N-CSRS

United States

Securities and Exchange Commission

Washington, D.C. 20549

Form N-CSR

Certified Shareholder Report of Registered Management Investment Companies

811-6447

(Investment Company Act File Number)

Federated Hermes Fixed Income Securities, Inc.

______________________________________________________________

(Exact Name of Registrant as Specified in Charter)

Federated Hermes Funds

4000 Ericsson Drive

Warrendale, PA 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: 11/30/23

Date of Reporting Period: Six months ended 05/31/23

Item 1. Reports to Stockholders

Semi-Annual Shareholder Report

May 31, 2023

 

 

Share Class | Ticker	A | STIAX	C | SINCX	F | STFSX
	Institutional | STISX	R6 | STILX

Federated Hermes Strategic Income Fund

Fund Established 1994

A Portfolio of Federated Hermes Fixed Income Securities, Inc.

Dear Valued Shareholder,

We are pleased to present the Semi-Annual Shareholder Report for your fund covering the period from December 1, 2022 through May 31, 2023. This report includes a complete listing of your fund’s holdings, performance information and financial statements along with other important fund information.

As a global leader in active, responsible investment management, Federated Hermes is guided by our conviction that responsible investing is the best way to create wealth over the long term. The company provides capabilities across a wide range of asset classes to investors around the world.

In addition, FederatedHermes.com/us offers quick and easy access to valuable resources that include timely fund updates, economic and market insights from our investment strategists and financial planning tools. You can also access many of those insights by following us on Twitter (@FederatedHermes) and LinkedIn.

Thank you for investing with us. We hope you find this information useful and look forward to keeping you informed.

Sincerely,
 

J. Christopher Donahue, President

Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee

CONTENTS 

Portfolio of Investments Summary Table	1
Portfolio of Investments	2
Financial Highlights	20
Statement of Assets and Liabilities	25
Statement of Operations	27
Statement of Changes in Net Assets	29
Notes to Financial Statements	30
Shareholder Expense Example	49
Evaluation and Approval of Advisory Contract	51
Liquidity Risk Management Program– Annual Evaluation of Adequacy and Effectiveness	61
Voting Proxies on Fund Portfolio Securities	63
Quarterly Portfolio Schedule	63

Portfolio of Investments Summary Table (unaudited)

At May 31, 2023, the Fund’s portfolio composition1 was as follows: 

Portfolio Composition	Percentage of Total Net Assets2
Corporate Debt Securities	52.5%
Residential Mortgage-Backed Securities	22.5%
Foreign Government Securities	9.6%
Collateralized Mortgage Obligations	4.1%
U.S. Treasuries	3.3%
Cash Equivalents3	2.2%
Common Stocks	2.0%
Asset-Backed Securities	1.9%
Commercial Mortgage-Backed Securities4	0.9%
Security Lending	1.6%
Other Security Types5	0.1%
Preferred Stocks6	0.0%
Derivatives7	(0.5)%
Other Assets and Liabilities—Net8	(0.2)%
TOTAL	100%

 

1	See the Fund’s Prospectus and Statement of Additional Information for a description of these investments.
2	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 greater than 10% of its net assets are not treated as a single portfolio security, but rather the Fund is treated as owning a pro rata portion of each security and each other asset and liability owned by the affiliated investment company. Accordingly, the percentages of total net assets shown in the table will differ from those presented on the Portfolio of Investments. 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.
3	Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements other than those representing securities lending collateral.
4	For purposes of this table, Mortgage-Backed Securities include mortgage-backed securities guaranteed by Government Sponsored Entities and adjustable rate mortgage-backed securities.
5	Other Security Types consists of purchased options.
6	Represents less than 0.1%.
7	Based upon net unrealized appreciation (depreciation) or value of the derivative contracts as applicable. Derivative contracts may consist of futures, forwards, options and swaps. The impact of a derivative contract on the Fund’s performance may be larger than its unrealized appreciation (depreciation) or value may indicate. In many cases, the notional value or amount of a derivative contract may provide a better indication of the contract’s significance to the portfolio. More complete information regarding the Fund’s direct investments in derivative contracts, including unrealized appreciation (depreciation), value and notional values or amounts of such contracts, can be found in the table at the end of the Portfolio of Investments included in this Report.
8	Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Semi-Annual Shareholder Report

1

Portfolio of Investments

May 31, 2023 (unaudited) 

Principal Amount, Shares or Contracts		Value
	CORPORATE BONDS—   5.8%
	Basic Industry - Chemicals—   0.0%
$   135,000	Albemarle Corp., Sr. Unsecd. Note, 5.450%, 12/1/2044	$    126,209
	Basic Industry - Metals & Mining—   0.1%
200,000	Anglo American Capital PLC, Sr. Unsecd. Note, 144A, 3.625%, 9/11/2024	194,651
75,000	Glencore Funding LLC, Sr. Unsecd. Note, 144A, 1.625%, 4/27/2026	67,913
55,000	Glencore Funding LLC, Sr. Unsecd. Note, 144A, 3.375%, 9/23/2051	36,482
200,000	Southern Copper Corp., Sr. Unsecd. Note, 6.750%, 4/16/2040	217,353
	TOTAL	516,399
	Capital Goods - Aerospace & Defense—   0.1%
80,000	BAE Systems Holdings, Inc., Sr. Unsecd. Note, 144A, 3.850%, 12/15/2025	77,317
100,000	Boeing Co., Sr. Unsecd. Note, 2.196%, 2/4/2026	93,085
215,000	Boeing Co., Sr. Unsecd. Note, 3.625%, 2/1/2031	194,514
30,000	Boeing Co., Sr. Unsecd. Note, 3.950%, 8/1/2059	21,620
160,000	Huntington Ingalls Industries, Inc., Sr. Unsecd. Note, 3.483%, 12/1/2027	148,032
65,000	Leidos, Inc., Sr. Unsecd. Note, Series WI, 2.300%, 2/15/2031	50,797
35,000	Leidos, Inc., Sr. Unsecd. Note, Series WI, 3.625%, 5/15/2025	33,808
100,000	Leidos, Inc., Sr. Unsecd. Note, Series WI, 4.375%, 5/15/2030	91,416
85,000	Northrop Grumman Corp., Sr. Unsecd. Note, 3.250%, 1/15/2028	80,098
100,000	Raytheon Technologies Corp., Sr. Unsecd. Note, 5.150%, 2/27/2033	101,773
	TOTAL	892,460
	Capital Goods - Building Materials—   0.0%
20,000	Allegion PLC, Sr. Unsecd. Note, 3.500%, 10/1/2029	17,875
80,000	Allegion US Holdings Co., Inc., Sr. Unsecd. Note, 3.200%, 10/1/2024	77,252
140,000	Allegion US Holdings Co., Inc., Sr. Unsecd. Note, 3.550%, 10/1/2027	131,454
35,000	Carrier Global Corp., Sr. Unsecd. Note, 2.722%, 2/15/2030	30,171
	TOTAL	256,752
	Capital Goods - Construction Machinery—   0.4%
3,390,000	Ashtead Capital, Inc., Sr. Unsecd. Note, 144A, 2.450%, 8/12/2031	2,654,443
195,000	CNH Industrial NV, Sr. Unsecd. Note, Series MTN, 3.850%, 11/15/2027	184,702
100,000	John Deere Capital Corp., Sr. Unsecd. Note, Series MTN, 3.450%, 3/7/2029	95,268
	TOTAL	2,934,413
	Capital Goods - Diversified Manufacturing—   0.1%
90,000	Lennox International, Inc., Sr. Unsecd. Note, 1.350%, 8/1/2025	82,763
100,000	Roper Technologies, Inc., Sr. Unsecd. Note, 1.750%, 2/15/2031	79,202
90,000	Valmont Industries, Inc., Sr. Unsecd. Note, 5.000%, 10/1/2044	78,865
80,000	Valmont Industries, Inc., Sr. Unsecd. Note, 5.250%, 10/1/2054	70,177
65,000	Vontier Corp., Sr. Unsecd. Note, Series WI, 1.800%, 4/1/2026	57,854

Semi-Annual Shareholder Report

2

Principal Amount, Shares or Contracts		Value
	CORPORATE BONDS—   continued
	Capital Goods - Diversified Manufacturing—   continued
$    25,000	Vontier Corp., Sr. Unsecd. Note, Series WI, 2.950%, 4/1/2031	$     19,733
90,000	Wabtec Corp., Sr. Unsecd. Note, 3.200%, 6/15/2025	85,444
65,000	Xylem, Inc., Sr. Unsecd. Note, 2.250%, 1/30/2031	54,307
	TOTAL	528,345
	Communications - Cable & Satellite—   0.1%
65,000	Charter Communications Operating, LLC, 5.375%, 5/1/2047	51,916
50,000	Charter Communications Operating, LLC/Charter Communications Operating Capital Corp., Sec. Fac. Bond, 3.850%, 4/1/2061	29,509
200,000	Comcast Corp., Sr. Unsecd. Note, 3.150%, 2/15/2028	188,000
30,000	Comcast Corp., Sr. Unsecd. Note, 3.450%, 2/1/2050	22,483
200,000	Comcast Corp., Sr. Unsecd. Note, 3.950%, 10/15/2025	196,651
	TOTAL	488,559
	Communications - Media & Entertainment—   0.2%
35,000	Alphabet, Inc., Sr. Unsecd. Note, 2.050%, 8/15/2050	21,516
150,000	Netflix, Inc., Sr. Unsecd. Note, 4.875%, 4/15/2028	148,927
25,000	Paramount Global, Sr. Unsecd. Note, 4.000%, 1/15/2026	23,712
40,000	Paramount Global, Sr. Unsecd. Note, 4.950%, 5/19/2050	29,791
100,000	Warnermedia Holdings, Inc., Sr. Unsecd. Note, 4.279%, 3/15/2032	87,418
1,645,000	Warnermedia Holdings, Inc., Sr. Unsecd. Note, 5.050%, 3/15/2042	1,331,912
60,000	Warnermedia Holdings, Inc., Sr. Unsecd. Note, 6.412%, 3/15/2026	60,146
	TOTAL	1,703,422
	Communications - Telecom Wireless—   0.1%
140,000	Crown Castle, Inc., Sr. Unsecd. Note, 5.200%, 2/15/2049	127,605
60,000	T-Mobile USA, Inc., 3.300%, 2/15/2051	41,523
100,000	T-Mobile USA, Inc., Series WI, 2.700%, 3/15/2032	83,070
110,000	T-Mobile USA, Inc., Sr. Unsecd. Note, 5.650%, 1/15/2053	109,969
100,000	Vodafone Group PLC, Sr. Unsecd. Note, 5.625%, 2/10/2053	95,594
	TOTAL	457,761
	Communications - Telecom Wirelines—   0.1%
100,000	AT&T, Inc., Sr. Unsecd. Note, 0.900%, 3/25/2024	96,514
100,000	AT&T, Inc., Sr. Unsecd. Note, 1.700%, 3/25/2026	91,446
175,000	AT&T, Inc., Sr. Unsecd. Note, 2.550%, 12/1/2033	137,601
40,000	AT&T, Inc., Sr. Unsecd. Note, 3.850%, 6/1/2060	28,636
90,000	AT&T, Inc., Sr. Unsecd. Note, 5.400%, 2/15/2034	90,268
85,000	AT&T, Inc., Sr. Unsecd. Note, Series WI, 5.300%, 8/15/2058	78,140
150,000	Rogers Communications, Inc., Sr. Unsecd. Note, 144A, 4.500%, 3/15/2042	124,407
50,000	Verizon Communications, Inc., Sr. Unsecd. Note, 3.000%, 3/22/2027	47,130
65,000	Verizon Communications, Inc., Sr. Unsecd. Note, 3.550%, 3/22/2051	47,335
	TOTAL	741,477
	Consumer Cyclical - Automotive—   0.5%
150,000	Daimler Trucks Financial N.A., Sr. Unsecd. Note, 144A, 2.375%, 12/14/2028	130,616

Semi-Annual Shareholder Report

3

Principal Amount, Shares or Contracts		Value
	CORPORATE BONDS—   continued
	Consumer Cyclical - Automotive—   continued
$   200,000	Ford Motor Credit Co. LLC, Sr. Unsecd. Note, 6.950%, 3/6/2026	$    200,594
100,000	General Motors Co., Sr. Unsecd. Note, 5.200%, 4/1/2045	83,290
50,000	General Motors Co., Sr. Unsecd. Note, 5.400%, 4/1/2048	42,021
25,000	General Motors Financial Co., Inc., Sr. Unsecd. Note, 4.150%, 6/19/2023	24,992
50,000	Hyundai Capital America, Sr. Unsecd. Note, 144A, 0.800%, 1/8/2024	48,503
3,000,000	Hyundai Capital America, Sr. Unsecd. Note, 144A, 3.000%, 2/10/2027	2,755,366
150,000	Mercedes-Benz Finance N.A., LLC, Unsecd. Note, 144A, 4.800%, 3/30/2026	149,882
	TOTAL	3,435,264
	Consumer Cyclical - Retailers—   0.1%
160,000	Advance Auto Parts, Inc., Sr. Unsecd. Note, Series WI, 3.900%, 4/15/2030	144,273
50,000	Alimentation Couche-Tard, Inc., Sr. Unsecd. Note, 144A, 3.550%, 7/26/2027	46,757
100,000	Alimentation Couche-Tard, Inc., Sr. Unsecd. Note, 144A, 3.800%, 1/25/2050	71,534
45,000	AutoNation, Inc., Sr. Unsecd. Note, 4.500%, 10/1/2025	43,848
20,000	AutoNation, Inc., Sr. Unsecd. Note, 4.750%, 6/1/2030	18,617
75,000	CVS Health Corp., Sr. Unsecd. Note, 2.625%, 8/15/2024	72,695
125,000	CVS Health Corp., Sr. Unsecd. Note, 5.050%, 3/25/2048	113,010
50,000	CVS Health Corp., Sr. Unsecd. Note, 5.250%, 2/21/2033	50,152
60,000	Home Depot, Inc., Sr. Unsecd. Note, 2.700%, 4/15/2030	53,696
120,000	Home Depot, Inc., Sr. Unsecd. Note, 2.950%, 6/15/2029	110,445
	TOTAL	725,027
	Consumer Cyclical - Services—   0.1%
50,000	Amazon.com, Inc., Sr. Unsecd. Note, 2.100%, 5/12/2031	42,312
250,000	Amazon.com, Inc., Sr. Unsecd. Note, 3.150%, 8/22/2027	238,638
200,000	Cintas Corp. No. 2, Sr. Unsecd. Note, 3.700%, 4/1/2027	194,690
120,000	Visa, Inc., Sr. Unsecd. Note, 2.750%, 9/15/2027	113,327
	TOTAL	588,967
	Consumer Non-Cyclical - Food/Beverage—   0.2%
60,000	Anheuser-Busch Cos. LLC / Anheuser-Busch InBev Worldwide, Inc., Sr. Unsecd. Note, 4.700%, 2/1/2036	58,808
250,000	Anheuser-Busch Cos. LLC / Anheuser-Busch InBev Worldwide, Inc., Sr. Unsecd. Note, 4.900%, 2/1/2046	237,655
37,000	Anheuser-Busch InBev Worldwide, Inc., Sr. Unsecd. Note, 4.600%, 4/15/2048	34,031
150,000	Coca-Cola Femsa S.A.B. de C.V., Sr. Unsecd. Note, 1.850%, 9/1/2032	119,000
150,000	Coca-Cola Femsa S.A.B. de C.V., Sr. Unsecd. Note, 2.750%, 1/22/2030	133,163
50,000	Constellation Brands, Inc., Sr. Unsecd. Note, 4.400%, 11/15/2025	49,205
100,000	Constellation Brands, Inc., Sr. Unsecd. Note, 5.250%, 11/15/2048	94,109
35,000	Flowers Foods, Inc., Sr. Unsecd. Note, 2.400%, 3/15/2031	28,847
50,000	Flowers Foods, Inc., Sr. Unsecd. Note, 3.500%, 10/1/2026	47,496

