FEDERATED MANAGED POOL SERIES
Federated Investors Funds
4000 Ericsson Drive
Warrendale, Pennsylvania 15086-7561
November 20, 2014
Asen Parachkevova
U.S. Securities and Exchange Commission
Division of Investment Management
100 F Street, N.E.
Washington, DC 20549-4720
RE: FEDERATED MANAGED POOL SERIES (the “Trust” or “Registrant”)
Federated Managed Volatility Strategy Portfolio (the “Fund”)
1933 Act File No. 333-128884
1940 Act File No. 811-21822
Dear Mr.Parachkevova:
The Registrant is filing this correspondence to respond to your November 3, 2014 comments on its Rule 485(a) Post-Effective Amendment No. 32 and Amendment No. 34, with respect to the Fund, submitted via EDGAR on September 17, 2014.
1. With respect to the cover page which contains a reference to the CFTC, please confirm that the Fund is being registered as a CPO and is not using Rule 4.5 to be exempt from registration.
RESPONSE: The Fund confirms that it is a commodity pool and that the Co-Advisers are each registered as a “commodity pool operator” and will be acting in that capacity with respect to the Fund.
2. With respect to the non-fundamental investment objective; if the Fund is plans on giving notice to shareholder in anticipation of a change in objective, please add a clarifying statement, in the form of a parenthetical is fine, stating how much notice will be given.
RESPONSE: The Fund will generally provide a notice to shareholders prior to a change in the non-fundamental investment objective. The Fund respectfully declines to add a statement to the prospectus but believes the disclosure meets the requirements of Item 2 of Form N-1A.
3. Please confirm that there is no recoupment of fees for the Fund.
RESPONSE: The Fund confirms that there is no recoupment of fees.
4. With respect to the fee table example please confirm that any waivers used in calculating the Example, are in effect for at least 1 year and are reflected in the Example.
RESPONSE: With respect to the Example, the Fund does not take waivers into account when calculating the numbers for the Example.
5. Please clarify in both the Summary and Statutory Strategy sections, which Co-Adviser is responsible for which portion of the strategy.
RESPONSE: With respect to the Summary Strategy Section, the Fund respectfully declines the comment, because it feels the current Summary Strategy disclosure is sufficient. With respect to the Statutory Strategy, the Fund will revise the section to include references related to each specific Co-Adviser’s responsibility in managing the Fund.
6. Please clarify in both the Summary and Statutory Fund Management sections, which portfolio manager is affiliated with which Co-Adviser.
RESPONSE: The Fund will modify both the Summary and Statutory Fund Management sections, to clarify each portfolio manager’s affiliation with a specific Co-Adviser.
7. With respect to the Advisory Fee, please confirm that each Co-Adviser is being evaluated for Section 15 purposes.
RESPONSE: The Fund so confirms. A summary of the Board’s evaluation of each Co-Adviser is set forth below in the response to Comment 8.
8. With respect to the annual approval of advisory contracts, please confirm how any Section 15 issues are handled and if there are any special issues using one contract for three Advisers. Also, how will the Board be evaluating the performance of each Adviser for the annual approval process?
RESPONSE: In accordance with Section 15(c) of the 1940 Act, the Board has reviewed in connection with the initial approval, and will continue to review in connection with each annual renewal, information regarding the services provided by each Co-Adviser and the share of the advisory fees paid by the Fund received for such services. The Fund confirms that the Board reviewed, considered and approved the initial fee allocations in connection with the approval of the advisory contract and reviewed a summary of the services to be provided by each Co-Adviser in connection with such allocations.
The advisory contract permits responsibilities to be shifted among the Co-Advisers and for their compensation to be adjusted accordingly. In the future, it is anticipated that the Board will review the services provided by the Co-Advisers in the aggregate, to the extent that the Co-Advisers collaborate with respect to the implementation of the Fund’s strategy, as well as separately, to the extent that specific services provided by a Co-Adviser are distinguishable and subject to meaningful assessment. In connection with such review, the Board will review each Co-Adviser from a quantitative as well as a qualitative perspective, and will analyze whether the allocation of fees to such Co-Adviser is commensurate with the services it provides to the Fund.
9. Where it is disclosed in the strategy that there is no average duration, please add in the standard duration explanation disclosure.
RESPONSE: The Fund respectfully declines the comment. The Fund feels the current disclosure contained in the strategy section is sufficient.
10. With respect to futures disclosure, from a tax perspective, how is the risk of using futures going to be managed with respect to Sub-Chapter M issues?
RESPONSE: The Fund invests primarily in derivative instruments (such as futures, options and swaps), equity linked notes, convertibles and fixed income securities. The Fund’s fixed-income investments will primarily be domestic noninvestment-grade debt securities (also known as “junk bonds” or “high-yield bonds”) and foreign (including emerging market debt securities) investment-grade and noninvestment-grade fixed-income securities. The Fund may also invest in domestic investment-grade fixed-income securities.
The Fund also plans to invest in exchange-traded broad-based equity index futures contracts to manage the Fund’s volatility. Such contracts do not present risks with respect to Subchapter M compliance. Under Subchapter M, the Fund must receive 90% of its gross income each year from “dividends, interest … gains from the sale or other disposition of stock or securities…or other income (including but not limited to gains from options, futures or forward contracts) derived with respect to its business of investing in such stock, securities, or currencies.” As the equity index futures contracts will be used to manage the volatility of the Fund’s investments in securities, the income produced by these futures contracts will be qualifying income for purposes of Subchapter M.
