Prospectus
December
31, 2023
Disclosure
contained herein relates to all classes of the Fund, as listed below, unless
otherwise noted.
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Share
Class | Ticker |
C
| MXCCX |
R | FMXKX |
Institutional | FISPX |
Service | FMXSX |
Federated Hermes Max-Cap Index Fund
A Portfolio of Federated Hermes Index Trust
A mutual
fund seeking to provide investment results that generally correspond to the
aggregate price and performance of publicly traded common stocks comprising the
Standard & Poor’s 500 Index (“Index”). The Fund is neither sponsored by nor
affiliated with Standard & Poor’s.
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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C |
R |
IS |
SS |
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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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C |
R |
IS |
SS |
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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 Reimbursements2 |
( |
( |
( |
( |
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Total
Annual Fund Operating Expenses After Fee Waivers and/or Expense
Reimbursements |
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|
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1
2
1
|
Share
Class |
1
Year |
3
Years |
5
Years |
10
Years |
|
C: |
|
|
|
|
|
Expenses
assuming redemption |
$263 |
$505 |
$871 |
$1,900 |
|
Expenses
assuming no redemption |
$163 |
$505 |
$871 |
$1,900 |
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R: |
|
|
|
|
|
Expenses
assuming redemption |
$131 |
$409 |
$708 |
$1,556 |
|
Expenses
assuming no redemption |
$131 |
$409 |
$708 |
$1,556 |
|
IS: |
|
|
|
|
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Expenses
assuming redemption |
$59 |
$186 |
$324 |
$726 |
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Expenses
assuming no redemption |
$59 |
$186 |
$324 |
$726 |
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SS: |
|
|
|
|
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Expenses
assuming redemption |
$117 |
$365 |
$633 |
$1,398 |
|
Expenses
assuming no redemption |
$117 |
$365 |
$633 |
$1,398 |
2
◾ Stock
Market Risk. The value
of equity securities in the Fund’s portfolio will fluctuate and, as a result,
the Fund’s Share price may decline suddenly or over a sustained period of time.
Information publicly available about a company, whether from the company’s
financial statements or other disclosures or from third parties, or information
available to some but not all market participants, can affect the price of a
company’s shares in the market. Among other factors, equity securities may
decline in value because of an increase in interest rates or changes in the
stock market. Recent and potential future changes in industry and/or economic
trends, as well as changes in monetary policy made by central banks and/or their
governments, also can affect the level of interest rates and contribute to the
development of or increase in volatility, illiquidity, shareholder redemptions
and other adverse effects (such as a decline in a company’s stock price), which
could negatively impact the Fund’s performance.
◾ Sector
Risk. Because
the Fund may allocate relatively more assets to certain industry sectors than
others, the Fund’s performance may be more susceptible to any developments which
affect those sectors emphasized by the Fund.
◾ Leverage
Risk. Leverage
risk is created when an investment 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.
◾ Liquidity
Risk. Liquidity
risk 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. Over-the-counter (OTC) derivative contracts
generally carry greater liquidity risk than exchange-traded
contracts.
◾ Risk
of Investing in Derivative Contracts.
Derivative contracts 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 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 may also
involve other risks described in this Prospectus, such as stock market, credit,
liquidity and leverage risks.
◾ Counterparty
Credit Risk. Credit
risk includes the possibility that a party to a transaction involving the Fund
will fail to meet its obligations.
◾ 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
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, or other potentially adverse
effects.
◾ Quantitative
Modeling Risk. The Fund
employs quantitative models as a management technique. These models examine
multiple economic factors using various proprietary and third-party data. The
results generated by quantitative analysis may perform differently than expected
and may negatively affect Fund performance for various reasons (for example,
human judgment, data imprecision, software or other technology malfunctions, or
programming inaccuracies).
◾ Technology
Risk. The
Manager 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.
3
The
Fund’s IS class total return for the nine-month period from January 1, 2023 to
September 30, 2023, was 12.83%.
Within
the periods shown in the bar chart, the Fund’s IS class highest quarterly return
was 20.49% (quarter ended June 30, 2020). Its lowest quarterly return was
(19.65)% (quarter ended March 31, 2020).
|
Share
Class |
1
Year |
5
Years |
10
Years |
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C: |
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Return
Before Taxes |
( |
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R: |
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Return
Before Taxes |
( |
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IS: |
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Return
Before Taxes |
( |
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Return
After Taxes on Distributions |
( |
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Return
After Taxes on Distributions and Sale of Fund Shares |
( |
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SS: |
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|
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Return
Before Taxes |
( |
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|
Standard
and Poor’s 500 Index1
(reflects
no deduction for fees, expenses or taxes) |
( |
|
|
1
4
FUND
MANAGEMENT
The Fund’s
Investment Manager is Federated Equity Management Company of
Pennsylvania.
Ian L.
