United States
Securities and Exchange Commission
Washington, D.C. 20549
Form N-CSR
Certified Shareholder Report of Registered Management Investment Companies
811-5950
(Investment Company Act File Number)
Federated Hermes Money Market Obligations Trust
_______________________________________________________________
(Exact Name of Registrant as Specified in Charter)
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, Pennsylvania 15086-7561
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
Peter J. Germain, Esquire
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
(Notices should be sent to the Agent for Service)
Date of Fiscal Year End: 07/31/22
Date of Reporting Period: 07/31/22
| Item 1. | Reports to Stockholders |
Annual Shareholder Report
July 31, 2022
|
Ticker FRFXX
|
Federated Hermes Capital Reserves Fund
A Portfolio of Federated Hermes Money Market Obligations Trust
Dear Valued Shareholder,
We are pleased to present the Annual Shareholder Report for your fund covering the period from August 1, 2021 through July 31, 2022. This report includes a complete listing of your fund’s holdings, performance information and financial statements along with other important fund information.
As a global leader in active, responsible investment management, Federated Hermes is guided by our conviction that responsible investing is the best way to create wealth over the long term. The company provides capabilities across a wide range of asset classes to investors around the world.
In addition, FederatedInvestors.com offers quick and easy access to valuable resources that include timely fund updates, economic and market insights from our investment strategists and financial planning tools. You can also access many of those insights by following us on Twitter (@FederatedHermes) and LinkedIn.
Thank you for investing with us. We hope you find this information useful and look forward to keeping you informed.
Sincerely,
J. Christopher Donahue, President
The Fund is a Retail Money Market Fund and is only available for investment to accounts beneficially owned by natural persons.
Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee
Portfolio of Investments Summary Tables (unaudited)
At July 31, 2022, the Fund’s portfolio composition1 was as follows:
|
Security Type
|
Percentage of
Total Net Assets
|
|
Commercial Paper
|
32.6%
|
|
Variable Rate Instruments
|
36.4%
|
|
Bank Instruments
|
12.5%
|
|
Other Repurchase Agreements and Repurchase Agreements
|
17.7%
|
|
U.S. Treasury
|
0.2%
|
|
Cash Equivalent2
|
0.6%
|
|
Other Assets and Liabilities—Net3
|
0.0%4
|
|
TOTAL
|
100%
|
At July 31, 2022, the Fund’s effective maturity5 schedule was as follows:
|
Securities With an
Effective Maturity of:
|
Percentage of
Total Net Assets
|
|
1-7 Days
|
69.9%6
|
|
8-30 Days
|
15.1%
|
|
31-90 Days
|
11.2%
|
|
91-180 Days
|
0.5%
|
|
181 Days or more
|
3.3%
|
|
Other Assets and Liabilities—Net3
|
0.0%4
|
|
TOTAL
|
100%
|
1
See the Fund’s Prospectus and Statement of Additional Information for more complete information regarding these security types.
2
Cash Equivalents include any investments in money market mutual funds.
3
Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.
4
Represents less than 0.1%.
5
Effective maturity is determined in accordance with the requirements of Rule 2a-7 under the Investment Company Act of 1940, which regulates money market mutual funds.
6
Overnight securities comprised 20.0% of the Fund’s portfolio.
Annual Shareholder Report
1
Portfolio of Investments
July 31, 2022
|
Principal
Amount or
Shares
|
|
|
Value
|
|
|
1
|
COMMERCIAL PAPER—32.6%
|
|
|
|
|
Aerospace / Auto—1.9%
|
|
|
$85,000,000
|
|
American Honda Finance Corp., (Honda Motor Co., Ltd. Support
Agreement), 2.201%—2.680%, 8/3/2022 - 9/12/2022
|
$84,786,914
|
|
|
|
Banking—7.6%
|
|
|
200,000,000
|
|
Anglesea Funding LLC, 2.321%, 8/4/2022 - 8/5/2022
|
199,953,278
|
|
13,000,000
|
|
Canadian Imperial Bank of Commerce, 2.069%, 3/20/2023
|
12,830,831
|
|
15,000,000
|
|
National Australia Bank Ltd., Melbourne, 3.865%, 6/15/2023
|
14,507,100
|
|
94,000,000
|
|
Nationwide Building Society, 2.200%, 8/3/2022
|
93,988,511
|
|
12,000,000
|
|
Toronto Dominion Bank, 2.051%, 3/17/2023
|
11,847,240
|
|
|
|
TOTAL
|
333,126,960
|
|
|
|
Chemicals—4.6%
|
|
|
100,000,000
|
|
BASF SE, 1.852%, 8/2/2022
|
99,994,861
|
|
60,000,000
|
|
DuPont de Nemours, Inc., 1.953%—2.374%,
8/1/2022 - 8/15/2022
|
59,967,742
|
|
40,000,000
|
|
PPG Industries, Inc., 2.103%, 8/1/2022
|
40,000,000
|
|
|
|
TOTAL
|
199,962,603
|
|
|
|
Electric Power—8.4%
|
|
|
35,000,000
|
|
Avangrid, Inc., 2.500%, 8/1/2022
|
35,000,000
|
|
217,500,000
|
|
Duke Energy Corp., 2.004%—2.501%,
8/1/2022 - 8/2/2022
|
217,497,639
|
|
115,500,000
|
|
NextEra Energy Capital Holdings, Inc., 2.501%—2.553%,
8/1/2022 - 8/12/2022
|
115,461,041
|
|
|
|
TOTAL
|
367,958,680
|
|
|
|
Food & Beverage—2.9%
|
|
|
125,000,000
|
|
Mondelez International, Inc., 2.231%—2.655%,
8/4/2022 - 8/23/2022
|
124,869,250
|
|
|
|
Mining—1.1%
|
|
|
50,000,000
|
|
Nutrien Ltd., 2.810%, 9/15/2022
|
49,825,000
|
|
|
|
Telecommunications—4.8%
|
|
|
50,000,000
|
|
Bell Canada, 2.153%, 8/11/2022
|
49,970,139
|
|
160,000,000
|
|
Verizon Communications, Inc., 2.054%—2.760%,
8/11/2022 - 9/13/2022
|
159,689,139
|
|
|
|
TOTAL
|
209,659,278
|
|
|
|
Utility Gas—1.3%
|
|
|
55,000,000
|
|
Southern Co. Gas Capital, 2.152%—2.253%, 8/2/2022 - 8/3/2022
|
54,995,083
|
|
|
|
TOTAL COMMERCIAL PAPER
|
1,425,183,768
|
Annual Shareholder Report
2
|
Principal
Amount or
Shares
|
|
|
Value
|
|
|
2
|
NOTES-VARIABLE—36.4%
|
|
|
|
|
Banking—32.5%
|
|
|
$75,000,000
|
|
Bank of Montreal, 2.840% (SOFR +0.560%), 8/1/2022
|
$75,000,000
|
|
50,000,000
|
|
Bank of Nova Scotia, Toronto, 2.810% (SOFR +0.530%), 8/1/2022
|
50,000,000
|
|
50,000,000
|
|
Bank of Nova Scotia, Toronto, 2.950% (SOFR +0.670%), 8/1/2022
|
50,000,000
|
|
9,200,000
|
|
Bragg 2019 Family Trust No. 1, Series 2019, (BOKF, N.A. LOC),
2.520%, 8/4/2022
|
9,200,000
|
|
67,210,000
|
|
Byron H. Rubin as Trustee of the Gerald J. Rubin Special Trust
No. 1, UAD June 23, 2016, (Comerica Bank LOC),
2.500%, 8/4/2022
|
67,210,000
|
|
75,000,000
|
|
Canadian Imperial Bank of Commerce, 2.840%
(SOFR +0.560%), 8/1/2022
|
75,000,000
|
|
35,080,000
|
|
Carol Allen Family Liquidity Trust, (Comerica Bank LOC),
2.480%, 8/4/2022
|
35,080,000
|
|
13,225,000
|
|
Catholic Health Initiatives, Taxable Municipal Funding Trust
(Series 2019-007) VRDNs, (Barclays Bank plc LOC),
2.550%, 8/4/2022
|
13,225,000
|
|
25,000,000
|
|
Collateralized Commercial Paper V Co. LLC, (J.P. Morgan
Securities LLC COL), 2.460% (SOFR +0.180%), 8/1/2022
|
25,000,000
|
|
50,000,000
|
|
Collateralized Commercial Paper V Co. LLC, (J.P. Morgan
Securities LLC COL), 2.780% (SOFR +0.500%), 8/1/2022
|
50,000,000
|
|
1,915,000
|
|
Colorado Health Facilities Authority, Series 2016B,
(UMB Bank, N.A. LOC), 2.760%, 8/4/2022
|
1,915,000
|
|
11,300,000
|
|
Connecticut Water Co., Series 2004, (Citizens Bank, N.A.,
Providence LOC), 2.620%, 8/3/2022
|
11,300,000
|
|
6,750,000
|
|
CT 2019 Irrevocable Trust, (BOKF, N.A. LOC), 2.520%, 8/4/2022
|
6,750,000
|
|
17,625,000
|
|
EG Irrevocable Life Insurance Trust, (BOKF, N.A. LOC),
1.710%, 8/4/2022
|
17,625,000
|
|
9,590,000
|
|
Eric and Lizzie Bommer Insurance Trust, (BOKF, N.A. LOC),
2.520%, 8/4/2022
|
9,590,000
|
|
2,090,000
|
|
Gannett Fleming, Inc., Series 2001, (Manufacturers & Traders
Trust Co., Buffalo LOC), 2.420%, 8/5/2022
|
2,090,000
|
|
4,725,000
|
|
GM Enterprises of Oregon, Inc., Series 2017, (Bank of the West,
San Francisco, CA LOC), 2.782%, 8/4/2022
|
4,725,000
|
|
23,445,000
|
|
J.R. Adventures Insurance Trust, (BOKF, N.A. LOC),
2.792%, 8/4/2022
|
23,445,000
|
|
8,120,000
|
|
MBW Legacy Investments, LLC, (BOKF, N.A. LOC),
2.520%, 8/4/2022
|
8,120,000
|
|
75,000,000
|
|
MUFG Bank Ltd., 1.720% (SOFR +0.190%), 8/1/2022
|
75,000,000
|
|
25,000,000
|
|
MUFG Bank Ltd., 2.140% (SOFR +0.610%), 8/1/2022
|
25,000,000
|
|
15,000,000
|
|
New York State Energy Research & Development Authority
(National Grid Generation LLC), (1997 Series A) Weekly VRDNs,
(NatWest Markets plc LOC), 1.620%, 8/3/2022
|
15,000,000
|
|
11,255,000
|
|
NLS 2015 Irrevocable Trust, (BOKF, N.A. LOC), 2.520%, 8/4/2022
|
11,255,000
|
Annual Shareholder Report
3
|
Principal
Amount or
Shares
|
|
|
Value
|
|
|
2
|
NOTES-VARIABLE—continued
|
|
|
|
|
Banking—continued
|
|
|
$15,000,000
|
|
Nuveen Credit Strategies Income Fund, Taxable Preferred Shares
(Series A), (Societe Generale, Paris LOC), 2.470%, 8/3/2022
|
$15,000,000
|
|
50,000,000
|
|
Nuveen Preferred Securities Income Fund, Variable Rate Demand
Note (Series A), (Barclays Bank plc LIQ), 2.470%, 8/4/2022
|
50,000,000
|
|
9,280,000
|
|
Opler 2013 Irrevocable Trust, (BOKF, N.A. LOC),
2.520%, 8/4/2022
|
9,280,000
|
|
30,565,000
|
|
RBS Insurance Trust, (BOKF, N.A. LOC), 2.520%, 8/4/2022
|
30,565,000
|
|
50,000,000
|
|
Regatta Funding Co., LLC, (Credit Suisse AG LIQ), 2.680%
(SOFR +0.400%), 10/14/2022
|
50,000,000
|
|
11,240,000
|
|
Richard F. Wilks Spousal Gifting Trust, (BOKF, N.A. LOC),
2.520%, 8/4/2022
|
11,240,000
|
|
30,000,000
|
|
Ridgefield Funding Company, LLC Series A, (BNP Paribas SA
COL), 2.470% (SOFR +0.190%), 8/1/2022
|
30,000,000
|
|
25,000,000
|
|
Royal Bank of Canada, 2.530% (SOFR +0.250%), 8/1/2022
|
25,000,000
|
|
90,000,000
|
|
Royal Bank of Canada, 2.840% (SOFR +0.560%), 8/1/2022
|
90,000,000
|
|
13,875,000
|
|
Steel Dust Recycling, LLC, Series 2016, (Comerica Bank LOC),
2.500%, 8/4/2022
|
13,875,000
|
|
50,000,000
|
|
Sumitomo Mitsui Banking Corp., 2.680% (SOFR +0.400%),
8/1/2022
|
50,000,000
|
|
50,000,000
|
|
Sumitomo Mitsui Banking Corp., 2.730% (SOFR +0.450%),
8/1/2022
|
50,000,000
|
|
25,000,000
|
|
Sumitomo Mitsui Banking Corp., 2.790% (SOFR +0.510%),
8/1/2022
|
25,000,000
|
|
38,415,000
|
|
Taxable Muni Funding Trust 2020-011, (Series 2020-011) VRDNs,
(Barclays Bank plc LOC), 2.550%, 8/4/2022
|
38,415,000
|
|
2,300,000
|
|
Taxable Muni Funding Trust 2021-002, Barclays Taxable Muni
Funding Trust (Series 2021-002) VRDNs, (Barclays Bank plc LOC),
2.550%, 8/4/2022
|
2,300,000
|
|
2,800,000
|
|
Taxable Muni Funding Trust 2021-007, (Series 2021-007) VRDNs,
(Barclays Bank plc LOC), 2.550%, 8/4/2022
|
2,800,000
|
|
21,000,000
|
|
Taxable Muni Funding Trust 2021-008, Barclays Taxable Trust
(Series 2021-008) VRDNs, (Barclays Bank plc LOC),
2.550%, 8/4/2022
|
21,000,000
|
|
25,600,000
|
|
Taxable Muni Funding Trust 2021-010, (Series 2021-010) VRDNs,
(Barclays Bank plc LOC), 2.550%, 8/4/2022
|
25,600,000
|
|
6,145,000
|
|
Taxable Municipal Funding Trust 2020-001, Barclays Taxable Muni
Funding Trust (Series 2020-001) VRDNs, (Barclays Bank plc LOC),
2.550%, 8/4/2022
|
6,145,000
|
|
5,501,055
|
|
Taxable Tender Option Bond Trust 2021-MIZ9060TX,
(Series 2021-MIZ9060TX) VRDNs, (Mizuho Bank Ltd.
GTD)/(Mizuho Bank Ltd. LIQ), 2.590%, 8/1/2022
|
5,501,055
|
Annual Shareholder Report
4
|
Principal
Amount or
Shares
|
|
|
Value
|
|
|
2
|
NOTES-VARIABLE—continued
|
|
|
|
|
Banking—continued
|
|
|
$6,500,000
|
|
Taxable Tender Option Bond Trust 2021-MIZ9064TX,
(Series 2021-MIZ9064TX) VRDNs, (Mizuho Bank Ltd.
LIQ)/(Mizuho Bank Ltd. LOC), 2.640%, 8/4/2022
|
$6,500,000
|
|
3,944,201
|
|
Taxable Tender Option Bond Trust 2021-MIZ9083TX,
(Series 2021-MIZ9083TX) VRDNs, (Mizuho Bank Ltd.
LIQ)/(Mizuho Bank Ltd. LOC), 2.590%, 8/1/2022
|
3,944,201
|
|
5,150,000
|
|
Taxable Tender Option Bond Trust 2022-MIZ9084TX,
(Series 2022-MIZ-9084TX) VRDNs, (Mizuho Bank Ltd.
LIQ)/(Mizuho Bank Ltd. LOC), 2.640%, 8/4/2022
|
5,150,000
|
|
18,750,000
|
|
Taxable Tender Option Bond Trust 2022-MIZ9087TX,
(Series 2022-MIZ9096TX) VRDNs, (Mizuho Bank Ltd.
LIQ)/(Mizuho Bank Ltd. LOC), 2.640%, 8/4/2022
|
18,750,000
|
|
3,800,000
|
|
Taxable Tender Option Bond Trust 2022-MIZ9094TX,
(Series 2022-MIZ9094TX) VRDNs, (Mizuho Bank Ltd.
LIQ)/(Mizuho Bank Ltd. LOC), 2.640%, 8/4/2022
|
3,800,000
|
|
20,000,000
|
|
Taxable Tender Option Bond Trust2021-MIZ9070TX,
(Series 2021-MIZ9070TX) VRDNs, (Mizuho Bank Ltd.
GTD)/(Mizuho Bank Ltd. LIQ), 2.720%, 8/1/2022
|
20,000,000
|
|
9,825,000
|
|
The KVR Insurance Trust, Series 2014, (BOKF, N.A. LOC),
2.520%, 8/4/2022
|
9,825,000
|
|
7,145,000
|
|
The Raymon Lee Ince Irrevocable Trust, (BOKF, N.A. LOC),
2.520%, 8/4/2022
|
7,145,000
|
|
25,000,000
|
|
Toronto Dominion Bank, 1.780% (SOFR +0.250%), 8/1/2022
|
25,000,000
|
|
90,000,000
|
|
Toronto Dominion Bank, 2.050% (SOFR +0.520%), 8/1/2022
|
90,000,000
|
|
7,305,000
|
|
Tuttle Insurance Trust No. 2, Series 2015, (BOKF, N.A. LOC),
2.520%, 8/4/2022
|
7,305,000
|
|
13,000,000
|
|
Yavapai County, AZ IDA—Recovery Zone Facility (Drake Cement
LLC), Taxable (Series 2015) Weekly VRDNs, (Bank of Nova Scotia,
Toronto LOC), 2.000%, 8/4/2022
|
13,000,000
|
|
|
|
TOTAL
|
1,423,670,256
|
|
|
|
Finance—Commercial—1.2%
|
|
|
50,000,000
|
|
Atlantic Asset Securitization LLC, 2.730% (SOFR +0.450%),
8/1/2022
|
49,997,847
|
|
|
|
Finance—Retail—2.3%
|
|
|
50,000,000
|
|
Barton Capital S.A., 2.700% (SOFR +0.420%), 8/1/2022
|
50,000,000
|
|
50,000,000
|
|
Thunder Bay Funding, LLC, 1.980% (SOFR +0.450%), 12/8/2022
|
50,000,000
|
|
|
|
TOTAL
|
100,000,000
|
|
|
|
Government Agency—0.4%
|
|
|
3,935,000
|
|
Jerry P. Himmel Irrevocable Trust No. 1, (Federal Home Loan
Bank of Dallas LOC), 2.450%, 8/4/2022
|
3,935,000
|
|
7,365,000
|
|
Millbrook, AL Redevelopment Authority, RAM Millbrook
Hospitality LLC Project, Series 2017, (Federal Home Loan
Bank of New York LOC), 2.500%, 8/4/2022
|
7,365,000
|
Annual Shareholder Report
5
|
Principal
Amount or
Shares
|
|
|
Value
|
|
|
2
|
NOTES-VARIABLE—continued
|
|
|
|
|
Government Agency—continued
|
|
|
$6,060,000
|
|
Roberts Insurance Trusts, LLC, (Federal Home Loan
Bank of Des Moines LOC), 2.450%, 8/4/2022
|
$6,060,000
|
|
|
|
TOTAL
|
17,360,000
|
|
|
|
TOTAL NOTES-VARIABLE
|
1,591,028,103
|
|
|
|
CERTIFICATES OF DEPOSIT—12.5%
|
|
|
|
|
Banking—12.5%
|
|
|
45,000,000
|
|
Canadian Imperial Bank of Commerce, 0.240%—0.350%,
10/12/2022 - 11/2/2022
|
45,000,000
|
|
75,000,000
|
|
Credit Agricole Corporate and Investment Bank,
1.420%—1.730%, 8/2/2022 - 8/18/2022
|
75,000,000
|
|
135,000,000
|
|
Credit Agricole Corporate and Investment Bank,
1.420%—1.730%, 8/2/2022 - 8/18/2022
|
135,000,000
|
|
20,000,000
|
|
DNB Bank ASA, 1.100%, 9/6/2022
|
20,000,000
|
|
50,000,000
|
|
Landesbank Hessen-Thuringen, 1.730%, 8/2/2022
|
50,000,000
|
|
75,000,000
|
|
Sumitomo Mitsui Trust Bank Ltd., 1.450%, 8/17/2022
|
75,000,000
|
|
30,000,000
|
|
Toronto Dominion Bank, 3.750%—4.070%, 6/15/2023 - 7/18/2023
|
30,000,000
|
|
115,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 0.270%—3.000%,
10/13/2022 - 6/9/2023
|
115,000,000
|
|
|
|
TOTAL CERTIFICATES OF DEPOSIT
|
545,000,000
|
|
|
|
OTHER REPURCHASE AGREEMENTS—11.4%
|
|
|
46,000,000
|
|
Repurchase agreement, 2.40% dated 7/29/2022 under which BNP
Paribas SA will repurchase the securities provided as collateral
for $50,010,000 on 8/1/2022. The securities provided as
collateral at the end of the period held with BNY Mellon, tri-party
agent, were U.S. government agency and U.S. Treasury with
various maturities to 1/1/2999 and the market value of those
underlying securities was $51,010,200.
|
46,000,000
|
|
50,000,000
|
|
Repurchase agreement, 2.39% dated 7/29/2022 under which
BofA Securities, Inc will repurchase the securities provided as
collateral for $50,009,958 on 8/1/2022. The securities provided
as collateral at the end of the period held with BNY Mellon,
tri-party agent, were corporate bonds and medium-term notes
with various maturities to 1/1/2999 and the market value of those
underlying securities was $51,010,279.
|
50,000,000
|
|
75,000,000
|
|
Repurchase agreement, 2.35% dated 7/29/2022 under which
BofA Securities, Inc will repurchase the securities provided as
collateral for $125,024,479 on 8/1/2022. The securities provided
as collateral at the end of the period held with BNY Mellon,
tri-party agent, were corporate bonds and medium-term notes
with various maturities to 11/2/2022 and the market value of
those underlying securities was $127,500,001.
|
75,000,000
|
Annual Shareholder Report
6
|
Principal
Amount or
Shares
|
|
|
Value
|
|
|
|
OTHER REPURCHASE AGREEMENTS—continued
|
|
|
$125,000,000
|
|
Repurchase agreement, 2.45% dated 7/29/2022 under which
Credit Suisse Securities (USA) LLC will repurchase the securities
provided as collateral for $150,071,458 on 8/5/2022. The
securities provided as collateral at the end of the period held
with BNY Mellon, tri-party agent, were asset-backed securities
with various maturities to 9/27/2060 and the market value of
those underlying securities was $153,031,238.
|
$125,000,000
|
|
60,000,000
|
|
Repurchase agreement, 2.42% dated 7/29/2022 under which
HSBC Securities (USA), Inc will repurchase the securities provided
as collateral for $60,012,100 on 8/1/2022. The securities
provided as collateral at the end of the period held with BNY
Mellon, tri-party agent, were corporate bonds, medium-term
notes and sovereign debt securities with various maturities to
2/15/2048 and the market value of those underlying securities
was $61,200,063.
|
60,000,000
|
|
20,000,000
|
|
Repurchase agreement, 2.14% dated 2/3/2022 under which
Mizuho Securities USA LLC will repurchase the securities
provided as collateral for $70,902,961 on 9/8/2022. The
securities provided as collateral at the end of the period held
with BNY Mellon, tri-party agent, were asset-backed securities
with various maturities to 11/25/2050 and the market value of
those underlying securities was $71,675,882.
|
20,000,000
|
|
25,000,000
|
|
Repurchase agreement, 2.91% dated 4/27/2021 under which
Wells Fargo Securities LLC will repurchase the securities provided
as collateral for $26,075,083 on 10/11/2022. The securities
provided as collateral at the end of the period held with BNY
Mellon, tri-party agent, were convertible bonds with various
maturities to 6/8/2023 and the market value of those underlying
securities was $25,539,940.
|
25,000,000
|
|
25,000,000
|
|
Repurchase agreement, 3.20% dated 2/3/2022 under which Wells
Fargo Securities LLC will repurchase the securities provided as
collateral for $25,575,556 on 10/20/2022. The securities provided
as collateral at the end of the period held with BNY Mellon,
tri-party agent, were convertible bonds with various maturities to
3/4/2026 and the market value of those underlying securities
was $25,522,667.
|
25,000,000
|
|
25,000,000
|
|
Repurchase agreement, 2.63% dated 6/24/2022 under which
Wells Fargo Securities LLC will repurchase the securities provided
as collateral for $25,164,375 on 9/22/2022. The securities
provided as collateral at the end of the period held with BNY
Mellon, tri-party agent, were convertible bonds with various
maturities to 2/15/2027 and the market value of those underlying
securities was $25,571,105.
|
25,000,000
|
Annual Shareholder Report
7
|
Principal
Amount or
Shares
|
|
|
Value
|
|
|
|
OTHER REPURCHASE AGREEMENTS—continued
|
|
|
$50,000,000
|
|
Repurchase agreement, 3.12% dated 3/23/2022 under which
Wells Fargo Securities LLC will repurchase the securities provided
as collateral for $50,884,000 on 10/13/2022. The securities
provided as collateral at the end of the period held with BNY
Mellon, tri-party agent, were convertible bonds with various
maturities to 1/1/2999 and the market value of those underlying
securities was $51,075,141.
|
$50,000,000
|
|
|
|
TOTAL OTHER REPURCHASE AGREEMENTS
|
501,000,000
|
|
|
|
REPURCHASE AGREEMENTS—6.3%
|
|
|
50,000,000
|
|
Interest in $200,000,000 joint repurchase agreement, 2.30%
dated 7/29/2022 under which BMO Harris Bank will repurchase
the securities provided as collateral for $200,038,333 on
8/1/2022. The securities provided as collateral at the end of the
period held with BNY Mellon, tri-party agent, were
U.S. government agency with various maturities to 5/1/2032 and
the market value of those underlying securities
was $205,616,343.
|
50,000,000
|
|
75,000,000
|
|
Interest in $250,000,000 joint repurchase agreement, 2.305%
dated 7/29/2022 under which ABN Amro Bank N.V. will
repurchase the securities provided as collateral for $250,048,021
on 8/1/2022. The securities provided as collateral at the end of
the period held with BNY Mellon, tri-party agent, were
U.S. government agency and U.S. Treasury with various maturities
to 6/1/2052 and the market value of those underlying securities
was $255,130,159.
|
75,000,000
|
|
150,000,000
|
|
Interest in $600,000,000 joint repurchase agreement, 2.25%
dated 7/29/2022 under which Natixis Financial Products LLC will
repurchase the securities provided as collateral for $600,112,500
on 8/1/2022. The securities provided as collateral at the end of
the period held with BNY Mellon, tri-party agent, were
U.S. Treasury with various maturities to 5/15/2052 and the market
value of those underlying securities was $612,114,799.
|
150,000,000
|
|
|
|
TOTAL REPURCHASE AGREEMENTS
|
275,000,000
|
|
|
|
U.S. TREASURY—0.2%
|
|
|
10,000,000
|
|
United States Treasury Floating Rate Notes, 2.570% (91-day T-Bill
+0.034%), 8/2/2022
|
10,000,604
|
|
|
|
INVESTMENT COMPANY—0.6%
|
|
|
26,997,300
|
|
Federated Hermes Institutional Prime Value Obligations Fund,
Institutional Shares, 1.84%3
|
27,000,103
|
|
|
|
TOTAL INVESTMENT IN SECURITIES—100.0%
(AT AMORTIZED COST)4
|
4,374,212,578
|
|
|
|
OTHER ASSETS AND LIABILITIES—0.0%5
|
1,700,558
|
|
|
|
TOTAL NET ASSETS—100%
|
$4,375,913,136
|
Securities that are subject to the federal alternative minimum tax (AMT) represent 0.9% of the Fund’s portfolio as calculated based upon total market value (unaudited).
Annual Shareholder Report
8
Affiliated fund holdings are investment companies which are managed by the Adviser or an affiliate of the Adviser. Transactions with affiliated fund holdings during the period ended July 31, 2022, were as follows:
|
|
Federated Hermes
Institutional
Prime Value
Obligations Fund,
Institutional Shares
|
|
Value as of 7/31/2021
|
$27,000,102
|
|
Purchases at Cost
|
$1,995,100
|
|
Proceeds from Sales
|
$(1,995,099)
|
|
Change in Unrealized Appreciation/Depreciation
|
$—
|
|
Net Realized Gain/(Loss)
|
$—
|
|
Value as of 7/31/2022
|
$27,000,103
|
|
Shares Held as of 7/31/2022
|
26,997,300
|
|
Dividend Income
|
$96,533
|
1
Discount rate at time of purchase for discount issues, or the coupon for interest-bearing issues.
2
Floating/variable note with current rate and current maturity or next reset date shown. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions. These securities do not indicate a reference rate and spread in their description above.
3
7-day net yield.
4
Also represents cost of investments for federal tax purposes.
5
Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.
Note: The categories of investments are shown as a percentage of total net assets at July 31, 2022.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Level 1—quoted prices in active markets for identical securities.
Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Also includes securities valued at amortized cost.
Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
Annual Shareholder Report
9
The following is a summary of the inputs used, as of July 31, 2022, in valuing the Fund’s assets carried at fair value:
|
Valuation Inputs
|
|
|
|
|
|
|
Level 1—
Quoted
Prices
|
Level 2—
Other
Significant
Observable
Inputs
|
Level 3—
Significant
Unobservable
Inputs
|
Total
|
|
Debt Securities:
|
|
|
|
|
|
Commercial Paper
|
$—
|
$1,425,183,768
|
$—
|
$1,425,183,768
|
|
Certificates of Deposit
|
—
|
545,000,000
|
—
|
545,000,000
|
|
Notes-Variable
|
—
|
1,591,028,103
|
—
|
1,591,028,103
|
|
Other Repurchase Agreements
|
—
|
501,000,000
|
—
|
501,000,000
|
|
Repurchase Agreements
|
—
|
275,000,000
|
—
|
275,000,000
|
|
U.S. Treasury
|
—
|
10,000,604
|
—
|
10,000,604
|
|
Investment Company
|
27,000,103
|
—
|
—
|
27,000,103
|
|
TOTAL SECURITIES
|
$27,000,103
|
$4,347,212,475
|
$—
|
$4,374,212,578
|
The following acronym(s) are used throughout this portfolio:
COL—Collateralized
GTD—Guaranteed
IDA—Industrial Development Authority
LIQ—Liquidity Agreement
LOC—Letter of Credit
SOFR—Secured Overnight Financing Rate
VRDNs—Variable Rate Demand Notes
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
10
Financial Highlights
(For a Share Outstanding Throughout Each Period)
|
Year Ended July 31
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income from Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.001
|
0.0001
|
0.007
|
0.016
|
0.007
|
|
Net realized gain (loss)
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
|
TOTAL FROM
INVESTMENT OPERATIONS
|
0.001
|
0.0001
|
0.007
|
0.016
|
0.007
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net income
|
(0.001)
|
(0.000)1
|
(0.007)
|
(0.016)
|
(0.007)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
|
TOTAL DISTRIBUTIONS
|
(0.001)
|
(0.000)1
|
(0.007)
|
(0.016)
|
(0.007)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.11%
|
0.01%
|
0.68%
|
1.58%
|
0.75%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.45%
|
0.23%4
|
0.94%4
|
1.02%4
|
1.02%4
|
|
Net investment income
|
0.11%
|
0.01%
|
0.65%
|
1.58%
|
0.70%
|
|
Expense waiver/reimbursement5
|
0.76%
|
0.97%
|
0.28%
|
0.19%
|
0.19%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$4,375,913
|
$4,295,924
|
$4,312,748
|
$4,030,191
|
$4,220,884
|
1
Represents less than $0.001.
2
Based on net asset value.
3
Amount does not reflect net expenses incurred by investment companies in which the Fund may invest.
4
The net expense ratio is calculated without reduction for expenses offset arrangements. The net expense ratio was 0.23%, 0.94%, 1.02%, and 1.02% for the years ended July 31, 2021, 2020, 2019, and 2018, respectively, after taking into account these expense reductions.
5
This expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense waiver/reimbursement recorded by investment companies in which the Fund may invest.
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
11
Statement of Assets and Liabilities
July 31, 2022
July 31, 2022
|
Assets:
|
|
|
|
Investment in securities, at value including $27,000,103 of
investment in an affiliated holding*
|
$3,598,212,578
|
|
|
Investments in other repurchase agreements and
repurchase agreements
|
776,000,000
|
|
|
Investment in securities, at amortized cost and fair value
|
|
$4,374,212,578
|
|
Income receivable
|
|
4,826,207
|
|
Cash
|
|
221,803
|
|
Income receivable from affiliated holding
|
|
36,124
|
|
Receivable for shares sold
|
|
102
|
|
TOTAL ASSETS
|
|
4,379,296,814
|
|
Liabilities:
|
|
|
|
Payable for shares redeemed
|
147
|
|
|
Payable for distribution services fee (Note 5)
|
1,690,203
|
|
|
Payable for other service fees (Notes 2 and 5)
|
1,068,491
|
|
|
Payable for transfer agent fee
|
365,086
|
|
|
Payable for custodian fees
|
76,941
|
|
|
Payable for investment adviser fee (Note 5)
|
37,440
|
|
|
Payable for administrative fee (Note 5)
|
28,050
|
|
|
Payable for Directors’/Trustees’ fees (Note 5)
|
1,140
|
|
|
Accrued expenses (Note 5)
|
116,180
|
|
|
TOTAL LIABILITIES
|
|
3,383,678
|
|
Net assets for 4,375,884,152 shares outstanding
|
|
$4,375,913,136
|
|
Net Assets Consists of:
|
|
|
|
Paid-in capital
|
|
$4,375,871,595
|
|
Total distributable earnings (loss)
|
|
41,541
|
|
TOTAL NET ASSETS
|
|
$4,375,913,136
|
|
Net Asset Value, Offering Price and Redemption Proceeds
Per Share:
|
|
|
|
$4,375,913,136 ÷ 4,375,884,152 shares outstanding, no par value,
unlimited shares authorized
|
|
$1.00
|
*
See information listed after the Fund’s Portfolio of Investments.
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
12
Statement of Operations
Year Ended July 31, 2022
Year Ended July 31, 2022
|
Investment Income:
|
|
|
|
|
Interest
|
|
|
$24,541,421
|
|
Dividends received from an affiliated holding*
|
|
|
96,533
|
|
TOTAL INCOME
|
|
|
24,637,954
|
|
Expenses:
|
|
|
|
|
Investment adviser fee (Note 5)
|
|
$8,724,094
|
|
|
Administrative fee (Note 5)
|
|
3,414,678
|
|
|
Custodian fees
|
|
154,692
|
|
|
Transfer agent fees (Note 2)
|
|
4,377,664
|
|
|
Directors’/Trustees’ fees (Note 5)
|
|
24,236
|
|
|
Auditing fees
|
|
22,400
|
|
|
Legal fees
|
|
7,358
|
|
|
Distribution services fee (Note 5)
|
|
23,991,259
|
|
|
Other service fees (Notes 2 and 5)
|
|
10,905,118
|
|
|
Portfolio accounting fees
|
|
183,117
|
|
|
Share registration costs
|
|
536,904
|
|
|
Printing and postage
|
|
300,605
|
|
|
Miscellaneous (Note 5)
|
|
37,133
|
|
|
TOTAL EXPENSES
|
|
52,679,258
|
|
|
Waivers and Reimbursements:
|
|
|
|
|
Waivers/reimbursements of investment adviser fee
(Note 5)
|
$(4,950,899)
|
|
|
|
Waivers/reimbursements of other operating expenses
(Notes 2 and 5)
|
(28,086,359)
|
|
|
|
TOTAL WAIVERS AND REIMBURSEMENTS
|
|
(33,037,258)
|
|
|
Net expenses
|
|
|
19,642,000
|
|
Net investment income
|
|
|
4,995,954
|
|
Net realized gain on investments
|
|
|
16,180
|
|
Change in net assets resulting from operations
|
|
|
$5,012,134
|
*
See information listed after the Fund’s Portfolio of Investments.
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
13
Statement of Changes in Net Assets
|
Year Ended July 31
|
2022
|
2021
|
|
Increase (Decrease) in Net Assets
|
|
|
|
Operations:
|
|
|
|
Net investment income
|
$4,995,954
|
$449,256
|
|
Net realized gain
|
16,180
|
7,910
|
|
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
|
5,012,134
|
457,166
|
|
Distributions to Shareholders
|
(4,972,760)
|
(446,155)
|
|
Share Transactions:
|
|
|
|
Proceeds from sale of shares
|
1,758,477,348
|
1,667,943,463
|
|
Net asset value of shares issued to shareholders in payment of
distributions declared
|
4,899,871
|
436,441
|
|
Cost of shares redeemed
|
(1,683,427,684)
|
(1,685,214,367)
|
|
CHANGE IN NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
|
79,949,535
|
(16,834,463)
|
|
Change in net assets
|
79,988,909
|
(16,823,452)
|
|
Net Assets:
|
|
|
|
Beginning of period
|
4,295,924,227
|
4,312,747,679
|
|
End of period
|
$4,375,913,136
|
$4,295,924,227
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
14
Notes to Financial Statements
July 31, 2022
1. ORGANIZATION
Federated Hermes Money Market Obligations Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end, management investment company. The Trust consists of 16 portfolios. The financial statements included herein are only those of Federated Hermes Capital Reserves Fund (the “Fund”), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder’s interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The investment objective of the Fund is to provide current income consistent with stability of principal and liquidity.
The Fund operates as a retail money market fund. As a retail money market fund, the Fund: (1) will generally continue to use amortized cost to value its portfolio securities and transact at a stable $1.00 net asset value (NAV); (2) has adopted policies and procedures reasonably designed to limit investments in the Fund to accounts beneficially owned by natural persons as required for a retail money market fund by Rule 2a-7 under the Act; and (3) has adopted policies and procedures to impose liquidity fees on redemptions and/or temporary redemption gates in the event that the Fund’s weekly liquid assets were to fall below a designated threshold, if the Fund’s Board of Trustees (the “Trustees”) determine such liquidity fees or redemption gates are in the best interest of the Fund.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
Most securities are valued at amortized cost. Under the amortized cost valuation method, an investment is valued initially at its cost as determined in accordance with GAAP. The Fund then adjusts the amount of interest income accrued each day over the term of the investment to account for any difference between the initial cost of the investment and the amount payable at its maturity. If amortized cost is determined not to approximate fair value, the value of the portfolio securities will be determined in accordance with the procedures described below. There can be no assurance that the Fund could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines its NAV per share, and the actual value obtained could be materially different.
Annual Shareholder Report
15
The Trustees have ultimate responsibility for determining the fair value of investments. The Trustees have appointed a valuation committee (“Valuation Committee”) comprised of officers of the Fund, Federated Investment Management Company (the “Adviser”) and certain of the Adviser’s affiliated companies to assist in determining fair value of securities and in overseeing the comparison of amortized cost to market-based value. The Trustees have also authorized the use of pricing services recommended by the Valuation Committee to provide fair value evaluations of the current value of certain investments for purposes of monitoring the relationship of market-based value and amortized cost. The Valuation Committee employs various methods for reviewing third-party pricing-service evaluations including periodic reviews of third-party pricing services’ policies, procedures and valuation methods (including key inputs and assumptions) and review of price challenges by the Adviser based on recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee determines the fair value of the investment in accordance with procedures adopted by the Trustees. The Trustees periodically review and approve the fair valuations made by the Valuation Committee and any changes made to the procedures.
Repurchase Agreements
The Fund may invest in repurchase agreements for short-term liquidity purposes. It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund’s custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control” as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.
The insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.
The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.
Repurchase agreements are subject to Master Netting Agreements which are agreements between the Fund and its counterparties that provide for the net settlement of all transactions and collateral with the Fund, through a single payment, in the event of default or termination. Amounts presented on the Portfolio of Investments and
Annual Shareholder Report
16
Statement of Assets and Liabilities are not net settlement amounts but gross. As indicated above, the cash or securities to be repurchased, as shown on the Portfolio of Investments, exceeds the repurchase price to be paid under the agreements reducing the net settlement amount to zero.
Investment Income, Gains and Losses, Expenses and Distributions
Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified cost basis. Interest income and expenses are accrued daily. Distributions to shareholders are recorded on the ex-dividend date. Distributions of net investment income, if any, are declared daily and paid monthly. Amortization/accretion of premium and discount is included in investment income. The detail of the total fund expense waivers and reimbursement of $33,037,258 is disclosed in various locations in this Note 2 and Note 5.
Other Service Fees and Transfer Agent Fees
The Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund to unaffiliated financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for other service fees. In addition, unaffiliated third-party financial intermediaries may waive other service fees. This waiver can be modified or terminated at any time. For the year ended July 31, 2022, unaffiliated third-party financial intermediaries waived $8,394,324 of other service fees and $2,143,765 of transfer agent fees.
Federal Taxes
It is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code (the “Code”) and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. As of and during the year ended July 31, 2022, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2022, tax years 2019 through 2022 remain subject to examination by the Fund’s major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.
When-Issued and Delayed-Delivery Transactions
The Fund may engage in when-issued or delayed-delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed-delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
Restricted Securities
The Fund may purchase securities which are considered restricted. Restricted securities are securities that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) are subject to contractual restrictions on public sales. In some cases, when a security cannot be offered for public sale without first being
Annual Shareholder Report
17
registered, the issuer of the restricted security has agreed to register such securities for resale, at the issuer’s expense, either upon demand by the Fund or in connection with another registered offering of the securities. Many such restricted securities may be resold in the secondary market in transactions exempt from registration. Restricted securities may be determined to be liquid under criteria established by the Trustees. The Fund will not incur any registration costs upon such resales. Restricted securities are valued at amortized cost in accordance with Rule 2a-7 under the Act.
Other
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ materially from those estimated. The Fund applies investment company accounting and reporting guidance.
3. SHARES OF BENEFICIAL INTEREST
The following table summarizes share activity:
|
Year Ended July 31
|
2022
|
2021
|
|
Shares sold
|
1,758,477,348
|
1,667,943,463
|
|
Shares issued to shareholders in payment of distributions declared
|
4,899,871
|
436,441
|
|
Shares redeemed
|
(1,683,427,684)
|
(1,685,214,367)
|
|
NET CHANGE RESULTING FROM FUND SHARE TRANSACTIONS
|
79,949,535
|
(16,834,463)
|
4. FEDERAL TAX INFORMATION
The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2022 and 2021, was as follows:
|
|
2022
|
2021
|
|
Ordinary Income
|
$4,972,760
|
$446,155
|
As of July 31, 2022, the components of distributable earnings on a tax basis were as follows:
|
Undistributed ordinary income
|
$37,957
|
|
Undistributed long term capital gains
|
$3,584
|
The Fund used capital loss carryforwards of $934 to offset capital gains realized during the year ended July 31, 2022.
Annual Shareholder Report
18
5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.20% of the Fund’s average daily net assets. Subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund. For the year ended July 31, 2022, the Adviser voluntarily waived $4,907,057 of its fee and voluntarily reimbursed $323,956 of transfer agent fees.
The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated investment companies. For the year ended July 31, 2022, the Adviser reimbursed $43,842.
Administrative Fee
Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated Hermes Funds subject to a fee under the Administrative Services Agreement. The fee paid to FAS is based on the average daily net assets of the Investment Complex as specified below:
|
Administrative Fee
|
Average Daily Net Assets
of the Investment Complex
|
|
0.100%
|
on assets up to $50 billion
|
|
0.075%
|
on assets over $50 billion
|
Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2022, the annualized fee paid to FAS was 0.078% of average daily net assets of the Fund.
In addition, FAS may charge certain out-of-pocket expenses to the Fund.
Distribution Services Fee
The Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund’s shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at 0.55% of average daily net assets, annually, to compensate FSC. Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2022, FSC waived $17,224,314 of its fees. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares.
Other Service Fees
For the year ended July 31, 2022, FSSC received $323 of the other service fees disclosed in Note 2.
Annual Shareholder Report
19
Expense Limitation
Due to the possibility of changes in market conditions and other factors, there can be no assurance that the level of waiver/reimbursement/reduction of Fund expenses reflected in the financial highlights will be maintained in the future. However, the Adviser and certain of its affiliates (which may include FSC, FAS and FSSC) on their own initiative have agreed to waive certain amounts of their respective fees and/or reimburse expenses. Total annual fund operating expenses (as shown in the financial highlights, excluding interest expense, extraordinary expenses and proxy-related expenses paid by the Fund, if any) and the Fund’s share of the fees and expenses of the investments in affiliated funds paid by the Fund (after the voluntary waivers and reimbursements) will not exceed 1.02% (the “Fee Limit”), up to but not including the later of (the “Termination Date”): (a) October 1, 2023; or (b) the date of the Fund’s next effective Prospectus. While the Adviser and its applicable affiliates currently do not anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or the Fee Limit increased prior to the Termination Date with the agreement of the Trustees.
Directors’/Trustees’ and Miscellaneous Fees
Certain Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate payment, Independent Directors’/Trustees’ fees and certain expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses are paid by an affiliate of the Adviser which in due course are reimbursed by the Fund. These expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses may be included in Accrued and Miscellaneous Expenses on the Statement of Assets and Liabilities and Statement of Operations, respectively.
6. CONCENTRATION OF RISK
A substantial portion of the Fund’s portfolio may be comprised of obligations of banks. As a result, the Fund may be more susceptible to any economic, business, political or other developments which generally affect these entities.
7. LINE OF CREDIT
The Fund participates with certain other Federated Hermes Funds, on a several basis, in an up to $500,000,000 unsecured, 364-day, committed, revolving line of credit (LOC) agreement dated June 22, 2022. The LOC was made available to temporarily finance the repurchase or redemption of shares of the Fund, failed trades, payment of dividends, settlement of trades and for other short-term, temporary or emergency general business purposes. The Fund cannot borrow under the LOC if an inter-fund loan is outstanding. The Fund’s ability to borrow under the LOC also is subject to the limitations of the Act and various conditions precedent that must be satisfied before the Fund can borrow. Loans under the LOC are charged interest at a fluctuating rate per annum equal to (a) the highest, on any day, of (i) the federal funds effective rate, (ii) the published secured overnight financing rate plus an assigned percentage and (iii) 0.0%, plus (b) a margin. Any fund eligible to borrow under the LOC pays its pro rata share of a commitment fee based on the amount of the lenders’ commitment that has not been utilized, quarterly in arrears and at maturity. As of July 31, 2022, the Fund had no outstanding loans. During the year ended July 31, 2022, the Fund did not utilize the LOC.
Annual Shareholder Report
20
8. INTERFUND LENDING
Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other funds advised by subsidiaries of Federated Hermes, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating affiliated funds. As of July 31, 2022, there were no outstanding loans. During the year ended July 31, 2022, the program was not utilized.
9. INDEMNIFICATIONS
Under the Fund’s organizational documents, its Officers and Directors/Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund (other than liabilities arising out of their willful misfeasance, bad faith, gross negligence or reckless disregard of their duties to the Fund). In addition, in the normal course of business, the Fund provides certain indemnifications under arrangements with third parties. Typically, obligations to indemnify a third party arise in the context of an arrangement entered into by the Fund under which the Fund agrees to indemnify such third party for certain liabilities arising out of actions taken pursuant to the arrangement, provided the third party’s actions are not deemed to have breached an agreed-upon standard of care (such as willful misfeasance, bad faith, gross negligence or reckless disregard of their duties under the contract). The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet arisen. The Fund does not anticipate any material claims or losses pursuant to these arrangements at this time, and accordingly expects the risk of loss to be remote.
10. OTHER MATTERS
An outbreak of respiratory disease caused by a novel coronavirus was first detected in China in late 2019 and subsequently spread globally. As of the date of the issuance of these financial statements, this coronavirus has resulted in closing borders, enhanced health screenings, disruptions to healthcare service preparation and delivery, quarantines, cancellations, and disruptions to supply chains, workflow operations and consumer activity, as well as general concern and uncertainty. The impact of this coronavirus may continue for an extended period of time and has resulted in substantial economic volatility. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could continue to negatively affect the worldwide economy, as well as the economies of individual countries, individual companies (including certain Fund service providers and issuers of the Fund’s investments) and the markets in general in significant and unforeseen ways. Any such impact could adversely affect the Fund’s performance.
Annual Shareholder Report
21
Report of Independent Registered Public Accounting Firm
TO THE board of trustees OF Federated Hermes Money Market Obligations trust and shareholders of Federated Hermes Capital Reserves Fund:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of Federated Hermes Capital Reserves Fund (the “Fund”) (one of the portfolios constituting Federated Hermes Money Market Obligations Trust (the “Trust”)), including the portfolio of investments, as of July 31, 2022, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the portfolios constituting Federated Hermes Money Market Obligations Trust) at July 31, 2022, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
Annual Shareholder Report
22
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of July 31, 2022, by correspondence with the custodian and others or by other appropriate auditing procedures where replies from others were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more Federated Hermes investment companies since 1979.
Boston, Massachusetts
September 23, 2022
September 23, 2022
Annual Shareholder Report
23
Shareholder Expense Example (unaudited)
As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or other services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2022 to July 31, 2022.
ACTUAL EXPENSES
The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses attributable to your investment during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Annual Shareholder Report
24
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
|
|
Beginning
Account Value
2/1/2022
|
Ending
Account Value
7/31/2022
|
Expenses Paid
During Period1
|
|
Actual
|
$1,000
|
$1,001.10
|
$3.622
|
|
Hypothetical (assuming a 5% return
before expenses)
|
$1,000
|
$1,021.17
|
$3.662
|
1
Expenses are equal to the Fund’s annualized net expense ratio of 0.73%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half-year period).
2
Actual and Hypothetical expenses paid during the period utilizing the Fund’s current Fee Limit of 1.02% (as reflected in the Notes to Financial Statements, Note 5 under Expense Limitation), multiplied by the average account value over the period, multiplied by 181/365 (to reflect expenses paid as if they had been in effect throughout the most recent one-half-year period) would be $5.06 and $5.11, respectively.
Annual Shareholder Report
25
Board of Trustees and Trust Officers
The Board of Trustees is responsible for managing the Trust’s business affairs and for exercising all the Trust’s powers except those reserved for the shareholders. The following tables give information about each Trustee and the senior officers of the Fund. Where required, the tables separately list Trustees who are “interested persons” of the Fund (i.e., “Interested” Trustees) and those who are not (i.e., “Independent” Trustees). Unless otherwise noted, the address of each person listed is 1001 Liberty Avenue, Pittsburgh, PA 15222-3779. The address of all Independent Trustees listed is 4000 Ericsson Drive, Warrendale, PA 15086-7561; Attention: Mutual Fund Board. As of December 31, 2021, the Trust comprised 16 portfolio(s), and the Federated Hermes Fund Family consisted of 33 investment companies (comprising 102 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Trustee oversees all portfolios in the Federated Hermes Fund Family and serves for an indefinite term. The Fund’s Statement of Additional Information includes additional information about Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400, Option #4.
Interested TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
J. Christopher Donahue*
Birth Date: April 11, 1949
President and Trustee
Indefinite Term
Began serving: April 1989
|
Principal Occupations: Principal Executive Officer and President of
certain of the Funds in the Federated Hermes Fund Family; Director or
Trustee of the Funds in the Federated Hermes Fund Family; President,
Chief Executive Officer and Director, Federated Hermes, Inc.;
Chairman and Trustee, Federated Investment Management Company;
Trustee, Federated Investment Counseling; Chairman and Director,
Federated Global Investment Management Corp.; Chairman and
Trustee, Federated Equity Management Company of Pennsylvania;
Trustee, Federated Shareholder Services Company; Director,
Federated Services Company.
Previous Positions: President, Federated Investment Counseling;
President and Chief Executive Officer, Federated Investment
Management Company, Federated Global Investment Management
Corp. and Passport Research, Ltd; Chairman, Passport Research, Ltd.
|
Annual Shareholder Report
26
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
Thomas R. Donahue*
Birth Date: October 20, 1958
Trustee
Indefinite Term
Began serving: May 2016
|
Principal Occupations: Director or Trustee of certain of the funds in
the Federated Hermes Fund Family; Chief Financial Officer, Treasurer,
Vice President and Assistant Secretary, Federated Hermes, Inc.;
Chairman and Trustee, Federated Administrative Services; Chairman
and Director, Federated Administrative Services, Inc.; Trustee and
Treasurer, Federated Advisory Services Company; Director or Trustee
and Treasurer, Federated Equity Management Company of
Pennsylvania, Federated Global Investment Management Corp.,
Federated Investment Counseling, and Federated Investment
Management Company; Director, MDTA LLC; Director, Executive Vice
President and Assistant Secretary, Federated Securities Corp.;
Director or Trustee and Chairman, Federated Services Company and
Federated Shareholder Services Company; and Director and
President, FII Holdings, Inc.
Previous Positions: Director, Federated Hermes, Inc.; Assistant
Secretary, Federated Investment Management Company, Federated
Global Investment Management Company and Passport Research,
LTD; Treasurer, Passport Research, LTD; Executive Vice President,
Federated Securities Corp.; and Treasurer, FII Holdings, Inc.
|
*
Family relationships and reasons for “interested” status: J. Christopher Donahue and Thomas R. Donahue are brothers. Both are “interested” due to their beneficial ownership of shares of Federated Hermes, Inc. and the positions they hold with Federated Hermes, Inc. and its subsidiaries.
Annual Shareholder Report
27
INDEPENDENT TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
John T. Collins
Birth Date: January 24, 1947
Trustee
Indefinite Term
Began serving:
September 2013
|
Principal Occupations: Director or Trustee, and Chair of the Board
of Directors or Trustees, of the Federated Hermes Fund Family;
formerly, Chairman and CEO, The Collins Group, Inc. (a private equity
firm) (Retired).
Other Directorships Held: Director, KLX Energy Services Holdings,
Inc. (oilfield services); former Director of KLX Corp. (aerospace).
Qualifications: Mr. Collins has served in several business and financial
management roles and directorship positions throughout his career.
Mr. Collins previously served as Chairman and CEO of The Collins
Group, Inc. (a private equity firm) and as a Director of KLX Corp.
Mr. Collins serves as Chairman Emeriti, Bentley University. Mr. Collins
previously served as Director and Audit Committee Member, Bank of
America Corp.; Director, FleetBoston Financial Corp.; and Director,
Beth Israel Deaconess Medical Center (Harvard University
Affiliate Hospital).
|
|
G. Thomas Hough
Birth Date: February 28, 1955
Trustee
Indefinite Term
Began serving: August 2015
|
Principal Occupations: Director or Trustee, Chair of the Audit
Committee of the Federated Hermes Fund Family; formerly, Vice
Chair, Ernst & Young LLP (public accounting firm) (Retired).
Other Directorships Held: Director, Chair of the Audit Committee,
Equifax, Inc.; Lead Director, Member of the Audit and Nominating and
Corporate Governance Committees, Haverty Furniture Companies,
Inc.; formerly, Director, Member of Governance and Compensation
Committees, Publix Super Markets, Inc.
Qualifications: Mr. Hough has served in accounting, business
management and directorship positions throughout his career.
Mr. Hough most recently held the position of Americas Vice Chair of
Assurance with Ernst & Young LLP (public accounting firm). Mr. Hough
serves on the President’s Cabinet and Business School Board of
Visitors for the University of Alabama. Mr. Hough previously served on
the Business School Board of Visitors for Wake Forest University, and
he previously served as an Executive Committee member of the
United States Golf Association.
|
Annual Shareholder Report
28
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
Maureen Lally-Green
Birth Date: July 5, 1949
Trustee
Indefinite Term
Began serving: August 2009
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Adjunct Professor Emerita of Law, Duquesne University
School of Law; formerly, Dean of the Duquesne University School of
Law and Professor of Law and Interim Dean of the Duquesne
University School of Law; formerly, Associate General Secretary and
Director, Office of Church Relations, Diocese of Pittsburgh.
Other Directorships Held: Director, CNX Resources Corporation
(formerly known as CONSOL Energy Inc.).
Qualifications: Judge Lally-Green has served in various legal and
business roles and directorship positions throughout her career. Judge
Lally-Green previously held the position of Dean of the School of Law
of Duquesne University (as well as Interim Dean). Judge Lally-Green
previously served as a member of the Superior Court of Pennsylvania
and as a Professor of Law, Duquesne University School of Law. Judge
Lally-Green was appointed by the Supreme Court of Pennsylvania to
serve on the Supreme Court’s Board of Continuing Judicial Education
and the Supreme Court’s Appellate Court Procedural Rules
Committee. Judge Lally-Green also currently holds the positions on
not for profit or for profit boards of directors as follows: Director
and Chair, UPMC Mercy Hospital; Regent, Saint Vincent Seminary;
Member, Pennsylvania State Board of Education (public); Director,
Catholic Charities, Pittsburgh; and Director CNX Resources
Corporation (formerly known as CONSOL Energy Inc.). Judge
Lally-Green has held the positions of: Director, Auberle; Director,
Epilepsy Foundation of Western and Central Pennsylvania; Director,
Ireland Institute of Pittsburgh; Director, Saint Thomas More Society;
Director and Chair, Catholic High Schools of the Diocese of
Pittsburgh, Inc.; Director, Pennsylvania Bar Institute; Director,
St. Vincent College; Director and Chair, North Catholic High
School, Inc.; Director and Vice Chair, Our Campaign for the Church
Alive!, Inc.; and Director, Saint Francis University.
|
|
Thomas M. O’Neill
Birth Date: June 14, 1951
Trustee
Indefinite Term
Began serving: August 2006
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Sole Proprietor, Navigator Management Company
(investment and strategic consulting).
Other Directorships Held: None.
Qualifications: Mr. O’Neill has served in several business, mutual fund
and financial management roles and directorship positions throughout
his career. Mr. O’Neill serves as Director, Medicines for Humanity.
Mr. O’Neill previously served as Chief Executive Officer and President,
Managing Director and Chief Investment Officer, Fleet Investment
Advisors; President and Chief Executive Officer, Aeltus Investment
Management, Inc.; General Partner, Hellman, Jordan Management
Co., Boston, MA; Chief Investment Officer, The Putnam Companies,
Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director
and Consultant, EZE Castle Software (investment order management
software); Director, The Golisano Children’s Museum of Naples,
Florida; and Director, Midway Pacific (lumber).
|
Annual Shareholder Report
29
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
Madelyn A. Reilly
Birth Date: February 2, 1956
Trustee
Indefinite Term
Began serving:
November 2020
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; formerly, Executive Vice President for Legal Affairs,
General Counsel and Secretary to the Board of Directors, Duquesne
University (Retired).
Other Directorships Held: None.
Qualifications: Ms. Reilly has served in various business and legal
management roles throughout her career. Ms. Reilly previously served
as Senior Vice President for Legal Affairs, General Counsel and
Secretary to the Board of Directors and Assistant General Counsel and
Director of Risk Management, Duquesne University. Prior to her work
at Duquesne University, Ms. Reilly served as Assistant General
Counsel of Compliance and Enterprise Risk as well as Senior Counsel
of Environment, Health and Safety, PPG Industries. Ms. Reilly currently
serves as a member of the Board of Directors of UPMC
Mercy Hospital.
|
|
P. Jerome Richey
Birth Date: February 23, 1949
Trustee
Indefinite Term
Began serving:
September 2013
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Management Consultant; Retired; formerly, Senior Vice
Chancellor and Chief Legal Officer, University of Pittsburgh and
Executive Vice President and Chief Legal Officer, CONSOL Energy Inc.
(now split into two separate publicly traded companies known as
CONSOL Energy Inc. and CNX Resources Corp.).
Other Directorships Held: None.
Qualifications: Mr. Richey has served in several business and legal
management roles and directorship positions throughout his career.
Mr. Richey most recently held the positions of Senior Vice Chancellor
and Chief Legal Officer, University of Pittsburgh. Mr. Richey previously
served as Chairman of the Board, Epilepsy Foundation of Western
Pennsylvania and Chairman of the Board, World Affairs Council of
Pittsburgh. Mr. Richey previously served as Chief Legal Officer and
Executive Vice President, CONSOL Energy Inc. and CNX Gas
Company; and Board Member, Ethics Counsel and Shareholder,
Buchanan Ingersoll & Rooney PC (a law firm).
|
|
John S. Walsh
Birth Date:
November 28, 1957
Trustee
Indefinite Term
Began serving: January 1999
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; President and Director, Heat Wagon, Inc. (manufacturer
of construction temporary heaters); President and Director,
Manufacturers Products, Inc. (distributor of portable construction
heaters); President, Portable Heater Parts, a division of Manufacturers
Products, Inc.
Other Directorships Held: None.
Qualifications: Mr. Walsh has served in several business management
roles and directorship positions throughout his career. Mr. Walsh
previously served as Vice President, Walsh & Kelly, Inc.
(paving contractors).
|
Annual Shareholder Report
30
OFFICERS
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Lori A. Hensler
Birth Date: January 6, 1967
TREASURER
Officer since: April 2013
|
Principal Occupations: Principal Financial Officer and Treasurer of the
Federated Hermes Fund Family; Senior Vice President, Federated
Administrative Services; Financial and Operations Principal for
Federated Securities Corp.; and Assistant Treasurer, Federated
Investors Trust Company. Ms. Hensler has received the Certified
Public Accountant designation.
Previous Positions: Controller of Federated Hermes, Inc.; Senior Vice
President and Assistant Treasurer, Federated Investors Management
Company; Treasurer, Federated Investors Trust Company; Assistant
Treasurer, Federated Administrative Services, Federated
Administrative Services, Inc., Federated Securities Corp., Edgewood
Services, Inc., Federated Advisory Services Company, Federated
Equity Management Company of Pennsylvania, Federated Global
Investment Management Corp., Federated Investment Counseling,
Federated Investment Management Company, Passport Research,
Ltd., and Federated MDTA, LLC; Financial and Operations Principal for
Federated Securities Corp., Edgewood Services, Inc. and Southpointe
Distribution Services, Inc.
|
|
Peter J. Germain
Birth Date:
September 3, 1959
CHIEF LEGAL OFFICER,
SECRETARY and EXECUTIVE
VICE PRESIDENT
Officer since: January 2005
|
Principal Occupations: Mr. Germain is Chief Legal Officer, Secretary
and Executive Vice President of the Federated Hermes Fund Family.
He is General Counsel, Chief Legal Officer, Secretary and Executive
Vice President, Federated Hermes, Inc.; Trustee and Senior Vice
President, Federated Investors Management Company; Trustee and
President, Federated Administrative Services; Director and President,
Federated Administrative Services, Inc.; Director and Vice President,
Federated Securities Corp.; Director and Secretary, Federated Private
Asset Management, Inc.; Secretary, Federated Shareholder Services
Company; and Secretary, Retirement Plan Service Company of
America. Mr. Germain joined Federated Hermes, Inc. in 1984 and is a
member of the Pennsylvania Bar Association.
Previous Positions: Deputy General Counsel, Special Counsel,
Managing Director of Mutual Fund Services, Federated Hermes, Inc.;
Senior Vice President, Federated Services Company; and Senior
Corporate Counsel, Federated Hermes, Inc.
|
|
Stephen Van Meter
Birth Date: June 5, 1975
CHIEF COMPLIANCE
OFFICER AND SENIOR VICE
PRESIDENT
Officer since: July 2015
|
Principal Occupations: Senior Vice President and Chief Compliance
Officer of the Federated Hermes Fund Family; Vice President and
Chief Compliance Officer of Federated Hermes, Inc. and Chief
Compliance Officer of certain of its subsidiaries. Mr. Van Meter joined
Federated Hermes, Inc. in October 2011. He holds FINRA licenses
under Series 3, 7, 24 and 66.
Previous Positions: Mr. Van Meter previously held the position of
Compliance Operating Officer, Federated Hermes, Inc. Prior to joining
Federated Hermes, Inc., Mr. Van Meter served at the United States
Securities and Exchange Commission in the positions of Senior
Counsel, Office of Chief Counsel, Division of Investment Management
and Senior Counsel, Division of Enforcement.
|
Annual Shareholder Report
31
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Deborah A. Cunningham
Birth Date:
September 15, 1959
CHIEF INVESTMENT OFFICER
Officer since: May 2004
|
Principal Occupations: Deborah A. Cunningham was named Chief
Investment Officer of Federated Hermes’ money market products in
2004. She joined Federated Hermes in 1981 and has been a Senior
Portfolio Manager since 1997 and an Executive Vice President of the
Fund’s Adviser since 2009. Ms. Cunningham has received the
Chartered Financial Analyst designation and holds an M.S.B.A. in
Finance from Robert Morris College.
|
Annual Shareholder Report
32
Evaluation and Approval of Advisory Contract–May 2022
Federated Hermes Capital Reserves Fund (the “Fund”)
At its meetings in May 2022 (the “May Meetings”), the Fund’s Board of Trustees (the “Board”), including those Trustees who are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940 (the “Independent Trustees”), reviewed and unanimously approved the continuation of the investment advisory contract between the Fund and Federated Investment Management Company (the “Adviser”) (the “Contract”) for an additional one-year term. The Board’s determination to approve the continuation of the Contract reflects the exercise of its business judgment after considering all of the information and factors believed to be relevant and appropriate on whether to approve the continuation of the existing arrangement. The information, factors and conclusions that formed the basis for the Board’s approval are summarized below.
Information Received and Review Process
At the request of the Independent Trustees, the Fund’s Chief Compliance Officer (the “CCO”) furnished to the Board in advance of its May Meetings an independent written evaluation presenting on the topics discussed below. The Board considered the CCO’s independent written evaluation (the “CCO Fee Evaluation Report”), along with other information, in evaluating the reasonableness of the Fund’s management fee and in determining to approve the continuation of the Contract. The CCO, in preparing the CCO Fee Evaluation Report, has the authority to retain consultants, experts or staff as reasonably necessary to assist in the performance of his duties, reports directly to the Board, and can be terminated only with the approval of a majority of the Independent Trustees. At the request of the Independent Trustees, the CCO Fee Evaluation Report followed the same general approach and covered the same topics as that of the report that had previously been delivered by the CCO in his capacity as “Senior Officer” prior to the elimination of the Senior Officer position in December 2017.
In addition to the extensive materials that comprise and accompany the CCO Fee Evaluation Report, the Board considered information specifically prepared in connection with the approval of the continuation of the Contract that was presented at the May Meetings. In this regard, in the months preceding the May Meetings, the Board requested and reviewed written responses and supporting materials prepared by the Adviser and its affiliates (collectively, “Federated Hermes”) in response to requests posed to Federated Hermes by independent legal counsel on behalf of the Independent Trustees encompassing a wide variety of topics, including those summarized below. The Board also considered such additional matters as the Independent Trustees deemed
Annual Shareholder Report
33
reasonably necessary to evaluate the Contract, which included detailed information about the Fund and Federated Hermes furnished to the Board at its meetings throughout the year and in between regularly scheduled meetings on particular matters as the need arose.
The Board’s consideration of the Contract included review of materials and information covering the following matters, among others: the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates; Federated Hermes’ business and operations; the Adviser’s investment philosophy, personnel and processes; the Fund’s investment objectives and strategies; the Fund’s short-term and long-term performance (in absolute terms, both on a gross basis and net of expenses, and relative to the Fund’s particular investment program and a group of its peer funds and/or its benchmark, as appropriate); the Fund’s investment objectives; the Fund’s fees and expenses, including the advisory fee and the overall expense structure of the Fund (both in absolute terms and relative to a group of its peer funds), with due regard for contractual or voluntary expense limitations (if any); the financial condition of Federated Hermes; the Adviser’s profitability with respect to the Fund; distribution and sales activity for the Fund; and the use and allocation of brokerage commissions derived from trading the Fund’s portfolio securities (if any).
The Board also considered judicial decisions concerning allegedly excessive investment advisory fees charged to other registered funds in determining to approve the Contract. Using these judicial decisions as a guide, the Board observed that the following factors may be relevant to an adviser’s fiduciary duty with respect to its receipt of compensation from a fund: (1) the nature and quality of the services provided by the adviser to the fund and its shareholders, including the performance of the fund, its benchmark and comparable funds; (2) the adviser’s cost of providing the services and the profitability to the adviser of providing advisory services to the fund; (3) the extent to which the adviser may realize “economies of scale” as the fund grows larger and, if such economies of scale exist, whether they have been appropriately shared with the fund and its shareholders or the family of funds; (4) any “fall-out” benefits that accrue to the adviser because of its relationship with the fund, including research services received from brokers that execute fund trades and any fees paid to affiliates of the adviser for services rendered to the fund; (5) comparative fee and expense structures, including a comparison of management fees paid to the adviser with those paid by similar funds both internally and externally as well as management fees charged to institutional and other advisory clients of the adviser for what might be viewed as like services; and (6) the extent of care, conscientiousness and independence with which the fund’s board members perform their duties and their expertise, including whether they are fully informed about all facts the board deems relevant to its consideration of the adviser’s services and fees. The Board noted that the Securities and Exchange Commission (“SEC”) disclosure requirements
Annual Shareholder Report
34
regarding the basis for a fund board’s approval of the fund’s investment advisory contract generally align with the factors listed above. The Board was guided by these factors in its review of the Contract to the extent it considered them to be appropriate and relevant, as discussed further below. The Board considered and weighed these factors in light of its substantial accumulated experience in governing the Fund and working with Federated Hermes on matters relating to the oversight of the other funds advised by Federated Hermes (each, a “Federated Hermes Fund” and, collectively, the (“Federated Hermes Funds”).
In addition to considering the above-referenced factors, the Board was mindful of the preferences and expectations of Fund shareholders and the potential disruptions of the Fund’s operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew the Contract. In particular, the Board recognized that many shareholders likely have invested in the Fund on the strength of Federated Hermes’ industry standing and reputation and with the expectation that Federated Hermes will have a continuing role in providing advisory services to the Fund. Thus, the Board observed that in the marketplace there are a range of investment options available to the Fund’s shareholders and such shareholders, having had the opportunity to consider other investment options, have effectively selected Federated Hermes by virtue of investing in the Fund.
In determining to approve the continuation of the Contract, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the continuation of the Contract was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Contract. The Board recognized that its evaluation process is evolutionary and that the factors considered and emphasis placed on relevant factors may change in recognition of changing circumstances in the registered fund marketplace. The Independent Trustees were assisted throughout the evaluation process by independent legal counsel. In connection with their deliberations at the May Meetings, the Independent Trustees met separately in executive session with their independent legal counsel and without management present to review the relevant materials and consider their responsibilities under applicable laws. In addition, senior management representatives of Federated Hermes also met with the Independent Trustees and their independent legal counsel to discuss the materials and presentations furnished to the Board at the May Meetings. The Board considered the approval of the Contract for the Fund as part of its consideration of agreements for funds across the family of Federated Hermes Funds, but its approvals were made on a fund-by-fund basis.
Annual Shareholder Report
35
Nature, Extent and Quality of Services
The Board considered the nature, extent and quality of the services provided to the Fund by the Adviser and the resources of Federated Hermes dedicated to the Fund. In this regard, the Board evaluated, among other things, the terms of the Contract and the range of services provided to the Fund by Federated Hermes. The Board considered the Adviser’s personnel, investment philosophy and process, investment research capabilities and resources, trade operations capabilities, experience and performance track record. The Board reviewed the qualifications, backgrounds and responsibilities of the portfolio management team primarily responsible for the day-to-day management of the Fund and Federated Hermes’ ability and experience in attracting and retaining qualified personnel to service the Fund. In addition, the Board noted that the Fund is a money market mutual fund that operates in accordance with the limitations set forth in Rule 2a-7 under the 1940 Act. In this connection, the Board considered the expertise of the Adviser in managing money market funds, its extensive experience with the requirements of Rule 2a-7 and its commitment to managing the Fund in accordance with these requirements. The Board also considered the Adviser’s ability to deliver competitive investment performance for the Fund when compared to the Fund’s Performance Peer Group (as defined below), which was deemed by the Board to be a useful indicator of how the Adviser is executing the Fund’s investment program. The Board also considered the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, in order to maintain a positive yield for the Fund in the low interest rate environment.
In addition, the Board considered the financial resources and overall reputation of Federated Hermes and its willingness to consider and make investments in personnel, infrastructure, technology, cybersecurity, business continuity planning and operational enhancements that are designed to benefit the Federated Hermes Funds. The Board noted the significant acquisition of Hermes Fund Managers Limited by Federated Hermes, which has deepened the organization’s investment management expertise and capabilities and expanded the investment process for all of the Federated Hermes Funds to have access to analytical resources related to environmental, social and governance (“ESG”) factors and issuer engagement on ESG matters. The Board considered the quality of Federated Hermes’ communications with the Board and responsiveness to Board inquiries and requests made from time to time with respect to the Fund and other Federated Hermes Funds. In this regard, the Board took into account Federated Hermes’ communications with the Board in light of the pandemic. The Board also considered that Federated Hermes is responsible for providing the Federated Hermes Funds’ officers.
The Board received and evaluated information regarding Federated Hermes’ regulatory and compliance environment. The Board considered Federated Hermes’ compliance program and compliance history and reports from the CCO about Federated Hermes’ compliance with applicable laws and
Annual Shareholder Report
36
regulations, including responses to regulatory developments and any compliance or other issues raised by regulatory agencies. The Board also noted Federated Hermes’ support of the Federated Hermes Funds’ compliance control structure and the compliance-related resources devoted by Federated Hermes in support of the Fund’s obligations pursuant to Rule 38a-1 under the Investment Company Act of 1940, including Federated Hermes’ commitment to respond to rulemaking and other regulatory initiatives of the SEC. The Board considered Federated Hermes’ approach to internal audits and risk management with respect to the Federated Hermes Funds and its day-to-day oversight of the Federated Hermes Funds’ compliance with their investment objectives and policies as well as with applicable laws and regulations, noting that regulatory and other developments had over time led to an increase in the scope of Federated Hermes’ oversight in this regard, including in connection with the designation of the Federated Hermes Funds’ investment advisers as the administrators of the Federated Hermes Funds’ liquidity risk management program.
The Board also considered the implementation of Federated Hermes’ business continuity plans and recognized steps taken by Federated Hermes to continue to provide the same nature, extent and quality of services to the Federated Hermes Funds during the pandemic. In addition, the Board noted Federated Hermes’ commitment to maintaining high quality systems and expending substantial resources to prepare for and respond to ongoing changes due to the market, regulatory and control environments in which the Fund and its service providers operate, including changes associated with the pandemic.
The Board considered Federated Hermes’ efforts to provide shareholders in the Federated Hermes Funds with a comprehensive array of funds with different investment objectives, policies and strategies. The Board considered the expenses that Federated Hermes had incurred, as well as the entrepreneurial and other risks assumed by Federated Hermes, in sponsoring and providing on-going services to new funds to expand these opportunities for shareholders. The Board noted the benefits to shareholders of being part of the family of Federated Hermes Funds, which include the general right to exchange investments between the same class of shares without the incurrence of additional sales charges.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided by the Adviser to the Fund.
Fund Investment Performance
The Board considered the investment performance of the Fund. In evaluating the Fund’s investment performance, the Board considered performance results in light of the Fund’s investment objective, strategies and risks. The Board considered detailed investment reports on, and the Adviser’s analysis of, the Fund’s performance over different time periods that were
Annual Shareholder Report
37
provided to the Board throughout the year and in connection with the May Meetings. These reports include, among other items, information on the Fund’s gross and net returns, the Fund’s investment performance compared to one or more relevant categories or groups of peer funds and the Fund’s benchmark index, performance attribution information and commentary on the effect of market conditions.
The Board also reviewed comparative information regarding the performance of other registered funds in the category of peer funds selected by iMoneyNet, an independent fund ranking organization (the “Performance Peer Group”). The Board noted the CCO’s view that comparisons to fund peer groups may be helpful, though not conclusive, in evaluating the performance of the Adviser in managing the Fund. The Board considered, in evaluating such comparisons, that in some cases there may be differences in the funds’ objectives or investment management techniques, or the costs to implement the funds, even within the same Performance Peer Group.
The Fund’s performance fell below the median of the Performance Peer Group for the one-year, three-year and five-year periods ended December 31, 2021. The Board discussed the Fund’s performance with the Adviser, including the reasons for and plans to seek to improve the Fund’s performance, and recognized the efforts being taken by the Adviser in the context of other factors considered relevant by the Board. The Board also considered the relatively tight dispersion of performance data with respect to the Fund and its Peer Group.
Based on these considerations, the Board concluded that it had continued confidence in the Adviser’s overall capabilities to manage the Fund.
Fund Expenses
The Board considered the advisory fee and overall expense structure of the Fund and the comparative fee and expense information that had been provided in connection with the May Meetings. In this regard, the Board was presented with, and considered, information regarding the contractual advisory fee rates, net advisory fee rates, total expense ratios and each element of the Fund’s total expense ratio (i.e., gross and net advisory fees, administrative fees, custody fees, portfolio accounting fees and transfer agency fees) relative to an appropriate group of peer funds compiled by Federated Hermes from the category of peer funds selected by iMoneyNet (the “Expense Peer Group”). The Board received a description of the methodology used to select the Expense Peer Group from the overall iMoneyNet category. The Board also reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall iMoneyNet category.
While mindful that courts have cautioned against giving too much weight to comparative information concerning fees charged by other advisers for managing funds with comparable investment programs, the Board noted that it found the use of such comparisons to be relevant to its evaluation. The Board
Annual Shareholder Report
38
focused on comparisons with other similar registered funds more heavily than non-registered fund products or services because such comparisons are believed to be more relevant. The Board considered that other registered funds are the products most like the Fund, in that they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle, in fact, chosen and maintained by the Fund’s shareholders. The Board noted that the range of such other registered funds’ fees and expenses, therefore, appears to be a relevant indicator of what investors have found to be reasonable in the marketplace in which the Fund competes.
The Board reviewed the contractual advisory fee rate, net advisory fee rate and other expenses of the Fund and noted the position of the Fund’s fee rates relative to its Expense Peer Group. In this regard, the Board noted that the contractual advisory fee rate was below the median of the Expense Peer Group, and the Board was satisfied that the overall expense structure of the Fund remained competitive.
The Board also received and considered information about the fees charged by Federated Hermes for providing advisory services to other types of clients with investment strategies similar to those of the Federated Hermes Funds, including non-registered fund clients (such as institutional separate accounts) and third-party unaffiliated registered funds for which the Adviser or its affiliates serve as sub-adviser. The Board noted the CCO’s conclusion that non-registered fund clients are inherently different products due to the following differences, among others: (i) different types of targeted investors; (ii) different applicable laws and regulations; (iii) different legal structures; (iv) different average account sizes and portfolio management techniques made necessary by different cash flows and different associated costs; (v) the time spent by portfolio managers and their teams (among other personnel across various departments, including legal, compliance and risk management) in reviewing securities pricing and fund liquidity; (vi) different administrative responsibilities; (vii) different degrees of risk associated with management; and (viii) a variety of different costs. The Board also considered information regarding the differences in the nature of the services required for Federated Hermes to manage its proprietary registered fund business versus managing a discrete pool of assets as a sub-adviser to another institution’s registered fund, noting the CCO’s view that Federated Hermes generally performs significant additional services and assumes substantially greater risks in managing the Fund and other Federated Hermes Funds than in its role as sub-adviser to an unaffiliated third-party registered fund. The Board noted that the CCO did not consider the fees for providing advisory services to other types of clients to be determinative in judging the appropriateness of the Federated Hermes Funds’ advisory fees.
Based on these considerations, the Board concluded that the fees and total operating expenses of the Fund, in conjunction with other matters considered, are reasonable in light of the services provided.
Annual Shareholder Report
39
Profitability
The Board received and considered profitability information furnished by Federated Hermes, as requested by the CCO. Such profitability information included revenues reported on a fund-by-fund basis and estimates of the allocation of expenses made on a fund-by-fund basis, using allocation methodologies specified by the CCO and described to the Board. The Board considered the CCO’s view that, while these cost allocation reports apply consistent allocation processes, the inherent difficulties in allocating costs on a fund-by-fund basis continues to cause the CCO to question the precision of the process and to conclude that such reports may be unreliable because a single change in an allocation estimate may dramatically alter the resulting estimate of cost and/or profitability of a Federated Hermes Fund and may produce unintended consequences. In addition, the Board considered the CCO’s view that the allocation methodologies used by Federated Hermes in estimating profitability for purposes of reporting to the Board in connection with the continuation of the Contract are consistent with the methodologies previously reviewed by an independent consultant. The Board noted that the independent consultant had previously conducted a review of the allocation methodologies and reported that, although there is no single best method to allocate expenses, the methodologies used by Federated Hermes are reasonable. The Board noted the impact of the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, on the profitability of the Fund to the Adviser.
The Board also reviewed information compiled by Federated Hermes comparing its profitability information to other publicly held fund management companies, including information regarding profitability trends over time. The Board considered the CCO’s conclusion that, based on such profitability information, Federated Hermes’ profit margins did not appear to be excessive. The Board also considered the CCO’s view that Federated Hermes appeared financially sound, with the resources necessary to fulfill its obligations under its contracts with the Federated Hermes Funds.
Economies of Scale
The Board received and considered information about the notion of possible realization of “economies of scale” as a fund grows larger, the difficulties of calculating economies of scale at an individual fund level, and the extent to which potential scale benefits are shared with shareholders. In this regard, the Board considered that Federated Hermes has made significant and long-term investments in areas that support all of the Federated Hermes Funds, such as: personnel, processes and tools for portfolio management, including the use of market data on which portfolio managers make investment decisions; trading operations; ESG integration and issuer engagement on ESG matters; shareholder services; compliance; business continuity; cybersecurity; internal audit and risk management functions; and technology that supports the provision of investment management services. The Board noted that Federated
Annual Shareholder Report
40
Hermes’ investments in these areas are extensive and are designed to provide enhanced services to the Federated Hermes Funds and their shareholders. The Board considered that the benefits of these investments are likely to be shared with the family of Federated Hermes Funds as a whole. In addition, the Board considered that fee waivers and expense reimbursements are another means for potential economies of scale to be shared with shareholders and can provide protection from an increase in expenses if a Federated Hermes Fund’s assets decline. The Board considered that, in order for the Federated Hermes Funds to remain competitive in the marketplace, Federated Hermes has frequently waived fees and/or reimbursed expenses for the Federated Hermes Funds and has disclosed to shareholders and/or reported to the Board its intention to do so (or continue to do so) in the future. The Board also considered Federated Hermes’ reductions in contractual management fees for certain Federated Hermes Funds during the prior year, including in response to the CCO’s recommendations in the prior year’s CCO Fee Evaluation Report, which have resulted in benefits being realized by shareholders.
The Board also considered reports on adviser-paid fees (commonly referred to as “revenue sharing”) that were provided to the Board throughout the year and in connection with the May Meetings. The Board considered that Federated Hermes and the CCO believe that this information should be viewed to determine if there was an incentive to either not apply breakpoints, or to apply breakpoints at higher levels, and should not be viewed to evaluate the reasonableness of advisory fees. The Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which is compounded by the lack of any uniform methodology or pattern with respect to structuring fund advisory fees with breakpoints that serve to reduce the fees as a fund attains a certain size.
Other Benefits
The Board considered information regarding the compensation and other ancillary (or “fall-out”) benefits that Federated Hermes derived from its relationships with the Federated Hermes Funds. The Board noted that, in addition to receiving advisory fees under the Federated Hermes Funds’ investment advisory contracts, Federated Hermes’ affiliates also receive fees for providing other services to the Federated Hermes Funds under separate contracts (e.g., for serving as the Federated Hermes Funds’ administrator and distributor). In this regard, the Board considered that certain of Federated Hermes’ affiliates provide distribution and shareholder services to the Federated Hermes Funds, for which they may be compensated through distribution and servicing fees paid pursuant to Rule 12b-1 plans or otherwise. The Board also received and considered information detailing any indirect benefit that Federated Hermes may derive from its receipt of research services from brokers who execute portfolio trades for the Federated Hermes Funds.
Annual Shareholder Report
41
Conclusions
The Board considered: (i) the CCO’s conclusion that his observations and the information accompanying the CCO Fee Evaluation Report show that the management fee for the Fund is reasonable; and (ii) the CCO’s recommendation that the Board approve the management fee. The Board noted that, under these circumstances, no changes were recommended to, and no objection was raised to the continuation of, the Contract by the CCO. The CCO also recognized that the Board’s evaluation of the Federated Hermes Funds’ advisory and sub-advisory arrangements is a continuing and ongoing process that is informed by the information that the Board requests and receives from management throughout the course of the year and, in this regard, the CCO noted certain items for future reporting to the Board or further consideration by management as the Board continues its ongoing oversight of the Federated Hermes Funds.
On the basis of the information and factors summarized above, among other information and factors deemed relevant by the Board, and the evaluation thereof, the Board, including the Independent Trustees, unanimously voted to approve the continuation of the Contract. The Board based its determination to approve the Contract on the totality of the circumstances and relevant factors and with a view of past and future long-term considerations. Not all of the factors and considerations identified above were necessarily deemed to be relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were deemed to be relevant, the Board’s determination to approve the continuation of the Contract reflects its view that Federated Hermes’ performance and actions provided a satisfactory basis to support the determination to approve the continuation of the existing arrangement.
Annual Shareholder Report
42
Voting Proxies on Fund Portfolio Securities
A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund’s portfolio is available, without charge and upon request, by calling 1-800-341-7400, Option #4. A report on “Form N-PX” of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available via the Proxy Voting Record (Form N-PX) link associated with the Fund and share class name at FederatedInvestors.com/FundInformation. Form N-PX filings are also available at the SEC’s website at sec.gov.
Portfolio Schedule
The Fund files with the SEC a complete schedule of its portfolio holdings as of the close of each month on “Form N-MFP.” Form N-MFP is available on the SEC’s website at sec.gov. You may access Form N-MFP via the link to the Fund and share class name at FederatedInvestors.com.
Annual Shareholder Report
43
You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The Fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
This Report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund’s Prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.
Federated Hermes Capital Reserves Fund
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at FederatedInvestors.com
or call 1-800-341-7400.
or call 1-800-341-7400.
Federated Securities Corp., Distributor
CUSIP 608919304
41050 (9/22)
© 2022 Federated Hermes, Inc.
Annual Shareholder Report
July 31, 2022
|
Share Class | Ticker
|
A | GRAXX
|
B | GRBXX
|
C | GRCXX
|
|
|
F | GRGXX
|
P | GRFXX
|
|
Federated Hermes Government Reserves Fund
Fund Established 2005
A Portfolio of Federated Hermes Money Market Obligations Trust
Dear Valued Shareholder,
We are pleased to present the Annual Shareholder Report for your fund covering the period from August 1, 2021 through July 31, 2022. This report includes a complete listing of your fund’s holdings, performance information and financial statements along with other important fund information.
As a global leader in active, responsible investment management, Federated Hermes is guided by our conviction that responsible investing is the best way to create wealth over the long term. The company provides capabilities across a wide range of asset classes to investors around the world.
In addition, FederatedInvestors.com offers quick and easy access to valuable resources that include timely fund updates, economic and market insights from our investment strategists and financial planning tools. You can also access many of those insights by following us on Twitter (@FederatedHermes) and LinkedIn.
Thank you for investing with us. We hope you find this information useful and look forward to keeping you informed.
Sincerely,
J. Christopher Donahue, President
Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee
Portfolio of Investments Summary Tables (unaudited)
At July 31, 2022, the Fund’s portfolio composition1 was as follows:
|
Security Type
|
Percentage of
Total Net Assets
|
|
Repurchase Agreements
|
64.7%
|
|
U.S. Treasury Securities
|
20.1%
|
|
U.S. Government Agency Securities
|
14.6%
|
|
Other Assets and Liabilities—Net2
|
0.6%
|
|
TOTAL
|
100%
|
At July 31, 2022, the Fund’s effective maturity3 schedule was as follows:
|
Securities With an
Effective Maturity of:
|
Percentage of
Total Net Assets
|
|
1-7 Days
|
83.5%4
|
|
8-30 Days
|
2.8%
|
|
31-90 Days
|
3.0%
|
|
91-180 Days
|
7.3%
|
|
181 Days or more
|
2.8%
|
|
Other Assets and Liabilities—Net2
|
0.6%
|
|
TOTAL
|
100%
|
1
See the Fund’s Prospectus and Statement of Additional Information for more complete information regarding these security types.
2
Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.
3
Effective maturity is determined in accordance with the requirements of Rule 2a-7 under the Investment Company Act of 1940, which regulates money market mutual funds.
4
Overnight Securities Comprised 66.0% of the Fund’s portfolio.
Annual Shareholder Report
1
Portfolio of Investments
July 31, 2022
|
Principal
Amount
|
|
|
Value
|
|
|
|
REPURCHASE AGREEMENTS—64.7%
|
|
|
$175,000,000
|
|
Interest in $250,000,000 joint repurchase agreement, 2.305%
dated 7/29/2022 under which ABN Amro Bank N.V. will
repurchase the securities provided as collateral for $250,048,021
on 8/1/2022. The securities provided as collateral at the end of
the period held with BNY Mellon, tri-party agent, were
U.S. Government Agency and U.S. Treasury Securities with
various maturities to 6/1/2052 and the market value of those
underlying securities was $255,130,159.
|
$175,000,000
|
|
150,000,000
|
|
Interest in $200,000,000 joint repurchase agreement, 2.300%
dated 7/29/2022 under which BMO Harris Bank, N.A. will
repurchase the securities provided as collateral for $200,038,333
on 8/1/2022. The securities provided as collateral at the end of
the period held with BNY Mellon, tri-party agent, were
U.S. Government Agency Securities with various maturities to
5/1/2032 and the market value of those underlying securities
was $205,616,343.
|
150,000,000
|
|
150,000,000
|
|
Repurchase agreement, 1.470% dated 6/7/2022 under which BNP
Paribas SA will repurchase the securities provided as collateral
for $150,575,750 on 9/9/2022. The securities provided as
collateral at the end of the period held with BNY Mellon, tri-party
agent, were U.S. Government Agency and U.S. Treasury
Securities with various maturities to 2/15/2046 and the market
value of those underlying securities was $153,337,377.
|
150,000,000
|
|
115,000,000
|
|
Repurchase agreement, 1.650% dated 5/16/2022 under which
BNP Paribas SA will repurchase the securities provided as
collateral for $115,969,833 on 11/16/2022. The securities
provided as collateral at the end of the period held with BNY
Mellon, tri-party agent, were U.S. Government Agency Securities
with various maturities to 6/1/2052 and the market value of those
underlying securities was $117,742,582.
|
115,000,000
|
|
60,000,000
|
|
Repurchase agreement, 1.700% dated 5/20/2022 under which
BNP Paribas SA will repurchase the securities provided as
collateral for $60,524,167 on 11/21/2022. The securities provided
as collateral at the end of the period held with BNY Mellon,
tri-party agent, were U.S. Government Agency and U.S. Treasury
Securities with various maturities to 6/20/2052 and the market
value of those underlying securities was $61,420,495.
|
60,000,000
|
|
50,000,000
|
|
Repurchase agreement, 1.800% dated 6/1/2022 under which BNP
Paribas SA will repurchase the securities provided as collateral
for $50,460,000 on 12/2/2022. The securities provided as
collateral at the end of the period held with BNY Mellon, tri-party
agent, were U.S. Government Agency and U.S. Treasury
Securities with various maturities to 7/1/2052 and the market
value of those underlying securities was $51,159,916
|
50,000,000
|
Annual Shareholder Report
2
|
Principal
Amount
|
|
|
Value
|
|
|
|
REPURCHASE AGREEMENTS—continued
|
|
|
$328,565,000
|
|
Interest in $330,000,000 joint repurchase agreement, 2.240%
dated 7/29/2022 under which BNP Paribas SA will repurchase the
securities provided as collateral for $330,061,600 on 8/1/2022.
The securities provided as collateral at the end of the period held
with BNY Mellon, tri-party agent, were U.S. Treasury Securities
with various maturities to 2/15/2047 and the market value of
those underlying securities was $336,662,870.
|
$328,565,000
|
|
172,000,000
|
|
Repurchase agreement, 2.240% dated 7/29/2022 under which
BNP Paribas SA will repurchase the securities provided as
collateral for $172,032,107 on 8/1/2022. The securities provided
as collateral at the end of the period held with BNY Mellon,
tri-party agent, were U.S. Treasury Securities with various
maturities to 5/15/2032 and the market value of those underlying
securities was $175,481,672.
|
172,000,000
|
|
150,000,000
|
|
Repurchase agreement, 2.270% dated 7/29/2022 under which
Bank Of America Securities, Inc. will repurchase the securities
provided as collateral for $150,028,375 on 8/1/2022. The
securities provided as collateral at the end of the period held
with BNY Mellon, tri-party agent, were U.S. Treasury Securities
with various maturities to 8/15/2026 and the market value of
those underlying securities was $153,028,943.
|
150,000,000
|
|
150,000,000
|
|
Repurchase agreement, 2.270% dated 7/29/2022 under which
Bank Of America Securities, Inc. will repurchase the securities
provided as collateral for $150,028,375 on 8/1/2022. The
securities provided as collateral at the end of the period held
with BNY Mellon, tri-party agent, were U.S. Treasury Securities
with various maturities to 8/15/2026 and the market value of
those underlying securities was $153,029,019.
|
150,000,000
|
|
72,787,000
|
|
Interest in $1,800,000,000 joint repurchase agreement, 2.300%
dated 7/29/2022 under which Bank Of America Securities, Inc.
will repurchase the securities provided as collateral for
$1,800,345,000 on 8/1/2022. The securities provided as collateral
at the end of the period held with BNY Mellon, tri-party agent,
were U.S. Government Agency Securities with various maturities
to 7/25/2052 and the market value of those underlying securities
was $1,854,355,350.
|
72,787,000
|
|
500,000,000
|
|
Repurchase agreement, 2.310% dated 3/4/2020 under which
Citigroup Global Markets, Inc. will repurchase the securities
provided as collateral for $528,490,000 on 8/9/2022. The
securities provided as collateral at the end of the period held
with BNY Mellon, tri-party agent, were U.S. Government Agency
and U.S. Treasury Securities with various maturities to 4/20/2063
and the market value of those underlying securities
was $510,599,888.
|
500,000,000
|
Annual Shareholder Report
3
|
Principal
Amount
|
|
|
Value
|
|
|
|
REPURCHASE AGREEMENTS—continued
|
|
|
$250,000,000
|
|
Repurchase agreement, 2.320% dated 7/28/2022 under which
Citigroup Global Markets, Inc. will repurchase the securities
provided as collateral for $250,902,222 on 9/22/2022. The
securities provided as collateral at the end of the period held
with BNY Mellon, tri-party agent, were U.S. Treasury Securities
with various maturities to 2/15/2050 and the market value of
those underlying securities was $255,065,773.
|
$250,000,000
|
|
4,500,000,000
|
|
Repurchase agreement, 2.300% dated 7/29/2022 under which
Federal Reserve Bank of New York will repurchase the securities
provided as collateral for $4,500,862,500 on 8/1/2022. The
securities provided as collateral at the end of the period held
with BNY Mellon, tri-party agent, were U.S. Treasury Securities
with various maturities to 2/15/2042 and the market value of
those underlying securities was $4,500,862,543.
|
4,500,000,000
|
|
50,000,000
|
|
Repurchase agreement, 2.305% dated 7/29/2022 under which
HSBC Securities (USA), Inc. will repurchase the securities
provided as collateral for $50,009,604 on 8/1/2022. The
securities provided as collateral at the end of the period held
with BNY Mellon, tri-party agent, were U.S. Government Agency
Securities with various maturities to 9/1/2051 and the market
value of those underlying securities was $51,000,000.
|
50,000,000
|
|
252,600,000
|
|
Interest in $600,000,000 joint repurchase agreement, 2.250%
dated 7/29/2022 under which Natixis Financial Products LLC will
repurchase the securities provided as collateral for $600,112,500
on 8/1/2022. The securities provided as collateral at the end of
the period held with BNY Mellon, tri-party agent, were
U.S. Government Agency Securities with various maturities to
5/15/2052 and the market value of those underlying securities
was $612,114,799.
|
252,600,000
|
|
|
|
TOTAL REPURCHASE AGREEMENTS
|
7,125,952,000
|
|
|
|
U.S. TREASURY—20.1%
|
|
|
50,000,000
|
1
|
United States Treasury Bill, 0.074%, 9/8/2022
|
49,996,042
|
|
200,000,000
|
1
|
United States Treasury Bill, 0.080%, 8/11/2022
|
199,995,555
|
|
75,500,000
|
1
|
United States Treasury Bill, 0.160%, 11/3/2022
|
75,468,458
|
|
50,000,000
|
1
|
United States Treasury Bill, 0.630%, 1/26/2023
|
49,844,250
|
|
95,000,000
|
1
|
United States Treasury Bill, 0.770%, 8/18/2022
|
94,965,457
|
|
22,000,000
|
1
|
United States Treasury Bill, 0.935%, 9/22/2022
|
21,970,288
|
|
90,000,000
|
1
|
United States Treasury Bill, 1.530%, 11/25/2022
|
89,556,300
|
|
47,000,000
|
1
|
United States Treasury Bill, 3.020%, 6/15/2023
|
45,746,196
|
|
103,500,000
|
1
|
United States Treasury Bills, 0.240%—1.580%, 12/1/2022
|
103,072,966
|
|
110,000,000
|
1
|
United States Treasury Bills, 1.465%—1.490%, 11/17/2022
|
109,511,300
|
|
141,000,000
|
2
|
United States Treasury Floating Rate Notes, 2.461% (91-day T-Bill
-0.075%), 8/2/2022
|
140,906,637
|
|
107,000,000
|
2
|
United States Treasury Floating Rate Notes, 2.521% (91-day T-Bill
-0.015%), 8/2/2022
|
107,077,485
|
Annual Shareholder Report
4
|
Principal
Amount
|
|
|
Value
|
|
|
|
U.S. TREASURY—continued
|
|
|
$179,000,000
|
2
|
United States Treasury Floating Rate Notes, 2.565% (91-day T-Bill
+0.029%), 8/2/2022
|
$179,027,974
|
|
117,760,000
|
2
|
United States Treasury Floating Rate Notes, 2.570% (91-day T-Bill
+0.034%), 8/2/2022
|
117,761,669
|
|
81,000,000
|
2
|
United States Treasury Floating Rate Notes, 2.571% (91-day T-Bill
+0.035%), 8/2/2022
|
80,997,912
|
|
165,150,000
|
2
|
United States Treasury Floating Rate Notes, 2.585% (91-day T-Bill
+0.049%), 8/2/2022
|
165,154,654
|
|
28,000,000
|
1
|
United States Treasury Note, 0.125%, 9/30/2022
|
27,997,369
|
|
85,000,000
|
1
|
United States Treasury Note, 0.125%, 11/30/2022
|
84,992,388
|
|
15,000,000
|
|
United States Treasury Note, 0.125%, 2/28/2023
|
14,867,202
|
|
16,000,000
|
|
United States Treasury Note, 0.125%, 5/31/2023
|
15,734,573
|
|
30,000,000
|
|
United States Treasury Note, 1.500%, 9/15/2022
|
30,052,225
|
|
13,600,000
|
|
United States Treasury Note, 1.625%, 8/15/2022
|
13,607,960
|
|
15,000,000
|
|
United States Treasury Note, 1.625%, 11/15/2022
|
15,065,826
|
|
28,000,000
|
|
United States Treasury Note, 2.125%, 12/31/2022
|
28,208,802
|
|
22,000,000
|
|
United States Treasury Note, 2.500%, 3/31/2023
|
22,124,551
|
|
170,000,000
|
|
United States Treasury Notes, 0.125%—2.000%, 10/31/2022
|
170,266,036
|
|
165,000,000
|
|
United States Treasury Notes, 1.625%—1.875%, 8/31/2022
|
165,227,878
|
|
|
|
TOTAL U.S. TREASURY
|
2,219,197,953
|
|
|
|
GOVERNMENT AGENCIES—14.6%
|
|
|
15,000,000
|
2
|
Federal Farm Credit System Floating Rate Notes, 1.630%
(Secured Overnight Financing Rate +0.100%), 8/2/2022
|
15,000,000
|
|
33,000,000
|
2
|
Federal Farm Credit System Floating Rate Notes, 2.300%
(Secured Overnight Financing Rate +0.020%), 8/1/2022
|
33,000,000
|
|
139,000,000
|
2
|
Federal Farm Credit System Floating Rate Notes, 2.305%
(Secured Overnight Financing Rate +0.025%), 8/1/2022
|
138,998,639
|
|
60,000,000
|
2
|
Federal Farm Credit System Floating Rate Notes, 2.307%
(Secured Overnight Financing Rate +0.027%), 8/1/2022
|
59,991,843
|
|
23,000,000
|
2
|
Federal Farm Credit System Floating Rate Notes, 2.310%
(Secured Overnight Financing Rate +0.030%), 8/1/2022
|
23,000,000
|
|
10,000,000
|
2
|
Federal Farm Credit System Floating Rate Notes, 2.315%
(Secured Overnight Financing Rate +0.035%), 8/1/2022
|
9,999,521
|
|
68,800,000
|
2
|
Federal Farm Credit System Floating Rate Notes, 2.320%
(Secured Overnight Financing Rate +0.040%), 8/1/2022
|
68,800,000
|
|
82,000,000
|
2
|
Federal Farm Credit System Floating Rate Notes, 2.325%
(Secured Overnight Financing Rate +0.045%), 8/1/2022
|
81,999,813
|
|
151,775,000
|
2
|
Federal Farm Credit System Floating Rate Notes, 2.330%
(Secured Overnight Financing Rate +0.050%), 8/1/2022
|
151,775,725
|
|
63,000,000
|
2
|
Federal Farm Credit System Floating Rate Notes, 2.335%
(Secured Overnight Financing Rate +0.055%), 8/1/2022
|
62,999,058
|
Annual Shareholder Report
5
|
Principal
Amount
|
|
|
Value
|
|
|
|
GOVERNMENT AGENCIES—continued
|
|
|
$57,000,000
|
2
|
Federal Farm Credit System Floating Rate Notes, 2.340%
(Secured Overnight Financing Rate +0.060%), 8/1/2022
|
$57,000,000
|
|
20,000,000
|
2
|
Federal Farm Credit System Floating Rate Notes, 2.345%
(Secured Overnight Financing Rate +0.065%), 8/1/2022
|
20,000,000
|
|
25,000,000
|
2
|
Federal Farm Credit System Floating Rate Notes, 2.355%
(Secured Overnight Financing Rate +0.075%), 8/1/2022
|
25,000,000
|
|
25,000,000
|
2
|
Federal Farm Credit System Floating Rate Notes, 2.360%
(Secured Overnight Financing Rate +0.080%), 8/1/2022
|
24,997,726
|
|
18,000,000
|
2
|
Federal Farm Credit System Floating Rate Notes, 2.365%
(Secured Overnight Financing Rate +0.085%), 8/1/2022
|
18,000,000
|
|
34,000,000
|
|
Federal Farm Credit System Notes, 0.100%, 10/19/2022
|
33,999,338
|
|
18,350,000
|
|
Federal Farm Credit System Notes, 0.160%, 12/5/2022
|
18,349,233
|
|
25,000,000
|
2
|
Federal Home Loan Bank System Floating Rate Notes, 1.620%
(Secured Overnight Financing Rate +0.100%), 8/1/2022
|
25,000,000
|
|
35,000,000
|
2
|
Federal Home Loan Bank System Floating Rate Notes, 2.315%
(Secured Overnight Financing Rate +0.035%), 8/1/2022
|
35,000,000
|
|
48,100,000
|
2
|
Federal Home Loan Bank System Floating Rate Notes, 2.320%
(Secured Overnight Financing Rate +0.040%), 8/1/2022
|
48,100,000
|
|
87,500,000
|
2
|
Federal Home Loan Bank System Floating Rate Notes, 2.335%
(Secured Overnight Financing Rate +0.055%), 8/1/2022
|
87,500,000
|
|
188,000,000
|
2
|
Federal Home Loan Bank System Floating Rate Notes, 2.340%
(Secured Overnight Financing Rate +0.060%), 8/1/2022
|
188,000,000
|
|
27,000,000
|
2
|
Federal Home Loan Bank System Floating Rate Notes, 2.345%
(Secured Overnight Financing Rate +0.065%), 8/1/2022
|
27,000,000
|
|
269,000,000
|
|
Federal Home Loan Bank System, 1.738%—2.350%,
12/23/2022 - 7/5/2023
|
268,995,904
|
|
70,000,000
|
2
|
Federal Home Loan Mortgage Corp. Floating Rate Notes, 2.345%
(Secured Overnight Financing Rate +0.065%), 8/1/2022
|
70,000,000
|
|
21,300,000
|
2
|
Federal Home Loan Mortgage Corp. Floating Rate Notes, 2.370%
(Secured Overnight Financing Rate +0.090%), 8/1/2022
|
21,300,000
|
|
|
|
TOTAL GOVERNMENT AGENCIES
|
1,613,806,800
|
|
|
|
TOTAL INVESTMENT IN SECURITIES—99.4%
(AT AMORTIZED COST)3
|
10,958,956,753
|
|
|
|
OTHER ASSETS AND LIABILITIES - NET—0.6%4
|
62,950,048
|
|
|
|
TOTAL NET ASSETS—100%
|
$11,021,906,801
|
1
Discount rate at time of purchase.
2
Floating/variable note with current rate and current maturity or next reset date shown.
3
Also represents cost of investments for federal tax purposes.
4
Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.
Annual Shareholder Report
6
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Level 1—quoted prices in active markets for identical securities.
Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Also includes securities valued at amortized cost.
Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
In valuing the Fund’s assets as of July 31, 2022, all investments of the Fund are valued using amortized cost, which is a methodology utilizing Level 2 inputs.
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
7
Financial Highlights–Class A Shares
(For a Share Outstanding Throughout Each Period)
|
Year Ended July 31
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.0001
|
0.0001
|
0.006
|
0.015
|
0.006
|
|
Net realized gain (loss)
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
(0.000)1
|
|
TOTAL FROM INVESTMENT OPERATIONS
|
0.0001
|
0.0001
|
0.006
|
0.015
|
0.006
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.000)1
|
(0.000)1
|
(0.006)
|
(0.015)
|
(0.006)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
—
|
—
|
(0.000)1
|
|
TOTAL DISTRIBUTIONS
|
(0.000)1
|
(0.000)1
|
(0.006)
|
(0.015)
|
(0.006)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.09%
|
0.01%
|
0.61%
|
1.47%
|
0.56%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.29%
|
0.11%4
|
0.64%4
|
0.87%4
|
0.87%4
|
|
Net investment income
|
0.08%
|
0.01%
|
0.54%
|
1.48%
|
0.54%
|
|
Expense waiver/reimbursement5
|
0.73%
|
0.92%
|
0.41%
|
0.14%
|
0.15%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$132,620
|
$133,442
|
$150,878
|
$103,120
|
$73,428
|
1
Represents less than $0.001.
2
Based on net asset value.
3
Amount does not reflect net expenses incurred by investment companies in which the Fund may invest.
4
The net expense ratio is calculated without reduction for expense offset arrangements. The net expense ratios are 0.11%, 0.64%, 0.87% and 0.87% for the years ended July 31, 2021, 2020, 2019 and 2018, respectively, after taking into account this expense reduction.
5
This expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense waiver/reimbursement recorded by investment companies in which the Fund may invest.
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
8
Financial Highlights–Class B Shares
(For a Share Outstanding Throughout Each Period)
|
Year Ended July 31
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.0001
|
0.0001
|
0.004
|
0.011
|
0.002
|
|
Net realized gain (loss)
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
(0.000)1
|
|
TOTAL FROM INVESTMENT OPERATIONS
|
0.0001
|
0.0001
|
0.004
|
0.011
|
0.002
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.000)1
|
(0.000)1
|
(0.004)
|
(0.011)
|
(0.002)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
—
|
—
|
(0.000)1
|
|
TOTAL DISTRIBUTIONS
|
(0.000)1
|
(0.000)1
|
(0.004)
|
(0.011)
|
(0.002)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.04%
|
0.01%
|
0.36%
|
1.07%
|
0.23%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.29%
|
0.11%4
|
0.95%4
|
1.27%4
|
1.19%4
|
|
Net investment income
|
0.03%
|
0.01%
|
0.40%
|
1.07%
|
0.20%
|
|
Expense waiver/reimbursement5
|
1.06%
|
1.26%
|
0.43%
|
0.11%
|
0.17%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$480
|
$843
|
$1,139
|
$1,682
|
$2,024
|
1
Represents less than $0.001.
2
Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable.
3
Amount does not reflect net expenses incurred by investment companies in which the Fund may invest.
4
The net expense ratio is calculated without reduction for expense offset arrangements. The net expense ratios are 0.11%, 0.95%, 1.27%, and 1.19% for the years ended July 31, 2021, 2020, 2019 and 2018, respectively, after taking into account this expense reduction.
5
This expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense waiver/reimbursement recorded by investment companies in which the Fund may invest.
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
9
Financial Highlights–Class C Shares
(For a Share Outstanding Throughout Each Period)
|
Year Ended July 31
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.0001
|
0.0001
|
0.004
|
0.011
|
0.002
|
|
Net realized gain (loss)
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
(0.000)1
|
|
TOTAL FROM INVESTMENT OPERATIONS
|
0.0001
|
0.0001
|
0.004
|
0.011
|
0.002
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.000)1
|
(0.000)1
|
(0.004)
|
(0.011)
|
(0.002)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
—
|
—
|
(0.000)1
|
|
TOTAL DISTRIBUTIONS
|
(0.000)1
|
(0.000)1
|
(0.004)
|
(0.011)
|
(0.002)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.04%
|
0.01%
|
0.38%
|
1.08%
|
0.23%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.38%
|
0.10%4
|
0.69%4
|
1.26%4
|
1.20%4
|
|
Net investment income
|
0.04%
|
0.01%
|
0.22%
|
1.09%
|
0.19%
|
|
Expense waiver/reimbursement5
|
0.94%
|
1.23%
|
0.65%
|
0.08%
|
0.16%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$5,543
|
$5,677
|
$8,299
|
$4,505
|
$6,007
|
1
Represents less than $0.001.
2
Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable.
3
Amount does not reflect net expenses incurred by investment companies in which the Fund may invest.
4
The net expense ratio is calculated without reduction for expense offset arrangements. The net expense ratios are 0.10%, 0.69%, 1.26%, and 1.20% for the years ended July 31, 2021, 2020, 2019 and 2018, respectively, after taking into account this expense reduction.
5
This expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense waiver/reimbursement recorded by investment companies in which the Fund may invest.
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
10
Financial Highlights–Class F Shares
(For a Share Outstanding Throughout Each Period)
|
Year Ended July 31
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.0001
|
0.0001
|
0.006
|
0.015
|
0.006
|
|
Net realized gain (loss)
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
(0.000)1
|
|
TOTAL FROM INVESTMENT OPERATIONS
|
0.0001
|
0.0001
|
0.006
|
0.015
|
0.006
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.000)1
|
(0.000)1
|
(0.006)
|
(0.015)
|
(0.006)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
—
|
—
|
(0.000)1
|
|
TOTAL DISTRIBUTIONS
|
(0.000)1
|
(0.000)1
|
(0.006)
|
(0.015)
|
(0.006)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.09%
|
0.01%
|
0.61%
|
1.47%
|
0.56%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.30%
|
0.11%4
|
0.62%4
|
0.87%4
|
0.87%4
|
|
Net investment income
|
0.09%
|
0.01%
|
0.53%
|
1.49%
|
0.54%
|
|
Expense waiver/reimbursement5
|
0.66%
|
0.89%
|
0.42%
|
0.16%
|
0.16%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$1,692
|
$1,609
|
$1,743
|
$1,556
|
$1,071
|
1
Represents less than $0.001.
2
Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable.
3
Amount does not reflect net expenses incurred by investment companies in which the Fund may invest.
4
The net expense ratio is calculated without reduction for expense offset arrangements. The net expense ratios are 0.11%, 0.62%, 0.87%, and 0.87% for the years ended July 31, 2021, 2020, 2019 and 2018, respectively, after taking into account this expense reduction.
5
This expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense waiver/reimbursement recorded by investment companies in which the Fund may invest.
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
11
Financial Highlights–Class P Shares
(For a Share Outstanding Throughout Each Period)
|
Year Ended July 31
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.0001
|
0.0001
|
0.005
|
0.013
|
0.004
|
|
Net realized gain (loss)
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
(0.000)1
|
|
TOTAL FROM INVESTMENT
OPERATIONS
|
0.0001
|
0.0001
|
0.005
|
0.013
|
0.004
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net
investment income
|
(0.000)1
|
(0.000)1
|
(0.005)
|
(0.013)
|
(0.004)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
—
|
—
|
(0.000)1
|
|
TOTAL DISTRIBUTIONS
|
(0.000)1
|
(0.000)1
|
(0.005)
|
(0.013)
|
(0.004)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.07%
|
0.01%
|
0.52%
|
1.32%
|
0.41%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.30%
|
0.11%4
|
0.72%4
|
1.02%4
|
1.02%4
|
|
Net investment income
|
0.06%
|
0.01%
|
0.47%
|
1.31%
|
0.40%
|
|
Expense waiver/reimbursement5
|
0.89%
|
1.09%
|
0.48%
|
0.18%
|
0.18%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$10,881,572
|
$11,417,910
|
$10,706,195
|
$8,069,420
|
$8,626,983
|
1
Represents less than $0.001.
2
Based on net asset value.
3
Amount does not reflect net expenses incurred by investment companies in which the Fund may invest.
