Prospectus
January
31, 2024
Disclosure
contained herein relates to all classes of the Fund, as listed below, unless
otherwise noted.
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Share
Class | Ticker |
A | IHIAX |
C | IHICX |
Institutional | EMDIX |
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Federated Hermes Emerging Market Debt Fund
A Portfolio of Federated Hermes World Investment Series, Inc.
A mutual
fund seeking a high level of current income, and a secondary objective of
capital appreciation, by investing primarily in a portfolio of emerging market
fixed-income investments.
As with
all mutual funds, the Securities and Exchange Commission (SEC) has not approved
or disapproved these securities or passed upon the adequacy of this Prospectus.
Any representation to the contrary is a criminal offense.
Not
FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee
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A |
C |
IS |
Maximum
Sales Charge (Load) Imposed on Purchases (as a percentage of offering
price) |
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Maximum
Deferred Sales Charge (Load) (as a percentage of original purchase price
or redemption proceeds, as applicable) |
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Maximum
Sales Charge (Load) Imposed on Reinvested Dividends (and other
Distributions) (as a percentage of offering price) |
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Redemption
Fee (as a percentage of amount redeemed, if
applicable) |
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Exchange
Fee |
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A |
C |
IS |
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Management
Fee |
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Distribution
(12b-1) Fee |
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Other
Expenses |
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Total
Annual Fund Operating Expenses |
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Fee
Waivers and/or Expense Reimbursements1 |
( |
( |
( |
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Total
Annual Fund Operating Expenses After Fee Waivers and/or Expense
Reimbursements |
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1
1
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Share
Class |
1
Year |
3
Years |
5
Years |
10
Years |
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A: |
|
|
|
|
|
Expenses
assuming redemption |
$760 |
$1,397 |
$2,057 |
$3,813 |
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Expenses
assuming no redemption |
$760 |
$1,397 |
$2,057 |
$3,813 |
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C: |
|
|
|
|
|
Expenses
assuming redemption |
$499 |
$1,210 |
$2,037 |
$4,021 |
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Expenses
assuming no redemption |
$399 |
$1,210 |
$2,037 |
$4,021 |
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IS: |
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|
|
|
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Expenses
assuming redemption |
$300 |
$918 |
$1,562 |
$3,290 |
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Expenses
assuming no redemption |
$300 |
$918 |
$1,562 |
$3,290 |
2
◾ Issuer
Credit Risk. It is
possible that interest or principal on securities will not be paid when due.
Such non-payment or default may reduce the value of the Fund’s portfolio
holdings, its share price and its performance.
◾ Counterparty
Credit Risk. Credit
risk includes the possibility that a party to a transaction involving the Fund
will fail to meet its obligations. This could cause the Fund to lose money or to
lose the benefit of the transaction or prevent the Fund from selling or buying
other securities to implement its investment
strategy.
◾ Risk
Associated with Noninvestment-Grade Securities.
Securities rated below investment grade generally are subject to greater
interest rate, credit and liquidity risks than investment-grade securities.
These securities are considered speculative with respect to the issuer’s ability
to pay interest and repay principal.
◾ Risk
Related to the Economy. The value
of the Fund’s portfolio may decline in tandem with a drop in the overall value
of the markets in which the Fund invests and/or other markets. Economic,
political and financial conditions, industry or economic trends and
developments, war or other military action, political or economic sanctions or
public health risks, such as epidemics or pandemics, may, from time to time, and
for varying periods of time, cause the Fund to experience volatility,
illiquidity, shareholder redemptions, loss of value, or other potentially
adverse effects. Among other investments, lower-grade bonds may be particularly
sensitive to changes in the economy.
◾ Risk
of Investing in Emerging Market Countries.
Securities issued or traded in emerging markets generally entail greater risks
than securities issued or traded in developed markets. Emerging market countries
may have relatively unstable governments and may present the risk of
nationalization of businesses, expropriation, confiscatory taxation or, in
certain instances, reversion to closed market, centrally planned
economies.
◾ Greater
China Risk. Although
larger and/or more established than many emerging markets, the markets of the
Greater China region function in many ways as emerging markets, and carry the
high levels of risks associated with emerging markets. Direct investments in, or
indirect exposure to, the Greater China region may be subject to the risks
associated with trading on less-developed trading markets, in addition to acute
political risks such as possible negative repercussions resulting from China’s
relationship with Taiwan or Hong Kong, restrictions on monetary repatriation, or
other adverse government actions. As export-driven economies, the economies of
countries in the Greater China region are affected by developments in the
economies of their principal trading partners.
◾ Liquidity
Risk. Trading
opportunities are more limited for fixed-income securities that have not
received any credit ratings, have received ratings below investment grade or are
not widely held or are issued by companies located in emerging markets.
Over-the-counter (OTC) derivative contracts generally carry greater liquidity
risk than exchange-traded contracts. This risk may be increased in times of
financial stress, if the trading market for OTC derivative contracts becomes
restricted.
◾ Risk
of Foreign Investing. Because
the Fund invests in securities issued by foreign companies and national
governments, the Fund’s Share price may be more affected by foreign economic and
political conditions, taxation policies and accounting and auditing standards
than would otherwise be the case.
3
◾ Currency
Risk. Exchange
rates for currencies fluctuate daily. Accordingly, the Fund may experience
increased volatility with respect to the value of its Shares and its returns as
a result of its exposure to foreign currencies through direct holding of such
currencies or holding of non-U.S. dollardenominated
securities.
◾ European
Union and Eurozone Related Risk. A number
of countries in the European Union (EU), including certain countries within the
EU that have adopted the euro (Eurozone), have experienced, and may continue to
experience, severe economic and financial difficulties. Additional countries
within the EU may also fall subject to such difficulties. These events could
negatively affect the value and liquidity of the Fund’s investments in
euro-denominated securities and derivatives contracts, securities of issuers
located in the EU or with significant exposure to EU issuers or
countries.
◾ Focused
Investment Risk. To the
extent that the Fund focuses its investments in the securities of a particular
issuer or companies in a particular country, group of countries, region, market,
industry, group of industries, sector, or asset class, the Fund’s exposure to
various risks may be heightened, including price volatility and adverse
economic, market, political, or regulatory occurrences affecting that issuer,
country, group of countries, region, market, industry, group of industries,
sector, or asset class.
◾ Interest
Rate Risk. Prices of
fixed-income securities generally fall when interest rates rise. The longer the
duration of a fixed-income security, the more susceptible it is to interest rate
risk. Recent and potential future changes in monetary policy made by central
banks and/or their governments are likely to affect the level of interest
rates.
◾ Credit
Enhancement Risk. The
securities in which the Fund invests may be subject to credit enhancement (for
example, guarantees, letters or credit or bond insurance). Credit enhancement is
designed to help assure timely pay of the security; it does not protect the Fund
against losses caused by declines in a security’s value due to changes in market
conditions.
◾ Leverage
Risk. Leverage
risk is created when an investment which includes, for example, an investment in
a derivative contract, exposes the Fund to a level of risk that exceeds the
amount invested. Changes in the value of such an investment magnify the Fund’s
risk of loss and potential for gain.
◾ Risk
of Investing in Derivative Contracts and Hybrid Instruments.
Derivative contracts and hybrid instruments involve risks different from, or
possibly greater than, risks associated with investing directly in securities
and other traditional investments. Specific risk issues related to the use of
such contracts and instruments include valuation and tax issues, increased
potential for losses and/or costs to the Fund and a potential reduction in gains
to the Fund. Each of these issues is described in greater detail in this
Prospectus. Derivative contracts and hybrid instruments may also involve other
risks described in this Prospectus such as interest rate, credit, currency,
liquidity and leverage risks.
◾ Custodial
Services and Related Investment Costs. Custodial
services and other costs relating to investment in international securities
markets generally are more expensive due to differing settlement and clearance
procedures than in the United States. The inability of the Fund to make intended
securities purchases due to settlement problems could cause the Fund to miss
attractive investment opportunities. In addition, security settlement and
clearance procedures in some emerging market countries may not fully protect the
Fund against loss of its assets.
◾ Technology
Risk. The
Adviser uses various technologies in managing the Fund, consistent with its
investment objective and strategy described in this Prospectus. For example,
proprietary and third-party data and systems are utilized to support decision
making for the Fund. Data imprecision, software or other technology
malfunctions, programming inaccuracies and similar circumstances may impair the
performance of these systems, which may negatively affect Fund
performance.
4
5
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Share
Class |
1
Year |
5
Years |
10
Years |
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A: |
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Return
Before Taxes |
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Return
After Taxes on Distributions |
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( |
( |
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Return
After Taxes on Distributions and Sale of Fund Shares |
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C: |
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Return
Before Taxes |
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IS: |
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Return
Before Taxes |
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J.P.
Morgan Emerging Markets Bond Index Global Diversified1
(reflects
no deduction for fees, expenses or taxes) |
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Blended
Index2
(reflects
no deduction for fees, expenses or taxes) |
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Morningstar
Emerging Market Bond Funds Average3 |
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1
2
3
FUND
MANAGEMENT
The
Fund’s Investment Adviser is Federated Investment Management Company (FIMCO).
The Fund’s Sub-Adviser is Federated
Hermes (UK) LLP (Fed UK).
FIMCO
Ihab L.
Salib, Senior Portfolio Manager, has been the Fund’s portfolio manager since May
of 2013.
Jason C. DeVito, CFA,
Senior Portfolio Manager, has been the Fund’s portfolio manager since January of
2018.
FED
UK
Mohammed H. Elmi, CFA,
Senior Portfolio Manager, has been the Fund’s portfolio manager since July of
2019.
purchase
and sale of fund shares
You
may purchase, redeem or exchange Shares of the Fund on any day the New York
Stock Exchange is open. Shares may be
purchased through a financial intermediary firm that has entered into a Fund
selling and/or servicing agreement with the Distributor or an affiliate
(“Financial Intermediary”) or directly from the Fund, by wire or by check.
Please note that certain purchase restrictions may apply. Redeem or exchange
Shares through a financial intermediary or directly from the Fund by telephone
at 1-800-341-7400 or by mail.
A
& C Classes
The
minimum investment amount for the Fund’s A and C classes is generally $1,500 for
initial investments and $100 for
subsequent investments. The minimum initial and subsequent investment amounts
for Individual Retirement Accounts are $250 and $100, respectively. There is no
minimum initial or subsequent investment amount for employer-sponsored
retirement plans. Certain types of accounts are eligible for lower minimum
investments. The minimum investment amount for Systematic Investment Programs is
$50.
IS
Class
The
minimum initial investment amount for the Fund’s IS class is generally
$1,000,000 and there is no minimum subsequent
investment amount. Certain types of accounts are eligible for lower minimum
investments.
Tax
Information
The
Fund’s distributions are taxable as ordinary income or capital gains except when
your investment is through a 401(k)
plan, an Individual Retirement Account or other tax-advantaged investment
plan.
6
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase the Fund through a broker-dealer or other financial intermediary
(such as a bank), the Fund and/or its related
companies may pay the intermediary for the sale of Fund Shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson to recommend the Fund
over another investment. Ask your salesperson or visit your financial
intermediary’s website for more information.
What are
the Fund’s Investment Strategies?
The
Fund’s investment objective is to seek a high level of current income. The Fund
has a secondary objective of capital appreciation.
While there is no assurance that the Fund will achieve its investment
objectives, it endeavors to do so by following the principal strategies and
policies described in this Prospectus. The Fund’s Statement of Additional
Information (SAI) provides information about the Fund’s non-principal
strategies.
The
Fund pursues its investment objectives by investing primarily in a portfolio of
emerging market fixed-income investments.
The Fund may invest in derivative contracts to implement its investment
strategies, as more fully described herein.
Emerging
market fixed-income investments are debt investments issued by foreign
governments or corporations in emerging
market countries. The Fund may invest in noninvestment-grade debt investments,
commonly known as junk instruments, which may offer higher yields than
investment-grade debt investments.
Investors
in lower-rated foreign debt investments may receive higher yields as
compensation for assuming higher credit
risks.
The
Fund does not limit the amount it may invest in investments rated below
investment grade. The fund’s investment adviser
(the “Adviser”) expects that the Fund’s primary credit risks will be sovereign
obligations of emerging market countries. However, the Adviser is permitted to
invest any portion of the Fund’s portfolio in either foreign government or
corporate debt investments of either emerging or developed
markets.
The
Fund may invest in debt investments denominated in either foreign currency or in
U.S. dollars. The Fund may buy or sell
foreign currencies in lieu of or in addition to non-U.S. dollar denominated
fixed-income investments in order to increase or decrease its exposure to
foreign interest rate and/or currency markets. While the Adviser may use
derivatives to limit the negative effect on the Fund’s investment returns
inclusive of those losses that may be incurred due to anticipated changes in the
relative values of selected currencies in the portfolio (the “Selected Portfolio
Currencies”), the Adviser will not attempt to fully insulate the Fund’s
investment returns from the influence of currency fluctuations on portfolio
investments denominated in foreign currencies (i.e., it will not attempt to
“fully hedge” the Fund’s portfolio of investments). The strategy is designed to
limit the downside risk to the Fund from fluctuations in the value of the
Selected Portfolio Currencies, without completely removing the influence of
currency fluctuations on the investment returns. There is no guarantee that this
strategy will work as intended.
The
Adviser actively manages the Fund’s portfolio seeking total returns over longer
periods in excess of the Fund’s broad based securities
market index, the J.P. Morgan Emerging Markets Bond Index Global Diversified
(JPM-EMBIGD), and the Blended Index (as defined in the Average Annual Total
Return Table above). The JPM-EMBIGD covers emerging market countries in the
following regions: Americas, Europe, Asia, Middle East and Africa. The
performance of the Fund, as an actively managed portfolio, should be evaluated
against the JPM-EMBIGD and the Blended Index over longer periods of time.
Consistent with the Fund’s benchmark, the Fund may, from time to time, have
larger allocations or make significant investments in issuers located or doing
business in a single country. Volatility in emerging markets means that even
small differences in time periods for comparison can have a substantial impact
on returns. The Fund has no duration target or parameters with respect to its
average portfolio duration. Rather, the Adviser may lengthen or shorten average
portfolio duration in response to changing market conditions. These duration
adjustments can be made either by buying or selling portfolio investments or
through the use of derivative contracts.
The
investment process entails a thorough assessment of the global macroeconomic
environment and determines the most
relevant investment themes that drive emerging markets. These investment themes
can be either secular or cyclical in nature and are intended to define guiding
principles which permeate through the various stages of the investment process
from country and sector to individual corporate issuers. In selecting
investments, the Adviser gives emphasis to the underlying quality of issuers
domiciled in emerging market countries. The Adviser performs intensive credit
analysis of both sovereign and corporate debt issues. Secondarily, the Adviser
considers the extent to which market interest rates may impact the potential
investment return of emerging markets debt investments.
7
The
Adviser analyzes credit by performing fundamental analysis of: (1) countries to
find relatively favorable economic and
political conditions; and (2) available investments in selected countries. In
selecting countries, the Adviser analyzes the financial condition of an emerging
market country including its credit ratings, government finances and outstanding
public debt, as well as the political environment of that country. The Adviser
also considers how developments in other countries in the region or world might
affect these factors. Using its analysis, the Adviser attempts to identify
countries with favorable characteristics, such as strengthening economy,
favorable inflation rate, sound budget policy or strong public commitment to
repay government debt.
For
investments in corporate issuers, the Adviser analyzes the business, competitive
position and financial condition of the issuer
to assess whether the investment’s risk is commensurate with its potential
return.
The
Fund may invest in derivative contracts to implement its investment strategies.
The Fund may use derivative contracts
or hybrid instruments to increase or decrease the portfolio’s exposure to the
investment(s) underlying the derivative contract or hybrid instrument in an
attempt to benefit from changes in the value of the underlying investment(s).
Additionally, by way of example, the Fund may use derivative contracts in an
attempt to:
◾ increase
or decrease the effective duration of the Fund portfolio (the Fund has no
duration target);
◾ seek to
benefit from anticipated changes in the volatility of designated assets or
instruments, such as indices, currencies and interest rates. (Volatility is a
measure of the frequency and level of changes in the value of an asset or
instrument without regard to the direction of such changes);
◾ obtain
premiums from the sale of derivative contracts;
◾ realize
gains from trading a derivative contract; or
◾ hedge
against potential losses.
There
can be no assurance that the Fund’s use of derivative contracts or hybrid
instruments will work as intended. Derivative
investments made by the Fund are included within the Fund’s 80% policy (as
described below) and are calculated at market value.
The
Fund will invest its assets so that at least 80% of its net assets (plus any
borrowings for investment purposes) are invested
in emerging market fixed-income investments. The Fund will notify shareholders
at least 60 days in advance of any change in its investment policy that would
enable the Fund to invest, under normal circumstances, less than 80% of its net
assets in emerging market fixed-income investments.
PORTFOLIO
TURNOVER
The
Fund actively trades its portfolio securities in an attempt to achieve its
investment objective. Active trading will cause the
Fund to have an increased portfolio turnover rate and increase the Fund’s
trading costs, which may have an adverse impact on the Fund’s performance. An
active trading strategy will likely result in the Fund generating more
short-term capital gains or losses. Short-term gains are generally taxed at a
higher rate than long-term gains. Any short-term losses are used first to offset
short-term gains.
TEMPORARY
INVESTMENTS
The
Fund may temporarily depart from its principal investment strategies by
investing its assets in shorter-term debt investments
and similar obligations or holding cash. It may do this in response to unusual
circumstances, such as: adverse market, economic or other conditions (for
example, to help avoid potential losses, or during periods when there is a
shortage of appropriate investments); to maintain liquidity to meet shareholder
redemptions or to accommodate cash inflows. It is possible that such investments
could affect the Fund’s investment returns and/or the ability to achieve the
Fund’s investment objectives.
What are
the Fund’s Principal Investments?
The
following provides general information on the Fund’s principal investments. The
Fund’s Statement of Additional Information
(SAI) provides information about the Fund’s non-principal investments and may
provide additional information about the Fund’s principal
investments.
Fixed-Income
Securities
Fixed-income
securities pay interest, dividends or distributions at a specified rate. The
rate may be a fixed percentage of the
principal or may be adjusted periodically. In addition, the issuer of a
fixed-income security must repay the principal amount of the security, normally
within a specified time. Fixed-income securities provide more regular income
than equity securities. However, the returns on fixed-income securities are
limited and normally do not increase with the issuer’s earnings. This limits the
potential appreciation of fixed-income securities as compared to equity
securities.
8
A
security’s yield measures the annual income earned on a security as a percentage
of its price. A security’s yield will increase
or decrease depending upon whether it costs less (a “discount”) or more (a
“premium”) than the principal amount. If the issuer may redeem the security
before its scheduled maturity, the price and yield on a discount or premium
security may change based upon the probability of an early redemption.
Securities with higher risks generally have higher yields.
The
following describes the fixed-income securities in which the Fund principally
invests:
FOREIGN
SECURITIES
Foreign
securities are securities of issuers based outside the United States. To the
extent a Fund invests in securities included
in its applicable broad-based securities market index, the Fund may consider an
issuer to be based outside the United States if the applicable index classifies
the issuer as based outside the United States. Accordingly, the Fund may
consider an issuer to be based outside the United States if the issuer satisfies
at least one, but not necessarily all, of the following:
◾ it is
organized under the laws of, or has its principal office located in, another
country;
◾ the
principal trading market for its securities is in another country;
◾ it
(directly or through its consolidated subsidiaries) derived in its most current
fiscal year at least 50% of its total assets, capitalization, gross revenue or
profit from goods produced, services performed or sales made in another country;
or
◾ it is
classified by an applicable index as based outside the United
States.
Foreign
securities are primarily denominated in foreign currencies. Along with the risks
normally associated with domestic
securities of the same type, foreign securities are subject to currency risks
and risks of foreign investing. Trading in certain foreign markets is also
subject to liquidity risks.
Foreign
Government Securities (A Type of Foreign Fixed-Income Security)
Foreign
government securities generally consist of fixed-income securities supported by
national, state or provincial governments
or similar political subdivisions. Foreign government securities also include
debt obligations of supranational entities, such as international organizations
designed or supported by governmental entities to promote economic
reconstruction or development, international banking institutions and related
government agencies. Examples of these include, but are not limited to, the
International Bank for Reconstruction and Development (the “World Bank”), the
Asian Development Bank, the European Investment Bank and the Inter-American
Development Bank.
Foreign
government securities also include fixed-income securities of quasi-governmental
agencies that are either issued by
entities owned by a national, state or equivalent government or are obligations
of a political unit that are not backed by the national government’s full faith
and credit. Further, foreign government securities include mortgage-related
securities issued or guaranteed by national, state or provincial governmental
instrumentalities, including quasi-governmental agencies.
Foreign
Corporate Debt Securities (A Type of Foreign Fixed-Income Security)
The
Fund will also invest in high-yield and investment-grade debt securities of
foreign corporations. Notes, bonds, debentures
and commercial paper are the most prevalent types of corporate debt securities.
The Fund may also purchase interests in bank loans to companies.
The
credit risks of corporate debt securities vary widely among issuers. The credit
risk of an issuer’s debt security may also vary
based on its priority for repayment. For example, higher ranking (“senior”) debt
securities have a higher priority than lower ranking (“subordinated”)
securities. This means that the issuer might not make payments on subordinated
securities while continuing to make payments on senior securities. In addition,
in the event of bankruptcy, holders of senior securities may receive amounts
otherwise payable to the holders of subordinated securities.
