United States
Securities and Exchange Commission
Washington, D.C. 20549
Form N-CSR
Certified Shareholder Report of Registered Management Investment Companies
811-7193
(Investment Company Act File Number)
Federated Hermes Institutional Trust
_______________________________________________________________
(Exact Name of Registrant as Specified in Charter)
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, Pennsylvania 15086-7561
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
Peter J. Germain, Esquire
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
(Notices should be sent to the Agent for Service)
Date of Fiscal Year End: 10/31/20
Date of Reporting Period: 10/31/20
| Item 1. | Reports to Stockholders |
Annual Shareholder Report
October 31, 2020
Federated Hermes Institutional High Yield Bond Fund(formerly, Federated Institutional High Yield Bond Fund)
Fund Established 2002
A Portfolio of Federated Hermes Institutional Trust(formerly, Federated Institutional Trust)
IMPORTANT NOTICE REGARDING REPORT DELIVERY
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund or your financial intermediary electronically by contacting your financial intermediary (such as a broker-dealer or bank); other shareholders may call the Fund at 1-800-341-7400, Option 4.
You may elect to receive all future reports in paper free of charge. You can inform the Fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by contacting your financial intermediary (such as a broker-dealer or bank); other shareholders may call the Fund at 1-800-341-7400, Option 4. Your election to receive reports in paper will apply to all funds held with the Fund complex or your financial intermediary.
Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee
J. Christopher
Donahue
President
Federated Hermes Institutional High Yield Bond Fund
Letter from the President
Dear Valued Shareholder,
I am pleased to present the Annual Shareholder Report for your fund covering the period from November 1, 2019 through October 31, 2020.
As we all confront the unprecedented effects of the coronavirus and the challenges it presents to our families, communities, businesses and the financial markets, I want you to know that everyone at Federated Hermes is dedicated to helping you successfully navigate the markets ahead. You can count on us for the insights, investment management knowledge and client service that you have come to expect. Please refer to our website, FederatedInvestors.com, for timely updates on this and other economic and market matters.
Thank you for investing with us. I hope you find this information useful and look forward to keeping you informed.
Sincerely, 
J. Christopher Donahue, President
Management’s Discussion of Fund Performance (unaudited)
The total return of Federated Hermes Institutional High Yield Bond Fund (the “Fund”), based on net asset value for the 12-month reporting period ended October 31, 2020, was 3.39% for the Institutional Shares and 3.29% for Class R6 Shares. The 3.39% total return for the Fund’s Institutional Shares for the reporting period consisted of 5.54% of taxable dividends and -2.15% of depreciation in the net asset value of shares. The total return of the Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index (BBHY2%ICI),1 a broad-based securities market index, was 3.42% during the same period. The total return of the Lipper High Yield Funds Average (LHYFA),2 the peer group for the Fund, was 1.91% during the same period. The Fund’s and LHYFA’s total returns for the most recently completed fiscal year reflected actual cash flows, transaction costs and other expenses which were not reflected in the total return of the BBHY2%ICI.
During the reporting period, the most significant factors affecting the Fund’s performance relative to the BBHY2%ICI were: (1) the allocation among industry sectors and (2) the selection of individual securities.
The following discussion will focus on the performance of the Fund’s Institutional Shares relative to the BBHY2%ICI.
MARKET OVERVIEW
The dominant theme impacting the high-yield3 market during the reporting period was the global spread of the novel coronavirus known as COVID-19 and its impact on the U.S. economy and the global economy. As the seriousness of the virus became apparent in the early part of calendar year 2020, riskier assets such as high-yield bonds4 plummeted in value, especially in the early part of March. As protective measures were put in place leading to a reduction in cases and deaths, financial markets began the long road to recovery aided by substantial monetary policy stimulus. As the reporting period came to an end, the global number of infections began to increase again, but financial markets seemed to be handling the news better than earlier in the reporting period as progress toward a vaccine and lower mortality rates gave investors hope that the worst impact of the virus was past. Also, the reduction in economic activity and disagreements among global producers resulted in lower oil prices which pressured the energy sector of the high-yield market. Overall default rates spiked higher in response to energy issuers experiencing a great uptick in distress. The impact of these factors can be seen in the movement of the yield spread between the Credit Suisse High Yield Bond Index5 and U.S. Treasury securities of comparable maturities, which began the period at 472 basis points (bp), declined to 388 bp in mid-January 2020, skyrocketed to over 1,400 bp in late March 2020 before declining to end the reporting period at 574 bp.
Annual Shareholder Report
Within the high-yield market, major industry sectors that substantially outperformed the overall BBHY2%ICI included: Diversified Manufacturing, Banking, Chemicals, Wireless Telecommunications and Automotive. Major industry sectors that substantially underperformed the overall BBHY2%ICI included: Oil Field Services, Leisure, Independent Energy, Aerospace & Defense and Media & Entertainment. From a credit quality perspective, the higher quality “BB”-rated sector led the way during the reporting period with a total return of 6.54% followed by the “B”-rated sector with a total return of 1.93%. The credit sensitive “CCC”-rated sector had a negative total return of -3.09% during the reporting period.
Sector Allocation
During the reporting period, the Fund was negatively impacted by its sector allocation. This was mainly the result of an underweight position to the Independent and Integrated Energy sectors in the second quarter of 2020. While Independent Energy was an underperformer across the entire period under review, it was a major outperformer in the second quarter led by a large number of companies that were downgraded from investment-grade at the end of March at very depressed prices. These issuers substantially rebounded after entering the high-yield index and were not owned by the Fund during that period of outperformance. The Fund was also negatively impacted by its overweight position to the poor-performing Media & Entertainment sector and its underweight position to the outperforming Food & Beverage, Wireline Telecommunications, Banking and Home Construction sectors.
The Fund benefited from its underweight position to the poor-performing Oil Field Services, Aerospace & Defense, Services, Leisure, Refining and Airlines sectors. Also, the Fund’s overweight position to the strong performing Healthcare, Packaging, Property & Casualty and Midstream sectors aided performance.
Security Selection
During the reporting period, the Fund was positively affected by security selection. This was especially true in the Oil Field Services, Healthcare, Cable & Satellite, Packaging, Aerospace & Defense, Property & Casualty, Leisure, Technology, Metals & Mining, Electric Utilities and Restaurant industry sectors. Specific Fund holdings that positively impacted performance relative to the BBHY2%ICI included: Antero Midstream, Flex Acquisition, Endo Pharmaceutical, Rackspace Technology and MPH Acquisition.
The Fund was negatively affected by security selection in the Independent Energy, Retail, Media & Entertainment and Food & Beverage sectors. Specific Fund holdings that negatively impacted performance relative to the BBHY2%ICI included: Party City, Callon Energy, Oasis Petroleum, Sesi LLC and Diamond Sports.
Annual Shareholder Report
1
Please see the footnotes to the line graphs below for definitions of, and further information about, the BBHY2%ICI.
2
Please see the footnotes to the line graphs below for definitions of, and further information about, the LHYFA.
3
High-yield, lower-rated securities generally entail greater market, credit and liquidity risks than investment-grade securities and may include higher volatility and a higher risk of default.
4
Bond prices are sensitive to changes in interest rates, and a rise in interest rates can cause a decline in their prices.
5
Credit Suisse High Yield Bond Index serves as a benchmark to evaluate the performance of low-quality bonds. Low-quality is defined as those bonds in the range from “BB” to “CCC” and defaults. The index is unmanaged, and it is not possible to invest directly in an index.
Annual Shareholder Report
FUND PERFORMANCE AND GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,0001 in the Federated Hermes Institutional High Yield Bond Fund (the “Fund”) from October 31, 2010 to October 31, 2020, compared to the Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index (BBHY2%ICI)2 and the Lipper High Yield Funds Average (LHYFA).3 The Average Annual Total Return Table below shows returns averaged over the stated periods.
Growth of a $10,000 Investment
Growth of $10,000 as of October 31, 2020 
The Fund offers multiple share classes whose performance may be greater than or less than its other share class(es) due to differences in sales charges and expenses. See the Average Annual Total Return table below for the returns of additional classes not shown in the line graph above.
Average Annual Total Returns for the Period Ended 10/31/2020
(returns reflect all applicable sales charges and contingent deferred sales charges as specified below in footnote #1)
Annual Shareholder Report
Performance data 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. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.
1
Represents a hypothetical investment of $10,000 in the Fund. The Fund’s performance assumes the reinvestment of all dividends and distributions. The BBHY2%ICI and the LHYFA have been adjusted to reflect reinvestment of dividends on securities in the indices.
2
The BBHY2%ICI is an issuer-constrained version of the Bloomberg Barclays U.S. Corporate High-Yield Index that measures the market of USD-denominated, noninvestment-grade, fixed-rate, taxable corporate bonds. The index follows the same rules as the uncapped index, but limits the exposure of each issuer to 2% of the total market value and redistributes any excess market value index-wide on a pro-rata basis. The BBHY2%ICI is not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission (SEC) requires to be reflected in the Fund’s performance. The index is unmanaged and unlike the Fund, is not affected by cash flows. It is not possible to invest directly in an index.
3
Lipper figures represent the average of the total returns reported by all funds designated by Lipper, Inc., as falling into the respective category and is not adjusted to reflect any sales charges. The Lipper figures in the Growth of $10,000 line graph are based on historical return information published by Lipper and reflect the return of the funds comprising the category in the year of publication. Because the funds designated by Lipper as falling into the category can change over time, the Lipper figures in the line graph may not match the Lipper figures in the Average Annual Total Returns table, which reflect the return of the funds that currently comprise the category.
4
The Fund’s R6 Shares commenced operations on June 29, 2016. For the period prior to the commencement of operations of the R6 Shares, the performance information shown is for Institutional Shares adjusted to reflect the expenses of R6 Shares for each year for which the Fund’s R6 expenses would have exceeded the actual expenses paid by the Fund’s Institutional Shares.
Annual Shareholder Report
Portfolio of Investments Summary Table (unaudited)
At October 31, 2020, the Fund’s index classification1 was as follows:
| Percentage of
Total Net Assets2 |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
High Yield Bond Portfolio | |
| |
Other Assets and Liabilities - Net5 | |
| |
| Index classifications are based upon, and individual portfolio securities are assigned to, the classifications and sub-classifications of the Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index (BBHY2%ICI). Individual portfolio securities that are not included in the BBHY2%ICI are assigned to an index classification by the Fund’s Adviser. |
| As of the date specified above, the Fund owned shares of one or more affiliated investment companies. For purposes of this table, affiliated investment companies (other than an affiliated money market mutual fund) in which the Fund invested less than 10% of its net assets, are listed individually in the table. |
| For purposes of this table, index classifications which constitute less than 3.5% of the Fund’s total net assets have been aggregated under the designation “Other.” |
| Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements. |
| Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities. |
Annual Shareholder Report
Portfolio of Investments
October 31, 2020
| | | |
| | | |
| | | |
| | TransDigm, Inc., Sec. Fac. Bond, 144A, 6.250%, 3/15/2026 | |
| | TransDigm, Inc., Sr. Sub. Note, 6.375%, 6/15/2026 | |
| | TransDigm, Inc., Sr. Sub. Note, 6.500%, 5/15/2025 | |
| | TransDigm, Inc., Sr. Sub. Note, 6.500%, 7/15/2024 | |
| | TransDigm, Inc., Sr. Sub., 6.875%, 5/15/2026 | |
| | TransDigm, Inc., Sr. Sub., Series WI, 5.500%, 11/15/2027 | |
| | TransDigm, Inc., Sr. Sub., Series WI, 7.500%, 3/15/2027 | |
| | | |
| | | |
| | Adient Global Holdings Ltd., Sr. Unsecd. Note, 144A, 4.875%, 8/15/2026 | |
| | Adient US LLC, 144A, 7.000%, 5/15/2026 | |
| | Adient US LLC, 144A, 9.000%, 4/15/2025 | |
