FEDERATED HERMES, INC.

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Business Combination

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On April 7, 2025, FHL acquired a majority (60%) equity interest in Rivington, a U.K.-based renewable energy project development business. See Note (4) to the Consolidated Financial Statements for additional information.

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On July 21, 2025, the U.S. Department of the Treasury’s (Treasury Department) Financial Crimes Enforcement Network (FinCEN) announced its intention to postpone the effective date of the final rule establishing Anti-Money Laundering/Countering the Financing of Terrorism Program and Suspicious Activity Report Filing Requirements for Registered Investment Advisers and Exempt Reporting Advisers (IA AML Rule) and to revisit the scope of the IA AML Rule at a future date. According to FinCEN, it anticipates delaying the effective date of the IA AML Rule from January 1, 2026, until January 1, 2028. FinCEN also announced that it intends to revisit the substance of the IA AML rule through a future rulemaking process, and that it intends to work with the SEC to revisit the proposed rule that would impose customer identification program rule requirements for investment advisors. In its announcement, FinCEN recognized the need to effectively tailor the IA AML Rule to the diverse business models and risk profiles of the investment advisor sector, and that extending the effective date of the IA AML Rule may help ease potential compliance costs for the investment advisor industry and reduce regulatory uncertainty.

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On April 9, 2025, the President signed a Presidential Memorandum (Memorandum) entitled “Directing the Repeal of Unlawful Regulations,” which is part of a broader Department of Government Efficiency (DOGE) deregulatory initiative reflected in the President’s February 19, 2025 Executive Order entitled “Ensuring Lawful Governance and Implementing the President’s ‘Department of Government Efficiency’ Deregulatory Initiative.” This executive order directed agencies to prioritize the repeal of regulations that are unlawful under 10 recent U.S. Supreme Court cases. In support of this initiative, on April 28, 2025, Federated Hermes submitted a letter to the new SEC Chairperson expressing its view that SEC’s adoption of the 2023 amendments to Rule 2a-7 under the 1940 Act, related to the mandatory liquidity fee framework for institutional prime and institutional tax-exempt money market funds, violates the Administrative Procedures Act and should be repealed. Federated Hermes believes this violation stems from the SEC’s failure to conduct a proper cost-benefit analysis, the establishment of an arbitrary threshold for mandatory liquidity fees, the absence of an analysis of less restrictive alternatives, and the lack of adequate notice and opportunity for public comment. On July 11, 2025, Federated Hermes submitted another letter to the SEC Chairperson in which Federated Hermes continued to advocate for the elimination or modification of the mandatory liquidity fee requirement under amended Rule 2a-7 under the 1940 Act, and also advocated for: (1) the amendment of New York Stock Exchange Rule 452(e) to allow broker-dealers greater discretion to vote proxies on behalf of their customers for purposes of achieving quorum for mutual fund shareholder meetings; (2) lowering quorum requirements under the 1940 Act for mutual fund shareholder meetings; (3) eliminating tailored shareholder reports based on a lack of utility, and, if not eliminated completely, eliminating the requirement to prepare tailored shareholder reports on a class-by-class basis, which increases operational and shareholder costs; (4) eliminating the requirement under the amended Names Rule for a mutual fund to sell portfolio securities within 90 days of falling out of compliance with the 80% threshold under the amended Names Rule; and (5) allowing electronic delivery of required regulatory documents to shareholders as the default option for delivery, unless a shareholder affirmatively elects to receive mailed copies of such documents. Federated Hermes also met in person on July 11, 2025 with the SEC Chairperson, certain other SEC Commissioners, and certain SEC staff members to discuss these topics, among others.

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Given the executive orders and above developments, as well as the SEC’s withdraw of certain previously proposed regulations as discussed below, the timing of proposed and new regulation has been, and likely will continue to be, delayed and the pace of new SEC proposed and final regulations slowed.