Foreign
Exchange Contracts
In
order to convert U.S. dollars into the currency needed to buy a foreign
security, or to convert foreign currency received
from the sale of a foreign security into U.S. dollars, the Fund may enter into
spot currency trades. In a spot trade, the Fund agrees to exchange one currency
for another at the current exchange rate. The Fund may also enter into
derivative contracts in which a foreign currency is an underlying asset. The
exchange rate for currency derivative contracts may be higher or lower than the
spot exchange rate. Use of these derivative contracts may increase or decrease
the Fund’s exposure to currency risks. The Fund may use both spot trades and
currency derivatives to increase or decrease its exposure to foreign interest
rate and/or currency markets.
9
Zero-Coupon
Securities (A Fixed-Income Security)
Zero-coupon
securities do not pay interest or principal until final maturity unlike debt
securities that provide periodic payments
of interest (referred to as a coupon payment). Investors buy zero-coupon
securities at a price below the amount payable at maturity. The difference
between the purchase price and the amount paid at maturity represents interest
on the zero-coupon security. Investors must wait until maturity to receive
interest and principal, which increases the interest rate and credit risks of a
zero-coupon security. A zero-coupon, step-up security converts to a coupon
security before final maturity.
There
are many forms of zero-coupon securities. Some are issued at a discount and are
referred to as zero coupon or capital
appreciation bonds. Others are created from interest-bearing bonds by separating
the right to receive the bond’s coupon payments from the right to receive the
bond’s principal due at maturity, a process known as coupon stripping. In
addition, some securities give the issuer the option to deliver additional
securities in place of cash interest payments, thereby increasing the amount
payable at maturity. These are referred to as pay-in-kind, PIK securities or
toggle securities.
Credit
Enhancement
Credit
enhancement consists of an arrangement in which a company agrees to pay amounts
due on a fixed-income security
if the issuer defaults. In some cases the company providing credit enhancement
makes all payments directly to the security holders and receives reimbursement
from the issuer. Normally, the credit enhancer may have greater financial
resources and liquidity than the issuer. For this reason, the Adviser may
evaluate the credit risk of a fixed-income security based solely upon its credit
enhancement.
Derivative
Contracts
Derivative
contracts are financial instruments that derive their value from underlying
securities, commodities, currencies,
indices, or other assets or instruments, including other derivative contracts
(each a “Reference Instrument” and collectively, “Reference Instruments”). The
most common types of derivative contracts are swaps, futures and options, and
major asset classes include interest rates, equities, commodities and foreign
exchange. Each party to a derivative contract may sometimes be referred to as a
“counterparty.” Some derivative contracts require payments relating to an
actual, future trade involving the Reference Instrument. These types of
derivatives are frequently referred to as “physically settled” derivatives.
Other derivative contracts require payments relating to the income or returns
from, or changes in the market value of, a Reference Instrument. These types of
derivatives are known as “cash-settled” derivatives since they require cash
payments in lieu of delivery of the Reference Instrument.
Many
derivative contracts are traded on exchanges. In these circumstances, the
relevant exchange sets all the terms of the
contract except for the price. Parties to an exchange-traded derivative contract
make payments through the exchange. Most exchanges require traders to maintain
margin accounts through their brokers to cover their potential obligations to
the exchange. Parties to the contract make (or collect) daily payments to the
margin accounts to reflect losses (or gains) in the value of their contracts.
This protects traders against a potential default by their counterparty. Trading
contracts on an exchange also allows traders to hedge or mitigate certain risks
or carry out more complex trading strategies by entering into offsetting
contracts.
The
Fund may also trade derivative contracts over-the-counter (OTC), meaning
off-exchange, in transactions negotiated directly
between the Fund and an eligible counterparty, which may be a financial
institution. OTC contracts do not necessarily have standard terms, so they may
be less liquid and more difficult to close out than exchange-traded derivative
contracts. In addition, OTC contracts with more specialized terms may be more
difficult to value than exchange-traded contracts, especially in times of
financial stress.
The
market for swaps and other OTC derivatives was largely unregulated prior to the
enactment of federal legislation known as
the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank
Act”). Regulations enacted by the Commodity Futures Trading Commission (the
“CFTC”) under the Dodd-Frank Act require the Fund to clear certain types of swap
contracts (including certain interest rate and credit default swaps) through a
central clearinghouse known as a derivatives clearing organization
(DCO).
To
clear a swap through a DCO, the Fund will submit the contract to, and post
margin with, a futures commission merchant
(FCM) that is a clearinghouse member. The Fund may enter into the swap with a
counterparty other than the FCM and arrange for the contract to be transferred
to the FCM for clearing or enter into the contract with the FCM itself. If the
Fund must centrally clear a transaction, the CFTC’s regulations also generally
require that the swap be executed on a registered exchange (either a designated
contract market (DCM) or swap execution facility (SEF)). Central clearing is
presently required only for certain swaps; the CFTC is expected to impose a
mandatory central clearing requirement for additional derivative instruments
over time.
10
DCOs,
DCMs, SEFs and FCMs are all subject to regulatory oversight by the CFTC. In
addition, certain derivative market
participants that act as market makers and engage in a significant amount of
“dealing” activity are also required to register as swap dealers with the CFTC.
Among other things, swap dealers are subject to minimum capital requirements and
business conduct standards and must also post and collect initial and variation
margin on uncleared swaps with certain of their counterparties. Because of this,
if the Fund enters into uncleared swaps with any swap dealers, it may be subject
to initial and variation margin requirements that could impact the Fund’s
ability to enter into swaps in the OTC market, including making transacting in
uncleared swaps significantly more expensive.
At
this point in time, most of the Dodd-Frank Act has been fully implemented,
though a small number of remaining rulemakings
are unfinished or are subject to phase-in periods. Any future regulatory or
legislative activity would not necessarily have a direct, immediate effect upon
the Fund, though it is within the realm of possibility that, upon implementation
of these measures or any future measures, they could potentially limit or
completely restrict the ability of the Fund to use these instruments as a part
of its investment strategy, increase the costs of using these instruments or
make them less effective.
Depending
on how the Fund uses derivative contracts and the relationships between the
market value of a derivative contract
and the Reference Instrument, derivative contracts may increase or decrease the
Fund’s exposure to the risks of the Reference Instrument and may also expose the
Fund to liquidity and leverage risks. OTC contracts also expose the Fund to
credit risks in the event that a counterparty defaults on the contract, although
this risk may be mitigated by submitting the contract for clearing through a
DCO, or certain other factors, such as collecting margin from the
counterparty.
As
discussed above, a counterparty’s exposure under a derivative contract may in
some cases be required to be secured with
initial and/or variation margin (a form of “collateral”).
The
Fund may invest in a derivative contract if it is permitted to own, invest in,
or otherwise have economic exposure to the
Reference Instrument. The Fund is not required to own a Reference Instrument in
order to buy or sell a derivative contract relating to that Reference
Instrument. The Fund may trade in the following specific types and/or
combinations of derivative contracts:
Futures
Contracts (A Type of Derivative)
Futures
contracts provide for the future sale by one party and purchase by another party
of a specified amount of a Reference
Instrument at a specified price, date and time. Entering into a contract to buy
a Reference Instrument is commonly referred to as buying a contract or holding a
long position in the asset. Entering into a contract to sell a Reference
Instrument is commonly referred to as selling a contract or holding a short
position in the Reference Instrument. Futures contracts are considered to be
commodity contracts. The Adviser has claimed an exclusion from the definition of
the term “commodity pool operator” under the Commodity Exchange Act with respect
to the Fund, and therefore is not subject to registration or regulation as a
commodity pool operator under the Act with respect to the Fund. Futures
contracts traded OTC are frequently referred to as forward contracts. The Fund
can buy or sell financial futures (such as interest rate futures, index futures
and security futures), as well as currency futures and currency forward
contracts.
Interest
Rate Futures
An
interest-rate futures contract is an exchange-traded contract for which the
Reference Instrument is an interest-bearing, fixed-income security or
an inter-bank deposit. Two examples of common interest rate futures contracts
are U.S. Treasury futures contracts and Eurodollar futures contracts. The
Reference Instrument for a U.S. Treasury futures contract is a U.S. Treasury
security. The Reference Instrument for a Eurodollar futures contract is the
Secured Overnight Financing Rate (commonly referred to as SOFR); Eurodollar
futures contracts enable the purchaser to obtain a fixed rate for the lending of
funds over a stated period of time and the seller to obtain a fixed rate for a
borrowing of funds over that same period.
Currency
Futures and Currency Forward Contracts (Types of Futures Contracts)
A
currency futures contract is an exchange-traded contract to buy or sell a
particular currency at a specific price at some time in
the future (commonly three months or more). A currency forward contract is not
an exchange-traded contract and represents an obligation to purchase or sell a
specific currency at a future date, at a price set at the time of the contract
and for a period agreed upon by the parties which may be either a window of time
or a fixed number of days from the date of the contract. Currency futures and
forward contracts are highly volatile, with a relatively small price movement
potentially resulting in substantial gains or losses to the Fund. Additionally,
the Fund may lose money on currency futures and forward contracts if changes in
currency rates do not occur as anticipated or if the Fund’s counterparty to the
contract were to default.
11
Option
Contracts (A Type of Derivative)
Option
contracts (also called “options”) are rights to buy or sell a Reference
Instrument for a specified price (the “exercise
price”) during, or at the end of, a specified period. The seller (or “writer”)
of the option receives a payment, or premium, from the buyer, which the writer
keeps regardless of whether the buyer uses (or exercises) the option. A call
option gives the holder (buyer) the right to buy the Reference Instrument from
the seller (writer) of the option. A put option gives the holder the right to
sell the Reference Instrument to the writer of the option. Options may be bought
or sold on a wide variety of Reference Instruments. Options that are written on
futures contracts will be subject to margin requirements similar to those
applied to futures contracts.
Swap
Contracts (A Type of Derivative)
A
swap contract (also known as a “swap”) is a type of derivative contract in which
two parties agree to pay each other (swap) the
returns derived from Reference Instruments. Swaps do not always involve the
delivery of the Reference Instruments by either party, and the parties might not
own the Reference Instruments underlying the swap. The payments are usually made
on a net basis so that, on any given day, the Fund would receive (or pay) only
the amount by which its payment under the contract is less than (or exceeds) the
amount of the other party’s payment. Swap agreements are sophisticated
instruments that can take many different forms and are known by a variety of
names. Common swap agreements that the Fund may use include:
Interest
Rate Swaps
Interest
rate swaps are contracts in which one party agrees to make regular payments
equal to a fixed or floating interest rate times a stated
principal amount (commonly referred to as a “notional principal amount”) in
return for payments equal to a different fixed or floating rate times the same
principal amount, for a specific period.
Credit
Default Swaps
A
credit default swap (CDS) is an agreement between two parties whereby one party
(the “Protection Buyer”) agrees to make
payments over the term of the CDS to the other party (the “Protection Seller”),
provided that no designated event of default, restructuring or other credit
related event (each a “Credit Event”) occurs with respect to Reference
Instrument that is usually a particular bond, loan or the unsecured credit of an
issuer, in general (the “Reference Obligation”). Many CDS are physically
settled, which means that if a Credit Event occurs, the Protection Seller must
pay the Protection Buyer the full notional value, or “par value,” of the
Reference Obligation in exchange for delivery by the Protection Buyer of the
Reference Obligation or another similar obligation issued by the issuer of the
Reference Obligation (the “Deliverable Obligation”). The Counterparties agree to
the characteristics of the Deliverable Obligation at the time that they enter
into the CDS. Alternately, a CDS can be “cash settled,” which means that upon
the occurrence of a Credit Event, the Protection Buyer will receive a payment
from the Protection Seller equal to the difference between the par amount of the
Reference Obligation and its market value at the time of the Credit Event. The
Fund may be either the Protection Buyer or the Protection Seller in a CDS. If
the Fund is a Protection Buyer and no Credit Event occurs, the Fund will lose
its entire investment in the CDS (i.e., an amount equal to the payments made to
the Protection Seller over the term of the CDS). However, if a Credit Event
occurs, the Fund (as Protection Buyer) will deliver the Deliverable Obligation
and receive a payment equal to the full notional value of the Reference
Obligation, even though the Reference Obligation may have little or no value. If
the Fund is the Protection Seller and no Credit Event occurs, the Fund will
receive a fixed rate of income throughout the term of the CDS. However, if a
Credit Event occurs, the Fund (as Protection Seller) will pay the Protection
Buyer the full notional value of the Reference Obligation and receive the
Deliverable Obligation from the Protection Buyer. A CDS may involve greater
risks than if the Fund invested directly in the Reference Obligation. For
example, a CDS may increase credit risk since the Fund has exposure to both the
issuer of the Reference Obligation and the Counterparty to the
CDS.
Hybrid
Instruments
Hybrid
instruments combine elements of two different kinds of securities or financial
instruments (such as a derivative contract).
Frequently, the value of a hybrid instrument is determined by reference to
changes in the value of a Reference Instrument (that is a designated security,
commodity, currency, index or other asset or instrument including a derivative
contract). The Fund may use hybrid instruments only in connection with
permissible investment activities. Hybrid instruments can take on many forms
including, but not limited to, the following forms. First, a common form of a
hybrid instrument combines elements of a derivative contract with those of
another security (typically a fixed-income security). In this case all or a
portion of the interest or principal payable on a hybrid security is determined
by reference to changes in the price of a Reference Instrument. Second, a hybrid
instrument may also combine elements of a fixed-income security and an equity
security. Third, hybrid instruments may include convertible securities with
conversion terms related to a Reference Instrument.
12
Depending
on the type and terms of the hybrid instrument, its risks may reflect a
combination of the risks of investing in the
Reference Instrument with the risks of investing in other securities, currencies
and derivative contracts. Thus, an investment in a hybrid instrument may entail
significant risks in addition to those associated with traditional investments
or the Reference Instrument. Hybrid instruments are also potentially more
volatile than traditional securities or the Reference Instrument. Moreover,
depending on the structure of the particular hybrid, it may expose the Fund to
leverage risks or carry liquidity risks.
OTHER
INVESTMENTS, TRANSACTIONS, TECHNIQUES
Derivatives
Regulation and Asset Coverage
The
regulation of the U.S. and non-U.S. derivatives markets has undergone
substantial change in recent years and such
change may continue. In addition, effective August 19, 2022, Rule 18f-4 (the
“Derivatives Rule”) under the Investment Company Act of 1940, as amended (the
“1940 Act”), replaced the asset segregation framework previously used by funds
to comply with limitations on leverage imposed by the 1940 Act. The Derivatives
Rule generally mandates that a fund either limit derivatives exposure to 10% or
less of its net assets, or in the alternative implement: (i) limits on leverage
calculated based value-at-risk (VAR); (ii) a written derivatives risk management
program (DRMP) administered by a derivatives risk manager appointed by the
Fund’s Board, including a majority of the independent Board members, that is
periodically reviewed by the Board; and (iii) new reporting and recordkeeping
requirements.
Investing
in Securities of Other Investment Companies
The
Fund may invest its assets in securities of other investment companies,
including the securities of affiliated money market
funds, as an efficient means of implementing its investment strategies, managing
its uninvested cash and/or other investment reasons consistent with the Fund’s
investment objective and investment strategies. The Fund may also invest in
emerging-market and fixed-income investments primarily by investing in another
investment company (which is not available for general investment by the public)
that owns those securities and that is advised by an affiliate of the Adviser.
The Fund may also invest in such securities directly. These other investment
companies are managed independently of the Fund and incur additional fees and/or
expenses which would, therefore, be borne indirectly by the Fund in connection
with any such investment. These investments also can create conflicts of
interests for the Adviser to the Fund and the investment adviser to the acquired
fund. For example, a conflict of interest can arise due to the possibility that
the Adviser to the Fund could make a decision to redeem the Fund’s investment in
the acquired fund. In the case of an investment in an affiliated fund, a
conflict of interest can arise if, because of the Fund’s investment in the
acquired fund, the acquired fund is able to garner more assets, thereby growing
the acquired fund and increasing the management fees received by the investment
adviser to the acquired fund, which would either be the Adviser or an affiliate
of the Adviser. However, the Adviser believes that the benefits and efficiencies
of making investments in other investment companies should outweigh the
potential additional fees and/or expenses and resulting conflicts of
interest.
Repurchase
Agreements
Repurchase
agreements are transactions in which the Fund buys a security from a dealer or
bank and agrees to sell the security
back at a mutually agreed-upon time and price. The repurchase price exceeds the
sale price, reflecting the Fund’s return on the transaction. This return is
unrelated to the interest rate on the underlying security. The Fund will enter
into repurchase agreements only with banks and other recognized financial
institutions, such as securities dealers, deemed creditworthy by the
Adviser.
The
Fund’s custodian or sub-custodian will take possession of the securities subject
to repurchase agreements. The Adviser or
sub-custodian will monitor the value of the underlying security each day to
ensure that the value of the security always equals or exceeds the repurchase
price.
Repurchase
agreements are subject to credit risks.
Investment
Ratings for Investment-Grade Securities
The
Adviser will determine whether a security is investment grade based upon the
credit ratings given by one or more NRSROs.
For example, Standard & Poor’s, an NRSRO, assigns ratings to
investment-grade securities (AAA, AA, A and BBB including modifiers,
sub-categories and gradations) based on their assessment of the likelihood of
the issuer’s inability to pay interest or principal (default) when due on each
security. Lower credit ratings correspond to higher credit risk. If a security
has not received a rating, the Fund must rely entirely upon the Adviser’s credit
assessment that the security is comparable to investment grade. The presence of
a ratings modifier, sub-category or gradation (for example, a (+) or (-)) is
intended to show relative standing within the major rating categories and does
not affect the security credit rating for purposes of the Fund’s investment
parameters. If a security is downgraded below the minimum quality grade
discussed above, the Adviser will reevaluate the security, but will not be
required to sell it.
13
Investment
Ratings for Noninvestment-Grade Securities
Noninvestment-grade
securities are rated below BBB- by an NRSRO. These bonds have greater economic,
credit and liquidity
risks than investment-grade securities.
Additional
Information Regarding the Security Selection Process
As
part of analysis in its security selection process, among other factors, the
Adviser also evaluates whether environmental,
social and governance factors could have a positive or negative impact on the
risk profiles of many issuers or guarantors in the universe of securities in
which the Fund may invest. The Adviser may also consider information derived
from active engagements conducted by its in-house stewardship team with certain
issuers or guarantors on environmental, social and governance topics. This
qualitative analysis does not automatically result in including or excluding
specific securities but may be used by Federated Hermes as an additional input
in its primary analysis.
What are
the Specific Risks of Investing in the Fund?
The
following provides general information on the risks associated with the Fund’s
principal investments. Any additional
risks associated with the Fund’s non-principal investments are described in the
Fund’s SAI. The Fund’s SAI also may provide additional information about the
risks associated with the Fund’s principal investments.
Issuer
Credit Risk
It
is possible that interest or principal on securities will not be paid when due.
Below investment-grade securities generally
have a higher default risk than investment-grade securities. Such non-payment or
default may reduce the value of the Fund’s portfolio holdings, its share price
and its performance.
Many
fixed-income securities receive credit ratings from nationally recognized
statistical rating organizations (NRSROs)
such as Fitch Rating Service, Moody’s Investor Services, Inc. and Standard &
Poor’s that assign ratings to securities by assessing the likelihood of an
issuer and/or guarantor default. Higher credit ratings correspond to lower
perceived credit risk and lower credit ratings correspond to higher perceived
credit risk. Credit ratings may be upgraded or downgraded from time to time as
an NRSRO’s assessment of the financial condition of a party obligated to make
payments with respect to such securities and credit risk changes. The impact of
any credit rating downgrade can be uncertain. Credit rating downgrades may lead
to increased interest rates and volatility in financial markets, which in turn
could negatively affect the value of the Fund’s portfolio holdings, its share
price and its investment performance. Credit ratings are not a guarantee of
quality. Credit ratings may lag behind the current financial conditions of the
issuer and/or guarantor and do not provide assurance against default or other
loss of money. Credit ratings do not protect against a decline in the value of a
security. If a security has not received a rating, the Fund must rely entirely
upon the Adviser’s credit assessment.
Fixed-income
securities generally compensate for greater credit risk by paying interest at a
higher rate. The difference between
the yield of a security and the yield of a U.S. Treasury security or other
appropriate benchmark with a comparable maturity (the “spread”) measures the
additional interest paid for risk. Spreads may increase generally in response to
adverse economic or market conditions. A security’s spread may also increase if
the security’s rating is lowered, or the security is perceived to have an
increased credit risk. An increase in the spread will cause the price of the
security to decline if interest rates remain unchanged.
Counterparty
Credit Risk
Credit
risk includes the possibility that a party to a transaction involving the Fund
will fail to meet its obligations. This could
cause the Fund to lose money or to lose the benefit of the transaction or
prevent the Fund from selling or buying other securities to implement its
investment strategy.
Risk
Associated with Noninvestment-Grade Securities
Securities
rated below investment grade, also known as junk bonds, generally entail greater
economic, credit and liquidity
risks than investment-grade securities. For example, their prices are more
volatile, economic downturns and financial setbacks may affect their prices more
negatively, and their trading market may be more limited. These securities are
considered speculative with respect to the issuer’s ability to pay interest and
repay principal.
RISK
RELATED TO THE ECONOMY
The
value of the Fund’s portfolio may decline in tandem with a drop in the overall
value of the markets in which the Fund invests and/or other
markets based on negative developments in the U.S. and global economies.