| | American Axle & Manufacturing, Inc., Sr. Unsecd. Note, Series WI, 6.500%, 4/1/2027 | |
| | Clarios Global LP, Sec. Fac. Bond, 144A, 6.750%, 5/15/2025 | |
| | Dana Financing Lux Sarl, 144A, 6.500%, 6/1/2026 | |
| | Dana Financing Lux Sarl, Sr. Unsecd. Note, 144A, 5.750%, 4/15/2025 | |
| | Dana, Inc., 5.625%, 6/15/2028 | |
| | Dana, Inc., Sr. Unsecd. Note, 5.375%, 11/15/2027 | |
| | Dana, Inc., Sr. Unsecd. Note, 5.500%, 12/15/2024 | |
| | Ford Motor Credit Co. LLC, Sr. Unsecd. Note, 3.096%, 5/4/2023 | |
| | Ford Motor Credit Co. LLC, Sr. Unsecd. Note, 3.336%, 3/18/2021 | |
| | Ford Motor Credit Co. LLC, Sr. Unsecd. Note, 3.339%, 3/28/2022 | |
| | Ford Motor Credit Co. LLC, Sr. Unsecd. Note, 3.813%, 10/12/2021 | |
| | Ford Motor Credit Co. LLC, Sr. Unsecd. Note, 4.063%, 11/1/2024 | |
| | Ford Motor Credit Co. LLC, Sr. Unsecd. Note, 4.125%, 8/17/2027 | |
| | Ford Motor Credit Co. LLC, Sr. Unsecd. Note, 4.140%, 2/15/2023 | |
| | Ford Motor Credit Co. LLC, Sr. Unsecd. Note, 4.250%, 9/20/2022 | |
| | Ford Motor Credit Co. LLC, Sr. Unsecd. Note, 4.271%, 1/9/2027 | |
| | Ford Motor Credit Co. LLC, Sr. Unsecd. Note, 5.113%, 5/3/2029 | |
| | Ford Motor Credit Co. LLC, Sr. Unsecd. Note, 5.125%, 6/16/2025 | |
| | Ford Motor Credit Co. LLC, Sr. Unsecd. Note, Series GMTN, 4.389%, 1/8/2026 | |
| | Goodyear Tire & Rubber Co., Sr. Unsecd. Note, 4.875%, 3/15/2027 | |
| | Goodyear Tire & Rubber Co., Sr. Unsecd. Note, 5.000%, 5/31/2026 | |
| | IAA Spinco Inc., Sr. Unsecd. Note, 144A, 5.500%, 6/15/2027 | |
| | IHO Verwaltungs GmbH, Sec. Fac. Bond, 144A, 6.000%, 5/15/2027 | |
| | IHO Verwaltungs GmbH, Sec. Fac. Bond, 144A, 6.375%, 5/15/2029 | |
Annual Shareholder Report
| | | |
| | CORPORATE BONDS— continued | |
| | | |
| | J.B. Poindexter & Co., Inc., Sr. Unsecd. Note, 144A, 7.125%, 4/15/2026 | |
| | KAR Auction Services, Inc., Sr. Unsecd. Note, 144A, 5.125%, 6/1/2025 | |
| | Panther BF Aggregator 2 LP, Sec. Fac. Bond, 144A, 6.250%, 5/15/2026 | |
| | Panther BF Aggregator 2 LP, Sr. Unsecd. Note, 144A, 8.500%, 5/15/2027 | |
| | Schaeffler Verwaltung Zw, 144A, 4.750%, 9/15/2026 | |
| | | |
| | | |
| | Ally Financial, Inc., Sr. Sub. Note, 5.750%, 11/20/2025 | |
| | | |
| | American Builders & Contractors Supply Co., Inc., 144A, 4.000%, 1/15/2028 | |
| | American Builders & Contractors Supply Co., Inc., Sr. Unsecd. Note, 144A, 5.875%, 5/15/2026 | |
| | CD&R Waterworks Merger Subsidiary LLC, Sr. Unsecd. Note, 144A, 6.125%, 8/15/2025 | |
| | Cornerstone Building Brands, Sr. Unsecd. Note, 144A, 6.125%, 1/15/2029 | |
| | Pisces Midco, Inc., Sec. Fac. Bond, 144A, 8.000%, 4/15/2026 | |
| | Standard Industries, Inc., Sr. Unsecd. Note, 144A, 3.375%, 1/15/2031 | |
| | Standard Industries, Inc., Sr. Unsecd. Note, 144A, 4.375%, 7/15/2030 | |
| | Standard Industries, Inc., Sr. Unsecd. Note, 144A, 4.750%, 1/15/2028 | |
| | Standard Industries, Inc., Sr. Unsecd. Note, 144A, 5.000%, 2/15/2027 | |
| | White Cap Buyer LLC, Sr. Unsecd. Note, 144A, 6.875%, 10/15/2028 | |
| | | |
| | | |
| | Cablevision Systems Corp., Sr. Unsecd. Note, 5.875%, 9/15/2022 | |
| | CCO Holdings LLC/Cap Corp., 144A, 5.375%, 5/1/2025 | |
| | CCO Holdings LLC/Cap Corp., 144A, 5.750%, 2/15/2026 | |
| | CCO Holdings LLC/Cap Corp., Sr. Sub. Secd. Note, 144A, 5.500%, 5/1/2026 | |
| | CCO Holdings LLC/Cap Corp., Sr. Unsecd. Note, 144A, 4.000%, 3/1/2023 | |
| | CCO Holdings LLC/Cap Corp., Sr. Unsecd. Note, 144A, 4.250%, 2/1/2031 | |
| | CCO Holdings LLC/Cap Corp., Sr. Unsecd. Note, 144A, 4.500%, 8/15/2030 | |
| | CCO Holdings LLC/Cap Corp., Sr. Unsecd. Note, 144A, 4.750%, 3/1/2030 | |
| | CCO Holdings LLC/Cap Corp., Sr. Unsecd. Note, 144A, 5.000%, 2/1/2028 | |
| | CCO Holdings LLC/Cap Corp., Sr. Unsecd. Note, 144A, 5.125%, 5/1/2027 | |
Annual Shareholder Report
| | | |
| | CORPORATE BONDS— continued | |
| | Cable Satellite— continued | |
| | CCO Holdings LLC/Cap Corp., Sr. Unsecd. Note, 144A, 5.375%, 6/1/2029 | |
| | CCO Holdings LLC/Cap Corp., Sr. Unsecd. Note, 144A, 5.875%, 5/1/2027 | |
| | CCO Holdings LLC/CCO Holdings Capital Corp., Sr. Unsecd. Note, 144A, 4.500%, 5/1/2032 | |
| | CSC Holdings LLC, 144A, 5.500%, 5/15/2026 | |
| | CSC Holdings LLC, Sr. Unsecd. Note, 144A, 3.375%, 2/15/2031 | |
| | CSC Holdings LLC, Sr. Unsecd. Note, 144A, 4.125%, 12/1/2030 | |
| | CSC Holdings LLC, Sr. Unsecd. Note, 144A, 4.625%, 12/1/2030 | |
| | CSC Holdings LLC, Sr. Unsecd. Note, 144A, 5.500%, 4/15/2027 | |
| | CSC Holdings LLC, Sr. Unsecd. Note, 144A, 5.750%, 1/15/2030 | |
| | CSC Holdings LLC, Sr. Unsecd. Note, 144A, 6.500%, 2/1/2029 | |
| | CSC Holdings LLC, Sr. Unsecd. Note, 144A, 7.500%, 4/1/2028 | |
| | CSC Holdings LLC, Sr. Unsecd. Note, 5.250%, 6/1/2024 | |
| | DISH DBS Corp., Sr. Unsecd. Note, 5.875%, 11/15/2024 | |
| | DISH DBS Corp., Sr. Unsecd. Note, 7.375%, 7/1/2028 | |
| | DISH DBS Corp., Sr. Unsecd. Note, 7.750%, 7/1/2026 | |
| | Doyla Holdco 18 Designated Activity Co., Sr. Unsecd. Note, 144A, 5.000%, 7/15/2028 | |
| | Intelsat Jackson Holdings S.A., Sr. Unsecd. Note, 144A, 8.500%, 10/15/2024 | |
| | Intelsat Jackson Holdings S.A., Sr. Unsecd. Note, 144A, 9.750%, 7/15/2025 | |
| | Intelsat Jackson Holdings S.A., Sr. Unsecd. Note, 5.500%, 8/1/2023 | |
| | Sirius XM Radio, Inc., Sr. Unsecd. Note, 144A, 3.875%, 8/1/2022 | |
| | Sirius XM Radio, Inc., Sr. Unsecd. Note, 144A, 4.125%, 7/1/2030 | |
| | Sirius XM Radio, Inc., Sr. Unsecd. Note, 144A, 4.625%, 7/15/2024 | |
| | Sirius XM Radio, Inc., Sr. Unsecd. Note, 144A, 5.000%, 8/1/2027 | |
| | Sirius XM Radio, Inc., Sr. Unsecd. Note, 144A, 5.375%, 7/15/2026 | |
| | Sirius XM Radio, Inc., Sr. Unsecd. Note, 144A, 5.500%, 7/1/2029 | |
| | Telenet Finance Luxembourg, Sec. Fac. Bond, 144A, 5.500%, 3/1/2028 | |
| | Virgin Media Finance PLC, Sr. Unsecd. Note, 144A, 5.000%, 7/15/2030 | |
| | Virgin Media Secured Finance PLC, 144A, 5.500%, 8/15/2026 | |
| | Virgin Media Secured Finance PLC, Sec. Fac. Bond, 144A, 4.500%, 8/15/2030 | |
| | Virgin Media Secured Finance PLC, Sec. Fac. Bond, 144A, 5.500%, 5/15/2029 | |
| | Vmed O2 UK Financing I PLC, Sec. Fac. Bond, 144A, 4.250%, 1/31/2031 | |
| | Ziggo Bond Co. BV, Sr. Unsecd. Note, 144A, 5.125%, 2/28/2030 | |
| | Ziggo BV, Sec. Fac. Bond, 144A, 4.875%, 1/15/2030 | |
| | Ziggo Finance BV, Sec. Fac. Bond, 144A, 5.500%, 1/15/2027 | |
Annual Shareholder Report
| | | |
| | CORPORATE BONDS— continued | |
| | Cable Satellite— continued | |
| | Ziggo Finance BV, Sr. Unsecd. Note, 144A, 6.000%, 1/15/2027 | |
| | | |
| | | |
| | Alpha 2 BV, Sr. Unsecd. Note, 144A, 8.750%, 6/1/2023 | |
| | Alpha 3 BV, Sr. Unsecd. Note, 144A, 6.250%, 2/1/2025 | |
| | Axalta Coat/Dutch Holding BV, Sr. Unsecd. Note, 144A, 4.750%, 6/15/2027 | |
| | Compass Minerals International, Inc., 144A, 4.875%, 7/15/2024 | |
| | Compass Minerals International, Inc., Sr. Unsecd. Note, 144A, 6.750%, 12/1/2027 | |
| | Element Solutions, Inc., Sr. Unsecd. Note, 144A, 3.875%, 9/1/2028 | |
| | H.B. Fuller Co., Sr. Unsecd. Note, 4.250%, 10/15/2028 | |
| | Hexion, Inc., Sr. Unsecd. Note, 144A, 7.875%, 7/15/2027 | |
| | Illuminate Buyer LLC/Illuminate Holdings IV Inc., Sr. Unsecd. Note, 144A, 9.000%, 7/1/2028 | |
| | Koppers, Inc., Sr. Unsecd. Note, 144A, 6.000%, 2/15/2025 | |
| | PQ Corp., Sr. Unsecd. Note, 144A, 5.750%, 12/15/2025 | |
| | Starfruit Finco BV, Sr. Unsecd. Note, 144A, 8.000%, 10/1/2026 | |
| | WR Grace & Co-Conn, Sr. Unsecd. Note, 144A, 4.875%, 6/15/2027 | |
| | | |
| | Construction Machinery— 0.6% | |
| | United Rentals North America, Inc., Sr. Unsecd. Note, 4.000%, 7/15/2030 | |
| | United Rentals North America, Inc., Sr. Unsecd. Note, 4.875%, 1/15/2028 | |
| | United Rentals North America, Inc., Sr. Unsecd. Note, 5.250%, 1/15/2030 | |
| | United Rentals North America, Inc., Term Loan - 2nd Lien, 3.875%, 11/15/2027 | |
| | United Rentals, Inc., Sr. Unsecd. Note, 3.875%, 2/15/2031 | |
| | United Rentals, Inc., Sr. Unsecd. Note, 5.875%, 9/15/2026 | |
| | | |
| | Consumer Cyclical Services— 1.8% | |
| | Allied Universal Holdco LLC, Sec. Fac. Bond, 144A, 6.625%, 7/15/2026 | |
| | Allied Universal Holdco LLC, Sr. Unsecd. Note, 144A, 9.750%, 7/15/2027 | |
| | Garda World Security Corp., Sec. Fac. Bond, 144A, 4.625%, 2/15/2027 | |
| | Go Daddy Operating Co. LLC / GD Finance Co. Inc., Sr. Unsecd. Note, 144A, 5.250%, 12/1/2027 | |
| | GW B-CR Security Corp., Sr. Unsecd. Note, 144A, 9.500%, 11/1/2027 | |
| | The Brink’s Co., Sr. Unsecd. Note, 144A, 5.500%, 7/15/2025 | |
| | | |
| | | |
| | Edgewell Personal Care Co., Sr. Unsecd. Note, 144A, 5.500%, 6/1/2028 | |
Annual Shareholder Report
| | | |
| | CORPORATE BONDS— continued | |
| | Consumer Products— continued | |
| | Energizer Holdings, Inc., Sr. Unsecd. Note, 144A, 4.375%, 3/31/2029 | |
| | Energizer Holdings, Inc., Sr. Unsecd. Note, 144A, 4.750%, 6/15/2028 | |
| | Energizer Holdings, Inc., Sr. Unsecd. Note, 144A, 7.750%, 1/15/2027 | |
| | Newell Brands, Inc., Sr. Unsecd. Note, 4.875%, 6/1/2025 | |
| | Prestige Brands, Inc., Sr. Unsecd. Note, 144A, 5.125%, 1/15/2028 | |
| | Prestige Brands, Inc., Sr. Unsecd. Note, 144A, 6.375%, 3/1/2024 | |
| | | |
| | Diversified Manufacturing— 1.6% | |
| | Amsted Industries, Inc., Sr. Unsecd. Note, 144A, 5.625%, 7/1/2027 | |
| | CFX Escrow Corp., Sr. Unsecd. Note, 144A, 6.000%, 2/15/2024 | |
| | CFX Escrow Corp., Sr. Unsecd. Note, 144A, 6.375%, 2/15/2026 | |
| | Entegris, Inc., Sr. Unsecd. Note, 144A, 4.625%, 2/10/2026 | |
| | Gates Global LLC, Sr. Unsecd. Note, 144A, 6.250%, 1/15/2026 | |
| | Stevens Holding Company, Inc., Sr. Unsecd. Note, 144A, 6.125%, 10/1/2026 | |
| | Titan Acquisition Ltd., Sr. Unsecd. Note, 144A, 7.750%, 4/15/2026 | |
| | WESCO Distribution, Inc., Sr. Unsecd. Note, 144A, 7.125%, 6/15/2025 | |
| | WESCO Distribution, Inc., Sr. Unsecd. Note, 144A, 7.250%, 6/15/2028 | |
| | WESCO Distribution, Inc., Sr. Unsecd. Note, 5.375%, 12/15/2021 | |
| | WESCO Distribution, Inc., Sr. Unsecd. Note, 5.375%, 6/15/2024 | |
| | | |
| | | |
| | Tervita Escrow Corp., 144A, 7.625%, 12/1/2021 | |
| | | |
| | Avolon Holdings Funding Ltd., Sr. Unsecd. Note, 144A, 5.250%, 5/15/2024 | |
| | Navient Corp., Sr. Unsecd. Note, 5.000%, 3/15/2027 | |
| | Navient Corp., Sr. Unsecd. Note, 5.500%, 1/25/2023 | |
| | Navient Corp., Sr. Unsecd. Note, 5.875%, 10/25/2024 | |
| | Navient Corp., Sr. Unsecd. Note, 5.875%, 3/25/2021 | |
| | Navient Corp., Sr. Unsecd. Note, 6.500%, 6/15/2022 | |
| | Navient Corp., Sr. Unsecd. Note, 6.750%, 6/15/2026 | |
| | Navient Corp., Sr. Unsecd. Note, 6.750%, 6/25/2025 | |
| | Navient Corp., Sr. Unsecd. Note, 7.250%, 9/25/2023 | |
| | Navient Corp., Sr. Unsecd. Note, Series MTN, 6.125%, 3/25/2024 | |
| | Navient Corp., Sr. Unsecd. Note, Series MTN, 7.250%, 1/25/2022 | |
| | Park Aerospace Holdings Ltd., Sr. Unsecd. Note, 144A, 5.500%, 2/15/2024 | |
| | Quicken Loans Llc / Quicken Loans Co-Issuer, Inc., Sr. Unsecd. Note, 144A, 3.625%, 3/1/2029 | |
| | Quicken Loans Llc / Quicken Loans Co-Issuer, Inc., Sr. Unsecd. Note, 144A, 3.875%, 3/1/2031 | |
| | Quicken Loans, Inc., Sr. Unsecd. Note, 144A, 5.250%, 1/15/2028 | |
Annual Shareholder Report
| | | |
| | CORPORATE BONDS— continued | |
| | Finance Companies— continued | |
| | United Shore Financial Services, Sr. Unsecd. Note, 144A, 5.500%, 11/15/2025 | |
| | | |
| | | |
| | Aramark Services, Inc., Sr. Unsecd. Note, 144A, 5.000%, 2/1/2028 | |
| | Aramark Services, Inc., Sr. Unsecd. Note, 144A, 5.000%, 4/1/2025 | |
| | Aramark Services, Inc., Sr. Unsecd. Note, 144A, 6.375%, 5/1/2025 | |
| | Aramark Services, Inc., Sr. Unsecd. Note, 4.750%, 6/1/2026 | |
| | B&G Foods, Inc., Sr. Unsecd. Note, 5.250%, 4/1/2025 | |
| | Kraft Heinz Foods Co., Sr. Unsecd. Note, 4.375%, 6/1/2046 | |
| | Kraft Heinz Foods Co., Sr. Unsecd. Note, 5.200%, 7/15/2045 | |
| | Lamb Weston Holdings, Inc., Sr. Unsecd. Note, 144A, 4.875%, 5/15/2028 | |
| | Lamb Weston Holdings, Inc., Sr. Unsub., 144A, 4.875%, 11/1/2026 | |
| | Performance Food Group, Inc., Sr. Unsecd. Note, 144A, 5.500%, 10/15/2027 | |
| | Post Holdings, Inc., Sr. Unsecd. Note, 144A, 4.625%, 4/15/2030 | |
| | Post Holdings, Inc., Sr. Unsecd. Note, 144A, 5.000%, 8/15/2026 | |
| | Post Holdings, Inc., Sr. Unsecd. Note, 144A, 5.500%, 12/15/2029 | |
| | Post Holdings, Inc., Sr. Unsecd. Note, 144A, 5.625%, 1/15/2028 | |
| | Post Holdings, Inc., Sr. Unsecd. Note, 144A, 5.750%, 3/1/2027 | |
| | U.S. Foodservice, Inc., Sr. Unsecd. Note, 144A, 5.875%, 6/15/2024 | |
| | | |
| | | |
| | Boyd Gaming Corp., Sr. Unsecd. Note, 144A, 8.625%, 6/1/2025 | |
| | Boyd Gaming Corp., Sr. Unsecd. Note, 4.750%, 12/1/2027 | |
| | Boyd Gaming Corp., Sr. Unsecd. Note, 6.375%, 4/1/2026 | |
| | Boyd Gaming Corp., Sr. Unsecd. Note, Series WI, 6.000%, 8/15/2026 | |
| | CCM Merger, Inc., Sr. Unsecd. Note, 144A, 6.375%, 5/1/2026 | |
| | Colt Merger Sub, Inc., Sr. Secd. Note, 144A, 5.750%, 7/1/2025 | |
| | Colt Merger Sub, Inc., Sr. Secd. Note, 144A, 6.250%, 7/1/2025 | |
| | Colt Merger Sub, Inc., Sr. Unsecd. Note, 144A, 8.125%, 7/1/2027 | |
| | CRC Escrow Issuer LLC, Sr. Unsecd. Note, 144A, 5.250%, 10/15/2025 | |
| | MGM Growth Properties LLC, Sr. Unsecd. Note, 4.500%, 1/15/2028 | |
| | MGM Growth Properties LLC, Sr. Unsecd. Note, 5.625%, 5/1/2024 | |
| | MGM Growth Properties LLC, Sr. Unsecd. Note, 5.750%, 2/1/2027 | |
| | MGM Growth Properties Operating Partnership LP / MGP Finance Co- Issuer Inc., Sr. Unsecd. Note, 144A, 4.625%, 6/15/2025 | |
| | MGM Resorts International, 6.000%, 3/15/2023 | |
| | MGM Resorts International, Sr. Unsecd. Note, 4.625%, 9/1/2026 | |
| | MGM Resorts International, Sr. Unsecd. Note, 4.750%, 10/15/2028 | |
| | MGM Resorts International, Sr. Unsecd. Note, 5.500%, 4/15/2027 | |
| | MGM Resorts International, Sr. Unsecd. Note, 5.750%, 6/15/2025 | |
Annual Shareholder Report
| | | |
| | CORPORATE BONDS— continued | |
| | | |
| | MGM Resorts International, Sr. Unsecd. Note, 6.750%, 5/1/2025 | |
| | Mohegan Tribal Gaming Authority, Sr. Unsecd. Note, 144A, 7.875%, 10/15/2024 | |
| | Star Group Holdings BV, Sr. Unsecd. Note, 144A, 7.000%, 7/15/2026 | |
| | Station Casinos, Inc., Sr. Unsecd. Note, 144A, 4.500%, 2/15/2028 | |
| | Station Casinos, Inc., Sr. Unsecd. Note, 144A, 5.000%, 10/1/2025 | |
| | Sugarhouse HSP Gaming Finance Corp., Sec. Fac. Bond, 144A, 5.875%, 5/15/2025 | |
| | Twin River Worldwide Holdings, Inc., Sr. Unsecd. Note, 144A, 6.750%, 6/1/2027 | |
| | VICI Properties LP/ VICI Note Co., Inc., 144A, 3.500%, 2/15/2025 | |
