Federated Project and Trade Finance Tender Fund

Transcription

1 Portfolio Manager Review and March 31, 2018 Federated Project and Trade Finance Tender Fund Fund Established 2016 Not FDIC Insured May Lose Value No Bank Guarantee

2 Portfolio Manager Review (unaudited) Ihab Salib Senior Vice President Federated Investment Management Co. Christopher McGinley Vice President Federated Investment Management Co. Market Overview In February of 2018, the World Trade Organization s World Trade Outlook Indicator suggested that the recovery of trade in 2017 was set to continue into 2018 with particularly strong performance anticipated in the Container and Air Freight sectors. This followed the World Trade Organization s upgrade of its estimate for the growth in volume of world trade from 2.4% to 3.6% for It should be noted, however, that these reports predated the recent tariff and trade war headlines. The question in the minds of investors is whether trade finance will be adversely affected. As of the end of March 2018, financial markets have seen heightened volatility, with the S&P 500 Index 1 off approximately 10% from its high on January 26, So far, however, there has been no impact on the real economy. In any case, trade will continue. In a recent report, Bloomberg Economics estimated that by 2020, assuming a trade war, global trade would likely be just 3.7% lower relative to a baseline of no change in tariff policy. 2 The behavior of trade and trade finance during the Great Recession provides some context. Before the financial crisis, the value of global merchandise trade grew from $12.1 trillion in 2006 to $16.2 trillion in It subsequently fell to a low of $12.6 trillion in Following 2008, the perception of risk increased and spreads on trade finance widened. 1 S&P 500 Index: An unmanaged capitalization-weighted index of 500 stocks designated to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Indexes are unmanaged and investments cannot be made in an index. 2 Bloomberg Economic Analysis, March Past performance is no guarantee of future results. Fund performance changes over time and current performance may be lower or higher than what is stated. Current performance information is updated monthly at FederatedInvestors.com and is also available by calling Portfolio Manager Review

3 Tariffs and the anticipated counter tariffs will introduce greater inefficiency into global trade with the usual unintended, counterproductive consequences. We consider a wider global tariff war unlikely, however, and it is important to note that trade between economies other than that of the United States will only be affected by the ripple effect from the disruption of U.S. trade, reflected in commodity price volatility and market substitution. The Federated Project and Trade Finance Tender Fund 3 (the Fund) portfolio s focus has been on trade between emerging economies, 4 so called south-to-south trade. As many regional and bilateral trade agreements are already in place, we expect south-to-south trade will not be particularly affected; indeed, initiatives such as the recently signed Comprehensive Progressive agreement for the Trans-Pacific Partnership (CPTPP) and China s Belt and Road Initiative (BRI) will accelerate the growth of these south-to-south trade flows. On the other hand, the Asian Bank released its annual report which stated that global users of trade finance continue to be challenged by a shortage of capital to finance trade. The report quantified the shortfall as approximately $1.6 trillion in Therefore, the Fund management continued to see an abundant supply of trade finance transactions. Looking back over the Fund s 12-Month Reporting Period At the end of March 2017, although it was still being initially invested, the Fund had exposure to 16 countries. The Banking sector contributed the most to Fund performance for the reporting period with the management team taking advantage of the high liquidity of financial issuers. For the three-month period ending March 31, 2018, the sector made an average contribution to Fund performance. Other top-performing sectors were Energy, Services and Foreign Sovereign. All geographical regions in which the Fund invested made positive contributions to absolute performance with the highest contributions coming from Africa and Asia. 3 The Fund is a continuously-offered, non-diversified, closed-end management company. The Fund will not list shares on any securities exchange, and it is not expected that any secondary market will develop for the shares. Shareholders will not be able to tender their shares for repurchase on a daily basis. At the discretion of the Fund s board of trustees, and provided that it is in the best interests of the Fund and shareholders to do so, the Fund intends to provide a limited degree of liquidity to shareholders by conducting repurchase offers, generally quarterly. 4 The Fund pursues its investment objective primarily by investing in trade finance, structured trade, export finance, import finance, supply chain financing and project finance assets of entities, including sovereign entities. Trade finance-related securities will be located primarily in, or have exposure to, global emerging markets. As such, the Fund is subject to all of the risks typical to investments generally made in emerging markets, in addition to risks specific to the trade finance asset class. Investing in the fund involves special risks including risks associated with non-investment grade securities, interest rate risk, prepayment risk, call risk, credit risk, liquidity risk, risks of investing in derivative contracts and hybrid instruments. Portfolio Manager Review

