Federated Hermes Project and Trade Finance Tender Fund
Portfolio of Investments
June 30, 2023 (unaudited)
Foreign Currency Par Amount, Principal Amount or Shares | Acquisition Date1 | Acquisition Cost in U.S. Dollars1 | Value in U.S. Dollars | ||
1 | TRADE FINANCE AGREEMENTS—87.8% | ||||
Banking—15.0% | |||||
$ 5,000,000 | Access Bank PLC, 6.500%, 8/25/2023 | 2/24/2023 | $ 4,903,000 | $ 4,965,848 | |
EUR 8,500,000 | Akbank T.A.S., 7.154%, 11/2/2023 | 5/8/2023- 5/24/2023 | 9,164,594 | 9,275,203 | |
$10,000,000 | 2 | Banco Do Brasil SA, 6.439% (SOFR +1.100%), 8/11/2023 | 11/24/2022 | 10,000,000 | 10,000,000 |
5,000,000 | Banco Santander (Brasil) SA, 5.998%, 8/10/2023 | 5/25/2023 | 5,000,000 | 5,002,789 | |
10,000,000 | Banco Santander (Brasil) SA, 6.136%, 12/15/2023 | 5/17/2023 | 10,000,000 | 9,996,225 | |
EUR 5,000,000 | 2 | Denizbank AS, 6.853% (3-month EURIBOR +0.034%), 11/22/2023 | 4/24/2023 | 5,513,165 | 5,456,002 |
$12,000,000 | 2 | Joint Stock Commercial Bank Agrobank, 9.456% (SOFR +4.500%), 10/13/2023 | 10/17/2022- 3/7/2023 | 12,000,000 | 12,071,999 |
EUR 3,000,000 | QNB Finansbank AS/Turkey, 6.937% (6-month EURIBOR +3.475%), 12/1/2023 | 4/24/2023 | 3,310,439 | 3,273,601 | |
4,500,000 | QNB Finansbank AS/Turkey, 6.962% (6-month EURIBOR +3.500%), 5/30/2024 | 5/24/2023 | 4,742,226 | 4,813,694 | |
$ 4,655,000 | 2 | Sonangol Finance Ltd. (“SFL”), Inc. in Cayman Islands, a wholly owned subsidiary of Sonangol EP, Term Loan, Series 2025 TF, 9.393% (1-month USLIBOR +4.200%), 1/29/2025 | 5/24/2023 | 4,621,275 | 4,655,000 |
EUR 3,000,000 | 2 | The National Bank for Foreign Economic Activity of the Republic of Uzbekistan (“NBU”), 7.218% (6-month EURIBOR +3.400%), 6/18/2024 | 4/24/2023 | 3,310,439 | 3,273,601 |
8,750,000 | Turikiye Vakiflar Bankasi T.A.O., Turkey, 6.937% (3-month EURIBOR +3.500%), 11/30/2023 | 5/8/2023- 5/18/2023 | 9,446,109 | 9,548,003 | |
5,000,000 | Turkiey Ihracat Kredi Bankasi A.S., 7.313%, 11/16/2023 | 5/8/2023 | 5,464,221 | 5,456,002 | |
TOTAL | 87,787,967 | ||||
Basic Industry - Forestry/Paper—0.0% | |||||
$ 75,000 | 2 | Bahia Cellulose, 8.156% (1-month USLIBOR +3.000%), 7/18/2023 | 11/20/2017 | 75,112 | 75,000 |
Basic Industry - Metals/Mining Excluding Steel—6.9% | |||||
5,400,000 | 2 | China Hongqiao Group Ltd., 9.017% (1-month USLIBOR +3.800%), 3/30/2024 | 6/3/2021 | 5,400,000 | 5,400,000 |
5,500,000 | 2 | Harmony Gold Mining Co. Ltd., 8.100% (SOFR +3.050%), 6/8/2025 | 7/31/2018- 7/6/2021 | 5,507,949 | 5,508,164 |
11,224,750 | Mosaic Fertilizantes P&K Ltd., Brazil and/or Mosaic Feritilizantes Ltd, 6.000%, 10/31/2023 | 2/21/2023- 5/10/2023 | 10,953,696 | 11,213,315 | |
