FHI 10-K & 10-Q changes, risk factors and insider trading

As an investment manager, riskRisk is inherent to Federated Hermes’ investment management business and offerings. U.S.,Global UK,financial, EU and other global financial/securities, capital, commodities, currency, real estate, energy, credit and other markets (collectively, as applicable, markets), by their nature, are proneinherently to uncertaintyuncertain and subject participants to a variety of risks. If any of the following risks actually arise, Federated Hermes’ Financial Condition can be materially adversely affected. The risks described below are not theexhaustive, onlyand additional risks toincluding Federated Hermes’ business and offerings. Additional risksthose not presently known or that are currently considered immaterial can also adversely affect its Financial Condition.

Potential Adverse Effects of a Material Concentration in Revenue. At any point in time, a significant portion of Federated Hermes’ total AUM or revenue can be attributableconcentrated toin one or more of its investment offerings, or asset classes, or one or more customers with whom it has a relationship.customers. See Note (45) to the Consolidated Financial Statements for information on material concentrations in Federated Hermes’ revenue. A significant and prolonged decline in the AUM of anmaterially concentrated offering, strategy, or asset class with a material concentration can havematerially aadversely material adverse effect onaffect Federated Hermes’ future revenues and, to a lesser extent, net income, due to a related reduction in distribution expenses associated with these offeringsofferings, strategies and assets. Likewise,Similarly, significant negativeadverse changes in Federated Hermes’ relationshiprelationships with a customercustomers or shareholdershareholders with arepresenting material concentrationconcentrations can havematerially aadversely material adverse effect on Federated Hermes’affect future revenues and, to a lesser extent, net income due to a related reduction in distribution expenses associated with this customer or shareholder. A significant change in Federated Hermes’ business and offerings, or a significant reduction in AUM due to regulatory developments and new or amended regulatory requirements, market changes, such as significant and rapid increases or decreases in interest rates over a short period of time causing certain investors to prefer direct investments in interest-bearing securities, non-competitive performance, declines in asset values, the availability, supply and/or market interest in repurchase agreements and other investments, significant deterioration in investor confidence, continuing declining or prolonged periods of low short-term interest rates or negative interest rates or negative yields and resulting fee waivers, investor preferences for deposit products or other Federal Deposit Insurance Corporation (FDIC)-insured products, or certain exchange-traded offerings, index funds or other passive investment offerings, changes in offering fee structures, changes in relationships with customers, or other circumstances, or factors that change Federated Hermes’ business and offerings, reduce AUM or alter asset mix, can havematerially aadversely material adverse effect onaffect Federated Hermes’ Financial Condition.

Potential Adverse Effect of Providing Financial Support to Investment Offerings. Federated Hermes can, from time to time, elect to provide financial support to its sponsored investment offerings. Providing suchSuch support utilizesrequires the use of capital that would otherwise be available for other corporate purposes or to satisfy certainmeet applicable capital or liquidity adequacy requirements. LossesAny resultinglosses from such support, or failurean inability to have or devotetimely deploy sufficient capital to support offerings,capital, can havematerially aadversely material adverse effect onaffect Federated Hermes’ Financial Condition.

Risk of Federated Hermes’ Money Market Offerings’ Ability to Maintain a Stable Net Asset Value. Approximately 51%53% of Federated Hermes’ total 2025 revenue for 2024 was attributable to money market assets. An investment in moneyMoney market fundsfund isinvestments are neither insured nor guaranteed by the FDIC or any other government agency. Federated Hermes’ retail andretail, government/public debt money market funds, and itsdebt, private and collective money market funds,funds seek to maintain a stable or constant NAV.NAV, Federatedand Hermes also offersits non-U.S. low volatilitylow-volatility NAV money market funds that seek to maintain a constant NAV, but will move to a four-digit NAV if such fund’s NAV falls outside of a 20-basis point collar. While stable or constant NAV money market funds seek to maintain a NAV of $1.00 per share, it is also possible to lose money by investing in these funds. Federated Hermes also offers institutional prime or municipal (or tax-exempt) money market funds which transact at a fluctuating NAV that usesuse four-decimal-places ($1.0000), and a short-term variable NAV non-U.S. money market fund. It is also possible to lose money by investing in these funds. Federated Hermes devotes substantial resources,resources such as significantto credit analysis, integration of proprietary insights from fundamental investment analysis,analysis (including governance, environmental or social factors and engagement interactions (for many of its investment offerings) and attention to security valuation, in connection with the management ofmanaging its offerings. However, the NAV of an institutional prime or municipal (or tax-exempt) money market fund, or variable NAV fund or, if the above described conditions are met, a low-volatility NAV money market fund, can fluctuate, and there is no guarantee that a retail, government/public debtdebt, orprivate retailand collective (i.e., stable or constant NAV) money market fund will be able to preserve a stable or constant NAV in the future. Market conditionsconditions, canliquidity leadconstraints, toprolonged aperiods limitedof low interest rates or regulatory developments and requirements that limit supply of money market securitiessecurities, andcreate severe liquidity issues and/or declines in interest ratesilliquidity, or additional prolonged periods of low yields in money market offerings, and regulatory developments and regulatory requirements can lead to shifts inshift asset levels and mix, whichmix can impactadversely affect money market fund NAVsNAVs, asset levels and performance. If the NAV of a Federated Hermes stable or constant NAV money market fund were to decline to less than $1.00 per share, or if the fluctuating NAV of an institutional prime or municipal (or tax-exempt) money market fund, or variable NAV money market fund or low-volatility NAV money market fund consistently or significantly declines to less than $1.0000 per share, such Federated Hermes money market fund would likely experience significant redemptions, resulting in reductions in AUM, loss of shareholder confidence and reputational harm, all of which can cause material adverse effects on Federated Hermes’ Financial Condition. GivenUnder U.S. money market fund reforms, significant daily redemptions on any day from Federated Hermes’ registered institutional prime or municipal (or tax-exempt) money market funds also maycan result in the imposition oftrigger discretionary or mandatory redemption fees, whichpotentially would likely leadleading to further reductionsAUM in AUM,reductions, loss of shareholder confidence, and reputational harm, and can cause additional material adverse effects on Federated Hermes’ Financial Condition.

Potential Adverse Effects of Increased Competition in the Investment Management Business. The investment management business is highly competitive. Federated Hermes competes in the management and distribution of investment offerings (such as the Federated Hermes Funds and Separate Accounts), stewardship services and real estate development services with other fund management companies and investment advisors, foreign, national, and regional broker/dealers, commercial banks, insurance companies and other institutions. Many of these competitors have substantially greater resources and brand recognition than Federated Hermes. Competition is based on various factors, including, among others, business reputation, investment performance, quality of service, engagement, carbon neutrality and other governance, environmental or social-related commitments and initiatives, the strength and continuity of management and selling relationships, distribution services offered, technological innovation (e.g., the use of financial technology, tokenization, block chain, artificial intelligence, natural language processing, digital client engagement tools and data science), the ability to generate, validate and publish accurate reports in a timely manner, the ability to offer customers and shareholders 24/7 access to their funds, the type (e.g., passive-passively- versus actively-managed, fund versus FDIC-insured deposits, governance, environmental or social factor integrated versus non-governance, environmental or social factor integrated) and range of offerings made available, fees charged, customer or shareholder preferences, political or other views surrounding governance, environmental or social-related offerings or governance, environmental or social factor integration, transformation, and investing, and geopolitical developments. As with any highly competitive market, competitive pricing structures are important. If competitors charge lower fees for similar offerings, Federated Hermes has reduced, or can further reduce, the fees on its own offerings (either directly on a gross basis or on a net basis through fee waivers) for competitive purposes in order to retain or attract customers and shareholders. Increased competition also can require changes in Federated Hermes’ business strategy or model, offerings, operational strategies, governance, environmental or social strategies and human resource management strategies to respond to competition from existing and new market innovations and competitors, which can increase expenses, create risks that such changes will not be successfully implemented, and cause Federated Hermes to not achieve its long-term strategic objectives. Such fee reductions, business strategy changes, or other effects of competition, or failures to adequately adjust to meet competition, can have a material adverse effect on Federated Hermes’ Financial Condition.

Many of Federated Hermes’ offerings are designed for use by institutions such as banks, insurance companies and other corporations.institutional Ainvestors, which hold a large portion of Federated Hermes’ managedits assets, particularly in money market, fixed-incomefixed‑income and alternative/private marketsmarket assets,strategies. areChanges held by institutional investors. Ifin the structure or attractiveness of institutional investment offerings, such as money market funds, changes or becomes disfavored by institutions, whether due to regulatory ordevelopments, market changes,conditions, competing offerings (such as FDIC-insured deposit products or non-transparent, actively managed ETFs) or otherwise,other factors, can limit Federated HermesHermes’ could be unableability to retain or grow market share and this canmaterially adversely affect Federated Hermes’ profitability and have a material adverse effect on Federated Hermes’ Financial Condition. Certain ofofferings Federatedcan Hermes’also be impact-oriented or other governance, environmental or social offerings also can be impact oriented and not suitable investmentsunsuitable for certain fiduciary customers in the U.S. without obtaining appropriate consent. Certain customersconsent, or potential customers of Federated Hermes also can disfavor impact oriented or other governance, environmental or social offeringsdisfavored for political or other reasons.reasons, These factorswhich can limitconstrain Federatedasset Hermes’ ability to market or grow assetsgrowth and this can adversely affect Federated Hermes’ future profitability and affect, potentially in a material way, future profitability and Federated Hermes’ Financial Condition.

A significant portion of Federated Hermes’ revenue comesis derived from providing offerings and strategies to the financial intermediary market, comprising over 10,00011,000 institutions and intermediary customers worldwide. Federated Hermes’ future profitability willdepends beon adverselyretaining affectedand if it is unable to retain or grow itsgrowing market share and can be adversely affected by consolidations in the banking and securities industries,industry asconsolidation and regulatory developments and regulatory requirements impactimpacting customers and shareholders.

Risks Related to the Development of New Offerings. Federated Hermes’ financial performance depends, in part, on its ability to successfully develop, market and manage new investment and related offerings. The developmentDeveloping and introducing new offerings requires sustained innovation and significant time, resources and ongoing support and investment. The introduction of new offerings requiresinvolves continued innovative efforts on Federated Hermes’ part and may require significant time and resources as well as ongoing support and investment. Substantialsubstantial risks and uncertainties are associated with the introduction of new offerings,uncertainties, including the implementation of new and appropriatecontrols, operational controlsreadiness, and procedures, shiftingchanging customer, shareholder and market preferences, thecompetitive introduction of competing offeringspressures and compliance with regulatory requirements.compliance. New offerings often must be in the marketplace forrequire three or more years in orderthe marketplace to generate theestablish track records requiredsufficient to attract significant AUMAUM. inflows.Customers, Increasingly, customersshareholders and intermediaries areincreasingly lookingseek to investment managers to delivertailored investment outcomes tailoredand value-added services beyond traditional offerings. Failure to particularinnovate, circumstancessuccessfully and needs, and to augment traditional investment offerings with additional value-added services. A failure to innovate and introduce successfullaunch new offerings or to effectively manage therelated risks related to such offerings can impact Federated Hermes’reduce market share and cause reductions in AUM, lossharm ofbusiness reputation and shareholder confidenceconfidence, and reputationalmaterially harm,adversely all of which can cause material adverse effects onaffect Federated Hermes’ Financial Condition.

Potential Adverse Effects of Changes in Federated Hermes’ Distribution Channels. Federated Hermes actsdistributes its investment offerings as a wholesaler ofthrough investmentfinancial offeringsintermediaries, to its customers, including, for example,including banks, broker/‑dealers, registered investment advisors and other financial planners.planners, Itand also sells investment offerings, and stewardship services andservices, real estate development services, and renewable energy project development services, including the origination and monetization of development-stage renewable projects, directly to corporations, institutions, government agencies and other customers. Revenues from certain development services can be linked to project activity and milestone-based payments, which can be difficult to forecast and can increase period-to-period revenue volatility. There can be no assurance that any offering diversification efforts (whether to Federated Hermes’ fund line-upofferings or geographically), governance, environmental or social positioningpositioning, or investments in technology, data and analytics to bolster Federated Hermes’support distribution efforts will be successful. There can also can be no assurance that Federated Hermes will continue to havemaintain access to anycurrent customercustomers or distribution channels, or that currentlymarket distributesconditions itswill offerings,support the sale or financing of development-stage projects on acceptable terms, that itscustomers relationshipwill withnot any onenarrow or morereduce the offerings they distribute, that such customersrelationships will continue over time or on existing economic termsterms, or that its sales orand distribution efforts will achievebe any particular level of success.successful. The impact of Voluntary Yield-related Fee Waivers,Waivers (if any), other waivers for competitive purposes and related reductions in distribution expense can vary depending upon, among other variables, changes in distribution models, changes in such customers’ distribution fee arrangements, changes in customer or shareholder relationships and changes in the extent to which the impact of the waivers is shared by one or more customers. TheDistribution cost of distributioncosts as a percentage of total fund revenue remainedincreased flatto at29% in 2025 compared to 28% in 2024 as compared to 2023.2024.