Semi-Annual Shareholder Report

4

Principal Amount, Shares or Contracts		Value
	CORPORATE BONDS—   continued
	Consumer Non-Cyclical - Food/Beverage—   continued
$    90,000	International Flavors & Fragrances, Inc., Sr. Unsecd. Note, 144A, 1.832%, 10/15/2027	$     76,141
50,000	Kraft Heinz Foods Co., Sr. Unsecd. Note, 3.000%, 6/1/2026	47,450
100,000	Kraft Heinz Foods Co., Sr. Unsecd. Note, 4.375%, 6/1/2046	84,177
35,000	McCormick & Co., Inc., Sr. Unsecd. Note, 2.500%, 4/15/2030	29,916
90,000	Smithfield Foods, Inc., Sr. Unsecd. Note, 144A, 3.000%, 10/15/2030	70,928
155,000	Sysco Corp., Sr. Unsecd. Note, 3.300%, 7/15/2026	148,111
75,000	Sysco Corp., Sr. Unsecd. Note, 4.450%, 3/15/2048	63,287
	TOTAL	1,322,324
	Consumer Non-Cyclical - Health Care—   0.1%
55,000	Agilent Technologies, Inc., Sr. Unsecd. Note, 2.100%, 6/4/2030	45,472
45,000	DH Europe Finance II S.a.r.l., Sr. Unsecd. Note, 2.600%, 11/15/2029	40,076
150,000	HCA, Inc., Sec. Fac. Bond, 3.500%, 7/15/2051	101,057
85,000	PerkinElmer, Inc., Sr. Unsecd. Note, 1.900%, 9/15/2028	72,289
170,000	PerkinElmer, Inc., Sr. Unsecd. Note, 3.300%, 9/15/2029	152,352
	TOTAL	411,246
	Consumer Non-Cyclical - Pharmaceuticals—   0.7%
150,000	AbbVie, Inc., Sr. Unsecd. Note, 2.950%, 11/21/2026	141,539
90,000	AbbVie, Inc., Sr. Unsecd. Note, 3.200%, 11/21/2029	81,728
120,000	Amgen, Inc., Sr. Unsecd. Note, 5.250%, 3/2/2033	120,476
3,990,000	Amgen, Inc., Sr. Unsecd. Note, 5.650%, 3/2/2053	3,994,338
200,000	AstraZeneca PLC, Sr. Unsecd. Note, 4.000%, 1/17/2029	196,051
90,000	Biogen, Inc., Sr. Unsecd. Note, 2.250%, 5/1/2030	75,414
24,000	Bristol-Myers Squibb Co., Sr. Unsecd. Note, Series WI, 3.400%, 7/26/2029	22,604
55,000	Bristol-Myers Squibb Co., Sr. Unsecd. Note, Series WI, 4.250%, 10/26/2049	47,995
50,000	Royalty Pharma PLC, Sr. Unsecd. Note, Series WI, 0.750%, 9/2/2023	49,352
50,000	Royalty Pharma PLC, Sr. Unsecd. Note, Series WI, 1.200%, 9/2/2025	45,209
	TOTAL	4,774,706
	Consumer Non-Cyclical - Supermarkets—   0.0%
75,000	Kroger Co., Sr. Unsecd. Note, 4.450%, 2/1/2047	64,613
	Consumer Non-Cyclical - Tobacco—   0.1%
80,000	Altria Group, Inc., Sr. Unsecd. Note, 2.450%, 2/4/2032	62,682
80,000	Altria Group, Inc., Sr. Unsecd. Note, 2.625%, 9/16/2026	74,768
100,000	Altria Group, Inc., Sr. Unsecd. Note, 3.700%, 2/4/2051	64,900
50,000	BAT Capital Corp., Sr. Unsecd. Note, 3.984%, 9/25/2050	32,951
175,000	Philip Morris International, Inc., Sr. Unsecd. Note, 5.750%, 11/17/2032	179,538
100,000	Reynolds American, Inc., Sr. Unsecd. Note, 7.000%, 8/4/2041	99,355
	TOTAL	514,194
	Energy - Independent—   0.0%
170,000	Hess Corp., Sr. Unsecd. Note, 5.600%, 2/15/2041	160,357

Semi-Annual Shareholder Report

5

Principal Amount, Shares or Contracts		Value
	CORPORATE BONDS—   continued
	Energy - Independent—   continued
$    50,000	Marathon Oil Corp., Sr. Unsecd. Note, 5.200%, 6/1/2045	$     41,848
	TOTAL	202,205
	Energy - Integrated—   0.0%
75,000	Cenovus Energy, Inc., Sr. Unsecd. Note, 4.250%, 4/15/2027	72,386
75,000	Shell International Finance B.V., Sr. Unsecd. Note, 2.750%, 4/6/2030	67,113
70,000	Shell International Finance B.V., Sr. Unsecd. Note, 4.000%, 5/10/2046	58,719
	TOTAL	198,218
	Energy - Midstream—   0.1%
70,000	Boardwalk Pipeline Partners LP, Sr. Unsecd. Note, 4.800%, 5/3/2029	67,775
65,000	Eastern Gas Transmission & Storage, Inc., Sr. Unsecd. Note, 3.900%, 11/15/2049	47,034
75,000	Kinder Morgan Energy Partners LP, Sr. Unsecd. Note, 4.150%, 2/1/2024	74,149
100,000	Kinder Morgan Energy Partners LP, Sr. Unsecd. Note, 6.375%, 3/1/2041	100,052
150,000	MPLX LP, Sr. Unsecd. Note, 4.950%, 3/14/2052	123,644
100,000	ONEOK, Inc., Sr. Unsecd. Note, 4.550%, 7/15/2028	96,229
50,000	ONEOK, Inc., Sr. Unsecd. Note, 5.200%, 7/15/2048	41,749
30,000	Targa Resources, Inc., Sr. Unsecd. Note, 4.200%, 2/1/2033	26,493
115,000	TC Pipelines, LP, Sr. Unsecd. Note, 3.900%, 5/25/2027	110,719
	TOTAL	687,844
	Energy - Oil Field Services—   0.0%
105,000	Ovintiv, Inc., Sr. Unsecd. Note, 7.100%, 7/15/2053	105,778
	Energy - Refining—   0.0%
160,000	Valero Energy Corp., Sr. Unsecd. Note, 4.000%, 4/1/2029	151,941
	Financial Institution - Banking—   0.7%
150,000	Associated Banc-Corp., Sub. Note, 4.250%, 1/15/2025	139,326
90,000	Bank of America Corp., Sr. Unsecd. Note, 2.299%, 7/21/2032	71,791
100,000	Bank of America Corp., Sr. Unsecd. Note, 2.572%, 10/20/2032	81,262
350,000	Bank of America Corp., Sr. Unsecd. Note, 2.687%, 4/22/2032	289,473
100,000	Bank of America Corp., Sr. Unsecd. Note, Series MTN, 2.884%, 10/22/2030	86,223
200,000	Bank of New York Mellon Corp., Sr. Unsecd. Note, Series MTN, 3.992%, 6/13/2028	192,854
95,000	Capital One Financial Corp., Sr. Unsecd. Note, 3.900%, 1/29/2024	93,853
275,000	Citigroup, Inc., Sr. Unsecd. Note, 2.561%, 5/1/2032	225,936
270,000	Citigroup, Inc., Sr. Unsecd. Note, 3.400%, 5/1/2026	258,667
270,000	Citizens Financial Group, Inc., Sub. Note, 2.638%, 9/30/2032	185,372
200,000	Compass Bank, Birmingham, Sub. Note, Series BKNT, 3.875%, 4/10/2025	191,925
100,000	Fifth Third Bancorp, Sr. Unsecd. Note, 3.950%, 3/14/2028	91,382
90,000	FNB Corp. (PA), Sr. Unsecd. Note, 5.150%, 8/25/2025	84,596
100,000	Goldman Sachs Group, Inc., Sr. Unsecd. Note, 2.615%, 4/22/2032	82,554
100,000	Goldman Sachs Group, Inc., Sr. Unsecd. Note, 3.102%, 2/24/2033	84,854
350,000	Goldman Sachs Group, Inc., Sr. Unsecd. Note, 3.814%, 4/23/2029	326,550

Semi-Annual Shareholder Report

6

Principal Amount, Shares or Contracts			Value
		CORPORATE BONDS—   continued
		Financial Institution - Banking—   continued
$    55,000		JPMorgan Chase & Co., Sr. Unsecd. Note, 0.824%, 6/1/2025	$     52,269
525,000		JPMorgan Chase & Co., Sr. Unsecd. Note, 2.580%, 4/22/2032	437,359
100,000		JPMorgan Chase & Co., Sr. Unsecd. Note, 2.963%, 1/25/2033	84,687
90,000		Morgan Stanley, Sr. Unsecd. Note, 1.593%, 5/4/2027	80,982
250,000		Morgan Stanley, Sr. Unsecd. Note, 3.625%, 1/20/2027	239,716
60,000		Morgan Stanley, Sr. Unsecd. Note, 4.889%, 7/20/2033	57,976
200,000		Morgan Stanley, Sr. Unsecd. Note, Series GMTN, 2.239%, 7/21/2032	159,709
100,000		Morgan Stanley, Sr. Unsecd. Note, Series MTN, 1.928%, 4/28/2032	78,156
110,000		Northern Trust Corp., Sub. Note, 6.125%, 11/2/2032	115,465
60,685	1	Regional Diversified Funding, 144A, 9.250%, 3/15/2030	25,488
200,000		Truist Bank, Sub. Note, Series BKNT, 3.300%, 5/15/2026	183,146
100,000		US Bancorp, Sr. Unsecd. Note, Series MTN, 1.375%, 7/22/2030	76,079
225,000		Wells Fargo & Co., Sr. Unsecd. Note, 3.000%, 10/23/2026	210,022
275,000		Wells Fargo & Co., Sr. Unsecd. Note, Series MTN, 2.879%, 10/30/2030	238,165
150,000		Wells Fargo & Co., Sr. Unsecd. Note, Series MTN, 4.897%, 7/25/2033	144,833
		TOTAL	4,670,670
		Financial Institution - Broker/Asset Mgr/Exchange—   0.0%
70,000		Jefferies Group LLC, Sr. Unsecd. Note, 2.750%, 10/15/2032	54,230
		Financial Institution - Finance Companies—   0.1%
250,000		AerCap Ireland Capital Ltd. / AerCap Global Aviation Trust, Sr. Unsecd. Note, 3.400%, 10/29/2033	199,195
75,000		Air Lease Corp., Sr. Unsecd. Note, 5.300%, 2/1/2028	74,171
80,000		Air Lease Corp., Sr. Unsecd. Note, 5.850%, 12/15/2027	80,011
		TOTAL	353,377
		Financial Institution - Insurance - Life—   0.0%
150,000		Massachusetts Mutual Life Insurance Co., Sub. Note, 144A, 4.900%, 4/1/2077	127,942
180,000		Pacific Life Insurance Co., Sub. Note, 144A, 4.300%, 10/24/2067	135,817
50,000		Principal Financial Group, Inc., Sr. Unsecd. Note, 2.125%, 6/15/2030	40,656
		TOTAL	304,415
		Financial Institution - REIT - Apartment—   0.1%
195,000		Avalonbay Communities, Inc., Sr. Unsecd. Note, Series MTN, 3.350%, 5/15/2027	183,947
165,000		UDR, Inc., Sr. Unsecd. Note, 3.100%, 11/1/2034	133,214
		TOTAL	317,161
		Financial Institution - REIT - Healthcare—   0.6%
160,000		Physicians Realty Trust, Sr. Unsecd. Note, 4.300%, 3/15/2027	151,681
115,000		Welltower, Inc., Sr. Unsecd. Note, 2.750%, 1/15/2031	95,026
5,000,000		Welltower, Inc., Sr. Unsecd. Note, 2.750%, 1/15/2032	4,049,974
		TOTAL	4,296,681
		Financial Institution - REIT - Office—   0.1%
90,000		Alexandria Real Estate Equities, Inc., Sr. Unsecd. Note, 3.950%, 1/15/2027	86,388