Subchapter M also requires that the assets held by the Fund meet certain diversification requirements based on the identity of the issuers of the securities in which the Fund invests. For purposes of these diversification requirements, a broad-based equity index futures contract is considered to be issued proportionately by the component companies of the applicable index. See PLR 8834046 (May 27, 1988), PLR 8811053 (December 22, 1987) and GCM 39708 (March 4, 1988). Accordingly, the equity index futures contracts in which the Fund plans to invest will help the Fund satisfy the Subchapter M diversification requirements.
11. With respect to the Fund being able to use derivative contracts and hybrid instruments, please list out which specific type of instruments will be used (for example, swaps, option etc.,) and disclose which Co-Adviser will be responsible for these transactions. This comment applies to both the Summary and Statutory strategies.
RESPONSE: The Fund respectfully declines the comment, because it feels the current disclosure is sufficient.
12. In the SummaryNon-Investment Grade Securities Risk please add a reference describing these as “junk bonds”.
RESPONSE: The risk of non-investment grade securities will be revised to read as follows:
Securities rated below investment grade (which are also known as junk bonds) may be subject to greater interest rate, credit and liquidity risks than investment-grade securities.
13. In theSummary Tax Information sectionplease include a statement stating that the tax advantaged plans may be subject to penalties for early withdrawals.
RESPONSE: The Fund respectfully declines the comment, and believes the disclosure meets the requirements of Item 7 of Form N-1A.
14.With respect to hybrids and swaps, please list out the specific types to be used and reference their investment and use in the strategy sections. Also, with respect to equity linked notes, please describe their use in the strategy sections.
RESPONSE: The Fund has reviewed the relevant guidance on the disclsoure of derivatives and believes that the current disclosure meets the requirements of all relevant guidance.
15. With respect to Investment in Securities of Other Investment Companies (core funds): Please confirm whether or not these are private funds or private pools.
RESPONSE: The Fund has the ability to invest in affiliated funds which are registered under the Investment Company Act of 1940, but the shares of the affiliated funds are not registered under the Securities Act of 1933.
16. Please reference hedging in the strategy sections and describe what instruments will be used to hedge.
RESPONSE: The Fund will provide response to this comment under a separate filing.
SAI COMMENTS:
17. With respect to using futures, please expand upon the risk related to Sub Chapter M.
RESPONSE:As we describe in our response to comment number 10 above the investments in equity index futures contracts do not pose any risks with respect to the Fund’s ability to meet the requirements of Subchapter M. The Fund therefore believes it is unnecessary to expand such risk disclosure.
18. With respect to the Trustee and Officer Tables please confirm that all previous positions are for the last 5 years.
RESPONSE: The Fund confirms that the information disclosed in the Trustee and Officer Table contains information related to the past 5 years.
19. With respect to all operational sections where “Adviser” is mentioned, please reference the Co-Advisers and list out them out where needed.
RESPONSE: The operational language in the SAI will be reviewed and Co-Advisers will be incorporated, where applicable. This language will be incorporated into the 485b filing.
20. Part C:With respect to Item 30, Indemnification, please confirm what the (1) references.
RESPONSE: In Item 30, Indemnification, the (1) references the list of registration statements that have been incorporated by reference provided in Item 28. The Part C has been revised to make the incorporation by reference related to Indemnification clearer.
21. With respect to the Underlying Funds, are the Co-Advisers also managers of the Underlying Funds? Please clarify who the Portfolio Managers are of the Underlying Funds and the respective Co-Adviser. Are the Co-Advisers apart of fixed-income?
RESPONSE: The Fund respectfully declines to add additional information about the Co-Advisers and Portfolio Managers of the Underlying Funds. Supplementally, as noted in the Fund’s prospectus, the Underlying Funds are as follows: Emerging Markets Fixed Income Core Fund, a portfolio of Federated Core Trust II L.P., Federated Mortgage Core Portfolio and High Yield Bond Portfolio, each a portfolio of Federated Core Trust. The Fund confirms that the investment adviser to each of the Underlying Funds is Federated Investment Management Company and the registration statement of each Underlying Fund is available on the SEC’s website.
In connection with the review of this filing by staff of the Securities and Exchange Commission, the Fund acknowledges the staff’s view that: the Fund is responsible for the adequacy and accuracy of the disclosure in the filings; staff comments or changes to disclosure in response to staff comments in the filings reviewed by the staff do not foreclose the Commission from taking any action with respect to the filing; and the Fund may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
If you have any questions, please do not hesitate to contact me at (724) 720-8830.