Economic, political and financial conditions, industry or economic trends and
developments or public health risks, such as epidemics or pandemics, may, from
time to time, and for varying periods of time, cause volatility, illiquidity or
other potentially adverse effects in the financial markets, including the
fixed-income market. The commencement, continuation or ending of
14
government
policies and economic stimulus programs, changes in monetary policy, increases
or decreases in interest rates, or other factors or events that affect the
financial markets, including the fixed-income markets, may contribute to the
development of or increase in volatility, illiquidity, shareholder redemptions
and other adverse effects which could negatively impact the Fund’s performance.
For example, the value of certain portfolio securities may rise or fall in
response to changes in interest rates, which could result from a change in
government policies, and has the potential to cause investors to move out of
certain portfolio securities, including fixed-income securities, on a large
scale. This may increase redemptions from funds that hold large amounts of
certain securities and may result in decreased liquidity and increased
volatility in the financial markets. Market factors, such as the demand for
particular portfolio securities, may cause the price of certain portfolio
securities to fall while the prices of other securities rise or remain
unchanged. Among other investments, lower-grade bonds may be particularly
sensitive to changes in the economy.
Geopolitical
Risk
Global
economic, political and financial conditions, war or other military action or
political or economic sanctions, may, from time to time, and for varying periods
of time, cause volatility, illiquidity, shareholder redemptions, loss of value,
or other potentially adverse effects in the financial markets, including the
fixed-income market. In particular, as a result of continued political tensions
and armed conflicts, including the Russian invasion of Ukraine commencing in
February of 2022, the extent and ultimate result of which are unknown at this
time, the United States and the European Union, along with the regulatory bodies
of a number of countries, have imposed economic sanctions on certain Russian
corporate entities and individuals, and certain sectors of Russia’s economy,
which may result in, among other things, the continued devaluation of Russian
currency, a downgrade in the country’s credit rating, and/or a decline in the
value and liquidity of Russian securities, property or interests. These
sanctions could also result in the immediate freeze of Russian securities and/or
funds invested in prohibited assets, impairing the ability of a fund to buy,
sell, receive or deliver those securities and/or assets. These sanctions or the
threat of additional sanctions could also result in Russia taking counter
measures or retaliatory actions, which may further impair the value and
liquidity of Russian securities. The United States and other nations or
international organizations may also impose additional economic sanctions or
take other actions that may adversely affect Russia-exposed issuers and
companies in various sectors of the Russian economy. Any or all of these
potential results could lead Russia’s economy into a recession. Economic
sanctions and other actions against Russian institutions, companies, and
individuals resulting from the ongoing conflict may also have a substantial
negative impact on other economies and securities markets both regionally and
globally, as well as on companies with operations in the conflict region, the
extent to which is unknown at this time.
Risk
of Investing in Emerging Market Countries
Securities
issued or traded in emerging markets, including frontier markets, generally
entail greater risks than securities issued or
traded in developed countries. For example, their prices may be significantly
more volatile than prices in developed countries. Emerging market economies may
also experience more severe down-turns (with corresponding currency
devaluations) than developed economies. The economies of frontier market
countries generally are smaller than those of traditional emerging market
countries, and frontier capital markets and legal systems are typically less
developed. As a result, investments in frontier markets are subject to increased
risks from extreme price volatility and illiquidity, government ownership of
private enterprise or other protectionism, volatile currency movements,
inadequate investor protection, and fraud and corruption.
Emerging
market countries may have relatively unstable governments and may present the
risk of nationalization of
businesses, expropriation, confiscatory taxation or, in certain instances,
reversion to closed market, centrally planned economies. These same risks exist
and may be greater in frontier markets.
GREATER
CHINA RISK
Although
larger and/or more established than many emerging markets, the markets of the
Greater China region function in many
ways as emerging markets, and carry the high levels of risks associated with
emerging markets. Direct investments in, or indirect exposure to, the Greater
China region may be subject to the risks associated with trading on
less-developed trading markets, in addition to acute political risks such as
possible negative repercussions resulting from China’s relationship with Taiwan
or Hong Kong, restrictions on monetary repatriation, or other adverse government
actions. The attitude of the Chinese government toward growth and capitalism is
uncertain, and the markets of Hong Kong and China could be hurt significantly by
any government interference or any material change in government policy. For
example, the Chinese government may restrict investment in companies or
industries considered important to national interests, or intervene in the
financial markets, such as by imposing trading restrictions, or banning or
curtailing short selling. As export-driven economies, the economies of countries
in the Greater China region are affected by developments in the economies of
their principal trading partners. A downturn in these economies could slow or
eliminate the growth of the economies of the Greater China region and adversely
impact the Fund’s investments.
15
Liquidity
Risk
Trading
opportunities are more limited for fixed-income securities that have not
received any credit ratings, have received
ratings below investment grade or are not widely held or are issued by companies
located in emerging markets. Also, if dealer capacity has not kept, or does not
keep, pace with market growth, or if regulatory changes or other certain
developments warrant, dealer inventories of securities (such as corporate bonds)
may reach low levels and impact a dealer’s ability to “make markets” (or buy or
sell a security at a quoted bid and ask price). These factors may make it more
difficult to sell or buy a security at a favorable price or time.
Consequently,
the Fund may have to accept a lower price to sell a security or not sell a
security, sell other securities to raise cash
or give up an investment opportunity, any of which could have a negative effect
on the Fund’s performance. A significant reduction in dealer inventories or
“market makers,” or other factors resulting in infrequent trading of securities,
can lead to decreased liquidity and may also lead to an increase in their price
volatility. These affects may be exacerbated during times of economic or
political stress. Noninvestment-grade securities generally have less liquidity
than investment-grade securities.
Liquidity
risk also refers to the possibility that the Fund may not be able to sell a
security or close out a derivative contract
when it wants to. If this happens, the Fund will be required to continue to hold
the security or keep the position open, and the Fund could incur
losses.
OTC
derivative contracts generally carry greater liquidity risk than exchange-traded
contracts. This risk may be increased
in times of financial stress, if the trading market for OTC derivative contracts
becomes restricted.
Increased
Fund redemption activity, which may occur in a rising interest rate environment
or for other reasons, also may increase
liquidity risk due to the need of the Fund to sell portfolio securities and may
negatively impact Fund performance.
RISK
OF FOREIGN INVESTING
Foreign
securities pose additional risks because foreign economic or political
conditions may be less favorable than those of
the United States. Foreign financial markets may also have fewer investor
protections. Securities in foreign markets may also be subject to taxation
policies that reduce returns for U.S. investors.
Foreign
companies may not provide information (including financial statements) as
frequently or to as great an extent as companies
in the United States. Foreign companies may also receive less coverage than U.S.
companies by market analysts and the financial press. In addition, foreign
countries may lack uniform accounting, auditing and financial reporting
standards or regulatory requirements comparable to those applicable to U.S.
companies. These factors may prevent the Fund and its Adviser from obtaining
information concerning foreign companies that is as frequent, extensive and
reliable as the information available concerning companies in the United
States.
Foreign
countries may have restrictions on foreign ownership of securities or may impose
exchange controls, capital flow
restrictions or repatriation restrictions that could adversely affect the Fund’s
investments.
Since
many loan instruments involve parties (for example, lenders, borrowers and agent
banks) located in multiple jurisdictions
outside of the United States, there is a risk that a security interest in any
related collateral may be unenforceable and obligations under the related loan
agreements may not be binding.
The
foreign sovereign debt securities the Fund purchases involve specific risks,
including that: (i) the governmental entity
that controls the repayment of sovereign debt may not be willing or able to
repay the principal and/or interest when it becomes due because of political
constraints, cash flow problems and other national economic factors; (ii)
governments may default on their sovereign debt, which may require holders of
such sovereign debt to participate in debt rescheduling or additional lending to
defaulting governments; and (iii) there is no bankruptcy proceedings by which
defaulted sovereign debt may be collected in whole or in part.
Legal
remedies available to investors in certain foreign countries may be more limited
than those available with respect to
investments in the United States or in other foreign countries. The laws of some
foreign countries may limit the Fund’s ability to invest in securities of
certain issuers organized under the laws of those foreign
countries.
The
Fund may at times allocate a significant portion of its assets to a single
country or group of countries. Accordingly, the Fund
may be adversely impacted by social, political, economic, currency or regulatory
developments or events affecting such country or group of countries.
Additionally, natural disasters affecting a particular country or group of
countries could have an adverse effect on issuers located in such country and
may have a significant impact on the performance of the Fund. The Fund’s
performance may be more volatile than the performance of more geographically
diversified funds.
16
Currency
Risk
Exchange
rates for currencies fluctuate daily. The combination of currency risk and
market risks tends to make securities
traded in foreign markets more volatile than securities traded exclusively in
the United States. The Adviser and Sub-Adviser attempt to manage currency risk
by limiting the amount the Fund invests in securities denominated in a
particular currency. However, diversification will not protect the Fund against
a general increase in the value of the U.S. dollar relative to other
currencies.
Investing
in currencies or securities denominated in a foreign currency entails risk of
being exposed to a currency that may not
fully reflect the strengths and weaknesses of the economy of the country or
region utilizing the currency. Currency risk includes both the risk that
currencies in which the Fund’s investments are traded, or currencies in which
the Fund has taken an active investment position, will decline in value relative
to the U.S. dollar and, in the case of hedging positions, that the U.S. dollar
will decline in value relative to the currency being hedged. In addition, it is
possible that a currency (such as, for example, the euro) could be abandoned in
the future by countries that have already adopted its use, and the effects of
such an abandonment on the applicable country and the rest of the countries
utilizing the currency are uncertain but could negatively affect the Fund’s
investments denominated in the currency. If a currency used by a country or
countries is replaced by another currency, the Fund’s Adviser and Sub-Adviser
would evaluate whether to continue to hold any investments denominated in such
currency, or whether to purchase investments denominated in the currency that
replaces such currency, at the time. Such investments may continue to be held,
or purchased, to the extent consistent with the Fund’s investment objective(s)
and permitted under applicable law.
Many
countries rely heavily upon export-dependent businesses and any strength in the
exchange rate between a currency
and the U.S. dollar or other currencies can have either a positive or a negative
effect upon corporate profits and the performance of investments in the country
or region utilizing the currency. Adverse economic events within such country or
region may increase the volatility of exchange rates against other currencies,
subjecting the Fund’s investments denominated in such country’s or region’s
currency to additional risks. In addition, certain countries, particularly
emerging market countries, may impose foreign currency exchange controls or
other restrictions on the transferability, repatriation or convertibility of
currency.
European
Union and eurozone Related risk
A
number of countries in the European Union (EU), including certain countries
within the EU that have adopted the euro
(Eurozone), have experienced, and may continue to experience, severe economic
and financial difficulties. Additional countries within the EU may also fall
subject to such difficulties. These events could negatively affect the value and
liquidity of the Fund’s investments in euro-denominated securities and
derivatives contracts, securities of issuers located in the EU or with
significant exposure to EU issuers or countries. If the euro is dissolved
entirely, the legal and contractual consequences for holders of euro-denominated
obligations and derivative contracts would be determined by laws in effect at
such time. Such investments may continue to be held, or purchased, to the extent
consistent with the Fund’s investment objective(s) and permitted under
applicable law. These potential developments, or market perceptions concerning
these and related issues, could adversely affect the value of the
Shares.
Certain
countries in the EU have had to accept assistance from supra-governmental
agencies such as the International Monetary
Fund, the European Stability Mechanism (the “ESM”) or other supra-governmental
agencies. The European Central Bank has also been intervening to purchase
Eurozone debt in an attempt to stabilize markets and reduce borrowing costs.
There can be no assurance that these agencies will continue to intervene or
provide further assistance and markets may react adversely to any expected
reduction in the financial support provided by these agencies. Responses to the
financial problems by European governments, central banks and others including
austerity measures and reforms, may not work, may result in social unrest and
may limit future growth and economic recovery or have other unintended
consequences.
In
addition, one or more countries may withdraw from the EU, and one or more
countries within the Eurozone may abandon
the euro. The impact of these actions, especially if they occur in a disorderly
fashion, could be significant and far-reaching. On January 31, 2020, the United
Kingdom (UK) left the EU, commonly referred to as “Brexit,” and there commenced
a transition period during which the EU and UK negotiated and agreed on the
nature of their future relationship, with such agreements becoming effective on
December 31, 2020. There is significant market uncertainty regarding Brexit’s
ramifications, and the range and potential implications of possible political,
regulatory, economic and market outcomes are difficult to predict. This
long-term uncertainty may affect other countries in the EU and elsewhere and may
cause volatility within the EU, triggering prolonged economic downturns in
certain countries within the EU. In addition, Brexit may create additional and
substantial economic stresses for the UK, including a contraction of the UK
economy and price volatility in UK stocks, decreased trade, capital outflows,
devaluation of the British pound, wider corporate bond spreads due to
uncertainty and declines in business and consumer spending as well as foreign
direct
17
investment.
Brexit may also adversely affect UK-based financial firms, including certain
sub-advisers to the Federated Hermes Funds, that have counterparties in the EU
or participate in market infrastructure (trading venues, clearinghouses,
settlement facilities) based in the EU. These events and the resulting market
volatility may have an adverse effect on the performance of the
Fund.
Focused
Investment RISK
To
the extent that the Fund focuses its investments in the securities of a
particular issuer or companies in a particular country,
group of countries, region, market, industry, group of industries, sector, or
asset class, the Fund’s exposure to various risks may be heightened, including
price volatility and adverse economic, market, political, or regulatory
occurrences affecting that issuer, country, group of countries, region, market,
industry, group of industries, sector, or asset class.
Interest
Rate Risk
Prices
of fixed-income securities rise and fall in response to changes in interest
rates. Generally, when interest rates rise, prices of
fixed-income securities fall. However, market factors, such as the demand for
particular fixed-income securities, may cause the price of certain fixed-income
securities to fall while the prices of other securities rise or remain
unchanged.
The
longer the duration of a fixed-income security, the more susceptible it is to
interest rate risk. The duration of a fixed-income
security may be equal to or shorter than the stated maturity of a fixed-income
security. Recent and potential future changes in monetary policy made by central
banks and/or their governments are likely to affect the level of interest rates.
Duration measures the price sensitivity of a fixed-income security given a
change in interest rates. For example, if a fixed-income security has an
effective duration of three years, a 1% increase in general interest rates would
be expected to cause the security’s value to decline about 3% while a 1%
decrease in general interest rates would be expected to cause the security’s
value to increase about 3%.
Credit
Enhancement Risk
The
securities in which the Fund invests may be subject to credit enhancement (for
example, guarantees, letters of credit or bond
insurance). Credit enhancement is designed to help assure timely payment of the
security; it does not protect the Fund against losses caused by declines in a
security’s value due to changes in market conditions. Securities subject to
credit enhancement generally would be assigned a lower credit rating if the
rating were based primarily on the credit quality of the issuer without regard
to the credit enhancement. If the credit quality of the credit enhancement
provider (for example, a bank or bond insurer) is downgraded, the rating on a
security credit enhanced by such credit enhancement provider also may be
downgraded.
A
single enhancement provider may provide credit enhancement to more than one of
the Fund’s investments. Having multiple
securities credit enhanced by the same enhancement provider will increase the
adverse effects on the Fund that are likely to result from a downgrading of, or
a default by, such an enhancement provider. Adverse developments in the banking
or bond insurance industries also may negatively affect the Fund, as the Fund
may invest in securities credit enhanced by banks or by bond insurers without
limit. Bond insurers that provide credit enhancement for large segments of the
fixed-income markets, including the municipal bond market, may be more
susceptible to being downgraded or defaulting during recessions or similar
periods of economic stress.
Leverage
Risk
Leverage
risk is created when an investment, which includes, for example, an investment
in a derivative contract, exposes
the Fund to a level of risk that exceeds the amount invested. Changes in the
value of such an investment magnify the Fund’s risk of loss and potential for
gain. Investments can have these same results if their returns are based on a
multiple of a specified index, security or other benchmark.
Risk
of Investing in Derivative Contracts and Hybrid Instruments
The
Fund’s exposure to derivative contracts and hybrid instruments (either directly
or through its investment in another investment
company) involves risks different from, or possibly greater than, the risks
associated with investing directly in securities and other traditional
investments. First, changes in the value of the derivative contracts and hybrid
instruments in which the Fund invests may not be correlated with changes in the
value of the underlying Reference Instruments or, if they are correlated, may
move in the opposite direction than originally anticipated. Second, while some
strategies involving derivatives may reduce the risk of loss, they may also
reduce potential gains or, in some cases, result in losses by offsetting
favorable price movements in portfolio holdings. Third, there is a risk that
derivative contracts and hybrid instruments may be erroneously priced or
improperly valued and, as a result, the Fund may need to make increased cash
payments to the counterparty. Fourth, exposure to derivative contracts and
hybrid instruments may have tax consequences to the Fund and its shareholders.
For example, derivative contracts and hybrid instruments may cause the Fund to
realize increased ordinary income or short-term capital gains (which are treated
as ordinary income for Federal income tax
18
purposes)
and, as a result, may increase taxable distributions to shareholders. In
addition, under certain circumstances certain derivative contracts and hybrid
instruments may cause the Fund to: (a) incur an excise tax on a portion of the
income related to those contracts and instruments; and/or (b) reclassify, as a
return of capital, some or all of the distributions previously made to
shareholders during the fiscal year as dividend income. Fifth, a common
provision in OTC derivative contracts permits the counterparty to terminate any
such contract between it and the Fund, if the value of the Fund’s total net
assets declines below a specified level over a given time period. Factors that
may contribute to such a decline (which usually must be substantial) include
significant shareholder redemptions and/or a marked decrease in the market value
of the Fund’s investments. Any such termination of the Fund’s OTC derivative
contracts may adversely affect the Fund (for example, by increasing losses
and/or costs, and/or preventing the Fund from fully implementing its investment
strategies). Sixth, the Fund may use a derivative contract to benefit from a
decline in the value of a Reference Instrument. If the value of the Reference
Instrument declines during the term of the contract, the Fund makes a profit on
the difference (less any payments the Fund is required to pay under the terms of
the contract). Any such strategy involves risk. There is no assurance that the
Reference Instrument will decline in value during the term of the contract and
make a profit for the Fund. The Reference Instrument may instead appreciate in
value creating a loss for the Fund. Seventh, a default or failure by a CCP or an
FCM (also sometimes called a “futures broker”), or the failure of a contract to
be transferred from an Executing Dealer to the FCM for clearing, may expose the
Fund to losses, increase its costs, or prevent the Fund from entering or exiting
derivative positions, accessing margin, or fully implementing its investment
strategies. The central clearing of a derivative and trading of a contract over
a SEF could reduce the liquidity in, or increase costs of entering into or
holding, any contracts. Finally, derivative contracts and hybrid instruments may
also involve other risks described in this Prospectus, such as stock market,
interest rate, credit, currency, liquidity and leverage risks.
CUSTODIAL
SERVICES AND RELATED INVESTMENT COSTS
Custodial
services and other costs relating to investment in international securities
markets generally are more expensive
than in the United States. Such markets have settlement and clearance procedures
that differ from those in the United States. In certain markets, there have been
times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the Fund to make intended securities purchases due to settlement
problems could cause the Fund to miss attractive investment opportunities.
Inability to dispose of a portfolio security caused by settlement problems could
result in losses to the Fund due to a subsequent decline in value of the
portfolio security. In addition, security settlement and clearance procedures in
some emerging market countries may not fully protect the Fund against loss of
its assets.
technology
Risk
The
Adviser uses various technologies in managing the Fund, consistent with its
investment objective(s) and strategy described
in this Prospectus. For example, proprietary and third-party data and systems
are utilized to support decision-making for the Fund. Data imprecision, software
or other technology malfunctions, programming inaccuracies and similar
circumstances may impair the performance of these systems, which may negatively
affect Fund performance.
What Do
Shares Cost?
CALCULATION
OF NET ASSET VALUE
When
the Fund receives your transaction request in proper form (as described in this
Prospectus under the sections entitled “How to Purchase
Shares” and “How to Redeem and Exchange Shares”), it is processed at the next
calculated net asset value of a Share (NAV) plus any applicable front-end sales
charge (“public offering price”). A Share’s NAV is determined as of the end of
regular trading on the New York Stock Exchange (NYSE) (normally 4:00 p.m.
Eastern time), each day the NYSE is open. The Fund calculates the NAV of each
class by valuing the assets allocated to the Share’s class, subtracting the
liabilities allocated to each class and dividing the balance by the number of
Shares of the class outstanding. The NAV for each class of Shares may differ due
to the level of expenses allocated to each class as well as a result of the
variance between the amount of accrued investment income and capital gains or
losses allocated to each class and the amount actually distributed to
shareholders of each class. The Fund’s current NAV and/or public offering price
may be found at FederatedHermes.com/us, via online news sources and in certain
newspapers.
You can
purchase, redeem or exchange Shares any day the NYSE is open.
When
the Fund holds securities that trade principally in foreign markets on days the
NYSE is closed, the value of the Fund’s
assets may change on days you cannot purchase or redeem Shares. This may also
occur when the U.S. markets for fixed-income securities are open on a day the
NYSE is closed.
In
calculating its NAV, the Fund generally values investments as
follows:
◾ 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.
19
◾ Fixed-income
securities are fair valued using price evaluations provided by a pricing service
approved by the Adviser.
◾ 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.
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, or if information furnished by a
pricing service, in the opinion of the 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 generally
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.
Shares
of other mutual funds are valued based upon their reported NAVs. The
prospectuses for these mutual funds explain
the circumstances under which they will use fair value pricing and the effects
of using fair value pricing.
Fair
Valuation and Significant Events Procedures
Pursuant
to Rule 2a-5 under the Investment Company Act of 1940, as amended, the Board has
designated the Adviser as the Fund’s
valuation designee to perform the fair valuation determination for securities
and other assets held by the Fund. 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 subject to Board oversight and certain reporting and
other requirements intended to provide the Board the information it needs to
oversee the Adviser’s fair value determinations.