4
The net expense ratio is calculated without reduction for expense offset arrangements. The net expense ratios are 0.11%, 0.72%, 1.02%, and 1.02% for the years ended July 31, 2021, 2020, 2019 and 2018, respectively, after taking into account this expense reduction.
5
This expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense waiver/reimbursement recorded by investment companies in which the Fund may invest.
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
12
Statement of Assets and Liabilities
July 31, 2022
July 31, 2022
|
Assets:
|
|
|
|
Investment in securities
|
$3,833,004,753
|
|
|
Investments in repurchase agreements
|
7,125,952,000
|
|
|
Investment in securities, at amortized cost and fair value
|
|
$10,958,956,753
|
|
Cash
|
|
531,377
|
|
Income receivable
|
|
11,283,519
|
|
Receivable for investments sold
|
|
75,500,000
|
|
Receivable for shares sold
|
|
199,204
|
|
TOTAL ASSETS
|
|
11,046,470,853
|
|
Liabilities:
|
|
|
|
Payable for investments purchased
|
15,000,000
|
|
|
Payable for shares redeemed
|
1,305,583
|
|
|
Income distribution payable
|
1,587
|
|
|
Payable for distribution services fee (Note 5)
|
4,322,752
|
|
|
Payable for other service fees (Notes 2 and 5)
|
2,417,472
|
|
|
Payable for transfer agent fee (Notes 2 and 5)
|
990,256
|
|
|
Payable for investment adviser fee (Note 5)
|
116,349
|
|
|
Payable for administrative fee (Note 5)
|
70,896
|
|
|
Accrued expenses (Note 5)
|
339,157
|
|
|
TOTAL LIABILITIES
|
|
24,564,052
|
|
Net assets for 11,021,905,448 shares outstanding
|
|
$11,021,906,801
|
|
Net Assets Consists of:
|
|
|
|
Paid-in capital
|
|
$11,021,904,312
|
|
Total distributable earnings (loss)
|
|
2,489
|
|
TOTAL NET ASSETS
|
|
$11,021,906,801
|
Annual Shareholder Report
13
Statement of Assets and Liabilities–continued
|
Net Asset Value, Offering Price and Redemption Proceeds
Per Share:
|
|
|
|
Class A Shares:
|
|
|
|
Net asset value per share ($132,619,728 ÷ 132,619,878 shares
outstanding), no par value, unlimited shares authorized
|
|
$1.00
|
|
Offering price per share
|
|
$1.00
|
|
Redemption proceeds per share
|
|
$1.00
|
|
Class B Shares:
|
|
|
|
Net asset value per share ($480,414 ÷ 480,419 shares
outstanding), no par value, unlimited shares authorized
|
|
$1.00
|
|
Offering price per share
|
|
$1.00
|
|
Redemption proceeds per share (94.50/100 of $1.00)1
|
|
$0.95
|
|
Class C Shares:
|
|
|
|
Net asset value per share ($5,542,595 ÷ 5,542,594 shares
outstanding), no par value, unlimited shares authorized
|
|
$1.00
|
|
Offering price per share
|
|
$1.00
|
|
Redemption proceeds per share (99.00/100 of $1.00)1
|
|
$0.99
|
|
Class F Shares:
|
|
|
|
Net asset value per share ($1,691,656 ÷ 1,691,656 shares
outstanding), no par value, unlimited shares authorized
|
|
$1.00
|
|
Offering price per share
|
|
$1.00
|
|
Redemption proceeds per share (99.00/100 of $1.00)1
|
|
$0.99
|
|
Class P Shares:
|
|
|
|
Net asset value per share ($10,881,572,408 ÷ 10,881,570,901
shares outstanding), no par value, unlimited shares authorized
|
|
$1.00
|
|
Offering price per share
|
|
$1.00
|
|
Redemption proceeds per share
|
|
$1.00
|
1
Under certain limited conditions, a “Contingent Deferred Sales Charge” of up to 5.50% for Class B Shares and up to 1.00% for Class C Shares and Class F Shares may be imposed. See “Sales Charge When You Redeem” in the Prospectus.
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
14
Statement of Operations
Year Ended July 31, 2022
Year Ended July 31, 2022
|
Investment Income:
|
|
|
|
|
Interest
|
|
|
$42,602,184
|
|
Expenses:
|
|
|
|
|
Investment adviser fee (Note 5)
|
|
$23,147,329
|
|
|
Administrative fee (Note 5)
|
|
9,058,762
|
|
|
Custodian fees
|
|
324,261
|
|
|
Transfer agent fees (Notes 2 and 5)
|
|
11,564,620
|
|
|
Directors’/Trustees’ fees (Note 5)
|
|
63,232
|
|
|
Auditing fees
|
|
22,400
|
|
|
Legal fees
|
|
7,358
|
|
|
Distribution services fee (Note 5)
|
|
63,533,224
|
|
|
Other service fees (Notes 2 and 5)
|
|
28,754,768
|
|
|
Portfolio accounting fees
|
|
197,643
|
|
|
Share registration costs
|
|
673,171
|
|
|
Printing and postage
|
|
696,125
|
|
|
Miscellaneous (Note 5)
|
|
50,287
|
|
|
TOTAL EXPENSES
|
|
138,093,180
|
|
|
Waivers and Reimbursements:
|
|
|
|
|
Waiver of investment adviser fee (Note 5)
|
$(19,057,942)
|
|
|
|
Waivers/reimbursements of other operating
expenses (Notes 2 and 5)
|
(83,748,434)
|
|
|
|
TOTAL WAIVERS AND REIMBURSEMENTS
|
|
(102,806,376)
|
|
|
Net expenses
|
|
|
35,286,804
|
|
Net investment income
|
|
|
7,315,380
|
|
Net realized gain on investments
|
|
|
1,517
|
|
Change in net assets resulting from operations
|
|
|
$7,316,897
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
15
Statement of Changes in Net Assets
|
Year Ended July 31
|
2022
|
2021
|
|
Increase (Decrease) in Net Assets
|
|
|
|
Operations:
|
|
|
|
Net investment income
|
$7,315,380
|
$1,370,207
|
|
Net realized gain
|
1,517
|
14,886
|
|
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
|
7,316,897
|
1,385,093
|
|
Distributions to Shareholders:
|
|
|
|
Class A Shares
|
(116,462)
|
(13,570)
|
|
Class B Shares
|
(198)
|
(92)
|
|
Class C Shares
|
(2,468)
|
(895)
|
|
Class F Shares
|
(1,463)
|
(168)
|
|
Class P Shares
|
(7,518,693)
|
(1,067,900)
|
|
CHANGE IN NET ASSETS RESULTING FROM
DISTRIBUTIONS TO SHAREHOLDERS
|
(7,639,284)
|
(1,082,625)
|
|
Share Transactions:
|
|
|
|
Proceeds from sale of shares
|
9,137,625,168
|
8,148,572,146
|
|
Net asset value of shares issued to shareholders in payment of
distributions declared
|
7,474,688
|
1,049,111
|
|
Cost of shares redeemed
|
(9,682,351,270)
|
(7,458,696,904)
|
|
CHANGE IN NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
|
(537,251,414)
|
690,924,353
|
|
Change in net assets
|
(537,573,801)
|
691,226,821
|
|
Net Assets:
|
|
|
|
Beginning of period
|
11,559,480,602
|
10,868,253,781
|
|
End of period
|
$11,021,906,801
|
$11,559,480,602
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
16
Notes to Financial Statements
July 31, 2022
1. ORGANIZATION
Federated Hermes Money Market Obligations Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end, management investment company. The Trust consists of 16 portfolios. The financial statements included herein are only those of Federated Hermes Government Reserves Fund (the “Fund”), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder’s interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers five classes of shares: Class A Shares, Class B Shares, Class C Shares, Class F Shares and Class P Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The investment objective of the Fund is to provide current income consistent with stability of principal and liquidity.
The Fund operates as a government money market fund. As a government money market fund, the Fund: (1) invests at least 99.5% of its total assets in: (i) cash; (ii) securities issued or guaranteed by the United States or certain U.S. government agencies or instrumentalities; and/or (iii) repurchase agreements that are collateralized fully; (2) generally continues to use amortized cost to value its portfolio securities and transact at a stable $1.00 net asset value (NAV); and (3) has elected not to be subject to the liquidity fees and gates requirement at this time as permitted by Rule 2a-7 under the Act.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
Securities are valued at amortized cost. Under the amortized cost valuation method, an investment is valued initially at its cost as determined in accordance with GAAP. The Fund then adjusts the amount of interest income accrued each day over the term of the investment to account for any difference between the initial cost of the investment and the amount payable at its maturity. If amortized cost is determined not to approximate fair value, the value of the portfolio securities will be determined in accordance with the procedures described below. There can be no assurance that the Fund could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines its NAV per share, and the actual value obtained could be materially different.
Annual Shareholder Report
17
The Fund’s Board of Trustees (the “Trustees”) have ultimate responsibility for determining the fair value of investments. The Trustees have appointed a valuation committee (“Valuation Committee”) comprised of officers of the Fund, Federated Investment Management Company (the “Adviser”) and certain of the Adviser’s affiliated companies to assist in determining fair value of securities and in overseeing the comparison of amortized cost to market-based value. The Trustees have also authorized the use of pricing services recommended by the Valuation Committee to provide fair value evaluations of the current value of certain investments for purposes of monitoring the relationship of market-based value and amortized cost. The Valuation Committee employs various methods for reviewing third-party pricing-service evaluations including periodic reviews of third-party pricing services’ policies, procedures and valuation methods (including key inputs and assumptions), and review of price challenges by the Adviser based on recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee determines the fair value of the investment in accordance with procedures adopted by the Trustees. The Trustees periodically review and approve the fair valuations made by the Valuation Committee and any changes made to the procedures.
Repurchase Agreements
The Fund may invest in repurchase agreements for short-term liquidity purposes. It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund’s custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control” as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.
The insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.
The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.
Annual Shareholder Report
18
Repurchase agreements are subject to Master Netting Agreements which are agreements between the Fund and its counterparties that provide for the net settlement of all transactions and collateral with the Fund, through a single payment, in the event of default or termination. Amounts presented on the Portfolio of Investments and Statement of Assets and Liabilities are not net settlement amounts but gross. As indicated above, the cash or securities to be repurchased, as shown on the Portfolio of Investments, exceeds the repurchase price to be paid under the agreements reducing the net settlement amount to zero.
Investment Income, Gains and Losses, Expenses and Distributions
Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified cost basis. Interest income and expenses are accrued daily. Distributions to shareholders are recorded on the ex-dividend date. Distributions of net investment income, if any, are declared daily and paid monthly. Amortization/accretion of premium and discount is included in investment income. Investment income, realized gains and losses, and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that select classes will bear certain expenses unique to those classes. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses. The detail of the total fund expense waivers and reimbursements of $102,806,376 is disclosed in various locations in this Note 2 and Note 5.
Transfer Agent Fees
For the year ended July 31, 2022, transfer agent fees for the Fund were as follows:
|
|
Transfer Agent
Fees Incurred
|
Transfer Agent
Fees Reimbursed
|
Transfer Agent
Fees Waived by
Unaffiliated
Third Parties
|
|
Class A Shares
|
$37,549
|
$(19,773)
|
$(15,500)
|
|
Class B Shares
|
335
|
(266)
|
—
|
|
Class C Shares
|
2,130
|
(124)
|
(838)
|
|
Class F Shares
|
403
|
(333)
|
(47)
|
|
Class P Shares
|
11,524,203
|
(701,998)
|
(6,583,718)
|
|
TOTAL
|
$11,564,620
|
$(722,494)
|
$(6,600,103)
|
Other Service Fees
The Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund’s Class A Shares, Class B Shares, Class C Shares, Class F Shares and Class P Shares to unaffiliated financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for other service fees. In addition, unaffiliated third-party financial intermediaries may waive other service fees. This waiver can be modified or terminated at any time.
Annual Shareholder Report
19
For the year ended July 31, 2022, other service fees for the Fund were as follows:
|
|
Other Service
Fees Incurred
|
Other Service
Fees Reimbursed
|
Other Service
Fees Waived by
Unaffiliated Third Parties
|
|
Class A Shares
|
$331,998
|
$(17,293)
|
$(249,710)
|
|
Class B Shares
|
1,458
|
(1,306)
|
—
|
|
Class C Shares
|
16,121
|
—
|
(13,788)
|
|
Class F Shares
|
2,837
|
(170)
|
(1,878)
|
|
Class P Shares
|
28,402,354
|
(118,417)
|
(24,564,584)
|
|
TOTAL
|
$28,754,768
|
$(137,186)
|
$(24,829,960)
|
Federal Taxes
It is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. As of and during the year ended July 31, 2022, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2022, tax years 2019 through 2022 remain subject to examination by the Fund’s major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.
When-Issued and Delayed-Delivery Transactions
The Fund may engage in when-issued or delayed-delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed-delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
Restricted Securities
The Fund may purchase securities which are considered restricted. Restricted securities are securities that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) are subject to contractual restrictions on public sales. In some cases, when a security cannot be offered for public sale without first being registered, the issuer of the restricted security has agreed to register such securities for resale, at the issuer’s expense, either upon demand by the Fund or in connection with another registered offering of the securities. Many such restricted securities may be resold in the secondary market in transactions exempt from registration. Restricted securities may be determined to be liquid under criteria established by the Trustees. The Fund will not incur any registration costs upon such resales. Restricted securities are valued at amortized cost in accordance with Rule 2a-7 under the Act.
Annual Shareholder Report
20
Other
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ materially from those estimated. The Fund applies investment company accounting and reporting guidance.
3. SHARES OF BENEFICIAL INTEREST
The following tables summarize share activity:
|
Year Ended July 31
|
2022
|
2021
|
||
|
Class A Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
73,725,006
|
$73,725,006
|
81,657,832
|
$81,657,832
|
|
Shares issued to shareholders in payment of
distributions declared
|
113,787
|
113,787
|
13,091
|
13,091
|
|
Shares redeemed
|
(74,657,374)
|
(74,657,374)
|
(99,109,836)
|
(99,109,836)
|
|
NET CHANGE RESULTING FROM
CLASS A SHARE TRANSACTIONS
|
(818,581)
|
$(818,581)
|
(17,438,913)
|
$(17,438,913)
|
|
Year Ended July 31
|
2022
|
2021
|
||
|
Class B Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
26,434
|
$26,434
|
324,777
|
$324,777
|
|
Shares issued to shareholders in payment of
distributions declared
|
170
|
170
|
87
|
87
|
|
Shares redeemed
|
(388,664)
|
(388,664)
|
(621,739)
|
(621,739)
|
|
NET CHANGE RESULTING FROM
CLASS B SHARE TRANSACTIONS
|
(362,060)
|
$(362,060)
|
(296,875)
|
$(296,875)
|
|
Year Ended July 31
|
2022
|
2021
|
||
|
Class C Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
8,302,537
|
$8,302,537
|
15,818,992
|
$15,818,992
|
|
Shares issued to shareholders in payment of
distributions declared
|
2,453
|
2,453
|
889
|
889
|
|
Shares redeemed
|
(8,438,969)
|
(8,438,969)
|
(18,442,707)
|
(18,442,707)
|
|
NET CHANGE RESULTING FROM
CLASS C SHARE TRANSACTIONS
|
(133,979)
|
$(133,979)
|
(2,622,826)
|
$(2,622,826)
|
|
Year Ended July 31
|
2022
|
2021
|
||
|
Class F Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
639,953
|
$639,953
|
601,358
|
$601,358
|
|
Shares issued to shareholders in payment of
distributions declared
|
997
|
997
|
119
|
119
|
|
Shares redeemed
|
(558,280)
|
(558,280)
|
(735,128)
|
(735,128)
|
|
NET CHANGE RESULTING FROM
CLASS F SHARE TRANSACTIONS
|
82,670
|
$82,670
|
(133,651)
|
$(133,651)
|
Annual Shareholder Report
21
|
Year Ended July 31
|
2022
|
2021
|
||
|
Class P Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
9,054,931,238
|
$9,054,931,238
|
8,050,169,194
|
$8,050,169,187
|
|
Shares issued to shareholders
in payment of
distributions declared
|
7,357,281
|
7,357,281
|
1,034,925
|
1,034,925
|
|
Shares redeemed
|
(9,598,307,983)
|
(9,598,307,983)
|
(7,339,787,494)
|
(7,339,787,494)
|
|
NET CHANGE
RESULTING FROM
CLASS P SHARE
TRANSACTIONS
|
(536,019,464)
|
$(536,019,464)
|
711,416,625
|
$711,416,618
|
|
NET CHANGE RESULTING
FROM TOTAL FUND
SHARE TRANSACTIONS
|
(537,251,414)
|
$(537,251,414)
|
690,924,360
|
$690,924,353
|
4. FEDERAL TAX INFORMATION
The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2022 and 2021, was as follows:
|
|
2022
|
2021
|
|
Ordinary income1
|
$7,639,284
|
$1,082,625
|
1
For tax purposes, short-term capital gain distributions are considered ordinary income distributions.
As of July 31, 2022, the components of distributable earnings on a tax basis were as follows:
|
|
|
|
Ordinary income
|
$972
|
|
Long-term capital gains
|
$1,517
|
5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.20% of the Fund’s average daily net assets. Subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund for competitive reasons such as to maintain the Fund’s expense ratio, or as and when appropriate, to maintain positive or zero net yields. For the year ended July 31, 2022, the Adviser voluntarily waived $19,057,942 of its fee and voluntarily reimbursed $722,494 of transfer agent fees.
Annual Shareholder Report
22
Administrative Fee
Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated Hermes Funds subject to a fee under the Administrative Services Agreement. The fee paid to FAS is based on the average daily net assets of the Investment Complex as specified below:
|
Administrative Fee
|
Average Daily Net Assets
of the Investment Complex
|
|
0.100%
|
on assets up to $50 billion
|
|
0.075%
|
on assets over $50 billion
|
Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2022, the annualized net fee paid to FAS was 0.078% of average daily net assets of the Fund.
In addition, FAS may charge certain out-of-pocket expenses to the Fund.
Distribution Services Fee
The Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund’s Class A Shares, Class B Shares, Class C Shares, Class F Shares and Class P Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets, annually, to compensate FSC:
|
Share Class Name
|
Percentage of Average Daily
Net Assets of Class
|
|
Class A Shares
|
0.45%
|
|
Class B Shares
|
0.75%
|
|
Class C Shares
|
0.75%
|
|
Class F Shares
|
0.45%
|
|
Class P Shares
|
0.55%
|
Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2022, distribution services fees for the Fund were as follows:
|
|
Distribution
Service Fees
Incurred
|
Distribution
Services Fees
Waived
|
|
Class A Shares
|
$605,537
|
$(455,682)
|
|
Class B Shares
|
4,374
|
(3,605)
|
|
Class C Shares
|
48,706
|
(36,403)
|
|
Class F Shares
|
6,842
|
(5,095)
|
|
Class P Shares
|
62,867,765
|
(50,957,906)
|
|
TOTAL
|
$63,533,224
|
$(51,458,691)
|
For the year ended July 31, 2022, FSC retained $297,121 of fees paid by the Fund.
Annual Shareholder Report
23
When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares.
Sales Charges
Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the year ended July 31, 2022, FSC retained $412, $1,216 and $177 of CDSC relating to redemptions of Class B Shares, Class C Shares and Class F Shares, respectively.
Other Service Fees
For the year ended July 31, 2022, FSSC received $30,798 and reimbursed $137,186 of the other service fees disclosed in Note 2.
Expense Limitation
Due to the possibility of changes in market conditions and other factors, there can be no assurance that the level of waivers/reimbursements of Fund expenses reflected in the financial highlights will be maintained in the future. The Adviser and certain of its affiliates (which may include FSC, FAS and FSSC) on their own initiative have agreed to waive certain amounts of their respective fees and/or reimburse expenses. Total annual fund operating expenses (as shown in the financial highlights, excluding interest expense, extraordinary expenses and proxy-related expenses paid by the Fund, if any) paid by the Fund’s Class A Shares, Class B Shares, Class C Shares, Class F Shares and Class P Shares (after the voluntary waivers and reimbursements) will not exceed 0.87%, 1.27%, 1.27%, 0.87% and 1.02% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) October 1, 2023; or (b) the date of the Fund’s next effective Prospectus. While the Adviser and its applicable affiliates currently do not anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or the Fee Limit increased prior to the Termination Date with the agreement of the Trustees.
Directors’/Trustees’ and Miscellaneous Fees
Certain Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate payment, Independent Directors’/Trustees’ fees and certain expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses are paid by an affiliate of the Adviser which in due course are reimbursed by the Fund. These expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses may be included in Accrued and Miscellaneous Expenses on the Statement of Assets and Liabilities and Statement of Operations, respectively.
6. INTERFUND LENDING
Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other funds advised by subsidiaries of Federated Hermes, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating affiliated funds. As of July 31, 2022, there were no outstanding loans. During the year ended July 31, 2022, the program was not utilized.
Annual Shareholder Report
24
7. Indemnifications
Under the Fund’s organizational documents, its Officers and Directors/Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund (other than liabilities arising out of their willful misfeasance, bad faith, gross negligence or reckless disregard of their duties to the Fund). In addition, in the normal course of business, the Fund provides certain indemnifications under arrangements with third parties. Typically, obligations to indemnify a third party arise in the context of an arrangement entered into by the Fund under which the Fund agrees to indemnify such third party for certain liabilities arising out of actions taken pursuant to the arrangement, provided the third party’s actions are not deemed to have breached an agreed-upon standard of care (such as willful misfeasance, bad faith, gross negligence or reckless disregard of their duties under the contract). The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet arisen. The Fund does not anticipate any material claims or losses pursuant to these arrangements at this time, and accordingly expects the risk of loss to be remote.
8. OTHER MATTERS
An outbreak of respiratory disease caused by a novel coronavirus was first detected in China in late 2019 and subsequently spread globally. As of the date of the issuance of these financial statements, this coronavirus has resulted in closing borders, enhanced health screenings, disruptions to healthcare service preparation and delivery, quarantines, cancellations, and disruptions to supply chains, workflow operations and consumer activity, as well as general concern and uncertainty. The impact of this coronavirus may continue for an extended period of time and has resulted in substantial economic volatility. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could continue to negatively affect the worldwide economy, as well as the economies of individual countries, individual companies (including certain Fund service providers and issuers of the Fund’s investments) and the markets in general in significant and unforeseen ways. Any such impact could adversely affect the Fund’s performance.
Annual Shareholder Report
25
Report of Independent Registered Public Accounting Firm
TO THE board of trustees OF Federated Hermes Money Market Obligations Trust and shareholders of Federated Hermes Government Reserves Fund:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of Federated Hermes Government Reserves Fund (the “Fund”) (one of the portfolios constituting Federated Hermes Money Market Obligations Trust (the “Trust”)), including the portfolio of investments, as of July 31, 2022, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the portfolios constituting Federated Hermes Money Market Obligations Trust) at July 31, 2022, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
Annual Shareholder Report
26
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of July 31, 2022, by correspondence with the custodian and others or by other appropriate auditing procedures where replies from others were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more Federated Hermes investment companies since 1979.
Boston, Massachusetts
September 23, 2022
September 23, 2022
Annual Shareholder Report
27
Shareholder Expense Example (unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or other service fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2022 to July 31, 2022.
ACTUAL EXPENSES
The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses attributable to your investment during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Annual Shareholder Report
28
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase or redemption payments. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
|
|
Beginning
Account Value
2/1/2022
|
Ending
Account Value
7/31/2022
|
Expenses Paid
During Period1
|
|
Actual:
|
|
|
|
|
Class A Shares
|
$1,000.00
|
$1,000.80
|
$2.532
|
|
Class B Shares
|
$1,000.00
|
$1,000.30
|
$2.933
|
|
Class C Shares
|
$1,000.00
|
$1,000.30
|
$3.124
|
|
Class F Shares
|
$1,000.00
|
$1,000.80
|
$2.635
|
|
Class P Shares
|
$1,000.00
|
$1,000.60
|
$2.636
|
|
Hypothetical (assuming a 5% return
before expenses):
|
|
|
|
|
Class A Shares
|
$1,000.00
|
$1,022.27
|
$2.562
|
|
Class B Shares
|
$1,000.00
|
$1,021.87
|
$2.963
|
|
Class C Shares
|
$1,000.00
|
$1,021.67
|
$3.164
|
|
Class F Shares
|
$1,000.00
|
$1,022.17
|
$2.665
|
|
Class P Shares
|
$1,000.00
|
$1,022.17
|
$2.666
|
1
Expenses are equal to the Fund’s annualized net expense ratios, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half-year period). The annualized net expense ratios are as follows:
|
Class A Shares
|
0.51%
|
|
Class B Shares
|
0.59%
|
|
Class C Shares
|
0.63%
|
|
Class F Shares
|
0.53%
|
|
Class P Shares
|
0.53%
|
2
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Class A Shares current Fee Limit of 0.87% (as reflected in the Notes to Financial Statements, Note 5 under Expense Limitation), multiplied by the average account value over the period, multiplied by 181/365 (to reflect expenses paid as if they had been in effect throughout the most recent one-half-year period) would be $4.32 and $4.36, respectively.
3
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Class B Shares current Fee Limit of 1.27% (as reflected in the Notes to Financial Statements, Note 5 under Expense Limitation), multiplied by the average account value over the period, multiplied by 181/365 (to reflect expenses paid as if they had been in effect throughout the most recent one-half-year period) would be $6.30 and $6.36, respectively.
4
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Class C Shares current Fee Limit of 1.27% (as reflected in the Notes to Financial Statements, Note 5 under Expense Limitation), multiplied by the average account value over the period, multiplied by 181/365 (to reflect expenses paid as if they had been in effect throughout the most recent one-half-year period) would be $6.30 and $6.36, respectively.
Annual Shareholder Report
29
5
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Class F Shares current Fee Limit of 0.87% (as reflected in the Notes to Financial Statements, Note 5 under Expense Limitation), multiplied by the average account value over the period, multiplied by 181/365 (to reflect expenses paid as if they had been in effect throughout the most recent one-half-year period) would be $4.32 and $4.36, respectively.
6
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Class P Shares current Fee Limit of 1.02% (as reflected in the Notes to Financial Statements, Note 5 under Expense Limitation), multiplied by the average account value over the period, multiplied by 181/365 (to reflect expenses paid as if they had been in effect throughout the most recent one-half-year period) would be $5.06 and $5.11, respectively.
Annual Shareholder Report
30
Board of Trustees and Trust Officers
The Board of Trustees is responsible for managing the Trust’s business affairs and for exercising all the Trust’s powers except those reserved for the shareholders. The following tables give information about each Trustee and the senior officers of the Fund. Where required, the tables separately list Trustees who are “interested persons” of the Fund (i.e., “Interested” Trustees) and those who are not (i.e., “Independent” Trustees). Unless otherwise noted, the address of each person listed is 1001 Liberty Avenue, Pittsburgh, PA 15222-3779. The address of all Independent Trustees listed is 4000 Ericsson Drive, Warrendale, PA 15086-7561; Attention: Mutual Fund Board. As of December 31, 2021, the Trust comprised 16 portfolio(s), and the Federated Hermes Fund Family consisted of 33 investment companies (comprising 102 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Trustee oversees all portfolios in the Federated Hermes Fund Family and serves for an indefinite term. The Fund’s Statement of Additional Information includes additional information about Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400, Option #4.
Interested TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
J. Christopher Donahue*
Birth Date: April 11, 1949
President and Trustee
Indefinite Term
Began serving: April 1989
|
Principal Occupations: Principal Executive Officer and President of
certain of the Funds in the Federated Hermes Fund Family; Director or
Trustee of the Funds in the Federated Hermes Fund Family; President,
Chief Executive Officer and Director, Federated Hermes, Inc.;
Chairman and Trustee, Federated Investment Management Company;
Trustee, Federated Investment Counseling; Chairman and Director,
Federated Global Investment Management Corp.; Chairman and
Trustee, Federated Equity Management Company of Pennsylvania;
Trustee, Federated Shareholder Services Company; Director,
Federated Services Company.
Previous Positions: President, Federated Investment Counseling;
President and Chief Executive Officer, Federated Investment
Management Company, Federated Global Investment Management
Corp. and Passport Research, Ltd; Chairman, Passport Research, Ltd.
|
Annual Shareholder Report
31
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
Thomas R. Donahue*
Birth Date: October 20, 1958
Trustee
Indefinite Term
Began serving: May 2016
|
Principal Occupations: Director or Trustee of certain of the funds in
the Federated Hermes Fund Family; Chief Financial Officer, Treasurer,
Vice President and Assistant Secretary, Federated Hermes, Inc.;
Chairman and Trustee, Federated Administrative Services; Chairman
and Director, Federated Administrative Services, Inc.; Trustee and
Treasurer, Federated Advisory Services Company; Director or Trustee
and Treasurer, Federated Equity Management Company of
Pennsylvania, Federated Global Investment Management Corp.,
Federated Investment Counseling, and Federated Investment
Management Company; Director, MDTA LLC; Director, Executive Vice
President and Assistant Secretary, Federated Securities Corp.;
Director or Trustee and Chairman, Federated Services Company and
Federated Shareholder Services Company; and Director and
President, FII Holdings, Inc.
Previous Positions: Director, Federated Hermes, Inc.; Assistant
Secretary, Federated Investment Management Company, Federated
Global Investment Management Company and Passport Research,
LTD; Treasurer, Passport Research, LTD; Executive Vice President,
Federated Securities Corp.; and Treasurer, FII Holdings, Inc.
|
*
Family relationships and reasons for “interested” status: J. Christopher Donahue and Thomas R. Donahue are brothers. Both are “interested” due to their beneficial ownership of shares of Federated Hermes, Inc. and the positions they hold with Federated Hermes, Inc. and its subsidiaries.
INDEPENDENT TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
John T. Collins
Birth Date: January 24, 1947
Trustee
Indefinite Term
Began serving: September
2013
|
Principal Occupations: Director or Trustee, and Chair of the Board
of Directors or Trustees, of the Federated Hermes Fund Family;
formerly, Chairman and CEO, The Collins Group, Inc. (a private equity
firm) (Retired).
Other Directorships Held: Director, KLX Energy Services Holdings,
Inc. (oilfield services); former Director of KLX Corp. (aerospace).
Qualifications: Mr. Collins has served in several business and financial
management roles and directorship positions throughout his career.
Mr. Collins previously served as Chairman and CEO of The Collins
Group, Inc. (a private equity firm) and as a Director of KLX Corp.
Mr. Collins serves as Chairman Emeriti, Bentley University. Mr. Collins
previously served as Director and Audit Committee Member, Bank of
America Corp.; Director, FleetBoston Financial Corp.; and Director,
Beth Israel Deaconess Medical Center (Harvard University
Affiliate Hospital).
|
Annual Shareholder Report
32
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
G. Thomas Hough
Birth Date: February 28, 1955
Trustee
Indefinite Term
Began serving: August 2015
|
Principal Occupations: Director or Trustee, Chair of the Audit
Committee of the Federated Hermes Fund Family; formerly, Vice
Chair, Ernst & Young LLP (public accounting firm) (Retired).
Other Directorships Held: Director, Chair of the Audit Committee,
Equifax, Inc.; Lead Director, Member of the Audit and Nominating and
Corporate Governance Committees, Haverty Furniture Companies,
Inc.; formerly, Director, Member of Governance and Compensation
Committees, Publix Super Markets, Inc.
Qualifications: Mr. Hough has served in accounting, business
management and directorship positions throughout his career.
Mr. Hough most recently held the position of Americas Vice Chair of
Assurance with Ernst & Young LLP (public accounting firm). Mr. Hough
serves on the President’s Cabinet and Business School Board of
Visitors for the University of Alabama. Mr. Hough previously served on
the Business School Board of Visitors for Wake Forest University, and
he previously served as an Executive Committee member of the
United States Golf Association.
|
|
Maureen Lally-Green
Birth Date: July 5, 1949
Trustee
Indefinite Term
Began serving: August 2009
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Adjunct Professor Emerita of Law, Duquesne University
School of Law; formerly, Dean of the Duquesne University School of
Law and Professor of Law and Interim Dean of the Duquesne
University School of Law; formerly, Associate General Secretary and
Director, Office of Church Relations, Diocese of Pittsburgh.
Other Directorships Held: Director, CNX Resources Corporation
(formerly known as CONSOL Energy Inc.).
Qualifications: Judge Lally-Green has served in various legal and
business roles and directorship positions throughout her career. Judge
Lally-Green previously held the position of Dean of the School of Law
of Duquesne University (as well as Interim Dean). Judge Lally-Green
previously served as a member of the Superior Court of Pennsylvania
and as a Professor of Law, Duquesne University School of Law. Judge
Lally-Green was appointed by the Supreme Court of Pennsylvania to
serve on the Supreme Court’s Board of Continuing Judicial Education
and the Supreme Court’s Appellate Court Procedural Rules
Committee. Judge Lally-Green also currently holds the positions on
not for profit or for profit boards of directors as follows: Director
and Chair, UPMC Mercy Hospital; Regent, Saint Vincent Seminary;
Member, Pennsylvania State Board of Education (public); Director,
Catholic Charities, Pittsburgh; and Director CNX Resources
Corporation (formerly known as CONSOL Energy Inc.). Judge
Lally-Green has held the positions of: Director, Auberle; Director,
Epilepsy Foundation of Western and Central Pennsylvania; Director,
Ireland Institute of Pittsburgh; Director, Saint Thomas More Society;
Director and Chair, Catholic High Schools of the Diocese of
Pittsburgh, Inc.; Director, Pennsylvania Bar Institute; Director,
St. Vincent College; Director and Chair, North Catholic High
School, Inc.; Director and Vice Chair, Our Campaign for the Church
Alive!, Inc.; and Director, Saint Francis University.
|
Annual Shareholder Report
33
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
Thomas M. O’Neill
Birth Date: June 14, 1951
Trustee
Indefinite Term
Began serving: August 2006
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Sole Proprietor, Navigator Management Company
(investment and strategic consulting).
Other Directorships Held: None.
Qualifications: Mr. O’Neill has served in several business, mutual fund
and financial management roles and directorship positions throughout
his career. Mr. O’Neill serves as Director, Medicines for Humanity.
Mr. O’Neill previously served as Chief Executive Officer and President,
Managing Director and Chief Investment Officer, Fleet Investment
Advisors; President and Chief Executive Officer, Aeltus Investment
Management, Inc.; General Partner, Hellman, Jordan Management
Co., Boston, MA; Chief Investment Officer, The Putnam Companies,
Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director
and Consultant, EZE Castle Software (investment order management
software); Director, The Golisano Children’s Museum of Naples,
Florida; and Director, Midway Pacific (lumber).
|
|
Madelyn A. Reilly
Birth Date: February 2, 1956
Trustee
Indefinite Term
Began serving:
November 2020
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; formerly, Executive Vice President for Legal Affairs,
General Counsel and Secretary to the Board of Directors, Duquesne
University (Retired).
Other Directorships Held: None.
Qualifications: Ms. Reilly has served in various business and legal
management roles throughout her career. Ms. Reilly previously served
as Senior Vice President for Legal Affairs, General Counsel and
Secretary to the Board of Directors and Assistant General Counsel and
Director of Risk Management, Duquesne University. Prior to her work
at Duquesne University, Ms. Reilly served as Assistant General
Counsel of Compliance and Enterprise Risk as well as Senior Counsel
of Environment, Health and Safety, PPG Industries. Ms. Reilly currently
serves as a member of the Board of Directors of UPMC
Mercy Hospital.
|
Annual Shareholder Report
34
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
P. Jerome Richey
Birth Date: February 23, 1949
Trustee
Indefinite Term
Began serving: September
2013
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Management Consultant; Retired; formerly, Senior Vice
Chancellor and Chief Legal Officer, University of Pittsburgh and
Executive Vice President and Chief Legal Officer, CONSOL Energy Inc.
(now split into two separate publicly traded companies known as
CONSOL Energy Inc. and CNX Resources Corp.).
Other Directorships Held: None.
Qualifications: Mr. Richey has served in several business and legal
management roles and directorship positions throughout his career.
Mr. Richey most recently held the positions of Senior Vice Chancellor
and Chief Legal Officer, University of Pittsburgh. Mr. Richey previously
served as Chairman of the Board, Epilepsy Foundation of Western
Pennsylvania and Chairman of the Board, World Affairs Council of
Pittsburgh. Mr. Richey previously served as Chief Legal Officer and
Executive Vice President, CONSOL Energy Inc. and CNX Gas
Company; and Board Member, Ethics Counsel and Shareholder,
Buchanan Ingersoll & Rooney PC (a law firm).
|
|
John S. Walsh
Birth Date:
November 28, 1957
Trustee
Indefinite Term
Began serving: January 1999
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; President and Director, Heat Wagon, Inc. (manufacturer
of construction temporary heaters); President and Director,
Manufacturers Products, Inc. (distributor of portable construction
heaters); President, Portable Heater Parts, a division of Manufacturers
Products, Inc.
Other Directorships Held: None.
Qualifications: Mr. Walsh has served in several business management
roles and directorship positions throughout his career. Mr. Walsh
previously served as Vice President, Walsh & Kelly, Inc.
(paving contractors).
|
Annual Shareholder Report
35
OFFICERS
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Lori A. Hensler
Birth Date: January 6, 1967
TREASURER
Officer since: April 2013
|
Principal Occupations: Principal Financial Officer and Treasurer of the
Federated Hermes Fund Family; Senior Vice President, Federated
Administrative Services; Financial and Operations Principal for
Federated Securities Corp.; and Assistant Treasurer, Federated
Investors Trust Company. Ms. Hensler has received the Certified
Public Accountant designation.
Previous Positions: Controller of Federated Hermes, Inc.; Senior Vice
President and Assistant Treasurer, Federated Investors Management
Company; Treasurer, Federated Investors Trust Company; Assistant
Treasurer, Federated Administrative Services, Federated
Administrative Services, Inc., Federated Securities Corp., Edgewood
Services, Inc., Federated Advisory Services Company, Federated
Equity Management Company of Pennsylvania, Federated Global
Investment Management Corp., Federated Investment Counseling,
Federated Investment Management Company, Passport Research,
Ltd., and Federated MDTA, LLC; Financial and Operations Principal for
Federated Securities Corp., Edgewood Services, Inc. and Southpointe
Distribution Services, Inc.
|
|
Peter J. Germain
Birth Date:
September 3, 1959
CHIEF LEGAL OFFICER,
SECRETARY and EXECUTIVE
VICE PRESIDENT
Officer since: January 2005
|
Principal Occupations: Mr. Germain is Chief Legal Officer, Secretary
and Executive Vice President of the Federated Hermes Fund Family.
He is General Counsel, Chief Legal Officer, Secretary and Executive
Vice President, Federated Hermes, Inc.; Trustee and Senior Vice
President, Federated Investors Management Company; Trustee and
President, Federated Administrative Services; Director and President,
Federated Administrative Services, Inc.; Director and Vice President,
Federated Securities Corp.; Director and Secretary, Federated Private
Asset Management, Inc.; Secretary, Federated Shareholder Services
Company; and Secretary, Retirement Plan Service Company of
America. Mr. Germain joined Federated Hermes, Inc. in 1984 and is a
member of the Pennsylvania Bar Association.
Previous Positions: Deputy General Counsel, Special Counsel,
Managing Director of Mutual Fund Services, Federated Hermes, Inc.;
Senior Vice President, Federated Services Company; and Senior
Corporate Counsel, Federated Hermes, Inc.
|
|
Stephen Van Meter
Birth Date: June 5, 1975
CHIEF COMPLIANCE
OFFICER AND SENIOR VICE
PRESIDENT
Officer since: July 2015
|
Principal Occupations: Senior Vice President and Chief Compliance
Officer of the Federated Hermes Fund Family; Vice President and
Chief Compliance Officer of Federated Hermes, Inc. and Chief
Compliance Officer of certain of its subsidiaries. Mr. Van Meter joined
Federated Hermes, Inc. in October 2011. He holds FINRA licenses
under Series 3, 7, 24 and 66.
Previous Positions: Mr. Van Meter previously held the position of
Compliance Operating Officer, Federated Hermes, Inc. Prior to joining
Federated Hermes, Inc., Mr. Van Meter served at the United States
Securities and Exchange Commission in the positions of Senior
Counsel, Office of Chief Counsel, Division of Investment Management
and Senior Counsel, Division of Enforcement.
|
Annual Shareholder Report
36
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Deborah A. Cunningham
Birth Date:
September 15, 1959
CHIEF INVESTMENT OFFICER
Officer since: May 2004
Portfolio Manager since:
December 2009
|
Principal Occupations: Deborah A. Cunningham has been the Fund’s
Portfolio Manager since December 2009. Ms. Cunningham was named
Chief Investment Officer of Federated Hermes’ money market
products in 2004. She joined Federated Hermes in 1981 and has been
a Senior Portfolio Manager since 1997 and an Executive Vice President
of the Fund’s Adviser since 2009. Ms. Cunningham has received the
Chartered Financial Analyst designation and holds an M.S.B.A. in
Finance from Robert Morris College.
|
Annual Shareholder Report
37
Evaluation and Approval of Advisory Contract–May 2022
Federated Hermes Government Reserves Fund (the “Fund”)
At its meetings in May 2022 (the “May Meetings”), the Fund’s Board of Trustees (the “Board”), including those Trustees who are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940 (the “Independent Trustees”), reviewed and unanimously approved the continuation of the investment advisory contract between the Fund and Federated Investment Management Company (the “Adviser”) (the “Contract”) for an additional one-year term. The Board’s determination to approve the continuation of the Contract reflects the exercise of its business judgment after considering all of the information and factors believed to be relevant and appropriate on whether to approve the continuation of the existing arrangement. The information, factors and conclusions that formed the basis for the Board’s approval are summarized below.
Information Received and Review Process
At the request of the Independent Trustees, the Fund’s Chief Compliance Officer (the “CCO”) furnished to the Board in advance of its May Meetings an independent written evaluation presenting on the topics discussed below. The Board considered the CCO’s independent written evaluation (the “CCO Fee Evaluation Report”), along with other information, in evaluating the reasonableness of the Fund’s management fee and in determining to approve the continuation of the Contract. The CCO, in preparing the CCO Fee Evaluation Report, has the authority to retain consultants, experts or staff as reasonably necessary to assist in the performance of his duties, reports directly to the Board, and can be terminated only with the approval of a majority of the Independent Trustees. At the request of the Independent Trustees, the CCO Fee Evaluation Report followed the same general approach and covered the same topics as that of the report that had previously been delivered by the CCO in his capacity as “Senior Officer” prior to the elimination of the Senior Officer position in December 2017.
In addition to the extensive materials that comprise and accompany the CCO Fee Evaluation Report, the Board considered information specifically prepared in connection with the approval of the continuation of the Contract that was presented at the May Meetings. In this regard, in the months preceding the May Meetings, the Board requested and reviewed written responses and supporting materials prepared by the Adviser and its affiliates (collectively, “Federated Hermes”) in response to requests posed to Federated Hermes by independent legal counsel on behalf of the Independent Trustees encompassing a wide variety of topics, including those summarized below. The Board also considered such additional matters as the Independent Trustees deemed
Annual Shareholder Report
38
reasonably necessary to evaluate the Contract, which included detailed information about the Fund and Federated Hermes furnished to the Board at its meetings throughout the year and in between regularly scheduled meetings on particular matters as the need arose.
The Board’s consideration of the Contract included review of materials and information covering the following matters, among others: the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates; Federated Hermes’ business and operations; the Adviser’s investment philosophy, personnel and processes; the Fund’s investment objectives and strategies; the Fund’s short-term and long-term performance (in absolute terms, both on a gross basis and net of expenses, and relative to the Fund’s particular investment program and a group of its peer funds and/or its benchmark, as appropriate); the Fund’s investment objectives; the Fund’s fees and expenses, including the advisory fee and the overall expense structure of the Fund (both in absolute terms and relative to a group of its peer funds), with due regard for contractual or voluntary expense limitations (if any); the financial condition of Federated Hermes; the Adviser’s profitability with respect to the Fund; distribution and sales activity for the Fund; and the use and allocation of brokerage commissions derived from trading the Fund’s portfolio securities (if any).
The Board also considered judicial decisions concerning allegedly excessive investment advisory fees charged to other registered funds in determining to approve the Contract. Using these judicial decisions as a guide, the Board observed that the following factors may be relevant to an adviser’s fiduciary duty with respect to its receipt of compensation from a fund: (1) the nature and quality of the services provided by the adviser to the fund and its shareholders, including the performance of the fund, its benchmark and comparable funds; (2) the adviser’s cost of providing the services and the profitability to the adviser of providing advisory services to the fund; (3) the extent to which the adviser may realize “economies of scale” as the fund grows larger and, if such economies of scale exist, whether they have been appropriately shared with the fund and its shareholders or the family of funds; (4) any “fall-out” benefits that accrue to the adviser because of its relationship with the fund, including research services received from brokers that execute fund trades and any fees paid to affiliates of the adviser for services rendered to the fund; (5) comparative fee and expense structures, including a comparison of management fees paid to the adviser with those paid by similar funds both internally and externally as well as management fees charged to institutional and other advisory clients of the adviser for what might be viewed as like services; and (6) the extent of care, conscientiousness and independence with which the fund’s board members perform their duties and their expertise, including whether they are fully informed about all facts the board deems relevant to its consideration of the adviser’s services and fees. The Board noted that the Securities and Exchange Commission (“SEC”) disclosure requirements
Annual Shareholder Report
39
regarding the basis for a fund board’s approval of the fund’s investment advisory contract generally align with the factors listed above. The Board was guided by these factors in its review of the Contract to the extent it considered them to be appropriate and relevant, as discussed further below. The Board considered and weighed these factors in light of its substantial accumulated experience in governing the Fund and working with Federated Hermes on matters relating to the oversight of the other funds advised by Federated Hermes (each, a “Federated Hermes Fund” and, collectively, the (“Federated Hermes Funds”).
In addition to considering the above-referenced factors, the Board was mindful of the preferences and expectations of Fund shareholders and the potential disruptions of the Fund’s operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew the Contract. In particular, the Board recognized that many shareholders likely have invested in the Fund on the strength of Federated Hermes’ industry standing and reputation and with the expectation that Federated Hermes will have a continuing role in providing advisory services to the Fund. Thus, the Board observed that in the marketplace there are a range of investment options available to the Fund’s shareholders and such shareholders, having had the opportunity to consider other investment options, have effectively selected Federated Hermes by virtue of investing in the Fund.
In determining to approve the continuation of the Contract, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the continuation of the Contract was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Contract. The Board recognized that its evaluation process is evolutionary and that the factors considered and emphasis placed on relevant factors may change in recognition of changing circumstances in the registered fund marketplace. The Independent Trustees were assisted throughout the evaluation process by independent legal counsel. In connection with their deliberations at the May Meetings, the Independent Trustees met separately in executive session with their independent legal counsel and without management present to review the relevant materials and consider their responsibilities under applicable laws. In addition, senior management representatives of Federated Hermes also met with the Independent Trustees and their independent legal counsel to discuss the materials and presentations furnished to the Board at the May Meetings. The Board considered the approval of the Contract for the Fund as part of its consideration of agreements for funds across the family of Federated Hermes Funds, but its approvals were made on a fund-by-fund basis.
Annual Shareholder Report
40
Nature, Extent and Quality of Services
The Board considered the nature, extent and quality of the services provided to the Fund by the Adviser and the resources of Federated Hermes dedicated to the Fund. In this regard, the Board evaluated, among other things, the terms of the Contract and the range of services provided to the Fund by Federated Hermes. The Board considered the Adviser’s personnel, investment philosophy and process, investment research capabilities and resources, trade operations capabilities, experience and performance track record. The Board reviewed the qualifications, backgrounds and responsibilities of the portfolio management team primarily responsible for the day-to-day management of the Fund and Federated Hermes’ ability and experience in attracting and retaining qualified personnel to service the Fund. In addition, the Board noted that the Fund is a money market mutual fund that operates in accordance with the limitations set forth in Rule 2a-7 under the 1940 Act. In this connection, the Board considered the expertise of the Adviser in managing money market funds, its extensive experience with the requirements of Rule 2a-7 and its commitment to managing the Fund in accordance with these requirements. The Board also considered the Adviser’s ability to deliver competitive investment performance for the Fund when compared to the Fund’s Performance Peer Group (as defined below), which was deemed by the Board to be a useful indicator of how the Adviser is executing the Fund’s investment program. The Board also considered the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, in order to maintain a positive yield for the Fund in the low interest rate environment.
In addition, the Board considered the financial resources and overall reputation of Federated Hermes and its willingness to consider and make investments in personnel, infrastructure, technology, cybersecurity, business continuity planning and operational enhancements that are designed to benefit the Federated Hermes Funds. The Board noted the significant acquisition of Hermes Fund Managers Limited by Federated Hermes, which has deepened the organization’s investment management expertise and capabilities and expanded the investment process for all of the Federated Hermes Funds to have access to analytical resources related to environmental, social and governance (“ESG”) factors and issuer engagement on ESG matters. The Board considered the quality of Federated Hermes’ communications with the Board and responsiveness to Board inquiries and requests made from time to time with respect to the Fund and other Federated Hermes Funds. In this regard, the Board took into account Federated Hermes’ communications with the Board in light of the pandemic. The Board also considered that Federated Hermes is responsible for providing the Federated Hermes Funds’ officers.
The Board received and evaluated information regarding Federated Hermes’ regulatory and compliance environment. The Board considered Federated Hermes’ compliance program and compliance history and reports from the CCO about Federated Hermes’ compliance with applicable laws and
Annual Shareholder Report
41
regulations, including responses to regulatory developments and any compliance or other issues raised by regulatory agencies. The Board also noted Federated Hermes’ support of the Federated Hermes Funds’ compliance control structure and the compliance-related resources devoted by Federated Hermes in support of the Fund’s obligations pursuant to Rule 38a-1 under the Investment Company Act of 1940, including Federated Hermes’ commitment to respond to rulemaking and other regulatory initiatives of the SEC. The Board considered Federated Hermes’ approach to internal audits and risk management with respect to the Federated Hermes Funds and its day-to-day oversight of the Federated Hermes Funds’ compliance with their investment objectives and policies as well as with applicable laws and regulations, noting that regulatory and other developments had over time led to an increase in the scope of Federated Hermes’ oversight in this regard, including in connection with the designation of the Federated Hermes Funds’ investment advisers as the administrators of the Federated Hermes Funds’ liquidity risk management program.
The Board also considered the implementation of Federated Hermes’ business continuity plans and recognized steps taken by Federated Hermes to continue to provide the same nature, extent and quality of services to the Federated Hermes Funds during the pandemic. In addition, the Board noted Federated Hermes’ commitment to maintaining high quality systems and expending substantial resources to prepare for and respond to ongoing changes due to the market, regulatory and control environments in which the Fund and its service providers operate, including changes associated with the pandemic.
The Board considered Federated Hermes’ efforts to provide shareholders in the Federated Hermes Funds with a comprehensive array of funds with different investment objectives, policies and strategies. The Board considered the expenses that Federated Hermes had incurred, as well as the entrepreneurial and other risks assumed by Federated Hermes, in sponsoring and providing on-going services to new funds to expand these opportunities for shareholders. The Board noted the benefits to shareholders of being part of the family of Federated Hermes Funds, which include the general right to exchange investments between the same class of shares without the incurrence of additional sales charges.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided by the Adviser to the Fund.
Fund Investment Performance
The Board considered the investment performance of the Fund. In evaluating the Fund’s investment performance, the Board considered performance results in light of the Fund’s investment objective, strategies and risks. The Board considered detailed investment reports on, and the Adviser’s analysis of, the Fund’s performance over different time periods that were
Annual Shareholder Report
42
provided to the Board throughout the year and in connection with the May Meetings. These reports include, among other items, information on the Fund’s gross and net returns, the Fund’s investment performance compared to one or more relevant categories or groups of peer funds and the Fund’s benchmark index, performance attribution information and commentary on the effect of market conditions.
The Board also reviewed comparative information regarding the performance of other registered funds in the category of peer funds selected by iMoneyNet, an independent fund ranking organization (the “Performance Peer Group”). The Board noted the CCO’s view that comparisons to fund peer groups may be helpful, though not conclusive, in evaluating the performance of the Adviser in managing the Fund. The Board considered, in evaluating such comparisons, that in some cases there may be differences in the funds’ objectives or investment management techniques, or the costs to implement the funds, even within the same Performance Peer Group.
The Fund’s performance fell below the median of the Performance Peer Group for the one-year period ended December 31, 2021. The Board discussed the Fund’s performance with the Adviser, including the reasons for and plans to seek to improve the Fund’s performance, and recognized the efforts being taken by the Adviser in the context of other factors considered relevant by the Board. The Board also considered the relatively tight dispersion of performance data with respect to the Fund and its Peer Group.
Based on these considerations, the Board concluded that it had continued confidence in the Adviser’s overall capabilities to manage the Fund.
Fund Expenses
The Board considered the advisory fee and overall expense structure of the Fund and the comparative fee and expense information that had been provided in connection with the May Meetings. In this regard, the Board was presented with, and considered, information regarding the contractual advisory fee rates, net advisory fee rates, total expense ratios and each element of the Fund’s total expense ratio (i.e., gross and net advisory fees, administrative fees, custody fees, portfolio accounting fees and transfer agency fees) relative to an appropriate group of peer funds compiled by Federated Hermes from the category of peer funds selected by iMoneyNet (the “Expense Peer Group”). The Board received a description of the methodology used to select the Expense Peer Group from the overall iMoneyNet category. The Board also reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall iMoneyNet category.
While mindful that courts have cautioned against giving too much weight to comparative information concerning fees charged by other advisers for managing funds with comparable investment programs, the Board noted that it found the use of such comparisons to be relevant to its evaluation. The Board focused on comparisons with other similar registered funds more heavily than
Annual Shareholder Report
43
non-registered fund products or services because such comparisons are believed to be more relevant. The Board considered that other registered funds are the products most like the Fund, in that they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle, in fact, chosen and maintained by the Fund’s shareholders. The Board noted that the range of such other registered funds’ fees and expenses, therefore, appears to be a relevant indicator of what investors have found to be reasonable in the marketplace in which the Fund competes.
The Board reviewed the contractual advisory fee rate, net advisory fee rate and other expenses of the Fund and noted the position of the Fund’s fee rates relative to its Expense Peer Group. In this regard, the Board noted that the contractual advisory fee rate was below the median of the Expense Peer Group, and the Board was satisfied that the overall expense structure of the Fund remained competitive.
The Board also received and considered information about the fees charged by Federated Hermes for providing advisory services to other types of clients with investment strategies similar to those of the Federated Hermes Funds, including non-registered fund clients (such as institutional separate accounts) and third-party unaffiliated registered funds for which the Adviser or its affiliates serve as sub-adviser. The Board noted the CCO’s conclusion that non-registered fund clients are inherently different products due to the following differences, among others: (i) different types of targeted investors; (ii) different applicable laws and regulations; (iii) different legal structures; (iv) different average account sizes and portfolio management techniques made necessary by different cash flows and different associated costs; (v) the time spent by portfolio managers and their teams (among other personnel across various departments, including legal, compliance and risk management) in reviewing securities pricing and fund liquidity; (vi) different administrative responsibilities; (vii) different degrees of risk associated with management; and (viii) a variety of different costs. The Board also considered information regarding the differences in the nature of the services required for Federated Hermes to manage its proprietary registered fund business versus managing a discrete pool of assets as a sub-adviser to another institution’s registered fund, noting the CCO’s view that Federated Hermes generally performs significant additional services and assumes substantially greater risks in managing the Fund and other Federated Hermes Funds than in its role as sub-adviser to an unaffiliated third-party registered fund. The Board noted that the CCO did not consider the fees for providing advisory services to other types of clients to be determinative in judging the appropriateness of the Federated Hermes Funds’ advisory fees.
Based on these considerations, the Board concluded that the fees and total operating expenses of the Fund, in conjunction with other matters considered, are reasonable in light of the services provided.
Annual Shareholder Report
44
Profitability
The Board received and considered profitability information furnished by Federated Hermes, as requested by the CCO. Such profitability information included revenues reported on a fund-by-fund basis and estimates of the allocation of expenses made on a fund-by-fund basis, using allocation methodologies specified by the CCO and described to the Board. The Board considered the CCO’s view that, while these cost allocation reports apply consistent allocation processes, the inherent difficulties in allocating costs on a fund-by-fund basis continues to cause the CCO to question the precision of the process and to conclude that such reports may be unreliable because a single change in an allocation estimate may dramatically alter the resulting estimate of cost and/or profitability of a Federated Hermes Fund and may produce unintended consequences. In addition, the Board considered the CCO’s view that the allocation methodologies used by Federated Hermes in estimating profitability for purposes of reporting to the Board in connection with the continuation of the Contract are consistent with the methodologies previously reviewed by an independent consultant. The Board noted that the independent consultant had previously conducted a review of the allocation methodologies and reported that, although there is no single best method to allocate expenses, the methodologies used by Federated Hermes are reasonable. The Board noted the impact of the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, on the profitability of the Fund to the Adviser.
The Board also reviewed information compiled by Federated Hermes comparing its profitability information to other publicly held fund management companies, including information regarding profitability trends over time. The Board considered the CCO’s conclusion that, based on such profitability information, Federated Hermes’ profit margins did not appear to be excessive. The Board also considered the CCO’s view that Federated Hermes appeared financially sound, with the resources necessary to fulfill its obligations under its contracts with the Federated Hermes Funds.
Economies of Scale
The Board received and considered information about the notion of possible realization of “economies of scale” as a fund grows larger, the difficulties of calculating economies of scale at an individual fund level, and the extent to which potential scale benefits are shared with shareholders. In this regard, the Board considered that Federated Hermes has made significant and long-term investments in areas that support all of the Federated Hermes Funds, such as: personnel, processes and tools for portfolio management, including the use of market data on which portfolio managers make investment decisions; trading operations; ESG integration and issuer engagement on ESG matters; shareholder services; compliance; business continuity; cybersecurity; internal audit and risk management functions; and technology that supports the provision of investment management services. The Board noted that Federated
Annual Shareholder Report
45
Hermes’ investments in these areas are extensive and are designed to provide enhanced services to the Federated Hermes Funds and their shareholders. The Board considered that the benefits of these investments are likely to be shared with the family of Federated Hermes Funds as a whole. In addition, the Board considered that fee waivers and expense reimbursements are another means for potential economies of scale to be shared with shareholders and can provide protection from an increase in expenses if a Federated Hermes Fund’s assets decline. The Board considered that, in order for the Federated Hermes Funds to remain competitive in the marketplace, Federated Hermes has frequently waived fees and/or reimbursed expenses for the Federated Hermes Funds and has disclosed to shareholders and/or reported to the Board its intention to do so (or continue to do so) in the future. The Board also considered Federated Hermes’ reductions in contractual management fees for certain Federated Hermes Funds during the prior year, including in response to the CCO’s recommendations in the prior year’s CCO Fee Evaluation Report, which have resulted in benefits being realized by shareholders.
The Board also considered reports on adviser-paid fees (commonly referred to as “revenue sharing”) that were provided to the Board throughout the year and in connection with the May Meetings. The Board considered that Federated Hermes and the CCO believe that this information should be viewed to determine if there was an incentive to either not apply breakpoints, or to apply breakpoints at higher levels, and should not be viewed to evaluate the reasonableness of advisory fees. The Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which is compounded by the lack of any uniform methodology or pattern with respect to structuring fund advisory fees with breakpoints that serve to reduce the fees as a fund attains a certain size.
Other Benefits
The Board considered information regarding the compensation and other ancillary (or “fall-out”) benefits that Federated Hermes derived from its relationships with the Federated Hermes Funds. The Board noted that, in addition to receiving advisory fees under the Federated Hermes Funds’ investment advisory contracts, Federated Hermes’ affiliates also receive fees for providing other services to the Federated Hermes Funds under separate contracts (e.g., for serving as the Federated Hermes Funds’ administrator and distributor). In this regard, the Board considered that certain of Federated Hermes’ affiliates provide distribution and shareholder services to the Federated Hermes Funds, for which they may be compensated through distribution and servicing fees paid pursuant to Rule 12b-1 plans or otherwise. The Board also received and considered information detailing any indirect benefit that Federated Hermes may derive from its receipt of research services from brokers who execute portfolio trades for the Federated Hermes Funds.
Annual Shareholder Report
46
Conclusions
The Board considered: (i) the CCO’s conclusion that his observations and the information accompanying the CCO Fee Evaluation Report show that the management fee for the Fund is reasonable; and (ii) the CCO’s recommendation that the Board approve the management fee. The Board noted that, under these circumstances, no changes were recommended to, and no objection was raised to the continuation of, the Contract by the CCO. The CCO also recognized that the Board’s evaluation of the Federated Hermes Funds’ advisory and sub-advisory arrangements is a continuing and ongoing process that is informed by the information that the Board requests and receives from management throughout the course of the year and, in this regard, the CCO noted certain items for future reporting to the Board or further consideration by management as the Board continues its ongoing oversight of the Federated Hermes Funds.
On the basis of the information and factors summarized above, among other information and factors deemed relevant by the Board, and the evaluation thereof, the Board, including the Independent Trustees, unanimously voted to approve the continuation of the Contract. The Board based its determination to approve the Contract on the totality of the circumstances and relevant factors and with a view of past and future long-term considerations. Not all of the factors and considerations identified above were necessarily deemed to be relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were deemed to be relevant, the Board’s determination to approve the continuation of the Contract reflects its view that Federated Hermes’ performance and actions provided a satisfactory basis to support the determination to approve the continuation of the existing arrangement.
Annual Shareholder Report
47
Voting Proxies on Fund Portfolio Securities
A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund’s portfolio is available, without charge and upon request, by calling 1-800-341-7400, Option #4. A report on “Form N-PX” of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available via the Proxy Voting Record (Form N-PX) link associated with the Fund and share class name at FederatedInvestors.com/FundInformation. Form N-PX filings are also available at the SEC’s website at sec.gov.
Portfolio Schedule
The Fund files with the SEC a complete schedule of its portfolio holdings as of the close of each month on “Form N-MFP.” Form N-MFP is available on the SEC’s website at sec.gov. You may access Form N-MFP via the link to the Fund and share class name at FederatedInvestors.com.
Annual Shareholder Report
48
You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
This Report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund’s Prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.
Federated Hermes Government Reserves Fund
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at FederatedInvestors.com
or call 1-800-341-7400.
or call 1-800-341-7400.
Federated Securities Corp., Distributor
CUSIP 608919544
CUSIP 608919536
CUSIP 608919528
CUSIP 608919510
CUSIP 608919205
CUSIP 608919536
CUSIP 608919528
CUSIP 608919510
CUSIP 608919205
33543 (9/22)
© 2022 Federated Hermes, Inc.
Annual Shareholder Report
July 31, 2022
|
Shares | Ticker
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Select | GRTXX
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Institutional | GOIXX
|
|
|
Service | GOSXX
|
Administrative | GOEXX
|
|
|
Cash II | GFYXX
|
Cash Series | GFSXX
|
|
|
Capital | GOCXX
|
Trust | GORXX
|
|
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Premier | GOFXX
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Advisor | GOVXX
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|
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SDG | GPHXX
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Federated Hermes Government Obligations Fund
A Portfolio of Federated Hermes Money Market Obligations Trust
Dear Valued Shareholder,
We are pleased to present the Annual Shareholder Report for your fund covering the period from August 1, 2021 through July 31, 2022. This report includes a complete listing of your fund’s holdings, performance information and financial statements along with other important fund information.
As a global leader in active, responsible investment management, Federated Hermes is guided by our conviction that responsible investing is the best way to create wealth over the long term. The company provides capabilities across a wide range of asset classes to investors around the world.
In addition, FederatedInvestors.com offers quick and easy access to valuable resources that include timely fund updates, economic and market insights from our investment strategists and financial planning tools. You can also access many of those insights by following us on Twitter (@FederatedHermes) and LinkedIn.
Thank you for investing with us. We hope you find this information useful and look forward to keeping you informed.
Sincerely,
J. Christopher Donahue, President
Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee
Portfolio of Investments Summary Tables (unaudited)
At July 31, 2022, the Fund’s portfolio composition1 was as follows:
|
Security Type
|
Percentage of
Total Net Assets
|
|
U.S. Government Agency Securities
|
13.2%
|
|
U.S. Treasury Securities
|
9.8%
|
|
Repurchase Agreements
|
73.7%
|
|
Other Assets and Liabilities—Net2
|
3.3%
|
|
TOTAL
|
100%
|
|
1
|
See the Fund’s Prospectus and Statement of Additional Information for a description of the
principal types of securities in which the Fund invests.
|
|
2
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
At July 31, 2022, the Fund’s effective maturity schedule1 was as follows:
|
Securities With an
Effective Maturity of:
|
Percentage of
Total Net Assets
|
|
1-7 Days
|
89.3%
|
|
8-30 Days
|
0.9%
|
|
31-90 Days
|
0.9%
|
|
91-180 Days
|
3.1%
|
|
181 Days or more
|
2.5%
|
|
Other Assets and Liabilities—Net2
|
3.3%
|
|
Total
|
100%
|
|
1
|
Effective maturity is determined in accordance with the requirements of Rule 2a-7 under the
Investment Company Act of 1940, which regulates money market mutual funds.
|
|
2
|
Assets, other than investments in securities, less liabilities. See Statement of Assets
and Liabilities.
|
Annual Shareholder Report
1
Portfolio of Investments
July 31, 2022
|
Principal
Amount
|
|
|
Value
|
|
|
|
GOVERNMENT AGENCIES— 13.2%
|
|
|
$ 45,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 1.630%
(Secured Overnight Financing Rate +0.100%), 8/2/2022
|
$ 45,000,000
|
|
160,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.290%
(Secured Overnight Financing Rate +0.010%), 8/1/2022
|
159,999,045
|
|
20,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.297%
(Secured Overnight Financing Rate +0.017%), 8/1/2022
|
19,993,739
|
|
595,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.300%
(Secured Overnight Financing Rate +0.020%), 8/1/2022
|
594,995,146
|
|
1,794,550,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.305%
(Secured Overnight Financing Rate +0.025%), 8/1/2022
|
1,794,534,011
|
|
178,600,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.307%
(Secured Overnight Financing Rate +0.027%), 8/1/2022
|
178,575,719
|
|
773,900,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.310%
(Secured Overnight Financing Rate +0.030%), 8/1/2022
|
773,802,862
|
|
350,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.312%
(Secured Overnight Financing Rate +0.032%), 8/1/2022
|
349,994,476
|
|
2,152,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.315%
(Secured Overnight Financing Rate +0.035%), 8/1/2022
|
2,151,974,183
|
|
599,850,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.320%
(Secured Overnight Financing Rate +0.040%), 8/1/2022
|
599,850,000
|
|
934,650,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.325%
(Secured Overnight Financing Rate +0.045%), 8/1/2022
|
934,647,879
|
|
662,650,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.330%
(Secured Overnight Financing Rate +0.050%), 8/1/2022
|
662,650,000
|
|
479,600,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.335%
(Secured Overnight Financing Rate +0.055%), 8/1/2022
|
479,599,669
|
|
1,144,575,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.340%
(Secured Overnight Financing Rate +0.060%), 8/1/2022
|
1,144,628,835
|
|
65,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.345%
(Secured Overnight Financing Rate +0.065%), 8/1/2022
|
65,000,000
|
|
259,850,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.360%
(Secured Overnight Financing Rate +0.080%), 8/1/2022
|
259,826,366
|
|
218,875,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.365%
(Secured Overnight Financing Rate +0.085%), 8/1/2022
|
218,875,000
|
|
389,000,000
|
|
Federal Farm Credit System Notes, 0.100%, 10/19/2022
|
388,992,428
|
|
559,000,000
|
|
Federal Farm Credit System, 0.070% - 3.000%, 10/13/2022 -
7/11/2023
|
558,921,049
|
|
500,000,000
|
2
|
Federal Home Loan Bank System Discount Notes,
1.800%, 2/2/2023
|
495,375,000
|
|
399,750,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 1.620%
(Secured Overnight Financing Rate +0.100%), 8/1/2022
|
399,750,000
|
|
25,000,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 2.295%
(Secured Overnight Financing Rate +0.015%), 8/1/2022
|
24,999,342
|
Annual Shareholder Report
2
|
Principal
Amount
|
|
|
Value
|
|
|
|
GOVERNMENT AGENCIES— continued
|
|
|
$ 95,000,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 2.310%
(Secured Overnight Financing Rate +0.030%), 8/1/2022
|
$ 95,000,000
|
|
399,750,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 2.335%
(Secured Overnight Financing Rate +0.055%), 8/1/2022
|
399,750,000
|
|
1,121,775,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 2.340%
(Secured Overnight Financing Rate +0.060%), 8/1/2022
|
1,121,775,000
|
|
280,000,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 2.345%
(Secured Overnight Financing Rate +0.065%), 8/1/2022
|
280,000,000
|
|
2,905,090,000
|
|
Federal Home Loan Bank System Floating Rate Notes, 1.738% -
2.350%, 9/9/2022 - 7/5/2023
|
2,905,119,342
|
|
627,000,000
|
1
|
Federal Home Loan Mortgage Corp. Floating Rate Notes,
2.345% (Secured Overnight Financing Rate +0.065%), 8/1/2022
|
627,000,000
|
|
304,000,000
|
1
|
Federal Home Loan Mortgage Corp. Floating Rate Notes,
2.370% (Secured Overnight Financing Rate +0.090%), 8/1/2022
|
304,000,000
|
|
281,890,000
|
1
|
Housing and Urban Development Floating Rate Notes, 1.750%
(91-day T-Bill +0.350%), 8/1/2022
|
281,890,000
|
|
|
|
TOTAL GOVERNMENT AGENCIES
|
18,316,519,091
|
|
|
|
U.S. TREASURIES— 9.8%
|
|
|
|
2
|
U.S. Treasury Bills—3.5%
|
|
|
355,700,000
|
|
United States Treasury Bills, 0.074%, 9/8/2022
|
355,671,841
|
|
65,000,000
|
|
United States Treasury Bills, 0.080%, 8/11/2022
|
64,998,556
|
|
512,000,000
|
|
United States Treasury Bills, 0.630%, 1/26/2023
|
510,405,120
|
|
1,010,400,000
|
|
United States Treasury Bills, 0.770%, 8/18/2022
|
1,010,032,607
|
|
1,051,000,000
|
|
United States Treasury Bills, 1.465% - 1.490%, 11/17/2022
|
1,046,333,529
|
|
1,020,000,000
|
|
United States Treasury Bills, 1.530%, 11/25/2022
|
1,014,971,400
|
|
854,000,000
|
|
United States Treasury Bills, 1.580%, 12/1/2022
|
849,427,303
|
|
|
|
TOTAL
|
4,851,840,356
|
|
|
|
U.S. Treasury Notes—6.3%
|
|
|
671,000,000
|
1
|
United States Treasury Floating Rate Notes, 2.461% (91-day T-Bill
-0.075%), 8/2/2022
|
670,999,945
|
|
1,359,290,000
|
1
|
United States Treasury Floating Rate Notes, 2.521% (91-day T-Bill
-0.015%), 8/2/2022
|
1,360,365,908
|
|
1,555,500,000
|
1
|
United States Treasury Floating Rate Notes, 2.565% (91-day T-Bill
+0.029%), 8/2/2022
|
1,555,823,899
|
|
2,149,000,000
|
1
|
United States Treasury Floating Rate Notes, 2.570% (91-day T-Bill
+0.034%), 8/2/2022
|
2,149,046,378
|
|
976,200,000
|
1
|
United States Treasury Floating Rate Notes, 2.571% (91-day T-Bill
+0.035%), 8/2/2022
|
976,174,386
|
|
910,920,000
|
1
|
United States Treasury Floating Rate Notes, 2.585% (91-day T-Bill
+0.049%), 8/2/2022
|
910,967,315
|
|
20,000,000
|
|
United States Treasury Notes, 0.125%, 10/31/2022
|
20,001,440
|
|
159,000,000
|
|
United States Treasury Notes, 0.125%, 2/28/2023
|
157,592,345
|
|
175,000,000
|
|
United States Treasury Notes, 0.125%, 5/31/2023
|
172,096,895
|
|
144,000,000
|
|
United States Treasury Notes, 1.625%, 8/15/2022
|
144,084,281
|
Annual Shareholder Report
3
|
Principal
Amount
|
|
|
Value
|
|
|
|
U.S. TREASURIES— continued
|
|
|
|
|
U.S. Treasury Notes—6.3%
|
|
|
$ 392,250,000
|
|
United States Treasury Notes, 1.625% - 1.875%, 8/31/2022
|
$ 392,776,305
|
|
188,439,000
|
|
United States Treasury Notes, 2.500%, 3/31/2023
|
189,505,829
|
|
|
|
TOTAL
|
8,699,434,926
|
|
|
|
TOTAL U.S. TREASURIES
|
13,551,275,282
|
|
|
|
REPURCHASE AGREEMENTS— 73.7%
|
|
|
849,447,000
|
|
Interest in $975,000,000 joint repurchase agreement 2.31%,
dated 7/29/2022 under which ABN Amro Bank N.V., Netherlands
will repurchase securities provided as collateral for $975,187,688
on 8/1/2022. The securities provided as collateral at the end of
the period held with BNY Mellon as tri-party agent, were
U.S. Government Agency and U.S. Treasury securities with
various maturities to 7/1/2052 and the market value of those
underlying securities was $997,119,148.
|
849,447,000
|
|
1,075,000,000
|
|
Repurchase agreement 2.31%, dated 7/29/2022 under which
HSBC Securities (USA), Inc. will repurchase securities provided as
collateral for $1,075,206,938 on 8/1/2022. The securities
provided as collateral at the end of the period held with BNY
Mellon as tri-party agent, were U.S. Government Agency
securities with various maturities to 2/1/2056 and the market
value of those underlying securities was $1,096,500,000.
|
1,075,000,000
|
|
1,150,000,000
|
|
Interest in $1,350,000,000 joint repurchase agreement 2.31%,
dated 7/29/2022 under which Bank of Nova Scotia will
repurchase securities provided as collateral for $1,350,259,875
on 8/1/2022. The securities provided as collateral at the end of
the period held with BNY Mellon as tri-party agent, were
U.S. Government Agency securities with various maturities to
8/1/2052 and the market value of those underlying securities
was $1,377,265,073.
|
1,150,000,000
|
|
498,068,000
|
|
Interest in $650,000,000 joint repurchase agreement 2.31%,
dated 7/29/2022 under which Mizuho Securities USA, Inc. will
repurchase securities provided as collateral for $650,125,125 on
8/1/2022. The securities provided as collateral at the end of the
period held with BNY Mellon as tri-party agent, were
U.S. Government Agency securities with various maturities to
8/1/2052 and the market value of those underlying securities
was $663,127,628.
|
498,068,000
|
|
850,000,000
|
|
Repurchase agreement 2.31%, dated 7/29/2022 under which
Wells Fargo Securities LLC will repurchase securities provided as
collateral for $850,163,625 on 8/1/2022. The securities provided
as collateral at the end of the period held with BNY Mellon as
tri-party agent, were U.S. Government Agency securities with
various maturities to 7/1/2052 and the market value of those
underlying securities was $867,166,997.
|
850,000,000
|
|
750,000,000
|
|
Repurchase agreement 2.30%, dated 7/29/2022 under which
BMO Capital Markets Corp. will repurchase securities provided
as collateral for $750,143,750 on 8/1/2022. The securities
provided as collateral at the end of the period held with BNY
Mellon as tri-party agent, were U.S. Government Agency
securities with various maturities to 4/20/2072 and the market
value of those underlying securities was $772,648,063.
|
750,000,000
|
Annual Shareholder Report
4
|
Principal
Amount
|
|
|
Value
|
|
|
|
REPURCHASE AGREEMENTS— continued
|
|
|
$ 723,999,000
|
|
Interest in $1,650,000,000 joint repurchase agreement 2.29%,
dated 7/29/2022 under which Mitsubishi UFJ Securities (USA),
Inc. will repurchase securities provided as collateral for
$1,650,314,875 on 8/1/2022. The securities provided as collateral
at the end of the period held with BNY Mellon as tri-party agent,
were U.S. Government Agency securities with various maturities
to 1/1/2057 and the market value of those underlying securities
was $1,683,321,173.
|
$ 723,999,000
|
|
2,056,576,000
|
|
Interest in $3,000,000,000 joint repurchase agreement 2.30%,
dated 7/29/2022 under which Sumitomo Mitsui Banking Corp.
will repurchase securities provided as collateral for
$3,000,575,000 on 8/1/2022. The securities provided as collateral
at the end of the period held with BNY Mellon as tri-party agent,
were U.S. Treasury securities with various maturities to 2/15/2050
and the market value of those underlying securities
was $3,060,586,535.
|
2,056,576,000
|
|
50,000,000
|
|
Repurchase agreement 2.30%, dated 7/29/2022 under which ING
Financial Markets LLC will repurchase securities provided as
collateral for $50,009,583 on 8/1/2022. The securities provided
as collateral at the end of the period held with BNY Mellon as
tri-party agent, were U.S. Government Agency securities with
various maturities to 6/20/2051 and the market value of those
underlying securities was $51,009,775.
|
50,000,000
|
|
949,000,000
|
|
Interest in $1,850,000,000 joint repurchase agreement 1.47%,
dated 6/7/2022 under which BNP Paribas S.A. will repurchase
securities provided as collateral for $1,857,025,375 on 9/9/2022.
The securities provided as collateral at the end of the period held
with BNY Mellon as tri-party agent, were U.S. Treasury securities
with various maturities to 8/15/2051 and the market value of
those underlying securities was $1,891,160,894.
|
949,000,000
|
|
400,000,000
|
|
Interest in $800,000,000 joint repurchase agreement 2.25%,
dated 7/29/2022 under which Natixis Financial Products LLC will
repurchase securities provided as collateral for $800,150,000 on
8/1/2022. The securities provided as collateral at the end of the
period held with BNY Mellon as tri-party agent, were
U.S. Treasury securities with various maturities to 5/15/2052 and
the market value of those underlying securities
was $816,153,045.
|
400,000,000
|
|
150,000,000
|
|
Repurchase agreement 2.33%, dated 7/29/2022 under which
Barclays Capital, Inc. will repurchase a security provided as
collateral for $150,029,125 on 8/1/2022. The security provided as
collateral at the end of the period held with BNY Mellon as
tri-party agent, was a U.S. Treasury security maturing on
11/15/2048 and the market value of that underlying security
was $153,028,498.
|
150,000,000
|
Annual Shareholder Report
5
|
Principal
Amount
|
|
|
Value
|
|
|
|
REPURCHASE AGREEMENTS— continued
|
|
|
$ 150,000,000
|
|
Interest in $1,800,000,000 joint repurchase agreement 2.30%,
dated 7/29/2022 under which Natixis Financial Products LLC will
repurchase securities provided as collateral for $1,800,345,000
on 8/1/2022. The securities provided as collateral at the end of
the period held with BNY Mellon as tri-party agent, were
U.S. Government Agency and U.S. Treasury securities with
various maturities to 6/16/2064 and the market value of those
underlying securities was $1,841,376,235.
|
$ 150,000,000
|
|
550,000,000
|
|
Interest in $750,000,000 joint repurchase agreement 2.30%,
dated 7/29/2022 under which Bank of Montreal will repurchase
securities provided as collateral for $750,143,750 on 8/1/2022.
The securities provided as collateral at the end of the period held
with BNY Mellon as tri-party agent, were U.S. Government
Agency securities with various maturities to 5/20/2072 and the
market value of those underlying securities was $768,906,178.
|
550,000,000
|
|
500,000,000
|
|
Interest in $700,000,000 joint repurchase agreement 2.31%,
dated 7/28/2022 under which Bank of Montreal will repurchase
securities provided as collateral for $701,437,333 on 8/29/2022.
The securities provided as collateral at the end of the period held
with BNY Mellon as tri-party agent, were U.S. Government
Agency securities with various maturities to 6/20/2072 and the
market value of those underlying securities was $718,454,092.
|
500,000,000
|
|
116,782,508
|
|
Repurchase agreement 2.32%, dated 7/29/2022 under which
Prudential Insurance Co. of America will repurchase securities
provided as collateral for $116,805,086 on 8/1/2022. The
securities provided as collateral at the end of the period held
with BNY Mellon as tri-party agent, were U.S. Government
Agency securities with various maturities to 10/1/2048 and the
market value of those underlying securities was $119,500,914.
|
116,782,508
|
|
82,218,750
|
|
Repurchase agreement 2.31%, dated 7/29/2022 under which
Prudential Legacy Insurance Co. of NJ will repurchase securities
provided as collateral for $82,234,577 on 8/1/2022. The
securities provided as collateral at the end of the period held
with BNY Mellon as tri-party agent, were U.S. Treasury securities
with various maturities to 8/15/2031 and the market value of
those underlying securities was $84,157,800.
|
82,218,750
|
|
398,000,000
|
|
Interest in $500,000,000 joint repurchase agreement 2.34%,
dated 5/12/2022 under which Royal Bank of Canada, New York
Branch will repurchase securities provided as collateral for
$504,582,500 on 9/30/2022. The securities provided as collateral
at the end of the period held with BNY Mellon as tri-party agent,
were U.S. Government Agency securities and a U.S. Treasury
security with various maturities to 2/1/2057 and the market value
of those underlying securities was $513,884,250.
|
398,000,000
|
|
580,000,000
|
|
Interest in $740,000,000 joint repurchase agreement 1.70%,
dated 5/20/2022 under which BNP Paribas S.A. will repurchase
securities provided as collateral for $746,464,722 on 11/21/2022.
The securities provided as collateral at the end of the period held
with BNY Mellon as tri-party agent, were U.S. Government
Agency securities with various maturities to 6/1/2056 and the
market value of those underlying securities was $757,916,422.
|
580,000,000
|
Annual Shareholder Report
6
|
Principal
Amount
|
|
|
Value
|
|
|
|
REPURCHASE AGREEMENTS— continued
|
|
|
$ 600,000,000
|
|
Interest in $750,000,000 joint repurchase agreement 1.80%,
dated 6/1/2022 under which BNP Paribas S.A. will repurchase
securities provided as collateral for $756,862,500 on 12/2/2022.
The securities provided as collateral at the end of the period held
with BNY Mellon as tri-party agent, were U.S. Government
Agency and U.S. Treasury securities with various maturities to
6/1/2056 and the market value of those underlying securities
was $767,496,568.
|
$ 600,000,000
|
|
482,000,000
|
|
Repurchase agreement 2.24%, dated 7/29/2022 under which
BNP Paribas S.A. will repurchase securities provided as collateral
for $482,089,973 on 8/1/2022. The securities provided as
collateral at the end of the period held with BNY Mellon as
tri-party agent, were U.S. Treasury securities with various
maturities to 5/15/2046 and the market value of those underlying
securities was $491,731,786.
|
482,000,000
|
|
250,000,000
|
|
Repurchase agreement 2.31%, dated 7/29/2022 under which
Credit Agricole Corporate and Investment Bank will repurchase a
security provided as collateral for $250,048,125 on 8/1/2022. The
security provided as collateral at the end of the period held with
BNY Mellon as tri-party agent, was a U.S. Treasury security
maturing on 1/20/2051 and the market value of that underlying
security was $255,048,982.
|
250,000,000
|
|
90,407,000
|
|
Repurchase agreement 2.22%, dated 7/29/2022 under which
BofA Securities, Inc. will repurchase a security provided as
collateral for $90,423,725 on 8/1/2022. The security provided as
collateral at the end of the period held with BNY Mellon as
tri-party agent, was a U.S. Treasury security maturing on
4/30/2027 and the market value of that underlying security
was $92,232,282.
|
90,407,000
|
|
1,000,000,000
|
|
Repurchase agreement 2.30%, dated 7/29/2022 under which
BofA Securities, Inc. will repurchase securities provided as
collateral for $1,000,191,667 on 8/1/2022. The securities
provided as collateral at the end of the period held with BNY
Mellon as tri-party agent, were U.S. Government Agency
securities with various maturities to 10/16/2055 and the market
value of those underlying securities was $1,030,197,417.
|
1,000,000,000
|
|
800,000,000
|
|
Repurchase agreement 2.30%, dated 7/29/2022 under which
Citigroup Global Markets, Inc. will repurchase securities provided
as collateral for $800,153,333 on 8/1/2022. The securities
provided as collateral at the end of the period held with BNY
Mellon as tri-party agent, were U.S. Government Agency
securities and a U.S. Treasury security with various maturities to
3/20/2051 and the market value of those underlying securities
was $816,156,471.
|
800,000,000
|
|
1,250,000,000
|
|
Interest in $1,750,000,000 joint repurchase agreement 2.31%,
dated 3/4/2020 under which Citigroup Global Markets, Inc. will
repurchase securities provided as collateral for $1,750,786,042
on 8/9/2022. The securities provided as collateral at the end of
the period held with BNY Mellon as tri-party agent, were
U.S. Government Agency securities and a U.S. Treasury security
with various maturities to 7/20/2072 and the market value of
those underlying securities was $1,793,157,590.
|
1,250,000,000
|
Annual Shareholder Report
7
|
Principal
Amount
|
|
|
Value
|
|
|
|
REPURCHASE AGREEMENTS— continued
|
|
|
$ 1,259,187,000
|
|
Interest in $1,547,000,000 joint repurchase agreement 2.30%,
dated 7/29/2022 under which Bank of America, N.A. will
repurchase securities provided as collateral for $1,547,296,508
on 8/1/2022. The securities provided as collateral at the end of
the period held with BNY Mellon as tri-party agent, were
U.S. Government Agency securities with various maturities to
4/20/2050 and the market value of those underlying securities
was $1,578,242,439.
|
$ 1,259,187,000
|
|
350,000,000
|
|
Interest in $500,000,000 joint repurchase agreement 2.31%,
dated 7/27/2022 under which Natixis Financial Products LLC will
repurchase securities provided as collateral for $501,796,667 on
9/22/2022. The securities provided as collateral at the end of the
period held with BNY Mellon as tri-party agent, was a
U.S. Government Agency security and U.S. Treasury securities
with various maturities to 5/15/2052 and the market value of
those underlying securities was $510,130,900.
|
350,000,000
|
|
400,000,000
|
|
Interest in $500,000,000 joint repurchase agreement 2.31%,
dated 7/28/2022 under which BMO Capital Markets Corp. will
repurchase securities provided as collateral for $501,026,667 on
8/29/2022. The securities provided as collateral at the end of the
period held with BNY Mellon as tri-party agent, were
U.S. Government Agency securities and a U.S. Treasury security
with various maturities to 1/20/2072 and the market value of
those underlying securities was $515,123,960.
|
400,000,000
|
|
425,000,000
|
|
Interest in $1,000,000,000 joint repurchase agreement 2.30%,
dated 7/29/2022 under which TD Securities (USA), LLC will
repurchase securities provided as collateral for $1,000,191,667
on 8/1/2022. The securities provided as collateral at the end of
the period held with BNY Mellon as tri-party agent, were
U.S. Government Agency securities with various maturities to
8/25/2052 and the market value of those underlying securities
was $1,029,990,424.
|
425,000,000
|
|
300,000,000
|
|
Repurchase agreement 2.30%, dated 7/29/2022 under which ING
Financial Markets LLC will repurchase securities provided as
collateral for $300,057,500 on 8/1/2022. The securities provided
as collateral at the end of the period held with BNY Mellon as
tri-party agent, were U.S. Treasury securities with various
maturities to 2/15/2045 and the market value of those underlying
securities was $306,798,858.
|
300,000,000
|
|
1,000,000,000
|
|
Interest in $1,250,000,000 joint repurchase agreement 2.32%,
dated 7/28/2022 under which Citigroup Global Markets, Inc. will
repurchase securities provided as collateral for $1,254,511,111
on 9/22/2022. The securities provided as collateral at the end of
the period held with BNY Mellon as tri-party agent, were
U.S. Government Agency and U.S. Treasury securities with
various maturities to 6/20/2049 and the market value of those
underlying securities was $1,279,105,662.
|
1,000,000,000
|
Annual Shareholder Report
8
|
Principal
Amount
|
|
|
Value
|
|
|
|
REPURCHASE AGREEMENTS— continued
|
|
|
$79,000,000,000
|
|
Repurchase agreement 2.30%, dated 7/29/2022 under which
Federal Reserve Bank of New York will repurchase securities
provided as collateral for $79,015,141,667 on 8/1/2022. The
securities provided as collateral at the end of the period held
with BNY Mellon as tri-party agent, were U.S. Treasury securities
with various maturities to 11/15/2045 and the market value of
those underlying securities was $79,015,141,760.
|
$ 79,000,000,000
|
|
2,000,000,000
|
|
Repurchase agreement 2.31%, dated 7/29/2022 under which
Fixed Income Clearing Corp. will repurchase securities provided
as collateral for $2,000,385,000 on 8/1/2022. The securities
provided as collateral at the end of the period held with State
Street Bank & Trust Co. tri-party agent, were U.S. Government
Agency securities with various maturities to 8/15/2062 and the
market value of those underlying securities was $2,040,000,000.
|
2,000,000,000
|
|
250,000,000
|
|
Repurchase agreement 2.29%, dated 7/29/2022 under which
Standard Chartered Bank will repurchase securities provided as
collateral for $250,047,708 on 8/1/2022. The securities provided
as collateral at the end of the period held with BNY Mellon as
tri-party agent, were U.S. Government Agency and U.S. Treasury
securities with various maturities to 4/1/2052 and the market
value of those underlying securities was $255,048,732.
|
250,000,000
|
|
250,000,000
|
|
Repurchase agreement 2.30%, dated 7/29/2022 under which
Australia & New Zealand Banking Group, will repurchase
securities provided as collateral for $250,047,917 on 8/1/2022.
The securities provided as collateral at the end of the period held
with BNY Mellon as tri-party agent, were U.S. Treasury securities
with various maturities to 5/15/2049 and the market value of
those underlying securities was $255,147,489.
|
250,000,000
|
|
450,003,250
|
|
Repurchase agreement 2.30%, dated 7/29/2022 under which
Metropolitan Life Insurance Co. will repurchase securities
provided as collateral for $450,089,501 on 8/1/2022. The
securities provided as collateral at the end of the period held
with BNY Mellon as tri-party agent, were U.S. Treasury securities
with various maturities to 11/15/2047 and the market value of
those underlying securities was $459,297,661.
|
450,003,250
|
|
|
|
TOTAL REPURCHASE AGREEMENTS
|
102,035,688,508
|
|
|
|
TOTAL INVESTMENT IN SECURITIES—96.7%
(AT AMORTIZED COST)3
|
133,903,482,881
|
|
|
|
OTHER ASSETS AND LIABILITIES - NET—3.3%4
|
4,560,295,520
|
|
|
|
TOTAL NET ASSETS—100%
|
$138,463,778,401
|
|
1
|
Floating/variable note with current rate and current maturity or next reset date shown.
|
|
2
|
Discount rate(s) at time of purchase.
|
|
3
|
Also represents cost of investments for federal tax purposes.
|
|
4
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
Note: The categories of investments are shown as a percentage of total net assets at July 31, 2022.
Annual Shareholder Report
9
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Level 1—quoted prices in active markets for identical securities.
Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Also includes securities valued at amortized cost.
Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
In valuing the Fund’s assets as of July 31, 2022, all investments of the Fund are valued using amortized cost, which is a methodology utilizing Level 2 inputs.
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
10
Financial Highlights–Select Shares1
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.003
|
0.0002
|
0.012
|
0.012
|
0.003
|
|
Net realized gain (loss)
|
(0.000)2
|
0.0002
|
(0.001)
|
(0.000)2
|
0.0002
|
|
Total From Investment Operations
|
0.003
|
0.0002
|
0.011
|
0.012
|
0.003
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.003)
|
(0.000)2
|
(0.011)
|
(0.012)
|
(0.003)
|
|
Distributions from net realized gain
|
—
|
—
|
(0.000)2
|
—
|
(0.000)2
|
|
Total Distributions
|
(0.003)
|
(0.000)2
|
(0.011)
|
(0.012)
|
(0.003)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return3
|
0.31%
|
0.02%
|
1.12%
|
1.23%
|
0.31%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses4
|
0.09%
|
0.11%
|
0.17%
|
1.15%
|
1.11%
|
|
Net investment income
|
0.25%
|
0.02%
|
0.74%
|
1.21%
|
0.24%
|
|
Expense waiver/reimbursement5
|
0.22%
|
0.20%
|
0.14%
|
0.13%
|
0.17%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$5,921,339
|
$8,073,883
|
$7,328,261
|
$3,307
|
$2,365
|
|
1
|
Effective August 1, 2019, the Class R Shares were re-designated as Select Shares.
|
|
2
|
Represents less than $0.001.
|
|
3
|
Based on net asset value.
|
|
4
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
5
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
11
Financial Highlights–Institutional Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.003
|
0.0001
|
0.011
|
0.021
|
0.013
|
|
Net realized gain (loss)
|
(0.000)1
|
—
|
(0.000)1
|
(0.000)1
|
0.0001
|
|
Total From Investment
Operations
|
0.003
|
0.0001
|
0.011
|
0.021
|
0.013
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment
income
|
(0.003)
|
(0.000)1
|
(0.011)
|
(0.021)
|
(0.013)
|
|
Distributions from net realized gain
|
—
|
—
|
(0.000)1
|
—
|
(0.000)1
|
|
Total Distributions
|
(0.003)
|
(0.000)1
|
(0.011)
|
(0.021)
|
(0.013)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.30%
|
0.02%
|
1.09%
|
2.17%
|
1.26%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.10%
|
0.10%
|
0.19%
|
0.19%
|
0.19%
|
|
Net investment income
|
0.28%
|
0.02%
|
0.97%
|
2.15%
|
1.24%
|
|
Expense waiver/reimbursement4
|
0.23%
|
0.23%
|
0.15%
|
0.14%
|
0.15%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$31,227,810
|
$31,176,397
|
$29,928,127
|
$23,667,498
|
$23,308,693
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
12
Financial Highlights–Service Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.002
|
0.0001
|
0.009
|
0.019
|
0.010
|
|
Net realized gain (loss)
|
(0.000)1
|
—
|
0.0001
|
(0.000)1
|
0.0001
|
|
Total From Investment
Operations
|
0.002
|
0.0001
|
0.009
|
0.019
|
0.010
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.002)
|
(0.000)1
|
(0.009)
|
(0.019)
|
(0.010)
|
|
Distributions from net realized gain
|
—
|
—
|
(0.000)1
|
—
|
(0.000)1
|
|
Total Distributions
|
(0.002)
|
(0.000)1
|
(0.009)
|
(0.019)
|
(0.010)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.22%
|
0.02%
|
0.91%
|
1.94%
|
1.03%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.17%
|
0.11%
|
0.38%
|
0.42%
|
0.41%
|
|
Net investment income
|
0.19%
|
0.01%
|
0.83%
|
1.93%
|
1.02%
|
|
Expense waiver/reimbursement4
|
0.38%
|
0.43%
|
0.17%
|
0.13%
|
0.13%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$10,082,923
|
$13,157,890
|
$12,300,069
|
$10,249,258
|
$7,828,028
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
13
Financial Highlights–Administrative Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
Period
Ended
7/31/20181
|
|||
|
|
2022
|
2021
|
2020
|
2019
|
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.046
|
0.024
|
0.009
|
0.019
|
0.009
|
|
Net realized gain (loss)
|
(0.044)
|
(0.024)
|
(0.000)2
|
(0.000)2
|
—
|
|
Total From Investment Operations
|
0.002
|
0.000
|
0.009
|
0.019
|
0.009
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.002)
|
(0.000)2
|
(0.009)
|
(0.019)
|
(0.009)
|
|
Distributions from net realized gain
|
—
|
—
|
(0.000)2
|
—
|
—
|
|
Total Distributions
|
(0.002)
|
(0.000)2
|
(0.009)
|
(0.019)
|
(0.009)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return3
|
0.22%
|
0.02%
|
0.88%
|
1.90%
|
0.91%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net Expenses4
|
0.14%
|
0.19%
|
0.41%
|
0.45%
|
0.45%5
|
|
Net investment income
|
0.14%
|
0.01%
|
0.89%
|
1.97%
|
1.23%5
|
|
Expense waiver/reimbursement6
|
0.43%
|
0.39%
|
0.18%
|
0.13%
|
0.15%5
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$78
|
$219
|
$253,981
|
$176,438
|
$12,413
|
|
1
|
Reflects operations for the period from September 28, 2017 (date of initial investment) to
July 31, 2018.
|
|
2
|
Represents less than $0.001.
|
|
3
|
Based on net asset value. Total returns for periods of less than one year are not annualized.
|
|
4
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
5
|
Computed on an annualized basis.
|
|
6
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
14
Financial Highlights–Cash II Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.001
|
0.0001
|
0.006
|
0.015
|
0.006
|
|
Net realized gain (loss)
|
(0.000)1
|
—
|
0.0001
|
(0.000)1
|
(0.000)1
|
|
Total From Investment Operations
|
0.001
|
0.0001
|
0.006
|
0.015
|
0.006
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.001)
|
(0.000)1
|
(0.006)
|
(0.015)
|
(0.006)
|
|
Distributions from net realized gain
|
—
|
—
|
(0.000)1
|
—
|
(0.000)1
|
|
Total Distributions
|
(0.001)
|
(0.000)1
|
(0.006)
|
(0.015)
|
(0.006)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.12%
|
0.02%
|
0.63%
|
1.51%
|
0.60%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.27%
|
0.11%
|
0.64%
|
0.84%
|
0.84%
|
|
Net investment income
|
0.11%
|
0.01%
|
0.61%
|
1.51%
|
0.60%
|
|
Expense waiver/reimbursement4
|
0.70%
|
0.86%
|
0.34%
|
0.13%
|
0.13%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$567,676
|
$625,477
|
$599,710
|
$534,565
|
$494,899
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
15
Financial Highlights–Cash Series Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.001
|
0.0001
|
0.005
|
0.013
|
0.004
|
|
Net realized gain (loss)
|
(0.000)1
|
—
|
0.0001
|
(0.000)1
|
(0.000)1
|
|
Total From Investment Operations
|
0.001
|
0.0001
|
0.005
|
0.013
|
0.004
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.001)
|
(0.000)1
|
(0.005)
|
(0.013)
|
(0.004)
|
|
Distributions from net realized gain
|
—
|
—
|
(0.000)1
|
—
|
(0.000)1
|
|
Total Distributions
|
(0.001)
|
(0.000)1
|
(0.005)
|
(0.013)
|
(0.004)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.10%
|
0.02%
|
0.54%
|
1.35%
|
0.39%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.26%
|
0.11%
|
0.71%
|
1.00%
|
1.05%
|
|
Net investment income
|
0.08%
|
0.01%
|
0.48%
|
1.35%
|
0.31%
|
|
Expense waiver/reimbursement4
|
0.93%
|
1.07%
|
0.47%
|
0.18%
|
0.18%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$307,895
|
$526,713
|
$349,935
|
$259,284
|
$96,724
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
16
Financial Highlights–Capital Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.003
|
0.0001
|
0.010
|
0.020
|
0.011
|
|
Net realized gain (loss)
|
(0.000)1
|
—
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
|
Total From Investment Operations
|
0.003
|
0.0001
|
0.010
|
0.020
|
0.011
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.003)
|
(0.000)1
|
(0.010)
|
(0.020)
|
(0.011)
|
|
Distributions from net realized gain
|
—
|
—
|
(0.000)1
|
—
|
(0.000)1
|
|
Total Distributions
|
(0.003)
|
(0.000)1
|
(0.010)
|
(0.020)
|
(0.011)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.26%
|
0.02%
|
0.99%
|
2.05%
|
1.14%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.14%
|
0.12%
|
0.30%
|
0.30%
|
0.30%
|
|
Net investment income
|
0.24%
|
0.01%
|
0.94%
|
2.04%
|
1.15%
|
|
Expense waiver/reimbursement4
|
0.30%
|
0.32%
|
0.14%
|
0.13%
|
0.13%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$3,094,786
|
$3,044,642
|
$3,454,165
|
$3,399,696
|
$3,078,850
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
17
Financial Highlights–Trust Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.002
|
0.0001
|
0.007
|
0.017
|
0.008
|
|
Net realized gain (loss)
|
(0.000)1
|
—
|
(0.000)1
|
(0.000)1
|
0.0001
|
|
Total From Investment Operations
|
0.002
|
0.0001
|
0.007
|
0.017
|
0.008
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.002)
|
(0.000)1
|
(0.007)
|
(0.017)
|
(0.008)
|
|
Distributions from net realized gain
|
—
|
—
|
(0.000)1
|
—
|
(0.000)1
|
|
Total Distributions
|
(0.002)
|
(0.000)1
|
(0.007)
|
(0.017)
|
(0.008)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.16%
|
0.02%
|
0.73%
|
1.67%
|
0.76%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.24%
|
0.12%
|
0.54%
|
0.69%
|
0.68%
|
|
Net investment income
|
0.13%
|
0.01%
|
0.66%
|
1.71%
|
0.74%
|
|
Expense waiver/reimbursement4
|
0.59%
|
0.71%
|
0.29%
|
0.13%
|
0.13%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$1,276,028
|
$2,658,370
|
$3,303,066
|
$2,472,153
|
$597,348
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
18
Financial Highlights–Premier Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.003
|
0.0001
|
0.011
|
0.022
|
0.013
|
|
Net realized gain (loss)
|
(0.000)1
|
—
|
0.0001
|
(0.000)1
|
(0.000)1
|
|
Total From Investment
Operations
|
0.003
|
0.0001
|
0.011
|
0.022
|
0.013
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment
income
|
(0.003)
|
(0.000)1
|
(0.011)
|
(0.022)
|
(0.013)
|
|
Distributions from net realized gain
|
—
|
—
|
(0.000)1
|
—
|
(0.000)1
|
|
Total Distributions
|
(0.003)
|
(0.000)1
|
(0.011)
|
(0.022)
|
(0.013)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.31%
|
0.03%
|
1.14%
|
2.21%
|
1.29%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.09%
|
0.10%
|
0.15%
|
0.15%
|
0.15%
|
|
Net investment income
|
0.33%
|
0.02%
|
0.96%
|
2.20%
|
1.28%
|
|
Expense waiver/reimbursement4
|
0.20%
|
0.18%
|
0.14%
|
0.13%
|
0.13%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$83,546,204
|
$69,590,226
|
$76,682,858
|
$42,873,211
|
$29,053,580
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
19
Financial Highlights–Advisor Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
Period
Ended
7/31/20191
|
||
|
|
2022
|
2021
|
2020
|
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
Net investment income
|
0.003
|
0.0002
|
0.011
|
0.012
|
|
Net realized gain (loss)
|
(0.000)2
|
—
|
0.0002
|
(0.000)2
|
|
Total From Investment Operations
|
0.003
|
0.0002
|
0.011
|
0.012
|
|
Less Distributions:
|
|
|
|
|
|
Distributions from net investment income
|
(0.003)
|
(0.000)2
|
(0.011)
|
(0.012)
|
|
Distributions from net realized gains
|
—
|
—
|
(0.000)2
|
—
|
|
Total Distributions
|
(0.003)
|
(0.000)2
|
(0.011)
|
(0.012)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return3
|
0.31%
|
0.03%
|
1.14%
|
1.24%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
Net expenses4
|
0.10%
|
0.11%
|
0.15%
|
0.15%5
|
|
Net investment income
|
0.54%
|
0.03%
|
0.81%
|
2.29%5
|
|
Expense waiver/reimbursement6
|
0.18%
|
0.17%
|
0.14%
|
0.13%5
|
|
Supplemental Data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$1,942,655
|
$571,121
|
$1,089
|
$356
|
|
1
|
Reflects operations for the period from January 18, 2019 (commencement of operations) to
July 31, 2019.
|
|
2
|
Represents less than $0.001.
|
|
3
|
Based on net asset value. Total returns for periods of less than one year are not annualized.
|
|
4
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
5
|
Computed on an annualized basis.
|
|
6
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
20
Financial Highlights–SDG Shares
(For a Share Outstanding Throughout the Period)
|
|
Period
Ended
7/31/20221
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
|
Income From Investment Operations:
|
|
|
Net investment income
|
0.003
|
|
Net realized gain (loss)
|
(0.000)2
|
|
Total From Investment Operations
|
0.003
|
|
Less Distributions:
|
|
|
Distributions from net investment income
|
(0.003)
|
|
Net Asset Value, End of Period
|
$1.00
|
|
Total Return3
|
0.29%
|
|
Ratios to Average Net Assets:
|
|
|
Net expenses4
|
0.14%5
|
|
Net investment income
|
0.92%5
|
|
Expense waiver/reimbursement6
|
0.15%5
|
|
Supplemental Data:
|
|
|
Net assets, end of period (000 omitted)
|
$496,384
|
|
1
|
Reflects operations for the period from March 30, 2022 (commencement of operations) to
July 31, 2022.
|
|
2
|
Represents less than $0.001.
|
|
3
|
Based on net asset value. Total returns for periods of less than one year are not annualized.
|
|
4
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
5
|
Computed on an annualized basis.
|
|
6
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
21
Statement of Assets and Liabilities
July 31, 2022
July 31, 2022
|
Assets:
|
|
|
Investment in repurchase agreements
|
$102,035,688,508
|
|
Investment in securities
|
31,867,794,373
|
|
Investment in securities, at amortized cost
|
133,903,482,881
|
|
Cash
|
3,500,252,071
|
|
Income receivable
|
104,642,065
|
|
Receivable for investments sold
|
1,111,000,000
|
|
Receivable for shares sold
|
117,859,922
|
|
Total Assets
|
138,737,236,939
|
|
Liabilities:
|
|
|
Payable for investments purchased
|
45,000,000
|
|
Payable for shares redeemed
|
124,230,839
|
|
Income distribution payable
|
94,606,118
|
|
Payable for investment adviser fee (Note 5)
|
799,271
|
|
Payable for administrative fee (Note 5)
|
892,939
|
|
Payable for Directors’/Trustees’ fees (Note 5)
|
20,913
|
|
Payable for distribution services fee (Note 5)
|
744,315
|
|
Payable for other service fees (Notes 2 and 5)
|
5,251,349
|
|
Accrued expenses (Note 5)
|
1,912,794
|
|
Total Liabilities
|
273,458,538
|
|
Net assets for 138,514,079,730 shares outstanding
|
$138,463,778,401
|
|
Net Assets Consist of:
|
|
|
Paid-in capital
|
$138,514,257,340
|
|
Total distributable earnings (loss)
|
(50,478,939)
|
|
Total Net Assets
|
$138,463,778,401
|
Annual Shareholder Report
22
Statement of Assets and Liabilities–continued
|
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
|
|
|
Select Shares:
|
|
|
$5,921,338,755 ÷ 5,923,490,877 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Institutional Shares:
|
|
|
$31,227,809,876 ÷ 31,239,143,752 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Service Shares:
|
|
|
$10,082,923,176 ÷ 10,086,586,102 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Administrative Shares:
|
|
|
$78,177 ÷ 78,205 shares outstanding, no par value, unlimited shares authorized
|
$1.00
|
|
Cash II Shares:
|
|
|
$567,676,450 ÷ 567,882,621 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Cash Series Shares:
|
|
|
$307,895,001 ÷ 308,006,847 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Capital Shares:
|
|
|
$3,094,785,928 ÷ 3,095,922,643 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Trust Shares:
|
|
|
$1,276,027,821 ÷ 1,276,491,146 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Premier Shares:
|
|
|
$83,546,203,825 ÷ 83,576,549,916 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Advisor Shares:
|
|
|
$1,942,655,311 ÷ 1,943,363,419 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
SDG Shares:
|
|
|
$496,384,081 ÷ 496,564,202 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
23
Statement of Operations
Year Ended July 31, 2022
Year Ended July 31, 2022
|
Investment Income:
|
|
|
Interest
|
$512,498,418
|
|
Expenses:
|
|
|
Investment adviser fee (Note 5)
|
257,830,933
|
|
Administrative fee (Note 5)
|
100,898,482
|
|
Custodian fees
|
3,602,177
|
|
Transfer agent fees (Note 2)
|
4,820,082
|
|
Directors’/Trustees’ fees (Note 5)
|
754,647
|
|
Auditing fees
|
25,029
|
|
Legal fees
|
7,362
|
|
Portfolio accounting fees
|
329,007
|
|
Distribution services fee (Note 5)
|
11,132,047
|
|
Other service fees (Notes 2 and 5)
|
59,526,934
|
|
Share registration costs
|
389,969
|
|
Printing and postage
|
994,022
|
|
Miscellaneous (Note 5)
|
606,787
|
|
TOTAL EXPENSES
|
440,917,478
|
|
Waivers and Reimbursements:
|
|
|
Waiver of investment adviser fee (Note 5)
|
(232,085,764)
|
|
Waivers/reimbursements of other operating expenses (Notes 2 and 5)
|
(75,629,165)
|
|
TOTAL WAIVERS AND REIMBURSEMENTS
|
(307,714,929)
|
|
Net expenses
|
133,202,549
|
|
Net investment income
|
379,295,869
|
|
Net realized loss on investments
|
(50,482,982)
|
|
Change in net assets resulting from operations
|
$328,812,887
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
24
Statement of Changes in Net Assets
|
Year Ended July 31
|
2022
|
2021
|
|
Increase (Decrease) in Net Assets
|
|
|
|
Operations:
|
|
|
|
Net investment income (loss)
|
$379,295,869
|
$24,909,877
|
|
Net realized gain (loss)
|
(50,482,982)
|
9,077,458
|
|
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS
|
328,812,887
|
33,987,335
|
|
Distributions to Shareholders:
|
|
|
|
Select Shares
|
(19,758,181)
|
(1,828,331)
|
|
Institutional Shares
|
(88,014,519)
|
(5,856,051)
|
|
Service Shares
|
(22,610,113)
|
(2,296,400)
|
|
Administrative Shares
|
(254)
|
(6,621)
|
|
Cash II Shares
|
(689,048)
|
(115,528)
|
|
Cash Series Shares
|
(314,780)
|
(68,462)
|
|
Capital Shares
|
(8,282,207)
|
(570,369)
|
|
Trust Shares
|
(3,682,995)
|
(554,628)
|
|
Premier Shares
|
(232,988,258)
|
(20,496,173)
|
|
Advisor Shares
|
(4,070,279)
|
(245,060)
|
|
SDG Shares1
|
(1,726,104)
|
—
|
|
CHANGE IN NET ASSETS RESULTING FROM
DISTRIBUTIONS TO SHAREHOLDERS
|
(382,136,738)
|
(32,037,623)
|
|
Share Transactions:
|
|
|
|
Proceeds from sale of shares
|
858,728,766,875
|
746,976,858,957
|
|
Net asset value of shares issued to shareholders in
payment of distributions declared
|
160,712,048
|
12,956,511
|
|
Cost of shares redeemed
|
(849,797,315,713)
|
(752,855,672,951)
|
|
CHANGE IN NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
|
9,092,163,210
|
(5,865,857,483)
|
|
Change in net assets
|
9,038,839,359
|
(5,863,907,771)
|
|
Net Assets:
|
|
|
|
Beginning of period
|
129,424,939,042
|
135,288,846,813
|
|
End of period
|
$138,463,778,401
|
$129,424,939,042
|
|
1
|
The Fund’s SDG Shares commenced operations on March 30, 2022.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
25
Notes to Financial Statements
July 31, 2022
1. ORGANIZATION
Federated Hermes Money Market Obligations Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust consists of 16 portfolios. The financial statements included herein are only those of Federated Hermes Government Obligations Fund (the “Fund”), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder’s interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers eleven classes of shares: Select Shares, Institutional Shares, Service Shares, Administrative Shares, Cash II Shares, Cash Series Shares, Capital Shares, Trust Shares, Premier Shares, Advisor Shares and SDG Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The investment objective of the Fund is to provide current income consistent with stability of principal.
The Fund operates as a government money market fund. As a government money market fund, the Fund: (1) invests at least 99.5% of its total assets in: (i) cash; (ii) securities issued or guaranteed by the United States or certain U.S. government agencies or instrumentalities; and/or (iii) repurchase agreements that are collateralized fully; (2) generally continues to use amortized cost to value its portfolio securities and transact at a stable $1.00 net asset value (NAV); and (3) has elected not to be subject to the liquidity fees and gates requirement at this time as permitted by Rule 2a-7 under the Act.
The Fund’s SDG Shares commenced operations on March 30, 2022.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
Securities are valued at amortized cost. Under the amortized cost valuation method, an investment is valued initially at its cost as determined in accordance with GAAP. The Fund then adjusts the amount of interest income accrued each day over the term of the investment to account for any difference between the initial cost of the investment and the amount payable at its maturity. If amortized cost is determined not to approximate fair value, the value of the portfolio securities will be determined in accordance with the procedures described below. There can be no assurance that the Fund could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines its NAV per share, and the actual value obtained could be materially different.
The Fund’s Board of Trustees (the “Trustees”) have ultimate responsibility for determining the fair value of investments. The Trustees have appointed a valuation committee (“Valuation Committee”) comprised of officers of the Fund, Federated Investment Management Company (the “Adviser”) and certain of the Adviser’s affiliated companies to assist in determining fair value of securities and in overseeing the
Annual Shareholder Report
26
comparison of amortized cost to market-based value. The Trustees have also authorized the use of pricing services recommended by the Valuation Committee to provide fair value evaluations of the current value of certain investments for purposes of monitoring the relationship of market-based value and amortized cost. The Valuation Committee employs various methods for reviewing third-party pricing-service evaluations including periodic reviews of third-party pricing services’ policies, procedures and valuation methods (including key inputs and assumptions), and review of price challenges by the Adviser based on recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee determines the fair value of the investment in accordance with procedures adopted by the Trustees. The Trustees periodically review and approve the fair valuations made by the Valuation Committee and any changes made to the procedures.
