Federated International Leaders Fund

Transcription

1 3/31/ Fund Facts Performance Inception Date 9/30/98 Benchmark Morningstar Category Foreign Large Blend Lipper Category International Multi-Cap Core Fund Assets $2.0 billion Ticker Symbols R6 Shares - FGRSX Institutional Shares - FGFLX A Shares - FGFAX C Shares - FGFCX R Shares - FGFRX Key Investment Team Marc Halperin Richard Winkowski, Jr. Dariusz Czoch, CFA Fund Description The fund seeks to provide long-term capital growth by investing primarily in developed-market stocks of high-quality, foreign companies that appear to be trading below their intrinsic value. Its high-conviction portfolio typically consists of 40 to 60 companies. Performance Average Annual Total Returns (%) Performance shown is before tax. Expense Ratio* 3 Month YTD Since Inception Before Waivers After Waivers R6 Shares Institutional Shares A Shares (NAV) A Shares (MOP) Benchmark Total Returns % 5% -5% Month Institutional Shares Benchmark Morningstar Category Average Calendar Returns (%) Institutional Shares Benchmark Morningstar Category Average Performance quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than what is stated. To view performance current to the most recent month-end, and for after-tax returns, contact us or visit FederatedInvestors.com. Maximum Offering Price figures reflect the maximum sales charge of 5.5% for A Shares. See the prospectus for other fees and expenses that apply to a continued investment in the fund. * The fund s expense ratio is from the most recent prospectus. The expense ratio may reflect voluntary fee waivers and/or expense reimbursements determined by the fund s Advisor and its affiliates. The voluntary waivers and/or reimbursements, if applicable, are in effect up to but not including the later of 2/1/19 or the date of the fund s next effective prospectus. NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE

2 2018 Investment Process Macro Team s Input/Themes Regular Meetings with Management Financial Statement Analysis Meetings with Industry Competitors Intensive Company Research Portfolio Construction & Risk Monitoring Portfolio Value Screens Portfolio Statistics Country Weightings (%) Weighted Median P/E (LTM).7x Weighted Median P/E (NTM).5x Weighted Median Market Cap $42.6 b Weighted Median Price/Book 1.6x Annual Portfolio Turnover 19.91% Number of Securities 60 Top Holdings (%) Accor SA 3.8 Credit Suisse Group AG 3.5 BNP Paribas SA 3.0 CRH PLC 2.9 Koninklijke Philips NV 2.7 Royal Dutch Shell PLC, Class A Shares 2.7 Kering 2.6 Rheinmetall AG 2.4 DBS Group Holdings Ltd. 2.3 Edenred 2.3 Total % of Portfolio 28.2 France United Kingdom Japan** Germany Switzerland Netherlands Italy Ireland Singapore Hong Kong South Korea Spain Sweden United States Belgium Cash/Cash Equivalents Federated International Leaders Fund Portfolio composition is based on net assets at the close of business on 3/31/18 and may not necessarily reflect adjustments that are routinely made when presenting net assets for formal financial statement purposes. Because this is a managed portfolio, the investment mix will change. Sector Weightings (%) Financials Consumer Discretionary Industrials Health Care Other: Japan Topix Futures Materials Energy Information Technology Consumer Staples Real Estate Telecommunication Services Cash/Cash Equivalents Federated International Leaders Fund **(Includes notional amount 8. in Japan Topix Futures).