The
Valuation Committee is also authorized to use pricing services to provide
fair price
evaluations of the current fair value of certain investments for purposes of
calculating the NAV. 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 as
the valuation designee. The Board periodically reviews the fair valuations made
by the Valuation Committee. The Board has also approved the Adviser’s fair
valuation and significant events procedures as part of the Fund’s compliance
program and will review any changes made to the procedures. The Fund’s SAI
discusses the methods used by pricing services and the Valuation Committee in
valuing investments.
Using
fair value to price investments may result in a value that is different from an
investment’s most recent closing price and
from the prices used by other registered funds to calculate their NAVs. The
application of the fair value procedures to an investment represents a good
faith determination of such investment’s fair value. 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 could be materially different.
The
Adviser also has 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; and
◾ Announcements
concerning matters such as acquisitions, recapitalizations or 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. The Board periodically reviews
fair valuations made in response to significant events.
20
The
fair valuation of securities following a significant event can serve to reduce
arbitrage opportunities for short-term traders to
profit at the expense of long-term investors in the Fund. For example, such
arbitrage opportunities may exist when the market on which portfolio securities
are traded closes before the Fund calculates its NAV, which is typically the
case with Asian and European markets. However, there is no assurance that these
significant event procedures will prevent dilution of the NAV by short-term
traders. See “Account and Share Information–Frequent
Trading Policies” for other procedures
the Fund employs to deter such short-term trading.
SALES
CHARGE INFORMATION
The
following table summarizes the minimum investment amount and the maximum sales
charge, if any, that you will pay on an
investment in the Fund. Keep in mind that financial intermediaries may charge
you fees for their services in connection with your Share
transactions.
|
|
Minimum
Initial/Subsequent
Investment
Amounts1
|
Maximum
Sales Charges | |
|
Shares
Offered |
Front-End
Sales
Charge2
|
Contingent
Deferred
Sales
Charge3
| |
|
A |
$1,500/$100 |
4.50% |
0.00% |
|
C |
$1,500/$100 |
None |
1.00% |
1
The
minimum initial and subsequent investment amounts for Individual Retirement
Accounts (IRAs) are generally $250 and $100, respectively. There is no minimum
initial or subsequent investment amount required for employer-sponsored
retirement plans; however, such accounts remain subject to the Fund’s policy on
“Accounts with Low Balances” as discussed later in this Prospectus. Please see
“By Systematic Investment Program” for applicable minimum investment. Financial
intermediaries may impose higher or lower minimum investment requirements on
their customers than those imposed by the Fund.
To
maximize your return and minimize the sales charges and marketing fees,
purchases of C class are generally limited to $1,000,000. Purchases equal to or
in excess of this limit may be made in A class. If your Shares are held on the
books of the Fund in the name of a financial intermediary, you may be subject to
rules of your financial intermediary that differ from those of the Fund. See
“Purchase Restrictions on C Class” below.
After
Class C Shares have been held for eight years from the date of purchase, they
will automatically convert to Class A Shares on the next monthly conversion
processing date, provided that certain conditions are satisfied. See “How is the
Fund Sold?” This conversion is a non-taxable event.
2
Front-End
Sales Charge is expressed as a percentage of public offering price. See “Sales
Charge When You Purchase.”
3
See
“Sales Charge When You Redeem.”
As
shown in the table above, each class of Shares has a different sales charge
structure. In addition, the ongoing annual operating
expenses (“expense ratios”), as well as the compensation payable to financial
intermediaries, also vary among the classes. Before you decide which class to
purchase, you should review the different charges and expenses of each class
carefully, in light of your personal circumstances, and consult with your
financial intermediary.
Among
the important factors to consider are the amount you plan to invest and the
length of time you expect to hold your
investment (for example, whether the investment is in connection with a
long-term retirement program). You should also consider, for example, that it
may be possible to reduce, or eliminate, the front-end sales charges imposed on
purchases of A class. Among other ways, A class has a series of “breakpoints,”
which means that the front-end sales charges decrease (and can be eliminated
entirely) as the amount invested increases. (The breakpoint schedule is set out
below, along with detailed information on ways to reduce, or eliminate,
front-end sales charges.) On the other hand, the C class does not have front-end
sales charges, but does impose a contingent deferred sales charge only if
redeemed within one year after purchase; however, the asset-based 12b-1 fees
charged to the C class are greater than those charged to the A
class.
You
should also consider that the expense ratio for A class will be lower than that
for C class. Thus, the fact that no front-end
charges are ever imposed on purchases of the C class does not always make it
preferable to A class.
SALES
CHARGE WHEN YOU PURCHASE
The
following table lists the sales charges which will be applied to your Share
purchase, subject to the breakpoint discounts
indicated in the table and described below.
21
|
A: | ||
|
Purchase
Amount |
Sales
Charge
as a
Percentage
of
Public
Offering
Price |
Sales
Charge
as a
Percentage
of Net
Amount Invested |
|
Less
than $100,000 |
4.50% |
4.71% |
|
$100,000
but less than $250,000 |
3.75% |
3.90% |
|
$250,000
but less than $500,000 |
2.50% |
2.56% |
|
$500,000
but less than $1 million |
2.00% |
2.04% |
|
$1
million or greater1
|
0.00% |
0.00% |
1
A
contingent deferred sales charge (CDSC) of 0.75% of the redemption amount
applies to Shares originally purchased in an amount of $1 million or more and
redeemed up to 24 months after purchase under certain investment programs where
a financial intermediary received an advance payment on the transaction. CDSC
exceptions may apply. See “Sales Charge When You Redeem.”
REDUCING
THE SALES CHARGE WITH BREAKPOINT DISCOUNTS
Your
investment may qualify for a reduction or elimination of the sales charge, also
known as a breakpoint discount. The
breakpoint discounts offered by the Fund are indicated in the table
above.
You
or your financial intermediary must notify the Fund’s Transfer Agent of
eligibility for any applicable breakpoint discount
at the time of purchase.
In
order to receive the applicable breakpoint discount, it may be necessary at the
time of purchase for you to inform your
financial intermediary or the Transfer Agent of the existence of other accounts
in which there are holdings eligible to be aggregated to meet a sales charge
breakpoint (“Qualifying Accounts”). Qualifying Accounts mean those share
accounts in the Federated Hermes funds held directly or through a financial
intermediary or through a single-participant retirement account by you, your
spouse, your parents (if you are under age 21) and/or your children under age
21, which can be linked using tax identification numbers (TINs), social security
numbers (SSNs) or broker identification numbers (BINs). Accounts held through
401(k) plans and similar multi-participant retirement plans, or through “Section
529” college savings plans or those accounts which cannot be linked using TINs,
SSNs or BINs, are not Qualifying Accounts.
In
order to verify your eligibility for a breakpoint discount, you will be required
to provide to your financial intermediary or the
Transfer Agent certain information on your New Account Form and may be required
to provide account statements regarding Qualifying Accounts. If you purchase
through a financial intermediary, you may be asked to provide additional
information and records as required by the financial intermediary. Failure to
provide proper notification or verification of eligibility for a breakpoint
discount may result in your not receiving a breakpoint discount to which you are
otherwise entitled. Breakpoint discounts apply only to your current purchase and
do not apply retroactively to previous purchases. The sales charges applicable
to the Shares offered in this Prospectus, and the breakpoint discounts offered
with respect to such Shares, are described in full in this Prospectus. Because
the Prospectus is available on FederatedHermes.com/us free of charge, Federated
Hermes does not disclose this information separately on the
website.
Contingent
upon notification to the Transfer Agent, the sales charge at purchase of the A
class only, may be reduced
or eliminated by:
Larger
Purchases
◾ Purchasing
the A class in greater quantities to reduce the applicable sales
charge;
Concurrent
and Accumulated Purchases
◾ Excluding any Federated
Hermes fund A class without a sales charge (“no-load A class”), combining
concurrent purchases of and/or current investments in the A class, C class, F
class and R class of any Federated Hermes fund made or held by Qualifying
Accounts; the purchase amount used in determining the sales charge on your
additional Share purchase will be calculated by multiplying the respective
maximum public offering price times the number of the A class,C class, F class
and R class Shares of any Federated Hermes fund currently held in Qualifying
Accounts and adding the dollar amount of your current purchase;
or
Letter
of Intent
◾ Signing a
letter of intent to purchase a qualifying amount of the A class within 13
months. (Call your financial intermediary or the Fund for more information.) The
Fund’s custodian will hold Shares in escrow equal to the maximum applicable
sales charge. If you complete the Letter of Intent, the Custodian will release
the Shares in escrow to your account. If you do not fulfill the Letter of
Intent, the Custodian will redeem the appropriate amount from the Shares held in
escrow to pay the sales charges that were not applied to your
purchases.
22
PURCHASE
restrictions ON C CLASS
In
order to maximize shareholder returns and minimize sales charges and marketing
fees, an investor’s purchases of the C class are generally
limited to $1,000,000 (except for employer-sponsored retirement plans held in
omnibus accounts). In applying the limit, the dollar amount of the current
purchase is added to the product obtained by multiplying the respective maximum
public offering price times the number of the A class, C class, F class and R
class of any Federated Hermes fund currently held in linked Qualifying Accounts,
as defined in the section entitled “Reducing the Sales Charge with Breakpoint
Discounts.” If the sum of these two amounts would equal or exceed the limit,
then the current purchase order will not be processed. Instead, the Distributor
will attempt to contact the investor or the investor’s financial intermediary to
offer the opportunity to convert the order to the A class.
If
your Shares are held on the books of the Fund in the name of a financial
intermediary, you may be subject to rules of your
financial intermediary that differ from those of the Fund.
ELIMINATING
The SALES CHARGE
Your
investment may qualify for a sales charge waiver. Sales charge waivers offered
by the Fund are listed below. In order to
receive a sales charge waiver, you must inform your financial intermediary or
the Transfer Agent at the time of each purchase that your investment is eligible
for a waiver. It is possible that your financial intermediary may not, in
accordance with its policies, procedures and system limitations, be able to
ensure your receipt of one or more of these waiver categories. In this
situation, you would need to invest directly through the Fund’s Transfer Agent.
If you do not let your financial intermediary or the Transfer Agent know that
your investment is eligible for a sales charge waiver at the time of purchase,
you may not receive the waiver to which you may otherwise be
entitled.
Contingent
upon notification to the Transfer Agent, the sales charge will be eliminated
when you purchase
or acquire Shares:
◾ within 120
days of redeeming Shares of an equal or greater amount (see “120 Day
Reinstatement Program” below);
◾ through an
eligible program offered by a Financial Intermediary that provides for the
purchase of Shares without imposition of a sales charge (for example, a wrap
account, self-directed brokerage account, retirement or other fee-based program
offered by the Financial Intermediary);
◾ with
reinvested dividends or capital gains;
◾ issued in
connection with the merger, consolidation or acquisition of the assets of
another fund. Further, the sales charge will be eliminated on purchases of
Shares made by a shareholder that originally became a shareholder of a Federated
Hermes Fund pursuant to the terms of an agreement and plan of reorganization
which permits shareholders to acquire Shares at NAV, provided that such
purchased Shares are held directly with the Fund’s transfer agent. If the Shares
are held through a financial intermediary, the sales charge waiver will not
apply (A class only);
◾ as a
Federated Life Member (Federated Hermes shareholders who originally were issued
shares through the “Liberty Account,” which was an account for the Liberty
Family of Funds on February 28, 1987, or who invested through an affinity group
prior to August 1, 1987, into the Liberty Account) (A class only);
◾ as a
Director, employee or former employee of the Fund, the Adviser, the Distributor
and their affiliates, an employee of any financial intermediary that sells
Shares according to a sales agreement with the Distributor, an immediate family
member of these individuals or a trust, pension or profit-sharing plan for these
individuals; or
◾ pursuant
to the exchange privilege.
The
sales charge will not be eliminated if you purchase Shares of the Fund through
an exchange of shares of any no-load A
class unless your no-load A class shares were acquired through an exchange of
shares on which the sales charge had previously been paid.
120
Day reinstatement program
Within
120 days of redeeming Class A Shares and Class C Shares of the Fund, upon proper
notification to the Fund’s Transfer
Agent, you may reinvest all or a portion of the redemption proceeds in Class A
Shares and Class C Shares of the Fund at net asset value, without the imposition
of a sales charge or CDSC. Please note:
◾ The
ownership of the account receiving the purchase is not required to be identical
to that of the account in which the redemption was placed; however, the
registration of the account receiving the purchase must include at least one
registered shareholder of the account from which the redemption
occurred.
◾ You will
not be reimbursed for any fees originally incurred on the redemption (e.g., CDSC
or redemption fees) by subsequently participating in the 120 DayReinstatement
Program.
◾ The 120
Day Reinstatement Program does not supersede or override any restrictions placed
on an account due to frequent trading and/or client contractual
issues.
Additional
operational restrictions may apply, please contact a Client Service
Representative at 1-800-341-7400 for more
information.
23
sales
charge when you redeem
Your
redemption proceeds may be reduced by a sales charge, commonly referred to as a
contingent deferred sales charge
(CDSC). Shares otherwise subject to a CDSC will not be charged a CDSC at the
time of an exchange; however, the CDSC will continue to be measured from the
date of your original purchase. The CDSC schedule applicable to your original
purchase will continue to apply to the shares you receive in an
exchange.
To
keep the sales charge as low as possible, the Fund redeems your Shares in this
order:
◾ Shares
that are not subject to a CDSC; and
◾ Shares
held the longest. (To determine the number of years your Shares have been held,
include the time you held shares of other Federated Hermes funds that have been
exchanged for Shares of this Fund.)
The
CDSC is then calculated using the Share price at the time of purchase or
redemption, whichever is lower.
|
A: |
|
|
|
If
you make a purchase of the A class in the amount of $1 million or more and
your financial intermediary received an advance commission on the sale,
you will
pay
a 0.75% CDSC on any such Shares redeemed within 24 months of the
purchase. | ||
|
C: |
|
|
|
You
will pay a 1.00% CDSC if you redeem Shares within 12 months of the
purchase date. | ||
Your
redemption may qualify for a waiver of the CDSC. The CDSC waivers offered by the
Fund are listed below. In order to
receive a waiver of the CDSC, you must inform your financial intermediary or the
Transfer Agent at the time of each redemption that your investment is eligible
for a waiver. It is possible that your financial intermediary may not, in
accordance with its policies, procedures and system limitations, be able to
ensure your receipt of one or more of these waiver categories. In this
situation, you would need to invest directly through the Fund’s Transfer Agent
in order to take advantage of the waiver. If you do not let your financial
intermediary or the Transfer Agent know that your redemption is eligible for a
CDSC waiver at the time of redemption, you may not receive the waiver to which
you may otherwise be entitled.
Contingent
upon notification to the Transfer Agent, you will not be charged a CDSC when
redeeming Shares:
◾ following
the death of the last surviving shareholder on the account or the post-purchase
disability of all registered shareholders, as defined in Section 72(m)(7) of the
Internal Revenue Code of 1986 (the beneficiary on an account with a Transfer on
Death registration is deemed the last surviving shareholder on the
account);
◾ due to the
termination of a trust following the death of the trustor/grantor or
beneficiary, provided that the trust document specifically states that the trust
is terminated upon the death;
◾ representing
minimum required distributions from an IRA or other retirement plan as required
under the Internal Revenue Code;
◾ purchased
by Directors, employees of the Fund, the Adviser, the Distributor and their
affiliates, by employees of a financial intermediary that sells Shares according
to a sales agreement with the Distributor, by the immediate family members of
the above persons and by trusts, pension or profit-sharing plans for the above
persons;
◾ purchased
through an eligible program offered by a Financial Intermediary that provides
for the purchase of Shares without imposition of a sales charge (for example, a
wrap account, self-directed brokerage account, retirement or other fee-based
program offered by the Financial Intermediary);
◾ purchased
with reinvested dividends or capital gains;
◾ redeemed
by the Fund when it closes an account for not meeting the minimum balance
requirements; or
◾ purchased
pursuant to the exchange privilege, if the Shares were held for the applicable
CDSC holding period (the holding period on the Shares purchased in the exchange
will include the holding period of the Shares sold in the
exchange);
A
Class Only
◾ purchased
in the amount of $1 million or more and redeemed within 24 months of purchase if
the Shares were originally purchased through an eligible program offered by a
Financial Intermediary that provides for the purchase of Shares without
imposition of a sales charge (for example, a wrap account, self-directed
brokerage account, retirement or other fee-based program offered by the
Financial Intermediary).
ADDITIONAL
INFORMATION ON THE AVAILABILITY OF CERTAIN WAIVERS AND DISCOUNTS
The
availability of certain sales charge waivers and discounts will depend on
whether you purchase your shares directly from the
Fund or through a financial intermediary. Certain
financial intermediaries may have different policies and procedures regarding
the availability of front-end sales load waivers or CDSC waivers which are
discussed in Appendix B to this Prospectus.The information contained in Appendix
B is provided by these financial intermediaries. Please contact your financial
intermediary to ensure that you have the information regarding the
24
sales
charge waivers and discounts available to you and that you understand the steps
you must take to qualify for available waivers and discounts. In all
instances, it is the shareholder’s responsibility to notify the Fund or the
shareholder’s Financial Intermediary at the time of purchase of any relationship
or other facts qualifying the investor for sales charge waivers or discounts.
For
waivers and discounts not available through a particular financial intermediary,
shareholders will have to purchase Fund shares directly from the Fund or through
another financial intermediary to receive these waivers or
discounts.
COMMISSIONS
ON CERTAIN SHARES
The
Fund does not charge any front-end load, deferred sales charge or other
asset-based fee for sales or distribution of Institutional
Shares. However, if you purchase Institutional Shares through a broker acting
solely as an agent on behalf of its customers, you may be required to pay a
commission to the broker in an amount determined and separately disclosed to you
by the broker.
Because
the Fund is not a party to any such commission arrangement between you and your
broker, any purchases and
redemptions of Institutional Shares will be made at the applicable net asset
value (before imposition of the sales commission). Any such commissions charged
by a broker are not reflected in the fees and expenses listed in the
“Risk/Return Summary: Fees and Expenses” section of the Fund’s Prospectus and
described above nor are they reflected in the “Performance: Bar Chart and
Table,” because they are not charged by the Fund.
Shares of
the Fund are available in other share classes that have different fees and
expenses.
How is the
Fund Sold?
The
Fund offers the following Share classes: Class A Shares (A), Class C Shares (C)
and Institutional Shares (IS), each representing
interests in a single portfolio of securities. All Share classes have different
sales charges and/or other expenses which affect their performance. Please note
that certain purchase restrictions may apply.
Under
the Distributor’s Contract with the Fund, the Distributor, Federated Securities
Corp., offers Shares on a continuous,
best-efforts basis. The Distributor is a subsidiary of Federated Hermes, Inc.
(“Federated Hermes,” formerly, Federated Investors, Inc.).
A
& C Classes
The
Fund’s Distributor markets the A and C classes to institutions or to
individuals, directly or through financial
intermediaries.
IS
Class
The
Fund’s Distributor markets the IS class to Eligible Investors, as described
below. In connection with a request to purchase
the IS class, you should provide documentation sufficient to verify your status
as an Eligible Investor. As a general matter, the IS class is not available for
direct investment by natural persons.
The
following categories of Eligible Investors are not subject to any minimum
initial investment amount for the purchase
of the IS class (however, such accounts remain subject to the Fund’s policy on
“Accounts with Low Balances” as discussed later in this Prospectus):
◾ An
investor participating in a no-load platform, network or other fee-based program
offered by a financial intermediary, for example, a wrap-account or retirement
platform, where Federated Hermes has entered into an agreement with the
intermediary;
◾ A
trustee/director, employee or former employee of the Fund, the Adviser, the
Distributor and their affiliates; an immediate family member of these
individuals or a trust, pension or profit-sharing plan for these
individuals;
◾ An
employer-sponsored retirement plan;
◾ A trust
institution investing on behalf of its trust customers;
◾ A
Federated Hermes Fund;
◾ An
investor (including a natural person) who acquired the IS class of a Federated
Hermes fund pursuant to the terms of an agreement and plan of reorganization
which permits the investor to acquire such shares; and
◾ In
connection with an acquisition of an investment management or advisory business,
or related investment services, products or assets, by Federated Hermes or its
investment advisory subsidiaries, an investor (including a natural person) who:
(1) becomes a client of an investment advisory subsidiary of Federated Hermes;
or (2) is a shareholder or interest holder of a pooled investment vehicle or
product that becomes advised or sub-advised by a Federated Hermes investment
advisory subsidiary as a result of such an acquisition other than as a result of
a fund reorganization transaction pursuant to an agreement and plan of
reorganization.
25
The
following categories of Eligible Investors are subject to applicable minimum
initial investment amounts for the purchase
of the IS class (see “How to Purchase Shares” below):
◾ An
investor, other than a natural person, purchasing the IS class directly from the
Fund; and
◾ In
connection with an initial purchase of the IS class through an exchange, an
investor (including a natural person) who owned the IS class of another
Federated Hermes fund as of December 31, 2008.