10,000,000 | 2 | PJSC Acron, 6.870% (1-month USLIBOR +1.700%), 5/18/2026 | 11/26/2021 | 10,000,000 | 9,789,590 |
8,000,000 | 2 | PJSC MMC Norilsk Nickel, 6.550% (SOFR +1.400%), 2/20/2025 | 11/30/2020- 10/22/2021 | 7,958,425 | 7,627,264 |
700,000 | 2 | Tasiast Mauritanie Ltd. SA, 8.500% (6-month USLIBOR +0.042%), 12/15/2027 | 10/15/2020 | 700,000 | 700,000 |
TOTAL | 40,238,333 | ||||
Building & Development—0.7% | |||||
4,275,000 | 2 | IHS Zambia Ltd., 10.248% (3-month USLIBOR +5.000%), 12/15/2027 | 11/26/2021 | 4,269,537 | 4,193,500 |
Building Materials—0.5% | |||||
3,254,308 | Cemex S.A.B de C.V., 6.440%, 9/26/2023 | 4/4/2023 | 3,153,588 | 3,206,102 | |
Communications - Telecom Wirelines—0.6% | |||||
EUR 3,200,000 | 2 | Telekom Srbija a.d. Beograd, 8.710% (6-month EURIBOR +4.950%), 6/1/2026 | 5/30/2023 | 3,433,440 | 3,491,841 |
Consumer Goods - Food - Wholesale—0.9% | |||||
$ 206,250 | 2 | Ghana Cocoa Board, 9.798% (6-month USLIBOR +4.400%), 11/12/2024 | 8/11/2021 | 206,250 | 199,962 |
4,735,294 | 2 | International Beverage Tashkent, 9.811% (3-month USLIBOR +4.500%), 12/29/2026 | 12/28/2021- 3/8/2022 | 4,735,294 | 4,735,294 |
894,737 | 2,3,4,5 | Vicentin SAIC II, 11.260% (3-month USLIBOR +6.000%), 1/15/2024 | 1/8/2018- 2/21/2018 | 894,737 | 134,211 |
TOTAL | 5,069,467 |
1
Foreign Currency Par Amount, Principal Amount or Shares | Acquisition Date1 | Acquisition Cost in U.S. Dollars1 | Value in U.S. Dollars | ||
1 | TRADE FINANCE AGREEMENTS—continued | ||||
Energy - Exploration & Production—8.9% | |||||
$11,000,000 | 2 | Azule Energy Holding Ltd., 9.550% (SOFR +4.500%), 7/29/2029 | 10/27/2022- 12/19/2022 | $10,920,000 | $ 10,986,704 |
11,000,000 | 2 | CC Energy Development Ltd., 8.914% (SOFR +3.750%), 7/1/2028 | 8/31/2022 | 11,000,000 | 11,000,000 |
8,423,441 | 2 | FPF005 PTE Ltd. Singapore, Inc., 8.138% (3-month USLIBOR +2.600%), 8/13/2024 | 6/16/2022 | 8,383,791 | 8,423,441 |
153,846 | 2 | SOCAR Energy ’18, 7.536% (3-month USLIBOR +2.200%), 11/8/2023 | 11/26/2019 | 153,154 | 153,846 |
5,000,000 | 2 | SOCAR Energy, 8.563% (6-month USLIBOR +3.450%), 8/11/2026 | 8/11/2021 | 4,957,500 | 5,000,000 |
6,145,626 | 2 | Sonangol Finance Ltd., 9.443% (1-month USLIBOR +4.250%), 12/20/2023 | 12/16/2022 | 6,091,722 | 6,133,187 |
3,800,000 | 2 | Sonangol Finance Ltd., 10.467% (1-month USLIBOR +5.250%), 9/30/2026 | 9/15/2021 | 3,762,000 | 3,800,000 |
6,666,667 | 2 | State Oil Co Of The Azer, 7.940% (6-month USLIBOR +2.700%), 2/22/2024 | 5/4/2021- 3/7/2023 | 6,606,417 | 6,661,792 |
TOTAL | 52,158,970 | ||||
Energy - Gas Distribution—3.4% | |||||
4,525,719 | 2 | Papua New Guinea Liquefied Natural Gas Global Company, 9.400% (6-month USLIBOR +3.500%), 6/15/2026 | 4/14/2023 | 4,480,462 | 4,525,719 |