Very truly yours,
/s/ Seana N. Banks
Seana N. Banks
Senior Paralegal
Shareholder Fees (fees paid directly from your investment) | |
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) | None |
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, as applicable) | None |
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) (as a percentage of offering price) | None |
Redemption Fee (as a percentage of amount redeemed, if applicable) | None |
Exchange Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | |
Management Fee | None |
Distribution (12b-1) Fee | None |
Other Expenses | 0.69% |
Acquired Fund Fees and Expenses | 0.06% |
Total Annual Fund Operating Expenses | 0.75% |
Fee Waivers and Expense Reimbursements1 | 0.69% |
Total Annual Fund Operating Expenses After Fee Waivers and Expense Reimbursements | 0.06% |
1 | The Co-Advisers will not charge a fee for their advisory services to the Fund. The Co-Advisers have contractually agreed to reimburse all operating expenses, excluding Acquired Fund Fees and Expenses and extraordinary expenses incurred by the Fund. Shareholders must approve any change to the contractual reimbursements. Investors should carefully consider the separate fees charged in connection with investment in the Fund. |
1 Year | $6 |
3 Years | $19 |
5 Years | $34 |
10 Years | $77 |
■ | Risk of Managed Volatility Strategy.While the managed volatility strategy seeks competitive returns, the management of 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) that it would not have otherwise been exposed if it only invested directly in equity securities. For example, the value of the Long Equity Index Futures Positions may decline in value due to a decline in the level of equity index futures contracts, while the value of the Short Equity Index Futures Positions may decline in value due to an increase in the level of equity index futures contracts. Furthermore, losses on the Short Equity Index Futures Position are potentially unlimited. Additionally, neither the Long nor Short Equity Index 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. The Fund's managed volatility strategy also exposes shareholders to leverage risk and the risks of investing in derivative contracts. |
■ | Leverage Risk.Leverage risk is created when an investment, which includes, for example, an investment in a derivative contract, exposes the Fund and/or an Underlying Fund to a level of risk that exceeds the amount invested. Changes in the value of such an investment magnify the Fund's and/or an Underlying Fund's risk of loss and potential for gain. |
■ | Risk of Investing in Derivative Contracts and Hybrid Instruments. Derivative contracts and hybrid instruments involve risks different from, or possibly greater than, risks associated with investing directly in securities and other traditional investments. Specific risk issues related to the use of such contracts and instruments include valuation issues, increased potential for losses and/or costs to the Fund and/or an Underlying Fund, and a potential reduction in gains to the Fund and/or an Underlying Fund. Each of these issues is described in greater detail in the Prospectus. Derivative contracts and hybrid instruments may also involve other risks described in the Prospectus or the Fund's Statement of Additional Information (SAI), such as stock market, interest rate, credit, currency, liquidity and leverage risks. |
■ | Issuer Credit Risk. It is possible that interest or principal on securities will not be paid when due. Noninvestment-grade securities generally have a higher default risk than investment-grade securities. Such non-payment or default may reduce the value of the Fund's and/or an Underlying Fund's portfolio holdings, its share price and its performance. |
■ | Counterparty Credit Risk. Counterparty credit risk includes the possibility that a party to a transaction (such as a derivative transaction) involving the Fund and/or an Underlying Fund may fail to meet its obligations. This could cause the Fund and/or an Underlying Fund to lose the benefit of the transaction or prevent the Fund and/or an Underlying Fund from selling or buying other securities to implement its investment strategy. |
■ | Stock Market Risk. The value of equity securities in the Fund's portfolio will fluctuate and, as a result, the Fund's Share price may decline suddenly or over a sustained period of time. Information publicly available about a company, whether from the company's financial statements or other disclosures or from third parties, or information available to some but not all market participants, can affect the price of a company's shares in the market. |
■ | Liquidity Risk. Trading opportunities are more limited for fixed-income securities that have not received any credit ratings, have received ratings below investment grade or are not widely held. Trading opportunities are more limited for collateralized mortgage obligations that have complex terms or that are not widely held. These features may make it more difficult to sell or buy a security at a favorable price or time. Consequently, the Fund and/or an Underlying Fund or an Underlying Fund and/or an Underlying Fund may have to accept a lower price to sell a security, sell other securities to raise cash or give up an investment opportunity, any of which could have a negative effect on the Fund's and/or an Underlying Fund's performance. Infrequent trading of securities may also lead to an increase in their price volatility. |
■ | Currency Risk. Exchange rates for currencies fluctuate daily. Accordingly, the Fund and/or and Underlying Fund may experience increased volatility with respect to the value of its Shares and its returns as a result of its exposure to foreign currencies through direct holding of such currencies or holding of non-U.S. dollar denominated securities. |
■ | Risk Associated with Noninvestment-Grade Securities. Securities rated below investment grade (which are also known as junk bonds), may be subject to greater interest rate, credit and liquidity risks than investment-grade securities. |
■ | Risk Related to Investing for Value. The Fund generally uses a “value” style of investing, so that the Fund's Share price may lag that of other funds using a different investment style. |
■ | Risk Related to the Economy. Lower grade bond returns are sensitive to changes in the economy. The value of the Fund's and/or an Underlying Fund's portfolio may decline in tandem with a drop in the overall value of the stock market based on negative developments in the United States and/or global economies. |
■ | Interest Rate Risk. Prices of fixed-income securities generally fall when interest rates rise. |
■ | Risk of Foreign Investing. Because the Fund and/or an Underlying Fund may invest in securities issued by foreign companies, the Fund's Share price may be more affected by foreign economic and political conditions, taxation policies and accounting and auditing standards than could otherwise be the case. |