Intra-Fund
Share Conversion Program
A
shareholder in the Fund’s Shares may convert their Shares at net asset value to
any other share class of the Fund if the shareholder
meets the investment minimum and eligibility requirements for the share class
into which the conversion is sought, as applicable. The share conversion program
is not applicable to the Fund’s Class A Shares and Class C Shares subject to a
contingent deferred sales charge, if applicable. For Class C Shares purchased
through a financial intermediary after June 30, 2017, such shares may only be
converted to another share class of the same Fund if: (i) the shares are no
longer subject to a CDSC or the financial intermediary agrees to reimburse the
Fund’s distributor the CDSC otherwise payable upon the sale of such shares; (ii)
the shareholder meets the investment minimum and eligibility requirements for
the share class into which the conversion is sought, as applicable; and (iii)
(a) the conversion is made to facilitate the shareholder’s participation in a
self-directed brokerage (non-advice) account or a fee-based advisory program
offered by the intermediary; or (b) the conversion is part of a multiple-client
transaction through a particular financial intermediary as pre-approved by the
Fund’s Administrator. Such conversion of classes should not result in a
realization event for tax purposes. Contact your financial intermediary or call
1-800-341-7400 to convert your Shares.
Class
C Share Automatic Conversion Feature
After
Class C Shares have been held for eight years from the date of purchase, they
will automatically convert into Class A
Shares on the next monthly conversion processing date, provided that the Fund or
financial intermediary has records confirming that the Class C Shares have been
held for at least eight years and that the Class A Shares are available for
purchase. For Class C Shares acquired in an exchange from another Federated
Hermes fund, the date of purchase will be based on the initial purchase of the
Class C Shares of the prior Federated Hermes fund. Certain financial
intermediaries, record keepers and platforms do not track shareholder level
share lot aging for certain types of accounts. These Class C Shares would not
satisfy the conditions for the conversion. Contact your financial intermediary
or call 1-800-341-7400 for more information.
Payments
to Financial Intermediaries
The
Fund and its affiliated service providers may pay fees as described below to
financial intermediaries (such as broker-dealers,
banks, investment advisers or third-party administrators) whose customers are
shareholders of the Fund.
FRONT-END
SALES CHARGE REALLOWANCES
The
Distributor receives a front-end sales charge on certain Share sales. The
Distributor pays a portion of this charge to financial
intermediaries that are eligible to receive it (the “Dealer Reallowance”) and
retains any remaining portion of the front-end sales charge.
When
a financial intermediary’s customer purchases Shares, the financial intermediary
may receive a Dealer Reallowance
as follows:
|
A: |
|
|
Purchase
Amount |
Dealer
Reallowance
as a
Percentage of
Public
Offering Price |
|
Less
than $100,000 |
4.00% |
|
$100,000
but less than $250,000 |
3.25% |
|
$250,000
but less than $500,000 |
2.25% |
|
$500,000
but less than $1 million |
1.80% |
|
$1
million or greater |
0.00% |
26
ADVANCE
COMMISSIONS
When
a financial intermediary’s customer purchases Shares, the financial intermediary
may receive an advance commission
as follows:
|
A
(for purchases over $1 million): |
|
|
Purchase
Amount |
Advance
Commission
as a
Percentage of
Public
Offering Price |
|
First
$1 million - $5 million |
0.75% |
|
Next
$5 million - $20 million |
0.50% |
|
Over
$20 million |
0.25% |
Advance
commissions are calculated on a year-by-year basis based on amounts invested
during that year. Accordingly, with
respect to additional purchase amounts, the advance commission breakpoint resets
annually to the first breakpoint on the anniversary of the first
purchase.
The
A class purchases under this program may be made by Letter of Intent or by
combining concurrent purchases. The above
advance commission will be paid only on those purchases that were not previously
subject to a front-end sales charge or dealer advance commission. Certain
retirement accounts may not be eligible for this program.
|
C: |
|
|
|
Advance
Commission
as a
Percentage of
Public
Offering Price |
|
All
Purchase Amounts |
1.00% |
RULE
12b-1
FEES
C
Class
The
Board has adopted a Rule 12b-1 Plan, which allows payment of marketing fees of
up to 0.75% of average net assets to the
Distributor for the sale, distribution, administration and customer servicing of
the Fund’s C class. When the Distributor receives Rule 12b-1 Fees, it may pay
some or all of them to financial intermediaries whose customers purchase Shares.
In addition, in connection with the sale of the C class, Federated Hermes and
its subsidiaries make advance commission payments to financial intermediaries
and in return may receive Rule 12b-1 Fees and contingent deferred sales loads
for the C class. Federated Hermes and its subsidiaries may benefit or sustain
losses from such arrangements. Because these Shares pay marketing fees on an
ongoing basis, your investment cost may be higher over time than other shares
with different sales charge and marketing fees.
service
fees
A
& C Classes
A and C
classes may pay Service Fees of up to 0.25% of average net assets to financial
intermediaries or to Federated Shareholder Services
Company (FSSC), a subsidiary of Federated Hermes, for providing services to
shareholders and maintaining shareholder accounts. Intermediaries that receive
Service Fees may include a company affiliated with management of Federated
Hermes. If a financial intermediary receives Service Fees on an account, it is
not eligible
to also
receive Account Administration Fees on that same account.
ACCOUNT
ADMINISTRATION FEES
A
& C Classes
A
and C classes may pay Account Administration Fees of up to 0.25% of average net
assets to banks that are not registered
as broker-dealers or investment advisers for providing administrative services
to the Fund and its shareholders. If a financial intermediary receives Account
Administration Fees on an account, it is not eligible to also receive Service
Fees or Recordkeeping Fees on that same account.
RECORDKEEPING
FEES
The
Fund may pay Recordkeeping Fees on an average-net-assets basis or on a
per-account-per-year basis to financial intermediaries
for providing recordkeeping services to the Fund and its shareholders. If a
financial intermediary receives Recordkeeping Fees on an account, it is not
eligible to also receive Account Administration Fees or Networking Fees on that
same account.
27
networking
fees
The
Fund may reimburse Networking Fees on a per-account-per-year basis to financial
intermediaries for providing administrative
services to the Fund and its shareholders on certain non-omnibus accounts. If a
financial intermediary receives Networking Fees on an account, it is not
eligible to also receive Recordkeeping Fees on that same
account.
ADDITIONAL
PAYMENTS TO FINANCIAL INTERMEDIARIES
The
Distributor may pay out of its own resources amounts to certain financial
intermediaries, including broker-dealers, banks,
registered investment advisers, independent financial planners and retirement
plan administrators, that support the sale of Shares or provide services to Fund
shareholders. The amounts of these payments could be significant, and may create
an incentive for the financial intermediary or its employees or associated
persons to recommend or sell Shares of the Fund to you. Not all financial
intermediaries receive such payments, and the amount of compensation may vary by
intermediary. In some cases, such payments may be made by or funded from the
resources of companies affiliated with the Distributor (including the Adviser).
These payments are not reflected in the fees and expenses listed in the fee
table section of the Fund’s Prospectus and described above because they are not
paid by the Fund.
These
payments are negotiated and may be based on such factors as: the number or value
of Shares that the financial intermediary
sells or may sell; the value of client assets invested; the level and types of
services or support furnished by the financial intermediary; or the Fund’s
and/or other Federated Hermes funds’ relationship with the financial
intermediary. These payments may be in addition to payments, as described above,
made by the Fund to the financial intermediary. In connection with these
payments, the financial intermediary may elevate the prominence or profile of
the Fund and/or other Federated Hermes funds, within the financial
intermediary’s organization by, for example, placement on a list of preferred or
recommended funds and/or granting the Distributor preferential or enhanced
opportunities to promote the funds in various ways within the financial
intermediary’s organization. In addition, as discussed above in “Commissions on
Certain Shares,” if you purchase IS Shares through a broker acting solely as an
agent on behalf of its customers, you may be required to pay a commission to the
broker in an amount determined and separately disclosed to you by the broker.
You can ask your financial intermediary for information about any payments it
receives from the Distributor or the Fund and any services provided, as well as
about fees and/or commissions it charges.
How to
Purchase Shares
You
may purchase Shares of the Fund any day the NYSE is open. Shares will be
purchased at the NAV next calculated after your
investment is received by the Fund, or its agent, in proper form. The Fund
reserves the right to reject any request to purchase or exchange Shares. New
investors must submit a completed New Account Form. All accounts, including
those for which there is no minimum initial investment amount required, are
subject to the Fund’s policy on “Accounts with Low Balances” as discussed later
in this Prospectus.
Where
the Fund offers more than one Share class and you do not specify the class
choice on your New Account Form or form
of payment
(e.g., Federal Reserve wire or check), you automatically will receive the A
class.
For
important account information, see the section “Security and Privacy
Protection.”
A
& C Classes
You
may purchase Shares through a financial intermediary, directly from the Fund or
through an exchange from another Federated
Hermes fund.
IS
Class
Eligible
investors may purchase Shares through a financial intermediary, directly from
the Fund or through an exchange from
another Federated Hermes fund in the manner described above under “How is the
Fund Sold?”
Where
applicable, the required minimum initial investment for IS class is generally
$1,000,000. There is no minimum subsequent
investment amount.
THROUGH
A FINANCIAL INTERMEDIARY
◾ Establish
an account with the financial intermediary; and
◾ Submit
your purchase order to the financial intermediary before the end of regular
trading on the NYSE (normally 4:00 p.m.Eastern time).
The
Fund has authorized certain intermediaries to accept Share purchase orders on
its behalf. When authorized intermediaries
receive an order in proper form, the order is considered as being placed with
the Fund, and Shares will be bought at the NAV next calculated after such an
order is received by the authorized intermediary. If your financial intermediary
is not an authorized intermediary, the Fund or its agent must receive the
purchase order in proper form from your financial intermediary by the end of
regular trading on the NYSE (normally 4:00 p.m. Eastern time) in order for your
transaction to be priced at that day’s NAV. In addition, your financial
intermediary must forward your payment
28
by the
prescribed trade settlement date (typically within one to three business days)
to the Fund’s transfer agent, SS&C GIDS, Inc. (“Transfer Agent”). You will
become the owner of Shares and receive dividends when your payment is received
in accordance with these time frames (provided that, if payment is received in
the form of a check, the check clears). If your payment is not received in
accordance with these time frames, or a check does not clear, your purchase will
be canceled and you could be liable for any losses, fees or expenses incurred by
the Fund or the Fund’s Transfer Agent.
Financial
intermediaries should send payments according to the instructions in the
sections “By Wire” or “By Check.”
Financial
intermediaries may impose higher or lower minimum investment requirements on
their customers than those imposed by
the Fund. Keep in mind that financial intermediaries may charge you fees for
their services in connection with your Share transactions.
Shareholders
are encouraged to ask their financial intermediary if they are an authorized
agent for the Fund and about any fees
that may be charged by the financial intermediary.
DIRECTLY
FROM THE FUND
◾ Establish
your account with the Fund by submitting a completed New Account Form;
and
◾ Send your
payment to the Fund by Federal Reserve wire or check.
You
will become the owner of Shares and your Shares will be priced at the next
calculated NAV after the Fund receives your wire
or your check. If your check does not clear, your purchase will be canceled and
you could be liable for any losses or fees incurred by the Fund or the Fund’s
Transfer Agent.
By
Wire
To
facilitate processing your order, please call the Fund before sending the wire.
Send your wire to:
State
Street Bank and Trust Company
Boston, MA
Dollar Amount of Wire
ABA Number 011000028
BNF: 23026552
Attention: Federated Hermes EDGEWIRE
Wire Order Number, Dealer Number or Group Number
Nominee/Institution Name
Fund Name and Number and Account Number
Boston, MA
Dollar Amount of Wire
ABA Number 011000028
BNF: 23026552
Attention: Federated Hermes EDGEWIRE
Wire Order Number, Dealer Number or Group Number
Nominee/Institution Name
Fund Name and Number and Account Number
You cannot
purchase Shares by wire on holidays when wire transfers are
restricted.
By
Check
Make your
check payable to The
Federated Hermes Funds, note
your account number on the check, and send it to:
The
Federated Hermes Funds
P.O. Box 219318
Kansas City, MO 64121-9318
P.O. Box 219318
Kansas City, MO 64121-9318
If you
send your check by a private
courier or overnight delivery service that
requires a street address, send it to:
The
Federated Hermes Funds
430 W 7th Street
Suite 219318
Kansas City, MO 64105-1407
430 W 7th Street
Suite 219318
Kansas City, MO 64105-1407
Payment
should be made in U.S. dollars and drawn on a U.S. bank. The Fund reserves the
right to reject any purchase
request. For example, to protect against check fraud the Fund may reject any
purchase request involving a check that is not made payable to The
Federated Hermes Funds
(including, but not limited to, requests to purchase Shares using third-party
checks) or involving temporary checks or credit card checks.
By
Direct Deposit
You may
establish Payroll Deduction/Direct Deposit arrangements for investments into the
Fund by either calling a Client Service
Representative at 1-800-341-7400; or by completing the Payroll Deduction/Direct
Deposit Form, which is available on FederatedHermes.com/us under “Resources” and
then “Literature and Forms,” then “Forms.” You will receive a confirmation when
this service is available.
THROUGH
AN EXCHANGE
You may
purchase Fund Shares through an exchange from another Federated Hermes fund. To
do this you must:
◾ meet any
applicable shareholder eligibility requirements;
◾ ensure
that the account registrations are identical;
29
◾ meet any
applicable minimum initial investment requirements; and
◾ receive a
prospectus for the fund into which you wish to exchange.
An
exchange is treated as a redemption and a subsequent purchase, and is a taxable
transaction. The Fund reserves the right to
reject any request to purchase or exchange Shares. The Fund may modify or
terminate the exchange privilege at any time.
A
& C Classes
You may
purchase Shares through an exchange from the same share class of another
Federated Hermes fund.
IS
Class
You
may purchase Shares through an exchange from any Federated Hermes fund or share
class that does not have a stated
sales charge or contingent deferred sales charge, except Shares of Federated
Hermes Institutional Money Market Management, Federated Hermes Institutional
Tax-Free Cash Trust, Federated Hermes Institutional Prime Obligations Fund,
Federated Hermes Institutional Prime Value Obligations Fund, no-load Class A
Shares and Class R Shares of any Fund.
By
Online Account Services
You may
access your accounts online to purchase Shares through FederatedHermes.com/us’s
Shareholder Account Access system once you have registered for access. Online
transactions may be subject to certain limitations including limitations as to
the amount of the transaction. For more information about the services available
through Shareholder Account Access, please visit FederatedHermes.com/us and
select “Sign In” and “Access and Manage Investments,” or call 1-800-341-7400,
Option #4 to speak with a Client Service Representative.
BY
SYSTEMATIC INVESTMENT PROGRAM (SIP)
Once
you have opened an account, you may automatically purchase additional Shares on
a regular basis by completing the SIP
section of the New Account Form or by contacting the Fund or your financial
intermediary. The minimum investment amount for SIPs is $50.
BY
AUTOMATED CLEARING HOUSE (ACH)
Once
you have opened an account, you may purchase additional Shares through a
depository institution that is an ACH
member. This purchase option can be established by completing the appropriate
sections of the New Account Form.
RETIREMENT
INVESTMENTS
A
& C Classes
You
may purchase Shares as retirement investments (such as qualified plans and IRAs
or transfer or rollover of assets).
Call your financial intermediary or the Fund for information on retirement
investments. We suggest that you discuss retirement investments with your tax
adviser. You may be subject to an account fee charged by your financial
intermediary.
How to
Redeem and Exchange Shares
You should
redeem or exchange Shares:
◾ through a
financial intermediary if you purchased Shares through a financial intermediary;
or
◾ directly
from the Fund if you purchased Shares directly from the Fund.
Shares
of the Fund may be redeemed for cash, or exchanged for shares of other Federated
Hermes funds as described herein, on
days on which the Fund computes its NAV. Redemption requests may be made by
telephone or in writing.
Redemption
proceeds normally are wired or mailed within one business day for each method of
payment after receiving a timely
request in proper form. Depending upon the method of payment, when shareholders
receive redemption proceeds can differ. Payment may be delayed for up to seven
days under certain circumstances (see “Limitations on Redemption
Proceeds”).
For
important account information, see the section “Security and Privacy
Protection.”
THROUGH
A FINANCIAL INTERMEDIARY
Submit
your redemption or exchange request to your financial intermediary by the end of
regular trading on the NYSE (normally
4:00 p.m. Eastern time). The redemption amount you will receive is based upon
the next calculated NAV after the Fund receives the order from your financial
intermediary.
30
DIRECTLY
FROM THE FUND
By
Telephone
You may
redeem or exchange Shares by simply calling the Fund at
1-800-341-7400.
If
you call before the end of regular trading on the NYSE (normally 4:00 p.m.
Eastern time), you will receive a redemption
amount based on that day’s NAV.
By
Mail
You may
redeem or exchange Shares by sending a written request to the Fund.
You
will receive a redemption amount based on the next calculated NAV after the Fund
receives your written request in proper
form.
Send
requests by mail to:
The
Federated Hermes Funds
P.O. Box 219318
Kansas City, MO 64121-9318
P.O. Box 219318
Kansas City, MO 64121-9318
Send
requests by private
courier or overnight delivery service
to:
The
Federated Hermes Funds
430 W 7th Street
Suite 219318
Kansas City, MO 64105-1407
430 W 7th Street
Suite 219318
Kansas City, MO 64105-1407
All
requests must include:
◾ Fund name
and Share class, account number and account registration;
◾ amount to
be redeemed or exchanged;
◾ signatures
of all shareholders exactly as registered; and
◾ if
exchanging, the Fund
name and Share class, account number and account registration into which you are
exchanging.
Call your
financial intermediary or the Fund if you need special instructions.
Signature
Guarantees
Signatures
must be guaranteed by a financial institution which is a participant in a
Medallion signature guarantee program
if:
◾ your
redemption will be sent to an address other than the address of
record;
◾ your
redemption will be sent to an address of record that was changed within the last
30 days;
◾ a
redemption is payable to someone other than the shareholder(s) of record;
or
◾ transferring
into another fund with a different shareholder registration.
A
Medallion signature guarantee is designed to protect your account from fraud.
Obtain a Medallion signature guarantee from a
bank or trust company, savings association, credit union or broker, dealer or
securities exchange member. A
notary
public
cannot provide a signature guarantee.
By
Online Account Services
You may
access your accounts online to redeem or exchange Shares through FederatedHermes.com/us’s
Shareholder Account Access system once you have registered for access. Online
transactions may be subject to certain limitations including limitations as to
the amount of the transaction. For more information about the services available
through Shareholder Account Access, please visit FederatedHermes.com/us and
select “Sign In” and “Access and Manage Investments,” or call 1-800-341-7400,
Option #4 to speak with a Client Service Representative.
PAYMENT
METHODS FOR REDEMPTIONS
Your
redemption proceeds will be mailed by check to your address of record. The
following payment options are available
if you complete the appropriate section of the New Account Form or an Account
Service Options Form. These payment options require a signature guarantee if
they were not established when the account was opened:
◾ An
electronic transfer to your account at a financial institution that is an ACH
member; or
◾ Wire
payment to your account at a domestic commercial bank that is a Federal Reserve
System member.
Methods
the Fund May Use to Meet Redemption Requests
The
Fund intends to pay Share redemptions in cash. To ensure that the Fund has cash
to meet Share redemptions on any day, the
Fund typically expects to hold a cash or cash equivalent reserve or sell
portfolio securities.
31
In unusual
or stressed circumstances, the Fund may generate cash in the following
ways:
◾ Inter-fund
Borrowing and Lending. The SEC
has granted an exemption that permits the Fund and all other funds advised by
subsidiaries of Federated Hermes (“Federated Hermes funds”) to lend and borrow
money for certain temporary purposes directly to and from other Federated Hermes
funds. Inter-fund borrowing and lending is permitted only: (a) to meet
shareholder redemption requests; (b) to meet commitments arising from “failed”
trades; and (c) for other temporary purposes. All inter-fund loans must be
repaid in seven days or less.
◾ Committed
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. The LOC was made available to temporarily finance the
repurchase or redemption of shares of the funds, 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.
◾ Redemption
in Kind. Although
the Fund intends to pay Share redemptions in cash, it reserves the right to pay
the redemption price in whole or in part by an “in-kind” distribution of the
Fund’s portfolio securities. Because the Fund has elected to be governed by Rule
18f-1 under the 1940 Act, the Fund is obligated to pay Share redemptions to any
one shareholder in cash only up to the lesser of $250,000 or 1% of the net
assets represented by such Share class during any 90-day period. Redemptions in
kind are made consistent with the procedures adopted by the Fund’s Board, which
generally include distributions of a pro rata share of the Fund’s portfolio
assets. Redemption in kind is not as liquid as a cash redemption. If redemption
is made in kind, securities received may be subject to market risk and the
shareholder could incur taxable gains and brokerage or other charges in
converting the securities to cash.
LIMITATIONS
ON REDEMPTION PROCEEDS
Redemption
proceeds normally are wired or mailed within one business day after receiving a
request in proper form. Payment
may be delayed for up to seven days:
◾ to allow
your purchase to clear (as discussed below);
◾ during
periods of market volatility;
◾ when a
shareholder’s trade activity or amount adversely impacts the Fund’s ability to
manage its assets; or
◾ during any
period when the Federal Reserve wire or applicable Federal Reserve banks are
closed, other than customary weekend and holiday closings.
If
you request a redemption of Shares recently purchased by check (including a
cashier’s check or certified check), money
order, bank draft or ACH, your redemption proceeds may not be made available for
up to seven calendar days to allow the Fund to collect payment on the instrument
used to purchase such Shares. If the purchase instrument does not clear, your
purchase order will be canceled and you will be responsible for any losses
incurred by the Fund as a result of your canceled order.