Repurchase Agreements
The Fund may invest in repurchase agreements for short-term liquidity purposes. It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund’s custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control” as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.
The insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.
The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund’s Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.
Repurchase agreements are subject to Master Netting Agreements which are agreements between the Fund and its counterparties that provide for the net settlement of all transactions and collateral with the Fund, through a single payment, in the event of default or termination. Amounts presented on the Portfolio of Investments and Statement of Assets and Liabilities are not net settlement amounts but gross. As indicated above, the cash or securities to be repurchased, as shown on the Portfolio of Investments, exceeds the repurchase price to be paid under the agreement reducing the net settlement amount to zero.
Annual Shareholder Report
27
Investment Income, Gains and Losses, Expenses and Distributions
Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis. Interest income and expenses are accrued daily. Distributions to shareholders are recorded on the ex-dividend date. Distributions of net investment income, if any, are declared daily and paid monthly. Amortization/accretion of premium and discount is included in investment income. Investment income, realized gains and losses, and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that select classes will bear certain expenses unique to those classes. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses. The detail of the total fund expense waivers and reimbursement of $307,714,929 is disclosed in various locations in this Note 2 and Note 5.
Transfer Agent Fees
For the year ended July 31, 2022, transfer agent fees for the Fund were as follows:
|
|
Transfer Agent
Fees Incurred
|
Transfer Agent
Fees Reimbursed
|
Transfer Agent Fees
Waived by Unaffiliated
Third Parties
|
|
Select Shares
|
$50,319
|
$—
|
$—
|
|
Institutional Shares
|
198,685
|
—
|
(268)
|
|
Service Shares
|
2,208,530
|
—
|
(1,241,138)
|
|
Administrative Shares
|
1
|
—
|
—
|
|
Cash II Shares
|
558,069
|
(2,756)
|
(338,580)
|
|
Cash Series Shares
|
232,137
|
—
|
(161,257)
|
|
Capital Shares
|
22,046
|
—
|
—
|
|
Trust Shares
|
1,095,521
|
(8,623)
|
(670,503)
|
|
Premier Shares
|
448,770
|
(822)
|
—
|
|
Advisor Shares
|
4,791
|
—
|
—
|
|
SDG Shares
|
1,213
|
—
|
—
|
|
TOTAL
|
$4,820,082
|
$(12,201)
|
$(2,411,746)
|
Other Service Fees
The Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund’s Select Shares, Institutional Shares, Service Shares, Administrative Shares, Cash II Shares, Cash Series Shares, Capital Shares, Trust Shares, Premier Shares and Advisor Shares to unaffiliated financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may
Annual Shareholder Report
28
voluntarily reimburse the Fund for other service fees. In addition, unaffiliated third-party financial intermediaries may waive other service fees. This waiver can be modified or terminated at any time. For the year ended July 31, 2022, other service fees for the Fund were as follows:
|
|
Other Service
Fees Incurred
|
Other Service
Fees Reimbursed
|
Other Service Fees
Waived by Unaffiliated
Third Parties
|
|
Select Shares
|
$1,402,752
|
$—
|
$(917,814)
|
|
Institutional Shares
|
15,038,644
|
—
|
(9,817,207)
|
|
Service Shares
|
28,677,669
|
(25,404)
|
(19,769,064)
|
|
Administrative Shares
|
64
|
—
|
(50)
|
|
Cash II Shares
|
1,527,621
|
—
|
(1,184,372)
|
|
Cash Series Shares
|
924,227
|
(5,321)
|
(791,552)
|
|
Capital Shares
|
5,181,593
|
—
|
(3,371,246)
|
|
Trust Shares
|
6,774,364
|
(4,551)
|
(5,204,539)
|
|
TOTAL
|
$59,526,934
|
$(35,276)
|
$(41,055,844)
|
For the year ended July 31, 2022, the Fund’s Premier Shares and Advisor Shares did not incur other service fees; however they may begin to incur this fee upon approval of the Trustees.
Federal Income Taxes
It is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code (the “Code”) and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. As of and during the year ended July 31, 2022, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2022, tax years 2019 through 2022 remain subject to examination by the Fund’s major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.
When-Issued and Delayed-Delivery Transactions
The Fund may engage in when-issued or delayed-delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed-delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
Other
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ materially from those estimated. The Fund applies investment company accounting and reporting guidance.
Annual Shareholder Report
29
3. SHARES OF BENEFICIAL INTEREST
The following tables summarize share activity:
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Select Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
13,629,752,471
|
$13,629,752,471
|
11,534,377,670
|
$11,534,389,592
|
|
Shares issued to
shareholders in payment
of distributions declared
|
441,651
|
441,651
|
57,230
|
57,230
|
|
Shares redeemed
|
(15,780,397,892)
|
(15,780,397,892)
|
(10,788,951,388)
|
(10,788,951,388)
|
|
NET CHANGE
RESULTING FROM
SELECT
SHARE TRANSACTIONS
|
(2,150,203,770)
|
$(2,150,203,770)
|
745,483,512
|
$745,495,434
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Institutional Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
224,829,179,654
|
$224,829,179,654
|
180,086,920,529
|
$180,086,956,684
|
|
Shares issued to
shareholders in payment
of distributions declared
|
31,988,578
|
31,988,578
|
2,026,188
|
2,026,188
|
|
Shares redeemed
|
(224,797,693,663)
|
(224,797,693,663)
|
(178,841,202,810)
|
(178,841,202,810)
|
|
NET CHANGE
RESULTING FROM
INSTITUTIONAL
SHARE TRANSACTIONS
|
63,474,569
|
$63,474,569
|
1,247,743,907
|
$1,247,780,062
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Service Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
27,391,276,505
|
$27,391,276,505
|
33,550,470,325
|
$33,550,489,325
|
|
Shares issued to
shareholders in payment
of distributions declared
|
9,246,109
|
9,246,109
|
754,237
|
754,237
|
|
Shares redeemed
|
(30,471,519,424)
|
(30,471,519,424)
|
(32,693,627,797)
|
(32,693,627,797)
|
|
NET CHANGE
RESULTING FROM
SERVICE
SHARE TRANSACTIONS
|
(3,070,996,810)
|
$(3,070,996,810)
|
857,596,765
|
$857,615,765
|
Annual Shareholder Report
30
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Administrative Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
860,627
|
$860,627
|
154,066,827
|
$154,066,827
|
|
Shares issued to
shareholders in payment
of distributions declared
|
169
|
169
|
1,024
|
1,024
|
|
Shares redeemed
|
(1,001,455)
|
(1,001,455)
|
(407,828,140)
|
(407,828,140)
|
|
NET CHANGE
RESULTING FROM
ADMINISTRATIVE
SHARE TRANSACTIONS
|
(140,659)
|
$(140,659)
|
(253,760,289)
|
$(253,760,289)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Cash II Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
384,359,199
|
$384,359,199
|
1,108,325,759
|
$1,108,326,840
|
|
Shares issued to
shareholders in payment
of distributions declared
|
677,732
|
677,732
|
113,869
|
113,869
|
|
Shares redeemed
|
(442,616,478)
|
(442,616,478)
|
(1,082,683,108)
|
(1,082,683,108)
|
|
NET CHANGE
RESULTING FROM
CASH II
SHARE TRANSACTIONS
|
(57,579,547)
|
$(57,579,547)
|
25,756,520
|
$25,757,601
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Cash Series Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
1,250,402,484
|
$1,250,402,484
|
1,974,548,300
|
$1,974,548,756
|
|
Shares issued to
shareholders in payment
of distributions declared
|
314,098
|
314,098
|
68,051
|
68,051
|
|
Shares redeemed
|
(1,469,410,905)
|
(1,469,410,905)
|
(1,797,848,066)
|
(1,797,848,066)
|
|
NET CHANGE
RESULTING FROM
CASH SERIES
SHARE TRANSACTIONS
|
(218,694,323)
|
$(218,694,323)
|
176,768,285
|
$176,768,741
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Capital Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
11,576,723,757
|
$11,576,723,757
|
10,680,533,074
|
$10,680,537,870
|
|
Shares issued to
shareholders in payment
of distributions declared
|
5,965,112
|
5,965,112
|
395,798
|
395,798
|
|
Shares redeemed
|
(11,531,336,929)
|
(11,531,336,929)
|
(11,090,499,803)
|
(11,090,499,803)
|
|
NET CHANGE
RESULTING FROM
CAPITAL
SHARE TRANSACTIONS
|
51,351,940
|
$51,351,940
|
(409,570,931)
|
$(409,566,135)
|
Annual Shareholder Report
31
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Trust Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
4,116,626,629
|
$4,116,626,629
|
5,919,821,773
|
$5,919,827,230
|
|
Shares issued to
shareholders in payment
of distributions declared
|
2,947,861
|
2,947,861
|
481,041
|
481,041
|
|
Shares redeemed
|
(5,501,391,334)
|
(5,501,391,334)
|
(6,565,038,268)
|
(6,565,038,268)
|
|
NET CHANGE
RESULTING FROM
TRUST
SHARE TRANSACTIONS
|
(1,381,816,844)
|
$(1,381,816,844)
|
(644,735,454)
|
$(644,729,997)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Premier Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
566,602,630,504
|
$566,602,630,504
|
501,565,158,244
|
$501,565,237,176
|
|
Shares issued to
shareholders in payment
of distributions declared
|
103,686,462
|
103,686,462
|
8,814,730
|
8,814,730
|
|
Shares redeemed
|
(552,718,368,752)
|
(552,718,368,752)
|
(508,667,711,171)
|
(508,667,711,171)
|
|
NET CHANGE
RESULTING FROM
PREMIER
SHARE TRANSACTIONS
|
13,987,948,214
|
$13,987,948,214
|
(7,093,738,197)
|
$(7,093,659,265)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Advisor Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
2,274,388,161
|
$2,274,388,161
|
402,477,521
|
$402,478,657
|
|
Shares issued to
shareholders in payment
of distributions declared
|
3,940,957
|
3,940,957
|
244,343
|
244,343
|
|
Shares redeemed
|
(906,072,880)
|
(906,072,880)
|
(920,282,400)
|
(920,282,400)
|
|
NET CHANGE
RESULTING FROM
ADVISOR
SHARES TRANSACTIONS
|
1,372,256,238
|
$1,372,256,238
|
(517,560,536)
|
$(517,559,400)
|
Annual Shareholder Report
32
|
|
Year Ended
7/31/20221
|
Year Ended
7/31/2021
|
||
|
SDG Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
6,672,566,884
|
$6,672,566,884
|
—
|
$—
|
|
Shares issued to
shareholders in payment
of distributions declared
|
1,503,319
|
1,503,319
|
—
|
—
|
|
Shares redeemed
|
(6,177,506,001)
|
(6,177,506,001)
|
—
|
—
|
|
NET CHANGE
RESULTING FROM SDG
SHARE TRANSACTIONS
|
496,564,202
|
$496,564,202
|
—
|
$—
|
|
NET CHANGE
RESULTING FROM
TOTAL FUND
SHARE TRANSACTIONS
|
9,092,163,210
|
$9,092,163,210
|
(5,866,016,418)
|
$(5,865,857,483)
|
|
1
|
Reflects operations for the period from March 30, 2022 (commencement of operations) to
July 31, 2022.
|
4. FEDERAL TAX INFORMATION
The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2022 and 2021, was as follows:
|
|
2022
|
2021
|
|
Ordinary income1
|
$382,136,738
|
$32,037,623
|
|
1
|
For tax purposes, short-term capital gain distributions are considered ordinary
income distributions.
|
As of July 31, 2022, the components of distributable earnings on a tax-basis were as follows:
|
Undistributed ordinary income
|
$4,043
|
|
Capital loss carryforwards
|
$(50,482,982)
|
As of July 31, 2022, the Fund had a capital loss carryforward of $50,482,982 which will reduce the Fund’s taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code, thereby reducing the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, these net capital losses retain their character as either short-term or long-term and do not expire.
The following schedule summarizes the Fund’s capital loss carryforwards:
|
Short-Term
|
Long-Term
|
Total
|
|
$50,482,982
|
$—
|
$50,482,982
|
Annual Shareholder Report
33
5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
The advisory agreement between the Fund and the Fund’s Adviser provides for an annual fee equal to 0.20% of the Fund’s average daily net assets. Subject to the terms described in the Expense Limitation note, the Fund’s Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund for competitive reasons such as to maintain the Fund’s expense ratio, or as and when appropriate, to maintain positive or zero net yields. For the year ended July 31, 2022, the Fund’s Adviser voluntarily waived $232,085,764 of its fee. In addition, the Adviser voluntarily reimbursed $12,201 and $24,234,379 of transfer agent fees and other operating expenses, respectively.
Administrative Fee
Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated Hermes Funds subject to a fee under the Administrative Services Agreement. The fee paid to FAS is based on the average daily net assets of the Investment Complex as specified below:
|
Administrative Fee
|
Average Daily Net Assets
of the Investment Complex
|
|
0.100%
|
on assets up to $50 billion
|
|
0.075%
|
on assets over $50 billion
|
Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2022, the annualized fee paid to FAS was 0.078% of average daily net assets of the Fund.
In addition, FAS may charge certain out-of-pocket expenses to the Fund.
Distribution Services Fee
The Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund’s Administrative Shares, Cash II Shares, Cash Series Shares and Trust Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:
|
|
Percentage of Average Daily
Net Assets of Class
|
|
Administrative Shares
|
0.25%
|
|
Cash II Shares
|
0.35%
|
|
Cash Series Shares
|
0.60%
|
|
Trust Shares
|
0.25%
|
Annual Shareholder Report
34
Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2022, distribution services fees for the Fund were as follows:
|
|
Distribution Services
Fees Incurred
|
Distribution Services
Fees Waived
|
|
Administrative Shares
|
$439
|
$(336)
|
|
Cash II Shares
|
2,138,912
|
(1,547,594)
|
|
Cash Series Shares
|
2,218,145
|
(1,745,834)
|
|
Trust Shares
|
6,774,551
|
(4,585,955)
|
|
TOTAL
|
$11,132,047
|
$(7,879,719)
|
When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended July 31, 2022, FSC retained $132,161 of fees paid by the Fund.
Other Service Fees
For the year ended July 31, 2022, FSSC received $171,696 and reimbursed $35,276 of the other service fees disclosed in Note 2.
Expense Limitation
Due to the possibility of changes in market conditions and other factors, there can be no assurance that the level of waivers/reimbursement/reduction of Fund expenses reflected in the financial highlights will be maintained in the future. However, the Fund’s Adviser and certain of its affiliates (which may include FSC, FAS and FSSC) on their own initiative have agreed to waive certain amounts of their respective fees and/or reimburse expenses. Total annual fund operating expenses (as shown in the financial highlights, excluding interest expense, extraordinary expenses and proxy-related expenses paid by the Fund, if any) paid by the Fund’s Select Shares, Institutional Shares, Service Shares, Administrative Shares, Cash II Shares, Cash Series Shares, Capital Shares, Trust Shares, Premier Shares, Advisor Shares and SDG Shares (after the voluntary waivers and/or reimbursements) will not exceed 0.17%, 0.20%, 0.45%, 0.45%, 0.85%, 1.05%, 0.30%, 0.70%, 0.15%, 0.15% and 0.15% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) October 1, 2023; or (b) the date of the Fund’s next effective Prospectus. While the Fund’s Adviser and its applicable affiliates currently do not anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or the Fee Limit increased prior to the Termination Date with the agreement of the Trustees.
Directors’/Trustees’ and Miscellaneous Fees
Certain Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate payment, Independent Directors’/Trustees’ fees and certain expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses are paid by an affiliate of the Fund’s Adviser which in due course are reimbursed by the Fund. These expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses may be included in Accrued and Miscellaneous Expenses on the Statement of Assets and Liabilities and Statement of Operations, respectively.
Annual Shareholder Report
35
6. Interfund Lending
Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other funds advised by subsidiaries of Federated Hermes, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating affiliated funds. As of July 31, 2022, there were no outstanding loans. During the year ended July 31, 2022, the program was not utilized.
7. INDEMNIFICATIONS
Under the Fund’s organizational documents, its Officers and Directors/Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund (other than liabilities arising out of their willful misfeasance, bad faith, gross negligence or reckless disregard of their duties to the Fund). In addition, in the normal course of business, the Fund provides certain indemnifications under arrangements with third parties. Typically, obligations to indemnify a third party arise in the context of an arrangement entered into by the Fund under which the Fund agrees to indemnify such third party for certain liabilities arising out of actions taken pursuant to the arrangement, provided the third party’s actions are not deemed to have breached an agreed-upon standard of care (such as willful misfeasance, bad faith, gross negligence or reckless disregard of their duties under the contract). The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet arisen. The Fund does not anticipate any material claims or losses pursuant to these arrangements at this time, and accordingly expects the risk of loss to be remote.
8. OTHER MATTERS
An outbreak of respiratory disease caused by a novel coronavirus was first detected in China in late 2019 and subsequently spread globally. As of the date of the issuance of these financial statements, this coronavirus has resulted in closing borders, enhanced health screenings, disruptions to healthcare service preparation and delivery, quarantines, cancellations, and disruptions to supply chains, workflow operations and consumer activity, as well as general concern and uncertainty. The impact of this coronavirus may continue for an extended period of time and has resulted in substantial economic volatility. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could continue to negatively affect the worldwide economy, as well as the economies of individual countries, individual companies (including certain Fund service providers and issuers of the Fund’s investments) and the markets in general in significant and unforeseen ways. Any such impact could adversely affect the Fund’s performance.
9. FEDERAL TAX INFORMATION (UNAUDITED)
For the fiscal year ended July 31, 2022, 100.00% of dividends paid by the Fund are interest-related dividends, as provided by the American Jobs Creation Act of 2004.
Annual Shareholder Report
36
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Federated Hermes Money Market Obligations Trust and the Shareholders of Federated Hermes Government Obligations Fund:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of the Federated Hermes Government Obligations Fund (the Fund), a portfolio of Federated Hermes Money Market Obligations Trust, including the portfolio of investments, as of July 31, 2022, the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the related notes (collectively, the financial statements) and the financial highlights for each of the years or periods in the five-year period then ended. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of July 31, 2022, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years or periods in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
Annual Shareholder Report
37
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Such procedures also included confirmation of securities owned as of July 31, 2022, by correspondence with custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of Federated Hermes’ investment companies since 2006.
Boston, Massachusetts
September 23, 2022
September 23, 2022
Annual Shareholder Report
38
Shareholder Expense Example (unaudited)
As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or other service fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2022 to July 31, 2022.
ACTUAL EXPENSES
The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses attributable to your investment during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Annual Shareholder Report
39
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
|
|
Beginning
Account Value
2/1/2022
|
Ending
Account Value
7/31/2022
|
Expenses Paid
During Period1
|
|
Actual:
|
|
|
|
|
Select Shares
|
$1,000
|
$1,002.90
|
$0.702
|
|
Institutional Shares
|
$1,000
|
$1,002.80
|
$0.793
|
|
Service Shares
|
$1,000
|
$1,002.10
|
$1.544
|
|
Administrative Shares
|
$1,000
|
$1,002.00
|
$1.495
|
|
Cash II Shares
|
$1,000
|
$1,001.10
|
$2.536
|
|
Cash Series Shares
|
$1,000
|
$1,000.80
|
$2.737
|
|
Capital Shares
|
$1,000
|
$1,002.50
|
$1.148
|
|
Trust Shares
|
$1,000
|
$1,001.40
|
$2.139
|
|
Premier Shares
|
$1,000
|
$1,003.00
|
$0.6010
|
|
Advisor Shares
|
$1,000
|
$1,003.00
|
$0.6511
|
|
SDG Shares
|
$1,000
|
$1,002.90
|
$0.4812
|
|
Hypothetical (assuming a 5% return
before expenses):
|
|
|
|
|
Select Shares
|
$1,000
|
$1,024.10
|
$0.702
|
|
Institutional Shares
|
$1,000
|
$1,024.00
|
$0.803
|
|
Service Shares
|
$1,000
|
$1,023.26
|
$1.564
|
|
Administrative Shares
|
$1,000
|
$1,023.31
|
$1.515
|
|
Cash II Shares
|
$1,000
|
$1,022.27
|
$2.566
|
|
Cash Series Shares
|
$1,000
|
$1,022.07
|
$2.767
|
|
Capital Shares
|
$1,000
|
$1,023.65
|
$1.158
|
|
Trust Shares
|
$1,000
|
$1,022.66
|
$2.169
|
|
Premier Shares
|
$1,000
|
$1,024.20
|
$0.6010
|
|
Advisor Shares
|
$1,000
|
$1,024.15
|
$0.6511
|
|
SDG Shares
|
$1,000
|
$1,024.10
|
$0.7012
|
|
1
|
Expenses are equal to the Fund’s annualized net expense ratios, multiplied by the average
account value over the period, multiplied by 181/365 (to reflect the one-half-year period). The
annualized net expense ratios are as follows:
|
|
Select Shares
|
0.14%
|
|
Institutional Shares
|
0.16%
|
|
Service Shares
|
0.31%
|
|
Administrative Shares
|
0.30%
|
|
Cash II Shares
|
0.51%
|
|
Cash Series Shares
|
0.55%
|
|
Capital Shares
|
0.23%
|
|
Trust Shares
|
0.43%
|
|
Premier Shares
|
0.12%
|
|
Advisor Shares
|
0.13%
|
|
SDG Shares
|
0.14%
|
Annual Shareholder Report
40
|
2
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Select Shares
current Fee Limit of 0.17% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $0.84 and $0.85, respectively.
|
|
3
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Institutional Shares
current Fee Limit of 0.20% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $0.99 and $1.00, respectively.
|
|
4
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Service Shares
current Fee Limit of 0.45% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $2.23 and $2.26, respectively.
|
|
5
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Administrative
Shares current Fee Limit of 0.45% (as reflected in the Notes to Financial Statements, Note 5
under Expense Limitation), multiplied by the average account value over the period, multiplied
by 181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $2.23 and $2.26, respectively.
|
|
6
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Cash II Shares
current Fee Limit of 0.85% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $4.22 and $4.26, respectively.
|
|
7
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Cash Series Shares
current Fee Limit of 1.05% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $5.21 and $5.26, respectively.
|
|
8
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Capital Shares
current Fee Limit of 0.30% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $1.49 and $1.51, respectively.
|
|
9
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Trust Shares
current Fee Limit of 0.70% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $3.47 and $3.51, respectively.
|
|
10
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Premier Shares
current Fee Limit of 0.15% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $0.74 and $0.75, respectively.
|
|
11
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Advisor Shares
current Fee Limit of 0.15% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $0.74 and $0.75, respectively.
|
|
12
|
“Actual” expense information for the SDG Shares is for the period from March 30, 2022 (date of
initial investment) to July 31, 2022. Actual expenses are equal to the SDG’s Shares annualized
net expense ratio of 0.14% multiplied by 124/365 (to reflect the period from initial investment to
July 31, 2022). “Hypothetical” expense information for the Fund is presented on the basis of the
full one-half year period to enable comparison to other funds. It is based on assuming the same
net expense ratio and average account value over the period, but it is multiplied by 181/365 (to
reflect the full half-year period).
|
Annual Shareholder Report
41
Board of Trustees and Trust Officers
The Board of Trustees is responsible for managing the Trust’s business affairs and for exercising all the Trust’s powers except those reserved for the shareholders. The following tables give information about each Trustee and the senior officers of the Fund. Where required, the tables separately list Trustees who are “interested persons” of the Fund (i.e., “Interested” Trustees) and those who are not (i.e., “Independent” Trustees). Unless otherwise noted, the address of each person listed is 1001 Liberty Avenue, Pittsburgh, PA 15222-3779. The address of all Independent Trustees listed is 4000 Ericsson Drive, Warrendale, PA 15086-7561; Attention: Mutual Fund Board. As of December 31, 2021, the Trust comprised 16 portfolio(s), and the Federated Hermes Fund Family consisted of 33 investment companies (comprising 102 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Trustee oversees all portfolios in the Federated Hermes Fund Family and serves for an indefinite term. The Fund’s Statement of Additional Information includes additional information about Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400, Option #4.
Interested TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
J. Christopher Donahue*
Birth Date: April 11, 1949
President and Trustee
Indefinite Term
Began serving: April 1989
|
Principal Occupations: Principal Executive Officer and President of
certain of the Funds in the Federated Hermes Fund Family; Director or
Trustee of the Funds in the Federated Hermes Fund Family; President,
Chief Executive Officer and Director, Federated Hermes, Inc.;
Chairman and Trustee, Federated Investment Management Company;
Trustee, Federated Investment Counseling; Chairman and Director,
Federated Global Investment Management Corp.; Chairman and
Trustee, Federated Equity Management Company of Pennsylvania;
Trustee, Federated Shareholder Services Company; Director,
Federated Services Company.
Previous Positions: President, Federated Investment Counseling;
President and Chief Executive Officer, Federated Investment
Management Company, Federated Global Investment Management
Corp. and Passport Research, Ltd; Chairman, Passport Research, Ltd.
|
Annual Shareholder Report
42
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
Thomas R. Donahue*
Birth Date: October 20, 1958
Trustee
Indefinite Term
Began serving: May 2016
|
Principal Occupations: Director or Trustee of certain of the funds in
the Federated Hermes Fund Family; Chief Financial Officer, Treasurer,
Vice President and Assistant Secretary, Federated Hermes, Inc.;
Chairman and Trustee, Federated Administrative Services; Chairman
and Director, Federated Administrative Services, Inc.; Trustee and
Treasurer, Federated Advisory Services Company; Director or Trustee
and Treasurer, Federated Equity Management Company of
Pennsylvania, Federated Global Investment Management Corp.,
Federated Investment Counseling, and Federated Investment
Management Company; Director, MDTA LLC; Director, Executive Vice
President and Assistant Secretary, Federated Securities Corp.;
Director or Trustee and Chairman, Federated Services Company and
Federated Shareholder Services Company; and Director and
President, FII Holdings, Inc.
Previous Positions: Director, Federated Hermes, Inc.; Assistant
Secretary, Federated Investment Management Company, Federated
Global Investment Management Company and Passport Research,
LTD; Treasurer, Passport Research, LTD; Executive Vice President,
Federated Securities Corp.; and Treasurer, FII Holdings, Inc.
|
*
Family relationships and reasons for “interested” status: J. Christopher Donahue and Thomas R. Donahue are brothers. Both are “interested” due to their beneficial ownership of shares of Federated Hermes, Inc. and the positions they hold with Federated Hermes, Inc. and its subsidiaries.
INDEPENDENT TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
John T. Collins
Birth Date: January 24, 1947
Trustee
Indefinite Term
Began serving: September
2013
|
Principal Occupations: Director or Trustee, and Chair of the Board
of Directors or Trustees, of the Federated Hermes Fund Family;
formerly, Chairman and CEO, The Collins Group, Inc. (a private equity
firm) (Retired).
Other Directorships Held: Director, KLX Energy Services Holdings,
Inc. (oilfield services); former Director of KLX Corp. (aerospace).
Qualifications: Mr. Collins has served in several business and financial
management roles and directorship positions throughout his career.
Mr. Collins previously served as Chairman and CEO of The Collins
Group, Inc. (a private equity firm) and as a Director of KLX Corp.
Mr. Collins serves as Chairman Emeriti, Bentley University. Mr. Collins
previously served as Director and Audit Committee Member, Bank of
America Corp.; Director, FleetBoston Financial Corp.; and Director,
Beth Israel Deaconess Medical Center (Harvard University
Affiliate Hospital).
|
Annual Shareholder Report
43
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
G. Thomas Hough
Birth Date: February 28, 1955
Trustee
Indefinite Term
Began serving: August 2015
|
Principal Occupations: Director or Trustee, Chair of the Audit
Committee of the Federated Hermes Fund Family; formerly, Vice
Chair, Ernst & Young LLP (public accounting firm) (Retired).
Other Directorships Held: Director, Chair of the Audit Committee,
Equifax, Inc.; Lead Director, Member of the Audit and Nominating and
Corporate Governance Committees, Haverty Furniture Companies,
Inc.; formerly, Director, Member of Governance and Compensation
Committees, Publix Super Markets, Inc.
Qualifications: Mr. Hough has served in accounting, business
management and directorship positions throughout his career.
Mr. Hough most recently held the position of Americas Vice Chair of
Assurance with Ernst & Young LLP (public accounting firm). Mr. Hough
serves on the President’s Cabinet and Business School Board of
Visitors for the University of Alabama. Mr. Hough previously served on
the Business School Board of Visitors for Wake Forest University, and
he previously served as an Executive Committee member of the
United States Golf Association.
|
|
Maureen Lally-Green
Birth Date: July 5, 1949
Trustee
Indefinite Term
Began serving: August 2009
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Adjunct Professor Emerita of Law, Duquesne University
School of Law; formerly, Dean of the Duquesne University School of
Law and Professor of Law and Interim Dean of the Duquesne
University School of Law; formerly, Associate General Secretary and
Director, Office of Church Relations, Diocese of Pittsburgh.
Other Directorships Held: Director, CNX Resources Corporation
(formerly known as CONSOL Energy Inc.).
Qualifications: Judge Lally-Green has served in various legal and
business roles and directorship positions throughout her career. Judge
Lally-Green previously held the position of Dean of the School of Law
of Duquesne University (as well as Interim Dean). Judge Lally-Green
previously served as a member of the Superior Court of Pennsylvania
and as a Professor of Law, Duquesne University School of Law. Judge
Lally-Green was appointed by the Supreme Court of Pennsylvania to
serve on the Supreme Court’s Board of Continuing Judicial Education
and the Supreme Court’s Appellate Court Procedural Rules
Committee. Judge Lally-Green also currently holds the positions on
not for profit or for profit boards of directors as follows: Director
and Chair, UPMC Mercy Hospital; Regent, Saint Vincent Seminary;
Member, Pennsylvania State Board of Education (public); Director,
Catholic Charities, Pittsburgh; and Director CNX Resources
Corporation (formerly known as CONSOL Energy Inc.). Judge
Lally-Green has held the positions of: Director, Auberle; Director,
Epilepsy Foundation of Western and Central Pennsylvania; Director,
Ireland Institute of Pittsburgh; Director, Saint Thomas More Society;
Director and Chair, Catholic High Schools of the Diocese of
Pittsburgh, Inc.; Director, Pennsylvania Bar Institute; Director,
St. Vincent College; Director and Chair, North Catholic High
School, Inc.; Director and Vice Chair, Our Campaign for the Church
Alive!, Inc.; and Director, Saint Francis University.
|
Annual Shareholder Report
44
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
Thomas M. O’Neill
Birth Date: June 14, 1951
Trustee
Indefinite Term
Began serving: August 2006
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Sole Proprietor, Navigator Management Company
(investment and strategic consulting).
Other Directorships Held: None.
Qualifications: Mr. O’Neill has served in several business, mutual fund
and financial management roles and directorship positions throughout
his career. Mr. O’Neill serves as Director, Medicines for Humanity.
Mr. O’Neill previously served as Chief Executive Officer and President,
Managing Director and Chief Investment Officer, Fleet Investment
Advisors; President and Chief Executive Officer, Aeltus Investment
Management, Inc.; General Partner, Hellman, Jordan Management
Co., Boston, MA; Chief Investment Officer, The Putnam Companies,
Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director
and Consultant, EZE Castle Software (investment order management
software); Director, The Golisano Children’s Museum of Naples,
Florida; and Director, Midway Pacific (lumber).
|
|
Madelyn A. Reilly
Birth Date: February 2, 1956
Trustee
Indefinite Term
Began serving:
November 2020
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; formerly, Executive Vice President for Legal Affairs,
General Counsel and Secretary to the Board of Directors, Duquesne
University (Retired).
Other Directorships Held: None.
Qualifications: Ms. Reilly has served in various business and legal
management roles throughout her career. Ms. Reilly previously served
as Senior Vice President for Legal Affairs, General Counsel and
Secretary to the Board of Directors and Assistant General Counsel and
Director of Risk Management, Duquesne University. Prior to her work
at Duquesne University, Ms. Reilly served as Assistant General
Counsel of Compliance and Enterprise Risk as well as Senior Counsel
of Environment, Health and Safety, PPG Industries. Ms. Reilly currently
serves as a member of the Board of Directors of UPMC
Mercy Hospital.
|
Annual Shareholder Report
45
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
P. Jerome Richey
Birth Date: February 23, 1949
Trustee
Indefinite Term
Began serving: September
2013
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Management Consultant; Retired; formerly, Senior Vice
Chancellor and Chief Legal Officer, University of Pittsburgh and
Executive Vice President and Chief Legal Officer, CONSOL Energy Inc.
(now split into two separate publicly traded companies known as
CONSOL Energy Inc. and CNX Resources Corp.).
Other Directorships Held: None.
Qualifications: Mr. Richey has served in several business and legal
management roles and directorship positions throughout his career.
Mr. Richey most recently held the positions of Senior Vice Chancellor
and Chief Legal Officer, University of Pittsburgh. Mr. Richey previously
served as Chairman of the Board, Epilepsy Foundation of Western
Pennsylvania and Chairman of the Board, World Affairs Council of
Pittsburgh. Mr. Richey previously served as Chief Legal Officer and
Executive Vice President, CONSOL Energy Inc. and CNX Gas
Company; and Board Member, Ethics Counsel and Shareholder,
Buchanan Ingersoll & Rooney PC (a law firm).
|
|
John S. Walsh
Birth Date:
November 28, 1957
Trustee
Indefinite Term
Began serving: January 1999
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; President and Director, Heat Wagon, Inc. (manufacturer
of construction temporary heaters); President and Director,
Manufacturers Products, Inc. (distributor of portable construction
heaters); President, Portable Heater Parts, a division of Manufacturers
Products, Inc.
Other Directorships Held: None.
Qualifications: Mr. Walsh has served in several business management
roles and directorship positions throughout his career. Mr. Walsh
previously served as Vice President, Walsh & Kelly, Inc.
(paving contractors).
|
Annual Shareholder Report
46
OFFICERS
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Lori A. Hensler
Birth Date: January 6, 1967
TREASURER
Officer since: April 2013
|
Principal Occupations: Principal Financial Officer and Treasurer of the
Federated Hermes Fund Family; Senior Vice President, Federated
Administrative Services; Financial and Operations Principal for
Federated Securities Corp.; and Assistant Treasurer, Federated
Investors Trust Company. Ms. Hensler has received the Certified
Public Accountant designation.
Previous Positions: Controller of Federated Hermes, Inc.; Senior Vice
President and Assistant Treasurer, Federated Investors Management
Company; Treasurer, Federated Investors Trust Company; Assistant
Treasurer, Federated Administrative Services, Federated
Administrative Services, Inc., Federated Securities Corp., Edgewood
Services, Inc., Federated Advisory Services Company, Federated
Equity Management Company of Pennsylvania, Federated Global
Investment Management Corp., Federated Investment Counseling,
Federated Investment Management Company, Passport Research,
Ltd., and Federated MDTA, LLC; Financial and Operations Principal for
Federated Securities Corp., Edgewood Services, Inc. and Southpointe
Distribution Services, Inc.
|
|
Peter J. Germain
Birth Date:
September 3, 1959
CHIEF LEGAL OFFICER,
SECRETARY and EXECUTIVE
VICE PRESIDENT
Officer since: January 2005
|
Principal Occupations: Mr. Germain is Chief Legal Officer, Secretary
and Executive Vice President of the Federated Hermes Fund Family.
He is General Counsel, Chief Legal Officer, Secretary and Executive
Vice President, Federated Hermes, Inc.; Trustee and Senior Vice
President, Federated Investors Management Company; Trustee and
President, Federated Administrative Services; Director and President,
Federated Administrative Services, Inc.; Director and Vice President,
Federated Securities Corp.; Director and Secretary, Federated Private
Asset Management, Inc.; Secretary, Federated Shareholder Services
Company; and Secretary, Retirement Plan Service Company of
America. Mr. Germain joined Federated Hermes, Inc. in 1984 and is a
member of the Pennsylvania Bar Association.
Previous Positions: Deputy General Counsel, Special Counsel,
Managing Director of Mutual Fund Services, Federated Hermes, Inc.;
Senior Vice President, Federated Services Company; and Senior
Corporate Counsel, Federated Hermes, Inc.
|
|
Stephen Van Meter
Birth Date: June 5, 1975
CHIEF COMPLIANCE
OFFICER AND SENIOR
VICE PRESIDENT
Officer since: July 2015
|
Principal Occupations: Senior Vice President and Chief Compliance
Officer of the Federated Hermes Fund Family; Vice President and
Chief Compliance Officer of Federated Hermes, Inc. and Chief
Compliance Officer of certain of its subsidiaries. Mr. Van Meter joined
Federated Hermes, Inc. in October 2011. He holds FINRA licenses
under Series 3, 7, 24 and 66.
Previous Positions: Mr. Van Meter previously held the position of
Compliance Operating Officer, Federated Hermes, Inc. Prior to joining
Federated Hermes, Inc., Mr. Van Meter served at the United States
Securities and Exchange Commission in the positions of Senior
Counsel, Office of Chief Counsel, Division of Investment Management
and Senior Counsel, Division of Enforcement.
|
Annual Shareholder Report
47
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Deborah A. Cunningham
Birth Date:
September 15, 1959
CHIEF INVESTMENT OFFICER
Officer since: May 2004
Portfolio Manager since:
January 1994
|
Principal Occupations: Deborah A. Cunningham has been the Fund’s
Portfolio Manager since January 1994. Ms. Cunningham was named
Chief Investment Officer of Federated Hermes’ money market
products in 2004. She joined Federated Hermes in 1981 and has been
a Senior Portfolio Manager since 1997 and an Executive Vice President
of the Fund’s Adviser since 2009. Ms. Cunningham has received the
Chartered Financial Analyst designation and holds an M.S.B.A. in
Finance from Robert Morris College.
|
Annual Shareholder Report
48
Evaluation and Approval of Advisory Contract–May 2022
Federated Hermes Government Obligations Fund (the “Fund”)
At its meetings in May 2022 (the “May Meetings”), the Fund’s Board of Trustees (the “Board”), including those Trustees who are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940 (the “Independent Trustees”), reviewed and unanimously approved the continuation of the investment advisory contract between the Fund and Federated Investment Management Company (the “Adviser”) (the “Contract”) for an additional one-year term. The Board’s determination to approve the continuation of the Contract reflects the exercise of its business judgment after considering all of the information and factors believed to be relevant and appropriate on whether to approve the continuation of the existing arrangement. The information, factors and conclusions that formed the basis for the Board’s approval are summarized below.
Information Received and Review Process
At the request of the Independent Trustees, the Fund’s Chief Compliance Officer (the “CCO”) furnished to the Board in advance of its May Meetings an independent written evaluation presenting on the topics discussed below. The Board considered the CCO’s independent written evaluation (the “CCO Fee Evaluation Report”), along with other information, in evaluating the reasonableness of the Fund’s management fee and in determining to approve the continuation of the Contract. The CCO, in preparing the CCO Fee Evaluation Report, has the authority to retain consultants, experts or staff as reasonably necessary to assist in the performance of his duties, reports directly to the Board, and can be terminated only with the approval of a majority of the Independent Trustees. At the request of the Independent Trustees, the CCO Fee Evaluation Report followed the same general approach and covered the same topics as that of the report that had previously been delivered by the CCO in his capacity as “Senior Officer” prior to the elimination of the Senior Officer position in December 2017.
In addition to the extensive materials that comprise and accompany the CCO Fee Evaluation Report, the Board considered information specifically prepared in connection with the approval of the continuation of the Contract that was presented at the May Meetings. In this regard, in the months preceding the May Meetings, the Board requested and reviewed written responses and supporting materials prepared by the Adviser and its affiliates (collectively, “Federated Hermes”) in response to requests posed to Federated Hermes by independent legal counsel on behalf of the Independent Trustees encompassing a wide variety of topics, including those summarized below. The Board also considered such additional matters as the Independent Trustees deemed
Annual Shareholder Report
49
reasonably necessary to evaluate the Contract, which included detailed information about the Fund and Federated Hermes furnished to the Board at its meetings throughout the year and in between regularly scheduled meetings on particular matters as the need arose.
The Board’s consideration of the Contract included review of materials and information covering the following matters, among others: the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates; Federated Hermes’ business and operations; the Adviser’s investment philosophy, personnel and processes; the Fund’s investment objectives and strategies; the Fund’s short-term and long-term performance (in absolute terms, both on a gross basis and net of expenses, and relative to the Fund’s particular investment program and a group of its peer funds and/or its benchmark, as appropriate); the Fund’s investment objectives; the Fund’s fees and expenses, including the advisory fee and the overall expense structure of the Fund (both in absolute terms and relative to a group of its peer funds), with due regard for contractual or voluntary expense limitations (if any); the financial condition of Federated Hermes; the Adviser’s profitability with respect to the Fund; distribution and sales activity for the Fund; and the use and allocation of brokerage commissions derived from trading the Fund’s portfolio securities (if any).
The Board also considered judicial decisions concerning allegedly excessive investment advisory fees charged to other registered funds in determining to approve the Contract. Using these judicial decisions as a guide, the Board observed that the following factors may be relevant to an adviser’s fiduciary duty with respect to its receipt of compensation from a fund: (1) the nature and quality of the services provided by the adviser to the fund and its shareholders, including the performance of the fund, its benchmark and comparable funds; (2) the adviser’s cost of providing the services and the profitability to the adviser of providing advisory services to the fund; (3) the extent to which the adviser may realize “economies of scale” as the fund grows larger and, if such economies of scale exist, whether they have been appropriately shared with the fund and its shareholders or the family of funds; (4) any “fall-out” benefits that accrue to the adviser because of its relationship with the fund, including research services received from brokers that execute fund trades and any fees paid to affiliates of the adviser for services rendered to the fund; (5) comparative fee and expense structures, including a comparison of management fees paid to the adviser with those paid by similar funds both internally and externally as well as management fees charged to institutional and other advisory clients of the adviser for what might be viewed as like services; and (6) the extent of care, conscientiousness and independence with which the fund’s board members perform their duties and their expertise, including whether they are fully informed about all facts the board deems relevant to its consideration of the adviser’s services and fees. The Board noted that the Securities and Exchange Commission (“SEC”) disclosure requirements
Annual Shareholder Report
50
regarding the basis for a fund board’s approval of the fund’s investment advisory contract generally align with the factors listed above. The Board was guided by these factors in its review of the Contract to the extent it considered them to be appropriate and relevant, as discussed further below. The Board considered and weighed these factors in light of its substantial accumulated experience in governing the Fund and working with Federated Hermes on matters relating to the oversight of the other funds advised by Federated Hermes (each, a “Federated Hermes Fund” and, collectively, the (“Federated Hermes Funds”).
In addition to considering the above-referenced factors, the Board was mindful of the preferences and expectations of Fund shareholders and the potential disruptions of the Fund’s operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew the Contract. In particular, the Board recognized that many shareholders likely have invested in the Fund on the strength of Federated Hermes’ industry standing and reputation and with the expectation that Federated Hermes will have a continuing role in providing advisory services to the Fund. Thus, the Board observed that in the marketplace there are a range of investment options available to the Fund’s shareholders and such shareholders, having had the opportunity to consider other investment options, have effectively selected Federated Hermes by virtue of investing in the Fund.
In determining to approve the continuation of the Contract, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the continuation of the Contract was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Contract. The Board recognized that its evaluation process is evolutionary and that the factors considered and emphasis placed on relevant factors may change in recognition of changing circumstances in the registered fund marketplace. The Independent Trustees were assisted throughout the evaluation process by independent legal counsel. In connection with their deliberations at the May Meetings, the Independent Trustees met separately in executive session with their independent legal counsel and without management present to review the relevant materials and consider their responsibilities under applicable laws. In addition, senior management representatives of Federated Hermes also met with the Independent Trustees and their independent legal counsel to discuss the materials and presentations furnished to the Board at the May Meetings. The Board considered the approval of the Contract for the Fund as part of its consideration of agreements for funds across the family of Federated Hermes Funds, but its approvals were made on a fund-by-fund basis.
Annual Shareholder Report
51
Nature, Extent and Quality of Services
The Board considered the nature, extent and quality of the services provided to the Fund by the Adviser and the resources of Federated Hermes dedicated to the Fund. In this regard, the Board evaluated, among other things, the terms of the Contract and the range of services provided to the Fund by Federated Hermes. The Board considered the Adviser’s personnel, investment philosophy and process, investment research capabilities and resources, trade operations capabilities, experience and performance track record. The Board reviewed the qualifications, backgrounds and responsibilities of the portfolio management team primarily responsible for the day-to-day management of the Fund and Federated Hermes’ ability and experience in attracting and retaining qualified personnel to service the Fund. In addition, the Board noted that the Fund is a money market mutual fund that operates in accordance with the limitations set forth in Rule 2a-7 under the 1940 Act. In this connection, the Board considered the expertise of the Adviser in managing money market funds, its extensive experience with the requirements of Rule 2a-7 and its commitment to managing the Fund in accordance with these requirements. The Board also considered the Adviser’s ability to deliver competitive investment performance for the Fund when compared to the Fund’s Performance Peer Group (as defined below), which was deemed by the Board to be a useful indicator of how the Adviser is executing the Fund’s investment program. The Board also considered the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, in order to maintain a positive yield for the Fund in the low interest rate environment.
In addition, the Board considered the financial resources and overall reputation of Federated Hermes and its willingness to consider and make investments in personnel, infrastructure, technology, cybersecurity, business continuity planning and operational enhancements that are designed to benefit the Federated Hermes Funds. The Board noted the significant acquisition of Hermes Fund Managers Limited by Federated Hermes, which has deepened the organization’s investment management expertise and capabilities and expanded the investment process for all of the Federated Hermes Funds to have access to analytical resources related to environmental, social and governance (“ESG”) factors and issuer engagement on ESG matters. The Board considered the quality of Federated Hermes’ communications with the Board and responsiveness to Board inquiries and requests made from time to time with respect to the Fund and other Federated Hermes Funds. In this regard, the Board took into account Federated Hermes’ communications with the Board in light of the pandemic. The Board also considered that Federated Hermes is responsible for providing the Federated Hermes Funds’ officers.
The Board received and evaluated information regarding Federated Hermes’ regulatory and compliance environment. The Board considered Federated Hermes’ compliance program and compliance history and reports from the CCO about Federated Hermes’ compliance with applicable laws and
Annual Shareholder Report
52
regulations, including responses to regulatory developments and any compliance or other issues raised by regulatory agencies. The Board also noted Federated Hermes’ support of the Federated Hermes Funds’ compliance control structure and the compliance-related resources devoted by Federated Hermes in support of the Fund’s obligations pursuant to Rule 38a-1 under the Investment Company Act of 1940, including Federated Hermes’ commitment to respond to rulemaking and other regulatory initiatives of the SEC. The Board considered Federated Hermes’ approach to internal audits and risk management with respect to the Federated Hermes Funds and its day-to-day oversight of the Federated Hermes Funds’ compliance with their investment objectives and policies as well as with applicable laws and regulations, noting that regulatory and other developments had over time led to an increase in the scope of Federated Hermes’ oversight in this regard, including in connection with the designation of the Federated Hermes Funds’ investment advisers as the administrators of the Federated Hermes Funds’ liquidity risk management program.
The Board also considered the implementation of Federated Hermes’ business continuity plans and recognized steps taken by Federated Hermes to continue to provide the same nature, extent and quality of services to the Federated Hermes Funds during the pandemic. In addition, the Board noted Federated Hermes’ commitment to maintaining high quality systems and expending substantial resources to prepare for and respond to ongoing changes due to the market, regulatory and control environments in which the Fund and its service providers operate, including changes associated with the pandemic.
The Board considered Federated Hermes’ efforts to provide shareholders in the Federated Hermes Funds with a comprehensive array of funds with different investment objectives, policies and strategies. The Board considered the expenses that Federated Hermes had incurred, as well as the entrepreneurial and other risks assumed by Federated Hermes, in sponsoring and providing on-going services to new funds to expand these opportunities for shareholders. The Board noted the benefits to shareholders of being part of the family of Federated Hermes Funds, which include the general right to exchange investments between the same class of shares without the incurrence of additional sales charges.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided by the Adviser to the Fund.
Fund Investment Performance
The Board considered the investment performance of the Fund. In evaluating the Fund’s investment performance, the Board considered performance results in light of the Fund’s investment objective, strategies and risks. The Board considered detailed investment reports on, and the Adviser’s analysis of, the Fund’s performance over different time periods that were
Annual Shareholder Report
53
provided to the Board throughout the year and in connection with the May Meetings. These reports include, among other items, information on the Fund’s gross and net returns, the Fund’s investment performance compared to one or more relevant categories or groups of peer funds and the Fund’s benchmark index, performance attribution information and commentary on the effect of market conditions.
The Board also reviewed comparative information regarding the performance of other registered funds in the category of peer funds selected by iMoneyNet, an independent fund ranking organization (the “Performance Peer Group”). The Board noted the CCO’s view that comparisons to fund peer groups may be helpful, though not conclusive, in evaluating the performance of the Adviser in managing the Fund. The Board considered, in evaluating such comparisons, that in some cases there may be differences in the funds’ objectives or investment management techniques, or the costs to implement the funds, even within the same Performance Peer Group.
For the one-year period ended December 31, 2021, the Fund’s performance was above the median of the Performance Peer Group. The Board also considered the relatively tight dispersion of performance data with respect to the Fund and its Performance Peer Group.
Based on these considerations, the Board concluded that it had continued confidence in the Adviser’s overall capabilities to manage the Fund.
Fund Expenses
The Board considered the advisory fee and overall expense structure of the Fund and the comparative fee and expense information that had been provided in connection with the May Meetings. In this regard, the Board was presented with, and considered, information regarding the contractual advisory fee rates, net advisory fee rates, total expense ratios and each element of the Fund’s total expense ratio (i.e., gross and net advisory fees, administrative fees, custody fees, portfolio accounting fees and transfer agency fees) relative to an appropriate group of peer funds compiled by Federated Hermes from the category of peer funds selected by iMoneyNet (the “Expense Peer Group”). The Board received a description of the methodology used to select the Expense Peer Group from the overall iMoneyNet category. The Board also reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall iMoneyNet category.
While mindful that courts have cautioned against giving too much weight to comparative information concerning fees charged by other advisers for managing funds with comparable investment programs, the Board noted that it found the use of such comparisons to be relevant to its evaluation. The Board focused on comparisons with other similar registered funds more heavily than non-registered fund products or services because such comparisons are believed to be more relevant. The Board considered that other registered funds are the products most like the Fund, in that they are readily available to Fund
Annual Shareholder Report
54
shareholders as alternative investment vehicles, and they are the type of investment vehicle, in fact, chosen and maintained by the Fund’s shareholders. The Board noted that the range of such other registered funds’ fees and expenses, therefore, appears to be a relevant indicator of what investors have found to be reasonable in the marketplace in which the Fund competes.
The Board reviewed the contractual advisory fee rate, net advisory fee rate and other expenses of the Fund and noted the position of the Fund’s fee rates relative to its Expense Peer Group. In this regard, the Board noted that the contractual advisory fee rate was above the median of the Expense Peer Group, but the Board noted the applicable waivers and reimbursements, and that the overall expense structure of the Fund remained competitive in the context of other factors considered by the Board.
The Board also received and considered information about the fees charged by Federated Hermes for providing advisory services to other types of clients with investment strategies similar to those of the Federated Hermes Funds, including non-registered fund clients (such as institutional separate accounts) and third-party unaffiliated registered funds for which the Adviser or its affiliates serve as sub-adviser. The Board noted the CCO’s conclusion that non-registered fund clients are inherently different products due to the following differences, among others: (i) different types of targeted investors; (ii) different applicable laws and regulations; (iii) different legal structures; (iv) different average account sizes and portfolio management techniques made necessary by different cash flows and different associated costs; (v) the time spent by portfolio managers and their teams (among other personnel across various departments, including legal, compliance and risk management) in reviewing securities pricing and fund liquidity; (vi) different administrative responsibilities; (vii) different degrees of risk associated with management; and (viii) a variety of different costs. The Board also considered information regarding the differences in the nature of the services required for Federated Hermes to manage its proprietary registered fund business versus managing a discrete pool of assets as a sub-adviser to another institution’s registered fund, noting the CCO’s view that Federated Hermes generally performs significant additional services and assumes substantially greater risks in managing the Fund and other Federated Hermes Funds than in its role as sub-adviser to an unaffiliated third-party registered fund. The Board noted that the CCO did not consider the fees for providing advisory services to other types of clients to be determinative in judging the appropriateness of the Federated Hermes Funds’ advisory fees.
Based on these considerations, the Board concluded that the fees and total operating expenses of the Fund, in conjunction with other matters considered, are reasonable in light of the services provided.
Annual Shareholder Report
55
Profitability
The Board received and considered profitability information furnished by Federated Hermes, as requested by the CCO. Such profitability information included revenues reported on a fund-by-fund basis and estimates of the allocation of expenses made on a fund-by-fund basis, using allocation methodologies specified by the CCO and described to the Board. The Board considered the CCO’s view that, while these cost allocation reports apply consistent allocation processes, the inherent difficulties in allocating costs on a fund-by-fund basis continues to cause the CCO to question the precision of the process and to conclude that such reports may be unreliable because a single change in an allocation estimate may dramatically alter the resulting estimate of cost and/or profitability of a Federated Hermes Fund and may produce unintended consequences. In addition, the Board considered the CCO’s view that the allocation methodologies used by Federated Hermes in estimating profitability for purposes of reporting to the Board in connection with the continuation of the Contract are consistent with the methodologies previously reviewed by an independent consultant. The Board noted that the independent consultant had previously conducted a review of the allocation methodologies and reported that, although there is no single best method to allocate expenses, the methodologies used by Federated Hermes are reasonable. The Board noted the impact of the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, on the profitability of the Fund to the Adviser.
The Board also reviewed information compiled by Federated Hermes comparing its profitability information to other publicly held fund management companies, including information regarding profitability trends over time. The Board considered the CCO’s conclusion that, based on such profitability information, Federated Hermes’ profit margins did not appear to be excessive. The Board also considered the CCO’s view that Federated Hermes appeared financially sound, with the resources necessary to fulfill its obligations under its contracts with the Federated Hermes Funds.
Economies of Scale
The Board received and considered information about the notion of possible realization of “economies of scale” as a fund grows larger, the difficulties of calculating economies of scale at an individual fund level, and the extent to which potential scale benefits are shared with shareholders. In this regard, the Board considered that Federated Hermes has made significant and long-term investments in areas that support all of the Federated Hermes Funds, such as: personnel, processes and tools for portfolio management, including the use of market data on which portfolio managers make investment decisions; trading operations; ESG integration and issuer engagement on ESG matters; shareholder services; compliance; business continuity; cybersecurity; internal audit and risk management functions; and technology that supports the provision of investment management services. The Board noted that Federated
Annual Shareholder Report
56
Hermes’ investments in these areas are extensive and are designed to provide enhanced services to the Federated Hermes Funds and their shareholders. The Board considered that the benefits of these investments are likely to be shared with the family of Federated Hermes Funds as a whole. In addition, the Board considered that fee waivers and expense reimbursements are another means for potential economies of scale to be shared with shareholders and can provide protection from an increase in expenses if a Federated Hermes Fund’s assets decline. The Board considered that, in order for the Federated Hermes Funds to remain competitive in the marketplace, Federated Hermes has frequently waived fees and/or reimbursed expenses for the Federated Hermes Funds and has disclosed to shareholders and/or reported to the Board its intention to do so (or continue to do so) in the future. The Board also considered Federated Hermes’ reductions in contractual management fees for certain Federated Hermes Funds during the prior year, including in response to the CCO’s recommendations in the prior year’s CCO Fee Evaluation Report, which have resulted in benefits being realized by shareholders.
The Board also considered reports on adviser-paid fees (commonly referred to as “revenue sharing”) that were provided to the Board throughout the year and in connection with the May Meetings. The Board considered that Federated Hermes and the CCO believe that this information should be viewed to determine if there was an incentive to either not apply breakpoints, or to apply breakpoints at higher levels, and should not be viewed to evaluate the reasonableness of advisory fees. The Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which is compounded by the lack of any uniform methodology or pattern with respect to structuring fund advisory fees with breakpoints that serve to reduce the fees as a fund attains a certain size.
Other Benefits
The Board considered information regarding the compensation and other ancillary (or “fall-out”) benefits that Federated Hermes derived from its relationships with the Federated Hermes Funds. The Board noted that, in addition to receiving advisory fees under the Federated Hermes Funds’ investment advisory contracts, Federated Hermes’ affiliates also receive fees for providing other services to the Federated Hermes Funds under separate contracts (e.g., for serving as the Federated Hermes Funds’ administrator and distributor). In this regard, the Board considered that certain of Federated Hermes’ affiliates provide distribution and shareholder services to the Federated Hermes Funds, for which they may be compensated through distribution and servicing fees paid pursuant to Rule 12b-1 plans or otherwise. The Board also received and considered information detailing any indirect benefit that Federated Hermes may derive from its receipt of research services from brokers who execute portfolio trades for the Federated Hermes Funds.
Annual Shareholder Report
57
Conclusions
The Board considered: (i) the CCO’s conclusion that his observations and the information accompanying the CCO Fee Evaluation Report show that the management fee for the Fund is reasonable; and (ii) the CCO’s recommendation that the Board approve the management fee. The Board noted that, under these circumstances, no changes were recommended to, and no objection was raised to the continuation of, the Contract by the CCO. The CCO also recognized that the Board’s evaluation of the Federated Hermes Funds’ advisory and sub-advisory arrangements is a continuing and ongoing process that is informed by the information that the Board requests and receives from management throughout the course of the year and, in this regard, the CCO noted certain items for future reporting to the Board or further consideration by management as the Board continues its ongoing oversight of the Federated Hermes Funds.
On the basis of the information and factors summarized above, among other information and factors deemed relevant by the Board, and the evaluation thereof, the Board, including the Independent Trustees, unanimously voted to approve the continuation of the Contract. The Board based its determination to approve the Contract on the totality of the circumstances and relevant factors and with a view of past and future long-term considerations. Not all of the factors and considerations identified above were necessarily deemed to be relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were deemed to be relevant, the Board’s determination to approve the continuation of the Contract reflects its view that Federated Hermes’ performance and actions provided a satisfactory basis to support the determination to approve the continuation of the existing arrangement.
Annual Shareholder Report
58
Voting Proxies on Fund Portfolio Securities
A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund’s portfolio is available, without charge and upon request, by calling 1-800-341-7400, Option #4. A report on “Form N-PX” of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available via the Proxy Voting Record (Form N-PX) link associated with the Fund and share class name at FederatedInvestors.com/FundInformation. Form N-PX filings are also available at the SEC’s website at sec.gov.
Portfolio Schedule
The Fund files with the SEC a complete schedule of its portfolio holdings as of the close of each month on “Form N-MFP.” Form N-MFP is available on the SEC’s website at sec.gov. You may access Form N-MFP via the link to the Fund and share class name at FederatedInvestors.com.
Annual Shareholder Report
59
You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
This Report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund’s Prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.
Federated Hermes Government Obligations Fund
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at FederatedInvestors.com
or call 1-800-341-7400.
or call 1-800-341-7400.
Federated Securities Corp., Distributor
CUSIP 608919478
CUSIP 60934N104
CUSIP 60934N807
CUSIP 608919395
CUSIP 608919676
CUSIP 608919684
CUSIP 608919809
CUSIP 60934N153
CUSIP 608919718
CUSIP 608919437
CUSIP 31423R104
CUSIP 60934N104
CUSIP 60934N807
CUSIP 608919395
CUSIP 608919676
CUSIP 608919684
CUSIP 608919809
CUSIP 60934N153
CUSIP 608919718
CUSIP 608919437
CUSIP 31423R104
Q450513 (9/22)
© 2022 Federated Hermes, Inc.
Annual Shareholder Report
July 31, 2022
|
Share Class | Ticker
|
Automated | GOAXX
|
Institutional | GOTXX
|
Service | GTSXX
|
|
Federated Hermes Government Obligations Tax-Managed Fund
A Portfolio of Federated Hermes Money Market Obligations Trust
Dear Valued Shareholder,
We are pleased to present the Annual Shareholder Report for your fund covering the period from August 1, 2021 through July 31, 2022. This report includes a complete listing of your fund’s holdings, performance information and financial statements along with other important fund information.
As a global leader in active, responsible investment management, Federated Hermes is guided by our conviction that responsible investing is the best way to create wealth over the long term. The company provides capabilities across a wide range of asset classes to investors around the world.
In addition, FederatedInvestors.com offers quick and easy access to valuable resources that include timely fund updates, economic and market insights from our investment strategists and financial planning tools. You can also access many of those insights by following us on Twitter (@FederatedHermes) and LinkedIn.
Thank you for investing with us. We hope you find this information useful and look forward to keeping you informed.
Sincerely,
J. Christopher Donahue, President
Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee
Portfolio of Investments Summary Tables (unaudited)
At July 31, 2022, the Fund’s portfolio composition1 was as follows:
|
Security Type
|
Percentage of
Total Net Assets
|
|
U.S. Treasury Securities
|
60.5%
|
|
U.S. Government Agency Securities
|
51.3%
|
|
Other Assets and Liabilities—Net2
|
(11.8)%
|
|
TOTAL
|
100%
|
At July 31, 2022, the Fund’s effective maturity3 schedule was as follows:
|
Securities With an
Effective Maturity of:
|
Percentage of
Total Net Assets
|
|
1-7 Days
|
37.2%
|
|
8-30 Days
|
26.9%
|
|
31-90 Days
|
38.0%
|
|
91-180 Days
|
7.9%
|
|
181 Days or more
|
1.8%
|
|
Other Assets and Liabilities—Net2
|
(11.8)%
|
|
TOTAL
|
100%
|
1
See the Fund’s Prospectus and Statement of Additional Information for a description of these investments.
2
Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.
3
Effective maturity is determined in accordance with the requirements of Rule 2a-7 under the Investment Company Act of 1940, which regulates money market mutual funds.
Annual Shareholder Report
1
Portfolio of Investments
July 31, 2022
|
Principal
Amount
|
|
|
Value
|
|
|
|
U.S. TREASURY—60.5%
|
|
|
$44,000,000
|
|
United States Treasury Bill, 0.080%, 8/11/2022
|
$43,999,022
|
|
100,000,000
|
|
United States Treasury Bill, 0.910%, 8/4/2022
|
99,992,417
|
|
25,000,000
|
|
United States Treasury Bill, 1.070%, 1/26/2023
|
24,867,736
|
|
75,000,000
|
|
United States Treasury Bill, 1.230%, 9/8/2022
|
74,902,625
|
|
141,000,000
|
|
United States Treasury Bill, 1.240%, 8/2/2022
|
140,995,143
|
|
100,000,000
|
|
United States Treasury Bill, 1.250%, 9/20/2022
|
99,826,389
|
|
100,000,000
|
|
United States Treasury Bill, 1.485%, 11/17/2022
|
99,554,500
|
|
200,000,000
|
|
United States Treasury Bill, 1.510%, 10/11/2022
|
199,404,389
|
|
50,000,000
|
|
United States Treasury Bill, 1.580%, 12/1/2022
|
49,732,278
|
|
100,000,000
|
|
United States Treasury Bill, 1.640%, 9/15/2022
|
99,795,000
|
|
275,000,000
|
|
United States Treasury Bill, 1.750%, 9/29/2022
|
274,211,285
|
|
50,000,000
|
|
United States Treasury Bill, 2.110%, 10/13/2022
|
49,786,070
|
|
500,000,000
|
|
United States Treasury Bill, 2.140%, 8/30/2022
|
499,167,780
|
|
50,000,000
|
|
United States Treasury Bill, 2.230%, 11/8/2022
|
49,693,375
|
|
150,000,000
|
|
United States Treasury Bill, 2.520%, 10/27/2022
|
149,086,500
|
|
134,320,000
|
|
United States Treasury Bill, 2.600%, 11/15/2022
|
133,291,706
|
|
29,000,000
|
|
United States Treasury Bill, 3.020%, 6/15/2023
|
28,226,377
|
|
200,000,000
|
|
United States Treasury Bills, 0.870%—1.670%, 9/22/2022
|
199,604,222
|
|
300,000,000
|
|
United States Treasury Bills, 1.280%—2.210%, 9/27/2022
|
299,109,777
|
|
500,000,000
|
|
United States Treasury Bills, 1.780%—1.980%, 8/16/2022
|
499,588,750
|
|
490,000,000
|
|
United States Treasury Bills, 2.050%—2.120%, 8/23/2022
|
489,368,004
|
|
35,000,000
|
1
|
United States Treasury Floating Rate Notes, 2.461%
(91-day T-Bill -0.075%), 8/2/2022
|
34,999,997
|
|
65,000,000
|
1
|
United States Treasury Floating Rate Notes, 2.470%
(91-day T-Bill +0.037%), 8/2/2022
|
64,999,970
|
|
42,000,000
|
1
|
United States Treasury Floating Rate Notes, 2.521%
(91-day T-Bill -0.015%), 8/2/2022
|
42,013,229
|
|
45,000,000
|
1
|
United States Treasury Floating Rate Notes, 2.565%
(91-day T-Bill +0.029%), 8/2/2022
|
45,020,677
|
|
120,000,000
|
1
|
United States Treasury Floating Rate Notes, 2.570%
(91-day T-Bill +0.034%), 8/2/2022
|
120,002,416
|
|
25,000,000
|
1
|
United States Treasury Floating Rate Notes, 2.585%
(91-day T-Bill +0.049%), 8/2/2022
|
25,000,000
|
|
25,000,000
|
|
United States Treasury Note, 0.125%, 11/30/2022
|
24,997,761
|
|
10,000,000
|
|
United States Treasury Note, 1.625%, 11/15/2022
|
10,043,889
|
|
10,000,000
|
|
United States Treasury Note, 2.500%, 3/31/2023
|
10,056,614
|
|
|
|
TOTAL U.S. TREASURY
|
3,981,337,898
|
Annual Shareholder Report
2
|
Principal
Amount
|
|
|
Value
|
|
|
|
GOVERNMENT AGENCIES—51.3%
|
|
|
$233,000,000
|
2
|
Federal Farm Credit System Discount Notes, 0.090%—2.400%,
8/24/2022 - 4/21/2023
|
$232,181,391
|
|
75,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.290%
(SOFR +0.010%), 8/1/2022
|
75,000,000
|
|
71,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.305%
(SOFR +0.025%), 8/1/2022
|
71,000,000
|
|
11,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.307%
(SOFR +0.027%), 8/1/2022
|
10,998,505
|
|
50,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.310%
(SOFR +0.030%), 8/1/2022
|
50,000,000
|
|
70,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.315%
(SOFR +0.035%), 8/1/2022
|
70,000,000
|
|
69,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.320%
(SOFR +0.040%), 8/1/2022
|
69,002,493
|
|
145,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.325%
(SOFR +0.045%), 8/1/2022
|
145,001,317
|
|
33,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.335%
(SOFR +0.055%), 8/1/2022
|
32,999,623
|
|
49,198,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.340%
(SOFR +0.060%), 8/1/2022
|
49,198,260
|
|
16,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.345%
(SOFR +0.065%), 8/1/2022
|
16,000,000
|
|
109,500,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.350%
(SOFR +0.070%), 8/1/2022
|
109,502,270
|
|
15,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.355%
(SOFR +0.075%), 8/1/2022
|
15,000,000
|
|
5,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.400%
(SOFR +0.120%), 8/1/2022
|
5,004,044
|
|
2,230,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.415%
(SOFR +0.135%), 8/1/2022
|
2,232,004
|
|
1,288,000,000
|
2
|
Federal Home Loan Bank System Discount Notes,
0.940%—2.530%, 8/2/2022 - 10/26/2022
|
1,285,950,684
|
|
50,000,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 1.570%
(SOFR +0.040%), 8/2/2022
|
50,000,000
|
|
100,000,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 2.280%
(SOFR +0.000%), 8/1/2022
|
100,000,000
|
|
100,000,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 2.285%
(SOFR +0.005%), 8/1/2022
|
100,000,943
|
|
458,000,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 2.290%
(SOFR +0.010%), 8/1/2022
|
458,000,765
|
|
105,000,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 2.310%
(SOFR +0.030%), 8/1/2022
|
105,000,000
|
|
114,000,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 2.315%
(SOFR +0.035%), 8/1/2022
|
114,000,000
|
Annual Shareholder Report
3
|
Principal
Amount
|
|
|
Value
|
|
|
|
GOVERNMENT AGENCIES—continued
|
|
|
$35,000,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 2.335%
(SOFR +0.055%), 8/1/2022
|
$35,000,000
|
|
30,000,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 2.340%
(SOFR +0.060%), 8/1/2022
|
30,000,000
|
|
17,000,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 2.345%
(SOFR +0.065%), 8/1/2022
|
17,000,000
|
|
78,500,000
|
|
Federal Home Loan Bank System, 1.738%—2.350%,
12/23/2022 - 7/5/2023
|
78,500,000
|
|
50,000,000
|
2
|
Tennessee Valley Authority Discount Note, 2.100%, 8/3/2022
|
49,994,167
|
|
|
|
TOTAL GOVERNMENT AGENCIES
|
3,376,566,466
|
|
|
|
TOTAL INVESTMENT IN SECURITIES—111.8%
(AT AMORTIZED COST)3
|
7,357,904,364
|
|
|
|
OTHER ASSETS AND LIABILITIES - NET—(11.8)%4
|
(774,122,633)
|
|
|
|
TOTAL NET ASSETS—100%
|
$6,583,781,731
|
1
Floating/variable note with current rate and current maturity or next reset date shown.
2
Discount rate at time of purchase.
3
The cost of investments for federal tax purposes amounts to $7,357,914,911.
4
Assets, other than investments in securities, less liabilities. A significant portion of this balance is the result of payables for securities purchased. See Statement of Assets and Liabilities.
Note: The categories of investments are shown as a percentage of total net assets at July 31, 2022.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Level 1—quoted prices in active markets for identical securities.
Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Also includes securities valued at amortized cost.
Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
In valuing the Fund’s assets as of July 31, 2022, all investments of the Fund are valued using amortized cost, which is a methodology utilizing Level 2 inputs.
The following acronym(s) is used throughout this portfolio:
|
SOFR
|
—Secured Overnight Financing Rate
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
4
Financial Highlights–Automated Shares
(For a Share Outstanding Throughout Each Period)
|
Year Ended July 31
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.001
|
0.0001
|
0.008
|
0.018
|
0.009
|
|
Net realized gain (loss)
|
(0.000)1
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
|
TOTAL FROM INVESTMENT OPERATIONS
|
0.001
|
0.0001
|
0.008
|
0.018
|
0.009
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.001)
|
(0.000)1
|
(0.008)
|
(0.018)
|
(0.009)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
|
TOTAL DISTRIBUTIONS
|
(0.001)
|
(0.000)1
|
(0.008)
|
(0.018)
|
(0.009)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.14%
|
0.01%
|
0.83%
|
1.81%
|
0.93%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.23%
|
0.10%
|
0.47%4
|
0.52%4
|
0.51%4
|
|
Net investment income
|
0.15%
|
0.02%
|
0.84%
|
1.79%
|
0.93%
|
|
Expense waiver/reimbursement5
|
0.39%
|
0.52%
|
0.15%
|
0.09%
|
0.09%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$192,603
|
$141,092
|
$154,561
|
$182,939
|
$176,028
|
1
Represents less than $0.001.
2
Based on net asset value.
3
Amount does not reflect net expenses incurred by investment companies in which the Fund may invest.
4
The net expense ratio is calculated without reduction for expense offset arrangements. The net expense ratios are 0.47%, 0.52% and 0.51% for the years ended July 31, 2020, 2019 and 2018, respectively, after taking into account these expense reductions.
5
This expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense waiver/reimbursement recorded by investment companies in which the Fund may invest.
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
5
Financial Highlights–Institutional Shares
(For a Share Outstanding Throughout Each Period)
|
Year Ended July 31
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.002
|
0.0001
|
0.011
|
0.021
|
0.012
|
|
Net realized gain (loss)
|
(0.000)1
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
|
TOTAL FROM INVESTMENT
OPERATIONS
|
0.002
|
0.0001
|
0.011
|
0.021
|
0.012
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.002)
|
(0.000)1
|
(0.011)
|
(0.021)
|
(0.012)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
|
TOTAL DISTRIBUTIONS
|
(0.002)
|
(0.000)1
|
(0.011)
|
(0.021)
|
(0.012)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.23%
|
0.01%
|
1.10%
|
2.13%
|
1.23%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.12%
|
0.10%
|
0.20%4
|
0.20%4
|
0.20%4
|
|
Net investment income
|
0.21%
|
0.02%
|
0.95%
|
2.11%
|
1.21%
|
|
Expense waiver/reimbursement5
|
0.17%
|
0.19%
|
0.09%
|
0.09%
|
0.09%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$3,507,901
|
$3,805,176
|
$4,366,142
|
$3,019,468
|
$2,739,607
|
1
Represents less than $0.001.
2
Based on net asset value.
3
Amount does not reflect net expenses incurred by investment companies in which the Fund may invest.
4
The net expense ratio is calculated without reduction for expense offset arrangements. The net expense ratios are 0.20%, 0.20% and 0.20% for the years ended July 31, 2020, 2019 and 2018, respectively, after taking into account these expense reductions.
5
This expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense waiver/reimbursement recorded by investment companies in which the Fund may invest.
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
6
Financial Highlights–Service Shares
(For a Share Outstanding Throughout Each Period)
|
Year Ended July 31
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.002
|
0.0001
|
0.009
|
0.019
|
0.010
|
|
Net realized gain (loss)
|
(0.000)1
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
|
TOTAL FROM INVESTMENT
OPERATIONS
|
0.002
|
0.0001
|
0.009
|
0.019
|
0.010
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.002)
|
(0.000)1
|
(0.009)
|
(0.019)
|
(0.010)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
|
TOTAL DISTRIBUTIONS
|
(0.002)
|
(0.000)1
|
(0.009)
|
(0.019)
|
(0.010)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.16%
|
0.01%
|
0.89%
|
1.88%
|
0.98%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.19%
|
0.10%
|
0.41%4
|
0.45%4
|
0.45%4
|
|
Net investment income
|
0.15%
|
0.02%
|
0.86%
|
1.86%
|
0.96%
|
|
Expense waiver/reimbursement5
|
0.34%
|
0.43%
|
0.13%
|
0.09%
|
0.09%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$2,883,277
|
$2,825,555
|
$2,950,794
|
$2,698,641
|
$2,651,637
|
1
Represents less than $0.001.
2
Based on net asset value.
3
Amount does not reflect net expenses incurred by investment companies in which the Fund may invest.
4
The net expense ratio is calculated without reduction for expense offset arrangements. The net expense ratios are 0.41%, 0.45% and 0.45% for the years ended July 31, 2020, 2019 and 2018, respectively, after taking into account these expense reductions.
5
This expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense waiver/reimbursement recorded by investment companies in which the Fund may invest.
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
7
Statement of Assets and Liabilities
July 31, 2022
July 31, 2022
|
Assets:
|
|
|
|
Investment in securities, at amortized cost and fair value
|
|
$7,357,904,364
|
|
Cash
|
|
3,462,641
|
|
Receivable from investments sold
|
|
35,000,000
|
|
Income receivable
|
|
4,789,041
|
|
Receivable for shares sold
|
|
2,647,036
|
|
TOTAL ASSETS
|
|
7,403,803,082
|
|
Liabilities:
|
|
|
|
Payable for investments purchased
|
$813,484,840
|
|
|
Income distribution payable
|
5,267,656
|
|
|
Payable for shares redeemed
|
234,761
|
|
|
Payable for other service fees (Notes 2 and 5)
|
641,321
|
|
|
Payable for investment adviser fee (Note 5)
|
63,485
|
|
|
Payable for administrative fee (Note 5)
|
42,336
|
|
|
Accrued expenses (Note 5)
|
286,952
|
|
|
TOTAL LIABILITIES
|
|
820,021,351
|
|
Net assets for 6,583,842,035 shares outstanding
|
|
$6,583,781,731
|
|
Net Assets Consists of:
|
|
|
|
Paid-in capital
|
|
$6,583,851,410
|
|
Total distributable earnings (loss)
|
|
(69,679)
|
|
TOTAL NET ASSETS
|
|
$6,583,781,731
|
|
Net Asset Value, Offering Price and Redemption Proceeds
Per Share:
|
|
|
|
Automated Shares:
|
|
|
|
$192,603,045 ÷ 192,604,937 shares outstanding, no par value,
unlimited shares authorized
|
|
$1.00
|
|
Institutional Shares:
|
|
|
|
$3,507,901,301 ÷ 3,507,932,837 shares outstanding, no par value,
unlimited shares authorized
|
|
$1.00
|
|
Service Shares:
|
|
|
|
$2,883,277,385 ÷ 2,883,304,261 shares outstanding, no par value,
unlimited shares authorized
|
|
$1.00
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
8
Statement of Operations
Year Ended July 31, 2022
Year Ended July 31, 2022
|
Investment Income:
|
|
|
|
|
Interest
|
|
|
$22,795,455
|
|
Expenses:
|
|
|
|
|
Investment adviser fee (Note 5)
|
|
$13,585,259
|
|
|
Administrative fee (Note 5)
|
|
5,316,816
|
|
|
Custodian fees
|
|
204,044
|
|
|
Transfer agent fees (Note 2)
|
|
190,635
|
|
|
Directors’/Trustees’ fees (Note 5)
|
|
39,953
|
|
|
Auditing fees
|
|
23,960
|
|
|
Legal fees
|
|
7,358
|
|
|
Other service fees (Notes 2 and 5)
|
|
7,711,951
|
|
|
Portfolio accounting fees
|
|
184,557
|
|
|
Share registration costs
|
|
58,216
|
|
|
Printing and postage
|
|
35,901
|
|
|
Miscellaneous (Note 5)
|
|
108,641
|
|
|
TOTAL EXPENSES
|
|
27,467,291
|
|
|
Waivers and Reimbursements:
|
|
|
|
|
Waiver of investment adviser fee (Note 5)
|
$(10,455,365)
|
|
|
|
Waivers/reimbursements of other operating expenses
(Notes 2 and 5)
|
(6,653,530)
|
|
|
|
TOTAL WAIVERS AND REIMBURSEMENTS
|
|
(17,108,895)
|
|
|
Net expenses
|
|
|
10,358,396
|
|
Net investment income
|
|
|
12,437,059
|
|
Net realized loss on investments
|
|
|
(64,848)
|
|
Change in net assets resulting from operations
|
|
|
$12,372,211
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
9
Statement of Changes in Net Assets
|
Year Ended July 31
|
2022
|
2021
|
|
Increase (Decrease) in Net Assets
|
|
|
|
Operations:
|
|
|
|
Net investment income
|
$12,437,059
|
$1,199,172
|
|
Net realized gain (loss)
|
(64,848)
|
51,584
|
|
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS
|
12,372,211
|
1,250,756
|
|
Distributions to Shareholders:
|
|
|
|
Automated Shares
|
(247,878)
|
(19,918)
|
|
Institutional Shares
|
(8,114,259)
|
(618,743)
|
|
Service Shares
|
(4,561,767)
|
(393,226)
|
|
CHANGE IN NET ASSETS RESULTING FROM
DISTRIBUTIONS TO SHAREHOLDERS
|
(12,923,904)
|
(1,031,887)
|
|
Share Transactions:
|
|
|
|
Proceeds from sale of shares
|
15,309,584,999
|
18,391,229,782
|
|
Net asset value of shares issued to shareholders in payment
of distributions declared
|
2,588,694
|
277,007
|
|
Cost of shares redeemed
|
(15,499,663,571)
|
(19,091,398,983)
|
|
CHANGE IN NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
|
(187,489,878)
|
(699,892,194)
|
|
Change in net assets
|
(188,041,571)
|
(699,673,325)
|
|
Net Assets:
|
|
|
|
Beginning of period
|
6,771,823,302
|
7,471,496,627
|
|
End of period
|
$6,583,781,731
|
$6,771,823,302
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
10
Notes to Financial Statements
July 31, 2022
1. ORGANIZATION
Federated Hermes Money Market Obligations Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust consists of 16 portfolios. The financial statements included herein are only those of Federated Hermes Government Obligations Tax-Managed Fund (the “Fund”), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated, and a shareholder’s interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers three classes of shares: Automated Shares, Institutional Shares and Service Shares. All shares of the Fund have equal rights with respect to voting, except on class specific matters. The investment objective of the Fund is to provide current income consistent with stability of principal and liquidity.
The Fund operates as a government money market fund. As a government money market fund, the Fund: (1) invests at least 99.5% of its total assets in: (i) cash; (ii) securities issued or guaranteed by the United States or certain U.S. government agencies or instrumentalities; and/or (iii) repurchase agreements that are collateralized fully; (2) generally continues to use amortized cost to value its portfolio securities and transact at a stable $1.00 net asset value (NAV); and (3) has elected not to be subject to the liquidity fees and gates requirement at this time as permitted by Rule 2a-7 under the Act.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
Securities are valued at amortized cost. Under the amortized cost valuation method, an investment is valued initially at its cost as determined in accordance with GAAP. The Fund then adjusts the amount of interest income accrued each day over the term of the investment to account for any difference between the initial cost of the investment and the amount payable at its maturity. If amortized cost is determined not to approximate fair value, the value of the portfolio securities will be determined in accordance with the procedures described below. There can be no assurance that the Fund could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines its NAV per share, and the actual value obtained could be materially different.
Annual Shareholder Report
11
The Fund’s Board of Trustees (the “Trustees”) have ultimate responsibility for determining the fair value of investments. The Trustees have appointed a valuation committee (“Valuation Committee”) comprised of officers of the Fund, Federated Investment Management Company (the “Adviser”) and certain of the Adviser’s affiliated companies to assist in determining fair value of securities and in overseeing the comparison of amortized cost to market-based value. The Trustees have also authorized the use of pricing services recommended by the Valuation Committee to provide fair value evaluations of the current value of certain investments for purposes of monitoring the relationship of market-based value and amortized cost. The Valuation Committee employs various methods for reviewing third-party pricing-service evaluations including periodic reviews of third-party pricing services’ policies, procedures and valuation methods (including key inputs and assumptions) and review of price challenges by the Adviser based on recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee determines the fair value of the investment in accordance with procedures adopted by the Trustees. The Trustees periodically review and approve the fair valuations made by the Valuation Committee and any changes made to the procedures.
Investment Income, Gains and Losses, Expenses and Distributions
Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis. Interest income and expenses are accrued daily. Distributions to shareholders are recorded on the ex-dividend date. Distributions of net investment income, if any, are declared daily and paid monthly. Amortization/accretion of premium and discount is included in investment income. Investment income, realized gains and losses and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that select classes will bear certain expenses unique to those classes. The detail of the total fund expense waivers and reimbursement of $17,108,895 is disclosed in various locations in this Note 2 and Note 5. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.
Transfer Agent Fees
For the year ended July 31, 2022, transfer agent fees for the Fund were as follows:
|
|
Transfer Agent
Fees Incurred
|
Transfer Agent
Fees Reimbursed
|
Transfer Agent
Fees Waived by
Unaffiliated Third Parties
|
|
Automated Shares
|
$128,812
|
$(12,067)
|
$(58,541)
|
|
Institutional Shares
|
34,438
|
—
|
—
|
|
Service Shares
|
27,385
|
—
|
—
|
|
TOTAL
|
$190,635
|
$(12,067)
|
$(58,541)
|
Annual Shareholder Report
12
Other Service Fees
The Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund’s Automated Shares, Institutional Shares and Service Shares to unaffiliated financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for other service fees. In addition, unaffiliated third-party financial intermediaries may waive other service fees. This waiver can be modified or terminated at any time. For the year ended July 31, 2022, other service fees for the Fund were as follows:
|
|
Other Service
Fees Incurred
|
Other Service
Fees Reimbursed
|
Other Service
Fees Waived by
Unaffiliated Third Parties
|
|
Automated Shares
|
$388,608
|
$(6,792)
|
$(272,064)
|
|
Service Shares
|
7,323,343
|
(47,801)
|
(5,153,165)
|
|
TOTAL
|
$7,711,951
|
$(54,593)
|
$(5,425,229)
|
For the year ended July 31, 2022, the Fund’s Institutional Shares did not incur other service fees; however, it may begin to incur this fee upon approval of the Trustees.
Federal Taxes
It is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code (the “Code”) and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. As of and during the year ended July 31, 2022, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2022, tax years 2019 through 2022 remain subject to examination by the Fund’s major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.
When-Issued and Delayed-Delivery Transactions
The Fund may engage in when-issued or delayed-delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed-delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
Other
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ materially from those estimated. The Fund applies investment company accounting and reporting guidance.
Annual Shareholder Report
13
3. SHARES OF BENEFICIAL INTEREST
The following tables summarize share activity:
|
Year Ended July 31
|
2022
|
2021
|
||
|
Automated Shares
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
265,079,347
|
$265,079,347
|
235,508,877
|
$235,508,877
|
|
Shares issued to shareholders in
payment of distributions declared
|
236,937
|
236,937
|
18,691
|
18,691
|
|
Shares redeemed
|
(213,792,818)
|
(213,792,818)
|
(249,001,474)
|
(249,001,474)
|
|
NET CHANGE RESULTING FROM
AUTOMATED
SHARE TRANSACTIONS
|
51,523,466
|
$51,523,466
|
(13,473,906)
|
$(13,473,906)
|
|
Year Ended July 31
|
2022
|
2021
|
||
|
Institutional Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
10,486,533,291
|
$10,486,533,291
|
11,095,755,149
|
$11,095,755,147
|
|
Shares issued to
shareholders in payment of
distributions declared
|
2,115,195
|
2,115,195
|
233,374
|
233,374
|
|
Shares redeemed
|
(10,785,612,159)
|
(10,785,612,159)
|
(11,657,069,766)
|
(11,657,069,766)
|
|
NET CHANGE
RESULTING FROM
INSTITUTIONAL
SHARE TRANSACTIONS
|
(296,963,673)
|
$(296,963,673)
|
(561,081,243)
|
$(561,081,245)
|
|
Year Ended July 31
|
2022
|
2021
|
||
|
Service Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
4,557,972,361
|
$4,557,972,361
|
7,059,965,758
|
$7,059,965,758
|
|
Shares issued to shareholders in
payment of
distributions declared
|
236,562
|
236,562
|
24,942
|
24,942
|
|
Shares redeemed
|
(4,500,258,594)
|
(4,500,258,594)
|
(7,185,327,743)
|
(7,185,327,743)
|
|
NET CHANGE RESULTING
FROM SERVICE
SHARE TRANSACTIONS
|
57,950,329
|
$57,950,329
|
(125,337,043)
|
$(125,337,043)
|
|
NET CHANGE RESULTING
FROM TOTAL FUND
SHARE TRANSACTIONS
|
(187,489,878)
|
$(187,489,878)
|
(699,892,192)
|
$(699,892,194)
|
Annual Shareholder Report
14
4. FEDERAL TAX INFORMATION
The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2022 and 2021, was as follows:
|
|
2022
|
2021
|
|
Ordinary income1
|
$12,923,904
|
$1,028,692
|
|
Long-term capital gains
|
$—
|
$3,195
|
1
For tax purposes, short-term capital gain distributions are considered ordinary income distributions.
As of July 31, 2022, the components of distributable earnings on a tax-basis were as follows:
|
Distributions payable
|
$(4,831)
|
|
Net unrealized depreciation
|
$(10,547)
|
|
Capital loss carryforwards
|
$(54,301)
|
The difference between book-basis and tax-basis net unrealized depreciation is attributable to the differing treatments for wash sales.
At July 31, 2022, the cost of investments for federal tax purposes was $7,357,914,911. The net unrealized depreciation of investments for federal tax purposes was $10,547. This consists entirely of net unrealized depreciation from investments for those securities having an excess of cost over value of $10,547.
As of July 31, 2022, the Fund had a capital loss carryforward of $54,301 which will reduce the Fund’s taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code, thereby reducing the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, these net capital losses retain their character as either short-term or long-term and do not expire.
The following schedule summarizes the Fund’s capital loss carryforwards:
|
Short-Term
|
Long-Term
|
Total
|
|
$54,301
|
$—
|
$54,301
|
5. Investment adviser fee and other transactions with affiliates
Investment Adviser Fee
The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.20% of the Fund’s average daily net assets. Subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund for competitive reasons such as to maintain the Fund’s expense ratio, or as and when appropriate, to maintain positive or zero net yields. For the year ended July 31, 2022, the Adviser voluntarily waived $10,455,365 of its fee. In addition, the Adviser voluntarily reimbursed $12,067 and $1,103,100 of transfer agent fees and other operating expenses, respectively.
Annual Shareholder Report
15
Administrative Fee
Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated Hermes Funds subject to a fee under the Administrative Services Agreement. The fee paid to FAS is based on the average daily net assets of the Investment Complex as specified below:
|
Administrative Fee
|
Average Daily Net Assets
of the Investment Complex
|
|
0.100%
|
on assets up to $50 billion
|
|
0.075%
|
on assets over $50 billion
|
Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2022, the annualized fee paid to FAS was 0.078% of average daily net assets of the Fund.
In addition, FAS may charge certain out-of-pocket expenses to the Fund.
Expense Limitation
Due to the possibility of changes in market conditions and other factors, there can be no assurance that the level of waiver/reimbursement/reduction of Fund expenses reflected in the financial highlights will be maintained in the future. However, the Adviser and certain of its affiliates (which may include FAS and FSSC) on their own initiative have agreed to waive certain amounts of their respective fees and/or reimburse expenses. Total annual fund operating expenses (as shown in the financial highlights, excluding interest expense, extraordinary expenses and proxy-related expenses paid by the Fund, if any) paid by the Fund’s Automated Shares, Institutional Shares and Service Shares (after the voluntary waivers and reimbursements) will not exceed 0.55%, 0.20% and 0.45% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) October 1, 2023; or (b) the date of the Fund’s next effective Prospectus. While the Adviser and its applicable affiliates currently do not anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or the Fee Limit increased prior to the Termination Date with the agreement of the Trustees.
Other Service Fees
For the year ended July 31, 2022, FSSC received $4,668 and reimbursed $54,593 of the other service fees disclosed in Note 2.
Directors’/Trustees’ and Miscellaneous Fees
Certain Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate payment, Independent Directors’/Trustees’ fees and certain expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses are paid by an affiliate of the Adviser which in due course are reimbursed by the Fund. These expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses may be included in Accrued and Miscellaneous Expenses on the Statement of Assets and Liabilities and Statement of Operations, respectively.
Annual Shareholder Report
16
6. INTERFUND LENDING
Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other funds advised by subsidiaries of Federated Hermes, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating affiliated funds. As of July 31, 2022, there were no outstanding loans. During the year ended July 31, 2022, the program was not utilized.
7. Indemnifications
Under the Fund’s organizational documents, its Officers and Directors/Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund (other than liabilities arising out of their willful misfeasance, bad faith, gross negligence or reckless disregard of their duties to the Fund). In addition, in the normal course of business, the Fund provides certain indemnifications under arrangements with third parties. Typically, obligations to indemnify a third party arise in the context of an arrangement entered into by the Fund under which the Fund agrees to indemnify such third party for certain liabilities arising out of actions taken pursuant to the arrangement, provided the third party’s actions are not deemed to have breached an agreed-upon standard of care (such as willful misfeasance, bad faith, gross negligence or reckless disregard of their duties under the contract). The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet arisen. The Fund does not anticipate any material claims or losses pursuant to these arrangements at this time, and accordingly expects the risk of loss to be remote.
8. Other Matters
An outbreak of respiratory disease caused by a novel coronavirus was first detected in China in late 2019 and subsequently spread globally. As of the date of the issuance of these financial statements, this coronavirus has resulted in closing borders, enhanced health screenings, disruptions to healthcare service preparation and delivery, quarantines, cancellations, and disruptions to supply chains, workflow operations and consumer activity, as well as general concern and uncertainty. The impact of this coronavirus may continue for an extended period of time and has resulted in substantial economic volatility. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could continue to negatively affect the worldwide economy, as well as the economies of individual countries, individual companies, (including certain Fund service providers and issuers of the Fund’s investments) and the markets in general in significant and unforeseen ways. Any such impact could adversely affect the Fund’s performance.
9. FEDERAL TAX INFORMATION (UNAUDITED)
For the year ended July 31, 2022, 100% of the dividends paid by the Fund are interest related dividends as provided by the American Jobs Creation Act of 2004.
Annual Shareholder Report
17
Report of Independent Registered Public Accounting Firm
To The Board of Trustees of Federated hermes Money Market Obligations Trust and the Shareholders of Federated Hermes Government Obligations Tax-Managed Fund:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of the Federated Hermes Government Obligations Tax-Managed Fund (the “Fund”), a portfolio of Federated Hermes Money Market Obligations Trust, including the portfolio of investments, as of July 31, 2022, the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the related notes (collectively, the “financial statements”) and the financial highlights for each of the years in the five-year period then ended. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of July 31, 2022, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
Annual Shareholder Report
18
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Such procedures also included confirmation of securities owned as of July 31, 2022, by correspondence with custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of Federated Hermes’ investment companies since 2006.
Boston, Massachusetts
September 23, 2022
September 23, 2022
Annual Shareholder Report
19
Shareholder Expense Example (unaudited)
As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or other service fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2022 to July 31, 2022.
ACTUAL EXPENSES
The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses attributable to your investment during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Annual Shareholder Report
20
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
|
|
Beginning
Account Value
2/1/2022
|
Ending
Account Value
7/31/2022
|
Expenses Paid
During Period1
|
|
Actual:
|
|
|
|
|
Automated Shares
|
$1,000
|
$1,001.30
|
$1.942
|
|
Institutional Shares
|
$1,000
|
$1,002.20
|
$0.94
|
|
Service Shares
|
$1,000
|
$1,001.50
|
$1.643
|
|
Hypothetical (assuming a 5% return
before expenses):
|
|
|
|
|
Automated Shares
|
$1,000
|
$1,022.86
|
$1.962
|
|
Institutional Shares
|
$1,000
|
$1,023.85
|
$0.95
|
|
Service Shares
|
$1,000
|
$1,023.16
|
$1.663
|
1
Expenses are equal to the Fund’s annualized net expense ratios, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half-year period). The annualized net expense ratios are as follows:
|
Automated Shares
|
0.39%
|
|
Institutional Shares
|
0.19%
|
|
Service Shares
|
0.33%
|
2
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Automated Shares current Fee Limit of 0.55% (as reflected in the Notes to Financial Statements, Note 5 under Expense Limitation), multiplied by the average account value over the period, multiplied by 181/365 (to reflect expenses paid as if they had been in effect throughout the most recent one-half-year period) would be $2.73 and $2.76, respectively.
3
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Service Shares current Fee Limit of 0.45% (as reflected in the Notes to Financial Statements, Note 5 under Expense Limitation), multiplied by the average account value over the period, multiplied by 181/365 (to reflect expenses paid as if they had been in effect throughout the most recent one-half-year period) would be $2.23 and $2.26, respectively.
Annual Shareholder Report
21
Board of Trustees and Trust Officers
The Board of Trustees is responsible for managing the Trust’s business affairs and for exercising all the Trust’s powers except those reserved for the shareholders. The following tables give information about each Trustee and the senior officers of the Fund. Where required, the tables separately list Trustees who are “interested persons” of the Fund (i.e., “Interested” Trustees) and those who are not (i.e., “Independent” Trustees). Unless otherwise noted, the address of each person listed is 1001 Liberty Avenue, Pittsburgh, PA 15222-3779. The address of all Independent Trustees listed is 4000 Ericsson Drive, Warrendale, PA 15086-7561; Attention: Mutual Fund Board. As of December 31, 2021, the Trust comprised 16 portfolio(s), and the Federated Hermes Fund Family consisted of 33 investment companies (comprising 102 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Trustee oversees all portfolios in the Federated Hermes Fund Family and serves for an indefinite term. The Fund’s Statement of Additional Information includes additional information about Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400, Option #4.
Interested TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
J. Christopher Donahue*
Birth Date: April 11, 1949
President and Trustee
Indefinite Term
Began serving: April 1989
|
Principal Occupations: Principal Executive Officer and President of
certain of the Funds in the Federated Hermes Fund Family; Director or
Trustee of the Funds in the Federated Hermes Fund Family; President,
Chief Executive Officer and Director, Federated Hermes, Inc.;
Chairman and Trustee, Federated Investment Management Company;
Trustee, Federated Investment Counseling; Chairman and Director,
Federated Global Investment Management Corp.; Chairman and
Trustee, Federated Equity Management Company of Pennsylvania;
Trustee, Federated Shareholder Services Company; Director,
Federated Services Company.
Previous Positions: President, Federated Investment Counseling;
President and Chief Executive Officer, Federated Investment
Management Company, Federated Global Investment Management
Corp. and Passport Research, Ltd; Chairman, Passport Research, Ltd.
|
Annual Shareholder Report
22
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
Thomas R. Donahue*
Birth Date: October 20, 1958
Trustee
Indefinite Term
Began serving: May 2016
|
Principal Occupations: Director or Trustee of certain of the funds in
the Federated Hermes Fund Family; Chief Financial Officer, Treasurer,
Vice President and Assistant Secretary, Federated Hermes, Inc.;
Chairman and Trustee, Federated Administrative Services; Chairman
and Director, Federated Administrative Services, Inc.; Trustee and
Treasurer, Federated Advisory Services Company; Director or Trustee
and Treasurer, Federated Equity Management Company of
Pennsylvania, Federated Global Investment Management Corp.,
Federated Investment Counseling, and Federated Investment
Management Company; Director, MDTA LLC; Director, Executive Vice
President and Assistant Secretary, Federated Securities Corp.;
Director or Trustee and Chairman, Federated Services Company and
Federated Shareholder Services Company; and Director and
President, FII Holdings, Inc.
Previous Positions: Director, Federated Hermes, Inc.; Assistant
Secretary, Federated Investment Management Company, Federated
Global Investment Management Company and Passport Research,
LTD; Treasurer, Passport Research, LTD; Executive Vice President,
Federated Securities Corp.; and Treasurer, FII Holdings, Inc.
|
*
Family relationships and reasons for “interested” status: J. Christopher Donahue and Thomas R. Donahue are brothers. Both are “interested” due to their beneficial ownership of shares of Federated Hermes, Inc. and the positions they hold with Federated Hermes, Inc. and its subsidiaries.
INDEPENDENT TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
John T. Collins
Birth Date: January 24, 1947
Trustee
Indefinite Term
Began serving:
September 2013
|
Principal Occupations: Director or Trustee, and Chair of the Board
of Directors or Trustees, of the Federated Hermes Fund Family;
formerly, Chairman and CEO, The Collins Group, Inc. (a private equity
firm) (Retired).
Other Directorships Held: Director, KLX Energy Services Holdings,
Inc. (oilfield services); former Director of KLX Corp. (aerospace).
Qualifications: Mr. Collins has served in several business and financial
management roles and directorship positions throughout his career.
Mr. Collins previously served as Chairman and CEO of The Collins
Group, Inc. (a private equity firm) and as a Director of KLX Corp.
Mr. Collins serves as Chairman Emeriti, Bentley University. Mr. Collins
previously served as Director and Audit Committee Member, Bank of
America Corp.; Director, FleetBoston Financial Corp.; and Director,
Beth Israel Deaconess Medical Center (Harvard University
Affiliate Hospital).
|
Annual Shareholder Report
23
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
G. Thomas Hough
Birth Date: February 28, 1955
Trustee
Indefinite Term
Began serving: August 2015
|
Principal Occupations: Director or Trustee, Chair of the Audit
Committee of the Federated Hermes Fund Family; formerly, Vice
Chair, Ernst & Young LLP (public accounting firm) (Retired).
Other Directorships Held: Director, Chair of the Audit Committee,
Equifax, Inc.; Lead Director, Member of the Audit and Nominating and
Corporate Governance Committees, Haverty Furniture Companies,
Inc.; formerly, Director, Member of Governance and Compensation
Committees, Publix Super Markets, Inc.
Qualifications: Mr. Hough has served in accounting, business
management and directorship positions throughout his career.
Mr. Hough most recently held the position of Americas Vice Chair of
Assurance with Ernst & Young LLP (public accounting firm). Mr. Hough
serves on the President’s Cabinet and Business School Board of
Visitors for the University of Alabama. Mr. Hough previously served on
the Business School Board of Visitors for Wake Forest University, and
he previously served as an Executive Committee member of the
United States Golf Association.
|
|
Maureen Lally-Green
Birth Date: July 5, 1949
Trustee
Indefinite Term
Began serving: August 2009
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Adjunct Professor Emerita of Law, Duquesne University
School of Law; formerly, Dean of the Duquesne University School of
Law and Professor of Law and Interim Dean of the Duquesne
University School of Law; formerly, Associate General Secretary and
Director, Office of Church Relations, Diocese of Pittsburgh.
Other Directorships Held: Director, CNX Resources Corporation
(formerly known as CONSOL Energy Inc.).
Qualifications: Judge Lally-Green has served in various legal and
business roles and directorship positions throughout her career. Judge
Lally-Green previously held the position of Dean of the School of Law
of Duquesne University (as well as Interim Dean). Judge Lally-Green
previously served as a member of the Superior Court of Pennsylvania
and as a Professor of Law, Duquesne University School of Law. Judge
Lally-Green was appointed by the Supreme Court of Pennsylvania to
serve on the Supreme Court’s Board of Continuing Judicial Education
and the Supreme Court’s Appellate Court Procedural Rules
Committee. Judge Lally-Green also currently holds the positions on
not for profit or for profit boards of directors as follows: Director
and Chair, UPMC Mercy Hospital; Regent, Saint Vincent Seminary;
Member, Pennsylvania State Board of Education (public); Director,
Catholic Charities, Pittsburgh; and Director CNX Resources
Corporation (formerly known as CONSOL Energy Inc.). Judge
Lally-Green has held the positions of: Director, Auberle; Director,
Epilepsy Foundation of Western and Central Pennsylvania; Director,
Ireland Institute of Pittsburgh; Director, Saint Thomas More Society;
Director and Chair, Catholic High Schools of the Diocese of
Pittsburgh, Inc.; Director, Pennsylvania Bar Institute; Director,
St. Vincent College; Director and Chair, North Catholic High
School, Inc.; Director and Vice Chair, Our Campaign for the Church
Alive!, Inc.; and Director, Saint Francis University.
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Annual Shareholder Report
24
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Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
Thomas M. O’Neill
Birth Date: June 14, 1951
Trustee
Indefinite Term
Began serving: August 2006
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Sole Proprietor, Navigator Management Company
(investment and strategic consulting).
Other Directorships Held: None.
Qualifications: Mr. O’Neill has served in several business, mutual fund
and financial management roles and directorship positions throughout
his career. Mr. O’Neill serves as Director, Medicines for Humanity.
Mr. O’Neill previously served as Chief Executive Officer and President,
Managing Director and Chief Investment Officer, Fleet Investment
Advisors; President and Chief Executive Officer, Aeltus Investment
Management, Inc.; General Partner, Hellman, Jordan Management
Co., Boston, MA; Chief Investment Officer, The Putnam Companies,
Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director
and Consultant, EZE Castle Software (investment order management
software); Director, The Golisano Children’s Museum of Naples,
Florida; and Director, Midway Pacific (lumber).
|
|
Madelyn A. Reilly
Birth Date: February 2, 1956
Trustee
Indefinite Term
Began serving:
November 2020
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; formerly, Executive Vice President for Legal Affairs,
General Counsel and Secretary to the Board of Directors, Duquesne
University (Retired).
Other Directorships Held: None.
Qualifications: Ms. Reilly has served in various business and legal
management roles throughout her career. Ms. Reilly previously served
as Senior Vice President for Legal Affairs, General Counsel and
Secretary to the Board of Directors and Assistant General Counsel and
Director of Risk Management, Duquesne University. Prior to her work
at Duquesne University, Ms. Reilly served as Assistant General
Counsel of Compliance and Enterprise Risk as well as Senior Counsel
of Environment, Health and Safety, PPG Industries. Ms. Reilly currently
serves as a member of the Board of Directors of UPMC
Mercy Hospital.
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Annual Shareholder Report
25
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
P. Jerome Richey
Birth Date: February 23, 1949
Trustee
Indefinite Term
Began serving:
September 2013
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Management Consultant; Retired; formerly, Senior Vice
Chancellor and Chief Legal Officer, University of Pittsburgh and
Executive Vice President and Chief Legal Officer, CONSOL Energy Inc.
(now split into two separate publicly traded companies known as
CONSOL Energy Inc. and CNX Resources Corp.).
Other Directorships Held: None.
Qualifications: Mr. Richey has served in several business and legal
management roles and directorship positions throughout his career.
Mr. Richey most recently held the positions of Senior Vice Chancellor
and Chief Legal Officer, University of Pittsburgh. Mr. Richey previously
served as Chairman of the Board, Epilepsy Foundation of Western
Pennsylvania and Chairman of the Board, World Affairs Council of
Pittsburgh. Mr. Richey previously served as Chief Legal Officer and
Executive Vice President, CONSOL Energy Inc. and CNX Gas
Company; and Board Member, Ethics Counsel and Shareholder,
Buchanan Ingersoll & Rooney PC (a law firm).
|
|
John S. Walsh
Birth Date:
November 28, 1957
Trustee
Indefinite Term
Began serving: January 1999
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; President and Director, Heat Wagon, Inc. (manufacturer
of construction temporary heaters); President and Director,
Manufacturers Products, Inc. (distributor of portable construction
heaters); President, Portable Heater Parts, a division of Manufacturers
Products, Inc.
Other Directorships Held: None.
Qualifications: Mr. Walsh has served in several business management
roles and directorship positions throughout his career. Mr. Walsh
previously served as Vice President, Walsh & Kelly, Inc.
(paving contractors).
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Annual Shareholder Report
26
OFFICERS
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Lori A. Hensler
Birth Date: January 6, 1967
TREASURER
Officer since: April 2013
|
Principal Occupations: Principal Financial Officer and Treasurer of the
Federated Hermes Fund Family; Senior Vice President, Federated
Administrative Services; Financial and Operations Principal for
Federated Securities Corp.; and Assistant Treasurer, Federated
Investors Trust Company. Ms. Hensler has received the Certified
Public Accountant designation.
Previous Positions: Controller of Federated Hermes, Inc.; Senior Vice
President and Assistant Treasurer, Federated Investors Management
Company; Treasurer, Federated Investors Trust Company; Assistant
Treasurer, Federated Administrative Services, Federated
Administrative Services, Inc., Federated Securities Corp., Edgewood
Services, Inc., Federated Advisory Services Company, Federated
Equity Management Company of Pennsylvania, Federated Global
Investment Management Corp., Federated Investment Counseling,
Federated Investment Management Company, Passport Research,
Ltd., and Federated MDTA, LLC; Financial and Operations Principal for
Federated Securities Corp., Edgewood Services, Inc. and Southpointe
Distribution Services, Inc.
|
|
Peter J. Germain
Birth Date:
September 3, 1959
CHIEF LEGAL OFFICER,
SECRETARY and EXECUTIVE
VICE PRESIDENT
Officer since: January 2005
|
Principal Occupations: Mr. Germain is Chief Legal Officer, Secretary
and Executive Vice President of the Federated Hermes Fund Family.
He is General Counsel, Chief Legal Officer, Secretary and Executive
Vice President, Federated Hermes, Inc.; Trustee and Senior Vice
President, Federated Investors Management Company; Trustee and
President, Federated Administrative Services; Director and President,
Federated Administrative Services, Inc.; Director and Vice President,
Federated Securities Corp.; Director and Secretary, Federated Private
Asset Management, Inc.; Secretary, Federated Shareholder Services
Company; and Secretary, Retirement Plan Service Company of
America. Mr. Germain joined Federated Hermes, Inc. in 1984 and is a
member of the Pennsylvania Bar Association.
Previous Positions: Deputy General Counsel, Special Counsel,
Managing Director of Mutual Fund Services, Federated Hermes, Inc.;
Senior Vice President, Federated Services Company; and Senior
Corporate Counsel, Federated Hermes, Inc.
|
|
Stephen Van Meter
Birth Date: June 5, 1975
CHIEF COMPLIANCE
OFFICER AND SENIOR VICE
PRESIDENT
Officer since: July 2015
|
Principal Occupations: Senior Vice President and Chief Compliance
Officer of the Federated Hermes Fund Family; Vice President and
Chief Compliance Officer of Federated Hermes, Inc. and Chief
Compliance Officer of certain of its subsidiaries. Mr. Van Meter joined
Federated Hermes, Inc. in October 2011. He holds FINRA licenses
under Series 3, 7, 24 and 66.
Previous Positions: Mr. Van Meter previously held the position of
Compliance Operating Officer, Federated Hermes, Inc. Prior to joining
Federated Hermes, Inc., Mr. Van Meter served at the United States
Securities and Exchange Commission in the positions of Senior
Counsel, Office of Chief Counsel, Division of Investment Management
and Senior Counsel, Division of Enforcement.
|
Annual Shareholder Report
27
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Deborah A. Cunningham
Birth Date:
September 15, 1959
CHIEF INVESTMENT OFFICER
Officer since: May 2004
|
Principal Occupations: Deborah A. Cunningham was named Chief
Investment Officer of Federated Hermes’ money market products in
2004. She joined Federated Hermes in 1981 and has been a Senior
Portfolio Manager since 1997 and an Executive Vice President of the
Fund’s Adviser since 2009. Ms. Cunningham has received the
Chartered Financial Analyst designation and holds an M.S.B.A. in
Finance from Robert Morris College.
|
Annual Shareholder Report
28
Evaluation and Approval of Advisory Contract–May 2022
Federated Hermes Government Obligations Tax-Managed Fund (the “Fund”)
At its meetings in May 2022 (the “May Meetings”), the Fund’s Board of Trustees (the “Board”), including those Trustees who are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940 (the “Independent Trustees”), reviewed and unanimously approved the continuation of the investment advisory contract between the Fund and Federated Investment Management Company (the “Adviser”) (the “Contract”) for an additional one-year term. The Board’s determination to approve the continuation of the Contract reflects the exercise of its business judgment after considering all of the information and factors believed to be relevant and appropriate on whether to approve the continuation of the existing arrangement. The information, factors and conclusions that formed the basis for the Board’s approval are summarized below.
Information Received and Review Process
At the request of the Independent Trustees, the Fund’s Chief Compliance Officer (the “CCO”) furnished to the Board in advance of its May Meetings an independent written evaluation presenting on the topics discussed below. The Board considered the CCO’s independent written evaluation (the “CCO Fee Evaluation Report”), along with other information, in evaluating the reasonableness of the Fund’s management fee and in determining to approve the continuation of the Contract. The CCO, in preparing the CCO Fee Evaluation Report, has the authority to retain consultants, experts or staff as reasonably necessary to assist in the performance of his duties, reports directly to the Board, and can be terminated only with the approval of a majority of the Independent Trustees. At the request of the Independent Trustees, the CCO Fee Evaluation Report followed the same general approach and covered the same topics as that of the report that had previously been delivered by the CCO in his capacity as “Senior Officer” prior to the elimination of the Senior Officer position in December 2017.
In addition to the extensive materials that comprise and accompany the CCO Fee Evaluation Report, the Board considered information specifically prepared in connection with the approval of the continuation of the Contract that was presented at the May Meetings. In this regard, in the months preceding the May Meetings, the Board requested and reviewed written responses and supporting materials prepared by the Adviser and its affiliates (collectively, “Federated Hermes”) in response to requests posed to Federated Hermes by independent legal counsel on behalf of the Independent Trustees encompassing a wide variety of topics, including those summarized below. The Board also considered such additional matters as the Independent Trustees deemed
Annual Shareholder Report
29
reasonably necessary to evaluate the Contract, which included detailed information about the Fund and Federated Hermes furnished to the Board at its meetings throughout the year and in between regularly scheduled meetings on particular matters as the need arose.
The Board’s consideration of the Contract included review of materials and information covering the following matters, among others: the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates; Federated Hermes’ business and operations; the Adviser’s investment philosophy, personnel and processes; the Fund’s investment objectives and strategies; the Fund’s short-term and long-term performance (in absolute terms, both on a gross basis and net of expenses, and relative to the Fund’s particular investment program and a group of its peer funds and/or its benchmark, as appropriate); the Fund’s investment objectives; the Fund’s fees and expenses, including the advisory fee and the overall expense structure of the Fund (both in absolute terms and relative to a group of its peer funds), with due regard for contractual or voluntary expense limitations (if any); the financial condition of Federated Hermes; the Adviser’s profitability with respect to the Fund; distribution and sales activity for the Fund; and the use and allocation of brokerage commissions derived from trading the Fund’s portfolio securities (if any).