1,444,632 | 2 | Papua New Guinea Liquefied Natural Gas Global Company, 9.900% (6-month USLIBOR +4.250%), 6/15/2024 | 4/14/2023 | 1,444,632 | 1,444,632 |
12,597,990 | 2 | Venture Global Calcasieu Pass LLC, 7.287% (1-month USLIBOR +2.625%), 8/19/2026 | 1/28/2021- 2/10/2023 | 12,556,904 | 12,597,990 |
1,137,333 | 2 | Venture Global Plaquemines LNG LLC, 7.077% (SOFR +1.975%), 5/25/2029 | 12/15/2022 | 1,137,333 | 1,137,333 |
TOTAL | 19,705,674 | ||||
Energy - Integrated Energy—1.1% | |||||
1,914,248 | 2 | Staatsolie Maatschappij Suriname NV, 10.829% (3-month USLIBOR +2.500%), 1/25/2028 | 6/30/2021 | 1,914,248 | 1,914,248 |
4,286,615 | 2 | Staatsolie Maatschappij Suriname NV, 7.400% (SOFR +2.600%), 1/25/2028 | 6/30/2021 | 4,286,615 | 4,286,615 |
TOTAL | 6,200,863 | ||||
Energy - Oil Refining and Marketing—5.9% | |||||
184,914 | 2 | Dangote, 11.735% (6-month USLIBOR +6.500%), 8/31/2023 | 2/6/2017 | 182,684 | 184,741 |
671,141 | 2 | Preem AB, 8.934% (1-month USLIBOR +3.850%), 6/21/2025 | 6/20/2023 | 671,141 | 671,141 |
8,045,482 | 2 | Trafigura Pte Ltd., 7.084% (1-month USLIBOR +2.000%), 9/30/2023 | 9/23/2022 | 8,045,482 | 8,045,482 |
5,250,000 | 2 | Trafigura Pte Ltd., AUS, 6.418% (1-month USLIBOR +2.000%), 6/30/2024 | 12/20/2022 | 5,250,000 | 5,250,000 |
5,750,000 | 2 | Trafigura Pte Ltd., NZ, 7.174% (1-month USLIBOR +2.000%), 5/5/2024 | 12/20/2022- 1/20/2023 | 5,750,000 | 5,750,000 |
2,971,698 | 2 | Yinson Bergenia Production, 8.945% (90-DAY AVERAGE SOFR +3.900%), 6/10/2028 | 3/6/2023- 6/21/2023 | 2,971,698 | 2,968,612 |
12,000,000 | 2 | Yinson Boronia Production, 8.523% (3-month USLIBOR +3.250%), 8/11/2026 | 12/17/2021- 8/19/2022 | 12,000,000 | 12,000,000 |
TOTAL | 34,869,976 | ||||
Farming & Agriculture—0.6% | |||||
3,499,368 | 2 | Cocobod PXF 2023 Facility Drawdown, 6.834% (SOFR +1.750%), 8/31/2023 | 11/30/2022- 3/13/2023 | 3,499,368 | 3,499,368 |
Foreign Sovereign—17.2% | |||||
5,000,000 | African Export-Import Bank (Afreximbank), 6.187%, 4/29/2024 | 5/1/2023 | 5,000,000 | 4,996,561 | |
5,628,375 | Bangladesh, Government of, 6.181%, 7/31/2023 | 12/29/2022- 1/25/2023 | 5,628,375 | 5,627,865 | |
EUR 412,000 | 2 | Bank of Industry Ltd. - Central Bank of Nigeria, 7.883% (3-month EURIBOR +4.500%), 2/14/2025 | 3/17/2020 | 452,046 | 449,575 |
$ 1,333,800 | 2 | Bank of Industry Ltd. - Central Bank of Nigeria, 11.510% (3-month USLIBOR +6.000%), 12/11/2023 | 4/21/2021 | 1,347,138 | 1,333,800 |
EUR 5,200,000 | 2 | Benin, Government of, 8.182% (6-month EURIBOR +4.300%), 12/21/2026 | 12/23/2021 | 5,893,941 | 5,674,242 |