In
addition, the right of redemption may be suspended, or the payment of proceeds
may be delayed (including beyond seven
days), during any period:
◾ when the
NYSE is closed, other than customary weekend and holiday closings;
◾ when
trading on the NYSE is restricted, as determined by the SEC;
◾ in which
an emergency exists, as determined by the SEC, so that disposal of the Fund’s
investments or determination of its NAV is not reasonably practicable;
or
◾ as the SEC
may by order permit for the protection of Fund shareholders.
You
will not accrue interest or dividends on uncashed redemption checks from the
Fund when checks are undeliverable and
returned to the Fund.
redemptions
from retirement accounts
A
& C Classes
In
the absence of your specific instructions, 10% of the value of your redemption
from a retirement account in the Fund may be
withheld for taxes. This withholding only applies to certain types of retirement
accounts.
EXCHANGE
PRIVILEGE
You may
exchange Shares of the Fund. To do this, you must:
◾ meet any
applicable shareholder eligibility requirements;
◾ ensure
that the account registrations are identical;
◾ meet any
applicable minimum initial investment requirements; and
◾ receive a
prospectus for the fund into which you wish to exchange.
32
An
exchange is treated as a redemption and a subsequent purchase, and is a taxable
transaction. The Fund reserves the right to
reject any request to purchase or exchange Shares. The Fund may modify or
terminate the exchange privilege at any time.
In
addition, the Fund may terminate your exchange privilege if your exchange
activity is found to be excessive under the Fund’s
frequent trading policies. See “Account and Share Information–Frequent
Trading Policies.”
Financial
intermediaries may have different policies and procedures regarding the
availability of intra-fund exchanges (“automatic
exchanges”). These exchanges which are directed by the financial intermediary
and not the Fund are discussed in Appendix B to this
Prospectus.
A
& C Classes
You may
exchange Shares into shares of the same class of another Federated Hermes
fund.
IS
Class
You
may exchange Shares of the Fund for shares of any Federated Hermes fund or share
class that does not have a stated
sales charge or contingent deferred sales charge, except Shares of Federated
Hermes Institutional Money Market Management, Federated Hermes Institutional
Tax-Free Cash Trust, Federated Hermes Institutional Prime Obligations Fund,
Federated Hermes Institutional Prime Value Obligations Fund, no-load Class A
Shares and Class R Shares of any Fund.
Systematic
Withdrawal/Exchange Program
You
may automatically redeem or exchange Shares. The minimum amount for all new or
revised systematic redemptions
or exchanges of Shares is $50 per transaction per fund. Complete the appropriate
section of the New Account Form or an Account Service Options Form or contact
your financial intermediary or the Fund. Your account value must meet the
minimum initial investment amount at the time the program is established. This
program may reduce, and eventually deplete, your account. Payments should not be
considered yield or income.
Generally,
it is not advisable to continue to purchase Shares subject to a sales charge
while redeeming Shares using this
program.
ADDITIONAL
CONDITIONS
Telephone
Transactions
The
Fund will record your telephone instructions. If the Fund does not follow
reasonable procedures, it may be liable for losses
due to unauthorized or fraudulent telephone instructions.
Share
Certificates
The
Fund no longer issues share certificates. If you are redeeming or exchanging
Shares represented by certificates previously
issued by the Fund, you must return the certificates with your written
redemption or exchange request. For your protection, send your certificates by
registered or certified mail, but do not endorse them.
Security
and Privacy Protection
ONLINE
ACCOUNT and TELEPHONE ACCESS SECURITY
Federated
Hermes will not be responsible for losses that result from unauthorized
transactions, unless Federated Hermes does not
follow procedures designed to verify your identity. When initiating a
transaction by telephone or online, shareholders should be aware that any person
with access to your account and other personal information including PINs
(Personal Identification Numbers) may be able to submit instructions by
telephone or online. Shareholders are responsible for protecting their identity
by using strong usernames and complex passwords which utilize combinations of
mixed case letters, numbers and symbols, and change passwords and PINs
frequently.
Using
FederatedHermes.com/us’s
Account Access website means you are consenting to sending and receiving
personal financial information over the Internet, so you should be sure you are
comfortable with the risks. You will be required to accept the terms of an
online agreement and to establish and utilize a password in order to access
online account services. The Transfer Agent has adopted security procedures to
confirm that Internet instructions are genuine. The Transfer Agent will also
send you written confirmation of share transactions. The Transfer Agent, the
Fund and any of its affiliates will not be liable for losses or expenses that
occur from fraudulent Internet instructions reasonably believed to be
genuine.
33
The
Transfer Agent or the Fund will employ reasonable procedures to confirm that
telephone transaction requests are genuine,
which may include recording calls, asking the caller to provide certain personal
identification information, sending you written confirmation, or requiring other
confirmation security procedures. The Transfer Agent, the Fund and any of its
affiliates will not be liable for relying on instructions submitted by telephone
that the Fund reasonably believes to be genuine.
ANTI-MONEY
LAUNDERING COMPLIANCE
To
help the government fight the funding of terrorism and money laundering
activities, federal law requires financial institutions
to obtain, verify and record information that identifies each new customer who
opens a Fund account and to determine whether such person’s name appears on
governmental lists of known or suspected terrorists or terrorist organizations.
Pursuant to the requirements under the USA PATRIOT Act, the information obtained
will be used for compliance with the USA PATRIOT Act or other applicable laws,
regulations and rules in connection with money laundering, terrorism or other
illicit activities.
Information
required includes your name, residential or business address, date of birth (for
an individual), and other information
that identifies you, including your social security number, tax identification
number or other identifying number. The Fund cannot waive these requirements.
The Fund is required by law to reject your Account Application if the required
information is not provided. If, after reasonable effort, the Fund is unable to
verify your identity or that of any other person(s) authorized to act on your
behalf, or believes it has identified potentially suspicious, fraudulent or
criminal activity, the Fund reserves the right to close your account and redeem
your shares at the next calculated NAV without your permission. Any applicable
contingent deferred sales charge (CDSC) will be assessed upon redemption of your
shares.
The
Fund has a strict policy designed to protect the privacy of your personal
information. A copy of Federated Hermes’ privacy policy notice was
given to you at the time you opened your account. The Fund sends a copy of the
privacy notice to you annually. You may also obtain the privacy notice by
calling the Fund, or through FederatedHermes.com/us.
Account
and Share Information
CONFIRMATIONS
AND ACCOUNT STATEMENTS
You
will receive confirmation of purchases, redemptions and exchanges (except for
systematic transactions). In addition,
you will receive periodic statements reporting all account activity, including
systematic transactions, dividends and capital gains paid.
DIVIDENDS
AND CAPITAL GAINS
The
Fund declares and pays any dividends monthly to shareholders. Dividends are paid
to all shareholders invested in the Fund
on the record date. The record date is the date on which a shareholder must
officially own Shares in order to earn a dividend.
In
addition, the Fund pays any capital gains at least annually and may make such
special distributions of dividends and capital gains as may
be necessary to meet applicable regulatory requirements. Your dividends and
capital gains distributions will be automatically reinvested in additional
Shares without a sales charge unless you elect cash payments. Dividends may also
be reinvested without sales charges in shares of any class of any other
Federated Hermes fund of which you are already a shareholder.
If
you purchase Shares just before the record date for a dividend or capital gain
distribution, you will pay the full price for the
Shares and then receive a portion of the price back in the form of a taxable
distribution, whether or not you reinvest the distribution in Shares. Therefore,
you should consider the tax implications of purchasing Shares shortly before the
record date for a dividend or capital gain. Contact your financial intermediary
or the Fund for information concerning when dividends and capital gains will be
paid.
Under
the federal securities laws, the Fund is required to provide a notice to
shareholders regarding the source of distributions made by the
Fund if such distributions are from sources other than ordinary investment
income. In addition, important information regarding the Fund’s distributions,
if applicable, is available via the link to the Fund and share class name at
FederatedHermes.com/us/FundInformation.
Small
Distributions and Uncashed Checks
Generally,
dividend and/or capital gain distributions payable by check in an amount of less
than $25 will be automatically
reinvested in additional shares. This policy does not apply if you have elected
to receive cash distributions that are directly deposited into your bank account
via wire or ACH.
34
Additionally,
if one or more dividend or capital gain distribution checks are returned as
“undeliverable,” or remain uncashed
for 180 days, all subsequent dividend and capital gain distributions will be
reinvested in additional shares. No interest will accrue on amounts represented
by uncashed distribution checks. For questions on whether reinvestment applies
to your distributions, please contact a Client Service Representative at
1-800-341-7400.
Certain
states, including the State of Texas, have laws that allow shareholders to
designate a representative to receive abandoned or unclaimed
property (“escheatment”) notifications by completing and submitting a
designation form that generally can be found on the official state website. If a
shareholder resides in an applicable state and elects to designate a
representative to receive escheatment notifications, escheatment notices
generally will be delivered as required by such state laws, including, as
applicable, to both the shareholder and the designated representative. A
completed designation form may be mailed to the Fund (if Shares are held
directly with the Fund) or to the shareholder’s financial intermediary (if
Shares are not held directly with the Fund). Shareholders should refer to
relevant state law for the shareholder’s specific rights and responsibilities
under his or her state’s escheatment law(s), which can generally be found on a
state’s official website.
ACCOUNTS
WITH LOW BALANCES
Federated
Hermes reserves the right to close accounts if redemptions or exchanges cause
the account balance to fall
below:
◾ $1,500 for
the A and C classes (or in the case of IRAs, $250); and
◾ $25,000
for the IS class.
Before
an account is closed, you will be notified and allowed at least 30 days to
purchase additional Shares to meet the
minimum.
TAX
INFORMATION
The
Fund and/or your financial intermediary provides year-end tax information and an
annual statement of your account activity
to assist you in completing your federal, state and local tax returns. Fund
distributions of dividends and capital gains are taxable to you whether paid in
cash or reinvested in the Fund. Dividends are taxable at different rates
depending on the source of dividend income. Distributions of net short-term
capital gains are taxable to you as ordinary income. Distributions of net
long-term capital gains are taxable to you as long-term capital gains regardless
of how long you have owned your Shares. Fund distributions are expected to be
primarily dividends. Redemptions and exchanges are taxable sales. Please consult
your tax adviser regarding your federal, state and local tax
liability.
FREQUENT
TRADING POLICIES
Frequent
or short-term trading into and out of the Fund can have adverse consequences for
the Fund and shareholders who use
the Fund as a long-term investment vehicle. Such trading in significant amounts
can disrupt the Fund’s investment strategies (e.g., by requiring it to sell
investments at inopportune times or maintain excessive short-term or cash
positions to support redemptions), increase brokerage and administrative costs
and affect the timing and amount of taxable gains distributed by the Fund.
Investors engaged in such trading may also seek to profit by anticipating
changes in the Fund’s NAV in advance of the time as of which NAV is
calculated.
The
Fund’s Board has approved policies and procedures intended to discourage
excessive frequent or short-term trading of the
Fund’s Shares. The Fund’s fair valuation procedures are intended in part to
discourage short-term trading strategies by reducing the potential for these
strategies to succeed. See “What Do Shares Cost?” The Fund also monitors trading
in Fund Shares in an effort to identify disruptive trading activity. The Fund
monitors trades into and out of the Fund within a period of 30 days or less. The
Fund may also monitor trades into and out of the Fund for potentially disruptive
trading activity over periods longer than 30 days. The size of Share
transactions subject to monitoring varies. Where it is determined that a
shareholder has exceeded the detection amounts twice within a period of 12
months, the Fund will temporarily prohibit the shareholder from making further
purchases or exchanges of Fund Shares. If the shareholder continues to exceed
the detection amounts for specified periods, the Fund will impose lengthier
trading restrictions on the shareholder, up to and including permanently
prohibiting the shareholder from making any further purchases or exchanges of
Fund Shares. Whether or not the specific monitoring limits are exceeded, the
Fund’s management or the Adviser may determine from the amount, frequency or
pattern of purchases and redemptions or exchanges that a shareholder is engaged
in excessive trading that is or could be detrimental to the Fund and other
shareholders and may prohibit the shareholder from making further purchases or
exchanges of Fund Shares. No matter how the Fund defines its limits on frequent
trading of Fund Shares, other purchases and sales of Fund Shares may have
adverse effects on the management of the Fund’s portfolio and its
performance.
35
The
Fund’s frequent trading restrictions do not apply to purchases and sales of Fund
Shares by other Federated Hermes funds.
These funds impose the same frequent trading restrictions as the Fund at their
shareholder level. In addition, allocation changes of the investing Federated
Hermes fund are monitored, and the managers of the recipient fund must determine
that there is no disruption to their management activity. The intent of this
exception is to allow investing fund managers to accommodate cash flows and
other activity that result from non-abusive trading in the investing fund,
without being stopped from such trading because the aggregate of such trades
exceeds the monitoring limits. Nonetheless, as with any trading in Fund Shares,
purchases and redemptions of Fund Shares by other Federated Hermes funds could
adversely affect the management of the Fund’s portfolio and its
performance.
The
Fund will not restrict transactions made on a non-discretionary basis by certain
asset allocation programs, wrap programs,
fund of funds, collective funds or other similar accounts that have been
pre-approved by Federated Hermes (“Approved Accounts”). The Fund will continue
to monitor transactions by the Approved Accounts and will seek to limit or
restrict even non-discretionary transactions by Approved Accounts that are
determined to be disruptive or harmful to the Fund.
The
Fund’s objective is that its restrictions on short-term trading should apply to
all shareholders that are subject to the restrictions,
regardless of the number or type of accounts in which Shares are held. However,
the Fund anticipates that limitations on its ability to identify trading
activity to specific shareholders, including where Shares are held through
intermediaries in multiple or omnibus accounts, will mean that these
restrictions may not be able to be applied uniformly in all cases.
Other
funds in the Federated Hermes family of funds may impose different monitoring
policies or in some cases, may not
monitor for frequent or short-term trading. Under normal market conditions such
monitoring policies are designed to protect the funds being monitored and their
shareholders and the operation of such policies and shareholder investments
under such monitoring are not expected to have materially adverse impact on the
Federated Hermes funds or their shareholders. If you plan to exchange your fund
shares for shares of another Federated Hermes fund, please read the prospectus
of that other Federated Hermes fund for more information.
The
Fund may invest in affiliated investment companies whose boards have determined
not to adopt frequent trading policies.
The Fund therefore may be exposed to any adverse consequences of any frequent or
short-term trading in such funds, to the extent of the Fund’s investment
therein.
PORTFOLIO
HOLDINGS INFORMATION
Information
concerning the Fund’s portfolio holdings is available via the link to the Fund
and share class name at FederatedHermes.com/us/FundInformation.
A complete listing of the Fund’s portfolio holdings as of the end of each
calendar quarter is posted on the website 30 days (or the next business day)
after the end of the quarter and remains posted for six months thereafter.
Summary portfolio composition information as of the close of each month is
posted on the website 15 days (or the next business day) after month-end and
remains posted until replaced by the information for the succeeding month. The
summary portfolio composition information may include identification of the
Fund’s top 10 holdings, and percentage breakdowns of the portfolio by credit
quality and geographic region.
You may
also access portfolio information as of the end of the Fund’s fiscal quarters
via the link to the Fund and share class name at
FederatedHermes.com/us. The Fund’s Annual and Semi-Annual Shareholder Reports
contain complete listings of the Fund’s portfolio holdings as of the end of the
Fund’s second and fourth fiscal quarters. Fiscal quarter information is made
available on the website within 70 days after the end of the fiscal quarter.
This information is also available in reports filed with the SEC at the SEC’s
website at sec.gov.
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.
In
addition, from time to time (for example, during periods of unusual market
conditions), additional information regarding the Fund’s
portfolio holdings and/or composition may be posted to FederatedHermes.com/us.
If and when such information is posted, its availability will be noted on, and
the information will be accessible from, the home page of the
website.
36
Who
Manages the Fund?
INVESTMENT
ADVISER
The
Board governs the Fund. The Board selects and oversees the Adviser, Federated
Investment Management Company (FIMCO).
The Adviser manages the Fund’s assets, including buying and selling portfolio
securities. Federated Advisory Services Company (FASC), an affiliate of the
Adviser, provides research, quantitative analysis, equity trading and
transaction settlement and certain other support services to the Adviser. The
fee for these services is paid by the Adviser and not by the Fund. The address
of the Adviser and FASC is 1001 Liberty Avenue, Pittsburgh, PA
15222-3779.
The
Adviser, Sub-Adviser and other subsidiaries of Federated Hermes advise
approximately 101 registered investment
companies spanning equity, fixed-income and money market mutual funds and also
manage a variety of other pooled investment vehicles, private investment
companies and customized separately managed accounts (including
non-U.S./offshore funds). Federated Hermes’ assets under management totaled
approximately $715.2 billion as of September 30, 2023. Federated Hermes was
established in 1955 as Federated Investors, Inc. and is one of the largest
investment managers in the United States with more than 2,000 employees.
Federated Hermes provides investment products to more than 10,000 investment
professionals and institutions.
The
Adviser advises approximately 73 registered investment companies and also
manages sub-advised funds. The Adviser’s assets under
management totaled approximately $468.4 billion as of December 31,
2023.
The
Adviser has delegated daily management of some or all of the Fund assets to the
Sub-Adviser, Federated Hermes (UK) LLP
(Fed UK). The Sub-Adviser is paid by the Adviser and not by the Fund, based on
the portion of securities the Sub-Adviser manages. The Sub-Adviser’s address is
150 Cheapside, London EC2V 6ET, United Kingdom.
SUB-ADVISER
Under
the supervision of the Adviser and oversight by the Board and pursuant to a
sub-advisory agreement between the
Adviser and the Sub-Adviser, Federated Hermes (UK) LLP, will act as
sub-investment adviser to the Fund. The Sub-Adviser will have day-to-day
portfolio management responsibilities of the Fund.
Federated
Hermes (UK) LLP, a limited liability partnership incorporated in England and
Wales, is a wholly owned London based subsidiary of
Federated Hermes, Inc., and is authorized and regulated by the UK Financial
Conduct Authority to provide investment management services. The Sub-Adviser is
also registered as an investment adviser with the SEC. The Sub-Adviser advises
approximately four registered investment companies. The Sub-Adviser’s assets
under management totaled approximately $11.5 billion as of December 31, 2023.
The Sub-Adviser’s assets under management are currently primarily comprised of
assets from non-U.S. domiciled funds, other pooled investment vehicles and
separate accounts, such as UK registered money market funds and other accounts
of institutional clients from the UK, Europe and certain other non-U.S.
jurisdictions.
PORTFOLIO
MANAGEMENT INFORMATION
FIMCO
Ihab
L. Salib
Ihab L.
Salib, Senior Portfolio Manager, has been the Fund’s portfolio manager since May
of 2013.
Mr.
Salib is Head of the International Fixed Income Group and Head of the Currency
Management Committee. He is responsible
for day-to-day management of the Fund focusing on asset allocation, interest
rate strategy and security selection. He has been with the Adviser or an
affiliate since 1999; has worked in investment management since 1992; has
managed investment portfolios since 2002. Education: B.A., State University of
New York at Stony Brook.
Jason
C. DeVito
Jason C. DeVito, CFA,
Senior Portfolio Manager, has been the Fund’s portfolio manager since January of
2018.
Mr.
DeVito is responsible for day-to-day management of the Fund focusing on asset
allocation, interest rate strategy and security
selection. He has been with the Adviser or an affiliate since 2002; has worked
in investment management since 2002; has managed investment portfolios since
2015. Education; B.B.A., University of Notre Dame; M.B.A., Carnegie Mellon
University.
37
Fed
UK
Mohammed
H. Elmi
Mohammed H. Elmi, CFA,
Senior Portfolio Manager, has been the Fund’s portfolio manager since July of
2019.
Mr.
Elmi is responsible for day-to-day management of the Fund focusing on asset
allocation, interest rate strategy and security
selection. He has been with the Adviser or an affiliate since 2013; has worked
in investment management since 2000; has managed investment portfolios since
2016. Education; B.Sc., M.Sc., University of London.
The
Fund’s SAI provides additional information about the Portfolio Managers’
compensation, management of other accounts
and ownership of securities in the Fund.
ADVISORY
FEES
The
Fund’s investment advisory contract provides for payment to the Adviser of an
annual investment advisory fee of 0.85% of
the Fund’s average daily net assets. The Adviser may voluntarily waive a portion
of its fee or reimburse the Fund for certain operating expenses. The Adviser and
its affiliates have also agreed to certain “Fee Limits” as described in the
footnote to the “Risk/Return Summary: Fees and Expenses” table found in the
“Fund Summary” section of the Prospectus.
A
discussion of the Board’s review of the Fund’s investment advisory and
subadvisory contracts is available in the Fund’s
Annual and Semi-Annual Shareholder Reports for the periods ended November 30 and
May 31, respectively.
Financial
Information
FINANCIAL
HIGHLIGHTS
The
Financial Highlights will help you understand the Fund’s financial performance
for its past five fiscal years. Some of the
information is presented on a per Share basis. Total returns represent the rate
an investor would have earned (or lost) on an investment in the Fund, assuming
reinvestment of any dividends and capital gains.
This
information has been audited by Ernst & Young LLP, an independent registered
public accounting firm, whose report,
along with the Fund’s audited financial statements, is included in the Annual
Report.