Semi-Annual Shareholder Report

7

Principal Amount, Shares or Contracts		Value
	CORPORATE BONDS—   continued
	Financial Institution - REIT - Office—   continued
$   110,000	Alexandria Real Estate Equities, Inc., Sr. Unsecd. Note, 3.950%, 1/15/2028	$    103,646
210,000	Boston Properties LP, Sr. Unsecd. Note, 4.500%, 12/1/2028	188,107
40,000	Piedmont Operating Partnership, LP, Sr. Unsecd. Note, 2.750%, 4/1/2032	27,377
	TOTAL	405,518
	Financial Institution - REIT - Other—   0.0%
40,000	WP Carey, Inc., Sr. Unsecd. Note, 4.250%, 10/1/2026	38,612
135,000	WP Carey, Inc., Sr. Unsecd. Note, 4.600%, 4/1/2024	132,662
	TOTAL	171,274
	Financial Institution - REIT - Retail—   0.0%
120,000	Regency Centers LP, Sr. Unsecd. Note, 4.125%, 3/15/2028	113,148
	Technology—   0.2%
50,000	Apple, Inc., Sr. Unsecd. Note, 3.000%, 11/13/2027	47,755
100,000	Apple, Inc., Sr. Unsecd. Note, 4.450%, 5/6/2044	97,824
72,000	Broadcom, Inc., Sr. Unsecd. Note, 4.150%, 11/15/2030	66,294
3,000	Broadcom, Inc., Sr. Unsecd. Note, 144A, 3.187%, 11/15/2036	2,247
60,000	Broadcom, Inc., Sr. Unsecd. Note, 144A, 3.419%, 4/15/2033	49,854
155,000	CDW LLC / CDW Finance, Sr. Unsecd. Note, 2.670%, 12/1/2026	138,847
50,000	Dell International LLC / EMC Corp., Sr. Unsecd. Note, 6.020%, 6/15/2026	51,192
85,000	Equifax, Inc., Sr. Unsecd. Note, 2.600%, 12/1/2024	81,249
200,000	Experian Finance PLC., Sr. Unsecd. Note, 144A, 4.250%, 2/1/2029	191,754
110,000	Fiserv, Inc., Sr. Unsecd. Note, 3.500%, 7/1/2029	100,788
125,000	Lam Research Corp., Sr. Unsecd. Note, 4.000%, 3/15/2029	121,737
30,000	Micron Technology, Inc., Sr. Unsecd. Note, 4.185%, 2/15/2027	28,918
150,000	Microsoft Corp., Sr. Unsecd. Note, 3.300%, 2/6/2027	146,754
200,000	Oracle Corp., Sr. Unsecd. Note, 3.250%, 11/15/2027	186,662
75,000	Oracle Corp., Sr. Unsecd. Note, 3.600%, 4/1/2050	51,801
150,000	Oracle Corp., Sr. Unsecd. Note, 6.900%, 11/9/2052	163,465
25,000	Skyworks Solutions, Inc., Sr. Unsecd. Note, 1.800%, 6/1/2026	22,361
80,000	Total System Services, Inc., Sr. Unsecd. Note, 4.800%, 4/1/2026	78,347
45,000	VMware, Inc., Sr. Unsecd. Note, 1.400%, 8/15/2026	39,864
45,000	VMware, Inc., Sr. Unsecd. Note, 2.200%, 8/15/2031	35,383
	TOTAL	1,703,096
	Technology Services—   0.4%
3,000,000	Global Payments, Inc., Sr. Unsecd. Note, 2.150%, 1/15/2027	2,680,328
45,000	Verisign, Inc., Sr. Unsecd. Note, 2.700%, 6/15/2031	37,521
	TOTAL	2,717,849
	Transportation - Railroads—   0.0%
90,000	Canadian Pacific Railway Co., Sr. Unsecd. Note, 1.750%, 12/2/2026	81,694
65,000	Union Pacific Corp., Sr. Unsecd. Note, 2.400%, 2/5/2030	57,031
	TOTAL	138,725

Semi-Annual Shareholder Report

8

Principal Amount, Shares or Contracts		Value
	CORPORATE BONDS—   continued
	Transportation - Services—   0.0%
$    80,000	Enterprise Rent-A-Car USA Finance Co., Sr. Unsecd. Note, 144A, 3.300%, 12/1/2026	$     75,320
75,000	Penske Truck Leasing Co. LP & PTL Finance Corp., Sr. Unsecd. Note, 144A, 3.400%, 11/15/2026	69,603
	TOTAL	144,923
	Utility - Electric—   0.5%
65,000	Ameren Corp., Sr. Unsecd. Note, 1.950%, 3/15/2027	58,220
80,000	American Electric Power Co., Inc., Sr. Unsecd. Note, 5.625%, 3/1/2033	81,660
50,000	Black Hills Corp., Sr. Unsecd. Note, 2.500%, 6/15/2030	41,693
25,000	Black Hills Corp., Sr. Unsecd. Note, 3.875%, 10/15/2049	18,273
175,000	CenterPoint Energy, Inc., Sr. Unsecd. Note, 2.650%, 6/1/2031	147,141
100,000	Constellation Energy Generation LLC, Sr. Unsecd. Note, 5.800%, 3/1/2033	102,856
110,000	Dominion Energy, Inc., Sr. Unsecd. Note, Series A, 1.450%, 4/15/2026	99,381
200,000	Duke Energy Corp., Sr. Unsecd. Note, 2.450%, 6/1/2030	167,871
80,000	Duke Energy Corp., Sr. Unsecd. Note, 3.950%, 8/15/2047	61,212
1,780,000	Duke Energy Ohio, Inc., Term Loan - 1st Lien, 5.650%, 4/1/2053	1,816,505
140,000	Evergy Metro, Inc., Sr. Unsecd. Note, 4.200%, 3/15/2048	115,895
30,000	Exelon Corp., Sr. Unsecd. Note, 4.100%, 3/15/2052	23,757
40,000	FirstEnergy Transmission LLC, Sr. Unsecd. Note, 144A, 4.550%, 4/1/2049	32,888
30,000	National Rural Utilities Cooperative Finance Corp., Sr. Unsecd. Note, 1.000%, 6/15/2026	26,833
110,000	National Rural Utilities Cooperative Finance Corp., Sr. Unsecd. Note, 2.950%, 2/7/2024	107,968
100,000	NextEra Energy Capital Holdings, Inc., Sr. Unsecd. Note, 5.050%, 2/28/2033	99,105
45,000	NiSource Finance Corp., Sr. Unsecd. Note, 3.490%, 5/15/2027	42,677
65,000	NiSource Finance Corp., Sr. Unsecd. Note, 4.375%, 5/15/2047	54,744
55,000	Puget Energy, Inc., Sec. Fac. Bond, 2.379%, 6/15/2028	48,123
185,000	Southern Co., Jr. Sub. Note, Series B, 4.000%, 1/15/2051	172,832
185,000	Virginia Electric & Power Co., Sr. Unsecd. Note, Series A, 3.500%, 3/15/2027	177,183
55,000	WEC Energy Group, Inc., Sr. Unsecd. Note, 2.200%, 12/15/2028	47,834
	TOTAL	3,544,651
	Utility - Natural Gas—   0.0%
30,000	National Fuel Gas Co., Sr. Unsecd. Note, 2.950%, 3/1/2031	23,974
100,000	National Fuel Gas Co., Sr. Unsecd. Note, 5.500%, 1/15/2026	99,329
180,000	Southern Natural Gas, Sr. Unsecd. Note, 144A, 4.800%, 3/15/2047	147,103
	TOTAL	270,406
	TOTAL CORPORATE BONDS (IDENTIFIED COST $46,322,971)	41,034,248

Semi-Annual Shareholder Report

9

Principal Amount, Shares or Contracts			Value
		MORTGAGE-BACKED SECURITIES—   4.5%
		Agency—   4.5%
$ 8,545,591		FHLMC, Pool SD8225, 3.000%, 7/1/2052	$  7,576,450
8,307,580		FHLMC, Pool SD8243, 3.500%, 9/1/2052	7,623,352
10,255,784		FNMA, Pool FBT224, 3.000%, 3/1/2052	9,092,693
7,791,353		FNMA, Pool MA4732, 4.000%, 9/1/2052	7,364,369
		TOTAL MORTGAGE-BACKED SECURITIES (IDENTIFIED COST $31,474,349)	31,656,864
		U.S. TREASURIES—   3.4%
		U.S. Treasury Notes—   3.4%
10,000,000		United States Treasury Note, 3.625%, 3/31/2028	9,923,437
9,500,000		United States Treasury Note, 3.875%, 12/31/2027	9,515,584
4,000,000		United States Treasury Note, 4.125%, 11/15/2032	4,146,774
		TOTAL U.S. TREASURIES (IDENTIFIED COST $23,890,209)	23,585,795
		COLLATERALIZED MORTGAGE OBLIGATIONS—   3.0%
		Commercial Mortgage—   0.6%
810,000		Bank 2018-BN12, Class A4, 4.255%, 5/15/2061	773,242
500,000	2	Bank 2018-BN15, Class A4, 4.407% (12-month USLIBOR +0.000%), 11/15/2061	479,398
345,000		Bank 2022-BNK40, Class A4, 3.506%, 3/15/2064	302,972
675,000		Benchmark Mortgage Trust 2019-B11, Class A5, 3.542%, 5/15/2052	607,054
520,000		Benchmark Mortgage Trust 2021-B26, Class A2, 1.957%, 6/15/2054	471,912
1,000,000		Commercial Mortgage Trust 2015-DC1, Class AM, 3.724%, 2/10/2048	946,711
1,000,000		Fontainebleau Miami Beach Trust, Class B, 3.447%, 12/10/2036	948,671
		TOTAL	4,529,960
		Federal Home Loan Mortgage Corporation—   0.2%
680,396		FHLMC REMIC, Series K105, Class A1, 1.536%, 9/25/2029	605,931
800,000		FHLMC REMIC, Series K070, Class A2, 3.303%, 11/25/2027	767,240
		TOTAL	1,373,171
		Non-Agency Mortgage-Backed Securities—   2.2%
3,707,015		GS Mortgage-Backed Securities 2022-PJ3, Class A4, 2.500%, 8/25/2052	3,003,840
6,851,148		JP Morgan Mortgage Trust 2022-1, Class A2, 3.000%, 7/25/2052	5,762,191
4,595,433		JP Morgan Mortgage Trust 2022-2, Class A3, 2.500%, 8/25/2052	3,717,992
3,708,858		JP Morgan Mortgage Trust 2022-3, Class A3, 2.500%, 8/25/2052	3,000,699
		TOTAL	15,484,722
		TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (IDENTIFIED COST $24,580,957)	21,387,853
		COMMON STOCKS—   1.8%
		Advertising—   0.0%
9,835		Red Rock Resorts, Inc.	448,378
		Agricultural Chemicals—   0.1%
21,615		Koppers Holdings, Inc.	625,970

Semi-Annual Shareholder Report

10

Principal Amount, Shares or Contracts			Value
		COMMON STOCKS—   continued
		Auto Components—   0.1%
38,578	3	American Axle & Manufacturing Holdings, Inc.	$    260,401
2,165		Lear Corp.	265,559
		TOTAL	525,960
		Commercial Services & Supplies—   0.1%
8,310		Brinks Co. (The)	552,864
		Communications Equipment—   0.1%
9,505	3	Lumentum Holdings, Inc.	502,815
		Containers & Packaging—   0.2%
97,485		Ardagh Metal Packaging	351,921
30,908		Graphic Packaging Holding Co.	738,701
8,013		WestRock Co.	224,444
		TOTAL	1,315,066
		Electric Utilities—   0.1%
15,775		NRG Energy, Inc.	533,037
		Food & Staples Retailing—   0.1%
13,305	3	US Foods Holding Corp.	529,273
		Gas Pipeline—   0.1%
39,111		Suburban Propane Partners LP	597,225
		Hotels Restaurants & Leisure—   0.1%
6,700		Boyd Gaming Corp.	426,991
13,350	3	Caesars Entertainment Corp.	547,484
		TOTAL	974,475
		Independent Power Producers & Energy Traders—   0.1%
24,270		Vistra Corp.	581,752
		Media—   0.2%
61,413	3	Cumulus Media, Inc.	197,750
149,475	3	Stagwell, Inc.	926,745
46,525		Townsquare Media, Inc., Class A	448,501
		TOTAL	1,572,996
		Media Entertainment—   0.0%
81,205	3	iHeartMedia, Inc.	192,456
		Metal Containers—   0.1%
38,946	3	O-I Glass, Inc.	806,961
		Oil Gas & Consumable Fuels—   0.1%
6,543		Devon Energy Corp.	301,632
1,816		Pioneer Natural Resources, Inc.	362,183
		TOTAL	663,815
		Personal Products—   0.1%
16,900		Energizer Holdings, Inc.	550,940
		Professional Services—   0.1%
5,460		Science Applications International Corp.	531,422

Semi-Annual Shareholder Report

11

Principal Amount, Shares or Contracts			Value
		COMMON STOCKS—   continued
		Technology Hardware Storage & Peripherals—   0.0%
10,530		Dell Technologies, Inc.	$    471,849
		Trading Companies & Distributors—   0.1%
9,225	3	GMS, Inc.	584,219
		Utility - Electric—   0.0%
13,500		Enviva, Inc.	118,530
		TOTAL COMMON STOCKS (IDENTIFIED COST $17,762,981)	12,680,003
		ASSET-BACKED SECURITIES—   1.3%
		Auto Receivables—   0.6%
$ 3,000,000		Ford Credit Auto Lease Trust 2022-A, Class D, 4.660%, 12/15/2026	2,876,526
1,567,383		Santander Bank Auto Credit-Linked Notes 2022-A, Class B, 5.281%, 5/15/2032	1,519,946
		TOTAL	4,396,472
		Other—   0.3%
2,205,040		Home Partners of America Trust 2022-1, Class B, 4.330%, 4/17/2039	2,080,124
		Student Loans—   0.4%
1,611,479		Navient Student Loan Trust 2021-GA, Class A, 1.580%, 4/15/2070	1,397,925
1,600,492		SMB Private Education Loan Trust 2021-E, Class A1A, 1.680%, 2/15/2051	1,434,880
		TOTAL	2,832,805
		TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST $9,955,917)	9,309,401
		PREFERRED STOCK—   0.0%
		Financials—   0.0%
40,000	1,3,4	Lehman Brothers Holdings, Inc., Pfd., 5.670% (IDENTIFIED COST $3,400)	400
		PURCHASED CALL OPTIONS—   0.0%
10,000,000		Morgan Stanley EUR CALL/USD PUT (CALL-Option), Notional Amount $817,600,000, Exercise Price $1.100, Expiration Date 7/7/2023	12,900
5,000,000		Morgan Stanley USD CALL/MXN PUT (CALL-Option), Notional Amount $408,800,000, Exercise Price $19.5, Expiration Date 6/5/2023	5
7,500,000		Toronto Dominion EUR CALL/USD PUT (CALL-Option), Notional Amount $430,950,000, Exercise Price $1.085, Expiration Date 6/22/2023	15,945
12,500,000		UBS AUD CALL/USD PUT (CALL-Option), Notional Amount $244,000,000, Exercise Price $0.685, Expiration Date 9/6/2023	61,562
7,500,000		UBS NZD CALL/USD PUT (CALL-Option), Notional Amount $146,400,000, Exercise Price $0.640, Expiration Date 8/11/2023	14,940
100		United States Treasury, Notional Amount $520,300, Exercise Price $134, Expiration Date 6/24/2023	20,313
		TOTAL PURCHASED CALL OPTIONS (IDENTIFIED COST $768,545)	125,665
		PURCHASED PUT OPTIONS—   0.1%
3,000,000		Barclays USD PUT/NOK CALL (PUT-Option), Notional Amount $454,020,000, Exercise Price $10.25, Expiration Date 7/10/2023	1,653