4,800,000 | Benin, Government of, 8.182%, 12/21/2026 | 12/21/2021 | 5,415,841 | 4,891,871 | |
7,000,000 | Burkina Faso, Government of, 3.600%, 3/1/2024 | 3/22/2023- 5/31/2023 | 7,612,198 | 7,638,402 |
2
Foreign Currency Par Amount, Principal Amount or Shares | Acquisition Date1 | Acquisition Cost in U.S. Dollars1 | Value in U.S. Dollars | ||
1 | TRADE FINANCE AGREEMENTS—continued | ||||
Foreign Sovereign—continued | |||||
EUR 5,000,000 | Cote D’Ivoire, Government of, 5.355%, 5/22/2024 | 4/24/2023 | $ 5,513,165 | $ 5,456,002 | |
3,500,000 | Cote D’Ivoire, Government of, 8.880%, 12/31/2025 | 2/3/2023 | 3,778,074 | 3,836,012 | |
10,001,000 | 2 | Cote D’Ivoire, Government of, 7.443% (3-month EURIBOR +2.900%), 12/7/2023 | 5/17/2022- 6/21/2022 | 10,545,523 | 10,913,095 |
4,000,000 | 2 | Cote D’Ivoire, Government of, 7.519% (1-month EURIBOR +4.050%), 12/13/2023 | 3/9/2023 | 4,222,766 | 4,364,801 |
$ 1,940,973 | Egypt, Government of, 3.680%, 11/24/2023 | 7/4/2022- 11/20/2022 | 1,940,973 | 1,887,398 | |
9,899,317 | Egypt, Government of, 7.427%, 5/24/2024 | 1/3/2023- 5/24/2023 | 9,871,817 | 9,458,404 | |
6,000,000 | 2 | Energy Development Oman, 7.584% (3-month USLIBOR +2.950%), 8/14/2028 | 11/2/2021- 11/5/2021 | 5,969,544 | 6,000,000 |
EUR 3,500,000 | 2 | Minister of Finance of Ukraine, 7.622% (3-month EURIBOR +4.100%), 9/1/2026 | 8/26/2021 | 4,114,075 | 2,899,686 |
3,889,200 | 2 | MOF Ivory Coast, 8.880% (6-month EURIBOR +0.037%), 12/28/2023 | 9/4/2019- 8/25/2021 | 4,501,364 | 4,128,675 |
8,000,000 | 2 | Senegal, Government of, 7.819% (3-month EURIBOR +4.350%), 3/1/2026 | 6/9/2023 | 8,596,798 | 8,729,603 |
$ 187,500 | 2 | Sharjah Govt., 6.698% (3-month USLIBOR +1.200%), 3/4/2024 | 9/21/2020 | 186,562 | 187,500 |
EUR 1,938,256 | Societe Nationale d’Electricite du Senegal, 4.450%, 10/2/2023 | 4/3/2023 | 2,113,960 | 2,115,026 | |
$10,000,000 | 2 | The Federal Republic of Nigeria acting by and through the Federal Ministry of Finance, Budget and National Planning of Nigeria (“MOF”), 11.413% (3-month USLIBOR +5.950%), 12/30/2023 | 9/1/2022- 1/19/2023 | 10,000,000 | 10,000,000 |
TOTAL | 100,588,518 | ||||
Government Agency—1.8% | |||||
EUR 9,979,180 | Republic of Senegal, represented by the Ministry of Economy, Planning & Corporation, 6.745%, 4/5/2024 | 1/11/2023- 4/17/2023 | 10,829,149 | 10,820,833 | |
Lease—2.3% | |||||
$ 4,805,675 | 2 | AerCap Holdings NV, 6.988% (3-month USLIBOR +1.450%), 12/31/2025 | 11/23/2021 | 4,808,986 | 4,791,364 |
9,000,000 | 2 | Far East Horizon Ltd., 6.908% (3-month USLIBOR +1.400%), 9/10/2024 | 9/15/2021 | 9,000,000 | 9,000,000 |
TOTAL | 13,791,364 | ||||
Machinery—2.4% | |||||