38
Financial
Highlights–Class
A Shares
(For a Share Outstanding Throughout
Each Period)
|
|
Year
Ended November 30, | ||||
|
|
2023 |
2022 |
2021 |
2020 |
2019 |
|
Net
Asset Value, Beginning of Period |
$6.80 |
$8.41 |
$8.85 |
$8.56 |
$7.91 |
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income1 |
0.53 |
0.50 |
0.44 |
0.47 |
0.54 |
|
Net
realized and unrealized gain (loss) |
0.20 |
(1.80) |
(0.60) |
0.02 |
0.33 |
|
TOTAL
FROM INVESTMENT OPERATIONS |
0.73 |
(1.30) |
(0.16) |
0.49 |
0.87 |
|
Less
Distributions: |
|
|
|
|
|
|
Distributions
from net investment income |
(0.25) |
(0.31) |
(0.28) |
(0.20) |
(0.22) |
|
Net
Asset Value, End of Period |
$7.28 |
$6.80 |
$8.41 |
$8.85 |
$8.56 |
|
Total
Return2 |
11.00% |
(15.60)% |
(1.96)% |
5.83% |
11.23% |
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses3 |
1.19% |
1.18% |
1.18% |
1.18%4 |
1.18%4 |
|
Net
investment income |
7.63% |
6.21% |
5.01% |
5.51% |
6.13% |
|
Expense
waiver/reimbursement5 |
2.03% |
1.43% |
1.01% |
1.16% |
0.91% |
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$12,128 |
$12,442 |
$28,558 |
$24,294 |
$26,993 |
|
Portfolio
turnover6 |
72% |
81% |
74% |
69% |
91% |
|
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. |
|
3 |
Amount
does not reflect net expenses incurred by investment companies in which
the Fund may invest. |
|
4 |
The
net expense ratios are calculated without reduction for expense offset
arrangements. The net expense ratios are 1.18% and 1.18% for the years
ended
November
30, 2020 and 2019, respectively, after taking into account these expense
reductions. |
|
5 |
This
expense decrease is reflected in both the net expense and 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. |
Further information
about the Fund’s performance is contained in the Fund’s Annual Report, dated
November 30, 2023, which can be obtained free of charge.
39
Financial
Highlights–Class
C Shares
(For a Share Outstanding Throughout
Each Period)
|
|
Year
Ended November 30, | ||||
|
|
2023 |
2022 |
2021 |
2020 |
2019 |
|
Net
Asset Value, Beginning of Period |
$6.75 |
$8.35 |
$8.80 |
$8.50 |
$7.86 |
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income1 |
0.48 |
0.46 |
0.39 |
0.45 |
0.49 |
|
Net
realized and unrealized gain (loss) |
0.19 |
(1.80) |
(0.63) |
(0.02) |
0.31 |
|
TOTAL
FROM INVESTMENT OPERATIONS |
0.67 |
(1.34) |
(0.24) |
0.43 |
0.80 |
|
Less
Distributions: |
|
|
|
|
|
|
Distributions
from net investment income |
(0.20) |
(0.26) |
(0.21) |
(0.13) |
(0.16) |
|
Net
Asset Value, End of Period |
$7.22 |
$6.75 |
$8.35 |
$8.80 |
$8.50 |
|
Total
Return2 |
10.10% |
(16.23)% |
(2.79)% |
5.20% |
10.34% |
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses3 |
1.94% |
1.93% |
1.93% |
1.93%4 |
1.93%4 |
|
Net
investment income |
7.03% |
5.61% |
4.51% |
4.93% |
5.56% |
|
Expense
waiver/reimbursement5 |
2.03% |
1.48% |
1.05% |
1.15% |
0.91% |
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$162 |
$257 |
$501 |
$1,394 |
$2,207 |
|
Portfolio
turnover6 |
72% |
81% |
74% |
69% |
91% |
|
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. |
|
3 |
Amount
does not reflect net expenses incurred by investment companies in which
the Fund may invest. |
|
4 |
The
net expense ratios are calculated without reduction for expense offset
arrangements. The net expense ratios are 1.93% and 1.93% for the years
ended
November
30, 2020 and 2019, respectively, after taking into account these expense
reductions. |
|
5 |
This
expense decrease is reflected in both the net expense and 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. |
Further information
about the Fund’s performance is contained in the Fund’s Annual Report, dated
November 30, 2023, which can be obtained free of charge.
40
Financial
Highlights–Institutional
Shares
(For a Share Outstanding Throughout
Each Period)
|
|
Year
Ended November 30, | ||||
|
|
2023 |
2022 |
2021 |
2020 |
2019 |
|
Net
Asset Value, Beginning of Period |
$6.81 |
$8.42 |
$8.87 |
$8.57 |
$7.92 |
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income1 |
0.55 |
0.55 |
0.46 |
0.49 |
0.56 |
|
Net
realized and unrealized gain (loss) |
0.20 |
(1.83) |
(0.61) |
0.03 |
0.33 |
|
TOTAL
FROM INVESTMENT OPERATIONS |
0.75 |
(1.28) |
(0.15) |
0.52 |
0.89 |
|
Less
Distributions: |
|
|
|
|
|
|
Distributions
from net investment income |
(0.27) |
(0.33) |
(0.30) |
(0.22) |
(0.24) |
|
Net
Asset Value, End of Period |
$7.29 |
$6.81 |
$8.42 |
$8.87 |
$8.57 |
|
Total
Return2 |
11.26% |
(15.37)% |
(1.81)% |
6.21% |
11.49% |
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses3 |
0.94% |
0.93% |
0.93% |
0.93%4 |
0.93%4 |
|
Net
investment income |
7.86% |
6.66% |
5.22% |
5.81% |
6.40% |
|
Expense
waiver/reimbursement5 |
2.03% |
1.48% |
1.01% |
1.15% |
0.91% |
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$5,392 |
$5,479 |
$10,464 |
$7,653 |
$9,256 |
|
Portfolio
turnover6 |
72% |
81% |
74% |
69% |
91% |
|
1 |
Per
share numbers have been calculated using the average shares
method. |
|
2 |
Based
on net asset value. |
|
3 |
Amount
does not reflect net expenses incurred by investment companies in which
the Fund may invest. |
|
4 |
The
net expense ratios are calculated without reduction for expense offset
arrangements. The net expense ratios are 0.93% and 0.93% for the years
ended
November
30, 2020 and 2019, respectively, after taking into account these expense
reductions. |
|
5 |
This
expense decrease is reflected in both the net expense and 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. |
Further information
about the Fund’s performance is contained in the Fund’s Annual Report, dated
November 30, 2023, which can be obtained free of
charge.
41
Appendix
A: Hypothetical Investment and Expense Information
The
following charts provide additional hypothetical information about the effect of
the Fund’s expenses, including investment
advisory fees and other Fund costs, on the Fund’s assumed returns over a 10-year
period. The charts show the estimated expenses that would be incurred in respect
of a hypothetical investment of $10,000, assuming a 5% return each year, and no
redemption of Shares. Each chart also assumes that the Fund’s annual expense
ratio stays the same throughout the 10-year period (except for the C class,
which converts to the A class after you have held them for eight years) and that
all dividends and distributions are reinvested. The annual expense ratios used
in each chart are the same as stated in the “Fees and Expenses” table of this
Prospectus (and thus do not reflect any fee waiver or expense reimbursement
currently in effect). The maximum amount of any sales charge that might be
imposed on the purchase of Shares
(and deducted from the hypothetical initial investment of $10,000; the
“Front-End Sales Charge”) is reflected in the “Hypothetical Expenses” column.
The hypothetical investment information does not reflect the effect of charges
(if any) normally applicable to redemptions of Shares
(e.g., deferred sales charges, redemption fees). Mutual fund returns, as well as
fees and expenses, may fluctuate over time, and your actual investment returns
and total expenses may be higher or lower than those shown below.
|
FEDERATED
HERMES EMERGING MARKET DEBT FUND - A CLASS | |||||
|
ANNUAL
EXPENSE RATIO: 3.22% | |||||
|
MAXIMUM
FRONT-END SALES CHARGE: 4.50% | |||||
|
Year |
Hypothetical
Beginning
Investment |
Hypothetical
Performance
Earnings |
Investment
After
Returns |
Hypothetical
Expenses |
Hypothetical
Ending
Investment |
|
1 |
$10,000.00 |
$477.50 |
$10,027.50 |
$760.25 |
$9,719.99 |
|
2 |
$9,719.99 |
$486.00 |
$10,205.99 |
$315.77 |
$9,893.01 |
|
3 |
$9,893.01 |
$494.65 |
$10,387.66 |
$321.39 |
$10,069.11 |
|
4 |
$10,069.11 |
$503.46 |
$10,572.57 |
$327.11 |
$10,248.34 |
|
5 |
$10,248.34 |
$512.42 |
$10,760.76 |
$332.93 |
$10,430.76 |
|
6 |
$10,430.76 |
$521.54 |
$10,952.30 |
$338.86 |
$10,616.43 |
|
7 |
$10,616.43 |
$530.82 |
$11,147.25 |
$344.89 |
$10,805.40 |
|
8 |
$10,805.40 |
$540.27 |
$11,345.67 |
$351.03 |
$10,997.74 |
|
9 |
$10,997.74 |
$549.89 |
$11,547.63 |
$357.28 |
$11,193.50 |
|
10 |
$11,193.50 |
$559.68 |
$11,753.18 |
$363.64 |
$11,392.74 |
|
Cumulative |
|
$5,176.23 |
|
$3,813.15 |
|
|
FEDERATED
HERMES EMERGING MARKET DEBT FUND - C CLASS | |||||
|
ANNUAL
EXPENSE RATIO: 3.97% | |||||
|
MAXIMUM
FRONT-END SALES CHARGE: NONE | |||||
|
Year |
Hypothetical
Beginning
Investment |
Hypothetical
Performance
Earnings |
Investment
After
Returns |
Hypothetical
Expenses |
Hypothetical
Ending
Investment |
|
1 |
$10,000.00 |
$500.00 |
$10,500.00 |
$399.04 |
$10,103.00 |
|
2 |
$10,103.00 |
$505.15 |
$10,608.15 |
$403.15 |
$10,207.06 |
|
3 |
$10,207.06 |
$510.35 |
$10,717.41 |
$407.31 |
$10,312.19 |
|
4 |
$10,312.19 |
$515.61 |
$10,827.80 |
$411.50 |
$10,418.41 |
|
5 |
$10,418.41 |
$520.92 |
$10,939.33 |
$415.74 |
$10,525.72 |
|
6 |
$10,525.72 |
$526.29 |
$11,052.01 |
$420.02 |
$10,634.13 |
|
7 |
$10,634.13 |
$531.71 |
$11,165.84 |
$424.35 |
$10,743.66 |
|
8 |
$10,743.66 |
$537.18 |
$11,280.84 |
$428.72 |
$10,854.32 |
|
Converts
from Class C to Class A |
Annual
Expense Ratio: 3.22% | ||||
|
9 |
$10,854.32 |
$542.72 |
$11,397.04 |
$352.62 |
$11,047.53 |
|
10 |
$11,047.53 |
$552.38 |
$11,599.91 |
$358.90 |
$11,244.18 |
|
Cumulative |
|
$5,242.31 |
|
$4,021.35 |
|
42
|
FEDERATED
HERMES EMERGING MARKET DEBT FUND - IS CLASS | |||||
|
ANNUAL
EXPENSE RATIO: 2.97% | |||||
|
MAXIMUM
FRONT-END SALES CHARGE: NONE | |||||
|
Year |
Hypothetical
Beginning
Investment |
Hypothetical
Performance
Earnings |
Investment
After
Returns |
Hypothetical
Expenses |
Hypothetical
Ending
Investment |
|
1 |
$10,000.00 |
$500.00 |
$10,500.00 |
$300.01 |
$10,203.00 |
|
2 |
$10,203.00 |
$510.15 |
$10,713.15 |
$306.10 |
$10,410.12 |
|
3 |
$10,410.12 |
$520.51 |
$10,930.63 |
$312.32 |
$10,621.45 |
|
4 |
$10,621.45 |
$531.07 |
$11,152.52 |
$318.66 |
$10,837.07 |
|
5 |
$10,837.07 |
$541.85 |
$11,378.92 |
$325.13 |
$11,057.06 |
|
6 |
$11,057.06 |
$552.85 |
$11,609.91 |
$331.73 |
$11,281.52 |
|
7 |
$11,281.52 |
$564.08 |
$11,845.60 |
$338.46 |
$11,510.53 |
|
8 |
$11,510.53 |
$575.53 |
$12,086.06 |
$345.33 |
$11,744.19 |
|
9 |
$11,744.19 |
$587.21 |
$12,331.40 |
$352.34 |
$11,982.60 |
|
10 |
$11,982.60 |
$599.13 |
$12,581.73 |
$359.50 |
$12,225.85 |
|
Cumulative |
|
$5,482.38 |
|
$3,289.58 |
|
43
Appendix
B: Sales Charge Waivers and Exchange Features for Shareholders Purchasing
Through Certain Financial Intermediaries
The
term “fund family,” used herein, shall refer to the Federated Hermes mutual
funds.
The
following Appendix applies to certain share classes offered by the
Fund.
Ameriprise
Financial
CLASS
A SHARES FRONT-END SALES CHARGE WAIVERS AVAILABLE AT AMERIPRISE
FINANCIAL:
The
following information applies to Class A shares purchases if you have an account
with or otherwise purchase Fund shares through Ameriprise Financial:
Effective
January 15, 2021, shareholders purchasing Fund shares through an Ameriprise
Financial retail brokerage account
are eligible for the following front-end sales charge waivers, which may differ
from those disclosed elsewhere in this Fund’s prospectus or SAI:
◾ Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b)
plans, profit sharing and money purchase pension plans and defined benefit
plans). For purposes of this provision, employer-sponsored retirement plans do
not include SEP IRAs, Simple IRAs or SAR-SEPs.
◾ Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same Fund (but not any other fund
within the same fund family).
◾ Shares
exchanged from Class C shares of the same fund in the month of or following the
7-year anniversary of the purchase date. To the extent that this prospectus
elsewhere provides for a waiver with respect to exchanges of Class C shares or
conversion of Class C shares following a shorter holding period, that waiver
will apply.
◾ Employees
and registered representatives of Ameriprise Financial or its affiliates and
their immediate family members.
◾ Shares
purchased by or through qualified accounts (including IRAs, Coverdell Education
Savings Accounts, 401(k)s, 403(b) TSCAs subject to ERISA and defined benefit
plans) that are held by a covered family member, defined as an Ameriprise
financial advisor and/or the advisor’s spouse, advisor’s lineal ascendant
(mother, father, grandmother, grandfather, great grandmother, great
grandfather), advisor’s lineal descendant (son, step-son, daughter,
step-daughter, grandson, granddaughter, great grandson, great granddaughter) or
any spouse of a covered family member who is a lineal descendant.
◾ Shares
purchased from the proceeds of redemptions within the same fund family, provided
(1) the repurchase occurs within 90 days following the redemption, (2) the
redemption and purchase occur in the same account, and (3) redeemed shares were
subject to a front-end or deferred sales load (i.e., Rights of
Reinstatement).
Robert
W. Baird & Co., Inc.
Effective
June 15, 2020, shareholders purchasing Fund shares through a Baird platform or
account will only be eligible for the
following sales charge waivers (front-end sales charge waivers and CDSC waivers)
and discounts, which may differ from those disclosed elsewhere in this
prospectus or the SAI.
Front-End
Sales Charge Waivers on Investors A-shares Available at Baird
◾ Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing share of the same fund;
◾ Share
purchase by employees and registered representatives of Baird or its affiliate
and their family members as designated by Baird;
◾ Shares
purchase from the proceeds of redemptions within the same fund family, provided:
(1) the repurchase occurs within 90 days following the redemption; (2) the
redemption and purchase occur in the same accounts; and (3) redeemed shares were
subject to a front-end or deferred sales charge (known as rights of
reinstatement);
◾ Class C
(i.e., level-load) shares that are no longer subject to a CDSC and are exchanged
to Class A shares (or the appropriate share class) of the same fund pursuant to
Baird’s intra-fund share class policies and procedures;
◾ Employer-sponsored
retirement plans or charitable accounts in a transactional brokerage account at
Baird, including 401(k) plans, 457 plans, employer-sponsored 403(b) plans,
profit sharing and money purchase pension plans and defined benefit plans. For
purposes of this provision, employer-sponsored retirement plans do not include
SEP IRAs, Simple IRAs or SAR-SEPs.
44
CDSC
Waivers on Investor A and C Shares Available at Baird
◾ Shares
sold upon the death or disability of the shareholder;
◾ Shares
sold as part of a systematic withdrawal plan as described in the Fund’s
Prospectus;
◾ Shares
bought due to returns of excess contributions from an IRA Account;
◾ Shares
sold as part of a required minimum distribution for IRA and retirement accounts
pursuant to the Internal Revenue Code;
◾ Shares
sold to pay Baird fees but only if the transaction is initiated by
Baird;
◾ Shares
acquired through a right of reinstatement.
Front-End
Sales Charge Discounts Available at Baird: Breakpoints and/or Rights of
Accumulations
◾ Breakpoints
as described in this prospectus;
◾ Rights of
accumulations which entitles shareholders to breakpoint discounts will be
automatically calculated based on the aggregated holding of fund family assets
held by accounts within the purchaser’s household at Baird. Eligible fund family
assets not held at Baird may be included in the rights of accumulations
calculation only if the shareholder notifies his or her financial advisor about
such assets;
◾ Letters of
Intent (LOI) allow for breakpoint discounts based on anticipated purchases
within a fund family through Baird, over a 13-month period of time.
Edward
D. Jones & Co., L.P. (EDWARD JONES)
Policies
Regarding Transactions Through Edward Jones
Effective on or
after January 1st, 2024, the following information supersedes prior information
with respect to transactions and positions held in fund shares through an Edward
Jones system. Clients of Edward Jones
(also referred
to as “shareholders”) purchasing fund shares on the Edward Jones commission and
fee-based platforms are eligible only for the following sales charge discounts
(also referred to as
“breakpoints”)
and
waivers, which can differ from discounts and waivers described elsewhere in the
mutual fund prospectus or statement of additional information (“SAI”) or through
another broker-dealer. In all instances, it is the shareholder’s responsibility
to inform Edward Jones at the time of purchase of any relationship, holdings of
fund family, or other facts qualifying the purchaser for discounts or waivers.
Edward Jones can ask for documentation of such circumstance. Shareholders should
contact Edward Jones if they have questions regarding their eligibility for
these discounts and waivers.
Breakpoints
◾ Breakpoint pricing,
otherwise known as volume pricing, at dollar thresholds as described in the
prospectus.
Rights of
Accumulation (“ROA”)
◾ The applicable sales
charge on a purchase of Class A shares is determined by taking into account all
share classes (except certain money market funds and any assets held in group
retirement plans) of the fund family held by the shareholder or in an account
grouped by Edward Jones with other accounts for the purpose of providing certain
pricing considerations (“pricing groups”). If grouping assets as a shareholder,
this includes all share classes held on the Edward Jones platform and/or held on
another platform.
The inclusion
of eligible fund family assets in the ROA calculation is dependent on the
shareholder notifying Edward Jones of such assets at the time of calculation.
Money market funds are included only if such shares were sold with a sales
charge at the time of purchase or acquired in exchange for shares purchased with
a sales charge.
◾ The employer maintaining a
SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the
IRA accounts associated with the plan to a plan-level grouping as opposed to
including all share classes at a shareholder or pricing group level.
◾ ROA is determined by
calculating the higher of cost minus redemptions or market value (current shares
x NAV).
Letter of Intent
(“LOI”)
◾ Through a LOI,
shareholders can receive the sales charge and breakpoint discounts for purchases
shareholders intend to make over a 13-month period from the date Edward Jones
receives the LOI. The LOI is determined by calculating the higher of cost or
market value of qualifying holdings at LOI initiation in combination with the
value that the shareholder intends to buy over a 13-month period to calculate
the front-end sales charge and any breakpoint discounts. Each purchase the
shareholder makes during that 13-month period will receive the sales charge and
breakpoint discount
45
that
applies to the total amount. The inclusion of eligible fund family assets in the
LOI calculation is dependent on the shareholder notifying
Edward Jones of such assets at the time of calculation. Purchases made before
the LOI is received by Edward Jones are not adjusted under the LOI and will not
reduce the sales charge previously paid. Sales charges will be adjusted if LOI
is not met.
◾ If the employer
maintaining a SEP IRA plan and/or SIMPLE IRA plan has elected to establish or
change ROA for the IRA accounts associated with the plan to a plan-level
grouping, LOIs will also be at the plan-level and may only be established by the
employer.
Sales Charge
Waivers
Sales
charges are waived for the following shareholders and in the following
situations:
◾ Associates of Edward Jones
and its affiliates and other accounts in the same pricing group (as determined
by Edward Jones under its policies and procedures) as the associate. This waiver
will continue for the remainder of the associate’s life if the associate retires
from Edward Jones in good-standing and remains in good standing pursuant to
Edward Jones’ policies and procedures.
◾ Shares
purchased in an Edward Jones fee-based program.
◾ Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment.
◾ Shares purchased from the
proceeds of redeemed shares of the same fund family so long as the following
conditions are met: the proceeds are from the sale of shares within 60 days of
the purchase, the sale and purchase are made from a share class that charges a
front load and one of
the
following:
– The redemption and
repurchase occur in the same account.
– The redemption proceeds
are used to process an: IRA contribution, excess contributions, conversion,
recharacterizing of contributions, or distribution, and the repurchase is done
in an account within the same Edward Jones grouping for ROA.
◾ Shares exchanged into
Class A shares from another share class so long as the exchange is into the same
fund and was initiated at the discretion of Edward Jones. Edward Jones is
responsible for any remaining CDSC due to the fund company, if applicable. Any
future purchases are subject to the applicable sales charge as disclosed in the
prospectus.
◾ Exchanges from Class C
shares to Class A shares of the same fund, generally, in the 84th month
following the anniversary of the purchase date or earlier at the discretion of
Edward Jones.