Potential Adverse Effects of Declines in the Amount of or Changes in the Mix of Assets under Management. A significant portion of Federated Hermes’ revenue is derived from investment advisory fees, which are typically based on the value of managed assets and vary with the type of asset being managed, with higher fees generally earned on multi-asset and equity investment offerings than on alternative/private market,markets, fixed income and money market offerings. Federated Hermes can also can earn performance fees or carried interest on certain offerings and types of assets. Mutual fund and other fund offerings generally havegenerate higher advisory fees than Separate Accounts.Accounts, Additionally, certainand components of distribution expense can vary depending upon theby asset class, distribution channel and/or the size or structure of the customer or shareholder relationship. Consequently,Accordingly, significant fluctuationschanges in the number of shareholderscustomer or customersshareholder ofactivity, Federated Hermes’ offerings, the value of securitiessecurity or other investmentsasset held by, orvalues, the level of subscriptions to or redemptions from, the offerings advised by its advisory subsidiaries andredemptions, overall asset mix among offerings, can materially affect AUM and thus Federated Hermes’ revenue, profitability and growth. Similarly, changes in Federated Hermes’ average asset mix across offerings or asset types havecan amaterially directaffect impactAUM onand Federated Hermes’ revenuerevenue, profitability and profitability.growth. Federated Hermes generally pays out a larger portion of the revenue earned from managed assets in money marketmarket, multi-asset, and multi-assetfixed-income fund offeringsfunds than the revenue earned from managed assets in equity, fixed-incomeequity and alternative/private markets fund offerings.funds. A significant portion of Federated Hermes’ managed assets is held in investment offerings that permit investors to redeemredemptions or withdraw their investmentwithdrawals at any time. Capacity constraints, where the size of AUM in a particular offering or asset class make it more difficult to trade efficiently in the market,trade, can result inrequire certain offerings or asset classes beingto be partially or fully closed to new investments, whichpotentially can resultresulting in redemptions or a reallocation of assets to other offerings or asset classes.reallocation. Changing market conditions, regulatory developments and regulatory requirements, among other factors, can cause a shift in Federated Hermes’ asset mix among different types of offerings or asset classes, such as towards money market and fixed-income offerings. Regulatory developments and regulatory requirements also can cause a shift between different types of offerings or asset classes, such as toward orofferings, between money market offerings or from money market offerings to other offerings. Each of the abovethese factors can cause a decline in or otherwise affect, potentially in a material way, Federated Hermes’ Financial Condition.

Impairment Risk. At December 31, 2024,2025, Federated Hermes had approximately $1.2 billion of intangible assets including goodwill totaling approximately $1.1 billion,goodwill, the vast majority of which representsrepresent assets capitalized in connection with acquisitions and business combinations. Federated Hermes might not realize the value of these assets. Management performs a review of the carrying values of goodwill and indefinite-lived intangible assets annually or when indicators of potential impairment exist and periodically reviews carrying values of other assets to determine whether events and circumstances indicate an impairment in value has occurred. AAsset variety of factors could cause the carrying value of an asset to become impaired. For example, the value of an assetvalues can be impactedimpaired if,by various factors including, among otherothers, factors,reduced projected future revenue streams are reduced due torevenues, lower managed assets, increased projected expenses, higher discount rates or other changes in interest rates. ShouldAny aidentified reviewimpairment indicatewould impairment,cause a write-down of the carrying value of the asset would occur,asset, resulting in a noncash charge which would adversely affect Federated Hermes’ results of operations and Financial Condition for the period.

Potential Adverse Effects of Termination or Failure to Renew Advisory Agreements. A substantial majority of Federated Hermes’ revenue is derived from investment advisory agreements with Federated Hermes Funds (and to a lesser extent, sub-advised mutual funds) registered under the 1940 Act that are terminable upon 60 days’ notice. InThese addition, each such investment advisory agreementagreements must be approved and renewed annually by each mutual fund’s board of directors or trustees,board, including independent members of the board of directors or trustees, or itsby shareholders, as required by law. Failure to renew, changes resulting in lower fees under, or termination of, certainor orfee reductions under a significant number of,of these agreements can havematerially aadversely material adverse impact onaffect Federated Hermes’ Financial Condition. As required byUnder the 1940 Act, each mutual fund investment advisory agreement with a mutual fund automatically terminates upon its assignment, although a new investment advisory agreementsagreement can be approved by the mutual fund’s directors or trusteesboard and, asif required by law, its shareholders. A sale or other transfer of a sufficient number of shares of Federated Hermes’ voting securities to transfer control of Federated Hermes can be deemed an assignment in certain circumstances. An assignment, actual or constructive, will trigger these termination provisions and can adversely affect Federated Hermes’ ability to realize the value of these agreements.

Federated Hermes’ investmentInvestment advisory agreements for Separate Accounts that are not investment companies subject to the 1940 Act are generally terminable uponon notice to Federated Hermes (or, in certain cases, after a 30-day, 60-day or other notice period). Asand, as required by the Advisers Act, investmentrequire advisorycustomer agreementsconsent for Separateassignment. Accounts also provide that consent is required from customers before the agreements can be assigned. The failureFailure to obtain required customer consents for an assignment, actual or constructive,constructive assignment can adversely affect Federated Hermes’ ability to realize the value of these agreements. Regarding the investment advisory agreements with non-U.S. registered or unregistered Federated Hermes Funds, shareholder notice or consent can be required if, after an investment advisory agreement is entered into, there are changes to fees. Such investment advisory agreements are generally terminable for any reason, without cause, after a 30-day to 90-day (or other) notice period. Customer consent to amend investment advisory agreements for non-U.S. Separate Accounts can be required for amendments to such agreements, and such agreements also are generally terminable for any reason, without cause, after a 30-day to 90-day (or other) notice period. The terms of investment advisory agreements, including consent or director or trustee, shareholder or other notice or approval requirements for amending, renewing, or terminating them, can be negotiated and vary among types of Federated Hermes Funds and Separate Accounts. The termination of, orTermination, failure to renew,renew or reductionfee inreductions fees under, anunder investment advisory agreementagreements, will reduce Federated Hermes’ revenue and the termination of, or failure to renew, or reduction in fees under, an investment advisory agreementparticularly with a significant customer,customers or investment advisory agreements with a series of customers, would reduce revenue and can negativelyadversely effect,affect, potentially in a material way, Federated Hermes’ Financial Condition.

Potential Adverse Effects of Rising Interest Rates. Increases in interest rates can haveadversely an adverse effect onaffect Federated Hermes’ revenue from money market, fixed-income,fixed‑income, alternative/private markets and other investment offerings. TheEquity valuesecurity of equity securitiesvalues (such as dividend-payingdividend‑paying equity securities) can rise and fallfluctuate in response to changes in interest rates. In a rising short-term interest rate environment,changes. In rising short‑term rate environments, certain investors usingcan shift from money market offerings or other short-durationshort‑duration fixed-incomefixed income offerings for cash management purposes can shift these investments to direct investments in comparable instruments in order to realizeseek higher yields. In addition, risingRising interest rates willalso tend to reduce the fair value of securities held in various offerings. Rising interest rates can also impactreduce the value of intangible or other assets held on Federated Hermes’ financial records and contributeincrease toimpairment financial impairment.risk. Rising interest rates can also impactreduce demand for, andincrease the cost to,of finance real estate,financing, and impactadversely affect the value of, and returns on,of, real estate and other alternative offerings. Among other potentialAdditional adverse effects,effects of rising interest rates can resultinclude, inamong decreasedothers, reduced liquidity, inflation and decreased affordability, changes in customer or shareholder preferences, higher costsborrowing for borrowings andcosts, increased market volatility, and can negatively impact thedecreased performance of Federated Hermes’ offerings and revenue. ManagementThe cannottiming estimateand the impactmagnitude of risingthese interest ratesimpacts (including, for example, on Federated Hermes’ revenuerevenues), are uncertain but such impact can havematerially aadversely material adverse effect onaffect Federated Hermes’ Financial Condition.

Potential Adverse Effects of Low Short-Term Interest Rates. In March 2020, in response to disrupted economic activity as a result of the outbreak of the coronavirus pandemic, the FOMC decreased the federal funds target rate range to 0% - 0.25%. The federal funds target rate drives short-term interest rates. AsIn a resultnear-zero ofor the near-zeronegative interest-rate environment, the gross yieldyields earned byon certain money market funds wascan notbe sufficientinsufficient to cover all of the fund’s operating expenses.expenses, Beginningresulting in the first quarter 2020, Federated Hermes began to incurincurring Voluntary Yield-related Fee Waivers.Waivers, Thesewhich waiverscan werebe partially offset by related reductions in distribution expense as a result of Federated Hermes’ mutual understanding and agreement with third-party intermediary customers to share the impact of the Voluntary Yield-related Fee Waivers. InFollowing responsemultiple toincreases globalin economic activity2022 and elevated2023 inflationand levels,subsequent thereductions FOMCin raised2024 and 2025, the federal funds target rate multiple times in 2022 and 2023, partially offset by reductions to the federal funds target rate in 2024. The range was 4.25%3.50 - 4.50%3.75% as of December 31, 2024,2025, and remained in that range as of January 29,28, 2025, the FOMC continued the range at that level. The rate increases in 2022 and 2023 eliminated the net negative pre-tax impact of the Voluntary Yield-related Fee Waivers by the second half of 2022.2026. See Item 1A – Risk Factors – Specific Risk Factors – Risks Related to Federated Hermes’ Investment Management Business and Offerings – Potential Adverse Effects of Increased Competition in the Investment Management Business for information on competitive waivers currently being implemented by Federated Hermes, other than the Voluntary Yield-related Fee Waivers.

Voluntary Yield-related Fee Waivers are calculated as a percentage of AUM in certain money market funds and thus can vary dependingbased uponon the asset levels and mix in such funds.mix. While the level of fee waivers is impacted by various factors, as an isolated variable, increases in short-term interest rates that result in higher yields on securities purchased in money market funds would likely reduce the negative pre-tax impact of these waivers. Conversely, as an isolated variable, decreases in short-term interest rates that result in lower or negative yields on securities purchased in money market funds generally would result in an increase in these fee waivers for certain money market funds and the negative pre-tax impact of these waivers. In that case, Federated Hermes can be required to implement structural changes to certain money market funds and incur additional expenses associated with implementing such changes. Any increases in yields due to increases in interest rates and resulting decreases in fee waivers, or any decreases in yields due to decreases in interest rates and resulting increases in fee waivers, would be uncertain and not directly proportional. The level and actual amount of fee waivers, and the resulting negative impact of these fee waivers, are contingent on a number of variables, such as changes in assets within the money market funds, changes in yields available for purchase by such funds, changes to the level of government stimulus programs (if any), which can result in the issuance of additional Treasury debt instruments, actions by the FOMC,Federal Open Market Committee (FOMC), the USDT, the SEC, the FSOC and other governmental entities, changes in expenses of the money market funds, changes in the mix of money market assets, changes in customer or shareholder relationships, changes in money market offerings structures, demand for competing investment offerings, changes in the distribution fee arrangements with third parties, Federated Hermes’ willingness to implement, or, when applicable, continue, Voluntary Yield-related Fee Waivers and changes in the extent to which the impact of the waivers is shared by third parties. In any period, a combination of variables can impact the amount of Voluntary Yield-related Fee Waivers, if any, and the actual amount and resulting negative impact of future fee waivers, if any, can vary significantly from period to period.

Federated Hermes did not incur Voluntary Yield-related Fee Waivers for the years ended December 31, 2025, 2024 or 2023. TheHowever, the duration, level and impact of anfuture interest ‑rate declinedeclines or future Voluntary Yield-related Fee Waivers can havematerially aadversely material adverse effect onaffect Federated Hermes’ Financial Condition.