Semi-Annual Shareholder Report

12

Principal Amount, Shares or Contracts			Value
		PURCHASED PUT OPTIONS—   continued
6,000	5	iShares iBoxx High Yield Corporate Bond ETF (PUT-Option), Notional Amount $44,466,000, Exercise Price $74, Expiration Date 7/21/2023	$    571,504
5,000,000		Morgan Stanley USD PUT/MXN CALL (PUT-Option), Notional Amount $408,800,000, Exercise Price $17.70, Expiration Date 6/1/2023	11,580
4,500,000		Morgan Stanley USD PUT/NOK CALL (PUT-Option), Notional Amount $367,920,000, Exercise Price $10.25, Expiration Date 7/10/2023	2,480
10,000,000		UBS USD PUT/JPY CALL (PUT-Option), Notional Amount $195,200,000, Exercise Price $128, Expiration Date 9/27/2023	60,750
6,000,000		UBS USD PUT/ZAR CALL (PUT-Option), Notional Amount $117,120,000, Exercise Price $17.50, Expiration Date 8/7/2023	2,484
		TOTAL PURCHASED PUT OPTIONS (IDENTIFIED COST $1,408,250)	650,451
		INVESTMENT COMPANIES—   79.8%
20,446,173		Emerging Markets Core Fund	158,048,920
11,286,000		Federated Hermes Government Obligations Fund, Premier Shares, 4.95%6	11,286,000
2,662,323		Federated Hermes Institutional Prime Value Obligations Fund, Institutional Shares, 5.15%6	2,661,790
46,008,645	7	High Yield Bond Core Fund	242,465,559
17,756,249		Mortgage Core Fund	149,685,183
		TOTAL INVESTMENT COMPANIES (IDENTIFIED COST $680,583,831)	564,147,452
		TOTAL INVESTMENT IN SECURITIES—99.7% (IDENTIFIED COST $836,751,410)8	704,578,132
		OTHER ASSETS AND LIABILITIES - NET—0.3%9	2,326,064
		TOTAL NET ASSETS—100%	$706,904,196

At May 31, 2023, the Fund had the following outstanding futures contracts: 

Description	Number of Contracts	Notional Value	Expiration Date	Value and Unrealized Appreciation (Depreciation)
Long Futures:
United States Treasury Notes 5-Year Long Futures	380	$41,449,687	September 2023	$147,301
United States Treasury Notes 10-Year Long Futures	5	$572,344	September 2023	$4,318
Short Futures:
United States Treasury Ultra Bond Short Futures	12	$1,642,500	September 2023	$(30,683)
NET UNREALIZED APPRECIATION ON FUTURES CONTRACTS				$120,936

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13

At May 31, 2023, the Fund had the following outstanding foreign exchange contracts: 

Settlement Date	Counterparty	Foreign Currency Units to Deliver/Receive		In Exchange For	Net Unrealized (Depreciation)
Contracts Sold:
6/7/2023	UBS AG	10,000,000	AUD	$15,293,607	$(50,481)
NET UNREALIZED DEPRECIATION ON FOREIGN EXCHANGE CONTRACTS					$(50,481)

At May 31, 2023, the Fund had the following outstanding written options contracts: 

Counterparty	Description	Number of Contracts	Notional Amount	Expiration Date	Exercise Price	Value
Call Options:
Bank of America Merril Lynch	USD CALL/BRL PUT	(10,000,000)	$10,000,000	July 2023	$5.30	$(98,480)
Barclays	USD CALL/NOK PUT	(10,000,000)	$10,000,000	July 2023	$10.60	$(462,300)
Morgan Stanley	USD CALL/JPY PUT	(15,000,000)	$15,000,000	June 2023	$136.00	$(372,165)
Morgan Stanley	USD CALL/ZAR PUT	(12,500,000)	$12,500,000	July 2023	$19.00	$(571,100)
Morgan Stanley	USD CALL/COP PUT	(10,000,000)	$10,000,000	June 2023	$4,750.00	$(34,550)
Toronto Dominion	EUR CALL/USD PUT	(15,000,000)	$15,000,000	June 2023	$1.11	$(4,410)
UBS	GBP CALL/USD PUT	(10,000,000)	$10,000,000	June 2023	$1.25	$(38,430)
Put Options:
Bank of America N.A.	iShares iBoxx High Yield Corporate Bond ETF	(12,000)	$12,000	July 2023	$71.00	$(292,025)
Bank of New York	NZD PUT/USD CALL	(12,000,000)	$12,000,000	June 2023	$0.62	$(296,220)
BNP	EUR PUT/USD CALL	(7,500,000)	$7,500,000	July 2023	$1.07	$(68,190)
BNP	GBP PUT/USD CALL	(10,000,000)	$10,000,000	June 2023	$1.24	$(46,520)
Credit Agricole	EUR PUT/USD CALL	(7,500,000)	$7,500,000	October 2023	$1.08	$(138,067)
Morgan Stanley	USD PUT/MXN CALL	(10,000,000)	$10,000,000	June 2023	$17.60	$(19,100)
Morgan Stanley	USD PUT/COP CALL	(10,000,000)	$10,000,000	June 2023	$4,400.00	$(88,200)
Morgan Stanley	NZD PUT/USD CALL	(10,000,000)	$10,000,000	July 2023	$0.61	$(172,920)
UBS	AUD PUT/USD CALL	(10,000,000)	$10,000,000	June 2023	$0.65	$(93,640)
UBS	USD PUT/BRL CALL	(10,000,000)	$10,000,000	July 2023	$4.80	$(21,730)
United States Treasury	United States Treasury, 103.25%, 6/24/2023	(300)	$300	June 2023	$103.25	$(332,813)
United States Treasury	United States Treasury, 125%, 7/22/2023	(300)	$300	July 2023	$125.00	$(318,750)
(Premium Received $3,210,574)						$(3,469,610)

Net Unrealized Appreciation/Depreciation on Futures Contracts, Foreign Exchange Contracts and Value of Written Options Contracts is included in “Other Assets and Liabilities–Net.”

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14

 

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15

Transactions with affiliated investment companies, which are funds managed by the Adviser or an affiliate of the Adviser, during the period ended May 31, 2023, were as follows: 

Affiliates	Value as of 11/30/2022	Purchases at Cost	Proceeds from Sales
Bank Loan Core Fund	$3,805,207	$82,155	$(3,916,173)
Emerging Markets Core Fund	$189,522,824	$24,014,878	$(52,500,000)
Federated Hermes Government Obligations Fund, Premier Shares*	$7,548,750	$42,095,075	$(38,357,825)
Federated Hermes Institutional Prime Value Obligations Fund, Institutional Shares	$28,407,081	$280,966,977	$(306,718,540)
High Yield Bond Core Fund	$295,244,292	$—	$(52,000,000)
Mortgage Core Fund	$118,504,997	$60,750,000	$(29,000,000)
TOTAL OF AFFILIATED TRANSACTIONS	$643,033,151	$407,909,085	$(482,492,538)

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16

 

Change in Unrealized Appreciation/ Depreciation	Net Realized Gain/ (Loss)	Value as of 5/31/2023	Shares Held as of 5/31/2023	Dividend Income
$387,538	$(358,727)	$—	—	$94,011
$5,174,457	$(8,163,239)	$158,048,920	20,446,173	$6,514,879
$—	$—	$11,286,000	11,286,000	$82,790
$(2,312)	$8,584	$2,661,790	2,662,323	$313,169
$9,504,879	$(10,283,612)	$242,465,559	46,008,645	$8,607,160
$1,703,743	$(2,273,557)	$149,685,183	17,756,249	$2,457,933
$16,768,305	$(21,070,551)	$564,147,452	98,159,390	$18,069,942

 

* All or a portion of the balance/activity for the fund relates to cash collateral received on securities lending transactions.

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund invests in a portfolio of Federated Hermes Core Trust (“Core Trust”), which is managed by Federated Investment Management Company (the “Adviser”). Core Trust is an open-end management company, registered under the Investment Company Act of 1940, as amended (the “Act”), available only to registered investment companies and other institutional investors. The investment objective of High Yield Bond Core Fund (HYCORE), a portfolio of Core Trust, is to seek high current income. Income distributions from HYCORE are declared daily and paid monthly, and are recorded by the Fund as dividend income. Capital gain distributions, if any, from HYCORE are declared and paid annually, and are recorded by the Fund as capital gains. Federated Hermes, Inc. (“Federated Hermes”) receives no advisory or administrative fees from HYCORE. Copies of the HYCORE financial statements are available on the EDGAR Database on the SEC’s website or upon request from the Fund. 

1	Market quotations and price evaluations are not available. Fair value determined using significant unobservable inputs in accordance with procedures established by and under the supervision of the Fund’s Adviser acting through its Valuation Committee.
2	Floating/variable note with current rate and current maturity or next reset date shown.
3	Non-income-producing security.
4	Issuer in default.
5	All or a portion of these securities are temporarily on loan to unaffiliated broker/dealers.
6	7-day net yield.
7	The High Yield Bond Core Fund is a diversified portfolio of below investment grade bonds.
8	The cost of investments for federal tax purposes amounts to $836,823,147.
9	Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Note: The categories of investments are shown as a percentage of total net assets at May 31, 2023.

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.

Semi-Annual Shareholder Report

17

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 May 31, 2023, in valuing the Fund’s assets carried at fair value: 

Valuation Inputs
	Level 1— Quoted Prices	Level 2— Other Significant Observable Inputs	Level 3— Significant Unobservable Inputs	Total
Debt Securities:
Corporate Bonds	$—	$41,008,760	$25,488	$41,034,248
Mortgage-Backed Securities	—	31,656,864	—	31,656,864
U.S. Treasuries	—	23,585,795	—	23,585,795
Collateralized Mortgage Obligations	—	21,387,853	—	21,387,853
Asset-Backed Securities	—	9,309,401	—	9,309,401
Purchased Call Options	—	125,665	—	125,665
Purchased Put Options	—	650,451	—	650,451
Equity Securities:
Common Stocks
Domestic	12,680,003	—	—	12,680,003
Preferred Stock
Domestic	—	—	400	400
Investment Companies	564,147,452	—	—	564,147,452
TOTAL SECURITIES	$576,827,455	$127,724,789	$25,888	$704,578,132
Other Financial Instruments:1
Assets
Futures Contracts	$151,619	$—	$—	$151,619
Liabilities
Futures Contracts	(30,683)	—	—	(30,683)
Foreign Exchange Contracts	—	(50,481)	—	(50,481)
Written Options Contracts	(2,899,755)	(569,855)	—	(3,469,610)
TOTAL OTHER FINANCIAL INSTRUMENTS	$(2,778,819)	$(620,336)	$—	$(3,399,155)

 

1 Other financial instruments are futures contracts.

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18

 

The following acronym(s) are used throughout this portfolio:
AUD	—Australian Dollar
BKNT	—Bank Notes
COP	—Colombian Peso
ETF	—Exchange-Traded Fund
EUR	—Euro
FHLMC	—Federal Home Loan Mortgage Corporation
FNMA	—Federal National Mortgage Association
GBP	—British Pound
GMTN	—Global Medium Term Note
JPY	—Japanese Yen
LIBOR	—London Interbank Offered Rate
MTN	—Medium Term Note
MXN	—Mexican Peso
NOK	—Norwegian Krone
NZD	—New Zealand Dollar
REIT	—Real Estate Investment Trust
REMIC	—Real Estate Mortgage Investment Conduit
USD	—United States Dollar
ZAR	—South African Rand

See Notes which are an integral part of the Financial Statements

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19

Financial Highlights–Class A Shares

(For a Share Outstanding Throughout Each Period) 

	Six Months Ended (unaudited) 5/31/2023	Year Ended November 30,
		2022	2021	2020	2019	2018
Net Asset Value, Beginning of Period	$7.86	$9.30	$9.29	$9.09	$8.60	$9.08
Income From Investment Operations:
Net investment income (loss)	0.18	0.351	0.341	0.321	0.361	0.371
Net realized and unrealized gain (loss)	(0.07)	(1.44)	0.01	0.17	0.47	(0.51)
Total From Investment Operations	0.11	(1.09)	0.35	0.49	0.83	(0.14)
Less Distributions:
Distributions from net investment income	(0.19)	(0.35)	(0.34)	(0.29)	(0.34)	(0.34)
Net Asset Value, End of Period	$7.78	$7.86	$9.30	$9.29	$9.09	$8.60
Total Return2	1.45%	(11.88)%	3.74%	5.56%	9.87%	(1.56)%
Ratios to Average Net Assets:
Net expenses3	0.93%4	0.93%	0.93%	0.93%	0.94%	0.93%
Net investment income	4.66%4	4.17%	3.61%	3.55%	3.99%	4.18%
Expense waiver/reimbursement5	0.13%4	0.10%	0.10%	0.13%	0.12%	0.13%
Supplemental Data:
Net assets, end of period (000 omitted)	$205,926	$222,213	$297,673	$292,259	$307,049	$307,761
Portfolio turnover6	46%	77%	50%	70%	58%	48%

 

1	Per share numbers have been calculated using the average shares method.
2	Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.
3	Amount does not reflect net expenses incurred by investment companies in which the Fund may invest.
4	Computed on an annualized basis.
5	This expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense waiver/reimbursement recorded by investment companies in which the Fund may invest.
6	Securities that mature are considered sales for purposes of this calculation.

See Notes which are an integral part of the Financial Statements

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20

Financial Highlights–Class C Shares

(For a Share Outstanding Throughout Each Period) 

	Six Months Ended (unaudited) 5/31/2023	Year Ended November 30,
		2022	2021	2020	2019	2018
Net Asset Value, Beginning of Period	$7.86	$9.30	$9.28	$9.09	$8.59	$9.07
Income From Investment Operations:
Net investment income (loss)	0.15	0.291	0.271	0.251	0.291	0.301
Net realized and unrealized gain (loss)	(0.08)	(1.44)	0.02	0.16	0.48	(0.50)
Total From Investment Operations	0.07	(1.15)	0.29	0.41	0.77	(0.20)
Less Distributions:
Distributions from net investment income	(0.16)	(0.29)	(0.27)	(0.22)	(0.27)	(0.28)
Net Asset Value, End of Period	$7.77	$7.86	$9.30	$9.28	$9.09	$8.59
Total Return2	0.94%	(12.54)%	3.07%	4.65%	9.19%	(2.30)%
Ratios to Average Net Assets:
Net expenses3	1.69%4	1.69%	1.68%	1.69%	1.68%	1.68%
Net investment income	3.91%4	3.40%	2.90%	2.80%	3.28%	3.43%
Expense waiver/reimbursement5	0.11%4	0.10%	0.10%	0.12%	0.12%	0.14%
Supplemental Data:
Net assets, end of period (000 omitted)	$22,179	$23,226	$35,536	$45,955	$58,296	$76,758
Portfolio turnover6	46%	77%	50%	70%	58%	48%

 

1	Per share numbers have been calculated using the average shares method.
2	Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.
3	Amount does not reflect net expenses incurred by investment companies in which the Fund may invest.
4	Computed on an annualized basis.
5	This expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense waiver/reimbursement recorded by investment companies in which the Fund may invest.
6	Securities that mature are considered sales for purposes of this calculation.