Miller, CFA, Senior Portfolio Manager, has been the Fund’s portfolio manager
since July 2012.
Damian
M. McIntyre, CFA, CAIA and FRM, Portfolio Manager, has been the Fund’s portfolio
manager since December
2016.
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.
C
Class
The
minimum investment amount for the Fund’s C class is generally $1,500 for initial
investments and $100 for subsequent
investments. The minimum initial and subsequent investment amounts for
Individual Retirement Accounts are generally $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.
R
Class
The
minimum initial and subsequent investment amounts for Individual Retirement
Account rollovers into the Fund’s R
class are generally $250 and $100, respectively. There is no minimum initial or
subsequent 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
& SS Classes
The
minimum initial investment amount for the Fund’s IS and SS classes is generally
$1,000,000 and there is no minimum
subsequent investment amount. Certain types of accounts are eligible for lower
minimum investments. The minimum investment amount for Systematic Investment
Programs is $50.
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.
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 provide investment results that generally
correspond to the aggregate price and performance
of publicly traded common stocks comprising the Standard & Poor’s 500 Index
(“Index”). While there is no assurance that the Fund will achieve its investment
objective, it endeavors to do so by following the principal strategies and
policies described in this Prospectus.
In
pursuing its investment objective, the Fund normally invests its assets
primarily in common stocks included in the Index. As of October 31,
2023, the capitalization range of the issuers comprising the Index was $4.0
billion to $2.7 trillion. As of the same date, the weighted median market
capitalization of the Fund was $29 billion. Market capitalization is determined
by multiplying the number of outstanding shares of an issuer by the current
market price per share. Except as noted below, the Fund seeks to reduce the
difference in the Fund’s portfolio performance relative to the performance of
the Index (“tracking error”) by investing in a portfolio that seeks to
replicate, as closely as possible, the composition of the Index. The Fund also
may employ the following strategies to attempt to further reduce tracking error:
(1) buying and selling securities after announced changes in the Index but
before or after the effective date of the changes; (2) purchasing Index futures
contracts in amounts approximating the cash held in the Fund’s portfolio; (3)
lending the Fund’s securities to broker/dealers or other institutions to earn
income for the Fund; and (4) purchasing domestically traded share classes of
Index companies other than the share classes included in the Index.
5
In
addition, the Manager, under normal circumstances, will use enhanced management
techniques in an attempt to improve
the performance of the Fund’s portfolio relative to the Index to compensate for
Fund expenses and tracking error. The Manager’s principal enhanced management
technique will be to over or underweight positions in securities within the
Index based upon the Manager’s quantitative analysis of the securities. The
analysis seeks to identify securities likely to have predictable returns based
on a number of factors such as, valuation, market sentiment, profitability and
capital use.
The
Fund may use derivative contracts to implement elements of its investment
strategy. The types of derivatives that the Fund
may use include, among others, futures. For example, the Fund may use derivative
contracts to increase or decrease the portfolio’s exposure to the investment(s)
underlying the derivative contracts 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 obtain premiums from the sale of
the 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 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 net assets so that at least 80% of its net assets (plus any
borrowings for investment purposes) are
invested in Index investments. The Fund will notify shareholders at least 60
days in advance of any changes in its investment policies that would enable the
Fund to normally invest less than 80% of its net assets (plus any borrowings for
investment purposes) in Index investments.
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.
Equity
Securities
Equity
securities represent a share of an issuer’s earnings and assets, after the
issuer pays its liabilities. The Fund cannot predict
the income it will receive from equity securities because issuers generally have
discretion as to the payment of any dividends or distributions. However, equity
securities offer greater potential for appreciation than many other types of
securities, because their value increases directly with the value of the
issuer’s business.
The
following describes the equity securities in which the Fund principally
invests.
Common
Stocks
Common
stocks are the most prevalent type of equity security. Common stocks receive the
issuer’s earnings after the issuer
pays its creditors and any preferred stockholders. As a result, changes in an
issuer’s earnings directly influence the value of its common stock.
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.
6
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.
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 Manager 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 index futures and security
futures).
7
OTHER
INVESTMENTS, TRANSACTIONS, TECHNIQUES
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/return profiles of many issuers in the universe of securities in which the
Fund may invest. This analysis does not automatically result in including or
excluding specific securities but may be used by Federated Hermes as an
additional input to improve portfolio risk/return characteristics.
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.
As
the Fund’s derivative exposure, if any, is 10% or less of its net assets,
excluding certain currency and interest rate hedging
transactions, the Fund is classified as a limited derivatives user under the
Derivatives Rule and will not be subject to the full requirements of the
Derivatives Rule as noted above, including VAR testing and stress testing and
certain Board reporting requirements. However, the Fund is still required to
implement written compliance policies and procedures reasonably designed to
manage its derivatives risks and monitor its derivatives exposure
daily.