8,789,736 | Dover Corporation and its subsidiaries, 5.885%, 11/6/2023 | 4/13/2023- 6/27/2023 | 8,649,401 | 8,884,854 | |
5,115,948 | MTD Products, Inc. and other subsidiaries of the Parent, 5.875%, 8/30/2023 | 4/24/2023- 5/11/2023 | 5,033,582 | 5,100,531 | |
TOTAL | 13,985,385 | ||||
Metals & Mining—1.7% | |||||
10,000,000 | 2 | Navoi Mining and Metallurgical Company, 9.815% (90-DAY AVERAGE SOFR +4.760%), 4/20/2027 | 11/24/2022 | 9,999,500 | 10,000,000 |
Oil Field Services—1.7% | |||||
9,898,069 | 2 | Sonasing Xikomba Ltd. (“Xikomfa”), Bermuda, Inc., 7.620% (3-month USLIBOR +2.300%), 5/29/2026 | 5/17/2022- 11/4/2022 | 9,900,854 | 9,898,069 |
Packaging—1.5% | |||||
8,666,253 | Westrock Shared Services, LLC and other subsidiaries of the Parent, 5.848%, 10/2/2023 | 4/27/2023- 6/26/2023 | 8,527,694 | 8,666,253 | |
Supranational—2.6% | |||||
9,000,000 | 2 | Africa Finance Corp., 6.059% (3-month USLIBOR +0.900%), 1/17/2025 | 3/11/2022 | 9,000,000 | 9,000,000 |
1,246,342 | African Export-Import Bank (Afreximbank), 2.947%, 9/5/2023 | 9/6/2022 | 1,246,343 | 1,242,953 | |
5,000,000 | 2 | Eastern and Southern African Trade and Development Bank, 6.614% (90-DAY AVERAGE SOFR +1.350%), 8/23/2024 | 2/9/2023 | 4,936,750 | 4,861,572 |
TOTAL | 15,104,525 | ||||
Technology & Electronics - Tech Hardware & Equipment—0.7% | |||||
4,172,902 | Datatec PLC, 5.650%, 9/15/2023 | 6/12/2023- 6/16/2023 | 4,091,771 | 4,169,157 |
3
Foreign Currency Par Amount, Principal Amount or Shares | Acquisition Date1 | Acquisition Cost in U.S. Dollars1 | Value in U.S. Dollars | ||
1 | TRADE FINANCE AGREEMENTS—continued | ||||
Telecommunications - Wireless—5.7% | |||||
$10,000,000 | 2 | IHS Holding Ltd., Cayman Islands, Inc., 8.989% (SOFR +3.750%), 10/28/2025 | 12/13/2022 | $ 9,795,000 | $ 10,000,000 |
6,100,000 | 2 | Phoenix Tower International Spain ETVE, S.L.U., 9.242% (SOFR +4.000%), 8/10/2027 | 11/21/2022 | 6,951,000 | 6,661,273 |
EUR 7,000,000 | 2 | PTI Iberica IV, Spanish, Inc., 7.450% (3-month EURIBOR +0.035%), 6/26/2028 | 9/28/2021- 12/22/2022 | 7,114,888 | 7,005,626 |
8,750,000 | 2 | TDC Net A/S, 4.954% (3-month EURIBOR +2.300%), 2/2/2027 | 3/28/2023 | 9,491,567 | 9,548,003 |
TOTAL | 33,214,902 | ||||
Transportation - Airlines—0.2% | |||||
$ 1,286,773 | 2 | Avolon Aerospace, 3.026% (1-month USLIBOR +1.600%), 3/31/2025 | 11/27/2019 | 1,346,375 | 1,223,217 |
Transportation - Transport Infrastructure/Services—2.2% | |||||
EUR 7,500,000 | 2 | Fraport TAV Antalya Yatirim Yapim ve Isletme (SPV, Turkey), 9.443% (6-month EURIBOR +5.500%), 3/25/2024 | 9/1/2022 | 7,461,001 | 8,227,480 |
$ 5,000,000 | 2 | Impala Terminals Switzerland SAR, 8.060% (SOFR +1.900%), 8/13/2025 | 3/28/2023 | 4,901,667 | 4,910,656 |