| | VICI Properties LP/ VICI Note Co., Inc., 144A, 3.750%, 2/15/2027 | |
| | VICI Properties LP/ VICI Note Co., Inc., Sr. Unsecd. Note, 144A, 4.125%, 8/15/2030 | |
| | VICI Properties LP/ VICI Note Co., Inc., Sr. Unsecd. Note, 144A, 4.250%, 12/1/2026 | |
| | VICI Properties LP/ VICI Note Co., Inc., Sr. Unsecd. Note, 144A, 4.625%, 12/1/2029 | |
| | | |
| | | |
| | Acadia Healthcare Co., Inc., Sr. Unsecd. Note, 144A, 5.000%, 4/15/2029 | |
| | Acadia Healthcare Co., Inc., Sr. Unsecd. Note, 144A, 5.500%, 7/1/2028 | |
| | Acadia Healthcare Co., Inc., Sr. Unsecd. Note, 5.625%, 2/15/2023 | |
| | Acadia Healthcare Co., Inc., Sr. Unsecd. Note, 6.500%, 3/1/2024 | |
| | Avantor Funding, Inc., Sec. Fac. Bond, 144A, 4.625%, 7/15/2028 | |
| | Avantor, Inc., 144A, 6.000%, 10/1/2024 | |
| | Charles River Laboratories International, Inc., Sr. Unsecd. Note, 144A, 5.500%, 4/1/2026 | |
| | CHS/Community Health Systems, Inc., 6.250%, 3/31/2023 | |
| | CHS/Community Health Systems, Inc., Sec. Fac. Bond, 144A, 6.625%, 2/15/2025 | |
| | CHS/Community Health Systems, Inc., Sec. Fac. Bond, 144A, 8.000%, 3/15/2026 | |
| | CHS/Community Health Systems, Inc., Sec. Fac. Bond, 144A, 8.625%, 1/15/2024 | |
| | Global Medical Response, Inc., Sec. Fac. Bond, 144A, 6.500%, 10/1/2025 | |
| | HCA, Inc., 5.000%, 3/15/2024 | |
| | HCA, Inc., 5.875%, 2/15/2026 | |
| | HCA, Inc., 5.875%, 5/1/2023 | |
| | HCA, Inc., Sr. Unsecd. Note, 3.500%, 9/1/2030 | |
| | HCA, Inc., Sr. Unsecd. Note, 5.375%, 2/1/2025 | |
| | HCA, Inc., Sr. Unsecd. Note, 5.375%, 9/1/2026 | |
| | HCA, Inc., Sr. Unsecd. Note, 5.625%, 9/1/2028 | |
Annual Shareholder Report
| | | |
| | CORPORATE BONDS— continued | |
| | | |
| | HCA, Inc., Sr. Unsecd. Note, 5.875%, 2/1/2029 | |
| | IMS Health, Inc., Sr. Unsecd. Note, 144A, 5.000%, 10/15/2026 | |
| | Iqvia, Inc., Sr. Unsecd. Note, 144A, 5.000%, 5/15/2027 | |
| | LifePoint Health, Inc., 144A, 6.750%, 4/15/2025 | |
| | LifePoint Health, Inc., Sec. Fac. Bond, 144A, 4.375%, 2/15/2027 | |
| | LifePoint Health, Inc., Sr. Unsecd. Note, 144A, 9.750%, 12/1/2026 | |
| | MEDNAX Inc., Sr. Unsecd. Note, 144A, 6.250%, 1/15/2027 | |
| | MPH Acquisition Holdings LLC, Sr. Unsecd. Note, 144A, 5.750%, 11/1/2028 | |
| | Surgery Center Holdings, Inc., Sr. Unsecd. Note, 144A, 6.750%, 7/1/2025 | |
| | Team Health Holdings, Inc., Sr. Unsecd. Note, 144A, 6.375%, 2/1/2025 | |
| | Teleflex, Inc., Sr. Unsecd. Note, 144A, 4.250%, 6/1/2028 | |
| | Teleflex, Inc., Sr. Unsecd. Note, 4.625%, 11/15/2027 | |
| | Teleflex, Inc., Sr. Unsecd. Note, 4.875%, 6/1/2026 | |
| | Tenet Healthcare Corp., 144A, 4.625%, 6/15/2028 | |
| | Tenet Healthcare Corp., 144A, 4.875%, 1/1/2026 | |
| | Tenet Healthcare Corp., 144A, 5.125%, 11/1/2027 | |
| | Tenet Healthcare Corp., 144A, 6.250%, 2/1/2027 | |
| | Tenet Healthcare Corp., 144A, 7.500%, 4/1/2025 | |
| | Tenet Healthcare Corp., 5.125%, 5/1/2025 | |
| | Tenet Healthcare Corp., Sr. Secd. Note, 4.625%, 7/15/2024 | |
| | Tenet Healthcare Corp., Sr. Unsecd. Note, 144A, 6.125%, 10/1/2028 | |
| | Tenet Healthcare Corp., Sr. Unsecd. Note, 6.750%, 6/15/2023 | |
| | Tenet Healthcare Corp., Sr. Unsecd. Note, 7.000%, 8/1/2025 | |
| | Vizient, Inc., Sr. Unsecd. Note, 144A, 6.250%, 5/15/2027 | |
| | West Street Merger Subsidiary, Inc., Sr. Unsecd. Note, 144A, 6.375%, 9/1/2025 | |
| | | |
| | | |
| | Centene Corp., Sr. Unsecd. Note, 144A, 5.375%, 6/1/2026 | |
| | Centene Corp., Sr. Unsecd. Note, 144A, 5.375%, 8/15/2026 | |
| | Centene Corp., Sr. Unsecd. Note, 3.000%, 10/15/2030 | |
| | Centene Corp., Sr. Unsecd. Note, 4.750%, 1/15/2025 | |
| | Centene Corp., Sr. Unsecd. Note, Series WI, 3.375%, 2/15/2030 | |
| | Centene Corp., Sr. Unsecd. Note, Series WI, 4.250%, 12/15/2027 | |
| | Centene Corp., Sr. Unsecd. Note, Series WI, 4.625%, 12/15/2029 | |
| | Centene Corp., Sr. Unsecd. Note, Series*, 4.750%, 1/15/2025 | |
| | | |
| | | |
| | Antero Resources Corp., Sr. Unsecd. Note, 5.000%, 3/1/2025 | |
| | Antero Resources Corp., Sr. Unsecd. Note, 5.125%, 12/1/2022 | |
| | Antero Resources Corp., Sr. Unsecd. Note, 5.625%, 6/1/2023 | |
Annual Shareholder Report
| | | |
| | CORPORATE BONDS— continued | |
| | Independent Energy— continued | |
| | Apache Corp., Sr. Unsecd. Note, 4.625%, 11/15/2025 | |
| | Apache Corp., Sr. Unsecd. Note, 4.875%, 11/15/2027 | |
| | Ascent Resources Utica Holdings LLC/ ARU Finance Corp., Sr. Unsecd. Note, 144A, 7.000%, 11/1/2026 | |
| | Ascent Resources Utica Holdings LLC/ ARU Finance Corp., Sr. Unsecd. Note, 144A, 9.000%, 11/1/2027 | |
| | Berry Petroleum Co., Sr. Unsecd. Note, 144A, 7.000%, 2/15/2026 | |
| | Callon Petroleum Corp., Sr. Unsecd. Note, 6.125%, 10/1/2024 | |
| | Callon Petroleum Corp., Sr. Unsecd. Note, Series WI, 6.375%, 7/1/2026 | |
| | Carrizo Oil & Gas, Inc., Sr. Unsecd. Note, 6.250%, 4/15/2023 | |
| | Carrizo Oil & Gas, Inc., Sr. Unsecd. Note, 8.250%, 7/15/2025 | |
| | Centennial Resource Production, LLC, Sr. Unsecd. Note, 144A, 6.875%, 4/1/2027 | |
| | Chesapeake Energy Corp., 144A, 11.500%, 1/1/2025 | |
| | Chesapeake Energy Corp., 5.750%, 3/15/2023 | |
| | Chesapeake Energy Corp., Sr. Unsecd. Note, 7.000%, 10/1/2024 | |
| | Continental Resources, Inc., Sr. Unsecd. Note, 4.375%, 1/15/2028 | |
| | Crownrock LP/ Crownrock F, 144A, 5.625%, 10/15/2025 | |
| | Endeavor Energy Resources LP, Sr. Unsecd. Note, 144A, 5.500%, 1/30/2026 | |
| | Endeavor Energy Resources LP, Sr. Unsecd. Note, 144A, 5.750%, 1/30/2028 | |
| | Endeavor Energy Resources LP, Sr. Unsecd. Note, 144A, 6.625%, 7/15/2025 | |
| | EQT Corp., Sr. Unsecd. Note, 5.000%, 1/15/2029 | |
| | EQT Corp., Sr. Unsecd. Note, 7.875%, 2/1/2025 | |
| | EQT Corp., Sr. Unsecd. Note, 8.750%, 2/1/2030 | |
| | Gulfport Energy Corp., Sr. Unsecd. Note, 6.000%, 10/15/2024 | |
| | Gulfport Energy Corp., Sr. Unsecd. Note, 6.375%, 5/15/2025 | |
| | Gulfport Energy Corp., Sr. Unsecd. Note, 6.625%, 5/1/2023 | |
| | Gulfport Energy Corp., Sr. Unsecd. Note, Series WI, 6.375%, 1/15/2026 | |
| | Jagged Peak Energy, Inc., Sr. Unsecd. Note, Series WI, 5.875%, 5/1/2026 | |
| | Oasis Petroleum Inc., 6.875%, 1/15/2023 | |
| | Oasis Petroleum Inc., 6.875%, 3/15/2022 | |
| | Oasis Petroleum Inc., Sr. Unsecd. Note, 144A, 6.250%, 5/1/2026 | |
| | Occidental Petroleum Corp., Sr. Unsecd. Note, 2.900%, 8/15/2024 | |
| | Occidental Petroleum Corp., Sr. Unsecd. Note, 3.200%, 8/15/2026 | |
| | Occidental Petroleum Corp., Sr. Unsecd. Note, 3.400%, 4/15/2026 | |
| | Occidental Petroleum Corp., Sr. Unsecd. Note, 3.500%, 6/15/2025 | |
| | Occidental Petroleum Corp., Sr. Unsecd. Note, 4.100%, 2/15/2047 | |
| | Occidental Petroleum Corp., Sr. Unsecd. Note, 4.300%, 8/15/2039 | |
Annual Shareholder Report
| | | |
| | CORPORATE BONDS— continued | |
| | Independent Energy— continued | |
| | Occidental Petroleum Corp., Sr. Unsecd. Note, 4.400%, 8/15/2049 | |
| | Occidental Petroleum Corp., Sr. Unsecd. Note, 4.500%, 7/15/2044 | |
| | Occidental Petroleum Corp., Sr. Unsecd. Note, 5.875%, 9/1/2025 | |
| | Occidental Petroleum Corp., Sr. Unsecd. Note, 6.450%, 9/15/2036 | |
| | Occidental Petroleum Corp., Sr. Unsecd. Note, 6.625%, 9/1/2030 | |
| | Occidental Petroleum Corp., Sr. Unsecd. Note, 7.150%, 5/15/2028 | |
| | Occidental Petroleum Corp., Sr. Unsecd. Note, 7.500%, 5/1/2031 | |
| | Occidental Petroleum Corp., Sr. Unsecd. Note, 8.000%, 7/15/2025 | |
| | Occidental Petroleum Corp., Sr. Unsecd. Note, 8.875%, 7/15/2030 | |
| | Parsley Energy LLC / Parsley Finance Corp., Sr. Unsecd. Note, 144A, 5.250%, 8/15/2025 | |
| | Parsley Energy LLC / Parsley Finance Corp., Sr. Unsecd. Note, 144A, 5.375%, 1/15/2025 | |
| | Parsley Energy LLC / Parsley Finance Corp., Sr. Unsecd. Note, 144A, 5.625%, 10/15/2027 | |
| | PDC Energy, Inc., Sr. Unsecd. Note, 6.125%, 9/15/2024 | |
| | PDC Energy, Inc., Sr. Unsecd. Note, Series WI, 5.750%, 5/15/2026 | |
| | QEP Resources, Inc., Sr. Unsecd. Note, 5.250%, 5/1/2023 | |
| | QEP Resources, Inc., Sr. Unsecd. Note, 5.625%, 3/1/2026 | |
| | Range Resources Corp., Sr. Unsecd. Note, 144A, 9.250%, 2/1/2026 | |
| | Range Resources Corp., Sr. Unsecd. Note, 4.875%, 5/15/2025 | |
| | Range Resources Corp., Sr. Unsecd. Note, 5.000%, 3/15/2023 | |
| | SM Energy Co., Sr. Unsecd. Note, 5.000%, 1/15/2024 | |
| | SM Energy Co., Sr. Unsecd. Note, 5.625%, 6/1/2025 | |
| | SM Energy Co., Sr. Unsecd. Note, 6.625%, 1/15/2027 | |
| | SM Energy Co., Sr. Unsecd. Note, 6.750%, 9/15/2026 | |
| | Southwestern Energy Co., Sr. Unsecd. Note, 7.750%, 10/1/2027 | |
| | Ultra Resources, Inc., Sr. Unsecd. Note, 144A, 7.125%, 4/15/2025 | |
| | WPX Energy Inc., Sr. Unsecd. Note, 4.500%, 1/15/2030 | |
| | WPX Energy Inc., Sr. Unsecd. Note, 5.250%, 10/15/2027 | |
| | WPX Energy Inc., Sr. Unsecd. Note, 5.250%, 9/15/2024 | |
| | WPX Energy Inc., Sr. Unsecd. Note, 5.750%, 6/1/2026 | |
| | WPX Energy Inc., Sr. Unsecd. Note, 5.875%, 6/15/2028 | |
| | | |
| | | |
| | Booz Allen Hamilton, Inc., Sr. Unsecd. Note, 144A, 3.875%, 9/1/2028 | |
| | Cushman & Wakefield US Borrower LLC, Sec. Fac. Bond, 144A, 6.750%, 5/15/2028 | |
| | Vertical Holdco GmbH, Sr. Unsecd. Note, 144A, 7.625%, 7/15/2028 | |
| | Vertical U.S. Newco, Inc., Sr. Unsecd. Note, 144A, 5.250%, 7/15/2027 | |
| | | |
| | | |
| | Acrisure LLC, Sec. Fac. Bond, 144A, 8.125%, 2/15/2024 | |
Annual Shareholder Report
| | | |
| | CORPORATE BONDS— continued | |
| | Insurance - P&C— continued | |
| | Alliant Holdings Intermediate LLC / Alliant Holdings Co-Issuer, Sr. Unsecd. Note, 144A, 6.750%, 10/15/2027 | |
| | AmWINS Group, Inc., Sr. Unsecd. Note, 144A, 7.750%, 7/1/2026 | |
| | Ardonagh Midco 2 PLC, Sr. Unsecd. Note, 144A, 11.500% / 12.750% PIK, 1/15/2027 | |
| | AssuredPartners, Inc., Sr. Unsecd. Note, 144A, 7.000%, 8/15/2025 | |
| | GTCR AP Finance, Inc., Sr. Unsecd. Note, 144A, 8.000%, 5/15/2027 | |
| | Hub International Ltd., Sr. Unsecd. Note, 144A, 7.000%, 5/1/2026 | |
| | NFP Corp., Sec. Fac. Bond, 144A, 7.000%, 5/15/2025 | |
| | NFP Corp., Sr. Unsecd. Note, 144A, 6.875%, 8/15/2028 | |
| | USIS Merger Subsidiary, Inc., Sr. Unsecd. Note, 144A, 6.875%, 5/1/2025 | |
| | | |
| | | |
| | Live Nation Entertainment, Inc., Sr. Unsecd. Note, 144A, 4.750%, 10/15/2027 | |
| | SeaWorld Parks & Entertainment, Inc., 144A, 9.500%, 8/1/2025 | |
| | Six Flags Entertainment Corp., Sr. Unsecd. Note, 144A, 5.500%, 4/15/2027 | |
| | Six Flags Theme Parks, Sec. Fac. Bond, 144A, 7.000%, 7/1/2025 | |
| | Vail Resorts, Inc., Sr. Unsecd. Note, 144A, 6.250%, 5/15/2025 | |
| | Viking Cruises Ltd., Sr. Unsecd. Note, 144A, 6.250%, 5/15/2025 | |
| | Voc Escrow Ltd., 144A, 5.000%, 2/15/2028 | |
| | | |
| | | |
| | Hilton Domestic Operating Company, Inc., Sr. Unsecd. Note, 144A, 5.375%, 5/1/2025 | |
| | Hilton Domestic Operating Company, Inc., Sr. Unsecd. Note, 144A, 5.750%, 5/1/2028 | |
| | Hilton Domestic Operating Company, Inc., Sr. Unsecd. Note, 4.250%, 9/1/2024 | |
| | Hilton Domestic Operating Company, Inc., Sr. Unsecd. Note, 5.125%, 5/1/2026 | |
| | Hilton Domestic Operating Company, Inc., Sr. Unsecd. Note, Series WI, 4.875%, 1/15/2030 | |
| | Hilton Worldwide Finance LLC, Sr. Unsecd. Note, 4.625%, 4/1/2025 | |
| | RHP Hotel Property/RHP Finance Corp., Series WI, 4.750%, 10/15/2027 | |
| | Wyndham Hotels & Resorts, Inc., Sr. Unsecd. Note, 144A, 4.375%, 8/15/2028 | |
| | Wyndham Hotels & Resorts, Inc., Sr. Unsecd. Note, 144A, 5.375%, 4/15/2026 | |
| | | |
| | Media Entertainment— 6.5% | |
| | AMC Networks, Inc., Sr. Unsecd. Note, 4.750%, 12/15/2022 | |
Annual Shareholder Report
| | | |
| | CORPORATE BONDS— continued | |
| | Media Entertainment— continued | |
| | AMC Networks, Inc., Sr. Unsecd. Note, 4.750%, 8/1/2025 | |
| | AMC Networks, Inc., Sr. Unsecd. Note, 5.000%, 4/1/2024 | |
| | CBS Radio, Inc., Sr. Unsecd. Note, 144A, 7.250%, 11/1/2024 | |
| | Cumulus Media News Holdings, Inc., 144A, 6.750%, 7/1/2026 | |
| | Diamond Sports Group LLC / Diamond Sports Finance Co., Sec. Fac. Bond, 144A, 5.375%, 8/15/2026 | |
| | Diamond Sports Group LLC / Diamond Sports Finance Co., Sec. Fac. Bond, 144A, 6.625%, 8/15/2027 | |
| | Entercom Media Corp., 144A, 6.500%, 5/1/2027 | |
| | Gannett Co., Inc., Sr. Unsecd. Note, 144A, 5.500%, 9/15/2024 | |
| | Gray Escrow, Inc., Sr. Unsecd. Note, 144A, 7.000%, 5/15/2027 | |
| | Gray Television, Inc., Sr. Unsecd. Note, 144A, 4.750%, 10/15/2030 | |
| | Gray Television, Inc., Sr. Unsecd. Note, 144A, 5.875%, 7/15/2026 | |
| | iHeartCommunications, Inc., 144A, 4.750%, 1/15/2028 | |
| | iHeartCommunications, Inc., 144A, 5.250%, 8/15/2027 | |
| | iHeartCommunications, Inc., 6.375%, 5/1/2026 | |
| | iHeartCommunications, Inc., Sr. Unsecd. Note, 8.375%, 5/1/2027 | |
| | Lamar Media Corp., Sr. Unsecd. Note, 4.000%, 2/15/2030 | |
| | Lamar Media Corp., Sr. Unsecd. Note, 4.875%, 1/15/2029 | |
| | Lamar Media Corp., Sr. Unsecd. Note, 5.750%, 2/1/2026 | |
| | Match Group, Inc., Sr. Unsecd. Note, 144A, 4.125%, 8/1/2030 | |
| | Match Group, Inc., Sr. Unsecd. Note, 144A, 4.625%, 6/1/2028 | |
| | Match Group, Inc., Sr. Unsecd. Note, 144A, 5.000%, 12/15/2027 | |
| | Nexstar Broadcasting, Inc., Sr. Unsecd. Note, 144A, 4.750%, 11/1/2028 | |
| | Nexstar Escrow Corp., Sr. Unsecd. Note, 144A, 5.625%, 7/15/2027 | |
| | Nielsen Finance LLC/Nielsen Finance Co., 144A, 5.000%, 4/15/2022 | |
| | Nielsen Finance LLC/Nielsen Finance Co., Sr. Unsecd. Note, 144A, 5.000%, 2/1/2025 | |
| | Nielsen Finance LLC/Nielsen Finance Co., Sr. Unsecd. Note, 144A, 5.625%, 10/1/2028 | |
| | Nielsen Finance LLC/Nielsen Finance Co., Sr. Unsecd. Note, 144A, 5.875%, 10/1/2030 | |
| | Outfront Media Capital LLC / Outfront Media Capital Corp., Sr. Unsecd. Note, 144A, 4.625%, 3/15/2030 | |
| | Outfront Media Capital LLC / Outfront Media Capital Corp., Sr. Unsecd. Note, 144A, 6.250%, 6/15/2025 | |
| | Scripps Escrow, Inc., Sr. Unsecd. Note, 144A, 5.875%, 7/15/2027 | |
| | Sinclair Television Group, 144A, 5.625%, 8/1/2024 | |
| | Sinclair Television Group, Sr. Unsecd. Note, 144A, 5.125%, 2/15/2027 | |
| | Sinclair Television Group, Sr. Unsecd. Note, 144A, 5.875%, 3/15/2026 | |
| | Tegna, Inc., Sr. Unsecd. Note, 144A, 4.625%, 3/15/2028 | |
| | Tegna, Inc., Sr. Unsecd. Note, 144A, 4.750%, 3/15/2026 | |
| | Tegna, Inc., Sr. Unsecd. Note, 144A, 5.000%, 9/15/2029 | |
| | Terrier Media Buyer, Inc., Sr. Unsecd. Note, 144A, 8.875%, 12/15/2027 | |
Annual Shareholder Report
| | | |
| | CORPORATE BONDS— continued | |
| | Media Entertainment— continued | |
| | WMG Acquisition Corp., Sec. Fac. Bond, 144A, 3.875%, 7/15/2030 | |
| | | |