The Board also considered judicial decisions concerning allegedly excessive investment advisory fees charged to other registered funds in determining to approve the Contract. Using these judicial decisions as a guide, the Board observed that the following factors may be relevant to an adviser’s fiduciary duty with respect to its receipt of compensation from a fund: (1) the nature and quality of the services provided by the adviser to the fund and its shareholders, including the performance of the fund, its benchmark and comparable funds; (2) the adviser’s cost of providing the services and the profitability to the adviser of providing advisory services to the fund; (3) the extent to which the adviser may realize “economies of scale” as the fund grows larger and, if such economies of scale exist, whether they have been appropriately shared with the fund and its shareholders or the family of funds; (4) any “fall-out” benefits that accrue to the adviser because of its relationship with the fund, including research services received from brokers that execute fund trades and any fees paid to affiliates of the adviser for services rendered to the fund; (5) comparative fee and expense structures, including a comparison of management fees paid to the adviser with those paid by similar funds both internally and externally as well as management fees charged to institutional and other advisory clients of the adviser for what might be viewed as like services; and (6) the extent of care, conscientiousness and independence with which the fund’s board members perform their duties and their expertise, including whether they are fully informed about all facts the board deems relevant to its consideration of the adviser’s services and fees. The Board noted that the Securities and Exchange Commission (“SEC”) disclosure requirements
Annual Shareholder Report
30
regarding the basis for a fund board’s approval of the fund’s investment advisory contract generally align with the factors listed above. The Board was guided by these factors in its review of the Contract to the extent it considered them to be appropriate and relevant, as discussed further below. The Board considered and weighed these factors in light of its substantial accumulated experience in governing the Fund and working with Federated Hermes on matters relating to the oversight of the other funds advised by Federated Hermes (each, a “Federated Hermes Fund” and, collectively, the (“Federated Hermes Funds”).
In addition to considering the above-referenced factors, the Board was mindful of the preferences and expectations of Fund shareholders and the potential disruptions of the Fund’s operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew the Contract. In particular, the Board recognized that many shareholders likely have invested in the Fund on the strength of Federated Hermes’ industry standing and reputation and with the expectation that Federated Hermes will have a continuing role in providing advisory services to the Fund. Thus, the Board observed that in the marketplace there are a range of investment options available to the Fund’s shareholders and such shareholders, having had the opportunity to consider other investment options, have effectively selected Federated Hermes by virtue of investing in the Fund.
In determining to approve the continuation of the Contract, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the continuation of the Contract was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Contract. The Board recognized that its evaluation process is evolutionary and that the factors considered and emphasis placed on relevant factors may change in recognition of changing circumstances in the registered fund marketplace. The Independent Trustees were assisted throughout the evaluation process by independent legal counsel. In connection with their deliberations at the May Meetings, the Independent Trustees met separately in executive session with their independent legal counsel and without management present to review the relevant materials and consider their responsibilities under applicable laws. In addition, senior management representatives of Federated Hermes also met with the Independent Trustees and their independent legal counsel to discuss the materials and presentations furnished to the Board at the May Meetings. The Board considered the approval of the Contract for the Fund as part of its consideration of agreements for funds across the family of Federated Hermes Funds, but its approvals were made on a fund-by-fund basis.
Annual Shareholder Report
31
Nature, Extent and Quality of Services
The Board considered the nature, extent and quality of the services provided to the Fund by the Adviser and the resources of Federated Hermes dedicated to the Fund. In this regard, the Board evaluated, among other things, the terms of the Contract and the range of services provided to the Fund by Federated Hermes. The Board considered the Adviser’s personnel, investment philosophy and process, investment research capabilities and resources, trade operations capabilities, experience and performance track record. The Board reviewed the qualifications, backgrounds and responsibilities of the portfolio management team primarily responsible for the day-to-day management of the Fund and Federated Hermes’ ability and experience in attracting and retaining qualified personnel to service the Fund. In addition, the Board noted that the Fund is a money market mutual fund that operates in accordance with the limitations set forth in Rule 2a-7 under the 1940 Act. In this connection, the Board considered the expertise of the Adviser in managing money market funds, its extensive experience with the requirements of Rule 2a-7 and its commitment to managing the Fund in accordance with these requirements. The Board also considered the Adviser’s ability to deliver competitive investment performance for the Fund when compared to the Fund’s Performance Peer Group (as defined below), which was deemed by the Board to be a useful indicator of how the Adviser is executing the Fund’s investment program. The Board also considered the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, in order to maintain a positive yield for the Fund in the low interest rate environment.
In addition, the Board considered the financial resources and overall reputation of Federated Hermes and its willingness to consider and make investments in personnel, infrastructure, technology, cybersecurity, business continuity planning and operational enhancements that are designed to benefit the Federated Hermes Funds. The Board noted the significant acquisition of Hermes Fund Managers Limited by Federated Hermes, which has deepened the organization’s investment management expertise and capabilities and expanded the investment process for all of the Federated Hermes Funds to have access to analytical resources related to environmental, social and governance (“ESG”) factors and issuer engagement on ESG matters. The Board considered the quality of Federated Hermes’ communications with the Board and responsiveness to Board inquiries and requests made from time to time with respect to the Fund and other Federated Hermes Funds. In this regard, the Board took into account Federated Hermes’ communications with the Board in light of the pandemic. The Board also considered that Federated Hermes is responsible for providing the Federated Hermes Funds’ officers.
The Board received and evaluated information regarding Federated Hermes’ regulatory and compliance environment. The Board considered Federated Hermes’ compliance program and compliance history and reports from the CCO about Federated Hermes’ compliance with applicable laws and
Annual Shareholder Report
32
regulations, including responses to regulatory developments and any compliance or other issues raised by regulatory agencies. The Board also noted Federated Hermes’ support of the Federated Hermes Funds’ compliance control structure and the compliance-related resources devoted by Federated Hermes in support of the Fund’s obligations pursuant to Rule 38a-1 under the Investment Company Act of 1940, including Federated Hermes’ commitment to respond to rulemaking and other regulatory initiatives of the SEC. The Board considered Federated Hermes’ approach to internal audits and risk management with respect to the Federated Hermes Funds and its day-to-day oversight of the Federated Hermes Funds’ compliance with their investment objectives and policies as well as with applicable laws and regulations, noting that regulatory and other developments had over time led to an increase in the scope of Federated Hermes’ oversight in this regard, including in connection with the designation of the Federated Hermes Funds’ investment advisers as the administrators of the Federated Hermes Funds’ liquidity risk management program.
The Board also considered the implementation of Federated Hermes’ business continuity plans and recognized steps taken by Federated Hermes to continue to provide the same nature, extent and quality of services to the Federated Hermes Funds during the pandemic. In addition, the Board noted Federated Hermes’ commitment to maintaining high quality systems and expending substantial resources to prepare for and respond to ongoing changes due to the market, regulatory and control environments in which the Fund and its service providers operate, including changes associated with the pandemic.
The Board considered Federated Hermes’ efforts to provide shareholders in the Federated Hermes Funds with a comprehensive array of funds with different investment objectives, policies and strategies. The Board considered the expenses that Federated Hermes had incurred, as well as the entrepreneurial and other risks assumed by Federated Hermes, in sponsoring and providing on-going services to new funds to expand these opportunities for shareholders. The Board noted the benefits to shareholders of being part of the family of Federated Hermes Funds, which include the general right to exchange investments between the same class of shares without the incurrence of additional sales charges.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided by the Adviser to the Fund.
Fund Investment Performance
The Board considered the investment performance of the Fund. In evaluating the Fund’s investment performance, the Board considered performance results in light of the Fund’s investment objective, strategies and risks. The Board considered detailed investment reports on, and the Adviser’s analysis of, the Fund’s performance over different time periods that were
Annual Shareholder Report
33
provided to the Board throughout the year and in connection with the May Meetings. These reports include, among other items, information on the Fund’s gross and net returns, the Fund’s investment performance compared to one or more relevant categories or groups of peer funds and the Fund’s benchmark index, performance attribution information and commentary on the effect of market conditions.
The Board also reviewed comparative information regarding the performance of other registered funds in the category of peer funds selected by iMoneyNet, an independent fund ranking organization (the “Performance Peer Group”). The Board noted the CCO’s view that comparisons to fund peer groups may be helpful, though not conclusive, in evaluating the performance of the Adviser in managing the Fund. The Board considered, in evaluating such comparisons, that in some cases there may be differences in the funds’ objectives or investment management techniques, or the costs to implement the funds, even within the same Performance Peer Group.
For the one-year period ended December 31, 2021, the Fund’s performance was above the median of the Performance Peer Group. The Board also considered the relatively tight dispersion of performance data with respect to the Fund and its Performance Peer Group.
Based on these considerations, the Board concluded that it had continued confidence in the Adviser’s overall capabilities to manage the Fund.
Fund Expenses
The Board considered the advisory fee and overall expense structure of the Fund and the comparative fee and expense information that had been provided in connection with the May Meetings. In this regard, the Board was presented with, and considered, information regarding the contractual advisory fee rates, net advisory fee rates, total expense ratios and each element of the Fund’s total expense ratio (i.e., gross and net advisory fees, administrative fees, custody fees, portfolio accounting fees and transfer agency fees) relative to an appropriate group of peer funds compiled by Federated Hermes from the category of peer funds selected by iMoneyNet (the “Expense Peer Group”). The Board received a description of the methodology used to select the Expense Peer Group from the overall iMoneyNet category. The Board also reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall iMoneyNet category.
While mindful that courts have cautioned against giving too much weight to comparative information concerning fees charged by other advisers for managing funds with comparable investment programs, the Board noted that it found the use of such comparisons to be relevant to its evaluation. The Board focused on comparisons with other similar registered funds more heavily than non-registered fund products or services because such comparisons are believed to be more relevant. The Board considered that other registered funds are the products most like the Fund, in that they are readily available to Fund
Annual Shareholder Report
34
shareholders as alternative investment vehicles, and they are the type of investment vehicle, in fact, chosen and maintained by the Fund’s shareholders. The Board noted that the range of such other registered funds’ fees and expenses, therefore, appears to be a relevant indicator of what investors have found to be reasonable in the marketplace in which the Fund competes.
The Board reviewed the contractual advisory fee rate, net advisory fee rate and other expenses of the Fund and noted the position of the Fund’s fee rates relative to its Expense Peer Group. In this regard, the Board noted that the contractual advisory fee rate was above the median of the Expense Peer Group, but the Board noted the applicable waivers and reimbursements, and that the overall expense structure of the Fund remained competitive in the context of other factors considered by the Board.
The Board also received and considered information about the fees charged by Federated Hermes for providing advisory services to other types of clients with investment strategies similar to those of the Federated Hermes Funds, including non-registered fund clients (such as institutional separate accounts) and third-party unaffiliated registered funds for which the Adviser or its affiliates serve as sub-adviser. The Board noted the CCO’s conclusion that non-registered fund clients are inherently different products due to the following differences, among others: (i) different types of targeted investors; (ii) different applicable laws and regulations; (iii) different legal structures; (iv) different average account sizes and portfolio management techniques made necessary by different cash flows and different associated costs; (v) the time spent by portfolio managers and their teams (among other personnel across various departments, including legal, compliance and risk management) in reviewing securities pricing and fund liquidity; (vi) different administrative responsibilities; (vii) different degrees of risk associated with management; and (viii) a variety of different costs. The Board also considered information regarding the differences in the nature of the services required for Federated Hermes to manage its proprietary registered fund business versus managing a discrete pool of assets as a sub-adviser to another institution’s registered fund, noting the CCO’s view that Federated Hermes generally performs significant additional services and assumes substantially greater risks in managing the Fund and other Federated Hermes Funds than in its role as sub-adviser to an unaffiliated third-party registered fund. The Board noted that the CCO did not consider the fees for providing advisory services to other types of clients to be determinative in judging the appropriateness of the Federated Hermes Funds’ advisory fees.
Based on these considerations, the Board concluded that the fees and total operating expenses of the Fund, in conjunction with other matters considered, are reasonable in light of the services provided.
Annual Shareholder Report
35
Profitability
The Board received and considered profitability information furnished by Federated Hermes, as requested by the CCO. Such profitability information included revenues reported on a fund-by-fund basis and estimates of the allocation of expenses made on a fund-by-fund basis, using allocation methodologies specified by the CCO and described to the Board. The Board considered the CCO’s view that, while these cost allocation reports apply consistent allocation processes, the inherent difficulties in allocating costs on a fund-by-fund basis continues to cause the CCO to question the precision of the process and to conclude that such reports may be unreliable because a single change in an allocation estimate may dramatically alter the resulting estimate of cost and/or profitability of a Federated Hermes Fund and may produce unintended consequences. In addition, the Board considered the CCO’s view that the allocation methodologies used by Federated Hermes in estimating profitability for purposes of reporting to the Board in connection with the continuation of the Contract are consistent with the methodologies previously reviewed by an independent consultant. The Board noted that the independent consultant had previously conducted a review of the allocation methodologies and reported that, although there is no single best method to allocate expenses, the methodologies used by Federated Hermes are reasonable. The Board noted the impact of the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, on the profitability of the Fund to the Adviser.
The Board also reviewed information compiled by Federated Hermes comparing its profitability information to other publicly held fund management companies, including information regarding profitability trends over time. The Board considered the CCO’s conclusion that, based on such profitability information, Federated Hermes’ profit margins did not appear to be excessive. The Board also considered the CCO’s view that Federated Hermes appeared financially sound, with the resources necessary to fulfill its obligations under its contracts with the Federated Hermes Funds.
Economies of Scale
The Board received and considered information about the notion of possible realization of “economies of scale” as a fund grows larger, the difficulties of calculating economies of scale at an individual fund level, and the extent to which potential scale benefits are shared with shareholders. In this regard, the Board considered that Federated Hermes has made significant and long-term investments in areas that support all of the Federated Hermes Funds, such as: personnel, processes and tools for portfolio management, including the use of market data on which portfolio managers make investment decisions; trading operations; ESG integration and issuer engagement on ESG matters; shareholder services; compliance; business continuity; cybersecurity; internal audit and risk management functions; and technology that supports the provision of investment management services. The Board noted that Federated
Annual Shareholder Report
36
Hermes’ investments in these areas are extensive and are designed to provide enhanced services to the Federated Hermes Funds and their shareholders. The Board considered that the benefits of these investments are likely to be shared with the family of Federated Hermes Funds as a whole. In addition, the Board considered that fee waivers and expense reimbursements are another means for potential economies of scale to be shared with shareholders and can provide protection from an increase in expenses if a Federated Hermes Fund’s assets decline. The Board considered that, in order for the Federated Hermes Funds to remain competitive in the marketplace, Federated Hermes has frequently waived fees and/or reimbursed expenses for the Federated Hermes Funds and has disclosed to shareholders and/or reported to the Board its intention to do so (or continue to do so) in the future. The Board also considered Federated Hermes’ reductions in contractual management fees for certain Federated Hermes Funds during the prior year, including in response to the CCO’s recommendations in the prior year’s CCO Fee Evaluation Report, which have resulted in benefits being realized by shareholders.
The Board also considered reports on adviser-paid fees (commonly referred to as “revenue sharing”) that were provided to the Board throughout the year and in connection with the May Meetings. The Board considered that Federated Hermes and the CCO believe that this information should be viewed to determine if there was an incentive to either not apply breakpoints, or to apply breakpoints at higher levels, and should not be viewed to evaluate the reasonableness of advisory fees. The Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which is compounded by the lack of any uniform methodology or pattern with respect to structuring fund advisory fees with breakpoints that serve to reduce the fees as a fund attains a certain size.
Other Benefits
The Board considered information regarding the compensation and other ancillary (or “fall-out”) benefits that Federated Hermes derived from its relationships with the Federated Hermes Funds. The Board noted that, in addition to receiving advisory fees under the Federated Hermes Funds’ investment advisory contracts, Federated Hermes’ affiliates also receive fees for providing other services to the Federated Hermes Funds under separate contracts (e.g., for serving as the Federated Hermes Funds’ administrator and distributor). In this regard, the Board considered that certain of Federated Hermes’ affiliates provide distribution and shareholder services to the Federated Hermes Funds, for which they may be compensated through distribution and servicing fees paid pursuant to Rule 12b-1 plans or otherwise. The Board also received and considered information detailing any indirect benefit that Federated Hermes may derive from its receipt of research services from brokers who execute portfolio trades for the Federated Hermes Funds.
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37
Conclusions
The Board considered: (i) the CCO’s conclusion that his observations and the information accompanying the CCO Fee Evaluation Report show that the management fee for the Fund is reasonable; and (ii) the CCO’s recommendation that the Board approve the management fee. The Board noted that, under these circumstances, no changes were recommended to, and no objection was raised to the continuation of, the Contract by the CCO. The CCO also recognized that the Board’s evaluation of the Federated Hermes Funds’ advisory and sub-advisory arrangements is a continuing and ongoing process that is informed by the information that the Board requests and receives from management throughout the course of the year and, in this regard, the CCO noted certain items for future reporting to the Board or further consideration by management as the Board continues its ongoing oversight of the Federated Hermes Funds.
On the basis of the information and factors summarized above, among other information and factors deemed relevant by the Board, and the evaluation thereof, the Board, including the Independent Trustees, unanimously voted to approve the continuation of the Contract. The Board based its determination to approve the Contract on the totality of the circumstances and relevant factors and with a view of past and future long-term considerations. Not all of the factors and considerations identified above were necessarily deemed to be relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were deemed to be relevant, the Board’s determination to approve the continuation of the Contract reflects its view that Federated Hermes’ performance and actions provided a satisfactory basis to support the determination to approve the continuation of the existing arrangement.
Annual Shareholder Report
38
Voting Proxies on Fund Portfolio Securities
A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund’s portfolio is available, without charge and upon request, by calling 1-800-341-7400, Option #4. A report on “Form N-PX” of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available via the Proxy Voting Record (Form N-PX) link associated with the Fund and share class name at FederatedInvestors.com/FundInformation. Form N-PX filings are also available at the SEC’s website at sec.gov.
Portfolio Schedule
The Fund files with the SEC a complete schedule of its portfolio holdings as of the close of each month on “Form N-MFP.” Form N-MFP is available on the SEC’s website at sec.gov. You may access Form N-MFP via the link to the Fund and share class name at FederatedInvestors.com.
Annual Shareholder Report
39
You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
This Report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund’s Prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.
Federated Hermes Government Obligations Tax-Managed Fund
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at FederatedInvestors.com
or call 1-800-341-7400.
or call 1-800-341-7400.
Federated Securities Corp., Distributor
CUSIP 608919494
CUSIP 60934N856
CUSIP 60934N849
CUSIP 60934N856
CUSIP 60934N849
39009 (9/22)
© 2022 Federated Hermes, Inc.
Annual Shareholder Report
July 31, 2022
|
Share Class | Ticker
|
Institutional | GOTXX
|
|
|
|
Federated Hermes Government Obligations Tax-Managed Fund
A Portfolio of Federated Hermes Money Market Obligations Trust
Dear Valued Shareholder,
We are pleased to present the Annual Shareholder Report for your fund covering the period from August 1, 2021 through July 31, 2022. This report includes a complete listing of your fund’s holdings, performance information and financial statements along with other important fund information.
As a global leader in active, responsible investment management, Federated Hermes is guided by our conviction that responsible investing is the best way to create wealth over the long term. The company provides capabilities across a wide range of asset classes to investors around the world.
In addition, FederatedInvestors.com offers quick and easy access to valuable resources that include timely fund updates, economic and market insights from our investment strategists and financial planning tools. You can also access many of those insights by following us on Twitter (@FederatedHermes) and LinkedIn.
Thank you for investing with us. We hope you find this information useful and look forward to keeping you informed.
Sincerely,
J. Christopher Donahue, President
Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee
Portfolio of Investments Summary Tables (unaudited)
At July 31, 2022, the Fund’s portfolio composition1 was as follows:
|
Security Type
|
Percentage of
Total Net Assets
|
|
U.S. Treasury Securities
|
60.5%
|
|
U.S. Government Agency Securities
|
51.3%
|
|
Other Assets and Liabilities—Net2
|
(11.8)%
|
|
TOTAL
|
100%
|
At July 31, 2022, the Fund’s effective maturity3 schedule was as follows:
|
Securities With an
Effective Maturity of:
|
Percentage of
Total Net Assets
|
|
1-7 Days
|
37.2%
|
|
8-30 Days
|
26.9%
|
|
31-90 Days
|
38.0%
|
|
91-180 Days
|
7.9%
|
|
181 Days or more
|
1.8%
|
|
Other Assets and Liabilities—Net2
|
(11.8)%
|
|
TOTAL
|
100%
|
1
See the Fund’s Prospectus and Statement of Additional Information for a description of these investments.
2
Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.
3
Effective maturity is determined in accordance with the requirements of Rule 2a-7 under the Investment Company Act of 1940, which regulates money market mutual funds.
Annual Shareholder Report
1
Portfolio of Investments
July 31, 2022
|
Principal
Amount
|
|
|
Value
|
|
|
|
U.S. TREASURY—60.5%
|
|
|
$44,000,000
|
|
United States Treasury Bill, 0.080%, 8/11/2022
|
$43,999,022
|
|
100,000,000
|
|
United States Treasury Bill, 0.910%, 8/4/2022
|
99,992,417
|
|
25,000,000
|
|
United States Treasury Bill, 1.070%, 1/26/2023
|
24,867,736
|
|
75,000,000
|
|
United States Treasury Bill, 1.230%, 9/8/2022
|
74,902,625
|
|
141,000,000
|
|
United States Treasury Bill, 1.240%, 8/2/2022
|
140,995,143
|
|
100,000,000
|
|
United States Treasury Bill, 1.250%, 9/20/2022
|
99,826,389
|
|
100,000,000
|
|
United States Treasury Bill, 1.485%, 11/17/2022
|
99,554,500
|
|
200,000,000
|
|
United States Treasury Bill, 1.510%, 10/11/2022
|
199,404,389
|
|
50,000,000
|
|
United States Treasury Bill, 1.580%, 12/1/2022
|
49,732,278
|
|
100,000,000
|
|
United States Treasury Bill, 1.640%, 9/15/2022
|
99,795,000
|
|
275,000,000
|
|
United States Treasury Bill, 1.750%, 9/29/2022
|
274,211,285
|
|
50,000,000
|
|
United States Treasury Bill, 2.110%, 10/13/2022
|
49,786,070
|
|
500,000,000
|
|
United States Treasury Bill, 2.140%, 8/30/2022
|
499,167,780
|
|
50,000,000
|
|
United States Treasury Bill, 2.230%, 11/8/2022
|
49,693,375
|
|
150,000,000
|
|
United States Treasury Bill, 2.520%, 10/27/2022
|
149,086,500
|
|
134,320,000
|
|
United States Treasury Bill, 2.600%, 11/15/2022
|
133,291,706
|
|
29,000,000
|
|
United States Treasury Bill, 3.020%, 6/15/2023
|
28,226,377
|
|
200,000,000
|
|
United States Treasury Bills, 0.870%—1.670%, 9/22/2022
|
199,604,222
|
|
300,000,000
|
|
United States Treasury Bills, 1.280%—2.210%, 9/27/2022
|
299,109,777
|
|
500,000,000
|
|
United States Treasury Bills, 1.780%—1.980%, 8/16/2022
|
499,588,750
|
|
490,000,000
|
|
United States Treasury Bills, 2.050%—2.120%, 8/23/2022
|
489,368,004
|
|
35,000,000
|
1
|
United States Treasury Floating Rate Notes, 2.461%
(91-day T-Bill -0.075%), 8/2/2022
|
34,999,997
|
|
65,000,000
|
1
|
United States Treasury Floating Rate Notes, 2.470%
(91-day T-Bill +0.037%), 8/2/2022
|
64,999,970
|
|
42,000,000
|
1
|
United States Treasury Floating Rate Notes, 2.521%
(91-day T-Bill -0.015%), 8/2/2022
|
42,013,229
|
|
45,000,000
|
1
|
United States Treasury Floating Rate Notes, 2.565%
(91-day T-Bill +0.029%), 8/2/2022
|
45,020,677
|
|
120,000,000
|
1
|
United States Treasury Floating Rate Notes, 2.570%
(91-day T-Bill +0.034%), 8/2/2022
|
120,002,416
|
|
25,000,000
|
1
|
United States Treasury Floating Rate Notes, 2.585%
(91-day T-Bill +0.049%), 8/2/2022
|
25,000,000
|
|
25,000,000
|
|
United States Treasury Note, 0.125%, 11/30/2022
|
24,997,761
|
|
10,000,000
|
|
United States Treasury Note, 1.625%, 11/15/2022
|
10,043,889
|
|
10,000,000
|
|
United States Treasury Note, 2.500%, 3/31/2023
|
10,056,614
|
|
|
|
TOTAL U.S. TREASURY
|
3,981,337,898
|
Annual Shareholder Report
2
|
Principal
Amount
|
|
|
Value
|
|
|
|
GOVERNMENT AGENCIES—51.3%
|
|
|
$233,000,000
|
2
|
Federal Farm Credit System Discount Notes, 0.090%—2.400%,
8/24/2022 - 4/21/2023
|
$232,181,391
|
|
75,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.290%
(SOFR +0.010%), 8/1/2022
|
75,000,000
|
|
71,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.305%
(SOFR +0.025%), 8/1/2022
|
71,000,000
|
|
11,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.307%
(SOFR +0.027%), 8/1/2022
|
10,998,505
|
|
50,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.310%
(SOFR +0.030%), 8/1/2022
|
50,000,000
|
|
70,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.315%
(SOFR +0.035%), 8/1/2022
|
70,000,000
|
|
69,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.320%
(SOFR +0.040%), 8/1/2022
|
69,002,493
|
|
145,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.325%
(SOFR +0.045%), 8/1/2022
|
145,001,317
|
|
33,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.335%
(SOFR +0.055%), 8/1/2022
|
32,999,623
|
|
49,198,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.340%
(SOFR +0.060%), 8/1/2022
|
49,198,260
|
|
16,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.345%
(SOFR +0.065%), 8/1/2022
|
16,000,000
|
|
109,500,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.350%
(SOFR +0.070%), 8/1/2022
|
109,502,270
|
|
15,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.355%
(SOFR +0.075%), 8/1/2022
|
15,000,000
|
|
5,000,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.400%
(SOFR +0.120%), 8/1/2022
|
5,004,044
|
|
2,230,000
|
1
|
Federal Farm Credit System Floating Rate Notes, 2.415%
(SOFR +0.135%), 8/1/2022
|
2,232,004
|
|
1,288,000,000
|
2
|
Federal Home Loan Bank System Discount Notes, 0.940%—
2.530%, 8/2/2022 - 10/26/2022
|
1,285,950,684
|
|
50,000,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 1.570%
(SOFR +0.040%), 8/2/2022
|
50,000,000
|
|
100,000,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 2.280%
(SOFR +0.000%), 8/1/2022
|
100,000,000
|
|
100,000,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 2.285%
(SOFR +0.005%), 8/1/2022
|
100,000,943
|
|
458,000,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 2.290%
(SOFR +0.010%), 8/1/2022
|
458,000,765
|
|
105,000,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 2.310%
(SOFR +0.030%), 8/1/2022
|
105,000,000
|
|
114,000,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 2.315%
(SOFR +0.035%), 8/1/2022
|
114,000,000
|
Annual Shareholder Report
3
|
Principal
Amount
|
|
|
Value
|
|
|
|
GOVERNMENT AGENCIES—continued
|
|
|
$35,000,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 2.335%
(SOFR +0.055%), 8/1/2022
|
$35,000,000
|
|
30,000,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 2.340%
(SOFR +0.060%), 8/1/2022
|
30,000,000
|
|
17,000,000
|
1
|
Federal Home Loan Bank System Floating Rate Notes, 2.345%
(SOFR +0.065%), 8/1/2022
|
17,000,000
|
|
78,500,000
|
|
Federal Home Loan Bank System, 1.738%—2.350%,
12/23/2022 - 7/5/2023
|
78,500,000
|
|
50,000,000
|
2
|
Tennessee Valley Authority Discount Note, 2.100%, 8/3/2022
|
49,994,167
|
|
|
|
TOTAL GOVERNMENT AGENCIES
|
3,376,566,466
|
|
|
|
TOTAL INVESTMENT IN SECURITIES—111.8%
(AT AMORTIZED COST)3
|
7,357,904,364
|
|
|
|
OTHER ASSETS AND LIABILITIES - NET—(11.8)%4
|
(774,122,633)
|
|
|
|
TOTAL NET ASSETS—100%
|
$6,583,781,731
|
1
Floating/variable note with current rate and current maturity or next reset date shown.
2
Discount rate at time of purchase.
3
The cost of investments for federal tax purposes amounts to $7,357,914,911.
4
Assets, other than investments in securities, less liabilities. A significant portion of this balance is the result of payables for securities purchased. See Statement of Assets and Liabilities.
Note: The categories of investments are shown as a percentage of total net assets at July 31, 2022.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Level 1—quoted prices in active markets for identical securities.
Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Also includes securities valued at amortized cost.
Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
In valuing the Fund’s assets as of July 31, 2022, all investments of the Fund are valued using amortized cost, which is a methodology utilizing Level 2 inputs.
The following acronym(s) is used throughout this portfolio:
|
SOFR
|
—Secured Overnight Financing Rate
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
4
Financial Highlights–Institutional Shares
(For a Share Outstanding Throughout Each Period)
|
Year Ended July 31
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.002
|
0.0001
|
0.011
|
0.021
|
0.012
|
|
Net realized gain (loss)
|
(0.000)1
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
|
TOTAL FROM INVESTMENT
OPERATIONS
|
0.002
|
0.0001
|
0.011
|
0.021
|
0.012
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.002)
|
(0.000)1
|
(0.011)
|
(0.021)
|
(0.012)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
|
TOTAL DISTRIBUTIONS
|
(0.002)
|
(0.000)1
|
(0.011)
|
(0.021)
|
(0.012)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.23%
|
0.01%
|
1.10%
|
2.13%
|
1.23%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.12%
|
0.10%
|
0.20%4
|
0.20%4
|
0.20%4
|
|
Net investment income
|
0.21%
|
0.02%
|
0.95%
|
2.11%
|
1.21%
|
|
Expense waiver/reimbursement5
|
0.17%
|
0.19%
|
0.09%
|
0.09%
|
0.09%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$3,507,901
|
$3,805,176
|
$4,366,142
|
$3,019,468
|
$2,739,607
|
1
Represents less than $0.001.
2
Based on net asset value.
3
Amount does not reflect net expenses incurred by investment companies in which the Fund may invest.
4
The net expense ratio is calculated without reduction for expense offset arrangements. The net expense ratios are 0.20%, 0.20% and 0.20% for the years ended July 31, 2020, 2019 and 2018, respectively, after taking into account these expense reductions.
5
This expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense waiver/reimbursement recorded by investment companies in which the Fund may invest.
See Notes which are an integral part of the Financial Statements
The financial highlights of the Automated Shares and Service Shares are presented separately.
Annual Shareholder Report
5
Statement of Assets and Liabilities
July 31, 2022
July 31, 2022
|
Assets:
|
|
|
|
Investment in securities, at amortized cost and fair value
|
|
$7,357,904,364
|
|
Cash
|
|
3,462,641
|
|
Receivable from investments sold
|
|
35,000,000
|
|
Income receivable
|
|
4,789,041
|
|
Receivable for shares sold
|
|
2,647,036
|
|
TOTAL ASSETS
|
|
7,403,803,082
|
|
Liabilities:
|
|
|
|
Payable for investments purchased
|
$813,484,840
|
|
|
Income distribution payable
|
5,267,656
|
|
|
Payable for shares redeemed
|
234,761
|
|
|
Payable for other service fees (Notes 2 and 5)
|
641,321
|
|
|
Payable for investment adviser fee (Note 5)
|
63,485
|
|
|
Payable for administrative fee (Note 5)
|
42,336
|
|
|
Accrued expenses (Note 5)
|
286,952
|
|
|
TOTAL LIABILITIES
|
|
820,021,351
|
|
Net assets for 6,583,842,035 shares outstanding
|
|
$6,583,781,731
|
|
Net Assets Consists of:
|
|
|
|
Paid-in capital
|
|
$6,583,851,410
|
|
Total distributable earnings (loss)
|
|
(69,679)
|
|
TOTAL NET ASSETS
|
|
$6,583,781,731
|
|
Net Asset Value, Offering Price and Redemption Proceeds
Per Share:
|
|
|
|
Automated Shares:
|
|
|
|
$192,603,045 ÷ 192,604,937 shares outstanding, no par value,
unlimited shares authorized
|
|
$1.00
|
|
Institutional Shares:
|
|
|
|
$3,507,901,301 ÷ 3,507,932,837 shares outstanding, no par value,
unlimited shares authorized
|
|
$1.00
|
|
Service Shares:
|
|
|
|
$2,883,277,385 ÷ 2,883,304,261 shares outstanding, no par value,
unlimited shares authorized
|
|
$1.00
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
6
Statement of Operations
Year Ended July 31, 2022
Year Ended July 31, 2022
|
Investment Income:
|
|
|
|
|
Interest
|
|
|
$22,795,455
|
|
Expenses:
|
|
|
|
|
Investment adviser fee (Note 5)
|
|
$13,585,259
|
|
|
Administrative fee (Note 5)
|
|
5,316,816
|
|
|
Custodian fees
|
|
204,044
|
|
|
Transfer agent fees (Note 2)
|
|
190,635
|
|
|
Directors’/Trustees’ fees (Note 5)
|
|
39,953
|
|
|
Auditing fees
|
|
23,960
|
|
|
Legal fees
|
|
7,358
|
|
|
Other service fees (Notes 2 and 5)
|
|
7,711,951
|
|
|
Portfolio accounting fees
|
|
184,557
|
|
|
Share registration costs
|
|
58,216
|
|
|
Printing and postage
|
|
35,901
|
|
|
Miscellaneous (Note 5)
|
|
108,641
|
|
|
TOTAL EXPENSES
|
|
27,467,291
|
|
|
Waivers and Reimbursements:
|
|
|
|
|
Waiver of investment adviser fee (Note 5)
|
$(10,455,365)
|
|
|
|
Waivers/reimbursements of other operating expenses
(Notes 2 and 5)
|
(6,653,530)
|
|
|
|
TOTAL WAIVERS AND REIMBURSEMENTS
|
|
(17,108,895)
|
|
|
Net expenses
|
|
|
10,358,396
|
|
Net investment income
|
|
|
12,437,059
|
|
Net realized loss on investments
|
|
|
(64,848)
|
|
Change in net assets resulting from operations
|
|
|
$12,372,211
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
7
Statement of Changes in Net Assets
|
Year Ended July 31
|
2022
|
2021
|
|
Increase (Decrease) in Net Assets
|
|
|
|
Operations:
|
|
|
|
Net investment income
|
$12,437,059
|
$1,199,172
|
|
Net realized gain (loss)
|
(64,848)
|
51,584
|
|
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS
|
12,372,211
|
1,250,756
|
|
Distributions to Shareholders:
|
|
|
|
Automated Shares
|
(247,878)
|
(19,918)
|
|
Institutional Shares
|
(8,114,259)
|
(618,743)
|
|
Service Shares
|
(4,561,767)
|
(393,226)
|
|
CHANGE IN NET ASSETS RESULTING FROM
DISTRIBUTIONS TO SHAREHOLDERS
|
(12,923,904)
|
(1,031,887)
|
|
Share Transactions:
|
|
|
|
Proceeds from sale of shares
|
15,309,584,999
|
18,391,229,782
|
|
Net asset value of shares issued to shareholders in payment
of distributions declared
|
2,588,694
|
277,007
|
|
Cost of shares redeemed
|
(15,499,663,571)
|
(19,091,398,983)
|
|
CHANGE IN NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
|
(187,489,878)
|
(699,892,194)
|
|
Change in net assets
|
(188,041,571)
|
(699,673,325)
|
|
Net Assets:
|
|
|
|
Beginning of period
|
6,771,823,302
|
7,471,496,627
|
|
End of period
|
$6,583,781,731
|
$6,771,823,302
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
8
Notes to Financial Statements
July 31, 2022
1. ORGANIZATION
Federated Hermes Money Market Obligations Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust consists of 16 portfolios. The financial statements included herein are only those of Federated Hermes Government Obligations Tax-Managed Fund (the “Fund”), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated, and a shareholder’s interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers three classes of shares: Automated Shares, Institutional Shares and Service Shares. All shares of the Fund have equal rights with respect to voting, except on class specific matters. The investment objective of the Fund is to provide current income consistent with stability of principal and liquidity.
The Fund operates as a government money market fund. As a government money market fund, the Fund: (1) invests at least 99.5% of its total assets in: (i) cash; (ii) securities issued or guaranteed by the United States or certain U.S. government agencies or instrumentalities; and/or (iii) repurchase agreements that are collateralized fully; (2) generally continues to use amortized cost to value its portfolio securities and transact at a stable $1.00 net asset value (NAV); and (3) has elected not to be subject to the liquidity fees and gates requirement at this time as permitted by Rule 2a-7 under the Act.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
Securities are valued at amortized cost. Under the amortized cost valuation method, an investment is valued initially at its cost as determined in accordance with GAAP. The Fund then adjusts the amount of interest income accrued each day over the term of the investment to account for any difference between the initial cost of the investment and the amount payable at its maturity. If amortized cost is determined not to approximate fair value, the value of the portfolio securities will be determined in accordance with the procedures described below. There can be no assurance that the Fund could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines its NAV per share, and the actual value obtained could be materially different.
Annual Shareholder Report
9
The Fund’s Board of Trustees (the “Trustees”) have ultimate responsibility for determining the fair value of investments. The Trustees have appointed a valuation committee (“Valuation Committee”) comprised of officers of the Fund, Federated Investment Management Company (the “Adviser”) and certain of the Adviser’s affiliated companies to assist in determining fair value of securities and in overseeing the comparison of amortized cost to market-based value. The Trustees have also authorized the use of pricing services recommended by the Valuation Committee to provide fair value evaluations of the current value of certain investments for purposes of monitoring the relationship of market-based value and amortized cost. The Valuation Committee employs various methods for reviewing third-party pricing-service evaluations including periodic reviews of third-party pricing services’ policies, procedures and valuation methods (including key inputs and assumptions) and review of price challenges by the Adviser based on recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee determines the fair value of the investment in accordance with procedures adopted by the Trustees. The Trustees periodically review and approve the fair valuations made by the Valuation Committee and any changes made to the procedures.
Investment Income, Gains and Losses, Expenses and Distributions
Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis. Interest income and expenses are accrued daily. Distributions to shareholders are recorded on the ex-dividend date. Distributions of net investment income, if any, are declared daily and paid monthly. Amortization/accretion of premium and discount is included in investment income. Investment income, realized gains and losses and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that select classes will bear certain expenses unique to those classes. The detail of the total fund expense waivers and reimbursement of $17,108,895 is disclosed in various locations in this Note 2 and Note 5. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.
Transfer Agent Fees
For the year ended July 31, 2022, transfer agent fees for the Fund were as follows:
|
|
Transfer Agent
Fees Incurred
|
Transfer Agent
Fees Reimbursed
|
Transfer Agent
Fees Waived by
Unaffiliated Third Parties
|
|
Automated Shares
|
$128,812
|
$(12,067)
|
$(58,541)
|
|
Institutional Shares
|
34,438
|
—
|
—
|
|
Service Shares
|
27,385
|
—
|
—
|
|
TOTAL
|
$190,635
|
$(12,067)
|
$(58,541)
|
Annual Shareholder Report
10
Other Service Fees
The Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund’s Automated Shares, Institutional Shares and Service Shares to unaffiliated financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for other service fees. In addition, unaffiliated third-party financial intermediaries may waive other service fees. This waiver can be modified or terminated at any time. For the year ended July 31, 2022, other service fees for the Fund were as follows:
|
|
Other Service
Fees Incurred
|
Other Service
Fees Reimbursed
|
Other Service
Fees Waived by
Unaffiliated Third Parties
|
|
Automated Shares
|
$388,608
|
$(6,792)
|
$(272,064)
|
|
Service Shares
|
7,323,343
|
(47,801)
|
(5,153,165)
|
|
TOTAL
|
$7,711,951
|
$(54,593)
|
$(5,425,229)
|
For the year ended July 31, 2022, the Fund’s Institutional Shares did not incur other service fees; however, it may begin to incur this fee upon approval of the Trustees.
Federal Taxes
It is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code (the “Code”) and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. As of and during the year ended July 31, 2022, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2022, tax years 2019 through 2022 remain subject to examination by the Fund’s major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.
When-Issued and Delayed-Delivery Transactions
The Fund may engage in when-issued or delayed-delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed-delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
Other
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ materially from those estimated. The Fund applies investment company accounting and reporting guidance.
Annual Shareholder Report
11
3. SHARES OF BENEFICIAL INTEREST
The following tables summarize share activity:
|
Year Ended July 31
|
2022
|
2021
|
||
|
Automated Shares
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
265,079,347
|
$265,079,347
|
235,508,877
|
$235,508,877
|
|
Shares issued to shareholders in
payment of distributions declared
|
236,937
|
236,937
|
18,691
|
18,691
|
|
Shares redeemed
|
(213,792,818)
|
(213,792,818)
|
(249,001,474)
|
(249,001,474)
|
|
NET CHANGE RESULTING FROM
AUTOMATED
SHARE TRANSACTIONS
|
51,523,466
|
$51,523,466
|
(13,473,906)
|
$(13,473,906)
|
|
Year Ended July 31
|
2022
|
2021
|
||
|
Institutional Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
10,486,533,291
|
$10,486,533,291
|
11,095,755,149
|
$11,095,755,147
|
|
Shares issued to
shareholders in payment of
distributions declared
|
2,115,195
|
2,115,195
|
233,374
|
233,374
|
|
Shares redeemed
|
(10,785,612,159)
|
(10,785,612,159)
|
(11,657,069,766)
|
(11,657,069,766)
|
|
NET CHANGE
RESULTING FROM
INSTITUTIONAL
SHARE TRANSACTIONS
|
(296,963,673)
|
$(296,963,673)
|
(561,081,243)
|
$(561,081,245)
|
|
Year Ended July 31
|
2022
|
2021
|
||
|
Service Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
4,557,972,361
|
$4,557,972,361
|
7,059,965,758
|
$7,059,965,758
|
|
Shares issued to shareholders in
payment of
distributions declared
|
236,562
|
236,562
|
24,942
|
24,942
|
|
Shares redeemed
|
(4,500,258,594)
|
(4,500,258,594)
|
(7,185,327,743)
|
(7,185,327,743)
|
|
NET CHANGE RESULTING
FROM SERVICE
SHARE TRANSACTIONS
|
57,950,329
|
$57,950,329
|
(125,337,043)
|
$(125,337,043)
|
|
NET CHANGE RESULTING
FROM TOTAL FUND
SHARE TRANSACTIONS
|
(187,489,878)
|
$(187,489,878)
|
(699,892,192)
|
$(699,892,194)
|
Annual Shareholder Report
12
4. FEDERAL TAX INFORMATION
The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2022 and 2021, was as follows:
|
|
2022
|
2021
|
|
Ordinary income1
|
$12,923,904
|
$1,028,692
|
|
Long-term capital gains
|
$—
|
$3,195
|
1
For tax purposes, short-term capital gain distributions are considered ordinary income distributions.
As of July 31, 2022, the components of distributable earnings on a tax-basis were as follows:
|
Distributions payable
|
$(4,831)
|
|
Net unrealized depreciation
|
$(10,547)
|
|
Capital loss carryforwards
|
$(54,301)
|
The difference between book-basis and tax-basis net unrealized depreciation is attributable to the differing treatments for wash sales.
At July 31, 2022, the cost of investments for federal tax purposes was $7,357,914,911. The net unrealized depreciation of investments for federal tax purposes was $10,547. This consists entirely of net unrealized depreciation from investments for those securities having an excess of cost over value of $10,547.
As of July 31, 2022, the Fund had a capital loss carryforward of $54,301 which will reduce the Fund’s taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code, thereby reducing the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, these net capital losses retain their character as either short-term or long-term and do not expire.
The following schedule summarizes the Fund’s capital loss carryforwards:
|
Short-Term
|
Long-Term
|
Total
|
|
$54,301
|
$—
|
$54,301
|
5. Investment adviser fee and other transactions with affiliates
Investment Adviser Fee
The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.20% of the Fund’s average daily net assets. Subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund for competitive reasons such as to maintain the Fund’s expense ratio, or as and when appropriate, to maintain positive or zero net yields. For the year ended July 31, 2022, the Adviser voluntarily waived $10,455,365 of its fee. In addition, the Adviser voluntarily reimbursed $12,067 and $1,103,100 of transfer agent fees and other operating expenses, respectively.
Annual Shareholder Report
13
Administrative Fee
Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated Hermes Funds subject to a fee under the Administrative Services Agreement. The fee paid to FAS is based on the average daily net assets of the Investment Complex as specified below:
|
Administrative Fee
|
Average Daily Net Assets
of the Investment Complex
|
|
0.100%
|
on assets up to $50 billion
|
|
0.075%
|
on assets over $50 billion
|
Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2022, the annualized fee paid to FAS was 0.078% of average daily net assets of the Fund.
In addition, FAS may charge certain out-of-pocket expenses to the Fund.
Expense Limitation
Due to the possibility of changes in market conditions and other factors, there can be no assurance that the level of waiver/reimbursement/reduction of Fund expenses reflected in the financial highlights will be maintained in the future. However, the Adviser and certain of its affiliates (which may include FAS and FSSC) on their own initiative have agreed to waive certain amounts of their respective fees and/or reimburse expenses. Total annual fund operating expenses (as shown in the financial highlights, excluding interest expense, extraordinary expenses and proxy-related expenses paid by the Fund, if any) paid by the Fund’s Automated Shares, Institutional Shares and Service Shares (after the voluntary waivers and reimbursements) will not exceed 0.55%, 0.20% and 0.45% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) October 1, 2023; or (b) the date of the Fund’s next effective Prospectus. While the Adviser and its applicable affiliates currently do not anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or the Fee Limit increased prior to the Termination Date with the agreement of the Trustees.
Other Service Fees
For the year ended July 31, 2022, FSSC received $4,668 and reimbursed $54,593 of the other service fees disclosed in Note 2.
Directors’/Trustees’ and Miscellaneous Fees
Certain Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate payment, Independent Directors’/Trustees’ fees and certain expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses are paid by an affiliate of the Adviser which in due course are reimbursed by the Fund. These expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses may be included in Accrued and Miscellaneous Expenses on the Statement of Assets and Liabilities and Statement of Operations, respectively.
Annual Shareholder Report
14
6. INTERFUND LENDING
Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other funds advised by subsidiaries of Federated Hermes, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating affiliated funds. As of July 31, 2022, there were no outstanding loans. During the year ended July 31, 2022, the program was not utilized.
7. Indemnifications
Under the Fund’s organizational documents, its Officers and Directors/Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund (other than liabilities arising out of their willful misfeasance, bad faith, gross negligence or reckless disregard of their duties to the Fund). In addition, in the normal course of business, the Fund provides certain indemnifications under arrangements with third parties. Typically, obligations to indemnify a third party arise in the context of an arrangement entered into by the Fund under which the Fund agrees to indemnify such third party for certain liabilities arising out of actions taken pursuant to the arrangement, provided the third party’s actions are not deemed to have breached an agreed-upon standard of care (such as willful misfeasance, bad faith, gross negligence or reckless disregard of their duties under the contract). The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet arisen. The Fund does not anticipate any material claims or losses pursuant to these arrangements at this time, and accordingly expects the risk of loss to be remote.
8. Other Matters
An outbreak of respiratory disease caused by a novel coronavirus was first detected in China in late 2019 and subsequently spread globally. As of the date of the issuance of these financial statements, this coronavirus has resulted in closing borders, enhanced health screenings, disruptions to healthcare service preparation and delivery, quarantines, cancellations, and disruptions to supply chains, workflow operations and consumer activity, as well as general concern and uncertainty. The impact of this coronavirus may continue for an extended period of time and has resulted in substantial economic volatility. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could continue to negatively affect the worldwide economy, as well as the economies of individual countries, individual companies, (including certain Fund service providers and issuers of the Fund’s investments) and the markets in general in significant and unforeseen ways. Any such impact could adversely affect the Fund’s performance.
9. FEDERAL TAX INFORMATION (UNAUDITED)
For the year ended July 31, 2022, 100% of the dividends paid by the Fund are interest related dividends as provided by the American Jobs Creation Act of 2004.
Annual Shareholder Report
15
Report of Independent Registered Public Accounting Firm
To The Board of Trustees of Federated hermes Money Market Obligations Trust and the Shareholders of Federated Hermes Government Obligations Tax-Managed Fund:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of the Federated Hermes Government Obligations Tax-Managed Fund (the “Fund”), a portfolio of Federated Hermes Money Market Obligations Trust, including the portfolio of investments, as of July 31, 2022, the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the related notes (collectively, the “financial statements”) and the financial highlights for each of the years in the five-year period then ended. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of July 31, 2022, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
Annual Shareholder Report
16
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Such procedures also included confirmation of securities owned as of July 31, 2022, by correspondence with custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of Federated Hermes’ investment companies since 2006.
Boston, Massachusetts
September 23, 2022
September 23, 2022
Annual Shareholder Report
17
Shareholder Expense Example (unaudited)
As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or other service fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2022 to July 31, 2022.
ACTUAL EXPENSES
The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses attributable to your investment during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Annual Shareholder Report
18
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
|
|
Beginning
Account Value
2/1/2022
|
Ending
Account Value
7/31/2022
|
Expenses Paid
During Period1
|
|
Actual:
|
$1,000
|
$1,002.20
|
$0.94
|
|
Hypothetical (assuming a 5% return
before expenses):
|
$1,000
|
$1,023.85
|
$0.95
|
1
Expenses are equal to the Fund’s Institutional Shares annualized net expense ratio of 0.19%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half-year period).
Annual Shareholder Report
19
Board of Trustees and Trust Officers
The Board of Trustees is responsible for managing the Trust’s business affairs and for exercising all the Trust’s powers except those reserved for the shareholders. The following tables give information about each Trustee and the senior officers of the Fund. Where required, the tables separately list Trustees who are “interested persons” of the Fund (i.e., “Interested” Trustees) and those who are not (i.e., “Independent” Trustees). Unless otherwise noted, the address of each person listed is 1001 Liberty Avenue, Pittsburgh, PA 15222-3779. The address of all Independent Trustees listed is 4000 Ericsson Drive, Warrendale, PA 15086-7561; Attention: Mutual Fund Board. As of December 31, 2021, the Trust comprised 16 portfolio(s), and the Federated Hermes Fund Family consisted of 33 investment companies (comprising 102 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Trustee oversees all portfolios in the Federated Hermes Fund Family and serves for an indefinite term. The Fund’s Statement of Additional Information includes additional information about Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400, Option #4.
Interested TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
J. Christopher Donahue*
Birth Date: April 11, 1949
President and Trustee
Indefinite Term
Began serving: April 1989
|
Principal Occupations: Principal Executive Officer and President of
certain of the Funds in the Federated Hermes Fund Family; Director or
Trustee of the Funds in the Federated Hermes Fund Family; President,
Chief Executive Officer and Director, Federated Hermes, Inc.;
Chairman and Trustee, Federated Investment Management Company;
Trustee, Federated Investment Counseling; Chairman and Director,
Federated Global Investment Management Corp.; Chairman and
Trustee, Federated Equity Management Company of Pennsylvania;
Trustee, Federated Shareholder Services Company; Director,
Federated Services Company.
Previous Positions: President, Federated Investment Counseling;
President and Chief Executive Officer, Federated Investment
Management Company, Federated Global Investment Management
Corp. and Passport Research, Ltd; Chairman, Passport Research, Ltd.
|
Annual Shareholder Report
20
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
Thomas R. Donahue*
Birth Date: October 20, 1958
Trustee
Indefinite Term
Began serving: May 2016
|
Principal Occupations: Director or Trustee of certain of the funds in
the Federated Hermes Fund Family; Chief Financial Officer, Treasurer,
Vice President and Assistant Secretary, Federated Hermes, Inc.;
Chairman and Trustee, Federated Administrative Services; Chairman
and Director, Federated Administrative Services, Inc.; Trustee and
Treasurer, Federated Advisory Services Company; Director or Trustee
and Treasurer, Federated Equity Management Company of
Pennsylvania, Federated Global Investment Management Corp.,
Federated Investment Counseling, and Federated Investment
Management Company; Director, MDTA LLC; Director, Executive Vice
President and Assistant Secretary, Federated Securities Corp.;
Director or Trustee and Chairman, Federated Services Company and
Federated Shareholder Services Company; and Director and
President, FII Holdings, Inc.
Previous Positions: Director, Federated Hermes, Inc.; Assistant
Secretary, Federated Investment Management Company, Federated
Global Investment Management Company and Passport Research,
LTD; Treasurer, Passport Research, LTD; Executive Vice President,
Federated Securities Corp.; and Treasurer, FII Holdings, Inc.
|
*
Family relationships and reasons for “interested” status: J. Christopher Donahue and Thomas R. Donahue are brothers. Both are “interested” due to their beneficial ownership of shares of Federated Hermes, Inc. and the positions they hold with Federated Hermes, Inc. and its subsidiaries.
INDEPENDENT TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
John T. Collins
Birth Date: January 24, 1947
Trustee
Indefinite Term
Began serving:
September 2013
|
Principal Occupations: Director or Trustee, and Chair of the Board
of Directors or Trustees, of the Federated Hermes Fund Family;
formerly, Chairman and CEO, The Collins Group, Inc. (a private equity
firm) (Retired).
Other Directorships Held: Director, KLX Energy Services Holdings,
Inc. (oilfield services); former Director of KLX Corp. (aerospace).
Qualifications: Mr. Collins has served in several business and financial
management roles and directorship positions throughout his career.
Mr. Collins previously served as Chairman and CEO of The Collins
Group, Inc. (a private equity firm) and as a Director of KLX Corp.
Mr. Collins serves as Chairman Emeriti, Bentley University. Mr. Collins
previously served as Director and Audit Committee Member, Bank of
America Corp.; Director, FleetBoston Financial Corp.; and Director,
Beth Israel Deaconess Medical Center (Harvard University
Affiliate Hospital).
|
Annual Shareholder Report
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|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
G. Thomas Hough
Birth Date: February 28, 1955
Trustee
Indefinite Term
Began serving: August 2015
|
Principal Occupations: Director or Trustee, Chair of the Audit
Committee of the Federated Hermes Fund Family; formerly, Vice
Chair, Ernst & Young LLP (public accounting firm) (Retired).
Other Directorships Held: Director, Chair of the Audit Committee,
Equifax, Inc.; Lead Director, Member of the Audit and Nominating and
Corporate Governance Committees, Haverty Furniture Companies,
Inc.; formerly, Director, Member of Governance and Compensation
Committees, Publix Super Markets, Inc.
Qualifications: Mr. Hough has served in accounting, business
management and directorship positions throughout his career.
Mr. Hough most recently held the position of Americas Vice Chair of
Assurance with Ernst & Young LLP (public accounting firm). Mr. Hough
serves on the President’s Cabinet and Business School Board of
Visitors for the University of Alabama. Mr. Hough previously served on
the Business School Board of Visitors for Wake Forest University, and
he previously served as an Executive Committee member of the
United States Golf Association.
|
|
Maureen Lally-Green
Birth Date: July 5, 1949
Trustee
Indefinite Term
Began serving: August 2009
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Adjunct Professor Emerita of Law, Duquesne University
School of Law; formerly, Dean of the Duquesne University School of
Law and Professor of Law and Interim Dean of the Duquesne
University School of Law; formerly, Associate General Secretary and
Director, Office of Church Relations, Diocese of Pittsburgh.
Other Directorships Held: Director, CNX Resources Corporation
(formerly known as CONSOL Energy Inc.).
Qualifications: Judge Lally-Green has served in various legal and
business roles and directorship positions throughout her career. Judge
Lally-Green previously held the position of Dean of the School of Law
of Duquesne University (as well as Interim Dean). Judge Lally-Green
previously served as a member of the Superior Court of Pennsylvania
and as a Professor of Law, Duquesne University School of Law. Judge
Lally-Green was appointed by the Supreme Court of Pennsylvania to
serve on the Supreme Court’s Board of Continuing Judicial Education
and the Supreme Court’s Appellate Court Procedural Rules
Committee. Judge Lally-Green also currently holds the positions on
not for profit or for profit boards of directors as follows: Director
and Chair, UPMC Mercy Hospital; Regent, Saint Vincent Seminary;
Member, Pennsylvania State Board of Education (public); Director,
Catholic Charities, Pittsburgh; and Director CNX Resources
Corporation (formerly known as CONSOL Energy Inc.). Judge
Lally-Green has held the positions of: Director, Auberle; Director,
Epilepsy Foundation of Western and Central Pennsylvania; Director,
Ireland Institute of Pittsburgh; Director, Saint Thomas More Society;
Director and Chair, Catholic High Schools of the Diocese of
Pittsburgh, Inc.; Director, Pennsylvania Bar Institute; Director,
St. Vincent College; Director and Chair, North Catholic High
School, Inc.; Director and Vice Chair, Our Campaign for the Church
Alive!, Inc.; and Director, Saint Francis University.
|
Annual Shareholder Report
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|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
Thomas M. O’Neill
Birth Date: June 14, 1951
Trustee
Indefinite Term
Began serving: August 2006
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Sole Proprietor, Navigator Management Company
(investment and strategic consulting).
Other Directorships Held: None.
Qualifications: Mr. O’Neill has served in several business, mutual fund
and financial management roles and directorship positions throughout
his career. Mr. O’Neill serves as Director, Medicines for Humanity.
Mr. O’Neill previously served as Chief Executive Officer and President,
Managing Director and Chief Investment Officer, Fleet Investment
Advisors; President and Chief Executive Officer, Aeltus Investment
Management, Inc.; General Partner, Hellman, Jordan Management
Co., Boston, MA; Chief Investment Officer, The Putnam Companies,
Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director
and Consultant, EZE Castle Software (investment order management
software); Director, The Golisano Children’s Museum of Naples,
Florida; and Director, Midway Pacific (lumber).
|
|
Madelyn A. Reilly
Birth Date: February 2, 1956
Trustee
Indefinite Term
Began serving:
November 2020
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; formerly, Executive Vice President for Legal Affairs,
General Counsel and Secretary to the Board of Directors, Duquesne
University (Retired).
Other Directorships Held: None.
Qualifications: Ms. Reilly has served in various business and legal
management roles throughout her career. Ms. Reilly previously served
as Senior Vice President for Legal Affairs, General Counsel and
Secretary to the Board of Directors and Assistant General Counsel and
Director of Risk Management, Duquesne University. Prior to her work
at Duquesne University, Ms. Reilly served as Assistant General
Counsel of Compliance and Enterprise Risk as well as Senior Counsel
of Environment, Health and Safety, PPG Industries. Ms. Reilly currently
serves as a member of the Board of Directors of UPMC
Mercy Hospital.
|
Annual Shareholder Report
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|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
P. Jerome Richey
Birth Date: February 23, 1949
Trustee
Indefinite Term
Began serving:
September 2013
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Management Consultant; Retired; formerly, Senior Vice
Chancellor and Chief Legal Officer, University of Pittsburgh and
Executive Vice President and Chief Legal Officer, CONSOL Energy Inc.
(now split into two separate publicly traded companies known as
CONSOL Energy Inc. and CNX Resources Corp.).
Other Directorships Held: None.
Qualifications: Mr. Richey has served in several business and legal
management roles and directorship positions throughout his career.
Mr. Richey most recently held the positions of Senior Vice Chancellor
and Chief Legal Officer, University of Pittsburgh. Mr. Richey previously
served as Chairman of the Board, Epilepsy Foundation of Western
Pennsylvania and Chairman of the Board, World Affairs Council of
Pittsburgh. Mr. Richey previously served as Chief Legal Officer and
Executive Vice President, CONSOL Energy Inc. and CNX Gas
Company; and Board Member, Ethics Counsel and Shareholder,
Buchanan Ingersoll & Rooney PC (a law firm).
|
|
John S. Walsh
Birth Date:
November 28, 1957
Trustee
Indefinite Term
Began serving: January 1999
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; President and Director, Heat Wagon, Inc. (manufacturer
of construction temporary heaters); President and Director,
Manufacturers Products, Inc. (distributor of portable construction
heaters); President, Portable Heater Parts, a division of Manufacturers
Products, Inc.
Other Directorships Held: None.
Qualifications: Mr. Walsh has served in several business management
roles and directorship positions throughout his career. Mr. Walsh
previously served as Vice President, Walsh & Kelly, Inc.
(paving contractors).
|
Annual Shareholder Report
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OFFICERS
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Lori A. Hensler
Birth Date: January 6, 1967
TREASURER
Officer since: April 2013
|
Principal Occupations: Principal Financial Officer and Treasurer of the
Federated Hermes Fund Family; Senior Vice President, Federated
Administrative Services; Financial and Operations Principal for
Federated Securities Corp.; and Assistant Treasurer, Federated
Investors Trust Company. Ms. Hensler has received the Certified
Public Accountant designation.
Previous Positions: Controller of Federated Hermes, Inc.; Senior Vice
President and Assistant Treasurer, Federated Investors Management
Company; Treasurer, Federated Investors Trust Company; Assistant
Treasurer, Federated Administrative Services, Federated
Administrative Services, Inc., Federated Securities Corp., Edgewood
Services, Inc., Federated Advisory Services Company, Federated
Equity Management Company of Pennsylvania, Federated Global
Investment Management Corp., Federated Investment Counseling,
Federated Investment Management Company, Passport Research,
Ltd., and Federated MDTA, LLC; Financial and Operations Principal for
Federated Securities Corp., Edgewood Services, Inc. and Southpointe
Distribution Services, Inc.
|
|
Peter J. Germain
Birth Date:
September 3, 1959
CHIEF LEGAL OFFICER,
SECRETARY and EXECUTIVE
VICE PRESIDENT
Officer since: January 2005
|
Principal Occupations: Mr. Germain is Chief Legal Officer, Secretary
and Executive Vice President of the Federated Hermes Fund Family.
He is General Counsel, Chief Legal Officer, Secretary and Executive
Vice President, Federated Hermes, Inc.; Trustee and Senior Vice
President, Federated Investors Management Company; Trustee and
President, Federated Administrative Services; Director and President,
Federated Administrative Services, Inc.; Director and Vice President,
Federated Securities Corp.; Director and Secretary, Federated Private
Asset Management, Inc.; Secretary, Federated Shareholder Services
Company; and Secretary, Retirement Plan Service Company of
America. Mr. Germain joined Federated Hermes, Inc. in 1984 and is a
member of the Pennsylvania Bar Association.
Previous Positions: Deputy General Counsel, Special Counsel,
Managing Director of Mutual Fund Services, Federated Hermes, Inc.;
Senior Vice President, Federated Services Company; and Senior
Corporate Counsel, Federated Hermes, Inc.
|
|
Stephen Van Meter
Birth Date: June 5, 1975
CHIEF COMPLIANCE
OFFICER AND SENIOR VICE
PRESIDENT
Officer since: July 2015
|
Principal Occupations: Senior Vice President and Chief Compliance
Officer of the Federated Hermes Fund Family; Vice President and
Chief Compliance Officer of Federated Hermes, Inc. and Chief
Compliance Officer of certain of its subsidiaries. Mr. Van Meter joined
Federated Hermes, Inc. in October 2011. He holds FINRA licenses
under Series 3, 7, 24 and 66.
Previous Positions: Mr. Van Meter previously held the position of
Compliance Operating Officer, Federated Hermes, Inc. Prior to joining
Federated Hermes, Inc., Mr. Van Meter served at the United States
Securities and Exchange Commission in the positions of Senior
Counsel, Office of Chief Counsel, Division of Investment Management
and Senior Counsel, Division of Enforcement.
|
Annual Shareholder Report
25
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Deborah A. Cunningham
Birth Date:
September 15, 1959
CHIEF INVESTMENT OFFICER
Officer since: May 2004
|
Principal Occupations: Deborah A. Cunningham was named Chief
Investment Officer of Federated Hermes’ money market products in
2004. She joined Federated Hermes in 1981 and has been a Senior
Portfolio Manager since 1997 and an Executive Vice President of the
Fund’s Adviser since 2009. Ms. Cunningham has received the
Chartered Financial Analyst designation and holds an M.S.B.A. in
Finance from Robert Morris College.
|
Annual Shareholder Report
26
Evaluation and Approval of Advisory Contract–May 2022
Federated Hermes Government Obligations Tax-Managed Fund (the “Fund”)
At its meetings in May 2022 (the “May Meetings”), the Fund’s Board of Trustees (the “Board”), including those Trustees who are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940 (the “Independent Trustees”), reviewed and unanimously approved the continuation of the investment advisory contract between the Fund and Federated Investment Management Company (the “Adviser”) (the “Contract”) for an additional one-year term. The Board’s determination to approve the continuation of the Contract reflects the exercise of its business judgment after considering all of the information and factors believed to be relevant and appropriate on whether to approve the continuation of the existing arrangement. The information, factors and conclusions that formed the basis for the Board’s approval are summarized below.
Information Received and Review Process
At the request of the Independent Trustees, the Fund’s Chief Compliance Officer (the “CCO”) furnished to the Board in advance of its May Meetings an independent written evaluation presenting on the topics discussed below. The Board considered the CCO’s independent written evaluation (the “CCO Fee Evaluation Report”), along with other information, in evaluating the reasonableness of the Fund’s management fee and in determining to approve the continuation of the Contract. The CCO, in preparing the CCO Fee Evaluation Report, has the authority to retain consultants, experts or staff as reasonably necessary to assist in the performance of his duties, reports directly to the Board, and can be terminated only with the approval of a majority of the Independent Trustees. At the request of the Independent Trustees, the CCO Fee Evaluation Report followed the same general approach and covered the same topics as that of the report that had previously been delivered by the CCO in his capacity as “Senior Officer” prior to the elimination of the Senior Officer position in December 2017.
In addition to the extensive materials that comprise and accompany the CCO Fee Evaluation Report, the Board considered information specifically prepared in connection with the approval of the continuation of the Contract that was presented at the May Meetings. In this regard, in the months preceding the May Meetings, the Board requested and reviewed written responses and supporting materials prepared by the Adviser and its affiliates (collectively, “Federated Hermes”) in response to requests posed to Federated Hermes by independent legal counsel on behalf of the Independent Trustees encompassing a wide variety of topics, including those summarized below. The Board also considered such additional matters as the Independent Trustees deemed
Annual Shareholder Report
27
reasonably necessary to evaluate the Contract, which included detailed information about the Fund and Federated Hermes furnished to the Board at its meetings throughout the year and in between regularly scheduled meetings on particular matters as the need arose.
The Board’s consideration of the Contract included review of materials and information covering the following matters, among others: the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates; Federated Hermes’ business and operations; the Adviser’s investment philosophy, personnel and processes; the Fund’s investment objectives and strategies; the Fund’s short-term and long-term performance (in absolute terms, both on a gross basis and net of expenses, and relative to the Fund’s particular investment program and a group of its peer funds and/or its benchmark, as appropriate); the Fund’s investment objectives; the Fund’s fees and expenses, including the advisory fee and the overall expense structure of the Fund (both in absolute terms and relative to a group of its peer funds), with due regard for contractual or voluntary expense limitations (if any); the financial condition of Federated Hermes; the Adviser’s profitability with respect to the Fund; distribution and sales activity for the Fund; and the use and allocation of brokerage commissions derived from trading the Fund’s portfolio securities (if any).
The Board also considered judicial decisions concerning allegedly excessive investment advisory fees charged to other registered funds in determining to approve the Contract. Using these judicial decisions as a guide, the Board observed that the following factors may be relevant to an adviser’s fiduciary duty with respect to its receipt of compensation from a fund: (1) the nature and quality of the services provided by the adviser to the fund and its shareholders, including the performance of the fund, its benchmark and comparable funds; (2) the adviser’s cost of providing the services and the profitability to the adviser of providing advisory services to the fund; (3) the extent to which the adviser may realize “economies of scale” as the fund grows larger and, if such economies of scale exist, whether they have been appropriately shared with the fund and its shareholders or the family of funds; (4) any “fall-out” benefits that accrue to the adviser because of its relationship with the fund, including research services received from brokers that execute fund trades and any fees paid to affiliates of the adviser for services rendered to the fund; (5) comparative fee and expense structures, including a comparison of management fees paid to the adviser with those paid by similar funds both internally and externally as well as management fees charged to institutional and other advisory clients of the adviser for what might be viewed as like services; and (6) the extent of care, conscientiousness and independence with which the fund’s board members perform their duties and their expertise, including whether they are fully informed about all facts the board deems relevant to its consideration of the adviser’s services and fees. The Board noted that the Securities and Exchange Commission (“SEC”) disclosure requirements
Annual Shareholder Report
28
regarding the basis for a fund board’s approval of the fund’s investment advisory contract generally align with the factors listed above. The Board was guided by these factors in its review of the Contract to the extent it considered them to be appropriate and relevant, as discussed further below. The Board considered and weighed these factors in light of its substantial accumulated experience in governing the Fund and working with Federated Hermes on matters relating to the oversight of the other funds advised by Federated Hermes (each, a “Federated Hermes Fund” and, collectively, the (“Federated Hermes Funds”).
In addition to considering the above-referenced factors, the Board was mindful of the preferences and expectations of Fund shareholders and the potential disruptions of the Fund’s operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew the Contract. In particular, the Board recognized that many shareholders likely have invested in the Fund on the strength of Federated Hermes’ industry standing and reputation and with the expectation that Federated Hermes will have a continuing role in providing advisory services to the Fund. Thus, the Board observed that in the marketplace there are a range of investment options available to the Fund’s shareholders and such shareholders, having had the opportunity to consider other investment options, have effectively selected Federated Hermes by virtue of investing in the Fund.
In determining to approve the continuation of the Contract, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the continuation of the Contract was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Contract. The Board recognized that its evaluation process is evolutionary and that the factors considered and emphasis placed on relevant factors may change in recognition of changing circumstances in the registered fund marketplace. The Independent Trustees were assisted throughout the evaluation process by independent legal counsel. In connection with their deliberations at the May Meetings, the Independent Trustees met separately in executive session with their independent legal counsel and without management present to review the relevant materials and consider their responsibilities under applicable laws. In addition, senior management representatives of Federated Hermes also met with the Independent Trustees and their independent legal counsel to discuss the materials and presentations furnished to the Board at the May Meetings. The Board considered the approval of the Contract for the Fund as part of its consideration of agreements for funds across the family of Federated Hermes Funds, but its approvals were made on a fund-by-fund basis.
Annual Shareholder Report
29
Nature, Extent and Quality of Services
The Board considered the nature, extent and quality of the services provided to the Fund by the Adviser and the resources of Federated Hermes dedicated to the Fund. In this regard, the Board evaluated, among other things, the terms of the Contract and the range of services provided to the Fund by Federated Hermes. The Board considered the Adviser’s personnel, investment philosophy and process, investment research capabilities and resources, trade operations capabilities, experience and performance track record. The Board reviewed the qualifications, backgrounds and responsibilities of the portfolio management team primarily responsible for the day-to-day management of the Fund and Federated Hermes’ ability and experience in attracting and retaining qualified personnel to service the Fund. In addition, the Board noted that the Fund is a money market mutual fund that operates in accordance with the limitations set forth in Rule 2a-7 under the 1940 Act. In this connection, the Board considered the expertise of the Adviser in managing money market funds, its extensive experience with the requirements of Rule 2a-7 and its commitment to managing the Fund in accordance with these requirements. The Board also considered the Adviser’s ability to deliver competitive investment performance for the Fund when compared to the Fund’s Performance Peer Group (as defined below), which was deemed by the Board to be a useful indicator of how the Adviser is executing the Fund’s investment program. The Board also considered the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, in order to maintain a positive yield for the Fund in the low interest rate environment.
In addition, the Board considered the financial resources and overall reputation of Federated Hermes and its willingness to consider and make investments in personnel, infrastructure, technology, cybersecurity, business continuity planning and operational enhancements that are designed to benefit the Federated Hermes Funds. The Board noted the significant acquisition of Hermes Fund Managers Limited by Federated Hermes, which has deepened the organization’s investment management expertise and capabilities and expanded the investment process for all of the Federated Hermes Funds to have access to analytical resources related to environmental, social and governance (“ESG”) factors and issuer engagement on ESG matters. The Board considered the quality of Federated Hermes’ communications with the Board and responsiveness to Board inquiries and requests made from time to time with respect to the Fund and other Federated Hermes Funds. In this regard, the Board took into account Federated Hermes’ communications with the Board in light of the pandemic. The Board also considered that Federated Hermes is responsible for providing the Federated Hermes Funds’ officers.
The Board received and evaluated information regarding Federated Hermes’ regulatory and compliance environment. The Board considered Federated Hermes’ compliance program and compliance history and reports from the CCO about Federated Hermes’ compliance with applicable laws and
Annual Shareholder Report
30
regulations, including responses to regulatory developments and any compliance or other issues raised by regulatory agencies. The Board also noted Federated Hermes’ support of the Federated Hermes Funds’ compliance control structure and the compliance-related resources devoted by Federated Hermes in support of the Fund’s obligations pursuant to Rule 38a-1 under the Investment Company Act of 1940, including Federated Hermes’ commitment to respond to rulemaking and other regulatory initiatives of the SEC. The Board considered Federated Hermes’ approach to internal audits and risk management with respect to the Federated Hermes Funds and its day-to-day oversight of the Federated Hermes Funds’ compliance with their investment objectives and policies as well as with applicable laws and regulations, noting that regulatory and other developments had over time led to an increase in the scope of Federated Hermes’ oversight in this regard, including in connection with the designation of the Federated Hermes Funds’ investment advisers as the administrators of the Federated Hermes Funds’ liquidity risk management program.
The Board also considered the implementation of Federated Hermes’ business continuity plans and recognized steps taken by Federated Hermes to continue to provide the same nature, extent and quality of services to the Federated Hermes Funds during the pandemic. In addition, the Board noted Federated Hermes’ commitment to maintaining high quality systems and expending substantial resources to prepare for and respond to ongoing changes due to the market, regulatory and control environments in which the Fund and its service providers operate, including changes associated with the pandemic.
The Board considered Federated Hermes’ efforts to provide shareholders in the Federated Hermes Funds with a comprehensive array of funds with different investment objectives, policies and strategies. The Board considered the expenses that Federated Hermes had incurred, as well as the entrepreneurial and other risks assumed by Federated Hermes, in sponsoring and providing on-going services to new funds to expand these opportunities for shareholders. The Board noted the benefits to shareholders of being part of the family of Federated Hermes Funds, which include the general right to exchange investments between the same class of shares without the incurrence of additional sales charges.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided by the Adviser to the Fund.
Fund Investment Performance
The Board considered the investment performance of the Fund. In evaluating the Fund’s investment performance, the Board considered performance results in light of the Fund’s investment objective, strategies and risks. The Board considered detailed investment reports on, and the Adviser’s analysis of, the Fund’s performance over different time periods that were
Annual Shareholder Report
31
provided to the Board throughout the year and in connection with the May Meetings. These reports include, among other items, information on the Fund’s gross and net returns, the Fund’s investment performance compared to one or more relevant categories or groups of peer funds and the Fund’s benchmark index, performance attribution information and commentary on the effect of market conditions.
The Board also reviewed comparative information regarding the performance of other registered funds in the category of peer funds selected by iMoneyNet, an independent fund ranking organization (the “Performance Peer Group”). The Board noted the CCO’s view that comparisons to fund peer groups may be helpful, though not conclusive, in evaluating the performance of the Adviser in managing the Fund. The Board considered, in evaluating such comparisons, that in some cases there may be differences in the funds’ objectives or investment management techniques, or the costs to implement the funds, even within the same Performance Peer Group.
For the one-year period ended December 31, 2021, the Fund’s performance was above the median of the Performance Peer Group. The Board also considered the relatively tight dispersion of performance data with respect to the Fund and its Performance Peer Group.
Based on these considerations, the Board concluded that it had continued confidence in the Adviser’s overall capabilities to manage the Fund.
Fund Expenses
The Board considered the advisory fee and overall expense structure of the Fund and the comparative fee and expense information that had been provided in connection with the May Meetings. In this regard, the Board was presented with, and considered, information regarding the contractual advisory fee rates, net advisory fee rates, total expense ratios and each element of the Fund’s total expense ratio (i.e., gross and net advisory fees, administrative fees, custody fees, portfolio accounting fees and transfer agency fees) relative to an appropriate group of peer funds compiled by Federated Hermes from the category of peer funds selected by iMoneyNet (the “Expense Peer Group”). The Board received a description of the methodology used to select the Expense Peer Group from the overall iMoneyNet category. The Board also reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall iMoneyNet category.
While mindful that courts have cautioned against giving too much weight to comparative information concerning fees charged by other advisers for managing funds with comparable investment programs, the Board noted that it found the use of such comparisons to be relevant to its evaluation. The Board focused on comparisons with other similar registered funds more heavily than non-registered fund products or services because such comparisons are believed to be more relevant. The Board considered that other registered funds are the products most like the Fund, in that they are readily available to Fund
Annual Shareholder Report
32
shareholders as alternative investment vehicles, and they are the type of investment vehicle, in fact, chosen and maintained by the Fund’s shareholders. The Board noted that the range of such other registered funds’ fees and expenses, therefore, appears to be a relevant indicator of what investors have found to be reasonable in the marketplace in which the Fund competes.
The Board reviewed the contractual advisory fee rate, net advisory fee rate and other expenses of the Fund and noted the position of the Fund’s fee rates relative to its Expense Peer Group. In this regard, the Board noted that the contractual advisory fee rate was above the median of the Expense Peer Group, but the Board noted the applicable waivers and reimbursements, and that the overall expense structure of the Fund remained competitive in the context of other factors considered by the Board.
The Board also received and considered information about the fees charged by Federated Hermes for providing advisory services to other types of clients with investment strategies similar to those of the Federated Hermes Funds, including non-registered fund clients (such as institutional separate accounts) and third-party unaffiliated registered funds for which the Adviser or its affiliates serve as sub-adviser. The Board noted the CCO’s conclusion that non-registered fund clients are inherently different products due to the following differences, among others: (i) different types of targeted investors; (ii) different applicable laws and regulations; (iii) different legal structures; (iv) different average account sizes and portfolio management techniques made necessary by different cash flows and different associated costs; (v) the time spent by portfolio managers and their teams (among other personnel across various departments, including legal, compliance and risk management) in reviewing securities pricing and fund liquidity; (vi) different administrative responsibilities; (vii) different degrees of risk associated with management; and (viii) a variety of different costs. The Board also considered information regarding the differences in the nature of the services required for Federated Hermes to manage its proprietary registered fund business versus managing a discrete pool of assets as a sub-adviser to another institution’s registered fund, noting the CCO’s view that Federated Hermes generally performs significant additional services and assumes substantially greater risks in managing the Fund and other Federated Hermes Funds than in its role as sub-adviser to an unaffiliated third-party registered fund. The Board noted that the CCO did not consider the fees for providing advisory services to other types of clients to be determinative in judging the appropriateness of the Federated Hermes Funds’ advisory fees.
Based on these considerations, the Board concluded that the fees and total operating expenses of the Fund, in conjunction with other matters considered, are reasonable in light of the services provided.
Annual Shareholder Report
33
Profitability
The Board received and considered profitability information furnished by Federated Hermes, as requested by the CCO. Such profitability information included revenues reported on a fund-by-fund basis and estimates of the allocation of expenses made on a fund-by-fund basis, using allocation methodologies specified by the CCO and described to the Board. The Board considered the CCO’s view that, while these cost allocation reports apply consistent allocation processes, the inherent difficulties in allocating costs on a fund-by-fund basis continues to cause the CCO to question the precision of the process and to conclude that such reports may be unreliable because a single change in an allocation estimate may dramatically alter the resulting estimate of cost and/or profitability of a Federated Hermes Fund and may produce unintended consequences. In addition, the Board considered the CCO’s view that the allocation methodologies used by Federated Hermes in estimating profitability for purposes of reporting to the Board in connection with the continuation of the Contract are consistent with the methodologies previously reviewed by an independent consultant. The Board noted that the independent consultant had previously conducted a review of the allocation methodologies and reported that, although there is no single best method to allocate expenses, the methodologies used by Federated Hermes are reasonable. The Board noted the impact of the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, on the profitability of the Fund to the Adviser.
The Board also reviewed information compiled by Federated Hermes comparing its profitability information to other publicly held fund management companies, including information regarding profitability trends over time. The Board considered the CCO’s conclusion that, based on such profitability information, Federated Hermes’ profit margins did not appear to be excessive. The Board also considered the CCO’s view that Federated Hermes appeared financially sound, with the resources necessary to fulfill its obligations under its contracts with the Federated Hermes Funds.
Economies of Scale
The Board received and considered information about the notion of possible realization of “economies of scale” as a fund grows larger, the difficulties of calculating economies of scale at an individual fund level, and the extent to which potential scale benefits are shared with shareholders. In this regard, the Board considered that Federated Hermes has made significant and long-term investments in areas that support all of the Federated Hermes Funds, such as: personnel, processes and tools for portfolio management, including the use of market data on which portfolio managers make investment decisions; trading operations; ESG integration and issuer engagement on ESG matters; shareholder services; compliance; business continuity; cybersecurity; internal audit and risk management functions; and technology that supports the provision of investment management services. The Board noted that Federated
Annual Shareholder Report
34
Hermes’ investments in these areas are extensive and are designed to provide enhanced services to the Federated Hermes Funds and their shareholders. The Board considered that the benefits of these investments are likely to be shared with the family of Federated Hermes Funds as a whole. In addition, the Board considered that fee waivers and expense reimbursements are another means for potential economies of scale to be shared with shareholders and can provide protection from an increase in expenses if a Federated Hermes Fund’s assets decline. The Board considered that, in order for the Federated Hermes Funds to remain competitive in the marketplace, Federated Hermes has frequently waived fees and/or reimbursed expenses for the Federated Hermes Funds and has disclosed to shareholders and/or reported to the Board its intention to do so (or continue to do so) in the future. The Board also considered Federated Hermes’ reductions in contractual management fees for certain Federated Hermes Funds during the prior year, including in response to the CCO’s recommendations in the prior year’s CCO Fee Evaluation Report, which have resulted in benefits being realized by shareholders.
The Board also considered reports on adviser-paid fees (commonly referred to as “revenue sharing”) that were provided to the Board throughout the year and in connection with the May Meetings. The Board considered that Federated Hermes and the CCO believe that this information should be viewed to determine if there was an incentive to either not apply breakpoints, or to apply breakpoints at higher levels, and should not be viewed to evaluate the reasonableness of advisory fees. The Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which is compounded by the lack of any uniform methodology or pattern with respect to structuring fund advisory fees with breakpoints that serve to reduce the fees as a fund attains a certain size.
Other Benefits
The Board considered information regarding the compensation and other ancillary (or “fall-out”) benefits that Federated Hermes derived from its relationships with the Federated Hermes Funds. The Board noted that, in addition to receiving advisory fees under the Federated Hermes Funds’ investment advisory contracts, Federated Hermes’ affiliates also receive fees for providing other services to the Federated Hermes Funds under separate contracts (e.g., for serving as the Federated Hermes Funds’ administrator and distributor). In this regard, the Board considered that certain of Federated Hermes’ affiliates provide distribution and shareholder services to the Federated Hermes Funds, for which they may be compensated through distribution and servicing fees paid pursuant to Rule 12b-1 plans or otherwise. The Board also received and considered information detailing any indirect benefit that Federated Hermes may derive from its receipt of research services from brokers who execute portfolio trades for the Federated Hermes Funds.
Annual Shareholder Report
35
Conclusions
The Board considered: (i) the CCO’s conclusion that his observations and the information accompanying the CCO Fee Evaluation Report show that the management fee for the Fund is reasonable; and (ii) the CCO’s recommendation that the Board approve the management fee. The Board noted that, under these circumstances, no changes were recommended to, and no objection was raised to the continuation of, the Contract by the CCO. The CCO also recognized that the Board’s evaluation of the Federated Hermes Funds’ advisory and sub-advisory arrangements is a continuing and ongoing process that is informed by the information that the Board requests and receives from management throughout the course of the year and, in this regard, the CCO noted certain items for future reporting to the Board or further consideration by management as the Board continues its ongoing oversight of the Federated Hermes Funds.
On the basis of the information and factors summarized above, among other information and factors deemed relevant by the Board, and the evaluation thereof, the Board, including the Independent Trustees, unanimously voted to approve the continuation of the Contract. The Board based its determination to approve the Contract on the totality of the circumstances and relevant factors and with a view of past and future long-term considerations. Not all of the factors and considerations identified above were necessarily deemed to be relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were deemed to be relevant, the Board’s determination to approve the continuation of the Contract reflects its view that Federated Hermes’ performance and actions provided a satisfactory basis to support the determination to approve the continuation of the existing arrangement.
Annual Shareholder Report
36
Voting Proxies on Fund Portfolio Securities
A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund’s portfolio is available, without charge and upon request, by calling 1-800-341-7400, Option #4. A report on “Form N-PX” of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available via the Proxy Voting Record (Form N-PX) link associated with the Fund and share class name at FederatedInvestors.com/FundInformation. Form N-PX filings are also available at the SEC’s website at sec.gov.
Portfolio Schedule
The Fund files with the SEC a complete schedule of its portfolio holdings as of the close of each month on “Form N-MFP.” Form N-MFP is available on the SEC’s website at sec.gov. You may access Form N-MFP via the link to the Fund and share class name at FederatedInvestors.com.
Annual Shareholder Report
37
You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
This Report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund’s Prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.
Federated Hermes Government Obligations Tax-Managed Fund
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at FederatedInvestors.com
or call 1-800-341-7400.
or call 1-800-341-7400.
Federated Securities Corp., Distributor
CUSIP 60934N856
33517 (9/22)
© 2022 Federated Hermes, Inc.
Annual Shareholder Report
July 31, 2022
|
Share Class | Ticker
|
Institutional | MMPXX
|
Service | MMSXX
|
Capital | MMLXX
|
|
|
Eagle | MMMXX
|
|
|
Federated Hermes Institutional Money Market Management
Fund Established 1974
A Portfolio of Federated Hermes Money Market Obligations Trust
Dear Valued Shareholder,
We are pleased to present the Annual Shareholder Report for your fund covering the period from August 1, 2021 through July 31, 2022. This report includes a complete listing of your fund’s holdings, performance information and financial statements along with other important fund information.
As a global leader in active, responsible investment management, Federated Hermes is guided by our conviction that responsible investing is the best way to create wealth over the long term. The company provides capabilities across a wide range of asset classes to investors around the world.
In addition, FederatedInvestors.com offers quick and easy access to valuable resources that include timely fund updates, economic and market insights from our investment strategists and financial planning tools. You can also access many of those insights by following us on Twitter (@FederatedHermes) and LinkedIn.
Thank you for investing with us. We hope you find this information useful and look forward to keeping you informed.
Sincerely,
J. Christopher Donahue, President
The Fund operates as a “Floating Net Asset Value” Money Market Fund.
The Share Price will fluctuate. It is possible to lose money by investing in the Fund.
The Share Price will fluctuate. It is possible to lose money by investing in the Fund.
Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee
Portfolio of Investments Summary Tables (unaudited)
At July 31, 2022, the Fund’s portfolio composition1 was as follows:
|
Security Type
|
Percentage of
Total Net Assets
|
|
Variable Instruments
|
29.1%
|
|
Commercial Paper
|
21.5%
|
|
Bank Instruments
|
20.1%
|
|
Other Repurchase Agreements and Repurchase Agreement
|
30.1%
|
|
Other Assets and Liabilities—Net2
|
(0.8)%
|
|
TOTAL
|
100%
|
|
1
|
See the Fund’s Prospectus and Statement of Additional Information for a description of these
investments.
|
|
2
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
At July 31, 2022, the Fund’s effective maturity schedule1 was as follows:
|
Securities With an
Effective Maturity of:
|
Percentage of
Total Net Assets
|
|
1-7 Days
|
77.4%2
|
|
8-30 Days
|
5.7%
|
|
31-90 Days
|
11.5%
|
|
91-180 Days
|
2.4%
|
|
181 Days or more
|
3.8%
|
|
Other Assets and Liabilities—Net3
|
(0.8)%
|
|
Total
|
100%
|
|
1
|
Effective maturity is determined in accordance with the requirements of Rule 2a-7 under the
Investment Company Act of 1940, which regulates money market mutual funds.
|
|
2
|
Overnight securities comprised 34.4% of the Fund’s portfolio.
|
|
3
|
Assets, other than investments in securities, less liabilities. See Statement of Assets
and Liabilities.
|
Annual Shareholder Report
1
Portfolio of Investments
July 31, 2022
|
Principal
Amount
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— 29.1%
|
|
|
|
|
Finance - Banking— 23.8%
|
|
|
$ 5,000,000
|
|
Anglesea Funding LLC, (Bank of Nova Scotia, Toronto COL)/(Nordea
Bank Abp COL)/(Societe Generale, Paris COL), 2.460% (SOFR
+0.180%), 8/10/2022
|
$ 5,000,000
|
|
3,500,000
|
|
Anglesea Funding LLC, (Bank of Nova Scotia, Toronto COL)/(Nordea
Bank Abp COL)/(Societe Generale, Paris COL), 2.680% (Overnight
Banking Fund Rate +0.360%), 12/23/2022
|
3,500,000
|
|
2,500,000
|
|
Anglesea Funding LLC, (Bank of Nova Scotia, Toronto COL)/(Nordea
Bank Abp COL)/(Societe Generale, Paris COL), 2.720% (SOFR
+0.440%), 11/18/2022
|
2,500,000
|
|
5,000,000
|
|
ASB Bank Ltd., 2.000% (SOFR +0.470%), 8/2/2022
|
5,001,357
|
|
5,000,000
|
|
Australia & New Zealand Banking Group, Melbourne, 2.430% (SOFR
+0.150%), 8/1/2022
|
4,999,249
|
|
10,000,000
|
|
Bank of Montreal, 2.230% (SOFR +0.700%), 8/1/2022
|
10,003,329
|
|
2,000,000
|
|
Bank of Montreal, 2.430% (SOFR +0.150%), 8/1/2022
|
1,999,151
|
|
5,000,000
|
|
Bank of Montreal, 2.530% (SOFR +0.250%), 8/1/2022
|
4,995,886
|
|
1,500,000
|
|
Bank of Montreal, 2.580% (SOFR +0.300%), 8/1/2022
|
1,496,576
|
|
5,000,000
|
|
Bank of Montreal, 2.840% (SOFR +0.560%), 8/1/2022
|
4,993,837
|
|
5,000,000
|
|
Bank of Montreal, 2.930% (SOFR +0.650%), 8/1/2022
|
5,000,289
|
|
10,000,000
|
|
Bank of Nova Scotia, Toronto, 2.430% (SOFR +0.150%), 8/1/2022
|
9,995,109
|
|
7,500,000
|
|
Bank of Nova Scotia, Toronto, 2.780% (SOFR +0.500%), 8/1/2022
|
7,490,593
|
|
5,000,000
|
|
Bank of Nova Scotia, Toronto, 2.800% (SOFR +0.520%), 8/2/2022
|
5,000,000
|
|
4,000,000
|
|
Bank of Nova Scotia, Toronto, 2.950% (SOFR +0.670%), 8/1/2022
|
3,999,208
|
|
15,000,000
|
|
Canadian Imperial Bank of Commerce, 2.780% (SOFR
+0.500%), 8/1/2022
|
14,978,682
|
|
5,000,000
|
|
Canadian Imperial Bank of Commerce, 2.830% (SOFR
+0.550%), 8/1/2022
|
4,993,459
|
|
3,500,000
|
|
Canadian Imperial Bank of Commerce, 2.920% (SOFR
+0.640%), 8/1/2022
|
3,500,000
|
|
4,500,000
|
|
City Furniture, Inc., (Wells Fargo Bank, N.A. LOC), 2.390%, 8/4/2022
|
4,500,000
|
|
5,000,000
|
|
Collateralized Commercial Paper V Co. LLC, (J.P. Morgan Securities
LLC COL), 2.780% (SOFR +0.500%), 8/1/2022
|
5,001,275
|
|
5,000,000
|
|
Collateralized Commercial Paper V Co. LLC, (J.P. Morgan Securities
LLC COL), 2.830% (SOFR +0.550%), 8/1/2022
|
5,000,000
|
|
5,000,000
|
|
Commonwealth Bank of Australia, 2.710% (SOFR +0.430%), 8/2/2022
|
4,995,375
|
|
5,000,000
|
|
Commonwealth Bank of Australia, 2.780% (SOFR +0.500%), 8/1/2022
|
4,997,332
|
|
5,000,000
|
|
Commonwealth Bank of Australia, 2.820% (SOFR +0.540%), 8/1/2022
|
4,998,130
|
|
10,000,000
|
|
MUFG Bank Ltd., 1.860% (SOFR +0.330%), 8/1/2022
|
10,000,000
|
|
10,000,000
|
|
National Australia Bank Ltd., Melbourne, 2.460% (SOFR
+0.180%), 8/2/2022
|
10,000,000
|
|
10,000,000
|
|
Nordea Bank Abp, 1.680% (SOFR +0.150%), 8/1/2022
|
10,000,000
|
Annual Shareholder Report
2
|
Principal
Amount
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 10,000,000
|
|
Nordea Bank Abp, 1.690% (SOFR +0.160%), 8/1/2022
|
$ 10,000,000
|
|
10,000,000
|
|
Nordea Bank Abp, 2.080% (SOFR +0.550%), 8/1/2022
|
10,000,000
|
|
10,000,000
|
|
Royal Bank of Canada, 2.830% (SOFR +0.550%), 8/1/2022
|
9,989,145
|
|
10,000,000
|
|
Royal Bank of Canada, 3.030% (SOFR +0.750%), 8/1/2022
|
10,000,000
|
|
5,000,000
|
|
Royal Bank of Canada, New York Branch, 2.430% (SOFR
+0.150%), 8/2/2022
|
4,997,636
|
|
10,000,000
|
|
Svenska Handelsbanken, Stockholm, 2.080% (SOFR
+0.550%), 8/1/2022
|
10,000,000
|
|
6,500,000
|
|
Taxable Tender Option Bond Trust 2021-MIZ9064TX,
(Series 2021-MIZ9064TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho Bank
Ltd. LOC), 2.640%, 8/4/2022
|
6,500,000
|
|
5,150,000
|
|
Taxable Tender Option Bond Trust 2022-MIZ9084TX,
(Series 2022-MIZ-9084TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho
Bank Ltd. LOC), 2.640%, 8/4/2022
|
5,150,000
|
|
5,400,000
|
|
Taxable Tender Option Bond Trust 2022-MIZ9087TX,
(Series 2022-MIZ9096TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho Bank
Ltd. LOC), 2.640%, 8/4/2022
|
5,400,000
|
|
3,800,000
|
|
Taxable Tender Option Bond Trust 2022-MIZ9094TX,
(Series 2022-MIZ9094TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho Bank
Ltd. LOC), 2.640%, 8/4/2022
|
3,800,000
|
|
2,000,000
|
|
Toronto Dominion Bank, 1.930% (SOFR +0.400%), 8/1/2022
|
1,997,530
|
|
10,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.780% (SOFR
+0.500%), 8/1/2022
|
10,000,521
|
|
12,500,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.780% (SOFR
+0.500%), 8/2/2022
|
12,492,450
|
|
|
|
TOTAL
|
259,266,119
|
|
|
|
Finance - Retail— 1.8%
|
|
|
5,000,000
|
|
Chariot Funding LLC, 1.710% (SOFR +0.180%), 8/1/2022
|
5,000,000
|
|
10,000,000
|
|
Chariot Funding LLC, 2.680% (SOFR +0.400%), 8/1/2022
|
9,999,471
|
|
5,000,000
|
|
Thunder Bay Funding, LLC, 2.080% (SOFR +0.550%), 9/26/2022
|
5,000,000
|
|
|
|
TOTAL
|
19,999,471
|
|
|
|
Government Agency— 3.5%
|
|
|
8,000,000
|
|
Archer 1 LLC, (Federal Home Loan Bank of San Francisco LOC),
2.450%, 8/4/2022
|
8,000,000
|
|
30,000,000
|
|
HW Hellman Building, L.P., (Federal Home Loan Bank of San Francisco
LOC), 2.450%, 8/4/2022
|
30,000,000
|
|
|
|
TOTAL
|
38,000,000
|
|
|
|
TOTAL NOTES - VARIABLE
(IDENTIFIED COST $317,349,250)
|
317,265,590
|
|
|
2
|
COMMERCIAL PAPER— 21.5%
|
|
|
|
|
Finance - Banking— 15.3%
|
|
|
5,000,000
|
|
Bank of Montreal, 2.800%, 5/9/2023
|
4,969,413
|
|
2,500,000
|
|
Bank of Nova Scotia, Toronto, 0.200%, 9/1/2022
|
2,494,437
|
Annual Shareholder Report
3
|
Principal
Amount
|
|
|
Value
|
|
|
2
|
COMMERCIAL PAPER— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 15,000,000
|
|
Bennington Stark Capital Co., LLC, (Societe Generale, Paris LIQ),
2.120%, 8/2/2022
|
$ 14,999,117
|
|
3,000,000
|
|
Canadian Imperial Bank of Commerce, 0.503% - 2.070%, 12/1/2022 -
3/20/2023
|
2,944,888
|
|
7,500,000
|
|
Chesham Finance LLC Series III, (Societe Generale, Paris COL),
2.404%, 8/31/2022
|
7,485,000
|
|
14,000,000
|
|
Gotham Funding Corp., (MUFG Bank Ltd. LIQ), 1.405% - 2.416%,
8/1/2022 - 10/3/2022
|
13,980,611
|
|
40,000,000
|
|
Lloyds Bank PLC, London, 1.413% - 2.419%, 8/5/2022 - 9/23/2022
|
39,942,862
|
|
1,000,000
|
|
LMA-Americas LLC, (Credit Agricole Corporate and Investment Bank
LIQ), 1.455%, 8/12/2022
|
999,557
|
|
35,000,000
|
|
Matchpoint Finance PLC, (BNP Paribas SA LIQ), 2.310% - 2.567%,
8/1/2022 - 10/11/2022
|
34,945,014
|
|
6,500,000
|
|
National Australia Bank Ltd., Melbourne, 1.005% - 3.844%, 9/6/2022 -
6/15/2023
|
6,438,609
|
|
15,000,000
|
|
Nationwide Building Society, 2.020%, 8/1/2022
|
15,000,000
|
|
2,000,000
|
|
Royal Bank of Canada, 0.250%, 10/14/2022
|
1,988,283
|
|
6,000,000
|
|
Royal Bank of Canada, New York Branch, 0.371% - 0.402%,
11/9/2022 - 11/15/2022
|
5,946,779
|
|
15,000,000
|
|
Toronto Dominion Bank, 2.051% - 2.903%, 3/17/2023 - 5/31/2023
|
14,558,610
|
|
|
|
TOTAL
|
166,693,180
|
|
|
|
Finance - Retail— 3.4%
|
|
|
5,000,000
|
|
Fairway Finance Co. LLC, 1.005%, 9/6/2022
|
4,986,778
|
|
7,500,000
|
|
Old Line Funding, LLC, 1.659%, 9/13/2022
|
7,475,544
|
|
7,500,000
|
|
Old Line Funding, LLC, 1.659%, 9/19/2022
|
7,471,898
|
|
10,000,000
|
|
Sheffield Receivables Company LLC, 1.976%, 8/18/2022
|
9,990,697
|
|
7,500,000
|
|
Thunder Bay Funding, LLC, 1.659%, 9/19/2022
|
7,472,971
|
|
|
|
TOTAL
|
37,397,888
|
|
|
|
Oil & Oil Finance— 0.9%
|
|
|
10,000,000
|
|
TotalEnergies Capital Canada Ltd., 2.200%, 8/3/2022
|
9,998,778
|
|
|
|
Sovereign— 1.9%
|
|
|
20,000,000
|
|
BNG Bank N.V., 2.311%, 8/4/2022
|
19,996,150
|
|
|
|
TOTAL COMMERCIAL PAPER
(IDENTIFIED COST $234,378,470)
|
234,085,996
|
|
|
|
CERTIFICATES OF DEPOSIT— 12.3%
|
|
|
|
|
Finance - Banking— 12.3%
|
|
|
2,500,000
|
|
Bank of Montreal, 2.850%, 5/24/2023
|
2,484,601
|
|
18,500,000
|
|
Canadian Imperial Bank of Commerce, 0.350%, 11/7/2022 -
11/10/2022
|
18,380,140
|
|
2,000,000
|
|
Credit Agricole Corporate and Investment Bank, 1.560%, 8/12/2022
|
2,000,000
|
|
10,000,000
|
|
DNB Bank ASA, 1.100%, 9/6/2022
|
9,986,399
|
|
2,500,000
|
|
Mizuho Bank Ltd., 2.600%, 10/20/2022
|
2,499,070
|
Annual Shareholder Report
4
|
Principal
Amount
|
|
|
Value
|
|
|
|
CERTIFICATES OF DEPOSIT— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 18,000,000
|
|
MUFG Bank Ltd., 1.420% - 1.450%, 8/18/2022 - 8/19/2022
|
$ 18,000,000
|
|
15,000,000
|
|
Sumitomo Mitsui Banking Corp., 1.450%, 8/5/2022
|
15,000,000
|
|
47,500,000
|
|
Sumitomo Mitsui Trust Bank Ltd., 1.450% - 2.530%, 8/17/2022 -
9/27/2022
|
47,500,000
|
|
19,000,000
|
|
Toronto Dominion Bank, 0.220% - 4.070%, 10/14/2022 - 7/18/2023
|
18,938,234
|
|
|
|
TOTAL CERTIFICATES OF DEPOSIT
(IDENTIFIED COST $135,000,000)
|
134,788,444
|
|
|
|
TIME DEPOSITS— 7.8%
|
|
|
|
|
Finance - Banking— 7.8%
|
|
|
55,000,000
|
|
ABN Amro Bank NV, 2.010%, 8/1/2022
|
55,000,000
|
|
30,000,000
|
|
Mizuho Bank Ltd., 2.320%, 8/1/2022
|
30,000,000
|
|
|
|
TOTAL TIME DEPOSITS
(IDENTIFIED COST $85,000,000)
|
85,000,000
|
|
|
|
OTHER REPURCHASE AGREEMENTS— 17.3%
|
|
|
|
|
Finance - Banking— 17.3%
|
|
|
10,000,000
|
|
BMO Capital Markets Corp., 2.42%, dated 7/29/2022, interest in a
$90,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $90,018,150 on 8/1/2022, in which
asset-backed securities, collateralized mortgage obligations, corporate
bonds, treasury notes, medium-term notes and sovereign debt with a
market value of $91,818,514 have been received as collateral and held
with BNY Mellon as tri-party agent.
|
10,000,000
|
|
15,000,000
|
|
BNP Paribas S.A., 2.40%, dated 7/29/2022, interest in a $500,000,000
collateralized loan agreement will repurchase securities provided as
collateral for $500,100,000 on 8/1/2022, in which asset-backed
securities, collateralized mortgage obligations, corporate bonds and
medium-term notes with a market value of $510,102,000 have been
received as collateral and held with BNY Mellon as tri-party agent.
|
15,000,000
|
|
50,000,000
|
|
BofA Securities, Inc., 2.39%, dated 7/29/2022, interest in a
$150,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $150,029,875 on 8/1/2022, in which
corporate bonds and medium-term notes with a market value of
$153,030,602 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
50,000,000
|
|
45,000,000
|
|
Credit Agricole S.A., 2.47%, dated 6/24/2022, interest in a
$300,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $300,144,083 on 8/9/2022, in which
asset-backed securities, collateralized mortgage obligations, corporate
bonds, commercial paper, treasury notes, treasury bills, medium-term
notes, U.S. Government Agency securities and sovereign debt with a
market value of $306,063,090 have been received as collateral and
held with BNY Mellon as tri-party agent.
|
45,000,000
|
|
5,000,000
|
|
HSBC Securities (USA), Inc., 2.52%, dated 7/29/2022, interest in a
$5,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $5,001,050 on 8/1/2022, in which corporate
bonds and medium-term notes with a market value of $5,100,357 have
been received as collateral and held with BNY Mellon as tri-party
agent.
|
5,000,000
|
Annual Shareholder Report
5
|
Principal
Amount
|
|
|
Value
|
|
|
|
OTHER REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 25,000,000
|
|
J.P. Morgan Securities LLC, 2.56%, dated 7/6/2022, interest in a
$250,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $250,480,000 on 8/2/2022, in which
corporate bonds and medium-term notes with a market value of
$255,000,001 have been received as collateral and held with
JPMorgan Chase as tri-party agent.
|
$ 25,000,000
|
|
15,000,000
|
|
Pershing LLC, 2.57%, dated 7/14/2022, interest in a $300,000,000
collateralized loan agreement will repurchase securities provided as
collateral for $300,0149,917 on 8/9/2022, in which asset-backed
securities, collateralized mortgage obligations, common stocks,
corporate bonds, convertible bonds, commercial paper, certificates of
deposit, exchange-traded funds, medium-term notes, municipal bonds
and U.S. Government Agency securities with a market value of
$306,100,946 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
15,000,000
|
|
24,000,000
|
|
Societe Generale, Paris., 2.47%, dated 7/29/2022, interest in a
$650,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $650,133,792 on 8/1/2022, in which
asset-backed securities, collateralized mortgage obligations, corporate
bonds, treasury bills and medium-term notes with a market value of
$663,136,856 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
24,000,000
|
|
|
|
TOTAL OTHER REPURCHASE AGREEMENTS
(IDENTIFIED COST $189,000,000)
|
189,000,000
|
|
|
|
REPURCHASE AGREEMENT— 12.8%
|
|
|
|
|
Finance - Banking— 12.8%
|
|
|
139,324,000
|
|
Interest in $3,000,000,000 joint repurchase agreement 2.30%, dated
7/29/2022 under which Sumitomo Mitsui Banking Corp will repurchase
securities provided as collateral for $3,000,575,000 on 8/1/2022. The
securities provided as collateral at the end of the period held with BNY
Mellon as tri-party agent, were U.S. Government Agency securities
with various maturities to 5/1/2052 and the market value of those
underlying securities was $3,060,586,510.
(IDENTIFIED COST $139,324,000)
|
139,324,000
|
|
|
|
TOTAL INVESTMENT IN SECURITIES—100.8%
(IDENTIFIED COST $1,100,051,720)3
|
1,099,464,030
|
|
|
|
OTHER ASSETS AND LIABILITIES - NET—(0.8)%4
|
(9,084,087)
|
|
|
|
TOTAL NET ASSETS—100%
|
$1,090,379,943
|
|
1
|
Floating/variable note with current rate and current maturity or next reset date shown.
|
|
2
|
Discount rate at time of purchase for discount issues, or the coupon for interest-bearing issues.
|
|
3
|
Also represents cost for federal tax purposes.
|
|
4
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
Note: The categories of investments are shown as a percentage of total net assets at July 31, 2022.
Annual Shareholder Report
6
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Level 1—quoted prices in active markets for identical securities.
Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Also includes securities valued at amortized cost.
Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
As of July 31, 2022, all investments of the Fund utilized Level 2 inputs in valuing the Fund’s assets carried at fair value.
|
The following acronym(s) are used throughout this portfolio:
|
|
|
|
COL
|
—Collateralized
|
|
|
LIQ
|
—Liquidity Agreement
|
|
|
LOC
|
—Letter of Credit
|
|
|
SOFR
|
—Secured Overnight Financing Rate
|
|
|
VRDNs
|
—Variable Rate Demand Notes
|
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
7
Financial Highlights–Institutional Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$0.9998
|
$1.0000
|
$0.9998
|
$0.9997
|
$1.0001
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.0036
|
0.0006
|
0.0141
|
0.0238
|
0.0157
|
|
Net realized and unrealized gain (loss)
|
(0.0006)
|
(0.0002)
|
0.0002
|
0.0001
|
(0.0004)
|
|
Total From Investment Operations
|
0.0030
|
0.0004
|
0.0143
|
0.0239
|
0.0153
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.0036)
|
(0.0006)
|
(0.0141)
|
(0.0238)
|
(0.0157)
|
|
Distributions from net realized gain
|
(0.0000)1
|
(0.0000)1
|
(0.0000)1
|
(0.0000)1
|
(0.0000)1
|
|
Total Distributions
|
(0.0036)
|
(0.0006)
|
(0.0141)
|
(0.0238)
|
(0.0157)
|
|
Net Asset Value, End of Period
|
$0.9992
|
$0.9998
|
$1.0000
|
$0.9998
|
$0.9997
|
|
Total Return2
|
0.30%
|
0.04%
|
1.44%
|
2.42%
|
1.54%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.15%
|
0.15%
|
0.15%
|
0.15%
|
0.15%
|
|
Net investment income
|
0.37%
|
0.07%
|
1.20%
|
2.39%
|
1.47%
|
|
Expense waiver/reimbursement4
|
0.18%
|
0.17%
|
0.21%
|
1.02%
|
0.81%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$1,085,231
|
$1,033,664
|
$1,353,697
|
$66,410
|
$34,986
|
|
1
|
Represents less than $0.0001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
8
Financial Highlights–Service Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$0.9998
|
$0.9999
|
$0.9997
|
$0.9997
|
$1.0001
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.0027
|
0.0001
|
0.0115
|
0.0213
|
0.0133
|
|
Net realized and unrealized gain (loss)
|
(0.0008)
|
(0.0001)
|
0.0003
|
0.00001
|
(0.0005)
|
|
Total From Investment Operations
|
0.0019
|
0.00001
|
0.0118
|
0.0213
|
0.0128
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.0026)
|
(0.0001)
|
(0.0116)
|
(0.0213)
|
(0.0132)
|
|
Distributions from net realized gain
|
(0.0000)1
|
(0.0000)1
|
(0.0000)1
|
(0.0000)1
|
(0.0000)1
|
|
Total Distributions
|
(0.0026)
|
(0.0001)
|
(0.0116)
|
(0.0213)
|
(0.0132)
|
|
Net Asset Value, End of Period
|
$0.9991
|
$0.9998
|
$0.9999
|
$0.9997
|
$0.9997
|
|
Total Return2
|
0.19%
|
0.00%3
|
1.18%
|
2.15%
|
1.28%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses4
|
0.22%
|
0.20%
|
0.40%
|
0.40%
|
0.40%
|
|
Net investment income
|
0.17%
|
0.01%
|
0.98%
|
2.16%
|
1.25%
|
|
Expense waiver/reimbursement5
|
0.36%
|
0.38%
|
0.27%
|
1.02%
|
0.85%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$420
|
$1,138
|
$781
|
$560
|
$499
|
|
1
|
Represents less than $0.0001.
|
|
2
|
Based on net asset value.
|
|
3
|
Represents less than 0.01%.
|
|
4
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
5
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
9
Financial Highlights–Capital Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$0.9998
|
$1.0000
|
$0.9998
|
$0.9997
|
$1.0001
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.0031
|
0.0002
|
0.0131
|
0.0228
|
0.0147
|
|
Net realized and unrealized gain (loss)
|
(0.0006)
|
(0.0002)
|
0.0002
|
0.0001
|
(0.0004)
|
|
Total From Investment Operations
|
0.0025
|
0.00001
|
0.0133
|
0.0229
|
0.0143
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.0031)
|
(0.0002)
|
(0.0131)
|
(0.0228)
|
(0.0147)
|
|
Distributions from net realized gain
|
(0.0000)1
|
(0.0000)1
|
(0.0000)1
|
(0.0000)1
|
(0.0000)1
|
|
Total Distributions
|
(0.0031)
|
(0.0002)
|
(0.0131)
|
(0.0228)
|
(0.0147)
|
|
Net Asset Value, End of Period
|
$0.9992
|
$0.9998
|
$1.0000
|
$0.9998
|
$0.9997
|
|
Total Return2
|
0.26%
|
0.00%3
|
1.33%
|
2.32%
|
1.44%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses4
|
0.19%
|
0.20%
|
0.25%
|
0.25%
|
0.25%
|
|
Net investment income
|
0.31%
|
0.02%
|
1.31%
|
2.28%
|
1.44%
|
|
Expense waiver/reimbursement5
|
0.24%
|
0.23%
|
0.28%
|
1.04%
|
0.86%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$179
|
$178
|
$181
|
$178
|
$174
|
|
1
|
Represents less than $0.0001.
|
|
2
|
Based on net asset value.
|
|
3
|
Represents less than 0.01%.
|
|
4
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
5
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
10
Financial Highlights–Eagle Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$0.9998
|
$1.0000
|
$0.9998
|
$0.9997
|
$1.0001
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.0026
|
0.0001
|
0.0122
|
0.0218
|
0.0137
|
|
Net realized and unrealized gain (loss)
|
(0.0006)
|
(0.0002)
|
0.0001
|
0.0001
|
(0.0004)
|
|
Total From Investment Operations
|
0.0020
|
(0.0001)
|
0.0123
|
0.0219
|
0.0133
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.0026)
|
(0.0001)
|
(0.0121)
|
(0.0218)
|
(0.0137)
|
|
Distributions from net realized gain
|
(0.0000)1
|
(0.0000)1
|
(0.0000)1
|
(0.0000)1
|
(0.0000)1
|
|
Total Distributions
|
(0.0026)
|
(0.0001)
|
(0.0121)
|
(0.0218)
|
(0.0137)
|
|
Net Asset Value, End of Period
|
$0.9992
|
$0.9998
|
$1.0000
|
$0.9998
|
$0.9997
|
|
Total Return2
|
0.20%
|
(0.01)%
|
1.23%
|
2.21%
|
1.33%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.24%
|
0.20%
|
0.35%
|
0.35%
|
0.35%
|
|
Net investment income
|
0.24%
|
0.01%
|
1.21%
|
2.18%
|
1.32%
|
|
Expense waiver/reimbursement4
|
0.33%
|
0.37%
|
0.29%
|
1.04%
|
0.85%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$4,550
|
$4,781
|
$4,918
|
$5,216
|
$6,275
|
|
1
|
Represents less than $0.0001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
11
Statement of Assets and Liabilities
July 31, 2022
July 31, 2022
|
Assets:
|
|
|
Investment in repurchase agreements and other repurchase agreements
|
$328,324,000
|
|
Investment in securities
|
771,140,030
|
|
Investment in securities, at value (identified cost $1,100,051,720)
|
1,099,464,030
|
|
Income receivable
|
1,048,782
|
|
Prepaid expenses
|
161
|
|
Total Assets
|
1,100,512,973
|
|
Liabilities:
|
|
|
Payable for investments purchased
|
8,485,000
|
|
Payable to bank
|
925
|
|
Income distribution payable
|
1,474,414
|
|
Payable for investment adviser fee (Note 5)
|
4,340
|
|
Payable for administrative fee (Note 5)
|
7,034
|
|
Accrued expenses (Note 5)
|
161,317
|
|
Total Liabilities
|
10,133,030
|
|
Net assets for 1,091,266,980 shares outstanding
|
$1,090,379,943
|
|
Net Assets Consist of:
|
|
|
Paid-in capital
|
$1,090,962,331
|
|
Total distributable earnings (loss)
|
(582,388)
|
|
Total Net Assets
|
$1,090,379,943
|
|
Net Asset Value, Offering Price and Redemption Proceeds Per Share
|
|
|
Institutional Shares:
|
|
|
$1,085,231,042 ÷ 1,086,113,994 shares outstanding, no par value, unlimited
shares authorized
|
$0.9992
|
|
Service Shares:
|
|
|
$420,181 ÷ 420,545 shares outstanding, no par value, unlimited shares authorized
|
$0.9991
|
|
Capital Shares:
|
|
|
$178,675 ÷ 178,821 shares outstanding, no par value, unlimited shares authorized
|
$0.9992
|
|
Eagle Shares:
|
|
|
$4,550,045 ÷ 4,553,620 shares outstanding, no par value, unlimited
shares authorized
|
$0.9992
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
12
Statement of Operations
Year Ended July 31, 2022
Year Ended July 31, 2022
|
Investment Income:
|
|
|
Interest
|
$5,519,943
|
|
Expenses:
|
|
|
Investment adviser fee (Note 5)
|
2,120,691
|
|
Administrative fee (Note 5)
|
830,449
|
|
Custodian fees
|
48,564
|
|
Transfer agent fees
|
92,934
|
|
Directors’/Trustees’ fees (Note 5)
|
6,230
|
|
Auditing fees
|
20,299
|
|
Legal fees
|
7,363
|
|
Portfolio accounting fees
|
213,321
|
|
Other service fees (Notes 2 and 5)
|
13,672
|
|
Share registration costs
|
74,350
|
|
Printing and postage
|
19,436
|
|
Miscellaneous (Note 5)
|
54,134
|
|
TOTAL EXPENSES
|
3,501,443
|
|
Waivers and Reimbursements:
|
|
|
Waiver of investment adviser fee (Note 5)
|
(1,899,061)
|
|
Waivers/reimbursements of other operating expenses (Notes 2 and 5)
|
(34,500)
|
|
TOTAL WAIVERS AND REIMBURSEMENTS
|
(1,933,561)
|
|
Net expenses
|
1,567,882
|
|
Net investment income
|
3,952,061
|
|
Realized and Unrealized Gain (Loss) on Investments:
|
|
|
Net realized gain on investments
|
2,780
|
|
Net change in unrealized appreciation of investments
|
(674,073)
|
|
Net realized and unrealized gain (loss) on investments
|
(671,293)
|
|
Change in net assets resulting from operations
|
$3,280,768
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
13
Statement of Changes in Net Assets
|
Year Ended July 31
|
2022
|
2021
|
|
Increase (Decrease) in Net Assets
|
|
|
|
Operations:
|
|
|
|
Net investment income
|
$3,952,061
|
$758,730
|
|
Net realized gain (loss)
|
2,780
|
630
|
|
Net change in unrealized appreciation/depreciation
|
(674,073)
|
(301,143)
|
|
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
|
3,280,768
|
458,217
|
|
Distributions to Shareholders:
|
|
|
|
Institutional Shares
|
(3,938,343)
|
(760,505)
|
|
Service Shares
|
(1,396)
|
(129)
|
|
Capital Shares
|
(562)
|
(36)
|
|
Eagle Shares
|
(11,262)
|
(439)
|
|
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS
TO SHAREHOLDERS
|
(3,951,563)
|
(761,109)
|
|
Share Transactions:
|
|
|
|
Proceeds from sale of shares
|
272,244,134
|
549,730,962
|
|
Net asset value of shares issued to shareholders in payment of
distributions declared
|
148,948
|
99,962
|
|
Cost of shares redeemed
|
(221,103,337)
|
(869,343,957)
|
|
CHANGE IN NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
|
51,289,745
|
(319,513,033)
|
|
Change in net assets
|
50,618,950
|
(319,815,925)
|
|
Net Assets:
|
|
|
|
Beginning of period
|
1,039,760,993
|
1,359,576,918
|
|
End of period
|
$1,090,379,943
|
$1,039,760,993
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
14
Notes to Financial Statements
July 31, 2022
1. ORGANIZATION
Federated Hermes Money Market Obligations Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust consists of 16 portfolios. The financial statements included herein are only those of Federated Hermes Institutional Money Market Management (the “Fund”), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder’s interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers four classes of shares: Institutional Shares, Service Shares, Capital Shares and Eagle Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The investment objective of the Fund is to provide current income consistent with stability of principal.