See Notes which are an integral part of the Financial Statements

Semi-Annual Shareholder Report

21

Financial Highlights–Class F Shares

(For a Share Outstanding Throughout Each Period) 

	Six Months Ended (unaudited) 5/31/2023	Year Ended November 30,
		2022	2021	2020	2019	2018
Net Asset Value, Beginning of Period	$7.80	$9.23	$9.22	$9.03	$8.54	$9.02
Income From Investment Operations:
Net investment income (loss)	0.18	0.351	0.341	0.311	0.351	0.371
Net realized and unrealized gain (loss)	(0.07)	(1.43)	0.01	0.17	0.48	(0.51)
Total From Investment Operations	0.11	(1.08)	0.35	0.48	0.83	(0.14)
Less Distributions:
Distributions from net investment income	(0.19)	(0.35)	(0.34)	(0.29)	(0.34)	(0.34)
Net Asset Value, End of Period	$7.72	$7.80	$9.23	$9.22	$9.03	$8.54
Total Return2	1.46%	(11.86)%	3.77%	5.49%	9.95%	(1.57)%
Ratios to Average Net Assets:
Net expenses3	0.93%4	0.93%	0.93%	0.93%	0.94%	0.93%
Net investment income	4.66%4	4.17%	3.62%	3.56%	3.99%	4.18%
Expense waiver/reimbursement5	0.13%4	0.10%	0.10%	0.12%	0.12%	0.13%
Supplemental Data:
Net assets, end of period (000 omitted)	$32,815	$35,464	$51,221	$51,426	$53,136	$51,431
Portfolio turnover6	46%	77%	50%	70%	58%	48%

 

1	Per share numbers have been calculated using the average shares method.
2	Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.
3	Amount does not reflect net expenses incurred by investment companies in which the Fund may invest.
4	Computed on an annualized basis.
5	This expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense waiver/reimbursement recorded by investment companies in which the Fund may invest.
6	Securities that mature are considered sales for purposes of this calculation.

See Notes which are an integral part of the Financial Statements

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22

Financial Highlights–Institutional Shares

(For a Share Outstanding Throughout Each Period) 

	Six Months Ended (unaudited) 5/31/2023	Year Ended November 30,
		2022	2021	2020	2019	2018
Net Asset Value, Beginning of Period	$7.81	$9.24	$9.23	$9.04	$8.55	$9.03
Income From Investment Operations:
Net investment income (loss)	0.19	0.381	0.361	0.341	0.381	0.401
Net realized and unrealized gain (loss)	(0.07)	(1.43)	0.02	0.17	0.48	(0.51)
Total From Investment Operations	0.12	(1.05)	0.38	0.51	0.86	(0.11)
Less Distributions:
Distributions from net investment income	(0.21)	(0.38)	(0.37)	(0.32)	(0.37)	(0.37)
Net Asset Value, End of Period	$7.72	$7.81	$9.24	$9.23	$9.04	$8.55
Total Return2	1.49%	(11.56)%	4.09%	5.83%	10.28%	(1.25)%
Ratios to Average Net Assets:
Net expenses3	0.61%4	0.61%	0.61%	0.61%	0.62%	0.62%
Net investment income	4.98%4	4.49%	3.82%	3.87%	4.23%	4.49%
Expense waiver/reimbursement5	0.23%4	0.19%	0.15%	0.20%	0.19%	0.18%
Supplemental Data:
Net assets, end of period (000 omitted)	$437,218	$547,135	$783,512	$246,898	$275,189	$134,398
Portfolio turnover6	46%	77%	50%	70%	58%	48%

 

1	Per share numbers have been calculated using the average shares method.
2	Based on net asset value. Total returns for periods of less than one year are not annualized.
3	Amount does not reflect net expenses incurred by investment companies in which the Fund may invest.
4	Computed on an annualized basis.
5	This expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense waiver/reimbursement recorded by investment companies in which the Fund may invest.
6	Securities that mature are considered sales for purposes of this calculation.

See Notes which are an integral part of the Financial Statements

Semi-Annual Shareholder Report

23

Financial Highlights–Class R6 Shares

(For a Share Outstanding Throughout Each Period) 

	Six Months Ended (unaudited) 5/31/2023	Year Ended November 30,
		2022	2021	2020	2019	2018
Net Asset Value, Beginning of Period	$7.86	$9.30	$9.29	$9.10	$8.60	$9.09
Income From Investment Operations:
Net investment income (loss)	0.20	0.381	0.371	0.351	0.381	0.401
Net realized and unrealized gain (loss)	(0.07)	(1.44)	0.01	0.16	0.49	(0.52)
Total From Investment Operations	0.13	(1.06)	0.38	0.51	0.87	(0.12)
Less Distributions:
Distributions from net investment income	(0.21)	(0.38)	(0.37)	(0.32)	(0.37)	(0.37)
Net Asset Value, End of Period	$7.78	$7.86	$9.30	$9.29	$9.10	$8.60
Total Return2	1.62%	(11.59)%	4.08%	5.80%	10.35%	(1.36)%
Ratios to Average Net Assets:
Net expenses3	0.60%4	0.60%	0.60%	0.60%	0.61%	0.61%
Net investment income	4.99%4	4.52%	3.88%	3.88%	4.30%	4.49%
Expense waiver/reimbursement5	0.11%4	0.10%	0.10%	0.12%	0.12%	0.12%
Supplemental Data:
Net assets, end of period (000 omitted)	$8,766	$9,974	$11,157	$5,468	$4,390	$3,790
Portfolio turnover6	46%	77%	50%	70%	58%	48%

 

1	Per share numbers have been calculated using the average shares method.
2	Based on net asset value. Total returns for periods of less than one year are not annualized.
3	Amount does not reflect net expenses incurred by investment companies in which the Fund may invest.
4	Computed on an annualized basis.
5	This expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense waiver/reimbursement recorded by investment companies in which the Fund may invest.
6	Securities that mature are considered sales for purposes of this calculation.

See Notes which are an integral part of the Financial Statements

Semi-Annual Shareholder Report

24

Statement of Assets and Liabilities
May 31, 2023 (unaudited)

 

Assets:
Investment in securities, at value including $10,989,000 of securities loaned and $564,147,452 of investments in affiliated holdings* (identified cost $836,751,410, including $680,583,831 of identified cost in affiliated holdings)	$704,578,132
Due from broker (Note 2)	4,137,437
Income receivable	860,995
Income receivable from affiliated holdings	2,854,494
Receivable for investments sold	11,134,411
Receivable for shares sold	227,896
Receivable for variation margin on futures contracts	341,591
Total Assets	724,134,956
Liabilities:
Payable for investments purchased	1,036,655
Payable for shares redeemed	956,035
Written options outstanding, at value (premium received $3,210,574)	3,469,610
Unrealized depreciation on foreign exchange contracts	50,481
Payable to bank	128,213
Payable for collateral due to broker for securities lending (Note 2)	11,286,000
Payable for investment adviser fee (Note 5)	8,368
Payable for administrative fee (Note 5)	1,507
Payable for distribution services fee (Note 5)	14,198
Payable for other service fees (Notes 2 and 5)	49,800
Accrued expenses (Note 5)	229,893
Total Liabilities	17,230,760
Net assets for 91,319,395 shares outstanding	$706,904,196
Net Assets Consist of:
Paid-in capital	$1,006,764,223
Total distributable earnings (loss)	(299,860,027)
Total Net Assets	$706,904,196

Semi-Annual Shareholder Report

25

Statement of Assets and Liabilities–continued

Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Class A Shares:
Net asset value per share ($205,925,815 ÷ 26,474,559 shares outstanding), $0.001 par value, 1,000,000,000 shares authorized	$7.78
Offering price per share (100/95.50 of $7.78)	$8.15
Redemption proceeds per share	$7.78
Class C Shares:
Net asset value per share ($22,178,750 ÷ 2,853,152 shares outstanding), $0.001 par value, 1,000,000,000 shares authorized	$7.77
Offering price per share	$7.77
Redemption proceeds per share (99.00/100 of $7.77)	$7.69
Class F Shares:
Net asset value per share ($32,815,417 ÷ 4,252,757 shares outstanding), $0.001 par value, 1,000,000,000 shares authorized	$7.72
Offering price per share (100/99.00 of $7.72)	$7.80
Redemption proceeds per share (99.00/100 of $7.72)	$7.64
Institutional Shares:
Net asset value per share ($437,218,100 ÷ 56,612,374 shares outstanding), $0.001 par value, 1,000,000,000 shares authorized	$7.72
Offering price per share	$7.72
Redemption proceeds per share	$7.72
Class R6 Shares:
Net asset value per share ($8,766,114 ÷ 1,126,553 shares outstanding), $0.001 par value, 1,000,000,000 shares authorized	$7.78
Offering price per share	$7.78
Redemption proceeds per share	$7.78

 

* See information listed after the Fund’s Portfolio of Investments.

See Notes which are an integral part of the Financial Statements

Semi-Annual Shareholder Report

26

Statement of Operations
Six Months Ended May 31, 2023 (unaudited)

 

Investment Income:
Dividends (including $17,987,152 received from affiliated holdings* and net of foreign taxes withheld of $1,464)	$18,206,483
Interest	2,952,166
Net income on securities loaned (includes $82,790 earned from affiliated holdings related to cash collateral balances) (Note 2)	12,349
TOTAL INCOME	21,170,998
Expenses:
Investment adviser fee (Note 5)	2,080,316
Administrative fee (Note 5)	297,184
Custodian fees	29,525
Transfer agent fees (Note 2)	497,550
Directors’/Trustees’ fees (Note 5)	4,025
Auditing fees	17,791
Legal fees	5,572
Portfolio accounting fees	104,487
Distribution services fee (Note 5)	87,353
Other service fees (Notes 2 and 5)	340,995
Share registration costs	54,125
Printing and postage	41,603
Miscellaneous (Note 5)	21,367
TOTAL EXPENSES	3,581,893
Waiver and Reimbursements:
Waiver/reimbursement of investment adviser fee (Note 5)	(434,580)
Reimbursement of other operating expenses (Notes 2 and 5)	(293,016)
TOTAL WAIVER AND REIMBURSEMENTS	(727,596)
Net expenses	2,854,297
Net investment income	18,316,701

Semi-Annual Shareholder Report

27

Statement of Operations–continued

Realized and Unrealized Gain (Loss) on Investments, Foreign Currency Transactions, Foreign Exchange Contracts, Futures Contracts, Written Options and Swap Contracts:
Net realized loss on investments (including net realized loss of $(21,070,551) on sales of investments in affiliated holdings*)	$(25,633,353)
Net realized loss on foreign currency transactions	(4,430,466)
Net realized gain on foreign exchange contracts	1,874,066
Net realized loss on futures contracts	(4,442,225)
Net realized gain on written options	6,005,222
Net realized loss on swap contracts	(84,177)
Net change in unrealized depreciation of investments (including net change in unrealized depreciation of $16,768,305 of investments in affiliated holdings*)	19,146,731
Net change in unrealized appreciation of translation of assets and liabilities in foreign currency	(166)
Net change in unrealized appreciation of foreign exchange contracts	(1,405,522)
Net change in unrealized depreciation of futures contracts	2,055,436
Net change in unrealized depreciation of written options	1,144,603
Net realized and unrealized gain (loss) on investments, foreign currency transactions, foreign exchange contracts, futures contracts, written options and swap contracts	(5,769,851)
Change in net assets resulting from operations	$12,546,850

 

* See information listed after the Fund’s Portfolio of Investments.

See Notes which are an integral part of the Financial Statements

Semi-Annual Shareholder Report

28

Statement of Changes in Net Assets 

 

	Six Months Ended (unaudited) 5/31/2023	Year Ended 11/30/2022
Increase (Decrease) in Net Assets
Operations:
Net investment income	$18,316,701	$47,673,876
Net realized gain (loss)	(26,710,933)	(73,663,968)
Net change in unrealized appreciation/depreciation	20,941,082	(123,140,565)
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS	12,546,850	(149,130,657)
Distributions to Shareholders:
Class A Shares	(5,330,350)	(10,661,480)
Class B Shares1	(12,908)	(84,354)
Class C Shares	(477,648)	(980,289)
Class F Shares	(858,729)	(1,872,770)
Institutional Shares	(12,524,777)	(33,241,296)
Class R6 Shares	(244,478)	(497,983)
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS	(19,448,890)	(47,338,172)
Share Transactions:
Proceeds from sale of shares	94,343,271	370,892,579
Net asset value of shares issued to shareholders in payment of distributions declared	19,061,247	46,537,659
Cost of shares redeemed	(239,166,291)	(564,382,893)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS	(125,761,773)	(146,952,655)
Change in net assets	(132,663,813)	(343,421,484)
Net Assets:
Beginning of period	839,568,009	1,182,989,493
End of period	$706,904,196	$839,568,009

 

1 On February 3, 2023, Class B Shares were converted into Class A Shares.

See Notes which are an integral part of the Financial Statements

Semi-Annual Shareholder Report

29

Notes to Financial Statements

May 31, 2023 (unaudited)

1. ORGANIZATION

Federated Hermes Fixed Income Securities, Inc. (the “Corporation”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Corporation consists of two portfolios. The financial statements included herein are only those of Federated Hermes Strategic Income Fund (the “Fund”), a diversified portfolio. The financial statements of the other portfolio 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 five classes of shares: Class A Shares, Class C Shares, Class F 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 a high level of current income.

At the close of business on February 3, 2023, Class B Shares were converted into the Fund’s existing Class A Shares pursuant to a Plan of Conversion approved by the Fund’s Board of Directors (the “Directors”). The conversion occurred on a tax-free basis. The cash value of a shareholder’s investment was not changed as a result of the share class conversion. No action was required by shareholders to effect the conversion.

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 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 Federated Investment Management Company (the “Adviser”).

◾

Shares of other mutual funds or non-exchange-traded investment companies are valued based upon their reported NAVs, or NAV per share practical expedient, as applicable.

◾

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 ask quotations.

◾

Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Adviser.

◾

For securities that are fair valued in accordance with procedures established by and under the general supervision of the Adviser, certain factors may be considered, such as: the last traded or purchase price of the security, information obtained by contacting the issuer or dealers, analysis of the issuer’s financial statements or other available documents, fundamental analytical data, the nature and duration of restrictions on disposition, the movement of the market in which the security is

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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.

If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, if the Fund cannot obtain price evaluations from a pricing service or from more than one dealer for an investment within a reasonable period of time as set forth in the Adviser’s valuation policies and procedures for the Fund, or if information furnished by a pricing service, in the opinion of the Adviser’s valuation committee (“Valuation Committee”), is deemed not representative of the fair value of such security, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines its NAV per share, and the actual value obtained could be materially different.

Fair Valuation and Significant Events Procedures

Pursuant to Rule 2a-5 under the Act, the Directors have designated the Adviser as the Fund’s valuation designee to perform any fair value determinations for securities and other assets held by the Fund. The Adviser is subject to the Directors’ oversight and certain reporting and other requirements intended to provide the Directors the information needed to oversee the Adviser’s fair value determinations.

The Adviser, acting through its Valuation Committee, is responsible for determining the fair value of investments for which market quotations are not readily available. The Valuation Committee is comprised of officers of the Adviser and certain of the Adviser’s affiliated companies and determines fair value and oversees the calculation of the NAV. The Valuation Committee is also authorized to use pricing services to provide fair value evaluations of the current value of certain investments for purposes of calculating the NAV. The Valuation Committee employs various methods for reviewing third-party pricing-service evaluations including periodic reviews of third-party pricing services’ policies, procedures and valuation methods (including key inputs, methods, models and assumptions), transactional back-testing, comparisons of evaluations of different pricing services, and review of price challenges by the Adviser based on recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee determines the fair value of the investment in accordance with procedures adopted by the Adviser. The Directors periodically review the fair valuations made by the Valuation Committee. The Directors have also approved the Adviser’s fair valuation and significant events procedures as part of the Fund’s compliance program and will review any changes made to the procedures.