◾ Purchases of Class 529-A
shares through a rollover from either another education savings plan or a
security used for qualified distributions.
◾ Purchases of Class
529-A
shares
made for
recontribution of
refunded
amounts.
Contingent
Deferred Sales Charge (“CDSC”) Waivers
If the shareholder
purchases shares that are subject to a CDSC and those shares are redeemed before
the CDSC is expired, the shareholder is responsible to pay the CDSC except in
the following conditions:
◾ The death or disability of
the shareholder.
◾ Systematic withdrawals
with
up to 10% per
year of the account value.
◾ Return of
excess contributions from an Individual Retirement Account (IRA).
◾ Shares redeemed as part of
a required minimum distribution for IRA and retirement accounts if the
redemption is taken in or after the year the shareholder reaches qualified age
based on applicable IRS regulations.
◾ Shares redeemed to pay
Edward Jones fees or costs in such cases where the transaction is initiated by
Edward Jones.
◾ Shares
exchanged in an Edward Jones fee-based program. Edward Jones is responsible for
any remaining CDSC due to the fund company, if applicable.
◾ Shares
acquired through a right of reinstatement.
◾ Shares
redeemed at the discretion of Edward Jones for Minimum Balances, as described
below.
Other
Important Information Regarding Transactions Through
Edward
Jones
Minimum
Purchase Amounts
◾ Initial
purchase minimum: $250
◾ Subsequent
purchase minimum: none
Minimum
Balances
◾ Edward
Jones has the right to redeem at its discretion fund holdings with a balance of
$250 or less. The following are examples of accounts that are not included in
this policy:
– A
fee-based account held on an Edward Jones platform
– A 529
account held on an Edward Jones platform
46
– An
account with an active systematic investment plan or LOI
Exchanging
Share Classes
◾ At any
time it deems necessary, Edward Jones has the authority to exchange at NAV a
shareholder’s holdings in a fund to Class A shares of the same fund.
Janney
Montgomery Scott LLC
Effective
May 1, 2020, if you purchase or redeem Fund shares through a Janney Montgomery
Scott LLC (“Janney”) brokerage
account, you will be eligible for the following load waivers (front-end sales
charge waivers and contingent deferred sales charge (CDSC), or back-end sales
charge, waivers) and discounts, which may differ from those disclosed elsewhere
in this Fund’s Prospectus or SAI.
Front-end
sales charge waivers on Class A Shares available at Janney
◾ Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same fund (but not any other fund
within the fund family).
◾ Shares
purchased by employees and registered representatives of Janney or its
affiliates and their family members as designated by Janney.
◾ Shares
purchased from the proceeds of redemptions within the same fund family,
provided: (1) the repurchase occurs within ninety (90) days following the
redemption; (2) the redemption and purchase occur in the same account; and (3)
redeemed shares were subject to a front-end or deferred sales load (i.e., right
of reinstatement).
◾ Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b)
plans, profit sharing and money purchase pension plans and defined benefit
plans). For purposes of this provision, employer-sponsored retirement plans do
not include SEP IRAs, Simple IRAs, SAR-SEPs or Keogh plans.
◾ Shares
acquired through a right of reinstatement.
◾ Class C
shares that are no longer subject to a contingent deferred sales charge and are
exchanged to Class A shares (or the appropriate share class) of the same fund
pursuant to Janney’s intra-fund share class policies and procedures.
CDSC
Waivers on Class A and C Shares available at Janney
◾ Shares
sold upon the death or disability of the shareholder.
◾ Shares
sold as part of a systematic withdrawal plan as described in the fund’s
Prospectus.
◾ Shares
purchased in connection with a return of excess contributions from an IRA
account.
◾ Shares
sold as part of a required minimum distribution for IRA and retirement accounts
if the redemption is taken in or after the year the shareholder reaches
qualified age based on applicable IRS regulations.
◾ Shares
sold to pay Janney fees but only if the transaction is initiated by
Janney.
◾ Shares
acquired through a right of reinstatement.
◾ Shares
exchanged into the same share class of a different Federated Hermes fund, if the
shares were held for the applicable CDSC holding period (the holding period on
the shares purchased in the exchange will include the holding period of the
shares sold in the exchange).
Front-end
sales charge discounts available at Janney: Breakpoints, Rights of Accumulation,
and/or Letters of Intent
◾ Breakpoints
as described in the fund’s Prospectus.
◾ Rights of accumulation
(ROA), which entitle shareholders to breakpoint discounts, will be automatically
calculated based on the aggregated holding of fund family assets held by
accounts within the purchaser’s household at Janney. Eligible fund family assets
not held at Janney may be included in the ROA calculation only if the
shareholder notifies his or her financial advisor about such assets.
◾ Letters of
intent which allow for breakpoint discounts based on anticipated purchases
within a fund family, over a 13-month time period. Eligible fund family assets
not held at Janney may be included in the calculation of letters of intent only
if the shareholder notifies his or her financial advisor about such
assets.
J.P.
Morgan Securities LLC
Effective September 29,
2023, if you purchase or hold Fund shares through an applicable J.P. Morgan
Securities LLC brokerage account, you will be eligible for the following sales
charge waivers (front-end sales charge waivers and contingent deferred sales
charge (CDSC), or back-end sales charge, waivers), share class conversion policy
and discounts, which may differ from those disclosed elsewhere in this Fund’s
prospectus or SAI.
47
Front-end sales
charge waivers on Class A shares available at J.P. Morgan Securities
LLC
◾ Shares exchanged from
Class C (i.e., level-load) shares that are no longer subject to a CDSC and are
exchanged into Class A shares of the same fund pursuant to J.P. Morgan
Securities LLC’s share class exchange policy.
◾ Qualified
employer-sponsored defined contribution and defined benefit retirement plans,
nonqualified deferred compensation plans, other employee benefit plans and
trusts used to fund those plans. For purposes of this provision, such plans do
not include SEP IRAs, SIMPLE IRAs, SAR-SEPs or 501(c)(3) accounts.
◾ Shares of funds purchased
through J.P. Morgan Securities LLC Self-Directed Investing accounts.
◾ Shares purchased through
rights of reinstatement.
◾ Shares purchased through
reinvestment of capital gains distributions and dividend reinvestment when
purchasing shares of the same fund (but not any other fund within the fund
family).
◾ Shares purchased by
employees and registered representatives of J.P. Morgan Securities LLC or its
affiliates and their spouse or financial dependent as defined by J.P. Morgan
Securities LLC.
Class C to Class
A share conversion
◾ A shareholder in the
Fund’s Class C shares will have their shares converted by J.P. Morgan Securities
LLC to Class A shares (or the appropriate share class) of the same fund if the
shares are no longer subject to a CDSC and the conversion is consistent with
J.P. Morgan Securities LLC’s policies and procedures.
CDSC waivers on
Class A and C shares available at J.P. Morgan Securities LLC
◾ Shares sold upon the death
or disability of the shareholder.
◾ Shares sold as part of a
systematic withdrawal plan as described in the Fund’s prospectus.
◾ Shares purchased in
connection with a return of excess contributions from an IRA
account.
◾ Shares sold as part of a
required minimum distribution for IRA and retirement accounts pursuant to the
Internal Revenue Code.
◾ Shares acquired through a
right of reinstatement.
Front-end load
discounts available at J.P. Morgan Securities LLC: breakpoints, rights of
accumulation & letters of intent
◾ Breakpoints as described
in the prospectus.
◾ Rights of Accumulation
(ROA) which entitle shareholders to breakpoint discounts as described in the
Fund’s prospectus will be automatically calculated based on the aggregated
holding of fund family assets held by accounts within the purchaser’s household
at J.P. Morgan Securities LLC. Eligible fund family assets not held at J.P.
Morgan Securities LLC (including 529 program holdings, where applicable) may be
included in the ROA calculation only if the shareholder notifies their financial
advisor about such assets.
◾ Letters of Intent (LOI)
which allow for breakpoint discounts based on anticipated purchases within a
fund family, through J.P. Morgan Securities LLC, over a 13-month period of time
(if applicable).
Merrill
Lynch
Shareholders
purchasing Fund shares through a Merrill Lynch platform or account will be
eligible only for the following
load waivers (front-end sales charge waivers and contingent deferred, or
back-end, sales charge waivers) and discounts, which may differ from those
disclosed elsewhere in this Fund’s prospectus or SAI.
Front-end
Sales Load Waivers on Class A Shares available at Merrill Lynch
◾ Employer-sponsored
retirement, deferred compensation and employee benefit plans (including health
savings accounts) and trusts used to fund those plans, provided that the shares
are not held in a commission-based brokerage account and shares are held for the
benefit of the plan;
◾ Shares
purchased by a 529 Plan (does not include 529 Plan units or 529-specific share
classes or equivalents);
◾ Shares
purchased through a Merrill Lynch affiliated investment advisory program or
exchanged due to the holdings moving from the program;
◾ Shares
exchanged due to the holdings moving from a Merrill Lynch affiliated investment
advisory program to a Merrill Lynch brokerage (non-advisory) account pursuant to
Merrill Lynch’s policies relating to sales load discounts and
waivers;
◾ Shares
purchased by third party investment advisors on behalf of their advisory clients
through Merrill Lynch’s platform;
◾ Shares of
funds purchased through the Merrill Edge Self-Directed platform (if
applicable);
48
◾ Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same fund (but not any other fund
within the fund family);
◾ Shares
exchanged from Class C (i.e., level-load) shares of the same fund pursuant to
Merrill Lynch’s policies relating to sales load discounts and
waivers;
◾ Employees
and registered representatives of Merrill Lynch or its affiliates and their
family members;
◾ Directors
or Trustees of the Fund, and employees of the Fund’s investment adviser or any
of its affiliates, as described in the prospectus;
◾ Eligible
shares purchased from the proceeds of redemptions within the same fund family,
provided: (1) the repurchase occurs within 90 days following the redemption; (2)
the redemption and purchase occur in the same account; and (3) redeemed shares
were subject to a front-end or deferred sales load (known as Rights of
Reinstatement). Automated transactions (i.e., systematic purchases and
withdrawals) and purchases made after shares are automatically sold to pay
Merrill Lynch’s account maintenance fees are not eligible for
reinstatement.
CDSC
Waivers on A, B and C Shares available at Merrill Lynch
◾ Death or
disability of the shareholder;
◾ Shares
sold as part of a systematic withdrawal plan as described in the Fund’s
prospectus;
◾ Return of
excess contributions from an IRA Account;
◾ Shares
sold as part of a required minimum distribution for IRA and retirement accounts
pursuant to the Internal Revenue Code;
◾ Shares
sold to pay Merrill Lynch fees but only if the transaction is initiated by
Merrill Lynch;
◾ Shares
acquired through a right of reinstatement;
◾ Shares
held in retirement brokerage accounts, that are exchanged for a lower cost share
class due to transfer to certain fee based accounts or platforms (applicable to
A and C shares only);
◾ Class A
Shares received through an exchange due to the holdings moving from a Merrill
Lynch affiliated investment advisory program to a Merrill Lynch brokerage
(non-advisory) account pursuant to Merrill Lynch’s policies relating to sales
load discounts and waivers.
Front-end
load Discounts Available at Merrill Lynch:
Breakpoints, Rights of Accumulation & Letters of Intent
Breakpoints, Rights of Accumulation & Letters of Intent
◾ Breakpoints
as described in this prospectus;
◾ Rights of
Accumulation (ROA) which entitle shareholders to breakpoint discounts as
described in the Fund’s prospectus will be automatically calculated based on the
aggregated holding of fund family assets held by accounts (including 529 program
holdings, where applicable) within the purchaser’s household at Merrill Lynch.
Eligible fund family assets not held at Merrill Lynch may be included in the ROA
calculation only if the shareholder notifies his or her financial advisor about
such assets;
◾ Letters of
Intent (LOI) which allow for breakpoint discounts based on anticipated purchases
within a fund family, through Merrill Lynch, over a 13-month period of time (if
applicable).
Morgan
Stanley Smith Barney
Shareholders
purchasing Fund shares through a Morgan Stanley Wealth Management transactional
brokerage account will be
eligible only for the following front-end sales charge waivers with respect to
Class A shares, which may differ from and may be more limited than those
disclosed elsewhere in this Fund’s Prospectus or SAI.
Front-End
Sales Charge Waivers on Class A Shares Available at Morgan Stanley Wealth
Management
◾ Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b)
plans, profit sharing and money purchase pension plans and defined benefit
plans). For purposes of this provision, employer-sponsored retirement plans do
not include SEP IRAs, Simple IRAs, SAR-SEPs or Keogh plans;
◾ Morgan
Stanley employee and employee-related accounts according to Morgan Stanley’s
account linking rules;
◾ Shares
purchased through reinvestment of dividends and capital gains distributions when
purchasing shares of the same fund;
◾ Shares
purchased through a Morgan Stanley self-directed brokerage account;
◾ Class C
(i.e., level-load) shares that are no longer subject to a contingent deferred
sales charge and are exchanged to Class A shares of the same fund pursuant to
Morgan Stanley Wealth Management’s intra-fund share class exchange
program;
49
◾ Shares
purchased from the proceeds of redemptions within the same fund family, provided
(i) the repurchase occurs within 90 days following the redemption, (ii) the
redemption and purchase occur in the same account, and (iii) redeemed shares
were subject to a front-end or deferred sales charge.
OPPENHEIMER
& CO., INC.
Effective
May 1, 2020, shareholders purchasing Fund shares through an Oppenheimer &
Co., Inc. (OPCO) platform or account
are eligible only for the following load waivers (front-end sales charge waivers
and contingent deferred, or back-end, sales charge waivers) and discounts, which
may differ from those disclosed elsewhere in this Fund’s prospectus or
SAI.
Front-end
Sales Load Waivers on Class A Shares available at OPCO
◾ Employer-sponsored
retirement, deferred compensation and employee benefit plans (including health
savings accounts) and trusts used to fund those plans, provided that the shares
are not held in a commission-based brokerage account and shares are held for the
benefit of the plan
◾ Shares
purchased by or through a 529 Plan
◾ Shares
purchased through an OPCO affiliated investment advisory program
◾ Shares
purchased through reinvestment of dividends and capital gains distributions when
purchasing shares of the same fund (but not any other fund within the fund
family)
◾ Shares
purchased from the proceeds of redemptions within the same fund family,
provided: (1) the repurchase occurs within 90 days following the redemption; (2)
the redemption and purchase occur in the same account; and (3) redeemed shares
were subject to a front-end or deferred sales load (known as Rights of
Reinstatement).
◾ A
shareholder in the Fund’s Class C shares will have their shares automatically
exchanged at net asset value to Class A shares (or the appropriate share class)
of the Fund if the shares are no longer subject to a CDSC and the automatic
exchange is in line with the policies and procedures of OPCO
◾ Employees
and registered representatives of OPCO or its affiliates and their family
members
◾ Directors
or Trustees of the Fund, and employees of the Fund’s investment adviser or any
of its affiliates, as described in this prospectus
CDSC
Waivers on A, B and C Shares available at OPCO
◾ Death or
disability of the shareholder
◾ Shares
sold as part of a systematic withdrawal plan as described in the Fund’s
prospectus
◾ Return of
excess contributions from an IRA Account
◾ Shares
sold as part of a required minimum distribution for IRA and retirement accounts
pursuant to the Internal Revenue Code
◾ Shares
sold to pay OPCO fees but only if the transaction is initiated by
OPCO
◾ Shares
acquired through a right of reinstatement
Front-end
load Discounts Available at OPCO: Breakpoints, Rights of Accumulation &
Letters of Intent
◾ Breakpoints
as described in this prospectus.
◾ Rights of
Accumulation (ROA), which entitle shareholders to breakpoint discounts, will be
automatically calculated based on the aggregated holding of fund family assets
held by accounts within the purchaser’s household at OPCO. Eligible fund family
assets not held at OPCO may be included in the ROA calculation only if the
shareholder notifies his or her financial advisor about such assets
Raymond
James & Associates, Inc., Raymond James Financial Services, Inc. and each
entity’s affiliates (“Raymond James”)
Effective
March 1, 2019, shareholders purchasing and redeeming Fund shares through a
Raymond James platform or account,
or through an introducing broker-dealer or independent registered investment
adviser for which Raymond James provides trade execution, clearance, and/or
custody services, will be eligible only for the following load waivers
(front-end sales charge waivers and contingent deferred, or back-end, sales
charge waivers) and discounts, which may differ from those disclosed elsewhere
in this Fund’s prospectus or SAI.
Front-End
Sales Load Waivers on Class A Shares Available at Raymond James
◾ Shares
purchased in an investment advisory program.
◾ Shares
purchased within the same fund family through a systematic reinvestment of
capital gains and dividend distributions.
50
◾ Employees
and registered representatives of Raymond James or its affiliates and their
family members as designated by Raymond James.
◾ Shares
purchased from the proceeds of redemptions within the same fund family,
provided: (1) the repurchase occurs within 90 days following the redemption; (2)
the redemption and purchase occur in the same account; and (3) redeemed shares
were subject to a front-end or deferred sales load (known as Rights of
Reinstatement).
◾ A
shareholder in the Fund’s Class C shares will have their shares automatically
exchanged at net asset value to Class A shares (or the appropriate share class)
of the Fund if the shares are no longer subject to a CDSC and the automatic
exchange is in line with the policies and procedures of Raymond
James.
CDSC
Waivers on A, B and C Shares Available at Raymond James
◾ Death or
disability of the shareholder.
◾ Shares
sold as part of a systematic withdrawal plan as described in the fund’s
prospectus.
◾ Return of
excess contributions from an IRA Account.
◾ Shares
sold as part of a required minimum distribution for IRA and retirement accounts
due to the shareholder reaching the qualified age based on applicable IRS
regulations as described in the fund’s prospectus.
◾ Shares
sold to pay Raymond James fees but only if the transaction is initiated by
Raymond James.
◾ Shares
acquired through a right of reinstatement.
Front-End
Load Discounts Available at Raymond James: Breakpoints, Rights of Accumulation,
and/or Letters of Intent
◾ Breakpoints
as described in this prospectus;
◾ Rights of
accumulation which entitle shareholders to breakpoint discounts will be
automatically calculated based on the aggregated holding of fund family assets
held by accounts within the purchaser’s household at Raymond James. Eligible
fund family assets not held at Raymond James may be included in the calculation
of rights of accumulation only if the shareholder notifies his or her financial
advisor about such assets.
◾ Letters of
Intent which allow for breakpoint discounts based on anticipated purchases
within a fund family, over a 13-month time period. Eligible fund family assets
not held at Raymond James may be included in the calculation of letters of
intent only if the shareholder notifies his or her financial advisor about such
assets.
Stifel,
Nicolaus & Company, Incorporated
Effective
July 1, 2020, shareholders purchasing Fund shares through a Stifel, Nicolaus
& Company, Incorporated (“Stifel”)
platform or account or who own shares for which Stifel or an affiliate is the
broker-dealer of record are eligible for the following additional sales charge
waiver.
Front-End
Sales Load Waiver on Class A Shares
◾ Class C
shares that have been held for more than seven (7) years will be converted to
Class A shares of the same Fund pursuant to Stifel’s policies and
procedures
All other
sales charge waivers and reductions described elsewhere in the Fund’s Prospectus
or SAI still apply.
U.S.
Bancorp Investments, Inc.
Effective
November 1, 2021, shareholders purchasing Fund shares through a U.S. Bancorp
Investments, Inc. (USBI) platform or who own
shares for which USBI is the broker-dealer, where the shares are held in an
omnibus account, will be eligible for the following front-end sales charge
waivers and discounts, which may differ from those disclosed elsewhere in the
Funds’ Prospectus or SAI. All other sales charge waivers and reductions
described elsewhere in the Fund’s Prospectus or SAI still apply.
USBI
Conversion of Class C Shares
Class
C (i.e., level-load) shares that are no longer subject to a contingent deferred
sales charge are systematically converted
to the Class A shares of the same fund pursuant to USBI’s intra-fund share class
policy. No front-end sales charge will apply to such
conversions.
51
An SAI dated January 31,
2024, is incorporated by reference into this Prospectus. Additional information
about the Fund and its investments is contained in the Fund’s SAI and Annual and
Semi-Annual Reports to shareholders as they become available. The Annual
Report’s Management’s Discussion of Fund Performance discusses market conditions
and investment strategies that significantly affected the Fund’s performance
during its last fiscal year. The SAI contains a description of the Fund’s
policies and procedures with respect to the disclosure of its portfolio
securities. To obtain the SAI, Annual Report, Semi-Annual Report and other
information without charge, and to make inquiries, call your financial
intermediary or the Fund at 1-800-341-7400.
The Fund’s shareholder
reports will be made available on FederatedHermes.com/us/FundInformation, and
you will be notified and provided with a link each time a report is posted to
the website. You may request to receive paper reports from the Fund or from your
financial intermediary, free of charge, at any time. You may also request to
receive documents through e-delivery.
These documents, as well
as additional information about the Fund (including portfolio holdings,
performance and distributions), are also available on
FederatedHermes.com/us.
You can
obtain information about the Fund (including the SAI) by accessing Fund
information from the EDGAR Database on the SEC’s website at sec.gov. You can
purchase copies of this information by contacting the SEC by email at
[email protected].
Federated Hermes
Emerging Market Debt Fund
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us atFederatedHermes.com/us
or call 1-800-341-7400.
or call 1-800-341-7400.
Federated Securities
Corp., Distributor
Investment
Company Act File No. 811-4017
CUSIP
31428U771
CUSIP 31428U755
CUSIP 31428U615
CUSIP 31428U755
CUSIP 31428U615
G01745-01
(1/24)
© 2024 Federated Hermes,
Inc.