FEDERATED HERMES, INC.

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Federated Hermes’ and its offerings’ primary regulator in the U.S. is the SEC. U.S. regulatory matters addressed in Federated Hermes’ 2024 Annual Report included, among others: (1) the anticipated regulatory impact resulting from the change in Presidential administration, including the possibility of deregulation; (2) SEC enforcement trends and examination priorities; (3) the Financial Stability Oversight Council’s continued focus on investment funds, including money market funds, other open-end short-term investment vehicles, private liquidity funds, local government investment pools, collective funds, and hedge funds; (4) the Financial Industry Regulatory Authority’s (FINRA) regulatory operations programs, including FINRA’s focus on certain regulatory obligations, examination observations, and effective practices of broker-dealers in certain key areas; and (5) certain specific regulatory developments involving the SEC, the Department of Labor (DOL), and other regulators.

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Change in Administration. With the new Presidential administration taking office on January 20, 2025, a new Chairperson of the SEC was confirmed by the U.S. Senate on April 9, 2025, and a majority of SEC Commissioners are Republican. There also is new senior leadership at the SEC, including a newly appointed Acting Director of the SEC’s Division of Enforcement, SEC Chief of Staff, and SEC’s Director of Policy. During his confirmation hearings, the newly confirmed Chairperson of the SEC indicated that he plans to emphasize reducing unnecessary regulations to promote capital formation, particularly for public and small company securities offerings, developing a clear regulatory framework for digital assets to provide clarity and foster innovation, and focusing on market efficiency and retail investor protection, while moving away from politicized regulations.

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As part of Department of Government Efficiency (DOGE) efforts to overhaul the federal government, on February 17, 2025, DOGE announced a series of planned cuts to, among other things, the SEC’s information technology contracts and office leases, along with contracts impacting the SEC’s Division of Examinations and Division of Enforcement. It has been reported that DOGE has cut SEC staff, as well as spending for media publications and database subscriptions. It was reported that, in late-February 2025, SEC officials informed regional directors at the SEC’s 10 regional offices that the SEC planned to eliminate their positions. It was subsequently reported that the SEC’s regional offices will be overseen by three new deputy directors beginning on April 9, 2025. In late March 2025, it was reported between 500 to 600 SEC staff employees have accepted employment buyout offers, particularly in the SEC’s Division of Enforcement and Office of General Counsel, and that more than 700 SEC staffers have tendered resignations since late January 2025. It also has been reported that, in late March 2025, SEC employees were informed that members of the DOGE task force would be treated as SEC staff members for purposes of network, system and data access. The long-term impact of these departures from the SEC staff can impact the SEC’s operations, including the SEC’s ability to issue new proposed and final regulations, conduct examinations, oversee markets and pursue enforcement actions.

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On January 20, 2025, the President issued an executive order that implemented a regulatory freeze pending review of existing proposed regulations. Under the executive order, all Federal executive departments and agencies were prohibited from proposing or issuing any rule in any manner, including by sending a rule to the Office of the Federal Register, until a department or agency head appointed or designated by the President reviews and approves the rule. In addition, all executive departments and agencies were instructed to immediately withdraw any rules that had been sent to the Office of the Federal Register but not published in the Federal Register, so that they can be reviewed and approved by a department or agency head appointed or designated by the President. Finally, the executive order instructed all executive departments and agencies to consider postponing for 60-days the effective date for any rules that had been published in the Federal Register, or any rules that had been issued in any manner but had not taken effect, for the purpose of reviewing any questions of fact, law, and policy that the rules may raise. During this 60-day period, where appropriate and consistent with applicable law, executive departments and agencies were instructed to consider opening a comment period to allow interested parties to provide comments about issues of fact, law, and policy, and consider further delaying such rules beyond the 60-day period. While it is unclear as to the extent to which the SEC is covered by this executive order as an independent agency, industry trade groups have requested the SEC to delay, and the SEC has in certain cases delayed, the implementation of certain SEC promulgated regulatory requirements for which compliance was not yet required. For example, on January 29, 2025, the SEC and Commodity Futures Trading Commission announced that they extended the compliance date for the amendments to Form PF applicable to private fund advisors that were adopted on February 8, 2024, from March 12, 2025 to June 12, 2025. On February 6, 2025, the SEC announced an extension of the compliance date for the short sale reporting rule to February 14, 2026. On March 14, 2025, as discussed further below, the SEC announced a six-month extension of the compliance dates related to the Names Rule, extending the deadline for large fund complexes to June 11, 2026, and small fund complexes to December 11, 2026. Given the executive order and above developments, it appears likely that the timing proposed in the SEC’s Fall 2024 Unified Agenda of Regulatory and Declaratory Actions, which was published on October 17, 2024, will be delayed and the pace of new SEC proposed and final regulations slowed.

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On February 18, 2025, the President issued an executive order that changed the way federal agencies promulgate new regulations. Under the executive order, all independent agencies, such as the SEC, are required to submit proposed new regulations to the White House Office of Information and Regulatory Affairs (White House) for review (except for monetary functions of the Federal Reserve) and must consult with the White House on their priorities and strategic plans. The executive order also provides that the White House will establish agency performance standards, and the Office of Management and Budget will adjust the independent agencies’ apportionments to ensure that tax dollars are spent wisely. The executive order is in line with other actions and commentary from the new Presidential administration that assert the President has broader authority over federal agencies than previous administrations have wielded.

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On April 8, 2025, the President issued an executive order, “Protecting American Energy from State Overreach,” which is aimed at securing America’s energy dominance by removing unlawful and burdensome state-level impediments to domestic energy production. The executive order directs the Attorney General to: (1) identify and take action against state laws and policies that burden the use of domestic energy resources and that are unconstitutional, preempted by federal law, or otherwise unenforceable; (2) prioritize taking action against laws and policies purporting to address “climate change” policies, or involving governmental, environmental and social initiatives, environmental justice, carbon or greenhouse gas emissions, and funds to collect carbon penalties or carbon taxes; and (3) submit a report to the President detailing actions taken and additional recommendations to protect American energy pursuant to the executive order in 60 days. It is unclear at this time what impact the executive order will have on climate change and carbon emissions disclosure rules for companies doing business in the relevant states.