4 Positioning At the end of the reporting period, the Fund had exposure to 29 countries and Fund management expected to add positions in Ukraine and Nigeria. Exposure to Turkey was being reduced as assets within the Banking sector have matured. We continue to seek opportunities that offer an attractive risk-reward profile. Portfolio Manager Review

5 March 31, 2018 Federated Project and Trade Finance Tender Fund Fund Established 2016 Not FDIC Insured May Lose Value No Bank Guarantee

6 CONTENTS Portfolio of Investments Summary Table... 1 Portfolio of Investments... 2 Financial Highlights... 8 Statement of Assets and Liabilities... 9 Statement of Operations Statement of Changes in Net Assets Statement of Cash Flows Notes to Financial Statements Report of Independent Registered Public Accounting Firm Shareholder Expense Example Board of Trustees and Fund Officers Evaluation and Approval of Advisory Contract May Voting Proxies on Fund Portfolio Securities Quarterly Portfolio Schedule... 36

7 Portfolio of Investments Summary Table (unaudited) At March 31, 2018, the Fund s portfolio composition 1 wasasfollows: Percentage of Security Type Total Net Assets Trade Finance Agreements 92.6% Cash Equivalents 2 3.9% Other Assets and Liabilities Net 3 3.5% TOTAL 100.0% 1 See the Fund s Prospectus for a description of the principal types of securities in which the Fund invests. 2 Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements. 3 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities. 1

8 Portfolio of Investments March 31, 2018 Principal Amount or Shares 1 TRADE FINANCE AGREEMENTS 92.6% Acquisition Date 1 Cost 1 Value Basic Industry - Chemicals 3.4% $1,000,000 2 Industries Chimiques Du Senegal, %, (3-month USLIBOR %), 11/6/ /3/2017 $ 1,000,000 $ 1,002,000 3/19/ ,889 OCP SA, 2.503%, 6/27/2018 3/28/ , ,201 TOTAL 1,659,201 Basic Industry - Forestry/Paper 3.1% 1,500,000 2 Bahia Cellulose, %, (1-month USLIBOR %), 7/18/ /20/2017 1,500,000 1,501,500 Basic Industry - Metals/Mining Excluding Steel 2.0% 1,000,000 2 Suek Tranche B, %, (1-month USLIBOR %), 5/17/ /10/ /24/2017 1,000, ,000 Capital Goods - Aerospace & Defense 1.7% 851,852 2 Gulf Air BSC, %, (1-month USLIBOR %), 1/19/2022 3/27/ , ,278 Consumer Cyclical - Apparel/Textiles 1.9% 957, ,000 1,071, ,571 2 PT Pan Brothers TBK, %, (3-month USLIBOR %), 6/1/2018 Consumer Non-Cyclical/ Food-Wholesale 9.0% 12/27/2017-1/31/ , ,284 2 Agrofertil, %, (12-month USLIBOR %), 7/16/2018 9/8/ , ,400 2 Cocobod 2017, %, (1-month USLIBOR %), 8/31/ Gambia, Government of, 5.012%-5.569%, (12-month USLIBOR %), 2/19/ /4/ /11/2017 1,071,429 1,069,822 12/21/2017-2/21/ , ,571 1,001,929 Molino Canuelas, 5.75%, 5/2/ /12/ , ,870 1,000,000 2 Vicentin II SIAC, 7.667%-7.742%, (3-month USLIBOR %), 1/15/2024 1/8/2018-2/21/2018 1,000,000 1,003,000 TOTAL 4,428,663 Energy - Exploration & Production 13.6% 1,166,667 2 EGPC African Export-Import Bank (Afreximbank), %, (3-month USLIBOR %), 12/6/2019 6/20/2017 1,166,667 1,162, ,667 2 KMG Vitol, %, (1-month USLIBOR %), 3/31/2020 3/16/ , ,667 2