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SEC Reduces Regulatory Agenda and Withdraws Numerous Proposed Rules. On June 12, 2025, the SEC announced the withdrawal of 15 pending rule proposals that were issued as far back as February 2022 and would have impacted, among others, public companies, investment advisors, investment companies and broker dealers. As a result, while it is likely that the SEC will issue new proposed rules to replace certain withdrawn proposals, such as the proposed amendments to Rule 206(4)-2 under the Advisers Act (Custody Rule), any future rulemaking related to the subject matter of such proposals will need to start over with a new proposed rulemaking and opportunity for public comment. In addition to the withdraw of the proposed amendments to the Custody Rule, other key rule proposals that were withdrawn by the SEC included proposed rules on: (1) cybersecurity risk management for investment advisors, registered investment companies, business development companies, broker-dealers and transfer agents; (2) enhanced disclosures by certain investment advisors and investment companies of governance, environmental and social investment practices; and (3) outsourcing by investment advisors. The releases for all 15 withdrawn proposals, which signal a move towards less prescriptive and more pragmatic regulation, are included on the SEC’s website at www.sec.gov/rules-regulations/rulemaking-activity.

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Crypto Asset Exchange-Traded Products. On July 1, 2025, as part of an effort to provide greater clarity on the application of the federal securities laws to crypto assets, the SEC provided its views on the application of certain disclosure requirements under the federal securities laws to offerings and registrations of securities by issuers of crypto asset exchange-traded products (Crypto Asset ETPs). Crypto Asset ETPs are investment products that are registered under the 1933 Act and 1934 Act and listed and traded on national securities exchanges. The guidance represents a dramatic shift in how the SEC regulates the cryptocurrency sector and marks the first step toward approval of dozens of exemptive applications for Crypto Asset ETPs. It has been reported that industry experts also expect the SEC’s Division of Trading and Markets to streamline the application process for Crypto Asset ETPs, which should accelerate the pace for new products. However, the guidance did not address products registered as investment companies under the 1940 Act.

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DOL Fiduciary Rule; Cryptocurrency Guidance. On May 28, 2025, the DOL took two actions that signal a shift in its approach to fiduciary oversight under the Employee Retirement Income Security Act of 1974, as amended (ERISA). First, the DOL notified the Court of Appeals for the Fifth Circuit that it would stop defending its 2022 regulation addressing the consideration of governance, environmental and social factors by fiduciaries in connection with investment decision-making. The DOL stated “that it will engage in new rulemaking” and adopt it “as expeditiously as possible.” Although it will be a new rulemaking, it has been reported that it could return to the DOL’s previous stance under the President’s first administration of broadly discouraging governance, environmental and social factors as investment considerations.

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On the same day, the DOL took a second action related to previously issued guidance regarding investments in cryptocurrency. In 2022, the DOL issued guidance warning against including cryptocurrency investment options in participant-directed retirement plans. On May 28, 2025, the DOL rescinded its 2022 guidance. By rescinding its prior guidance, the DOL has ceased to discourage plan sponsors and other fiduciaries from including cryptocurrency in their plans’ investment options. Instead, the DOL expressly takes the view that cryptocurrencies should be evaluated under the same fiduciary standards that apply to any other asset class.

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SEC Reconsiders 15% Limit on Private Fund Investments in Closed-End Funds. On May 19, 2025, the SEC Chairperson stated that the SEC is evaluating lifting the 15% private fund limit for closed-end funds. Since 2002, the SEC staff has taken the position that closed-end funds investing 15% or more of their assets in private funds should impose a minimum initial investment requirement of $25,000 and restrict sales to investors that satisfy the accredited investor standard. In his remarks, the SEC Chairperson acknowledged that, as a result, many retail investors have missed out on opportunities to invest in closed-end funds that invest in private investment funds, like hedge funds and private equity funds. The SEC Chairperson further stated that lifting the limit “could increase investment opportunities for retail investors seeking to diversify their investment allocation in line with their investment time horizon and risk tolerance.” On May 20, 2025, the SEC’s Director of the Division of Investment Management followed the SEC Chairperson’s remarks and stated that: “While the Division continues its day-to-day work, we are also adapting to an ever-changing industry. As [the SEC Chairperson] mentioned in his remarks yesterday, for example, the staff as of yesterday [Monday, May 19, 2025], will no longer provide comments limiting the ability of retail investors to invest in registered closed-end funds that invest in private funds. This decision was made based on the ever-evolving industry, and we hope that the shift will provide investors with new investment opportunities to the extent they align with their risk tolerance and investment objectives.”