| | | |
| | Coeur Mining, Inc., Sr. Unsecd. Note, 5.875%, 6/1/2024 | |
| | Freeport-McMoRan, Inc., Sr. Unsecd. Note, 4.125%, 3/1/2028 | |
| | Freeport-McMoRan, Inc., Sr. Unsecd. Note, 4.250%, 3/1/2030 | |
| | Freeport-McMoRan, Inc., Sr. Unsecd. Note, 4.375%, 8/1/2028 | |
| | Freeport-McMoRan, Inc., Sr. Unsecd. Note, 4.625%, 8/1/2030 | |
| | Freeport-McMoRan, Inc., Sr. Unsecd. Note, 5.000%, 9/1/2027 | |
| | Freeport-McMoRan, Inc., Sr. Unsecd. Note, 5.250%, 9/1/2029 | |
| | Freeport-McMoRan, Inc., Sr. Unsecd. Note, 5.400%, 11/14/2034 | |
| | HudBay Minerals, Inc., Sr. Unsecd. Note, 144A, 7.625%, 1/15/2025 | |
| | | |
| | | |
| | AmeriGas Partners LP, Sr. Unsecd. Note, 5.500%, 5/20/2025 | |
| | AmeriGas Partners LP, Sr. Unsecd. Note, 5.625%, 5/20/2024 | |
| | AmeriGas Partners LP, Sr. Unsecd. Note, 5.750%, 5/20/2027 | |
| | AmeriGas Partners LP, Sr. Unsecd. Note, 5.875%, 8/20/2026 | |
| | Antero Midstream Partners LP, Sr. Unsecd. Note, 144A, 5.750%, 1/15/2028 | |
| | Antero Midstream Partners LP, Sr. Unsecd. Note, 144A, 5.750%, 3/1/2027 | |
| | Antero Midstream Partners LP, Sr. Unsecd. Note, 5.375%, 9/15/2024 | |
| | Atlas Pipeline Partners LP, 5.875%, 8/1/2023 | |
| | Buckeye Partners, Sr. Unsecd. Note, 144A, 4.125%, 3/1/2025 | |
| | Buckeye Partners, Sr. Unsecd. Note, 144A, 4.500%, 3/1/2028 | |
| | Cheniere Corpus Christi Holdings LLC, 5.125%, 6/30/2027 | |
| | Cheniere Corpus Christi Holdings LLC, Sr. Secd. Note, 5.875%, 3/31/2025 | |
| | Cheniere Energy Partners, LP, Series WI, 5.250%, 10/1/2025 | |
| | Cheniere Energy Partners, LP, Sr. Unsecd. Note, 5.625%, 10/1/2026 | |
| | Cheniere Energy Partners, LP, Sr. Unsecd. Note, Series WI, 4.500%, 10/1/2029 | |
| | Cheniere Energy, Inc., Sr. Secd. Note, 144A, 4.625%, 10/15/2028 | |
| | CNX Midstream Partners LP / CNX Midstream Finance Corp., Sr. Unsecd. Note, 144A, 6.500%, 3/15/2026 | |
| | EQM Midstream Partners, LP, Sr. Unsecd. Note, 144A, 6.500%, 7/1/2027 | |
| | EQT Midstream Partners LP, Sr. Unsecd. Note, 144A, 6.000%, 7/1/2025 | |
| | EQT Midstream Partners LP, Sr. Unsecd. Note, 4.750%, 7/15/2023 | |
| | EQT Midstream Partners LP, Sr. Unsecd. Note, 5.500%, 7/15/2028 | |
| | EQT Midstream Partners LP, Sr. Unsecd. Note, 6.500%, 7/15/2048 | |
| | Hess Midstream Operations LP, Sr. Unsecd. Note, 144A, 5.625%, 2/15/2026 | |
Annual Shareholder Report
| | | |
| | CORPORATE BONDS— continued | |
| | | |
| | Hess Midstream Partners LP, Sr. Unsecd. Note, 144A, 5.125%, 6/15/2028 | |
| | Holly Energy Partners LP, Sr. Unsecd. Note, 144A, 5.000%, 2/1/2028 | |
| | NuStar Logistics LP, Sr. Unsecd. Note, 5.625%, 4/28/2027 | |
| | NuStar Logistics LP, Sr. Unsecd. Note, 5.750%, 10/1/2025 | |
| | NuStar Logistics LP, Sr. Unsecd. Note, 6.000%, 6/1/2026 | |
| | NuStar Logistics LP, Sr. Unsecd. Note, 6.375%, 10/1/2030 | |
| | Rattler Midstream Partners LP, Sr. Unsecd. Note, 144A, 5.625%, 7/15/2025 | |
| | Suburban Propane Partners LP, 5.500%, 6/1/2024 | |
| | Suburban Propane Partners LP, Sr. Unsecd. Note, 5.750%, 3/1/2025 | |
| | Suburban Propane Partners LP, Sr. Unsecd. Note, 5.875%, 3/1/2027 | |
| | Summit Midstream Holdings LLC, 5.500%, 8/15/2022 | |
| | Summit Midstream Holdings LLC, Sr. Unsecd. Note, 5.750%, 4/15/2025 | |
| | Sunoco LP/Finance Corp., Sr. Unsecd. Note, Series WI, 5.500%, 2/15/2026 | |
| | Sunoco LP/Finance Corp., Sr. Unsecd. Note, Series WI, 5.875%, 3/15/2028 | |
| | Targa Resources Partners LP / Targa Resources Partners Finance Corp., Sr. Unsecd. Note, 144A, 4.875%, 2/1/2031 | |
| | Targa Resources Partners LP / Targa Resources Partners Finance Corp., Sr. Unsecd. Note, 144A, 5.500%, 3/1/2030 | |
| | Targa Resources Partners LP / Targa Resources Partners Finance Corp., Sr. Unsecd. Note, 5.000%, 1/15/2028 | |
| | Targa Resources Partners LP / Targa Resources Partners Finance Corp., Sr. Unsecd. Note, 5.125%, 2/1/2025 | |
| | Targa Resources Partners LP / Targa Resources Partners Finance Corp., Sr. Unsecd. Note, 5.250%, 5/1/2023 | |
| | Targa Resources Partners LP / Targa Resources Partners Finance Corp., Sr. Unsecd. Note, 5.375%, 2/1/2027 | |
| | Targa Resources Partners LP / Targa Resources Partners Finance Corp., Sr. Unsecd. Note, 5.875%, 4/15/2026 | |
| | Targa Resources Partners LP / Targa Resources Partners Finance Corp., Sr. Unsecd. Note, 6.500%, 7/15/2027 | |
| | TransMontaigne Partners LP/TLP Finance Corp., Sr. Unsecd. Note, 6.125%, 2/15/2026 | |
| | Western Gas Partners LP, Sr. Unsecd. Note, 4.000%, 7/1/2022 | |
| | Western Gas Partners LP, Sr. Unsecd. Note, 4.500%, 3/1/2028 | |
| | Western Gas Partners LP, Sr. Unsecd. Note, 4.650%, 7/1/2026 | |
| | Western Gas Partners LP, Sr. Unsecd. Note, 5.300%, 3/1/2048 | |
| | Western Gas Partners LP, Sr. Unsecd. Note, 5.450%, 4/1/2044 | |
| | Western Gas Partners LP, Sr. Unsecd. Note, 5.500%, 8/15/2048 | |
| | Western Midstream Operating, LP, Sr. Unsecd. Note, 4.100%, 2/1/2025 | |
| | Western Midstream Operating, LP, Sr. Unsecd. Note, 5.050%, 2/1/2030 | |
Annual Shareholder Report
| | | |
| | CORPORATE BONDS— continued | |
| | | |
| | Western Midstream Operating, LP, Sr. Unsecd. Note, 6.250%, 2/1/2050 | |
| | | |
| | | |
| | Archrock Partners LP / Archrock Partners Finance Corp., Sr. Unsecd. Note, 144A, 6.250%, 4/1/2028 | |
| | Archrock Partners LP / Archrock Partners Finance Corp., Sr. Unsecd. Note, 144A, 6.875%, 4/1/2027 | |
| | Nabors Industries Ltd., Sr. Unsecd. Note, 144A, 7.250%, 1/15/2026 | |
| | Nabors Industries Ltd., Sr. Unsecd. Note, 144A, 7.500%, 1/15/2028 | |
| | Precision Drilling Corp., Sr. Unsecd. Note, 144A, 7.125%, 1/15/2026 | |
| | Precision Drilling Corp., Sr. Unsecd. Note, 5.250%, 11/15/2024 | |
| | Precision Drilling Corp., Sr. Unsecd. Note, 7.750%, 12/15/2023 | |
| | Sesi LLC, 7.125%, 12/15/2021 | |
| | Sesi LLC, Sr. Unsecd. Note, Series WI, 7.750%, 9/15/2024 | |
| | Shelf Drilling Holdings Ltd., Sr. Unsecd. Note, 144A, 8.250%, 2/15/2025 | |
| | USA Compression Partners LP, Sr. Unsecd. Note, 6.875%, 9/1/2027 | |
| | USA Compression Partners LP, Sr. Unsecd. Note, Series WI, 6.875%, 4/1/2026 | |
| | | |
| | | |
| | ARD Finance SA, Sec. Fac. Bond, 144A, 6.500%, 6/30/2027 | |
| | Ardagh Packaging Finance PLC/Ardagh Holdings, Sec. Fac. Bond, 144A, 5.250%, 8/15/2027 | |
| | Ardagh Packaging Finance PLC/Ardagh Holdings, Sr. Unsecd. Note, 144A, 5.250%, 8/15/2027 | |
| | Ardagh Packaging Finance PLC/Ardagh Holdings, Sr. Unsecd. Note, 144A, 6.000%, 2/15/2025 | |
| | Ball Corp., Sr. Unsecd. Note, 2.875%, 8/15/2030 | |
| | Ball Corp., Sr. Unsecd. Note, 4.875%, 3/15/2026 | |
| | Berry Global Escrow Corp., 144A, 4.875%, 7/15/2026 | |
| | Berry Global Escrow Corp., 144A, 5.625%, 7/15/2027 | |
| | Berry Plastics Corp., 5.125%, 7/15/2023 | |
| | Bway Holding Co., Sec. Fac. Bond, 144A, 5.500%, 4/15/2024 | |
| | Bway Holding Co., Sr. Unsecd. Note, 144A, 7.250%, 4/15/2025 | |
| | Crown Americas LLC / Crown Americas Capital Corp. VI, Sr. Unsecd. Note, 4.750%, 2/1/2026 | |
| | Crown Americas LLC, 4.500%, 1/15/2023 | |
| | Crown Americas LLC, Sr. Unsecd. Note, 4.250%, 9/30/2026 | |
| | Flex Acquisition Co., Inc., Sr. Unsecd. Note, 144A, 6.875%, 1/15/2025 | |
| | Flex Acquisition Co., Inc., Sr. Unsecd. Note, 144A, 7.875%, 7/15/2026 | |
| | Greif, Inc., Sr. Unsecd. Note, 144A, 6.500%, 3/1/2027 | |
| | Owens-Brockway Glass Container, Inc., 144A, 5.375%, 1/15/2025 | |
| | Owens-Brockway Glass Container, Inc., 144A, 5.875%, 8/15/2023 | |
Annual Shareholder Report
| | | |
| | CORPORATE BONDS— continued | |
| | | |
| | Owens-Brockway Glass Container, Inc., 144A, 6.375%, 8/15/2025 | |
| | Owens-Brockway Glass Container, Inc., Sr. Unsecd. Note, 144A, 6.625%, 5/13/2027 | |
| | Reynolds Group Issuer, Inc. / LLC / LU, Sec. Fac. Bond, 144A, 4.000%, 10/15/2027 | |
| | Sealed Air Corp., 144A, 4.875%, 12/1/2022 | |
| | Sealed Air Corp., Sr. Unsecd. Note, 144A, 4.000%, 12/1/2027 | |
| | Sealed Air Corp., Sr. Unsecd. Note, 144A, 5.125%, 12/1/2024 | |
| | Silgan Holdings, Inc., Sr. Unsecd. Note, Series WI, 4.125%, 2/1/2028 | |
| | Trident Merger Subsidiary, Inc., Sr. Unsecd. Note, 144A, 6.625%, 11/1/2025 | |
| | Trident Merger Subsidiary, Inc., Sr. Unsecd. Note, 144A, 9.250%, 8/1/2024 | |
| | Trivium Packaging Finance BV, Sec. Fac. Bond, 144A, 5.500%, 8/15/2026 | |
| | Trivium Packaging Finance BV, Sr. Unsecd. Note, 144A, 8.500%, 8/15/2027 | |
| | | |
| | | |
| | Clearwater Paper Corp., Sr. Unsecd. Note, 144A, 4.750%, 8/15/2028 | |
| | Clearwater Paper Corp., Sr. Unsecd. Note, 144A, 5.375%, 2/1/2025 | |
| | Graphic Packaging International, LLC, Sr. Unsecd. Note, 144A, 3.500%, 3/1/2029 | |
| | Graphic Packaging International, LLC, Sr. Unsecd. Note, 144A, 3.500%, 3/15/2028 | |
| | Graphic Packaging International, LLC, Sr. Unsecd. Note, 144A, 4.750%, 7/15/2027 | |
| | | |
| | | |
| | Bausch Health Cos, Inc., Sec. Fac. Bond, 144A, 5.500%, 11/1/2025 | |
| | Bausch Health Cos, Inc., Sec. Fac. Bond, 144A, 5.750%, 8/15/2027 | |
| | Bausch Health Cos, Inc., Sr. Secd. Note, 144A, 7.000%, 3/15/2024 | |
| | Bausch Health Cos, Inc., Sr. Unsecd. Note, 144A, 5.000%, 1/30/2028 | |
| | Bausch Health Cos, Inc., Sr. Unsecd. Note, 144A, 5.250%, 1/30/2030 | |
| | Bausch Health Cos, Inc., Sr. Unsecd. Note, 144A, 5.500%, 3/1/2023 | |
| | Bausch Health Cos, Inc., Sr. Unsecd. Note, 144A, 5.875%, 5/15/2023 | |
| | Bausch Health Cos, Inc., Sr. Unsecd. Note, 144A, 6.125%, 4/15/2025 | |
| | Bausch Health Cos, Inc., Sr. Unsecd. Note, 144A, 6.250%, 2/15/2029 | |
| | Bausch Health Cos, Inc., Sr. Unsecd. Note, 144A, 7.250%, 5/30/2029 | |
| | Bausch Health Cos, Inc., Sr. Unsecd. Note, 144A, 8.500%, 1/31/2027 | |
| | Bausch Health Cos, Inc., Sr. Unsecd. Note, 144A, 9.000%, 12/15/2025 | |
| | Bausch Health Cos, Inc., Sr. Unsecd. Note, 144A, 9.250%, 4/1/2026 | |
| | Emergent BioSolutions, Inc., Sr. Unsecd. Note, 144A, 3.875%, 8/15/2028 | |
Annual Shareholder Report
| | | |
| | CORPORATE BONDS— continued | |
| | Pharmaceuticals— continued | |
| | Endo Dac / Endo Finance LLC / Endo Finco, Inc., 144A, 6.000%, 6/30/2028 | |
| | Endo Dac / Endo Finance LLC / Endo Finco, Inc., Term Loan - 2nd Lien, 144A, 9.500%, 7/31/2027 | |
| | Jaguar Holding Co. II/Pharmaceutical Product Development LLC, Sr. Unsecd. Note, 144A, 4.625%, 6/15/2025 | |
| | Jaguar Holding Co. II/Pharmaceutical Product Development LLC, Sr. Unsecd. Note, 144A, 5.000%, 6/15/2028 | |
| | Mallinckrodt International Finance SA/Mallinckrodt CB LLC, Sr. Unsecd. Note, 144A, 5.500%, 4/15/2025 | |
| | Mallinckrodt International Finance SA/Mallinckrodt CB LLC, Sr. Unsecd. Note, 144A, 5.625%, 10/15/2023 | |
| | Par Pharmaceutical Cos., Inc., Sec. Fac. Bond, 144A, 7.500%, 4/1/2027 | |
| | | |
| | | |
| | 1011778 BC Unltd. Liability Co./New Red Finance, Inc., 144A, 3.875%, 1/15/2028 | |
| | 1011778 BC Unltd. Liability Co./New Red Finance, Inc., 144A, 4.375%, 1/15/2028 | |
| | 1011778 BC Unltd. Liability Co./New Red Finance, Inc., 144A, 5.000%, 10/15/2025 | |
| | 1011778 BC Unltd. Liability Co./New Red Finance, Inc., Sr. Secd. Note, 144A, 4.250%, 5/15/2024 | |
| | 1011778 BC Unltd. Liability Co./New Red Finance, Inc., Term Loan - 1st Lien, 144A, 3.500%, 2/15/2029 | |
| | 1011778 BC Unltd. Liability Co./New Red Finance, Inc., Term Loan - 2nd Lien, 144A, 4.000%, 10/15/2030 | |
| | KFC Holding Co./Pizza Hut Holdings LLC/Taco Bell of America LLC, Sr. Unsecd. Note, 144A, 4.750%, 6/1/2027 | |
| | Yum! Brands, Inc., Sr. Unsecd. Note, 144A, 4.750%, 1/15/2030 | |
| | Yum! Brands, Inc., Sr. Unsecd. Note, 144A, 5.250%, 6/1/2026 | |
| | Yum! Brands, Inc., Sr. Unsecd. Note, 144A, 7.750%, 4/1/2025 | |
| | Yum! Brands, Inc., Sr. Unsecd. Note, 3.625%, 3/15/2031 | |
| | | |
| | | |
| | Academy Ltd., Sec. Fac. Bond, 144A, 6.000%, 11/15/2027 | |
| | Hanesbrands, Inc., Sr. Unsecd. Note, 144A, 4.875%, 5/15/2026 | |
| | Michaels Stores, Inc., Sr. Unsecd. Note, 144A, 8.000%, 7/15/2027 | |
| | Party City Holdings, Inc., 144A, 5.750% (6-month USLIBOR 0.750% Floor +5.000%), 7/15/2025 | |
| | William Carter Co., Sr. Unsecd. Note, 144A, 5.500%, 5/15/2025 | |
| | | |
| | | |
| | Albertsons Cos. LLC/SAFEW, Sr. Unsecd. Note, 144A, 3.250%, 3/15/2026 | |
Annual Shareholder Report
| | | |
| | CORPORATE BONDS— continued | |
| | | |
| | Albertsons Cos. LLC/SAFEW, Sr. Unsecd. Note, 144A, 3.500%, 3/15/2029 | |
| | Albertsons Cos. LLC/SAFEW, Sr. Unsecd. Note, 144A, 4.875%, 2/15/2030 | |
| | Albertsons Cos. LLC/SAFEW, Sr. Unsecd. Note, 144A, 5.875%, 2/15/2028 | |
| | Albertsons Cos. LLC/SAFEW, Sr. Unsecd. Note, 144A, 7.500%, 3/15/2026 | |
| | Albertsons Cos. LLC/SAFEW, Sr. Unsecd. Note, 5.750%, 3/15/2025 | |
| | | |
| | | |
| | AMS AG, Sr. Unsecd. Note, 144A, 7.000%, 7/31/2025 | |
| | Banff Merger Subsidiary, Inc., Sr. Unsecd. Note, 144A, 9.750%, 9/1/2026 | |
| | Black Knight InfoServ LLC, Sr. Unsecd. Note, 144A, 3.625%, 9/1/2028 | |
| | BY Crown Parent LLC / BY Bond Finance Inc., 144A, 4.250%, 1/31/2026 | |
| | Cars.com, Inc., Sr. Unsecd. Note, 144A, 6.375%, 11/1/2028 | |
| | CDW LLC/ CDW Finance, Sr. Unsecd. Note, 3.250%, 2/15/2029 | |
| | CDW LLC/ CDW Finance, Sr. Unsecd. Note, 4.250%, 4/1/2028 | |
| | CDW LLC/ CDW Finance, Sr. Unsecd. Note, 5.500%, 12/1/2024 | |
| | Diamond 1 Finance Corp./Diamond 2 Finance Corp., Sr. Unsecd. Note, 144A, 7.125%, 6/15/2024 | |
| | Fair Isaac & Co., Inc., Sr. Unsecd. Note, 144A, 4.000%, 6/15/2028 | |
| | Financial & Risk US Holdings Inc., 144A, 6.250%, 5/15/2026 | |
| | Financial & Risk US Holdings Inc., Sr. Unsecd. Note, 144A, 8.250%, 11/15/2026 | |
| | Gartner, Inc., Sr. Unsecd. Note, 144A, 3.750%, 10/1/2030 | |
| | Gartner, Inc., Sr. Unsecd. Note, 144A, 4.500%, 7/1/2028 | |
| | JDA Escrow LLC / JDA Bond Finance, Inc., 144A, 7.375%, 10/15/2024 | |
| | Logan Merger Sub, Inc., Sr. Secd. Note, 144A, 5.500%, 9/1/2027 | |
| | Microchip Technology, Inc., Sr. Unsecd. Note, 144A, 4.250%, 9/1/2025 | |
| | MSCI, Inc., Sr. Unsecd. Note, 144A, 3.875%, 2/15/2031 | |
| | NCR Corp., Sr. Unsecd. Note, 144A, 5.000%, 10/1/2028 | |
| | NCR Corp., Sr. Unsecd. Note, 144A, 5.250%, 10/1/2030 | |
| | NCR Corp., Sr. Unsecd. Note, 144A, 5.750%, 9/1/2027 | |
| | NCR Corp., Sr. Unsecd. Note, 144A, 6.125%, 9/1/2029 | |
| | NCR Corp., Sr. Unsecd. Note, 144A, 8.125%, 4/15/2025 | |
| | Nuance Communications, Inc., Sr. Unsecd. Note, 5.625%, 12/15/2026 | |
| | ON Semiconductor Corp., Sr. Unsecd. Note, 144A, 3.875%, 9/1/2028 | |
| | Open Text Corp., Sr. Unsecd. Note, 144A, 3.875%, 2/15/2028 | |