The Fund operates as an institutional money market fund. As an institutional money market fund, the Fund: (1) will not be limited to institutional investors, but will continue to be available to retail investors; (2) will utilize current market-based prices (except as otherwise generally permitted to value individual portfolio securities with remaining maturities of 60 days or less at amortized cost in accordance with Securities and Exchange Commission (SEC) rules and guidance) to value its portfolio securities and transact at a floating net asset value (NAV) that uses four decimal-place precision ($1.0000); and (3) has adopted policies and procedures to impose liquidity fees on redemptions and/or temporary redemption gates in the event that the Fund’s weekly liquid assets were to fall below a designated threshold, if the Fund’s Board of Trustees (the “Trustees”) determine such liquidity fees or redemption gates are in the best interest of the Fund.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
In calculating its NAV, the Fund generally values investments as follows:
◾
Fixed-income securities with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Trustees.
◾
Fixed-income securities with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium), unless the issuer’s creditworthiness is impaired or other factors indicate that amortized cost is not an accurate estimate of the investment’s fair value, in which case it would be valued in the same manner as a longer-term security. The Fund may only use this method to value a portfolio security when it can reasonably conclude, at each time it makes a valuation determination, that the amortized cost price of the portfolio security is approximately the same as the fair value of the security as determined without the use of amortized cost valuation.
Annual Shareholder Report
15
◾
Shares of other mutual funds or non-exchange-traded investment companies are valued based upon their reported NAVs, or NAV per share practical expedient, as applicable.
◾
For securities that are fair valued in accordance with procedures established by and under the general supervision of the Trustees, certain factors may be considered, such as: the last traded or purchase price of the security, information obtained by contacting the issuer or dealers, analysis of the issuer’s financial statements or other available documents, fundamental analytical data, the nature and duration of restrictions on disposition, the movement of the market in which the security is normally traded, public trading in similar securities or derivative contracts of the issuer or comparable issuers, movement of a relevant index, or other factors including but not limited to industry changes and relevant government actions.
If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, if the Fund cannot obtain price evaluations from a pricing service or from more than one dealer for an investment within a reasonable period of time as set forth in the Fund’s valuation policies and procedures, or if information furnished by a pricing service, in the opinion of the valuation committee (“Valuation Committee”), is deemed not representative of the fair value of such security, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines its NAV per share, and the actual value obtained could be materially different.
Fair Valuation Procedures
The Trustees have ultimate responsibility for determining the fair value of investments for which market quotations are not readily available. The Trustees have appointed a Valuation Committee comprised of officers of the Fund, Federated Investment Management Company (the “Adviser”) and certain of the Adviser’s affiliated companies to assist in determining fair value and in overseeing the calculation of the NAV. The Trustees have also authorized the use of pricing services recommended by the Valuation Committee to provide fair value evaluations of the current value of certain investments for purposes of calculating the NAV. The Valuation Committee employs various methods for reviewing third-party pricing-service evaluations including periodic reviews of third-party pricing services’ policies, procedures and valuation methods (including key inputs, methods, models and assumptions), transactional back-testing, comparisons of evaluations of different pricing services, and review of price challenges by the Adviser based on recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee determines the fair value of the investment in accordance with procedures adopted by the Trustees. The Trustees periodically review and approve the fair valuations made by the Valuation Committee and any changes made to the procedures.
Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a “bid” evaluation). Other pricing services offer both bid evaluations and price evaluations
Annual Shareholder Report
16
indicative of a price between the prices bid and asked for the investment (a “mid” evaluation). The Fund normally uses bid evaluations for any U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for any other types of fixed-income securities and any over-the-counter derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.
Repurchase Agreements
The Fund may invest in repurchase agreements for short-term liquidity purposes. It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund’s custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control” as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.
The insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.
The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund’s Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.
Repurchase agreements are subject to Master Netting Agreements which are agreements between the Fund and its counterparties that provide for the net settlement of all transactions and collateral with the Fund, through a single payment, in the event of default or termination. Amounts presented on the Portfolio of Investments and Statement of Assets and Liabilities are not net settlement amounts but gross. As indicated above, the cash or securities to be repurchased, as shown on the Portfolio of Investments, exceeds the repurchase price to be paid under the agreement reducing the net settlement amount to zero.
Investment Income, Gains and Losses, Expenses and Distributions
Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis. Interest income and expenses are accrued daily. Distributions to shareholders are recorded on the ex-dividend date. Distributions of net investment income, if any, are declared daily and paid monthly. Amortization/accretion of premium and discount is included in investment income. Investment income, realized and unrealized gains and losses, and
Annual Shareholder Report
17
certain fund-level expenses are allocated to each class based on relative average daily net assets, except that select classes will bear certain expenses unique to those classes. The detail of the total fund expense waivers and reimbursements of $1,933,561 is disclosed in various locations in this Note 2 and Note 5. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.
Other Service Fees
The Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund’s Institutional Shares, Service Shares, Capital Shares and Eagle Shares to unaffiliated financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for other service fees. In addition, unaffiliated third-party financial intermediaries may waive other service fees. This waiver can be modified or terminated at any time.
For the year ended July 31, 2022, other service fees for the Fund were as follows:
|
|
Other Service
Fees Incurred
|
Other Service
Fees Reimbursed
|
Other Service Fees
Waived by Unaffiliated
Third Parties
|
|
Service Shares
|
$2,050
|
$—
|
$(1,402)
|
|
Capital Shares
|
179
|
—
|
(96)
|
|
Eagle Shares
|
11,443
|
(13)
|
(6,923)
|
|
TOTAL
|
$13,672
|
$(13)
|
$(8,421)
|
For the year ended July 31, 2022, the Fund’s Institutional Shares did not incur other service fees.
Federal Taxes
It is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. As of and during the year ended July 31, 2022, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2022, tax years 2019 through 2022 remain subject to examination by the Fund’s major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.
When-Issued and Delayed-Delivery Transactions
The Fund may engage in when-issued or delayed-delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed-delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
Annual Shareholder Report
18
Restricted Securities
The Fund may purchase securities which are considered restricted. Restricted securities are securities that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) are subject to contractual restrictions on public sales. In some cases, when a security cannot be offered for public sale without first being registered, the issuer of the restricted security has agreed to register such securities for resale, at the issuer’s expense, either upon demand by the Fund or in connection with another registered offering of the securities. Many such restricted securities may be resold in the secondary market in transactions exempt from registration. Restricted securities may be determined to be liquid under criteria established by the Trustees. The Fund will not incur any registration costs upon such resales. The Fund’s restricted securities, like other securities, are priced in accordance with procedures established by and under the general supervision of the Trustees.
Other
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ materially from those estimated. The Fund applies investment company accounting and reporting guidance.
3. SHARES OF BENEFICIAL INTEREST
The following tables summarize share activity:
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Institutional Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
263,484,507
|
$263,336,933
|
540,618,930
|
$540,592,436
|
|
Shares issued to shareholders in payment of
distributions declared
|
137,289
|
137,190
|
99,498
|
99,485
|
|
Shares redeemed
|
(211,358,360)
|
(211,239,946)
|
(860,513,380)
|
(860,423,549)
|
|
NET CHANGE RESULTING FROM
INSTITUTIONAL SHARE TRANSACTIONS
|
52,263,436
|
$52,234,177
|
(319,794,952)
|
$(319,731,628)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Service Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
8,119,057
|
$8,114,658
|
8,490,909
|
$8,488,527
|
|
Shares issued to shareholders in payment of
distributions declared
|
52
|
52
|
4
|
4
|
|
Shares redeemed
|
(8,836,748)
|
(8,831,908)
|
(8,133,990)
|
(8,131,632)
|
|
NET CHANGE RESULTING FROM
SERVICE SHARE TRANSACTIONS
|
(717,639)
|
$(717,198)
|
356,923
|
$356,899
|
Annual Shareholder Report
19
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Capital Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
—
|
$—
|
—
|
$—
|
|
Shares issued to shareholders in payment of
distributions declared
|
562
|
562
|
36
|
36
|
|
Shares redeemed
|
—
|
—
|
(2,451)
|
(2,451)
|
|
NET CHANGE RESULTING FROM
CAPITAL SHARE TRANSACTIONS
|
562
|
$562
|
(2,415)
|
$(2,415)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Eagle Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
792,916
|
$792,543
|
650,122
|
$649,999
|
|
Shares issued to shareholders in payment of
distributions declared
|
11,152
|
11,144
|
437
|
437
|
|
Shares redeemed
|
(1,032,026)
|
(1,031,483)
|
(786,474)
|
(786,325)
|
|
NET CHANGE RESULTING FROM EAGLE
SHARE TRANSACTIONS
|
(227,958)
|
$(227,796)
|
(135,915)
|
$(135,889)
|
|
NET CHANGE RESULTING FROM TOTAL
FUND SHARE TRANSACTIONS
|
51,318,401
|
$51,289,745
|
(319,576,359)
|
$(319,513,033)
|
4. FEDERAL TAX INFORMATION
The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2022 and 2021, was as follows:
|
|
2022
|
2021
|
|
Ordinary income1
|
$3,951,563
|
$761,109
|
|
1
|
For tax purposes, short-term capital gain distributions are considered ordinary
income distributions.
|
As of July 31, 2022, the components of distributable earnings on a tax-basis were as follows:
|
Undistributed ordinary income1
|
$5,302
|
|
Net unrealized depreciation
|
$(587,690)
|
|
1
|
For tax purposes, short-term capital gains are considered ordinary income in determining
distributable earnings.
|
At July 31, 2022, the cost of investments for federal tax purposes was $1,100,051,720. The net unrealized depreciation of investments for federal tax purposes was $587,690. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $6,770 and net unrealized depreciation from investments for those securities having an excess of cost over value of $594,460.
Annual Shareholder Report
20
5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.20% of the Fund’s average daily net assets. Subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund for competitive reasons such as to maintain the Fund’s expense ratio, or as and when appropriate, to maintain positive or zero net yields. For the year ended July 31, 2022, the Adviser voluntarily waived $1,899,061 of its fee and voluntarily reimbursed $26,066 of other operating expenses.
Administrative Fee
Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated Hermes Funds subject to a fee under the Administrative Services Agreement. The fee paid to FAS is based on the average daily net assets of the Investment Complex as specified below:
|
Administrative Fee
|
Average Daily Net Assets
of the Investment Complex
|
|
0.100%
|
on assets up to $50 billion
|
|
0.075%
|
on assets over $50 billion
|
Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2022, the annualized fee paid to FAS was 0.078% of average daily net assets of the Fund.
In addition, FAS may charge certain out-of-pocket expenses to the Fund.
Other Service Fees
For the year ended July 31, 2022, FSSC received $4,476 of the other service fees disclosed in Note 2.
Expense Limitation
Due to the possibility of changes in market conditions and other factors, there can be no assurance that the level of waivers/reimbursement/reduction of Fund expenses reflected in the financial highlights will be maintained in the future. However, the Adviser and certain of its affiliates (which may include FAS and FSSC) on their own initiative have agreed to waive certain amounts of their respective fees and/or reimburse expenses. Total annual fund operating expenses (as shown in the financial highlights, excluding interest expense, extraordinary expenses and proxy-related expenses paid by the Fund, if any) paid by the Fund’s Institutional Shares, Service Shares, Capital Shares and Eagle Shares (after the voluntary waivers and/or reimbursements) will not exceed 0.15%, 0.40%, 0.25% and 0.40% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) October 1, 2023; or (b) the date of the Fund’s next
Annual Shareholder Report
21
effective Prospectus. While the Adviser and its applicable affiliates currently do not anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or the Fee Limit increased prior to the Termination Date with the agreement of the Trustees.
Directors’/Trustees’ and Miscellaneous Fees
Certain Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate payment, Independent Directors’/Trustees’ fees and certain expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses are paid by an affiliate of the Adviser which in due course are reimbursed by the Fund. These expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses may be included in Accrued and Miscellaneous Expenses on the Statement of Assets and Liabilities and Statement of Operations, respectively.
6. CONCENTRATION OF RISK
A substantial part of the Fund’s portfolio may be comprised of obligations of banks. As a result, the Fund may be more susceptible to any economic, business, political or other developments which generally affect these entities.
7. LINE OF CREDIT
The Fund participates with certain other Federated Hermes Funds, on a several basis, in an up to $500,000,000 unsecured, 364-day, committed, revolving line of credit (LOC) agreement dated June 22, 2022. The LOC was made available to temporarily finance the repurchase or redemption of shares of the Fund, failed trades, payment of dividends, settlement of trades and for other short-term, temporary or emergency general business purposes. The Fund cannot borrow under the LOC if an inter-fund loan is outstanding. The Fund’s ability to borrow under the LOC also is subject to the limitations of the Act and various conditions precedent that must be satisfied before the Fund can borrow. Loans under the LOC are charged interest at a fluctuating rate per annum equal to (a) the highest, on any day, of (i) the federal funds effective rate, (ii) the published secured overnight financing rate plus an assigned percentage, and (iii) 0.0%, plus (b) a margin. Any fund eligible to borrow under the LOC pays its pro rata share of a commitment fee based on the amount of the lenders’ commitment that has not been utilized, quarterly in arrears and at maturity. As of July 31, 2022, the Fund had no outstanding loans. During the year ended July 31, 2022, the Fund did not utilize the LOC.
8. INTERFUND LENDING
Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other funds advised by subsidiaries of Federated Hermes, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating affiliated funds. As of July 31, 2022, there were no outstanding loans. During the year ended July 31, 2022, the program was not utilized.
9. INDEMNIFICATIONS
Under the Fund’s organizational documents, its Officers and Directors/Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund (other than liabilities arising out of their willful misfeasance, bad faith, gross negligence or reckless disregard of their duties to the Fund). In addition, in the normal
Annual Shareholder Report
22
course of business, the Fund provides certain indemnifications under arrangements with third parties. Typically, obligations to indemnify a third party arise in the context of an arrangement entered into by the Fund under which the Fund agrees to indemnify such third party for certain liabilities arising out of actions taken pursuant to the arrangement, provided the third party’s actions are not deemed to have breached an agreed-upon standard of care (such as willful misfeasance, bad faith, gross negligence or reckless disregard of their duties under the contract). The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet arisen. The Fund does not anticipate any material claims or losses pursuant to these arrangements at this time, and accordingly expects the risk of loss to be remote.
10. OTHER MATTERS
An outbreak of respiratory disease caused by a novel coronavirus was first detected in China in late 2019 and subsequently spread globally. As of the date of the issuance of these financial statements, this coronavirus has resulted in closing borders, enhanced health screenings, disruptions to healthcare service preparation and delivery, quarantines, cancellations, and disruptions to supply chains, workflow operations and consumer activity, as well as general concern and uncertainty. The impact of this coronavirus may continue for an extended period of time and has resulted in substantial economic volatility. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could continue to negatively affect the worldwide economy, as well as the economies of individual countries, individual companies (including certain Fund service providers and issuers of the Fund’s investments) and the markets in general in significant and unforeseen ways. Any such impact could adversely affect the Fund’s performance.
11. FEDERAL TAX INFORMATION (UNAUDITED)
For the fiscal year ended July 31, 2022, 71.07% of dividends paid by the Fund are interest-related dividends, as provided by the American Jobs Creation Act of 2004.
Annual Shareholder Report
23
Report of Independent Registered Public Accounting Firm
TO THE BOARD OF TRUSTEES OF FEDERATED HERMES MONEY MARKET OBLIGATIONS TRUST AND SHAREHOLDERS OF FEDERATED HERMES INSTITUTIONAL MONEY MARKET MANAGEMENT:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of Federated Hermes Institutional Money Market Management (the “Fund”) (one of the portfolios constituting Federated Hermes Money Market Obligations Trust (the “Trust”)), including the portfolio of investments, as of July 31, 2022, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the portfolios constituting Federated Hermes Money Market Obligations Trust) at July 31, 2022, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
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We conducted our audits in accordance with standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of July 31, 2022, by correspondence with the custodian and others or by other appropriate auditing procedures where replies from others were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more Federated Hermes investment companies since 1979.
Boston, Massachusetts
September 23, 2022
September 23, 2022
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Shareholder Expense Example (unaudited)
As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or other service fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2022 to July 31, 2022.
ACTUAL EXPENSES
The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses attributable to your investment during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
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Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
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Beginning
Account Value
2/1/2022
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Ending
Account Value
7/31/2022
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Expenses Paid
During Period1
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Actual:
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Institutional Shares
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$1,000
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$1,003.10
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$0.75
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Service Shares
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$1,000
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$1,002.10
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$1.742
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Capital Shares
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$1,000
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$1,002.70
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$1.19
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Eagle Shares
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$1,000
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$1,002.10
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$1.743
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Hypothetical (assuming a 5% return
before expenses):
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Institutional Shares
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$1,000
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$1,024.05
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$0.75
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Service Shares
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$1,000
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$1,023.06
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$1.762
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Capital Shares
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$1,000
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$1,023.60
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$1.20
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Eagle Shares
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$1,000
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$1,023.06
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$1.763
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1
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Expenses are equal to the Fund’s annualized net expense ratios, multiplied by the average
account value over the period, multiplied by 181/365 (to reflect the one-half-year period). The
annualized net expense ratios are as follows:
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Institutional Shares
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0.15%
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Service Shares
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0.35%
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Capital Shares
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0.24%
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Eagle Shares
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0.35%
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2
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Actual and Hypothetical expenses paid during the period utilizing the Fund’s Service Shares
current Fee Limit of 0.40% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $1.99 and $2.01, respectively.
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3
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Actual and Hypothetical expenses paid during the period utilizing the Fund’s Eagle Shares
current Fee Limit of 0.40% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $1.99 and $2.01, respectively.
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27
Board of Trustees and Trust Officers
The Board of Trustees is responsible for managing the Trust’s business affairs and for exercising all the Trust’s powers except those reserved for the shareholders. The following tables give information about each Trustee and the senior officers of the Fund. Where required, the tables separately list Trustees who are “interested persons” of the Fund (i.e., “Interested” Trustees) and those who are not (i.e., “Independent” Trustees). Unless otherwise noted, the address of each person listed is 1001 Liberty Avenue, Pittsburgh, PA 15222-3779. The address of all Independent Trustees listed is 4000 Ericsson Drive, Warrendale, PA 15086-7561; Attention: Mutual Fund Board. As of December 31, 2021, the Trust comprised 16 portfolio(s), and the Federated Hermes Fund Family consisted of 33 investment companies (comprising 102 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Trustee oversees all portfolios in the Federated Hermes Fund Family and serves for an indefinite term. The Fund’s Statement of Additional Information includes additional information about Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400, Option #4.
Interested TRUSTEES Background
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Name
Birth Date
Positions Held with Trust
Date Service Began
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Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
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J. Christopher Donahue*
Birth Date: April 11, 1949
President and Trustee
Indefinite Term
Began serving: April 1989
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Principal Occupations: Principal Executive Officer and President of
certain of the Funds in the Federated Hermes Fund Family; Director or
Trustee of the Funds in the Federated Hermes Fund Family; President,
Chief Executive Officer and Director, Federated Hermes, Inc.;
Chairman and Trustee, Federated Investment Management Company;
Trustee, Federated Investment Counseling; Chairman and Director,
Federated Global Investment Management Corp.; Chairman and
Trustee, Federated Equity Management Company of Pennsylvania;
Trustee, Federated Shareholder Services Company; Director,
Federated Services Company.
Previous Positions: President, Federated Investment Counseling;
President and Chief Executive Officer, Federated Investment
Management Company, Federated Global Investment Management
Corp. and Passport Research, Ltd; Chairman, Passport Research, Ltd.
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Name
Birth Date
Positions Held with Trust
Date Service Began
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Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
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Thomas R. Donahue*
Birth Date: October 20, 1958
Trustee
Indefinite Term
Began serving: May 2016
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Principal Occupations: Director or Trustee of certain of the funds in
the Federated Hermes Fund Family; Chief Financial Officer, Treasurer,
Vice President and Assistant Secretary, Federated Hermes, Inc.;
Chairman and Trustee, Federated Administrative Services; Chairman
and Director, Federated Administrative Services, Inc.; Trustee and
Treasurer, Federated Advisory Services Company; Director or Trustee
and Treasurer, Federated Equity Management Company of
Pennsylvania, Federated Global Investment Management Corp.,
Federated Investment Counseling, and Federated Investment
Management Company; Director, MDTA LLC; Director, Executive Vice
President and Assistant Secretary, Federated Securities Corp.;
Director or Trustee and Chairman, Federated Services Company and
Federated Shareholder Services Company; and Director and
President, FII Holdings, Inc.
Previous Positions: Director, Federated Hermes, Inc.; Assistant
Secretary, Federated Investment Management Company, Federated
Global Investment Management Company and Passport Research,
LTD; Treasurer, Passport Research, LTD; Executive Vice President,
Federated Securities Corp.; and Treasurer, FII Holdings, Inc.
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*
Family relationships and reasons for “interested” status: J. Christopher Donahue and Thomas R. Donahue are brothers. Both are “interested” due to their beneficial ownership of shares of Federated Hermes, Inc. and the positions they hold with Federated Hermes, Inc. and its subsidiaries.
INDEPENDENT TRUSTEES Background
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Name
Birth Date
Positions Held with Trust
Date Service Began
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Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
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John T. Collins
Birth Date: January 24, 1947
Trustee
Indefinite Term
Began serving:
September 2013
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Principal Occupations: Director or Trustee, and Chair of the Board
of Directors or Trustees, of the Federated Hermes Fund Family;
formerly, Chairman and CEO, The Collins Group, Inc. (a private equity
firm) (Retired).
Other Directorships Held: Director, KLX Energy Services Holdings,
Inc. (oilfield services); former Director of KLX Corp. (aerospace).
Qualifications: Mr. Collins has served in several business and financial
management roles and directorship positions throughout his career.
Mr. Collins previously served as Chairman and CEO of The Collins
Group, Inc. (a private equity firm) and as a Director of KLX Corp.
Mr. Collins serves as Chairman Emeriti, Bentley University. Mr. Collins
previously served as Director and Audit Committee Member, Bank of
America Corp.; Director, FleetBoston Financial Corp.; and Director,
Beth Israel Deaconess Medical Center (Harvard University
Affiliate Hospital).
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Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
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G. Thomas Hough
Birth Date: February 28, 1955
Trustee
Indefinite Term
Began serving: August 2015
|
Principal Occupations: Director or Trustee, Chair of the Audit
Committee of the Federated Hermes Fund Family; formerly, Vice
Chair, Ernst & Young LLP (public accounting firm) (Retired).
Other Directorships Held: Director, Chair of the Audit Committee,
Equifax, Inc.; Lead Director, Member of the Audit and Nominating and
Corporate Governance Committees, Haverty Furniture Companies,
Inc.; formerly, Director, Member of Governance and Compensation
Committees, Publix Super Markets, Inc.
Qualifications: Mr. Hough has served in accounting, business
management and directorship positions throughout his career.
Mr. Hough most recently held the position of Americas Vice Chair of
Assurance with Ernst & Young LLP (public accounting firm). Mr. Hough
serves on the President’s Cabinet and Business School Board of
Visitors for the University of Alabama. Mr. Hough previously served on
the Business School Board of Visitors for Wake Forest University, and
he previously served as an Executive Committee member of the
United States Golf Association.
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Maureen Lally-Green
Birth Date: July 5, 1949
Trustee
Indefinite Term
Began serving: August 2009
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Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Adjunct Professor Emerita of Law, Duquesne University
School of Law; formerly, Dean of the Duquesne University School of
Law and Professor of Law and Interim Dean of the Duquesne
University School of Law; formerly, Associate General Secretary and
Director, Office of Church Relations, Diocese of Pittsburgh.
Other Directorships Held: Director, CNX Resources Corporation
(formerly known as CONSOL Energy Inc.).
Qualifications: Judge Lally-Green has served in various legal and
business roles and directorship positions throughout her career. Judge
Lally-Green previously held the position of Dean of the School of Law
of Duquesne University (as well as Interim Dean). Judge Lally-Green
previously served as a member of the Superior Court of Pennsylvania
and as a Professor of Law, Duquesne University School of Law. Judge
Lally-Green was appointed by the Supreme Court of Pennsylvania to
serve on the Supreme Court’s Board of Continuing Judicial Education
and the Supreme Court’s Appellate Court Procedural Rules
Committee. Judge Lally-Green also currently holds the positions on
not for profit or for profit boards of directors as follows: Director
and Chair, UPMC Mercy Hospital; Regent, Saint Vincent Seminary;
Member, Pennsylvania State Board of Education (public); Director,
Catholic Charities, Pittsburgh; and Director CNX Resources
Corporation (formerly known as CONSOL Energy Inc.). Judge
Lally-Green has held the positions of: Director, Auberle; Director,
Epilepsy Foundation of Western and Central Pennsylvania; Director,
Ireland Institute of Pittsburgh; Director, Saint Thomas More Society;
Director and Chair, Catholic High Schools of the Diocese of
Pittsburgh, Inc.; Director, Pennsylvania Bar Institute; Director,
St. Vincent College; Director and Chair, North Catholic High
School, Inc.; Director and Vice Chair, Our Campaign for the Church
Alive!, Inc.; and Director, Saint Francis University.
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Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
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Thomas M. O’Neill
Birth Date: June 14, 1951
Trustee
Indefinite Term
Began serving: August 2006
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Sole Proprietor, Navigator Management Company
(investment and strategic consulting).
Other Directorships Held: None.
Qualifications: Mr. O’Neill has served in several business, mutual fund
and financial management roles and directorship positions throughout
his career. Mr. O’Neill serves as Director, Medicines for Humanity.
Mr. O’Neill previously served as Chief Executive Officer and President,
Managing Director and Chief Investment Officer, Fleet Investment
Advisors; President and Chief Executive Officer, Aeltus Investment
Management, Inc.; General Partner, Hellman, Jordan Management
Co., Boston, MA; Chief Investment Officer, The Putnam Companies,
Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director
and Consultant, EZE Castle Software (investment order management
software); Director, The Golisano Children’s Museum of Naples,
Florida; and Director, Midway Pacific (lumber).
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Madelyn A. Reilly
Birth Date: February 2, 1956
Trustee
Indefinite Term
Began serving:
November 2020
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; formerly, Executive Vice President for Legal Affairs,
General Counsel and Secretary to the Board of Directors, Duquesne
University (Retired).
Other Directorships Held: None.
Qualifications: Ms. Reilly has served in various business and legal
management roles throughout her career. Ms. Reilly previously served
as Senior Vice President for Legal Affairs, General Counsel and
Secretary to the Board of Directors and Assistant General Counsel and
Director of Risk Management, Duquesne University. Prior to her work
at Duquesne University, Ms. Reilly served as Assistant General
Counsel of Compliance and Enterprise Risk as well as Senior Counsel
of Environment, Health and Safety, PPG Industries. Ms. Reilly currently
serves as a member of the Board of Directors of UPMC
Mercy Hospital.
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Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
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P. Jerome Richey
Birth Date: February 23, 1949
Trustee
Indefinite Term
Began serving:
September 2013
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Management Consultant; Retired; formerly, Senior Vice
Chancellor and Chief Legal Officer, University of Pittsburgh and
Executive Vice President and Chief Legal Officer, CONSOL Energy Inc.
(now split into two separate publicly traded companies known as
CONSOL Energy Inc. and CNX Resources Corp.).
Other Directorships Held: None.
Qualifications: Mr. Richey has served in several business and legal
management roles and directorship positions throughout his career.
Mr. Richey most recently held the positions of Senior Vice Chancellor
and Chief Legal Officer, University of Pittsburgh. Mr. Richey previously
served as Chairman of the Board, Epilepsy Foundation of Western
Pennsylvania and Chairman of the Board, World Affairs Council of
Pittsburgh. Mr. Richey previously served as Chief Legal Officer and
Executive Vice President, CONSOL Energy Inc. and CNX Gas
Company; and Board Member, Ethics Counsel and Shareholder,
Buchanan Ingersoll & Rooney PC (a law firm).
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John S. Walsh
Birth Date:
November 28, 1957
Trustee
Indefinite Term
Began serving: January 1999
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; President and Director, Heat Wagon, Inc. (manufacturer
of construction temporary heaters); President and Director,
Manufacturers Products, Inc. (distributor of portable construction
heaters); President, Portable Heater Parts, a division of Manufacturers
Products, Inc.
Other Directorships Held: None.
Qualifications: Mr. Walsh has served in several business management
roles and directorship positions throughout his career. Mr. Walsh
previously served as Vice President, Walsh & Kelly, Inc.
(paving contractors).
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OFFICERS
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Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Lori A. Hensler
Birth Date: January 6, 1967
TREASURER
Officer since: April 2013
|
Principal Occupations: Principal Financial Officer and Treasurer of the
Federated Hermes Fund Family; Senior Vice President, Federated
Administrative Services; Financial and Operations Principal for
Federated Securities Corp.; and Assistant Treasurer, Federated
Investors Trust Company. Ms. Hensler has received the Certified
Public Accountant designation.
Previous Positions: Controller of Federated Hermes, Inc.; Senior Vice
President and Assistant Treasurer, Federated Investors Management
Company; Treasurer, Federated Investors Trust Company; Assistant
Treasurer, Federated Administrative Services, Federated
Administrative Services, Inc., Federated Securities Corp., Edgewood
Services, Inc., Federated Advisory Services Company, Federated
Equity Management Company of Pennsylvania, Federated Global
Investment Management Corp., Federated Investment Counseling,
Federated Investment Management Company, Passport Research,
Ltd., and Federated MDTA, LLC; Financial and Operations Principal for
Federated Securities Corp., Edgewood Services, Inc. and Southpointe
Distribution Services, Inc.
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|
Peter J. Germain
Birth Date:
September 3, 1959
CHIEF LEGAL OFFICER,
SECRETARY and EXECUTIVE
VICE PRESIDENT
Officer since: January 2005
|
Principal Occupations: Mr. Germain is Chief Legal Officer, Secretary
and Executive Vice President of the Federated Hermes Fund Family.
He is General Counsel, Chief Legal Officer, Secretary and Executive
Vice President, Federated Hermes, Inc.; Trustee and Senior Vice
President, Federated Investors Management Company; Trustee and
President, Federated Administrative Services; Director and President,
Federated Administrative Services, Inc.; Director and Vice President,
Federated Securities Corp.; Director and Secretary, Federated Private
Asset Management, Inc.; Secretary, Federated Shareholder Services
Company; and Secretary, Retirement Plan Service Company of
America. Mr. Germain joined Federated Hermes, Inc. in 1984 and is a
member of the Pennsylvania Bar Association.
Previous Positions: Deputy General Counsel, Special Counsel,
Managing Director of Mutual Fund Services, Federated Hermes, Inc.;
Senior Vice President, Federated Services Company; and Senior
Corporate Counsel, Federated Hermes, Inc.
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|
Stephen Van Meter
Birth Date: June 5, 1975
CHIEF COMPLIANCE
OFFICER AND SENIOR VICE
PRESIDENT
Officer since: July 2015
|
Principal Occupations: Senior Vice President and Chief Compliance
Officer of the Federated Hermes Fund Family; Vice President and
Chief Compliance Officer of Federated Hermes, Inc. and Chief
Compliance Officer of certain of its subsidiaries. Mr. Van Meter joined
Federated Hermes, Inc. in October 2011. He holds FINRA licenses
under Series 3, 7, 24 and 66.
Previous Positions: Mr. Van Meter previously held the position of
Compliance Operating Officer, Federated Hermes, Inc. Prior to joining
Federated Hermes, Inc., Mr. Van Meter served at the United States
Securities and Exchange Commission in the positions of Senior
Counsel, Office of Chief Counsel, Division of Investment Management
and Senior Counsel, Division of Enforcement.
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Annual Shareholder Report
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Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Deborah A. Cunningham
Birth Date:
September 15, 1959
CHIEF INVESTMENT OFFICER
Officer since: May 2004
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Principal Occupations: Deborah A. Cunningham was named Chief
Investment Officer of Federated Hermes’ money market products in
2004. She joined Federated Hermes in 1981 and has been a Senior
Portfolio Manager since 1997 and an Executive Vice President of the
Fund’s Adviser since 2009. Ms. Cunningham has received the
Chartered Financial Analyst designation and holds an M.S.B.A. in
Finance from Robert Morris College.
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Annual Shareholder Report
34
Evaluation and Approval of Advisory Contract–May 2022
Federated Hermes Institutional Money Market Management (the “Fund”)
At its meetings in May 2022 (the “May Meetings”), the Fund’s Board of Trustees (the “Board”), including those Trustees who are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940 (the “Independent Trustees”), reviewed and unanimously approved the continuation of the investment advisory contract between the Fund and Federated Investment Management Company (the “Adviser”) (the “Contract”) for an additional one-year term. The Board’s determination to approve the continuation of the Contract reflects the exercise of its business judgment after considering all of the information and factors believed to be relevant and appropriate on whether to approve the continuation of the existing arrangement. The information, factors and conclusions that formed the basis for the Board’s approval are summarized below.
Information Received and Review Process
At the request of the Independent Trustees, the Fund’s Chief Compliance Officer (the “CCO”) furnished to the Board in advance of its May Meetings an independent written evaluation presenting on the topics discussed below. The Board considered the CCO’s independent written evaluation (the “CCO Fee Evaluation Report”), along with other information, in evaluating the reasonableness of the Fund’s management fee and in determining to approve the continuation of the Contract. The CCO, in preparing the CCO Fee Evaluation Report, has the authority to retain consultants, experts or staff as reasonably necessary to assist in the performance of his duties, reports directly to the Board, and can be terminated only with the approval of a majority of the Independent Trustees. At the request of the Independent Trustees, the CCO Fee Evaluation Report followed the same general approach and covered the same topics as that of the report that had previously been delivered by the CCO in his capacity as “Senior Officer” prior to the elimination of the Senior Officer position in December 2017.
In addition to the extensive materials that comprise and accompany the CCO Fee Evaluation Report, the Board considered information specifically prepared in connection with the approval of the continuation of the Contract that was presented at the May Meetings. In this regard, in the months preceding the May Meetings, the Board requested and reviewed written responses and supporting materials prepared by the Adviser and its affiliates (collectively, “Federated Hermes”) in response to requests posed to Federated Hermes by independent legal counsel on behalf of the Independent Trustees encompassing a wide variety of topics, including those summarized below. The Board also considered such additional matters as the Independent Trustees deemed
Annual Shareholder Report
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reasonably necessary to evaluate the Contract, which included detailed information about the Fund and Federated Hermes furnished to the Board at its meetings throughout the year and in between regularly scheduled meetings on particular matters as the need arose.
The Board’s consideration of the Contract included review of materials and information covering the following matters, among others: the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates; Federated Hermes’ business and operations; the Adviser’s investment philosophy, personnel and processes; the Fund’s investment objectives and strategies; the Fund’s short-term and long-term performance (in absolute terms, both on a gross basis and net of expenses, and relative to the Fund’s particular investment program and a group of its peer funds and/or its benchmark, as appropriate); the Fund’s investment objectives; the Fund’s fees and expenses, including the advisory fee and the overall expense structure of the Fund (both in absolute terms and relative to a group of its peer funds), with due regard for contractual or voluntary expense limitations (if any); the financial condition of Federated Hermes; the Adviser’s profitability with respect to the Fund; distribution and sales activity for the Fund; and the use and allocation of brokerage commissions derived from trading the Fund’s portfolio securities (if any).
The Board also considered judicial decisions concerning allegedly excessive investment advisory fees charged to other registered funds in determining to approve the Contract. Using these judicial decisions as a guide, the Board observed that the following factors may be relevant to an adviser’s fiduciary duty with respect to its receipt of compensation from a fund: (1) the nature and quality of the services provided by the adviser to the fund and its shareholders, including the performance of the fund, its benchmark and comparable funds; (2) the adviser’s cost of providing the services and the profitability to the adviser of providing advisory services to the fund; (3) the extent to which the adviser may realize “economies of scale” as the fund grows larger and, if such economies of scale exist, whether they have been appropriately shared with the fund and its shareholders or the family of funds; (4) any “fall-out” benefits that accrue to the adviser because of its relationship with the fund, including research services received from brokers that execute fund trades and any fees paid to affiliates of the adviser for services rendered to the fund; (5) comparative fee and expense structures, including a comparison of management fees paid to the adviser with those paid by similar funds both internally and externally as well as management fees charged to institutional and other advisory clients of the adviser for what might be viewed as like services; and (6) the extent of care, conscientiousness and independence with which the fund’s board members perform their duties and their expertise, including whether they are fully informed about all facts the board deems relevant to its consideration of the adviser’s services and fees. The Board noted that the Securities and Exchange Commission (“SEC”) disclosure requirements
Annual Shareholder Report
36
regarding the basis for a fund board’s approval of the fund’s investment advisory contract generally align with the factors listed above. The Board was guided by these factors in its review of the Contract to the extent it considered them to be appropriate and relevant, as discussed further below. The Board considered and weighed these factors in light of its substantial accumulated experience in governing the Fund and working with Federated Hermes on matters relating to the oversight of the other funds advised by Federated Hermes (each, a “Federated Hermes Fund” and, collectively, the (“Federated Hermes Funds”).
In addition to considering the above-referenced factors, the Board was mindful of the preferences and expectations of Fund shareholders and the potential disruptions of the Fund’s operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew the Contract. In particular, the Board recognized that many shareholders likely have invested in the Fund on the strength of Federated Hermes’ industry standing and reputation and with the expectation that Federated Hermes will have a continuing role in providing advisory services to the Fund. Thus, the Board observed that in the marketplace there are a range of investment options available to the Fund’s shareholders and such shareholders, having had the opportunity to consider other investment options, have effectively selected Federated Hermes by virtue of investing in the Fund.
In determining to approve the continuation of the Contract, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the continuation of the Contract was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Contract. The Board recognized that its evaluation process is evolutionary and that the factors considered and emphasis placed on relevant factors may change in recognition of changing circumstances in the registered fund marketplace. The Independent Trustees were assisted throughout the evaluation process by independent legal counsel. In connection with their deliberations at the May Meetings, the Independent Trustees met separately in executive session with their independent legal counsel and without management present to review the relevant materials and consider their responsibilities under applicable laws. In addition, senior management representatives of Federated Hermes also met with the Independent Trustees and their independent legal counsel to discuss the materials and presentations furnished to the Board at the May Meetings. The Board considered the approval of the Contract for the Fund as part of its consideration of agreements for funds across the family of Federated Hermes Funds, but its approvals were made on a fund-by-fund basis.
Annual Shareholder Report
37
Nature, Extent and Quality of Services
The Board considered the nature, extent and quality of the services provided to the Fund by the Adviser and the resources of Federated Hermes dedicated to the Fund. In this regard, the Board evaluated, among other things, the terms of the Contract and the range of services provided to the Fund by Federated Hermes. The Board considered the Adviser’s personnel, investment philosophy and process, investment research capabilities and resources, trade operations capabilities, experience and performance track record. The Board reviewed the qualifications, backgrounds and responsibilities of the portfolio management team primarily responsible for the day-to-day management of the Fund and Federated Hermes’ ability and experience in attracting and retaining qualified personnel to service the Fund. In addition, the Board noted that the Fund is a money market mutual fund that operates in accordance with the limitations set forth in Rule 2a-7 under the 1940 Act. In this connection, the Board considered the expertise of the Adviser in managing money market funds, its extensive experience with the requirements of Rule 2a-7 and its commitment to managing the Fund in accordance with these requirements. The Board also considered the Adviser’s ability to deliver competitive investment performance for the Fund when compared to the Fund’s Performance Peer Group (as defined below), which was deemed by the Board to be a useful indicator of how the Adviser is executing the Fund’s investment program. The Board also considered the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, in order to maintain a positive yield for the Fund in the low interest rate environment.
In addition, the Board considered the financial resources and overall reputation of Federated Hermes and its willingness to consider and make investments in personnel, infrastructure, technology, cybersecurity, business continuity planning and operational enhancements that are designed to benefit the Federated Hermes Funds. The Board noted the significant acquisition of Hermes Fund Managers Limited by Federated Hermes, which has deepened the organization’s investment management expertise and capabilities and expanded the investment process for all of the Federated Hermes Funds to have access to analytical resources related to environmental, social and governance (“ESG”) factors and issuer engagement on ESG matters. The Board considered the quality of Federated Hermes’ communications with the Board and responsiveness to Board inquiries and requests made from time to time with respect to the Fund and other Federated Hermes Funds. In this regard, the Board took into account Federated Hermes’ communications with the Board in light of the pandemic. The Board also considered that Federated Hermes is responsible for providing the Federated Hermes Funds’ officers.
The Board received and evaluated information regarding Federated Hermes’ regulatory and compliance environment. The Board considered Federated Hermes’ compliance program and compliance history and reports from the CCO about Federated Hermes’ compliance with applicable laws and
Annual Shareholder Report
38
regulations, including responses to regulatory developments and any compliance or other issues raised by regulatory agencies. The Board also noted Federated Hermes’ support of the Federated Hermes Funds’ compliance control structure and the compliance-related resources devoted by Federated Hermes in support of the Fund’s obligations pursuant to Rule 38a-1 under the Investment Company Act of 1940, including Federated Hermes’ commitment to respond to rulemaking and other regulatory initiatives of the SEC. The Board considered Federated Hermes’ approach to internal audits and risk management with respect to the Federated Hermes Funds and its day-to-day oversight of the Federated Hermes Funds’ compliance with their investment objectives and policies as well as with applicable laws and regulations, noting that regulatory and other developments had over time led to an increase in the scope of Federated Hermes’ oversight in this regard, including in connection with the designation of the Federated Hermes Funds’ investment advisers as the administrators of the Federated Hermes Funds’ liquidity risk management program.
The Board also considered the implementation of Federated Hermes’ business continuity plans and recognized steps taken by Federated Hermes to continue to provide the same nature, extent and quality of services to the Federated Hermes Funds during the pandemic. In addition, the Board noted Federated Hermes’ commitment to maintaining high quality systems and expending substantial resources to prepare for and respond to ongoing changes due to the market, regulatory and control environments in which the Fund and its service providers operate, including changes associated with the pandemic.
The Board considered Federated Hermes’ efforts to provide shareholders in the Federated Hermes Funds with a comprehensive array of funds with different investment objectives, policies and strategies. The Board considered the expenses that Federated Hermes had incurred, as well as the entrepreneurial and other risks assumed by Federated Hermes, in sponsoring and providing on-going services to new funds to expand these opportunities for shareholders. The Board noted the benefits to shareholders of being part of the family of Federated Hermes Funds, which include the general right to exchange investments between the same class of shares without the incurrence of additional sales charges.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided by the Adviser to the Fund.
Fund Investment Performance
The Board considered the investment performance of the Fund. In evaluating the Fund’s investment performance, the Board considered performance results in light of the Fund’s investment objective, strategies and risks. The Board considered detailed investment reports on, and the Adviser’s analysis of, the Fund’s performance over different time periods that were
Annual Shareholder Report
39
provided to the Board throughout the year and in connection with the May Meetings. These reports include, among other items, information on the Fund’s gross and net returns, the Fund’s investment performance compared to one or more relevant categories or groups of peer funds and the Fund’s benchmark index, performance attribution information and commentary on the effect of market conditions.
The Board also reviewed comparative information regarding the performance of other registered funds in the category of peer funds selected by iMoneyNet, an independent fund ranking organization (the “Performance Peer Group”). The Board noted the CCO’s view that comparisons to fund peer groups may be helpful, though not conclusive, in evaluating the performance of the Adviser in managing the Fund. The Board considered, in evaluating such comparisons, that in some cases there may be differences in the funds’ objectives or investment management techniques, or the costs to implement the funds, even within the same Performance Peer Group.
The Fund’s performance fell below the median of the Performance Peer Group for the one-year period ended December 31, 2021. The Board discussed the Fund’s performance with the Adviser and recognized the efforts being taken by the Adviser in the context of other factors considered relevant by the Board. The Board also considered the relatively tight dispersion of performance data with respect to the Fund and its Peer Group.
Based on these considerations, the Board concluded that it had continued confidence in the Adviser’s overall capabilities to manage the Fund.
Fund Expenses
The Board considered the advisory fee and overall expense structure of the Fund and the comparative fee and expense information that had been provided in connection with the May Meetings. In this regard, the Board was presented with, and considered, information regarding the contractual advisory fee rates, net advisory fee rates, total expense ratios and each element of the Fund’s total expense ratio (i.e., gross and net advisory fees, administrative fees, custody fees, portfolio accounting fees and transfer agency fees) relative to an appropriate group of peer funds compiled by Federated Hermes from the category of peer funds selected by iMoneyNet (the “Expense Peer Group”). The Board received a description of the methodology used to select the Expense Peer Group from the overall iMoneyNet category. The Board also reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall iMoneyNet category.
While mindful that courts have cautioned against giving too much weight to comparative information concerning fees charged by other advisers for managing funds with comparable investment programs, the Board noted that it found the use of such comparisons to be relevant to its evaluation. The Board focused on comparisons with other similar registered funds more heavily than non-registered fund products or services because such comparisons are
Annual Shareholder Report
40
believed to be more relevant. The Board considered that other registered funds are the products most like the Fund, in that they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle, in fact, chosen and maintained by the Fund’s shareholders. The Board noted that the range of such other registered funds’ fees and expenses, therefore, appears to be a relevant indicator of what investors have found to be reasonable in the marketplace in which the Fund competes.
The Board reviewed the contractual advisory fee rate, net advisory fee rate and other expenses of the Fund and noted the position of the Fund’s fee rates relative to its Expense Peer Group. In this regard, the Board noted that the contractual advisory fee rate was above the median of the Expense Peer Group, but the Board noted the applicable waivers and reimbursements, and that the overall expense structure of the Fund remained competitive in the context of other factors considered by the Board.
The Board also received and considered information about the fees charged by Federated Hermes for providing advisory services to other types of clients with investment strategies similar to those of the Federated Hermes Funds, including non-registered fund clients (such as institutional separate accounts) and third-party unaffiliated registered funds for which the Adviser or its affiliates serve as sub-adviser. The Board noted the CCO’s conclusion that non-registered fund clients are inherently different products due to the following differences, among others: (i) different types of targeted investors; (ii) different applicable laws and regulations; (iii) different legal structures; (iv) different average account sizes and portfolio management techniques made necessary by different cash flows and different associated costs; (v) the time spent by portfolio managers and their teams (among other personnel across various departments, including legal, compliance and risk management) in reviewing securities pricing and fund liquidity; (vi) different administrative responsibilities; (vii) different degrees of risk associated with management; and (viii) a variety of different costs. The Board also considered information regarding the differences in the nature of the services required for Federated Hermes to manage its proprietary registered fund business versus managing a discrete pool of assets as a sub-adviser to another institution’s registered fund, noting the CCO’s view that Federated Hermes generally performs significant additional services and assumes substantially greater risks in managing the Fund and other Federated Hermes Funds than in its role as sub-adviser to an unaffiliated third-party registered fund. The Board noted that the CCO did not consider the fees for providing advisory services to other types of clients to be determinative in judging the appropriateness of the Federated Hermes Funds’ advisory fees.
Based on these considerations, the Board concluded that the fees and total operating expenses of the Fund, in conjunction with other matters considered, are reasonable in light of the services provided.
Annual Shareholder Report
41
Profitability
The Board received and considered profitability information furnished by Federated Hermes, as requested by the CCO. Such profitability information included revenues reported on a fund-by-fund basis and estimates of the allocation of expenses made on a fund-by-fund basis, using allocation methodologies specified by the CCO and described to the Board. The Board considered the CCO’s view that, while these cost allocation reports apply consistent allocation processes, the inherent difficulties in allocating costs on a fund-by-fund basis continues to cause the CCO to question the precision of the process and to conclude that such reports may be unreliable because a single change in an allocation estimate may dramatically alter the resulting estimate of cost and/or profitability of a Federated Hermes Fund and may produce unintended consequences. In addition, the Board considered the CCO’s view that the allocation methodologies used by Federated Hermes in estimating profitability for purposes of reporting to the Board in connection with the continuation of the Contract are consistent with the methodologies previously reviewed by an independent consultant. The Board noted that the independent consultant had previously conducted a review of the allocation methodologies and reported that, although there is no single best method to allocate expenses, the methodologies used by Federated Hermes are reasonable. The Board noted the impact of the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, on the profitability of the Fund to the Adviser.
The Board also reviewed information compiled by Federated Hermes comparing its profitability information to other publicly held fund management companies, including information regarding profitability trends over time. The Board considered the CCO’s conclusion that, based on such profitability information, Federated Hermes’ profit margins did not appear to be excessive. The Board also considered the CCO’s view that Federated Hermes appeared financially sound, with the resources necessary to fulfill its obligations under its contracts with the Federated Hermes Funds.
Economies of Scale
The Board received and considered information about the notion of possible realization of “economies of scale” as a fund grows larger, the difficulties of calculating economies of scale at an individual fund level, and the extent to which potential scale benefits are shared with shareholders. In this regard, the Board considered that Federated Hermes has made significant and long-term investments in areas that support all of the Federated Hermes Funds, such as: personnel, processes and tools for portfolio management, including the use of market data on which portfolio managers make investment decisions; trading operations; ESG integration and issuer engagement on ESG matters; shareholder services; compliance; business continuity; cybersecurity; internal audit and risk management functions; and technology that supports the provision of investment management services. The Board noted that Federated
Annual Shareholder Report
42
Hermes’ investments in these areas are extensive and are designed to provide enhanced services to the Federated Hermes Funds and their shareholders. The Board considered that the benefits of these investments are likely to be shared with the family of Federated Hermes Funds as a whole. In addition, the Board considered that fee waivers and expense reimbursements are another means for potential economies of scale to be shared with shareholders and can provide protection from an increase in expenses if a Federated Hermes Fund’s assets decline. The Board considered that, in order for the Federated Hermes Funds to remain competitive in the marketplace, Federated Hermes has frequently waived fees and/or reimbursed expenses for the Federated Hermes Funds and has disclosed to shareholders and/or reported to the Board its intention to do so (or continue to do so) in the future. The Board also considered Federated Hermes’ reductions in contractual management fees for certain Federated Hermes Funds during the prior year, including in response to the CCO’s recommendations in the prior year’s CCO Fee Evaluation Report, which have resulted in benefits being realized by shareholders.
The Board also considered reports on adviser-paid fees (commonly referred to as “revenue sharing”) that were provided to the Board throughout the year and in connection with the May Meetings. The Board considered that Federated Hermes and the CCO believe that this information should be viewed to determine if there was an incentive to either not apply breakpoints, or to apply breakpoints at higher levels, and should not be viewed to evaluate the reasonableness of advisory fees. The Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which is compounded by the lack of any uniform methodology or pattern with respect to structuring fund advisory fees with breakpoints that serve to reduce the fees as a fund attains a certain size.
Other Benefits
The Board considered information regarding the compensation and other ancillary (or “fall-out”) benefits that Federated Hermes derived from its relationships with the Federated Hermes Funds. The Board noted that, in addition to receiving advisory fees under the Federated Hermes Funds’ investment advisory contracts, Federated Hermes’ affiliates also receive fees for providing other services to the Federated Hermes Funds under separate contracts (e.g., for serving as the Federated Hermes Funds’ administrator and distributor). In this regard, the Board considered that certain of Federated Hermes’ affiliates provide distribution and shareholder services to the Federated Hermes Funds, for which they may be compensated through distribution and servicing fees paid pursuant to Rule 12b-1 plans or otherwise. The Board also received and considered information detailing any indirect benefit that Federated Hermes may derive from its receipt of research services from brokers who execute portfolio trades for the Federated Hermes Funds.
Annual Shareholder Report
43
Conclusions
The Board considered: (i) the CCO’s conclusion that his observations and the information accompanying the CCO Fee Evaluation Report show that the management fee for the Fund is reasonable; and (ii) the CCO’s recommendation that the Board approve the management fee. The Board noted that, under these circumstances, no changes were recommended to, and no objection was raised to the continuation of, the Contract by the CCO. The CCO also recognized that the Board’s evaluation of the Federated Hermes Funds’ advisory and sub-advisory arrangements is a continuing and ongoing process that is informed by the information that the Board requests and receives from management throughout the course of the year and, in this regard, the CCO noted certain items for future reporting to the Board or further consideration by management as the Board continues its ongoing oversight of the Federated Hermes Funds.
On the basis of the information and factors summarized above, among other information and factors deemed relevant by the Board, and the evaluation thereof, the Board, including the Independent Trustees, unanimously voted to approve the continuation of the Contract. The Board based its determination to approve the Contract on the totality of the circumstances and relevant factors and with a view of past and future long-term considerations. Not all of the factors and considerations identified above were necessarily deemed to be relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were deemed to be relevant, the Board’s determination to approve the continuation of the Contract reflects its view that Federated Hermes’ performance and actions provided a satisfactory basis to support the determination to approve the continuation of the existing arrangement.
Annual Shareholder Report
44
Voting Proxies on Fund Portfolio Securities
A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund’s portfolio is available, without charge and upon request, by calling 1-800-341-7400, Option #4. A report on “Form N-PX” of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available via the Proxy Voting Record (Form N-PX) link associated with the Fund and share class name at FederatedInvestors.com/FundInformation. Form N-PX filings are also available at the SEC’s website at sec.gov.
Portfolio Schedule
The Fund files with the SEC a complete schedule of its portfolio holdings as of the close of each month on “Form N-MFP.” Form N-MFP is available on the SEC’s website at sec.gov. You may access Form N-MFP via the link to the Fund and share class name at FederatedInvestors.com.
Annual Shareholder Report
45
You could lose money by investing in the Fund. Because the share price of the Fund will fluctuate, when you sell your shares they may be worth more or less than what you originally paid for them. The Fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
This Report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund’s Prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.
Federated Hermes Institutional Money Market Management
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at FederatedInvestors.com
or call 1-800-341-7400.
or call 1-800-341-7400.
Federated Securities Corp., Distributor
CUSIP 608919775
CUSIP 608919742
CUSIP 608919759
CUSIP 60934N211
CUSIP 608919742
CUSIP 608919759
CUSIP 60934N211
28876 (9/22)
© 2022 Federated Hermes, Inc.
Annual Shareholder Report
July 31, 2022
|
Share Class | Ticker
|
Automated | PTAXX
|
R | PTRXX
|
Wealth | PCOXX
|
|
|
Advisor | PCVXX
|
Service | PRCXX
|
Cash II | PCDXX
|
|
|
Cash Series | PTSXX
|
Capital | PCCXX
|
Trust | PTTXX
|
Federated Hermes Prime Cash Obligations Fund
A Portfolio of Federated Hermes Money Market Obligations Trust
Dear Valued Shareholder,
We are pleased to present the Annual Shareholder Report for your fund covering the period from August 1, 2021 through July 31, 2022. This report includes a complete listing of your fund’s holdings, performance information and financial statements along with other important fund information.
As a global leader in active, responsible investment management, Federated Hermes is guided by our conviction that responsible investing is the best way to create wealth over the long term. The company provides capabilities across a wide range of asset classes to investors around the world.
In addition, FederatedInvestors.com offers quick and easy access to valuable resources that include timely fund updates, economic and market insights from our investment strategists and financial planning tools. You can also access many of those insights by following us on Twitter (@FederatedHermes) and LinkedIn.
Thank you for investing with us. We hope you find this information useful and look forward to keeping you informed.
Sincerely,
J. Christopher Donahue, President
The Fund is a Retail Money Market Fund and is only available for investment to accounts beneficially owned by natural persons.
Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee
Portfolio of Investments Summary Tables (unaudited)
At July 31, 2022, the Fund’s portfolio composition1 was as follows:
|
Security Type
|
Percentage of
Total Net Assets
|
|
Other Repurchase Agreements and Repurchase Agreements
|
32.8%
|
|
Variable Rate Instruments
|
22.3%
|
|
Bank Instruments
|
22.2%
|
|
Commercial Paper
|
12.0%
|
|
U.S. Treasury Securities
|
0.3%
|
|
Cash Equivalent2
|
8.0%
|
|
Other Assets and Liabilities—Net3
|
2.4%
|
|
TOTAL
|
100%
|
|
1
|
See the Fund’s Prospectus and Statement of Additional Information for more complete
information regarding these security types. With respect to this table, Commercial Paper
includes commercial paper with interest rates that are fixed or that reset periodically.
|
|
2
|
Cash Equivalents include any investments in money market mutual funds.
|
|
3
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
At July 31, 2022, the Fund’s effective maturity schedule1 was as follows:
|
Securities With an
Effective Maturity of:
|
Percentage of
Total Net Assets
|
|
1-7 Days2
|
76.6%
|
|
8-30 Days
|
6.2%
|
|
31-90 Days
|
8.9%
|
|
91-180 Days
|
3.1%
|
|
181 Days or more
|
2.8%
|
|
Other Assets and Liabilities—Net3
|
2.4%
|
|
Total
|
100%
|
|
1
|
Effective maturity is determined in accordance with the requirements of Rule 2a-7 under the
Investment Company Act of 1940, which regulates money market mutual funds.
|
|
2
|
Overnight securities comprised 37.3% of the Fund’s portfolio.
|
|
3
|
Assets, other than investments in securities, less liabilities. See Statement of Assets
and Liabilities.
|
Annual Shareholder Report
1
Portfolio of Investments
July 31, 2022
|
Principal
Amount
or Shares
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— 22.3%
|
|
|
|
|
Finance - Banking— 19.8%
|
|
|
$ 95,000,000
|
|
Anglesea Funding LLC, (Bank of Nova Scotia, Toronto
COL)/(Nordea Bank Abp COL)/(Societe Generale, Paris COL),
2.460% (SOFR +0.180%), 8/10/2022
|
$ 95,000,000
|
|
15,000,000
|
|
Anglesea Funding LLC, (Bank of Nova Scotia, Toronto
COL)/(Nordea Bank Abp COL)/(Societe Generale, Paris COL),
2.500% (SOFR +0.220%), 8/5/2022
|
15,000,000
|
|
90,000,000
|
|
Anglesea Funding LLC, (Bank of Nova Scotia, Toronto
COL)/(Nordea Bank Abp COL)/(Societe Generale, Paris COL),
2.680% (SOFR +0.360%), 12/23/2022
|
90,000,000
|
|
15,000,000
|
|
Anglesea Funding LLC, (Bank of Nova Scotia, Toronto
COL)/(Nordea Bank Abp COL)/(Societe Generale, Paris COL),
2.720% (SOFR +0.440%), 11/18/2022
|
15,000,000
|
|
13,000,000
|
|
ASB Bank Ltd., 2.000% (SOFR +0.470%), 8/2/2022
|
13,000,000
|
|
60,000,000
|
|
Australia & New Zealand Banking Group, Melbourne, 2.430%
(SOFR +0.150%), 8/1/2022
|
59,990,994
|
|
195,000,000
|
|
Bank of Montreal, 2.230% (SOFR +0.700%), 8/1/2022
|
195,000,000
|
|
100,000,000
|
2
|
Bank of Montreal, 2.430% (SOFR +0.150%), 8/1/2022
|
100,000,000
|
|
45,000,000
|
|
Bank of Montreal, 2.530% (SOFR +0.250%), 8/1/2022
|
45,000,000
|
|
50,000,000
|
|
Bank of Montreal, 2.580% (SOFR +0.300%), 8/1/2022
|
50,000,000
|
|
73,500,000
|
|
Bank of Montreal, 2.580% (SOFR +0.300%), 8/1/2022
|
73,500,000
|
|
85,000,000
|
|
Bank of Montreal, 2.930% (SOFR +0.650%), 8/1/2022
|
85,000,000
|
|
150,000,000
|
2
|
Bank of Nova Scotia, Toronto, 2.430% (SOFR +0.150%), 8/1/2022
|
150,000,000
|
|
20,000,000
|
|
Bank of Nova Scotia, Toronto, 2.530% (SOFR +0.250%), 8/1/2022
|
20,000,000
|
|
50,000,000
|
2
|
Bank of Nova Scotia, Toronto, 2.530% (SOFR +0.250%), 8/1/2022
|
50,000,000
|
|
206,000,000
|
2
|
Bank of Nova Scotia, Toronto, 2.780% (SOFR +0.500%), 8/1/2022
|
206,000,000
|
|
40,000,000
|
2
|
Bank of Nova Scotia, Toronto, 2.860% (SOFR +0.580%), 8/1/2022
|
40,000,000
|
|
73,300,000
|
|
Bank of Nova Scotia, Toronto, 2.950% (SOFR +0.670%), 8/1/2022
|
73,300,000
|
|
25,000,000
|
2
|
Canadian Imperial Bank of Commerce, 2.490% (SOFR
+0.210%), 8/1/2022
|
25,000,000
|
|
18,750,000
|
2
|
Canadian Imperial Bank of Commerce, 2.780% (SOFR
+0.500%), 8/1/2022
|
18,749,999
|
|
250,000,000
|
2
|
Canadian Imperial Bank of Commerce, 2.780% (SOFR
+0.500%), 8/1/2022
|
250,000,000
|
|
80,000,000
|
2
|
Canadian Imperial Bank of Commerce, 2.830% (SOFR
+0.550%), 8/1/2022
|
80,000,000
|
|
71,500,000
|
2
|
Canadian Imperial Bank of Commerce, 2.920% (SOFR
+0.640%), 8/1/2022
|
71,500,000
|
|
70,000,000
|
|
Collateralized Commercial Paper V Co. LLC, (J.P. Morgan Securities
LLC COL), 2.780% (SOFR +0.500%), 8/1/2022
|
70,000,000
|
Annual Shareholder Report
2
|
Principal
Amount
or Shares
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 60,000,000
|
|
Collateralized Commercial Paper V Co. LLC, (J.P. Morgan Securities
LLC COL), 2.830% (SOFR +0.550%), 8/1/2022
|
$ 60,000,000
|
|
45,000,000
|
|
Commonwealth Bank of Australia, 2.780% (SOFR
+0.500%), 8/1/2022
|
45,000,000
|
|
39,000,000
|
|
Commonwealth Bank of Australia, 2.820% (SOFR
+0.540%), 8/1/2022
|
39,000,000
|
|
6,725,000
|
|
Fiore Capital LLC, (Wells Fargo Bank, N.A. LOC), 2.420%, 8/4/2022
|
6,725,000
|
|
1,075,000
|
|
Gadsden, AL Airport Authority, Series 2004, (Wells Fargo Bank,
N.A. LOC), 1.860%, 8/4/2022
|
1,075,000
|
|
355,000
|
|
Montgomery, AL IDB, (Wells Fargo Bank, N.A. LOC),
2.630%, 8/4/2022
|
355,000
|
|
89,500,000
|
2
|
MUFG Bank Ltd., 1.860% (SOFR +0.330%), 8/1/2022
|
89,500,000
|
|
110,000,000
|
|
National Australia Bank Ltd., Melbourne, 2.460% (SOFR
+0.180%), 8/2/2022
|
110,000,000
|
|
80,000,000
|
2
|
Nordea Bank Abp, 1.680% (SOFR +0.150%), 8/1/2022
|
80,000,000
|
|
175,000,000
|
2
|
Nordea Bank Abp, 1.690% (SOFR +0.160%), 8/1/2022
|
175,000,000
|
|
50,000,000
|
2
|
Nordea Bank Abp, 2.080% (SOFR +0.550%), 8/1/2022
|
50,000,000
|
|
19,670,000
|
|
Osprey Properties Limited Partnership, LLLP & Nighthawk
Properties, LLC, Series 2008, (Wells Fargo Bank, N.A. LOC),
2.370%, 8/4/2022
|
19,670,000
|
|
29,435,000
|
|
Panel Rey S.A., Series 2016, (Citibank N.A., New York LOC),
2.450%, 8/4/2022
|
29,435,000
|
|
90,000,000
|
|
Royal Bank of Canada, 2.830% (SOFR +0.550%), 8/1/2022
|
90,000,000
|
|
200,000,000
|
|
Royal Bank of Canada, 3.030% (SOFR +0.750%), 8/1/2022
|
200,000,000
|
|
100,000,000
|
|
Royal Bank of Canada, New York Branch, 2.430% (SOFR
+0.150%), 8/2/2022
|
100,000,000
|
|
75,000,000
|
|
Royal Bank of Canada, New York Branch, 2.430% (SOFR
+0.150%), 8/2/2022
|
75,000,000
|
|
405,000
|
|
Spira Millennium LLC, Series 2001, (Bank of America N.A. LOC),
2.380%, 8/4/2022
|
405,000
|
|
100,000,000
|
|
Svenska Handelsbanken, Stockholm, 2.030% (SOFR
+0.500%), 8/1/2022
|
100,000,000
|
|
39,000,000
|
2
|
Svenska Handelsbanken, Stockholm, 2.080% (SOFR
+0.550%), 8/1/2022
|
39,000,000
|
|
36,732,455
|
|
Taxable Tender Option Bond Trust 2021-MIZ9060TX,
(Series 2021-MIZ9060TX) VRDNs, (GTD by Mizuho Bank
Ltd.)/(Mizuho Bank Ltd. LIQ), 2.590%, 8/1/2022
|
36,732,455
|
|
25,000,000
|
|
Taxable Tender Option Bond Trust 2021-MIZ9071TX,
(Series 2021-MIZ9071TX) VRDNs, (GTD by Mizuho Bank
Ltd.)/(Mizuho Bank Ltd. LIQ), 2.720%, 8/1/2022
|
25,000,000
|
|
3,954,173
|
|
Taxable Tender Option Bond Trust 2021-MIZ9083TX,
(Series 2021-MIZ9083TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho
Bank Ltd. LOC), 2.590%, 8/1/2022
|
3,954,173
|
Annual Shareholder Report
3
|
Principal
Amount
or Shares
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 18,750,000
|
|
Taxable Tender Option Bond Trust 2022-MIZ9087TX,
(Series 2022-MIZ9096TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho
Bank Ltd. LOC), 2.640%, 8/4/2022
|
$ 18,750,000
|
|
30,000,000
|
|
Taxable Tender Option Bond Trust2021-MIZ9070TX,
(Series 2021-MIZ9070TX) VRDNs, (GTD by Mizuho Bank
Ltd.)/(Mizuho Bank Ltd. LIQ), 2.720%, 8/1/2022
|
30,000,000
|
|
118,000,000
|
2
|
Toronto Dominion Bank, 1.930% (SOFR +0.400%), 8/1/2022
|
118,000,000
|
|
18,290,000
|
|
Triborough Bridge & Tunnel Authority, NY, (Taxable Series E)
Weekly VRDNs, (Bank of America N.A. LOC), 2.310%, 8/4/2022
|
18,290,000
|
|
20,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.780% (SOFR
+0.500%), 8/1/2022
|
20,000,000
|
|
20,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.780% (SOFR
+0.500%), 8/1/2022
|
20,000,000
|
|
250,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.780% (SOFR
+0.500%), 8/2/2022
|
250,000,000
|
|
|
|
TOTAL
|
3,741,932,621
|
|
|
|
Finance - Retail— 0.7%
|
|
|
25,000,000
|
|
Chariot Funding LLC, 1.710% (SOFR +0.180%), 8/1/2022
|
25,000,000
|
|
50,000,000
|
|
Chariot Funding LLC, 2.680% (SOFR +0.400%), 8/1/2022
|
50,000,000
|
|
15,000,000
|
|
Thunder Bay Funding, LLC, 2.080% (SOFR +0.550%), 1/20/2023
|
15,000,000
|
|
20,000,000
|
|
Thunder Bay Funding, LLC, 2.080% (SOFR +0.550%), 9/26/2022
|
20,000,000
|
|
25,000,000
|
|
Thunder Bay Funding, LLC, 2.880% (SOFR +0.600%), 10/20/2022
|
25,000,000
|
|
|
|
TOTAL
|
135,000,000
|
|
|
|
Government Agency— 1.8%
|
|
|
5,915,000
|
|
1320 W Jefferson LLC, (Federal Home Loan Bank of San Francisco
LOC), 2.450%, 8/3/2022
|
5,915,000
|
|
4,925,000
|
|
Andrew Long Irrevocable Family Trust, (Federal Home Loan Bank of
Dallas LOC), 2.450%, 8/4/2022
|
4,925,000
|
|
2,700,000
|
|
Archer 1 LLC, (Federal Home Loan Bank of San Francisco LOC),
2.450%, 8/4/2022
|
2,700,000
|
|
2,100,000
|
|
BWF Forge TL Properties Owner LLC, (Federal Home Loan Bank of
Des Moines LOC)/(Federal Home Loan Bank of San Francisco LOC),
2.450%, 8/4/2022
|
2,100,000
|
|
1,695,000
|
|
CMR LLC, CMR LLC Project Series 2017, (Federal Home Loan Bank
of Indianapolis LOC), 2.610%, 8/4/2022
|
1,695,000
|
|
5,635,000
|
|
Dennis Wesley Company, Inc., The Dennis Wesley Company, Inc.
Project, (Federal Home Loan Bank of Indianapolis LOC),
2.450%, 8/4/2022
|
5,635,000
|
|
6,130,000
|
|
Frank Dale Insurance Trust, (Federal Home Loan Bank of Dallas
LOC), 2.450%, 8/4/2022
|
6,130,000
|
|
11,100,000
|
|
Ivy Row at South, LLC, (Federal Home Loan Bank of Atlanta LOC),
2.450%, 8/4/2022
|
11,100,000
|
|
6,740,000
|
|
Mason Harrison Ratliff Enterprises, LLC, (Federal Home Loan Bank
of Dallas LOC), 2.450%, 8/4/2022
|
6,740,000
|
Annual Shareholder Report
4
|
Principal
Amount
or Shares
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— continued
|
|
|
|
|
Government Agency— continued
|
|
|
$ 30,200,000
|
|
Mike P. Sturdivant, Sr. Family Trust, (Federal Home Loan Bank of
Dallas LOC), 2.450%, 8/4/2022
|
$ 30,200,000
|
|
25,622,500
|
|
Naples SI, LLC, (Federal Home Loan Bank of Indianapolis LOC),
2.450%, 8/4/2022
|
25,622,500
|
|
35,960,000
|
|
Park Stanton Place LP, (Federal Home Loan Bank of San Francisco
LOC), 2.450%, 8/4/2022
|
35,960,000
|
|
6,215,000
|
|
Phenix City, AL Downtown Redevelopment Authority, Series
2013-A, (Federal Home Loan Bank of New York LOC),
2.450%, 8/4/2022
|
6,215,000
|
|
21,000,000
|
|
Pittsburg Fox Creek Associates L.P., Series 2011-A, (Federal Home
Loan Bank of San Francisco LOC), 2.450%, 8/4/2022
|
21,000,000
|
|
5,225,000
|
|
Public Finance Authority, Series 2015-A Ram Eufaula Hospitality,
LLC, (Federal Home Loan Bank of New York LOC),
2.500%, 8/4/2022
|
5,225,000
|
|
6,000,000
|
|
Riverview Project, Series 2021, (Federal Home Loan Bank of Des
Moines LOC), 2.450%, 8/4/2022
|
6,000,000
|
|
15,150,000
|
|
Rohnert Park 668, L.P., (Federal Home Loan Bank of San Francisco
LOC), 2.450%, 8/4/2022
|
15,150,000
|
|
7,600,000
|
|
Sandy Jacobs Irrevocable Insurance Trust, Series 2019, (Federal
Home Loan Bank of Des Moines LOC), 2.450%, 8/4/2022
|
7,600,000
|
|
22,065,000
|
|
Sendra Family Irrevocable Trust, (Federal Home Loan Bank of Dallas
LOC), 2.450%, 8/4/2022
|
22,065,000
|
|
11,260,000
|
|
Shawn R. Trapuzzano Irrevocable Insurance Trust, (Federal Home
Loan Bank of Pittsburgh LOC), 2.450%, 8/4/2022
|
11,260,000
|
|
4,860,000
|
|
Spingola Insurance Trust, (Federal Home Loan Bank of Dallas LOC),
2.450%, 8/4/2022
|
4,860,000
|
|
2,560,000
|
|
The J.G. Aguirre Master Trust, (Federal Home Loan Bank of Atlanta
LOC), 2.450%, 8/4/2022
|
2,560,000
|
|
23,765,000
|
|
The Jacob Rosenstein Irrevocable Life Insurance Trust, (Federal
Home Loan Bank of Des Moines LOC), 2.450%, 8/4/2022
|
23,765,000
|
|
4,150,000
|
|
The Mary Jane Beauregard Irrevocable Insurance Trust of 2017,
(Federal Home Loan Bank of Dallas LOC), 2.450%, 8/3/2022
|
4,150,000
|
|
4,710,000
|
|
The Mulberry Family Trust, (Federal Home Loan Bank of Dallas
LOC), 2.450%, 8/4/2022
|
4,710,000
|
|
20,330,000
|
|
The Murray D. Berry Trust, (Federal Home Loan Bank of Des Moines
LOC), 2.450%, 8/3/2022
|
20,330,000
|
|
20,945,000
|
|
The Ray L. Berry Trust, (Federal Home Loan Bank of Des Moines
LOC), 2.450%, 8/3/2022
|
20,945,000
|
|
16,400,000
|
|
Wingo Family Master Trust, (Federal Home Loan Bank of Des
Moines LOC), 2.450%, 8/4/2022
|
16,400,000
|
|
|
|
TOTAL
|
330,957,500
|
|
|
|
TOTAL NOTES - VARIABLE
|
4,207,890,121
|
Annual Shareholder Report
5
|
Principal
Amount
or Shares
|
|
|
Value
|
|
|
|
TIME DEPOSITS— 12.3%
|
|
|
|
|
Finance - Banking— 12.3%
|
|
|
$ 945,000,000
|
|
ABN Amro Bank NV, 2.010% - 2.220%, 8/1/2022 - 8/3/2022
|
$ 945,000,000
|
|
850,000,000
|
|
Australia & New Zealand Banking Group, Melbourne,
2.210%, 8/3/2022
|
850,000,000
|
|
525,000,000
|
|
Mizuho Bank Ltd., 2.320%, 8/1/2022
|
525,000,000
|
|
|
|
TOTAL TIME DEPOSITS
|
2,320,000,000
|
|
|
3
|
COMMERCIAL PAPER— 12.0%
|
|
|
|
|
Finance - Banking— 9.7%
|
|
|
40,000,000
|
|
Antalis S.A., (Societe Generale, Paris LIQ), 1.772%, 8/1/2022
|
40,000,000
|
|
40,000,000
|
|
Bank of Montreal, 2.800%, 5/9/2023
|
40,000,000
|
|
112,500,000
|
|
Bank of Nova Scotia, Toronto, 0.200% - 0.205%, 9/7/2022 -
9/16/2022
|
112,475,678
|
|
167,500,000
|
|
Bennington Stark Capital Co., LLC, (Societe Generale, Paris LIQ),
2.120%, 8/2/2022
|
167,490,136
|
|
165,000,000
|
|
Canadian Imperial Bank of Commerce, 0.503% - 2.070%,
12/1/2022 - 3/20/2023
|
164,267,674
|
|
100,000,000
|
|
Canadian Imperial Holdings, Inc., 0.351%, 11/8/2022
|
99,903,750
|
|
100,000,000
|
|
Chesham Finance LLC Series III, (Societe Generale, Paris COL),
2.404%, 8/31/2022
|
99,800,000
|
|
116,995,000
|
|
Gotham Funding Corp., (MUFG Bank Ltd. LIQ), 1.405% - 2.416%,
8/1/2022 - 10/3/2022
|
116,624,483
|
|
150,000,000
|
|
Lloyds Bank PLC, London, 1.413% - 2.419%, 8/5/2022 - 9/23/2022
|
149,722,146
|
|
23,000,000
|
|
LMA-Americas LLC, (Credit Agricole Corporate and Investment
Bank LIQ), 1.455%, 8/12/2022
|
22,989,810
|
|
140,000,000
|
|
Matchpoint Finance PLC, (BNP Paribas SA LIQ), 2.310% - 2.567%,
8/1/2022 - 10/11/2022
|
139,798,833
|
|
124,000,000
|
|
National Australia Bank Ltd., Melbourne, 1.005% - 3.866%,
9/6/2022 - 6/15/2023
|
121,805,100
|
|
125,000,000
|
|
Nationwide Building Society, 2.020%, 8/1/2022
|
125,000,000
|
|
65,000,000
|
|
Royal Bank of Canada, 0.250%, 10/14/2022
|
64,966,597
|
|
197,000,000
|
|
Royal Bank of Canada, New York Branch, 0.220% - 0.402%,
10/7/2022 - 11/15/2022
|
196,821,764
|
|
166,000,000
|
|
Toronto Dominion Bank, 2.051% - 2.903%, 3/17/2023 - 5/31/2023
|
162,456,170
|
|
|
|
TOTAL
|
1,824,122,141
|
|
|
|
Finance - Retail— 0.9%
|
|
|
25,000,000
|
|
Fairway Finance Co. LLC, 1.005%, 9/6/2022
|
24,975,000
|
|
30,000,000
|
|
Old Line Funding, LLC, 1.659%, 9/13/2022
|
29,940,875
|
|
80,000,000
|
|
Sheffield Receivables Company LLC, 1.976%, 8/18/2022
|
79,925,578
|
|
40,000,000
|
|
Thunder Bay Funding, LLC, 1.659%, 9/19/2022
|
39,910,166
|
|
|
|
TOTAL
|
174,751,619
|
|
|
|
Oil & Oil Finance— 0.5%
|
|
|
90,000,000
|
|
TotalEnergies Capital Canada Ltd., 2.200%, 8/3/2022
|
89,989,000
|
Annual Shareholder Report
6
|
Principal
Amount
or Shares
|
|
|
Value
|
|
|
3
|
COMMERCIAL PAPER— continued
|
|
|
|
|
Sovereign— 0.9%
|
|
|
$ 170,000,000
|
|
BNG Bank N.V., 2.201% - 2.311%, 8/3/2022 - 8/4/2022
|
$ 169,975,006
|
|
|
|
TOTAL COMMERCIAL PAPER
|
2,258,837,766
|
|
|
|
CERTIFICATES OF DEPOSIT— 9.9%
|
|
|
|
|
Finance - Banking— 9.9%
|
|
|
131,500,000
|
|
Canadian Imperial Bank of Commerce, 0.350%, 11/7/2022 -
11/10/2022
|
131,500,000
|
|
165,000,000
|
|
Credit Agricole Corporate and Investment Bank, 1.560% - 2.320%,
8/5/2022 - 8/12/2022
|
165,000,000
|
|
150,000,000
|
|
DNB Bank ASA, 1.100%, 9/6/2022
|
150,000,000
|
|
142,500,000
|
|
Mizuho Bank Ltd., 2.600%, 10/20/2022
|
142,500,000
|
|
160,000,000
|
|
MUFG Bank Ltd., 1.420% - 1.450%, 8/18/2022 - 8/19/2022
|
160,000,000
|
|
100,000,000
|
|
Sumitomo Mitsui Banking Corp., 1.450%, 8/5/2022
|
100,000,000
|
|
657,500,000
|
|
Sumitomo Mitsui Trust Bank Ltd., 1.450% - 2.530%, 8/17/2022 -
9/29/2022
|
657,500,000
|
|
365,500,000
|
|
Toronto Dominion Bank, 0.220% - 4.070%, 10/14/2022 - 7/18/2023
|
365,500,000
|
|
|
|
TOTAL CERTIFICATES OF DEPOSIT
|
1,872,000,000
|
|
|
|
U.S. TREASURY— 0.3%
|
|
|
|
|
U.S. Treasury Notes— 0.3%
|
|
|
50,000,000
|
1
|
United States Treasury Floating Rate Notes, 2.570% (91-day T-Bill
+0.034%), 8/2/2022
|
50,003,021
|
|
|
|
OTHER REPURCHASE AGREEMENTS— 15.7%
|
|
|
|
|
Finance - Banking— 15.7%
|
|
|
80,000,000
|
|
BMO Capital Markets Corp., 2.42%, dated 7/29/2022, interest in a
$90,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $90,018,150 on 8/1/2022, in which
asset-backed securities, collateralized mortgage obligations,
corporate bonds, treasury note, medium-term notes and sovereign
with a market value of $91,818,514 have been received as collateral
and held with BNY Mellon as tri-party agent.
|
80,000,000
|
|
100,000,000
|
|
BMO Capital Markets Corp., 2.05%, dated 2/8/2021, interest in a
$200,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $200,706,111 on 9/12/2022, in
which corporate bonds and medium-term notes with a market value
of $204,755,998 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
100,000,000
|
|
20,000,000
|
|
BMO Capital Markets Corp., 2.47%, dated 7/29/2022, interest in a
$20,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $20,204,117 on 8/1/2022, in which
asset-backed securities and corporate bonds with a market value of
$20,404,760 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
20,000,000
|
Annual Shareholder Report
7
|
Principal
Amount
or Shares
|
|
|
Value
|
|
|
|
OTHER REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 25,000,000
|
|
BNP Paribas S.A., 2.40%, dated 7/29/2022, interest in a
$500,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $500,100,000 on 8/1/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds and medium-term note with a market value of
$510,102,000 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
$ 25,000,000
|
|
130,000,000
|
|
Credit Agricole S.A., 2.47%, dated 6/24/2022, interest in a
$300,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $300,144,083 on 8/9/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, commercial paper, treasury notes, treasury bills
medium-term notes, U.S. Government Agency securities and
sovereign debt with a market value of $306,063,090 have been
received as collateral and held with BNY Mellon as tri-party agent.
|
130,000,000
|
|
520,000,000
|
|
Credit Agricole S.A., 2.37%, dated 6/24/2022, interest in a
$800,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $800,368,667 on 8/9/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, commercial paper, treasury notes, treasury bill,
medium-term notes and sovereign debt with a market value of
$816,161,433 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
520,000,000
|
|
25,000,000
|
|
HSBC Securities (USA), Inc., 2.42%, dated 7/29/2022, interest in a
$25,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $25,005,042 on 8/1/2022, in which
asset-backed securities with a market value of $25,500,014 have
been received as collateral and held with BNY Mellon as tri-party
agent.
|
25,000,000
|
|
100,000,000
|
|
BNP Paribas S.A., 2.47%, dated 7/29/2022, interest in a
$100,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $100,020,583 on 8/1/2022, in
which corporate bonds with a market value of $102,021,846 have
been received as collateral and held with BNY Mellon as tri-party
agent.
|
100,000,000
|
|
160,000,000
|
|
J.P. Morgan Securities LLC, 2.56%, dated 7/6/2022, interest in a
$250,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $250,480,000 on 8/2/2022, in
which corporate bonds and medium-term notes with a market value
of $255,000,001 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
160,000,000
|
|
50,000,000
|
|
Mizuho Securities USA, Inc., 2.42%, dated 7/29/2022, interest in a
$100,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $100,020,167 on 8/1/2022, in
which commercial paper and municipal bonds with a market value
of $102,022,014 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
50,000,000
|
Annual Shareholder Report
8
|
Principal
Amount
or Shares
|
|
|
Value
|
|
|
|
OTHER REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 70,000,000
|
|
Mizuho Securities USA, Inc., 2.14%, dated 2/3/2022, interest in a
$80,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $80,309,111 on 9/8/2022, in which
asset-backed securities and commercial paper with a market value
of $81,730,968 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
$ 70,000,000
|
|
30,000,000
|
|
Mizuho Securities USA, Inc., 2.52%, dated 7/29/2022, interest in a
$75,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $75,015,750 on 8/1/2022, in which
common stocks with a market value of $76,516,072 have been
received as collateral and held with BNY Mellon as tri-party agent.
|
30,000,000
|
|
200,000,000
|
|
Mitsubishi UFG Securities Americas, Inc., 2.47%, dated 7/29/2022,
interest in a $300,000,000 collateralized loan agreement will
repurchase securities provided as collateral for $300,061,750 on
8/1/2022, in which American depositary receipts, common stocks,
corporate bonds, exchange traded funds and unit investment trust,
medium-term notes and municipal bonds with a market value of
$306,063,397 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
200,000,000
|
|
150,000,000
|
|
Pershing LLC, 2.57%, dated 7/14/2022, interest in a $300,000,000
collateralized loan agreement will repurchase securities provided as
collateral for $300,149,917 on 8/9/2022, in which asset-backed
securities, collateralized mortgage obligations, corporate bonds,
commercial paper, common stocks, convertible bond, certificate of
deposit, exchange traded funds, medium-term notes and municipal
bonds and U.S. Government Agency securities with a market value
of $306,100,946 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
150,000,000
|
|
225,000,000
|
|
Societe Generale, Paris, 2.38%, dated 7/29/2022, interest in a
$350,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $350,069,417 on 8/1/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, medium-term notes, municipal bonds, sovereign
securities and treasury bill with a market value of $357,071,176
have been received as collateral and held with BNY Mellon as
tri-party agent.
|
225,000,000
|
|
320,000,000
|
|
Societe Generale, Paris, 2.47%, dated 7/29/2022, interest in a
$650,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $650,133,792 on 8/1/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, medium-term notes sand treasury bill with a
market value of $663,136,856 have been received as collateral and
held with BNY Mellon as tri-party agent.
|
320,000,000
|
|
100,000,000
|
|
Standard Chartered Bank, 2.45%, dated 7/28/2022, interest in a
$100,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $100,047,639 on 8/4/2022, in
which U.S. Treasury bonds, U.S. Treasury notes and
U.S. Government Agency securities with a market value of
$102,027,802 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
100,000,000
|
Annual Shareholder Report
9
|
Principal
Amount
or Shares
|
|
|
Value
|
|
|
|
OTHER REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 150,000,000
|
|
Wells Fargo Securities LLC, 2.63%, dated 6/24/2022, interest in a
$150,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $150,986,250 on 9/22/2022, in
which sovereign securities with a market value of $153,424,860
have been received as collateral and held with BNY Mellon as
tri-party agent.
|
$ 150,000,000
|
|
175,000,000
|
|
Wells Fargo Securities LLC, 2.91%, dated 4/27/2021, interest in a
$175,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $176,273,125 on 10/11/2022, in
which convertible bonds and sovereign securities with a market
value of $178,774,603 have been received as collateral and held
with BNY Mellon as tri-party agent.
|
175,000,000
|
|
190,000,000
|
|
Wells Fargo Securities LLC, 3.12%, dated 3/23/2022, interest in a
$190,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $191,482,000 on 10/13/2022, in
which sovereign securities with a market value of $194,085,564
have been received as collateral and held with BNY Mellon as
tri-party agent.
|
190,000,000
|
|
150,000,000
|
|
Wells Fargo Securities LLC, 3.20%, dated 2/3/2022, interest in a
$150,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $151,200,000 on 10/20/2022, in
which sovereign securities with a market value of $153,136,948
have been received as collateral and held with BNY Mellon as
tri-party agent.
|
150,000,000
|
|
|
|
TOTAL OTHER REPURCHASE AGREEMENTS
|
2,970,000,000
|
|
|
|
REPURCHASE AGREEMENTS— 17.1%
|
|
|
|
|
Finance - Banking— 17.1%
|
|
|
426,001,000
|
|
Interest in $1,650,000,000 joint repurchase agreement 2.29%,
dated 7/29/2022 under which Mitsubishi UFG Securities Americas,
Inc. will repurchase securities provided as collateral for
$1,650,314,875 on 8/1/2022. The securities provided as collateral at
the end of the period held with BNY Mellon as tri-party agent, were
U.S. Government Agency securities with various maturities to
1/1/2057 and the market value of those underlying securities
was $1,683,321,173.
|
426,001,000
|
|
250,000,000
|
|
Interest in $1,800,000,000 joint repurchase agreement 2.30%,
dated 7/29/2022 under which Natixis Financial Products LLC will
repurchase securities provided as collateral for $1,800,345,000 on
8/1/2022. The securities provided as collateral at the end of the
period held with BNY Mellon as tri-party agent, were
U.S. Government Agency and U.S. Treasury securities with various
maturities to 6/16/2064 and the market value of those underlying
securities was $1,841,376,235.
|
250,000,000
|
Annual Shareholder Report
10
|
Principal
Amount
or Shares
|
|
|
Value
|
|
|
|
REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$2,500,000,000
|
|
Repurchase agreement 2.30%, dated 7/29/2022 under which
Federal Reserve Bank of New York will repurchase securities
provided as collateral for $2,500,479,167 on 8/1/2022. The
securities provided as collateral at the end of the period held with
BNY Mellon as tri-party agent, were U.S. Treasury securities with
various maturities to 5/15/2039 and the market value of those
underlying securities was $2,500,479,193.
|
$ 2,500,000,000
|
|
50,000,000
|
|
Interest in $150,000,000 joint repurchase agreement 2.39%, dated
7/29/2022 under which Standard Chartered Bank will repurchase
securities provided as collateral for $150,029,875 on 8/1/2022. The
securities provided as collateral at the end of the period held with
BNY Mellon as tri-party agent, were U.S. Government Agency
securities with various maturities to 2/16/2064 and the market value
of those underlying securities was $153,030,473.
|
50,000,000
|
|
|
|
TOTAL REPURCHASE AGREEMENTS
|
3,226,001,000
|
|
|
|
INVESTMENT COMPANIES— 8.0%
|
|
|
1,000,016,505
|
|
Federated Hermes Institutional Money Market Management,
Institutional Shares, 1.86%4
|
999,713,001
|
|
500,317,389
|
|
Federated Hermes Institutional Prime Value Obligations Fund,
Institutional Shares, 1.84%4
|
500,320,089
|
|
|
|
TOTAL INVESTMENT COMPANIES
|
1,500,033,090
|
|
|
|
TOTAL INVESTMENT IN SECURITIES—97.6%
(AT AMORTIZED COST)5
|
18,404,764,998
|
|
|
|
OTHER ASSETS AND LIABILITIES - NET—2.4%6
|
455,846,467
|
|
|
|
TOTAL NET ASSETS—100%
|
$18,860,611,465
|
Affiliated fund holdings are investment companies which are managed by the Adviser or an affiliate of the Adviser. Transactions with affiliated fund holdings during the period ended July 31, 2022, were as follows:
|
|
Federated
Hermes
Institutional
Money Market
Management,
Institutional Shares
|
Federated
Hermes
Institutional
Prime Value
Obligations Fund,
Institutional Shares
|
Total of
Affiliated
Transactions
|
|
Value as of 7/31/2021
|
$999,713,001
|
$500,267,526
|
$1,499,980,527
|
|
Purchases at Cost
|
$—
|
$44,798
|
$44,798
|
|
Proceeds from Sales
|
$—
|
$(44,998)
|
$(44,998)
|
|
Change in Unrealized Appreciation/
Depreciation
|
$—
|
$—
|
$—
|
|
Net Realized Gain/(Loss)
|
$—
|
$52,763
|
$52,763
|
|
Value as of 7/31/2022
|
$999,713,001
|
$500,320,089
|
$1,500,033,090
|
|
Shares Held as of 7/31/2022
|
1,000,016,505
|
500,317,389
|
1,500,333,894
|
|
Dividend Income
|
$3,569,405
|
$1,758,689
|
$5,328,094
|
Annual Shareholder Report
11
|
1
|
Floating/variable note with current rate and current maturity or next reset date shown. Certain
variable rate securities are not based on a published reference rate and spread but are
determined by the issuer or agent and are based on current market conditions. These securities
do not indicate a reference rate and spread in their description above.
|
|
2
|
Denotes a variable rate security with current rate and next reset date shown.
|
|
3
|
Discount rate at time of purchase for discount issues, or the coupon for interest-bearing issues.
|
|
4
|
7-day net yield.
|
|
5
|
Also represents cost of investments for federal tax purposes.
|
|
6
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
Note: The categories of investments are shown as a percentage of total net assets at July 31, 2022.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Level 1—quoted prices in active markets for identical securities.
Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Also includes securities valued at amortized cost.
Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used, as of July 31, 2022, in valuing the Fund’s assets carried at fair value:
|
Valuation Inputs
|
||||
|
|
Level 1—
Quoted
Prices
|
Level 2—
Other
Significant
Observable
Inputs
|
Level 3—
Significant
Unobservable
Inputs
|
Total
|
|
Debt Securities:
|
|
|
|
|
|
Notes - Variable
|
$—
|
$4,207,890,121
|
$—
|
$4,207,890,121
|
|
Time Deposits
|
—
|
2,320,000,000
|
—
|
2,320,000,000
|
|
Commercial Paper
|
—
|
2,258,837,766
|
—
|
2,258,837,766
|
|
Certificates of Deposit
|
—
|
1,872,000,000
|
—
|
1,872,000,000
|
|
U.S. Treasury
|
—
|
50,003,021
|
—
|
50,003,021
|
|
Other Repurchase
Agreements
|
—
|
2,970,000,000
|
—
|
2,970,000,000
|
|
Repurchase Agreements
|
—
|
3,226,001,000
|
—
|
3,226,001,000
|
|
Investment Company
|
1,500,033,090
|
—
|
—
|
1,500,033,090
|
|
TOTAL SECURITIES
|
$1,500,033,090
|
$16,904,731,908
|
$—
|
$18,404,764,998
|
Annual Shareholder Report
12
|
The following acronym(s) are used throughout this portfolio:
|
|
|
|
COL
|
—Collateralized
|
|
|
GTD
|
—Guaranteed
|
|
|
IDB
|
—Industrial Development Bond
|
|
|
LIQ
|
—Liquidity Agreement
|
|
|
LOC
|
—Letter of Credit
|
|
|
SOFR
|
—Secured Overnight Financing Rate
|
|
|
VRDNs
|
—Variable Rate Demand Notes
|
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
13
Financial Highlights–Automated Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.002
|
0.0001
|
0.010
|
0.020
|
0.012
|
|
Net realized gain (loss)
|
0.0001
|
0.0001
|
0.0001
|
(0.000)1
|
0.0001
|
|
Total From Investment Operations
|
0.002
|
0.0001
|
0.010
|
0.020
|
0.012
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.002)
|
(0.000)1
|
(0.010)
|
(0.020)
|
(0.012)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
|
Total Distributions
|
(0.002)
|
(0.000)1
|
(0.010)
|
(0.020)
|
(0.012)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.20%
|
0.01%
|
1.01%
|
2.03%
|
1.22%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.32%
|
0.23%
|
0.53%
|
0.54%
|
0.51%
|
|
Net investment income
|
0.18%
|
0.01%
|
1.01%
|
2.06%
|
1.21%
|
|
Expense waiver/reimbursement4
|
0.33%
|
0.41%
|
0.11%
|
0.10%
|
0.13%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$711,893
|
$1,034,830
|
$1,603,414
|
$1,678,950
|
$376,107
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
14
Financial Highlights–Class R Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.001
|
0.0001
|
0.006
|
0.014
|
0.006
|
|
Net realized gain (loss)
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
|
Total From Investment Operations
|
0.001
|
0.0001
|
0.006
|
0.014
|
0.006
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.001)
|
(0.000)1
|
(0.006)
|
(0.014)
|
(0.006)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
|
Total Distributions
|
(0.001)
|
(0.000)1
|
(0.006)
|
(0.014)
|
(0.006)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.08%
|
0.01%
|
0.56%
|
1.42%
|
0.58%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.45%
|
0.23%
|
0.97%
|
1.13%
|
1.15%
|
|
Net investment income
|
0.09%
|
0.01%
|
0.54%
|
1.42%
|
0.56%
|
|
Expense waiver/reimbursement4
|
0.82%
|
1.09%
|
0.32%
|
0.16%
|
0.18%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$41,244
|
$38,762
|
$48,615
|
$44,257
|
$42,390
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
15
Financial Highlights–Wealth Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.003
|
0.0001
|
0.013
|
0.023
|
0.015
|
|
Net realized gain (loss)
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
|
TOTAL FROM INVESTMENT
OPERATIONS
|
0.003
|
0.0001
|
0.013
|
0.023
|
0.015
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.003)
|
(0.000)1
|
(0.013)
|
(0.023)
|
(0.015)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
|
TOTAL DISTRIBUTIONS
|
(0.003)
|
(0.000)1
|
(0.013)
|
(0.023)
|
(0.015)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.33%
|
0.04%
|
1.33%
|
2.36%
|
1.53%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.19%
|
0.20%
|
0.20%
|
0.20%
|
0.20%
|
|
Net investment income
|
0.36%
|
0.04%
|
1.33%
|
2.36%
|
1.56%
|
|
Expense waiver/reimbursement4
|
0.12%
|
0.10%
|
0.10%
|
0.10%
|
0.13%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$13,928,308
|
$11,788,470
|
$18,814,127
|
$16,862,096
|
$5,770,600
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
16
Financial Highlights–Advisor Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
Period
Ended
7/31/20191
|
||
|
|
2022
|
2021
|
2020
|
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
Net investment income
|
0.003
|
0.0002
|
0.013
|
0.013
|
|
Net realized gain (loss)
|
0.0002
|
0.0002
|
0.0002
|
—
|
|
Total From Investment Operations
|
0.003
|
0.0002
|
0.013
|
0.013
|
|
Less Distributions:
|
|
|
|
|
|
Distributions from net investment income
|
(0.003)
|
(0.000)2
|
(0.013)
|
(0.013)
|
|
Distributions from net realized gains
|
(0.000)2
|
(0.000)2
|
(0.000)2
|
—
|
|
Total Distributions
|
(0.003)
|
(0.000)2
|
(0.013)
|
(0.013)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return3
|
0.33%
|
0.04%
|
1.33%
|
1.31%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
Net expenses4
|
0.19%
|
0.20%
|
0.20%
|
0.20%5
|
|
Net investment income
|
0.75%
|
0.04%
|
1.32%
|
2.39%5
|
|
Expense waiver/reimbursement6
|
0.10%
|
0.10%
|
0.10%
|
0.10%5
|
|
Supplemental Data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$1,026,476
|
$187,921
|
$376,278
|
$276,284
|
|
1
|
Reflects operations for the period from January 18, 2019 (date of initial investment) to
July 31, 2019.
|
|
2
|
Represents less than $0.001.
|
|
3
|
Based on net asset value. Total returns for periods of less than one year are not annualized.
|
|
4
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
5
|
Computed on an annualized basis.
|
|
6
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
17
Financial Highlights–Service Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.002
|
0.0001
|
0.011
|
0.021
|
0.013
|
|
Net realized gain (loss)
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
(0.000)1
|
|
Total From Investment Operations
|
0.002
|
0.0001
|
0.011
|
0.021
|
0.013
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.002)
|
(0.000)1
|
(0.011)
|
(0.021)
|
(0.013)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
|
Total Distributions
|
(0.002)
|
(0.000)1
|
(0.011)
|
(0.021)
|
(0.013)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.24%
|
0.01%
|
1.09%
|
2.10%
|
1.28%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.28%
|
0.23%
|
0.45%
|
0.45%
|
0.45%
|
|
Net investment income
|
0.23%
|
0.01%
|
1.06%
|
2.09%
|
1.31%
|
|
Expense waiver/reimbursement4
|
0.28%
|
0.32%
|
0.10%
|
0.10%
|
0.13%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$1,479,712
|
$1,711,361
|
$3,016,273
|
$2,757,262
|
$1,799,914
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
18
Financial Highlights–Cash II Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.001
|
0.0001
|
0.007
|
0.016
|
0.008
|
|
Net realized gain (loss)
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
|
Total From Investment Operations
|
0.001
|
0.0001
|
0.007
|
0.016
|
0.008
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.001)
|
(0.000)1
|
(0.007)
|
(0.016)
|
(0.008)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
|
Total Distributions
|
(0.001)
|
(0.000)1
|
(0.007)
|
(0.016)
|
(0.008)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.12%
|
0.01%
|
0.72%
|
1.65%
|
0.83%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.40%
|
0.22%
|
0.81%
|
0.90%
|
0.90%
|
|
Net investment income
|
0.12%
|
0.01%
|
0.71%
|
1.64%
|
0.80%
|
|
Expense waiver/reimbursement4
|
0.60%
|
0.78%
|
0.19%
|
0.10%
|
0.13%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$1,301,550
|
$1,275,933
|
$1,125,251
|
$1,043,702
|
$998,683
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
19
Financial Highlights–Cash Series Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.001
|
0.0001
|
0.006
|
0.015
|
0.007
|
|
Net realized gain (loss)
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
|
Total From Investment Operations
|
0.001
|
0.0001
|
0.006
|
0.015
|
0.007
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.001)
|
(0.000)1
|
(0.006)
|
(0.015)
|
(0.007)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
|
Total Distributions
|
(0.001)
|
(0.000)1
|
(0.006)
|
(0.015)
|
(0.007)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.09%
|
0.01%
|
0.62%
|
1.51%
|
0.72%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.42%
|
0.22%
|
0.92%
|
1.03%
|
1.00%
|
|
Net investment income
|
0.10%
|
0.01%
|
0.63%
|
1.49%
|
0.72%
|
|
Expense waiver/reimbursement4
|
0.84%
|
1.03%
|
0.34%
|
0.21%
|
0.23%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$42,283
|
$42,076
|
$33,265
|
$32,789
|
$29,911
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
20
Financial Highlights–Capital Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.003
|
0.0001
|
0.012
|
0.022
|
0.013
|
|
Net realized gain (loss)
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
0.001
|
|
Total From Investment Operations
|
0.003
|
0.0001
|
0.012
|
0.022
|
0.014
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.003)
|
(0.000)1
|
(0.012)
|
(0.022)
|
(0.014)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
|
Total Distributions
|
(0.003)
|
(0.000)1
|
(0.012)
|
(0.022)
|
(0.014)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.29%
|
0.01%
|
1.23%
|
2.26%
|
1.43%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.23%
|
0.23%
|
0.30%
|
0.30%
|
0.30%
|
|
Net investment income
|
0.27%
|
0.01%
|
1.20%
|
2.25%
|
1.46%
|
|
Expense waiver/reimbursement4
|
0.18%
|
0.18%
|
0.10%
|
0.10%
|
0.13%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$310,975
|
$329,279
|
$548,708
|
$670,114
|
$398,852
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
21
Financial Highlights–Trust Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.002
|
0.0001
|
0.009
|
0.018
|
0.010
|
|
Net realized gain (loss)
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
|
Total From Investment Operations
|
0.002
|
0.0001
|
0.009
|
0.018
|
0.010
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.002)
|
(0.000)1
|
(0.009)
|
(0.018)
|
(0.010)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
|
Total Distributions
|
(0.002)
|
(0.000)1
|
(0.009)
|
(0.018)
|
(0.010)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.17%
|
0.01%
|
0.87%
|
1.85%
|
1.02%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.33%
|
0.23%
|
0.66%
|
0.70%
|
0.70%
|
|
Net investment income
|
0.12%
|
0.01%
|
0.86%
|
1.90%
|
1.03%
|
|
Expense waiver/reimbursement4
|
0.47%
|
0.57%
|
0.14%
|
0.10%
|
0.13%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$18,172
|
$2,670,993
|
$3,667,951
|
$3,502,863
|
$19,829
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
22
Statement of Assets and Liabilities
July 31, 2022
July 31, 2022
|
Assets:
|
|
|
Investment in repurchase agreements and other repurchase agreements
|
$6,196,001,000
|
|
Investment in securities, including $1,500,033,090 of investment in affiliated
holdings*
|
12,208,763,998
|
|
Investment in securities, at amortized cost and fair value
|
18,404,764,998
|
|
Cash
|
499,965,635
|
|
Income receivable
|
15,109,160
|
|
Income receivable from affiliated holdings
|
1,986,792
|
|
Receivable for shares sold
|
80,292,825
|
|
Total Assets
|
19,002,119,410
|
|
Liabilities:
|
|
|
Payable for investments purchased
|
101,300,000
|
|
Payable for shares redeemed
|
35,357,228
|
|
Income distribution payable
|
1,641,527
|
|
Payable for investment adviser fee (Note 5)
|
168,775
|
|
Payable for administrative fee (Note 5)
|
121,261
|
|
Payable for Directors’/Trustees’ fees (Note 5)
|
1,290
|
|
Payable for distribution services fee (Note 5)
|
687,724
|
|
Payable for other service fees (Notes 2 and 5)
|
1,317,710
|
|
Accrued expenses (Note 5)
|
912,430
|
|
Total Liabilities
|
141,507,945
|
|
Net assets for 18,860,455,668 shares outstanding
|
$18,860,611,465
|
|
Net Assets Consist of:
|
|
|
Paid-in capital
|
$18,860,446,852
|
|
Total distributable earnings (loss)
|
164,613
|
|
Total Net Assets
|
$18,860,611,465
|
Annual Shareholder Report
23
Statement of Assets and Liabilities–continued
|
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
|
|
|
Automated Shares:
|
|
|
$711,892,590 ÷ 711,886,688 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Class R Shares:
|
|
|
$41,244,466 ÷ 41,244,123 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Wealth Shares:
|
|
|
$13,928,307,730 ÷ 13,928,192,808 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Advisor Shares:
|
|
|
$1,026,475,838 ÷ 1,026,467,354 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Service Shares:
|
|
|
$1,479,711,780 ÷ 1,479,699,509 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Cash II Shares:
|
|
|
$1,301,549,758 ÷ 1,301,538,951 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Cash Series Shares:
|
|
|
$42,282,604 ÷ 42,282,252 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Capital Shares:
|
|
|
$310,974,601 ÷ 310,972,028 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Trust Shares:
|
|
|
$18,172,098 ÷ 18,171,955 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
*
|
See information listed after the Fund’s Portfolio of Investments.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
24
Statement of Operations
Year Ended July 31, 2022
Year Ended July 31, 2022
|
Investment Income:
|
|
|
Interest
|
$89,761,883
|
|
Dividends received from affiliated holdings*
|
5,328,094
|
|
TOTAL INCOME
|
95,089,977
|
|
Expenses:
|
|
|
Investment adviser fee (Note 5)
|
36,509,887
|
|
Administrative fee (Note 5)
|
14,289,405
|
|
Custodian fees
|
567,852
|
|
Transfer agent fees (Note 2)
|
5,569,261
|
|
Directors’/Trustees’ fees (Note 5)
|
105,194
|
|
Auditing fees
|
23,960
|
|
Legal fees
|
7,357
|
|
Portfolio accounting fees
|
273,154
|
|
Distribution services fee (Note 5)
|
11,240,682
|
|
Other service fees (Notes 2 and 5)
|
17,306,459
|
|
Share registration costs
|
344,470
|
|
Printing and postage
|
419,263
|
|
Miscellaneous (Note 5)
|
198,385
|
|
TOTAL EXPENSES
|
86,855,329
|
|
Waivers and Reimbursements:
|
|
|
Waiver of investment adviser fee (Note 5)
|
(23,635,210)
|
|
Waivers/reimbursements of other operating expenses (Notes 2 and 5)
|
(21,320,329)
|
|
TOTAL WAIVERS AND REIMBURSEMENTS
|
(44,955,539)
|
|
Net expenses
|
41,899,790
|
|
Net investment income
|
53,190,187
|
|
Net realized gain on investments (including net realized gain of $52,763 on sales of
investments in affiliated holdings*)
|
143,440
|
|
Change in net assets resulting from operations
|
$53,333,627
|
|
*
|
See information listed after the Fund’s Portfolio of Investments.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
25
Statement of Changes in Net Assets
|
Year Ended July 31
|
2022
|
2021
|
|
Increase (Decrease) in Net Assets
|
|
|
|
Operations:
|
|
|
|
Net investment income
|
$53,190,187
|
$7,423,269
|
|
Net realized gain (loss)
|
143,440
|
11,556
|
|
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS
|
53,333,627
|
7,434,825
|
|
Distributions to Shareholders:
|
|
|
|
Automated Shares
|
(2,585,791)
|
(137,765)
|
|
Class R Shares
|
(33,725)
|
(3,974)
|
|
Wealth Shares
|
(39,560,633)
|
(6,432,149)
|
|
Advisor Shares
|
(2,214,414)
|
(127,699)
|
|
Service Shares
|
(3,354,482)
|
(233,300)
|
|
Cash II Shares
|
(1,568,320)
|
(125,177)
|
|
Cash Series Shares
|
(37,265)
|
(3,927)
|
|
Capital Shares
|
(832,858)
|
(50,973)
|
|
Trust Shares
|
(2,998,443)
|
(349,121)
|
|
CHANGE IN NET ASSETS RESULTING FROM
DISTRIBUTIONS TO SHAREHOLDERS
|
(53,185,931)
|
(7,464,085)
|
|
Share Transactions:
|
|
|
|
Proceeds from sale of shares
|
19,988,592,929
|
15,284,485,959
|
|
Net asset value of shares issued to shareholders in payment
of distributions declared
|
49,057,880
|
6,952,724
|
|
Cost of shares redeemed
|
(20,256,811,128)
|
(25,445,666,626)
|
|
CHANGE IN NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
|
(219,160,319)
|
(10,154,227,943)
|
|
Change in net assets
|
(219,012,623)
|
(10,154,257,203)
|
|
Net Assets:
|
|
|
|
Beginning of period
|
19,079,624,088
|
29,233,881,291
|
|
End of period
|
$18,860,611,465
|
$19,079,624,088
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
26
Notes to Financial Statements
July 31, 2022
1. ORGANIZATION
Federated Hermes Money Market Obligations Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust consists of 16 portfolios. The financial statements included herein are only those of Federated Hermes Prime Cash Obligations Fund (the “Fund”), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder’s interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers nine classes of shares: Automated Shares, Class R Shares, Wealth Shares, Advisor Shares, Service Shares, Cash II Shares, Cash Series Shares, Capital Shares and Trust Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The investment objective of the Fund is to provide current income consistent with stability of principal and liquidity.
