Offers strong portfolio diversification The fund's short-selling focus pursues low or inverse correlation to the overall stock market.
	Managed to reduce portfolio volatility Federated Prudent Bear Fund seeks solid performance with a goal of controlling risk.
	Provides a potential hedge against inflation Offers investors the opportunity to benefit from strategic positions in gold and precious metals and mining stocks.

Offering investors the opportunity to use short selling as an asset allocation tool, Federated Prudent Bear Fund may be an effective hedge against stock and market downturns.

Short Selling Basics A short selling strategy can be risky, especially for investors who aren't able to access — or interpret — the volumes of data required to execute well-informed short sell decisions. In a successful "short sale," the investor benefits from a falling stock price. To execute a short sale, the investor borrows the stock with the agreement to return the shares in the future. Likely "short" candidates include: Companies with unrealistic growth projections or troubled balance sheets Weaker companies in industries undergoing significant changes Firms facing legal difficulties or major regulatory issues Eventually, a short seller purchases stock to replace the borrowed shares. A profit is realized if the stock is bought back at a price lower than its original sale price.

A Word About Risk
Federated Prudent Bear Fund regularly makes short sales of securities, which involves unlimited risk including the possibility that losses may exceed the original amount invested. The fund may also use options and futures contracts, which have risks associated with unlimited losses of the underlying holdings due to unanticipated market movements and failure to correctly predict the direction of securities prices, interest rates and currency exchange rates. However, a mutual fund investor's risk is limited to one's amount of investment in a mutual fund. The fund may also hold restricted securities purchased through private placements. Such securities may be difficult to sell without experiencing delays or additional costs. The prices of gold and other precious metals may be subject to substantial price fluctuations over short periods of time and may be adversely affected by unpredictable international monetary and political developments. Please see the prospectus for further details. Considering the increased risks, the fund may not be suitable for all investors.

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