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SEC Crypto Asset-Related FAQs. On May 15, 2025, the SEC’s Division of Trading and Markets released Frequently Asked Questions (FAQs) clarifying how certain broker-dealer and transfer agency rules related to crypto asset activities. The FAQs provide guidance on crypto asset custody by broker-dealers’ and transfer agents’ use of the blockchain to maintain master securityholder files. On the same day, the SEC and FINRA’s Office of General Counsel withdrew their July 8, 2019 joint statement on broker-dealer custody of digital asset securities. The withdrawn joint statement had previously outlined

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significant challenges and risks associated with broker-dealers custodying crypto asset securities, noting difficulties in complying with certain federal securities laws. The FAQs provide clarity for broker-dealers and transfer agents on the application of various laws and rules to crypto asset securities. The issuance of the FAQs and withdrawal of the joint statement follow statements made by the SEC staff that it intends to move away from ad hoc enforcement and guidance and toward implementing a more formal, structured, and rational regulatory landscape for crypto assets.

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D.C. Circuit Court Limits SEC Regulatory Reach Over Proxy Advisory Firms. In July 2020, the SEC adopted amendments to its rules governing proxy solicitations. In addition to addressing changes to the procedure for submitting shareholder proposals, the amendments codified the SEC's interpretation that proxy voting advice generally constitutes a solicitation within the meaning of the proxy rules under the 1934 Act. The 2020 amendments meant that proxy advisory firms had to file their proxy recommendations with the SEC as proxy solicitations, unless the firm: (1) disclosed conflicts of interest and steps taken to address such conflicts; and (2) adopted procedures to make their proxy advice available to the companies that are the target of that advice at least by the time the advice is disseminated to the proxy voting firm’s clients and established a mechanism to inform clients of the company’s response to the proxy advisory firm’s advice before the applicable shareholder meeting (“notice and awareness conditions”). Institutional Shareholder Service, Inc. (ISS), a proxy advisory firm, challenged the SEC’s interpretation of the term “solicit” under Section 14(a) of the 1934 Act. On July 1, 2025, the U.S. Court of Appeals for the D.C. Circuit affirmed the district court’s grant of summary judgment to ISS, finding that the SEC’s expanded definition of “solicit” and “solicitation” went beyond the meaning contemplated by Congress in enacting Section 14(a) of the 1934 Act. Specifically, the court stated that contemporaneous dictionaries suggest that “to solicit” and “solicitation” entail seeking to persuade another to take a specific action. The court stated that, while it may be reasonable to say that a client (i.e., institutional investor) “solicits” a proxy advisory firm’s recommendation on how to vote, when the proxy advisory firm provides that recommendation, it has not “solicited” the client’s vote.

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SEC Stops Defense of its 2016 Liquidity Rule. On July 11, 2025, the SEC filed a joint stipulation to dismiss with prejudice its case against an investment advisor, two of its officers, and two independent trustees of a mutual fund advised by the investment advisor in which the SEC had alleged that the investment advisor violated Rule 22e-4 under the 1940 Act (“SEC Liquidity Rule”), which limits mutual funds from holding more than 15% of net assets in illiquid investments. The investment advisor allegedly failed to present a plan to reduce illiquid holdings and did not make required filings. It has been reported that the case was significantly impacted by the 2024 U.S. Supreme Court decision in Loper Bright Enterprises v. Raimondo, which overturned prior case law that gave deference to agency determinations or regulations and allows courts to independently interpret agency rules, weakening the SEC’s position. The dismissal can be viewed as a setback for the SEC’s regulatory authority, especially in enforcing newer rules like the Liquidity Rule, and is an example of the broader impact of the Loper Bright decision on federal agency enforcement actions.