9 Principal Amount or Shares 1 TRADE FINANCE AGREEMENTS continued Acquisition Date 1 Cost 1 Value $1,500,000 1,212,430 1,045,454 1,147, ,000 1,500, , ,000 1,380,810 2,468,472 1,000,000 1,500,000 1,000,000 1,000,000 Energy - Exploration & Production continued 2 L1E, %, (1-month USLIBOR %), 12/30/2021 9/12/2017 $ 1,470,000 $ 1,484,250 2 Nigerian Petro, %, (3-month USLIBOR %), 6/17/ /27/2017 1,157,871 1,205,156 2 Rosneft Oil Co., 3.648%, (1-month USLIBOR %), 6/27/2019 9/28/2017 1,047,091 1,043,886 2 Sonangol, 5.702%, (3-month USLIBOR %), 7/30/2021 4/3/2017 1,106,434 1,147,632 TOTAL 6,707,591 Energy - Integrated Energy 4.0% 2 INA Industrija Nafte DD, %, (6-month USLIBOR %), 8/19/2019 1/31/ , ,000 2 Puma International Financing SA, %, (1-month USLIBOR %), 5/13/2019 6/23/2017 1,498,500 1,497,000 TOTAL 1,996,000 Energy - Oil Field Equipment & Services 1.5% 2 ADES, %, (3-month USLIBOR %), 11/12/2020 1/31/ , ,875 Energy - Oil Refining and Marketing 9.3% 2 Dangote, %, (6-month USLIBOR %), 8/28/ Egypt, Government of, 3.902%-4.764%, (12-month USLIBOR %), 1/11/ Pakistan, Government of, 3.723%-3.938%, (12-month USLIBOR %), 11/19/2018 2/6/ /28/ , ,750 7/17/2017-1/12/2018 1,380,810 1,380,120 8/3/ /21/2017 2,468,472 2,469,706 TOTAL 4,606,576 Finance/Banks/Brokers 7.1% 2 Bahrain Is Bank, %, (3-month USLIBOR %), 9/28/2018 9/27/2017 1,000,000 1,000,000 2 Banco Do Brasil S.A., 3.427%, (3-month USLIBOR %), 6/29/2018 8/11/2017 1,500,000 1,498,500 2 United Bank for Africa PLC, %, (3-month USLIBOR %), 12/19/2018 1/16/ , ,500 TOTAL 3,497,000 Foreign Sovereign 20.0% 2 Armenia International Airports CJSC, %, (6-month USLIBOR %), 12/23/ /28/2017 1,010,000 1,008,000 3

10 Principal Amount or Shares 1 TRADE FINANCE AGREEMENTS continued Acquisition Date 1 Cost 1 Value $1,000,000 1,000,000 1,300, ,839 Foreign Sovereign continued 2 Bank of Kigali Ltd., %, (3-month USLIBOR %), 10/19/2021 6/19/2017 $ 1,000,000 $ 996,000 2 JSC Partnership, %, (12-month USLIBOR %), 9/22/2020 9/22/2017 1,013,700 1,015,500 2 Kenya, Government of, %, (6-month USLIBOR %), 4/18/ Maldives, Government of, 4.022%-4.334%, (3-month USLIBOR %), 6/5/2018 4/18/2017-4/27/2017 1,298,500 1,293,500 1/24/2018-3/16/ , ,251 1,000,000 2 Ministry of Finance Tanzania, %, (6-month USLIBOR %), 6/23/2022 6/26/ ,000 1,000,500 1,000,000 2 Ministry of Finance Zambia, %, (6-month USLIBOR %), 7/13/2020 7/17/2017 1,000, ,500 1,000,000 2 National Bank of Egypt, %, (6-month USLIBOR %), 6/4/2018 1/31/ ,800 1,001,000 1,500,000 Tunisia, Government of, 2.418%, 9/18/ /29/2017-3/21/2018 1,500,000 1,503, ,094 Tunisia, Government of, 2.418%, 8/22/2018 2/22/ , ,897 TOTAL 9,891,148 Metals & Mining 3.0% 1,500,000 2 Ferrexpo AG, 6.802%, (3-month USLIBOR %), 12/31/2020 3/7/2018 1,483,125 1,497,750 Services - Airlines 1.8% 897,436 2 Pakistan International Airlines, %, (1-month USLIBOR %), 2/24/2021 9/27/ , ,744 Services - Railroads 3.7% 658,290 2 Autopistas Urbanas SA (AUSA), %, (3-month USLIBOR %), 11/15/2022 5/19/ /13/ , ,986 1,166,667 2 Ethiopian Railway Corp., %, (6-month USLIBOR %), 7/8/2021 5/4/2017 1,166,667 1,164,917 TOTAL 1,820,903 Services - Transportation Excluding Air/Rail 1.8% 895,288 2 Asyaport, %, (6-month USLIBOR %), 1/10/2024 1/31/ , ,631 Supranational 2.0% 1,000,000 2 PTA Bank, %, (3-month USLIBOR %), 10/4/2018 2/1/2017 1,000,000 1,000,500 Utility - Electric-Generation 3.7% 1,000,000 2 Casablanca & Giacote Solar PV Project, %, (6-month USLIBOR %), 5/15/2020 5/15/ , ,500 4