| | Open Text Corp., Sr. Unsecd. Note, 144A, 4.125%, 2/15/2030 | |
| | PTC, Inc., Sr. Unsecd. Note, 144A, 4.000%, 2/15/2028 | |
| | Qorvo, Inc., Sr. Unsecd. Note, 144A, 3.375%, 4/1/2031 | |
Annual Shareholder Report
| | | |
| | CORPORATE BONDS— continued | |
| | | |
| | Qorvo, Inc., Sr. Unsecd. Note, 4.375%, 10/15/2029 | |
| | Science Applications International Corp., Sr. Unsecd. Note, 144A, 4.875%, 4/1/2028 | |
| | Sensata Technologies B.V., Sr. Unsecd. Note, 144A, 4.375%, 2/15/2030 | |
| | Sensata Technologies B.V., Sr. Unsecd. Note, 144A, 5.000%, 10/1/2025 | |
| | Sensata Technologies UK Financing Co. PLC, Sr. Unsecd. Note, 144A, 6.250%, 2/15/2026 | |
| | Sensata Technologies, Inc., 144A, 3.750%, 2/15/2031 | |
| | SS&C Technologies, Inc., Sr. Unsecd. Note, 144A, 5.500%, 9/30/2027 | |
| | Star Merger Sub, Inc., 144A, 6.875%, 8/15/2026 | |
| | Star Merger Sub, Inc., Sr. Unsecd. Note, 144A, 10.250%, 2/15/2027 | |
| | Tempo Acquisition LLC, Sr. Unsecd. Note, 144A, 6.750%, 6/1/2025 | |
| | TTM Technologies, Inc., Sr. Unsecd. Note, 144A, 5.625%, 10/1/2025 | |
| | Verisign, Inc., Sr. Unsecd. Note, 4.750%, 7/15/2027 | |
| | Veritas US, Inc./Veritas Bermuda, Ltd., Sr. Secd. Note, 144A, 7.500%, 9/1/2025 | |
| | Western Digital Corp., Sr. Unsecd. Note, 4.750%, 2/15/2026 | |
| | | |
| | Transportation Services— 0.3% | |
| | Stena International S.A., Sec. Fac. Bond, 144A, 6.125%, 2/1/2025 | |
| | Watco Cos LLC/Finance Co., Sr. Unsecd. Note, 144A, 6.500%, 6/15/2027 | |
| | | |
| | | |
| | Calpine Corp., 144A, 4.500%, 2/15/2028 | |
| | Calpine Corp., 144A, 5.250%, 6/1/2026 | |
| | Calpine Corp., Sr. Unsecd. Note, 144A, 4.625%, 2/1/2029 | |
| | Calpine Corp., Sr. Unsecd. Note, 144A, 5.000%, 2/1/2031 | |
| | Calpine Corp., Sr. Unsecd. Note, 144A, 5.125%, 3/15/2028 | |
| | DPL, Inc., Sr. Unsecd. Note, 144A, 4.125%, 7/1/2025 | |
| | Enviva Partners LP/Enviva Partners Finance Corp., Sr. Unsecd. Note, 144A, 6.500%, 1/15/2026 | |
| | NRG Energy, Inc., Sr. Unsecd. Note, 144A, 5.250%, 6/15/2029 | |
| | NRG Energy, Inc., Sr. Unsecd. Note, 6.625%, 1/15/2027 | |
| | NRG Energy, Inc., Sr. Unsecd. Note, 7.250%, 5/15/2026 | |
| | NRG Energy, Inc., Sr. Unsecd. Note, Series WI, 5.750%, 1/15/2028 | |
| | Pattern Energy Operations LP / Pattern Energy Operations Inc., Sr. Unsecd. Note, 144A, 4.500%, 8/15/2028 | |
| | TerraForm Power Operating LLC, Sr. Unsecd. Note, 144A, 4.250%, 1/31/2023 | |
| | TerraForm Power Operating LLC, Sr. Unsecd. Note, 144A, 4.750%, 1/15/2030 | |
| | TerraForm Power Operating LLC, Sr. Unsecd. Note, 144A, 5.000%, 1/31/2028 | |
Annual Shareholder Report
| | | |
| | CORPORATE BONDS— continued | |
| | Utility - Electric— continued | |
| | Vistra Operations Co., LLC, Sr. Unsecd. Note, 144A, 5.000%, 7/31/2027 | |
| | Vistra Operations Co., LLC, Sr. Unsecd. Note, 144A, 5.500%, 9/1/2026 | |
| | Vistra Operations Co., LLC, Sr. Unsecd. Note, 144A, 5.625%, 2/15/2027 | |
| | | |
| | Wireless Communications— 2.3% | |
| | Altice France SA, 144A, 8.125%, 2/1/2027 | |
| | Numericable-SFR SAS, 144A, 7.375%, 5/1/2026 | |
| | Sprint Capital Corp., Company Guarantee, 6.875%, 11/15/2028 | |
| | Sprint Corp., 7.125%, 6/15/2024 | |
| | Sprint Corp., 7.875%, 9/15/2023 | |
| | Sprint Corp., Sr. Unsecd. Note, 7.625%, 2/15/2025 | |
| | Sprint Corp., Sr. Unsecd. Note, 7.625%, 3/1/2026 | |
| | Sprint Nextel Corp., Sr. Unsecd. Note, 6.000%, 11/15/2022 | |
| | T-Mobile USA, Inc., Sr. Unsecd. Note, 4.500%, 2/1/2026 | |
| | T-Mobile USA, Inc., Sr. Unsecd. Note, 4.750%, 2/1/2028 | |
| | T-Mobile USA, Inc., Sr. Unsecd. Note, 5.125%, 4/15/2025 | |
| | T-Mobile USA, Inc., Sr. Unsecd. Note, 5.375%, 4/15/2027 | |
| | T-Mobile USA, Inc., Sr. Unsecd. Note, 6.000%, 3/1/2023 | |
| | T-Mobile USA, Inc., Sr. Unsecd. Note, 6.000%, 4/15/2024 | |
| | T-Mobile USA, Inc., Sr. Unsecd. Note, 6.500%, 1/15/2026 | |
| | | |
| | TOTAL CORPORATE BONDS
(IDENTIFIED COST $8,744,737,860) | |
| | FLOATING RATE LOANS— 0.2% | |
| | | |
| | Envision Healthcare Corp., Term Loan - 1st Lien, Series B, 7.000% (3-month USLIBOR 1.000% Floor +6.000%), 10/10/2025 | |
| | | |
| | Ascent Resources Utica Holdings, LLC, Term Loan - 2nd Lien, 10.000% (1-month USLIBOR 1.000% Floor +9.000%), 11/1/2025 | |
| | TOTAL FLOATING RATE LOANS
(IDENTIFIED COST $32,448,909) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | Media Entertainment— 0.0% | |
| | | |
Annual Shareholder Report
| | | |
| | | |
| | | |
| | | |
| | TOTAL COMMON STOCKS
(IDENTIFIED COST $22,743,285) | |
| | INVESTMENT COMPANIES— 6.4% | |
| | Federated Hermes Institutional Prime Value Obligations Fund, Institutional Shares, 0.10%7 | |
| | High Yield Bond Portfolio | |
| | TOTAL INVESTMENT COMPANIES
(IDENTIFIED COST $612,247,751) | |
| | TOTAL INVESTMENT IN SECURITIES—99.6%
(IDENTIFIED COST $9,412,177,805)8 | |
| | OTHER ASSETS AND LIABILITIES - NET—0.4%9 | |
| | | |
Affiliated fund holdings are investment companies which are managed by the Adviser or an affiliate of the Adviser. Transactions with the affiliated fund holdings during the period ended October 31, 2020, were as follows:
| Federated Hermes
Institutional
Prime Value
Obligations Fund,
Institutional Shares | | Total of
Affiliated
Transactions |
| | | |
| | | |
| | | |
Change in Unrealized Appreciation/ Depreciation | | | |
| | | |
| | | |
Shares Held as of 10/31/2020 | | | |
| | | |
Gain Distributions Received | | | |
| |
| Non-income-producing security. |
| Subsequent to October 31, 2020, the issuer filed for Chapter 11 of the U.S. Bankruptcy Code. |
| Market quotations and price evaluations are not available. Fair value determined using significant unobservable inputs in accordance with procedures established by and under the general supervision of the Fund’s Board of Trustees (the “Trustees”). |
| The company announced it intends to restructure through a Chapter 11 filing. |
| Floating/variable note with current rate and current maturity or next reset date shown. |
| |
| The cost of investments for federal tax purposes amounts to $9,425,845,932. |
| Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities. |
Annual Shareholder Report
Note: The categories of investments are shown as a percentage of total net assets at October 31, 2020.
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.
The following is a summary of the inputs used, as of October 31, 2020, in valuing the Fund’s assets carried at fair value:
|
| | Level 2—
Other
Significant
Observable
Inputs | Level 3—
Significant
Unobservable
Inputs | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
The following acronym(s) are used throughout this portfolio: | |
| |
| —London Interbank Offered Rate |
| |
| |
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
Financial Highlights–Institutional Shares
(For a Share Outstanding Throughout Each Period)
| |
| | | | | |
Net Asset Value, Beginning of Period | | | | | |
Income From Investment Operations: | | | | | |
| | | | | |
Net realized and unrealized gain (loss) | | | | | |
Total From Investment Operations | | | | | |
| | | | | |
Distributions from net investment income | | | | | |
| | | | | |
Net Asset Value, End of Period | | | | | |
| | | | | |
Ratios to Average Net Assets: | | | | | |
| | | | | |
| | | | | |
Expense waiver/reimbursement4 | | | | | |
| | | | | |
Net assets, end of period (000 omitted) | | | | | |
| | | | | |
| Represents less than $0.01. |
| Based on net asset value. |
| Amount does not reflect net expenses incurred by investment companies in which the Fund may invest. |
| This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above. Amount does not reflect expense waiver/reimbursement recorded by investment companies in which the Fund may invest. |
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
Financial Highlights–Class R6 Shares
(For a Share Outstanding Throughout Each Period)
| | |
| | | | |
Net Asset Value, Beginning of Period | | | | | |
Income From Investment Operations: | | | | | |
| | | | | |
Net realized and unrealized gain (loss) | | | | | |
Total From Investment Operations | | | | | |
| | | | | |
Distributions from net investment income | | | | | |
| | | | | |
Net Asset Value, End of Period | | | | | |
| | | | | |
Ratios to Average Net Assets: | | | | | |
| | | | | |
| | | | | |
Expense waiver/reimbursement6 | | | | | |
| | | | | |
Net assets, end of period (000 omitted) | | | | | |
| | | | | |
| Reflects operations for the period from June 29, 2016 (date of initial investment) to October 31, 2016. |
| Represents less than $0.01. |
| Based on net asset value. Total returns for periods of less than one year are not annualized. |
| Amount does not reflect net expenses incurred by investment companies in which the Fund may invest. |
| Computed on an annualized basis. |
| This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above. Amount does not reflect expense waiver/reimbursement recorded by investment companies in which the Fund may invest. |
| Portfolio turnover is calculated at the Fund level. Percentage indicated was calculated for the year ended October 31, 2016. |
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
Statement of Assets and LiabilitiesOctober 31, 2020
| |
Investment in securities, at value including $598,695,952 of investment in affiliated holdings* (identified cost $9,412,177,805) | |
| |
| |
Income receivable from affiliated holdings | |
Receivable for investments sold | |
Receivable for shares sold | |
| |
| |
Payable for investments purchased | |
Payable for shares redeemed | |
Income distribution payable | |
Payable for investment adviser fee (Note 5) | |
Payable for administrative fee (Note 5) | |
Accrued expenses (Note 5) | |
| |
Net assets for 976,818,564 shares outstanding | |
| |
| |
Total distributable earnings (loss) | |
| |
Net Asset Value, Offering Price and Redemption Proceeds Per Share: | |
| |
$6,287,622,779 ÷ 657,177,393 shares outstanding, no par value, unlimited shares authorized | |
| |
$3,059,664,867 ÷ 319,641,171 shares outstanding, no par value, unlimited shares authorized | |
| See information listed after the Fund’s Portfolio of Investments. |
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
Statement of OperationsYear Ended October 31, 2020
| |
| |
Dividends received from affiliated holdings* | |
| |
| |
Investment adviser fee (Note 5) | |
Administrative fee (Note 5) | |
| |
Transfer agent fees (Note 2) | |
Directors’/Trustees’ fees (Note 5) | |
| |
| |
Portfolio accounting fees | |
| |
| |
| |
| |
Waiver and Reimbursements: | |
Waiver/reimbursement of investment adviser fee (Note 5) | |
Reimbursement of other operating expenses (Notes 2 and 5) | |
TOTAL WAIVER AND REIMBURSEMENTS | |
| |
| |
Realized and Unrealized Gain (Loss) on Investments: | |
Net realized loss on investments (including net realized loss of $(19,309,033) on sales of investments in affiliated holdings*) | |
Realized gain distribution from affiliated investment company shares* | |
Net change in unrealized depreciation of investments (including net change in unrealized depreciation of $(2,404,454) on investments in affiliated holdings*) | |
Net realized and unrealized gain (loss) on investments | |
Change in net assets resulting from operations | |
| See information listed after the Fund’s Portfolio of Investments. |
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
Statement of Changes in Net Assets
| | |
Increase (Decrease) in Net Assets | | |
| | |
| | |
| | |
Net change in unrealized appreciation/depreciation | | |
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | | |
Distributions to Shareholders: | | |
| | |
| | |
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS | | |
| | |
Proceeds from sale of shares | | |
Net asset value of shares issued to shareholders in payment of distributions declared | | |
| | |
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS | | |
| | |
| | |
| | |
| | |
| | |
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
Notes to Financial Statements
October 31, 2020
1. ORGANIZATION
Federated Hermes Institutional Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust consists of three portfolios. The financial statements included herein are only those of Federated Hermes Institutional High Yield Bond Fund (the “Fund”), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder’s interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers two classes of shares: Institutional Shares and Class R6 Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The investment objective of the Fund is to seek high current income.
Prior to June 29, 2020, the name of the Trust and Fund was Federated Institutional Trust and Federated Institutional High Yield Bond Fund, respectively.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
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 Trustees.
■
Shares of other mutual funds or non-exchange-traded investment companies are valued based upon their reported NAVs.
■
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.
■
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.
■
Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Trustees.
■
For securities that are fair valued in accordance with procedures established by and under the general supervision of the Trustees, 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, or other factors including but not limited to industry changes and relevant government actions.
Annual Shareholder Report
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 Fund’s valuation policies and procedures, or if information furnished by a pricing service, in the opinion of the 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.
Fair Valuation and Significant Events Procedures
The Trustees have ultimate responsibility for determining the fair value of investments for which market quotations are not readily available. The Trustees have appointed a Valuation Committee comprised of officers of the Fund, Federated Investment Management Company (the “Adviser”) and certain of the Adviser’s affiliated companies to assist in determining fair value and in overseeing the calculation of the NAV. The Trustees have also authorized the use of pricing services recommended by the Valuation Committee 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 Trustees. The Trustees periodically review and approve the fair valuations made by the Valuation Committee and any changes made to the procedures.
Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. 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 asked 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 procedures adopted by the Trustees.
The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser 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
Annual Shareholder Report
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 Trustees have 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 Fund will determine the fair value of the investment in accordance with the fair valuation procedures approved by the Trustees. The Trustees have ultimate responsibility for any fair valuations made in response to a significant event.
Repurchase Agreements
The Fund may invest in repurchase agreements for short-term liquidity purposes. It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund’s custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control” as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.
The insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.
The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund’s Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.
Annual Shareholder Report
Investment Income, Gains and Losses, Expenses and Distributions
Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis. Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income, if any, are declared daily and paid monthly. Non-cash dividends included in dividend income, if any, are recorded at fair value. Amortization/accretion of premium and discount is included in investment income. Investment income, realized and unrealized gains and losses, and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that select classes will bear certain expenses unique to those classes. The detail of the total fund expense waiver and reimbursements of $3,874,534 is disclosed in various locations in this Note 2 and Note 5.
For the year ended October 31, 2020, transfer agent fees for the Fund were as follows:
| Transfer Agent
Fees Incurred | Transfer Agent
Fees Reimbursed |
| | |
| | |
| | |
Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.
Federal Taxes
It is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code (the “Code”) and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. As of and during the year ended October 31, 2020, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of October 31, 2020, tax years 2017 through 2020 remain subject to examination by the Fund’s major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.
When-Issued and Delayed-Delivery Transactions
The Fund may engage in when-issued or delayed-delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed-delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
Annual Shareholder Report
Restricted Securities
The Fund may purchase securities which are considered restricted. Restricted securities are securities that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) are subject to contractual restrictions on public sales. In some cases, when a security cannot be offered for public sale without first being registered, the issuer of the restricted security has agreed to register such securities for resale, at the issuer’s expense, either upon demand by the Fund or in connection with another registered offering of the securities. Many such restricted securities may be resold in the secondary market in transactions exempt from registration. Restricted securities may be determined to be liquid under criteria established by the Trustees. The Fund will not incur any registration costs upon such resales. The Fund’s restricted securities, like other securities, are priced in accordance with procedures established by and under the general supervision of the Trustees.
Other
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ materially from those estimated. The Fund applies investment company accounting and reporting guidance.
3. SHARES OF BENEFICIAL INTEREST
The following tables summarize share activity:
| | |
| | | | |
| | | | |
Shares issued to shareholders in payment of distributions declared | | | | |
| | | | |
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS | | | | |
| | |
| | | | |
| | | | |
Shares issued to shareholders in payment of distributions declared | | | | |
| | | | |
NET CHANGE RESULTING FROM CLASS R6 SHARE TRANSACTIONS | | | | |
NET CHANGE RESULTING FROM TOTAL FUND SHARE TRANSACTIONS | | | | |
Annual Shareholder Report
Redemption Fees
Prior to June 30, 2019, the Fund imposed a 2.00% redemption fee to shareholders of the Fund’s Institutional Shares and Class R6 Shares who redeemed shares held for 90 days or less. All redemption fees are recorded by the Fund as additions to paid-in capital. For the year ended October 31, 2019, the redemption fees for Institutional Shares and Class R6 Shares amounted to $595,044 and $140,371, respectively.
4. FEDERAL TAX INFORMATION
The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended October 31, 2020 and 2019, was as follows:
As of October 31, 2020, the components of distributable earnings on a tax-basis were as follows:
Undistributed ordinary income | |
| |
Capital loss carryforwards | |
The difference between book-basis and tax-basis net unrealized appreciation/depreciation is attributable to differing treatments for defaulted securities, deferral of losses on wash sales and discount accretion/premium amortization on debt securities.
At October 31, 2020, the cost of investments for federal tax purposes was $9,425,845,932. The net unrealized depreciation of investments for federal tax purposes was $115,045,844. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $258,575,177 and net unrealized depreciation from investments for those securities having an excess of cost over value of $373,621,021.
As of October 31, 2020, the Fund had a capital loss carryforward of $128,398,379 which will reduce the Fund’s taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code, thereby reducing the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, these net capital losses retain their character as either short-term or long-term and do not expire.
The following schedule summarizes the Fund’s capital loss carryforwards:
Annual Shareholder Report
5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.40% of the Fund’s average daily net assets. Subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund. For the year ended October 31, 2020, the Adviser voluntarily waived $1,681,602 of its fee and voluntarily reimbursed $1,909,389 of transfer agent fees.
The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated investment companies. For the year ended October 31, 2020, the Adviser reimbursed $283,543.
Administrative Fee
Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated Hermes Funds subject to a fee under the Administrative Services Agreement. The fee paid to FAS is based on the average daily net assets of the Investment Complex as specified below:
| Average Daily Net Assets
of the Investment Complex |
| on assets up to $50 billion |
| on assets over $50 billion |
Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended October 31, 2020, the annualized fee paid to FAS was 0.078% of average daily net assets of the Fund.
In addition, FAS may charge certain out-of-pocket expenses to the Fund.
Expense Limitation
The Adviser and certain of its affiliates (which may include FAS) on their own initiative have agreed to waive certain amounts of their respective fees and/or reimburse expenses. Total annual fund operating expenses (as shown in the financial highlights, excluding interest expense, extraordinary expenses and proxy-related expenses paid by the Fund, if any) paid by the Fund’s Institutional Shares and Class R6 Shares (after the voluntary waivers and/or reimbursements) will not exceed 0.49% and 0.48% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) January 1, 2022; or (b) the date of the Fund’s next effective Prospectus. While the Adviser and its applicable affiliates currently do not anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or the Fee Limit increased prior to the Termination Date with the agreement of the Trustees.
Annual Shareholder Report
Interfund Transactions
During the year ended October 31, 2020, the Fund engaged in purchase transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees and/or common Officers. These purchase transactions complied with Rule 17a-7 under the Act and amounted to $15,031,161.
Directors’/Trustees’ and Miscellaneous Fees
Certain Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate payment, Independent Directors’/Trustees’ fees and certain expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses are paid by an affiliate of the Adviser which in due course are reimbursed by the Fund. These expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses may be included in Accrued and Miscellaneous Expenses on the Statement of Assets and Liabilities and Statement of Operations, respectively.
6. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the year ended October 31, 2020, were as follows:
7. LINE OF CREDIT
The Fund participates with certain other Federated Hermes Funds, on a several basis, in an up to $500,000,000 unsecured, 364-day, committed, revolving line of credit (LOC) agreement dated June 24, 2020. The LOC was made available to temporarily finance the repurchase or redemption of shares of the Fund, failed trades, payment of dividends, settlement of trades and for other short-term, temporary or emergency general business purposes. The Fund cannot borrow under the LOC if an inter-fund loan is outstanding. The Fund’s ability to borrow under the LOC also is subject to the limitations of the Act and various conditions precedent that must be satisfied before the Fund can borrow. Loans under the LOC are charged interest at a fluctuating rate per annum equal to the highest, on any day, of (a) (i) the federal funds effective rate, (ii) the one month London Interbank Offered Rate (LIBOR), or a replacement rate as appropriate, and (iii) 0.0%, plus (b) a margin. Any fund eligible to borrow under the LOC pays its pro rata share of an upfront fee, and its pro rata share of a commitment fee based on the amount of the lenders’ commitment that has not been utilized, quarterly in arrears and at maturity. As of October 31, 2020, the Fund had no outstanding loans. During the year ended October 31, 2020, the Fund did not utilize the LOC.
8. INTERFUND LENDING
Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other funds advised by subsidiaries of Federated Hermes, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating affiliated funds. As of October 31, 2020, there were no outstanding loans. During the year ended October 31, 2020, the program was not utilized.
Annual Shareholder Report
9. OTHER MATTERS
An outbreak of respiratory disease caused by a novel coronavirus was first detected in China in late 2019 and subsequently spread globally. As of the date of the issuance of these financial statements, this coronavirus has resulted in closing borders, enhanced health screenings, healthcare service preparation and delivery, quarantines, cancellations, and disruptions to supply chains, workflow operations and consumer activity, as well as general concern and uncertainty. The impact of this coronavirus may be short-term or may last for an extended period of time and has resulted in a substantial economic downturn. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could continue to negatively affect the worldwide economy, as well as the economies of individual countries, individual companies (including certain Fund service providers and issuers of the Fund’s investments) and the markets in general in significant and unforeseen ways. Any such impact could adversely affect the Fund’s performance.
10. FEDERAL TAX INFORMATION (UNAUDITED)
For the fiscal year ended October 31, 2020, 83.56% of dividends paid by the Fund are interest-related dividends, as provided by the American Jobs Creation Act of 2004.
Annual Shareholder Report
Report of Independent Registered Public Accounting Firm
TO THE BOARD OF TRUSTEES OF FEDERATED HERMES INSTITUTIONAL TRUST AND SHAREHOLDERS OF FEDERATED HERMES INSTITUTIONAL HIGH YIELD BOND FUND:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of Federated Hermes Institutional High Yield Bond Fund (formerly, Federated Institutional High Yield Bond Fund) (the “Fund”) (one of the portfolios constituting Federated Hermes Institutional Trust (formerly, Federated Institutional Trust) (the “Trust”)), including the portfolio of investments, as of October 31, 2020, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the portfolios constituting Federated Hermes Institutional Trust) at October 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
Annual Shareholder Report
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2020, by correspondence with the custodian and others or by other appropriate auditing procedures where replies from others were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. We have served as the auditor of one or more Federated Hermes’ investment companies since 1979.
Boston, Massachusetts
December 23, 2020
Annual Shareholder Report
Shareholder Expense Example (unaudited)
As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or other service fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from May 1, 2020 to October 31, 2020.
ACTUAL EXPENSES
The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses attributable to your investment during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Annual Shareholder Report
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
| Beginning
Account Value
5/1/2020 | Ending
Account Value
10/31/2020 | Expenses Paid
During Period1 |
| | | |
| | | |
| | | |
Hypothetical (assuming a 5% return before expenses): | | | |
| | | |
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| Expenses are equal to the Fund’s annualized net expense ratios, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half-year period). The annualized net expense ratios are as follows: |
Annual Shareholder Report
Board of Trustees and Trust Officers
The Board of Trustees is responsible for managing the Trust’s business affairs and for exercising all the Trust’s powers except those reserved for the shareholders. The following tables give information about each Trustee and the senior officers of the Fund. Where required, the tables separately list Trustees who are “interested persons” of the Fund (i.e., “Interested” Trustees) and those who are not (i.e., “Independent” Trustees). Unless otherwise noted, the address of each person listed is 1001 Liberty Avenue, Pittsburgh, PA 15222. The address of all Independent Trustees listed is 4000 Ericsson Drive, Warrendale, PA 15086-7561; Attention: Mutual Fund Board. As of December 31, 2019, the Trust comprised three portfolio(s), and the Federated Hermes Fund Family consisted of 41 investment companies (comprising 135 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Trustee oversees all portfolios in the Federated Hermes Fund Family and serves for an indefinite term. The Fund’s Statement of Additional Information includes additional information about Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400.
Interested TRUSTEES 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) |
J. Christopher Donahue*
Birth Date: April 11, 1949
President and Trustee
Indefinite Term
Began serving:
April 1999 | Principal Occupations: Principal Executive Officer and President of certain of the Funds in the Federated Hermes Fund Family; Director or Trustee of the Funds in the Federated Hermes Fund Family; President, Chief Executive Officer and Director, Federated Hermes, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman and Trustee, Federated Equity Management Company of Pennsylvania; 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; Chairman, Passport Research, Ltd. |
Annual Shareholder Report
Name Birth Date Positions Held with Trust Date Service Began | Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s) |
John B. Fisher*
Birth Date: May 16, 1956
Trustee
Indefinite Term
Began serving: May 2016 | Principal Occupations: Principal Executive Officer and President of certain of the Funds in the Federated Hermes Fund Family; Director or Trustee of certain of the Funds in the Federated Hermes Fund Family; Vice President, Federated Hermes, Inc.; President, Director/Trustee and CEO, Federated Advisory Services Company, Federated Equity Management Company of Pennsylvania, Federated Global Investment Management Corp., Federated Investment Counseling, Federated Investment Management Company; President of some of the Funds in the Federated Hermes Fund Family and Director, Federated Investors Trust Company.
Previous Positions: President and Director of the Institutional Sales Division of Federated Securities Corp.; President and Director of Federated Investment Counseling; President and CEO of Passport Research, Ltd.; Director, Edgewood Securities Corp.; Director, Federated Services Company; Director, Federated Hermes, Inc.; Chairman and Director, Southpointe Distribution Services, Inc. and President, Technology, Federated Services Company. |
*
Reasons for “interested” status: J. Christopher Donahue and John B. Fisher are interested due to their beneficial ownership of shares of Federated Hermes, Inc. and due to positions they hold with Federated Hermes, Inc. and its subsidiaries.
INDEPENDENT TRUSTEES Background
Name
Birth Date
Positions Held with Trust
Date Service Began | Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications |
John T. Collins
Birth Date: January 24, 1947
Trustee
Indefinite Term
Began serving:
October 2013 | Principal Occupations: Director or Trustee of the Federated Hermes Fund Family; formerly, Chairman and CEO, The Collins Group, Inc. (a private equity firm) (Retired).
Other Directorships Held: Chairman of the Board of Directors, Director, and Chairman of the Compensation Committee, KLX Energy Services Holdings, Inc. (oilfield services); former Director of KLX Corp. (aerospace).
Qualifications: Mr. Collins has served in several business and financial management roles and directorship positions throughout his career. Mr. Collins previously served as Chairman and CEO of The Collins Group, Inc. (a private equity firm) and as a Director of KLX Corp. Mr. Collins serves as Chairman Emeriti, Bentley University. Mr. Collins previously served as Director and Audit Committee Member, Bank of America Corp.; Director, FleetBoston Financial Corp.; and Director, Beth Israel Deaconess Medical Center (Harvard University Affiliate Hospital). |
Annual Shareholder Report
Name Birth Date Positions Held with Trust Date Service Began | Principal Occupation(s) for Past Five Years, Other Directorships Held, Previous Position(s) and Qualifications |
G. Thomas Hough
Birth Date: February 28, 1955
Trustee
Indefinite Term
Began serving: August 2015 | Principal Occupations: Director or Trustee, Chair of the Audit Committee of the Federated Hermes Fund Family; formerly, Vice Chair, Ernst & Young LLP (public accounting firm) (Retired).
Other Directorships Held: Director, Chair of the Audit Committee, Equifax, Inc.; Director, Member of the Audit Committee, Haverty Furniture Companies, Inc.; formerly, Director, Member of Governance and Compensation Committees, Publix Super Markets, Inc.
Qualifications: Mr. Hough has served in accounting, business management and directorship positions throughout his career. Mr. Hough most recently held the position of Americas Vice Chair of Assurance with Ernst & Young LLP (public accounting firm). Mr. Hough serves on the President’s Cabinet and Business School Board of Visitors for the University of Alabama. Mr. Hough previously served on the Business School Board of Visitors for Wake Forest University, and he previously served as an Executive Committee member of the United States Golf Association. |
Maureen Lally-Green
Birth Date: July 5, 1949
Trustee
Indefinite Term
Began serving: August 2009 | Principal Occupations: Director or Trustee of the Federated Hermes Fund Family; Adjunct Professor of Law, Duquesne University School of Law; formerly, Dean of the Duquesne University School of Law and Professor of Law and Interim Dean of the Duquesne University School of Law; formerly, Associate General Secretary and Director, Office of Church Relations, Diocese of Pittsburgh.
Other Directorships Held: Director, CNX Resources Corporation (formerly known as CONSOL Energy Inc.).
Qualifications: Judge Lally-Green has served in various legal and business roles and directorship positions throughout her career. Judge Lally-Green previously held the position of Dean of the School of Law of Duquesne University (as well as Interim Dean). Judge Lally-Green previously served as a member of the Superior Court of Pennsylvania and as a Professor of Law, Duquesne University School of Law. Judge Lally-Green was appointed by the Supreme Court of Pennsylvania to serve on the Supreme Court’s Board of Continuing Judicial Education and the Supreme Court’s Appellate Court Procedural Rules Committee. Judge Lally-Green also currently holds the positions on not for profit or for profit boards of directors as follows: Director and Chair, UPMC Mercy Hospital; Director and Vice Chair, Our Campaign for the Church Alive!, Inc.; Regent, Saint Vincent Seminary; Member, Pennsylvania State Board of Education (public); Director, Catholic Charities, Pittsburgh; and Director CNX Resources Corporation (formerly known as CONSOL Energy Inc.). Judge Lally-Green has held the positions of: Director, Auberle; Director, Epilepsy Foundation of Western and Central Pennsylvania; Director, Ireland Institute of Pittsburgh; Director, Saint Thomas More Society; Director and Chair, Catholic High Schools of the Diocese of Pittsburgh, Inc.; Director, Pennsylvania Bar Institute; Director, St. Vincent College; and Director and Chair, North Catholic High School, Inc. |
Annual Shareholder Report
Name Birth Date Positions Held with Trust Date Service Began | Principal Occupation(s) for Past Five Years, Other Directorships Held, Previous Position(s) and Qualifications |
Charles F. Mansfield, Jr.
Birth Date: April 10, 1945
Trustee
Indefinite Term
Began serving: April 1999 | Principal Occupations: Director or Trustee of the Federated Hermes Fund Family; Management Consultant and Author.
Other Directorships Held: None.
Qualifications: Mr. Mansfield has served as a Marine Corps officer and in several banking, business management, educational roles and directorship positions throughout his long career. He remains active as a Management Consultant and Author. |
Thomas M. O’Neill
Birth Date: June 14, 1951
Trustee
Indefinite Term
Began serving: August 2006 | Principal Occupations: Director or Trustee of the Federated Hermes Fund Family; Sole Proprietor, Navigator Management Company (investment and strategic consulting).
Other Directorships Held: None.
Qualifications: Mr. O’Neill has served in several business, mutual fund and financial management roles and directorship positions throughout his career. Mr. O’Neill serves as Director, Medicines for Humanity and Director, The Golisano Children’s Museum of Naples, Florida. Mr. O’Neill previously served as 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); and Director, Midway Pacific (lumber). |
Madelyn A. Reilly
Birth Date: February 2, 1956
Trustee
Indefinite Term
Began serving:
November 2020 | Principal Occupations: Director or Trustee of the Federated Hermes Fund Family; Senior Vice President for Legal Affairs, General Counsel and Secretary of the Board of Trustees, Duquesne University.
Other Directorships Held: None.