Potential Adverse Effects of Poor Investment Performance. Success in the investment management business isdepends largely dependent on the investment performance of Federated HermesHermes’ Funds, Separate Accounts, orand other investment offerings relative to market conditions and competing offerings. Investment performance also depends on the quality of investmentsecurity selection, proper valuation of investments,valuation, liquidity management,management and the performance of theunderlying portfolio companiesinvestments. and other investments in which Federated Hermes’, shareholders’ and customers’ assets are invested. The valueValue and performance of theFederated Hermes’ offerings, and underlying portfolio companiesinvestments, in which Federated Hermes’, shareholders’ and customers’ assets are investedcan also can be adversely impacted, potentially in a material way, by climate, social, environmental, governancegovernance, benchmark, index and geopolitical changes, oras well as associated pricing, operational, implementation and other factors,risks. which, in turn, can adversely impact Federated Hermes’ and its offerings’ performance. GoodStrong performance generally assistssupports AUM retention and growth of AUM,growth, resulting in additional revenues.revenues, Goodincluding, performanceamong canother also result inrevenue, performance fees or carried interestinterest, being earned on certain offerings. Conversely,while poor performance,performance or the failure to meet thestated investment objectives and policies of offerings,offerings tends to have the opposite effect. There can be no guarantee that any offering, or underlying investment, will be successful or have good performance. An offering being, or becoming, an unsuitable offering for a customer or shareholder, whether due to changes in investment objectives or otherwise, also tends to result in decreased sales and increased redemptions, and failure to earn performance fees, carried interest and/or other fees. For certain offerings, failure to integrate and apply acceptable governance, environmental or social standards, carbon neutrality or climate change strategies, or sustainability or responsible investment principles, can be considered in determining, or result in, poor performance, and result in decreased sales and increased redemptions, and failure to earn performance fees, carried interest and/or other fees. The failure to earn performance fees, carried interest and/or other fees results in a corresponding decrease in revenues to Federated Hermes. Poor performance can, therefore, have a material adverse effect on Federated Hermes’ Financial Condition. Market conditions, such as volatility, illiquidity and rising or falling interest rates, among others, can adversely affect the performance of certain quantitative or other offerings, asset classes or sectors. Limitations imposed by certain customers, trade agreementsagreements, tariffs and government-imposed restrictions, such as those on investments in certain countries or companies, can limit investment opportunities and negatively affect performance. Performance can also can be adversely affected by inferior security selection, human error, government or issuer financial constraints, climate change that impacts portfolio company performance, pandemics or other unexpected events, and other factors. The effects of poor performance on Federated Hermes can be magnified where assets, customers or shareholders are concentrated in certain offerings, asset classes or sectors. Changes in foreign currency exchange rates and poor performance of investments made by Federated Hermes, or derivatives (including, for example, hedges or forward contracts) or other financial transactions entered into by Federated Hermes, can result in investment or capital losses and materially adversely affect Federated Hermes’ Financial Condition. The failure or poor performance of competitors’ offerings, which can be like those offered by Federated Hermes, can undermine investor confidence in those offering types, regardless of Federated Hermes’ own performance.

Risk Related to Federated Hermes’ Common Stock and Corporate Structure

Common Stock and Status as a Controlled Company. Federated Hermes has two classes of common stock: Class A, which has voting power; and Class B, which is non-voting except in certain limited circumstances. All of the outstanding shares of Class A common stock are held by the Voting Shares Irrevocable Trust for the benefit of certain members of the Donahue family. The three trustees of this trust are Federated Hermes’ President and CEO and Chairman of the board of directors, J. Christopher Donahue, his brother, Thomas R. Donahue, Federated Hermes’ Vice President, Treasurer and Chief Financial Officer and a director, and Ann C. Donahue, the wife of J. Christopher Donahue. Accordingly, Federated Hermes qualifies as a “controlled company” under Section 303A of the NYSE Listed Company Manual. As a controlled company, Federated Hermes qualifies for and relies upon exemptions from several NYSE corporate governance requirements, including requirements that: (1) a majority of the board of directors consists of independent directors; and (2) the entity maintains a nominating/corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities. As a result, while Federated Hermes’ board of directors maycan from time to time have a majority of independent directors, Federated Hermes’ board of directors is not required to have (and, as of December 31, 2024,2025, did not have) a majority of independent directors. It also does not maintain a nominating/corporate governance committee. Federated Hermes is also exempt as a “controlled company” from certain additional independence requirements and responsibilities regarding compensation advisors applicable to Compensation Committee members. The Class A common stock and Class B common stock of Federated Hermes have equal rights to dividends and distributions, when declared, whether in cash or stock, and receive the same amount of consideration per share, notwithstanding any differences in voting rights, in the event of a purchase of Federated Hermes by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger, consolidation or stock purchase) or a sale of all or substantially all of the assets of Federated Hermes. There can be no assurance that Federated Hermes will generate sufficient earnings and cash flow to pay dividends or distributions at current levels or at all. Any reduction or elimination of dividends can adversely affect the market price of Federated Hermes’ Class B common stock. While Federated Hermes believes its dual-class structure is appropriate and benefits its shareholders, and should be a factor taken into account by shareholders when investing in Federated Hermes, as a company with a dual-class structure, Federated Hermes can be excluded from certain financial indexes, which can result in decreased investments in its Class B common stock and adversely affect its stock price. The sale or issuance of substantial amounts of Federated Hermes’ Class B common stock in the public market also can adversely affect its price. If existing shareholders sell substantial amounts of Class B common stock, or if there is a perception that such sales will occur, the market price of Federated Hermes Class B common stock can decline as a result.

Potential Adverse Effects of a Decline or Disruption in the Economy or Markets. Economic or market downturns, deficits, disruptions,disruptions or other conditions (domestic or international) conditions can causeresult in volatility, illiquidity and other potentialadverse market effects, including, among other potentially material adverse effectsimpacts, inreduced the markets. Such conditions also can adversely affect, potentially in a material way, theinvestment supply of investments, (such as money market or municipal (tax-exempt) securities), diminished profitability, and the profitabilityperformance, and performance of, demand for,for and investor confidence inin, investment offerings. Such economic or market downturns, deficits, disruptions or otherThese conditions can include, foramong example,others, disruptionsmarket indisruptions, the markets,sector defaults or poor performance in certain sectors of the economy,underperformance, changes in the levels of consumer spending and personal savings, unemployment, excessive or unsustainable corporateprivate, public, corporate, or emerging market debt levels, increased personal, business or government/municipality bankruptcies, supply ‑chain disruptions, theshifts commencement,in continuationfiscal or endingmonetary ofpolicy governmentor policiesreform and(such reforms,as stimulus programs and other market-related actions,programs, quantitative easing or tightening,tightening) or other changesmarket-related in monetary policy,activities), central bank changes in risk perception or activism through continued, high/rising deficits, market wariness, increased or decreased ownership, exchange, cancellation or issuance of debt or other means, increased regulation or the pace of new regulation or deregulation, changes in interest rates, changes in oil prices or other changes in commodity markets or prices, changes in currency values, changes in property values and financial costs, or exchange rates or currency abandonment, inflation, deflation, or stagflation, index changes, widening bid/ask spreads, changes in the allocation of capital to market-making, restructuring of government-sponsored entities, imposition of economic sanctions or government-imposed investment restrictions, trade friction or trade wars and increased trade tariffs, economic or political weakness, political turmoil, changes in political views on governance, environmental or social-related matters, geopolitical tensions (such as between the U.S. and Russia, China, Iran andIran, North Korea and Venezuela) or military escalation (such as Russia’s invasion of Ukraine or the Israel-Hamas war) or other instability in certain countries or regions, technology-related or cyber-attacks or incidents, terrorism, climate change, the prospects for or concerns about any of the foregoing factors or events, or other factors or events that affect the markets. EachIn addition, power grid congestion or capacity constraints, including curtailment of therenewable abovegeneration factors,or among others,storage, can causereduce project economics and delay or limit project development and related services. These and related factors or events can contribute to volatility, illiquidity, economic or market downturns, loss of value, market and supply-chain disruptions, or othersupply‑chain conditionsdisruptions and have potentiallyother adverse effects. For example, increasedactual or threatened sanctions or tariffs (or the threat thereof) can result,lead to, among other effects, in currency devaluation, credit ‑rating downgrades, decreasedreduced liquidity, increased volatility, asset freezes,freezes or retaliatory actions,measures, which can exacerbate cybersecurity, market and other risks. See also Item 1A – Risk Factors – General Risk Factors – Other General Risks – Potential Adverse Effects of Unpredictable Events or Consequences.

In addition, Federated Hermes’ offerings, and their portfolio holdings,investments can be adversely affected, potentially in a material way, by changes in U.S., UK,U.K., EU or other markets, sovereign credit‑rating downgrades of U.S., UK or other countries’ credit ratings, the U.S. debt limit or other developments in the U.S., UK,debt-limit and other countrieseconomic asdevelopments, wellor as byother actual or potential deterioration in international sovereign or other market conditions.

At December 31, 2024,2025, Federated Hermes’ liquid assets of $694.1$769.4 million included investments in certain money market and fluctuating ‑NAV Federated Hermes Funds that can havewith direct and/or indirect exposuresexposure to international sovereign debt and currency risks. Federated Hermes and its money market and other Federated Hermes Funds also rely on and interact with various other financial industry participants, such asincluding counterparties, broker/‑dealers, banks, clearing organizations, other investment offerings, service providers, customers, and shareholders, as a result of operations, trading, distribution, and other relationships. As a result, Federated Hermes’ Financial Condition can be adversely affected by thewhose creditworthiness or financial soundness ofcan otheradversely financialaffect industryFederated participants,Hermes’ Financial Condition, particularly induring timesperiods of stressmarket orstress. disruption.Losses Therearising can be no assurance that any potential losses realized as a result offrom these exposures willcan notmaterially haveadversely a material adverse effect onaffect Federated Hermes’ Financial Condition. The ability of Federated Hermes to compete and sustain asset and revenue growth is dependent, in part, on the relative attractiveness of the types of investment offerings it distributes or markets, and their performance under prevailing market conditions. Adverse market conditions or other events also can impact Federated Hermes’ customers and shareholders. In the event of extreme circumstances, such as economic, political, or business crises, Federated Hermes’ offerings can suffer significant net redemptions in AUM causing severe liquidity issues in its short-term, fixed-income or certain other offerings and declines in the value of and returns on AUM, all of which can cause material adverse effects on Federated Hermes’ Financial Condition.

No Assurance of Access to Sufficient Liquidity or Capital. From time to time, likeLike other companies, Federated Hermes’ operationsoperations, (including corporate initiatives,actions such aslike stock repurchases, acquisitions and other corporate actions)actions, can at times require more cash than isoperations available from operations.generate. In thesesuch circumstances,cases, itFederated Hermes can beborrow necessary to borrowmoney from lending facilities or to raise capital by securingthrough new debt or byequity selling Federated Hermes equityissuances or debt securities.sales. Certain subsidiaries of Federated Hermes, such asincluding its broker-dealer and certain non-U.S. subsidiaries, can also can be required to maintain a specified levelliquidity of liquiditylevels or regulatory capital. Significant changes to required capital, operating losses, or extraordinary charges against required capital can adversely affect their ability to maintain or expand operations if Federated Hermes cannot make additional investments in them. Federated Hermes’ ability to raise additional capital independs theon future will be affected by severalmany factors including, for example, its creditworthiness andcreditworthiness, credit ratingsratings, andstock the market value of its common stock, as well asvalue, interest rates and general market conditions. There can be no assurance that Federated Hermes will be able to obtain or maintain necessary capital or obtain these funds andor financing on acceptable terms, if at all. IfFailure Federated Hermes cannotto obtain or maintain necessaryneeded capital or obtain such funds and financing, it can havematerially aadversely material adverse effect onaffect Federated Hermes’ Financial Condition. IfLikewise, if a Federated Hermes Fund requiresneeds liquidity to meetpay shareholder redemptions or for other reasons, there also can be no assurance thatit such Federated Hermes Fund will be able tocan access anycredit available line of credit, rely onlines, inter-fund lending arrangementsarrangements, or access other liquidity sources of liquidity on acceptable terms, orif at all, and, if such a Federated Hermes Fund cannot obtain sufficient liquidity, itwhich can have a material adverse effect on such Federated Hermes Fund,Fund and result in redemptions and a corresponding reduction in Federated Hermes’ AUM and Federated Hermes’ revenue. While not obligated, if Federated Hermes decideselects to provide credit support to a Federated Hermes Fund, Federatedits Hermes’own liquidity and income can be adversely impacted.affected. These factors can havematerially aadversely material adverse effect onaffect Federated Hermes’ Financial Condition.