TOTAL | 13,138,136 | ||||
Utility - Electric—1.3% | |||||
EUR 7,000,000 | 2 | Eesti Energia AS, 7.784% (3-month EURIBOR +4.500%), 5/11/2028 | 5/5/2023 | 7,712,249 | 7,638,402 |
Utility - Electric-Generation—2.0% | |||||
$ 5,040,000 | 2 | Karadeniz Powership Osman Khan Co., Ltd., 10.550% (6-month USLIBOR +5.500%), 9/15/2026 | 10/14/2021 | 4,989,600 | 5,037,377 |
1,666,666 | 2 | Karpower International B.V., 13.843% (6-month USLIBOR +8.500%), 11/16/2023 | 2/21/2023 | 1,667,417 | 1,664,938 |
2,162,000 | 2 | Karpower International DMCC (opco, Dubai) (“Karpower Reef”), 11.742% (SOFR +6.500%), 6/30/2026 | 5/10/2023 | 2,134,975 | 2,150,458 |
1,935,272 | 2 | Karpowership, 9.735% (6-month USLIBOR +4.500%), 2/28/2025 | 7/30/2020- 7/9/2021 | 1,915,921 | 1,941,454 |
339,312 | 2 | SMN Barka Power Company S.A.O.C., 6.496% (6-month USLIBOR +1.250%), 3/28/2024 | 12/2/2020 | 312,167 | 334,662 |
769,231 | 2 | The Sharjah Electricity and Water Authority, 7.448% (1-month USLIBOR +1.950%), 12/23/2025 | 12/21/2020 | 767,884 | 769,231 |
TOTAL | 11,898,120 | ||||
TOTAL TRADE FINANCE AGREEMENTS (IDENTIFIED COST $516,673,491) | 514,633,942 | ||||
INVESTMENT COMPANY—9.5% | |||||
55,565,694 | Federated Hermes Institutional Prime Value Obligations Fund, Institutional Shares, 5.19%6 (IDENTIFIED COST $55,545,635) | 55,554,581 | |||
TOTAL INVESTMENT IN SECURITIES—97.3% (IDENTIFIED COST $572,219,126) | 570,188,523 | ||||
OTHER ASSETS AND LIABILITIES - NET—2.7%7 | 15,713,247 | ||||
TOTAL NET ASSETS—100% | $585,901,770 |
At June 30, 2023, the Fund had the following outstanding foreign exchange contracts:
Settlement Date | Counterparty | Foreign Currency Units to Deliver/Receive | In Exchange For | Net Unrealized Appreciation/ (Depreciation) | |
Contracts Sold: | |||||
7/14/2023 | State Street Bank & Trust Co. | 3,200,000 | EUR | $3,446,041 | $(47,300) |
7/14/2023 | State Street Bank & Trust Co. | 1,400,000 | EUR | $1,499,332 | $(29,005) |
7/14/2023 | Bank Of New York | 4,987,500 | EUR | $5,350,415 | $(94,285) |
7/14/2023 | State Street Bank & Trust Co. | 62,242,250 | EUR | $67,081,902 | $(866,046) |
7/27/2023 | Barclays Bank | 73,886,000 | EUR | $81,179,080 | $468,164 |
NET UNREALIZED DEPRECIATION ON FOREIGN EXCHANGE CONTRACTS | $(568,472) |
4
The average value at settlement date payable and receivable of foreign exchange contracts purchased and sold by the Fund throughout the period was $877,551 and $1,034,923, respectively. This is based on the contracts held as of each month-end throughout the three-month fiscal period.
Net Unrealized Depreciation on Foreign Exchange Contracts is included in “Other Assets and Liabilities—Net.”