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Diversity, Equity and Inclusion (DEI). On January 21, 2025, the President signed an executive order, “Ending Illegal Discrimination And Restoring Merit-Based Opportunity,” which focused on DEI initiatives and directed executive agencies and departments to terminate all “discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements,” curtail the Office of Federal Contract Compliance Programs’ (OFCCP) operational authority, and directed agencies to scrutinize the DEI practices of private sector employers.

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The first portion of the executive order rescinded Executive Order 11246 (1965), which established the OFCCP and provided the OFCCP its operational authority to ensure compliance with anti-discrimination laws by federal contractors. The second portion of the executive order focused on DEI programs in the private sector. Specifically, the executive order directed agency heads to submit reports within 120 days identifying: (1) key sectors within each agency's jurisdiction; (2) private sector companies with the most “egregious and discriminatory” DEI programs; (3) a plan to deter DEI programs “that constitute illegal discrimination or preferences;” (4) litigation that would be potentially appropriate for federal lawsuits, intervention, or statements of interest; and (5) potential regulatory action and sub-regulatory guidance. Under the executive order, agencies

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were directed to identify up to nine potential investigations of publicly traded corporations, large non-profit corporations or associations, foundations with assets over $500 million, state and local bar and medical associations, and universities with endowments over $1 billion.

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On February 21, 2025, the United States District Court for the District of Maryland issued a nationwide injunction temporarily preventing enforcement of the following three provisions of the executive order on the basis that they were unconstitutional under the First and Fifth Amendments of the U.S. Constitution: (1) the requirement that federal contractors and grantees certify that they do not operate “illegal” DEI programs and comply with federal discrimination laws; (2) the direction to the U.S. Attorney General to deter “illegal” DEI programs or principles in the private sector by, in part, submitting a report identifying up to nine civil enforcement investigations of certain private sector companies, associations, and educational institutions; and (3) the requirement that federal agencies terminate federal awards, grants or contracts allotted based on an “illegal” DEI program. On March 14, 2025, a three-judge panel of the Court of Appeals for the Fourth Circuit overturned the District Court’s preliminary injunction, ruling that the injunction should be lifted while litigation over the executive order continues.

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On March 29, 2025, it was reported that the Presidential administration has ordered foreign companies (e.g., French companies) with U.S. government contracts to comply with this DEI executive order.

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Schedule 13G Interpretive Guidance. On February 11, 2025, the SEC issued a new Compliance and Disclosure Interpretation (C&DI) regarding the eligibility of shareholders (including institutional investment advisors) to file beneficial ownership reports on Schedule 13G. Sections 13(d) and 13(g) of the 1934 Act require that beneficial owners of more than 5% of a voting class of equity securities of an issuer registered under the 1934 Act report their beneficial ownership on a Schedule 13D or, if eligible, a Schedule 13G. The C&DI addresses the circumstances in which a shareholder’s engagement with an issuer’s management on a particular topic would cause the shareholder to be deemed to hold the relevant class of securities of the issuer with the “purpose or effect of changing or influencing control of the issuer,” thereby causing the shareholder to lose eligibility to report on Schedule 13G and requiring the shareholder to report on Schedule 13D within five business days of losing eligibility to report on Schedule 13G. Under prior guidance, the SEC provided that much of what constitutes ordinary course institutional investor engagement with portfolio companies – including engagement on executive compensation, corporate governance matters (such as board declassification), or social or environmental policies – would not, on its own, constitute an attempt to change or influence control of such companies, and therefore preclude such investors from reporting on Schedule 13G. The new C&DI deviates from this permissive approach, emphasizing that such engagement may constitute an attempt to influence or control issuers if it involves an attempt to exert pressure on management to take specific actions. The updated guidance provides for a facts-and-circumstances approach that looks to “the subject matter of the engagement [and] the context in which the engagement occurs.” As a result, shareholders (including institutional investment advisors) who have historically reported their beneficial ownership on Schedule 13G as passive investors will now need to closely consider whether their engagement practices with issuers on certain topics historically perceived as ordinary course can now cause them to be viewed as holding the relevant class of the issuer’s securities with a “purpose or effect of changing or influencing control of the issuer,” and, therefore, trigger a loss of eligibility to report beneficial ownership on Schedule 13G and require reporting on Schedule 13D. This new guidance has the potential to reshape, potentially in a significant way, the corporate governance, the executive compensation and the governance, environmental or social engagement landscape and stewardship services provided by institutional investment advisors, including, among others, Federated Hermes.

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SEC Staff Guidance on Shareholder Proposal Rule. On February 12, 2025, the SEC Staff issued Staff Legal Bulletin No. 14M, which provided guidance on the exclusion of shareholder proposals under Rule 14a-8 of the 1934 Act. This bulletin rescinded the previous Staff Legal Bulletin No. 14L and reinstated earlier guidance, expanding the ability of companies to exclude shareholder proposals on the grounds of “economic relevance” and “ordinary business.” The bulletin clarified that proposals addressing social policy issues, such as climate-related proposals, can be excluded unless they transcend ordinary business matters and raise significant policy issues appropriate for a shareholder vote. The bulletin emphasized a case-by-case analysis of shareholder proposals, considering the specific facts and circumstances of each company.

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SEC Enforcement Authority. On March 10, 2025, the SEC announced it is amending its regulations to eliminate the delegation of authority to its Enforcement Director to issue formal orders of investigation, which empower the SEC enforcement staff to issue subpoenas in connection with investigations. The withdrawal of delegated authority can mean that the process for investigating potentially violative conduct likely will be lengthier, because obtaining a formal order will now require seeking authorization from the SEC, a multi-step and multi-week process.