■ | Risk of Investing in Emerging Markets Countries. Securities issued or traded in emerging markets, including frontier markets, generally entail greater risks than securities issued or traded in developed markets. Emerging market countries may have relatively unstable governments and may present the risk of nationalization of businesses, expropriation, and confiscatory taxation or, in certain instances, reversion to closed market, centrally-planned economies. These same risks exist and may be greater in frontier markets. |
■ | Eurozone Related Risk.A number of countries in the European Union (EU) have experienced, and may continue to experience, severe economic and financial difficulties. Additional EU member countries may also fall subject to such difficulties. These events could negatively affect the value and liquidity of the Fund's and/or an Underlying Fund's investments in euro-denominated securities and derivatives contracts, securities of issuers located in the EU or with significant exposure to EU issuers or countries. |
■ | Sector Risk. Sector risk is the possibility that a certain sector may underperform other sectors or the market as a whole. |
■ | Share Ownership Concentration Risk. A majority of an Underlying Portfolio's Shares may be held by other mutual funds advised by a Co-Adviser and its affiliates. It also is possible that some or all of these other mutual funds will decide to purchase or redeem shares of an Underlying Portfolio simultaneously or within a short period of time of one another in order to execute their asset allocation strategies which could have adverse consequences for the Underlying Portfolio and other shareholders. |
��� | Technology Risk. The Co-Advisers use various technologies in managing the Fund, consistent with its investment objective and strategy described in this Prospectus. For example, proprietary and third-party data and systems are utilized to support decision-making for the Fund. Data imprecision, software or other technology malfunctions, programming inaccuracies and similar circumstances may impair the performance of these systems, which may negatively affect Fund performance. |
■ | FIMCO employs a fundamental analysis to determine the best debt securities within specific credit quality constraints. For investments in corporate issuers, the FIMCO analyzes the business, competitive position and general financial condition of the issuer to determine whether a security's credit risk is commensurate with its potential return. The Fund may also invest in U.S. government and mortgage-backed securities when it believes those securities offer better relative value than investment-grade corporate debt securities. |
■ | Noninvestment-grade debt issues (also known as “junk bonds” or “high-yield bonds”) have higher yields than investment-grade issues. FIMCO attempts to select high-yield bonds that offer superior potential returns for the default risks being assumed. |
■ | increase or decrease the effective duration of the Fund portfolio; |
■ | obtain premiums from the sale of derivative contracts; |
■ | realize gains from trading a derivative contract; or |
■ | hedge against potential losses. |
There can be no assurance that the Fund's use of derivative contracts or hybrid instruments will work as intended. |
■ | increase or decrease the effective duration of the Fund portfolio; |
■ | obtain premiums from the sale of derivative contracts; |
■ | realize gains from trading a derivative contract; or |
■ | hedge against potential losses. |
There can be no assurance that EmCore's use of derivative contracts or hybrid instruments will work as intended. |
■ | increase or decrease the effective duration of the Fund portfolio; |
■ | obtain premiums from the sale of derivative contracts; |
■ | realize gains from trading a derivative contract; or |
■ | hedge against potential losses. |
There can be no assurance that HYCore's use of derivative contracts or hybrid instruments will work as intended. |
■ | it is organized under the laws of, or has a principal office located in, another country; |
■ | the principal trading market for its securities is in another country; or |
■ | it (directly or through its consolidated subsidiaries) derived in its most current fiscal year at least 50% of its total assets, capitalization, gross revenue or profit from goods produced, services performed or sales made in another country. |
■ | an electronic transfer to the shareholder's wrap fee, separately managed or discretionary investment account (i.e., Eligible Account) custodied at a financial institution that is an ACH member; |
■ | wire payment to the shareholder's wrap fee, separately managed or discretionary investment account (i.e., Eligible Account) custodied at a domestic commercial bank that is a Federal Reserve System member; or |
■ | check mailed to the qualified custodian of the shareholder's wrap fee, separately managed or discretionary investment accounts (i.e., Eligible Account). |
■ | to allow a purchase to clear; |
■ | during periods of market volatility; |
■ | when a shareholder's trade activity or amount adversely impacts the Fund's ability to manage its assets; or |
■ | during any period when the Federal Reserve wire or applicable Federal Reserve banks are closed, other than customary weekend and holiday closings. |
■ | when the NYSE is closed, other than customary weekend and holiday closings; |
■ | when trading on the NYSE is restricted, as determined by the SEC; or |
■ | in which an emergency exists, as determined by the SEC, so that disposal of the Fund's investments or determination of its NAV is not reasonably practicable. |
■ | Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Board of Trustees (“Board”). |
■ | Fixed-income securities acquired with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium). |
■ | Derivative contracts listed on exchanges are valued at their reported settlement or closing price, except that options are valued at the mean of closing bid and asked quotations. |
■ | OTC derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Board. |
■ | With respect to securities traded principally in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures contracts; |
■ | Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; and |
■ | Announcements concerning matters such as acquisitions, recapitalizations, or litigation developments, or a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry. |
FEDERATED MANAGED VOLATILITY STRATEGY PORTFOLIO | |||||
ANNUAL EXPENSE RATIO: 0.06% | |||||
MAXIMUM FRONT-END SALES CHARGE: NONE | |||||
Year | Hypothetical Beginning Investment | Hypothetical Performance Earnings | Investment After Returns | Hypothetical Expenses | Hypothetical Ending Investment |
1 | $10,000.00 | $500.00 | $10,500.00 | $6.15 | $10,494.00 |
2 | $10,494.00 | $524.70 | $11,018.70 | $6.45 | $11,012.40 |
3 | $11,012.40 | $550.62 | $11,563.02 | $6.77 | $11,556.41 |
4 | $11,556.41 | $577.82 | $12,134.23 | $7.11 | $12,127.30 |
5 | $12,127.30 | $606.37 | $12,733.67 | $7.46 | $12,726.39 |
6 | $12,726.39 | $636.32 | $13,362.71 | $7.82 | $13,355.07 |
7 | $13,355.07 | $667.75 | $14,022.82 | $8.21 | $14,014.81 |
8 | $14,014.81 | $700.74 | $14,715.55 | $8.62 | $14,707.14 |
9 | $14,707.14 | $735.36 | $15,442.50 | $9.04 | $15,433.67 |
10 | $15,433.67 | $771.68 | $16,205.35 | $9.49 | $16,196.09 |
Cumulative | $6,271.36 | $77.12 |
Federated Investors Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
or call 1-800-341-7400.