Securities
Lending
The
Fund may lend portfolio securities to borrowers that the Manager deems
creditworthy. In return, the Fund receives cash or
liquid securities from the borrower as collateral. The borrower must furnish
additional collateral if the market value of the loaned securities increases.
Also, the borrower must pay the Fund the equivalent of any dividends or interest
received on the loaned securities.
The
Fund will reinvest cash collateral in securities that qualify as an acceptable
investment for the Fund. However, the Fund must
pay interest to the borrower for the use of cash collateral. An acceptable
investment into which the Fund may reinvest cash collateral includes, among
other acceptable investments, securities of affiliated money market funds
(including affiliated institutional prime money market funds with a “floating”
net asset value that can impose redemption fees and liquidity gates, impose
certain operational impediments to investing cash collateral, and, if net asset
value decreases, result in the Fund having to cover the decrease in the value of
the cash collateral).
Loans
are subject to termination at the option of the Fund or the borrower. The Fund
will not have the right to vote on securities
while they are on loan. However, the Fund will attempt to terminate a loan in an
effort to reacquire the securities in time to vote on matters that are deemed to
be material by the Manager. There can be no assurance that the Fund will have
sufficient notice of such matters to be able to terminate the loan in time to
vote thereon. The Fund may pay administrative and custodial fees in connection
with a loan and may pay a negotiated portion of the interest earned on the cash
collateral to a securities lending agent or broker.
Securities
lending activities are subject to interest rate risk and credit risk. These
transactions create leverage risk.
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. 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 Manager 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. The Fund
may invest in money market securities directly.
8
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.
Stock
Market Risk
The
value of equity securities in the Fund’s portfolio will rise and fall over time.
These fluctuations could be a sustained trend or a
drastic movement. Historically, the equity market has moved in cycles, and the
value of the Fund’s securities may fluctuate from day to day. The Fund’s
portfolio will reflect changes in prices of individual portfolio stocks or
general changes in stock valuations. Consequently, the Fund’s Share price may
decline. The Manager attempts to manage market risk by limiting the amount the
Fund invests in each company’s equity securities. However, diversification will
not protect the Fund against widespread or prolonged declines in the stock
market.
Information
publicly available about a company, whether from the company’s financial
statements or other disclosures or from
third parties, or information available to some but not all market participants,
can affect the price of a company’s shares in the market. The price of a
company’s shares depends significantly on the information publicly available
about the company. The reporting of poor results by a company, the restatement
of a company’s financial statements or corrections to other information
regarding a company or its business may adversely affect the price of its
shares, as would allegations of fraud or other misconduct by the company’s
management. The Fund may also be disadvantaged if some market participants have
access to material information not readily available to other market
participants, including the Fund.
Sector
Risk
Companies
with similar characteristics may be grouped together in broad categories called
sectors. Sector risk is the possibility
that a certain sector may underperform other sectors or the market as a whole.
As the Manager allocates more of the Fund’s portfolio holdings to a particular
sector, the Fund’s performance will be more susceptible to any economic,
business or other developments which generally affect that sector.
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.
Liquidity
Risk
Trading
opportunities are more limited for equity securities that are not widely held.
This 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, 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. Infrequent trading of securities may also lead to an
increase in their price volatility.
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.
Risk
of Investing in Derivative Contracts
The
Fund’s exposure to derivative contracts (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 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 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 may have
tax consequences to the Fund and its shareholders. For example, derivative
contracts may cause the Fund to realize increased ordinary income or short-term
capital gains (which are treated as ordinary income for Federal income tax
purposes) and, as a result, may increase taxable distributions to shareholders.
In addition, under certain circumstances certain derivative contracts may cause
the Fund to: (a) incur an excise tax on a portion of the income related to those
9
contracts;
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 may also involve other risks described
in this Prospectus, such as stock market, credit, liquidity and leverage
risks.
Counterparty
Credit Risk
Credit
risk includes the possibility that a party to a transaction (such as a
derivative 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
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, or industry or
economic trends and developments, may, from time to time, and for varying
periods of time, cause volatility, illiquidity or other potentially adverse
effects in the financial markets. The commencement, continuation or ending of
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 may contribute to the development of or increase in
volatility, illiquidity, shareholder redemptions and other adverse effects (such
as a decline in a company’s stock price), which could negatively impact the
Fund’s performance. For example, the value of equity securities may rise and
fall in response to changes in interest rates. Market factors, such as the
demand for particular equity securities, may cause the price of certain equity
securities to fall while the prices of other securities rise or remain
unchanged.