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New DOL Fiduciary Rule. Two U.S. District Courts in Texas previously stayed the new DOL fiduciary rule, which was issued on April 23, 2024, and, among other things, permits plan fiduciaries to consider governance, environmental and social factors in choosing retirement plan investments. On February 14, 2025, the District Court for the Northern District of Texas issued a

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decision in which it concluded that the new DOL fiduciary rule comports with the Employee Retirement Income Security Act of 1974, as amended, noting that the new DOL fiduciary rule is carefully written to specify that fiduciaries must keep beneficiaries’ financial interests paramount and allows for governance, environmental or social considerations to be factored in when choosing among alternatives that serve plans equally. Despite this court decision, the new DOL fiduciary rule remains subject to potential challenge or revision by the new Presidential administration, the Republican Congress and Republican state attorneys general. For example, on March 19, 2025, the Chairperson of the U.S. House of Representative Education and Workforce Committee sent a letter to the Secretary of Labor urging the Secretary to rescind or withdraw the new DOL fiduciary rule. This follows a motion filed in the U.S. Court of Appeals for the Fourth Circuit in February 2025, asking the court to pause the DOL’s appeals in two court cases. The court agreed to pause the consolidated appeals, which were initiated under the prior Presidential administration. Under the new Presidential administration, the DOL stated that the pause would “allow new DOL officials sufficient time to become familiar with the issues in these cases and determine how they wish to proceed.”

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SEC Climate-Related Disclosure Rule. In March 2024, the SEC adopted a final rule requiring certain corporate issuers to disclose certain climate-related information in registration statements and annual reports (SEC Climate-Related Disclosure Rule). The SEC Climate-Related Disclosure Rule requires large publicly traded companies to disclose, among other things, greenhouse gas emissions and the financial impacts of severe weather events. The SEC Climate-Related Disclosure Rule wasimmediately met with legal challenges, with the litigation consolidated in the U.S. Court of Appeals for the Eighth Circuit (Eighth Circuit). On February 11, 2025, the acting SEC Chairperson requested that the Eighth Circuit pause the litigation over the SEC Climate Disclosure Rule, citing, among other things, that a majority of SEC Commissioners no longer agree with the SEC’s prior litigation filings defending the adoption of the rules and that he continues to question the SEC’s statutory authority to adopt the rules, the need for the rules, and the cost-benefit analysis supporting the rules. On March 27, 2025, the SEC notified the Eighth Circuit that the SEC is withdrawing its defense of the SEC Climate-Related Disclosure Rule, and that the SEC’s counsel is no longer authorized to advance the arguments in the brief the SEC had filed. Given this decision, and the new Republican administration and Congress, the status of the SEC Climate Disclosure Rule for corporate issuers, as well as similar anticipated SEC rules for registered investment advisors and investment companies, is unclear. It is possible that new, replacement rules will not be proposed.

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Names Rule. On September 20, 2023, the SEC adopted significant amendments to the Names Rule, as well as certain forms and disclosure requirements. Among the relevant changes, the Names Rule amendments significantly expand the universe of fund names in scope of the Names Rule. For example, the amendments to the Names Rule expand the application of the Names Rule to fund names suggesting a focus on specific types of investments, industries, geographic regions or characteristics, such as “growth,” “value,” and terms indicating that the fund’s investment decisions incorporate one or more governance, environmental or social factors.

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To address certain interpretative questions, on January 8, 2025, the SEC released updated Frequently Asked Questions (FAQs) that modify, supersede, or withdraw portions of prior FAQs related to the Names Rule. In the updated FAQs, among other things, the SEC Staff provides guidance relating to the shareholder approval requirement for a fund seeking to revise a fundamental 80% Policy, stating that a fundamental 80% Policy may be amended to bring such policy into compliance with the amended Names Rule without shareholder approval, provided the amended policy does not deviate from the existing policy or other existing fundamental policies. The FAQs restate that individual funds must determine, based on their own individual circumstances, whether shareholder approval is necessary within this framework. Accordingly, funds may take the position that clarifications or other nonmaterial revisions to a fundamental 80% Policy in response to the amended Names Rule would not require shareholder approval. If it is determined that nonmaterial revisions have been made to a fundamental 80% Policy, notice to the fund's shareholders is required. With respect to money market funds, the FAQs also confirm that funds that use the term “money market” in their name along with another term or terms that describe a type of money market instrument (e.g., a “Treasury Money Market Fund”) must adopt an 80% Policy to invest at least 80% of the value of their assets in the type of money market instrument suggested by its name. The FAQs further explain that a generic money market fund, one where no other describing term is included in its name, would not be required to adopt an 80% Policy. The SEC Staff also removed certain prior FAQs for certain reasons, including because they were deemed no longer relevant as they addressed circumstances that were specific to the 2001 adoption of the Names Rule or were separately addressed in the adopting release related to the 2023 amendments to the Names Rule.

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On March 14, 2025, the SEC announced a six-month extension of the compliance dates for the Names Rule amendments. The compliance date for larger fund groups was extended from December 11, 2025, to June 11, 2026, and the compliance date for smaller fund groups was extended from June 11, 2026, to December 11, 2026. Compliance with the Names Rule amendments for a newly established Fund will be required upon the filing of its first registration statement on or following the new compliance dates (i.e., June 11, 2026, for larger funds and December 11, 2026, for smaller funds). To minimize costs of

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compliance, existing Funds' compliance dates will align with the timing of certain annual disclosure documents depending on the specific type of Fund. For example, for existing open-end Funds, compliance will be required on the date of filing of the first on-cycle annual prospectus update on or following the new compliance dates depending on the size of the Fund and, for existing closed-end Funds, compliance will be required on the date of distribution of the first on-cycle annual report to shareholders on or following the new compliance dates depending on the size of the Fund.

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In a letter dated April 11, 2025, from the Investment Company Institute (ICI) to the new SEC Chairperson, the ICI asked the SEC to reconsider and repeal some or all of the Names Rule amendments.

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Based on the amended Names Rule and FAQs, Federated Hermes has recommended the following changes be implemented in respect of the domestic registered Federated Hermes Funds upon compliance with the amended Names Rule becoming required: (1) one name change; (2) the adoption of an 80% Policy by two funds; (3) modifications to existing 80% Policies by 16 funds; and (4) enhanced investment strategies disclosures for three funds.