2014 ©Federated Investors, Inc.
Federated Investors Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
or call 1-800-341-7400.
of Federated Investors, Inc.
2014 ©Federated Investors, Inc.
■ | Buy call options on a Reference Instrument in anticipation of an increase in the value of the Reference Instrument; and |
■ | Write call options on a Reference Instrument to generate income from premiums, and in anticipation of a decrease or only limited increase in the value of the Reference Instrument. If the Fund writes a call option on a Reference Instrument that it owns and that call option is exercised, the Fund foregoes any possible profit from an increase in the market price of the Reference Instrument over the exercise price plus the premium received. |
■ | Buy put options on a Reference Instrument in anticipation of a decrease in the value of the Reference Instrument; and |
■ | Write put options on a Reference Instrument to generate income from premiums, and in anticipation of an increase or only limited decrease in the value of the Reference Instrument. In writing puts, there is a risk that the Fund may be required to take delivery of the Reference Instrument when its current market price is lower than the exercise price. |
■ | Equity securities listed on a U.S. securities exchange or traded through the U.S. national market system are valued at their last reported sale price or official closing price in their principal exchange or market. If a price is not readily available, such equity securities are valued based upon the mean of closing bid and asked quotations from one or more dealers. |
■ | Other equity securities traded primarily in the United States are valued based upon the mean of closing bid and asked quotations from one or more dealers. |
■ | Equity securities traded primarily through securities exchanges and regulated market systems outside the United States are valued at their last reported sale price or official closing price in their principal exchange or market. These prices may be adjusted for significant events occurring after the closing of such exchanges or market systems as described below. If a price is not readily available, such equity securities are valued based upon the mean of closing bid and asked quotations from one or more dealers. |
■ | Fixed-income securities and repurchase agreements acquired with remaining maturities of greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Board. The methods used by pricing services to determine such price evaluations are described below. If a price evaluation is not readily available, such fixed-income securities are fair valued based upon price evaluations from one or more dealers. |
■ | Fixed-income securities and repurchase agreements acquired with remaining maturities of 60 days or less are valued at their amortized cost as described below, unless the issuer's creditworthiness is impaired or other factors indicate that amortized cost is not an accurate estimate of the investment's fair value, in which case it would be valued in the same manner as a longer-term security or repurchase agreement. |
■ | Futures contracts listed on exchanges are valued at their reported settlement price. Option contracts listed on exchanges are based upon the mean of closing bid and asked quotations reported by the exchange or from one or more futures commission merchants. |
■ | OTC derivative contracts are fair valued using price evaluations provided by various pricing services approved by the Board. The methods used by pricing services to determine such price evaluations are described below. If a price evaluation is not readily available, such derivative contracts are fair valued based upon price evaluations from one or more dealers or using a recognized pricing model for the contract. |
■ | Shares of other mutual funds are valued based upon their reported NAVs. The prospectuses for these mutual funds explain the circumstances under which they will use fair value pricing and the effects of using fair value pricing. |
■ | With respect to securities traded principally in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures contracts; |
■ | With respect to price evaluations of fixed-income securities determined before the close of regular trading on the NYSE, actions by the Federal Reserve Open Market Committee and other significant trends in U.S. fixed-income markets; |
■ | Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; and |
■ | Announcements concerning matters such as acquisitions, recapitalizations or litigation developments, or a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry. |
■ | Outstanding skills in disciplines deemed by the Independent Trustees to be particularly relevant to the role of Independent Trustee and to the Federated funds, including legal, accounting, business management, the financial industry generally and the investment industry particularly. |
■ | Desire and availability to serve for a substantial period of time, taking into account the Board's current mandatory retirement age of 73 years. |
■ | No conflicts which would interfere with qualifying as independent. |
■ | Appropriate interpersonal skills to work effectively with other Independent Trustees. |
■ | Understanding and appreciation of the important role occupied by Independent Trustees in the regulatory structure governing regulated investment companies. |
■ | Diversity of background. |
Name Birth Date Positions Held with Trust Date Service Began | Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s) | Aggregate Compensation From Fund (past fiscal year) | Total Compensation From Fund and Federated Fund Complex (past calendar year) |
John F. Donahue* Birth Date: July 28, 1924 Trustee Began serving: November 2005 | Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.; Chairman of the Federated Fund Complex's Executive Committee. Previous Positions: Chairman of the Federated Fund Complex; Trustee, Federated Investment Management Company; Chairman and Director, Federated Investment Counseling. | $0 | $0 |