Potential Adverse Effects of Changes in Laws, Regulations and Other Regulatory Requirements. Like other companies, Federated Hermes andHermes, its investment management businessbusiness, and its offerings are (and any new business line commenced or acquired by Federated Hermes would be) subject to extensive regulation both withinglobally, and outsideany thenew U.S.business Federatedline, Hermesacquired andbusiness, itsor investmentnew or acquired offerings (suchwould be as the Federated Hermes Funds), are subject to various U.S. and non-U.S. regulatory requirements.well. In the U.S., suchkey regulatory requirements include, among others, the federal securities laws, principallyothers: the 1933 Act, the 1934 Act, the 1940 Act andAct, the Advisers Act and other federal securities laws; state lawsanti-fraud, regardingstate securities fraudregistration and registrationcertain other state laws; and regulations orand other rules, promulgated by various regulatory authorities, self-regulatory organizations or exchanges,exchanges. both domestically and internationally. From time to time, applicable securitiesSecurities laws can be substantially amended substantially.from time to time.

Federated HermesRecent and itsfuture domesticlegislation offerings,by Congress, state legislatures, foreign parliaments, and anyother non-U.S. offerings, to the extent distributed or marketed in the U.S., continue to be primarily regulated by the SEC. Federated Hermes,governments, and certain Federated Hermes Funds, are also subject to regulationrulemaking by the CFTC and the NFA due to their investment in futures, swaps or certain other commodity interests in more than de minimis amounts. In addition, during the past several years, regulators, self-regulatory organizations, or exchanges, such as the SEC, FINRA, CFTC, NFA, NYSE andNYSE, state or local governments and regulators, havethe adopted,FCA, CBI, CIMA, Monetary Authority of Singapore, ASIC, CSSF, and could adopt, other regulatoryregulators, requirementsself-regulatory organizations or exchanges, have increased, and amendmentscan thatfurther have increasedincrease, Federated Hermes’ operating expensesexpenses, and affected the conduct of its offerings, as well as Federated Hermes’its AUM, revenues, and operating income, and can continue to do so.income. Federated Hermes’ offerings are affected by regulatory requirements and regulatory authorities that impact the manner in whichway Federated Hermes’ offerings are structured, marketed, distributed, delivered,delivered or sold. Federated HermesHermes’ stewardship (engagement and itsproxy offeringsrecommendations) services are also are affectedimpacted by certainsecurities laws, proxy‑advisor regulation, antitrust or competition laws, governance, environmental, and social‑related laws, and other regulatory requirements, as well as Congressional and other governmental inquiries, examinations, investigations, hearings, and enforcement. Regulatory requirements governingapplicable to banks, other financial institutions, intermediaries, real estate and power generation can also affect Federated Hermes and its offerings, including changes to renewable energy grid connection, capacity allocation, and permitting regimes that can delay projects or realreduce estate.their viability.

Failure to comply with applicable U.S. and non-U.S. regulatory requirements in the various jurisdictions where Federated Hermes operates, and its offerings are distributed or marketed, can result in a wide range of liability or disciplinary actions against Federated Hermes or its business or offerings, which can impact, potentially in a material way, Federated Hermes’ Financial Condition. Breaches of regulatory requirements can result in regulatory enforcement, civil or criminal liability, and/or the imposition of sanctions or ordersrestrictive orders, and/or a wide range of liability or other disciplinary actions against or affecting Federated Hermes, or its business or its offerings, including monetary damages, injunctions, disgorgements, fines, penalties, cease and desist orders, censures, reprimands, and the revocation, cancellation, suspension or restriction of licenses, registration status or required approvals. A public regulatory issue can also have a negative impact on Federated Hermes’ reputation,reputation. and asAccordingly, a resultfailure impactto comply with applicable regulatory requirements can affect, potentially in a material way, Federated Hermes’ offerings and Financial Condition.

AsGrowth of Federated Hermes’ business and offerings grow (whether organicallyorganic or through acquisition,acquisitions, newproduct offeringsexpansion, beingmarket distributedappreciation, or marketed, increased market values of assets held by or in offerings, expansionentry into new countries, jurisdictions or markets, or otherwise), Federatedcan Hermes’increase offeringscompliance obligations, costs and operationsrisk, needreporting to comply with applicable regulatory requirements, which increases compliance riskrisks, and operating expenses, including reporting risks and the costs associated with compliance.costs. The pace of the issuance and adoption/enactment of new regulatory developments and regulatory requirements, overlapping compliance deadlines, and actual or potential conflicts amongst requirements and regulatory approaches across or among the various jurisdictions where Federated Hermes operates, and its offerings are distributed or marketed, compound compliance risks, internal and external resource requirements, and operational costs. Compliance risk, internal and external resource requirements, and operating expenses also can increase as Federated Hermes continues to expand its use of governance, environmental or social, sustainability, stewardship or other data inputs or investment techniques in providing its offerings, as well as when markets, customer or shareholder requirements, support models and technology increase in complexity. Federated Hermes has taken steps to integrate the proprietary insights from fundamental investment analysis, including governance, environmental or social factors and engagement interactions, into many of its offerings. Related compliance expense is further exacerbated by the increasing spectrum of governance, environmental or social disclosure requirements that can differ between jurisdictions, countries and markets, as well as jurisdiction-specific legislation affecting the ability to utilize certain (e.g., non-material) governance, environmental or social research factors to manage certain customer assets (such as state government or pension fund assets). Failure to comply with legal and regulatory requirements, or changes to legal and regulatory requirements, whether due to conflicts of interest, breaches of fiduciary duty, trading on the basis of material nonpublic information, other improper conduct by employees or service providers, inadequate processes, procedures and controls, or other causes, can impact market integrity, customer or shareholder outcomes and satisfaction, performance and Federated Hermes’ reputation, as well as its compliance with its investment advisory and other agreements, licensing requirements and governance and compliance policies, and result in lost business, fines, penalties or other sanctions. Significant or repeated failures also can change Federated Hermes’ regulators’ views of, and relationship with, Federated Hermes. Regulators or other government bodies also have undertaken or couldcan undertake examinations, investigations, inquiries, hearings and/or enforcement actions involving investment management industry participants, such as Federated Hermes and its offerings. Regulators also can adopt new or different interpretations of regulatory requirements, either through formal rulemaking or informally through enforcement proceedings, no-action letters, or exemptive orders or through providing comments to filings, which can negatively affect, potentially in a material way, Federated Hermes’ offerings or its ability to operate.

Federated Hermes expends internal and external resources to respond to examinations, Congressional/government inquiries and investigations, to defend hearings and enforcement actions, and to resolve comments from regulators, which increases operating expenses, including professional fees and costs of compliance. Federated Hermes continues to monitor and evaluate the impact of the regulatory developments and regulatory requirements discussed above (and in Item 1- Business – Regulatory Matters) on Federated Hermes’ Financial Condition. Among other potential impacts, increases in regulatory developments and requirements have increased,led, and couldcan continue to increase, in additionlead to greater compliance risks and compliance costs, theincluding increased costs associated with technology, legal, operations and other efforts to address regulatory-related matters. Deregulation also is a possibility. Regulatory developments and requirements also have caused, and can continue to cause: (1) certain offering line-up, structure, pricing and product development changes; (2) changes in the ability to utilize “soft dollars” to pay for certain research and brokerage services (rather than Federated Hermes paying for such services directly); (3) money market, equity, fixed-income, alternative/private markets and multi-asset offerings becoming less attractive to institutional and other investors; (4) reductions in the Federated Hermes Funds offered by intermediary customers; (5) changes in fees charged, asset flows, levels and mix, and customer or shareholder relationships; and (6) reductions in AUM, revenues and operating profits. For example, certain money market funds or other offerings can become less attractive to institutional or other investors, which can change asset mix and reduce AUM, revenues and operating income. Changes in money market fund regulation increasesincrease this risk.

In addition, the Dodd-Frank Act provides for a systemic risk regulation regime under which it is possible that Federated Hermes, and/or any one or more of its offerings couldcan be subject to designation as a systemically important financial institution (SIFI) by the FSOC. Similarly, it is possible that the FSB couldcan designate Federated Hermes, and/or one of its offerings (such as the non-U.S. Federated Hermes Funds), as a non-bank, non-insurance company global SIFI. Among other potential impacts, any such designation would result in Federated Hermes and/or its offerings being subject to additional banking regulation and bank-oriented measures and oversight by the Board of Governors of the Federal Reserve Systemor orthe FSB. Any such designation of Federated Hermes or one or more of its offerings (particularly money market funds) would be detrimental to Federated Hermes’ business and offerings,offerings and can materially and adversely affect Federated Hermes’ Financial Condition.

In addition, a FTT, particularly if enacted with broad application in the UKU.K., orthe EU, or the U.S., would be detrimental to Federated Hermes’ business and offerings.

Federated Hermes’ business and offerings also have been,been and will continue to be impacted by changes in tax laws. Any repeal of U.S. tax laws that allow ETFs to receive favorable treatment of certain redemptions can adversely impact Federated Hermes’ ETF offerings and business. When tax laws are amended to increase taxes applicable to Federated Hermes, its offerings, customers, shareholders and service providers, the increased tax expense can have an adverse impact, potentially in a material way, on Federated Hermes’ offerings’ and strategies’ performance, AUM, and service provider fees, and Federated Hermes’ Financial Condition. The failure to properly calculate, report and remit such taxes also can subject Federated Hermes, its offerings, customers, shareholders and service providers to additional tax liability, fines and penalties. In addition, various service industries, including, for example, mutual fund service providers, have been, and continue to be, the subject of changes in tax policy that impact their state and local tax liability. Changes that have been adopted or proposed include: (1) an expansion of the nature of a service company’s activities or services that subject it, or Federated Hermes or its offerings, to tax in a jurisdiction, (e.g., income, sales, use or other types of taxes),; (2) a change in the methodology by which multi-state companies apportion their income between jurisdictions,jurisdictions; and (3) a requirement that affiliated companies calculate their state tax as one combined entity. As adopted changes become effective and additional jurisdictions enact similar changes, among other potential impacts, there can be a material adverse effect on Federated Hermes’ tax liability and effective tax rate and, as a result, net income. Tax changes also can adversely affect Federated Hermes’ offerings and Financial Condition.

Potential Adverse Effects of Litigation, Investigations, Proceedings and Other Claims. Like other companies, Federated Hermes,Hermes and its offeringsofferings, (such as the Federated Hermes Funds and Federated Hermes’its stewardship business),business, can beface subject to regulatoryone or more (including potentially parallel) regulatory, Congressional/governmentgovernmental examinations, inquiries, investigations, hearings, enforcement actions, litigationlitigation, and other claims and proceedings. Regarding examinations, Federated Hermes and its offerings are subject toundergo routine, sweep and other examinations, inquiries, investigations, proceedings (administrative, regulatory, civil, or otherwise) and other claims by its regulators (regulatory claims). Federated Hermes and its offerings also can be subject to employee, former employee, customer, shareholder and other third-party,face complaints, proceedings (such as civil litigation) and other claims from employees, former employees, customers, shareholders, or other third parties (business-related claims). As Federated Hermes’ business and offerings grow (whether organically or through acquisition,organic growthexpansion, inacquisitions, rising AUM, or new offerings being distributed or marketed, or otherwise), the attention and resources devoted to compliance, and the possibility of noncompliance, can increase. TheCompliance attentiondemands and resourcesnoncompliance devotedrisk to compliance, and the possibility of noncompliance, as well as the threat of Congressional/government inquiries, investigations, hearings, or enforcement actions, or other litigation,can also can increase as Federated Hermes usesand its offerings expand into new jurisdictions or markets, offer new investment offerings, and incorporate governance, environmental orenvironmental, social, sustainability, stewardshipstewardship, or other data inputs or investment techniques in providing its offerings, enters new countries, jurisdictions,techniques, or markets, and offers financial investment offerings, as well as when markets, customer requirements, support models and technology increasebecome inmore complexity.complex. Federated Hermes has business-related claims asserted and threatened against it, and Federated Hermes and its offerings are subject to certain regulatory claims (such as routine and sweep examinations and other inquiries), in the ordinary course of business. In addition, Federated Hermes, and its offerings, can be subject to business-related claims, claims related to Federated Hermes sponsorship or management of, or inclusion of proprietary offerings in, its 401(k) plan or other benefit plans, and administrative, regulatory, or civil investigations and proceedings or other regulatory claims, outside of the ordinary course of business. For example, in August 2023, a class action lawsuit was filed, on behalf of the Federated Hermes, Inc. Employees Profit Sharing/401(Kk) Plan (Plan), in the U.S. District Court for the Western District of Pennsylvania (Western District) against Federated Hermes and certain other defendants alleging breach of their fiduciary duties of prudence and loyalty, and certain other causes of action, relating to administering the Plan. In March 2025, a former employee filed a lawsuit against Federated Hermes alleging discrimination. In July 2023, Federated Hermes, and a subsidiary, also filed suit in the Western District against its first two primary insurance carriers relating to Federated Hermes’ claims for coverage of certain losses incurred.