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U.S. House of Representatives Committee on the Judiciary (House Judiciary Committee) Antitrust Inquiries. On March 31, 2025, the House Judiciary Committee sent letters to Institutional Shareholder Services (ISS) and Glass Lewis & Co. (Glass Lewis) inquiring regarding the market power they allegedly wield in the proxy advisory industry and requesting records dating back to 2021 to help it “evaluate the sufficiency of U.S. antitrust laws to address competition concerns in the proxy advisory market.” In the letters, among other allegations, the House Judiciary Committee alleges that ISS and Glass Lewis “conspired with a climate cartel to align their proxy voting recommendations by the use of nearly identical language to direct their clients” and to “provide nearly identical recommendations to their clients to support [governance, environmental and social] and [diversity, equity and inclusion] initiatives.” The letters follow December 20, 2023 subpoenas from the House Judiciary Committee to ISS and Glass Lewis as part of a probe into governance, environmental, and social-related violations of U.S. antitrust laws, including whether Glass Lewis and ISS violated antitrust laws by coordinating governance, environmental, and social-related efforts with industry participants. On November 27, 2024, 11 Republican state Attorneys General filed a lawsuit against three major asset managers alleging that the asset managers, motivated by environmental issues, colluded to reduce coal production through exercising their proxy voting authority over their significant shareholders in nine coal companies in violation of U.S. antitrust law. Following a June 11, 2024 interim report, the House Judiciary Committee issued on December 13, 2024 an interim report in which the House Judiciary Committee purportedly details how a group of major financial institutions and climate activists allegedly colluded to pressure U.S. companies into committing to “net zero” climate goals in violation of U.S. antitrust laws. On December 20, 2024, the House Judiciary Committee sent letters to over 60 asset managers, including FHL, Federated Hermes’ wholly owned London-based subsidiary, requesting information regarding their involvement with certain “net zero” initiatives. FHL responded to the House Judiciary Committee on January 24, 2025.

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Outside the U.S., Federated Hermes’ and its offerings’ primary regulators include the United Kingdom (U.K.) Financial Conduct Authority (FCA), the Central Bank of Ireland, the Luxembourg Commission de Surveillance du Secteur Financier, the Cayman Island Monetary Authority, the Monetary Authority of Singapore and the Australian Securities and Investments Commission. Federated Hermes and its offerings are subject to various non-U.S. regulatory requirements, and may be impacted by regulatory developments by or involving those primary regulators, as well as, among others, the European Commission,

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European Securities and Markets Authority (ESMA), Bank of England (BoE), His Majesty’s Treasury in the U.K. (HMT), Financial Stability Board (FSB), and the International Organization of Securities Commission (IOSCO). Non-U.S. regulatory matters addressed in Federated Hermes’ 2024 Annual Report included, among others: (1) the FCA’s consultation on consumer composite investments (CCI) and the disclosure requirements for CCIs; (2) money market fund reform in the U.K. and EU; (3) FSB and IOSCO reforms to address liquidity risk management requirements; (4) U.K. and EU changes to rules on how asset managers may pay for investment research; (5) EU and U.K. sustainability requirements for asset managers and investment offerings; (6) EU and U.K. sustainability reporting requirements for corporations; and (7) the EU Digital Operational Resilience Act.

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EU UCITS and EU AIFs – Supervisory Action on Compliance and Internal Audit Functions. On February 14, 2025, the ESMA announced that it was launching a common supervisory action (CSA) with EU regulators on the compliance and internal audit functions of EU Undertakings for the Collective Investment in Transferable Assets (UCITS) management companies and alternative investment fund (AIFs) managers (AIFMs) across the EU. The CSA will be conducted throughout 2025 to assess the extent to which UCITS management companies and AIFMs have established effective compliance and internal audit functions to perform their duties adequately under the EU AIFM and UCITS Directives. ESMA intends to publish a final report with results and findings in 2026.

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EU Sustainability Requirements for Corporations. On February 26, 2025, the European Commission published a set of sustainability-related proposals called the Omnibus package (Omnibus Package) purportedly to simplify EU sustainability laws by amending the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD). The Omnibus Package includes amendments and clarifications that aim to streamline and simplify key EU sustainability regulations and seek to focus sustainability reporting requirements on the largest companies that are likely to have a significant impact on the climate and environment. Therefore, the proposals include changes that would reduce the number of entities within the scope of CSRD. The Omnibus Package also includes proposed changes intended to reduce the complexity of CSRD and CSDDD to ease the compliance burden, particularly for small and medium-sized businesses.

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EU and U.K. Sustainability Requirements for Asset Managers and Investment Offerings. The regulation of sustainable investment offerings and disclosure requirements remains an area of focus for regulators outside the U.S. In the EU, funds in existence before November 21, 2024 have until May 21, 2025 to comply with the ESMA guidelines regarding the use of governance, environmental or social and sustainability related terms in fund names. The guidelines aim to ensure that investors are protected against unsubstantiated or exaggerated sustainability claims in fund names by setting out clear and measurable criteria to be met for funds using governance, environmental or social or sustainability-related terms in their names. In addition, a review of the EU Sustainability Finance Disclosure Regulation (SFDR) by the European Commission is ongoing. The European Commission confirmed in its 2025 Work Programme (published on February 11, 2025), that revisions to the SFDR have been postponed and are now expected in the fourth quarter of 2025. The review of the SFDR may result in a legislative proposal for further amendments to the SFDR.

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In the U.K., on February 14, 2025, the FCA announced that it is delaying publication of a policy statement on extending the labelling requirements under the FCA’s Sustainability Disclosure Requirements (SDR) to asset managers providing individual portfolio management services. The FCA published a consultation paper in April 2024. The outcome of that consultation was postponed until the second quarter of 2025 and the final rules remain pending.