Qualifications: Ms. Reilly has served in various business and legal management roles throughout her career. Ms. Reilly previously served as Director of Risk Management and Associate General Counsel, Duquesne University. Prior to her work at Duquesne University, Ms. Reilly served as Assistant General Counsel of Compliance and Enterprise Risk as well as Senior Counsel of Environment, Health and Safety, PPG Industries. Ms. Reilly also previously served as Chair of the Risk Management Committee for Holy Ghost Preparatory School, Philadelphia and Secretary and Chair of the Governance Committee, Oakland Catholic High School Board of Trustees, Pittsburgh. |
Annual Shareholder Report
Name Birth Date Positions Held with Trust Date Service Began | Principal Occupation(s) for Past Five Years, Other Directorships Held, Previous Position(s) and Qualifications |
P. Jerome Richey
Birth Date: February 23, 1949
Trustee
Indefinite Term
Began serving:
October 2013 | Principal Occupations: Director or Trustee of the Federated Hermes Fund Family; Management Consultant; Retired; formerly, Senior Vice Chancellor and Chief Legal Officer, University of Pittsburgh and Executive Vice President and Chief Legal Officer, CNX Resources Corporation (formerly known as CONSOL Energy Inc.).
Other Directorships Held: None.
Qualifications: Mr. Richey has served in several business and legal management roles and directorship positions throughout his career. Mr. Richey most recently held the positions of Senior Vice Chancellor and Chief Legal Officer, University of Pittsburgh. Mr. Richey previously served as Chairman of the Board, Epilepsy Foundation of Western Pennsylvania and Chairman of the Board, World Affairs Council of Pittsburgh. Mr. Richey previously served as Chief Legal Officer and Executive Vice President, CNX Resources Corporation (formerly known as CONSOL Energy Inc.); and Board Member, Ethics Counsel and Shareholder, Buchanan Ingersoll & Rooney PC (a law firm). |
John S. Walsh
Birth Date:
November 28, 1957
Trustee
Indefinite Term
Began serving: April 1999 | Principal Occupations: Director or Trustee, and Chair of the Board of Directors or Trustees, of the Federated Hermes Fund Family; 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.
Other Directorships Held: None.
Qualifications: Mr. Walsh has served in several business management roles and directorship positions throughout his career. Mr. Walsh previously served as Vice President, Walsh & Kelly, Inc. (paving contractors). |
Annual Shareholder Report
OFFICERS
Name
Birth Date
Positions Held with Trust
Date Service Began | Principal Occupation(s) for Past Five Years
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 Hermes Fund Family; Senior Vice President, Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp.; and Assistant Treasurer, Federated Investors Trust Company. Ms. Hensler has received the Certified Public Accountant designation.
Previous Positions: Controller of Federated Hermes, 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, SECRETARY and EXECUTIVE VICE PRESIDENT
Officer since: January 2005 | Principal Occupations: Mr. Germain is Chief Legal Officer, Secretary and Executive Vice President of the Federated Hermes Fund Family. He is General Counsel, Chief Legal Officer, Secretary and Executive Vice President, Federated Hermes, Inc.; Trustee and Senior Vice President, Federated Investors Management Company; Trustee and President, Federated Administrative Services; Director and President, Federated Administrative Services, Inc.; Director and Vice President, Federated Securities Corp.; Director and Secretary, Federated Private Asset Management, Inc.; Secretary, Federated Shareholder Services Company; and Secretary, Retirement Plan Service Company of America. Mr. Germain joined Federated Hermes, Inc. 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 Hermes, Inc.; Senior Vice President, Federated Services Company; and Senior Corporate Counsel, Federated Hermes, Inc. |
Stephen Van Meter
Birth Date: June 5, 1975
CHIEF COMPLIANCE OFFICER AND SENIOR VICE PRESIDENT
Officer since: July 2015 | Principal Occupations: Senior Vice President and Chief Compliance Officer of the Federated Hermes Fund Family; Vice President and Chief Compliance Officer of Federated Hermes, Inc. and Chief Compliance Officer of certain of its subsidiaries. Mr. Van Meter joined Federated Hermes, Inc. in October 2011. He holds FINRA licenses under Series 3, 7, 24 and 66.
Previous Positions: Mr. Van Meter previously held the position of Compliance Operating Officer, Federated Hermes, Inc. Prior to joining Federated Hermes, Inc., Mr. Van Meter served at the United States Securities and Exchange Commission in the positions of Senior Counsel, Office of Chief Counsel, Division of Investment Management and Senior Counsel, Division of Enforcement. |
Annual Shareholder Report
Name Birth Date Positions Held with Trust Date Service Began | Principal Occupation(s) for Past Five Years and Previous Position(s) |
Robert J. Ostrowski
Birth Date: April 26, 1963
Chief Investment Officer
Officer since: May 2004 | Principal Occupations: Robert J. Ostrowski joined Federated Hermes, Inc. in 1987 as an Investment Analyst and became a Portfolio Manager in 1990. He was named Chief Investment Officer of Federated Hermes’ 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. |
Annual Shareholder Report
Evaluation and Approval of Advisory Contract–May 2020
Federated Institutional High Yield Bond Fund (the “Fund”)
(EFFECTIVE CLOSE OF BUSINESS ON JUNE 26, 2020, THE FUND’S NAME CHANGED TO FEDERATED HERMES INSTITUTIONAL HIGH YIELD BOND FUND)
At its meetings in May 2020 (the “May Meetings”), the Fund’s Board of Trustees (the “Board”), including a majority of those Trustees who are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940 (the “Independent Trustees”), reviewed and unanimously approved the continuation of the investment advisory contract between the Fund and Federated Investment Management Company (the “Adviser”) (the “Contract”) for an additional one-year term. The Board’s determination to approve the continuation of the Contract reflects the exercise of its business judgment after considering all of the information and factors believed to be relevant and appropriate on whether to continue the existing arrangements. The information, factors and conclusions that formed the basis for the Board’s approval are summarized below.
Information Received and Review Process
At the request of the Independent Trustees, the Fund’s Chief Compliance Officer (the “CCO”) furnished to the Board in advance of its May Meetings an independent written evaluation presenting on the topics discussed below. The Board considered the CCO’s independent written evaluation (the “CCO Fee Evaluation Report”), along with other information, in evaluating the reasonableness of the Fund’s management fee and in determining to approve the continuation of the Contract. The CCO, in preparing the CCO Fee Evaluation Report, has the authority to retain consultants, experts or staff as reasonably necessary to assist in the performance of his duties, reports directly to the Board, and can be terminated only with the approval of a majority of the Independent Trustees. At the request of the Independent Trustees, the CCO Fee Evaluation Report followed the same general approach and covered the same topics as that of the report that had previously been delivered by the CCO in his capacity as “Senior Officer” prior to the elimination of the Senior Officer position in December 2017.
In addition to the extensive materials that comprise and accompany the CCO Fee Evaluation Report, in the months preceding the May Meetings, the Board requested and reviewed written responses and supporting materials prepared by the Adviser and its affiliates (collectively, “Federated Hermes”) in response to requests posed to Federated Hermes on behalf of the Independent Trustees encompassing a wide variety of topics. The Board also considered such additional matters as the Independent Trustees deemed reasonably necessary to evaluate the Contract, which included detailed information about the Fund and Federated Hermes furnished to the Board at its meetings
Annual Shareholder Report
throughout the year and in between regularly scheduled meetings on particular matters as the need arose, as well as information specifically prepared in connection with the approval of the continuation of the Contract that was presented at the May Meetings.
The Board’s consideration of the Contract included review of materials and information covering the following matters, among others: the Adviser’s and sub-adviser’s investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund’s short-term and long-term performance (in absolute terms, both on a gross basis and net of expenses, and relative to the Fund’s particular investment program and a group of its peer funds and/or its benchmark, as appropriate) and comments on the reasons for the Fund’s performance; the Fund’s investment objectives; the Fund’s expenses, including the advisory fee and the overall expense structure of the Fund (both in absolute terms and relative to a group of its peer funds), with due regard for contractual or voluntary expense limitations (if any); the use and allocation of brokerage commissions derived from trading the Fund’s portfolio securities (if any); and the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders; the entrepreneurial and other risks assumed by the Adviser in sponsoring and managing the Fund; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund’s relationship to the other funds advised by Federated Hermes (each, a “Federated Hermes Fund”), which include a comprehensive array of funds with different investment objectives, policies and strategies which are generally available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated Hermes Funds and the Federated Hermes’ affiliates that service them (including communications from regulatory agencies), as well as Federated Hermes’ responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated Hermes Funds and/or Federated Hermes may be responding to them. In addition, the Board received and considered information furnished by Federated Hermes on the impacts of the coronavirus (COVID-19) outbreak on Federated Hermes generally and the Fund in particular, including, among other information, the current and anticipated impacts on the management, operations and performance of the Fund. The Board noted that its evaluation process is evolutionary and that the criteria considered and the emphasis placed on relevant criteria may change in recognition of changing circumstances in the mutual fund marketplace.
The Board also considered judicial decisions concerning allegedly excessive investment advisory fees in determining to approve the Contract. Using these judicial decisions as a guide, the Board observed that the following factors may be relevant to an adviser’s fiduciary duty with respect to its receipt of
Annual Shareholder Report
compensation from a fund: (1) the nature and quality of the services provided by an adviser to a fund and its shareholders (including the performance of the fund, its benchmark, and comparable funds); (2) an adviser’s cost of providing the services (including the profitability to an adviser of providing advisory services to a fund); (3) the extent to which an adviser may realize “economies of scale” as a fund grows larger and, if such economies of scale exist, whether they have been shared with a fund and its shareholders or the family of funds; (4) any “fall-out” financial benefits that accrue to an adviser because of its relationship with a fund (including research services received from brokers that execute fund trades and any fees paid to affiliates of an adviser for services rendered to a fund); (5) comparative fee and expense structures (including a comparison of fees paid to an adviser with those paid by similar funds both internally and externally as well as management fees charged to institutional and other advisory clients of the adviser for what might be viewed as like services); and (6) the extent of care, conscientiousness and independence with which the fund’s board members perform their duties and their expertise (including whether they are fully informed about all facts the board deems relevant to its consideration of an adviser’s services and fees). The Board noted that the Securities and Exchange Commission (“SEC”) disclosure requirements regarding the basis for a fund board’s approval of the fund’s investment advisory contracts generally align with the factors listed above. The Board was aware of these factors and was guided by them in its review of the Contract to the extent it considered them to be appropriate and relevant, as discussed further below.
The Board considered and weighed these factors in light of its substantial accumulated experience in governing the Fund and working with Federated Hermes on matters relating to the Federated Hermes Funds. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Contract was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Contract. The Independent Trustees were assisted throughout the evaluation process by independent legal counsel. In connection with their deliberations at the May Meetings, the Independent Trustees met separately in executive session with their independent legal counsel and without management present to review the relevant materials and consider their responsibilities under applicable laws. In addition, senior management representatives of Federated Hermes also met with the Independent Trustees and their independent legal counsel to discuss the materials and presentations furnished to the Board at the May Meetings. The Board considered the approval of the Contract for the Fund as part of its consideration of agreements for funds across the Federated Hermes Funds family, but its approvals were made on a fund-by-fund basis.
Annual Shareholder Report
Nature, Extent and Quality of Services
The Board considered the nature, extent and quality of the services provided to the Fund by the Adviser and the resources of the Adviser and its affiliates dedicated to the Fund. In this regard, the Board evaluated, among other things, the Adviser’s personnel, experience and track record, as well as the financial resources and overall reputation of Federated Hermes and its willingness to invest in personnel and infrastructure that benefit the Federated Hermes Funds. The Board noted the significant acquisition of Hermes Fund Managers Limited by Federated Hermes in 2018, which has deepened the organization’s investment management expertise and capabilities and expanded the investment process for all of the Federated Hermes Funds to incorporate environmental, social and governance (“ESG”) factors and issuer engagement on ESG matters.
In addition, the Board reviewed the qualifications, backgrounds and responsibilities of the portfolio management team primarily responsible for the day-to-day management of the Fund and the Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board noted the compliance program of the Adviser and the compliance-related resources devoted by the Adviser and its affiliates in support of the Fund’s obligations pursuant to Rule 38a-1 under the Investment Company Act of 1940, including the Adviser’s commitment to respond to rulemaking and other regulatory initiatives of the SEC such as the liquidity risk management program rules. In addition, the Board considered the response by the Adviser to recent market conditions and considered the overall performance of the Adviser in this context. The Fund’s ability to deliver competitive performance when compared to its Performance Peer Group (as defined below) was also deemed to be relevant by the Board as a useful indicator of how the Adviser is executing the Fund’s investment program. The Adviser’s ability to execute this program was one of the Board’s considerations in reaching a conclusion that the nature, extent and quality of the Adviser’s investment management and related services warrant the continuation of the Contract.
Fund Investment Performance
In evaluating the Fund’s investment performance, the Board considered performance results in light of the Fund’s investment objective, strategies and risks, as disclosed in the Fund’s prospectus. The Board also considered the Fund’s performance in light of the overall recent market conditions. The Board considered detailed investment reports on the Fund’s performance over different time periods that were provided to the Board throughout the year and in connection with the May Meetings and evaluated the Adviser’s analysis of the Fund’s performance for these time periods. The Board also reviewed comparative information regarding the performance of other mutual funds in the category of peer funds selected by Morningstar, Inc. (the “Morningstar”), an independent fund ranking organization (the “Performance Peer Group”), noting the CCO’s view that comparisons to fund peer groups may be helpful,
Annual Shareholder Report
though not conclusive, in evaluating the performance of the Adviser in managing the Fund. The Board considered, in evaluating such comparisons, that in some cases there may be differences in the funds’ objectives or investment management techniques, or the costs to implement the funds, even within the same Performance Peer Group.
For the one-year, three-year and five-year periods ended December 31, 2019, the Fund’s performance was above the median of the relevant Performance Peer Group.
Following such evaluation, and full deliberations, the Board concluded that the performance of the Fund supported renewal of the Contract.
Fund Expenses
While mindful that courts have cautioned against giving too much weight to comparative information concerning fees charged by other advisers for managing funds with comparable investment programs, the Board has found the use of such comparisons to be relevant to its deliberations. In this regard, the Board was presented with, and considered, information regarding the contractual advisory fee rates, net advisory fee rates, total expense ratios and each element of the Fund’s total expense ratio (i.e., gross and net advisory fees, administrative fees, custody fees, portfolio accounting fees and transfer agency fees) relative to an appropriate group of peer funds compiled by Federated Hermes from the category of peer funds selected by Morningstar (the “Expense Peer Group”). The Board received a description of the methodology used to select the Expense Peer Group from the overall Morningstar category. The Board also reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall Morningstar category. The Board focused on comparisons with other similar mutual funds more heavily than non-mutual fund products or services because such comparisons are believed to be more relevant. The Board considered that other mutual funds are the products most like the Fund, in that they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle, in fact, chosen and maintained by the Fund’s investors. The Board noted that the range of their fees and expenses, therefore, appears to be a relevant indicator of what consumers have found to be reasonable in the marketplace in which the Fund competes.
The Board reviewed the contractual advisory fee rate, net advisory fee rate and other expenses of the Fund and noted the position of the Fund’s fee rates relative to its Expense Peer Group. In this regard, the Board noted that the contractual advisory fee rate was below the median of the Expense Peer Group and the Board was satisfied that the overall expense structure of the Fund remained competitive.
Annual Shareholder Report
For comparison, the Board received and considered information about the fees charged by Federated Hermes for providing advisory services to other types of clients with investment strategies similar to those of the Federated Hermes Funds, including non-mutual fund clients such as institutional separate accounts and third-party unaffiliated mutual funds for which the Adviser or its affiliates serve as sub-adviser. The Board noted the CCO’s conclusion that non-mutual fund clients are inherently different products due to the following differences, among others: (i) different types of targeted investors; (ii) different applicable laws and regulations; (iii) different legal structures; (iv) different average account sizes and portfolio management techniques made necessary by different cash flows and different associated costs; (v) and the time spent by portfolio managers and their teams (among other personnel across various departments, including legal, compliance and risk management) in reviewing securities pricing, addressing different administrative responsibilities, and addressing different degrees of risk associated with management; and (vi) a variety of different costs. The Board also considered information regarding the differences in the nature of the services required for Federated Hermes to manage its proprietary mutual fund business versus managing a discrete pool of assets as a sub-adviser to another institution’s mutual fund, noting that Federated Hermes generally performs significant additional services and assumes substantially greater risks in managing the Fund and other Federated Hermes Funds than in its role as sub-adviser to an unaffiliated third-party mutual fund. The Board noted that the CCO did not consider the fees for providing advisory services to other types of clients to be determinative in judging the appropriateness of the Federated Hermes Funds’ advisory fees.
The Board considered the CCO’s view that the services, administrative responsibilities and risks associated with such relationships are quite different than serving as a primary adviser to a fund.
Following such evaluation, and full deliberations, the Board concluded that the fees and expenses of the Fund are reasonable and supported renewal of the Contract.
Profitability and Other Benefits
The Board also received financial information about Federated Hermes, including information regarding the compensation and ancillary (or “fall-out”) benefits Federated Hermes derived from its relationships with the Federated Hermes Funds. This information covered not only the fees under the Federated Hermes Funds’ investment advisory contracts, but also fees received by Federated Hermes’ affiliates for providing other services to the Federated Hermes Funds under separate contracts (e.g., for serving as the Federated Hermes Funds’ administrator and distributor). In this regard, the Board considered that certain of Federated Hermes’ affiliates provide distribution and shareholder services to the Federated Hermes Funds, for which they may be compensated through distribution and servicing fees paid pursuant to
Annual Shareholder Report
Rule 12b-1 plans or otherwise. The Board also received and considered information detailing any indirect benefit Federated Hermes may derive from its receipt of research services from brokers who execute portfolio trades for the Federated Hermes Funds. In addition, the Board considered the fact that, in order for the Federated Hermes Funds to be competitive in the marketplace, the Adviser and its affiliates frequently waived fees and/or reimbursed expenses and have disclosed to Federated Hermes Fund shareholders and/or reported to the Board their intention to do so in the future. Moreover, the Board received and considered regular reports from Federated Hermes throughout the year as to the institution, adjustment or elimination of these voluntary waivers and/or reimbursements.
The Board received and considered information furnished by Federated Hermes, as requested by the CCO, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the CCO and described to the Board. The Board considered the CCO’s view that, while these cost allocation reports apply consistent allocation processes, the inherent difficulties in allocating costs continues to cause the CCO to question the precision of the process and to conclude that such reports may be unreliable, because a single change in an allocation estimate may dramatically alter the resulting estimate of cost and/or profitability of a Federated Hermes Fund and may produce unintended consequences. The allocation information, including the CCO’s view that fund-by-fund estimations may be unreliable, was considered in the evaluation by the Board. In addition, the Board considered that, during the prior year, an independent consultant conducted a review of the allocation methodologies used by Federated Hermes in estimating profitability for purposes of reporting to the Board in connection with the continuation of the Contract. The Board noted the consultant’s view that, although there is no single best method to allocate expenses, the methodologies used by Federated Hermes are reasonable.