Epidemic
and Pandemic Risk
An outbreak of respiratory
disease caused by a novel coronavirus was first detected in China in late 2019
and subsequently spread globally. This coronavirus has resulted in, and may
continue to result in, closed borders, enhanced health screenings, disruptions
to healthcare service preparation and delivery, quarantines, cancellations and
disruptions to supply chains, workflow operations and consumer activity, as well
as general concern and uncertainty. The impact of this coronavirus has resulted
in substantial economic volatility. Health crises caused by outbreaks, such as
the coronavirus outbreak, may exacerbate other pre-existing political, social
and economic risks. The impact of this outbreak, and other epidemics and
pandemics that may arise in the future, could continue to negatively affect the
worldwide economy, as well as the economies of individual countries, individual
companies, including certain Fund service providers and issuers of the Fund’s
investments, and the markets in general in significant and unforeseen ways. In
addition, governments, their regulatory agencies, or self-regulatory
organizations may take actions in response to the pandemic, including
significant fiscal and monetary policy changes, that may affect the instruments
in which the Fund invests or the issuers of such instruments. Any such impact
could adversely affect the Fund’s performance.
Quantitative
MOdeling Risk
The
Fund employs quantitative models as a management technique. These models examine
multiple economic and market
factors using large data sets. The results generated by quantitative analysis
may be different than expected and may negatively affect Fund performance for a
variety of reasons. For example, human judgment plays a role in building,
utilizing, testing and modifying the financial algorithms and formulas used in
these models. Additionally, the data, which is typically supplied by third
parties, can be imprecise or become stale due to new events or changing
circumstances.
10
Market
performance can be affected by non-quantitative factors (for example, investor
fear or over-reaction or other emotional considerations) that are not easily
integrated into quantitative analysis. There may also be technical issues with
the construction and implementation of quantitative models (for example,
software or other technology malfunctions, or programming
inaccuracies).
technology
Risk
The
Manager 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). 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.
◾ 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, the Board of Trustees
(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.
11
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.
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
| |
|
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.
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.”
12
120
Day reinstatement program
Within
120 days of redeeming 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 Shares of the Fund from
which the redemption occurred 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 Day Reinstatement
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.
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.
|
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 Trustees, employees of the Fund, the Manager, 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;
◾ 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).
13
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
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 C Shares (C), Class R Shares (R),
Institutional Shares (IS) and Service
Shares (SS), 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.).
C
Class
The
Fund’s Distributor markets the C class to institutions acting on behalf of their
customers or to individuals, directly or through
financial intermediaries.
R
Class
The
Fund’s Distributor markets the R class to: 401(k) plans; 457 plans; employer
sponsored 403(b) plans; profit sharing and money
purchase pension plans; defined benefit plans; non-qualified deferred
compensation plans and IRA Rollovers from such plans; Health Savings Accounts
(HSA) and Health Reimbursement Accounts (HRA); SEP or SIMPLE IRAs held directly
or through financial intermediaries, as well as IRAs and investment-only 403(b)
plans held through financial intermediaries.
IS
& SS Classes
The
Fund’s Distributor markets the IS and SS classes to Eligible Investors, as
described below. In connection with a request to
purchase an IS or SS class, you should provide documentation sufficient to
verify your status as an Eligible Investor. As a general matter, IS and SS
classes are 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 IS or SS classes (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 Manager, 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;
14
◾ A trust
institution investing on behalf of its trust customers;
◾ Additional
sales to an investor (including a natural person) who owned IS and SS classes of
the Fund as of December 31, 2008;
◾ A
Federated Hermes Fund;
◾ An
investor (including a natural person) who acquired IS and SS classes 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.
The
following categories of Eligible Investors are subject to applicable minimum
initial investment amounts for the purchase
of IS or SS classes (see “How to Purchase Shares” below):
◾ An
investor, other than a natural person, purchasing IS and SS classes directly
from the Fund; and
◾ In
connection with an initial purchase of IS and SS classes through an exchange, an
investor (including a natural person) who owned IS and SS classes 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 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.
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 managers or third-party administrators) whose customers are
shareholders of the Fund.
ADVANCE
COMMISSIONS
When
a financial intermediary’s customer purchases Shares, the financial intermediary
may receive an advance commission
as follows:
|
C: |
|
|
|
Advance
Commission
as a
Percentage of
Public
Offering Price |
|
All
Purchase Amounts |
1.00% |
RULE
12b-1
FEES
C,
R & SS Classes
The
Board has adopted a Rule 12b-1 Plan, which allows payment of marketing fees of
up to 0.75% for the C class, 0.50% for
the R class and 0.30% for the SS class of average net assets to the Distributor
for the sale, distribution, administration and customer servicing of the Fund’s
C, R and SS class Shares. 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
15
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 charges and marketing fees.
service
fees
C,
IS & SS Classes
C,
IS and SS 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.
The
Fund has no present intention of paying, accruing or incurring any such Service
Fees on the IS class until such time as
approved by the Fund’s Board of Trustees.
ACCOUNT
ADMINISTRATION FEES
C,
IS & SS Classes
C,
IS and SS 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 managers 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.