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On March 11, 2025, the FCA in the U.K. published a statement setting out its position on sustainability regulations and U.K. defense companies. The FCA noted that its rules, including sustainability rules - such as the SDR and Taskforce for Climate-related Financial Disclosures (TCFD), do not prevent firms from investing in defense companies. Such sustainability rules aim to: (i) ensure information about investments claiming to be sustainable can be trusted and accessible to investors, and (ii) improve the quality of sustainability-related information in the market. The FCA clarified that these rules should not be confused with financial institutions’ own policies relating to the type of businesses they wish to support.

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EU and U.K. Regulation of Governance, Environmental or Social Ratings. The EU regulation on governance, environmental and social rating activities became effective on January 1, 2025, and is scheduled to apply to companies starting on July 2, 2026. In the U.K., the HMT is finalizing the scope of the regulatory requirements for governance, environmental and social ratings providers. On March 11, 2025, the FCA noted that it intends to consult on proposed governance, environment and social-related rules during 2025. To assist with this, the FCA has asked governance, environmental and social ratings providers

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to complete a voluntary survey to help shape policy objectives. The survey was issued on March 21, 2025, and firms are encouraged to respond by no later than May 16, 2025.

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T+1 Settlement. On January 22, 2025, ESMA, the European Commission and the European Central Bank launched a new governance structure to support the transition to the T+1 settlement cycle in the EU. In the U.K., on February 6, 2025, the Accelerated Settlement Technical Group (ASTG) published the U.K. implementation plan for the first day of trading for T+1 settlement. The ASTG proposed an October 11, 2027 transition date, which is consistent with the date proposed in the EU. The ASTG also recommends that the U.K. and other EU jurisdictions should collaborate closely to determine if a coordinated shift to T+1 is possible. On February 19, 2025, the U.K. Government confirmed that it intends to legislate to make T+1 the standard settlement cycle in the U.K. starting on October 11, 2027.

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EU Operational Resilience Requirements. The EU Digital Operational Resilience Requirements (DORA) became effective on January 17, 2025. Further EU regulatory developments have occurred since DORA became effective. The European Commission rejected the European Supervisory Authorities’ (ESAs) draft Regulatory Technical Standards (RTS) on subcontracting information and communication technology services in a letter dated January 21, 2025. The European Commission noted that certain RTS requirements exceeded the mandate given to the ESAs, particularly the provisions on monitoring the subcontracting chain. In addition, there appear to be delays in the transposition of DORA in certain EU Member States. On March 27, 2025, the European Commission announced that it opened infringement proceedings by sending a formal notice letter to 13 EU Member States for failing to implement the DORA directive in their respective jurisdictions.

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U.K.’s Digital Securities Sandbox (DSS). The DSS is the first financial market infrastructure sandbox to be established under powers granted by the U.K.’s Financial Services and Markets Act 2023 (FSMA). On January 30, 2025, the FSMA DSS Amendment Regulations (the DSS Regulations), were published, together with an explanatory memorandum. The DSS Regulations create the framework that will enable the BoE and FCA to operate the DSS, which allows participants to use developing technology - such as distributed ledger technology – to undertake the activities traditionally associated with central securities depositaries and trading venues, such as the issuance, trading and settlement of securities. On March 3, 2025, the DSS Regulations became effective and on March 28, 2025, the FCA updated its DSS guidance to provide further clarity on when and how ancillary activities would be included in a sandbox approval notice and how such activities are to be treated under the FCA Handbook when carried out by an authorized person.

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U.K.’s Digital Gilt Instrument (DIGIT). The U.K. Government intends to develop a DIGIT using distributed ledger technology. It has indicated that the DIGIT would be short-dated, digitally native, bonds that would have similar features to a conventional gilt (i.e., government bonds). They would be separate to the main debt management program, comprising gilt and Treasury Bill operations, managed by the Debt Management Office. DIGIT would be issued on a platform operating within the DSS Regulations framework described above. The launch of a pilot was originally announced in November 2024, and the U.K. Government subsequently announced on March 18, 2025 the launch of the procurement process.

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U.K. OFR. Upon the U.K. exiting from the EU in 2020, the FCA created the Temporary Marketing Permissions Regime (TMPR) for UCITS funds then passported into the U.K. to continue to be marketed with obtaining individual recognition under the U.K. Financial Services and Markets Act. The TMPR will expire in December 2025. It was replaced by the OFR, which was introduced in February 2021 and allowed the U.K. to declare that types of funds passported into the U.K., and individual funds, have equivalent investor safeguards as FCA registered funds, or impose additional standards, so they can continue to be marketed. In January 2024, the U.K. announced European Economic Area UCITS were an equivalent regime for purposes of the OFR, but individual funds would be recognized after applying. Asset managers are to apply during “landing periods” assigned alphabetically. The landing period for Federated Hermes’ Irish UCITS Funds to apply is July 2025 to the end of September 2025.

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Management's Discussion and Analysis (continued)

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Management's Discussion and Analysis (continued)

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Intangible Asset Impairment

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During the second quarter of 2024, a $66.3 million non-cash impairment of an indefinite-lived intangible asset associated with the 2018 FHL acquisition was recorded in Intangible Asset Related expense on the Consolidated Statements of Income. See Note (10) to the Consolidated Financial Statements for additional information related to the impairment of this indefinite-lived intangible asset.

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SEC Spring 2024 Reg Flex Agenda. The SEC published its Spring 2024 Unified Agenda of Regulatory and Declaratory Actions (SEC Spring 2024 Reg Flex Agenda) on July 8, 2024. The SEC Spring 2024 Reg Flex Agenda identified 34 rulemaking initiatives on the SEC’s calendar for 2024 and 2025, including 19 final rules and 15 additional proposed rules. Among other developments, the SEC Spring 2024 Reg Flex Agenda signals that the SEC Staff is considering recommending that the SEC re-issue proposed rules on open-end fund liquidity risk management programs and swing pricing by April 2025, safeguarding advisory client assets (i.e., amendments to the Custody Rule under the Advisers Act) by October 2024, andconflicts of interest associated with the use of predictive data analytics (or artificial intelligence) by broker-dealers and investment advisors by October 2024. The original proposed rules on these topics were subject to significant public comments that were opposed to many aspects of the proposed rules.

