since its inception in 1995, the Prudent Bear Fund has used specialized

investment strategies to achieve performance at the top of its bear-market

fund peer group. More specifically, the fund targets positive capital

appreciation through a combination of short sales of equity securities,

short sales and puts of equity market indices and long positions in stocks

of precious-metals companies, overlaid with a risk control process to limit

losses in bull markets.

    The Prudent Global Income Fund seeks current income and capital

appreciation for its investors. The Prudent Global Income Fund is designed

to help investors benefit from a weakening U.S. dollar and increasing gold

prices. It invests largely in short-term government-issued foreign fixed-

income securities and gold mining equity securities.

    "Federated believes that the Prudent Bear funds' strong performance and

unique investing approach will complement Federated's existing alternative

investment products, as well as other core offerings, as a part of an

investor's overall asset allocation strategy," said J. Christopher Donahue.

"In addition, the Prudent Bear funds will be distributed through the deep

network of financial intermediaries with whom Federated has existing


    "We chose Federated because of the firm's commitment to the Prudent

Bear funds' investment strategies and investment team, as well as the

significant additional resources Federated can provide to the funds," said

David W. Tice. "In addition, Federated's broad array of investment products

provides the Prudent Bear funds' shareholders with the ability to exchange

into other equity or fixed-income mutual funds."

    The sale is expected to close in the fourth quarter of 2008. In

connection with the agreement, Federated will re-brand the Prudent Bear

funds as the newly created Federated Prudent Bear Fund and the Federated

Prudent Global Income Fund and will acquire the related intellectual


    As maintaining the stability of management is important to each of the

Prudent Bear funds' success, key investment management personnel who

currently work on the funds have signed employment and non-compete

agreements with Federated. Doug Noland, who has been responsible for much

of the day-to-day management of both funds, will serve as senior vice

president and senior portfolio manager for both funds and will continue to

provide day-to-day management of each portfolio. Noland has worked on the

Prudent Bear funds in various capacities for nearly 10 years and has almost

19 years of short-side fund-management experience. Noland earned his

undergraduate degree in accounting and finance from the University of

Oregon and earned a master's of business administration degree from Indiana


    "Doug Noland is one of the top minds in the country when it comes to

shorting stocks in a risk- controlled mutual fund framework," said Steve

Auth, Federated's chief investment officer for global equities. "He and his

team will be a valuable addition to Federated as we grow our capabilities

in the alternative-asset space."

    Patrick Ryan Bend will also continue in his role on the investment

management team as he joins Federated as vice president and portfolio

manager for the Federated Prudent Bear Fund. Bend has been a part of the

investment process at the Prudent Bear funds since 2004. He earned his

undergraduate degree from the University of Western Ontario and a master's

of business administration degree from Indiana University. Bend is a CFA


    David W. Tice, who founded the Prudent Bear funds and was instrumental

in building them into the well-recognized products that they are today,

will join Federated as a chief portfolio strategist. Tice is a CFA

charterholder and certified public accountant. He earned his master's of

business administration and undergraduate degrees from Texas Christian


    The transaction has been approved by the Board of Directors of

Federated Investors, Inc. and the owner of David W. Tice and Associates

LLC. The Board of Directors of the Prudent Bear funds and Board of Trustees

of the Federated mutual funds are each scheduled to meet to discuss the

proposed reorganizations of the Prudent Bear funds into the newly created

Federated funds in July and August 2008, respectively. In addition to being

subject to the approval of the Board of Trustees of the Federated mutual

funds and the Board of Directors of the Prudent Bear funds, the

reorganizations are subject to the approval of the Prudent Bear funds'


    Federated Investors, Inc. is one of the largest investment managers in

the United States, managing $338.5 billion in assets as of March 31, 2008.

With 147 mutual funds and a variety of separately managed account options,

Federated provides comprehensive investment management to more than 5,400

institutions and intermediaries including corporations, government

entities, insurance companies, foundations and endowments, banks and

broker/dealers. For more information, visit

    Certain statements in this press release, such as those related to

Federated's expansion of its alternative-asset product line, the

distribution of the new funds, and fund management, 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, 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. Among other risks and uncertainties is the ability of Federated

to successfully expand its alternative-asset product line, distribute the

new funds, maintain stable fund management and the risk factors discussed

in Federated's annual and quarterly reports as filed with the Securities

and Exchange Commission. 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.

    Federated Securities Corp. is distributor of the Federated funds.

    Quasar Distributors, LLC, is distributor of the Prudent Bear funds.

    Quasar Distributors, LLC and David W. Tice & Associates are not

affiliated with Federated.

    Federated separately managed accounts are made available through

Federated Global Investment Management, Federated Investment Counseling and

MDT Advisers, each a registered investment advisor.

    More information about the Prudent Bear Funds may be obtained by

calling 800-711-1848, or visiting Please read the

prospectus carefully before investing.

    A prospectus/proxy statement with respect to the proposed transaction

will be mailed to shareholders and filed with the Securities and Exchange

Commission (SEC). Investors are urged to read the prospectus/proxy

statement because it contains important information. The prospectus/proxy

statement and other relevant documents will be available free of charge on

the SEC's Web site at or by calling 1-800-341-7400.

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