The
Fund has no present intention of paying, accruing or incurring any such Account
Administration Fees on the IS class
until such time as approved by the Fund’s Board of Trustees.
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.
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 Manager).
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.
16
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.
For
important account information, see the section “Security and Privacy
Protection.”
C
Class
You
may purchase Shares through a financial intermediary, directly from the Fund or
through an exchange from another Federated
Hermes fund.
R
Class
You
may purchase Shares through a financial intermediary, directly from the Fund or
through an exchange from another Federated
Hermes fund.
The
minimum initial and subsequent investment amounts for IRA Rollovers from
retirement plans are generally $250 and $100,
respectively. There is no minimum initial or subsequent amount 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.
An
institutional investor’s minimum investment is calculated by combining all
accounts it maintains with the Fund.
IS
& SS Classes
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 and SS classes 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 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.
17
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;
◾ 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.
C
& R Classes
You may
purchase Shares through an exchange from the same share class of another
Federated Hermes fund.
IS
& SS Classes
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.
18
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
C
& R 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.
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
19
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.
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
20
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
C
& R 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.
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.
C
& R Classes
You may
exchange Shares into shares of the same class of another Federated Hermes
fund.
21
IS
& SS Classes
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.
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.
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.
22
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 quarterly 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.
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.
23
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 C class (or in the case of IRAs, $250);
◾ $250 for
the R class; and
◾ $25,000
for the IS and SS classes.
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 both dividends and capital gains. 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 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 Manager 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.
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.
24
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.
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 a percentage breakdown of the portfolio by
sector.
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.
Who
Manages the Fund?
The
Board governs the Fund. The Board selects and oversees the Manager, Federated
Equity Management Company of Pennsylvania. The
Manager manages the Fund’s assets, including buying and selling portfolio
securities. Federated Advisory Services Company (FASC), an affiliate of the
Manager, provides research, quantitative analysis, equity trading
and
transaction
settlement and certain other support services to the Manager. The fee for these
services is paid by the Manager and not by the Fund. The address of the Manager
and FASC is 1001 Liberty Avenue, Pittsburgh, PA 15222-3779.
The
Manager and other advisory subsidiaries of Federated Hermes combined advise
approximately 102 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 $668.9 billion
as of December 31, 2022. Federated Hermes was established in 1955 as Federated
Investors, Inc. and is one of the largest investment managers in the United
States with nearly 2,000 employees. Federated Hermes provides investment
products to more than 11,000 investment professionals and
institutions.
The
Manager advises approximately 16 registered investment
companies and also manages sub-advised funds. The Manager’s assets under
management totaled approximately $16.7 billion as of December 31,
2022.
25
PORTFOLIO
MANAGEMENT INFORMATION
Ian
L. Miller
Ian L.
Miller, CFA, Senior Portfolio Manager, has been the Fund’s portfolio manager
since July 2012.
Mr.
Miller is jointly responsible for the day-to-day management of the Fund. He has
been with the Manager or an affiliate
since 2006; has worked in investment management since 2006; and has managed
investment portfolios since 2012. Education: B.S., Clarion University; M.S., The
Johns Hopkins University.
Damian
M. McIntyre
Damian
M. McIntyre, CFA, CAIA and FRM, Portfolio Manager, has been the Fund’s portfolio
manager since December
2016.
Mr.
McIntyre is jointly responsible for the day-to-day management of the Fund. He
has been with the Manager or an affiliate
since 2008; has worked in investment management since 2008; and has managed
investment portfolios since 2014. Education: B.S. and M.B.A., Carnegie Mellon
University.
The
Fund’s SAI provides additional information about the Portfolio Managers’
compensation, management of other accounts
and ownership of securities in the Fund.
Management
FEES
The
Fund’s investment management contract provides for payment to the Manager of an
annual management fee of 0.30% of
the Fund’s average daily net assets. The Manager may voluntarily waive a portion
of its fee or reimburse the Fund for certain operating expenses. The Manager 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 management contract is
available in the Fund’s annual and semi-annual
shareholder reports for the periods ended October 31 and April 30,
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.