Transactions with affiliated investment companies, which are funds managed by the Adviser or an affiliate of the Adviser, during the period ended June 30, 2023, were as follows:
Federated Hermes Institutional Prime Value Obligations Fund, Institutional Shares | |
Value as of 3/31/2023 | $90,363,791 |
Purchases at Cost | $80,248,092 |
Proceeds from Sales | $(115,056,960) |
Change in Unrealized Appreciation/Depreciation | $(6,499) |
Net Realized Gain/(Loss) | $6,157 |
Value as of 6/30/2023 | $55,554,581 |
Shares Held as of 6/30/2023 | 55,565,694 |
Dividend Income | $958,147 |
1 | Denotes a restricted security that either: (a) cannot be offered for public sale without first being registered, or availing of an exemption from registration, under the Securities Act of 1933; or (b) is subject to a contractual restriction on public sales. At June 30, 2023, these restricted securities amounted to $514,633,942, which represented 87.8% of total net assets. |
2 | Floating/variable note with current rate and current maturity or next reset date shown. |
3 | Issuer in default. |
4 | Market quotations and price valuations are not available. Fair value determined using significant unobservable inputs in accordance with procedures established by and under the supervision of the Fund’s Adviser acting through its Valuation Committee. |
5 | Non-income-producing security. |
6 | 7-day net yield. |
7 | Assets, other than investments in securities, less liabilities. |
Note: The categories of investments are shown as a percentage of total net assets at June 30, 2023.
Investment Valuation
In calculating its net asset value (NAV), the Fund generally values investments as follows:
◾ Fixed-income securities are fair valued using price evaluations provided by a pricing service approved by the Federated Investment Management Company (the “Adviser”).
◾ Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
◾ Shares of other mutual funds or non-exchange-traded investment companies are valued based upon their reported NAVs, or NAV per share practical expedient, as applicable.
◾ 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 ask quotations.
◾ Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Adviser.
◾ For securities that are fair valued in accordance with procedures established by and under the general supervision of the Adviser, certain factors may be considered, such as: the last traded or purchase price of the security, information obtained by contacting the issuer or dealers, analysis of the issuer’s financial statements or other available documents, fundamental analytical data, the nature and duration of restrictions on disposition, the movement of the market in which the security is normally traded, public trading in similar securities or derivative contracts of the issuer or comparable issuers, movement of a relevant index, expected recovery rate on distressed securities, opinion of legal counsel regarding the outcome of any relevant legal matters or other factors including but not limited to industry changes and relevant government actions.
If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, if the Fund cannot obtain price evaluations from a pricing service or from more than one dealer for an investment within a reasonable period of time as set forth in the Adviser’s valuation policies and procedures for the Fund, or if information furnished by a pricing service, in the opinion of the Adviser’s valuation committee (“Valuation Committee”), is deemed not representative of the fair value of such security, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines its NAV per share, and the actual value obtained could be materially different.
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Fair Valuation and Significant Events Procedures
Pursuant to Rule 2a-5 under the Investment Company Act of 1940, the Fund’s Board of Trustees (the “Trustees”) has designated the Adviser as the Fund’s valuation designee to perform any fair value determinations for securities and other assets held by the Fund. The Adviser is subject to the Trustees’ oversight and certain reporting and other requirements intended to provide the Trustees the information needed to oversee the Adviser’s fair value determinations.
The Adviser, acting through its Valuation Committee, is responsible for determining the fair value of investments for which market quotations are not readily available. The Valuation Committee is comprised of officers of the Adviser and certain of the Adviser’s affiliated companies and determines fair value and oversees the calculation of the NAV. The Valuation Committee is also authorized to use pricing services to provide fair value evaluations of the current value of certain investments for purposes of calculating the NAV. The Valuation Committee employs various methods for reviewing third-party pricing-service evaluations including periodic reviews of third-party pricing services’ policies, procedures and valuation methods (including key inputs, methods, models and assumptions), transactional back-testing, comparisons of evaluations of different pricing services, and review of price challenges by the Adviser based on recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee determines the fair value of the investment in accordance with procedures adopted by the Adviser. The Trustees periodically review the fair valuations made by the Valuation Committee. The Trustees have also approved the Adviser’s fair valuation and significant events procedures as part of the Fund’s compliance program and will review any changes made to the procedures.