The Fund operates as a retail money market fund. As a retail money market fund, the Fund: (1) will generally continue to use amortized cost to value its portfolio securities and transact at a stable $1.00 net asset value (NAV); (2) has adopted policies and procedures reasonably designed to limit investments in the Fund to accounts beneficially owned by natural persons as required for a retail money market fund by Rule 2a-7 under the Act; and (3) has adopted policies and procedures to impose liquidity fees on redemptions and/or temporary redemption gates in the event that the Fund’s weekly liquid assets were to fall below a designated threshold, if the Fund’s Board of Trustees (the “Trustees”) determines such liquidity fees or redemption gates are in the best interests of the Fund.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
Most securities are valued at amortized cost. Under the amortized cost valuation method, an investment is valued initially at its cost as determined in accordance with GAAP. The Fund then adjusts the amount of interest income accrued each day over the term of the investment to account for any difference between the initial cost of the investment and the amount payable at its maturity. If amortized cost is determined not to approximate fair value, the value of the portfolio securities will be determined in accordance with the procedures described below. There can be no assurance that the Fund could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines its NAV per share, and the actual value obtained could be materially different.
The Trustees have ultimate responsibility for determining the fair value of investments. The Trustees have appointed a valuation committee (“Valuation Committee”) comprised of officers of the Fund, Federated Investment Management Company (the “Adviser”) and certain of the Adviser’s affiliated companies to assist in determining fair value of securities and in overseeing the comparison of amortized cost
Annual Shareholder Report
27
to market-based value. The Trustees have also authorized the use of pricing services recommended by the Valuation Committee to provide fair value evaluations of the current value of certain investments for purposes of monitoring the relationship of market-based value and amortized cost. The Valuation Committee employs various methods for reviewing third-party pricing-service evaluations including periodic reviews of third-party pricing services’ policies, procedures and valuation methods (including key inputs and assumptions), and review of price challenges by the Adviser based on recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee determines the fair value of the investment in accordance with procedures adopted by the Trustees. The Trustees periodically review and approve the fair valuations made by the Valuation Committee and any changes made to the procedures.
Repurchase Agreements
The Fund may invest in repurchase agreements for short-term liquidity purposes. It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund’s custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control” as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.
The insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.
The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund’s Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.
Repurchase agreements are subject to Master Netting Agreements which are agreements between the Fund and its counterparties that provide for the net settlement of all transactions and collateral with the Fund, through a single payment, in the event of default or termination. Amounts presented on the Portfolio of Investments and Statement of Assets and Liabilities are not net settlement amounts but gross. As indicated above, the cash or securities to be repurchased, as shown on the Portfolio of Investments, exceeds the repurchase price to be paid under the agreement reducing the net settlement amount to zero.
Annual Shareholder Report
28
Investment Income, Gains and Losses, Expenses and Distributions
Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis. Interest income and expenses are accrued daily. Distributions to shareholders are recorded on the ex-dividend date. Distributions of net investment income, if any, are declared daily and paid monthly. Amortization/accretion of premium and discount is included in investment income. Investment income, realized gains and losses, and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that select classes will bear certain expenses unique to those classes. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses. The detail of the total fund expense waivers and reimbursements of $44,955,539 is disclosed in various locations in this Note 2 and Note 5.
Transfer Agent Fees
For the year ended July 31, 2022, transfer agent fees for the Fund were as follows:
|
|
Transfer Agent
Fees Incurred
|
Transfer Agent
Fees Reimbursed
|
Transfer Agent Fees
Waived by Unaffiliated
Third Parties
|
|
Automated Shares
|
$1,539,140
|
$(83,334)
|
$(628,059)
|
|
Class R Shares
|
94,591
|
—
|
(52,132)
|
|
Wealth Shares
|
1,686,518
|
(94)
|
—
|
|
Advisor Shares
|
24,100
|
—
|
—
|
|
Service Shares
|
243,106
|
—
|
(28)
|
|
Cash II Shares
|
1,444,009
|
(10,081)
|
(726,221)
|
|
Cash Series Shares
|
45,892
|
(2,043)
|
(22,901)
|
|
Capital Shares
|
50,699
|
—
|
—
|
|
Trust Shares
|
441,206
|
(6)
|
—
|
|
TOTAL
|
$5,569,261
|
$(95,558)
|
$(1,429,341)
|
Other Service Fees
The Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund’s Automated Shares, Class R Shares, Wealth Shares, Advisor Shares, Service Shares, Cash II Shares, Cash Series Shares, Capital Shares and Trust Shares to unaffiliated financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Financial intermediaries may include a company affiliated with management of Federated Hermes, Inc. A financial intermediary affiliated with management of Federated Hermes, Inc. received $14,630 of other service fees for the year ended July 31, 2022. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for other service fees. In addition, unaffiliated third-party financial intermediaries may waive other service fees. This waiver can be modified or terminated at any time.
Annual Shareholder Report
29
For the year ended July 31, 2022, other service fees for the Fund were as follows:
|
|
Other Service
Fees Incurred
|
Other Service
Fees Reimbursed
|
Other Service Fees
Waived by Unaffiliated
Third Parties
|
|
Automated Shares
|
$3,589,196
|
$—
|
$(2,318,200)
|
|
Class R Shares
|
94,911
|
(1,849)
|
(75,432)
|
|
Service Shares
|
3,697,068
|
—
|
(2,360,209)
|
|
Cash II Shares
|
3,216,087
|
—
|
(2,450,647)
|
|
Cash Series Shares
|
97,403
|
—
|
(77,893)
|
|
Capital Shares
|
305,095
|
(1,420)
|
(186,668)
|
|
Trust Shares
|
6,306,699
|
—
|
(4,840,272)
|
|
TOTAL
|
$17,306,459
|
$(3,269)
|
$(12,309,321)
|
For the year ended July 31, 2022, the Fund’s Wealth Shares and Advisor Shares did not incur other service fees; however they may begin to incur this fee upon approval of the Trustees.
Federal Taxes
It is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. As of and during the year ended July 31, 2022, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2022, tax years 2019 through 2022 remain subject to examination by the Fund’s major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.
When-Issued and Delayed-Delivery Transactions
The Fund may engage in when-issued or delayed-delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed-delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
Restricted Securities
The Fund may purchase securities which are considered restricted. Restricted securities are securities that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) are subject to contractual restrictions on public sales. In some cases, when a security cannot be offered for public sale without first being registered, the issuer of the restricted security has agreed to register such securities for resale, at the issuer’s expense, either upon demand by the Fund or in connection with another registered offering of the securities. Many such restricted securities may be
Annual Shareholder Report
30
resold in the secondary market in transactions exempt from registration. Restricted securities may be determined to be liquid under criteria established by the Trustees. The Fund will not incur any registration costs upon such resales. Restricted securities are valued at amortized cost in accordance with Rule 2a-7 under the Act.
Other
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ materially from those estimated. The Fund applies investment company accounting and reporting guidance.
3. SHARES OF BENEFICIAL INTEREST
The following tables summarize share activity:
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Automated Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
1,528,635,804
|
$1,528,635,804
|
1,092,892,574
|
$1,092,892,574
|
|
Shares issued to shareholders
in payment of
distributions declared
|
2,577,947
|
2,577,947
|
135,800
|
135,800
|
|
Shares redeemed
|
(1,854,156,282)
|
(1,854,156,282)
|
(1,661,611,602)
|
(1,661,611,602)
|
|
NET CHANGE RESULTING
FROM AUTOMATED
SHARE TRANSACTIONS
|
(322,942,531)
|
$(322,942,531)
|
(568,583,228)
|
$(568,583,228)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Class R Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
17,000,468
|
$17,000,468
|
25,037,245
|
$25,037,245
|
|
Shares issued to shareholders
in payment of
distributions declared
|
33,614
|
33,614
|
3,927
|
3,927
|
|
Shares redeemed
|
(14,551,648)
|
(14,551,648)
|
(34,894,798)
|
(34,894,798)
|
|
NET CHANGE RESULTING
FROM CLASS R
SHARE TRANSACTIONS
|
2,482,434
|
$2,482,434
|
(9,853,626)
|
$(9,853,626)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Wealth Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
13,906,013,345
|
$13,906,013,345
|
8,603,643,868
|
$8,603,643,868
|
|
Shares issued to shareholders
in payment of
distributions declared
|
35,833,910
|
35,833,910
|
5,940,168
|
5,940,168
|
|
Shares redeemed
|
(11,802,119,110)
|
(11,802,119,110)
|
(15,635,221,953)
|
(15,635,221,953)
|
|
NET CHANGE RESULTING
FROM WEALTH
SHARE TRANSACTIONS
|
2,139,728,145
|
$2,139,728,145
|
(7,025,637,917)
|
$(7,025,637,917)
|
Annual Shareholder Report
31
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Advisor Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
1,349,386,951
|
$1,349,386,951
|
170,408,084
|
$170,408,084
|
|
Shares issued to shareholders
in payment of
distributions declared
|
2,214,267
|
2,214,267
|
127,699
|
127,699
|
|
Shares redeemed
|
(513,054,969)
|
(513,054,969)
|
(358,892,162)
|
(358,892,162)
|
|
NET CHANGE RESULTING
FROM ADVISOR
SHARE TRANSACTIONS
|
838,546,249
|
$838,546,249
|
(188,356,379)
|
$(188,356,379)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Service Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
1,344,417,523
|
$1,344,417,523
|
1,287,654,602
|
$1,287,654,602
|
|
Shares issued to shareholders
in payment of
distributions declared
|
3,061,138
|
3,061,138
|
220,581
|
220,581
|
|
Shares redeemed
|
(1,579,139,032)
|
(1,579,139,032)
|
(2,592,784,162)
|
(2,592,784,162)
|
|
NET CHANGE RESULTING
FROM SERVICE
SHARE TRANSACTIONS
|
(231,660,371)
|
$(231,660,371)
|
(1,304,908,979)
|
$(1,304,908,979)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Cash II Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
610,894,665
|
$610,894,665
|
1,494,273,060
|
$1,494,273,060
|
|
Shares issued to shareholders
in payment of
distributions declared
|
1,557,950
|
1,557,950
|
124,526
|
124,526
|
|
Shares redeemed
|
(586,846,085)
|
(586,846,085)
|
(1,343,714,244)
|
(1,343,714,244)
|
|
NET CHANGE RESULTING
FROM CASH II
SHARE TRANSACTIONS
|
25,606,530
|
$25,606,530
|
150,683,342
|
$150,683,342
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Cash Series Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
61,276,990
|
$61,276,990
|
60,002,729
|
$60,002,729
|
|
Shares issued to shareholders
in payment of
distributions declared
|
36,978
|
36,978
|
3,891
|
3,891
|
|
Shares redeemed
|
(61,108,129)
|
(61,108,129)
|
(51,194,705)
|
(51,194,705)
|
|
NET CHANGE RESULTING
FROM CASH SERIES
SHARE TRANSACTIONS
|
205,839
|
$205,839
|
8,811,915
|
$8,811,915
|
Annual Shareholder Report
32
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Capital Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
299,364,846
|
$299,364,846
|
286,065,142
|
$286,065,142
|
|
Shares issued to shareholders
in payment of
distributions declared
|
743,705
|
743,705
|
47,159
|
47,159
|
|
Shares redeemed
|
(318,414,947)
|
(318,414,947)
|
(505,540,753)
|
(505,540,753)
|
|
NET CHANGE RESULTING
FROM CAPITAL
SHARE TRANSACTIONS
|
(18,306,396)
|
$(18,306,396)
|
(219,428,452)
|
$(219,428,452)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Trust Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
871,602,337
|
$871,602,337
|
2,264,508,655
|
$2,264,508,655
|
|
Shares issued to shareholders
in payment of
distributions declared
|
2,998,371
|
2,998,371
|
348,973
|
348,973
|
|
Shares redeemed
|
(3,527,420,926)
|
(3,527,420,926)
|
(3,261,812,247)
|
(3,261,812,247)
|
|
NET CHANGE RESULTING
FROM TRUST
SHARE TRANSACTIONS
|
(2,652,820,218)
|
$(2,652,820,218)
|
(996,954,619)
|
$(996,954,619)
|
|
NET CHANGE RESULTING
FROM TOTAL FUND
SHARE TRANSACTIONS
|
(219,160,319)
|
$(219,160,319)
|
(10,154,227,943)
|
$(10,154,227,943)
|
4. FEDERAL TAX INFORMATION
The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2022 and 2021, was as follows:
|
|
2022
|
2021
|
|
Ordinary income1
|
$53,185,931
|
$7,464,085
|
|
1
|
For tax purposes, short-term capital gain distributions are considered ordinary
income distributions.
|
As of July 31, 2022, the components of distributable earnings on a tax-basis were as follows:
|
Undistributed ordinary income2
|
$100,866
|
|
Undistributed long-term capital gains
|
$63,747
|
|
2
|
For tax purposes, short-term capital gains are considered ordinary income in determining
distributable earnings.
|
Annual Shareholder Report
33
5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.20% of the Fund’s average daily net assets. Subject to the terms described in the Expense Limitation note, the Fund’s Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund for competitive reasons such as to maintain the Fund’s expense ratio, or as and when appropriate, to maintain positive or zero net yields. For the year ended July 31, 2022, the Fund’s Adviser voluntarily waived $21,273,930 of its fee and voluntarily reimbursed $95,558 of transfer agent fees.
The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated investment companies. For the year ended July 31, 2022, the Adviser reimbursed $2,361,280.
Administrative Fee
Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated Hermes Funds subject to a fee under the Administrative Services Agreement. The fee paid to FAS is based on the average daily net assets of the Investment Complex as specified below:
|
Administrative Fee
|
Average Daily Net Assets
of the Investment Complex
|
|
0.100%
|
on assets up to $50 billion
|
|
0.075%
|
on assets over $50 billion
|
Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2022, the annualized fee paid to FAS was 0.078% of average daily net assets of the Fund.
In addition, FAS may charge certain out-of-pocket expenses to the Fund.
Distribution Services Fee
The Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund’s Class R Shares, Cash II Shares, Cash Series Shares and Trust Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:
|
|
Percentage of Average Daily
Net Assets of Class
|
|
Class R Shares
|
0.50%
|
|
Cash II Shares
|
0.35%
|
|
Cash Series Shares
|
0.60%
|
|
Trust Shares
|
0.25%
|
Annual Shareholder Report
34
Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2022, distribution services fees for the Fund were as follows:
|
|
Distribution Services
Fees Incurred
|
Distribution Services
Fees Waived
|
|
Class R Shares
|
$196,533
|
$(148,261)
|
|
Cash II Shares
|
4,503,683
|
(3,048,860)
|
|
Cash Series Shares
|
233,767
|
(178,423)
|
|
Trust Shares
|
6,306,699
|
(4,107,296)
|
|
TOTAL
|
$11,240,682
|
$(7,482,840)
|
When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares.
Other Service Fees
For the year ended July 31, 2022, FSSC received $16,713 of the other service fees disclosed in Note 2.
Expense Limitation
Due to the possibility of changes in market conditions and other factors, there can be no assurance that the level of waivers/reimbursement/reduction of Fund expenses reflected in the financial highlights will be maintained in the future. However, the Adviser and certain of its affiliates (which may include FSC, FAS and FSSC) on their own initiative have agreed to waive certain amounts of their respective fees and/or reimburse expenses. Total annual fund operating expenses (as shown in the financial highlights, excluding interest expense, extraordinary expenses and proxy-related expenses paid by the Fund, if any) including the Fund’s share of fees and expenses of the investments in affiliated funds paid by the Fund’s Automated Shares, Class R Shares, Wealth Shares, Advisor Shares, Service Shares, Cash II Shares, Cash Series Shares, Capital Shares and Trust Shares (after the voluntary waivers and/or reimbursements) will not exceed 0.55%, 1.15%, 0.20%, 0.20%, 0.45%, 0.90%, 1.05%, 0.30% and 0.70% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) October 1, 2023; or (b) the date of the Fund’s next effective Prospectus. While the Adviser and its applicable affiliates currently do not anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or the Fee Limit increased prior to the Termination Date with the agreement of the Trustees.
Interfund Transactions
During the year ended July 31, 2022, the Fund engaged in sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees and/or common Officers. These sale transactions complied with Rule 17a-7 under the Act and amounted to $19,000,000.
Directors’/Trustees’ and Miscellaneous Fees
Certain Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate payment, Independent Directors’/Trustees’ fees and certain expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses are paid by an affiliate of the
Annual Shareholder Report
35
Adviser which in due course are reimbursed by the Fund. These expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses may be included in Accrued and Miscellaneous Expenses on the Statement of Assets and Liabilities and Statement of Operations, respectively.
6. CONCENTRATION OF RISK
A substantial portion of the Fund’s portfolio may be comprised of securities deemed by the Adviser to be in similar sectors. As a result, the Fund may be more susceptible to any economic, business, political or other developments which generally affect these entities.
7. LINE OF CREDIT
The Fund participates with certain other Federated Hermes Funds, on a several basis, in an up to $500,000,000 unsecured, 364-day, committed, revolving line of credit (LOC) agreement dated June 22, 2022. The LOC was made available to temporarily finance the repurchase or redemption of shares of the Fund, failed trades, payment of dividends, settlement of trades and for other short-term, temporary or emergency general business purposes. The Fund cannot borrow under the LOC if an inter-fund loan is outstanding. The Fund’s ability to borrow under the LOC also is subject to the limitations of the Act and various conditions precedent that must be satisfied before the Fund can borrow. Loans under the LOC are charged interest at a fluctuating rate per annum equal to (a) the highest, on any day, of (i) the federal funds effective rate, (ii) the published secured overnight financing rate plus an assigned percentage, and (iii) 0.0%, plus (b) a margin. Any fund eligible to borrow under the LOC pays its pro rata share of a commitment fee based on the amount of the lenders’ commitment that has not been utilized, quarterly in arrears and at maturity. As of July 31, 2022, the Fund had no outstanding loans. During the year ended July 31, 2022, the Fund did not utilize the LOC.
8. INTERFUND LENDING
Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other funds advised by subsidiaries of Federated Hermes, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating affiliated funds. As of July 31, 2022, there were no outstanding loans. During the year ended July 31, 2022, the program was not utilized.
9. INDEMNIFICATIONS
Under the Fund’s organizational documents, its Officers and Directors/Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund (other than liabilities arising out of their willful misfeasance, bad faith, gross negligence or reckless disregard of their duties to the Fund). In addition, in the normal course of business, the Fund provides certain indemnifications under arrangements with third parties. Typically, obligations to indemnify a third party arise in the context of an arrangement entered into by the Fund under which the Fund agrees to indemnify such third party for certain liabilities arising out of actions taken pursuant to the arrangement, provided the third party’s actions are not deemed to have breached an agreed-upon standard of care (such as willful misfeasance, bad faith, gross negligence or reckless disregard of their duties under the contract). The Fund’s maximum exposure under
Annual Shareholder Report
36
these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet arisen. The Fund does not anticipate any material claims or losses pursuant to these arrangements at this time, and accordingly expects the risk of loss to be remote.
10. OTHER MATTERS
An outbreak of respiratory disease caused by a novel coronavirus was first detected in China in late 2019 and subsequently spread globally. As of the date of the issuance of these financial statements, this coronavirus has resulted in closing borders, enhanced health screenings, disruptions to healthcare service preparation and delivery, quarantines, cancellations, and disruptions to supply chains, workflow operations and consumer activity, as well as general concern and uncertainty. The impact of this coronavirus may continue for an extended period of time and has resulted in substantial economic volatility. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could continue to negatively affect the worldwide economy, as well as the economies of individual countries, individual companies (including certain Fund service providers and issuers of the Fund’s investments) and the markets in general in significant and unforeseen ways. Any such impact could adversely affect the Fund’s performance.
11. FEDERAL TAX INFORMATION (UNAUDITED)
For the fiscal year ended July 31, 2022, 73.37% of dividends paid by the Fund are interest-related dividends, as provided by the American Jobs Creation Act of 2004.
Annual Shareholder Report
37
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Federated Hermes Money Market Obligations Trust and the Shareholders of Federated Hermes Prime Cash Obligations Fund:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of the Federated Hermes Prime Cash Obligations Fund (the Fund), a portfolio of Federated Hermes Money Market Obligations Trust, including the portfolio of investments, as of July 31, 2022, the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the related notes (collectively, the financial statements) and the financial highlights for each of the years or periods in the five-year period then ended. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of July 31, 2022, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years or periods in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
Annual Shareholder Report
38
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Such procedures also included confirmation of securities owned as of July 31, 2022, by correspondence with custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of Federated Hermes’ investment companies since 2006.
Boston, Massachusetts
September 23, 2022
September 23, 2022
Annual Shareholder Report
39
Shareholder Expense Example (unaudited)
As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or other service fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2022 to July 31, 2022.
ACTUAL EXPENSES
The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses attributable to your investment during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Annual Shareholder Report
40
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
|
|
Beginning
Account Value
2/1/2022
|
Ending
Account Value
7/31/2022
|
Expenses Paid
During Period1
|
|
Actual:
|
|
|
|
|
Automated Shares
|
$1,000
|
$1,002.00
|
$2.182
|
|
Class R Shares
|
$1,000
|
$1,000.80
|
$3.473
|
|
Wealth Shares
|
$1,000
|
$1,003.30
|
$0.94
|
|
Advisor Shares
|
$1,000
|
$1,003.30
|
$0.94
|
|
Service Shares
|
$1,000
|
$1,002.30
|
$1.894
|
|
Cash II Shares
|
$1,000
|
$1,001.20
|
$3.085
|
|
Cash Series Shares
|
$1,000
|
$1,000.90
|
$3.326
|
|
Capital Shares
|
$1,000
|
$1,002.90
|
$1.347
|
|
Trust Shares
|
$1,000
|
$1,001.60
|
$2.488
|
|
Hypothetical (assuming a 5% return
before expenses):
|
|
|
|
|
Automated Shares
|
$1,000
|
$1,022.61
|
$2.212
|
|
Class R Shares
|
$1,000
|
$1,021.32
|
$3.513
|
|
Wealth Shares
|
$1,000
|
$1,023.85
|
$0.95
|
|
Advisor Shares
|
$1,000
|
$1,023.85
|
$0.95
|
|
Service Shares
|
$1,000
|
$1,022.91
|
$1.914
|
|
Cash II Shares
|
$1,000
|
$1,021.72
|
$3.115
|
|
Cash Series Shares
|
$1,000
|
$1,021.47
|
$3.366
|
|
Capital Shares
|
$1,000
|
$1,023.46
|
$1.357
|
|
Trust Shares
|
$1,000
|
$1,022.32
|
$2.518
|
|
1
|
Expenses are equal to the Fund’s annualized net expense ratios, multiplied by the average
account value over the period, multiplied by 181/365 (to reflect the one-half-year period). The
annualized net expense ratios are as follows:
|
|
Automated Shares
|
0.44%
|
|
Class R Shares
|
0.70%
|
|
Wealth Shares
|
0.19%
|
|
Advisor Shares
|
0.19%
|
|
Service Shares
|
0.38%
|
|
Cash II Shares
|
0.62%
|
|
Cash Series Shares
|
0.67%
|
|
Capital Shares
|
0.27%
|
|
Trust Shares
|
0.50%
|
Annual Shareholder Report
41
|
2
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Automated Shares
current Fee Limit of 0.55% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $2.73 and $2.76, respectively.
|
|
3
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Class R Shares
current Fee Limit of 1.15% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $5.71 and $5.76, respectively.
|
|
4
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Service Shares
current Fee Limit of 0.45% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $2.23 and $2.26, respectively.
|
|
5
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Cash II Shares
current Fee Limit of 0.90% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $4.47 and $4.51, respectively.
|
|
6
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Cash Series Shares
current Fee Limit of 1.05% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $5.21 and $5.26, respectively.
|
|
7
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Capital Shares
current Fee Limit of 0.30% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $1.49 and $1.51, respectively.
|
|
8
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Trust Shares
current Fee Limit of 0.70% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $3.47 and $3.51, respectively.
|
Annual Shareholder Report
42
Board of Trustees and Trust Officers
The Board of Trustees is responsible for managing the Trust’s business affairs and for exercising all the Trust’s powers except those reserved for the shareholders. The following tables give information about each Trustee and the senior officers of the Fund. Where required, the tables separately list Trustees who are “interested persons” of the Fund (i.e., “Interested” Trustees) and those who are not (i.e., “Independent” Trustees). Unless otherwise noted, the address of each person listed is 1001 Liberty Avenue, Pittsburgh, PA 15222-3779. The address of all Independent Trustees listed is 4000 Ericsson Drive, Warrendale, PA 15086-7561; Attention: Mutual Fund Board. As of December 31, 2021, the Trust comprised 16 portfolio(s), and the Federated Hermes Fund Family consisted of 33 investment companies (comprising 102 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Trustee oversees all portfolios in the Federated Hermes Fund Family and serves for an indefinite term. The Fund’s Statement of Additional Information includes additional information about Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400, Option #4.
Interested TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
J. Christopher Donahue*
Birth Date: April 11, 1949
President and Trustee
Indefinite Term
Began serving: April 1989
|
Principal Occupations: Principal Executive Officer and President of
certain of the Funds in the Federated Hermes Fund Family; Director or
Trustee of the Funds in the Federated Hermes Fund Family; President,
Chief Executive Officer and Director, Federated Hermes, Inc.;
Chairman and Trustee, Federated Investment Management Company;
Trustee, Federated Investment Counseling; Chairman and Director,
Federated Global Investment Management Corp.; Chairman and
Trustee, Federated Equity Management Company of Pennsylvania;
Trustee, Federated Shareholder Services Company; Director,
Federated Services Company.
Previous Positions: President, Federated Investment Counseling;
President and Chief Executive Officer, Federated Investment
Management Company, Federated Global Investment Management
Corp. and Passport Research, Ltd; Chairman, Passport Research, Ltd.
|
Annual Shareholder Report
43
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
Thomas R. Donahue*
Birth Date: October 20, 1958
Trustee
Indefinite Term
Began serving: May 2016
|
Principal Occupations: Director or Trustee of certain of the funds in
the Federated Hermes Fund Family; Chief Financial Officer, Treasurer,
Vice President and Assistant Secretary, Federated Hermes, Inc.;
Chairman and Trustee, Federated Administrative Services; Chairman
and Director, Federated Administrative Services, Inc.; Trustee and
Treasurer, Federated Advisory Services Company; Director or Trustee
and Treasurer, Federated Equity Management Company of
Pennsylvania, Federated Global Investment Management Corp.,
Federated Investment Counseling, and Federated Investment
Management Company; Director, MDTA LLC; Director, Executive Vice
President and Assistant Secretary, Federated Securities Corp.;
Director or Trustee and Chairman, Federated Services Company and
Federated Shareholder Services Company; and Director and
President, FII Holdings, Inc.
Previous Positions: Director, Federated Hermes, Inc.; Assistant
Secretary, Federated Investment Management Company, Federated
Global Investment Management Company and Passport Research,
LTD; Treasurer, Passport Research, LTD; Executive Vice President,
Federated Securities Corp.; and Treasurer, FII Holdings, Inc.
|
*
Family relationships and reasons for “interested” status: J. Christopher Donahue and Thomas R. Donahue are brothers. Both are “interested” due to their beneficial ownership of shares of Federated Hermes, Inc. and the positions they hold with Federated Hermes, Inc. and its subsidiaries.
INDEPENDENT TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
John T. Collins
Birth Date: January 24, 1947
Trustee
Indefinite Term
Began serving:
September 2013
|
Principal Occupations: Director or Trustee, and Chair of the Board
of Directors or Trustees, of the Federated Hermes Fund Family;
formerly, Chairman and CEO, The Collins Group, Inc. (a private equity
firm) (Retired).
Other Directorships Held: Director, KLX Energy Services Holdings,
Inc. (oilfield services); former Director of KLX Corp. (aerospace).
Qualifications: Mr. Collins has served in several business and financial
management roles and directorship positions throughout his career.
Mr. Collins previously served as Chairman and CEO of The Collins
Group, Inc. (a private equity firm) and as a Director of KLX Corp.
Mr. Collins serves as Chairman Emeriti, Bentley University. Mr. Collins
previously served as Director and Audit Committee Member, Bank of
America Corp.; Director, FleetBoston Financial Corp.; and Director,
Beth Israel Deaconess Medical Center (Harvard University
Affiliate Hospital).
|
Annual Shareholder Report
44
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
G. Thomas Hough
Birth Date: February 28, 1955
Trustee
Indefinite Term
Began serving: August 2015
|
Principal Occupations: Director or Trustee, Chair of the Audit
Committee of the Federated Hermes Fund Family; formerly, Vice
Chair, Ernst & Young LLP (public accounting firm) (Retired).
Other Directorships Held: Director, Chair of the Audit Committee,
Equifax, Inc.; Lead Director, Member of the Audit and Nominating and
Corporate Governance Committees, Haverty Furniture Companies,
Inc.; formerly, Director, Member of Governance and Compensation
Committees, Publix Super Markets, Inc.
Qualifications: Mr. Hough has served in accounting, business
management and directorship positions throughout his career.
Mr. Hough most recently held the position of Americas Vice Chair of
Assurance with Ernst & Young LLP (public accounting firm). Mr. Hough
serves on the President’s Cabinet and Business School Board of
Visitors for the University of Alabama. Mr. Hough previously served on
the Business School Board of Visitors for Wake Forest University, and
he previously served as an Executive Committee member of the
United States Golf Association.
|
|
Maureen Lally-Green
Birth Date: July 5, 1949
Trustee
Indefinite Term
Began serving: August 2009
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Adjunct Professor Emerita of Law, Duquesne University
School of Law; formerly, Dean of the Duquesne University School of
Law and Professor of Law and Interim Dean of the Duquesne
University School of Law; formerly, Associate General Secretary and
Director, Office of Church Relations, Diocese of Pittsburgh.
Other Directorships Held: Director, CNX Resources Corporation
(formerly known as CONSOL Energy Inc.).
Qualifications: Judge Lally-Green has served in various legal and
business roles and directorship positions throughout her career. Judge
Lally-Green previously held the position of Dean of the School of Law
of Duquesne University (as well as Interim Dean). Judge Lally-Green
previously served as a member of the Superior Court of Pennsylvania
and as a Professor of Law, Duquesne University School of Law. Judge
Lally-Green was appointed by the Supreme Court of Pennsylvania to
serve on the Supreme Court’s Board of Continuing Judicial Education
and the Supreme Court’s Appellate Court Procedural Rules
Committee. Judge Lally-Green also currently holds the positions on
not for profit or for profit boards of directors as follows: Director
and Chair, UPMC Mercy Hospital; Regent, Saint Vincent Seminary;
Member, Pennsylvania State Board of Education (public); Director,
Catholic Charities, Pittsburgh; and Director CNX Resources
Corporation (formerly known as CONSOL Energy Inc.). Judge
Lally-Green has held the positions of: Director, Auberle; Director,
Epilepsy Foundation of Western and Central Pennsylvania; Director,
Ireland Institute of Pittsburgh; Director, Saint Thomas More Society;
Director and Chair, Catholic High Schools of the Diocese of
Pittsburgh, Inc.; Director, Pennsylvania Bar Institute; Director,
St. Vincent College; Director and Chair, North Catholic High
School, Inc.; Director and Vice Chair, Our Campaign for the Church
Alive!, Inc.; and Director, Saint Francis University.
|
Annual Shareholder Report
45
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
Thomas M. O’Neill
Birth Date: June 14, 1951
Trustee
Indefinite Term
Began serving: August 2006
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Sole Proprietor, Navigator Management Company
(investment and strategic consulting).
Other Directorships Held: None.
Qualifications: Mr. O’Neill has served in several business, mutual fund
and financial management roles and directorship positions throughout
his career. Mr. O’Neill serves as Director, Medicines for Humanity.
Mr. O’Neill previously served as Chief Executive Officer and President,
Managing Director and Chief Investment Officer, Fleet Investment
Advisors; President and Chief Executive Officer, Aeltus Investment
Management, Inc.; General Partner, Hellman, Jordan Management
Co., Boston, MA; Chief Investment Officer, The Putnam Companies,
Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director
and Consultant, EZE Castle Software (investment order management
software); Director, The Golisano Children’s Museum of Naples,
Florida; and Director, Midway Pacific (lumber).
|
|
Madelyn A. Reilly
Birth Date: February 2, 1956
Trustee
Indefinite Term
Began serving:
November 2020
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; formerly, Executive Vice President for Legal Affairs,
General Counsel and Secretary to the Board of Directors, Duquesne
University (Retired).
Other Directorships Held: None.
Qualifications: Ms. Reilly has served in various business and legal
management roles throughout her career. Ms. Reilly previously served
as Senior Vice President for Legal Affairs, General Counsel and
Secretary to the Board of Directors and Assistant General Counsel and
Director of Risk Management, Duquesne University. Prior to her work
at Duquesne University, Ms. Reilly served as Assistant General
Counsel of Compliance and Enterprise Risk as well as Senior Counsel
of Environment, Health and Safety, PPG Industries. Ms. Reilly currently
serves as a member of the Board of Directors of UPMC
Mercy Hospital.
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Annual Shareholder Report
46
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
P. Jerome Richey
Birth Date: February 23, 1949
Trustee
Indefinite Term
Began serving:
September 2013
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Management Consultant; Retired; formerly, Senior Vice
Chancellor and Chief Legal Officer, University of Pittsburgh and
Executive Vice President and Chief Legal Officer, CONSOL Energy Inc.
(now split into two separate publicly traded companies known as
CONSOL Energy Inc. and CNX Resources Corp.).
Other Directorships Held: None.
Qualifications: Mr. Richey has served in several business and legal
management roles and directorship positions throughout his career.
Mr. Richey most recently held the positions of Senior Vice Chancellor
and Chief Legal Officer, University of Pittsburgh. Mr. Richey previously
served as Chairman of the Board, Epilepsy Foundation of Western
Pennsylvania and Chairman of the Board, World Affairs Council of
Pittsburgh. Mr. Richey previously served as Chief Legal Officer and
Executive Vice President, CONSOL Energy Inc. and CNX Gas
Company; and Board Member, Ethics Counsel and Shareholder,
Buchanan Ingersoll & Rooney PC (a law firm).
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|
John S. Walsh
Birth Date:
November 28, 1957
Trustee
Indefinite Term
Began serving: January 1999
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; President and Director, Heat Wagon, Inc. (manufacturer
of construction temporary heaters); President and Director,
Manufacturers Products, Inc. (distributor of portable construction
heaters); President, Portable Heater Parts, a division of Manufacturers
Products, Inc.
Other Directorships Held: None.
Qualifications: Mr. Walsh has served in several business management
roles and directorship positions throughout his career. Mr. Walsh
previously served as Vice President, Walsh & Kelly, Inc.
(paving contractors).
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Annual Shareholder Report
47
OFFICERS
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Lori A. Hensler
Birth Date: January 6, 1967
TREASURER
Officer since: April 2013
|
Principal Occupations: Principal Financial Officer and Treasurer of the
Federated Hermes Fund Family; Senior Vice President, Federated
Administrative Services; Financial and Operations Principal for
Federated Securities Corp.; and Assistant Treasurer, Federated
Investors Trust Company. Ms. Hensler has received the Certified
Public Accountant designation.
Previous Positions: Controller of Federated Hermes, Inc.; Senior Vice
President and Assistant Treasurer, Federated Investors Management
Company; Treasurer, Federated Investors Trust Company; Assistant
Treasurer, Federated Administrative Services, Federated
Administrative Services, Inc., Federated Securities Corp., Edgewood
Services, Inc., Federated Advisory Services Company, Federated
Equity Management Company of Pennsylvania, Federated Global
Investment Management Corp., Federated Investment Counseling,
Federated Investment Management Company, Passport Research,
Ltd., and Federated MDTA, LLC; Financial and Operations Principal for
Federated Securities Corp., Edgewood Services, Inc. and Southpointe
Distribution Services, Inc.
|
|
Peter J. Germain
Birth Date:
September 3, 1959
CHIEF LEGAL OFFICER,
SECRETARY and EXECUTIVE
VICE PRESIDENT
Officer since: January 2005
|
Principal Occupations: Mr. Germain is Chief Legal Officer, Secretary
and Executive Vice President of the Federated Hermes Fund Family.
He is General Counsel, Chief Legal Officer, Secretary and Executive
Vice President, Federated Hermes, Inc.; Trustee and Senior Vice
President, Federated Investors Management Company; Trustee and
President, Federated Administrative Services; Director and President,
Federated Administrative Services, Inc.; Director and Vice President,
Federated Securities Corp.; Director and Secretary, Federated Private
Asset Management, Inc.; Secretary, Federated Shareholder Services
Company; and Secretary, Retirement Plan Service Company of
America. Mr. Germain joined Federated Hermes, Inc. in 1984 and is a
member of the Pennsylvania Bar Association.
Previous Positions: Deputy General Counsel, Special Counsel,
Managing Director of Mutual Fund Services, Federated Hermes, Inc.;
Senior Vice President, Federated Services Company; and Senior
Corporate Counsel, Federated Hermes, Inc.
|
|
Stephen Van Meter
Birth Date: June 5, 1975
CHIEF COMPLIANCE
OFFICER AND SENIOR VICE
PRESIDENT
Officer since: July 2015
|
Principal Occupations: Senior Vice President and Chief Compliance
Officer of the Federated Hermes Fund Family; Vice President and
Chief Compliance Officer of Federated Hermes, Inc. and Chief
Compliance Officer of certain of its subsidiaries. Mr. Van Meter joined
Federated Hermes, Inc. in October 2011. He holds FINRA licenses
under Series 3, 7, 24 and 66.
Previous Positions: Mr. Van Meter previously held the position of
Compliance Operating Officer, Federated Hermes, Inc. Prior to joining
Federated Hermes, Inc., Mr. Van Meter served at the United States
Securities and Exchange Commission in the positions of Senior
Counsel, Office of Chief Counsel, Division of Investment Management
and Senior Counsel, Division of Enforcement.
|
Annual Shareholder Report
48
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Deborah A. Cunningham
Birth Date:
September 15, 1959
Chief Investment Officer
Officer since: May 2004
Portfolio Manager since:
November 1996
|
Principal Occupations: Deborah A. Cunningham has been the Fund’s
Portfolio Manager since November 1996. Ms. Cunningham was named
Chief Investment Officer of Federated Hermes’ money market
products in 2004. She joined Federated Hermes in 1981 and has been
a Senior Portfolio Manager since 1997 and an Executive Vice President
of the Fund’s Adviser since 2009. Ms. Cunningham has received the
Chartered Financial Analyst designation and holds an M.S.B.A. in
Finance from Robert Morris College.
|
Annual Shareholder Report
49
Evaluation and Approval of Advisory Contract–May 2022
Federated Hermes Prime Cash Obligations Fund (the “Fund”)
At its meetings in May 2022 (the “May Meetings”), the Fund’s Board of Trustees (the “Board”), including those Trustees who are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940 (the “Independent Trustees”), reviewed and unanimously approved the continuation of the investment advisory contract between the Fund and Federated Investment Management Company (the “Adviser”) (the “Contract”) for an additional one-year term. The Board’s determination to approve the continuation of the Contract reflects the exercise of its business judgment after considering all of the information and factors believed to be relevant and appropriate on whether to approve the continuation of the existing arrangement. The information, factors and conclusions that formed the basis for the Board’s approval are summarized below.
Information Received and Review Process
At the request of the Independent Trustees, the Fund’s Chief Compliance Officer (the “CCO”) furnished to the Board in advance of its May Meetings an independent written evaluation presenting on the topics discussed below. The Board considered the CCO’s independent written evaluation (the “CCO Fee Evaluation Report”), along with other information, in evaluating the reasonableness of the Fund’s management fee and in determining to approve the continuation of the Contract. The CCO, in preparing the CCO Fee Evaluation Report, has the authority to retain consultants, experts or staff as reasonably necessary to assist in the performance of his duties, reports directly to the Board, and can be terminated only with the approval of a majority of the Independent Trustees. At the request of the Independent Trustees, the CCO Fee Evaluation Report followed the same general approach and covered the same topics as that of the report that had previously been delivered by the CCO in his capacity as “Senior Officer” prior to the elimination of the Senior Officer position in December 2017.
In addition to the extensive materials that comprise and accompany the CCO Fee Evaluation Report, the Board considered information specifically prepared in connection with the approval of the continuation of the Contract that was presented at the May Meetings. In this regard, in the months preceding the May Meetings, the Board requested and reviewed written responses and supporting materials prepared by the Adviser and its affiliates (collectively, “Federated Hermes”) in response to requests posed to Federated Hermes by independent legal counsel on behalf of the Independent Trustees encompassing a wide variety of topics, including those summarized below. The Board also considered such additional matters as the Independent Trustees deemed
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50
reasonably necessary to evaluate the Contract, which included detailed information about the Fund and Federated Hermes furnished to the Board at its meetings throughout the year and in between regularly scheduled meetings on particular matters as the need arose.
The Board’s consideration of the Contract included review of materials and information covering the following matters, among others: the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates; Federated Hermes’ business and operations; the Adviser’s investment philosophy, personnel and processes; the Fund’s investment objectives and strategies; the Fund’s short-term and long-term performance (in absolute terms, both on a gross basis and net of expenses, and relative to the Fund’s particular investment program and a group of its peer funds and/or its benchmark, as appropriate); the Fund’s investment objectives; the Fund’s fees and expenses, including the advisory fee and the overall expense structure of the Fund (both in absolute terms and relative to a group of its peer funds), with due regard for contractual or voluntary expense limitations (if any); the financial condition of Federated Hermes; the Adviser’s profitability with respect to the Fund; distribution and sales activity for the Fund; and the use and allocation of brokerage commissions derived from trading the Fund’s portfolio securities (if any).
The Board also considered judicial decisions concerning allegedly excessive investment advisory fees charged to other registered funds in determining to approve the Contract. Using these judicial decisions as a guide, the Board observed that the following factors may be relevant to an adviser’s fiduciary duty with respect to its receipt of compensation from a fund: (1) the nature and quality of the services provided by the adviser to the fund and its shareholders, including the performance of the fund, its benchmark and comparable funds; (2) the adviser’s cost of providing the services and the profitability to the adviser of providing advisory services to the fund; (3) the extent to which the adviser may realize “economies of scale” as the fund grows larger and, if such economies of scale exist, whether they have been appropriately shared with the fund and its shareholders or the family of funds; (4) any “fall-out” benefits that accrue to the adviser because of its relationship with the fund, including research services received from brokers that execute fund trades and any fees paid to affiliates of the adviser for services rendered to the fund; (5) comparative fee and expense structures, including a comparison of management fees paid to the adviser with those paid by similar funds both internally and externally as well as management fees charged to institutional and other advisory clients of the adviser for what might be viewed as like services; and (6) the extent of care, conscientiousness and independence with which the fund’s board members perform their duties and their expertise, including whether they are fully informed about all facts the board deems relevant to its consideration of the adviser’s services and fees. The Board noted that the Securities and Exchange Commission (“SEC”) disclosure requirements
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51
regarding the basis for a fund board’s approval of the fund’s investment advisory contract generally align with the factors listed above. The Board was guided by these factors in its review of the Contract to the extent it considered them to be appropriate and relevant, as discussed further below. The Board considered and weighed these factors in light of its substantial accumulated experience in governing the Fund and working with Federated Hermes on matters relating to the oversight of the other funds advised by Federated Hermes (each, a “Federated Hermes Fund” and, collectively, the (“Federated Hermes Funds”).
In addition to considering the above-referenced factors, the Board was mindful of the preferences and expectations of Fund shareholders and the potential disruptions of the Fund’s operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew the Contract. In particular, the Board recognized that many shareholders likely have invested in the Fund on the strength of Federated Hermes’ industry standing and reputation and with the expectation that Federated Hermes will have a continuing role in providing advisory services to the Fund. Thus, the Board observed that in the marketplace there are a range of investment options available to the Fund’s shareholders and such shareholders, having had the opportunity to consider other investment options, have effectively selected Federated Hermes by virtue of investing in the Fund.
In determining to approve the continuation of the Contract, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the continuation of the Contract was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Contract. The Board recognized that its evaluation process is evolutionary and that the factors considered and emphasis placed on relevant factors may change in recognition of changing circumstances in the registered fund marketplace. The Independent Trustees were assisted throughout the evaluation process by independent legal counsel. In connection with their deliberations at the May Meetings, the Independent Trustees met separately in executive session with their independent legal counsel and without management present to review the relevant materials and consider their responsibilities under applicable laws. In addition, senior management representatives of Federated Hermes also met with the Independent Trustees and their independent legal counsel to discuss the materials and presentations furnished to the Board at the May Meetings. The Board considered the approval of the Contract for the Fund as part of its consideration of agreements for funds across the family of Federated Hermes Funds, but its approvals were made on a fund-by-fund basis.
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52
Nature, Extent and Quality of Services
The Board considered the nature, extent and quality of the services provided to the Fund by the Adviser and the resources of Federated Hermes dedicated to the Fund. In this regard, the Board evaluated, among other things, the terms of the Contract and the range of services provided to the Fund by Federated Hermes. The Board considered the Adviser’s personnel, investment philosophy and process, investment research capabilities and resources, trade operations capabilities, experience and performance track record. The Board reviewed the qualifications, backgrounds and responsibilities of the portfolio management team primarily responsible for the day-to-day management of the Fund and Federated Hermes’ ability and experience in attracting and retaining qualified personnel to service the Fund. In addition, the Board noted that the Fund is a money market mutual fund that operates in accordance with the limitations set forth in Rule 2a-7 under the 1940 Act. In this connection, the Board considered the expertise of the Adviser in managing money market funds, its extensive experience with the requirements of Rule 2a-7 and its commitment to managing the Fund in accordance with these requirements. The Board also considered the Adviser’s ability to deliver competitive investment performance for the Fund when compared to the Fund’s Performance Peer Group (as defined below), which was deemed by the Board to be a useful indicator of how the Adviser is executing the Fund’s investment program. The Board also considered the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, in order to maintain a positive yield for the Fund in the low interest rate environment.
In addition, the Board considered the financial resources and overall reputation of Federated Hermes and its willingness to consider and make investments in personnel, infrastructure, technology, cybersecurity, business continuity planning and operational enhancements that are designed to benefit the Federated Hermes Funds. The Board noted the significant acquisition of Hermes Fund Managers Limited by Federated Hermes, which has deepened the organization’s investment management expertise and capabilities and expanded the investment process for all of the Federated Hermes Funds to have access to analytical resources related to environmental, social and governance (“ESG”) factors and issuer engagement on ESG matters. The Board considered the quality of Federated Hermes’ communications with the Board and responsiveness to Board inquiries and requests made from time to time with respect to the Fund and other Federated Hermes Funds. In this regard, the Board took into account Federated Hermes’ communications with the Board in light of the pandemic. The Board also considered that Federated Hermes is responsible for providing the Federated Hermes Funds’ officers.
The Board received and evaluated information regarding Federated Hermes’ regulatory and compliance environment. The Board considered Federated Hermes’ compliance program and compliance history and reports from the CCO about Federated Hermes’ compliance with applicable laws and
Annual Shareholder Report
53
regulations, including responses to regulatory developments and any compliance or other issues raised by regulatory agencies. The Board also noted Federated Hermes’ support of the Federated Hermes Funds’ compliance control structure and the compliance-related resources devoted by Federated Hermes in support of the Fund’s obligations pursuant to Rule 38a-1 under the Investment Company Act of 1940, including Federated Hermes’ commitment to respond to rulemaking and other regulatory initiatives of the SEC. The Board considered Federated Hermes’ approach to internal audits and risk management with respect to the Federated Hermes Funds and its day-to-day oversight of the Federated Hermes Funds’ compliance with their investment objectives and policies as well as with applicable laws and regulations, noting that regulatory and other developments had over time led to an increase in the scope of Federated Hermes’ oversight in this regard, including in connection with the designation of the Federated Hermes Funds’ investment advisers as the administrators of the Federated Hermes Funds’ liquidity risk management program.
The Board also considered the implementation of Federated Hermes’ business continuity plans and recognized steps taken by Federated Hermes to continue to provide the same nature, extent and quality of services to the Federated Hermes Funds during the pandemic. In addition, the Board noted Federated Hermes’ commitment to maintaining high quality systems and expending substantial resources to prepare for and respond to ongoing changes due to the market, regulatory and control environments in which the Fund and its service providers operate, including changes associated with the pandemic.
The Board considered Federated Hermes’ efforts to provide shareholders in the Federated Hermes Funds with a comprehensive array of funds with different investment objectives, policies and strategies. The Board considered the expenses that Federated Hermes had incurred, as well as the entrepreneurial and other risks assumed by Federated Hermes, in sponsoring and providing on-going services to new funds to expand these opportunities for shareholders. The Board noted the benefits to shareholders of being part of the family of Federated Hermes Funds, which include the general right to exchange investments between the same class of shares without the incurrence of additional sales charges.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided by the Adviser to the Fund.
Fund Investment Performance
The Board considered the investment performance of the Fund. In evaluating the Fund’s investment performance, the Board considered performance results in light of the Fund’s investment objective, strategies and risks. The Board considered detailed investment reports on, and the Adviser’s analysis of, the Fund’s performance over different time periods that were
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54
provided to the Board throughout the year and in connection with the May Meetings. These reports include, among other items, information on the Fund’s gross and net returns, the Fund’s investment performance compared to one or more relevant categories or groups of peer funds and the Fund’s benchmark index, performance attribution information and commentary on the effect of market conditions.
The Board also reviewed comparative information regarding the performance of other registered funds in the category of peer funds selected by iMoneyNet, an independent fund ranking organization (the “Performance Peer Group”). The Board noted the CCO’s view that comparisons to fund peer groups may be helpful, though not conclusive, in evaluating the performance of the Adviser in managing the Fund. The Board considered, in evaluating such comparisons, that in some cases there may be differences in the funds’ objectives or investment management techniques, or the costs to implement the funds, even within the same Performance Peer Group.
For the one-year period ended December 31, 2021, the Fund’s performance was above the median of the Performance Peer Group. The Board also considered the relatively tight dispersion of performance data with respect to the Fund and its Performance Peer Group.
Based on these considerations, the Board concluded that it had continued confidence in the Adviser’s overall capabilities to manage the Fund.
Fund Expenses
The Board considered the advisory fee and overall expense structure of the Fund and the comparative fee and expense information that had been provided in connection with the May Meetings. In this regard, the Board was presented with, and considered, information regarding the contractual advisory fee rates, net advisory fee rates, total expense ratios and each element of the Fund’s total expense ratio (i.e., gross and net advisory fees, administrative fees, custody fees, portfolio accounting fees and transfer agency fees) relative to an appropriate group of peer funds compiled by Federated Hermes from the category of peer funds selected by iMoneyNet (the “Expense Peer Group”). The Board received a description of the methodology used to select the Expense Peer Group from the overall iMoneyNet category. The Board also reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall iMoneyNet category.
While mindful that courts have cautioned against giving too much weight to comparative information concerning fees charged by other advisers for managing funds with comparable investment programs, the Board noted that it found the use of such comparisons to be relevant to its evaluation. The Board focused on comparisons with other similar registered funds more heavily than non-registered fund products or services because such comparisons are believed to be more relevant. The Board considered that other registered funds are the products most like the Fund, in that they are readily available to Fund
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55
shareholders as alternative investment vehicles, and they are the type of investment vehicle, in fact, chosen and maintained by the Fund’s shareholders. The Board noted that the range of such other registered funds’ fees and expenses, therefore, appears to be a relevant indicator of what investors have found to be reasonable in the marketplace in which the Fund competes.
The Board reviewed the contractual advisory fee rate, net advisory fee rate and other expenses of the Fund and noted the position of the Fund’s fee rates relative to its Expense Peer Group. In this regard, the Board noted that the contractual advisory fee rate was below the median of the Expense Peer Group, and the Board was satisfied that the overall expense structure of the Fund remained competitive.
The Board also received and considered information about the fees charged by Federated Hermes for providing advisory services to other types of clients with investment strategies similar to those of the Federated Hermes Funds, including non-registered fund clients (such as institutional separate accounts) and third-party unaffiliated registered funds for which the Adviser or its affiliates serve as sub-adviser. The Board noted the CCO’s conclusion that non-registered fund clients are inherently different products due to the following differences, among others: (i) different types of targeted investors; (ii) different applicable laws and regulations; (iii) different legal structures; (iv) different average account sizes and portfolio management techniques made necessary by different cash flows and different associated costs; (v) the time spent by portfolio managers and their teams (among other personnel across various departments, including legal, compliance and risk management) in reviewing securities pricing and fund liquidity; (vi) different administrative responsibilities; (vii) different degrees of risk associated with management; and (viii) a variety of different costs. The Board also considered information regarding the differences in the nature of the services required for Federated Hermes to manage its proprietary registered fund business versus managing a discrete pool of assets as a sub-adviser to another institution’s registered fund, noting the CCO’s view that Federated Hermes generally performs significant additional services and assumes substantially greater risks in managing the Fund and other Federated Hermes Funds than in its role as sub-adviser to an unaffiliated third-party registered fund. The Board noted that the CCO did not consider the fees for providing advisory services to other types of clients to be determinative in judging the appropriateness of the Federated Hermes Funds’ advisory fees.
Based on these considerations, the Board concluded that the fees and total operating expenses of the Fund, in conjunction with other matters considered, are reasonable in light of the services provided.
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56
Profitability
The Board received and considered profitability information furnished by Federated Hermes, as requested by the CCO. Such profitability information included revenues reported on a fund-by-fund basis and estimates of the allocation of expenses made on a fund-by-fund basis, using allocation methodologies specified by the CCO and described to the Board. The Board considered the CCO’s view that, while these cost allocation reports apply consistent allocation processes, the inherent difficulties in allocating costs on a fund-by-fund basis continues to cause the CCO to question the precision of the process and to conclude that such reports may be unreliable because a single change in an allocation estimate may dramatically alter the resulting estimate of cost and/or profitability of a Federated Hermes Fund and may produce unintended consequences. In addition, the Board considered the CCO’s view that the allocation methodologies used by Federated Hermes in estimating profitability for purposes of reporting to the Board in connection with the continuation of the Contract are consistent with the methodologies previously reviewed by an independent consultant. The Board noted that the independent consultant had previously conducted a review of the allocation methodologies and reported that, although there is no single best method to allocate expenses, the methodologies used by Federated Hermes are reasonable. The Board noted the impact of the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, on the profitability of the Fund to the Adviser.
The Board also reviewed information compiled by Federated Hermes comparing its profitability information to other publicly held fund management companies, including information regarding profitability trends over time. The Board considered the CCO’s conclusion that, based on such profitability information, Federated Hermes’ profit margins did not appear to be excessive. The Board also considered the CCO’s view that Federated Hermes appeared financially sound, with the resources necessary to fulfill its obligations under its contracts with the Federated Hermes Funds.
Economies of Scale
The Board received and considered information about the notion of possible realization of “economies of scale” as a fund grows larger, the difficulties of calculating economies of scale at an individual fund level, and the extent to which potential scale benefits are shared with shareholders. In this regard, the Board considered that Federated Hermes has made significant and long-term investments in areas that support all of the Federated Hermes Funds, such as: personnel, processes and tools for portfolio management, including the use of market data on which portfolio managers make investment decisions; trading operations; ESG integration and issuer engagement on ESG matters; shareholder services; compliance; business continuity; cybersecurity; internal audit and risk management functions; and technology that supports the provision of investment management services. The Board noted that Federated
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Hermes’ investments in these areas are extensive and are designed to provide enhanced services to the Federated Hermes Funds and their shareholders. The Board considered that the benefits of these investments are likely to be shared with the family of Federated Hermes Funds as a whole. In addition, the Board considered that fee waivers and expense reimbursements are another means for potential economies of scale to be shared with shareholders and can provide protection from an increase in expenses if a Federated Hermes Fund’s assets decline. The Board considered that, in order for the Federated Hermes Funds to remain competitive in the marketplace, Federated Hermes has frequently waived fees and/or reimbursed expenses for the Federated Hermes Funds and has disclosed to shareholders and/or reported to the Board its intention to do so (or continue to do so) in the future. The Board also considered Federated Hermes’ reductions in contractual management fees for certain Federated Hermes Funds during the prior year, including in response to the CCO’s recommendations in the prior year’s CCO Fee Evaluation Report, which have resulted in benefits being realized by shareholders.
The Board also considered reports on adviser-paid fees (commonly referred to as “revenue sharing”) that were provided to the Board throughout the year and in connection with the May Meetings. The Board considered that Federated Hermes and the CCO believe that this information should be viewed to determine if there was an incentive to either not apply breakpoints, or to apply breakpoints at higher levels, and should not be viewed to evaluate the reasonableness of advisory fees. The Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which is compounded by the lack of any uniform methodology or pattern with respect to structuring fund advisory fees with breakpoints that serve to reduce the fees as a fund attains a certain size.
Other Benefits
The Board considered information regarding the compensation and other ancillary (or “fall-out”) benefits that Federated Hermes derived from its relationships with the Federated Hermes Funds. The Board noted that, in addition to receiving advisory fees under the Federated Hermes Funds’ investment advisory contracts, Federated Hermes’ affiliates also receive fees for providing other services to the Federated Hermes Funds under separate contracts (e.g., for serving as the Federated Hermes Funds’ administrator and distributor). In this regard, the Board considered that certain of Federated Hermes’ affiliates provide distribution and shareholder services to the Federated Hermes Funds, for which they may be compensated through distribution and servicing fees paid pursuant to Rule 12b-1 plans or otherwise. The Board also received and considered information detailing any indirect benefit that Federated Hermes may derive from its receipt of research services from brokers who execute portfolio trades for the Federated Hermes Funds.
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Conclusions
The Board considered: (i) the CCO’s conclusion that his observations and the information accompanying the CCO Fee Evaluation Report show that the management fee for the Fund is reasonable; and (ii) the CCO’s recommendation that the Board approve the management fee. The Board noted that, under these circumstances, no changes were recommended to, and no objection was raised to the continuation of, the Contract by the CCO. The CCO also recognized that the Board’s evaluation of the Federated Hermes Funds’ advisory and sub-advisory arrangements is a continuing and ongoing process that is informed by the information that the Board requests and receives from management throughout the course of the year and, in this regard, the CCO noted certain items for future reporting to the Board or further consideration by management as the Board continues its ongoing oversight of the Federated Hermes Funds.
On the basis of the information and factors summarized above, among other information and factors deemed relevant by the Board, and the evaluation thereof, the Board, including the Independent Trustees, unanimously voted to approve the continuation of the Contract. The Board based its determination to approve the Contract on the totality of the circumstances and relevant factors and with a view of past and future long-term considerations. Not all of the factors and considerations identified above were necessarily deemed to be relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were deemed to be relevant, the Board’s determination to approve the continuation of the Contract reflects its view that Federated Hermes’ performance and actions provided a satisfactory basis to support the determination to approve the continuation of the existing arrangement.
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Voting Proxies on Fund Portfolio Securities
A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund’s portfolio is available, without charge and upon request, by calling 1-800-341-7400, Option #4. A report on “Form N-PX” of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available via the Proxy Voting Record (Form N-PX) link associated with the Fund and share class name at FederatedInvestors.com/FundInformation. Form N-PX filings are also available at the SEC’s website at sec.gov.
Portfolio Schedule
The Fund files with the SEC a complete schedule of its portfolio holdings as of the close of each month on “Form N-MFP.” Form N-MFP is available on the SEC’s website at sec.gov. You may access Form N-MFP via the link to the Fund and share class name at FederatedInvestors.com.
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You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The Fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
This Report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund’s Prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.
Federated Hermes Prime Cash Obligations Fund
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at FederatedInvestors.com
or call 1-800-341-7400.
or call 1-800-341-7400.
Federated Securities Corp., Distributor
CUSIP 608919627
CUSIP 608919577
CUSIP 60934N625
CUSIP 608919429
CUSIP 60934N617
CUSIP 608919593
CUSIP 608919585
CUSIP 60934N591
CUSIP 608919619
CUSIP 608919577
CUSIP 60934N625
CUSIP 608919429
CUSIP 60934N617
CUSIP 608919593
CUSIP 608919585
CUSIP 60934N591
CUSIP 608919619
Q450519 (9/22)
© 2022 Federated Hermes, Inc.
Annual Shareholder Report
July 31, 2022
|
Share Class | Ticker
|
Wealth | PCOXX
|
|
|
|
Federated Hermes Prime Cash Obligations Fund
A Portfolio of Federated Hermes Money Market Obligations Trust
Dear Valued Shareholder,
We are pleased to present the Annual Shareholder Report for your fund covering the period from August 1, 2021 through July 31, 2022. This report includes a complete listing of your fund’s holdings, performance information and financial statements along with other important fund information.
As a global leader in active, responsible investment management, Federated Hermes is guided by our conviction that responsible investing is the best way to create wealth over the long term. The company provides capabilities across a wide range of asset classes to investors around the world.
In addition, FederatedInvestors.com offers quick and easy access to valuable resources that include timely fund updates, economic and market insights from our investment strategists and financial planning tools. You can also access many of those insights by following us on Twitter (@FederatedHermes) and LinkedIn.
Thank you for investing with us. We hope you find this information useful and look forward to keeping you informed.
Sincerely,
J. Christopher Donahue, President
The Fund is a Retail Money Market Fund and is only available for investment to accounts beneficially owned by natural persons.
Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee
Portfolio of Investments Summary Tables (unaudited)
At July 31, 2022, the Fund’s portfolio composition1 was as follows:
|
Security Type
|
Percentage of
Total Net Assets
|
|
Other Repurchase Agreements and Repurchase Agreements
|
32.8%
|
|
Variable Rate Instruments
|
22.3%
|
|
Bank Instruments
|
22.2%
|
|
Commercial Paper
|
12.0%
|
|
U.S. Treasury Securities
|
0.3%
|
|
Cash Equivalent2
|
8.0%
|
|
Other Assets and Liabilities—Net3
|
2.4%
|
|
TOTAL
|
100%
|
|
1
|
See the Fund’s Prospectus and Statement of Additional Information for more complete
information regarding these security types. With respect to this table, Commercial Paper
includes commercial paper with interest rates that are fixed or that reset periodically.
|
|
2
|
Cash Equivalents include any investments in money market mutual funds.
|
|
3
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
At July 31, 2022, the Fund’s effective maturity schedule1 was as follows:
|
Securities With an
Effective Maturity of:
|
Percentage of
Total Net Assets
|
|
1-7 Days2
|
76.6%
|
|
8-30 Days
|
6.2%
|
|
31-90 Days
|
8.9%
|
|
91-180 Days
|
3.1%
|
|
181 Days or more
|
2.8%
|
|
Other Assets and Liabilities—Net3
|
2.4%
|
|
Total
|
100%
|
|
1
|
Effective maturity is determined in accordance with the requirements of Rule 2a-7 under the
Investment Company Act of 1940, which regulates money market mutual funds.
|
|
2
|
Overnight securities comprised 37.3% of the Fund’s portfolio.
|
|
3
|
Assets, other than investments in securities, less liabilities. See Statement of Assets
and Liabilities.
|
Annual Shareholder Report
1
Portfolio of Investments
July 31, 2022
|
Principal
Amount
or Shares
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— 22.3%
|
|
|
|
|
Finance - Banking— 19.8%
|
|
|
$ 95,000,000
|
|
Anglesea Funding LLC, (Bank of Nova Scotia, Toronto
COL)/(Nordea Bank Abp COL)/(Societe Generale, Paris COL),
2.460% (SOFR +0.180%), 8/10/2022
|
$ 95,000,000
|
|
15,000,000
|
|
Anglesea Funding LLC, (Bank of Nova Scotia, Toronto
COL)/(Nordea Bank Abp COL)/(Societe Generale, Paris COL),
2.500% (SOFR +0.220%), 8/5/2022
|
15,000,000
|
|
90,000,000
|
|
Anglesea Funding LLC, (Bank of Nova Scotia, Toronto
COL)/(Nordea Bank Abp COL)/(Societe Generale, Paris COL),
2.680% (SOFR +0.360%), 12/23/2022
|
90,000,000
|
|
15,000,000
|
|
Anglesea Funding LLC, (Bank of Nova Scotia, Toronto
COL)/(Nordea Bank Abp COL)/(Societe Generale, Paris COL),
2.720% (SOFR +0.440%), 11/18/2022
|
15,000,000
|
|
13,000,000
|
|
ASB Bank Ltd., 2.000% (SOFR +0.470%), 8/2/2022
|
13,000,000
|
|
60,000,000
|
|
Australia & New Zealand Banking Group, Melbourne, 2.430%
(SOFR +0.150%), 8/1/2022
|
59,990,994
|
|
195,000,000
|
|
Bank of Montreal, 2.230% (SOFR +0.700%), 8/1/2022
|
195,000,000
|
|
100,000,000
|
2
|
Bank of Montreal, 2.430% (SOFR +0.150%), 8/1/2022
|
100,000,000
|
|
45,000,000
|
|
Bank of Montreal, 2.530% (SOFR +0.250%), 8/1/2022
|
45,000,000
|
|
50,000,000
|
|
Bank of Montreal, 2.580% (SOFR +0.300%), 8/1/2022
|
50,000,000
|
|
73,500,000
|
|
Bank of Montreal, 2.580% (SOFR +0.300%), 8/1/2022
|
73,500,000
|
|
85,000,000
|
|
Bank of Montreal, 2.930% (SOFR +0.650%), 8/1/2022
|
85,000,000
|
|
150,000,000
|
2
|
Bank of Nova Scotia, Toronto, 2.430% (SOFR +0.150%), 8/1/2022
|
150,000,000
|
|
20,000,000
|
|
Bank of Nova Scotia, Toronto, 2.530% (SOFR +0.250%), 8/1/2022
|
20,000,000
|
|
50,000,000
|
2
|
Bank of Nova Scotia, Toronto, 2.530% (SOFR +0.250%), 8/1/2022
|
50,000,000
|
|
206,000,000
|
2
|
Bank of Nova Scotia, Toronto, 2.780% (SOFR +0.500%), 8/1/2022
|
206,000,000
|
|
40,000,000
|
2
|
Bank of Nova Scotia, Toronto, 2.860% (SOFR +0.580%), 8/1/2022
|
40,000,000
|
|
73,300,000
|
|
Bank of Nova Scotia, Toronto, 2.950% (SOFR +0.670%), 8/1/2022
|
73,300,000
|
|
25,000,000
|
2
|
Canadian Imperial Bank of Commerce, 2.490% (SOFR
+0.210%), 8/1/2022
|
25,000,000
|
|
18,750,000
|
2
|
Canadian Imperial Bank of Commerce, 2.780% (SOFR
+0.500%), 8/1/2022
|
18,749,999
|
|
250,000,000
|
2
|
Canadian Imperial Bank of Commerce, 2.780% (SOFR
+0.500%), 8/1/2022
|
250,000,000
|
|
80,000,000
|
2
|
Canadian Imperial Bank of Commerce, 2.830% (SOFR
+0.550%), 8/1/2022
|
80,000,000
|
|
71,500,000
|
2
|
Canadian Imperial Bank of Commerce, 2.920% (SOFR
+0.640%), 8/1/2022
|
71,500,000
|
|
70,000,000
|
|
Collateralized Commercial Paper V Co. LLC, (J.P. Morgan Securities
LLC COL), 2.780% (SOFR +0.500%), 8/1/2022
|
70,000,000
|
Annual Shareholder Report
2
|
Principal
Amount
or Shares
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 60,000,000
|
|
Collateralized Commercial Paper V Co. LLC, (J.P. Morgan Securities
LLC COL), 2.830% (SOFR +0.550%), 8/1/2022
|
$ 60,000,000
|
|
45,000,000
|
|
Commonwealth Bank of Australia, 2.780% (SOFR
+0.500%), 8/1/2022
|
45,000,000
|
|
39,000,000
|
|
Commonwealth Bank of Australia, 2.820% (SOFR
+0.540%), 8/1/2022
|
39,000,000
|
|
6,725,000
|
|
Fiore Capital LLC, (Wells Fargo Bank, N.A. LOC), 2.420%, 8/4/2022
|
6,725,000
|
|
1,075,000
|
|
Gadsden, AL Airport Authority, Series 2004, (Wells Fargo Bank,
N.A. LOC), 1.860%, 8/4/2022
|
1,075,000
|
|
355,000
|
|
Montgomery, AL IDB, (Wells Fargo Bank, N.A. LOC),
2.630%, 8/4/2022
|
355,000
|
|
89,500,000
|
2
|
MUFG Bank Ltd., 1.860% (SOFR +0.330%), 8/1/2022
|
89,500,000
|
|
110,000,000
|
|
National Australia Bank Ltd., Melbourne, 2.460% (SOFR
+0.180%), 8/2/2022
|
110,000,000
|
|
80,000,000
|
2
|
Nordea Bank Abp, 1.680% (SOFR +0.150%), 8/1/2022
|
80,000,000
|
|
175,000,000
|
2
|
Nordea Bank Abp, 1.690% (SOFR +0.160%), 8/1/2022
|
175,000,000
|
|
50,000,000
|
2
|
Nordea Bank Abp, 2.080% (SOFR +0.550%), 8/1/2022
|
50,000,000
|
|
19,670,000
|
|
Osprey Properties Limited Partnership, LLLP & Nighthawk
Properties, LLC, Series 2008, (Wells Fargo Bank, N.A. LOC),
2.370%, 8/4/2022
|
19,670,000
|
|
29,435,000
|
|
Panel Rey S.A., Series 2016, (Citibank N.A., New York LOC),
2.450%, 8/4/2022
|
29,435,000
|
|
90,000,000
|
|
Royal Bank of Canada, 2.830% (SOFR +0.550%), 8/1/2022
|
90,000,000
|
|
200,000,000
|
|
Royal Bank of Canada, 3.030% (SOFR +0.750%), 8/1/2022
|
200,000,000
|
|
100,000,000
|
|
Royal Bank of Canada, New York Branch, 2.430% (SOFR
+0.150%), 8/2/2022
|
100,000,000
|
|
75,000,000
|
|
Royal Bank of Canada, New York Branch, 2.430% (SOFR
+0.150%), 8/2/2022
|
75,000,000
|
|
405,000
|
|
Spira Millennium LLC, Series 2001, (Bank of America N.A. LOC),
2.380%, 8/4/2022
|
405,000
|
|
100,000,000
|
|
Svenska Handelsbanken, Stockholm, 2.030% (SOFR
+0.500%), 8/1/2022
|
100,000,000
|
|
39,000,000
|
2
|
Svenska Handelsbanken, Stockholm, 2.080% (SOFR
+0.550%), 8/1/2022
|
39,000,000
|
|
36,732,455
|
|
Taxable Tender Option Bond Trust 2021-MIZ9060TX,
(Series 2021-MIZ9060TX) VRDNs, (GTD by Mizuho Bank
Ltd.)/(Mizuho Bank Ltd. LIQ), 2.590%, 8/1/2022
|
36,732,455
|
|
25,000,000
|
|
Taxable Tender Option Bond Trust 2021-MIZ9071TX,
(Series 2021-MIZ9071TX) VRDNs, (GTD by Mizuho Bank
Ltd.)/(Mizuho Bank Ltd. LIQ), 2.720%, 8/1/2022
|
25,000,000
|
|
3,954,173
|
|
Taxable Tender Option Bond Trust 2021-MIZ9083TX,
(Series 2021-MIZ9083TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho
Bank Ltd. LOC), 2.590%, 8/1/2022
|
3,954,173
|
Annual Shareholder Report
3
|
Principal
Amount
or Shares
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 18,750,000
|
|
Taxable Tender Option Bond Trust 2022-MIZ9087TX,
(Series 2022-MIZ9096TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho
Bank Ltd. LOC), 2.640%, 8/4/2022
|
$ 18,750,000
|
|
30,000,000
|
|
Taxable Tender Option Bond Trust2021-MIZ9070TX,
(Series 2021-MIZ9070TX) VRDNs, (GTD by Mizuho Bank
Ltd.)/(Mizuho Bank Ltd. LIQ), 2.720%, 8/1/2022
|
30,000,000
|
|
118,000,000
|
2
|
Toronto Dominion Bank, 1.930% (SOFR +0.400%), 8/1/2022
|
118,000,000
|
|
18,290,000
|
|
Triborough Bridge & Tunnel Authority, NY, (Taxable Series E)
Weekly VRDNs, (Bank of America N.A. LOC), 2.310%, 8/4/2022
|
18,290,000
|
|
20,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.780% (SOFR
+0.500%), 8/1/2022
|
20,000,000
|
|
20,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.780% (SOFR
+0.500%), 8/1/2022
|
20,000,000
|
|
250,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.780% (SOFR
+0.500%), 8/2/2022
|
250,000,000
|
|
|
|
TOTAL
|
3,741,932,621
|
|
|
|
Finance - Retail— 0.7%
|
|
|
25,000,000
|
|
Chariot Funding LLC, 1.710% (SOFR +0.180%), 8/1/2022
|
25,000,000
|
|
50,000,000
|
|
Chariot Funding LLC, 2.680% (SOFR +0.400%), 8/1/2022
|
50,000,000
|
|
15,000,000
|
|
Thunder Bay Funding, LLC, 2.080% (SOFR +0.550%), 1/20/2023
|
15,000,000
|
|
20,000,000
|
|
Thunder Bay Funding, LLC, 2.080% (SOFR +0.550%), 9/26/2022
|
20,000,000
|
|
25,000,000
|
|
Thunder Bay Funding, LLC, 2.880% (SOFR +0.600%), 10/20/2022
|
25,000,000
|
|
|
|
TOTAL
|
135,000,000
|
|
|
|
Government Agency— 1.8%
|
|
|
5,915,000
|
|
1320 W Jefferson LLC, (Federal Home Loan Bank of San Francisco
LOC), 2.450%, 8/3/2022
|
5,915,000
|
|
4,925,000
|
|
Andrew Long Irrevocable Family Trust, (Federal Home Loan Bank of
Dallas LOC), 2.450%, 8/4/2022
|
4,925,000
|
|
2,700,000
|
|
Archer 1 LLC, (Federal Home Loan Bank of San Francisco LOC),
2.450%, 8/4/2022
|
2,700,000
|
|
2,100,000
|
|
BWF Forge TL Properties Owner LLC, (Federal Home Loan Bank of
Des Moines LOC)/(Federal Home Loan Bank of San Francisco LOC),
2.450%, 8/4/2022
|
2,100,000
|
|
1,695,000
|
|
CMR LLC, CMR LLC Project Series 2017, (Federal Home Loan Bank
of Indianapolis LOC), 2.610%, 8/4/2022
|
1,695,000
|
|
5,635,000
|
|
Dennis Wesley Company, Inc., The Dennis Wesley Company, Inc.
Project, (Federal Home Loan Bank of Indianapolis LOC),
2.450%, 8/4/2022
|
5,635,000
|
|
6,130,000
|
|
Frank Dale Insurance Trust, (Federal Home Loan Bank of Dallas
LOC), 2.450%, 8/4/2022
|
6,130,000
|
|
11,100,000
|
|
Ivy Row at South, LLC, (Federal Home Loan Bank of Atlanta LOC),
2.450%, 8/4/2022
|
11,100,000
|
|
6,740,000
|
|
Mason Harrison Ratliff Enterprises, LLC, (Federal Home Loan Bank
of Dallas LOC), 2.450%, 8/4/2022
|
6,740,000
|
Annual Shareholder Report
4
|
Principal
Amount
or Shares
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— continued
|
|
|
|
|
Government Agency— continued
|
|
|
$ 30,200,000
|
|
Mike P. Sturdivant, Sr. Family Trust, (Federal Home Loan Bank of
Dallas LOC), 2.450%, 8/4/2022
|
$ 30,200,000
|
|
25,622,500
|
|
Naples SI, LLC, (Federal Home Loan Bank of Indianapolis LOC),
2.450%, 8/4/2022
|
25,622,500
|
|
35,960,000
|
|
Park Stanton Place LP, (Federal Home Loan Bank of San Francisco
LOC), 2.450%, 8/4/2022
|
35,960,000
|
|
6,215,000
|
|
Phenix City, AL Downtown Redevelopment Authority, Series
2013-A, (Federal Home Loan Bank of New York LOC),
2.450%, 8/4/2022
|
6,215,000
|
|
21,000,000
|
|
Pittsburg Fox Creek Associates L.P., Series 2011-A, (Federal Home
Loan Bank of San Francisco LOC), 2.450%, 8/4/2022
|
21,000,000
|
|
5,225,000
|
|
Public Finance Authority, Series 2015-A Ram Eufaula Hospitality,
LLC, (Federal Home Loan Bank of New York LOC),
2.500%, 8/4/2022
|
5,225,000
|
|
6,000,000
|
|
Riverview Project, Series 2021, (Federal Home Loan Bank of Des
Moines LOC), 2.450%, 8/4/2022
|
6,000,000
|
|
15,150,000
|
|
Rohnert Park 668, L.P., (Federal Home Loan Bank of San Francisco
LOC), 2.450%, 8/4/2022
|
15,150,000
|
|
7,600,000
|
|
Sandy Jacobs Irrevocable Insurance Trust, Series 2019, (Federal
Home Loan Bank of Des Moines LOC), 2.450%, 8/4/2022
|
7,600,000
|
|
22,065,000
|
|
Sendra Family Irrevocable Trust, (Federal Home Loan Bank of Dallas
LOC), 2.450%, 8/4/2022
|
22,065,000
|
|
11,260,000
|
|
Shawn R. Trapuzzano Irrevocable Insurance Trust, (Federal Home
Loan Bank of Pittsburgh LOC), 2.450%, 8/4/2022
|
11,260,000
|
|
4,860,000
|
|
Spingola Insurance Trust, (Federal Home Loan Bank of Dallas LOC),
2.450%, 8/4/2022
|
4,860,000
|
|
2,560,000
|
|
The J.G. Aguirre Master Trust, (Federal Home Loan Bank of Atlanta
LOC), 2.450%, 8/4/2022
|
2,560,000
|
|
23,765,000
|
|
The Jacob Rosenstein Irrevocable Life Insurance Trust, (Federal
Home Loan Bank of Des Moines LOC), 2.450%, 8/4/2022
|
23,765,000
|
|
4,150,000
|
|
The Mary Jane Beauregard Irrevocable Insurance Trust of 2017,
(Federal Home Loan Bank of Dallas LOC), 2.450%, 8/3/2022
|
4,150,000
|
|
4,710,000
|
|
The Mulberry Family Trust, (Federal Home Loan Bank of Dallas
LOC), 2.450%, 8/4/2022
|
4,710,000
|
|
20,330,000
|
|
The Murray D. Berry Trust, (Federal Home Loan Bank of Des Moines
LOC), 2.450%, 8/3/2022
|
20,330,000
|
|
20,945,000
|
|
The Ray L. Berry Trust, (Federal Home Loan Bank of Des Moines
LOC), 2.450%, 8/3/2022
|
20,945,000
|
|
16,400,000
|
|
Wingo Family Master Trust, (Federal Home Loan Bank of Des
Moines LOC), 2.450%, 8/4/2022
|
16,400,000
|
|
|
|
TOTAL
|
330,957,500
|
|
|
|
TOTAL NOTES - VARIABLE
|
4,207,890,121
|
Annual Shareholder Report
5
|
Principal
Amount
or Shares
|
|
|
Value
|
|
|
|
TIME DEPOSITS— 12.3%
|
|
|
|
|
Finance - Banking— 12.3%
|
|
|
$ 945,000,000
|
|
ABN Amro Bank NV, 2.010% - 2.220%, 8/1/2022 - 8/3/2022
|
$ 945,000,000
|
|
850,000,000
|
|
Australia & New Zealand Banking Group, Melbourne,
2.210%, 8/3/2022
|
850,000,000
|
|
525,000,000
|
|
Mizuho Bank Ltd., 2.320%, 8/1/2022
|
525,000,000
|
|
|
|
TOTAL TIME DEPOSITS
|
2,320,000,000
|
|
|
3
|
COMMERCIAL PAPER— 12.0%
|
|
|
|
|
Finance - Banking— 9.7%
|
|
|
40,000,000
|
|
Antalis S.A., (Societe Generale, Paris LIQ), 1.772%, 8/1/2022
|
40,000,000
|
|
40,000,000
|
|
Bank of Montreal, 2.800%, 5/9/2023
|
40,000,000
|
|
112,500,000
|
|
Bank of Nova Scotia, Toronto, 0.200% - 0.205%, 9/7/2022 -
9/16/2022
|
112,475,678
|
|
167,500,000
|
|
Bennington Stark Capital Co., LLC, (Societe Generale, Paris LIQ),
2.120%, 8/2/2022
|
167,490,136
|
|
165,000,000
|
|
Canadian Imperial Bank of Commerce, 0.503% - 2.070%,
12/1/2022 - 3/20/2023
|
164,267,674
|
|
100,000,000
|
|
Canadian Imperial Holdings, Inc., 0.351%, 11/8/2022
|
99,903,750
|
|
100,000,000
|
|
Chesham Finance LLC Series III, (Societe Generale, Paris COL),
2.404%, 8/31/2022
|
99,800,000
|
|
116,995,000
|
|
Gotham Funding Corp., (MUFG Bank Ltd. LIQ), 1.405% - 2.416%,
8/1/2022 - 10/3/2022
|
116,624,483
|
|
150,000,000
|
|
Lloyds Bank PLC, London, 1.413% - 2.419%, 8/5/2022 - 9/23/2022
|
149,722,146
|
|
23,000,000
|
|
LMA-Americas LLC, (Credit Agricole Corporate and Investment
Bank LIQ), 1.455%, 8/12/2022
|
22,989,810
|
|
140,000,000
|
|
Matchpoint Finance PLC, (BNP Paribas SA LIQ), 2.310% - 2.567%,
8/1/2022 - 10/11/2022
|
139,798,833
|
|
124,000,000
|
|
National Australia Bank Ltd., Melbourne, 1.005% - 3.866%,
9/6/2022 - 6/15/2023
|
121,805,100
|
|
125,000,000
|
|
Nationwide Building Society, 2.020%, 8/1/2022
|
125,000,000
|
|
65,000,000
|
|
Royal Bank of Canada, 0.250%, 10/14/2022
|
64,966,597
|
|
197,000,000
|
|
Royal Bank of Canada, New York Branch, 0.220% - 0.402%,
10/7/2022 - 11/15/2022
|
196,821,764
|
|
166,000,000
|
|
Toronto Dominion Bank, 2.051% - 2.903%, 3/17/2023 - 5/31/2023
|
162,456,170
|
|
|
|
TOTAL
|
1,824,122,141
|
|
|
|
Finance - Retail— 0.9%
|
|
|
25,000,000
|
|
Fairway Finance Co. LLC, 1.005%, 9/6/2022
|
24,975,000
|
|
30,000,000
|
|
Old Line Funding, LLC, 1.659%, 9/13/2022
|
29,940,875
|
|
80,000,000
|
|
Sheffield Receivables Company LLC, 1.976%, 8/18/2022
|
79,925,578
|
|
40,000,000
|
|
Thunder Bay Funding, LLC, 1.659%, 9/19/2022
|
39,910,166
|
|
|
|
TOTAL
|
174,751,619
|
|
|
|
Oil & Oil Finance— 0.5%
|
|
|
90,000,000
|
|
TotalEnergies Capital Canada Ltd., 2.200%, 8/3/2022
|
89,989,000
|
Annual Shareholder Report
6
|
Principal
Amount
or Shares
|
|
|
Value
|
|
|
3
|
COMMERCIAL PAPER— continued
|
|
|
|
|
Sovereign— 0.9%
|
|
|
$ 170,000,000
|
|
BNG Bank N.V., 2.201% - 2.311%, 8/3/2022 - 8/4/2022
|
$ 169,975,006
|
|
|
|
TOTAL COMMERCIAL PAPER
|
2,258,837,766
|
|
|
|
CERTIFICATES OF DEPOSIT— 9.9%
|
|
|
|
|
Finance - Banking— 9.9%
|
|
|
131,500,000
|
|
Canadian Imperial Bank of Commerce, 0.350%, 11/7/2022 -
11/10/2022
|
131,500,000
|
|
165,000,000
|
|
Credit Agricole Corporate and Investment Bank, 1.560% - 2.320%,
8/5/2022 - 8/12/2022
|
165,000,000
|
|
150,000,000
|
|
DNB Bank ASA, 1.100%, 9/6/2022
|
150,000,000
|
|
142,500,000
|
|
Mizuho Bank Ltd., 2.600%, 10/20/2022
|
142,500,000
|
|
160,000,000
|
|
MUFG Bank Ltd., 1.420% - 1.450%, 8/18/2022 - 8/19/2022
|
160,000,000
|
|
100,000,000
|
|
Sumitomo Mitsui Banking Corp., 1.450%, 8/5/2022
|
100,000,000
|
|
657,500,000
|
|
Sumitomo Mitsui Trust Bank Ltd., 1.450% - 2.530%, 8/17/2022 -
9/29/2022
|
657,500,000
|
|
365,500,000
|
|
Toronto Dominion Bank, 0.220% - 4.070%, 10/14/2022 - 7/18/2023
|
365,500,000
|
|
|
|
TOTAL CERTIFICATES OF DEPOSIT
|
1,872,000,000
|
|
|
|
U.S. TREASURY— 0.3%
|
|
|
|
|
U.S. Treasury Notes— 0.3%
|
|
|
50,000,000
|
1
|
United States Treasury Floating Rate Notes, 2.570% (91-day T-Bill
+0.034%), 8/2/2022
|
50,003,021
|
|
|
|
OTHER REPURCHASE AGREEMENTS— 15.7%
|
|
|
|
|
Finance - Banking— 15.7%
|
|
|
80,000,000
|
|
BMO Capital Markets Corp., 2.42%, dated 7/29/2022, interest in a
$90,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $90,018,150 on 8/1/2022, in which
asset-backed securities, collateralized mortgage obligations,
corporate bonds, treasury note, medium-term notes and sovereign
with a market value of $91,818,514 have been received as collateral
and held with BNY Mellon as tri-party agent.
|
80,000,000
|
|
100,000,000
|
|
BMO Capital Markets Corp., 2.05%, dated 2/8/2021, interest in a
$200,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $200,706,111 on 9/12/2022, in
which corporate bonds and medium-term notes with a market value
of $204,755,998 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
100,000,000
|
|
20,000,000
|
|
BMO Capital Markets Corp., 2.47%, dated 7/29/2022, interest in a
$20,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $20,204,117 on 8/1/2022, in which
asset-backed securities and corporate bonds with a market value of
$20,404,760 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
20,000,000
|
Annual Shareholder Report
7
|
Principal
Amount
or Shares
|
|
|
Value
|
|
|
|
OTHER REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 25,000,000
|
|
BNP Paribas S.A., 2.40%, dated 7/29/2022, interest in a
$500,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $500,100,000 on 8/1/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds and medium-term note with a market value of
$510,102,000 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
$ 25,000,000
|
|
130,000,000
|
|
Credit Agricole S.A., 2.47%, dated 6/24/2022, interest in a
$300,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $300,144,083 on 8/9/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, commercial paper, treasury notes, treasury bills
medium-term notes, U.S. Government Agency securities and
sovereign debt with a market value of $306,063,090 have been
received as collateral and held with BNY Mellon as tri-party agent.
|
130,000,000
|
|
520,000,000
|
|
Credit Agricole S.A., 2.37%, dated 6/24/2022, interest in a
$800,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $800,368,667 on 8/9/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, commercial paper, treasury notes, treasury bill,
medium-term notes and sovereign debt with a market value of
$816,161,433 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
520,000,000
|
|
25,000,000
|
|
HSBC Securities (USA), Inc., 2.42%, dated 7/29/2022, interest in a
$25,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $25,005,042 on 8/1/2022, in which
asset-backed securities with a market value of $25,500,014 have
been received as collateral and held with BNY Mellon as tri-party
agent.
|
25,000,000
|
|
100,000,000
|
|
BNP Paribas S.A., 2.47%, dated 7/29/2022, interest in a
$100,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $100,020,583 on 8/1/2022, in
which corporate bonds with a market value of $102,021,846 have
been received as collateral and held with BNY Mellon as tri-party
agent.
|
100,000,000
|
|
160,000,000
|
|
J.P. Morgan Securities LLC, 2.56%, dated 7/6/2022, interest in a
$250,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $250,480,000 on 8/2/2022, in
which corporate bonds and medium-term notes with a market value
of $255,000,001 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
160,000,000
|
|
50,000,000
|
|
Mizuho Securities USA, Inc., 2.42%, dated 7/29/2022, interest in a
$100,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $100,020,167 on 8/1/2022, in
which commercial paper and municipal bonds with a market value
of $102,022,014 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
50,000,000
|
Annual Shareholder Report
8
|
Principal
Amount
or Shares
|
|
|
Value
|
|
|
|
OTHER REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 70,000,000
|
|
Mizuho Securities USA, Inc., 2.14%, dated 2/3/2022, interest in a
$80,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $80,309,111 on 9/8/2022, in which
asset-backed securities and commercial paper with a market value
of $81,730,968 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
$ 70,000,000
|
|
30,000,000
|
|
Mizuho Securities USA, Inc., 2.52%, dated 7/29/2022, interest in a
$75,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $75,015,750 on 8/1/2022, in which
common stocks with a market value of $76,516,072 have been
received as collateral and held with BNY Mellon as tri-party agent.
|
30,000,000
|
|
200,000,000
|
|
Mitsubishi UFG Securities Americas, Inc., 2.47%, dated 7/29/2022,
interest in a $300,000,000 collateralized loan agreement will
repurchase securities provided as collateral for $300,061,750 on
8/1/2022, in which American depositary receipts, common stocks,
corporate bonds, exchange traded funds and unit investment trust,
medium-term notes and municipal bonds with a market value of
$306,063,397 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
200,000,000
|
|
150,000,000
|
|
Pershing LLC, 2.57%, dated 7/14/2022, interest in a $300,000,000
collateralized loan agreement will repurchase securities provided as
collateral for $300,149,917 on 8/9/2022, in which asset-backed
securities, collateralized mortgage obligations, corporate bonds,
commercial paper, common stocks, convertible bond, certificate of
deposit, exchange traded funds, medium-term notes and municipal
bonds and U.S. Government Agency securities with a market value
of $306,100,946 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
150,000,000
|
|
225,000,000
|
|
Societe Generale, Paris, 2.38%, dated 7/29/2022, interest in a
$350,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $350,069,417 on 8/1/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, medium-term notes, municipal bonds, sovereign
securities and treasury bill with a market value of $357,071,176
have been received as collateral and held with BNY Mellon as
tri-party agent.
|
225,000,000
|
|
320,000,000
|
|
Societe Generale, Paris, 2.47%, dated 7/29/2022, interest in a
$650,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $650,133,792 on 8/1/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, medium-term notes sand treasury bill with a
market value of $663,136,856 have been received as collateral and
held with BNY Mellon as tri-party agent.
|
320,000,000
|
|
100,000,000
|
|
Standard Chartered Bank, 2.45%, dated 7/28/2022, interest in a
$100,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $100,047,639 on 8/4/2022, in
which U.S. Treasury bonds, U.S. Treasury notes and
U.S. Government Agency securities with a market value of
$102,027,802 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
100,000,000
|
Annual Shareholder Report
9
|
Principal
Amount
or Shares
|
|
|
Value
|
|
|
|
OTHER REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 150,000,000
|
|
Wells Fargo Securities LLC, 2.63%, dated 6/24/2022, interest in a
$150,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $150,986,250 on 9/22/2022, in
which sovereign securities with a market value of $153,424,860
have been received as collateral and held with BNY Mellon as
tri-party agent.
|
$ 150,000,000
|
|
175,000,000
|
|
Wells Fargo Securities LLC, 2.91%, dated 4/27/2021, interest in a
$175,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $176,273,125 on 10/11/2022, in
which convertible bonds and sovereign securities with a market
value of $178,774,603 have been received as collateral and held
with BNY Mellon as tri-party agent.
|
175,000,000
|
|
190,000,000
|
|
Wells Fargo Securities LLC, 3.12%, dated 3/23/2022, interest in a
$190,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $191,482,000 on 10/13/2022, in
which sovereign securities with a market value of $194,085,564
have been received as collateral and held with BNY Mellon as
tri-party agent.
|
190,000,000
|
|
150,000,000
|
|
Wells Fargo Securities LLC, 3.20%, dated 2/3/2022, interest in a
$150,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $151,200,000 on 10/20/2022, in
which sovereign securities with a market value of $153,136,948
have been received as collateral and held with BNY Mellon as
tri-party agent.
|
150,000,000
|
|
|
|
TOTAL OTHER REPURCHASE AGREEMENTS
|
2,970,000,000
|
|
|
|
REPURCHASE AGREEMENTS— 17.1%
|
|
|
|
|
Finance - Banking— 17.1%
|
|
|
426,001,000
|
|
Interest in $1,650,000,000 joint repurchase agreement 2.29%,
dated 7/29/2022 under which Mitsubishi UFG Securities Americas,
Inc. will repurchase securities provided as collateral for
$1,650,314,875 on 8/1/2022. The securities provided as collateral at
the end of the period held with BNY Mellon as tri-party agent, were
U.S. Government Agency securities with various maturities to
1/1/2057 and the market value of those underlying securities
was $1,683,321,173.
|
426,001,000
|
|
250,000,000
|
|
Interest in $1,800,000,000 joint repurchase agreement 2.30%,
dated 7/29/2022 under which Natixis Financial Products LLC will
repurchase securities provided as collateral for $1,800,345,000 on
8/1/2022. The securities provided as collateral at the end of the
period held with BNY Mellon as tri-party agent, were
U.S. Government Agency and U.S. Treasury securities with various
maturities to 6/16/2064 and the market value of those underlying
securities was $1,841,376,235.
|
250,000,000
|
Annual Shareholder Report
10
|
Principal
Amount
or Shares
|
|
|
Value
|
|
|
|
REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$2,500,000,000
|
|
Repurchase agreement 2.30%, dated 7/29/2022 under which
Federal Reserve Bank of New York will repurchase securities
provided as collateral for $2,500,479,167 on 8/1/2022. The
securities provided as collateral at the end of the period held with
BNY Mellon as tri-party agent, were U.S. Treasury securities with
various maturities to 5/15/2039 and the market value of those
underlying securities was $2,500,479,193.
|
$ 2,500,000,000
|
|
50,000,000
|
|
Interest in $150,000,000 joint repurchase agreement 2.39%, dated
7/29/2022 under which Standard Chartered Bank will repurchase
securities provided as collateral for $150,029,875 on 8/1/2022. The
securities provided as collateral at the end of the period held with
BNY Mellon as tri-party agent, were U.S. Government Agency
securities with various maturities to 2/16/2064 and the market value
of those underlying securities was $153,030,473.
|
50,000,000
|
|
|
|
TOTAL REPURCHASE AGREEMENTS
|
3,226,001,000
|
|
|
|
INVESTMENT COMPANIES— 8.0%
|
|
|
1,000,016,505
|
|
Federated Hermes Institutional Money Market Management,
Institutional Shares, 1.86%4
|
999,713,001
|
|
500,317,389
|
|
Federated Hermes Institutional Prime Value Obligations Fund,
Institutional Shares, 1.84%4
|
500,320,089
|
|
|
|
TOTAL INVESTMENT COMPANIES
|
1,500,033,090
|
|
|
|
TOTAL INVESTMENT IN SECURITIES—97.6%
(AT AMORTIZED COST)5
|
18,404,764,998
|
|
|
|
OTHER ASSETS AND LIABILITIES - NET—2.4%6
|
455,846,467
|
|
|
|
TOTAL NET ASSETS—100%
|
$18,860,611,465
|
Affiliated fund holdings are investment companies which are managed by the Adviser or an affiliate of the Adviser. Transactions with affiliated fund holdings during the period ended July 31, 2022, were as follows:
|
|
Federated
Hermes
Institutional
Money Market
Management,
Institutional Shares
|
Federated
Hermes
Institutional
Prime Value
Obligations Fund,
Institutional Shares
|
Total of
Affiliated
Transactions
|
|
Value as of 7/31/2021
|
$999,713,001
|
$500,267,526
|
$1,499,980,527
|
|
Purchases at Cost
|
$—
|
$44,798
|
$44,798
|
|
Proceeds from Sales
|
$—
|
$(44,998)
|
$(44,998)
|
|
Change in Unrealized Appreciation/
Depreciation
|
$—
|
$—
|
$—
|
|
Net Realized Gain/(Loss)
|
$—
|
$52,763
|
$52,763
|
|
Value as of 7/31/2022
|
$999,713,001
|
$500,320,089
|
$1,500,033,090
|
|
Shares Held as of 7/31/2022
|
1,000,016,505
|
500,317,389
|
1,500,333,894
|
|
Dividend Income
|
$3,569,405
|
$1,758,689
|
$5,328,094
|
Annual Shareholder Report
11
|
1
|
Floating/variable note with current rate and current maturity or next reset date shown. Certain
variable rate securities are not based on a published reference rate and spread but are
determined by the issuer or agent and are based on current market conditions. These securities
do not indicate a reference rate and spread in their description above.
|
|
2
|
Denotes a variable rate security with current rate and next reset date shown.
|
|
3
|
Discount rate at time of purchase for discount issues, or the coupon for interest-bearing issues.
|
|
4
|
7-day net yield.
|
|
5
|
Also represents cost of investments for federal tax purposes.
|
|
6
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
Note: The categories of investments are shown as a percentage of total net assets at July 31, 2022.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Level 1—quoted prices in active markets for identical securities.
Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Also includes securities valued at amortized cost.
Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used, as of July 31, 2022, in valuing the Fund’s assets carried at fair value:
|
Valuation Inputs
|
||||
|
|
Level 1—
Quoted
Prices
|
Level 2—
Other
Significant
Observable
Inputs
|
Level 3—
Significant
Unobservable
Inputs
|
Total
|
|
Debt Securities:
|
|
|
|
|
|
Notes - Variable
|
$—
|
$4,207,890,121
|
$—
|
$4,207,890,121
|
|
Time Deposits
|
—
|
2,320,000,000
|
—
|
2,320,000,000
|
|
Commercial Paper
|
—
|
2,258,837,766
|
—
|
2,258,837,766
|
|
Certificates of Deposit
|
—
|
1,872,000,000
|
—
|
1,872,000,000
|
|
U.S. Treasury
|
—
|
50,003,021
|
—
|
50,003,021
|
|
Other Repurchase
Agreements
|
—
|
2,970,000,000
|
—
|
2,970,000,000
|
|
Repurchase Agreements
|
—
|
3,226,001,000
|
—
|
3,226,001,000
|
|
Investment Company
|
1,500,033,090
|
—
|
—
|
1,500,033,090
|
|
TOTAL SECURITIES
|
$1,500,033,090
|
$16,904,731,908
|
$—
|
$18,404,764,998
|
Annual Shareholder Report
12
|
The following acronym(s) are used throughout this portfolio:
|
|
|
|
COL
|
—Collateralized
|
|
|
GTD
|
—Guaranteed
|
|
|
IDB
|
—Industrial Development Bond
|
|
|
LIQ
|
—Liquidity Agreement
|
|
|
LOC
|
—Letter of Credit
|
|
|
SOFR
|
—Secured Overnight Financing Rate
|
|
|
VRDNs
|
—Variable Rate Demand Notes
|
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
13
Financial Highlights–Wealth Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.003
|
0.0001
|
0.013
|
0.023
|
0.015
|
|
Net realized gain (loss)
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
|
TOTAL FROM INVESTMENT
OPERATIONS
|
0.003
|
0.0001
|
0.013
|
0.023
|
0.015
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.003)
|
(0.000)1
|
(0.013)
|
(0.023)
|
(0.015)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
|
TOTAL DISTRIBUTIONS
|
(0.003)
|
(0.000)1
|
(0.013)
|
(0.023)
|
(0.015)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.33%
|
0.04%
|
1.33%
|
2.36%
|
1.53%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.19%
|
0.20%
|
0.20%
|
0.20%
|
0.20%
|
|
Net investment income
|
0.36%
|
0.04%
|
1.33%
|
2.36%
|
1.56%
|
|
Expense waiver/reimbursement4
|
0.12%
|
0.10%
|
0.10%
|
0.10%
|
0.13%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$13,928,308
|
$11,788,470
|
$18,814,127
|
$16,862,096
|
$5,770,600
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
The financial highlights of the Automated Shares, Class R Shares, Advisor Shares, Service Shares, Cash II Shares, Cash Series Shares, Capital Shares and Trust Shares are presented separately.
Annual Shareholder Report
14
Statement of Assets and Liabilities
July 31, 2022
July 31, 2022
|
Assets:
|
|
|
Investment in repurchase agreements and other repurchase agreements
|
$6,196,001,000
|
|
Investment in securities, including $1,500,033,090 of investment in affiliated
holdings*
|
12,208,763,998
|
|
Investment in securities, at amortized cost and fair value
|
18,404,764,998
|
|
Cash
|
499,965,635
|
|
Income receivable
|
15,109,160
|
|
Income receivable from affiliated holdings
|
1,986,792
|
|
Receivable for shares sold
|
80,292,825
|
|
Total Assets
|
19,002,119,410
|
|
Liabilities:
|
|
|
Payable for investments purchased
|
101,300,000
|
|
Payable for shares redeemed
|
35,357,228
|
|
Income distribution payable
|
1,641,527
|
|
Payable for investment adviser fee (Note 5)
|
168,775
|
|
Payable for administrative fee (Note 5)
|
121,261
|
|
Payable for Directors’/Trustees’ fees (Note 5)
|
1,290
|
|
Payable for distribution services fee (Note 5)
|
687,724
|
|
Payable for other service fees (Notes 2 and 5)
|
1,317,710
|
|
Accrued expenses (Note 5)
|
912,430
|
|
Total Liabilities
|
141,507,945
|
|
Net assets for 18,860,455,668 shares outstanding
|
$18,860,611,465
|
|
Net Assets Consist of:
|
|
|
Paid-in capital
|
$18,860,446,852
|
|
Total distributable earnings (loss)
|
164,613
|
|
Total Net Assets
|
$18,860,611,465
|
Annual Shareholder Report
15
Statement of Assets and Liabilities–continued
|
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
|
|
|
Automated Shares:
|
|
|
$711,892,590 ÷ 711,886,688 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Class R Shares:
|
|
|
$41,244,466 ÷ 41,244,123 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Wealth Shares:
|
|
|
$13,928,307,730 ÷ 13,928,192,808 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Advisor Shares:
|
|
|
$1,026,475,838 ÷ 1,026,467,354 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Service Shares:
|
|
|
$1,479,711,780 ÷ 1,479,699,509 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Cash II Shares:
|
|
|
$1,301,549,758 ÷ 1,301,538,951 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Cash Series Shares:
|
|
|
$42,282,604 ÷ 42,282,252 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Capital Shares:
|
|
|
$310,974,601 ÷ 310,972,028 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Trust Shares:
|
|
|
$18,172,098 ÷ 18,171,955 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
*
|
See information listed after the Fund’s Portfolio of Investments.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
16
Statement of Operations
Year Ended July 31, 2022
Year Ended July 31, 2022
|
Investment Income:
|
|
|
Interest
|
$89,761,883
|
|
Dividends received from affiliated holdings*
|
5,328,094
|
|
TOTAL INCOME
|
95,089,977
|
|
Expenses:
|
|
|
Investment adviser fee (Note 5)
|
36,509,887
|
|
Administrative fee (Note 5)
|
14,289,405
|
|
Custodian fees
|
567,852
|
|
Transfer agent fees (Note 2)
|
5,569,261
|
|
Directors’/Trustees’ fees (Note 5)
|
105,194
|
|
Auditing fees
|
23,960
|
|
Legal fees
|
7,357
|
|
Portfolio accounting fees
|
273,154
|
|
Distribution services fee (Note 5)
|
11,240,682
|
|
Other service fees (Notes 2 and 5)
|
17,306,459
|
|
Share registration costs
|
344,470
|
|
Printing and postage
|
419,263
|
|
Miscellaneous (Note 5)
|
198,385
|
|
TOTAL EXPENSES
|
86,855,329
|
|
Waivers and Reimbursements:
|
|
|
Waiver of investment adviser fee (Note 5)
|
(23,635,210)
|
|
Waivers/reimbursements of other operating expenses (Notes 2 and 5)
|
(21,320,329)
|
|
TOTAL WAIVERS AND REIMBURSEMENTS
|
(44,955,539)
|
|
Net expenses
|
41,899,790
|
|
Net investment income
|
53,190,187
|
|
Net realized gain on investments (including net realized gain of $52,763 on sales of
investments in affiliated holdings*)
|
143,440
|
|
Change in net assets resulting from operations
|
$53,333,627
|
|
*
|
See information listed after the Fund’s Portfolio of Investments.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
17
Statement of Changes in Net Assets
|
Year Ended July 31
|
2022
|
2021
|
|
Increase (Decrease) in Net Assets
|
|
|
|
Operations:
|
|
|
|
Net investment income
|
$53,190,187
|
$7,423,269
|
|
Net realized gain (loss)
|
143,440
|
11,556
|
|
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS
|
53,333,627
|
7,434,825
|
|
Distributions to Shareholders:
|
|
|
|
Automated Shares
|
(2,585,791)
|
(137,765)
|
|
Class R Shares
|
(33,725)
|
(3,974)
|
|
Wealth Shares
|
(39,560,633)
|
(6,432,149)
|
|
Advisor Shares
|
(2,214,414)
|
(127,699)
|
|
Service Shares
|
(3,354,482)
|
(233,300)
|
|
Cash II Shares
|
(1,568,320)
|
(125,177)
|
|
Cash Series Shares
|
(37,265)
|
(3,927)
|
|
Capital Shares
|
(832,858)
|
(50,973)
|
|
Trust Shares
|
(2,998,443)
|
(349,121)
|
|
CHANGE IN NET ASSETS RESULTING FROM
DISTRIBUTIONS TO SHAREHOLDERS
|
(53,185,931)
|
(7,464,085)
|
|
Share Transactions:
|
|
|
|
Proceeds from sale of shares
|
19,988,592,929
|
15,284,485,959
|
|
Net asset value of shares issued to shareholders in payment
of distributions declared
|
49,057,880
|
6,952,724
|
|
Cost of shares redeemed
|
(20,256,811,128)
|
(25,445,666,626)
|
|
CHANGE IN NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
|
(219,160,319)
|
(10,154,227,943)
|
|
Change in net assets
|
(219,012,623)
|
(10,154,257,203)
|
|
Net Assets:
|
|
|
|
Beginning of period
|
19,079,624,088
|
29,233,881,291
|
|
End of period
|
$18,860,611,465
|
$19,079,624,088
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
18
Notes to Financial Statements
July 31, 2022
1. ORGANIZATION
Federated Hermes Money Market Obligations Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust consists of 16 portfolios. The financial statements included herein are only those of Federated Hermes Prime Cash Obligations Fund (the “Fund”), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder’s interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers nine classes of shares: Automated Shares, Class R Shares, Wealth Shares, Advisor Shares, Service Shares, Cash II Shares, Cash Series Shares, Capital Shares and Trust Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The investment objective of the Fund is to provide current income consistent with stability of principal and liquidity.
The Fund operates as a retail money market fund. As a retail money market fund, the Fund: (1) will generally continue to use amortized cost to value its portfolio securities and transact at a stable $1.00 net asset value (NAV); (2) has adopted policies and procedures reasonably designed to limit investments in the Fund to accounts beneficially owned by natural persons as required for a retail money market fund by Rule 2a-7 under the Act; and (3) has adopted policies and procedures to impose liquidity fees on redemptions and/or temporary redemption gates in the event that the Fund’s weekly liquid assets were to fall below a designated threshold, if the Fund’s Board of Trustees (the “Trustees”) determines such liquidity fees or redemption gates are in the best interests of the Fund.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
Most securities are valued at amortized cost. Under the amortized cost valuation method, an investment is valued initially at its cost as determined in accordance with GAAP. The Fund then adjusts the amount of interest income accrued each day over the term of the investment to account for any difference between the initial cost of the investment and the amount payable at its maturity. If amortized cost is determined not to approximate fair value, the value of the portfolio securities will be determined in accordance with the procedures described below. There can be no assurance that the Fund could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines its NAV per share, and the actual value obtained could be materially different.
The Trustees have ultimate responsibility for determining the fair value of investments. The Trustees have appointed a valuation committee (“Valuation Committee”) comprised of officers of the Fund, Federated Investment Management Company (the “Adviser”) and certain of the Adviser’s affiliated companies to assist in determining fair value of securities and in overseeing the comparison of amortized cost
Annual Shareholder Report
19
to market-based value. The Trustees have also authorized the use of pricing services recommended by the Valuation Committee to provide fair value evaluations of the current value of certain investments for purposes of monitoring the relationship of market-based value and amortized cost. The Valuation Committee employs various methods for reviewing third-party pricing-service evaluations including periodic reviews of third-party pricing services’ policies, procedures and valuation methods (including key inputs and assumptions), and review of price challenges by the Adviser based on recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee determines the fair value of the investment in accordance with procedures adopted by the Trustees. The Trustees periodically review and approve the fair valuations made by the Valuation Committee and any changes made to the procedures.
Repurchase Agreements
The Fund may invest in repurchase agreements for short-term liquidity purposes. It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund’s custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control” as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.
The insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.
The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund’s Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.
Repurchase agreements are subject to Master Netting Agreements which are agreements between the Fund and its counterparties that provide for the net settlement of all transactions and collateral with the Fund, through a single payment, in the event of default or termination. Amounts presented on the Portfolio of Investments and Statement of Assets and Liabilities are not net settlement amounts but gross. As indicated above, the cash or securities to be repurchased, as shown on the Portfolio of Investments, exceeds the repurchase price to be paid under the agreement reducing the net settlement amount to zero.
Annual Shareholder Report
20
Investment Income, Gains and Losses, Expenses and Distributions
Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis. Interest income and expenses are accrued daily. Distributions to shareholders are recorded on the ex-dividend date. Distributions of net investment income, if any, are declared daily and paid monthly. Amortization/accretion of premium and discount is included in investment income. Investment income, realized gains and losses, and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that select classes will bear certain expenses unique to those classes. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses. The detail of the total fund expense waivers and reimbursements of $44,955,539 is disclosed in various locations in this Note 2 and Note 5.
Transfer Agent Fees
For the year ended July 31, 2022, transfer agent fees for the Fund were as follows:
|
|
Transfer Agent
Fees Incurred
|
Transfer Agent
Fees Reimbursed
|
Transfer Agent Fees
Waived by Unaffiliated
Third Parties
|
|
Automated Shares
|
$1,539,140
|
$(83,334)
|
$(628,059)
|
|
Class R Shares
|
94,591
|
—
|
(52,132)
|
|
Wealth Shares
|
1,686,518
|
(94)
|
—
|
|
Advisor Shares
|
24,100
|
—
|
—
|
|
Service Shares
|
243,106
|
—
|
(28)
|
|
Cash II Shares
|
1,444,009
|
(10,081)
|
(726,221)
|
|
Cash Series Shares
|
45,892
|
(2,043)
|
(22,901)
|
|
Capital Shares
|
50,699
|
—
|
—
|
|
Trust Shares
|
441,206
|
(6)
|
—
|
|
TOTAL
|
$5,569,261
|
$(95,558)
|
$(1,429,341)
|
Other Service Fees
The Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund’s Automated Shares, Class R Shares, Wealth Shares, Advisor Shares, Service Shares, Cash II Shares, Cash Series Shares, Capital Shares and Trust Shares to unaffiliated financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Financial intermediaries may include a company affiliated with management of Federated Hermes, Inc. A financial intermediary affiliated with management of Federated Hermes, Inc. received $14,630 of other service fees for the year ended July 31, 2022. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for other service fees. In addition, unaffiliated third-party financial intermediaries may waive other service fees. This waiver can be modified or terminated at any time.
Annual Shareholder Report
21
For the year ended July 31, 2022, other service fees for the Fund were as follows:
|
|
Other Service
Fees Incurred
|
Other Service
Fees Reimbursed
|
Other Service Fees
Waived by Unaffiliated
Third Parties
|
|
Automated Shares
|
$3,589,196
|
$—
|
$(2,318,200)
|
|
Class R Shares
|
94,911
|
(1,849)
|
(75,432)
|
|
Service Shares
|
3,697,068
|
—
|
(2,360,209)
|
|
Cash II Shares
|
3,216,087
|
—
|
(2,450,647)
|
|
Cash Series Shares
|
97,403
|
—
|
(77,893)
|
|
Capital Shares
|
305,095
|
(1,420)
|
(186,668)
|
|
Trust Shares
|
6,306,699
|
—
|
(4,840,272)
|
|
TOTAL
|
$17,306,459
|
$(3,269)
|
$(12,309,321)
|
For the year ended July 31, 2022, the Fund’s Wealth Shares and Advisor Shares did not incur other service fees; however they may begin to incur this fee upon approval of the Trustees.
Federal Taxes
It is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. As of and during the year ended July 31, 2022, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2022, tax years 2019 through 2022 remain subject to examination by the Fund’s major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.
