Federated Managed Volatility Fund II

As of 09-30-2014

Highlights

  • Pursues current income and long-term growth of income.
  • Seeks to manage portfolio volatility by using equity index futures, targeting an annualized fund volatility of approximately 10%.
  • Provides a highly diversified approach to income.
  • Invests in high yielding stocks of undervalued mid- to large-cap companies that are likely to maintain and increase their dividends.
  • Invests in diversified bond sectors that include U.S. government, investment-grade corporate and mortgage-backed, high-yield corporate, and international developed and emerging market.
  • Balances income opportunities and risk across markets and sectors through active management.

Key Investment Team


Facts

Fund Number(s)   333
CUSIP   313916108
Benchmark   40% Russell 1000 Value Index/20% Barclays High Yield 2% Issuer Capped Index/20% Barclays Emerging Market Bond Index/20% Barclays Mortgage-Backed Securities Index
Performance Inception Date   02-10-1994
Fiscal Year-End   12-31
Current Prospectus Date   04-30-2014

Morningstar Ratings™

disclosures »
    Funds in Category
Overall 573
3 Year 573
5 Year 479
10 Year 266
Based on risk adjusted total return. The overall rating is derived from a weighted average of the fund’s three-, five-, and ten-year average annual returns, as applicable.

Morningstar Category & Style

disclosures »
Category Conservative Allocation
Style


 
 
 
 
 
 
 
 
 
 
 
The fund’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional instruments.

There can be no guarantee that the fund will maintain its annualized volatility target. Further- more, while the volatility management seeks competitive returns with more consistent volatility of returns, the attainment and maintenance of the target volatility does not ensure that the fund will deliver competitive returns. The fund’s managed volatility strategy may expose the fund to losses (some of which may be sudden and significant) that it would not have otherwise been exposed to if it only invested directly in equity and fixed income securities. For example, the value of the Long S&P Futures Positions (which may be up to 60% of the fund’s net asset value) may decline in value due to a decline in the level of the S&P 500, while the value of the Short S&P Futures Position (which may be up to 40% of the fund’s net asset value) may decline in value due to an increase in the level of the S&P 500. Furthermore, losses on the Short S&P Futures Position are potentially unlimited. Additionally, neither the Long nor Short S&P 500 Futures Positions are being held to hedge the value of the fund’s direct investments in equity securities and, as a result, these futures contracts may decline in value at the same time as the fund’s direct investments in equity securities. Moreover, the fund uses S&P 500 futures positions to manage the volatility of a portfolio of both fixed income and equity securities. Under varying market conditions there can be no assurance that these three components will correlate to each other. The fund’s managed volatility strategy also exposes shareholders to leverage risk and the risks of investing in derivative contracts.

Diversification does not assure a profit nor protect against loss.

There are no guarantees that dividend-paying stocks will continue to pay dividends. In addition, dividend-paying stocks may not experience the same capital appreciation potential as non-dividend-paying stocks.

Effective December 2, 2011, the fund's name was changed from Federated Capital Income Fund II to Federated Managed Volatility Fund II and the Adviser will use derivative contracts, including stock index futures to target an annualized volatility level for the Fund of approximately 10%. However, the actual or realized volatility for any particular period may be materially higher or lower depending on market conditions.

Volatility is a statistical measurement of the frequency and level of changes in the value of an asset, index or instrument without regard to the direction of those changes. Volatility may result from rapid and dramatic price swings. There can be no guarantee that the Fund will maintain its annualized volatility target. Furthermore, while the volatility management seeks competitive returns with more consistent volatility of returns, the attainment and maintenance of the target volatility does not ensure that the Fund will deliver competitive returns.

Bond prices are sensitive to changes in interest rates, and a rise in interest rates can cause a decline in their prices.

International investing involves special risks including currency risk, increased volatility, political risks, and differences in auditing and other financial standards. Prices of emerging-markets securities can be significantly more volatile than the prices of securities in developed countries, and currency risk and political risks are accentuated in emerging markets.

High-yield, lower-rated securities generally entail greater market, credit/default and liquidity risks and may be more volatile than investment-grade securities.

Fund shares are available exclusively as a funding vehicle for life insurance companies writing variable life insurance policies and variable annuity contracts.  If you are an individual investor, contact your financial advisor or insurance company for more information on these products.

Investors should carefully consider the fund's investment objectives, risks, charges and expenses before investing. To obtain a summary prospectus or prospectus containing this and other information, contact us or view the prospectus provided on this website. Please carefully read the summary prospectus or prospectus before investing.

"Category" product classifications noted at the top are Federated's internal classifications.

For additional information, including definitions of related terms and indexes, see the Financial Glossary and Benchmark Index Glossary.

Federated Securities Corp., Distributor
Not FDIC Insured May Lose Value No Bank Guarantee
Copyright © 2014 Federated Investors, Inc.

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