The Fund’s investments in trade finance agreements are primarily determined by applying discounted cash flow methodologies utilizing various inputs such as available or implied credit ratings, loan characteristics, seniority, collateral, comparable debt instruments, yield curves or indices, broader loan data, bond data and bond sector curves. When appropriate, other considerations may include asset liquidation analyses, internal credit assessments and general market conditions. The Fund utilizes third-party pricing specialists in determining its valuations. Typically, there are no other sources of evaluations for these investments and the inputs utilized are less observable. Additionally, trade finance agreements are typically held to maturity by investors and therefore do not trade on a consistent basis. Accordingly, executed trade prices are usually unavailable and thus, generally cannot be relied upon to support valuations of these investments. Therefore, inputs unobservable in active markets must be relied upon more heavily and as such, the Fund’s management has determined these to be Level 3 investments. The prices realized for these investments upon sale may be different than prices used by the Fund to value them and the differences could be material.
Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a “bid” evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and ask for the investment (a “mid” evaluation). The Fund normally uses bid evaluations for any U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for any other types of fixed-income securities and any OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with the Adviser’s procedures.
The Adviser has also adopted procedures requiring an investment to be priced at its fair value whenever the Valuation Committee determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment’s value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:
◾ 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;
◾ Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, or a natural disaster affecting the issuer’s operations or regulatory changes or market developments affecting the issuer’s industry.
The Adviser has adopted procedures whereby the Valuation Committee uses a pricing service to provide factors to update the fair value of equity securities traded principally in foreign markets from the time of the close of their respective foreign stock exchanges to the pricing time of the Fund. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Valuation Committee will determine the fair value of the investment in accordance with the fair valuation procedures approved by the Adviser. The Trustees periodically review fair valuations made in response to significant events.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Level 1—quoted prices in active markets for identical securities.
Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Also includes securities valued at amortized cost.
Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
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The following is a summary of the inputs used, as of June 30, 2023, in valuing the Fund’s assets carried at fair value:
Valuation Inputs | ||||
Level 1— Quoted Prices | Level 2— Other Significant Observable Inputs | Level 3— Significant Unobservable Inputs | Total | |
Debt Securities: | ||||
Trade Finance Agreements | $— | $— | $514,633,942 | $514,633,942 |
Investment Company | 55,554,581 | — | — | 55,554,581 |
TOTAL SECURITIES | $55,554,581 | $— | $514,633,942 | $570,188,523 |
Other Financial Instruments1 | ||||
Assets | $— | $468,164 | $— | $468,164 |
Liabilities | — | (1,036,636) | — | (1,036,636) |
TOTAL OTHER FINANCIAL INSTRUMENTS | $— | $(568,472) | $— | $(568,472) |
1 | Other financial instruments are foreign exchange contracts. |
Trade finance agreements’ fair values are primarily derived from discounted cash flow methodologies utilizing unobservable inputs due to the lack of market transactions. The discount rate used within the methodologies to discount the future anticipated cash flows is considered a significant unobservable input. Increases/(decreases) in the discount rate would result in a (decrease)/increase to an investment’s fair value.
Following is a reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value:
Investments in Trade Finance Agreements | |
Balance as of 3/31/2023 | $472,021,560 |
Accreted/amortized discount/premiums | 785,756 |
Realized gain (loss) | 695,914 |
Change in unrealized appreciation/depreciation | 1,799,484 |
Purchases | 189,344,686 |
(Sales) | (150,013,458) |
Balance as of 6/30/2023 | $514,633,942 |
Total change in unrealized appreciation/depreciation attributable to investments still held at 6/30/2023 | $1,792,985 |
The following acronym(s) are used throughout this portfolio: | ||
EUR | —Euro | |
EURIBOR | —Euro Interbank Offered Rate | |
LIBOR | —London Interbank Offered Rate | |
SOFR | —Secured Overnight Financing Rate |
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