11 Principal Amount or Shares 1 TRADE FINANCE AGREEMENTS continued Acquisition Date 1 Cost 1 Value Utility - Electric-Generation continued $ 211,542 2 Egypt Electric, %, (3-month USLIBOR %), 4/10/2020 8/3/2017 $ 211,542 $ 209, ,883 2 Egypt Electric, %, (3-month USLIBOR %), 5/5/2020 1/31/ , ,740 TOTAL 1,845,089 TOTAL TRADE FINANCE AGREEMENTS (IDENTIFIED COST $45,728,754) 45,797,733 INVESTMENT COMPANY 3.9% 1,949,742 Federated Institutional Prime Value Obligations Fund, Institutional Shares, 1.78% 3 (IDENTIFIED COST $1,949,547) 1,949,352 TOTAL INVESTMENT IN SECURITIES 96.5% (IDENTIFIED COST $47,678,301) 4 47,747,085 OTHER ASSETS AND LIABILITIES - NET 3.5% 5 1,737,179 TOTAL NET ASSETS 100% $ 49,484,264 Affiliated fund holdings are investment companies which are managed by the Adviser or an affiliate of the Adviser. Transactions with affiliated fund holdings during the year ended March 31, 2018, were as follows: Federated Institutional Prime Value Obligations Fund, Institutional Shares Balance of Shares Held 3/31/ ,042,167 Purchases/Additions 38,510,538 Sales/Reductions (81,602,963) Balance of Shares Held 3/31/2018 1,949,742 Value $ 1,949,352 Change in Unrealized Appreciation/Depreciation $ (9,199) Net Realized Gains/(Loss) $ (582) Dividend Income $ 221,792 1 Denotes a restricted security that either: (a) cannot be offered for public sale without first being registered, or availing of an exemption from registration, under the Securities Act of 1933; or (b) is subject to a contractual restriction on public sales. At March 31, 2018, these restricted securities amounted to $45,797,733, which represented 92.6% of total net assets. 2 Floating/variable note with current rate and current maturity or next reset date shown. 3 7-day net yield. 4 The cost of investments for federal tax purposes amounts to $47,678, Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities. 5

12 Note: The categories of investments are shown as a percentage of total net assets at March 31, Various inputs are used in determining the value of the Fund s investments. These inputs are summarized in the three broad levels listed below: Level 1 quoted prices in active markets for identical securities. Level 2 other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Also includes securities valued at amortized cost. Level 3 significant unobservable inputs (including the Fund s own assumptions in determining the fair value of investments). The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities. The following is a summary of the inputs used, as of March 31, 2018, in valuing the Fund s assets carried at fair value: Valuation Inputs Level 1 Quoted Prices Level 2 Other Significant Observable Inputs Level 3 Significant Unobservable Inputs Total Debt Securities: Trade Finance Agreements $ $ $45,797,733 $45,797,733 Investment Company 1,949,352 1,949,352 TOTAL SECURITIES $1,949,352 $ $45,797,733 $47,747,085 The Fund uses a pricing service to provide price evaluations for Level 3 asset-backed securities, trade finance agreements and foreign government/agencies. The majority of price evaluations provided by the pricing service are based on market quotes provided by market specialists which are unobservable, and a portion of the evaluations are extrapolated from quotes for similar credits in similar regions. Due to specialists inputs being proprietary and unobservable in the market place, these investments are determined to be Level 3 securities. Periodic reviews of third-party pricing services, including this particular pricing service s policies, procedures and valuation methods are conducted in accordance with procedures adopted by the Fund s Board of Trustees (the Trustees ). See the Fair Valuation and Significant Events Procedures section of the accompanying Notes to Financial Statements for more information. 6

13 Following is a reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value: Investments in Trade Finance Agreements Balance as of March 31, 2017 $ 25,747,399 Accrued discount/premiums 142,346 Realized gain (loss) 24,049 Change in unrealized appreciation (depreciation) 62,531 Purchases 70,447,294 (Sales) (50,625,886) Balance as of March 31, 2018 $ 45,797,733 The total change in unrealized appreciation (depreciation) attributable to investments still held at March 31, 2018 $ 61,647 The following acronym is used throughout this portfolio: LIBOR London Interbank Offered Rate See Notes which are an integral part of the Financial Statements 7