Risks Related to Auditor Independence. As with other public companies, there can be no assurance that a registered public accounting firm (Accounting Firm) engaged by Federated Hermes or the Federated Hermes Funds to audit or review their respective financial statements will remain eligible to serve as the independent Accounting Firm to Federated Hermes or any Federated Hermes Fund under applicable securities laws. Similar toLike other fund sponsors that are public companies, certain Federated Hermes Funds also utilize the Accounting Firm engaged by Federated Hermes. If it were to be determined that the independence requirements under applicable securities laws or International Ethics Standards Board for Accountants (IESBA) rules, or any applicable similar rules in relevant jurisdictions outside the U.S., were not complied with regarding Federated Hermes, its previously filed Annual Reports on Form 10-K (including financial statements audited by its existing Accounting Firm) and Quarterly Reports on Form 10-Q (including financial statements reviewed by its existing Accounting Firm) might not be considered compliant with the applicable securities laws and/or IESBA rules. If it were to be determined that an Accounting Firm did not comply with the independence requirements, among other things, the financial statements audited by the Accounting Firm and the interim financial statements reviewed by the Accounting Firm could have to be audited and reviewed, respectively, by another independent Accounting Firm, Federated Hermes' eligibility to issue securities under its existing registration statements can be impacted and certain financial reporting and/or other covenants with, and representations and warranties to, Federated Hermes' lenders or debt holders can be impacted. Similar issues would arise for a Federated Hermes Fund for which Federated Hermes' Accounting Firm (or another Accounting Firm) serves as such Federated Hermes Fund's independent Accounting Firm if it were to be determined that Federated Hermes' Accounting Firm (or such other Accounting Firm) was not in compliance with the independence requirements under applicable securities laws and/or IESBA rules, or any applicable similar rules in relevant jurisdictions outside the U.S., with respect to such Federated Hermes Fund. If a determination cannot be made that the Accounting Firm satisfies the independence requirements with respect to an applicable Federated Hermes Fund, the Accounting Firm also can be prevented from making a determination that it satisfies the independence requirements with respect to Federated Hermes, since Federated Hermes would be an affiliate (i.e., the ultimate parent company) of the investment advisor to the relevant Federated Hermes Fund. In either case, such events can have a material adverse effect on Federated Hermes' Financial Condition.

Operational Risks. Like other companies, Federated Hermes’ business, offeringsofferings, and operations arerely supportedglobally internallyon internal resources and through management of relationships, including, for example,numerous outsourcing relationships,and vendor relationships with various third-partythird‑party service providers, bothwhose domestically and internationally. In turn, service providers’own operations relydepend on additional relationshipsthird‑party with other third parties.relationships. Operational risks include, butamong are not limited toothers: improper, inefficient,inefficient or unauthorized transaction execution, processing, pricing and/or monitoring of transactions; inadequate, deficient, inefficient, inflexible, non-resilient, deficient or non-scalablenon‑scalable technology, processes, operating systems, security or other infrastructure, resources or controls; poor performanceunderperformance by internal resources or third partythird-party service providers; failureinadequate torecruiting, appropriatelysupervision, attract,training, retain,retention train,or supervisepromotion and promoteof the wellbeingwell-being and resiliency of qualified human capital resources,resources (whether internal or external; failure to perform due diligence on third party service providers (particularly when due diligence is conducted remotely); business disruptions; supply chain disruptions (whether within Federated Hermes or third party); employee turnover (whether because of retirement or otherwise, and particularly involving executives, management or other key employees); failureinsufficient due diligence on third-party service providers; business or supply‑chain disruptions; health and safety incidents and work conditions involving employees, contractors, or third parties at facilities and project sites; failures to effectively upgradeupgrade, patch, integrate, modernize or patch, or decommission, integrate, or modernize,decommission technology or transition to a “cloud-based” environment; inadequaciesweaknesses in or breaches in Federated Hermes’, its investment offerings’ or a service provider’sof governance policies or internal controlcontrols processes(whether by Federated Hermes, its offerings, or third-party service providers); unauthorized disclosure or manipulation of, or access to, confidential, proprietary or non-public personal or business information; unauthorized access to accounts, applications or systems; and noncompliance with regulatory requirements, investment mandates and related investment parametersparameters, regulatory requirements or customer-imposed restrictions. As Federated Hermes’Hermes and its relevant service providers’ businessesproviders expand or becomeface moreincreasing complexcomplexity andor requirecustomization additionalor scalability or customization,needs, operational risk increases.can Thereincrease. isSystem aor riskprocess thatchanges, changes (including upgrades or patches)patches, can be implemented in operationalan systems,improperly modelscontrolled andenvironment, businessineffectively, processesuntimely, are not completed correctlyinefficiently or inincorrectly, acreating controlled, timely, integrated or effective manner. These types of changes also give rise to otheradditional risks, such asas, theamong riskothers, that an employee, service providerintentional or thirdunintentional party, or groupcompromise of employees, service providers or third parties, can intentionally or unintentionally compromise the integrity or security of confidential, proprietary or personal information or other data of Federated Hermes, its employees oremployees, its customers, shareholders, service providers or serviceother providers.third Managementparties. Federated Hermes relies on itsemployees, service providersproviders, and employees, systems,technology, and business continuity plans,plans to comply with established procedures, controls, regulatory requirements, investment parameters or customer-imposedcustomer‑imposed restrictions. BreakdownFailures in or improper use of systems, human error orerror, improper action by employees or service providers,actions, or noncompliance with regulatory requirements, investment parameters or customer-imposed restrictions, can causematerially materialadversely adverse effects onaffect Federated Hermes’ Financial Condition.

Systems, Technology and Cybersecurity Risks. Like other companies, Federated Hermes utilizes software and related technologies throughout its business, including, for example, both proprietary systems and those provided by outside service providers. Service providers to whom certain services, functions or responsibilities are outsourced by or for, and customers and shareholders of, Federated Hermes and its offerings, and third parties on which such service providers, customers and shareholders rely, also utilize software and related technologies in their businesses. Certain software applications that Federated Hermes uses in its business are licensed by, and supported, upgraded, and maintained by, third-party vendors. A suspension or termination of certain of these licenses or the related support, upgrades, and maintenance can cause temporary system delays or interruptions that can adversely affect Federated Hermes’ business and offerings. Federated Hermes continues to increase its investment in systems and technology, including externally hosted or cloud-based systems and technology, and its reliance on third parties, for investment management and trading operations, information and data management and governance, disaster recovery, compliance, and other areas of its business, and continues to explore innovative technological solutions and offerings involving artificial intelligence and financial technology. Federated Hermes has adopted a measured approach to artificial intelligence technology given reliability, cybersecurity, and other concerns, and it is possible that competitors will more quickly or effectively implement the use of artificial intelligence technology giving them a competitive advantage over Federated Hermes. Unanticipated issues also can occur with any software, system or other technology and it is not possible to predict with certainty all of the adverse effects that can result from a failure of Federated Hermes or a third party to address technology or computer system problems. Along with cyber incidents described more fully below, business changes, data or model imprecision, control failures, obsolescence, software or other technology malfunctions, severe weather, natural disaster or other climate conditions, human error, programming inaccuracies and similar or other circumstances or events can impair the performance of systems and technology or render them non-available. Systems and technology risk has increased as Federated Hermes’ systems and technology are integrated and deployed on an enterprise-wide basis. There can be no assurance that potential system interruptions, other technology-related issues, or the cost necessary to rectify the problems would not have a material adverse effect on Federated Hermes’ Financial Condition.

Like other companies, Federated Hermes has experienced, and will continue to experience, cyber incidents on a daily basis.daily. As of December 31, 2024,2025, cyber incidents have not had a material adverse effect on Federated Hermes’ Financial Condition. Cyber incidents can affect, potentially in a material way, Federated Hermes’ relationships with its offerings, accounts, customers, employees, shareholders, relevant service providers and other third parties. A cyber incident can cause Federated Hermes, its business, offerings, accounts, customers, employees, shareholders or relevant service providers, or other third parties, to lose proprietary, sensitive, confidential or non-public business offering, account, customer, employee, shareholder, or personal information, or intellectual property, suffer data corruption or business interruption, impair data coverage or quality, lose operational capacity (for example, the loss of the ability to process transactions, generate or make filings or deliver reports or statements, calculate NAVs, or allow the transaction of business, or other disruptions to operations), and/or fail to comply with applicable privacy and other regulatory requirements. Among other potentially harmful effects, cyber incidents also can result in theft, unauthorized monitoring and failures in the physical infrastructure or operating systems. Any cyber incident can cause lost revenues, the occurrence of other financial losses, diminished future cash flows, significant increases in compliance or other costs or expenses (such as costs associated with compliance with cybersecurity regulatory requirements, protection, detection, remediation and corrective measures, and credit monitoring for impacted individuals), exposure to increased litigation and legal risks (such as regulatory actions and penalties, and breach of contract or other litigation-related fees and expenses), reputational damage, damage to employee perceptions of the company, damage to competitiveness, stock price and shareholder value, and other negative or adverse impacts. Cyber incidents affecting issuers in which Federated Hermes’ or its customers’ or shareholders’ assets are invested also can cause such investments to lose value. Any of these cyber incidents can become incrementally worse if they were to remain undetected for an extended period of time.period.

The operating systems of Federated Hermes, and its offerings, customers, shareholders, and relevant service providers are dependent on the effectiveness of information security policies and procedures (both at Federated Hermes and its service providers) which seek to ensure that such systems are protected from cyber incidents. Federated Hermes has established a committee to oversee Federated Hermes’ information security and data governance efforts, and updates on cyber incidents and risks are reviewed with relevant committees, as well as Federated Hermes’ board of directors (or a committee thereof), on a periodic (generally quarterly) basis (and more frequently when circumstances warrant) as part of risk management oversight responsibilities. Federated Hermes has, and believes its offerings and its service providers have, established risk management systems that are reasonably designed to seek to reduce the risks associated with cyber incidents. Federated Hermes employs various measures aimed at mitigating cyber risk, including, among others, use of firewalls, system segmentation, system monitoring, virus scanning, periodic penetration testing, employee phishing training and an employee cybersecurity awareness campaign. Among other service provider management efforts, Federated Hermes conducts due diligence on key service providers relating to cybersecurity. However, there is no guarantee that such efforts will be successful, either entirely or partially, as there are limits on Federated Hermes’ ability to prevent, detect, or mitigate cyber incidents. Among other reasons, the cybersecurity landscape is constantly evolving, the nature of malicious cyber incidents is becoming increasingly sophisticated and Federated Hermes, and its relevant affiliates and offerings, cannot control the systems and cybersecurity systems and practices of issuers, relevant service providers or other third parties. Federated Hermes’ risk from cyber incidents also can increase as a resultbecause of expansion into new markets, jurisdictions or countries, acquisitions, new technology, or previously unexploited vulnerabilities in software or related patches becoming activated (or “weaponized”) by hackers.

Artificial Intelligence Risks. Federated Hermes has begun using artificial intelligence and machine learning technologies to enhance certain workflows and processes used in its business. Artificial intelligence is still in its early stages, and the introduction and incorporation of artificial intelligence technologies maycan result in unintended consequencesconsequences, emerging ethical issues, or other new or expanded risks and liabilities.liabilities (including, without limitation, reputational harm and legal liability). If the content, analyses, or recommendations that artificial intelligence applications assist in producing are, or are alleged to be, deficient, inaccurate, or biased, such as due to limitations in artificial intelligence algorithms, insufficient or biased base data or flawed training methodologies, Federated Hermes’ Financial Condition can be adversely affected. Additionally, artificial intelligence technology is continuously evolving, and Federated Hermes can incur costs to adopt and deploy artificial intelligence technologies that couldcan become obsolete earlier than expected, and there can be no assurance that Federated Hermes will realize the desired or anticipated benefits from artificial intelligence. Also, Federated Hermes’ competitors, customers, intermediaries, shareholders, service providerscompetitors and other third parties can incorporate artificial intelligence into their investment offerings more quickly or more successfully than Federated Hermes, which couldcan impair Federated Hermes’ ability to compete effectively and adversely affect its Financial Condition.