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U.S. Supreme Court to Decide Whether Section 47(b) of 1940 Act Creates Private Right of Action. On June 30, 2025, the U.S. Supreme Court agreed to hear a case that will determine whether Section 47(b) of the 1940 Act creates a private right of action for shareholders of registered investment companies to bring lawsuits for alleged violations of the statute. The Second Circuit Court of Appeals has recognized such a right of action since 2019, allowing litigation claims by private plaintiffs for alleged 1940 Act violations, despite Congress having granted the SEC sole regulatory authority to enforce the 1940 Act. Other circuit courts of appeal have rejected a Section 47(b) private right of action. The U.S. Supreme Court granted certiorari and agreed to hear a case to resolve the circuit split. The outcome of the appeal, to be heard in the Supreme Court’s October 2025 term, will have broad implications for registered funds governed by the 1940 Act (including mutual funds, exchange-traded funds (ETFs) and closed-end funds). Under the 1940 Act, Congress granted fund shareholders a single express private right of action to bring lawsuits – namely, a claim for allegedly excessive advisory fees under Section 36(b), which was added to the statute by amendment in 1970. Applying key Supreme Court precedent from 2000, lower courts have uniformly declined to read into the statutory language implied private rights of action to enforce other 1940 Act provisions. The sole outlier was the Second Circuit’s 2019 decision in Oxford University Bank v. Lansuppe Feeder, LLC, recognizing an implied private right of action under Section 47(b). Since that case, certain so-called “activist” investors have repeatedly seized upon Section 47(b) as an entry point to challenge closed-end fund bylaws as violating other provisions of the 1940 Act regarding fund capital structure and board elections. These lawsuits have been in support of such “activist’s” closed-end fund “arbitrage strategy” seeking to force liquidity events in such funds, such as tender offers, reorganizations into open-end funds, or fund liquidations, to obtain short-term profits at the expense of other longer-term shareholders.

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The Investment Company Institute (ICI) and the Asset Management Group of the Securities Industry and Financial Markets Association (SIFMA AMG) submitted an amicus brief in the case to be heard by the U.S. Supreme Court in which they explained that the threat posed by a Section 47(b) private right of action extends well beyond the closed-end fund “activist” strategy, noting the consequences of a potential flood of litigation claims by the plaintiffs’ bar via Section 47(b) go beyond

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wasteful litigation expense. For example, according to the ICI and SIFMA AMG, private litigation claims, in which courts would not necessarily be bound by the SEC’s interpretation of the 1940 Act, could risk contradictory interpretation and significant regulatory uncertainty, dampening investment management industry innovations and ultimately harming shareholders. The Supreme Court’s decision could have a significant impact on all facets of the registered fund industry. Federated Hermes agrees with the ICI and SIFMA AMG, and believes that a private right of action should not exist under Section 47(b) of the 1940 Act.

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Generating Retirement Ownership Through Long-Term Holding Act of 2025 (GROWTH Act) Introduced in Congress. After being previously introduced in the U.S. House of Representatives, on May 21, 2025, the GROWTH Act was introduced in the U.S. Senate, with the stated aims of empowering investors by allowing automatic reinvestment of capital gain distributions in mutual funds and other registered funds and eliminating unexpected tax bills for reinvested capital gains outside of tax-preferred accounts. If enacted as introduced, the GROWTH Act would incentivize reinvestment and compounding growth in such funds by deferring annual taxes on capital gains distributions until an investor sells their shares or redeems/exits from a fund. In doing so, the GROWTH Act would address the disparity that exists between mutual fund investors and investors in other types of vehicles, such as ETFs, who are taxed only when gains are realized. The ICI, Federated Hermes, and other mutual fund companies support the enactment of the GROWTH Act.

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Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) Enacted. On July 18, 2025, the President signed the GENIUS Act into law with the stated intentions of prioritizing consumer protection, strengthening the U.S. dollar, and bolstering national security to make the U.S. a leader in digital assets and spur innovation. The GENIUS Act purports to protect consumers from bad actors in financial markets. It creates a U.S. federal regulatory system for stablecoins, which are a type of cryptocurrency designed to maintain a stable value by being tied to a reserve asset, most commonly the U.S. dollar. It endeavors to ensure the stability of stablecoins and consumer trust by requiring stablecoin issuers to: (1) maintain 100% liquid asset reserves like U.S. dollars or short-term U.S. Treasuries to back their stablecoins; (2) make monthly, public disclosures of the composition of reserves; (3) comply with strict marketing rules to protect consumers from deceptive practices, such as making misleading claims that their stablecoins are backed by the U.S. government, federally insured, or legal tender; (4) establish anti-money laundering and sanctions compliance programs with risk assessments, sanctions list verification, and customer identification; and (5) establish the technical capability to seize, freeze and burn payment stablecoins when legally required to do so. It purports to improve the Treasury Department’s ability to combat illicit stablecoin activities by enhancing its sanctions evasion and money laundering enforcement capabilities. It also provides that, in the event of an insolvency of a stablecoin issuer, the claims of stablecoin holders are to be given priority over all other creditors.