14 Financial Highlights (For a Share Outstanding Throughout Each Period) Period Year Ended Ended 3/31/2018 3/31/ Net Asset Value, Beginning of Period $10.02 $10.01 Income From Investment Operations: Net investment income Net realized and unrealized gain TOTAL FROM INVESTMENT OPERATIONS Less Distributions: Distributions from net investment income (0.32) (0.01) Distributions from net realized gain (0.00) 2 TOTAL DISTRIBUTIONS (0.32) (0.01) Net Asset Value, End of Period $10.00 $10.02 Total Return % 0.22% Ratios to Average Net Assets: Net expenses 0.67% 0.34% 5 Net investment income 2.74% 1.37% 5 Expense waiver/reimbursement % 1.72% 5 Supplemental Data: Net assets, end of period (000 omitted) $49,484 $70,873 Portfolio turnover 39% 4% 1 Reflects operations for the period from January 31, 2017 (date of initial public investment) to March 31, During the period prior to date of initial public investment, a distribution of $0.012 per share was made to the Adviser. 2 Per share numbers have been calculated using the average shares method. 3 Represents less than $ Based on net asset value. Total returns for periods of less than one year are not annualized. 5 Computed on an annualized basis. 6 This expense decrease is reflected in both the net expense and the net investment income ratios shown above. See Notes which are an integral part of the Financial Statements 8

15 Statement of Assets and Liabilities March 31, 2018 Assets: Investment in securities, at value including $1,949,352 of investment in an affiliated holding (identified cost $47,678,301) $47,747,085 Cash 218,484 Income receivable 450,539 Income receivable from an affiliated holding 6,341 Receivable for investments sold 1,224,404 TOTAL ASSETS 49,646,853 Liabilities: Payable for drawdown fees $ 8,971 Payable for transfer agent fee 9,619 Payable for Directors /Trustees fees (Note 5) 4,315 Payable for auditing fees 59,920 Payable for portfolio accounting fees 69,307 Payable for insurance premiums 3,680 Accrued expenses (Note 5) 6,777 TOTAL LIABILITIES 162,589 Net assets for 4,950,896 shares outstanding $49,484,264 Net Assets Consist of: Paid-in capital $49,350,125 Net unrealized appreciation 68,784 Accumulated net realized gain 7,508 Undistributed net investment income 57,847 TOTAL NET ASSETS $49,484,264 Net Asset Value, Offering Price and Redemption Proceeds Per Share: $49,484,264 4,950,896 shares outstanding, no par value, unlimited shares authorized $10.00 See Notes which are an integral part of the Financial Statements 9

16 Statement of Operations Year Ended March 31, 2018 Investment Income: Interest $2,083,710 Dividends received from an affiliated holding (see footnotes to Portfolio of Investments) 221,792 TOTAL INCOME 2,305,502 Expenses: Investment adviser fee (Note 5) $ 338,141 Custodian fees 6,448 Transfer agent fee 68,702 Directors /Trustees fees (Note 5) 4,315 Auditing fees 40,500 Legal fees 11,347 Portfolio accounting fees 121,181 Share registration costs 31,851 Printing and postage 15,901 Offering costs (Note 6) 41,669 Miscellaneous (Note 5) 4,762 TOTAL EXPENSES 684,817 Waiver/reimbursement of investment adviser fee (Note 5) (229,088) Net expenses 455,729 Net investment income 1,849,773 Realized and Unrealized Gain (Loss) on Investments: Net realized gain on investments (including net realized loss of $(582) on sales of investments in an affiliated holding) 23,467 Net change in unrealized appreciation of investments (including net change in unrealized appreciation of $(9,199) on investments in an affiliated holding) 53,332 Net realized and unrealized gain on investments 76,799 Change in net assets resulting from operations $1,926,572 See Notes which are an integral part of the Financial Statements 10

17 Statement of Changes in Net Assets Year Ended 3/31/2018 Period Ended 3/31/ Increase (Decrease) in Net Assets Operations: Net investment income $ 1,849,773 $ 159,428 Net realized gain 23,467 3,057 Net change in unrealized appreciation/depreciation 53,332 15,452 CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 1,926, ,937 Distributions to Shareholders: Distributions from net investment income (1,869,310) (82,044) Distributions from net realized gain on investments (19,016) CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS (1,888,326) (82,044) Share Transactions: Proceeds from sale of shares 70,594,911 Net asset value of shares issued to shareholders in payment of distributions declared 1,888,326 82,044 Cost of shares redeemed (23,315,156) CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (21,426,830) 70,676,955 Change in net assets (21,388,584) 70,772,848 Net Assets: Beginning of period 70,872, ,000 End of period (including undistributed net investment income of $57,847 and $77,384, respectively) $ 49,484,264 $70,872,848 1 Reflects operations for the period from October 12, 2016 (date of initial investment) to March 31, See Notes which are an integral part of the Financial Statements 11