Recruiting and Retaining Key Personnel (Human Capital Resource Management Risk). Like other industries, the investment management business is highly competitivecompetitive, and experienced professionals have significant career mobility. Federated Hermes’ ability to attract or acquire, and motivate and retain, quality personnel has contributed significantly to its growth and success and is important to attracting and retaining customers and shareholders. The market for qualified executives, portfolio managers, analysts, traders, sales representatives and other key personnel is extremely competitive. The move to hybrid work environments (including opportunities to work from home provided by competitors), along with increases in competitor salaries, has increased competition for quality personnel, and made hiring and retaining qualified and experienced personnel more challenging. Regulatory requirements, business performance and a lack of financial flexibility also are factors in attracting and retaining qualified personnel. There can be no assurance that Federated Hermes will be successful in its efforts to recruit or acquire, and motivate, train and retain, the required personnel. In addition to competing opportunities, personnel elect to pursue other interests for business, personal and other reasons or retire from time to time. The post-coronavirus pandemic work environment, and related work environment changes, including hybrid-working arrangements, can create retention and other human capital resource management risks. State and federal regulatory requirements intended to limit or curtail the enforceability of non-competition, employee non-solicitation, confidentiality and similar restrictive covenant clauses can make it more difficult to retain qualified personnel. Federated Hermes has encouraged the continued retention of its executives and other key personnel through measures such as providing competitive compensation arrangements, a non-discriminatory, diverse, and inclusive work environment, work arrangement flexibility and, in certain cases, employment agreements. The internal transfer or departure of any such personnel can have an adverse effect on Federated Hermes. In certain circumstances, the internal transfertransfer, retirement or other departure of key employees can cause higher redemption rates for certain AUM, the loss of customer or shareholder relationships.relationships, or create risk that job responsibilities are not successfully re-distributed or transferred.transferred or experience, management skills and/or institutional business knowledge are not retained. Moreover, since certain of Federated Hermes’ offerings, or customer or shareholder relationships, contribute significantly to its revenues and earnings, the loss of even a small number of key personnel associated with these offerings, or customer or shareholder relationships, can have a disproportionate adverse impact, potentially in a material way, on Federated Hermes’ Financial Condition. In addition, due to the global nature of Federated Hermes’ business, key personnel can have reasons to travel to regions susceptible to higher risk of civil unrest, organized crime, or terrorism, and it can be difficult for Federated Hermes to ensure the safety of personnel traveling to such regions. See Item 1 – Business – Human Capital Resource Management for additional information on recruiting and retention practices.

No Assurance of Successful Acquisitions.Strategic Transactions. Like other companies, Federated Hermes’ business strategy contemplates seeking acquisition candidates and other business relationships, and growing through acquisitions.such acquisitions and other strategic transactions, each of which involves risks and uncertainties. For Federated Hermes, this generally involves acquisitions of other investment management companies, investment assets and related businesses, both domestically and internationally. There can be no assurance that Federated Hermes will find suitable acquisition candidates or opportunities for other strategic transactions at acceptable prices and with an aligned business culture and vision, have sufficient capital resources to realize its acquisition or strategic strategy, be successful in entering into definitive acquisition or transaction agreements or consummating acquisitions,acquisitions or other strategic transactions, or successfully collaborating with, or integrating or consolidating, acquired companiescompanies, other businesses or assets into Federated Hermes or its offerings. There also can be no assurance that any such acquisitions,acquisitions or other strategic transactions, if consummated, will not increase organizational stress to unacceptable levels or cause process failures, result in violations of applicable regulatory requirements, increasedincrease taxes or otherwise increase legal, tax or compliance concerns, or will increase value or otherwise prove to be advantageous to Federated Hermes. On the other hand, successful collaboration with, or integration or consolidation of, acquired companiescompanies, other businesses, or assets can increase the value of such acquired companiescompanies, businesses or assets and result in increased contingent deferred payments or other payment obligations for Federated Hermes, which can affect Federated Hermes’ Financial Condition.

Potential Adverse Effects of Reputational Harm. Like other companies, any material losses in customer or shareholder confidence in Federated Hermes, or its offerings, or in the investment management industry as a result of actual or potential regulatory proceedings or litigation, economic or market downturns or disruptions, material errors in public news reports, political or other views for or against governance, environmental or social investing or integration, oppositions to trademark or other intellectual property registration applications or allegations of trade name, trademark or other intellectual property infringement or misappropriation, allegations of breaches of fiduciary duty, actual or perceived misconduct or unprofessional, unethical or illegal behavior, improper corporate actions, poor communications with investors or the public via social media or otherwise, abuse of authority, a cyber incident, rumors or inaccurate information being posted on the internet or social media, failure to achieve carbon neutrality, climate change or other public commitments or pledges, failure to implement or accurately disclose governance, environmental or social strategies or initiatives, controversial tenants in real estate owned or managed by Federated Hermes, fraudulent or fake websites or domain names using Federated Hermes’ or a subsidiary’s name, logo or address, or similar names, logos or addresses, misleading or unfavorable research or reports published by securities or industry analysts about Federated Hermes or its business prospects or other matters can negatively impact Federated Hermes’ brand, culture, trusted status, reputation and/or stock price, increase redemptions from and/or reduce sales of Federated Hermes’ offerings (such as the Federated Hermes Funds) and/or change employee or potential employee perceptions of the company which can impact the willingness of a potential employee to be hired by, or an employee to remain at, Federated Hermes. If such losses or events were to occur, it can have a material adverse effect on Federated Hermes’ Financial Condition. With increased focus on sustainability (including governance, environmental or social matters), any perceived deficiency in Federated Hermes’ policies and practices on, or political or other public backlash against, these matters can impact Federated Hermes’ brand, reputation or stock price, as well as investor preference for Federated Hermes’ securities and offerings, and, accordingly, adversely affect, potentially in a material way, Federated Hermes’ Financial Condition.

Potential Adverse Effects of Unpredictable Events or Consequences. Like other companies, unpredictable events, such as a natural disaster, unforeseen risks associated with the coronavirus pandemic or a new pandemic, war, or military escalation (such as Russia’s invasion of Ukraine or the Israel-Hamas war), terrorist attack or other business continuity event, unexpected market, or economic developments, such as changes in interest rates, or political developments, including shifts in governmental support for renewable energy or changes in permitting, planning or consenting regimes, or extreme weather, droughts, storms, climate, or other similar governance, environmental or social changes (particularly in the case of portfolio companies in which Federated Hermes’ investment offerings are invested), or unpredictable consequences or side effects of certain known, unknown, planned, or unexpected events, can adversely impact Federated Hermes’, its offerings’, accounts’, customers’, shareholders’ and portfolio companies’ (in which Federated Hermes and its offerings are invested), and each of their respective service providers’, ability to conduct business, as well as Federated Hermes’ Financial Condition. Physical climate change risks arising from changing or adverse weather and climate change (particularly in the case of portfolio companies in which Federated Hermes’ offerings are invested), and transition climate change risks arising as economies and markets transition to low carbon and other environments, also can have adverse impacts. Such unpredictable events or consequences can cause, among other effects, business disruptions, supply chain disruptions, disruptions in economic conditions, market disruptions or transformation, changes in management or governmental processes, changes in consumer demand and investor preferences, obsolescence of certain offerings affecting certain sectors, stranded assets across a range of assets, sectors or geographies, infrastructure and real estate destruction, abandonment or damage leading to increased refurbishment and repair costs, changes in technology, system interruption, loss of life, unavailability of personnel, increased insurance costs or an inability to insure certain assets, an inability to provide information or services, either at all or in accordance with applicable requirements, standards, or restrictions, and/or additional costs.

There can be no assurance that unpredictable or unexpected events, reports or consequences, or the costs to address such events, inaccurate reports, or consequences, would not have a material adverse effect on Federated Hermes’ Financial Condition.

Federated Hermes is a global leader in active, responsibleactive investing with $829.6$902.6 billion in managed assets as of December 31, 2024.2025. The majority of Federated Hermes’ revenue is derived from advising Federated Hermes Funds and Separate Accounts in domestic and international public and private markets. Federated Hermes also derives revenue from providing administrative and other fund-related services (including distribution and shareholder servicing) as well as stewardship andstewardship, real estate development and renewable energy project development services. For additional information on Federated Hermes’ markets, see Item 1 – Business – Distribution Channels and Product Markets.

Investment advisory fees, administrative service fees and certain fees for other services, such as distribution and shareholder service fees, are contract-based and are generally calculated as a percentage of the average net assets of managed investment portfolios. Federated Hermes’ revenue is primarily dependent upon factors that affect the value of managed/serviced assets, including market conditions and the ability to attract and retain assets. Generally, managed assets in Federated Hermes’ public market investment products and strategies (together with other offered services, as applicable, offerings) can be redeemed or withdrawn at any time with no advance notice requirement, while managed assets in Federated Hermes’ private market investment offerings are subject to restrictions toon withdrawals. Fee rates for Federated Hermes’ services generally vary by asset and service type and can vary based on changes in asset levels. Generally, advisory fees charged for services provided to multi-asset and equity offerings are higher than advisory fees charged to alternative/private markets and fixed-income offerings, which in turn are higher than advisory fees charged to money market offerings. Likewise, Federated Hermes Funds typically have higher advisory fees than Separate Accounts. Similarly, revenue is also dependent upon the relative composition of average AUM across both asset and offering types. Federated Hermes can implement fee waiverswaivers, rebates or expense reimbursements for competitive reasons such as to maintain positive or zero net yields (Voluntary Yield-related Fee Waivers,Waivers), to maintain certain fund expense ratios, to meet regulatory requirements or to meet contractual requirements (collectively, Fee Waivers). Since Federated Hermes’ public market offerings are largely distributed and serviced through financial intermediary customers, Federated Hermes paysmakes apayments, portionout of feesits earnedreasonable fromprofits sponsoredand offeringsother resources, to the financial intermediary customers that sell these offerings. These payments are generally calculated as a percentage of net assets attributable to the applicable financial intermediary and represent the vast majority of Distribution expense on the Consolidated Statements of Income. Certain components of Distribution expense can vary depending upon the asset type, distribution channel and/or the size of the customer relationship. Federated Hermes generally pays out a larger portion of the revenue earned from managed assets in equity, money marketmarket, multi-asset, and multi-assetfixed-income funds than the revenue earned from managed assets in fixed-incomeequity and alternative/private markets funds.

Federated Hermes’ most significant operating expenses are Compensation and Related expense and Distribution expense. Compensation and Related expense includes base salary and wages, incentive compensation and other employee expensesexpenses, including payroll taxes and benefits. Incentive compensation, which includes share-based compensation, can vary depending on various factors including, but not limited to, the overall results of operations of Federated Hermes, investment management performance and sales performance.

The discussion and analysis of Federated Hermes’ Financialfinancial Conditioncondition (includingand results of operations) are based on Federated Hermes’ Consolidated Financial Statements. Federated Hermes operates in one operating segment, the investment management business. Management analyzes all expected revenue and expenses and considers market demands in determining an overall fee structure for services provided and in evaluating the addition of new business. Federated Hermes’ growth and profitability are dependent upon its ability to attract and retain AUM and upon the profitability of those assets, which is impacted, in part, by Fee Waivers. Fees for mutual fund-related services are ultimately subject to the approval of the independent directors or trustees of the mutual funds and, as required by law, fund shareholders. Management believes that meaningful indicators of Federated Hermes’ financial performance include AUM, gross and net offering sales, total revenue and net income, both in total and per diluted share.

With Federated Hermes’ global operations, Federated Hermes, and certain of its subsidiaries and offerings (such as the Federated Hermes Funds), are registered with or licensed by, and subject to examination by, various U.S. and/or non-U.S. regulators, self-regulatory agencies or exchanges, such as, among others, the SEC, FINRA, CFTC, DOL, NYSE, FCA, CBI, CIMA, Monetary Authority of Singapore, ASICSASIC and CSSF.