26
Financial
Highlights–Class
C Shares
(For a Share Outstanding Throughout
Each Period)
|
|
Year
Ended October 31, | ||||
|
|
2023 |
2022 |
2021 |
2020 |
2019 |
|
Net
Asset Value, Beginning of Period |
$7.52 |
$10.48 |
$9.21 |
$9.91 |
$12.74 |
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income1 |
0.02 |
0.01 |
0.002 |
0.04 |
0.06 |
|
Net
realized and unrealized gain (loss) |
0.55 |
(1.42) |
3.28 |
0.68 |
1.03 |
|
TOTAL
FROM INVESTMENT OPERATIONS |
0.57 |
(1.41) |
3.28 |
0.72 |
1.09 |
|
Less
Distributions: |
|
|
|
|
|
|
Distributions
from net investment income |
(0.02) |
(0.02) |
(0.02) |
(0.05) |
(0.06) |
|
Distributions
from net realized gain |
(1.06) |
(1.53) |
(1.99) |
(1.37) |
(3.86) |
|
TOTAL
DISTRIBUTIONS |
(1.08) |
(1.55) |
(2.01) |
(1.42) |
(3.92) |
|
Net
Asset Value, End of Period |
$7.01 |
$7.52 |
$10.48 |
$9.21 |
$9.91 |
|
Total
Return3 |
8.48% |
(15.74)% |
40.91% |
8.04% |
12.59% |
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses4 |
1.41% |
1.41% |
1.41% |
1.42%5 |
1.41% |
|
Net
investment income |
0.34% |
0.10% |
0.03% |
0.46% |
0.61% |
|
Expense
waiver/reimbursement6 |
0.18% |
0.11% |
0.10% |
0.12% |
0.10% |
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$26,832 |
$26,374 |
$35,915 |
$30,451 |
$35,742 |
|
Portfolio
turnover7 |
32% |
33% |
33% |
29% |
32% |
|
1 |
Per
share numbers have been calculated using the average shares
method. |
|
2 |
Represents
less than $0.01. |
|
3 |
Based
on net asset value, which does not reflect the sales charge, redemption
fee or contingent deferred sales charge, if
applicable. |
|
4 |
Amount
does not reflect net expenses incurred by investment companies in which
the Fund may invest. |
|
5 |
The
net expense ratio is calculated without reduction for expense offset
arrangements. The net expense ratio is 1.42% for the year ended October
31, 2020, after
taking
into account this expense reduction. |
|
6 |
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. |
|
7 |
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
October 31, 2023, which can be obtained free of charge.
27
Financial
Highlights–Class
R Shares
(For a Share Outstanding Throughout
Each Period)
|
|
Year
Ended October 31, | ||||
|
|
2023 |
2022 |
2021 |
2020 |
2019 |
|
Net
Asset Value, Beginning of Period |
$7.81 |
$10.81 |
$9.44 |
$10.12 |
$12.92 |
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income1 |
0.05 |
0.03 |
0.03 |
0.07 |
0.09 |
|
Net
realized and unrealized gain (loss) |
0.56 |
(1.47) |
3.37 |
0.70 |
1.06 |
|
TOTAL
FROM INVESTMENT OPERATIONS |
0.61 |
(1.44) |
3.40 |
0.77 |
1.15 |
|
Less
Distributions: |
|
|
|
|
|
|
Distributions
from net investment income |
(0.05) |
(0.03) |
(0.04) |
(0.08) |
(0.09) |
|
Distributions
from net realized gain |
(1.06) |
(1.53) |
(1.99) |
(1.37) |
(3.86) |
|
TOTAL
DISTRIBUTIONS |
(1.11) |
(1.56) |
(2.03) |
(1.45) |
(3.95) |
|
Net
Asset Value, End of Period |
$7.31 |
$7.81 |
$10.81 |
$9.44 |
$10.12 |
|
Total
Return2 |
8.75% |
(15.48)% |
41.28% |
8.39% |
13.00% |
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses3 |
1.10% |
1.11% |
1.10% |
1.11%4 |
1.08% |
|
Net
investment income |
0.65% |
0.40% |
0.34% |
0.75% |
0.94% |
|
Expense
waiver/reimbursement5 |
0.18% |
0.13% |
0.10% |
0.12% |
0.11% |
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$32,131 |
$32,551 |
$42,899 |
$35,879 |
$38,142 |
|
Portfolio
turnover6 |
32% |
33% |
33% |
29% |
32% |
|
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 ratio is calculated without reduction for expense offset
arrangements. The net expense ratio is 1.11% for the year ended October
31, 2020, after
taking
into account this expense reduction. |
|
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
October 31, 2023, which can be obtained free of charge.