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 ask for the investment (a “mid” evaluation). The Fund normally uses bid evaluations for any U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses

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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 Adviser.

The Adviser has also adopted procedures requiring an investment to be priced at its fair value whenever the Valuation Committee determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment’s value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

◾

With respect to securities traded principally in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures contracts;

◾

Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded;

◾

Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, or a natural disaster affecting the issuer’s operations or regulatory changes or market developments affecting the issuer’s industry.

The Adviser has adopted procedures whereby the Valuation Committee uses a pricing service to provide factors to update the fair value of equity securities traded principally in foreign markets from the time of the close of their respective foreign stock exchanges to the pricing time of the Fund. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Valuation Committee will determine the fair value of the investment in accordance with the fair valuation procedures approved by the Adviser. The Directors periodically review fair valuations made in response to significant events.

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.

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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.

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 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. Gains and losses realized on principal payment of mortgage-backed securities (paydown gains and losses) are classified as part of 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. 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. The detail of the total fund expense waiver and reimbursements of $727,596 is disclosed in this Note 2 and Note 5.

Transfer Agent Fees

For the six months ended May 31, 2023, transfer agent fees for the Fund were as shown below. Prior to their conversion to Class A Shares at the close of business on February 3, 2023, the Class B Shares were also subject to these fees and reimbursements. 

	Transfer Agent Fees Incurred	Transfer Agent Fees Reimbursed
Class A Shares	$122,240	$(15,319)
Class B Shares	924	(549)
Class C Shares	11,374	—
Class F Shares	18,823	(1,743)
Institutional Shares	343,326	(275,405)
Class R6 Shares	863	—
TOTAL	$497,550	$(293,016)

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Other Service Fees

The Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund’s Class A Shares, Class C Shares and Class F Shares to unaffiliated financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Prior to their conversion to Class A Shares at the close of business on February 3, 2023, the Class B Shares were also subject to these fees. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for other service fees.

For the six months ended May 31, 2023, other service fees for the Fund were as follows: 

	Other Service Fees Incurred
Class A Shares	$268,891
Class B Shares	629
Class C Shares	28,488
Class F Shares	42,987
TOTAL	$340,995

Federal Taxes

It is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code of 1986 (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 six months ended May 31, 2023, 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 May 31, 2023, tax years 2019 through 2022 remain subject to examination by the Fund’s major tax jurisdictions, which include the United States of America, the State of Maryland and the Commonwealth of Pennsylvania.

The Fund may be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The Fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or gains are earned.

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.

Swap Contracts

Swap contracts involve two parties that agree to exchange the returns (or the differential in rates of return) earned or realized on particular predetermined investments, instruments, indices or other measures. The gross returns to be exchanged or “swapped” between parties are generally calculated with respect to a “notional

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amount” for a predetermined period of time. The Fund may enter into interest rate, total return, credit default, currency and other swap agreements. Risks may arise upon entering into swap agreements from the potential inability of the counterparties to meet the terms of their contract from unanticipated changes in the value of the swap agreement. In connection with these agreements, securities or cash may be identified as collateral or margin in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default.

The Fund uses credit default swaps to manage market and sector/asset class risks. The “buyer” in a credit default swap is obligated to pay the “seller” a periodic stream of payments over the term of the contract provided that no event of default on an underlying reference obligation has occurred. If an event of default occurs, the seller must pay the buyer the full notional value, or the “par value”, of the reference obligation in exchange for the reference obligation. In connection with these agreements, securities may be identified as collateral in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default or bankruptcy/insolvency. Recovery values are assumed by market makers considering either industry standard recovery rates or entity specific factors and considerations until a credit event occurs. If a credit event has occurred, the recovery value is typically determined by a facilitated auction whereby a minimum number of allowable broker bids, together with a specific valuation method, are used to calculate the settlement value. The maximum amount of the payment that may occur, as a result of a credit event payable by the protection seller, is equal to the notional amount of the underlying index or security. The Fund’s maximum risk of loss from counterparty credit risk, either as the protection buyer or as the protection seller, is the fair value of the contract. This risk is mitigated by having a master netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty.

Upfront payments received or paid by the Fund will be reflected as an asset or liability on the Statement of Assets and Liabilities. Changes in the value of swap contracts are included in “Swaps, at value” on the Statement of Assets and Liabilities, and periodic payments are reported as “Net realized gain (loss) on swap contracts” in the Statement of Operations.

Certain swap contracts may be centrally cleared (“centrally cleared swaps”), whereby all payments made or received by the Fund pursuant to the contract are with a central clearing party (CCP) rather than the counterparty. The CCP guarantees the performance of the parties to the contract. Upon entering into centrally cleared swaps, the Fund is required to deposit with the CCP, either in cash or securities, an amount of initial margin determined by the CCP, which is subject to adjustment. For centrally cleared swaps, the daily change in valuation is recorded as a receivable or payable for variation margin and settled in cash with the CCP daily. In the case of centrally cleared swaps, counterparty risk is minimal due to protections provided by the CCP.

At May 31, 2023, the Fund had no outstanding swap contracts.

The average notional amount of swap contracts held by the Fund throughout the period was $22,142,857. This is based on amounts held as of each month-end throughout the six-month period.

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Futures Contracts

The Fund purchases and sells financial futures contracts to seek to increase return and to manage duration and yield curve risks. Upon entering into a financial futures contract with a broker, the Fund is required to deposit with a broker, either U.S. government securities or a specified amount of cash, which is shown as due from broker in the Statement of Assets and Liabilities. Futures contracts are valued daily and unrealized gains or losses are recorded in a “variation margin” account. The Fund receives from or pays to the broker a specified amount of cash based upon changes in the variation margin account. When a contract is closed, the Fund recognizes a realized gain or loss. Futures contracts have market risks, including the risk that the change in the value of the contract may not correlate with the changes in the value of the underlying securities. There is minimal counterparty risk to the Fund since futures contracts are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures contracts, guarantees the futures contracts against default.

Futures contracts outstanding at period end are listed after the Fund’s Portfolio of Investments.

The average notional value of long and short futures contracts held by the Fund throughout the period was $15,718,083 and $13,456,886, respectively. This is based on amounts held as of each month-end throughout the six-month period.

Foreign Exchange Contracts

The Fund enters into foreign exchange contracts to seek to increase return and to manage currency risk. The Fund enters into foreign exchange contracts to protect assets against adverse changes in foreign currency exchange rates or exchange control regulations. Purchased contracts are used to acquire exposure to foreign currencies, whereas, contracts to sell are used to hedge the Fund’s securities against currency fluctuations. Risks may arise upon entering into these transactions from the potential inability of counterparties to meet the terms of their commitments and from unanticipated movements in security prices or foreign exchange rates. The foreign exchange contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized until the settlement date.

Foreign exchange contracts are subject to Master Netting Agreements (MNA) which are agreements between the Fund and its counterparties that provide for the net settlement of all transactions and collateral with the Fund, through a single payment, in the event of default or termination. Amounts presented on the Portfolio of Investments and Statement of Assets and Liabilities are not net settlement amounts but gross.

Foreign exchange contracts outstanding at period end, including net unrealized appreciation/depreciation or net settlement amount, are listed after the Fund’s Portfolio of Investments.

The average value at settlement date payable and receivable of foreign exchange contracts purchased and sold by the Fund throughout the period was $1,231,744 and $2,253,860, respectively. This is based on the contracts held as of each month-end throughout the six-month period.

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Foreign Currency Translation

The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the rates of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, income and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund’s books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at period end, resulting from changes in the exchange rate.

Securities Lending

The Fund participates in a securities lending program providing for the lending of corporate bonds and government securities to qualified brokers. The term of the loans within the program is one year or less. The Fund normally receives cash collateral for securities loaned that may be invested in affiliated money market funds, other money market instruments and/or repurchase agreements. Investments in money market funds may include funds with a “floating” NAV that can impose redemption fees and liquidity gates, impose certain operational impediments to investing cash collateral, and, if the investee fund’s NAV decreases, result in the Fund recognizing losses and being required to cover the decrease in the value of the cash collateral. Collateral is maintained at a minimum level of 100% of the market value of investments loaned, plus interest, if applicable. In accordance with the Fund’s securities lending agreement, the market value of securities on loan is determined each day at the close of business and any additional collateral required to cover the value of securities on loan is delivered to the Fund on the next business day. Earnings on collateral are allocated between the borrower of the security, the securities lending agent, as a fee for its services under the program and the Fund, according to agreed-upon rates. The Fund will not have the right to vote on securities while they are on loan. However, the Fund will attempt to terminate a loan in an effort to reacquire the securities in time to vote on matters that are deemed to be material by the Adviser. There can be no assurance that the Fund will have sufficient notice of such matters to be able to terminate the loan in time to vote thereon.

Securities lending transactions are subject to MNA. Amounts presented on the Portfolio of Investments and Statement of Assets and Liabilities are not net settlement amounts but gross. The cash collateral received by the Fund exceeds the market value of the securities loaned reducing the net settlement amount to zero. Additionally, the securities lending agreement executed by the Fund includes an indemnification clause. This clause stipulates that the borrower will reimburse the Fund for any losses as a result of any failure of the borrower to return equivalent securities to the Fund.

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As of May 31, 2023, securities subject to this type of arrangement and related collateral were as follows: 

Fair Value of Securities Loaned	Collateral Received
$10,989,000	$11,286,000

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 Directors. 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 Adviser.

Option Contracts

The Fund buys or sells put and call options to seek to increase income and return, and to manage currency, duration and market risks. The seller (“writer”) of an option receives a payment or premium, from the buyer, which the writer keeps regardless of whether the buyer exercises the option. When the Fund writes a put or call option, an amount equal to the premium received is recorded as a liability and subsequently marked to market to reflect the current value of the option written. Premiums received from writing options which expire are treated as realized gains. The Fund, as a writer of an option, bears the market risk of an unfavorable change in the price of the underlying reference instrument. When the Fund purchases a put or call option, an amount equal to the premium paid is recorded as an increase to the cost of the investment and subsequently marked to market to reflect the current value of the option purchased. Premiums paid for purchasing options which expire are treated as realized losses. Premiums received/paid for writing/purchasing options which are exercised or closed are added to the proceeds or offset against amounts paid on the underlying reference instrument to determine the realized gain or loss. The risk associated with purchasing put and call options is limited to the premium paid. Options can trade on securities or commodities exchanges. In this case, the exchange sets all the terms of the contract except for the price. Most exchanges require investors to maintain margin accounts through their brokers to cover their potential obligations to the exchange. This protects investors against potential defaults by the counterparty.

Purchased option contracts outstanding at period end are listed in the Fund’s Portfolio of Investments and written option contracts outstanding at period end are listed after the Fund’s Portfolio of Investments.

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The average market value of purchased put and call options held by the Fund throughout the period was $800,951 and $1,714,254, respectively. This is based on amounts held as of each month-end throughout the six-month period.

The average market value of written put and call options held by the Fund throughout the period was $1,651,524 and $1,465,361, respectively. This is based on amounts held as of each month-end throughout the six-month period.

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Additional Disclosure Related to Derivative Instruments 

Fair Value of Derivative Instruments
	Assets		Liabilities
	Statement of Assets and Liabilities Location	Fair Value	Statement of Assets and Liabilities Location	Fair Value
Derivatives not accounted for as hedging instruments under ASC Topic 815
Interest rate contracts	Receivable for variation margin on futures contracts	$120,936*		$—
Interest rate contracts	Purchased options, within Investment in securities, at value	20,313		—
Interest rate contracts		—	Written options outstanding, at value	651,563
Equity contracts		—	Written options outstanding, at value	292,025
Equity contracts	Purchased options, within Investment in securities at value	571,504		—
Foreign exchange contracts		—	Unrealized depreciation on foreign exchange contracts	50,481
Foreign exchange contracts		—	Written options outstanding, at value	2,526,022
Foreign exchange contracts	Purchased options, within Investment in securities at value	184,299		—
Total derivatives not accounted for as hedging instruments under ASC Topic 815		$897,052		$3,520,091

 

* Includes net cumulative appreciation of futures contracts as reported in the footnotes to the Portfolio of Investments. Only the current day’s variation margin is reported within the Statement of Assets and Liabilities.

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The Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended May 31, 2023 

Amount of Realized Gain or (Loss) on Derivatives Recognized in Income
	OTC Swaps	Futures Contracts	Foreign Exchange Contracts	Purchased Options Contracts1	Written Options Contracts	Total
Interest rate contracts	$—	$(2,809,690)	$—	$(94,126)	$(736,777)	$(3,640,593)
Equity contracts	—	(1,632,535)	—	(229,975)	1,112,310	(750,200)
Foreign exchange contracts	—	—	1,874,066	(132,232)	5,629,689	7,371,523
Credit contracts	(84,177)	—	—	—	—	(84,177)
TOTAL	$(84,177)	$(4,442,225)	$1,874,066	$(456,333)	$6,005,222	$2,896,553

 

1 The net realized loss on Purchased Options Contracts is found within the Net realized loss on investments on the Statement of Operations.

 

Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income
	Futures Contracts	Foreign Exchange Contracts	Purchased Options Contracts1	Written Options Contracts	Total
Interest rate contracts	$383,044	$—	$122,965	$323,771	$829,780
Equity contracts	1,672,392	—	(1,545,808)	694,000	820,584
Foreign exchange contracts	—	(1,405,522)	(1,160,768)	126,832	(2,439,458)
TOTAL	$2,055,436	$(1,405,522)	$(2,583,611)	$1,144,603	$(789,094)

 

1 The net change in unrealized depreciation of Purchased Options Contracts is found within the Net change in unrealized depreciation of investments on the Statement of Operations.