3 2018 Highlights Global GDP growth continues. Global interest rates normalize. Elections in Italy and Russia. Thawing of tensions stemming from North Korean aggressions. Impacts from U.S. tariffs on steel and aluminum. Looking Back In the first quarter of 2018, global equity markets performance were mixed with emerging markets outperforming developed markets 1.42% versus -1.53% as measured by the MSCI Emerging Markets Index and the, respectively. While economic data, including employment, manufacturing and investment, remained robust globally, uncertainty stemming from geopolitical risk, along with volatility in domestic markets, weighed on returns. Economic growth continued across the eurozone following GDP growth of 2.7% in 20, the fastest pace since While manufacturing and service PMIs fell from recent highs, both remained well above 50 indicating that the region continued to benefit from expansionary monetary policies. During the quarter, the European Central Bank (ECB) dropped its pledge to expand its bond-buying program marking a change to its easing bias as it looks towards rate normalization and hinted that its quantitative easing (QE) program could end later this year. The decision provided additional support for the euro, which strengthened nearly 3% against the dollar during the quarter, putting pressure on the trade surplus. The labor market also remained resilient as the unemployment level fell to 8.6%, the lowest since In Germany, weeks of negotiations concluded with the formation of a government led by Angela Merkel. The news was welcomed as Merkel s Christian Democratic Union and the Social Democrats agreed to increase spending to support households and an aging infrastructure. The German labor market remained tight as the unemployment rate fell to 5.4%, the lowest level since reunification. In the U.K., despite a 43-year low in unemployment, business sentiment slipped as Brexit negotiations continued. In Italy, consumer confidence rose despite the failure of March s election to result in a majority victory as populist parties made large gains. In Asia, Japan began the year by posting its eighth straight quarter-on-quarter GDP expansion marking the longest streak in nearly three decades. Growth was widespread with private consumption and business investment both positive. Similar to Europe, the labor market was a bright spot with the unemployment rate falling to nearly a 25-year low of 2.4%. The tight labor market helped inflation stay on its upward path with core inflation hitting 1.4% in February, its highest level in three years but still below the 2% target. In China, the National People s Congress (NPC) held its annual meeting where it announced a growth target of 6.5%, which was unchanged from 20. Most notably, the NPC ratified a proposal that removed the two term presidential term limit, enabling President Xi to effectively remain in power indefinitely. Recent data out of the U.S. confirmed the positive outlook for its economy. While employment numbers pointed to a tightening labor market, inflation remained subdued and below the Federal Reserve s (Fed) 2% target. Full-year growth estimates for the overall economy increased as recent tax reform is expected to benefit both households and businesses. New Fed chair Jerome Powell affirmed the positive outlook and hinted at the possibility of four rate hikes this year instead of three. Concerns over a trade war with China following the announcement of a 25% tariff on imported steel and tariff on imported aluminum weighed on equities. The tech sector was under pressure on the news that user data was mishandled by social media companies. Performance Federated International Leaders Fund (A Shares at NAV) returned -0.37% for the quarter ending March 31, That compares to its benchmark, the MSCI EAFE, which returned -1.53% during the period. Performance Contributors Within the fund, the largest positive contributions came from the holdings in the Industrials and Consumer Discretionary sectors as well as banks. The fund s stock selection in Commercial and Professional Services outperformed the benchmark significantly. Strong stock selection within banks was also a positive contributor. In Consumer Discretionary, positive sales in China coupled with a higher concentration on ecommerce and innovation drove fund holding Prada s performance for the quarter. Accor successfully spun off HotelInvest and delivered industry-leading growth from the ongoing revenue recovery in France, Eastern Europe and Brazil. Performance Detractors Negative contributions were primarily attributable to holdings in Consumer Staples, specifically Tobacco companies and select Financials. In Financials, insurer AXA s acquisition of XL Group was not well received by the market as investors hopes had been for increased share buybacks and more modest acquisitions. ABN AMRO Group NV was down as it reported mundane earnings and a disappointing dividend and Credit Suisse Group lagged for the quarter following weaker-than-expected recovery in trading. Performance quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than what is stated. To view performance current to the most recent month-end, and for after-tax returns, contact us or visit FederatedInvestors.com. See disclosure section for important disclosures and definitions.

4 2018 Risk Statistics Standard Deviation Alpha Beta R Sources: Federated Investors, Morningstar, Inc. Fund vs. See disclosure section for important definitions. 5- Risk/Return Return Higher Return, Lower Risk % 5% Lower Return, Higher Risk 5% % Risk (Standard Deviation) Federated International Leaders Fund (IS) History of Outperformance vs. Benchmark and the MSCI Europe Large Cap Index 3 25% Total Returns % 5% -5% 3/31/ 9/30/ 3/31/ 9/30/ 3/31/ 9/30/ 3/31/ 9/30/ 3/31/ 9/30/ 3/31/18 Federated International Leaders Fund (IS) MSCI Europe Large Cap Index Source: Morningstar, Inc. Quarterly rolling 5-year returns. Performance quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than what is stated. To view performance current to the most recent month-end, and for after-tax returns, contact us or visit FederatedInvestors.com.

5 Rolling Returns (IS) 3-18 Performance quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than what is stated. To view performance current to the most recent month-end, and for after-tax returns, contact us or visit FederatedInvestors.com. Category Rankings Morningstar Foreign Large Blend Category R6 Shares Morningstar Category % Rank 77 4 Morningstar Category Rank 98 of 768 Funds 452 of 605 Funds IS Shares Morningstar Category % Rank 79 4 Morningstar Category Rank 106 of 768 Funds 466 of 605 Funds 68 of 536 Funds A Shares Morningstar Category % Rank Morningstar Category Rank 5 of 768 Funds 501 of 605 Funds 94 of 536 Funds of 355 Funds Lipper International Multi-Cap Core R6 Shares Lipper Category % Rank 80 Lipper Category Rank 55 of 420 Funds 264 of 330 Funds IS Shares Lipper Category % Rank 82 Lipper Category Rank 59 of 420 Funds 270 of 330 Funds 46 of 282 Funds A Shares Lipper Category % Rank Lipper Category Rank 72 of 420 Funds 286 of 330 Funds 68 of 282 Funds 8 of 185 Funds Past performance is no guarantee of future results. Rankings are based on total return and do not take sales charges into account.