Changes in Total Long-Term Fund and Separate Account Assets

Changes in Federated Hermes’ average asset mix year-over-year across both asset classes and offering types have a direct impact on Federated Hermes’ operating income. Asset mix impacts Federated Hermes’ total revenue due to the difference in the fee rates earned on each asset class and offering type per invested dollar,dollar and certain components of distribution expense can vary depending upon the asset class, distribution channel and/or the size of the customer relationship. The following table presents the relative composition of average managed assets and the percent of total revenue derived from each asset class and offering type overfor the last three years:

Average managed assets increased 12%8% for 20242025 as compared to 2023.2024. Period-end managed assets increased 9% at December 31, 20242025 as compared to December 31, 2023,2024, primarily from an increase in money market and equity assets. Total average money market assets increased 15%9% for 20242025 compared to 2023.2024. Period-end money market assets increased 13%8% at December 31, 20242025 as compared to December 31, 2023.2024. The Federal Reserve loweredimplemented thea federalseries fundsof three rate threecuts, times beginningstarting in September,September settling2025, landing at a range of 4.25%3.5% to 4.5%3.75% inby December,December 2025, and U.S. money market funds reached a record high at nearly $7$8.2 trillion. Money market funds continued to offer a yield advantage compared to some securities in the direct market, especially overnight securities and those with floating rates, which trace the Federal Reserve moves immediately. Average equity assets decreasedincreased 2%11% for 20242025 as compared to 2023.2024. Period-end equity assets remainedincreased flat23% at December 31, 20242025 as compared to December 31, 20232024 primarily due to market appreciation nearlyand, completelyto offseta bylesser extent, net redemptions.sales. The S&P 500 finished the year up more than 21%,16%, aidedas bytech stocks continued to drive returns, although market breadth improved late in the tech stocks, which benefited from the artificial intelligence boom.year. Average fixed-income assets increased 9%3% for 20242025 as compared to 2023.2024. Period-end fixed-income assets increased 3%2% at December 31, 20242025 as compared to December 31, 20232024 primarily due to market appreciation.appreciation, partially offset by net redemptions. Overall, fixed-income markets haddelivered asolid volatileperformance in 2025, with most fixed-income asset classes offering gains. Throughout the year, with yields surging late in 2024 on concerns over a potential reacceleration of inflation. Yields on the 10-Year Treasury note increasedtraded fromin 3.9%a atrange thebetween starta low of 3.97% and a high of 4.79%, closing the year toat above4.18%, 4.5%slightly bylower than the year’syear-end end.2024 level. Average alternative/private markets assets decreased 4% for 20242025 as compared to 2023.2024. Period-end alternative/private markets assets decreasedincreased 8%1% at December 31, 20242025 as compared to December 31, 20232024 primarily due to fluctuations in foreign currency exchange rates, partially offset by net redemptions.

Revenue. Revenue increased $22.5$168.6 million in 20242025 as compared to 20232024 primarily due to (1) increases in money market and fixed-incomeequity revenue of $85.0$106.5 million and $9.6$36.0 million, respectively, primarily related to higher average assets. These increases were partially offset by (1) a decrease in carried interest of $50.0 million (partially offset in Compensation and Related expense) andassets (2) decreasesan increase in equityperformance and alternative/private markets revenuefees of $9.4$7.9 million and $6.5(3) million,an respectively,increase duein toreal lowerestate averagedevelopment assets.fees of $7.8 million.

Federated Hermes’ ratio of revenue to average managed assets was 0.20%0.21% and 0.23%0.20% for 20242025 and 2023,2024, respectively. The decreaseincrease in the rate was primarily due to the decreasechange in carriedthe interestmix andof aasset decreaseclasses of money market assets in revenue from lower average equity assets during 20242025 as compared to 2023.2024.

Nonoperating Income (Expenses). Nonoperating Income (Expenses), net decreasedincreased $3.6$13.5 million in 20242025 as compared to 2023.2024. The decreaseincrease is primarily due to a $6.6$14.5 million decreaseincrease in Gain (Loss) on Securities, net due primarily to a smallerlarger increase in the market value of investments in 20242025 as compared to 2023. This decrease was partially offset by a $3.5 million increase in Investment Income, net primarily due to anthe increase in the yieldmarket onvalue of investments duein to rising interest rates and higher cash and cash equivalents balances.2024.

Income Taxes. The income tax provision for 20242025 and 20232024 was $113.2$133.4 million and $106.6$113.2 million, respectively. The provision for 20242025 increased $6.6$20.2 million as compared to 20232024 primarily due to an increase in U.S. income tax resulting from increased U.S. pre-tax income. The effective tax rate was 24.4% for 2025 and 29.7% for 2024 and 25.9% for 2023.2024. The increasedecrease in the effective tax rate was primarily due to the resultimpact in 2024 of a valuation allowance on foreign deferred tax assets and the impairment of an indefinite-lived intangible asset (2.3%), and a state law change and a state deferred tax adjustment (0.8%).asset. See Note (15) to the Consolidated Financial Statements for additional information on the effective tax rate, as well as other tax disclosures.

Pillar Two legislation has been enacted in certain jurisdictions in which Federated Hermes operates. The legislation iswas effective for the financial year beginning January 1, 2024. Federated Hermes is in scope of the enacted legislation and has performed an assessment of its potential exposure to Pillar Two income taxes based on the most recent tax filings, country-by-country report and financial statements for the constituent entities of Federated Hermes. Based on the assessment, for fiscal yearyears 2025 and 2024 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.

Net Income Attributable to Federated Hermes, Inc. Net income decreasedincreased $30.7$135.0 million in 20242025 as compared to 20232024 primarily as a result of the changes in revenue, operating expenses, nonoperating income (expenses) and income taxes noted above. Diluted earnings per share for 20242025 decreasedincreased $0.17$1.90 as compared to 20232024 primarily due to decreasedincreased net income ($0.35$1.63), partiallyand, offsetto a lesser extent, by a decrease in shares outstanding resulting from share repurchases ($0.18$0.27).

At December 31, 2024,2025, Federated Hermes’ liquid assets included investments in certain money market and fluctuating-value Federated Hermes Funds that canmay have direct and/or indirect exposures to international sovereign debt and currency risks. Federated Hermes continues to actively monitor its investment portfolios to manage sovereign debt and currency risks with respect to certain European countries, China and certain other countries subject to economic sanctions. Federated Hermes’ experienced portfolio managers and analysts work to evaluate credit risk through quantitative and fundamental analysis. Further, regarding international exposure, certain money market funds (representing approximately $468$558 million in AUM) that meet the requirements of Rule 2a-7 under the 1940 Act (Rule 2a-7) or operate in accordance with requirements similar to those 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.

Cash Provided by Investing Activities. In 2024,2025, net cash provided by investing activities was $64.3$2.0 million which primarily represented $119.9$42.2 million in cash received from redemptions of Investments—Affiliates and Other, partially offset by $47.5(1) $18.7 million paid for purchases of Investments—Affiliates and Other.Other, (2) cash paid for the Rivington acquisition, net of cash acquired ($12.8 million) and (3) cash deposits made on a fixed asset to be acquired in 2026 ($6.0 million).

Cash Used by Financing Activities. In 2024,2025, net cash used by financing activities was $286.4$237.9 million. Of this amount, Federated Hermes paid (1) $184.8 million or $2.21 per share in dividends to holders of its common shares, (2) $137.6$262.8 million to repurchase shares of Class B common stock primarily in connection with its stock repurchase programs (see Note (14) to the Consolidated Financial Statements for additional information), (2) $104.9 million or $1.33 per share in dividends to holders of its common shares and (3) $31.3$35.4 million of distributions to noncontrolling interests in subsidiaries. This activity was partially offset by $69.1$163.9 million of contributions from noncontrolling interests in subsidiaries.

On July 30, 2021, Federated Hermes entered into an unsecured Fourth Amended and Restated Credit Agreement by and among Federated Hermes, certain of its subsidiaries as guarantors party thereto, a syndicate of eleven banks as Lenders party thereto, PNC Bank, National Association as administrative agent, PNC Capital Markets LLC, as sole bookrunner and joint lead arranger, Citigroup Global Markets, Inc., as joint lead arranger, Citibank, N.A. as syndication agent, and Toronto-Dominion Bank, New York Branch as documentation agent (Credit Agreement). The Credit Agreement consists of a $350 million revolving credit facility with an additional $200 million available via an optional increase (or accordion) feature. Borrowings under the Credit Agreement may be used for general corporate purposes including cash payments related to acquisitions, dividends, investments and share repurchases. As of December 31, 2024,2025, Federated Hermes hashad $350 million available to borrow under the Credit Agreement. See Note (11) to the Consolidated Financial Statements for additional information.

Both the Note Purchase Agreement and the Credit Agreement have certain stated events of default and cross default provisions which would permit the lenders/counterparties to accelerate the repayment of debt outstanding if not cured within the applicable grace periods. The events of default generally include breaches of contract, failure to make required loan payments, insolvency, cessation of business, notice of lien or assessment,assessment and other proceedings, whether voluntary or involuntary, that would require the repayment of amounts borrowed.

Future Cash Needs. In addition to the contractual obligations described above, management expects that principal uses of cash will include funding business acquisitions (including the FCP acquisition disclosed in Note (3)) and global expansion, funding distribution expenditures, paying incentive and base compensation, paying shareholder dividends, paying debt obligations, paying taxes, repurchasing company stock, developing and seeding new offerings, modifying existing offerings and relationships and maintaining regulatory liquidity and capital requirements. In addition, Federated Hermes expects to invest approximately $280$300 million (including the allocation of approximately $190$200 million in existing technology-related overhead, primarily the compensation expense of existing employees and an external spend of approximately $90$100 million) over the next three years to support a number of planned technology-driven initiatives. Any number of factors canmay cause Federated Hermes’ future cash needs to increase. As a result of the highly regulated nature of the investment management business, management anticipates that aggregate expenditures for compliance and investment management personnel, compliance systems and technology and related professional and consulting fees couldcan continue to increase.

Investments—Consolidated Investment Companies at December 31, 20242025 increased $11.9$3.1 million from December 31, 20232024 primarily due to (1) an increase of $55.5$22.4 million related to the consolidation of two variable interest entities (VIEs) in 2024.2025, This(2) an increase wasof $13.8 million related to net purchases on existing consolidated products and (3) an increase of $4.9 million due to foreign exchange rate fluctuations. These increases were partially offset by a decrease of $40.2$38.2 million related to the deconsolidation of two voting rights entities (VREs)VIEs in 2024.2025.

Investments—Affiliates and Other at December 31, 20242025 decreasedincreased $52.8$2.1 million from December 31, 20232024 primarily due to a decrease of $72.5 million in net redemptions, partially offset by an increase of $16.9$11.6 million related to the deconsolidation of atwo VREVIEs which reclassified Federated Hermes' investments into Investments—Affiliates and Other.Other and an increase of $9.6 million in net appreciation on existing investments. These increases were partially offset by a decrease of $20.3 million in net redemptions.

Receivables—AffiliatesReceivables, net at December 31, 2025 decreased $22.4 million from December 31, 2024 primarily due to (1) the reclassification of the $15.9 million insurance reimbursement receivable (see Note (20) to the Consolidated Financial Statements for additional information) from short-term to long-term due to delays in the litigation and (2) the 2025 receipt of performance fees accrued at December 31, 2024 decreased $12.4 million from December 31, 2023 primarily due to a decrease in investment advisory and administrative service fees ($5.3 million) and the 2024 receipt of carried interest earned in 2023 ($4.4$6.8 million).

Accrued Compensation and Benefits at December 31, 20242025 decreasedincreased $1.3$19.3 million from December 31, 20232024 primarily due to the 20232025 incentive compensation accruals recorded at December 31, 2025 ($151.4 million), partially offset by 2024 accrued annual incentive compensation being paid in the first quarter 20242025 ($129.4 million), partially offset by 2024 incentive compensation accruals recorded at December 31, 2024 ($127.4$133.0 million).

Indefinite-lived intangible assets are reviewed for impairment at the accounting unit level annually as of OctoberDecember 1,31, or when indicators of a potential impairment exist. Federated Hermes has combined certain indefinite-lived assets into three distinct units of accounting for impairment testing purposes. The factors considered in determining the asset grouping include, among others, the highest and best use of the assets and the inseparable nature of the cash flows. Such asset grouping determination is reconsidered annually and may change depending on the facts and circumstances. Federated Hermes’ current indefinite-lived intangible assets’ units of accounting are: (1) FHL right to manage public fund assets; (2) Hermes trade name; and (3) all other rights to manage fund assets. Management may use a qualitative or quantitative approach which requires the weighting of positive and negative evidence collected through the consideration of various factors to determine whether it is more likely than not that an indefinite-lived intangible asset or asset group is impaired. During the year ended December 31, 2024,2025, management used both qualitative and quantitative approaches. For the quantitative analyses, management used an income-based approach to valuation, the discounted cash flow method. Management considers macroeconomic and entity-specific factors, including projected AUM, projected revenue growth rates, projected pre-tax profit margins, tax rates, discount rates and, in the case of a trade name valuation, a royalty rate. In addition, management reconsiders on a quarterly basis whether events or circumstances indicate that a change in the useful life has occurred. Indicators of a possible change in useful life monitored by management generally include changes in the expected use of the asset, a significant decline in the level of managed assets, changes to legal, regulatory or contractual provisions of the rights to manage fund assets, the effects of obsolescence, demand, competition and other economic factors that could impact the funds’ projected performance and existence, and significant reductions in underlying operating cash flows.