When-Issued and Delayed-Delivery Transactions
The Fund may engage in when-issued or delayed-delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed-delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
Restricted Securities
The Fund may purchase securities which are considered restricted. Restricted securities are securities that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) are subject to contractual restrictions on public sales. In some cases, when a security cannot be offered for public sale without first being registered, the issuer of the restricted security has agreed to register such securities for resale, at the issuer’s expense, either upon demand by the Fund or in connection with another registered offering of the securities. Many such restricted securities may be
Annual Shareholder Report
22
resold in the secondary market in transactions exempt from registration. Restricted securities may be determined to be liquid under criteria established by the Trustees. The Fund will not incur any registration costs upon such resales. Restricted securities are valued at amortized cost in accordance with Rule 2a-7 under the Act.
Other
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ materially from those estimated. The Fund applies investment company accounting and reporting guidance.
3. SHARES OF BENEFICIAL INTEREST
The following tables summarize share activity:
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Automated Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
1,528,635,804
|
$1,528,635,804
|
1,092,892,574
|
$1,092,892,574
|
|
Shares issued to shareholders
in payment of
distributions declared
|
2,577,947
|
2,577,947
|
135,800
|
135,800
|
|
Shares redeemed
|
(1,854,156,282)
|
(1,854,156,282)
|
(1,661,611,602)
|
(1,661,611,602)
|
|
NET CHANGE RESULTING
FROM AUTOMATED
SHARE TRANSACTIONS
|
(322,942,531)
|
$(322,942,531)
|
(568,583,228)
|
$(568,583,228)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Class R Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
17,000,468
|
$17,000,468
|
25,037,245
|
$25,037,245
|
|
Shares issued to shareholders
in payment of
distributions declared
|
33,614
|
33,614
|
3,927
|
3,927
|
|
Shares redeemed
|
(14,551,648)
|
(14,551,648)
|
(34,894,798)
|
(34,894,798)
|
|
NET CHANGE RESULTING
FROM CLASS R
SHARE TRANSACTIONS
|
2,482,434
|
$2,482,434
|
(9,853,626)
|
$(9,853,626)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Wealth Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
13,906,013,345
|
$13,906,013,345
|
8,603,643,868
|
$8,603,643,868
|
|
Shares issued to shareholders
in payment of
distributions declared
|
35,833,910
|
35,833,910
|
5,940,168
|
5,940,168
|
|
Shares redeemed
|
(11,802,119,110)
|
(11,802,119,110)
|
(15,635,221,953)
|
(15,635,221,953)
|
|
NET CHANGE RESULTING
FROM WEALTH
SHARE TRANSACTIONS
|
2,139,728,145
|
$2,139,728,145
|
(7,025,637,917)
|
$(7,025,637,917)
|
Annual Shareholder Report
23
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Advisor Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
1,349,386,951
|
$1,349,386,951
|
170,408,084
|
$170,408,084
|
|
Shares issued to shareholders
in payment of
distributions declared
|
2,214,267
|
2,214,267
|
127,699
|
127,699
|
|
Shares redeemed
|
(513,054,969)
|
(513,054,969)
|
(358,892,162)
|
(358,892,162)
|
|
NET CHANGE RESULTING
FROM ADVISOR
SHARE TRANSACTIONS
|
838,546,249
|
$838,546,249
|
(188,356,379)
|
$(188,356,379)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Service Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
1,344,417,523
|
$1,344,417,523
|
1,287,654,602
|
$1,287,654,602
|
|
Shares issued to shareholders
in payment of
distributions declared
|
3,061,138
|
3,061,138
|
220,581
|
220,581
|
|
Shares redeemed
|
(1,579,139,032)
|
(1,579,139,032)
|
(2,592,784,162)
|
(2,592,784,162)
|
|
NET CHANGE RESULTING
FROM SERVICE
SHARE TRANSACTIONS
|
(231,660,371)
|
$(231,660,371)
|
(1,304,908,979)
|
$(1,304,908,979)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Cash II Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
610,894,665
|
$610,894,665
|
1,494,273,060
|
$1,494,273,060
|
|
Shares issued to shareholders
in payment of
distributions declared
|
1,557,950
|
1,557,950
|
124,526
|
124,526
|
|
Shares redeemed
|
(586,846,085)
|
(586,846,085)
|
(1,343,714,244)
|
(1,343,714,244)
|
|
NET CHANGE RESULTING
FROM CASH II
SHARE TRANSACTIONS
|
25,606,530
|
$25,606,530
|
150,683,342
|
$150,683,342
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Cash Series Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
61,276,990
|
$61,276,990
|
60,002,729
|
$60,002,729
|
|
Shares issued to shareholders
in payment of
distributions declared
|
36,978
|
36,978
|
3,891
|
3,891
|
|
Shares redeemed
|
(61,108,129)
|
(61,108,129)
|
(51,194,705)
|
(51,194,705)
|
|
NET CHANGE RESULTING
FROM CASH SERIES
SHARE TRANSACTIONS
|
205,839
|
$205,839
|
8,811,915
|
$8,811,915
|
Annual Shareholder Report
24
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Capital Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
299,364,846
|
$299,364,846
|
286,065,142
|
$286,065,142
|
|
Shares issued to shareholders
in payment of
distributions declared
|
743,705
|
743,705
|
47,159
|
47,159
|
|
Shares redeemed
|
(318,414,947)
|
(318,414,947)
|
(505,540,753)
|
(505,540,753)
|
|
NET CHANGE RESULTING
FROM CAPITAL
SHARE TRANSACTIONS
|
(18,306,396)
|
$(18,306,396)
|
(219,428,452)
|
$(219,428,452)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Trust Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
871,602,337
|
$871,602,337
|
2,264,508,655
|
$2,264,508,655
|
|
Shares issued to shareholders
in payment of
distributions declared
|
2,998,371
|
2,998,371
|
348,973
|
348,973
|
|
Shares redeemed
|
(3,527,420,926)
|
(3,527,420,926)
|
(3,261,812,247)
|
(3,261,812,247)
|
|
NET CHANGE RESULTING
FROM TRUST
SHARE TRANSACTIONS
|
(2,652,820,218)
|
$(2,652,820,218)
|
(996,954,619)
|
$(996,954,619)
|
|
NET CHANGE RESULTING
FROM TOTAL FUND
SHARE TRANSACTIONS
|
(219,160,319)
|
$(219,160,319)
|
(10,154,227,943)
|
$(10,154,227,943)
|
4. FEDERAL TAX INFORMATION
The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2022 and 2021, was as follows:
|
|
2022
|
2021
|
|
Ordinary income1
|
$53,185,931
|
$7,464,085
|
|
1
|
For tax purposes, short-term capital gain distributions are considered ordinary
income distributions.
|
As of July 31, 2022, the components of distributable earnings on a tax-basis were as follows:
|
Undistributed ordinary income2
|
$100,866
|
|
Undistributed long-term capital gains
|
$63,747
|
|
2
|
For tax purposes, short-term capital gains are considered ordinary income in determining
distributable earnings.
|
Annual Shareholder Report
25
5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.20% of the Fund’s average daily net assets. Subject to the terms described in the Expense Limitation note, the Fund’s Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund for competitive reasons such as to maintain the Fund’s expense ratio, or as and when appropriate, to maintain positive or zero net yields. For the year ended July 31, 2022, the Fund’s Adviser voluntarily waived $21,273,930 of its fee and voluntarily reimbursed $95,558 of transfer agent fees.
The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated investment companies. For the year ended July 31, 2022, the Adviser reimbursed $2,361,280.
Administrative Fee
Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated Hermes Funds subject to a fee under the Administrative Services Agreement. The fee paid to FAS is based on the average daily net assets of the Investment Complex as specified below:
|
Administrative Fee
|
Average Daily Net Assets
of the Investment Complex
|
|
0.100%
|
on assets up to $50 billion
|
|
0.075%
|
on assets over $50 billion
|
Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2022, the annualized fee paid to FAS was 0.078% of average daily net assets of the Fund.
In addition, FAS may charge certain out-of-pocket expenses to the Fund.
Distribution Services Fee
The Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund’s Class R Shares, Cash II Shares, Cash Series Shares and Trust Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:
|
|
Percentage of Average Daily
Net Assets of Class
|
|
Class R Shares
|
0.50%
|
|
Cash II Shares
|
0.35%
|
|
Cash Series Shares
|
0.60%
|
|
Trust Shares
|
0.25%
|
Annual Shareholder Report
26
Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2022, distribution services fees for the Fund were as follows:
|
|
Distribution Services
Fees Incurred
|
Distribution Services
Fees Waived
|
|
Class R Shares
|
$196,533
|
$(148,261)
|
|
Cash II Shares
|
4,503,683
|
(3,048,860)
|
|
Cash Series Shares
|
233,767
|
(178,423)
|
|
Trust Shares
|
6,306,699
|
(4,107,296)
|
|
TOTAL
|
$11,240,682
|
$(7,482,840)
|
When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares.
Other Service Fees
For the year ended July 31, 2022, FSSC received $16,713 of the other service fees disclosed in Note 2.
Expense Limitation
Due to the possibility of changes in market conditions and other factors, there can be no assurance that the level of waivers/reimbursement/reduction of Fund expenses reflected in the financial highlights will be maintained in the future. However, the Adviser and certain of its affiliates (which may include FSC, FAS and FSSC) on their own initiative have agreed to waive certain amounts of their respective fees and/or reimburse expenses. Total annual fund operating expenses (as shown in the financial highlights, excluding interest expense, extraordinary expenses and proxy-related expenses paid by the Fund, if any) including the Fund’s share of fees and expenses of the investments in affiliated funds paid by the Fund’s Automated Shares, Class R Shares, Wealth Shares, Advisor Shares, Service Shares, Cash II Shares, Cash Series Shares, Capital Shares and Trust Shares (after the voluntary waivers and/or reimbursements) will not exceed 0.55%, 1.15%, 0.20%, 0.20%, 0.45%, 0.90%, 1.05%, 0.30% and 0.70% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) October 1, 2023; or (b) the date of the Fund’s next effective Prospectus. While the Adviser and its applicable affiliates currently do not anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or the Fee Limit increased prior to the Termination Date with the agreement of the Trustees.
Interfund Transactions
During the year ended July 31, 2022, the Fund engaged in sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees and/or common Officers. These sale transactions complied with Rule 17a-7 under the Act and amounted to $19,000,000.
Directors’/Trustees’ and Miscellaneous Fees
Certain Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate payment, Independent Directors’/Trustees’ fees and certain expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses are paid by an affiliate of the
Annual Shareholder Report
27
Adviser which in due course are reimbursed by the Fund. These expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses may be included in Accrued and Miscellaneous Expenses on the Statement of Assets and Liabilities and Statement of Operations, respectively.
6. CONCENTRATION OF RISK
A substantial portion of the Fund’s portfolio may be comprised of securities deemed by the Adviser to be in similar sectors. As a result, the Fund may be more susceptible to any economic, business, political or other developments which generally affect these entities.
7. LINE OF CREDIT
The Fund participates with certain other Federated Hermes Funds, on a several basis, in an up to $500,000,000 unsecured, 364-day, committed, revolving line of credit (LOC) agreement dated June 22, 2022. The LOC was made available to temporarily finance the repurchase or redemption of shares of the Fund, failed trades, payment of dividends, settlement of trades and for other short-term, temporary or emergency general business purposes. The Fund cannot borrow under the LOC if an inter-fund loan is outstanding. The Fund’s ability to borrow under the LOC also is subject to the limitations of the Act and various conditions precedent that must be satisfied before the Fund can borrow. Loans under the LOC are charged interest at a fluctuating rate per annum equal to (a) the highest, on any day, of (i) the federal funds effective rate, (ii) the published secured overnight financing rate plus an assigned percentage, and (iii) 0.0%, plus (b) a margin. Any fund eligible to borrow under the LOC pays its pro rata share of a commitment fee based on the amount of the lenders’ commitment that has not been utilized, quarterly in arrears and at maturity. As of July 31, 2022, the Fund had no outstanding loans. During the year ended July 31, 2022, the Fund did not utilize the LOC.
8. INTERFUND LENDING
Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other funds advised by subsidiaries of Federated Hermes, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating affiliated funds. As of July 31, 2022, there were no outstanding loans. During the year ended July 31, 2022, the program was not utilized.
9. INDEMNIFICATIONS
Under the Fund’s organizational documents, its Officers and Directors/Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund (other than liabilities arising out of their willful misfeasance, bad faith, gross negligence or reckless disregard of their duties to the Fund). In addition, in the normal course of business, the Fund provides certain indemnifications under arrangements with third parties. Typically, obligations to indemnify a third party arise in the context of an arrangement entered into by the Fund under which the Fund agrees to indemnify such third party for certain liabilities arising out of actions taken pursuant to the arrangement, provided the third party’s actions are not deemed to have breached an agreed-upon standard of care (such as willful misfeasance, bad faith, gross negligence or reckless disregard of their duties under the contract). The Fund’s maximum exposure under
Annual Shareholder Report
28
these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet arisen. The Fund does not anticipate any material claims or losses pursuant to these arrangements at this time, and accordingly expects the risk of loss to be remote.
10. OTHER MATTERS
An outbreak of respiratory disease caused by a novel coronavirus was first detected in China in late 2019 and subsequently spread globally. As of the date of the issuance of these financial statements, this coronavirus has resulted in closing borders, enhanced health screenings, disruptions to healthcare service preparation and delivery, quarantines, cancellations, and disruptions to supply chains, workflow operations and consumer activity, as well as general concern and uncertainty. The impact of this coronavirus may continue for an extended period of time and has resulted in substantial economic volatility. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could continue to negatively affect the worldwide economy, as well as the economies of individual countries, individual companies (including certain Fund service providers and issuers of the Fund’s investments) and the markets in general in significant and unforeseen ways. Any such impact could adversely affect the Fund’s performance.
11. FEDERAL TAX INFORMATION (UNAUDITED)
For the fiscal year ended July 31, 2022, 73.37% of dividends paid by the Fund are interest-related dividends, as provided by the American Jobs Creation Act of 2004.
Annual Shareholder Report
29
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Federated Hermes Money Market Obligations Trust and the Shareholders of Federated Hermes Prime Cash Obligations Fund:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of the Federated Hermes Prime Cash Obligations Fund (the Fund), a portfolio of Federated Hermes Money Market Obligations Trust, including the portfolio of investments, as of July 31, 2022, the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the related notes (collectively, the financial statements) and the financial highlights for each of the years or periods in the five-year period then ended. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of July 31, 2022, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years or periods in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
Annual Shareholder Report
30
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Such procedures also included confirmation of securities owned as of July 31, 2022, by correspondence with custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of Federated Hermes’ investment companies since 2006.
Boston, Massachusetts
September 23, 2022
September 23, 2022
Annual Shareholder Report
31
Shareholder Expense Example (unaudited)
As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or other service fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2022 to July 31, 2022.
ACTUAL EXPENSES
The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses attributable to your investment during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
|
|
Beginning
Account Value
2/1/2022
|
Ending
Account Value
7/31/2022
|
Expenses Paid
During Period1
|
|
Actual
|
$1,000.00
|
$1,003.30
|
$0.94
|
|
Hypothetical (assuming a 5% return
before expenses)
|
$1,000.00
|
$1,023.85
|
$0.95
|
|
1
|
Expenses are equal to the Fund’s annualized net expense ratio of 0.19%, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half-year period).
|
Annual Shareholder Report
32
Board of Trustees and Trust Officers
The Board of Trustees is responsible for managing the Trust’s business affairs and for exercising all the Trust’s powers except those reserved for the shareholders. The following tables give information about each Trustee and the senior officers of the Fund. Where required, the tables separately list Trustees who are “interested persons” of the Fund (i.e., “Interested” Trustees) and those who are not (i.e., “Independent” Trustees). Unless otherwise noted, the address of each person listed is 1001 Liberty Avenue, Pittsburgh, PA 15222-3779. The address of all Independent Trustees listed is 4000 Ericsson Drive, Warrendale, PA 15086-7561; Attention: Mutual Fund Board. As of December 31, 2021, the Trust comprised 20 portfolio(s), and the Federated Hermes Fund Family consisted of 33 investment companies (comprising 102 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Trustee oversees all portfolios in the Federated Hermes Fund Family and serves for an indefinite term. The Fund’s Statement of Additional Information includes additional information about Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400, Option #4.
Interested TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
J. Christopher Donahue*
Birth Date: April 11, 1949
President and Trustee
Indefinite Term
Began serving: April 1989
|
Principal Occupations: Principal Executive Officer and President of
certain of the Funds in the Federated Hermes Fund Family; Director or
Trustee of the Funds in the Federated Hermes Fund Family; President,
Chief Executive Officer and Director, Federated Hermes, Inc.;
Chairman and Trustee, Federated Investment Management Company;
Trustee, Federated Investment Counseling; Chairman and Director,
Federated Global Investment Management Corp.; Chairman and
Trustee, Federated Equity Management Company of Pennsylvania;
Trustee, Federated Shareholder Services Company; Director,
Federated Services Company.
Previous Positions: President, Federated Investment Counseling;
President and Chief Executive Officer, Federated Investment
Management Company, Federated Global Investment Management
Corp. and Passport Research, Ltd; Chairman, Passport Research, Ltd.
|
Annual Shareholder Report
33
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
Thomas R. Donahue*
Birth Date: October 20, 1958
Trustee
Indefinite Term
Began serving: May 2016
|
Principal Occupations: Director or Trustee of certain of the funds in
the Federated Hermes Fund Family; Chief Financial Officer, Treasurer,
Vice President and Assistant Secretary, Federated Hermes, Inc.;
Chairman and Trustee, Federated Administrative Services; Chairman
and Director, Federated Administrative Services, Inc.; Trustee and
Treasurer, Federated Advisory Services Company; Director or Trustee
and Treasurer, Federated Equity Management Company of
Pennsylvania, Federated Global Investment Management Corp.,
Federated Investment Counseling, and Federated Investment
Management Company; Director, MDTA LLC; Director, Executive Vice
President and Assistant Secretary, Federated Securities Corp.;
Director or Trustee and Chairman, Federated Services Company and
Federated Shareholder Services Company; and Director and
President, FII Holdings, Inc.
Previous Positions: Director, Federated Hermes, Inc.; Assistant
Secretary, Federated Investment Management Company, Federated
Global Investment Management Company and Passport Research,
LTD; Treasurer, Passport Research, LTD; Executive Vice President,
Federated Securities Corp.; and Treasurer, FII Holdings, Inc.
|
*
Family relationships and reasons for “interested” status: J. Christopher Donahue and Thomas R. Donahue are brothers. Both are “interested” due to their beneficial ownership of shares of Federated Hermes, Inc. and the positions they hold with Federated Hermes, Inc. and its subsidiaries.
INDEPENDENT TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
John T. Collins
Birth Date: January 24, 1947
Trustee
Indefinite Term
Began serving:
September 2013
|
Principal Occupations: Director or Trustee, and Chair of the Board
of Directors or Trustees, of the Federated Hermes Fund Family;
formerly, Chairman and CEO, The Collins Group, Inc. (a private equity
firm) (Retired).
Other Directorships Held: Director, KLX Energy Services Holdings,
Inc. (oilfield services); former Director of KLX Corp. (aerospace).
Qualifications: Mr. Collins has served in several business and financial
management roles and directorship positions throughout his career.
Mr. Collins previously served as Chairman and CEO of The Collins
Group, Inc. (a private equity firm) and as a Director of KLX Corp.
Mr. Collins serves as Chairman Emeriti, Bentley University. Mr. Collins
previously served as Director and Audit Committee Member, Bank of
America Corp.; Director, FleetBoston Financial Corp.; and Director,
Beth Israel Deaconess Medical Center (Harvard University
Affiliate Hospital).
|
Annual Shareholder Report
34
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
G. Thomas Hough
Birth Date: February 28, 1955
Trustee
Indefinite Term
Began serving: August 2015
|
Principal Occupations: Director or Trustee, Chair of the Audit
Committee of the Federated Hermes Fund Family; formerly, Vice
Chair, Ernst & Young LLP (public accounting firm) (Retired).
Other Directorships Held: Director, Chair of the Audit Committee,
Equifax, Inc.; Lead Director, Member of the Audit and Nominating and
Corporate Governance Committees, Haverty Furniture Companies,
Inc.; formerly, Director, Member of Governance and Compensation
Committees, Publix Super Markets, Inc.
Qualifications: Mr. Hough has served in accounting, business
management and directorship positions throughout his career.
Mr. Hough most recently held the position of Americas Vice Chair of
Assurance with Ernst & Young LLP (public accounting firm). Mr. Hough
serves on the President’s Cabinet and Business School Board of
Visitors for the University of Alabama. Mr. Hough previously served on
the Business School Board of Visitors for Wake Forest University, and
he previously served as an Executive Committee member of the
United States Golf Association.
|
|
Maureen Lally-Green
Birth Date: July 5, 1949
Trustee
Indefinite Term
Began serving: August 2009
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Adjunct Professor Emerita of Law, Duquesne University
School of Law; formerly, Dean of the Duquesne University School of
Law and Professor of Law and Interim Dean of the Duquesne
University School of Law; formerly, Associate General Secretary and
Director, Office of Church Relations, Diocese of Pittsburgh.
Other Directorships Held: Director, CNX Resources Corporation
(formerly known as CONSOL Energy Inc.).
Qualifications: Judge Lally-Green has served in various legal and
business roles and directorship positions throughout her career. Judge
Lally-Green previously held the position of Dean of the School of Law
of Duquesne University (as well as Interim Dean). Judge Lally-Green
previously served as a member of the Superior Court of Pennsylvania
and as a Professor of Law, Duquesne University School of Law. Judge
Lally-Green was appointed by the Supreme Court of Pennsylvania to
serve on the Supreme Court’s Board of Continuing Judicial Education
and the Supreme Court’s Appellate Court Procedural Rules
Committee. Judge Lally-Green also currently holds the positions on
not for profit or for profit boards of directors as follows: Director
and Chair, UPMC Mercy Hospital; Regent, Saint Vincent Seminary;
Member, Pennsylvania State Board of Education (public); Director,
Catholic Charities, Pittsburgh; and Director CNX Resources
Corporation (formerly known as CONSOL Energy Inc.). Judge
Lally-Green has held the positions of: Director, Auberle; Director,
Epilepsy Foundation of Western and Central Pennsylvania; Director,
Ireland Institute of Pittsburgh; Director, Saint Thomas More Society;
Director and Chair, Catholic High Schools of the Diocese of
Pittsburgh, Inc.; Director, Pennsylvania Bar Institute; Director,
St. Vincent College; Director and Chair, North Catholic High
School, Inc.; Director and Vice Chair, Our Campaign for the Church
Alive!, Inc.; and Director, Saint Francis University.
|
Annual Shareholder Report
35
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
Thomas M. O’Neill
Birth Date: June 14, 1951
Trustee
Indefinite Term
Began serving: August 2006
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Sole Proprietor, Navigator Management Company
(investment and strategic consulting).
Other Directorships Held: None.
Qualifications: Mr. O’Neill has served in several business, mutual fund
and financial management roles and directorship positions throughout
his career. Mr. O’Neill serves as Director, Medicines for Humanity.
Mr. O’Neill previously served as Chief Executive Officer and President,
Managing Director and Chief Investment Officer, Fleet Investment
Advisors; President and Chief Executive Officer, Aeltus Investment
Management, Inc.; General Partner, Hellman, Jordan Management
Co., Boston, MA; Chief Investment Officer, The Putnam Companies,
Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director
and Consultant, EZE Castle Software (investment order management
software); Director, The Golisano Children’s Museum of Naples,
Florida; and Director, Midway Pacific (lumber).
|
|
Madelyn A. Reilly
Birth Date: February 2, 1956
Trustee
Indefinite Term
Began serving:
November 2020
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; formerly, Executive Vice President for Legal Affairs,
General Counsel and Secretary to the Board of Directors, Duquesne
University (Retired).
Other Directorships Held: None.
Qualifications: Ms. Reilly has served in various business and legal
management roles throughout her career. Ms. Reilly previously served
as Senior Vice President for Legal Affairs, General Counsel and
Secretary to the Board of Directors and Assistant General Counsel and
Director of Risk Management, Duquesne University. Prior to her work
at Duquesne University, Ms. Reilly served as Assistant General
Counsel of Compliance and Enterprise Risk as well as Senior Counsel
of Environment, Health and Safety, PPG Industries. Ms. Reilly currently
serves as a member of the Board of Directors of UPMC
Mercy Hospital.
|
Annual Shareholder Report
36
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
P. Jerome Richey
Birth Date: February 23, 1949
Trustee
Indefinite Term
Began serving:
September 2013
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Management Consultant; Retired; formerly, Senior Vice
Chancellor and Chief Legal Officer, University of Pittsburgh and
Executive Vice President and Chief Legal Officer, CONSOL Energy Inc.
(now split into two separate publicly traded companies known as
CONSOL Energy Inc. and CNX Resources Corp.).
Other Directorships Held: None.
Qualifications: Mr. Richey has served in several business and legal
management roles and directorship positions throughout his career.
Mr. Richey most recently held the positions of Senior Vice Chancellor
and Chief Legal Officer, University of Pittsburgh. Mr. Richey previously
served as Chairman of the Board, Epilepsy Foundation of Western
Pennsylvania and Chairman of the Board, World Affairs Council of
Pittsburgh. Mr. Richey previously served as Chief Legal Officer and
Executive Vice President, CONSOL Energy Inc. and CNX Gas
Company; and Board Member, Ethics Counsel and Shareholder,
Buchanan Ingersoll & Rooney PC (a law firm).
|
|
John S. Walsh
Birth Date:
November 28, 1957
Trustee
Indefinite Term
Began serving: January 1999
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; President and Director, Heat Wagon, Inc. (manufacturer
of construction temporary heaters); President and Director,
Manufacturers Products, Inc. (distributor of portable construction
heaters); President, Portable Heater Parts, a division of Manufacturers
Products, Inc.
Other Directorships Held: None.
Qualifications: Mr. Walsh has served in several business management
roles and directorship positions throughout his career. Mr. Walsh
previously served as Vice President, Walsh & Kelly, Inc.
(paving contractors).
|
Annual Shareholder Report
37
OFFICERS
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Lori A. Hensler
Birth Date: January 6, 1967
TREASURER
Officer since: April 2013
|
Principal Occupations: Principal Financial Officer and Treasurer of the
Federated Hermes Fund Family; Senior Vice President, Federated
Administrative Services; Financial and Operations Principal for
Federated Securities Corp.; and Assistant Treasurer, Federated
Investors Trust Company. Ms. Hensler has received the Certified
Public Accountant designation.
Previous Positions: Controller of Federated Hermes, Inc.; Senior Vice
President and Assistant Treasurer, Federated Investors Management
Company; Treasurer, Federated Investors Trust Company; Assistant
Treasurer, Federated Administrative Services, Federated
Administrative Services, Inc., Federated Securities Corp., Edgewood
Services, Inc., Federated Advisory Services Company, Federated
Equity Management Company of Pennsylvania, Federated Global
Investment Management Corp., Federated Investment Counseling,
Federated Investment Management Company, Passport Research,
Ltd., and Federated MDTA, LLC; Financial and Operations Principal for
Federated Securities Corp., Edgewood Services, Inc. and Southpointe
Distribution Services, Inc.
|
|
Peter J. Germain
Birth Date:
September 3, 1959
CHIEF LEGAL OFFICER,
SECRETARY and EXECUTIVE
VICE PRESIDENT
Officer since: January 2005
|
Principal Occupations: Mr. Germain is Chief Legal Officer, Secretary
and Executive Vice President of the Federated Hermes Fund Family.
He is General Counsel, Chief Legal Officer, Secretary and Executive
Vice President, Federated Hermes, Inc.; Trustee and Senior Vice
President, Federated Investors Management Company; Trustee and
President, Federated Administrative Services; Director and President,
Federated Administrative Services, Inc.; Director and Vice President,
Federated Securities Corp.; Director and Secretary, Federated Private
Asset Management, Inc.; Secretary, Federated Shareholder Services
Company; and Secretary, Retirement Plan Service Company of
America. Mr. Germain joined Federated Hermes, Inc. in 1984 and is a
member of the Pennsylvania Bar Association.
Previous Positions: Deputy General Counsel, Special Counsel,
Managing Director of Mutual Fund Services, Federated Hermes, Inc.;
Senior Vice President, Federated Services Company; and Senior
Corporate Counsel, Federated Hermes, Inc.
|
|
Stephen Van Meter
Birth Date: June 5, 1975
CHIEF COMPLIANCE
OFFICER AND SENIOR VICE
PRESIDENT
Officer since: July 2015
|
Principal Occupations: Senior Vice President and Chief Compliance
Officer of the Federated Hermes Fund Family; Vice President and
Chief Compliance Officer of Federated Hermes, Inc. and Chief
Compliance Officer of certain of its subsidiaries. Mr. Van Meter joined
Federated Hermes, Inc. in October 2011. He holds FINRA licenses
under Series 3, 7, 24 and 66.
Previous Positions: Mr. Van Meter previously held the position of
Compliance Operating Officer, Federated Hermes, Inc. Prior to joining
Federated Hermes, Inc., Mr. Van Meter served at the United States
Securities and Exchange Commission in the positions of Senior
Counsel, Office of Chief Counsel, Division of Investment Management
and Senior Counsel, Division of Enforcement.
|
Annual Shareholder Report
38
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Deborah A. Cunningham
Birth Date:
September 15, 1959
Chief Investment Officer
Officer since: May 2004
Portfolio Manager since:
November 1996
|
Principal Occupations: Deborah A. Cunningham has been the Fund’s
Portfolio Manager since November 1996. Ms. Cunningham was named
Chief Investment Officer of Federated Hermes’ money market
products in 2004. She joined Federated Hermes in 1981 and has been
a Senior Portfolio Manager since 1997 and an Executive Vice President
of the Fund’s Adviser since 2009. Ms. Cunningham has received the
Chartered Financial Analyst designation and holds an M.S.B.A. in
Finance from Robert Morris College.
|
Annual Shareholder Report
39
Evaluation and Approval of Advisory Contract–May 2022
Federated Hermes Prime Cash Obligations Fund (the “Fund”)
At its meetings in May 2022 (the “May Meetings”), the Fund’s Board of Trustees (the “Board”), including those Trustees who are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940 (the “Independent Trustees”), reviewed and unanimously approved the continuation of the investment advisory contract between the Fund and Federated Investment Management Company (the “Adviser”) (the “Contract”) for an additional one-year term. The Board’s determination to approve the continuation of the Contract reflects the exercise of its business judgment after considering all of the information and factors believed to be relevant and appropriate on whether to approve the continuation of the existing arrangement. The information, factors and conclusions that formed the basis for the Board’s approval are summarized below.
Information Received and Review Process
At the request of the Independent Trustees, the Fund’s Chief Compliance Officer (the “CCO”) furnished to the Board in advance of its May Meetings an independent written evaluation presenting on the topics discussed below. The Board considered the CCO’s independent written evaluation (the “CCO Fee Evaluation Report”), along with other information, in evaluating the reasonableness of the Fund’s management fee and in determining to approve the continuation of the Contract. The CCO, in preparing the CCO Fee Evaluation Report, has the authority to retain consultants, experts or staff as reasonably necessary to assist in the performance of his duties, reports directly to the Board, and can be terminated only with the approval of a majority of the Independent Trustees. At the request of the Independent Trustees, the CCO Fee Evaluation Report followed the same general approach and covered the same topics as that of the report that had previously been delivered by the CCO in his capacity as “Senior Officer” prior to the elimination of the Senior Officer position in December 2017.
In addition to the extensive materials that comprise and accompany the CCO Fee Evaluation Report, the Board considered information specifically prepared in connection with the approval of the continuation of the Contract that was presented at the May Meetings. In this regard, in the months preceding the May Meetings, the Board requested and reviewed written responses and supporting materials prepared by the Adviser and its affiliates (collectively, “Federated Hermes”) in response to requests posed to Federated Hermes by independent legal counsel on behalf of the Independent Trustees encompassing a wide variety of topics, including those summarized below. The Board also considered such additional matters as the Independent Trustees deemed
Annual Shareholder Report
40
reasonably necessary to evaluate the Contract, which included detailed information about the Fund and Federated Hermes furnished to the Board at its meetings throughout the year and in between regularly scheduled meetings on particular matters as the need arose.
The Board’s consideration of the Contract included review of materials and information covering the following matters, among others: the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates; Federated Hermes’ business and operations; the Adviser’s investment philosophy, personnel and processes; the Fund’s investment objectives and strategies; the Fund’s short-term and long-term performance (in absolute terms, both on a gross basis and net of expenses, and relative to the Fund’s particular investment program and a group of its peer funds and/or its benchmark, as appropriate); the Fund’s investment objectives; the Fund’s fees and expenses, including the advisory fee and the overall expense structure of the Fund (both in absolute terms and relative to a group of its peer funds), with due regard for contractual or voluntary expense limitations (if any); the financial condition of Federated Hermes; the Adviser’s profitability with respect to the Fund; distribution and sales activity for the Fund; and the use and allocation of brokerage commissions derived from trading the Fund’s portfolio securities (if any).
The Board also considered judicial decisions concerning allegedly excessive investment advisory fees charged to other registered funds in determining to approve the Contract. Using these judicial decisions as a guide, the Board observed that the following factors may be relevant to an adviser’s fiduciary duty with respect to its receipt of compensation from a fund: (1) the nature and quality of the services provided by the adviser to the fund and its shareholders, including the performance of the fund, its benchmark and comparable funds; (2) the adviser’s cost of providing the services and the profitability to the adviser of providing advisory services to the fund; (3) the extent to which the adviser may realize “economies of scale” as the fund grows larger and, if such economies of scale exist, whether they have been appropriately shared with the fund and its shareholders or the family of funds; (4) any “fall-out” benefits that accrue to the adviser because of its relationship with the fund, including research services received from brokers that execute fund trades and any fees paid to affiliates of the adviser for services rendered to the fund; (5) comparative fee and expense structures, including a comparison of management fees paid to the adviser with those paid by similar funds both internally and externally as well as management fees charged to institutional and other advisory clients of the adviser for what might be viewed as like services; and (6) the extent of care, conscientiousness and independence with which the fund’s board members perform their duties and their expertise, including whether they are fully informed about all facts the board deems relevant to its consideration of the adviser’s services and fees. The Board noted that the Securities and Exchange Commission (“SEC”) disclosure requirements
Annual Shareholder Report
41
regarding the basis for a fund board’s approval of the fund’s investment advisory contract generally align with the factors listed above. The Board was guided by these factors in its review of the Contract to the extent it considered them to be appropriate and relevant, as discussed further below. The Board considered and weighed these factors in light of its substantial accumulated experience in governing the Fund and working with Federated Hermes on matters relating to the oversight of the other funds advised by Federated Hermes (each, a “Federated Hermes Fund” and, collectively, the (“Federated Hermes Funds”).
In addition to considering the above-referenced factors, the Board was mindful of the preferences and expectations of Fund shareholders and the potential disruptions of the Fund’s operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew the Contract. In particular, the Board recognized that many shareholders likely have invested in the Fund on the strength of Federated Hermes’ industry standing and reputation and with the expectation that Federated Hermes will have a continuing role in providing advisory services to the Fund. Thus, the Board observed that in the marketplace there are a range of investment options available to the Fund’s shareholders and such shareholders, having had the opportunity to consider other investment options, have effectively selected Federated Hermes by virtue of investing in the Fund.
In determining to approve the continuation of the Contract, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the continuation of the Contract was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Contract. The Board recognized that its evaluation process is evolutionary and that the factors considered and emphasis placed on relevant factors may change in recognition of changing circumstances in the registered fund marketplace. The Independent Trustees were assisted throughout the evaluation process by independent legal counsel. In connection with their deliberations at the May Meetings, the Independent Trustees met separately in executive session with their independent legal counsel and without management present to review the relevant materials and consider their responsibilities under applicable laws. In addition, senior management representatives of Federated Hermes also met with the Independent Trustees and their independent legal counsel to discuss the materials and presentations furnished to the Board at the May Meetings. The Board considered the approval of the Contract for the Fund as part of its consideration of agreements for funds across the family of Federated Hermes Funds, but its approvals were made on a fund-by-fund basis.
Annual Shareholder Report
42
Nature, Extent and Quality of Services
The Board considered the nature, extent and quality of the services provided to the Fund by the Adviser and the resources of Federated Hermes dedicated to the Fund. In this regard, the Board evaluated, among other things, the terms of the Contract and the range of services provided to the Fund by Federated Hermes. The Board considered the Adviser’s personnel, investment philosophy and process, investment research capabilities and resources, trade operations capabilities, experience and performance track record. The Board reviewed the qualifications, backgrounds and responsibilities of the portfolio management team primarily responsible for the day-to-day management of the Fund and Federated Hermes’ ability and experience in attracting and retaining qualified personnel to service the Fund. In addition, the Board noted that the Fund is a money market mutual fund that operates in accordance with the limitations set forth in Rule 2a-7 under the 1940 Act. In this connection, the Board considered the expertise of the Adviser in managing money market funds, its extensive experience with the requirements of Rule 2a-7 and its commitment to managing the Fund in accordance with these requirements. The Board also considered the Adviser’s ability to deliver competitive investment performance for the Fund when compared to the Fund’s Performance Peer Group (as defined below), which was deemed by the Board to be a useful indicator of how the Adviser is executing the Fund’s investment program. The Board also considered the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, in order to maintain a positive yield for the Fund in the low interest rate environment.
In addition, the Board considered the financial resources and overall reputation of Federated Hermes and its willingness to consider and make investments in personnel, infrastructure, technology, cybersecurity, business continuity planning and operational enhancements that are designed to benefit the Federated Hermes Funds. The Board noted the significant acquisition of Hermes Fund Managers Limited by Federated Hermes, which has deepened the organization’s investment management expertise and capabilities and expanded the investment process for all of the Federated Hermes Funds to have access to analytical resources related to environmental, social and governance (“ESG”) factors and issuer engagement on ESG matters. The Board considered the quality of Federated Hermes’ communications with the Board and responsiveness to Board inquiries and requests made from time to time with respect to the Fund and other Federated Hermes Funds. In this regard, the Board took into account Federated Hermes’ communications with the Board in light of the pandemic. The Board also considered that Federated Hermes is responsible for providing the Federated Hermes Funds’ officers.
The Board received and evaluated information regarding Federated Hermes’ regulatory and compliance environment. The Board considered Federated Hermes’ compliance program and compliance history and reports from the CCO about Federated Hermes’ compliance with applicable laws and
Annual Shareholder Report
43
regulations, including responses to regulatory developments and any compliance or other issues raised by regulatory agencies. The Board also noted Federated Hermes’ support of the Federated Hermes Funds’ compliance control structure and the compliance-related resources devoted by Federated Hermes in support of the Fund’s obligations pursuant to Rule 38a-1 under the Investment Company Act of 1940, including Federated Hermes’ commitment to respond to rulemaking and other regulatory initiatives of the SEC. The Board considered Federated Hermes’ approach to internal audits and risk management with respect to the Federated Hermes Funds and its day-to-day oversight of the Federated Hermes Funds’ compliance with their investment objectives and policies as well as with applicable laws and regulations, noting that regulatory and other developments had over time led to an increase in the scope of Federated Hermes’ oversight in this regard, including in connection with the designation of the Federated Hermes Funds’ investment advisers as the administrators of the Federated Hermes Funds’ liquidity risk management program.
The Board also considered the implementation of Federated Hermes’ business continuity plans and recognized steps taken by Federated Hermes to continue to provide the same nature, extent and quality of services to the Federated Hermes Funds during the pandemic. In addition, the Board noted Federated Hermes’ commitment to maintaining high quality systems and expending substantial resources to prepare for and respond to ongoing changes due to the market, regulatory and control environments in which the Fund and its service providers operate, including changes associated with the pandemic.
The Board considered Federated Hermes’ efforts to provide shareholders in the Federated Hermes Funds with a comprehensive array of funds with different investment objectives, policies and strategies. The Board considered the expenses that Federated Hermes had incurred, as well as the entrepreneurial and other risks assumed by Federated Hermes, in sponsoring and providing on-going services to new funds to expand these opportunities for shareholders. The Board noted the benefits to shareholders of being part of the family of Federated Hermes Funds, which include the general right to exchange investments between the same class of shares without the incurrence of additional sales charges.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided by the Adviser to the Fund.
Fund Investment Performance
The Board considered the investment performance of the Fund. In evaluating the Fund’s investment performance, the Board considered performance results in light of the Fund’s investment objective, strategies and risks. The Board considered detailed investment reports on, and the Adviser’s analysis of, the Fund’s performance over different time periods that were
Annual Shareholder Report
44
provided to the Board throughout the year and in connection with the May Meetings. These reports include, among other items, information on the Fund’s gross and net returns, the Fund’s investment performance compared to one or more relevant categories or groups of peer funds and the Fund’s benchmark index, performance attribution information and commentary on the effect of market conditions.
The Board also reviewed comparative information regarding the performance of other registered funds in the category of peer funds selected by iMoneyNet, an independent fund ranking organization (the “Performance Peer Group”). The Board noted the CCO’s view that comparisons to fund peer groups may be helpful, though not conclusive, in evaluating the performance of the Adviser in managing the Fund. The Board considered, in evaluating such comparisons, that in some cases there may be differences in the funds’ objectives or investment management techniques, or the costs to implement the funds, even within the same Performance Peer Group.
For the one-year period ended December 31, 2021, the Fund’s performance was above the median of the Performance Peer Group. The Board also considered the relatively tight dispersion of performance data with respect to the Fund and its Performance Peer Group.
Based on these considerations, the Board concluded that it had continued confidence in the Adviser’s overall capabilities to manage the Fund.
Fund Expenses
The Board considered the advisory fee and overall expense structure of the Fund and the comparative fee and expense information that had been provided in connection with the May Meetings. In this regard, the Board was presented with, and considered, information regarding the contractual advisory fee rates, net advisory fee rates, total expense ratios and each element of the Fund’s total expense ratio (i.e., gross and net advisory fees, administrative fees, custody fees, portfolio accounting fees and transfer agency fees) relative to an appropriate group of peer funds compiled by Federated Hermes from the category of peer funds selected by iMoneyNet (the “Expense Peer Group”). The Board received a description of the methodology used to select the Expense Peer Group from the overall iMoneyNet category. The Board also reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall iMoneyNet category.
While mindful that courts have cautioned against giving too much weight to comparative information concerning fees charged by other advisers for managing funds with comparable investment programs, the Board noted that it found the use of such comparisons to be relevant to its evaluation. The Board focused on comparisons with other similar registered funds more heavily than non-registered fund products or services because such comparisons are believed to be more relevant. The Board considered that other registered funds are the products most like the Fund, in that they are readily available to Fund
Annual Shareholder Report
45
shareholders as alternative investment vehicles, and they are the type of investment vehicle, in fact, chosen and maintained by the Fund’s shareholders. The Board noted that the range of such other registered funds’ fees and expenses, therefore, appears to be a relevant indicator of what investors have found to be reasonable in the marketplace in which the Fund competes.
The Board reviewed the contractual advisory fee rate, net advisory fee rate and other expenses of the Fund and noted the position of the Fund’s fee rates relative to its Expense Peer Group. In this regard, the Board noted that the contractual advisory fee rate was below the median of the Expense Peer Group, and the Board was satisfied that the overall expense structure of the Fund remained competitive.
The Board also received and considered information about the fees charged by Federated Hermes for providing advisory services to other types of clients with investment strategies similar to those of the Federated Hermes Funds, including non-registered fund clients (such as institutional separate accounts) and third-party unaffiliated registered funds for which the Adviser or its affiliates serve as sub-adviser. The Board noted the CCO’s conclusion that non-registered fund clients are inherently different products due to the following differences, among others: (i) different types of targeted investors; (ii) different applicable laws and regulations; (iii) different legal structures; (iv) different average account sizes and portfolio management techniques made necessary by different cash flows and different associated costs; (v) the time spent by portfolio managers and their teams (among other personnel across various departments, including legal, compliance and risk management) in reviewing securities pricing and fund liquidity; (vi) different administrative responsibilities; (vii) different degrees of risk associated with management; and (viii) a variety of different costs. The Board also considered information regarding the differences in the nature of the services required for Federated Hermes to manage its proprietary registered fund business versus managing a discrete pool of assets as a sub-adviser to another institution’s registered fund, noting the CCO’s view that Federated Hermes generally performs significant additional services and assumes substantially greater risks in managing the Fund and other Federated Hermes Funds than in its role as sub-adviser to an unaffiliated third-party registered fund. The Board noted that the CCO did not consider the fees for providing advisory services to other types of clients to be determinative in judging the appropriateness of the Federated Hermes Funds’ advisory fees.
Based on these considerations, the Board concluded that the fees and total operating expenses of the Fund, in conjunction with other matters considered, are reasonable in light of the services provided.
Annual Shareholder Report
46
Profitability
The Board received and considered profitability information furnished by Federated Hermes, as requested by the CCO. Such profitability information included revenues reported on a fund-by-fund basis and estimates of the allocation of expenses made on a fund-by-fund basis, using allocation methodologies specified by the CCO and described to the Board. The Board considered the CCO’s view that, while these cost allocation reports apply consistent allocation processes, the inherent difficulties in allocating costs on a fund-by-fund basis continues to cause the CCO to question the precision of the process and to conclude that such reports may be unreliable because a single change in an allocation estimate may dramatically alter the resulting estimate of cost and/or profitability of a Federated Hermes Fund and may produce unintended consequences. In addition, the Board considered the CCO’s view that the allocation methodologies used by Federated Hermes in estimating profitability for purposes of reporting to the Board in connection with the continuation of the Contract are consistent with the methodologies previously reviewed by an independent consultant. The Board noted that the independent consultant had previously conducted a review of the allocation methodologies and reported that, although there is no single best method to allocate expenses, the methodologies used by Federated Hermes are reasonable. The Board noted the impact of the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, on the profitability of the Fund to the Adviser.
The Board also reviewed information compiled by Federated Hermes comparing its profitability information to other publicly held fund management companies, including information regarding profitability trends over time. The Board considered the CCO’s conclusion that, based on such profitability information, Federated Hermes’ profit margins did not appear to be excessive. The Board also considered the CCO’s view that Federated Hermes appeared financially sound, with the resources necessary to fulfill its obligations under its contracts with the Federated Hermes Funds.
Economies of Scale
The Board received and considered information about the notion of possible realization of “economies of scale” as a fund grows larger, the difficulties of calculating economies of scale at an individual fund level, and the extent to which potential scale benefits are shared with shareholders. In this regard, the Board considered that Federated Hermes has made significant and long-term investments in areas that support all of the Federated Hermes Funds, such as: personnel, processes and tools for portfolio management, including the use of market data on which portfolio managers make investment decisions; trading operations; ESG integration and issuer engagement on ESG matters; shareholder services; compliance; business continuity; cybersecurity; internal audit and risk management functions; and technology that supports the provision of investment management services. The Board noted that Federated
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47
Hermes’ investments in these areas are extensive and are designed to provide enhanced services to the Federated Hermes Funds and their shareholders. The Board considered that the benefits of these investments are likely to be shared with the family of Federated Hermes Funds as a whole. In addition, the Board considered that fee waivers and expense reimbursements are another means for potential economies of scale to be shared with shareholders and can provide protection from an increase in expenses if a Federated Hermes Fund’s assets decline. The Board considered that, in order for the Federated Hermes Funds to remain competitive in the marketplace, Federated Hermes has frequently waived fees and/or reimbursed expenses for the Federated Hermes Funds and has disclosed to shareholders and/or reported to the Board its intention to do so (or continue to do so) in the future. The Board also considered Federated Hermes’ reductions in contractual management fees for certain Federated Hermes Funds during the prior year, including in response to the CCO’s recommendations in the prior year’s CCO Fee Evaluation Report, which have resulted in benefits being realized by shareholders.
The Board also considered reports on adviser-paid fees (commonly referred to as “revenue sharing”) that were provided to the Board throughout the year and in connection with the May Meetings. The Board considered that Federated Hermes and the CCO believe that this information should be viewed to determine if there was an incentive to either not apply breakpoints, or to apply breakpoints at higher levels, and should not be viewed to evaluate the reasonableness of advisory fees. The Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which is compounded by the lack of any uniform methodology or pattern with respect to structuring fund advisory fees with breakpoints that serve to reduce the fees as a fund attains a certain size.
Other Benefits
The Board considered information regarding the compensation and other ancillary (or “fall-out”) benefits that Federated Hermes derived from its relationships with the Federated Hermes Funds. The Board noted that, in addition to receiving advisory fees under the Federated Hermes Funds’ investment advisory contracts, Federated Hermes’ affiliates also receive fees for providing other services to the Federated Hermes Funds under separate contracts (e.g., for serving as the Federated Hermes Funds’ administrator and distributor). In this regard, the Board considered that certain of Federated Hermes’ affiliates provide distribution and shareholder services to the Federated Hermes Funds, for which they may be compensated through distribution and servicing fees paid pursuant to Rule 12b-1 plans or otherwise. The Board also received and considered information detailing any indirect benefit that Federated Hermes may derive from its receipt of research services from brokers who execute portfolio trades for the Federated Hermes Funds.
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48
Conclusions
The Board considered: (i) the CCO’s conclusion that his observations and the information accompanying the CCO Fee Evaluation Report show that the management fee for the Fund is reasonable; and (ii) the CCO’s recommendation that the Board approve the management fee. The Board noted that, under these circumstances, no changes were recommended to, and no objection was raised to the continuation of, the Contract by the CCO. The CCO also recognized that the Board’s evaluation of the Federated Hermes Funds’ advisory and sub-advisory arrangements is a continuing and ongoing process that is informed by the information that the Board requests and receives from management throughout the course of the year and, in this regard, the CCO noted certain items for future reporting to the Board or further consideration by management as the Board continues its ongoing oversight of the Federated Hermes Funds.
On the basis of the information and factors summarized above, among other information and factors deemed relevant by the Board, and the evaluation thereof, the Board, including the Independent Trustees, unanimously voted to approve the continuation of the Contract. The Board based its determination to approve the Contract on the totality of the circumstances and relevant factors and with a view of past and future long-term considerations. Not all of the factors and considerations identified above were necessarily deemed to be relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were deemed to be relevant, the Board’s determination to approve the continuation of the Contract reflects its view that Federated Hermes’ performance and actions provided a satisfactory basis to support the determination to approve the continuation of the existing arrangement.
Annual Shareholder Report
49
Voting Proxies on Fund Portfolio Securities
A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund’s portfolio is available, without charge and upon request, by calling 1-800-341-7400, Option #4. A report on “Form N-PX” of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available via the Proxy Voting Record (Form N-PX) link associated with the Fund and share class name at FederatedInvestors.com/FundInformation. Form N-PX filings are also available at the SEC’s website at sec.gov.
Portfolio Schedule
The Fund files with the SEC a complete schedule of its portfolio holdings as of the close of each month on “Form N-MFP.” Form N-MFP is available on the SEC’s website at sec.gov. You may access Form N-MFP via the link to the Fund and share class name at FederatedInvestors.com.
Annual Shareholder Report
50
You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The Fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
This Report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund’s Prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.
Federated Hermes Prime Cash Obligations Fund
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at FederatedInvestors.com
or call 1-800-341-7400.
or call 1-800-341-7400.
Federated Securities Corp., Distributor
CUSIP 60934N625
Q453566 (9/22)
© 2022 Federated Hermes, Inc.
Annual Shareholder Report
July 31, 2022
|
Share Class | Ticker
|
Institutional | POIXX
|
Service | PRSXX
|
Capital | POPXX
|
|
Federated Hermes Institutional Prime Obligations Fund
A Portfolio of Federated Hermes Money Market Obligations Trust
Dear Valued Shareholder,
We are pleased to present the Annual Shareholder Report for your fund covering the period from August 1, 2021 through July 31, 2022. This report includes a complete listing of your fund’s holdings, performance information and financial statements along with other important fund information.
As a global leader in active, responsible investment management, Federated Hermes is guided by our conviction that responsible investing is the best way to create wealth over the long term. The company provides capabilities across a wide range of asset classes to investors around the world.
In addition, FederatedInvestors.com offers quick and easy access to valuable resources that include timely fund updates, economic and market insights from our investment strategists and financial planning tools. You can also access many of those insights by following us on Twitter (@FederatedHermes) and LinkedIn.
Thank you for investing with us. We hope you find this information useful and look forward to keeping you informed.
Sincerely,
J. Christopher Donahue, President
The Fund operates as a “Floating Net Asset Value” Money Market Fund.
The Share Price will fluctuate. It is possible to lose money by investing in the Fund.
The Share Price will fluctuate. It is possible to lose money by investing in the Fund.
Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee
Portfolio of Investments Summary Tables (unaudited)
At July 31, 2022, the Fund’s portfolio composition1 was as follows:
|
Security Type
|
Percentage of
Total Net Assets
|
|
Other Repurchase Agreements and Repurchase Agreements
|
37.0%
|
|
Variable Rate Instruments
|
27.3%
|
|
Bank Instruments
|
21.7%
|
|
Commercial Paper
|
14.0%
|
|
U.S. Treasury Securities
|
0.3%
|
|
Other Assets and Liabilities—Net2
|
(0.3)%
|
|
TOTAL
|
100%
|
|
1
|
See the Fund’s Prospectus and Statement of Additional Information for a description of these
security types.
|
|
2
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
At July 31, 2022, the Fund’s effective maturity schedule1 was as follows:
|
Securities With an
Effective Maturity of:
|
Percentage of
Total Net Assets
|
|
1-7 Days2
|
79.5%
|
|
8-30 Days
|
5.3%
|
|
31-90 Days
|
9.9%
|
|
91-180 Days
|
2.1%
|
|
181 Days or more
|
3.5%
|
|
Other Assets and Liabilities—Net3
|
(0.3)%
|
|
Total
|
100%
|
|
1
|
Effective maturity is determined in accordance with the requirements of Rule 2a-7 under the
Investment Company Act of 1940, which regulates money market mutual funds.
|
|
2
|
Overnight securities comprised 35.6% of the Fund’s portfolio.
|
|
3
|
Assets, other than investments in securities, less liabilities. See Statement of Assets
and Liabilities.
|
Annual Shareholder Report
1
Portfolio of Investments
July 31, 2022
|
Principal
Amount
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— 27.3%
|
|
|
|
|
Finance - Banking— 23.3%
|
|
|
$ 90,000,000
|
|
Anglesea Funding LLC, (Bank of Nova Scotia, Toronto
COL)/(Nordea Bank Abp COL)/(Societe Generale, Paris COL),
2.460% (SOFR+0.180%), 8/10/2022
|
$ 90,000,000
|
|
6,500,000
|
|
Anglesea Funding LLC, (Bank of Nova Scotia, Toronto
COL)/(Nordea Bank Abp COL)/(Societe Generale, Paris COL),
2.680% (Overnight Banking Fund Rate +0.360%), 12/23/2022
|
6,500,000
|
|
30,000,000
|
|
ASB Bank Ltd., 2.000% (SOFR +0.470%), 8/2/2022
|
30,008,140
|
|
110,000,000
|
|
Bank of Montreal, 2.230% (SOFR +0.700%), 8/1/2022
|
110,036,615
|
|
104,000,000
|
|
Bank of Montreal, 2.430% (SOFR +0.150%), 8/1/2022
|
103,955,840
|
|
30,000,000
|
|
Bank of Montreal, 2.840% (SOFR +0.560%), 8/1/2022
|
29,963,024
|
|
60,000,000
|
|
Bank of Montreal, 2.930% (SOFR +0.650%), 8/1/2022
|
59,632,964
|
|
100,000,000
|
|
Bank of Nova Scotia, Toronto, 2.430% (SOFR +0.150%), 8/1/2022
|
100,000,000
|
|
50,000,000
|
|
Bank of Nova Scotia, Toronto, 2.530% (SOFR +0.250%), 8/1/2022
|
49,909,739
|
|
25,000,000
|
|
Bank of Nova Scotia, Toronto, 2.780% (SOFR +0.500%), 8/1/2022
|
24,968,645
|
|
33,500,000
|
|
Bank of Nova Scotia, Toronto, 2.800% (SOFR +0.520%), 8/2/2022
|
33,500,000
|
|
20,000,000
|
|
Bank of Nova Scotia, Toronto, 2.860% (SOFR +0.580%), 8/1/2022
|
20,007,378
|
|
125,000,000
|
|
Bank of Nova Scotia, Toronto, 2.950% (SOFR +0.670%), 8/1/2022
|
124,975,245
|
|
25,000,000
|
|
Canadian Imperial Bank of Commerce, 2.490% (SOFR
+0.210%), 8/1/2022
|
24,983,767
|
|
54,000,000
|
|
Canadian Imperial Bank of Commerce, 2.780% (SOFR
+0.500%), 8/1/2022
|
53,923,257
|
|
120,000,000
|
|
Canadian Imperial Bank of Commerce, 2.780% (SOFR
+0.500%), 8/1/2022
|
119,833,600
|
|
120,000,000
|
|
Canadian Imperial Bank of Commerce, 2.830% (SOFR
+0.550%), 8/1/2022
|
119,843,012
|
|
50,000,000
|
|
Canadian Imperial Bank of Commerce, 2.920% (SOFR
+0.640%), 8/1/2022
|
50,000,000
|
|
50,000,000
|
|
Canadian Imperial Holdings, Inc., 2.800% (SOFR
+0.520%), 8/1/2022
|
49,930,476
|
|
4,025,000
|
|
Centra State Medical Arts Building LLC, (TD Bank, N.A. LOC),
2.410%, 8/3/2022
|
4,025,000
|
|
55,000,000
|
|
Collateralized Commercial Paper V Co. LLC, (J.P. Morgan Securities
LLC COL), 2.780% (SOFR +0.500%), 8/1/2022
|
55,014,030
|
|
35,000,000
|
|
Collateralized Commercial Paper V Co. LLC, (J.P. Morgan Securities
LLC COL), 2.830% (SOFR +0.550%), 8/1/2022
|
35,000,000
|
|
45,000,000
|
|
Commonwealth Bank of Australia, 2.710% (SOFR
+0.430%), 8/2/2022
|
44,958,374
|
|
50,000,000
|
|
Commonwealth Bank of Australia, 2.780% (SOFR
+0.500%), 8/1/2022
|
49,973,325
|
|
25,000,000
|
|
Commonwealth Bank of Australia, 2.820% (SOFR
+0.540%), 8/1/2022
|
24,990,651
|
Annual Shareholder Report
2
|
Principal
Amount
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 16,700,000
|
|
Greene County Development Authority, Reynolds Lodge, LLC
Series 2000B, (U.S. Bank, N.A. LOC), 1.800%, 8/3/2022
|
$ 16,700,000
|
|
3,000,000
|
|
Griffin-Spalding County, GA Development Authority, Norcom, Inc.
Project 2013A, (Bank of America N.A. LOC), 2.450%, 8/4/2022
|
3,000,000
|
|
7,000,000
|
|
Griffin-Spalding County, GA Development Authority, Norcom, Inc.
Project, (Bank of America N.A. LOC), 2.450%, 8/4/2022
|
7,000,000
|
|
7,595,000
|
|
Gulf Gate Apartments LLC, Series 2003, (Wells Fargo Bank, N.A.
LOC), 2.370%, 8/4/2022
|
7,595,000
|
|
12,320,000
|
|
Hamilton Station Park and Ride, Series 2005, (Wells Fargo Bank,
N.A. LOC), 2.370%, 8/4/2022
|
12,320,000
|
|
15,365,000
|
|
Los Angeles County Fair Association, (Wells Fargo Bank, N.A. LOC),
2.340%, 8/3/2022
|
15,365,000
|
|
9,000,000
|
|
Michael Dennis Sullivan Irrevocable Trust, (Wells Fargo Bank, N.A.
LOC), 2.450%, 8/4/2022
|
9,000,000
|
|
100,000,000
|
|
MUFG Bank Ltd., 1.860% (SOFR +0.330%), 8/1/2022
|
100,000,000
|
|
79,000,000
|
|
National Australia Bank Ltd., Melbourne, 2.460% (SOFR
+0.180%), 8/2/2022
|
79,000,000
|
|
110,000,000
|
|
Nordea Bank Abp, 1.680% (SOFR +0.150%), 8/1/2022
|
110,000,000
|
|
115,000,000
|
|
Nordea Bank Abp, 1.690% (SOFR +0.160%), 8/1/2022
|
115,000,000
|
|
109,000,000
|
|
Nordea Bank Abp, 2.080% (SOFR +0.550%), 8/1/2022
|
109,000,000
|
|
34,000,000
|
|
Nuveen Floating Rate Income Fund, (Series A), (Sumitomo Mitsui
Banking Corp. LOC), 2.470%, 8/4/2022
|
34,000,000
|
|
3,115,000
|
|
Public Building Corp. Springfield, MO, Jordan Valley Ice Park, Series
2003, (U.S. Bank, N.A. LOC), 2.380%, 8/4/2022
|
3,115,000
|
|
150,000,000
|
|
Royal Bank of Canada, 2.830% (SOFR +0.550%), 8/1/2022
|
149,837,175
|
|
62,500,000
|
|
Royal Bank of Canada, 3.030% (SOFR +0.750%), 8/1/2022
|
62,500,000
|
|
152,500,000
|
|
Royal Bank of Canada, New York Branch, 2.430% (SOFR
+0.150%), 8/2/2022
|
152,427,909
|
|
18,965,000
|
|
Salem Green, LLP, Salem Green Apartments Project, Series 2010,
(Wells Fargo Bank, N.A. LOC), 2.370%, 8/4/2022
|
18,965,000
|
|
150,000,000
|
|
Svenska Handelsbanken, Stockholm, 2.080% (SOFR
+0.550%), 8/1/2022
|
150,000,000
|
|
62,284,973
|
|
Taxable Tender Option Bond Trust 2021-MIZ9060TX,
(Series 2021-MIZ9060TX) VRDNs, (GTD by Mizuho Bank
Ltd.)/(Mizuho Bank Ltd. LIQ), 2.590%, 8/1/2022
|
62,284,973
|
|
25,000,000
|
|
Taxable Tender Option Bond Trust 2021-MIZ9071TX,
(Series 2021-MIZ9071TX) VRDNs, (GTD by Mizuho Bank
Ltd.)/(Mizuho Bank Ltd. LIQ), 2.720%, 8/1/2022
|
25,000,000
|
|
10,000,000
|
|
Taxable Tender Option Bond Trust 2021-MIZ9075TX,
(Series MIZ-9075TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho Bank
Ltd. LOC), 2.590%, 8/1/2022
|
10,000,000
|
|
4,680,000
|
|
Taxable Tender Option Bond Trust 2021-MIZ9077TX,
(Series 2021-MIZ9077TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho
Bank Ltd. LOC), 2.590%, 8/1/2022
|
4,680,000
|
Annual Shareholder Report
3
|
Principal
Amount
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 3,000,000
|
|
Taxable Tender Option Bond Trust 2021-MIZ9078TX,
(Series 2021-MIZ9078TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho
Bank Ltd. LOC), 2.590%, 8/1/2022
|
$ 3,000,000
|
|
3,954,172
|
|
Taxable Tender Option Bond Trust 2021-MIZ9083TX,
(Series 2021-MIZ9083TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho
Bank Ltd. LOC), 2.590%, 8/1/2022
|
3,954,172
|
|
18,750,000
|
|
Taxable Tender Option Bond Trust 2022-MIZ9087TX,
(Series 2022-MIZ9096TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho
Bank Ltd. LOC), 2.640%, 8/4/2022
|
18,750,000
|
|
30,000,000
|
|
Taxable Tender Option Bond Trust2021-MIZ9070TX,
(Series 2021-MIZ9070TX) VRDNs, (GTD by Mizuho Bank
Ltd.)/(Mizuho Bank Ltd. LIQ), 2.720%, 8/1/2022
|
30,000,000
|
|
68,300,000
|
|
Triborough Bridge & Tunnel Authority, NY, (Taxable Series E)
Weekly VRDNs, (Bank of America N.A. LOC), 2.310%, 8/4/2022
|
68,300,000
|
|
3,600,000
|
|
Village Green Finance Co. LLC, (Series 1997), (Wells Fargo Bank,
N.A. LOC), 2.660%, 8/3/2022
|
3,600,000
|
|
99,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.730% (SOFR
+0.450%), 8/1/2022
|
98,900,322
|
|
150,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.730%
(SOFR+0.450%), 8/2/2022
|
149,841,945
|
|
80,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.780% (SOFR
+0.500%), 8/1/2022
|
80,004,166
|
|
40,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.780% (SOFR
+0.500%), 8/1/2022
|
39,976,808
|
|
136,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.780% (SOFR
+0.500%), 8/2/2022
|
135,917,855
|
|
5,870,000
|
|
Yeshivas Novominsk, Series 2008, (TD Bank, N.A. LOC),
2.450%, 8/4/2022
|
5,870,000
|
|
|
|
TOTAL
|
3,310,838,407
|
|
|
|
Finance - Retail— 2.3%
|
|
|
70,000,000
|
|
Chariot Funding LLC, 1.710% (SOFR +0.180%), 8/1/2022
|
70,000,000
|
|
45,000,000
|
|
Chariot Funding LLC, 2.680% (SOFR +0.400%), 8/1/2022
|
44,997,621
|
|
45,000,000
|
|
Old Line Funding, LLC, 2.080% (SOFR +0.550%), 1/9/2023
|
44,994,657
|
|
100,000,000
|
|
Old Line Funding, LLC, 2.830% (SOFR +0.550%), 10/3/2022
|
100,016,040
|
|
47,500,000
|
|
Thunder Bay Funding, LLC, 2.080% (SOFR +0.550%), 9/26/2022
|
47,500,000
|
|
25,000,000
|
|
Thunder Bay Funding, LLC, 2.880% (SOFR +0.600%), 10/20/2022
|
25,006,354
|
|
|
|
TOTAL
|
332,514,672
|
|
|
|
Government Agency— 1.7%
|
|
|
5,285,000
|
|
1320 W Jefferson LLC, (Federal Home Loan Bank of San Francisco
LOC), 2.450%, 8/3/2022
|
5,285,000
|
|
42,450,000
|
|
Archer 1 LLC, (Federal Home Loan Bank of San Francisco LOC),
2.450%, 8/4/2022
|
42,450,000
|
|
9,015,000
|
|
Austen Children’s Gift Trust, (Federal Home Loan Bank of Dallas
LOC), 2.450%, 8/4/2022
|
9,015,000
|
Annual Shareholder Report
4
|
Principal
Amount
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— continued
|
|
|
|
|
Government Agency— continued
|
|
|
$ 6,830,000
|
|
Baker Life Insurance Trust, (Federal Home Loan Bank of Des Moines
LOC), 2.450%, 8/4/2022
|
$ 6,830,000
|
|
34,850,000
|
|
BWF Forge TL Properties Owner LLC, (Federal Home Loan Bank of
Des Moines LOC)/(Federal Home Loan Bank of San Francisco LOC),
2.450%, 8/4/2022
|
34,850,000
|
|
5,705,000
|
|
Catania Family Trust, (Federal Home Loan Bank of Dallas LOC),
2.450%, 8/4/2022
|
5,705,000
|
|
4,270,000
|
|
Jim Brooks Irrevocable Trust, (Federal Home Loan Bank of Dallas
LOC), 2.440%, 8/4/2022
|
4,270,000
|
|
11,570,000
|
|
Joseph L. Goggins Irrevocable Insurance Trust, (Federal Home Loan
Bank of Des Moines LOC), 2.450%, 8/4/2022
|
11,570,000
|
|
3,655,000
|
|
Karyn Brooks Descendants Trust, (Federal Home Loan Bank of
Dallas LOC), 2.440%, 8/4/2022
|
3,655,000
|
|
6,380,000
|
|
MHF DKF Insurance Trust, (Federal Home Loan Bank of Dallas
LOC), 2.450%, 8/3/2022
|
6,380,000
|
|
17,030,000
|
|
Mohr Green Associates L.P., 2012-A, (Federal Home Loan Bank of
San Francisco LOC), 2.450%, 8/4/2022
|
17,030,000
|
|
22,610,000
|
|
NWD 2017 Family Trust No. 1, (Federal Home Loan Bank of Dallas
LOC), 2.450%, 8/4/2022
|
22,610,000
|
|
9,080,000
|
|
Park Stanton Place LP, (Federal Home Loan Bank of San Francisco
LOC), 2.450%, 8/4/2022
|
9,080,000
|
|
5,010,000
|
|
R.J. Brooks Jr. Irrevocable Trust, (Federal Home Loan Bank of Dallas
LOC), 2.440%, 8/4/2022
|
5,010,000
|
|
6,980,000
|
|
RK Trust, (Federal Home Loan Bank of Dallas LOC),
2.450%, 8/4/2022
|
6,980,000
|
|
6,255,000
|
|
Sibley Family Irrevocable Insurance Trust, (Federal Home Loan Bank
of Des Moines LOC), 2.450%, 8/4/2022
|
6,255,000
|
|
6,610,000
|
|
The CLC Irrevocable Insurance Trust, (Federal Home Loan Bank of
Des Moines LOC), 2.450%, 8/4/2022
|
6,610,000
|
|
5,120,000
|
|
The Eugene Kim Irrevocable Life Insurance Trust, (Federal Home
Loan Bank of Dallas LOC), 2.450%, 8/4/2022
|
5,120,000
|
|
22,830,000
|
|
The Gregory P. Berry Trust, (Federal Home Loan Bank of Des
Moines LOC), 2.450%, 8/3/2022
|
22,830,000
|
|
5,740,000
|
|
The Leopold Family Insurance Trust, (Federal Home Loan Bank of
Dallas LOC), 2.450%, 8/4/2022
|
5,740,000
|
|
5,975,000
|
|
The Thompson 2018 Family Trust, (Federal Home Loan Bank of
Dallas LOC), 2.440%, 8/4/2022
|
5,975,000
|
|
|
|
TOTAL
|
243,250,000
|
|
|
|
TOTAL NOTES - VARIABLE
(IDENTIFIED COST $3,888,274,137)
|
3,886,603,079
|
|
|
2
|
COMMERCIAL PAPER— 14.0%
|
|
|
|
|
Finance - Banking— 10.7%
|
|
|
63,970,000
|
|
Antalis S.A., (Societe Generale, Paris LIQ), 1.773% - 1.853%,
8/1/2022 - 8/5/2022
|
63,965,027
|
|
60,000,000
|
|
Bank of Montreal, 2.800%, 5/9/2023
|
60,003,463
|
Annual Shareholder Report
5
|
Principal
Amount
|
|
|
Value
|
|
|
2
|
COMMERCIAL PAPER— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 200,000,000
|
|
Bank of Nova Scotia, Toronto, 0.200% - 0.210%, 9/8/2022 -
9/29/2022
|
$ 199,336,437
|
|
100,000,000
|
|
Bennington Stark Capital Co., LLC, (Societe Generale, Paris LIQ),
2.120%, 8/2/2022
|
99,994,111
|
|
104,000,000
|
|
Canadian Imperial Bank of Commerce, 0.503% - 2.070%,
12/1/2022 - 3/20/2023
|
102,483,433
|
|
50,000,000
|
|
Canadian Imperial Holdings, Inc., 0.351%, 11/8/2022
|
49,631,666
|
|
42,500,000
|
|
Chesham Finance LLC Series III, (Societe Generale, Paris COL),
2.404%, 8/31/2022
|
42,415,000
|
|
107,500,000
|
|
Gotham Funding Corp., (MUFG Bank Ltd. LIQ), 1.405% - 2.416%,
8/1/2022 - 10/3/2022
|
107,015,267
|
|
200,000,000
|
|
Lloyds Bank PLC, London, 1.413% - 2.419%, 8/5/2022 - 9/23/2022
|
199,765,183
|
|
5,000,000
|
|
LMA-Americas LLC, (Credit Agricole Corporate and Investment
Bank LIQ), 1.455%, 8/12/2022
|
4,997,785
|
|
92,000,000
|
|
Matchpoint Finance PLC, (BNP Paribas SA LIQ), 2.310% - 2.567%,
8/1/2022 - 10/11/2022
|
91,752,562
|
|
82,000,000
|
|
National Australia Bank Ltd., Melbourne, 1.005% - 3.844%,
9/6/2022 - 6/15/2023
|
81,133,799
|
|
85,000,000
|
|
Nationwide Building Society, 2.020%, 8/1/2022
|
85,000,000
|
|
145,000,000
|
|
Royal Bank of Canada, 0.251% - 2.229%, 10/14/2022 - 3/29/2023
|
143,538,329
|
|
80,000,000
|
|
Royal Bank of Canada, New York Branch, 0.371% - 0.402%,
11/9/2022 - 11/15/2022
|
79,285,026
|
|
122,000,000
|
|
Toronto Dominion Bank, 2.903%, 5/31/2023
|
118,207,691
|
|
|
|
TOTAL
|
1,528,524,779
|
|
|
|
Finance - Retail— 1.7%
|
|
|
69,000,000
|
|
Fairway Finance Co. LLC, 1.005%, 9/6/2022
|
68,817,535
|
|
60,000,000
|
|
Old Line Funding, LLC, 1.659%, 9/13/2022
|
59,804,347
|
|
60,000,000
|
|
Old Line Funding, LLC, 1.659%, 9/19/2022
|
59,775,187
|
|
50,000,000
|
|
Sheffield Receivables Company LLC, 1.976%, 8/18/2022
|
49,958,958
|
|
|
|
TOTAL
|
238,356,027
|
|
|
|
Oil & Oil Finance— 0.5%
|
|
|
70,000,000
|
|
TotalEnergies Capital Canada Ltd., 2.200%, 8/3/2022
|
69,991,445
|
|
|
|
Sovereign— 1.1%
|
|
|
160,000,000
|
|
BNG Bank N.V., 2.201% - 2.311%, 8/3/2022 - 8/4/2022
|
159,976,228
|
|
|
|
TOTAL COMMERCIAL PAPER
(IDENTIFIED COST $2,001,640,522)
|
1,996,848,479
|
|
|
|
TIME DEPOSITS— 11.1%
|
|
|
|
|
Finance - Banking— 11.1%
|
|
|
500,000,000
|
|
ABN Amro Bank NV, 2.220% - 2.330%, 8/3/2022 - 8/5/2022
|
500,000,000
|
|
275,000,000
|
|
Australia & New Zealand Banking Group, Melbourne,
2.210%, 8/3/2022
|
275,000,000
|
|
440,000,000
|
|
Australia & New Zealand Banking Group, Melbourne,
2.320%, 8/1/2022
|
440,000,000
|
Annual Shareholder Report
6
|
Principal
Amount
|
|
|
Value
|
|
|
|
TIME DEPOSITS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 360,000,000
|
|
Mizuho Bank Ltd., 2.320%, 8/1/2022
|
$ 360,000,000
|
|
|
|
TOTAL TIME DEPOSITS
(IDENTIFIED COST $1,575,000,000)
|
1,575,000,000
|
|
|
|
CERTIFICATES OF DEPOSIT— 10.6%
|
|
|
|
|
Finance - Banking— 10.6%
|
|
|
26,500,000
|
|
Bank of Montreal, 2.850%, 5/24/2023
|
26,336,767
|
|
210,000,000
|
|
Credit Agricole Corporate and Investment Bank, 1.560% - 2.320%,
8/5/2022 - 8/12/2022
|
210,000,000
|
|
115,000,000
|
|
DNB Bank ASA, 1.100%, 9/6/2022
|
114,843,595
|
|
100,000,000
|
|
Mizuho Bank Ltd., 2.600%, 10/20/2022
|
100,000,000
|
|
165,000,000
|
|
MUFG Bank Ltd., 1.420% - 1.450%, 8/18/2022 - 8/19/2022
|
164,962,798
|
|
70,000,000
|
|
Sumitomo Mitsui Banking Corp., 1.450%, 8/5/2022
|
70,000,000
|
|
515,000,000
|
|
Sumitomo Mitsui Trust Bank Ltd., 1.450% - 2.530%, 8/18/2022 -
9/29/2022
|
514,947,924
|
|
305,000,000
|
|
Toronto Dominion Bank, 0.220% - 4.070%, 10/14/2022 - 7/18/2023
|
303,829,965
|
|
|
|
TOTAL CERTIFICATES OF DEPOSIT
(IDENTIFIED COST $1,506,500,000)
|
1,504,921,049
|
|
|
|
U.S. TREASURY— 0.3%
|
|
|
|
|
U.S. Treasury Notes— 0.3%
|
|
|
50,000,000
|
1
|
United States Treasury Floating Rate Notes, 2.570% (91-day T-Bill
+0.034%), 8/2/2022
(IDENTIFIED COST $50,003,021)
|
50,137,907
|
|
|
|
OTHER REPURCHASE AGREEMENTS— 17.8%
|
|
|
|
|
Finance - Banking— 17.8%
|
|
|
100,000,000
|
|
BMO Capital Markets Corp., 2.05%, dated 2/8/2021, interest in a
$200,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $200,706,111 on 9/12/2022, in
which corporate bonds and medium-term notes with a market value
of $204,755,998 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
100,000,000
|
|
439,000,000
|
|
BNP Paribas S.A., 2.40%, dated 7/29/2022, interest in a
$500,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $500,100,000 on 8/1/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds and medium-term note with a market value of
$510,102,000 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
439,000,000
|
|
100,000,000
|
|
Bofa Securities, Inc., 2.39%, dated 7/29/2022, interest in a
$150,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $150,029,875 on 8/1/2022, in
which corporate bonds and medium-term notes with a market value
of $153,030,602 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
100,000,000
|
Annual Shareholder Report
7
|
Principal
Amount
|
|
|
Value
|
|
|
|
OTHER REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 100,000,000
|
|
Bofa Securities, Inc., 2.94%, dated 9/4/2020, interest in a
$100,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $100,735,000 on 10/31/2022, in
which convertible bonds with a market value of $102,199,120 have
been received as collateral and held with BNY Mellon as tri-party
agent.
|
$ 100,000,000
|
|
250,000,000
|
|
Bofa Securities, Inc., 2.94%, dated 9/9/2020, interest in a
$250,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $251,837,500 on 10/31/2022, in
which convertible bonds, medium-term notes and Sovereign with a
market value of $255,496,826 have been received as collateral and
held with BNY Mellon as tri-party agent.
|
250,000,000
|
|
25,000,000
|
|
Bofa Securities, Inc., 2.35%, dated 7/29/2022, interest in a
$25,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $25,004,896 on 8/1/2022, in which
commercial paper with a market value of $25,505,956 have been
received as collateral and held with BNY Mellon as tri-party agent.
|
25,000,000
|
|
125,000,000
|
|
Credit Agricole S.A., 2.47%, dated 6/24/2022, interest in a
$300,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $300,144,083 on 8/9/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, commercial paper, treasury notes, treasury bills
medium-term notes, U.S. Government Agency securities and
sovereign debt with a market value of $306,063,090 have been
received as collateral and held with BNY Mellon as tri-party agent.
|
125,000,000
|
|
280,000,000
|
|
Credit Agricole S.A., 2.37%, dated 6/24/2022, interest in a
$800,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $800,368,667 on 8/9/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, commercial paper, treasury notes, treasury bill,
medium-term notes and sovereign debt with a market value of
$816,161,433 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
280,000,000
|
|
70,000,000
|
|
HSBC Securities (USA), Inc., 2.42%, dated 7/29/2022, interest in a
$70,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $70,014,117 on 8/1/2022, in which
corporate bonds, medium-term notes and Sovereign debt with a
market value of $71,400,029 have been received as collateral and
held with BNY Mellon as tri-party agent.
|
70,000,000
|
|
49,490,000
|
|
ING Financial Markets LLC, 2.39%, dated 7/29/2022, interest in a
$50,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $50,009,958 on 8/1/2022, in which
corporate bonds with a market value of $51,010,957 have been
received as collateral and held with BNY Mellon as tri-party agent.
|
49,490,000
|
|
100,000,000
|
|
ING Financial Markets LLC, 2.40%, dated 7/29/2022, interest in a
$100,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $100,020,000 on 8/1/2022, in
which common stocks, corporate bonds and medium-term notes
with a market value of $102,020,404 have been received as
collateral and held with BNY Mellon as tri-party agent.
|
100,000,000
|
Annual Shareholder Report
8
|
Principal
Amount
|
|
|
Value
|
|
|
|
OTHER REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 65,000,000
|
|
J.P. Morgan Securities LLC, 2.56%, dated 7/6/2022, interest in a
$250,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $250,480,000 on 8/2/2022, in
which corporate bonds and medium-term notes with a market value
of $255,000,001 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
$ 65,000,000
|
|
45,000,000
|
|
Mizuho Securities USA, Inc., 2.52%, dated 7/29/2022, interest in a
$75,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $75,015,750 on 8/1/2022, in which
common stocks with a market value of $76,516,072 have been
received as collateral and held with BNY Mellon as tri-party agent.
|
45,000,000
|
|
50,000,000
|
|
Mizuho Securities USA, Inc., 2.42%, dated 7/29/2022, interest in a
$100,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $100,020,167 on 8/1/2022, in
which commercial paper and municipal bonds with a market value
of $102,022,014 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
50,000,000
|
|
81,000,000
|
|
Mitsubishi UFG Securities Americas, Inc., 2.47%, dated 7/29/2022,
interest in a $300,000,000 collateralized loan agreement will
repurchase securities provided as collateral for $300,061,750 on
8/1/2022, in which American depositary receipts, common stocks,
corporate bonds, exchange-traded funds and unit investment trust,
medium-term notes and municipal bonds with a market value of
$306,063,397 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
81,000,000
|
|
135,000,000
|
|
Pershing LLC, 2.57%, dated 7/14/2022, interest in a $300,000,000
collateralized loan agreement will repurchase securities provided as
collateral for $300,149,917 on 8/9/2022, in which asset-backed
securities, collateralized mortgage obligations, corporate bonds,
commercial paper, common stocks, convertible bond, certificate of
deposit, exchange-traded funds, medium-term notes and municipal
bonds and U.S. Government Agency securities with a market value
of $306,100,946 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
135,000,000
|
|
125,000,000
|
|
Societe Generale, Paris, 2.38%, dated 7/29/2022, interest in a
$350,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $350,069,417 on 8/1/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, medium-term notes, municipal bonds, sovereign
securities and treasury bill with a market value of $357,071,176
have been received as collateral and held with BNY Mellon as
tri-party agent.
|
125,000,000
|
|
277,000,000
|
|
Societe Generale, Paris, 2.47%, dated 7/29/2022, interest in a
$650,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $650,133,792 on 8/1/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, medium-term notes and treasury bill with a
market value of $663,136,856 have been received as collateral and
held with BNY Mellon as tri-party agent.
|
277,000,000
|
Annual Shareholder Report
9
|
Principal
Amount
|
|
|
Value
|
|
|
|
OTHER REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 125,000,000
|
|
Wells Fargo Securities LLC, 3.20%, dated 2/3/2022, interest in a
$125,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $126,000,000 on 8/1/2022, in
which sovereign securities with a market value of $127,614,209
have been received as collateral and held with BNY Mellon as
tri-party agent.
|
$ 125,000,000
|
|
|
|
TOTAL OTHER REPURCHASE AGREEMENTS
(IDENTIFIED COST $2,541,490,000)
|
2,541,490,000
|
|
|
|
REPURCHASE AGREEMENTS— 19.2%
|
|
|
|
|
Finance - Banking— 19.2%
|
|
|
150,000,000
|
|
Repurchase agreement 2.40%, dated 7/29/2022 under which ABN
Amro Bank N.V., Netherlands will repurchase securities provided as
collateral for $150,030,000 on 8/1/2022. The securities provided as
collateral at the end of the period held with BNY Mellon as tri-party
agent, were U.S. Government Agency securities with various
maturities to 7/25/2052 and the market value of those underlying
securities was $153,030,600.
|
150,000,000
|
|
299,000,000
|
|
Interest in $1,650,000,000 joint repurchase agreement 2.29%,
dated 7/29/2022 under which Mitsubishi UFJ Securities (USA), Inc.
will repurchase securities provided as collateral for $1,650,314,875
on 8/1/2022. The securities provided as collateral at the end of the
period held with BNY Mellon as tri-party agent, were
U.S. Government Agency securities with various maturities to
1/1/2057 and the market value of those underlying securities
was $1,683,321,173.
|
299,000,000
|
|
500,000,000
|
|
Interest in $1,650,000,000 joint repurchase agreement 2.29%,
dated 7/29/2022 under which Mitsubishi UFJ Securities (USA), Inc.
will repurchase securities provided as collateral for $1,650,314,875
on 8/1/2022. The securities provided as collateral at the end of the
period held with BNY Mellon as tri-party agent, were
U.S. Government Agency securities with various maturities to
1/1/2057 and the market value of those underlying securities
was $1,683,321,173.
|
500,000,000
|
|
700,000,000
|
|
Interest in $1,800,000,000 joint repurchase agreement 2.30%,
dated 7/29/2022 under which Natixis Financial Products LLC will
repurchase securities provided as collateral for $1,800,345,000 on
8/1/2022. The securities provided as collateral at the end of the
period held with BNY Mellon as tri-party agent, were
U.S. Government Agency and U.S. Treasury securities with various
maturities to 6/16/2064 and the market value of those underlying
securities was $1,841,376,235.
|
700,000,000
|
|
1,000,000,000
|
|
Repurchase agreement 2.30%, dated 7/29/2022 under which
Federal Reserve Bank of New York will repurchase securities
provided as collateral for $1,000,191,667 on 8/1/2022. The
securities provided as collateral at the end of the period held with
BNY Mellon as tri-party agent, were U.S. Treasury securities with
various maturities to 2/15/2036 and the market value of those
underlying securities was $1,000,191,722.
|
1,000,000,000
|
Annual Shareholder Report
10
|
Principal
Amount
|
|
|
Value
|
|
|
|
REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 87,000,000
|
|
Interest in $150,000,000 joint repurchase agreement 2.39%, dated
7/29/2022 under which Standard Chartered Bank will repurchase
securities provided as collateral for $150,029,875 on 8/1/2022. The
securities provided as collateral at the end of the period held with
BNY Mellon as tri-party agent, were U.S. Government Agency
securities with various maturities to 2/16/2064 and the market value
of those underlying securities was $153,030,473.
|
$ 87,000,000
|
|
|
|
TOTAL REPURCHASE AGREEMENTS
(IDENTIFIED COST $2,736,000,000)
|
2,736,000,000
|
|
|
|
TOTAL INVESTMENT IN SECURITIES—100.3%
(IDENTIFIED COST $14,298,907,680)3
|
14,291,000,514
|
|
|
|
OTHER ASSETS AND LIABILITIES - NET—(0.3)%4
|
(46,154,429)
|
|
|
|
TOTAL NET ASSETS—100%
|
$14,244,846,085
|
|
1
|
Floating/variable note with current rate and current maturity or next reset date shown. Certain
variable rate securities are not based on a published reference rate and spread but are
determined by the issuer or agent and are based on current market conditions. These securities
do not indicate a reference rate and spread in their description above.
|
|
2
|
Discount rate at time of purchase for discount issues, or the coupon for interest-bearing issues.
|
|
3
|
Also represents cost of investments for federal tax purposes.
|
|
4
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
Note: The categories of investments are shown as a percentage of total net assets at July 31, 2022.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Level 1—quoted prices in active markets for identical securities.
Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Also includes securities valued at amortized cost.
Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
Annual Shareholder Report
11
As of July 31, 2022, all investments of the Fund utilized Level 2 inputs in valuing the Fund’s assets carried at fair value.
|
The following acronym(s) are used throughout this portfolio:
|
|
|
|
COL
|
—Collateralized
|
|
|
GTD
|
—Guaranteed
|
|
|
LIQ
|
—Liquidity Agreement
|
|
|
LLP
|
—Limited Liability Partnership
|
|
|
LOC
|
—Letter of Credit
|
|
|
MHF
|
—Maryland Housing Fund
|
|
|
PLC
|
—Public Limited Company
|
|
|
SOFR
|
—Secured Overnight Financing Rate
|
|
|
VRDNs
|
—Variable Rate Demand Notes
|
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
12
Financial Highlights–Institutional Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.0005
|
$1.0007
|
$1.0004
|
$1.0003
|
$1.0003
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income (loss)
|
0.00371
|
0.0008
|
0.0136
|
0.0239
|
0.0156
|
|
Net realized and unrealized gain (loss)
|
(0.0008)
|
(0.0002)
|
0.0003
|
0.0001
|
0.00002
|
|
Total From Investment
Operations
|
0.0029
|
0.0006
|
0.0139
|
0.0240
|
0.0156
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment
income
|
(0.0036)
|
(0.0008)
|
(0.0136)
|
(0.0239)
|
(0.0156)
|
|
Net Asset Value, End of Period
|
$0.9998
|
$1.0005
|
$1.0007
|
$1.0004
|
$1.0003
|
|
Total Return3
|
0.29%
|
0.05%
|
1.39%
|
2.43%
|
1.57%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses4
|
0.16%
|
0.15%
|
0.15%
|
0.15%
|
0.17%
|
|
Net investment income
|
0.38%
|
0.08%
|
1.37%
|
2.41%
|
1.62%
|
|
Expense waiver/reimbursement5
|
0.12%
|
0.13%
|
0.13%
|
0.13%
|
0.12%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$14,232,133
|
$15,298,656
|
$23,611,390
|
$21,146,776
|
$10,941,508
|
|
1
|
Per share numbers have been calculated using the average shares method.
|
|
2
|
Represents less than $0.0001.
|
|
3
|
Based on net asset value.
|
|
4
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
5
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
13
Financial Highlights–Service Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.0005
|
$1.0007
|
$1.0004
|
$1.0002
|
$1.0003
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income (loss)
|
0.00191
|
0.0001
|
0.0112
|
0.0218
|
0.0134
|
|
Net realized and unrealized gain (loss)
|
(0.0002)
|
(0.0002)
|
0.0003
|
0.0002
|
0.00002
|
|
Total From Investment Operations
|
0.0017
|
(0.0001)
|
0.0115
|
0.0220
|
0.0134
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.0025)
|
(0.0001)
|
(0.0112)
|
(0.0218)
|
(0.0135)
|
|
Net Asset Value, End of Period
|
$0.9997
|
$1.0005
|
$1.0007
|
$1.0004
|
$1.0002
|
|
Total Return3
|
0.17%
|
(0.01)%
|
1.15%
|
2.22%
|
1.35%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses4
|
0.26%
|
0.24%
|
0.40%
|
0.37%
|
0.39%
|
|
Net investment income
|
0.18%
|
0.01%
|
1.22%
|
2.21%
|
1.33%
|
|
Expense waiver/reimbursement5
|
0.25%
|
0.28%
|
0.13%
|
0.13%
|
0.12%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$12,713
|
$32,413
|
$83,818
|
$93,979
|
$47,817
|
|
1
|
Per share numbers have been calculated using the average shares method.
|
|
2
|
Represents less than $0.0001.
|
|
3
|
Based on net asset value.
|
|
4
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
5
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
14
Financial Highlights–Capital Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
20221
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.0005
|
$1.0008
|
$1.0004
|
$1.0002
|
$1.0002
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income (loss)
|
0.00012
|
0.0006
|
0.0131
|
0.0234
|
0.0151
|
|
Net realized and unrealized gain (loss)
|
0.0038
|
(0.0005)
|
0.0004
|
0.0002
|
0.00003
|
|
Total From Investment Operations
|
0.0039
|
0.0001
|
0.0135
|
0.0236
|
0.0151
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.0032)
|
(0.0004)
|
(0.0131)
|
(0.0234)
|
(0.0151)
|
|
Net Asset Value, End of Period
|
$1.0012
|
$1.0005
|
$1.0008
|
$1.0004
|
$1.0002
|
|
Total Return4
|
0.39%
|
0.01%
|
1.35%
|
2.39%
|
1.52%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses5
|
0.16%
|
0.20%
|
0.20%
|
0.20%
|
0.23%
|
|
Net investment income
|
0.01%
|
0.05%
|
1.19%
|
2.31%
|
1.52%
|
|
Expense waiver/reimbursement6
|
0.17%
|
0.13%
|
0.13%
|
0.13%
|
0.12%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$07
|
$4,501
|
$23,527
|
$14,374
|
$25,206
|
|
1
|
Certain ratios included in Ratios to Average Net Assets and per share amounts may be inflated
or deflated as compared to the fee structure for each respective share class as a result of daily
systematic allocations being rounded to the nearest penny for fund level income, expense and
realized gain/loss amounts. Such differences are immaterial.
|
|
2
|
Per share numbers have been calculated using the average shares method.
|
|
3
|
Represents less than $0.0001.
|
|
4
|
Based on net asset value.
|
|
5
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
6
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
|
7
|
Represents less than $1,000.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
15
Statement of Assets and Liabilities
July 31, 2022
July 31, 2022
|
Assets:
|
|
|
Investment in repurchase agreements and other repurchase agreements
|
$5,277,490,000
|
|
Investment in securities
|
9,013,510,514
|
|
Investment in securities, at value (identified cost $14,298,907,680)
|
14,291,000,514
|
|
Cash
|
553,403
|
|
Income receivable
|
12,267,528
|
|
Total Assets
|
14,303,821,445
|
|
Liabilities:
|
|
|
Payable for investments purchased
|
42,415,000
|
|
Income distribution payable
|
15,954,638
|
|
Payable for investment adviser fee (Note 5)
|
117,280
|
|
Payable for administrative fee (Note 5)
|
91,887
|
|
Accrued expenses (Note 5)
|
396,555
|
|
Total Liabilities
|
58,975,360
|
|
Net assets for 14,248,059,005 shares outstanding
|
$14,244,846,085
|
|
Net Assets Consist of:
|
|
|
Paid-in capital
|
$14,254,096,547
|
|
Total distributable earnings (loss)
|
(9,250,462)
|
|
Total Net Assets
|
$14,244,846,085
|
|
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
|
|
|
Institutional Shares:
|
|
|
$14,232,132,569 ÷ 14,235,341,975 shares outstanding, no par value, unlimited
shares authorized
|
$0.9998
|
|
Service Shares:
|
|
|
$12,713,416 ÷ 12,716,930 shares outstanding, no par value, unlimited
shares authorized
|
$0.9997
|
|
Capital Shares:
|
|
|
$100 ÷ 100 shares outstanding, no par value, unlimited shares authorized
|
$1.0012*
|
|
*
|
Actual net asset value per share presented differs from calculated net asset value per share due
to rounding.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
16
Statement of Operations
Year Ended July 31, 2022
Year Ended July 31, 2022
|
Investment Income:
|
|
|
Interest
|
$72,199,266
|
|
Expenses:
|
|
|
Investment adviser fee (Note 5)
|
26,847,301
|
|
Administrative fee (Note 5)
|
10,508,115
|
|
Custodian fees
|
427,458
|
|
Transfer agent fees
|
115,442
|
|
Directors’/Trustees’ fees (Note 5)
|
77,727
|
|
Auditing fees
|
25,110
|
|
Legal fees
|
7,362
|
|
Portfolio accounting fees
|
271,093
|
|
Other service fees (Notes 2 and 5)
|
51,845
|
|
Share registration costs
|
57,131
|
|
Printing and postage
|
19,010
|
|
Miscellaneous (Note 5)
|
113,955
|
|
TOTAL EXPENSES
|
38,521,549
|
|
Waivers and Reimbursement:
|
|
|
Waiver of investment adviser fee (Note 5)
|
(16,595,747)
|
|
Waiver/reimbursement of other operating expenses (Notes 2 and 5)
|
(28,684)
|
|
TOTAL WAIVERS AND REIMBURSEMENT
|
(16,624,431)
|
|
Net expenses
|
21,897,118
|
|
Net investment income
|
50,302,148
|
|
Realized and Unrealized Gain (Loss) on Investments:
|
|
|
Net realized gain on investments
|
54,512
|
|
Net change in unrealized appreciation of investments
|
(9,036,105)
|
|
Net realized and unrealized gain (loss) on investments
|
(8,981,593)
|
|
Change in net assets resulting from operations
|
$41,320,555
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
17
Statement of Changes in Net Assets
|
Year Ended July 31
|
2022
|
2021
|
|
Increase (Decrease) in Net Assets
|
|
|
|
Operations:
|
|
|
|
Net investment income
|
$50,302,148
|
$17,271,664
|
|
Net realized gain (loss)
|
54,512
|
113,108
|
|
Net change in unrealized appreciation/depreciation
|
(9,036,105)
|
(6,131,457)
|
|
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS
|
41,320,555
|
11,253,315
|
|
Distributions to Shareholders:
|
|
|
|
Institutional Shares
|
(50,220,717)
|
(17,245,644)
|
|
Service Shares
|
(41,365)
|
(4,862)
|
|
Capital Shares
|
(48)
|
(8,147)
|
|
CHANGE IN NET ASSETS RESULTING FROM
DISTRIBUTIONS TO SHAREHOLDERS
|
(50,262,130)
|
(17,258,653)
|
|
Share Transactions:
|
|
|
|
Proceeds from sale of shares
|
24,614,918,258
|
36,831,815,005
|
|
Net asset value of shares issued to shareholders in payment
of distributions declared
|
8,299,365
|
3,142,765
|
|
Cost of shares redeemed
|
(25,705,000,012)
|
(45,212,117,547)
|
|
CHANGE IN NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
|
(1,081,782,389)
|
(8,377,159,777)
|
|
Change in net assets
|
(1,090,723,964)
|
(8,383,165,115)
|
|
Net Assets:
|
|
|
|
Beginning of period
|
15,335,570,049
|
23,718,735,164
|
|
End of period
|
$14,244,846,085
|
$15,335,570,049
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
18
Notes to Financial Statements
July 31, 2022
1. ORGANIZATION
Federated Hermes Money Market Obligations Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust consists of 16 portfolios. The financial statements included herein are only those of Federated Hermes Institutional Prime Obligations Fund (the “Fund”), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder’s interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers three classes of shares: Institutional Shares, Service Shares and Capital Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The investment objective of the Fund is to provide current income consistent with stability of principal.
The Fund operates as an institutional money market fund. As an institutional money market fund, the Fund: (1) will not be limited to institutional investors, but will continue to be available to retail investors; (2) will utilize current market-based prices (except as otherwise generally permitted to value individual portfolio securities with remaining maturities of 60 days or less at amortized cost in accordance with Securities and Exchange Commission (SEC) rules and guidance) to value its portfolio securities and transact at a floating net asset value (NAV) that uses four decimal-place precision ($1.0000); and (3) has adopted policies and procedures to impose liquidity fees on redemptions and/or temporary redemption gates in the event that the Fund’s weekly liquid assets were to fall below a designated threshold, if the Fund’s Board of Trustees (the “Trustees”) determine such liquidity fees or redemption gates are in the best interest of the Fund.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
In calculating its NAV, the Fund generally values investments as follows:
◾
Fixed-income securities with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Trustees.
◾
Fixed-income securities with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium), unless the issuer’s creditworthiness is impaired or other factors indicate that amortized cost is not an accurate estimate of the investment’s fair value, in which case it would be valued in the same manner as a longer-term security. The Fund may only use this method to value a portfolio security when it can reasonably conclude, at each time it makes a valuation determination, that the amortized cost price of the portfolio security is approximately the same as the fair value of the security as determined without the use of amortized cost valuation.
Annual Shareholder Report
19
◾
Shares of other mutual funds or non-exchange-traded investment companies are valued based upon their reported NAVs, or NAV per share practical expedient, as applicable.
◾
For securities that are fair valued in accordance with procedures established by and under the general supervision of the Trustees, certain factors may be considered, such as: the last traded or purchase price of the security, information obtained by contacting the issuer or dealers, analysis of the issuer’s financial statements or other available documents, fundamental analytical data, the nature and duration of restrictions on disposition, the movement of the market in which the security is normally traded, public trading in similar securities or derivative contracts of the issuer or comparable issuers, movement of a relevant index, or other factors including but not limited to industry changes and relevant government actions.
If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, if the Fund cannot obtain price evaluations from a pricing service or from more than one dealer for an investment within a reasonable period of time as set forth in the Fund’s valuation policies and procedures, or if information furnished by a pricing service, in the opinion of the valuation committee (“Valuation Committee”), is deemed not representative of the fair value of such security, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines its NAV per share, and the actual value obtained could be materially different.
Fair Valuation Procedures
The Trustees have ultimate responsibility for determining the fair value of investments for which market quotations are not readily available. The Trustees have appointed a Valuation Committee comprised of officers of the Fund, Federated Investment Management Company (the “Adviser”) and certain of the Adviser’s affiliated companies to assist in determining fair value and in overseeing the calculation of the NAV. The Trustees have also authorized the use of pricing services recommended by the Valuation Committee to provide fair value evaluations of the current value of certain investments for purposes of calculating the NAV. The Valuation Committee employs various methods for reviewing third-party pricing-service evaluations including periodic reviews of third-party pricing services’ policies, procedures and valuation methods (including key inputs, methods, models and assumptions), transactional back-testing, comparisons of evaluations of different pricing services and review of price challenges by the Adviser based on recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee determines the fair value of the investment in accordance with procedures adopted by the Trustees. The Trustees periodically review and approve the fair valuations made by the Valuation Committee and any changes made to the procedures.
Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a “bid” evaluation). Other pricing services offer both bid evaluations and price evaluations
Annual Shareholder Report
20
indicative of a price between the prices bid and asked for the investment (a “mid” evaluation). The Fund normally uses bid evaluations for any U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for any other types of fixed-income securities and any over-the-counter derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.
Repurchase Agreements
The Fund may invest in repurchase agreements for short-term liquidity purposes. It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund’s custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control” as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.
The insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.
The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund’s Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.
Repurchase agreements are subject to Master Netting Agreements which are agreements between the Fund and its counterparties that provide for the net settlement of all transactions and collateral with the Fund, through a single payment, in the event of default or termination. Amounts presented on the Portfolio of Investments and Statement of Assets and Liabilities are not net settlement amounts but gross. As indicated above, the cash or securities to be repurchased, as shown on the Portfolio of Investments, exceeds the repurchase price to be paid under the agreement reducing the net settlement amount to zero.
Investment Income, Gains and Losses, Expenses and Distributions
Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis. Interest income and expenses are accrued daily. Distributions to shareholders are recorded on the ex-dividend date. Distributions of net investment income, if any, are declared daily and paid monthly. Amortization/accretion of premium and discount is included in investment income. Investment income, realized and unrealized gains and losses, and
Annual Shareholder Report
21
certain fund-level expenses are allocated to each class based on relative average daily net assets, except that select classes will bear certain expenses unique to those classes. The detail of the total fund expense waivers and reimbursement of $16,624,431 is disclosed in various locations in this Note 2 and Note 5.
Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.
Other Service Fees
The Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund’s Institutional Shares, Service Shares and Capital Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for other service fees. In addition, unaffiliated third-party financial intermediaries may waive other service fees. This waiver can be modified or terminated at any time.
For the year ended July 31, 2022, other service fees for the Fund were as follows:
|
|
Other Service
Fees Incurred
|
Other Service
Fees Reimbursed
|
Other Service Fees
Waived by Unaffiliated
Third Parties
|
|
Service Shares
|
$51,604
|
$(3,382)
|
$(25,103)
|
|
Capital Shares
|
241
|
(112)
|
(87)
|
|
TOTAL
|
$51,845
|
$(3,494)
|
$(25,190)
|
For the year ended July 31, 2022, the Fund’s Institutional Shares did not incur other service fees.
Federal Taxes
It is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code (the “Code”) and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. As of and during the year ended July 31, 2022, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2022, tax years 2019 through 2022 remain subject to examination by the Fund’s major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.
When-Issued and Delayed-Delivery Transactions
The Fund may engage in when-issued or delayed-delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed-delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
Annual Shareholder Report
22
Restricted Securities
The Fund may purchase securities which are considered restricted. Restricted securities are securities that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) are subject to contractual restrictions on public sales. In some cases, when a security cannot be offered for public sale without first being registered, the issuer of the restricted security has agreed to register such securities for resale, at the issuer’s expense, either upon demand by the Fund or in connection with another registered offering of the securities. Many such restricted securities may be resold in the secondary market in transactions exempt from registration. Restricted securities may be determined to be liquid under criteria established by the Trustees. The Fund will not incur any registration costs upon such resales. The Fund’s restricted securities, like other securities, are priced in accordance with procedures established by and under the general supervision of the Trustees.
Other
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ materially from those estimated. The Fund applies investment company accounting and reporting guidance.
3. SHARES OF BENEFICIAL INTEREST
The following tables summarize share activity:
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Institutional Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
24,232,087,166
|
$24,233,003,776
|
36,196,687,324
|
$36,215,427,054
|
|
Shares issued to shareholders
in payment of
distributions declared
|
8,283,360
|
8,282,176
|
3,128,894
|
3,130,517
|
|
Shares redeemed
|
(25,296,641,390)
|
(25,298,888,431)
|
(44,503,031,101)
|
(44,525,308,528)
|
|
NET CHANGE RESULTING
FROM INSTITUTIONAL
SHARE TRANSACTIONS
|
(1,056,270,864)
|
$(1,057,602,479)
|
(8,303,214,883)
|
$(8,306,750,957)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Service Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
381,843,923
|
$381,914,482
|
320,686,975
|
$320,849,653
|
|
Shares issued to shareholders
in payment of
distributions declared
|
17,154
|
17,151
|
4,099
|
4,101
|
|
Shares redeemed
|
(401,541,566)
|
(401,611,014)
|
(372,056,896)
|
(372,241,775)
|
|
NET CHANGE RESULTING
FROM SERVICE
SHARE TRANSACTIONS
|
(19,680,489)
|
$(19,679,381)
|
(51,365,822)
|
$(51,388,021)
|
Annual Shareholder Report
23
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Capital Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
—
|
$—
|
295,358,986
|
$295,538,298
|
|
Shares issued to shareholders
in payment of
distributions declared
|
38
|
38
|
8,141
|
8,147
|
|
Shares redeemed
|
(4,498,390)
|
(4,500,567)
|
(314,377,023)
|
(314,567,244)
|
|
NET CHANGE RESULTING
FROM CAPITAL
SHARE TRANSACTIONS
|
(4,498,352)
|
$(4,500,529)
|
(19,009,896)
|
$(19,020,799)
|
|
NET CHANGE RESULTING
FROM TOTAL FUND
SHARE TRANSACTIONS
|
(1,080,449,705)
|
$(1,081,782,389)
|
(8,373,590,601)
|
$(8,377,159,777)
|
4. FEDERAL TAX INFORMATION
The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2022 and 2021, was as follows:
|
|
2022
|
2021
|
|
Ordinary income
|
$50,262,130
|
$17,258,653
|
As of July 31, 2022, the components of distributable earnings on a tax-basis were as follows:
|
Undistributed ordinary income
|
$57,427
|
|
Net unrealized depreciation
|
$(7,907,166)
|
|
Capital loss carryforwards
|
$(1,400,723)
|
At July 31, 2022, the cost of investments for federal tax purposes was $14,298,907,680. The net unrealized depreciation of investments for federal tax purposes was $7,907,166. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $451,830 and net unrealized depreciation from investments for those securities having an excess of cost over value of $8,358,996.
As of July 31, 2022, the Fund had a capital loss carryforward of $1,400,723 which will reduce the Fund’s taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code, thereby reducing the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, these net capital losses retain their character as either short-term or long-term and do not expire.
The following schedule summarizes the Fund’s capital loss carryforwards:
|
Short-Term
|
Long-Term
|
Total
|
|
$1,400,723
|
$—
|
$1,400,723
|
The Fund used capital loss carryforwards of $54,512 to offset capital gains realized during the year ended July 31, 2022.
Annual Shareholder Report
24
5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.20% of the Fund’s average daily net assets. Subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee for competitive reasons such as to maintain the Fund’s expense ratio, or as and when appropriate, to maintain positive or zero net yields. For the year ended July 31, 2022, the Adviser voluntarily waived $16,595,747 of its fee.
Administrative Fee
Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated Hermes Funds subject to a fee under the Administrative Services Agreement. The fee paid to FAS is based on the average daily net assets of the Investment Complex as specified below:
|
Administrative Fee
|
Average Daily Net Assets
of the Investment Complex
|
|
0.100%
|
on assets up to $50 billion
|
|
0.075%
|
on assets over $50 billion
|
Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2022, the annualized fee paid to FAS was 0.078% of average daily net assets of the Fund.
In addition, FAS may charge certain out-of-pocket expenses to the Fund.
Other Service Fees
For the year ended July 31, 2022, FSSC received $132 and reimbursed $3,494 of the other service fees disclosed in Note 2.
Expense Limitation
Due to the possibility of changes in market conditions and other factors, there can be no assurance that the level of waivers/reimbursement/reduction of Fund expenses reflected in the financial highlights will be maintained in the future. However, the Adviser and certain of its affiliates (which may include FSSC and FAS) on their own initiative have agreed to waive certain amounts of their respective fees and/or reimburse expenses. Total annual fund operating expenses (as shown in the financial highlights, excluding interest expense, extraordinary expenses and proxy-related expenses paid by the Fund, if any) paid by the Fund’s Institutional Shares, Service Shares and Capital Shares (after the voluntary waivers and/or reimbursements) will not exceed 0.20%, 0.45% and 0.25% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) October 1, 2023; or (b) the date of the Fund’s next effective Prospectus. While the Adviser and its applicable affiliates currently do not anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or the Fee Limit increased prior to the Termination Date with the agreement of the Trustees.
Annual Shareholder Report
25
Interfund Transactions
During the year ended July 31, 2022, the Fund engaged in sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees and/or common Officers. These sale transactions complied with Rule 17a-7 under the Act and amounted to $14,500,000. Net realized gain/loss recognized on these transactions was $0.
Directors’/Trustees’ and Miscellaneous Fees
Certain Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate payment, Independent Directors’/Trustees’ fees and certain expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses are paid by an affiliate of the Adviser which in due course are reimbursed by the Fund. These expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses may be included in Accrued and Miscellaneous Expenses on the Statement of Assets and Liabilities and Statement of Operations, respectively.
Affiliated Shares of Beneficial Interest
As of July 31, 2022, a majority of the shares of beneficial interest outstanding are owned by other affiliated investment companies.
6. CONCENTRATION OF RISK
A substantial part of the Fund’s portfolio may be comprised of obligations of banks. As a result, the Fund may be more susceptible to any economic, business, political or other developments which generally affect these entities.
7. LINE OF CREDIT
The Fund participates with certain other Federated Hermes Funds, on a several basis, in an up to $500,000,000 unsecured, 364-day, committed, revolving line of credit (LOC) agreement dated June 22, 2022. The LOC was made available to temporarily finance the repurchase or redemption of shares of the Fund, failed trades, payment of dividends, settlement of trades and for other short-term, temporary or emergency general business purposes. The Fund cannot borrow under the LOC if an inter-fund loan is outstanding. The Fund’s ability to borrow under the LOC also is subject to the limitations of the Act and various conditions precedent that must be satisfied before the Fund can borrow. Loans under the LOC are charged interest at a fluctuating rate per annum equal to (a) the highest, on any day, of (i) the federal funds effective rate, (ii) the published secured overnight financing rate plus an assigned percentage, and (iii) 0.0%, plus (b) a margin. Any fund eligible to borrow under the LOC pays its pro rata share of a commitment fee based on the amount of the lenders’ commitment that has not been utilized, quarterly in arrears and at maturity. As of July 31, 2022, the Fund had no outstanding loans. During the year ended July 31, 2022, the Fund did not utilize the LOC.
8. INTERFUND LENDING
Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other funds advised by subsidiaries of Federated Hermes, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating affiliated funds. As of July 31, 2022, there were no outstanding loans. During the year ended July 31, 2022, the program was not utilized.
Annual Shareholder Report
26
9. INDEMNIFICATIONS
Under the Fund’s organizational documents, its Officers and Directors/Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund (other than liabilities arising out of their willful misfeasance, bad faith, gross negligence or reckless disregard of their duties to the Fund). In addition, in the normal course of business, the Fund provides certain indemnifications under arrangements with third parties. Typically, obligations to indemnify a third party arise in the context of an arrangement entered into by the Fund under which the Fund agrees to indemnify such third party for certain liabilities arising out of actions taken pursuant to the arrangement, provided the third party’s actions are not deemed to have breached an agreed-upon standard of care (such as willful misfeasance, bad faith, gross negligence or reckless disregard of their duties under the contract). The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet arisen. The Fund does not anticipate any material claims or losses pursuant to these arrangements at this time, and accordingly expects the risk of loss to be remote.
10. OTHER MATTERS
An outbreak of respiratory disease caused by a novel coronavirus was first detected in China in late 2019 and subsequently spread globally. As of the date of the issuance of these financial statements, this coronavirus has resulted in closing borders, enhanced health screenings, disruptions to healthcare service preparation and delivery, quarantines, cancellations, and disruptions to supply chains, workflow operations and consumer activity, as well as general concern and uncertainty. The impact of this coronavirus may continue for an extended period of time and has resulted in substantial economic volatility. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could continue to negatively affect the worldwide economy, as well as the economies of individual countries, individual companies (including certain Fund service providers and issuers of the Fund’s investments) and the markets in general in significant and unforeseen ways. Any such impact could adversely affect the Fund’s performance.
11. FEDERAL TAX INFORMATION (UNAUDITED)
For the fiscal year ended July 31, 2022, 77.09% of dividends paid by the Fund are interest-related dividends, as provided by the American Jobs Creation Act of 2004.
Annual Shareholder Report
27
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Federated Hermes Money Market Obligations Trust and the Shareholders of Federated Hermes Institutional Prime Obligations Fund:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of the Federated Hermes Institutional Prime Obligations Fund (the Fund), a portfolio of Federated Hermes Money Market Obligations Trust, including the portfolio of investments, as of July 31, 2022, the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the related notes (collectively, the financial statements) and the financial highlights for each of the years in the five-year period then ended. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of July 31, 2022, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
Annual Shareholder Report
28
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Such procedures also included confirmation of securities owned as of July 31, 2022, by correspondence with custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of Federated Hermes’ investment companies since 2006.