18 Statement of Cash Flows Year Ended March 31, 2018 Operating Activities: Change in net assets resulting from operations $ 1,926,572 Adjustments to Reconcile Change in Net Assets Resulting From Operations to Net Cash Provided By Operating Activities: Purchases of investment securities (70,447,294) Proceeds from disposition of investment securities 50,625,886 Purchase of short-term investment, net 43,096,547 Amortization/accretion of premium/discount, net (142,346) Amortization of deferred offering costs 41,669 Increase in income receivable (334,908) Increase in receivable for investments sold (1,224,404) Increase in accrued expenses 68,717 Net realized gain (23,467) Change in unrealized appreciation/depreciation (53,332) NET CASH PROVIDED BY OPERATING ACTIVITIES 23,533,640 Financing Activities: Payment for shares redeemed (23,315,156) NET CASH USED IN FINANCING ACTIVITIES (23,315,156) Net increase in cash 218,484 Cash at beginning period Cash at end of period $ 218,484 Non-cash financing activities not included herein consist of reinvestments of dividends and distributions of $1,888,326. See Notes which are an integral part of the Financial Statements 12

19 Notes to Financial Statements March 31, ORGANIZATION Federated Project and Trade Finance Tender Fund (the Fund ) was organized as a Delaware statutory trust on June 30, 2016, as a continuously offered, non-diversified, closed-end management investment company. The Fund is registered under the Investment Company Act of 1940, as amended, and the Securities Act of 1933, as amended. The Fund s investment objective is to provide total return primarily from income. The Fund received its initial capital from Federated Investment Management Company (the Adviser ), a wholly owned subsidiary of Federated Investors, Inc., on October 12, 2016, in which the sale and issuance was made of 10,000 common shares of beneficial interest, at an aggregate purchase price of $100,000. The Fund became effective on December 7, 2016, and the first public shares were sold on January 31, Distributions of $120 were made to the Adviser prior to the date of initial public investment. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with U.S. generally accepted accounting principles (GAAP). Investment Valuation In calculating its net asset value (NAV), the Fund generally values investments as follows: Fixed-income securities are fair valued using price evaluations provided by a pricing service approved by the Trustees. Shares of other mutual funds or non-exchange-traded investment companies are valued based upon their reported NAVs. Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market. Derivative contracts listed on exchanges are valued at their reported settlement or closing price, except that options are valued at the mean of closing bid and asked quotations. Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Trustees. For securities that are fair valued in accordance with procedures established by and under the general supervision of the Trustees, certain factors may be considered such as: the last traded or purchase price of the security, information obtained by contacting the issuer or dealers, analysis of the issuer s financial statements or other available documents, fundamental analytical data, the nature and duration of restrictions on disposition, the movement of the market in which the security is normally traded, public trading in similar securities or derivative contracts of the issuer or comparable issuers, movement of a relevant index, or other factors including but not limited to industry changes and relevant government actions. If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, if the Fund cannot obtain price evaluations from a pricing service or from more than one dealer for an investment within a reasonable period of time as set forth in the Fund s valuation policies and procedures, or if information furnished by a pricing service, in the opinion of the valuation committee ( Valuation Committee ), is deemed not 13

20 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. Fair Valuation and Significant Events Procedures The Trustees have ultimate responsibility for determining the fair value of investments for which market quotations are not readily available. The Trustees have appointed a Valuation Committee comprised of officers of the Fund, Adviser and certain of the Adviser s affiliated companies to assist in determining fair value and in overseeing the calculation of the NAV. The Trustees have also authorized the use of pricing services recommended by the Valuation Committee to provide fair value evaluations of the current value of certain investments for purposes of calculating the NAV. The Valuation Committee employs various methods for reviewing third-party pricing-service evaluations including periodic reviews of third-party pricing services policies, procedures and valuation methods (including key inputs, methods, models and assumptions), transactional back-testing, comparisons of evaluations of different pricing services, and review of price challenges by the Adviser based on recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee determines the fair value of the investment in accordance with procedures adopted by the Trustees. The Trustees periodically review and approve the fair valuations made by the Valuation Committee and any changes made to the procedures. The pricing service bases their evaluations for the majority of Fund investments on indications of values from banks that make project and trade finance loans, weighted based on the accuracy of their historical indications and other factors to arrive at a price evaluation. 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. The Fund may hold securities that are valued on the basis of prices provided by a single pricing source, including dealers from whom the securities were purchased. These securities may be less liquid and the price realized upon a sale may be different than the price used to value the security. Although the factors on which pricing services base their evaluations generally consist of observable inputs, certain fixed-income securities, such as trade finance agreements, are typically held to maturity by investors and therefore do not trade on a consistent basis. Accordingly, pricing services frequently cannot rely on executed trade prices to support their evaluations of these securities and must necessarily rely more heavily on unobservable inputs. In such circumstances, the Fund may classify securities as having a Level 3 valuation due to a lack of observable market transactions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a bid evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a mid evaluation). The Fund normally uses bid evaluations for any U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for any other types of fixed income securities and any OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees. 14