As indicated above, certain derivative investments are transacted subject to MNA. These agreements permit the Fund to offset with a counterparty certain derivative payables and/or receivables with collateral held and create one single net payment in the event of default or termination of the agreement by either the Fund or the counterparty. Amounts presented on the Portfolio of Investments and Statement of Assets and Liabilities are not net settlement amounts but gross. As of May 31, 2023, the impact of netting assets and liabilities and the collateral pledged or received based on MNA are detailed below: 

Gross Amounts Not Offset In the Statement of Assets and Liabilities
Transaction	Gross Asset Derivatives Presented In Statement of Assets and Liabilities	Financial Instrument	Collateral Received	Net Amount
Purchased Option Contracts	$776,116	$(193,077)	$—	$583,039

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Transaction	Gross Liability Derivatives Presented In Statement of Assets and Liabilities	Financial Instrument	Collateral Received	Net Amount
Foreign Exchange Contracts	$50,481	$—	$—	$50,481
Written Option Contracts	3,469,610	(193,077)	—	3,276,533
Total	$3,520,091	$(193,077)	$—	$3,327,014

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. CAPITAL STOCK

The following tables summarize capital stock activity: 

	Six Months Ended 5/31/2023		Year Ended 11/30/2022
Class A Shares:	Shares	Amount	Shares	Amount
Shares sold	756,180	$5,971,610	1,713,104	$14,736,265
Shares issued to shareholders in payment of distributions declared	635,998	5,003,625	1,187,809	9,988,342
Conversion of Class B Shares to Class A Shares1	165,549	1,344,260	—	—
Shares redeemed	(3,350,824)	(26,422,170)	(6,636,093)	(55,614,721)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	(1,793,097)	$(14,102,675)	(3,735,180)	$(30,890,114)
	Six Months Ended 5/31/2023		Year Ended 11/30/2022
Class B Shares:	Shares	Amount	Shares	Amount
Shares sold	93	$734	2,909	$26,010
Shares issued to shareholders in payment of distributions declared	1,526	11,961	8,538	72,492
Conversion of Class B Shares to Class A Shares1	(165,829)	(1,344,260)	—	—
Shares redeemed	(34,114)	(268,267)	(232,077)	(1,990,664)
NET CHANGE RESULTING FROM CLASS B SHARE TRANSACTIONS	(198,324)	$(1,599,832)	(220,630)	$(1,892,162)

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	Six Months Ended 5/31/2023		Year Ended 11/30/2022
Class C Shares:	Shares	Amount	Shares	Amount
Shares sold	428,017	$3,381,151	562,104	$4,875,088
Shares issued to shareholders in payment of distributions declared	60,518	475,855	115,754	976,686
Shares redeemed	(591,818)	(4,665,407)	(1,544,384)	(13,031,772)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	(103,283)	$(808,401)	(866,526)	$(7,179,998)
	Six Months Ended 5/31/2023		Year Ended 11/30/2022
Class F Shares:	Shares	Amount	Shares	Amount
Shares sold	56,181	$441,942	265,927	$2,234,665
Shares issued to shareholders in payment of distributions declared	107,618	840,061	220,022	1,836,573
Shares redeemed	(457,880)	(3,573,771)	(1,487,545)	(11,869,646)
NET CHANGE RESULTING FROM CLASS F SHARE TRANSACTIONS	(294,081)	$(2,291,768)	(1,001,596)	$(7,798,408)
	Six Months Ended 5/31/2023		Year Ended 11/30/2022
Institutional Shares:	Shares	Amount	Shares	Amount
Shares sold	10,445,497	$81,910,329	39,857,359	$344,718,323
Shares issued to shareholders in payment of distributions declared	1,598,231	12,488,582	3,971,622	33,170,889
Shares redeemed	(25,516,603)	(200,233,351)	(58,538,838)	(477,851,241)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	(13,472,875)	$(105,834,440)	(14,709,857)	$(99,962,029)
	Six Months Ended 5/31/2023		Year Ended 11/30/2022
Class R6 Shares:	Shares	Amount	Shares	Amount
Shares sold	163,706	$1,293,245	497,862	$4,302,228
Shares issued to shareholders in payment of distributions declared	30,649	241,163	58,754	492,677
Shares redeemed	(336,145)	(2,659,065)	(487,342)	(4,024,849)
NET CHANGE RESULTING FROM R6 SHARE TRANSACTIONS	(141,790)	$(1,124,657)	69,274	$770,056
NET CHANGE RESULTING FROM TOTAL FUND SHARE TRANSACTIONS	(16,003,450)	$(125,761,773)	(20,464,515)	$(146,952,655)

 

1 On February 3, 2023, Class B Shares were converted into Class A Shares. Within the Statement of Changes in Net Assets, the conversion from Class B Shares is within the Cost of shares redeemed and the conversion to Class A Shares is within Proceeds from sale of shares.

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4. FEDERAL TAX INFORMATION

At May 31, 2023, the cost of investments for federal tax purposes was $836,823,147. The net unrealized depreciation of investments for federal tax purposes was $132,433,595. This consists of unrealized appreciation from investments for those securities having an excess of value over cost of $1,339,414 and unrealized depreciation from investments for those securities having an excess of cost over value of $133,773,009. The amounts presented are inclusive of derivative contracts.

As of November 30, 2022, the Fund had a capital loss carryforward of $132,910,995 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: 

Short-Term	Long-Term	Total
$37,763,731	$95,147,264	$132,910,995

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 0.55% 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 competitive reasons such as to maintain the Fund’s expense ratio, or as and when appropriate, to maintain positive or zero net yields. For the six months ended May 31, 2023, the Adviser voluntarily waived $427,264 of its fee.

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 six months ended May 31, 2023, the Adviser reimbursed $7,316. For the six months ended May 31, 2023, the Adviser voluntarily reimbursed $293,016 of transfer agent fees.

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: 

Administrative Fee	Average Daily Net Assets of the Investment Complex
0.100%	on assets up to $50 billion
0.075%	on assets over $50 billion

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Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the six months ended May 31, 2023, the annualized fee paid to FAS was 0.079% of average daily net assets of the Fund.

In addition, FAS may charge certain out-of-pocket expenses to the Fund.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund’s Class C Shares and Class F Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC: 

	Percentage of Average Daily Net Assets of Class
Class C Shares	0.75%
Class F Shares	0.05%

Prior to their conversion to Class A Shares at the close of business on February 3, 2023, the Class B Shares were also subject to the Plan at 0.75% of average daily net assets of the Class B Shares.

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. For the six months ended May 31, 2023, distribution services fees for the Fund were as follows: 

	Distribution Services Fees Incurred
Class B Shares	$1,888
Class C Shares	85,465
TOTAL	$87,353

For the six months ended May 31, 2023, the Fund’s Class F Shares did not incur a distribution services fee; however, it may begin to incur this fee upon approval of the Directors.

When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the six months ended May 31, 2023, FSC retained $13,385 of fees paid by the Fund.

Sales Charges

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the six months ended May 31, 2023, FSC retained $2,842 in sales charges from the sale of Class A Shares. FSC also retained $149, $536 and $7,902 of CDSC relating to redemptions of Class B Shares, Class C Shares and Class F Shares, respectively.

Other Service Fees

For the six months ended May 31, 2023, FSSC received $5,773 of the other service fees disclosed in Note 2.

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Expense Limitation

The Adviser and certain of its affiliates (which may include FSC, FAS and FSSC) 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, tax reclaim recovery expenses and proxy-related expenses paid by the Fund, if any) paid by the Fund’s Class A Shares, Class C Shares, Class F Shares, Institutional Shares and Class R6 Shares (after the voluntary waivers and/or reimbursements) will not exceed 0.93%, 1.70%, 0.93%, 0.61% and 0.60%, (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) February 1, 2024; 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 Directors.

Directors’/Trustees’ and Miscellaneous Fees

Certain Officers and Directors 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 six months ended May 31, 2023, were as follows: 

Purchases	$190,696,456
Sales	$259,891,267

7. CONCENTRATION OF RISK

The Fund invests in securities of non-U.S. issuers. Political or economic developments may have an effect on the liquidity and volatility of portfolio securities and currency holdings.

8. 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 22, 2022, which was renewed on June 21, 2023. 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 (a) the highest, on any day, of (i) the federal funds effective rate, (ii) the published secured overnight financing rate plus an

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assigned percentage, and (iii) 0.0%, plus (b) a margin. Any fund eligible to borrow under the LOC pays 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 May 31, 2023, the Fund had no outstanding loans. During the six months ended May 31, 2023, the Fund did not utilize the LOC.

9. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the SEC, 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 May 31, 2023, there were no outstanding loans. During the six months ended May 31, 2023, the program was not utilized.

10. INDEMNIFICATIONS

Under the Fund’s organizational documents, its Officers and Directors/Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund (other than liabilities arising out of their willful misfeasance, bad faith, gross negligence or reckless disregard of their duties to the Fund). In addition, in the normal course of business, the Fund provides certain indemnifications under arrangements with third parties. Typically, obligations to indemnify a third party arise in the context of an arrangement entered into by the Fund under which the Fund agrees to indemnify such third party for certain liabilities arising out of actions taken pursuant to the arrangement, provided the third party’s actions are not deemed to have breached an agreed-upon standard of care (such as willful misfeasance, bad faith, gross negligence or reckless disregard of their duties under the contract). The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet arisen. The Fund does not anticipate any material claims or losses pursuant to these arrangements at this time, and accordingly expects the risk of loss to be remote.

11. 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, and may continue to result in, closed borders, enhanced health screenings, disruptions to 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 has resulted in substantial economic volatility. 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. In addition, governments, their regulatory agencies, or self-regulatory organizations may take actions in response to the pandemic, including significant fiscal and monetary policy changes, that may affect the instruments in which the Fund invests or the issuers of such investments. Any such impact could adversely affect the Fund’s performance.

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12. Recent Accounting Pronouncements

In December 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2022-06 “Reference Rate Reform (Topic 848)”. ASU No. 2022-06 updates and clarifies ASU No. 2020-04, which provides optional, temporary relief with respect to the financial reporting of contracts subject to certain types of modifications due to the planned discontinuation of LIBOR and other interbank-offered reference rates. The temporary relief provided by ASU No. 2022-06 is effective immediately for certain reference rate-related contract modifications that occur through December 31, 2024. Management does not expect ASU No. 2022-06 to have a material impact on the financial statements.

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Shareholder Expense Example (unaudited)

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) 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 December 1, 2022 to May 31, 2023.

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.

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Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase or redemption payments. 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. In addition, if these transaction costs were included, your costs would have been higher. 

	Beginning Account Value 12/1/2022	Ending Account Value 5/31/2023	Expenses Paid During Period1
Actual:
Class A Shares	$1,000	$1,014.50	$4.67
Class C Shares	$1,000	$1,009.40	$8.47
Class F Shares	$1,000	$1,014.60	$4.67
Institutional Shares	$1,000	$1,014.90	$3.06
Class R6 Shares	$1,000	$1,016.20	$3.02
Hypothetical (assuming a 5% return before expenses):
Class A Shares	$1,000	$1,020.29	$4.68
Class C Shares	$1,000	$1,016.50	$8.50
Class F Shares	$1,000	$1,020.29	$4.68
Institutional Shares	$1,000	$1,021.89	$3.07
Class R6 Shares	$1,000	$1,021.94	$3.02

 

1 Expenses are equal to the Fund’s annualized net expense ratios, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half-year period). The annualized net expense ratios are as follows:

 

Class A Shares	0.93%
Class C Shares	1.69%
Class F Shares	0.93%
Institutional Shares	0.61%
Class R6 Shares	0.60%

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Evaluation and Approval of Advisory Contract–May 2023

Federated Hermes Strategic Income Fund (the “Fund”)

At its meetings in May 2023 (the “May Meetings”), the Fund’s Board of Directors (the “Board”), including those Directors who are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940 (the “Independent Directors”), 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 approve the continuation of the existing arrangement. 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 Directors, the Fund’s Chief Compliance Officer (the “CCO”) furnished to the Board in advance of its May Meetings an independent written evaluation of the Fund’s management fee (the “CCO Fee Evaluation Report”). The Board considered 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 Directors. At the request of the Independent Directors, 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, the Board considered information specifically prepared in connection with the approval of the continuation of the Contract that was presented at the May Meetings. In this regard, 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 by independent legal counsel on behalf of the Independent Directors encompassing a wide variety of topics, including those summarized below. The Board also considered such additional matters as the Independent Directors

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deemed reasonably necessary to evaluate the Contract, which included detailed information about the Fund and Federated Hermes furnished to the Board at its meetings throughout the year and in between regularly scheduled meetings on particular matters as the need arose.

The Board’s consideration of the Contract included review of materials and information covering the following matters, among others: the nature, quality and extent of the advisory and other services provided to the Fund by Federated Hermes; Federated Hermes’ business and operations; the Adviser’s investment philosophy, personnel and processes; the Fund’s investment objectives and 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); the Fund’s fees and 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 financial condition of Federated Hermes; the Adviser’s profitability with respect to managing the Fund; distribution and sales activity for the Fund; and the use and allocation of brokerage commissions derived from trading the Fund’s portfolio securities (if any).

The Board also considered judicial decisions concerning allegedly excessive investment advisory fees charged to other registered funds in evaluating 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 compensation from a fund: (1) the nature and quality of the services provided by the adviser to the fund and its shareholders, including the performance of the fund, its benchmark and comparable funds; (2) the adviser’s cost of providing the services and the profitability to the adviser of providing advisory services to the fund; (3) the extent to which the adviser may realize “economies of scale” as the fund grows larger and, if such economies of scale exist, whether they have been appropriately shared with the fund and its shareholders or the family of funds; (4) any “fall-out” benefits that accrue to the adviser because of its relationship with the fund, including research services received from brokers that execute fund trades and any fees paid to affiliates of the adviser for services rendered to the fund; (5) comparative fee and expense structures, including a comparison of management fees paid to the adviser with those paid by similar funds managed by the same adviser or other advisers as well as management fees charged to institutional and other advisory clients of the same 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 the adviser’s services and fees. The Board noted that the Securities and Exchange Commission (“SEC”) disclosure requirements

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regarding the basis for a fund board’s approval of the fund’s investment advisory contract generally align with the factors listed above. The Board was guided by these factors in its evaluation 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 oversight of the other funds advised by Federated Hermes (each, a “Federated Hermes Fund” and, collectively, the “Federated Hermes Funds”).

In addition, the Board considered the preferences and expectations of Fund shareholders and 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 the Contract. In particular, the Board recognized that many shareholders likely have invested in the Fund based on the strength of Federated Hermes’ industry standing and reputation and with the expectation that Federated Hermes will have a continuing role in providing advisory services to the Fund. Thus, the Board observed that there are a range of investment options available to the Fund’s shareholders and such shareholders in the marketplace, having had the opportunity to consider other investment options, have effectively selected Federated Hermes by virtue of investing in the Fund.

In determining to approve the continuation of the Contract, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the continuation of 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 Board recognized that its evaluation process is evolutionary and that the factors considered and emphasis placed on relevant factors may change in recognition of changing circumstances in the registered fund marketplace. The Independent Directors were assisted throughout the evaluation process by independent legal counsel. In connection with their deliberations at the May Meetings, the Independent Directors 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 Directors 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 family of Federated Hermes Funds, but its approvals were made on a fund-by-fund basis.

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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 Federated Hermes dedicated to the Fund. In this regard, the Board evaluated, among other things, the terms of the Contract and the range of services provided to the Fund by Federated Hermes. The Board considered the Adviser’s personnel, investment philosophy and process, investment research capabilities and resources, trade operations capabilities, experience and performance track record. 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 Federated Hermes’ ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered the trading operations by the Advisers, including the execution of portfolio transactions and the selection of brokers for those transactions. The Board also considered the Adviser’s ability to deliver competitive investment performance for the Fund when compared to the Fund’s Performance Peer Group (as defined below), which was deemed by the Board to be a useful indicator of how the Adviser is executing the Fund’s investment program.