J. Christopher Donahue* Birth Date: April 11, 1949 President andTrustee Began serving: October 2005 | Principal Occupations: Principal Executive Officer and President of certain of the Funds in the Federated Fund Complex; Director or Trustee of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Federated Equity Management Company of Pennsylvania and Passport Research, Ltd. (investment advisory subsidiary of Federated); Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd. | $0 | $0 |
* | Family relationships and reasons for “interested” status: John F. Donahue is the father of J. Christopher Donahue; both are “interested” due to their beneficial ownership of shares of Federated Investors, Inc. and the positions they hold with Federated and its subsidiaries. |
+ | Because the Fund is a new portfolio of the Trust, Trustee compensation has not yet been earned and will be reported following the Fund's next fiscal year. |
Name Birth Date Positions Held with Trust Date Service Began | Principal Occupation(s) and Other Directorships Held for Past Five Years, Previous Position(s) and Qualifications | Aggregate Compensation From Fund (past fiscal year) | Total Compensation From Fund and Federated Fund Complex (past calendar year) |
John T. Collins Birth Date: January 24, 1947 Trustee Began serving: October 2013 | Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman and CEO, The Collins Group, Inc. (a private equity firm). Other Directorships Held: Chairman Emeriti, Bentley University; Director, Sterling Suffolk Downs, Inc.; Former Director, National Association of Printers and Lithographers. Previous Positions: Director and Audit Committee Member, Bank of America Corp. Qualifications: Business management and director experience. | $57,446.48 | |
Maureen Lally-Green Birth Date: July 5, 1949 Trustee Began serving: August 2009 | Principal Occupations: Director or Trustee of the Federated Fund Complex; Associate General Secretary and Director, Office for Church Relations, Diocese of Pittsburgh; Adjunct Professor of Law, Duquesne University School of Law; Superior Court of Pennsylvania (service began 1998 and ended July 2009). Other Directorships Held: Director, Consol Energy (service started June 2013); Director, Auberle (service ended December 2013); Member, Pennsylvania State Board of Education; Director, Saint Vincent College; Director, Ireland Institute of Pittsburgh (service ended December 2013); Director and Chair, UPMC Mercy Hospital; Regent, St. Vincent Seminary; Director, Epilepsy Foundation of Western and Central Pennsylvania; Director, Saint Thomas More Society (service ended December 2013); Director, Our Campaign for the Church Alive!, Inc.; Director, Pennsylvania Bar Institute (2013-present); Director, Cardinal Wuerl North Catholic High School (2013-present). Previous Position: Professor of Law, Duquesne University School of Law, Pittsburgh (1983-1998). Qualifications: Legal and director experience. | $235,168.73 | |
Peter E. Madden Birth Date: March 16, 1942 Trustee Began serving: November 2005 | Principal Occupation: Director or Trustee, and Chairman of the Board of Directors or Trustees, of the Federated Fund Complex. Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, Chief Operating Officer and Director, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange. Qualifications:Business management, mutual fund services and director experience. | $310,000 | |
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 Trustee Began serving: November 2005 | Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant. Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University; Executive Vice President DVC Group, Inc. (marketing, communications and technology). Qualifications: Banking, business management, education and director experience. | $247,500 |
Name Birth Date Positions Held with Trust Date Service Began | Principal Occupation(s) and Other Directorships Held for Past Five Years, Previous Position(s) and Qualifications | Aggregate Compensation From Fund (past fiscal year) | Total Compensation From Fund and Federated Fund Complex (past calendar year) |
Thomas M. O'Neill Birth Date: June 14, 1951 Trustee Began serving: October 2006 | Principal Occupations: Director or Trustee, Vice Chairman of the Audit Committee of the Federated Fund Complex; Sole Proprietor, Navigator Management Company (investment and strategic consulting). Other Directorships Held: Board of Overseers, Children's Hospital of Boston; Visiting Committee on Athletics, Harvard College; Board of Directors, Medicines for Humanity; Board of Directors, The Golisano Children's Museum of Naples, Florida. Previous Positions: Chief Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director and Consultant, EZE Castle Software (investment order management software); Director, Midway Pacific (lumber). Qualifications: Business management, mutual fund, director and investment experience. | $247,500 | |
P. Jerome Richey Birth Date: February 23, 1949 Trustee Began serving: October 2013 | Principal Occupations: Director or Trustee of the Federated Fund Complex; General Counsel, University of Pittsburgh. Other Directorships Held: Board Chairman, Epilepsy Foundation of Western Pennsylvania; Board Member, World Affairs Council of Pittsburgh. Previous Positions: Chief Legal Officer and Executive Vice President, CONSOL Energy Inc.; Shareholder, Buchanan Ingersoll & Rooney PC (a law firm). Qualifications: Business management, legal and director experience. | $57,531.57 | |
John S. Walsh Birth Date: November 28, 1957 Trustee Began serving: November 2005 | Principal Occupations: Director or Trustee, Chairman of the Audit Committee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position: Vice President, Walsh & Kelly, Inc. Qualifications: Business management and director experience. | $253,125 |
+ | Because the Fund is a new portfolio of the Trust, Trustee compensation has not yet been earned and will be reported following the Fund's next fiscal year. |
Name Birth Date Address Positions Held with Trust Date Service Began | Principal Occupation(s) and Previous Position(s) |
John W. McGonigle Birth Date: October 26, 1938 EXECUTIVE VICE PRESIDENT AND SECRETARY Officer since: October 2005 | Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Vice Chairman, Executive Vice President, Secretary and Director, Federated Investors, Inc. Previous Positions: Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp. |