21 The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment s value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include: With respect to securities traded principally in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures contracts; Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, or a natural disaster affecting the issuer s operations or regulatory changes or market developments affecting the issuer s industry. The Trustees have adopted procedures whereby the Valuation Committee uses a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment in accordance with the fair valuation procedures approved by the Trustees. The Trustees have ultimate responsibility for any fair valuations made in response to a significant event. 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 quarterly. 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. The detail of the total fund expense waiver and reimbursement of $229,088 is disclosed in Note 5. Federal Taxes It is the Fund s policy to comply with the Subchapter M provision of the Internal Revenue Code and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. As of and during the year ended March 31, 2018, 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 March 31, 2018, the tax years 2017 and 2018 remain subject to examination by the Fund s major tax jurisdictions, which include the United States of America and the State of Delaware. 15

22 Restricted Securities The Fund may purchase securities which are considered restricted. Restricted securities are securities that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) are subject to contractual restrictions on public sales. In some cases, when a security cannot be offered for public sale without first being registered, the issuer of the restricted security has agreed to register such securities for resale, at the issuer s expense, either upon demand by the Fund or in connection with another registered offering of the securities. Many such restricted securities may be resold in the secondary market in transactions exempt from registration. Restricted securities may be determined to be liquid under criteria established by the Trustees. The Fund will not incur any registration costs upon such resales. The Fund s restricted securities, like other securities, are priced in accordance with procedures established by and under the general supervision of the Trustees. Other The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. The Fund applies investment company accounting and reporting guidance. 3. SHARES OF BENEFICIAL INTEREST The following table summarizes share activity: Year Ended 3/31/2018 Period Ended 3/31/ Shares sold 7,052,439 Shares issued to shareholders in payment of distributions declared 188,700 8,188 Shares redeemed (2,308,431) NET CHANGE RESULTING FROM FUND SHARE TRANSACTIONS (2,119,731) 7,060,627 1 Reflects operations for the period from October 12, 2016 (date of initial investment) to March 31, Each Shareholder will automatically be a participant under the Fund s Dividend Reinvestment Plan (DRP) and have all income dividends and/or capital gains distributions automatically reinvested in Shares. Election not to participate in the DRP and to receive all income dividends and/or capital gains distributions, if any, in cash may be made by notice to the Fund or, if applicable, to a Shareholder s broker or other intermediary (who should be directed to inform the Fund). 4. FEDERAL TAX INFORMATION The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended March 31, 2018 and 2017, was as follows: Ordinary income 1 $1,888,326 $82,044 1 For tax purposes, short-term capital gain distributions are considered ordinary income distributions. 16

23 As of March 31, 2018, the components of distributable earnings on a tax-basis were as follows: Undistributed ordinary income 2 $65,072 Net unrealized appreciation $68,784 Undistributed long-term capital gains $ For tax purposes, short-term capital gains are considered ordinary income in determining distributable earnings. At March 31, 2018, the cost of investments for federal tax purposes was $47,678,301. The net unrealized appreciation of investments for federal tax purposes was $68,784. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $146,332 and net unrealized depreciation from investments for those securities having an excess of cost over value of $77, 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 0.50% of the Fund s average daily net assets. The Adviser and certain of its affiliates on their own initiative have agreed to waive their fees (if any), and/or reimburse expenses. Effective May 1, 2017, total annual fund operating expenses (as shown in the financial highlights, excluding interest expense, extraordinary expenses, proxy-related expenses, premiums for risk insurance policies on portfolio securities and certain legal fees related to specific investments paid by the Fund, if any) paid by the Fund (after the voluntary waivers and reimbursements) will not exceed 0.70% of the Fund s average daily net assets (the Fee Limit ), up to but not including the later of (the Termination Date ): (a) September 1, 2018; or (b) the date of the Fund s next effective Prospectus. While the Adviser and its applicable affiliates currently do not anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or the Fee Limit increased prior to the Termination Date with the agreement of the Trustees. Effective from January 31, 2017 through April 30, 2017, the Adviser and certain of its affiliates on their own initiative had agreed to waive certain amounts of their respective fees and/or reimburse expenses such that total annual operating expenses as described above would not exceed 0.34%. For the year ended March 31, 2018, the Adviser voluntarily waived $207,363 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 year ended March 31, 2018, the Adviser reimbursed $21,