In addition, the Board considered the financial resources and overall reputation of Federated Hermes and its willingness to consider and make investments in personnel, infrastructure, technology, cybersecurity, business continuity planning and operational enhancements that are designed to benefit the Federated Hermes Funds. The Board noted that the significant acquisition of Hermes Fund Managers Limited by Federated Hermes has deepened Federated Hermes’ investment management expertise and capabilities and its access to analytical resources related to environmental, social and governance (“ESG”) factors and issuer engagement on ESG matters. The Board considered Federated Hermes’ oversight of the securities lending program for the Federated Hermes Funds that engage in securities lending and noted the income earned by the Federated Hermes Funds that participate in such program. In addition, the Board considered the quality of Federated Hermes’ communications with the Board and responsiveness to Board inquiries and requests made from time to time with respect to the Federated Hermes Funds. The Board also considered that Federated Hermes is responsible for providing the Federated Hermes Funds’ officers.

The Board received and evaluated information regarding Federated Hermes’ regulatory and compliance environment. The Board considered Federated Hermes’ compliance program and compliance history and reports from the CCO about Federated Hermes’ compliance with applicable laws and regulations, including responses to regulatory developments and any compliance or other issues raised by regulatory agencies. The Board also noted Federated Hermes’ support of the Federated Hermes Funds’ compliance control structure and the compliance-related resources devoted by Federated Hermes in support of the Fund’s obligations pursuant to Rule 38a-1 under the

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Investment Company Act of 1940, including Federated Hermes’ commitment to respond to rulemaking and other regulatory initiatives of the SEC. The Board considered Federated Hermes’ approach to internal audits and risk management with respect to the Federated Hermes Funds and its day-to-day oversight of the Federated Hermes Funds’ compliance with their investment objectives and policies as well as with applicable laws and regulations, noting that regulatory and other developments had over time led, and continue to lead, to an increase in the scope of Federated Hermes’ oversight in this regard, including in connection with the implementation of new rules on derivatives risk management and fair valuation.

The Board also considered the implementation of Federated Hermes’ business continuity plans. In addition, the Board noted Federated Hermes’ commitment to maintaining high quality systems and expending substantial resources to prepare for and respond to ongoing changes due to the market, regulatory and control environments in which the Fund and its service providers operate.

The Board considered Federated Hermes’ efforts to provide shareholders in the Federated Hermes Funds with a comprehensive array of funds with different investment objectives, policies and strategies. The Board considered the expenses that Federated Hermes had incurred, as well as the entrepreneurial and other risks assumed by Federated Hermes, in sponsoring and providing on-going services to new funds to expand these opportunities for shareholders. The Board noted the benefits to shareholders of being part of the family of Federated Hermes Funds, which include the general right to exchange investments between the same class of shares without the incurrence of additional sales charges.

Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided by the Adviser to the Fund.

Fund Investment Performance

The Board considered the investment performance of the Fund. In evaluating the Fund’s investment performance, the Board considered performance results in light of the Fund’s investment objective, strategies and risks. The Board considered detailed investment reports on, and the Adviser’s analysis of, the Fund’s performance over different time periods that were provided to the Board throughout the year and in connection with the May Meetings. These reports included, among other items, information on the Fund’s gross and net returns, the Fund’s investment performance compared to one or more relevant categories or groups of peer funds and the Fund’s benchmark index, performance attribution information and commentary on the effect of market conditions. The Board considered that, in its evaluation of investment performance at meetings throughout the year, it focused particular attention on information indicating less favorable performance of certain

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Federated Hermes Funds for specific time periods and discussed with Federated Hermes the reasons for such performance as well as any specific actions Federated Hermes had taken, or had agreed to take, to seek to enhance Fund investment performance and the results of those actions.

The Board also reviewed comparative information regarding the performance of other registered funds in the category of peer funds selected by Morningstar, Inc. (the “Morningstar”), an independent fund ranking organization (the “Performance Peer Group”). The Board noted the CCO’s view that comparisons to fund peer groups may be helpful, though not conclusive, in evaluating the performance of the Adviser in managing the Fund. The Board considered in the CCO’s view that, in evaluating such comparisons, 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 periods ended December 31, 2022, the Fund’s performance fell below the Performance Peer Group median for the one-year and three-year periods, and was above the Performance Peer Group median for the five-year period. The Board discussed the Fund’s performance with the Adviser and recognized the efforts being taken by the Adviser in the context of other factors considered relevant by the Board.

Based on these considerations, the Board concluded that it had continued confidence in the Adviser’s overall capabilities to manage the Fund.

Fund Expenses

The Board considered the advisory fee and overall expense structure of the Fund and the comparative fee and expense information that had been provided in connection with the May Meetings. 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.

While mindful that courts have cautioned against giving too much weight to comparative information concerning fees charged to funds by other advisers, the use of comparisons between the Fund and its Expense Peer Group assisted the Board in its evaluation of the Fund’s fees and expenses. The Board focused on comparisons with other registered funds with comparable investment programs more heavily than non-registered fund products or services because such comparisons are believed to be more relevant. The Board considered that

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other registered 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 shareholders. The Board noted that the range of such other registered funds’ fees and expenses, therefore, appears to be a relevant indicator of what investors 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.

The Board also received and considered information about the nature and extent of services offered and fees charged by Federated Hermes to other types of clients with investment strategies similar to those of the Federated Hermes Funds, including non-registered fund clients (such as institutional separate accounts) and third-party unaffiliated registered funds for which the Adviser or its affiliates serve as sub-adviser. The Board noted the CCO’s conclusion that non-registered 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) 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 and fund liquidity; (vi) different administrative responsibilities; (vii) different degrees of risk associated with management; and (viii) 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 registered fund business versus managing a discrete pool of assets as a sub-adviser to another institution’s registered fund, noting the CCO’s view 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 registered 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.

Based on these considerations, the Board concluded that the fees and total operating expenses of the Fund, in conjunction with other matters considered, are reasonable in light of the services provided.

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Profitability

The Board received and considered profitability information furnished by Federated Hermes, as requested by the CCO. Such profitability information included revenues reported on a fund-by-fund basis and estimates of the allocation of expenses made 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 on a fund-by-fund basis 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. In addition, the Board considered the CCO’s view that 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 are consistent with the methodologies previously reviewed by an independent consultant. The Board noted that the independent consultant had previously conducted a review of the allocation methodologies and reported to the Board that, although there is no single best method to allocate expenses, the methodologies used by Federated Hermes are reasonable. The Board considered the CCO’s view that the estimated profitability to the Adviser from its relationship with the Fund was not unreasonable in relation to the services provided.

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 recognized that profitability comparisons among fund management companies are difficult because of the variation in the type of comparative information that is publicly available, and the profitability of any fund management company is affected by numerous factors. 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 determining economies of scale at an individual fund level, and the extent to which potential scale benefits are shared with shareholders. In this regard, the Board considered that Federated Hermes has made significant and long-term investments in areas that support all of the Federated Hermes Funds, such as: portfolio management, investment research and trading operations; shareholder services; compliance; business continuity, cybersecurity and information

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security programs; internal audit and risk management functions; and technology 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 are likely to be shared with the family of Federated Hermes Funds as a whole. In addition, the Board considered that fee waivers and expense 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. The Board considered that, in order for the Federated Hermes Funds to remain competitive in the marketplace, Federated Hermes has frequently waived fees and/or reimbursed expenses for the Federated Hermes Funds and has disclosed to shareholders and/or reported to the Board its intention to do so (or continue to do so) in the future. The Board also considered that Federated Hermes has been active in managing expenses of the Federated Hermes Funds in recent years, which has resulted in benefits being realized by shareholders.

The Board also received and considered information on adviser-paid fees (commonly referred to as “revenue sharing” payments) that was provided to the Board throughout the year and in connection with the May Meetings. The Board considered that Federated Hermes and the CCO believe that this information is relevant to considering whether Federated Hermes had an incentive to either not apply breakpoints, or to apply breakpoints at higher levels, but should not be considered when evaluating the reasonableness of advisory fees. The Board also noted the absence of any applicable regulatory or industry guidelines economies of scale, which is compounded by the lack of any uniform methodology or pattern with respect to structuring fund advisory fees with breakpoints that serve to reduce the fees as a fund attains a certain size.

Other Benefits

The Board considered information regarding the compensation and other ancillary (or “fall-out”) benefits that Federated Hermes derived from its relationships with the Federated Hermes Funds. The Board noted that, in addition to receiving advisory fees under the Federated Hermes Funds’ investment advisory contracts, Federated Hermes’ affiliates also receive fees for providing other services to the Federated Hermes Funds under separate service contracts including 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 Rule 12b-1 plans or otherwise. The Board also received and considered information detailing the benefits, if any, that Federated Hermes may derive from its receipt of research services from brokers who execute portfolio trades for the Federated Hermes Funds.

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Conclusions

The Board considered: (i) the CCO’s conclusion that his observations and the information accompanying the CCO Fee Evaluation Report show that the management fee for the Fund is reasonable; and (ii) 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 sub-advisory arrangements is a continuing and ongoing 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 ongoing oversight of the Federated Hermes Funds.

On the basis of the information and factors summarized above, among other information and factors deemed relevant by the Board, and the evaluation thereof, the Board, including the Independent Directors, unanimously voted to approve the continuation of the Contract. The Board based its determination to approve the Contract on the totality of the circumstances and relevant factors and with a view of 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.

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60

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 Fixed Income Securities, Inc. (the “Corporation”) has adopted and implemented a liquidity risk management program (the “Program”) for Federated Hermes Strategic Income Fund (the “Fund” and, collectively with the other non-money market open-end funds advised by Federated Hermes, 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 Directors of the Corporation (the “Board”) has approved the designation of each Federated Hermes Fund’s investment adviser as the administrator for the Program (the “Administrator”) with respect to that Fund. The Administrator, in turn, has delegated day-to-day responsibility for the administration of the Program to multiple Liquidity Risk Management Committees, which are comprised of representatives from certain divisions within Federated Hermes.

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 2023, 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 April 1, 2022 through March 31, 2023 (the “Period”). The Report addressed the operation of the Program and assessed the adequacy and effectiveness of its implementation, including, where applicable, the operation of any HLIM established for a Federated Hermes Fund. There were no material changes to the Program during the Period. The Report summarized the operation of the Program and

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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 it was not necessary for the Fund to utilize, and the Fund did not utilize, any alternative funding sources that were available to the Federated Hermes Funds during the Period, such as the Federated Hermes Funds’ interfund lending facility, redemptions in-kind, reverse repurchase agreement transactions, redemptions delayed beyond the normal T+1 settlement but within seven days of the redemption request, and committed lines of credit;

◾ 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 the Administrator’s evaluation of the services performed by the vendor in support of this process, including the Administrator’s view that the methodologies utilized by the vendor continue to be appropriate;

◾ 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 operation of 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 operation of the procedures for monitoring this limit;

◾ the fact that there were no liquidity events during the Period that materially affected the Fund’s liquidity risk;

◾ the impact on liquidity and management of liquidity risk, if any, caused by extended non-U.S. market closures and confirmation that there were no issues for any of the affected Federated Hermes Funds in meeting shareholder redemptions at any time during these temporary non-U.S. market closures.

Based on this review, the Administrator 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, Option #4. 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 FederatedHermes.com/us/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 FederatedHermes.com/us.

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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.

 
IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY 

In an effort to reduce costs and avoid duplicate mailings, the Fund(s) intend to deliver a single copy of certain documents to each household in which more than one shareholder of the Fund(s) resides (so-called “householding”), as permitted by applicable rules. The Fund’s “householding” program covers its/their Prospectus and Statement of Additional Information, and supplements to each, as well as Semi-Annual and Annual Shareholder Reports and any Proxies or information statements. Shareholders must give their written consent to participate in the “householding” program. The Fund is also permitted to treat a shareholder as having given consent (“implied consent”) if (i) shareholders with the same last name, or believed to be members of the same family, reside at the same street address or receive mail at the same post office box, (ii) the Fund gives notice of its intent to “household” at least sixty (60) days before it begins “householding” and (iii) none of the shareholders in the household have notified the Fund(s) or their agent of the desire to “opt out” of “householding.” Shareholders who have granted written consent, or have been deemed to have granted implied consent, can revoke that consent and opt out of “householding” at any time: shareholders who purchased shares through an intermediary should contact their representative; other shareholders may call the Fund at 1-800-341-7400, Option #4.

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Federated Hermes Strategic Income Fund
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561

Contact us atFederatedHermes.com/us
or call 1-800-341-7400.

Federated Securities Corp., Distributor

CUSIP 31417P502
CUSIP 31417P700
CUSIP 31417P809
CUSIP 31417P841
CUSIP 31417P833

G00324-01 (7/23)

© 2023 Federated Hermes, Inc.

 

Item 2. Code of Ethics

Not Applicable

Item 3. Audit Committee Financial Expert

Not Applicable

Item 4. Principal Accountant Fees and Services

Not Applicable

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 period covered by this 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

Item 13. Exhibits

(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 Fixed Income Securities, Inc.

By /S/ Lori A. Hensler

Lori A. Hensler

Principal Financial Officer

Date July 21, 2023

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 July 21, 2023

By /S/ Lori A. Hensler

Lori A. Hensler

Principal Financial Officer

Date July 21, 2023

EX-99.CERT

N-CSR Item 13(a)(2) - Exhibits: Certifications

I, J. Christopher Donahue, certify that:

1. I have reviewed this report on Form N-CSR of Federated Hermes Fixed Income Securities, Inc. on behalf of: Federated Hermes Strategic Income Fund ("registrant");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

1. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

2. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

3. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

4. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

1. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

2. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 21, 2023

/S/ J. Christopher Donahue

J. Christopher Donahue

President - Principal Executive Officer

N-CSR Item 13(a)(2) - Exhibits: Certifications

I, Lori A. Hensler, certify that:

1. I have reviewed this report on Form N-CSR of Federated Hermes Fixed Income Securities, Inc. on behalf of: Federated Hermes Strategic Income Fund ("registrant");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

1. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

2. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

3. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

4. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

1. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

2. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 21, 2023

/S/ Lori A. Hensler

Lori A. Hensler

Treasurer - Principal Financial Officer

EX-99.CERT906

N-CSR Item 13(b) - Exhibits: Certifications

SECTION 906 CERTIFICATION

Pursuant to 18 U.S.C.§ 1350, the undersigned officers of Federated Hermes Fixed Income Securities, Inc. on behalf of Federated Hermes Strategic Income Fund (the “Registrant”), hereby certify, to the best of our knowledge, that the Registrant’s Report on Form N-CSR for the period ended May 31, 2023(the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities and Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Dated: July 21, 2023

/s/ J. Christopher Donahue

J. Christopher Donahue

Title: President, Principal Executive Officer

Dated: July 21, 2023

/s/ Lori A. Hensler

Lori A. Hensler

Title: Treasurer, Principal Financial Officer

This certification is being furnished solely pursuant to 18 U.S.C.§ 1350 and is not being filed as part of the Report or as a separate disclosure document.