Name Birth Date Address Positions Held with Trust Date Service Began | Principal Occupation(s) and Previous Position(s) |
Lori A. Hensler Birth Date: January 6, 1967 Treasurer Officer since: April 2013 | Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp. and Edgewood Services, Inc.; and Assistant Treasurer, Federated Investors Trust Company. Ms. Hensler has received the Certified Public Accountant designation. Previous Positions: Controller of Federated Investors, Inc.; Senior Vice President and Assistant Treasurer, Federated Investors Management Company; Treasurer, Federated Investors Trust Company; Assistant Treasurer, Federated Administrative Services, Federated Administrative Services, Inc., Federated Securities Corp., Edgewood Services, Inc., Federated Advisory Services Company, Federated Equity Management Company of Pennsylvania, Federated Global Investment Management Corp., Federated Investment Counseling, Federated Investment Management Company, Passport Research, Ltd. and Federated MDTA, LLC; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and Southpointe Distribution Services, Inc. |
Peter J. Germain Birth Date: September 3, 1959 CHIEF LEGAL OFFICER Officer since: October 2005 | Principal Occupations: Mr. Germain is Chief Legal Officer of the Federated Fund Complex. He is General Counsel and Vice President, Federated Investors, Inc.; President, Federated Administrative Services and Federated Administrative Services, Inc.; Vice President, Federated Securities Corp.; Secretary, Federated Private Asset Management, Inc.; and Secretary, Retirement Plan Service Company of America. Mr. Germain joined Federated in 1984 and is a member of the Pennsylvania Bar Association. Previous Positions: Deputy General Counsel, Special Counsel, Managing Director of Mutual Fund Services, Federated Investors, Inc.; Senior Vice President, Federated Services Company; and Senior Corporate Counsel, Federated Investors, Inc. |
Richard B. Fisher Birth Date: May 17, 1923 VICE CHAIRMAN Officer since: October 2005 | Principal Occupations: Vice Chairman or Vice President of some of the Funds in the Federated Fund Complex; Vice Chairman, Federated Investors, Inc.; Chairman, Federated Securities Corp. Previous Positions: President and Director or Trustee of some of the Funds in the Federated Fund Complex; Executive Vice President, Federated Investors, Inc.; Director and Chief Executive Officer, Federated Securities Corp. |
Brian P. Bouda Birth Date: February 28, 1947 CHIEF COMPLIANCE OFFICER AND SENIOR VICE PRESIDENT Officer since: October 2005 | Principal Occupations: Senior Vice President and Chief Compliance Officer of the Federated Fund Complex; Vice President and Chief Compliance Officer of Federated Investors, Inc. and Chief Compliance Officer of certain of its subsidiaries. Mr. Bouda joined Federated in 1999 and is a member of the American Bar Association and the State Bar Association of Wisconsin. Previous Positions: Served in Senior Management positions with a large regional banking organization. |
Robert J. Ostrowski Birth Date: April 26, 1963 Chief Investment Officer Officer since: September 2006 | Principal Occupations: Robert J. Ostrowski joined Federated in 1987 as an Investment Analyst and became a Portfolio Manager in 1990. He was named Chief Investment Officer of Federated's taxable fixed-income products in 2004 and also serves as a Senior Portfolio Manager. Mr. Ostrowski became an Executive Vice President of the Fund's Adviser in 2009 and served as a Senior Vice President of the Fund's Adviser from 1997 to 2009. Mr. Ostrowski has received the Chartered Financial Analyst designation. He received his M.S. in Industrial Administration from Carnegie Mellon University. |
Michael Dieschbourg Birth Date: June 19, 1957 Vice President Officer since: December 2014 Portfolio Manager since: December 2014 | Principal Occupations: Michael Dieschbourg has been the Fund's Portfolio Manager since December 2014. He is Vice President of the Trust with respect to the Fund. Mr. Dieschbourg joined Federated in January 2014 as a Managing Director and Senior Vice President of the Fund's Co-Adviser. Prior to joining Federated, Mr. Dieschbourg was employed with Broadmark Asset Management, Inc., serving as Senior Managing Director, from 2010 to 2013. Previously, he worked for two Legg Mason affiliates from 2005 to 2010: serving as Chief Executive Officer and Global and International Equity Manager with Global Currents Investment Management, LLC, and serving as Managing Director with Brandywine Global Asset Management. Mr. Dieschbourg has received the Certified Investment Management Analyst® certification, and earned a B.B.A. from Loyola University. |
** | Officers do not receive any compensation from the Fund. |
Board Committee | Committee Members | Committee Functions | Meetings Held During Last Fiscal Year |
Executive | John F. Donahue Peter E. Madden John S. Walsh | In between meetings of the full Board, the Executive Committee generally may exercise all the powers of the full Board in the management and direction of the business and conduct of the affairs of the Trust in such manner as the Executive Committee shall deem to be in the best interests of the Trust. However, the Executive Committee cannot elect or remove Board members, increase or decrease the number of Trustees, elect or remove any Officer, declare dividends, issue shares or recommend to shareholders any action requiring shareholder approval. | None |
Audit | Maureen Lally-Green Charles F. Mansfield, Jr. Thomas M. O'Neill John S. Walsh | The purposes of the Audit Committee are to oversee the accounting and financial reporting process of the Fund, the Fund's internal control over financial reporting and the quality, integrity and independent audit of the Fund's financial statements. The Committee also oversees or assists the Board with the oversight of compliance with legal requirements relating to those matters, approves the engagement and reviews the qualifications, independence and performance of the Fund's independent registered public accounting firm, acts as a liaison between the independent registered public accounting firm and the Board and reviews the Fund's internal audit function. | Seven |