6 2018 Investors should carefully consider the fund s investment objectives, risks, charges and expenses before investing. To obtain a summary prospectus or a prospectus containing this and other information, contact us or visit FederatedInvestors.com. Please carefully read the summary prospectus or the prospectus before investing. These materials include general information and have not been tailored for any specific recipient or recipients. Accordingly, these materials are not intended to cause Federated or any affiliate to become a fiduciary within the meaning of Section 3(21)(A)(ii) of the Employee Retirement Income Security Act of 1974, as amended or Section 4975(e)(3)(B) of the Internal Revenue Code of 1986, as amended. The fund s Institutional Shares commenced operations on June 21, For the period prior to the commencement of operations for the Institutional Shares, the performance information shown is for the fund s A Shares. The performance of the A Shares has not been adjusted to reflect the expenses of the Institutional Shares since the Institutional Shares have a lower expense ratio than the expense ratio of the A Shares. The performance of the A Shares has been adjusted to reflect the absence of sales charges and to remove any voluntary waiver of the fund s expenses related to the A Shares that may have occurred during the period prior to the commencement of operations of the Institutional Shares. The fund s R6 Shares commenced operations on August 8, 20. For the period prior to the commencement of operations of the R6 Shares, the R6 Shares performance information shown is for the A Shares. The performance of the A Shares has not been adjusted to reflect the expenses of the R6 Shares, since the R6 Shares have a lower expense ratio than the expense ratio of the A Shares. The performance of the A Shares has been adjusted to reflect the absence of sales charges and to remove any voluntary waiver of fund expenses related to the A Shares that may have occurred during the period prior to the commencement of operations of the R6 Shares. A Word About Risk Mutual funds are subject to risks and fluctuate in value. International investing involves special risks, including currency risk, increased volatility, political risks, and differences in auditing and other financial standards. Prices of emerging market and frontier market 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. Definitions is an equity index which captures large- and mid-cap representation across developed markets countries around the world, excluding the U.S. and Canada. The index covers approximately 85% of the free float-adjusted market capitalization in each country. MSCI Europe Large Cap Index Captures large cap representation across Developed Markets (DM) countries in Europe. With 201 constituents, the index covers approximately 7 of the free float-adjusted market capitalization across the European Developed Markets equity universe. Indexes are unmanaged and cannot be invested in directly. Alpha shows how much or how little return is generated, given the risk a portfolio takes. A portfolio with an Alpha greater than 0 has earned more than expected given its Beta meaning the portfolio has generated excess return without increasing risk. A portfolio with a negative Alpha is producing a lower return than would be expected given its risk. Beta measures a portfolio s volatility relative to the market. A Beta greater than 1.00 suggests the portfolio has historically been more volatile than the market as measured by the fund s benchmark. A Beta less than 1.00 suggests the portfolio has historically had less volatility relative to the market. R-Squared indicates what percentage of a portfolio s movement in performance is explained by movement in performance of the market. R-squared ranges from 0 to 100, and a score of 100 suggests that all movements of a portfolio s performance are completely explained by movements in the market as measured by the fund s benchmark. Standard Deviation is a historical measure of the variability of returns relative to the average annual return. A higher number indicates higher overall volatility. Weighted Median P/E (LTM Latest 12 Months) is a ratio comparing share price to earnings per share using data from the previous 12 months. Weighted Median P/E (NTM Next 12 Months) is a ratio comparing share price to earnings per share using estimated data for the next 12 months. Weighted Median Price/Book is a ratio comparing share price to book value or assets minus liabilities. Weighted Median Market Cap is the calculation representing the median market capitalization of the stocks in the portfolio, weighted by the amount of each stock. Ratings and Rating Agencies Lipper Categories: Data Source: Lipper, A Reuters Company. Copyright 2018 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. Morningstar Category identifies funds based on their actual investment styles as measured by their underlying portfolio holdings over the past three years. If the fund is less than three years old, the category is based on the life of the fund Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. G (4/18) Federated Securities Corp., Distributor Federated is a registered trademark of Federated Investors, Inc Federated Investors, Inc.