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Bill Introduced to Enact U.S. Financial Transactions Tax. On June 18, 2025, The Wall Street Tax Act (H.R. 4035) was introduced into the U.S. House of Representatives. The Wall Street Tax Act purportedly, if enacted as proposed, would levy a financial transaction tax (FTT) of 0.1% – phased in over five years–on the sale of stocks, bonds, and derivatives to discourage certain risky and unproductive trading practices. The tax would apply to the fair market value of assets. Initial public offerings and short-term debt would be exempted from the tax.

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U.K. Reform of AIFMD regime. HMT and the FCA published a consultation paper and call for input respectively on April 7, 2025, on the reform of the U.K. alternative investment funds regime which is derived from the EU Alternative Investment Fund Managers Directive (AIFMD). Key proposals include the removal of the distinction between the existing registration regime for sub-threshold AIFMs and the authorization regime for full-scope AIFMs so that all AIFMs will be subject to a single authorization regime. Consequently, on the removal of the sub-threshold AIFM concept, it is proposed that the requirements for AIFMs would be based on a proportionate application depending on the size of the AIFM, with larger firms subject to more onerous requirements. For these purposes, AIFMs will be categorized into three tiers based on the size of their assets under management (AUM). The proposed tiers are: (i) large – AUM of £5bn or more, (ii) mid-sized – AUM of £100m to £5bn, and (iii) small – AUM of £100m or less. The deadline for responses to the publications closed on June 9, 2025. The FCA intends to consult on detailed rules in the first half of 2026.

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U.K. New Disclosure Regime for Consumer Composite Investments. The FCA published on April 16, 2025 a further consultation paper (CP25/9) on the CCI regime. Further proposals include a revised approach to the calculation of transaction costs, revisions to simplify the current cost disclosure rules under the U.K. MiFID framework, and transitional provisions to allow firms flexibility to move across to the new regime as soon as they are ready. The consultation closed on May 28, 2025. The FCA plans to issue a Policy Statement with final rules in late 2025.

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U.K. and EU Changes to Rules on Payment for Investment Research. In the U.K., the FCA has extended the ability to ‘bundle’ payment for third party research with trade execution costs from FCA-regulated MiFID investment firms to FCA-regulated investment fund managers including UCITS management companies and AIFMs. Fund managers’ ability to do so is subject to guardrails largely similar to those outlined in the Federated Hermes’ 2024 Annual Report. The extension entered into force on May 9, 2025.

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In the EU, ESMA subsequently published on April 8, 2025 its final report on technical advice in relation to the EU initiative permitting combination of investment research with execution costs for EU MiFID investment firms. Specifically, ESMA’s technical advice focuses on proposed changes to certain legislative provisions in the EU MiFID regulatory framework. These proposals include a requirement for an EU MiFID investment firm to enter into a joint payment agreement which prevents it from paying substantially more for the research component than it would have paid for it without the bundling, and does not impede its ability to provide best execution.

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Liquidity Risk Management for EU UCITS and Open-ended Funds. ESMA published on April 15, 2025 two final reports setting out the draft regulatory technical standards (RTS) and guidelines on the selection and calibration of liquidity management tools (LMTs) by EU UCITS and open-ended AIFs. Factors to consider in accessing the suitability of LMTs include: (i) the fund’s legal structure and any specific structuring features; (ii) the fund’s investment strategy and investment policy; (iii) the dealing terms of the fund including, inter alia, lock-up period, settlement period, redemption policy, and dealing frequency; (iv) the liquidity profile of the fund and its underlying assets, including anticipated liquidity demands; (v) the results of liquidity stress testing; (vi) the characteristics of the fund’s investor base; and (vii) the fund’s distribution policy. The draft RTS has been submitted to the European Commission which has three months to make a decision.