The Board also reviewed information compiled by Federated Hermes comparing its profitability information to other publicly held fund management companies, including information regarding profitability trends over time. The Board considered the CCO’s conclusion that, based on such profitability information, Federated Hermes’ profit margins did not appear to be excessive. The Board also considered the CCO’s view that Federated Hermes appeared financially sound, with the resources necessary to fulfill its obligations under its contracts with the Federated Hermes Funds.
Economies of Scale
The Board received and considered information about the notion of possible realization of “economies of scale” as a fund grows larger, the difficulties of calculating economies of scale at an individual fund level, and the extent to which potential scale benefits are shared with shareholders. In this regard, the
Annual Shareholder Report
Board considered that the Adviser has made significant and long-term investments in areas that support all of the Federated Hermes Funds, such as personnel and processes for the portfolio management, trading operations, issuer engagement (including with respect to ESG matters), shareholder services, compliance, business continuity, internal audit and risk management functions, as well as systems technology (including technology relating to cybersecurity) and use of data. The Board noted that Federated Hermes’ investments in these areas are extensive and are designed to provide enhanced services to the Federated Hermes Funds and their shareholders. The Board considered that the benefits of these investments (as well as the benefits of any economies of scale, should they exist) are likely to be shared with the Federated Hermes Fund family as a whole. In addition, the Board considered that the Adviser and its affiliates have frequently waived fees and/or reimbursed expenses for the Federated Hermes Funds and that such waivers and reimbursements are another means for potential economies of scale to be shared with shareholders and can provide protection from an increase in expenses if a Federated Hermes Fund’s assets decline. Federated Hermes, as it does throughout the year, and specifically in connection with the Board’s review of the Contract, furnished information relative to adviser-paid fees (commonly referred to as revenue sharing). The Board considered the beliefs of Federated Hermes and the CCO that this information should be viewed to determine if there was an incentive to either not apply breakpoints, or to apply breakpoints at higher levels, and should not be viewed to determine the appropriateness of advisory fees. The Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with “breakpoints” that serve to reduce the fee as a fund attains a certain size.
Conclusions
The Board considered the CCO’s conclusion that his observations and the information accompanying the CCO Fee Evaluation Report show that the management fee for the Fund was reasonable and the CCO’s recommendation that the Board approve the management fee. The Board noted that, under these circumstances, no changes were recommended to, and no objection was raised to the continuation of, the Contract by the CCO. The CCO also recognized that the Board’s evaluation of the Federated Hermes Funds’ advisory and subadvisory arrangements is a continuing and on-going process that is informed by the information that the Board requests and receives from management throughout the course of the year and, in this regard, the CCO noted certain items for future reporting to the Board or further consideration by management as the Board continues its on-going oversight of the Federated Hermes Funds.
Annual Shareholder Report
In its determination to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an investment advisory contract. In particular, the Board recognized that many shareholders have invested in the Fund on the strength of the Adviser’s industry standing and reputation and with the expectation that the Adviser will have a continuing role in providing advisory services to the Fund. Thus, the Board’s approval of the Contract reflected the fact that it is the shareholders who have effectively selected the Adviser by virtue of having invested in the Fund. The Board concluded that, in light of the factors summarized above, including the nature, quality and scope of the services provided to the Fund by the Adviser and its affiliates, continuation of the Contract was appropriate.
The Board based its determination to approve the Contract on the totality of the circumstances and relevant factors and with a view to past and future long-term considerations. Not all of the factors and considerations identified above were necessarily deemed to be relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were deemed to be relevant, the Board’s determination to approve the continuation of the Contract reflects its view that Federated Hermes’ performance and actions provided a satisfactory basis to support the determination to continue the existing arrangement.
Annual Shareholder Report
Liquidity Risk Management Program– Annual Evaluation of Adequacy and Effectiveness
In accordance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the “Liquidity Rule”), Federated Hermes Institutional Trust (the “Trust”) has adopted and implemented a liquidity risk management program (the “Program”) for Federated Hermes Institutional High Yield Bond Fund (the “Fund” and, collectively with the Federated Hermes funds, the “Federated Hermes Funds”). The Program seeks to assess and manage the Fund’s liquidity risk. “Liquidity risk” is defined under the Liquidity Rule as the risk that the Fund is unable to meet redemption requests without significantly diluting remaining investors’ interests in the Fund. The Board of Trustees of the Trust (the “Board”) has approved the designation of the Fund’s investment adviser as the administrator for the Program for the Fund. Each affiliated Federated Hermes advisory subsidiary (including the Fund’s investment adviser) that serves as investment adviser to a Federated Hermes Fund (including the Fund) has been approved as the administrator of the Program for each Federated Hermes Fund they manage (each an “Administrator”). The Administrator in turn has delegated daily responsibility for the administration of the Program to multiple Liquidity Risk Management Committees (the “Committees”). The Committees, which are comprised of representatives of Enterprise Risk Management, Compliance, Investment Management and Trading, must review and assess certain information related to the liquidity of the Federated Hermes Funds, including the Fund.
The Program is comprised of various components designed to support the assessment and/or management of liquidity risk, including: (1) the periodic assessment (no less frequently than annually) of certain factors that influence the Fund’s liquidity risk; (2) the periodic classification (no less frequently than monthly) of the Fund’s investments into one of four liquidity categories that reflect an estimate of their liquidity under current market conditions; (3) a 15% limit on the acquisition of “illiquid investments” (as defined under the Liquidity Rule); (4) to the extent a Fund does not invest primarily in “highly liquid investments” (as defined under the Liquidity Rule), the determination of a minimum percentage of the Fund’s assets that generally will be invested in highly liquid investments (an “HLIM”); (5) if a Fund has established an HLIM, the periodic review (no less frequently than annually) of the HLIM and the adoption of policies and procedures for responding to a shortfall of the Fund’s highly liquid investments below its HLIM; and (6) periodic reporting to the Board.
At its meetings in May 2020, the Board received and reviewed a written report (the “Report”) from the Federated Hermes Funds’ Chief Compliance Officer and Chief Risk Officer, on behalf of the Administrator, concerning the operation of the Program for the period from the Program’s inception on December 1, 2018 through March 31, 2020 (the “Period”). The Report
Annual Shareholder Report
addressed the operation of the Program and assessed its adequacy and effectiveness, including, where applicable, the operation of any HLIM established for a Federated Hermes Fund and each Federated Hermes Fund’s access to other available funding sources such as the Federated Hermes Funds’ interfund lending facility, redemptions in-kind and committed lines of credit. There were no material changes to the Program during the Period. The Report summarized the operation of the Program and the information and factors considered by the Administrator in assessing whether the Program has been adequately and effectively implemented with respect to the Federated Hermes Funds. Such information and factors included, among other things:
■ confirmation that the Fund did not utilize alternative funding sources during the Period;
■ the periodic classifications of the Fund’s investments into one of four liquidity categories and the methodologies and inputs used to classify the investments, including the Fund’s reasonably anticipated trade size;
■ the analysis received from a third-party liquidity assessment vendor that is taken into account in the process of determining the liquidity classifications of the Fund’s investments and the results of an evaluation of the services performed by the vendor in support of this process;
■ the fact that the Fund invested primarily in highly liquid investments during the Period and, therefore, was not required to establish, and has not established, an HLIM and the procedures for monitoring the status of the Fund as investing primarily in highly liquid investments;
■ the fact that the Fund invested no more than 15% of its assets in illiquid investments during the Period and the procedures for monitoring this limit; and
■ liquidity events during the Period, including the impact on liquidity caused by extended non-U.S. market closures and the market disruptions resulting from the novel coronavirus outbreak, and the fact that there were no specific liquidity events during the Period that materially affected the Fund’s liquidity risk.
Based on this review, the Fund’s investment adviser, in its role as Administrator, collectively with the other investment advisers to the Federated Hermes Funds, concluded that the Program is operating effectively to assess and manage the Fund’s liquidity risk, and that the Program has been and continues to be adequately and effectively implemented to monitor and, as applicable, respond to the Fund’s liquidity developments.
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Voting Proxies on Fund Portfolio Securities
A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund’s portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on “Form N-PX” of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available via the Proxy Voting Record (Form N-PX) link associated with the Fund and share class name at FederatedInvestors.com/FundInformation. Form N-PX filings are also available at the SEC’s website at sec.gov.
Quarterly Portfolio Schedule
Each fiscal quarter, the Fund will file with the SEC a complete schedule of its monthly portfolio holdings on “Form N-PORT.” The Fund’s holdings as of the end of the third month of every fiscal quarter, as reported on Form N-PORT, will be publicly available on the SEC’s website at sec.gov within 60 days of the end of the fiscal quarter upon filing. You may also access this information via the link to the Fund and share class name at FederatedInvestors.com.
Annual Shareholder Report
Mutual funds are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal.
This Report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund’s Prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information. 
Federated Hermes Institutional High Yield Bond Fund
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at FederatedInvestors.com
or call 1-800-341-7400.
Federated Securities Corp., Distributor
CUSIP 31420B300
CUSIP 31420B847
29856 (12/20)
© 2020 Federated Hermes, Inc.
(a) As of the end of the period covered by this report, the registrant has adopted a code of ethics (the "Section 406 Standards for Investment Companies - Ethical Standards for Principal Executive and Financial Officers") that applies to the registrant's Principal Executive Officer and Principal Financial Officer; the registrant's Principal Financial Officer also serves as the Principal Accounting Officer.
(c) There was no amendment to the registrant’s code of ethics described in Item 2(a) above during the period covered by the report.
(d) There was no waiver granted, either actual or implicit, from a provision to the registrant’s code of ethics described in Item 2(a) above during the period covered by the report.
(e) Not Applicable
(f)(3) The registrant hereby undertakes to provide any person, without charge, upon request, a copy of the code of ethics. To request a copy of the code of ethics, contact the registrant at 1-800-341-7400, and ask for a copy of the Section 406 Standards for Investment Companies - Ethical Standards for Principal Executive and Financial Officers.
Item 3. Audit Committee Financial Expert
The registrant's Board has determined that each of the following members of the Board's Audit Committee is an “audit committee financial expert,” and is "independent," for purposes of this Item: John T. Collins, G. Thomas Hough and Thomas M. O'Neill.
| Item 4. | Principal Accountant Fees and Services |
(a) Audit Fees billed to the registrant for the two most recent fiscal years:
Fiscal year ended 2020 - $95,740
Fiscal year ended 2019 - $97,990
(b) Audit-Related Fees billed to the registrant for the two most recent fiscal years:
Fiscal year ended 2020 - $0
Fiscal year ended 2019 - $0
Amount requiring approval of the registrant’s audit committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $0 and $0 respectively.
(c) Tax Fees billed to the registrant for the two most recent fiscal years:
Fiscal year ended 2020 - $0
Fiscal year ended 2019 - $0
Amount requiring approval of the registrant’s audit committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $0 and $0 respectively.
(d) All Other Fees billed to the registrant for the two most recent fiscal years:
Fiscal year ended 2020 - $0
Fiscal year ended 2019 - $0
Amount requiring approval of the registrant’s audit committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $0 and $0 respectively.
(e)(1) Audit Committee Policies regarding Pre-approval of Services.
The Audit Committee is required to pre-approve audit and non-audit services performed by the independent auditor in order to assure that the provision of such services do not impair the auditor’s independence. Unless a type of service to be provided by the independent auditor has received general pre-approval, it will require specific pre-approval by the Audit Committee. Any proposed services exceeding pre-approved cost levels will require specific pre-approval by the Audit Committee.
Certain services have the general pre-approval of the Audit Committee. The term of the general pre-approval is 12 months from the date of pre-approval, unless the Audit Committee specifically provides for a different period. The Audit Committee will annually review the services that may be provided by the independent auditor without obtaining specific pre-approval from the Audit Committee and may grant general pre-approval for such services. The Audit Committee will revise the list of general pre-approved services from time to time, based on subsequent determinations. The Audit Committee will not delegate to management its responsibilities to pre-approve services performed by the independent auditor.
The Audit Committee has delegated pre-approval authority to its Chairman for services that do not exceed a specified dollar threshold. The Chairman or Chief Audit Executive will report any such pre-approval decisions to the Audit Committee at its next scheduled meeting. The Committee will designate another member with such pre-approval authority when the Chairman is unavailable.
AUDIT SERVICES
The annual Audit services engagement terms and fees will be subject to the specific pre-approval of the Audit Committee. The Audit Committee will approve, if necessary, any changes in terms, conditions and fees resulting from changes in audit scope, registered investment company (RIC) structure or other matters.
In addition to the annual Audit services engagement specifically approved by the Audit Committee, the Audit Committee may grant general pre-approval for other Audit services, which are those services that only the independent auditor reasonably can provide. The Audit Committee has pre-approved certain Audit services; with limited exception, all other audit services must be specifically pre-approved by the Audit Committee.
AUDIT-RELATED SERVICES
Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of the RIC’s financial statements or that are traditionally performed by the independent auditor. The Audit Committee believes that the provision of Audit-related services does not impair the independence of the auditor, and has pre-approved certain audit-related services; all other audit-related services must be specifically pre-approved by the Audit Committee.
TAX SERVICES
The Audit Committee believes that the independent auditor can provide Tax services to the RIC such as tax compliance, tax planning and tax advice without impairing the auditor’s independence. However, the Audit Committee will not permit the retention of the independent auditor in connection with a transaction initially recommended by the independent auditor, the purpose of which may be tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Audit Committee has pre-approved certain Tax services; with limited exception, all tax services involving large and complex transactions must be specifically pre-approved by the Audit Committee.
ALL OTHER SERVICES
With respect to the provision of permissible services other than audit, review or attest services the pre-approval requirement is waived if:
| (1) | With respect to such services rendered to the Funds, the aggregate amount of all such services provided constitutes no more than five percent of the total amount of revenues paid by the audit client to its accountant during the fiscal year in which the services are provided; and, |
| (2) | With respect to such services rendered to the Fund’s investment adviser and any entity controlling, controlled by to under common control with the investment adviser such as affiliated non-U.S. and U.S. funds not under the Audit Committee’s purview and which do not fall within a category of service which has been determined by the Audit Committee not to have a direct impact on the operations or financial reporting of the RIC, the aggregate amount of all services provided constitutes no more than five percent of the total amount of revenues paid to the RIC’s auditor by the RIC, its investment adviser and any entity controlling, controlled by, or under common control with the investment adviser during the fiscal year in which the services are provided; and |
| (3) | Such services were not recognized by the issuer or RIC at the time of the engagement to be non-audit services; and |
| (4) | Such services are promptly brought to the attention of the Audit Committee and approved prior to the completion of the audit by the Audit Committee or by one or more members of the Audit Committee who are members of the Board of Directors to whom authority to grant such approvals has been delegated by the Audit Committee. |
The Audit Committee may grant general pre-approval to those permissible non-audit services which qualify for pre-approval and which it believes are routine and recurring services, and would not impair the independence of the auditor.
The SEC’s rules and relevant guidance should be consulted to determine the precise definitions of these services and applicability of exceptions to certain of the prohibitions.
PRE-APPROVAL FEE LEVELS
Pre-approval fee levels for all services to be provided by the independent auditor will be established annually by the Audit Committee. Any proposed services exceeding these levels will require specific pre-approval by the Audit Committee.
PROCEDURES
Requests or applications to provide services that require specific approval by the Audit Committee will be submitted to the Audit Committee by the Fund’s Principal Accounting Officer and/or the Chief Audit Executive of Federated Hermes, Inc., only after those individuals have determined that the request or application is consistent with the SEC’s rules on auditor independence.
(e)(2) Percentage of services identified in items 4(b) through 4(d) that were approved by the registrants audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X:
4(b)
Fiscal year ended 2020 – 0%
Fiscal year ended 2019 - 0%
Percentage of services provided to the registrants investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were approved by the registrants audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, 0% and 0% respectively.
4(c)
Fiscal year ended 2020 – 0%
Fiscal year ended 2019 – 0%
Percentage of services provided to the registrants investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were approved by the registrants audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, 0% and 0% respectively.
4(d)
Fiscal year ended 2020 – 0%
Fiscal year ended 2019 – 0%
Percentage of services provided to the registrants investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were approved by the registrants audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, 0% and 0% respectively.
| (g) | Non-Audit Fees billed to the registrant, the registrant’s investment adviser, and certain entities controlling, controlled by or under common control with the investment adviser: |
Fiscal year ended 2020 - $122,735
Fiscal year ended 2019 - $606,377
| (h) | The registrant’s Audit Committee has considered that the provision of non-audit services that were rendered to the registrant’s adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence. |
| Item 5. | Audit Committee of Listed Registrants |
Not Applicable
| Item 6. | Schedule of Investments |
(a) The registrant’s Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this form.
(b) Not Applicable; Fund had no divestments during the reporting period covered since the previous Form N-CSR filing.
| Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies |
Not Applicable
| Item 8. | Portfolio Managers of Closed-End Management Investment Companies |
Not Applicable
| Item 9. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers |
Not Applicable
| Item 10. | Submission of Matters to a Vote of Security Holders |
No Changes to Report
| Item 11. | Controls and Procedures |
(a) The registrant’s President and Treasurer have concluded that the
registrant’s disclosure controls and procedures (as defined in rule 30a-3(c) under the Act) are effective in design and operation and are sufficient to form the basis of the certifications required by Rule 30a-(2) under the Act, based on their evaluation of these disclosure controls and procedures within 90 days of the filing date of this report on Form N-CSR.
(b) There were no changes in the registrant’s internal control over financial reporting (as defined in rule 30a-3(d) under the Act) during the registrant’s most recent fiscal half-year (the registrant’s second fiscal half-year in the case of an annual report) that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
| Item 12. | Disclosure of Securities Lending Activities for Closed-End Management Investment Companies |
Not Applicable
(a)(1) Code of Ethics- Not Applicable to this Report.
(a)(2) Certifications of Principal Executive Officer and Principal Financial Officer.
(a)(3) Not Applicable.
(b) Certifications pursuant to 18 U.S.C. Section 1350.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant Federated Hermes Institutional Trust
By /S/ Lori A. Hensler
Lori A. Hensler, Principal Financial Officer
Date December 23, 2020
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By /S/ J. Christopher Donahue
J. Christopher Donahue, Principal Executive Officer
Date December 23, 2020
By /S/ Lori A. Hensler
Lori A. Hensler, Principal Financial Officer
Date December 23, 2020