28
Financial
Highlights–Institutional
Shares
(For a Share Outstanding Throughout
Each Period)
|
|
Year
Ended October 31, | ||||
|
|
2023 |
2022 |
2021 |
2020 |
2019 |
|
Net
Asset Value, Beginning of Period |
$8.06 |
$11.10 |
$9.64 |
$10.31 |
$13.09 |
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income1 |
0.11 |
0.10 |
0.11 |
0.14 |
0.16 |
|
Net
realized and unrealized gain (loss) |
0.58 |
(1.51) |
3.45 |
0.70 |
1.08 |
|
TOTAL
FROM INVESTMENT OPERATIONS |
0.69 |
(1.41) |
3.56 |
0.84 |
1.24 |
|
Less
Distributions: |
|
|
|
|
|
|
Distributions
from net investment income |
(0.10) |
(0.10) |
(0.11) |
(0.14) |
(0.16) |
|
Distributions
from net realized gain |
(1.06) |
(1.53) |
(1.99) |
(1.37) |
(3.86) |
|
TOTAL
DISTRIBUTIONS |
(1.16) |
(1.63) |
(2.10) |
(1.51) |
(4.02) |
|
Net
Asset Value, End of Period |
$7.59 |
$8.06 |
$11.10 |
$9.64 |
$10.31 |
|
Total
Return2 |
9.64% |
(14.78)% |
42.34% |
9.16% |
13.76% |
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses3 |
0.36% |
0.36% |
0.36% |
0.36%4 |
0.36% |
|
Net
investment income |
1.43% |
1.15% |
1.07% |
1.50% |
1.66% |
|
Expense
waiver/reimbursement5 |
0.21% |
0.15% |
0.14% |
0.16% |
0.13% |
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$69,518 |
$115,854 |
$159,314 |
$119,545 |
$133,835 |
|
Portfolio
turnover6 |
32% |
33% |
33% |
29% |
32% |
|
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 ratio is calculated without reduction for expense offset
arrangements. The net expense ratio is 0.36% for the year ended October
31, 2020, after
taking
into account this expense reduction. |
|
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
October 31, 2023, which can be obtained free of charge.
29
Financial
Highlights–Service
Shares
(For a Share Outstanding Throughout
Each Period)
|
|
Year
Ended October 31, | ||||
|
|
2023 |
2022 |
2021 |
2020 |
2019 |
|
Net
Asset Value, Beginning of Period |
$7.84 |
$10.85 |
$9.46 |
$10.14 |
$12.94 |
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income1 |
0.08 |
0.07 |
0.08 |
0.11 |
0.13 |
|
Net
realized and unrealized gain (loss) |
0.57 |
(1.48) |
3.38 |
0.70 |
1.06 |
|
TOTAL
FROM INVESTMENT OPERATIONS |
0.65 |
(1.41) |
3.46 |
0.81 |
1.19 |
|
Less
Distributions: |
|
|
|
|
|
|
Distributions
from net investment income |
(0.08) |
(0.07) |
(0.08) |
(0.12) |
(0.13) |
|
Distributions
from net realized gain |
(1.06) |
(1.53) |
(1.99) |
(1.37) |
(3.86) |
|
TOTAL
DISTRIBUTIONS |
(1.14) |
(1.60) |
(2.07) |
(1.49) |
(3.99) |
|
Net
Asset Value, End of Period |
$7.35 |
$7.84 |
$10.85 |
$9.46 |
$10.14 |
|
Total
Return2 |
9.32% |
(15.12)% |
42.02% |
8.87% |
13.41% |
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses3 |
0.66% |
0.66% |
0.66% |
0.66%4 |
0.66% |
|
Net
investment income |
1.09% |
0.85% |
0.77% |
1.23% |
1.36% |
|
Expense
waiver/reimbursement5 |
0.47% |
0.40% |
0.39% |
0.41% |
0.39% |
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$58,899 |
$60,644 |
$90,795 |
$72,477 |
$107,852 |
|
Portfolio
turnover6 |
32% |
33% |
33% |
29% |
32% |
|
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 ratio is calculated without reduction for expense offset
arrangements. The net expense ratio is 0.66% for the year ended October
31, 2020, after
taking
into account this expense reduction. |
|
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
October 31, 2023, which can be obtained free of charge.