Nominating | John T. Collins Maureen Lally-Green Peter E. Madden Charles F. Mansfield, Jr. Thomas M. O'Neill P. Jerome Richey John S. Walsh | The Nominating Committee, whose members consist of all Independent Trustees, selects and nominates persons for election to the Fund's Board when vacancies occur. The Committee will consider candidates recommended by shareholders, Independent Trustees, officers or employees of any of the Fund's agents or service providers and counsel to the Fund. Any shareholder who desires to have an individual considered for nomination by the Committee must submit a recommendation in writing to the Secretary of the Fund, at the Fund's address appearing on the back cover of this SAI. The recommendation should include the name and address of both the shareholder and the candidate and detailed information concerning the candidate's qualifications and experience. In identifying and evaluating candidates for consideration, the Committee shall consider such factors as it deems appropriate. Those factors will ordinarily include: integrity, intelligence, collegiality, judgment, diversity, skill, business and other experience, qualification as an “Independent Trustee,” the existence of material relationships which may create the appearance of a lack of independence, financial or accounting knowledge and experience and dedication and willingness to devote the time and attention necessary to fulfill Board responsibilities. | Two |
Interested Board Member Name | Dollar Range of Shares Owned in Federated Managed Volatility Strategy Portfolio | Aggregate Dollar Range of Shares Owned in Federated Family of Investment Companies |
John F. Donahue | None | Over $100,000 |
J. Christopher Donahue | None | Over $100,000 |
Independent Board Member Name | ||
John T. Collins | None | None |
Maureen Lally-Green | None | Over $100,000 |
Peter E. Madden | None | Over $100,000 |
Charles F. Mansfield, Jr. | None | Over $100,000 |
Thomas M. O'Neill | None | Over $100,000 |
P. Jerome Richey | None | None |
John S. Walsh | None | Over $100,000 |
Types of Accounts Managed by James P. Gordon, Jr. | Total Number of Additional Accounts Managed/Total Assets* |
Registered Investment Companies | 3/$459.8 million |
Other Pooled Investment Vehicles | 0/$0 |
Other Accounts | 0/$0 |
* | None of the Accounts has an advisory fee that is based on the performance of the account. |
Types of Accounts Managed by Michael Dieschbourg | Total Number of Additional Accounts Managed/Total Assets* |
Registered Investment Companies | 3/$459.8 million |
Other Pooled Investment Vehicles | 0/$0 |
Other Accounts | 0/$0 |
* | None of the Accounts has an advisory fee that is based on the performance of the account. |
Types of Accounts Managed by Damian McIntyre | Total Number of Additional Accounts Managed/Total Assets* |
Registered Investment Companies | 0/$0 |
Other Pooled Investment Vehicles | 0/$0 |
Other Accounts | 0/$0 |
* | None of the Accounts has an advisory fee that is based on the performance of the account. |
Types of Accounts Managed by John Nichol | Total Number of Additional Accounts Managed/Total Assets* |
Registered Investment Companies | 5/$3.4 billion |
Other Pooled Investment Vehicles | 0/$0 |
Other Accounts | 8/$9.4 million |
* | None of the Accounts has an advisory fee that is based on the performance of the account. |
Types of Accounts Managed by Linda Bakhshian | Total Number of Additional Accounts Managed/Total Assets* |
Registered Investment Companies | 4/$3.4 billion |
Other Pooled Investment Vehicles | 0/$0 |
Other Accounts | 8/$9.4 million |
* | None of the Accounts has an advisory fee that is based on the performance of the account. |
Types of Accounts Managed by Mark Durbiano | Total Number of Additional Accounts Managed/Total Assets* | Additional Accounts/Assets Managed that are Subject to Advisory Fee Based on Account Performance |
Registered Investment Companies | 21/$13.1 billion | 0/$0 |
Other Pooled Investment Vehicles | 1/$30.0 million | 0/$0 |
Other Accounts | 2/$89.1 million | 2/$236.3 million |
* | None of the Accounts has an advisory fee that is based on the performance of the account. |
Types of Accounts Managed by Ihab Salib | Total Number of Additional Accounts Managed/Total Assets* | Additional Accounts/Assets Managed that are Subject to Advisory Fee Based on Account Performance |
Registered Investment Companies | 15/$2.0 billion | 0/$0 |
Other Pooled Investment Vehicles | 6/$521.5 million | 0/$0 |
Other Accounts | 0/$0 | 5/$889.1 billion |
* | None of the Accounts has an advisory fee that is based on the performance of the account. |
Types of Accounts Managed by Todd Abraham | Total Number of Additional Accounts Managed/Total Assets* |
Registered Investment Companies | 18/$5.1 billion |
Other Pooled Investment Vehicles | 0/$0 |
Other Accounts | 0/$0 |
* | None of the Accounts has an advisory fee that is based on the performance of the account. |
Administrative Services Fee Rate | Average Daily Net Assets of the Investment Complex |
0.150 of 1% | on the first $5 billion |
0.125 of 1% | on the next $5 billion |
0.100 of 1% | on the next $10 billion |
0.075 of 1% | on assets over $20 billion |
4000 Ericsson Drive
Warrendale, PA 15086-7561
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
450 Lexington Avenue, Suite 3700
New York, NY, 10017-3943
Federated Equity Management Company of Pennsylvania
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
P.O. Box 8600
Boston, MA 02266-8600
200 Clarendon Street
Boston, MA 02116-5072
K&L Gates LLP
Markit Group Limited
Standard & Poor's Financial Services LLC
Thomson Reuters Corporation
Moody's Investors Service, Inc.
Standard & Poor's Financial Services LLC
Barclays Inc.
Bloomberg L.P.
ByAllAccounts, Inc.
Citibank, N.A.
Informa Investment Solutions, Inc.
Investortools, Inc.
Morningstar, Inc.
MSCI Inc.
SmartStream Technologies, Ltd.
SunGard Data Systems Inc.
The Yield Book, Inc.
Wolters Kluwer N.V.