24 Certain of the Fund s assets are managed by Federated Investors (UK) LLP (the Sub- Adviser ) an affiliate of the Adviser. Under the terms of a sub-advisory agreement between the Adviser and the Sub-Adviser, the Sub-Adviser receives an annual fee equal to 0.39% of the daily net assets of the Fund. The fee is paid by the Adviser out of its resources and is not an incremental Fund expense. For the year ended March 31, 2018, the Sub-Adviser earned a fee of $263,696. Administrative Services Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. FAS receives no compensation for providing administrative services to the Fund. Directors /Trustees and Miscellaneous Fees Certain Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate payment, 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. ORGANIZATION EXPENSES AND OFFERING COSTS Organization expenses were recorded as a Fund expense as incurred and such costs were paid by the Adviser. The Fund began reimbursing the Adviser for these costs following the commencement of investment operations. Offering costs are accounted for as a deferred charge by the Fund and are amortized to expense over 12 months from the commencement of investment operations. 7. INVESTMENT TRANSACTIONS Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the year ended March 31, 2018, were as follows: Purchases $39,333,194 Sales $11,821, CONCENTRATION OF RISK (UNAUDITED) 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. 18

25 At March 31, 2018, the diversification of countries was as follows: Percentage of Country Total Net Assets Egypt 10.4 Pakistan 6.8 Brazil 6.1 Nigeria 6.0 Angola 5.3 Argentina 5.3 Tunisia 4.7 Kenya 4.6 Russia 4.1 Bahrain 3.7 Ukrainian Ssr 3.0 Germany, Federal Republic of 3.0 Ethiopia 2.4 Ghana 2.2 Georgia 2.1 Armenia 2.0 Senegal 2.0 Tanzania, United Republic Of 2.0 Uruguay 2.0 Rwanda 2.0 Zambia 2.0 Indonesia 1.9 Turkey 1.9 Gambia 1.6 Kazakhstan 1.3 Morocco 1.3 Paraguay 1.3 Croatia 1.0 Maldives INTERFUND LENDING Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other funds advised by subsidiaries of Federated Investors, 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 March 31, 2018, there were no outstanding loans. During the year ended March 31, 2018, the program was not utilized. 19

26 Report of Independent Registered Public Accounting Firm TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF FEDERATED PROJECT AND TRADE FINANCE TENDER FUND: Opinion on the Financial Statements We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of the Federated Project and Trade Finance Tender Fund (the Fund ), as of March 31, 2018, the related statement of operations for the year then ended, the statements of changes in net assets for the year then ended and the related notes (collectively, the financial statements ) and the financial highlights for each of the years or periods in the two-year period then ended. In our opinion, the financial statements and financial highlights present fairly, in all material respects the financial position of the Fund as of March 31, 2018, the results of its operations for the year then ended, the changes in its net assets for the year then ended, and the financial highlights for each of the years or periods in the two-year period then ended, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements and financial highlights are the responsibility of the Fund s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 20

27 We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Such procedures also included confirmation of securities owned as of March 31, 2018, by correspondence with the custodian and brokers, or by other appropriate auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion. We have served as the auditor for one or more of Federated Investors investment companies since Boston, Massachusetts May 25,

28 Shareholder Expense Example (unaudited) As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or other service fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from October 1, 2017 to March 31, 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. Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. Beginning Account Value 10/1/2017 Ending Account Value 3/31/2018 Expenses Paid During Period 1 Actual $1,000 $1, $3.52 Hypothetical (assuming a 5% return before expenses) $1,000 $1, $ Expenses are equal to the Fund s annualized net expense ratio of 0.70%, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half-year period). 22

29 Board of Trustees and Fund Officers The Board of Trustees is responsible for managing the Fund s business affairs and for exercising all the Fund s powers except those reserved for the shareholders. The following tables give information about each Trustee and the senior officers of the Fund. Where required, the tables separately list Trustees who are interested persons of the Fund (i.e., Interested Trustees) and those who are not (i.e., Independent Trustees). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA The address of all Independent Trustees listed is 4000 Ericsson Drive, Warrendale, PA ; Attention: Mutual Fund Board. As of December 31, 2017, the Fund comprised one portfolio(s), and the Federated Fund Family consisted of 40 investment companies (comprising 108 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Trustee oversees all portfolios in the Federated Fund Family and serves for an indefinite term. The Fund s Statement of Additional Information includes additional information about Fund Trustees and is available, without charge and upon request, by calling INTERESTED TRUSTEES BACKGROUND Name Birth Date Positions Held with Fund Date Service Began J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Indefinite Term Began serving: August 2016 Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s) Principal Occupations: Principal Executive Officer and President of certain of the Funds in the Federated Fund Family; Director or Trustee of the Funds in the Federated Fund Family; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman and Trustee, Federated Equity Management Company of Pennsylvania; Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd; Chairman, Passport Research, Ltd. 23