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Global Liquidity Risk Management. On May 27, 2025, the IOSCO published a final report (FR/10/2025) and guidance (FR/11/2025) on its revised recommendations for liquidity risk management (LRM) for collective investment schemes. The final report sets out 17 revised recommendations including, inter alia: (i) general recommendations about the LRM process, (ii) setting liquidity thresholds at the portfolio level, and (iii) consistency of open-ended funds asset liquidity and redemption terms. National and supra-national regulators of financial services regulators are expected to take into consideration the IOSCO recommendations in their regulation of asset managers’ LRM arrangements.

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EU Savings and Investments Union (SIU). On April 15, 2025, the European Commission launched a targeted consultation on obstacles to capital markets integration across the EU. This encompassed a wide-ranging set of initiatives aiming to develop the EU capital and banking markets, and to boost the EU’s economic competitiveness by improving the way the EU financial system mobilizes savings towards productive investments. The targeted consultation covers proposed changes affecting fund distribution and asset managers, including a proposed simplification of regulations and reduction of overall compliance burden, facilitating integration of liquidity pools, and addressing identified post-trading issues. The consultation closed on June 10, 2025, with a comprehensive package of measures expected in the fourth quarter of 2025.

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U.K. Sustainability Requirements for Corporations. The U.K. government published on June 25, 2025 a consultation on the U.K. Sustainability Reporting Standards (U.K. SRS) which are based on IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures. The U.K. government also created two committees to assist with the implementation of the U.K. SRS – a Technical Advisory Committee and a Policy and Implementation Committee. The final U.K. SRS are expected in the fall of 2025 for voluntary use. The U.K. government and the FCA will consider subsequently whether to make the U.K. SRS mandatory for certain entities.

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EU and U.K. Sustainability Requirements for Asset Managers and Investment Offerings. In the EU, the European Commission launched on May 2, 2025 a Call for Evidence relating to the review of the Sustainable Finance Disclosure Regulation (SFDR). This Call for Evidence was part of the review process for the SFDR, and identified certain areas of improvement. The proposed changes to the SFDR are expected in the fourth quarter of 2025.

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In the U.K., the FCA announced on April 29, 2025 that it had decided not to finalize at this stage the rules it had previously consulted on regarding extending the Sustainability Disclosure Regime to asset managers providing individual portfolio management services.

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EU and U.K. Regulation of Governance. Environmental and Social Ratings. In the EU, ESMA published on May 2, 2025 its consultation paper on the draft regulatory technical standards (RTS) under the governance, environmental and social rating regulation setting out proposed requirements on (i) application for authorization and recognition of governance, environmental and social ratings providers; (ii) measures and safeguards to mitigate conflicts of interest; and (iii) disclosures to be made by governance, environmental and social rating providers. ESMA is expected to publish a final report on the RTS in the fourth quarter of 2025.

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EU High-Risk Third Jurisdictions. On June 10, 2025, the European Commission updated, in the form of a proposed delegated regulation, its list of high-risk jurisdictions for the purposes of the EU anti-money laundering and counter-terrorist financing (collectively, AML) framework. EU entities covered by the AML framework are required to apply enhanced due diligence in transactions involving these jurisdictions. The updated list will enter into force after scrutiny and non‑objection of the European Parliament and the Council of the European Union within a period of one month (which can be prolonged for a further month).

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Revenue. Revenue increased $22.3 million for the three-month period ended June 30, 2025, as compared to the same period in 2024, primarily due to an increase in revenue of $18.5 million and $2.4 million from higher average money market and equity assets, respectively.

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Revenue increased $49.4 million for the six-month period ended June 30, 2025, as compared to the same period in 2024, primarily due to an increase in revenue of $39.8 million and $4.3 million from higher average money market and equity assets, respectively, and a $4.0 million increase in performance fees.