As of December 31, 2024,2025, due to a decrease in near term projected cash flows, primarily driven by a decrease in AUMprojected as a result of net redemptions,revenue, management concluded that an indicator of potential impairment existed for the indefinite-lived intangible asset related to the FHL right to manage public fund assets, which had a carrying value of £72.2 million ($90.4$97.3 million). A discounted cash flow analysis was prepared which resulted in the estimated fair value exceeding the carrying value by moreless than 15%.5%. The key assumptions in the discounted cash flow analysis include revenue growth rates, pre-tax profit margins and the discount rate applied to the projected cash flows. The risk of future impairment increases with a decrease in projected cash flows and/or an increase in the discount rate.

As of December 31, 2024,2025, assuming all other assumptions remain static, an increase or decrease of 10% in projected revenue growth rates would result in a corresponding change to estimated fair value of approximately 10%.9%. An increase or decrease of 10% in pre-tax profit margins would result in a corresponding change to estimated fair value of approximately 17%.16%. An increase or decrease in the discount rate of 25 basis points would result in an inverse change to estimated fair value of approximately 3%. Market volatility and other events related to geopolitical or other unexpected events couldin the future can further reduce the AUM, revenues and earnings associated with thisFederated Hermes’ indefinite-lived intangible assetassets and can result in subsequent impairment tests being performed based upon updated assumptions and future cash flow projections, which can result in an impairment. For additional information on risks related to geopolitical or other unexpected events, see Item 1A – Risk Factors – SpecificGeneral Risk Factors – Other General Risks Related to Federated Hermes’ Investment Management Business and Offerings – Potential Adverse Effects of TerminationUnpredictable Events or Failure to Renew Advisory Agreements.Consequences.

Federated Hermes is a global leader in active investing with $907.1$911.6 billion in managed assets as of MarchJune 31,30, 2026. The majority of Federated Hermes’ revenue is derived from advising Federated Hermes Funds and Separate Accounts in domestic and international public and private markets. Federated Hermes also derives revenue from providing administrative and other fund-related services (including distribution and shareholder servicing) as well as stewardship, real estate development and renewable energy project development services.

Investment advisory fees, administrative service fees and certain fees for other services, such as distribution and shareholder service fees, are contract-based and are generally calculated as a percentage of the average net assets of managed investment portfolios. Federated Hermes’ revenue is primarily dependent upon factors that affect the value of managed/serviced assets, including market conditions and the ability to attract and retain assets. Generally, managed assets in Federated Hermes’ public market investment products and strategies (together with other offered services, as applicable, offerings) can be redeemed or withdrawn at any time with no advance notice requirement, while managed assets in Federated Hermes’ private market investment offerings are subject to restrictions on withdrawals. Fee rates for Federated Hermes’ services generally vary by asset and service type and can vary based on changes in asset levels. Generally, advisory fees charged for services provided to multi-asset and equity offerings are higher than advisory fees charged to alternative/private markets and fixed-income offerings, which in turn are higher than advisory fees charged to money market offerings. Likewise, Federated Hermes Funds typically have higher advisory fees than Separate Accounts. Similarly, revenue is also dependent upon the relative composition of average AUM across both asset and offering types. Federated Hermes can implement Fee Waivers such as Voluntary Yield-related Fee Waivers, to maintain certain fund expense ratios, to meet regulatory requirements or to meet contractual requirements. Since Federated Hermes’ public market offerings are largely distributed and serviced through financial intermediary customers, Federated Hermes makes payments, out of its reasonable profits and other resources, to the financial intermediary customers that sell these offerings. These payments are generally calculated as a percentage of net assets attributable to the applicable financial intermediary and represent the vast majority of Distribution expense on the Consolidated Statements of Income. Certain components of Distribution expense can vary depending upon the asset type, distribution channel and/or the size of the customer relationship. Federated Hermes generally pays out a larger portion of the revenue earned from managed assets in money market, multi-asset,market and fixed-incomemulti-asset funds than the revenue earned from managed assets in fixed-income, equity and alternative/private markets funds.

The business and regulatory environmentsenvironment in which Federated Hermes operates globally remainremains complex, uncertain and subject to change. Federated Hermes and its investment management business are subject to extensive regulation, both within and outside of the U.S., including various laws, rules and regulations globally that impose restrictions, limitations, registration, reporting and disclosure requirements on its business, and add complexity to its global compliance operations. For example, Federated Hermes and its offerings are subject to various: (1) federal securities laws, such as the Securities Act of 1933,1933 (1933 Act), the Securities Exchange Act of 1934 (Exchange Act), the Investment Company Act of 1940 (1940 Act), and the Investment Advisers Act of 1940 (Advisers Act); (2) state laws regarding fraud and registration; and (3) regulations or other rules promulgated by various regulatory authorities, or other authorities. These regulatory requirements, and other regulatory developments, continue to impact the investment management industry generally and will continue to impact, to various degrees, Federated Hermes’ business, results of operations, financial condition, cash flows and stock price (collectively, Financial Condition).

Please see Federated Hermes’ prior public filings, including the discussions under Part I, Item 2 – Management’s Discussion and Analysis – Business Developments – Current Regulatory Developments, in Federated Hermes’ Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026 (First Quarter 2026 Form 10-Q), and Part I, Item 1 – Business – Regulatory MattersMatters, in Federated Hermes’ Annual Report on Form 10‑K10-K for the year ended December 31, 2025,2025 (2025 Annual Report), for an overview of Federated Hermes’ regulatory environment and related regulatory developments and requirements for periods prior to March 31, 2026 and December 31, 2025.2025, respectively.

Federated Hermes’ and its offerings’The primary regulator in the U.S. for Federated Hermes and its offerings is the SEC. U.S. regulatory matters addressed in Federated Hermes’ 2025 Annual Report and First Quarter 2026 Form 10-Q included, among others: (1) the regulatory impact resulting from the current Presidential administration, which has fundamentally redirected the SEC away from expansive regulation and aggressive enforcement to emphasizing deregulation, capital formation and “back-to-basics” investor protection; (2) SEC enforcement trends and examination priorities; (3) the Financial Stability Oversight Council’s (FSOC) priorities for 2026, which are primarily focused on deregulation and promoting economic growth; (4) the Financial Industry Regulatory Authority’s (FINRA) regulatory operations programs, including FINRA’s key areas of focus for 2026; and (5) SEC proposed amendments to Form N-PORT and the Names Rule compliance dates; (6) scrutiny of governance, environmental and social initiatives, including state laws governing proxy advisory services; (7) the FSOC’s proposed interpretive guidance on systemically important financial institution (SIFI) designations; (8) the Department of Labor’s (DOL) proposed rules establishing a safe harbor framework that would allow for the inclusion of alternative assets, such as private market investments, in 401(k) plans; (9) the SEC’s enforcement results for its 2025 fiscal year; and (10) certain other specific regulatory developments involving the SEC, the Department of Labor (DOL),DOL, and other regulators.

Key regulatory developments and requirements in the U.S. since DecemberMarch 31, 2025,2026, that can significantly impact or relate to Federated Hermes’ business and offerings include, among others, the following. Unless otherwise noted, Federated Hermes is evaluating the impact of the matters described on its business and offerings.

SEC and Commodity Futures TradingTrade Commission (CFTC) Propose Amendments to Form PF. On April 20, 2026, the SEC and CFTC proposed amendments to Form PF to: (1) eliminate filing requirements for smaller advisors by raising the Form PF filing threshold for all filers from $150 million in private fund assets under managementAUM to $1 billion in private fund assets under managementAUM and raising the reporting threshold for large hedge fund advisors from $1.5 billion in hedge fund assets under managementAUM to $10 billion in hedge fund assets under managementAUM; (2) eliminate certain reporting requirements for smaller hedge fund advisors; and (3) eliminate, streamline and simplify certain other reporting requirements by, among other proposed changes, eliminating certain “look through” requirements, eliminating certain performance volatility reporting requirements, simplifying certain large hedge fund counterparty exposure reporting, eliminating certain current reporting for large hedge fund advisors, and eliminating quarterly event reporting for all private equity fund advisors. SEC-registered investment advisors that satisfy Form PF’s filing thresholds must file Form PF, which is intended to provide the SEC, CFTC and FSOC with confidential information about the operations and strategies of private funds and their investment advisors. The proposed amendments would repeal certain enhanced reporting requirements promulgated by the SEC in 2024. The public comment period for thethis proposedproposal amendmentsended willon endJune 6023, days after the proposed amendments are published in the Federal Register.2026.

SEC Publishes Concept Release on Consolidated Audit Trail and Other Audit Trails and Data Sources. On April 16, 2026, the SEC published a concept release soliciting comments in support of a comprehensive review of the Consolidated Audit Trail and other audit trails and related data sources currently used in the regulation of U.S. securities markets, including comments regarding the funding mechanisms for these audit trails and/or related data sources. The Consolidated Audit Trail is a centralized, SEC‑mandatedSEC-mandated system that collects and links detailed data on all orders, quotes and trades across U.S. equity and options markets that purports to enable regulators to efficiently surveil, reconstruct and investigate market activity. The public comment period willfor end 60 days after thethis concept release isended publishedon inJune the22, Federal Register.2026.

Texas Stock Exchange Propose(TXSE) Proposes to Exempt Closed-End Funds (CEFs) from Requirement to Hold Annual Shareholder Meetings. On April 6, 2026, the Texas Stock Exchange (TXSE) filed a proposed rule change with the SEC, SR TXSE 2026-005, establishing listing and continued listing standards for CEFs and interval funds on its new exchange. As part of this proposal, the TXSE proposed to eliminate the exchange-level requirement that listed CEFs hold annual shareholder meetings. The TXSE proposal follows the Cboe Global Markets Inc. (Cboe) withdrawal on December 12, 2025 of its May 20, 2025 proposal that would have exempted newly-listed CEFs from the requirement to hold annual shareholder meetings and, subject to shareholder approval, also would have exempted previously listed CEFs from the annual shareholder meeting requirement, and the New York Stock Exchange withdrawal on January 5, 2026 of a similar June 6, 2025 proposal. Federated Hermes fullysubmitted supportsa comment letter on July 2, 2026, supporting efforts to eliminate annual shareholder meetings for exchange listed CEFs. In Federated Hermes’ view, CEFs are more akin to registered mutual funds, which are not required to have annual meetings, than listed operating companies and the annual shareholder meeting requirement subjects them to attack by activist shareholders who buy discounted shares and then take action to force the CEFs to incur liquidity eventsevents, (such as tender offers, reorganizations or open-ending of the CEFs) to realize or arbitrage the difference between the discounted purchase price and the CEFs’ NAV, all to the detriment of the CEFs and their long-term investors.

Outside the U.S., the primary regulators of Federated Hermes’Hermes and its offerings’ primary regulatorsofferings include the United Kingdom (U.K.) Financial Conduct Authority (FCA), the Central Bank of Ireland,Ireland (CBI), the Luxembourg Commission de Surveillance du Secteur Financier, the Cayman Islands 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 requirementsrequirements, and may be impacted by regulatory developments by or involving those primary regulators, as well as, among others, the European Commission, European Securities and Markets Authority (ESMA), Bank of England (BoE), His Majesty’s Treasury (HM Treasury) in the U.K.,, Financial Stability Board,Board (FSB), and the International Organization of Securities Commissions.Commission (IOSCO). Non-U.S. regulatory matters addressed in Federated Hermes’ 2025 Annual Report and First Quarter 2026 Form 10-Q included, among others: (1) moneykey marketregulatory fundpriorities reformidentified by regulators in the U.K. and European Union (EU); (2) formoney EUmarket Undertakingsfund for the Collective Investment in Transferable Securities (UCITS), potential changes to the eligible assets requirements; (3) changes to liquidity risk management requirementsreform in the U.K. and EU; (43) the U.K. FCA’s final rules on consumer composite investments (CCI) and the disclosure requirements for CCIs; (5) the steps being taken to shift to a T+1 settlement cycle in the U.K. and EU changes to liquidity risk management requirements; (64) EUU.K. and U.K.EU sustainability requirements for asset managers and investment offerings; (75) EUU.K. and U.K.EU sustainability reporting requirements for corporations; (6) U.K. and EU anti-money laundering requirements; (7) EU reforms to enhance the European Market Infrastructure Regulation (EMIR); (8) theU.K. and EU Savingsregulation of governance, environmental and Investmentssocial Unionratings; (SIU9) the transition to the T+1 settlement in the U.K. and RetailEU; Investmentand Strategy(10) the retail investment strategy (RIS). in the EU.

Key regulatory developments outside the U.S. since DecemberMarch 31, 20252026 that can significantly impact or relate to Federated Hermes’ business and offerings include, among others, the following. Unless otherwise noted, Federated Hermes is evaluating the impact of the matters described on its business and offerings.