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Examples of other proposed rules currently identified by the SEC Spring 2024 Reg Flex Agenda to be issued by October 2024 or April 2025 include, among others, human capital management disclosure, board diversity disclosure, amendments to the Rule 144 holding period, amendments to Regulation D, including updates to the accredited investor definition and Form D, fund fee disclosure, and broker-dealer and investment advisor conflicts in the use of predictive data analytics, artificial

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intelligence, machine learning and similar technologies. Examples of final rules that are currently identified by the SEC Spring 2024 Reg Flex Agenda to be issued by October 2024 or April 2025 include, among others, enhanced disclosure by certain investment advisors and investment companies about ESG investment practices, cybersecurity risk management for investment advisors and investment companies, and outsourcing by investment advisors. These final and proposed rules are expected to impose significant new requirements on the investment management industry, including Federated Hermes.

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Climate-Related Disclosures for Investors. In October 2023, California enacted new climate accountability legislation that will require large businesses doing business in California that were formed in the United States and that have revenues of more than $1 billion to make annual disclosures of certain greenhouse gas emission information (including Scope 3 disclosures) and biennial disclosure of certain climate-related financial risks and mitigation measures, beginning in 2026 (unless such California regulatory requirements are successfully challenged in court). On September 27, 2024, California’s governor, signed into law Senate Bill 219 (SB 219), which enacts several amendments to the previously enacted California climate-related disclosure rules. Among other things, SB 219: (1) provides an additional six-month delay for the publication of regulations by the California Air Resource Board (CARB) for scope emissions disclosures, (2) changes the timeline of Scope 3 emissions disclosure by permitting CARB to prepare a schedule for disclosure of Scope 3 emissions rather than the previous timeline requiring Scope 3 emissions disclosure no later than 180 days after Scopes 1 and 2 emissions disclosure, (3) permits consolidated reporting at the parent level for scope emissions, and (4) eliminates the payment of filing fee requirements.

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New Department of Labor (DOL) Fiduciary Rule. On April 23, 2024, the DOL issued its final “Fiduciary Rule” in which it made changes to the definition of “investment advice” fiduciary under the Employee Retirement Income Security Act of 1974 (ERISA), as well as amendments to several prohibited transaction class exemptions (DOL New Fiduciary Rule). The changes, among other things, broaden the circumstances in which ERISA fiduciary status will apply to investment advisors, broker dealers and other entities with direct or indirect discretionary authority or control, that represent or acknowledge acting as a fiduciary, or that make investment recommendations to investors on a regular basis as part of their business, including recommendations relating to ERISA plan rollover transactions, any other securities transaction, or any investment strategy involving securities or other investment property. The final rule amends or eliminates several prohibited transaction exemptions (PTE), including, among others, PTE 77-4 (Purchase of Shares of Open-End Investment Companies), and requires all investment advice fiduciaries to comply with the “best interest” standard of care and disclosure requirements under PTE 2020-02 in order to receive compensation that would otherwise be prohibited under ERISA in the absence of an exemption, including commissions, 12b-1 fees, revenue sharing, and mark-ups and mark-downs in certain principal transactions. On July 10, 2024, the U.S. House of Representatives’ (House) Education and Workforce Committee passed by a 23-18 vote a Congressional Review Act resolution to disapprove (and therefore prevent from taking effect) the DOL New Fiduciary Rule as a “reckless overreach” by the current administration. The House Appropriations Committee also approved by a 31-25 vote on July 10, 2024, the Fiscal Year 2025 Labor, Health and Human Services, Education, and Related Agencies bill, which, if passed by Congress and signed by the President, would prevent the DOL from using any funds to administer, implement or enforce the DOL New Fiduciary Rule. Both the resolution and legislation must be passed by Congress and signed by the President (or Congress must override the President’s veto). The DOL New Fiduciary Rule, which was scheduled to become effective on September 23, 2024, is being challenged by plaintiffs in a number of federal courts. In September 2023, the U.S. District Court for the Northern District of Texas had relied on the U.S. Supreme Court’s Chevron Doctrine, which required federal courts to defer to regulatory agency regulations if the language of a statute at issue was ambiguous and the agency’s interpretation was “reasonable,” in ruling that the DOL acted within its authority under the Administrative Procedure Act (APA) in issuing the DOL New Fiduciary Rule. However, as a result of the Supreme Court overturning the Chevron Doctrine in June 2024, on July 18, 2024, the Fifth Circuit directed the U.S. District Court for the North…

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argument that the DOL exceeded its authority in issuing the rule. On July 25 and 26, 2024, the U.S. District Court for the Eastern District of Texas and the U.S. District Court for the Northern District of Texas, respectively, issued stays on the effective date of the DOL New Fiduciary Rule. Both courts found that the plaintiffs’ challenges to the rule were likely to succeed on the merits because the rulemaking exceeds the DOL’s authority.

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Federal Trade Commission (FTC) Ban on Non-Compete Agreements. On April 23, 2024, the FTC issued its final rule purporting to ban all new post-employment non-compete agreements between an employer and its employee after its effective date, which was scheduled for September 4, 2024. The final rule would have applied to for-profit companies, regardless of industry or level of worker (e.g., senior executive versus other levels of employee). Lawsuits were filed challenging the FTC’s final rule, including by the U.S. Chamber of Commerce. On July 3, 2024, the U.S. District Court for the Northern District of Texas, where one of the challenges was filed, issued an order preliminarily enjoining the FTC from enforcing the rule against the plaintiffs in the case until the court decided whether the FTC violated the APA by exceeding its statutory authority. On August 20, 2024, the U.S. District Court for the Northern District of Texas granted summary judgment in favor of the plaintiffs who had sued to prevent the FTC from enforcing the rule. The ruling, which blocks the FTC’s final rule from going into effect, found that the FTC “lack[ed] statutory authority to promulgate the Non-Compete Rule” and noted that the FTC’s rule was “arbitrary and capricious” as the FTC failed to provide a reasonable explanation to justify the breadth of the rule. The FTC filed an appeal to the court’s decision on October 18, 2024.