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Operating Expenses. Total Operating Expenses for the three-month period ended June 30, 2025 decreased $54.1 million, as compared to the same period in 2024. Intangible Asset Related expense decreased $65.9 million primarily due to the June 30, 2024 impairment of an indefinite-lived intangible asset related to the FHL right to manage public fund assets. Other expense decreased $7.2 million due primarily to fluctuations in foreign currency exchange rates. These decreases were partially offset by an increase of $14.1 million in Compensation and Related expense primarily due to higher incentive compensation and an increase in Distribution expense of $5.9 million primarily due to higher average money market fund assets.

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The income tax provision was $66.3 million for the six-month period ended June 30, 2025, as compared to $52.4 million for the same period in 2024. The increase in the income tax provision was primarily due to an increase in U.S. income tax due to increased U.S. income ($7.0 million) and a net tax benefit associated with the 2024 impairment on a foreign indefinite-lived intangible asset ($6.0 million). The effective tax rate was 24.8% for the six-month period ended June 30, 2025, as compared to 35.8% for the same period in 2024. The decrease in the effective tax rate was primarily due to the impact in 2024 of the valuation allowance on foreign deferred tax assets and the impairment of a foreign indefinite-lived intangible asset.

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On July 4, 2025, the President signed a spending and tax bill into law (the 2025 Spending and Tax Bill). The final version of the bill includes several provisions impacting how U.S. multinational businesses calculate foreign income, deductions, and credits. It permanently extends many of the tax provisions initially introduced by the Tax Cuts and Jobs Act and introduces significant U.S. federal tax changes relevant to multinational businesses. Federated Hermes has performed an assessment of the potential impact of the 2025 Spending and Tax Bill. Based on the assessment, for fiscal year 2025 Federated Hermes does not expect a material impact to its income tax expense.

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Other Current Assets at June 30, 2025 increased $11.1 million from December 31, 2024 primarily due to deposits made on a fixed asset to be acquired in the next year.

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Redeemable Noncontrolling Interests in Subsidiaries at June 30, 2025 increased $107.5 million from December 31, 2024 primarily due to additional outside investments in consolidated VIEs ($80.0 million) and noncontrolling interests recorded in connection with the Rivington acquisition ($27.4 million).

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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 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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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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Revenue. Revenue increased $27.2 million for the three-month period ended March 31, 2025, as compared to the same period in 2024, primarily due to an increase in money market revenue of $21.3 million due to an increase in average money market assets, an increase in performance fees of $3.4 million and an increase in carried interest of $2.1 million (partially offset in Compensation and Related expense).

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Income Taxes Payable at March 31, 2025 increased $27.5 million from December 31, 2024 primarily due to an accrual for the first quarter estimated federal tax payment that was paid in April 2025.

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During the quarter ended March 31, 2025, management did not identify any indicators for potential impairment of the indefinite-lived intangible asset related to the FHL right to manage public fund assets.

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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, such as: (1) amendments to Form PF; (2) the compliance date for the short sale reporting rule; and (3) the compliance dates related to the Names Rule.

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Nonoperating Income (Expenses), net increased $10.6 million for the six-month period ended June 30, 2025, as compared to the same period in 2024. The increase is primarily due to a $11.3 million increase in Gain (Loss) on Securities, net due to an increase in the market value of investments.

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Federated Hermes expects to be able to rely on the transitional safe harbor for each of the jurisdictions in which it operates. As a result, Federated Hermes does not expect a material exposure to Pillar Two income taxes in those jurisdictions. This assessment will continue to be monitored and updated as additional guidance and/or legislation is released.

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Net income increased $96.1 million for the six-month period ended June 30, 2025, as compared to the same period in 2024, primarily as a result of the changes in revenues, expenses, nonoperating income (expenses) and income taxes noted above. Diluted earnings per share for the six-month period ended June 30, 2025 increased $1.28, as compared to the same period in 2024, primarily due to increased net income ($1.16) and a decrease in shares outstanding resulting from share repurchases ($0.12).

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Long-Term Debt. On March 17, 2022, pursuant to the Note Purchase Agreement, Federated Hermes issued unsecured senior Notes in the aggregate amount of $350 million at a fixed interest rate of 3.29% per annum, payable semiannually in arrears in March and September in each year of the agreement. The entire principal amount of the $350 million Notes will become due

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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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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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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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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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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.