30
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 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 MAX-CAP INDEX FUND - C CLASS | |||||
|
ANNUAL
EXPENSE RATIO: 1.60% | |||||
|
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 |
$162.72 |
$10,340.00 |
|
2 |
$10,340.00 |
$517.00 |
$10,857.00 |
$168.25 |
$10,691.56 |
|
3 |
$10,691.56 |
$534.58 |
$11,226.14 |
$173.97 |
$11,055.07 |
|
4 |
$11,055.07 |
$552.75 |
$11,607.82 |
$179.89 |
$11,430.94 |
|
5 |
$11,430.94 |
$571.55 |
$12,002.49 |
$186.00 |
$11,819.59 |
|
6 |
$11,819.59 |
$590.98 |
$12,410.57 |
$192.33 |
$12,221.46 |
|
7 |
$12,221.46 |
$611.07 |
$12,832.53 |
$198.87 |
$12,636.99 |
|
8 |
$12,636.99 |
$631.85 |
$13,268.84 |
$205.63 |
$13,066.65 |
|
9 |
$13,066.65 |
$653.33 |
$13,719.98 |
$212.62 |
$13,510.92 |
|
10 |
$13,510.92 |
$675.55 |
$14,186.47 |
$219.85 |
$13,970.29 |
|
Cumulative |
|
$5,838.66 |
|
$1,900.13 |
|
|
FEDERATED
HERMES MAX-CAP INDEX FUND - R CLASS |
|
| |||
|
ANNUAL
EXPENSE RATIO: 1.29% |
|
| |||
|
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 |
$131.39 |
$10,371.00 |
|
2 |
$10,371.00 |
$518.55 |
$10,889.55 |
$136.27 |
$10,755.76 |
|
3 |
$10,755.76 |
$537.79 |
$11,293.55 |
$141.32 |
$11,154.80 |
|
4 |
$11,154.80 |
$557.74 |
$11,712.54 |
$146.57 |
$11,568.64 |
|
5 |
$11,568.64 |
$578.43 |
$12,147.07 |
$152.00 |
$11,997.84 |
|
6 |
$11,997.84 |
$599.89 |
$12,597.73 |
$157.64 |
$12,442.96 |
|
7 |
$12,442.96 |
$622.15 |
$13,065.11 |
$163.49 |
$12,904.59 |
|
8 |
$12,904.59 |
$645.23 |
$13,549.82 |
$169.56 |
$13,383.35 |
|
9 |
$13,383.35 |
$669.17 |
$14,052.52 |
$175.85 |
$13,879.87 |
|
10 |
$13,879.87 |
$693.99 |
$14,573.86 |
$182.37 |
$14,394.81 |
|
Cumulative |
|
$5,922.94 |
|
$1,556.46 |
|
31
|
FEDERATED
HERMES MAX-CAP INDEX FUND - IS CLASS |
| ||||
|
ANNUAL
EXPENSE RATIO: 0.58% |
| ||||
|
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 |
$59.28 |
$10,442.00 |
|
2 |
$10,442.00 |
$522.10 |
$10,964.10 |
$61.90 |
$10,903.54 |
|
3 |
$10,903.54 |
$545.18 |
$11,448.72 |
$64.64 |
$11,385.48 |
|
4 |
$11,385.48 |
$569.27 |
$11,954.75 |
$67.50 |
$11,888.72 |
|
5 |
$11,888.72 |
$594.44 |
$12,483.16 |
$70.48 |
$12,414.20 |
|
6 |
$12,414.20 |
$620.71 |
$13,034.91 |
$73.59 |
$12,962.91 |
|
7 |
$12,962.91 |
$648.15 |
$13,611.06 |
$76.85 |
$13,535.87 |
|
8 |
$13,535.87 |
$676.79 |
$14,212.66 |
$80.24 |
$14,134.16 |
|
9 |
$14,134.16 |
$706.71 |
$14,840.87 |
$83.79 |
$14,758.89 |
|
10 |
$14,758.89 |
$737.94 |
$15,496.83 |
$87.49 |
$15,411.23 |
|
Cumulative |
|
$6,121.29 |
|
$725.76 |
|
|
FEDERATED
HERMES MAX-CAP INDEX FUND - SS CLASS |
| ||||
|
ANNUAL
EXPENSE RATIO: 1.15% |
| ||||
|
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 |
$117.21 |
$10,385.00 |
|
2 |
$10,385.00 |
$519.25 |
$10,904.25 |
$121.73 |
$10,784.82 |
|
3 |
$10,784.82 |
$539.24 |
$11,324.06 |
$126.41 |
$11,200.04 |
|
4 |
$11,200.04 |
$560.00 |
$11,760.04 |
$131.28 |
$11,631.24 |
|
5 |
$11,631.24 |
$581.56 |
$12,212.80 |
$136.33 |
$12,079.04 |
|
6 |
$12,079.04 |
$603.95 |
$12,682.99 |
$141.58 |
$12,544.08 |
|
7 |
$12,544.08 |
$627.20 |
$13,171.28 |
$147.03 |
$13,027.03 |
|
8 |
$13,027.03 |
$651.35 |
$13,678.38 |
$152.69 |
$13,528.57 |
|
9 |
$13,528.57 |
$676.43 |
$14,205.00 |
$158.57 |
$14,049.42 |
|
10 |
$14,049.42 |
$702.47 |
$14,751.89 |
$164.68 |
$14,590.32 |
|
Cumulative |
|
$5,961.45 |
|
$1,397.51 |
|
32
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.
33
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
34
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
35
– 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.
36
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);
37
◾ 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;
38
◾ 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.
39
◾ 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.
40
An SAI dated December 31,
2023, 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
Max-Cap Index Fund
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at
FederatedHermes.com/us
or call 1-800-341-7400.
or call 1-800-341-7400.
Federated Securities
Corp., Distributor
Investment
Company Act File No. 811-6061
CUSIP
31420E502
CUSIP 31420E809
CUSIP 31420E106
CUSIP 31420E403
CUSIP 31420E809
CUSIP 31420E106
CUSIP 31420E403
G00717-01
(12/23)
© 2023 Federated Hermes,
Inc.