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Customer Identification Programs for Investment Advisors. On May 13, 2024, the SEC, and the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a joint notice of proposed rulemaking (NPRM) to apply customer identification program (CIP) obligations to certain investment advisors, which would include Federated Hermes’ investment advisory subsidiaries registered with the SEC. The proposed rule would require SEC-registered investment advisors (RIAs) and exempt reporting advisors (ERAs) to, among other things, implement a CIP that includes procedures for: (1) verifying the identity of each customer to the extent reasonable and practicable; and (2) maintaining records of the information used to verify a customer’s identity, including name, address, and other identifying information. The public comment period on the proposed rule ended on July 22, 2024.

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Proposal to Eliminate Annual Shareholder Meetings for Exchange Listed Closed-End Funds. On June 6, 2024, the New York Stock Exchange (NYSE) filed an application with the SEC proposing amendments to Section 302 of the NYSE Listed Company Manual that would eliminate the requirements for closed-end management investment companies with shares listed for trading on the NYSE to hold an annual shareholder meeting each fiscal year. If approved by the SEC, the proposed amendments would exempt such exchange-listed closed-end funds from the requirement to hold an annual meeting. The SEC published the proposed amendments on July 9, 2024, and the public comment period on the proposed amendments closed on July 30, 2024. On October 4, 2024, the SEC issued an order instituting proceedings to determine whether to approve or disapprove the proposed rule change. The SEC has invited interested persons to submit written data, views and arguments regarding whether the proposed rule change should be approved or disapproved and interested persons may request an opportunity to make an oral presentation. Federated Hermes fully supports the proposed amendments. Exchange-listed closed end funds are more akin to registered mutual funds, which are not required to have annual meetings, than listed operating companies. The listed shares of such closed-end funds often trade on the NYSE at a discount to their NAV. This subjects them to attack by activist shareholders who buy discounted shares and then take action to force the closed-end funds to incur liquidity events (such as tender offers, reorganizations, or open-ending of the closed-end funds) to realize or arbitrage the difference between the discounted purchase prices and the closed-end funds’ NAV. This can reduce the number of such closed-end funds that are offered and have detrimental effects on the closed-end funds and their long-term shareholders, which in many cases are retirement investors.

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Federated Hermes’ primary regulators outside the U.S. are the United Kingdom (UK) Financial Conduct Authority (FCA), the Central Bank of Ireland, and the Luxembourg Commission de Surveillance du Secteur Financier. Federated Hermes’ is also regulated outside the U.S. by, among other regulators, the Monetary Authority of Singapore, Australian Securities and Investments Commission, Financial Services Agency of Japan and the Cayman Island Monetary Authority. Non-U.S. regulatory matters addressed in Federated Hermes’ 2023 Annual Report and First and Second Quarter 2024 Form 10-Qs included, among others: money market fund reform initiatives in the European Union (EU), UK and internationally; EU and UK sustainability disclosure requirements; EU regulatory developments such as the EU Retail Investment Package and review of the EU Undertakings for the Collective Investment in Transferable Securities (UCITS) Eligible Assets Directive and the Digital Operational Resilience Act (DORA); as well as UK regulatory developments including the UK Overseas Funds Regime (OFR), the re-introduction of the possibility of bundling investment research costs and sustainability requirements for asset

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EU UCITS and EU AIFMs – Consultation on liquidity management tools. Federated Hermes’ 2023 Annual Report describes changes to the EU Alternative Investment Fund Managers Directive (EU AIFMD) and UCITS Directive (EU UCITS) following a review of those directives. Those changes have been finalized, and include provisions regarding liquidity risk management. Consequential to those changes, on July 8, 2024, the European Securities and Markets Authority (ESMA) published two consultation papers regarding liquidity management tools (LMTs) for EU UCITS and EU alternative investment fund managers (AIFM) of open-ended alternative investment funds. One of the consultation papers relates to the development of regulatory technical standards to determine the characteristics of LMTs available to AIFMs and UCITS management companies. The second consultation paper concerns the development of guidelines that are intended to establish common standards in relation to the selection, activation and calibration of LMTs. The consultation periods for the two consultations ended on October 8, 2024.

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EU and UK sustainability requirements for asset managers and investment products. Federated Hermes’ 2023 Annual Report describes regulatory developments relating to sustainability disclosure requirements in the EU and UK applicable to asset managers and their products. In relation to the UK’s Sustainability Disclosure Requirements (SDR) and labelling regime, the FCA announced on September 9, 2024, that it is offering limited temporary measures until April 2, 2025, for firms to comply with the ‘naming and marketing rules’ under the SDR, which will apply in certain exceptional circumstances. In addition, there has been a delay in the publication of the UK Government’s consultation on extending SDR and labelling for funds able to be marketed in the UK under the OFR, which was originally intended to be published during the third quarter of 2024. In the EU, ESMA published its finalized guidelines regarding the use of ESG-related terms in fund names, which apply to UCITS management companies and AIFMs. The guidelines seek to ensure that investors are protected against unsubstantiated or exaggerated sustainability claims in fund names by setting out clear and measurable criteria to be met for funds using ESG or sustainability-related terms in their names. The guidelines will take effect on November 21, 2024 for new funds, and on May 21, 2025 for existing funds.

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EU and UK sustainability reporting requirements for corporations. Federated Hermes’ 2023 Annual Report described developments relating to sustainability disclosure requirements in the EU and UK applicable to corporations. These include: in the EU, the EU Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive; and in the UK a proposal to put in place UK sustainability reporting standards for UK corporations based on the Sustainability Disclosure Standards within the International Financial Reporting Standards issued by the International Sustainability Standards Board. In relation to CSRD, on August 7, 2024, the European Commission published frequently asked questions primarily regarding the interpretation of certain legal provisions in the CSRD. The CSRD expands the scope of companies that are required to disclose sustainability information, and increases the extent and level of detail required to be disclosed regarding sustainability matters.

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UK proposed re-introduction of bundling for investment research received by asset managers. On July 26, 2024, the FCA published its final rules and policy statement (PS24/9) regarding the “new” payment optionality for asset managers to pay for the investment research they receive. Effective August 1, 2024, asset managers in the UK will have the option of bundling payments for third party research together with execution services. This is in addition to the options of paying for research out of the asset manager’s own resources, or from a dedicated research payment account established by the manager. The ability to bundle investment research costs is subject to certain guardrails, including requiring that firms: (1) adopt a formal policy on the use of bundled payments for research; (2) establish a budget for the amount of third-party research to be purchased; (3) undertake ongoing assessments of the value and price of the research received; (4) determine an approach to the allocation of costs across the firm’s clients and a structure for the allocation of payments across research providers; (5) put in place operational procedures for the administration of accounts to purchase research; and (6) disclose to clients the firm's approach to bundled payments and the costs incurred.

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UK Overseas Funds Regime. Federated Hermes’ 2023 Annual Report described developments relating to the UK’s OFR, which sets the framework for marketing overseas investment funds to UK retail investors, as well as the marketing of overseas money market funds in the UK (whether to retail or non-retail investors). The OFR will replace the existing temporary marketing permissions regime (TMPR). EU UCITS (excluding money market funds) have been deemed equivalent for the purposes of the OFR, and therefore may avail of this once the OFR becomes available. On July 17, 2024, the FCA published its final rules and policy statement (PS24/17) regarding the implementation of the OFR. Following finalization of those rules, on September 30, 2024, the FCA opened its ‘OFR gateway’ to EU UCITS not in the TMPR to allow them to apply for OFR recognition. Starting July 1, 2025, Federated Hermes can apply for recognition under OFR.

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Digital Operational Resilience Act. The EU DORA will become effective on January 17, 2025. The DORA creates a framework for the management of information and communications technology risks by financial services firms in the EU. DORA is supplemented by various detailed measures. On July 17, 2024, the European Supervisory Authorities (ESAs) published four final regulatory technical standards and one set of implementing technical standards on the notification and reporting process for major information and communication technology (ICT) incidents involving critical third-party providers and significant cyber threats. The ESAs also published two DORA guidelines which relate to: (1) the estimation of aggregated annual costs and losses caused by major ICT-related incidents, and (2) the oversight, cooperation and information exchange between ESAs and the competent authorities.

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Revenue decreased $10.7 million for the nine-month period ended September 30, 2024, as compared to the same period in 2023, primarily due to a decrease in carried interest of $47.0 million (partially offset in Compensation and Related expense) and a decrease of $20.3 million in equity revenue due to lower average assets. These decreases were partially offset by an increase in money market revenue of $60.3 million due to an increase in average money market assets.

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Total Operating Expenses for the nine-month period ended September 30, 2024 increased $23.3 million, as compared to the same period in 2023. Intangible Asset Related expense increased $65.9 million primarily due to an impairment of a foreign intangible asset (see Note (10) to the Consolidated Financial Statements for additional information). Systems and Communications expense increased $5.4 million due to planned technology-driven initiatives. Professional Service Fees increased $5.2 million due primarily to technology initiatives. These increases were partially offset by (1) a decrease of $32.6 million in Compensation and Related expense primarily due to carried interest paid as compensation and (2) a decrease of $22.6 million in Other expense primarily due to the costs associated with a fund restructuring in 2023 ($10.9 million) and fluctuations in foreign currency exchange rates ($8.4 million).

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Nonoperating Income (Expenses), net increased $9.2 million for the nine-month period ended September 30, 2024, as compared to the same period in 2023. The increase is primarily due to (1) a $6.7 million increase in Gain (Loss) on Securities, net from a larger increase in the market value of investments in the first nine months of 2024 as compared to the increase in the market value of investments during the same period in 2023 and (2) a $2.6 million increase in Investment Income, net primarily due to an increase in investment yields in 2024 as compared to the investment yields during the same period in 2023.

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Investments—Affiliates and Other at September 30, 2024 decreased $33.3 million from December 31, 2023 primarily due to net redemptions.

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Long-Term Lease Liabilities at September 30, 2024 decreased $10.2 million from December 31, 2023 primarily due to payments made on leases in 2024.

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and related asset mixes, as well as the degree to which these factors impact Federated Hermes' institutional prime and municipal (or tax-exempt) money market business and Federated Hermes' Financial Condition.

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of Financial Condition and Results of Operations (unaudited)

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in Rule 2a-7, include holdings with indirect short-term exposures invested primarily in high-quality international bank names that are subject to Federated Hermes’ credit analysis process.

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of Financial Condition and Results of Operations (unaudited)

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management anticipates that aggregate expenditures for compliance and investment management personnel, compliance systems and technology and related professional and consulting fees can continue to increase.

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of Financial Condition and Results of Operations (unaudited)

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Income Taxes. The income tax provision was $32.3 million for the three-month period ended September 30, 2024, as compared to $26.7 million for the same period in 2023. The increase in the income tax provision was primarily due to an increase in U.S. income tax resulting from increased U.S. income. The effective tax rate was 26.3% for the three-month period ended September 30, 2024, as compared to 26.5% for the same period in 2023.

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Pillar Two legislation has been enacted in certain jurisdictions in which Federated Hermes operates. The legislation is effective for the financial year beginning January 1, 2024. Federated Hermes is in scope of the enacted legislation and has performed an

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Net income decreased $33.2 million for the nine-month period ended September 30, 2024, as compared to the same period in 2023, primarily as a result of the changes in revenues, expenses, nonoperating income (expenses) and income taxes noted above. Diluted earnings per share for the nine-month period ended September 30, 2024 decreased $0.24, as compared to the same period in 2023, primarily due to decreased net income ($0.39), partially offset by a decrease in shares outstanding resulting from share repurchases ($0.15).

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potential acquisitions, to pay down debt outstanding under the Credit Agreement and for other general corporate purposes. See Note (11) to the Consolidated Financial Statements for additional information on the Note Purchase Agreement.