Boston, Massachusetts
September 23, 2022
September 23, 2022
Annual Shareholder Report
29
Shareholder Expense Example (unaudited)
As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or other service fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2022 to July 31, 2022.
ACTUAL EXPENSES
The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses attributable to your investment during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Annual Shareholder Report
30
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
|
|
Beginning
Account Value
2/1/2022
|
Ending
Account Value
7/31/2022
|
Expenses Paid
During Period1
|
|
Actual:
|
|
|
|
|
Institutional Shares
|
$1,000
|
$1,003.00
|
$0.842
|
|
Service Shares
|
$1,000
|
$1,001.90
|
$1.843
|
|
Capital Shares
|
$1,000
|
$1,003.90
|
$0.804
|
|
Hypothetical (assuming a 5% return
before expenses):
|
|
|
|
|
Institutional Shares
|
$1,000
|
$1,023.95
|
$0.852
|
|
Service Shares
|
$1,000
|
$1,022.96
|
$1.863
|
|
Capital Shares
|
$1,000
|
$1,024.00
|
$0.804
|
|
1
|
Expenses are equal to the Fund’s annualized net expense ratios, multiplied by the average
account value over the period, multiplied by 181/365 (to reflect the one-half-year period). The
annualized net expense ratios are as follows:
|
|
Institutional Shares
|
0.17%
|
|
Service Shares
|
0.37%
|
|
Capital Shares
|
0.16%
|
|
2
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Institutional Shares
current Fee Limit of 0.20% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $0.99 and $1.00, respectively.
|
|
3
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Service Shares
current Fee Limit of 0.45% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $2.23 and $2.26, respectively.
|
|
4
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Capital Shares
current Fee Limit of 0.25% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $1.24 and $1.24, respectively.
|
Annual Shareholder Report
31
Board of Trustees and Trust Officers
The Board of Trustees is responsible for managing the Trust’s business affairs and for exercising all the Trust’s powers except those reserved for the shareholders. The following tables give information about each Trustee and the senior officers of the Fund. Where required, the tables separately list Trustees who are “interested persons” of the Fund (i.e., “Interested” Trustees) and those who are not (i.e., “Independent” Trustees). Unless otherwise noted, the address of each person listed is 1001 Liberty Avenue, Pittsburgh, PA 15222-3779. The address of all Independent Trustees listed is 4000 Ericsson Drive, Warrendale, PA 15086-7561; Attention: Mutual Fund Board. As of December 31, 2021, the Trust comprised 16 portfolio(s), and the Federated Hermes Fund Family consisted of 33 investment companies (comprising 102 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Trustee oversees all portfolios in the Federated Hermes Fund Family and serves for an indefinite term. The Fund’s Statement of Additional Information includes additional information about Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400, Option #4.
Interested TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
J. Christopher Donahue*
Birth Date: April 11, 1949
President and Trustee
Indefinite Term
Began serving: April 1989
|
Principal Occupations: Principal Executive Officer and President of
certain of the Funds in the Federated Hermes Fund Family; Director or
Trustee of the Funds in the Federated Hermes Fund Family; President,
Chief Executive Officer and Director, Federated Hermes, Inc.;
Chairman and Trustee, Federated Investment Management Company;
Trustee, Federated Investment Counseling; Chairman and Director,
Federated Global Investment Management Corp.; Chairman and
Trustee, Federated Equity Management Company of Pennsylvania;
Trustee, Federated Shareholder Services Company; Director,
Federated Services Company.
Previous Positions: President, Federated Investment Counseling;
President and Chief Executive Officer, Federated Investment
Management Company, Federated Global Investment Management
Corp. and Passport Research, Ltd; Chairman, Passport Research, Ltd.
|
Annual Shareholder Report
32
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
Thomas R. Donahue*
Birth Date: October 20, 1958
Trustee
Indefinite Term
Began serving: May 2016
|
Principal Occupations: Director or Trustee of certain of the funds in
the Federated Hermes Fund Family; Chief Financial Officer, Treasurer,
Vice President and Assistant Secretary, Federated Hermes, Inc.;
Chairman and Trustee, Federated Administrative Services; Chairman
and Director, Federated Administrative Services, Inc.; Trustee and
Treasurer, Federated Advisory Services Company; Director or Trustee
and Treasurer, Federated Equity Management Company of
Pennsylvania, Federated Global Investment Management Corp.,
Federated Investment Counseling, and Federated Investment
Management Company; Director, MDTA LLC; Director, Executive Vice
President and Assistant Secretary, Federated Securities Corp.;
Director or Trustee and Chairman, Federated Services Company and
Federated Shareholder Services Company; and Director and
President, FII Holdings, Inc.
Previous Positions: Director, Federated Hermes, Inc.; Assistant
Secretary, Federated Investment Management Company, Federated
Global Investment Management Company and Passport Research,
LTD; Treasurer, Passport Research, LTD; Executive Vice President,
Federated Securities Corp.; and Treasurer, FII Holdings, Inc.
|
*
Family relationships and reasons for “interested” status: J. Christopher Donahue and Thomas R. Donahue are brothers. Both are “interested” due to their beneficial ownership of shares of Federated Hermes, Inc. and the positions they hold with Federated Hermes, Inc. and its subsidiaries.
INDEPENDENT TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
John T. Collins
Birth Date: January 24, 1947
Trustee
Indefinite Term
Began serving:
September 2013
|
Principal Occupations: Director or Trustee, and Chair of the Board
of Directors or Trustees, of the Federated Hermes Fund Family;
formerly, Chairman and CEO, The Collins Group, Inc. (a private equity
firm) (Retired).
Other Directorships Held: Director, KLX Energy Services Holdings,
Inc. (oilfield services); former Director of KLX Corp. (aerospace).
Qualifications: Mr. Collins has served in several business and financial
management roles and directorship positions throughout his career.
Mr. Collins previously served as Chairman and CEO of The Collins
Group, Inc. (a private equity firm) and as a Director of KLX Corp.
Mr. Collins serves as Chairman Emeriti, Bentley University. Mr. Collins
previously served as Director and Audit Committee Member, Bank of
America Corp.; Director, FleetBoston Financial Corp.; and Director,
Beth Israel Deaconess Medical Center (Harvard University
Affiliate Hospital).
|
Annual Shareholder Report
33
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
G. Thomas Hough
Birth Date: February 28, 1955
Trustee
Indefinite Term
Began serving: August 2015
|
Principal Occupations: Director or Trustee, Chair of the Audit
Committee of the Federated Hermes Fund Family; formerly, Vice
Chair, Ernst & Young LLP (public accounting firm) (Retired).
Other Directorships Held: Director, Chair of the Audit Committee,
Equifax, Inc.; Lead Director, Member of the Audit and Nominating and
Corporate Governance Committees, Haverty Furniture Companies,
Inc.; formerly, Director, Member of Governance and Compensation
Committees, Publix Super Markets, Inc.
Qualifications: Mr. Hough has served in accounting, business
management and directorship positions throughout his career.
Mr. Hough most recently held the position of Americas Vice Chair of
Assurance with Ernst & Young LLP (public accounting firm). Mr. Hough
serves on the President’s Cabinet and Business School Board of
Visitors for the University of Alabama. Mr. Hough previously served on
the Business School Board of Visitors for Wake Forest University, and
he previously served as an Executive Committee member of the
United States Golf Association.
|
|
Maureen Lally-Green
Birth Date: July 5, 1949
Trustee
Indefinite Term
Began serving: August 2009
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Adjunct Professor Emerita of Law, Duquesne University
School of Law; formerly, Dean of the Duquesne University School of
Law and Professor of Law and Interim Dean of the Duquesne
University School of Law; formerly, Associate General Secretary and
Director, Office of Church Relations, Diocese of Pittsburgh.
Other Directorships Held: Director, CNX Resources Corporation
(formerly known as CONSOL Energy Inc.).
Qualifications: Judge Lally-Green has served in various legal and
business roles and directorship positions throughout her career. Judge
Lally-Green previously held the position of Dean of the School of Law
of Duquesne University (as well as Interim Dean). Judge Lally-Green
previously served as a member of the Superior Court of Pennsylvania
and as a Professor of Law, Duquesne University School of Law. Judge
Lally-Green was appointed by the Supreme Court of Pennsylvania to
serve on the Supreme Court’s Board of Continuing Judicial Education
and the Supreme Court’s Appellate Court Procedural Rules
Committee. Judge Lally-Green also currently holds the positions on
not for profit or for profit boards of directors as follows: Director
and Chair, UPMC Mercy Hospital; Regent, Saint Vincent Seminary;
Member, Pennsylvania State Board of Education (public); Director,
Catholic Charities, Pittsburgh; and Director CNX Resources
Corporation (formerly known as CONSOL Energy Inc.). Judge
Lally-Green has held the positions of: Director, Auberle; Director,
Epilepsy Foundation of Western and Central Pennsylvania; Director,
Ireland Institute of Pittsburgh; Director, Saint Thomas More Society;
Director and Chair, Catholic High Schools of the Diocese of
Pittsburgh, Inc.; Director, Pennsylvania Bar Institute; Director,
St. Vincent College; Director and Chair, North Catholic High
School, Inc.; Director and Vice Chair, Our Campaign for the Church
Alive!, Inc.; and Director, Saint Francis University.
|
Annual Shareholder Report
34
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
Thomas M. O’Neill
Birth Date: June 14, 1951
Trustee
Indefinite Term
Began serving: August 2006
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Sole Proprietor, Navigator Management Company
(investment and strategic consulting).
Other Directorships Held: None.
Qualifications: Mr. O’Neill has served in several business, mutual fund
and financial management roles and directorship positions throughout
his career. Mr. O’Neill serves as Director, Medicines for Humanity.
Mr. O’Neill previously served as Chief Executive Officer and President,
Managing Director and Chief Investment Officer, Fleet Investment
Advisors; President and Chief Executive Officer, Aeltus Investment
Management, Inc.; General Partner, Hellman, Jordan Management
Co., Boston, MA; Chief Investment Officer, The Putnam Companies,
Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director
and Consultant, EZE Castle Software (investment order management
software); Director, The Golisano Children’s Museum of Naples,
Florida; and Director, Midway Pacific (lumber).
|
|
Madelyn A. Reilly
Birth Date: February 2, 1956
Trustee
Indefinite Term
Began serving:
November 2020
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; formerly, Executive Vice President for Legal Affairs,
General Counsel and Secretary to the Board of Directors, Duquesne
University (Retired).
Other Directorships Held: None.
Qualifications: Ms. Reilly has served in various business and legal
management roles throughout her career. Ms. Reilly previously served
as Senior Vice President for Legal Affairs, General Counsel and
Secretary to the Board of Directors and Assistant General Counsel and
Director of Risk Management, Duquesne University. Prior to her work
at Duquesne University, Ms. Reilly served as Assistant General
Counsel of Compliance and Enterprise Risk as well as Senior Counsel
of Environment, Health and Safety, PPG Industries. Ms. Reilly currently
serves as a member of the Board of Directors of UPMC
Mercy Hospital.
|
Annual Shareholder Report
35
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Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
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P. Jerome Richey
Birth Date: February 23, 1949
Trustee
Indefinite Term
Began serving:
September 2013
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Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Management Consultant; Retired; formerly, Senior Vice
Chancellor and Chief Legal Officer, University of Pittsburgh and
Executive Vice President and Chief Legal Officer, CONSOL Energy Inc.
(now split into two separate publicly traded companies known as
CONSOL Energy Inc. and CNX Resources Corp.).
Other Directorships Held: None.
Qualifications: Mr. Richey has served in several business and legal
management roles and directorship positions throughout his career.
Mr. Richey most recently held the positions of Senior Vice Chancellor
and Chief Legal Officer, University of Pittsburgh. Mr. Richey previously
served as Chairman of the Board, Epilepsy Foundation of Western
Pennsylvania and Chairman of the Board, World Affairs Council of
Pittsburgh. Mr. Richey previously served as Chief Legal Officer and
Executive Vice President, CONSOL Energy Inc. and CNX Gas
Company; and Board Member, Ethics Counsel and Shareholder,
Buchanan Ingersoll & Rooney PC (a law firm).
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John S. Walsh
Birth Date:
November 28, 1957
Trustee
Indefinite Term
Began serving: January 1999
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; President and Director, Heat Wagon, Inc. (manufacturer
of construction temporary heaters); President and Director,
Manufacturers Products, Inc. (distributor of portable construction
heaters); President, Portable Heater Parts, a division of Manufacturers
Products, Inc.
Other Directorships Held: None.
Qualifications: Mr. Walsh has served in several business management
roles and directorship positions throughout his career. Mr. Walsh
previously served as Vice President, Walsh & Kelly, Inc.
(paving contractors).
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Annual Shareholder Report
36
OFFICERS
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Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Lori A. Hensler
Birth Date: January 6, 1967
TREASURER
Officer since: April 2013
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Principal Occupations: Principal Financial Officer and Treasurer of the
Federated Hermes Fund Family; Senior Vice President, Federated
Administrative Services; Financial and Operations Principal for
Federated Securities Corp.; and Assistant Treasurer, Federated
Investors Trust Company. Ms. Hensler has received the Certified
Public Accountant designation.
Previous Positions: Controller of Federated Hermes, Inc.; Senior Vice
President and Assistant Treasurer, Federated Investors Management
Company; Treasurer, Federated Investors Trust Company; Assistant
Treasurer, Federated Administrative Services, Federated
Administrative Services, Inc., Federated Securities Corp., Edgewood
Services, Inc., Federated Advisory Services Company, Federated
Equity Management Company of Pennsylvania, Federated Global
Investment Management Corp., Federated Investment Counseling,
Federated Investment Management Company, Passport Research,
Ltd., and Federated MDTA, LLC; Financial and Operations Principal for
Federated Securities Corp., Edgewood Services, Inc. and Southpointe
Distribution Services, Inc.
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Peter J. Germain
Birth Date:
September 3, 1959
CHIEF LEGAL OFFICER,
SECRETARY and EXECUTIVE
VICE PRESIDENT
Officer since: January 2005
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Principal Occupations: Mr. Germain is Chief Legal Officer, Secretary
and Executive Vice President of the Federated Hermes Fund Family.
He is General Counsel, Chief Legal Officer, Secretary and Executive
Vice President, Federated Hermes, Inc.; Trustee and Senior Vice
President, Federated Investors Management Company; Trustee and
President, Federated Administrative Services; Director and President,
Federated Administrative Services, Inc.; Director and Vice President,
Federated Securities Corp.; Director and Secretary, Federated Private
Asset Management, Inc.; Secretary, Federated Shareholder Services
Company; and Secretary, Retirement Plan Service Company of
America. Mr. Germain joined Federated Hermes, Inc. in 1984 and is a
member of the Pennsylvania Bar Association.
Previous Positions: Deputy General Counsel, Special Counsel,
Managing Director of Mutual Fund Services, Federated Hermes, Inc.;
Senior Vice President, Federated Services Company; and Senior
Corporate Counsel, Federated Hermes, Inc.
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Stephen Van Meter
Birth Date: June 5, 1975
CHIEF COMPLIANCE
OFFICER AND SENIOR
VICE PRESIDENT
Officer since: July 2015
|
Principal Occupations: Senior Vice President and Chief Compliance
Officer of the Federated Hermes Fund Family; Vice President and
Chief Compliance Officer of Federated Hermes, Inc. and Chief
Compliance Officer of certain of its subsidiaries. Mr. Van Meter joined
Federated Hermes, Inc. in October 2011. He holds FINRA licenses
under Series 3, 7, 24 and 66.
Previous Positions: Mr. Van Meter previously held the position of
Compliance Operating Officer, Federated Hermes, Inc. Prior to joining
Federated Hermes, Inc., Mr. Van Meter served at the United States
Securities and Exchange Commission in the positions of Senior
Counsel, Office of Chief Counsel, Division of Investment Management
and Senior Counsel, Division of Enforcement.
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Annual Shareholder Report
37
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Deborah A. Cunningham
Birth Date:
September 15, 1959
CHIEF INVESTMENT OFFICER
Officer since: May 2004
Portfolio Manager since:
July 1991
|
Principal Occupations: Deborah A. Cunningham has been the Fund’s
Portfolio Manager since July 1991. Ms. Cunningham was named Chief
Investment Officer of Federated Hermes’ money market products in
2004. She joined Federated Hermes in 1981 and has been a Senior
Portfolio Manager since 1997 and an Executive Vice President of the
Fund’s Adviser since 2009. Ms. Cunningham has received the
Chartered Financial Analyst designation and holds an M.S.B.A. in
Finance from Robert Morris College.
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Annual Shareholder Report
38
Evaluation and Approval of Advisory Contract–May 2022
Federated Hermes Institutional Prime Obligations Fund (the “Fund”)
At its meetings in May 2022 (the “May Meetings”), the Fund’s Board of Trustees (the “Board”), including those Trustees who are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940 (the “Independent Trustees”), reviewed and unanimously approved the continuation of the investment advisory contract between the Fund and Federated Investment Management Company (the “Adviser”) (the “Contract”) for an additional one-year term. The Board’s determination to approve the continuation of the Contract reflects the exercise of its business judgment after considering all of the information and factors believed to be relevant and appropriate on whether to approve the continuation of the existing arrangement. The information, factors and conclusions that formed the basis for the Board’s approval are summarized below.
Information Received and Review Process
At the request of the Independent Trustees, the Fund’s Chief Compliance Officer (the “CCO”) furnished to the Board in advance of its May Meetings an independent written evaluation presenting on the topics discussed below. The Board considered the CCO’s independent written evaluation (the “CCO Fee Evaluation Report”), along with other information, in evaluating the reasonableness of the Fund’s management fee and in determining to approve the continuation of the Contract. The CCO, in preparing the CCO Fee Evaluation Report, has the authority to retain consultants, experts or staff as reasonably necessary to assist in the performance of his duties, reports directly to the Board, and can be terminated only with the approval of a majority of the Independent Trustees. At the request of the Independent Trustees, the CCO Fee Evaluation Report followed the same general approach and covered the same topics as that of the report that had previously been delivered by the CCO in his capacity as “Senior Officer” prior to the elimination of the Senior Officer position in December 2017.
In addition to the extensive materials that comprise and accompany the CCO Fee Evaluation Report, the Board considered information specifically prepared in connection with the approval of the continuation of the Contract that was presented at the May Meetings. In this regard, in the months preceding the May Meetings, the Board requested and reviewed written responses and supporting materials prepared by the Adviser and its affiliates (collectively, “Federated Hermes”) in response to requests posed to Federated Hermes by independent legal counsel on behalf of the Independent Trustees encompassing a wide variety of topics, including those summarized below. The Board also considered such additional matters as the Independent Trustees deemed
Annual Shareholder Report
39
reasonably necessary to evaluate the Contract, which included detailed information about the Fund and Federated Hermes furnished to the Board at its meetings throughout the year and in between regularly scheduled meetings on particular matters as the need arose.
The Board’s consideration of the Contract included review of materials and information covering the following matters, among others: the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates; Federated Hermes’ business and operations; the Adviser’s investment philosophy, personnel and processes; the Fund’s investment objectives and strategies; the Fund’s short-term and long-term performance (in absolute terms, both on a gross basis and net of expenses, and relative to the Fund’s particular investment program and a group of its peer funds and/or its benchmark, as appropriate); the Fund’s investment objectives; the Fund’s fees and expenses, including the advisory fee and the overall expense structure of the Fund (both in absolute terms and relative to a group of its peer funds), with due regard for contractual or voluntary expense limitations (if any); the financial condition of Federated Hermes; the Adviser’s profitability with respect to the Fund; distribution and sales activity for the Fund; and the use and allocation of brokerage commissions derived from trading the Fund’s portfolio securities (if any).
The Board also considered judicial decisions concerning allegedly excessive investment advisory fees charged to other registered funds in determining to approve the Contract. Using these judicial decisions as a guide, the Board observed that the following factors may be relevant to an adviser’s fiduciary duty with respect to its receipt of compensation from a fund: (1) the nature and quality of the services provided by the adviser to the fund and its shareholders, including the performance of the fund, its benchmark and comparable funds; (2) the adviser’s cost of providing the services and the profitability to the adviser of providing advisory services to the fund; (3) the extent to which the adviser may realize “economies of scale” as the fund grows larger and, if such economies of scale exist, whether they have been appropriately shared with the fund and its shareholders or the family of funds; (4) any “fall-out” benefits that accrue to the adviser because of its relationship with the fund, including research services received from brokers that execute fund trades and any fees paid to affiliates of the adviser for services rendered to the fund; (5) comparative fee and expense structures, including a comparison of management fees paid to the adviser with those paid by similar funds both internally and externally as well as management fees charged to institutional and other advisory clients of the adviser for what might be viewed as like services; and (6) the extent of care, conscientiousness and independence with which the fund’s board members perform their duties and their expertise, including whether they are fully informed about all facts the board deems relevant to its consideration of the adviser’s services and fees. The Board noted that the Securities and Exchange Commission (“SEC”) disclosure requirements
Annual Shareholder Report
40
regarding the basis for a fund board’s approval of the fund’s investment advisory contract generally align with the factors listed above. The Board was guided by these factors in its review of the Contract to the extent it considered them to be appropriate and relevant, as discussed further below. The Board considered and weighed these factors in light of its substantial accumulated experience in governing the Fund and working with Federated Hermes on matters relating to the oversight of the other funds advised by Federated Hermes (each, a “Federated Hermes Fund” and, collectively, the (“Federated Hermes Funds”).
In addition to considering the above-referenced factors, the Board was mindful of the preferences and expectations of Fund shareholders and the potential disruptions of the Fund’s operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew the Contract. In particular, the Board recognized that many shareholders likely have invested in the Fund on the strength of Federated Hermes’ industry standing and reputation and with the expectation that Federated Hermes will have a continuing role in providing advisory services to the Fund. Thus, the Board observed that in the marketplace there are a range of investment options available to the Fund’s shareholders and such shareholders, having had the opportunity to consider other investment options, have effectively selected Federated Hermes by virtue of investing in the Fund.
In determining to approve the continuation of the Contract, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the continuation of the Contract was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Contract. The Board recognized that its evaluation process is evolutionary and that the factors considered and emphasis placed on relevant factors may change in recognition of changing circumstances in the registered fund marketplace. The Independent Trustees were assisted throughout the evaluation process by independent legal counsel. In connection with their deliberations at the May Meetings, the Independent Trustees met separately in executive session with their independent legal counsel and without management present to review the relevant materials and consider their responsibilities under applicable laws. In addition, senior management representatives of Federated Hermes also met with the Independent Trustees and their independent legal counsel to discuss the materials and presentations furnished to the Board at the May Meetings. The Board considered the approval of the Contract for the Fund as part of its consideration of agreements for funds across the family of Federated Hermes Funds, but its approvals were made on a fund-by-fund basis.
Annual Shareholder Report
41
Nature, Extent and Quality of Services
The Board considered the nature, extent and quality of the services provided to the Fund by the Adviser and the resources of Federated Hermes dedicated to the Fund. In this regard, the Board evaluated, among other things, the terms of the Contract and the range of services provided to the Fund by Federated Hermes. The Board considered the Adviser’s personnel, investment philosophy and process, investment research capabilities and resources, trade operations capabilities, experience and performance track record. The Board reviewed the qualifications, backgrounds and responsibilities of the portfolio management team primarily responsible for the day-to-day management of the Fund and Federated Hermes’ ability and experience in attracting and retaining qualified personnel to service the Fund. In addition, the Board noted that the Fund is a money market mutual fund that operates in accordance with the limitations set forth in Rule 2a-7 under the 1940 Act. In this connection, the Board considered the expertise of the Adviser in managing money market funds, its extensive experience with the requirements of Rule 2a-7 and its commitment to managing the Fund in accordance with these requirements. The Board also considered the Adviser’s ability to deliver competitive investment performance for the Fund when compared to the Fund’s Performance Peer Group (as defined below), which was deemed by the Board to be a useful indicator of how the Adviser is executing the Fund’s investment program. The Board also considered the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, in order to maintain a positive yield for the Fund in the low interest rate environment.
In addition, the Board considered the financial resources and overall reputation of Federated Hermes and its willingness to consider and make investments in personnel, infrastructure, technology, cybersecurity, business continuity planning and operational enhancements that are designed to benefit the Federated Hermes Funds. The Board noted the significant acquisition of Hermes Fund Managers Limited by Federated Hermes, which has deepened the organization’s investment management expertise and capabilities and expanded the investment process for all of the Federated Hermes Funds to have access to analytical resources related to environmental, social and governance (“ESG”) factors and issuer engagement on ESG matters. The Board considered the quality of Federated Hermes’ communications with the Board and responsiveness to Board inquiries and requests made from time to time with respect to the Fund and other Federated Hermes Funds. In this regard, the Board took into account Federated Hermes’ communications with the Board in light of the pandemic. The Board also considered that Federated Hermes is responsible for providing the Federated Hermes Funds’ officers.
The Board received and evaluated information regarding Federated Hermes’ regulatory and compliance environment. The Board considered Federated Hermes’ compliance program and compliance history and reports from the CCO about Federated Hermes’ compliance with applicable laws and
Annual Shareholder Report
42
regulations, including responses to regulatory developments and any compliance or other issues raised by regulatory agencies. The Board also noted Federated Hermes’ support of the Federated Hermes Funds’ compliance control structure and the compliance-related resources devoted by Federated Hermes in support of the Fund’s obligations pursuant to Rule 38a-1 under the Investment Company Act of 1940, including Federated Hermes’ commitment to respond to rulemaking and other regulatory initiatives of the SEC. The Board considered Federated Hermes’ approach to internal audits and risk management with respect to the Federated Hermes Funds and its day-to-day oversight of the Federated Hermes Funds’ compliance with their investment objectives and policies as well as with applicable laws and regulations, noting that regulatory and other developments had over time led to an increase in the scope of Federated Hermes’ oversight in this regard, including in connection with the designation of the Federated Hermes Funds’ investment advisers as the administrators of the Federated Hermes Funds’ liquidity risk management program.
The Board also considered the implementation of Federated Hermes’ business continuity plans and recognized steps taken by Federated Hermes to continue to provide the same nature, extent and quality of services to the Federated Hermes Funds during the pandemic. In addition, the Board noted Federated Hermes’ commitment to maintaining high quality systems and expending substantial resources to prepare for and respond to ongoing changes due to the market, regulatory and control environments in which the Fund and its service providers operate, including changes associated with the pandemic.
The Board considered Federated Hermes’ efforts to provide shareholders in the Federated Hermes Funds with a comprehensive array of funds with different investment objectives, policies and strategies. The Board considered the expenses that Federated Hermes had incurred, as well as the entrepreneurial and other risks assumed by Federated Hermes, in sponsoring and providing on-going services to new funds to expand these opportunities for shareholders. The Board noted the benefits to shareholders of being part of the family of Federated Hermes Funds, which include the general right to exchange investments between the same class of shares without the incurrence of additional sales charges.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided by the Adviser to the Fund.
Fund Investment Performance
The Board considered the investment performance of the Fund. In evaluating the Fund’s investment performance, the Board considered performance results in light of the Fund’s investment objective, strategies and risks. The Board considered detailed investment reports on, and the Adviser’s analysis of, the Fund’s performance over different time periods that were
Annual Shareholder Report
43
provided to the Board throughout the year and in connection with the May Meetings. These reports include, among other items, information on the Fund’s gross and net returns, the Fund’s investment performance compared to one or more relevant categories or groups of peer funds and the Fund’s benchmark index, performance attribution information and commentary on the effect of market conditions.
The Board also reviewed comparative information regarding the performance of other registered funds in the category of peer funds selected by iMoneyNet, an independent fund ranking organization (the “Performance Peer Group”). The Board noted the CCO’s view that comparisons to fund peer groups may be helpful, though not conclusive, in evaluating the performance of the Adviser in managing the Fund. The Board considered, in evaluating such comparisons, that in some cases there may be differences in the funds’ objectives or investment management techniques, or the costs to implement the funds, even within the same Performance Peer Group.
For the one-year period ended December 31, 2021, the Fund’s performance was above the median of the Performance Peer Group. The Board also considered the relatively tight dispersion of performance data with respect to the Fund and its Performance Peer Group.
Based on these considerations, the Board concluded that it had continued confidence in the Adviser’s overall capabilities to manage the Fund.
Fund Expenses
The Board considered the advisory fee and overall expense structure of the Fund and the comparative fee and expense information that had been provided in connection with the May Meetings. In this regard, the Board was presented with, and considered, information regarding the contractual advisory fee rates, net advisory fee rates, total expense ratios and each element of the Fund’s total expense ratio (i.e., gross and net advisory fees, administrative fees, custody fees, portfolio accounting fees and transfer agency fees) relative to an appropriate group of peer funds compiled by Federated Hermes from the category of peer funds selected by iMoneyNet (the “Expense Peer Group”). The Board received a description of the methodology used to select the Expense Peer Group from the overall iMoneyNet category. The Board also reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall iMoneyNet category.
While mindful that courts have cautioned against giving too much weight to comparative information concerning fees charged by other advisers for managing funds with comparable investment programs, the Board noted that it found the use of such comparisons to be relevant to its evaluation. The Board focused on comparisons with other similar registered funds more heavily than non-registered fund products or services because such comparisons are believed to be more relevant. The Board considered that other registered funds are the products most like the Fund, in that they are readily available to Fund
Annual Shareholder Report
44
shareholders as alternative investment vehicles, and they are the type of investment vehicle, in fact, chosen and maintained by the Fund’s shareholders. The Board noted that the range of such other registered funds’ fees and expenses, therefore, appears to be a relevant indicator of what investors have found to be reasonable in the marketplace in which the Fund competes.
The Board reviewed the contractual advisory fee rate, net advisory fee rate and other expenses of the Fund and noted the position of the Fund’s fee rates relative to its Expense Peer Group. In this regard, the Board noted that the contractual advisory fee rate was above the median of the Expense Peer Group, but the Board noted the applicable waivers and reimbursements, and that the overall expense structure of the Fund remained competitive in the context of other factors considered by the Board.
The Board also received and considered information about the fees charged by Federated Hermes for providing advisory services to other types of clients with investment strategies similar to those of the Federated Hermes Funds, including non-registered fund clients (such as institutional separate accounts) and third-party unaffiliated registered funds for which the Adviser or its affiliates serve as sub-adviser. The Board noted the CCO’s conclusion that non-registered fund clients are inherently different products due to the following differences, among others: (i) different types of targeted investors; (ii) different applicable laws and regulations; (iii) different legal structures; (iv) different average account sizes and portfolio management techniques made necessary by different cash flows and different associated costs; (v) the time spent by portfolio managers and their teams (among other personnel across various departments, including legal, compliance and risk management) in reviewing securities pricing and fund liquidity; (vi) different administrative responsibilities; (vii) different degrees of risk associated with management; and (viii) a variety of different costs. The Board also considered information regarding the differences in the nature of the services required for Federated Hermes to manage its proprietary registered fund business versus managing a discrete pool of assets as a sub-adviser to another institution’s registered fund, noting the CCO’s view that Federated Hermes generally performs significant additional services and assumes substantially greater risks in managing the Fund and other Federated Hermes Funds than in its role as sub-adviser to an unaffiliated third-party registered fund. The Board noted that the CCO did not consider the fees for providing advisory services to other types of clients to be determinative in judging the appropriateness of the Federated Hermes Funds’ advisory fees.
Based on these considerations, the Board concluded that the fees and total operating expenses of the Fund, in conjunction with other matters considered, are reasonable in light of the services provided.
Annual Shareholder Report
45
Profitability
The Board received and considered profitability information furnished by Federated Hermes, as requested by the CCO. Such profitability information included revenues reported on a fund-by-fund basis and estimates of the allocation of expenses made on a fund-by-fund basis, using allocation methodologies specified by the CCO and described to the Board. The Board considered the CCO’s view that, while these cost allocation reports apply consistent allocation processes, the inherent difficulties in allocating costs on a fund-by-fund basis continues to cause the CCO to question the precision of the process and to conclude that such reports may be unreliable because a single change in an allocation estimate may dramatically alter the resulting estimate of cost and/or profitability of a Federated Hermes Fund and may produce unintended consequences. In addition, the Board considered the CCO’s view that the allocation methodologies used by Federated Hermes in estimating profitability for purposes of reporting to the Board in connection with the continuation of the Contract are consistent with the methodologies previously reviewed by an independent consultant. The Board noted that the independent consultant had previously conducted a review of the allocation methodologies and reported that, although there is no single best method to allocate expenses, the methodologies used by Federated Hermes are reasonable. The Board noted the impact of the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, on the profitability of the Fund to the Adviser.
The Board also reviewed information compiled by Federated Hermes comparing its profitability information to other publicly held fund management companies, including information regarding profitability trends over time. The Board considered the CCO’s conclusion that, based on such profitability information, Federated Hermes’ profit margins did not appear to be excessive. The Board also considered the CCO’s view that Federated Hermes appeared financially sound, with the resources necessary to fulfill its obligations under its contracts with the Federated Hermes Funds.
Economies of Scale
The Board received and considered information about the notion of possible realization of “economies of scale” as a fund grows larger, the difficulties of calculating economies of scale at an individual fund level, and the extent to which potential scale benefits are shared with shareholders. In this regard, the Board considered that Federated Hermes has made significant and long-term investments in areas that support all of the Federated Hermes Funds, such as: personnel, processes and tools for portfolio management, including the use of market data on which portfolio managers make investment decisions; trading operations; ESG integration and issuer engagement on ESG matters; shareholder services; compliance; business continuity; cybersecurity; internal audit and risk management functions; and technology that supports the provision of investment management services. The Board noted that Federated
Annual Shareholder Report
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Hermes’ investments in these areas are extensive and are designed to provide enhanced services to the Federated Hermes Funds and their shareholders. The Board considered that the benefits of these investments are likely to be shared with the family of Federated Hermes Funds as a whole. In addition, the Board considered that fee waivers and expense reimbursements are another means for potential economies of scale to be shared with shareholders and can provide protection from an increase in expenses if a Federated Hermes Fund’s assets decline. The Board considered that, in order for the Federated Hermes Funds to remain competitive in the marketplace, Federated Hermes has frequently waived fees and/or reimbursed expenses for the Federated Hermes Funds and has disclosed to shareholders and/or reported to the Board its intention to do so (or continue to do so) in the future. The Board also considered Federated Hermes’ reductions in contractual management fees for certain Federated Hermes Funds during the prior year, including in response to the CCO’s recommendations in the prior year’s CCO Fee Evaluation Report, which have resulted in benefits being realized by shareholders.
The Board also considered reports on adviser-paid fees (commonly referred to as “revenue sharing”) that were provided to the Board throughout the year and in connection with the May Meetings. The Board considered that Federated Hermes and the CCO believe that this information should be viewed to determine if there was an incentive to either not apply breakpoints, or to apply breakpoints at higher levels, and should not be viewed to evaluate the reasonableness of advisory fees. The Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which is compounded by the lack of any uniform methodology or pattern with respect to structuring fund advisory fees with breakpoints that serve to reduce the fees as a fund attains a certain size.
Other Benefits
The Board considered information regarding the compensation and other ancillary (or “fall-out”) benefits that Federated Hermes derived from its relationships with the Federated Hermes Funds. The Board noted that, in addition to receiving advisory fees under the Federated Hermes Funds’ investment advisory contracts, Federated Hermes’ affiliates also receive fees for providing other services to the Federated Hermes Funds under separate contracts (e.g., for serving as the Federated Hermes Funds’ administrator and distributor). In this regard, the Board considered that certain of Federated Hermes’ affiliates provide distribution and shareholder services to the Federated Hermes Funds, for which they may be compensated through distribution and servicing fees paid pursuant to Rule 12b-1 plans or otherwise. The Board also received and considered information detailing any indirect benefit that Federated Hermes may derive from its receipt of research services from brokers who execute portfolio trades for the Federated Hermes Funds.
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Conclusions
The Board considered: (i) the CCO’s conclusion that his observations and the information accompanying the CCO Fee Evaluation Report show that the management fee for the Fund is reasonable; and (ii) the CCO’s recommendation that the Board approve the management fee. The Board noted that, under these circumstances, no changes were recommended to, and no objection was raised to the continuation of, the Contract by the CCO. The CCO also recognized that the Board’s evaluation of the Federated Hermes Funds’ advisory and sub-advisory arrangements is a continuing and ongoing process that is informed by the information that the Board requests and receives from management throughout the course of the year and, in this regard, the CCO noted certain items for future reporting to the Board or further consideration by management as the Board continues its ongoing oversight of the Federated Hermes Funds.
On the basis of the information and factors summarized above, among other information and factors deemed relevant by the Board, and the evaluation thereof, the Board, including the Independent Trustees, unanimously voted to approve the continuation of the Contract. The Board based its determination to approve the Contract on the totality of the circumstances and relevant factors and with a view of past and future long-term considerations. Not all of the factors and considerations identified above were necessarily deemed to be relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were deemed to be relevant, the Board’s determination to approve the continuation of the Contract reflects its view that Federated Hermes’ performance and actions provided a satisfactory basis to support the determination to approve the continuation of the existing arrangement.
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Voting Proxies on Fund Portfolio Securities
A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund’s portfolio is available, without charge and upon request, by calling 1-800-341-7400, Option #4. A report on “Form N-PX” of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available via the Proxy Voting Record (Form N-PX) link associated with the Fund and share class name at FederatedInvestors.com/FundInformation. Form N-PX filings are also available at the SEC’s website at sec.gov.
Portfolio Schedule
The Fund files with the SEC a complete schedule of its portfolio holdings as of the close of each month on “Form N-MFP.” Form N-MFP is available on the SEC’s website at sec.gov. You may access Form N-MFP via the link to the Fund and share class name at FederatedInvestors.com.
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You could lose money by investing in the Fund. Because the share price of the Fund will fluctuate, when you sell your shares they may be worth more or less than what you originally paid for them. The Fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
This Report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund’s Prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.
Federated Hermes Institutional Prime Obligations Fund
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at FederatedInvestors.com
or call 1-800-341-7400.
or call 1-800-341-7400.
Federated Securities Corp., Distributor
CUSIP 60934N203
CUSIP 60934N708
CUSIP 608919767
CUSIP 60934N708
CUSIP 608919767
Q450523 (9/22)
© 2022 Federated Hermes, Inc.
Annual Shareholder Report
July 31, 2022
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Share Class | Ticker
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Institutional | POIXX
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Federated Hermes Institutional Prime Obligations Fund
A Portfolio of Federated Hermes Money Market Obligations Trust
Dear Valued Shareholder,
We are pleased to present the Annual Shareholder Report for your fund covering the period from August 1, 2021 through July 31, 2022. This report includes a complete listing of your fund’s holdings, performance information and financial statements along with other important fund information.
As a global leader in active, responsible investment management, Federated Hermes is guided by our conviction that responsible investing is the best way to create wealth over the long term. The company provides capabilities across a wide range of asset classes to investors around the world.
In addition, FederatedInvestors.com offers quick and easy access to valuable resources that include timely fund updates, economic and market insights from our investment strategists and financial planning tools. You can also access many of those insights by following us on Twitter (@FederatedHermes) and LinkedIn.
Thank you for investing with us. We hope you find this information useful and look forward to keeping you informed.
Sincerely,
J. Christopher Donahue, President
The Fund operates as a “Floating Net Asset Value” Money Market Fund.
The Share Price will fluctuate. It is possible to lose money by investing in the Fund.
The Share Price will fluctuate. It is possible to lose money by investing in the Fund.
Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee
Portfolio of Investments Summary Tables (unaudited)
At July 31, 2022, the Fund’s portfolio composition1 was as follows:
|
Security Type
|
Percentage of
Total Net Assets
|
|
Other Repurchase Agreements and Repurchase Agreements
|
37.0%
|
|
Variable Rate Instruments
|
27.3%
|
|
Bank Instruments
|
21.7%
|
|
Commercial Paper
|
14.0%
|
|
U.S. Treasury Securities
|
0.3%
|
|
Other Assets and Liabilities—Net2
|
(0.3)%
|
|
TOTAL
|
100%
|
|
1
|
See the Fund’s Prospectus and Statement of Additional Information for a description of these
security types.
|
|
2
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
At July 31, 2022, the Fund’s effective maturity schedule1 was as follows:
|
Securities With an
Effective Maturity of:
|
Percentage of
Total Net Assets
|
|
1-7 Days2
|
79.5%
|
|
8-30 Days
|
5.3%
|
|
31-90 Days
|
9.9%
|
|
91-180 Days
|
2.1%
|
|
181 Days or more
|
3.5%
|
|
Other Assets and Liabilities—Net3
|
(0.3)%
|
|
Total
|
100%
|
|
1
|
Effective maturity is determined in accordance with the requirements of Rule 2a-7 under the
Investment Company Act of 1940, which regulates money market mutual funds.
|
|
2
|
Overnight securities comprised 35.6% of the Fund’s portfolio.
|
|
3
|
Assets, other than investments in securities, less liabilities. See Statement of Assets
and Liabilities.
|
Annual Shareholder Report
1
Portfolio of Investments
July 31, 2022
|
Principal
Amount
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— 27.3%
|
|
|
|
|
Finance - Banking— 23.3%
|
|
|
$ 90,000,000
|
|
Anglesea Funding LLC, (Bank of Nova Scotia, Toronto
COL)/(Nordea Bank Abp COL)/(Societe Generale, Paris COL),
2.460% (SOFR+0.180%), 8/10/2022
|
$ 90,000,000
|
|
6,500,000
|
|
Anglesea Funding LLC, (Bank of Nova Scotia, Toronto
COL)/(Nordea Bank Abp COL)/(Societe Generale, Paris COL),
2.680% (Overnight Banking Fund Rate +0.360%), 12/23/2022
|
6,500,000
|
|
30,000,000
|
|
ASB Bank Ltd., 2.000% (SOFR +0.470%), 8/2/2022
|
30,008,140
|
|
110,000,000
|
|
Bank of Montreal, 2.230% (SOFR +0.700%), 8/1/2022
|
110,036,615
|
|
104,000,000
|
|
Bank of Montreal, 2.430% (SOFR +0.150%), 8/1/2022
|
103,955,840
|
|
30,000,000
|
|
Bank of Montreal, 2.840% (SOFR +0.560%), 8/1/2022
|
29,963,024
|
|
60,000,000
|
|
Bank of Montreal, 2.930% (SOFR +0.650%), 8/1/2022
|
59,632,964
|
|
100,000,000
|
|
Bank of Nova Scotia, Toronto, 2.430% (SOFR +0.150%), 8/1/2022
|
100,000,000
|
|
50,000,000
|
|
Bank of Nova Scotia, Toronto, 2.530% (SOFR +0.250%), 8/1/2022
|
49,909,739
|
|
25,000,000
|
|
Bank of Nova Scotia, Toronto, 2.780% (SOFR +0.500%), 8/1/2022
|
24,968,645
|
|
33,500,000
|
|
Bank of Nova Scotia, Toronto, 2.800% (SOFR +0.520%), 8/2/2022
|
33,500,000
|
|
20,000,000
|
|
Bank of Nova Scotia, Toronto, 2.860% (SOFR +0.580%), 8/1/2022
|
20,007,378
|
|
125,000,000
|
|
Bank of Nova Scotia, Toronto, 2.950% (SOFR +0.670%), 8/1/2022
|
124,975,245
|
|
25,000,000
|
|
Canadian Imperial Bank of Commerce, 2.490% (SOFR
+0.210%), 8/1/2022
|
24,983,767
|
|
54,000,000
|
|
Canadian Imperial Bank of Commerce, 2.780% (SOFR
+0.500%), 8/1/2022
|
53,923,257
|
|
120,000,000
|
|
Canadian Imperial Bank of Commerce, 2.780% (SOFR
+0.500%), 8/1/2022
|
119,833,600
|
|
120,000,000
|
|
Canadian Imperial Bank of Commerce, 2.830% (SOFR
+0.550%), 8/1/2022
|
119,843,012
|
|
50,000,000
|
|
Canadian Imperial Bank of Commerce, 2.920% (SOFR
+0.640%), 8/1/2022
|
50,000,000
|
|
50,000,000
|
|
Canadian Imperial Holdings, Inc., 2.800% (SOFR
+0.520%), 8/1/2022
|
49,930,476
|
|
4,025,000
|
|
Centra State Medical Arts Building LLC, (TD Bank, N.A. LOC),
2.410%, 8/3/2022
|
4,025,000
|
|
55,000,000
|
|
Collateralized Commercial Paper V Co. LLC, (J.P. Morgan Securities
LLC COL), 2.780% (SOFR +0.500%), 8/1/2022
|
55,014,030
|
|
35,000,000
|
|
Collateralized Commercial Paper V Co. LLC, (J.P. Morgan Securities
LLC COL), 2.830% (SOFR +0.550%), 8/1/2022
|
35,000,000
|
|
45,000,000
|
|
Commonwealth Bank of Australia, 2.710% (SOFR
+0.430%), 8/2/2022
|
44,958,374
|
|
50,000,000
|
|
Commonwealth Bank of Australia, 2.780% (SOFR
+0.500%), 8/1/2022
|
49,973,325
|
|
25,000,000
|
|
Commonwealth Bank of Australia, 2.820% (SOFR
+0.540%), 8/1/2022
|
24,990,651
|
Annual Shareholder Report
2
|
Principal
Amount
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 16,700,000
|
|
Greene County Development Authority, Reynolds Lodge, LLC
Series 2000B, (U.S. Bank, N.A. LOC), 1.800%, 8/3/2022
|
$ 16,700,000
|
|
3,000,000
|
|
Griffin-Spalding County, GA Development Authority, Norcom, Inc.
Project 2013A, (Bank of America N.A. LOC), 2.450%, 8/4/2022
|
3,000,000
|
|
7,000,000
|
|
Griffin-Spalding County, GA Development Authority, Norcom, Inc.
Project, (Bank of America N.A. LOC), 2.450%, 8/4/2022
|
7,000,000
|
|
7,595,000
|
|
Gulf Gate Apartments LLC, Series 2003, (Wells Fargo Bank, N.A.
LOC), 2.370%, 8/4/2022
|
7,595,000
|
|
12,320,000
|
|
Hamilton Station Park and Ride, Series 2005, (Wells Fargo Bank,
N.A. LOC), 2.370%, 8/4/2022
|
12,320,000
|
|
15,365,000
|
|
Los Angeles County Fair Association, (Wells Fargo Bank, N.A. LOC),
2.340%, 8/3/2022
|
15,365,000
|
|
9,000,000
|
|
Michael Dennis Sullivan Irrevocable Trust, (Wells Fargo Bank, N.A.
LOC), 2.450%, 8/4/2022
|
9,000,000
|
|
100,000,000
|
|
MUFG Bank Ltd., 1.860% (SOFR +0.330%), 8/1/2022
|
100,000,000
|
|
79,000,000
|
|
National Australia Bank Ltd., Melbourne, 2.460% (SOFR
+0.180%), 8/2/2022
|
79,000,000
|
|
110,000,000
|
|
Nordea Bank Abp, 1.680% (SOFR +0.150%), 8/1/2022
|
110,000,000
|
|
115,000,000
|
|
Nordea Bank Abp, 1.690% (SOFR +0.160%), 8/1/2022
|
115,000,000
|
|
109,000,000
|
|
Nordea Bank Abp, 2.080% (SOFR +0.550%), 8/1/2022
|
109,000,000
|
|
34,000,000
|
|
Nuveen Floating Rate Income Fund, (Series A), (Sumitomo Mitsui
Banking Corp. LOC), 2.470%, 8/4/2022
|
34,000,000
|
|
3,115,000
|
|
Public Building Corp. Springfield, MO, Jordan Valley Ice Park, Series
2003, (U.S. Bank, N.A. LOC), 2.380%, 8/4/2022
|
3,115,000
|
|
150,000,000
|
|
Royal Bank of Canada, 2.830% (SOFR +0.550%), 8/1/2022
|
149,837,175
|
|
62,500,000
|
|
Royal Bank of Canada, 3.030% (SOFR +0.750%), 8/1/2022
|
62,500,000
|
|
152,500,000
|
|
Royal Bank of Canada, New York Branch, 2.430% (SOFR
+0.150%), 8/2/2022
|
152,427,909
|
|
18,965,000
|
|
Salem Green, LLP, Salem Green Apartments Project, Series 2010,
(Wells Fargo Bank, N.A. LOC), 2.370%, 8/4/2022
|
18,965,000
|
|
150,000,000
|
|
Svenska Handelsbanken, Stockholm, 2.080% (SOFR
+0.550%), 8/1/2022
|
150,000,000
|
|
62,284,973
|
|
Taxable Tender Option Bond Trust 2021-MIZ9060TX,
(Series 2021-MIZ9060TX) VRDNs, (GTD by Mizuho Bank
Ltd.)/(Mizuho Bank Ltd. LIQ), 2.590%, 8/1/2022
|
62,284,973
|
|
25,000,000
|
|
Taxable Tender Option Bond Trust 2021-MIZ9071TX,
(Series 2021-MIZ9071TX) VRDNs, (GTD by Mizuho Bank
Ltd.)/(Mizuho Bank Ltd. LIQ), 2.720%, 8/1/2022
|
25,000,000
|
|
10,000,000
|
|
Taxable Tender Option Bond Trust 2021-MIZ9075TX,
(Series MIZ-9075TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho Bank
Ltd. LOC), 2.590%, 8/1/2022
|
10,000,000
|
|
4,680,000
|
|
Taxable Tender Option Bond Trust 2021-MIZ9077TX,
(Series 2021-MIZ9077TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho
Bank Ltd. LOC), 2.590%, 8/1/2022
|
4,680,000
|
Annual Shareholder Report
3
|
Principal
Amount
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 3,000,000
|
|
Taxable Tender Option Bond Trust 2021-MIZ9078TX,
(Series 2021-MIZ9078TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho
Bank Ltd. LOC), 2.590%, 8/1/2022
|
$ 3,000,000
|
|
3,954,172
|
|
Taxable Tender Option Bond Trust 2021-MIZ9083TX,
(Series 2021-MIZ9083TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho
Bank Ltd. LOC), 2.590%, 8/1/2022
|
3,954,172
|
|
18,750,000
|
|
Taxable Tender Option Bond Trust 2022-MIZ9087TX,
(Series 2022-MIZ9096TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho
Bank Ltd. LOC), 2.640%, 8/4/2022
|
18,750,000
|
|
30,000,000
|
|
Taxable Tender Option Bond Trust2021-MIZ9070TX,
(Series 2021-MIZ9070TX) VRDNs, (GTD by Mizuho Bank
Ltd.)/(Mizuho Bank Ltd. LIQ), 2.720%, 8/1/2022
|
30,000,000
|
|
68,300,000
|
|
Triborough Bridge & Tunnel Authority, NY, (Taxable Series E)
Weekly VRDNs, (Bank of America N.A. LOC), 2.310%, 8/4/2022
|
68,300,000
|
|
3,600,000
|
|
Village Green Finance Co. LLC, (Series 1997), (Wells Fargo Bank,
N.A. LOC), 2.660%, 8/3/2022
|
3,600,000
|
|
99,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.730% (SOFR
+0.450%), 8/1/2022
|
98,900,322
|
|
150,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.730%
(SOFR+0.450%), 8/2/2022
|
149,841,945
|
|
80,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.780% (SOFR
+0.500%), 8/1/2022
|
80,004,166
|
|
40,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.780% (SOFR
+0.500%), 8/1/2022
|
39,976,808
|
|
136,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.780% (SOFR
+0.500%), 8/2/2022
|
135,917,855
|
|
5,870,000
|
|
Yeshivas Novominsk, Series 2008, (TD Bank, N.A. LOC),
2.450%, 8/4/2022
|
5,870,000
|
|
|
|
TOTAL
|
3,310,838,407
|
|
|
|
Finance - Retail— 2.3%
|
|
|
70,000,000
|
|
Chariot Funding LLC, 1.710% (SOFR +0.180%), 8/1/2022
|
70,000,000
|
|
45,000,000
|
|
Chariot Funding LLC, 2.680% (SOFR +0.400%), 8/1/2022
|
44,997,621
|
|
45,000,000
|
|
Old Line Funding, LLC, 2.080% (SOFR +0.550%), 1/9/2023
|
44,994,657
|
|
100,000,000
|
|
Old Line Funding, LLC, 2.830% (SOFR +0.550%), 10/3/2022
|
100,016,040
|
|
47,500,000
|
|
Thunder Bay Funding, LLC, 2.080% (SOFR +0.550%), 9/26/2022
|
47,500,000
|
|
25,000,000
|
|
Thunder Bay Funding, LLC, 2.880% (SOFR +0.600%), 10/20/2022
|
25,006,354
|
|
|
|
TOTAL
|
332,514,672
|
|
|
|
Government Agency— 1.7%
|
|
|
5,285,000
|
|
1320 W Jefferson LLC, (Federal Home Loan Bank of San Francisco
LOC), 2.450%, 8/3/2022
|
5,285,000
|
|
42,450,000
|
|
Archer 1 LLC, (Federal Home Loan Bank of San Francisco LOC),
2.450%, 8/4/2022
|
42,450,000
|
|
9,015,000
|
|
Austen Children’s Gift Trust, (Federal Home Loan Bank of Dallas
LOC), 2.450%, 8/4/2022
|
9,015,000
|
Annual Shareholder Report
4
|
Principal
Amount
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— continued
|
|
|
|
|
Government Agency— continued
|
|
|
$ 6,830,000
|
|
Baker Life Insurance Trust, (Federal Home Loan Bank of Des Moines
LOC), 2.450%, 8/4/2022
|
$ 6,830,000
|
|
34,850,000
|
|
BWF Forge TL Properties Owner LLC, (Federal Home Loan Bank of
Des Moines LOC)/(Federal Home Loan Bank of San Francisco LOC),
2.450%, 8/4/2022
|
34,850,000
|
|
5,705,000
|
|
Catania Family Trust, (Federal Home Loan Bank of Dallas LOC),
2.450%, 8/4/2022
|
5,705,000
|
|
4,270,000
|
|
Jim Brooks Irrevocable Trust, (Federal Home Loan Bank of Dallas
LOC), 2.440%, 8/4/2022
|
4,270,000
|
|
11,570,000
|
|
Joseph L. Goggins Irrevocable Insurance Trust, (Federal Home Loan
Bank of Des Moines LOC), 2.450%, 8/4/2022
|
11,570,000
|
|
3,655,000
|
|
Karyn Brooks Descendants Trust, (Federal Home Loan Bank of
Dallas LOC), 2.440%, 8/4/2022
|
3,655,000
|
|
6,380,000
|
|
MHF DKF Insurance Trust, (Federal Home Loan Bank of Dallas
LOC), 2.450%, 8/3/2022
|
6,380,000
|
|
17,030,000
|
|
Mohr Green Associates L.P., 2012-A, (Federal Home Loan Bank of
San Francisco LOC), 2.450%, 8/4/2022
|
17,030,000
|
|
22,610,000
|
|
NWD 2017 Family Trust No. 1, (Federal Home Loan Bank of Dallas
LOC), 2.450%, 8/4/2022
|
22,610,000
|
|
9,080,000
|
|
Park Stanton Place LP, (Federal Home Loan Bank of San Francisco
LOC), 2.450%, 8/4/2022
|
9,080,000
|
|
5,010,000
|
|
R.J. Brooks Jr. Irrevocable Trust, (Federal Home Loan Bank of Dallas
LOC), 2.440%, 8/4/2022
|
5,010,000
|
|
6,980,000
|
|
RK Trust, (Federal Home Loan Bank of Dallas LOC),
2.450%, 8/4/2022
|
6,980,000
|
|
6,255,000
|
|
Sibley Family Irrevocable Insurance Trust, (Federal Home Loan Bank
of Des Moines LOC), 2.450%, 8/4/2022
|
6,255,000
|
|
6,610,000
|
|
The CLC Irrevocable Insurance Trust, (Federal Home Loan Bank of
Des Moines LOC), 2.450%, 8/4/2022
|
6,610,000
|
|
5,120,000
|
|
The Eugene Kim Irrevocable Life Insurance Trust, (Federal Home
Loan Bank of Dallas LOC), 2.450%, 8/4/2022
|
5,120,000
|
|
22,830,000
|
|
The Gregory P. Berry Trust, (Federal Home Loan Bank of Des
Moines LOC), 2.450%, 8/3/2022
|
22,830,000
|
|
5,740,000
|
|
The Leopold Family Insurance Trust, (Federal Home Loan Bank of
Dallas LOC), 2.450%, 8/4/2022
|
5,740,000
|
|
5,975,000
|
|
The Thompson 2018 Family Trust, (Federal Home Loan Bank of
Dallas LOC), 2.440%, 8/4/2022
|
5,975,000
|
|
|
|
TOTAL
|
243,250,000
|
|
|
|
TOTAL NOTES - VARIABLE
(IDENTIFIED COST $3,888,274,137)
|
3,886,603,079
|
|
|
2
|
COMMERCIAL PAPER— 14.0%
|
|
|
|
|
Finance - Banking— 10.7%
|
|
|
63,970,000
|
|
Antalis S.A., (Societe Generale, Paris LIQ), 1.773% - 1.853%,
8/1/2022 - 8/5/2022
|
63,965,027
|
|
60,000,000
|
|
Bank of Montreal, 2.800%, 5/9/2023
|
60,003,463
|
Annual Shareholder Report
5
|
Principal
Amount
|
|
|
Value
|
|
|
2
|
COMMERCIAL PAPER— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 200,000,000
|
|
Bank of Nova Scotia, Toronto, 0.200% - 0.210%, 9/8/2022 -
9/29/2022
|
$ 199,336,437
|
|
100,000,000
|
|
Bennington Stark Capital Co., LLC, (Societe Generale, Paris LIQ),
2.120%, 8/2/2022
|
99,994,111
|
|
104,000,000
|
|
Canadian Imperial Bank of Commerce, 0.503% - 2.070%,
12/1/2022 - 3/20/2023
|
102,483,433
|
|
50,000,000
|
|
Canadian Imperial Holdings, Inc., 0.351%, 11/8/2022
|
49,631,666
|
|
42,500,000
|
|
Chesham Finance LLC Series III, (Societe Generale, Paris COL),
2.404%, 8/31/2022
|
42,415,000
|
|
107,500,000
|
|
Gotham Funding Corp., (MUFG Bank Ltd. LIQ), 1.405% - 2.416%,
8/1/2022 - 10/3/2022
|
107,015,267
|
|
200,000,000
|
|
Lloyds Bank PLC, London, 1.413% - 2.419%, 8/5/2022 - 9/23/2022
|
199,765,183
|
|
5,000,000
|
|
LMA-Americas LLC, (Credit Agricole Corporate and Investment
Bank LIQ), 1.455%, 8/12/2022
|
4,997,785
|
|
92,000,000
|
|
Matchpoint Finance PLC, (BNP Paribas SA LIQ), 2.310% - 2.567%,
8/1/2022 - 10/11/2022
|
91,752,562
|
|
82,000,000
|
|
National Australia Bank Ltd., Melbourne, 1.005% - 3.844%,
9/6/2022 - 6/15/2023
|
81,133,799
|
|
85,000,000
|
|
Nationwide Building Society, 2.020%, 8/1/2022
|
85,000,000
|
|
145,000,000
|
|
Royal Bank of Canada, 0.251% - 2.229%, 10/14/2022 - 3/29/2023
|
143,538,329
|
|
80,000,000
|
|
Royal Bank of Canada, New York Branch, 0.371% - 0.402%,
11/9/2022 - 11/15/2022
|
79,285,026
|
|
122,000,000
|
|
Toronto Dominion Bank, 2.903%, 5/31/2023
|
118,207,691
|
|
|
|
TOTAL
|
1,528,524,779
|
|
|
|
Finance - Retail— 1.7%
|
|
|
69,000,000
|
|
Fairway Finance Co. LLC, 1.005%, 9/6/2022
|
68,817,535
|
|
60,000,000
|
|
Old Line Funding, LLC, 1.659%, 9/13/2022
|
59,804,347
|
|
60,000,000
|
|
Old Line Funding, LLC, 1.659%, 9/19/2022
|
59,775,187
|
|
50,000,000
|
|
Sheffield Receivables Company LLC, 1.976%, 8/18/2022
|
49,958,958
|
|
|
|
TOTAL
|
238,356,027
|
|
|
|
Oil & Oil Finance— 0.5%
|
|
|
70,000,000
|
|
TotalEnergies Capital Canada Ltd., 2.200%, 8/3/2022
|
69,991,445
|
|
|
|
Sovereign— 1.1%
|
|
|
160,000,000
|
|
BNG Bank N.V., 2.201% - 2.311%, 8/3/2022 - 8/4/2022
|
159,976,228
|
|
|
|
TOTAL COMMERCIAL PAPER
(IDENTIFIED COST $2,001,640,522)
|
1,996,848,479
|
|
|
|
TIME DEPOSITS— 11.1%
|
|
|
|
|
Finance - Banking— 11.1%
|
|
|
500,000,000
|
|
ABN Amro Bank NV, 2.220% - 2.330%, 8/3/2022 - 8/5/2022
|
500,000,000
|
|
275,000,000
|
|
Australia & New Zealand Banking Group, Melbourne,
2.210%, 8/3/2022
|
275,000,000
|
|
440,000,000
|
|
Australia & New Zealand Banking Group, Melbourne,
2.320%, 8/1/2022
|
440,000,000
|
Annual Shareholder Report
6
|
Principal
Amount
|
|
|
Value
|
|
|
|
TIME DEPOSITS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 360,000,000
|
|
Mizuho Bank Ltd., 2.320%, 8/1/2022
|
$ 360,000,000
|
|
|
|
TOTAL TIME DEPOSITS
(IDENTIFIED COST $1,575,000,000)
|
1,575,000,000
|
|
|
|
CERTIFICATES OF DEPOSIT— 10.6%
|
|
|
|
|
Finance - Banking— 10.6%
|
|
|
26,500,000
|
|
Bank of Montreal, 2.850%, 5/24/2023
|
26,336,767
|
|
210,000,000
|
|
Credit Agricole Corporate and Investment Bank, 1.560% - 2.320%,
8/5/2022 - 8/12/2022
|
210,000,000
|
|
115,000,000
|
|
DNB Bank ASA, 1.100%, 9/6/2022
|
114,843,595
|
|
100,000,000
|
|
Mizuho Bank Ltd., 2.600%, 10/20/2022
|
100,000,000
|
|
165,000,000
|
|
MUFG Bank Ltd., 1.420% - 1.450%, 8/18/2022 - 8/19/2022
|
164,962,798
|
|
70,000,000
|
|
Sumitomo Mitsui Banking Corp., 1.450%, 8/5/2022
|
70,000,000
|
|
515,000,000
|
|
Sumitomo Mitsui Trust Bank Ltd., 1.450% - 2.530%, 8/18/2022 -
9/29/2022
|
514,947,924
|
|
305,000,000
|
|
Toronto Dominion Bank, 0.220% - 4.070%, 10/14/2022 - 7/18/2023
|
303,829,965
|
|
|
|
TOTAL CERTIFICATES OF DEPOSIT
(IDENTIFIED COST $1,506,500,000)
|
1,504,921,049
|
|
|
|
U.S. TREASURY— 0.3%
|
|
|
|
|
U.S. Treasury Notes— 0.3%
|
|
|
50,000,000
|
1
|
United States Treasury Floating Rate Notes, 2.570% (91-day T-Bill
+0.034%), 8/2/2022
(IDENTIFIED COST $50,003,021)
|
50,137,907
|
|
|
|
OTHER REPURCHASE AGREEMENTS— 17.8%
|
|
|
|
|
Finance - Banking— 17.8%
|
|
|
100,000,000
|
|
BMO Capital Markets Corp., 2.05%, dated 2/8/2021, interest in a
$200,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $200,706,111 on 9/12/2022, in
which corporate bonds and medium-term notes with a market value
of $204,755,998 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
100,000,000
|
|
439,000,000
|
|
BNP Paribas S.A., 2.40%, dated 7/29/2022, interest in a
$500,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $500,100,000 on 8/1/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds and medium-term note with a market value of
$510,102,000 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
439,000,000
|
|
100,000,000
|
|
Bofa Securities, Inc., 2.39%, dated 7/29/2022, interest in a
$150,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $150,029,875 on 8/1/2022, in
which corporate bonds and medium-term notes with a market value
of $153,030,602 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
100,000,000
|
Annual Shareholder Report
7
|
Principal
Amount
|
|
|
Value
|
|
|
|
OTHER REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 100,000,000
|
|
Bofa Securities, Inc., 2.94%, dated 9/4/2020, interest in a
$100,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $100,735,000 on 10/31/2022, in
which convertible bonds with a market value of $102,199,120 have
been received as collateral and held with BNY Mellon as tri-party
agent.
|
$ 100,000,000
|
|
250,000,000
|
|
Bofa Securities, Inc., 2.94%, dated 9/9/2020, interest in a
$250,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $251,837,500 on 10/31/2022, in
which convertible bonds, medium-term notes and Sovereign with a
market value of $255,496,826 have been received as collateral and
held with BNY Mellon as tri-party agent.
|
250,000,000
|
|
25,000,000
|
|
Bofa Securities, Inc., 2.35%, dated 7/29/2022, interest in a
$25,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $25,004,896 on 8/1/2022, in which
commercial paper with a market value of $25,505,956 have been
received as collateral and held with BNY Mellon as tri-party agent.
|
25,000,000
|
|
125,000,000
|
|
Credit Agricole S.A., 2.47%, dated 6/24/2022, interest in a
$300,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $300,144,083 on 8/9/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, commercial paper, treasury notes, treasury bills
medium-term notes, U.S. Government Agency securities and
sovereign debt with a market value of $306,063,090 have been
received as collateral and held with BNY Mellon as tri-party agent.
|
125,000,000
|
|
280,000,000
|
|
Credit Agricole S.A., 2.37%, dated 6/24/2022, interest in a
$800,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $800,368,667 on 8/9/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, commercial paper, treasury notes, treasury bill,
medium-term notes and sovereign debt with a market value of
$816,161,433 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
280,000,000
|
|
70,000,000
|
|
HSBC Securities (USA), Inc., 2.42%, dated 7/29/2022, interest in a
$70,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $70,014,117 on 8/1/2022, in which
corporate bonds, medium-term notes and Sovereign debt with a
market value of $71,400,029 have been received as collateral and
held with BNY Mellon as tri-party agent.
|
70,000,000
|
|
49,490,000
|
|
ING Financial Markets LLC, 2.39%, dated 7/29/2022, interest in a
$50,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $50,009,958 on 8/1/2022, in which
corporate bonds with a market value of $51,010,957 have been
received as collateral and held with BNY Mellon as tri-party agent.
|
49,490,000
|
|
100,000,000
|
|
ING Financial Markets LLC, 2.40%, dated 7/29/2022, interest in a
$100,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $100,020,000 on 8/1/2022, in
which common stocks, corporate bonds and medium-term notes
with a market value of $102,020,404 have been received as
collateral and held with BNY Mellon as tri-party agent.
|
100,000,000
|
Annual Shareholder Report
8
|
Principal
Amount
|
|
|
Value
|
|
|
|
OTHER REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 65,000,000
|
|
J.P. Morgan Securities LLC, 2.56%, dated 7/6/2022, interest in a
$250,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $250,480,000 on 8/2/2022, in
which corporate bonds and medium-term notes with a market value
of $255,000,001 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
$ 65,000,000
|
|
45,000,000
|
|
Mizuho Securities USA, Inc., 2.52%, dated 7/29/2022, interest in a
$75,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $75,015,750 on 8/1/2022, in which
common stocks with a market value of $76,516,072 have been
received as collateral and held with BNY Mellon as tri-party agent.
|
45,000,000
|
|
50,000,000
|
|
Mizuho Securities USA, Inc., 2.42%, dated 7/29/2022, interest in a
$100,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $100,020,167 on 8/1/2022, in
which commercial paper and municipal bonds with a market value
of $102,022,014 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
50,000,000
|
|
81,000,000
|
|
Mitsubishi UFG Securities Americas, Inc., 2.47%, dated 7/29/2022,
interest in a $300,000,000 collateralized loan agreement will
repurchase securities provided as collateral for $300,061,750 on
8/1/2022, in which American depositary receipts, common stocks,
corporate bonds, exchange-traded funds and unit investment trust,
medium-term notes and municipal bonds with a market value of
$306,063,397 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
81,000,000
|
|
135,000,000
|
|
Pershing LLC, 2.57%, dated 7/14/2022, interest in a $300,000,000
collateralized loan agreement will repurchase securities provided as
collateral for $300,149,917 on 8/9/2022, in which asset-backed
securities, collateralized mortgage obligations, corporate bonds,
commercial paper, common stocks, convertible bond, certificate of
deposit, exchange-traded funds, medium-term notes and municipal
bonds and U.S. Government Agency securities with a market value
of $306,100,946 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
135,000,000
|
|
125,000,000
|
|
Societe Generale, Paris, 2.38%, dated 7/29/2022, interest in a
$350,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $350,069,417 on 8/1/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, medium-term notes, municipal bonds, sovereign
securities and treasury bill with a market value of $357,071,176
have been received as collateral and held with BNY Mellon as
tri-party agent.
|
125,000,000
|
|
277,000,000
|
|
Societe Generale, Paris, 2.47%, dated 7/29/2022, interest in a
$650,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $650,133,792 on 8/1/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, medium-term notes and treasury bill with a
market value of $663,136,856 have been received as collateral and
held with BNY Mellon as tri-party agent.
|
277,000,000
|
Annual Shareholder Report
9
|
Principal
Amount
|
|
|
Value
|
|
|
|
OTHER REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 125,000,000
|
|
Wells Fargo Securities LLC, 3.20%, dated 2/3/2022, interest in a
$125,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $126,000,000 on 8/1/2022, in
which sovereign securities with a market value of $127,614,209
have been received as collateral and held with BNY Mellon as
tri-party agent.
|
$ 125,000,000
|
|
|
|
TOTAL OTHER REPURCHASE AGREEMENTS
(IDENTIFIED COST $2,541,490,000)
|
2,541,490,000
|
|
|
|
REPURCHASE AGREEMENTS— 19.2%
|
|
|
|
|
Finance - Banking— 19.2%
|
|
|
150,000,000
|
|
Repurchase agreement 2.40%, dated 7/29/2022 under which ABN
Amro Bank N.V., Netherlands will repurchase securities provided as
collateral for $150,030,000 on 8/1/2022. The securities provided as
collateral at the end of the period held with BNY Mellon as tri-party
agent, were U.S. Government Agency securities with various
maturities to 7/25/2052 and the market value of those underlying
securities was $153,030,600.
|
150,000,000
|
|
299,000,000
|
|
Interest in $1,650,000,000 joint repurchase agreement 2.29%,
dated 7/29/2022 under which Mitsubishi UFJ Securities (USA), Inc.
will repurchase securities provided as collateral for $1,650,314,875
on 8/1/2022. The securities provided as collateral at the end of the
period held with BNY Mellon as tri-party agent, were
U.S. Government Agency securities with various maturities to
1/1/2057 and the market value of those underlying securities
was $1,683,321,173.
|
299,000,000
|
|
500,000,000
|
|
Interest in $1,650,000,000 joint repurchase agreement 2.29%,
dated 7/29/2022 under which Mitsubishi UFJ Securities (USA), Inc.
will repurchase securities provided as collateral for $1,650,314,875
on 8/1/2022. The securities provided as collateral at the end of the
period held with BNY Mellon as tri-party agent, were
U.S. Government Agency securities with various maturities to
1/1/2057 and the market value of those underlying securities
was $1,683,321,173.
|
500,000,000
|
|
700,000,000
|
|
Interest in $1,800,000,000 joint repurchase agreement 2.30%,
dated 7/29/2022 under which Natixis Financial Products LLC will
repurchase securities provided as collateral for $1,800,345,000 on
8/1/2022. The securities provided as collateral at the end of the
period held with BNY Mellon as tri-party agent, were
U.S. Government Agency and U.S. Treasury securities with various
maturities to 6/16/2064 and the market value of those underlying
securities was $1,841,376,235.
|
700,000,000
|
|
1,000,000,000
|
|
Repurchase agreement 2.30%, dated 7/29/2022 under which
Federal Reserve Bank of New York will repurchase securities
provided as collateral for $1,000,191,667 on 8/1/2022. The
securities provided as collateral at the end of the period held with
BNY Mellon as tri-party agent, were U.S. Treasury securities with
various maturities to 2/15/2036 and the market value of those
underlying securities was $1,000,191,722.
|
1,000,000,000
|
Annual Shareholder Report
10
|
Principal
Amount
|
|
|
Value
|
|
|
|
REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 87,000,000
|
|
Interest in $150,000,000 joint repurchase agreement 2.39%, dated
7/29/2022 under which Standard Chartered Bank will repurchase
securities provided as collateral for $150,029,875 on 8/1/2022. The
securities provided as collateral at the end of the period held with
BNY Mellon as tri-party agent, were U.S. Government Agency
securities with various maturities to 2/16/2064 and the market value
of those underlying securities was $153,030,473.
|
$ 87,000,000
|
|
|
|
TOTAL REPURCHASE AGREEMENTS
(IDENTIFIED COST $2,736,000,000)
|
2,736,000,000
|
|
|
|
TOTAL INVESTMENT IN SECURITIES—100.3%
(IDENTIFIED COST $14,298,907,680)3
|
14,291,000,514
|
|
|
|
OTHER ASSETS AND LIABILITIES - NET—(0.3)%4
|
(46,154,429)
|
|
|
|
TOTAL NET ASSETS—100%
|
$14,244,846,085
|
|
1
|
Floating/variable note with current rate and current maturity or next reset date shown. Certain
variable rate securities are not based on a published reference rate and spread but are
determined by the issuer or agent and are based on current market conditions. These securities
do not indicate a reference rate and spread in their description above.
|
|
2
|
Discount rate at time of purchase for discount issues, or the coupon for interest-bearing issues.
|
|
3
|
Also represents cost of investments for federal tax purposes.
|
|
4
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
Note: The categories of investments are shown as a percentage of total net assets at July 31, 2022.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Level 1—quoted prices in active markets for identical securities.
Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Also includes securities valued at amortized cost.
Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
Annual Shareholder Report
11
As of July 31, 2022, all investments of the Fund utilized Level 2 inputs in valuing the Fund’s assets carried at fair value.
|
The following acronym(s) are used throughout this portfolio:
|
|
|
|
COL
|
—Collateralized
|
|
|
GTD
|
—Guaranteed
|
|
|
LIQ
|
—Liquidity Agreement
|
|
|
LLP
|
—Limited Liability Partnership
|
|
|
LOC
|
—Letter of Credit
|
|
|
MHF
|
—Maryland Housing Fund
|
|
|
PLC
|
—Public Limited Company
|
|
|
SOFR
|
—Secured Overnight Financing Rate
|
|
|
VRDNs
|
—Variable Rate Demand Notes
|
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
12
Financial Highlights–Institutional Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.0005
|
$1.0007
|
$1.0004
|
$1.0003
|
$1.0003
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income (loss)
|
0.00371
|
0.0008
|
0.0136
|
0.0239
|
0.0156
|
|
Net realized and unrealized gain (loss)
|
(0.0008)
|
(0.0002)
|
0.0003
|
0.0001
|
0.00002
|
|
Total From Investment
Operations
|
0.0029
|
0.0006
|
0.0139
|
0.0240
|
0.0156
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment
income
|
(0.0036)
|
(0.0008)
|
(0.0136)
|
(0.0239)
|
(0.0156)
|
|
Net Asset Value, End of Period
|
$0.9998
|
$1.0005
|
$1.0007
|
$1.0004
|
$1.0003
|
|
Total Return3
|
0.29%
|
0.05%
|
1.39%
|
2.43%
|
1.57%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses4
|
0.16%
|
0.15%
|
0.15%
|
0.15%
|
0.17%
|
|
Net investment income
|
0.38%
|
0.08%
|
1.37%
|
2.41%
|
1.62%
|
|
Expense waiver/reimbursement5
|
0.12%
|
0.13%
|
0.13%
|
0.13%
|
0.12%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$14,232,133
|
$15,298,656
|
$23,611,390
|
$21,146,776
|
$10,941,508
|
|
1
|
Per share numbers have been calculated using the average shares method.
|
|
2
|
Represents less than $0.0001.
|
|
3
|
Based on net asset value.
|
|
4
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
5
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
The financial highlights of the Service Shares and Capital Shares are presented separately.
Annual Shareholder Report
13
Statement of Assets and Liabilities
July 31, 2022
July 31, 2022
|
Assets:
|
|
|
Investment in repurchase agreements and other repurchase agreements
|
$5,277,490,000
|
|
Investment in securities
|
9,013,510,514
|
|
Investment in securities, at value (identified cost $14,298,907,680)
|
14,291,000,514
|
|
Cash
|
553,403
|
|
Income receivable
|
12,267,528
|
|
Total Assets
|
14,303,821,445
|
|
Liabilities:
|
|
|
Payable for investments purchased
|
42,415,000
|
|
Income distribution payable
|
15,954,638
|
|
Payable for investment adviser fee (Note 5)
|
117,280
|
|
Payable for administrative fee (Note 5)
|
91,887
|
|
Accrued expenses (Note 5)
|
396,555
|
|
Total Liabilities
|
58,975,360
|
|
Net assets for 14,248,059,005 shares outstanding
|
$14,244,846,085
|
|
Net Assets Consist of:
|
|
|
Paid-in capital
|
$14,254,096,547
|
|
Total distributable earnings (loss)
|
(9,250,462)
|
|
Total Net Assets
|
$14,244,846,085
|
|
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
|
|
|
Institutional Shares:
|
|
|
$14,232,132,569 ÷ 14,235,341,975 shares outstanding, no par value, unlimited
shares authorized
|
$0.9998
|
|
Service Shares:
|
|
|
$12,713,416 ÷ 12,716,930 shares outstanding, no par value, unlimited
shares authorized
|
$0.9997
|
|
Capital Shares:
|
|
|
$100 ÷ 100 shares outstanding, no par value, unlimited shares authorized
|
$1.0012*
|
|
*
|
Actual net asset value per share presented differs from calculated net asset value per share due
to rounding.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
14
Statement of Operations
Year Ended July 31, 2022
Year Ended July 31, 2022
|
Investment Income:
|
|
|
Interest
|
$72,199,266
|
|
Expenses:
|
|
|
Investment adviser fee (Note 5)
|
26,847,301
|
|
Administrative fee (Note 5)
|
10,508,115
|
|
Custodian fees
|
427,458
|
|
Transfer agent fees
|
115,442
|
|
Directors’/Trustees’ fees (Note 5)
|
77,727
|
|
Auditing fees
|
25,110
|
|
Legal fees
|
7,362
|
|
Portfolio accounting fees
|
271,093
|
|
Other service fees (Notes 2 and 5)
|
51,845
|
|
Share registration costs
|
57,131
|
|
Printing and postage
|
19,010
|
|
Miscellaneous (Note 5)
|
113,955
|
|
TOTAL EXPENSES
|
38,521,549
|
|
Waivers and Reimbursement:
|
|
|
Waiver of investment adviser fee (Note 5)
|
(16,595,747)
|
|
Waiver/reimbursement of other operating expenses (Notes 2 and 5)
|
(28,684)
|
|
TOTAL WAIVERS AND REIMBURSEMENT
|
(16,624,431)
|
|
Net expenses
|
21,897,118
|
|
Net investment income
|
50,302,148
|
|
Realized and Unrealized Gain (Loss) on Investments:
|
|
|
Net realized gain on investments
|
54,512
|
|
Net change in unrealized appreciation of investments
|
(9,036,105)
|
|
Net realized and unrealized gain (loss) on investments
|
(8,981,593)
|
|
Change in net assets resulting from operations
|
$41,320,555
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
15
Statement of Changes in Net Assets
|
Year Ended July 31
|
2022
|
2021
|
|
Increase (Decrease) in Net Assets
|
|
|
|
Operations:
|
|
|
|
Net investment income
|
$50,302,148
|
$17,271,664
|
|
Net realized gain (loss)
|
54,512
|
113,108
|
|
Net change in unrealized appreciation/depreciation
|
(9,036,105)
|
(6,131,457)
|
|
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS
|
41,320,555
|
11,253,315
|
|
Distributions to Shareholders:
|
|
|
|
Institutional Shares
|
(50,220,717)
|
(17,245,644)
|
|
Service Shares
|
(41,365)
|
(4,862)
|
|
Capital Shares
|
(48)
|
(8,147)
|
|
CHANGE IN NET ASSETS RESULTING FROM
DISTRIBUTIONS TO SHAREHOLDERS
|
(50,262,130)
|
(17,258,653)
|
|
Share Transactions:
|
|
|
|
Proceeds from sale of shares
|
24,614,918,258
|
36,831,815,005
|
|
Net asset value of shares issued to shareholders in payment
of distributions declared
|
8,299,365
|
3,142,765
|
|
Cost of shares redeemed
|
(25,705,000,012)
|
(45,212,117,547)
|
|
CHANGE IN NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
|
(1,081,782,389)
|
(8,377,159,777)
|
|
Change in net assets
|
(1,090,723,964)
|
(8,383,165,115)
|
|
Net Assets:
|
|
|
|
Beginning of period
|
15,335,570,049
|
23,718,735,164
|
|
End of period
|
$14,244,846,085
|
$15,335,570,049
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
16
Notes to Financial Statements
July 31, 2022
1. ORGANIZATION
Federated Hermes Money Market Obligations Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust consists of 16 portfolios. The financial statements included herein are only those of Federated Hermes Institutional Prime Obligations Fund (the “Fund”), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder’s interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers three classes of shares: Institutional Shares, Service Shares and Capital Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The investment objective of the Fund is to provide current income consistent with stability of principal.
The Fund operates as an institutional money market fund. As an institutional money market fund, the Fund: (1) will not be limited to institutional investors, but will continue to be available to retail investors; (2) will utilize current market-based prices (except as otherwise generally permitted to value individual portfolio securities with remaining maturities of 60 days or less at amortized cost in accordance with Securities and Exchange Commission (SEC) rules and guidance) to value its portfolio securities and transact at a floating net asset value (NAV) that uses four decimal-place precision ($1.0000); and (3) has adopted policies and procedures to impose liquidity fees on redemptions and/or temporary redemption gates in the event that the Fund’s weekly liquid assets were to fall below a designated threshold, if the Fund’s Board of Trustees (the “Trustees”) determine such liquidity fees or redemption gates are in the best interest of the Fund.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
In calculating its NAV, the Fund generally values investments as follows:
◾
Fixed-income securities with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Trustees.
◾
Fixed-income securities with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium), unless the issuer’s creditworthiness is impaired or other factors indicate that amortized cost is not an accurate estimate of the investment’s fair value, in which case it would be valued in the same manner as a longer-term security. The Fund may only use this method to value a portfolio security when it can reasonably conclude, at each time it makes a valuation determination, that the amortized cost price of the portfolio security is approximately the same as the fair value of the security as determined without the use of amortized cost valuation.
Annual Shareholder Report
17
◾
Shares of other mutual funds or non-exchange-traded investment companies are valued based upon their reported NAVs, or NAV per share practical expedient, as applicable.
◾
For securities that are fair valued in accordance with procedures established by and under the general supervision of the Trustees, certain factors may be considered, such as: the last traded or purchase price of the security, information obtained by contacting the issuer or dealers, analysis of the issuer’s financial statements or other available documents, fundamental analytical data, the nature and duration of restrictions on disposition, the movement of the market in which the security is normally traded, public trading in similar securities or derivative contracts of the issuer or comparable issuers, movement of a relevant index, or other factors including but not limited to industry changes and relevant government actions.
If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, if the Fund cannot obtain price evaluations from a pricing service or from more than one dealer for an investment within a reasonable period of time as set forth in the Fund’s valuation policies and procedures, or if information furnished by a pricing service, in the opinion of the valuation committee (“Valuation Committee”), is deemed not representative of the fair value of such security, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines its NAV per share, and the actual value obtained could be materially different.
Fair Valuation Procedures
The Trustees have ultimate responsibility for determining the fair value of investments for which market quotations are not readily available. The Trustees have appointed a Valuation Committee comprised of officers of the Fund, Federated Investment Management Company (the “Adviser”) and certain of the Adviser’s affiliated companies to assist in determining fair value and in overseeing the calculation of the NAV. The Trustees have also authorized the use of pricing services recommended by the Valuation Committee to provide fair value evaluations of the current value of certain investments for purposes of calculating the NAV. The Valuation Committee employs various methods for reviewing third-party pricing-service evaluations including periodic reviews of third-party pricing services’ policies, procedures and valuation methods (including key inputs, methods, models and assumptions), transactional back-testing, comparisons of evaluations of different pricing services and review of price challenges by the Adviser based on recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee determines the fair value of the investment in accordance with procedures adopted by the Trustees. The Trustees periodically review and approve the fair valuations made by the Valuation Committee and any changes made to the procedures.
Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a “bid” evaluation). Other pricing services offer both bid evaluations and price evaluations
Annual Shareholder Report
18
indicative of a price between the prices bid and asked for the investment (a “mid” evaluation). The Fund normally uses bid evaluations for any U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for any other types of fixed-income securities and any over-the-counter derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.
Repurchase Agreements
The Fund may invest in repurchase agreements for short-term liquidity purposes. It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund’s custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control” as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.
The insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.
The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund’s Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.
Repurchase agreements are subject to Master Netting Agreements which are agreements between the Fund and its counterparties that provide for the net settlement of all transactions and collateral with the Fund, through a single payment, in the event of default or termination. Amounts presented on the Portfolio of Investments and Statement of Assets and Liabilities are not net settlement amounts but gross. As indicated above, the cash or securities to be repurchased, as shown on the Portfolio of Investments, exceeds the repurchase price to be paid under the agreement reducing the net settlement amount to zero.
Investment Income, Gains and Losses, Expenses and Distributions
Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis. Interest income and expenses are accrued daily. Distributions to shareholders are recorded on the ex-dividend date. Distributions of net investment income, if any, are declared daily and paid monthly. Amortization/accretion of premium and discount is included in investment income. Investment income, realized and unrealized gains and losses, and
Annual Shareholder Report
19
certain fund-level expenses are allocated to each class based on relative average daily net assets, except that select classes will bear certain expenses unique to those classes. The detail of the total fund expense waivers and reimbursement of $16,624,431 is disclosed in various locations in this Note 2 and Note 5.
Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.
Other Service Fees
The Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund’s Institutional Shares, Service Shares and Capital Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for other service fees. In addition, unaffiliated third-party financial intermediaries may waive other service fees. This waiver can be modified or terminated at any time.
For the year ended July 31, 2022, other service fees for the Fund were as follows:
|
|
Other Service
Fees Incurred
|
Other Service
Fees Reimbursed
|
Other Service Fees
Waived by Unaffiliated
Third Parties
|
|
Service Shares
|
$51,604
|
$(3,382)
|
$(25,103)
|
|
Capital Shares
|
241
|
(112)
|
(87)
|
|
TOTAL
|
$51,845
|
$(3,494)
|
$(25,190)
|
For the year ended July 31, 2022, the Fund’s Institutional Shares did not incur other service fees.
Federal Taxes
It is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code (the “Code”) and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. As of and during the year ended July 31, 2022, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2022, tax years 2019 through 2022 remain subject to examination by the Fund’s major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.
When-Issued and Delayed-Delivery Transactions
The Fund may engage in when-issued or delayed-delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed-delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
Annual Shareholder Report
20
Restricted Securities
The Fund may purchase securities which are considered restricted. Restricted securities are securities that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) are subject to contractual restrictions on public sales. In some cases, when a security cannot be offered for public sale without first being registered, the issuer of the restricted security has agreed to register such securities for resale, at the issuer’s expense, either upon demand by the Fund or in connection with another registered offering of the securities. Many such restricted securities may be resold in the secondary market in transactions exempt from registration. Restricted securities may be determined to be liquid under criteria established by the Trustees. The Fund will not incur any registration costs upon such resales. The Fund’s restricted securities, like other securities, are priced in accordance with procedures established by and under the general supervision of the Trustees.
Other
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ materially from those estimated. The Fund applies investment company accounting and reporting guidance.
3. SHARES OF BENEFICIAL INTEREST
The following tables summarize share activity:
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Institutional Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
24,232,087,166
|
$24,233,003,776
|
36,196,687,324
|
$36,215,427,054
|
|
Shares issued to shareholders
in payment of
distributions declared
|
8,283,360
|
8,282,176
|
3,128,894
|
3,130,517
|
|
Shares redeemed
|
(25,296,641,390)
|
(25,298,888,431)
|
(44,503,031,101)
|
(44,525,308,528)
|
|
NET CHANGE RESULTING
FROM INSTITUTIONAL
SHARE TRANSACTIONS
|
(1,056,270,864)
|
$(1,057,602,479)
|
(8,303,214,883)
|
$(8,306,750,957)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Service Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
381,843,923
|
$381,914,482
|
320,686,975
|
$320,849,653
|
|
Shares issued to shareholders
in payment of
distributions declared
|
17,154
|
17,151
|
4,099
|
4,101
|
|
Shares redeemed
|
(401,541,566)
|
(401,611,014)
|
(372,056,896)
|
(372,241,775)
|
|
NET CHANGE RESULTING
FROM SERVICE
SHARE TRANSACTIONS
|
(19,680,489)
|
$(19,679,381)
|
(51,365,822)
|
$(51,388,021)
|
Annual Shareholder Report
21
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Capital Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
—
|
$—
|
295,358,986
|
$295,538,298
|
|
Shares issued to shareholders
in payment of
distributions declared
|
38
|
38
|
8,141
|
8,147
|
|
Shares redeemed
|
(4,498,390)
|
(4,500,567)
|
(314,377,023)
|
(314,567,244)
|
|
NET CHANGE RESULTING
FROM CAPITAL
SHARE TRANSACTIONS
|
(4,498,352)
|
$(4,500,529)
|
(19,009,896)
|
$(19,020,799)
|
|
NET CHANGE RESULTING
FROM TOTAL FUND
SHARE TRANSACTIONS
|
(1,080,449,705)
|
$(1,081,782,389)
|
(8,373,590,601)
|
$(8,377,159,777)
|
4. FEDERAL TAX INFORMATION
The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2022 and 2021, was as follows:
|
|
2022
|
2021
|
|
Ordinary income
|
$50,262,130
|
$17,258,653
|
As of July 31, 2022, the components of distributable earnings on a tax-basis were as follows:
|
Undistributed ordinary income
|
$57,427
|
|
Net unrealized depreciation
|
$(7,907,166)
|
|
Capital loss carryforwards
|
$(1,400,723)
|
At July 31, 2022, the cost of investments for federal tax purposes was $14,298,907,680. The net unrealized depreciation of investments for federal tax purposes was $7,907,166. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $451,830 and net unrealized depreciation from investments for those securities having an excess of cost over value of $8,358,996.
As of July 31, 2022, the Fund had a capital loss carryforward of $1,400,723 which will reduce the Fund’s taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code, thereby reducing the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, these net capital losses retain their character as either short-term or long-term and do not expire.
The following schedule summarizes the Fund’s capital loss carryforwards:
|
Short-Term
|
Long-Term
|
Total
|
|
$1,400,723
|
$—
|
$1,400,723
|
The Fund used capital loss carryforwards of $54,512 to offset capital gains realized during the year ended July 31, 2022.
Annual Shareholder Report
22
5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.20% of the Fund’s average daily net assets. Subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee for competitive reasons such as to maintain the Fund’s expense ratio, or as and when appropriate, to maintain positive or zero net yields. For the year ended July 31, 2022, the Adviser voluntarily waived $16,595,747 of its fee.
Administrative Fee
Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated Hermes Funds subject to a fee under the Administrative Services Agreement. The fee paid to FAS is based on the average daily net assets of the Investment Complex as specified below:
|
Administrative Fee
|
Average Daily Net Assets
of the Investment Complex
|
|
0.100%
|
on assets up to $50 billion
|
|
0.075%
|
on assets over $50 billion
|
Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2022, the annualized fee paid to FAS was 0.078% of average daily net assets of the Fund.
In addition, FAS may charge certain out-of-pocket expenses to the Fund.
Other Service Fees
For the year ended July 31, 2022, FSSC received $132 and reimbursed $3,494 of the other service fees disclosed in Note 2.
Expense Limitation
Due to the possibility of changes in market conditions and other factors, there can be no assurance that the level of waivers/reimbursement/reduction of Fund expenses reflected in the financial highlights will be maintained in the future. However, the Adviser and certain of its affiliates (which may include FSSC and FAS) on their own initiative have agreed to waive certain amounts of their respective fees and/or reimburse expenses. Total annual fund operating expenses (as shown in the financial highlights, excluding interest expense, extraordinary expenses and proxy-related expenses paid by the Fund, if any) paid by the Fund’s Institutional Shares, Service Shares and Capital Shares (after the voluntary waivers and/or reimbursements) will not exceed 0.20%, 0.45% and 0.25% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) October 1, 2023; or (b) the date of the Fund’s next effective Prospectus. While the Adviser and its applicable affiliates currently do not anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or the Fee Limit increased prior to the Termination Date with the agreement of the Trustees.
Annual Shareholder Report
23
Interfund Transactions
During the year ended July 31, 2022, the Fund engaged in sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees and/or common Officers. These sale transactions complied with Rule 17a-7 under the Act and amounted to $14,500,000. Net realized gain/loss recognized on these transactions was $0.
Directors’/Trustees’ and Miscellaneous Fees
Certain Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate payment, Independent Directors’/Trustees’ fees and certain expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses are paid by an affiliate of the Adviser which in due course are reimbursed by the Fund. These expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses may be included in Accrued and Miscellaneous Expenses on the Statement of Assets and Liabilities and Statement of Operations, respectively.
Affiliated Shares of Beneficial Interest
As of July 31, 2022, a majority of the shares of beneficial interest outstanding are owned by other affiliated investment companies.
6. CONCENTRATION OF RISK
A substantial part of the Fund’s portfolio may be comprised of obligations of banks. As a result, the Fund may be more susceptible to any economic, business, political or other developments which generally affect these entities.
7. LINE OF CREDIT
The Fund participates with certain other Federated Hermes Funds, on a several basis, in an up to $500,000,000 unsecured, 364-day, committed, revolving line of credit (LOC) agreement dated June 22, 2022. The LOC was made available to temporarily finance the repurchase or redemption of shares of the Fund, failed trades, payment of dividends, settlement of trades and for other short-term, temporary or emergency general business purposes. The Fund cannot borrow under the LOC if an inter-fund loan is outstanding. The Fund’s ability to borrow under the LOC also is subject to the limitations of the Act and various conditions precedent that must be satisfied before the Fund can borrow. Loans under the LOC are charged interest at a fluctuating rate per annum equal to (a) the highest, on any day, of (i) the federal funds effective rate, (ii) the published secured overnight financing rate plus an assigned percentage, and (iii) 0.0%, plus (b) a margin. Any fund eligible to borrow under the LOC pays its pro rata share of a commitment fee based on the amount of the lenders’ commitment that has not been utilized, quarterly in arrears and at maturity. As of July 31, 2022, the Fund had no outstanding loans. During the year ended July 31, 2022, the Fund did not utilize the LOC.
8. INTERFUND LENDING
Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other funds advised by subsidiaries of Federated Hermes, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating affiliated funds. As of July 31, 2022, there were no outstanding loans. During the year ended July 31, 2022, the program was not utilized.
Annual Shareholder Report
24
9. INDEMNIFICATIONS
Under the Fund’s organizational documents, its Officers and Directors/Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund (other than liabilities arising out of their willful misfeasance, bad faith, gross negligence or reckless disregard of their duties to the Fund). In addition, in the normal course of business, the Fund provides certain indemnifications under arrangements with third parties. Typically, obligations to indemnify a third party arise in the context of an arrangement entered into by the Fund under which the Fund agrees to indemnify such third party for certain liabilities arising out of actions taken pursuant to the arrangement, provided the third party’s actions are not deemed to have breached an agreed-upon standard of care (such as willful misfeasance, bad faith, gross negligence or reckless disregard of their duties under the contract). The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet arisen. The Fund does not anticipate any material claims or losses pursuant to these arrangements at this time, and accordingly expects the risk of loss to be remote.
10. OTHER MATTERS
An outbreak of respiratory disease caused by a novel coronavirus was first detected in China in late 2019 and subsequently spread globally. As of the date of the issuance of these financial statements, this coronavirus has resulted in closing borders, enhanced health screenings, disruptions to healthcare service preparation and delivery, quarantines, cancellations, and disruptions to supply chains, workflow operations and consumer activity, as well as general concern and uncertainty. The impact of this coronavirus may continue for an extended period of time and has resulted in substantial economic volatility. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could continue to negatively affect the worldwide economy, as well as the economies of individual countries, individual companies (including certain Fund service providers and issuers of the Fund’s investments) and the markets in general in significant and unforeseen ways. Any such impact could adversely affect the Fund’s performance.
11. FEDERAL TAX INFORMATION (UNAUDITED)
For the fiscal year ended July 31, 2022, 77.09% of dividends paid by the Fund are interest-related dividends, as provided by the American Jobs Creation Act of 2004.
Annual Shareholder Report
25
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Federated Hermes Money Market Obligations Trust and the Shareholders of Federated Hermes Institutional Prime Obligations Fund:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of the Federated Hermes Institutional Prime Obligations Fund (the Fund), a portfolio of Federated Hermes Money Market Obligations Trust, including the portfolio of investments, as of July 31, 2022, the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the related notes (collectively, the financial statements) and the financial highlights for each of the years in the five-year period then ended. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of July 31, 2022, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
Annual Shareholder Report
26
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Such procedures also included confirmation of securities owned as of July 31, 2022, by correspondence with custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of Federated Hermes’ investment companies since 2006.
Boston, Massachusetts
September 23, 2022
September 23, 2022
Annual Shareholder Report
27
Shareholder Expense Example (unaudited)
As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or other service fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2022 to July 31, 2022.
ACTUAL EXPENSES
The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses attributable to your investment during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Annual Shareholder Report
28
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
|
|
Beginning
Account Value
2/1/2022
|
Ending
Account Value
7/31/2022
|
Expenses Paid
During Period1
|
|
Actual
|
$1,000.00
|
$1,003.00
|
$0.842
|
|
Hypothetical (assuming a 5% return
before expenses)
|
$1,000.00
|
$1,023.95
|
$0.852
|
|
1
|
Expenses are equal to the Fund’s Institutional Shares annualized net expense ratio of 0.17%,
multiplied by the average account value over the period, multiplied by 181/365 (to reflect the
one-half-year period).
|
|
2
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Institutional Shares
current Fee Limit of 0.20% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $0.99 and $1.00, respectively.
|
Annual Shareholder Report
29
Board of Trustees and Trust Officers
The Board of Trustees is responsible for managing the Trust’s business affairs and for exercising all the Trust’s powers except those reserved for the shareholders. The following tables give information about each Trustee and the senior officers of the Fund. Where required, the tables separately list Trustees who are “interested persons” of the Fund (i.e., “Interested” Trustees) and those who are not (i.e., “Independent” Trustees). Unless otherwise noted, the address of each person listed is 1001 Liberty Avenue, Pittsburgh, PA 15222-3779. The address of all Independent Trustees listed is 4000 Ericsson Drive, Warrendale, PA 15086-7561; Attention: Mutual Fund Board. As of December 31, 2021, the Trust comprised 16 portfolio(s), and the Federated Hermes Fund Family consisted of 33 investment companies (comprising 102 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Trustee oversees all portfolios in the Federated Hermes Fund Family and serves for an indefinite term. The Fund’s Statement of Additional Information includes additional information about Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400, Option #4.
Interested TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
J. Christopher Donahue*
Birth Date: April 11, 1949
President and Trustee
Indefinite Term
Began serving: April 1989
|
Principal Occupations: Principal Executive Officer and President of
certain of the Funds in the Federated Hermes Fund Family; Director or
Trustee of the Funds in the Federated Hermes Fund Family; President,
Chief Executive Officer and Director, Federated Hermes, Inc.;
Chairman and Trustee, Federated Investment Management Company;
Trustee, Federated Investment Counseling; Chairman and Director,
Federated Global Investment Management Corp.; Chairman and
Trustee, Federated Equity Management Company of Pennsylvania;
Trustee, Federated Shareholder Services Company; Director,
Federated Services Company.
Previous Positions: President, Federated Investment Counseling;
President and Chief Executive Officer, Federated Investment
Management Company, Federated Global Investment Management
Corp. and Passport Research, Ltd; Chairman, Passport Research, Ltd.
|
Annual Shareholder Report
30
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
Thomas R. Donahue*
Birth Date: October 20, 1958
Trustee
Indefinite Term
Began serving: May 2016
|
Principal Occupations: Director or Trustee of certain of the funds in
the Federated Hermes Fund Family; Chief Financial Officer, Treasurer,
Vice President and Assistant Secretary, Federated Hermes, Inc.;
Chairman and Trustee, Federated Administrative Services; Chairman
and Director, Federated Administrative Services, Inc.; Trustee and
Treasurer, Federated Advisory Services Company; Director or Trustee
and Treasurer, Federated Equity Management Company of
Pennsylvania, Federated Global Investment Management Corp.,
Federated Investment Counseling, and Federated Investment
Management Company; Director, MDTA LLC; Director, Executive Vice
President and Assistant Secretary, Federated Securities Corp.;
Director or Trustee and Chairman, Federated Services Company and
Federated Shareholder Services Company; and Director and
President, FII Holdings, Inc.
Previous Positions: Director, Federated Hermes, Inc.; Assistant
Secretary, Federated Investment Management Company, Federated
Global Investment Management Company and Passport Research,
LTD; Treasurer, Passport Research, LTD; Executive Vice President,
Federated Securities Corp.; and Treasurer, FII Holdings, Inc.
|
*
Family relationships and reasons for “interested” status: J. Christopher Donahue and Thomas R. Donahue are brothers. Both are “interested” due to their beneficial ownership of shares of Federated Hermes, Inc. and the positions they hold with Federated Hermes, Inc. and its subsidiaries.
INDEPENDENT TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
John T. Collins
Birth Date: January 24, 1947
Trustee
Indefinite Term
Began serving:
September 2013
|
Principal Occupations: Director or Trustee, and Chair of the Board
of Directors or Trustees, of the Federated Hermes Fund Family;
formerly, Chairman and CEO, The Collins Group, Inc. (a private equity
firm) (Retired).
Other Directorships Held: Director, KLX Energy Services Holdings,
Inc. (oilfield services); former Director of KLX Corp. (aerospace).
Qualifications: Mr. Collins has served in several business and financial
management roles and directorship positions throughout his career.
Mr. Collins previously served as Chairman and CEO of The Collins
Group, Inc. (a private equity firm) and as a Director of KLX Corp.
Mr. Collins serves as Chairman Emeriti, Bentley University. Mr. Collins
previously served as Director and Audit Committee Member, Bank of
America Corp.; Director, FleetBoston Financial Corp.; and Director,
Beth Israel Deaconess Medical Center (Harvard University
Affiliate Hospital).
|
Annual Shareholder Report
31
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
G. Thomas Hough
Birth Date: February 28, 1955
Trustee
Indefinite Term
Began serving: August 2015
|
Principal Occupations: Director or Trustee, Chair of the Audit
Committee of the Federated Hermes Fund Family; formerly, Vice
Chair, Ernst & Young LLP (public accounting firm) (Retired).
Other Directorships Held: Director, Chair of the Audit Committee,
Equifax, Inc.; Lead Director, Member of the Audit and Nominating and
Corporate Governance Committees, Haverty Furniture Companies,
Inc.; formerly, Director, Member of Governance and Compensation
Committees, Publix Super Markets, Inc.
Qualifications: Mr. Hough has served in accounting, business
management and directorship positions throughout his career.
Mr. Hough most recently held the position of Americas Vice Chair of
Assurance with Ernst & Young LLP (public accounting firm). Mr. Hough
serves on the President’s Cabinet and Business School Board of
Visitors for the University of Alabama. Mr. Hough previously served on
the Business School Board of Visitors for Wake Forest University, and
he previously served as an Executive Committee member of the
United States Golf Association.
|
|
Maureen Lally-Green
Birth Date: July 5, 1949
Trustee
Indefinite Term
Began serving: August 2009
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Adjunct Professor Emerita of Law, Duquesne University
School of Law; formerly, Dean of the Duquesne University School of
Law and Professor of Law and Interim Dean of the Duquesne
University School of Law; formerly, Associate General Secretary and
Director, Office of Church Relations, Diocese of Pittsburgh.
Other Directorships Held: Director, CNX Resources Corporation
(formerly known as CONSOL Energy Inc.).
Qualifications: Judge Lally-Green has served in various legal and
business roles and directorship positions throughout her career. Judge
Lally-Green previously held the position of Dean of the School of Law
of Duquesne University (as well as Interim Dean). Judge Lally-Green
previously served as a member of the Superior Court of Pennsylvania
and as a Professor of Law, Duquesne University School of Law. Judge
Lally-Green was appointed by the Supreme Court of Pennsylvania to
serve on the Supreme Court’s Board of Continuing Judicial Education
and the Supreme Court’s Appellate Court Procedural Rules
Committee. Judge Lally-Green also currently holds the positions on
not for profit or for profit boards of directors as follows: Director
and Chair, UPMC Mercy Hospital; Regent, Saint Vincent Seminary;
Member, Pennsylvania State Board of Education (public); Director,
Catholic Charities, Pittsburgh; and Director CNX Resources
Corporation (formerly known as CONSOL Energy Inc.). Judge
Lally-Green has held the positions of: Director, Auberle; Director,
Epilepsy Foundation of Western and Central Pennsylvania; Director,
Ireland Institute of Pittsburgh; Director, Saint Thomas More Society;
Director and Chair, Catholic High Schools of the Diocese of
Pittsburgh, Inc.; Director, Pennsylvania Bar Institute; Director,
St. Vincent College; Director and Chair, North Catholic High
School, Inc.; Director and Vice Chair, Our Campaign for the Church
Alive!, Inc.; and Director, Saint Francis University.
|
Annual Shareholder Report
32
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
Thomas M. O’Neill
Birth Date: June 14, 1951
Trustee
Indefinite Term
Began serving: August 2006
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Sole Proprietor, Navigator Management Company
(investment and strategic consulting).
Other Directorships Held: None.
Qualifications: Mr. O’Neill has served in several business, mutual fund
and financial management roles and directorship positions throughout
his career. Mr. O’Neill serves as Director, Medicines for Humanity.
Mr. O’Neill previously served as Chief Executive Officer and President,
Managing Director and Chief Investment Officer, Fleet Investment
Advisors; President and Chief Executive Officer, Aeltus Investment
Management, Inc.; General Partner, Hellman, Jordan Management
Co., Boston, MA; Chief Investment Officer, The Putnam Companies,
Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director
and Consultant, EZE Castle Software (investment order management
software); Director, The Golisano Children’s Museum of Naples,
Florida; and Director, Midway Pacific (lumber).
|
|
Madelyn A. Reilly
Birth Date: February 2, 1956
Trustee
Indefinite Term
Began serving:
November 2020
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; formerly, Executive Vice President for Legal Affairs,
General Counsel and Secretary to the Board of Directors, Duquesne
University (Retired).
Other Directorships Held: None.
Qualifications: Ms. Reilly has served in various business and legal
management roles throughout her career. Ms. Reilly previously served
as Senior Vice President for Legal Affairs, General Counsel and
Secretary to the Board of Directors and Assistant General Counsel and
Director of Risk Management, Duquesne University. Prior to her work
at Duquesne University, Ms. Reilly served as Assistant General
Counsel of Compliance and Enterprise Risk as well as Senior Counsel
of Environment, Health and Safety, PPG Industries. Ms. Reilly currently
serves as a member of the Board of Directors of UPMC
Mercy Hospital.
|
Annual Shareholder Report
33
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
P. Jerome Richey
Birth Date: February 23, 1949
Trustee
Indefinite Term
Began serving:
September 2013
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Management Consultant; Retired; formerly, Senior Vice
Chancellor and Chief Legal Officer, University of Pittsburgh and
Executive Vice President and Chief Legal Officer, CONSOL Energy Inc.
(now split into two separate publicly traded companies known as
CONSOL Energy Inc. and CNX Resources Corp.).
Other Directorships Held: None.
Qualifications: Mr. Richey has served in several business and legal
management roles and directorship positions throughout his career.
Mr. Richey most recently held the positions of Senior Vice Chancellor
and Chief Legal Officer, University of Pittsburgh. Mr. Richey previously
served as Chairman of the Board, Epilepsy Foundation of Western
Pennsylvania and Chairman of the Board, World Affairs Council of
Pittsburgh. Mr. Richey previously served as Chief Legal Officer and
Executive Vice President, CONSOL Energy Inc. and CNX Gas
Company; and Board Member, Ethics Counsel and Shareholder,
Buchanan Ingersoll & Rooney PC (a law firm).
|
|
John S. Walsh
Birth Date:
November 28, 1957
Trustee
Indefinite Term
Began serving: January 1999
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; President and Director, Heat Wagon, Inc. (manufacturer
of construction temporary heaters); President and Director,
Manufacturers Products, Inc. (distributor of portable construction
heaters); President, Portable Heater Parts, a division of Manufacturers
Products, Inc.
Other Directorships Held: None.
Qualifications: Mr. Walsh has served in several business management
roles and directorship positions throughout his career. Mr. Walsh
previously served as Vice President, Walsh & Kelly, Inc.
(paving contractors).
|
Annual Shareholder Report
34
OFFICERS
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Lori A. Hensler
Birth Date: January 6, 1967
TREASURER
Officer since: April 2013
|
Principal Occupations: Principal Financial Officer and Treasurer of the
Federated Hermes Fund Family; Senior Vice President, Federated
Administrative Services; Financial and Operations Principal for
Federated Securities Corp.; and Assistant Treasurer, Federated
Investors Trust Company. Ms. Hensler has received the Certified
Public Accountant designation.
Previous Positions: Controller of Federated Hermes, Inc.; Senior Vice
President and Assistant Treasurer, Federated Investors Management
Company; Treasurer, Federated Investors Trust Company; Assistant
Treasurer, Federated Administrative Services, Federated
Administrative Services, Inc., Federated Securities Corp., Edgewood
Services, Inc., Federated Advisory Services Company, Federated
Equity Management Company of Pennsylvania, Federated Global
Investment Management Corp., Federated Investment Counseling,
Federated Investment Management Company, Passport Research,
Ltd., and Federated MDTA, LLC; Financial and Operations Principal for
Federated Securities Corp., Edgewood Services, Inc. and Southpointe
Distribution Services, Inc.
|
|
Peter J. Germain
Birth Date:
September 3, 1959
CHIEF LEGAL OFFICER,
SECRETARY and EXECUTIVE
VICE PRESIDENT
Officer since: January 2005
|
Principal Occupations: Mr. Germain is Chief Legal Officer, Secretary
and Executive Vice President of the Federated Hermes Fund Family.
He is General Counsel, Chief Legal Officer, Secretary and Executive
Vice President, Federated Hermes, Inc.; Trustee and Senior Vice
President, Federated Investors Management Company; Trustee and
President, Federated Administrative Services; Director and President,
Federated Administrative Services, Inc.; Director and Vice President,
Federated Securities Corp.; Director and Secretary, Federated Private
Asset Management, Inc.; Secretary, Federated Shareholder Services
Company; and Secretary, Retirement Plan Service Company of
America. Mr. Germain joined Federated Hermes, Inc. in 1984 and is a
member of the Pennsylvania Bar Association.
Previous Positions: Deputy General Counsel, Special Counsel,
Managing Director of Mutual Fund Services, Federated Hermes, Inc.;
Senior Vice President, Federated Services Company; and Senior
Corporate Counsel, Federated Hermes, Inc.
|
|
Stephen Van Meter
Birth Date: June 5, 1975
CHIEF COMPLIANCE
OFFICER AND SENIOR
VICE PRESIDENT
Officer since: July 2015
|
Principal Occupations: Senior Vice President and Chief Compliance
Officer of the Federated Hermes Fund Family; Vice President and
Chief Compliance Officer of Federated Hermes, Inc. and Chief
Compliance Officer of certain of its subsidiaries. Mr. Van Meter joined
Federated Hermes, Inc. in October 2011. He holds FINRA licenses
under Series 3, 7, 24 and 66.
Previous Positions: Mr. Van Meter previously held the position of
Compliance Operating Officer, Federated Hermes, Inc. Prior to joining
Federated Hermes, Inc., Mr. Van Meter served at the United States
Securities and Exchange Commission in the positions of Senior
Counsel, Office of Chief Counsel, Division of Investment Management
and Senior Counsel, Division of Enforcement.
|
Annual Shareholder Report
35
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Deborah A. Cunningham
Birth Date:
September 15, 1959
CHIEF INVESTMENT OFFICER
Officer since: May 2004
Portfolio Manager since:
July 1991
|
Principal Occupations: Deborah A. Cunningham has been the Fund’s
Portfolio Manager since July 1991. Ms. Cunningham was named Chief
Investment Officer of Federated Hermes’ money market products in
2004. She joined Federated Hermes in 1981 and has been a Senior
Portfolio Manager since 1997 and an Executive Vice President of the
Fund’s Adviser since 2009. Ms. Cunningham has received the
Chartered Financial Analyst designation and holds an M.S.B.A. in
Finance from Robert Morris College.
|
Annual Shareholder Report
36
Evaluation and Approval of Advisory Contract–May 2022
Federated Hermes Institutional Prime Obligations Fund (the “Fund”)
At its meetings in May 2022 (the “May Meetings”), the Fund’s Board of Trustees (the “Board”), including those Trustees who are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940 (the “Independent Trustees”), reviewed and unanimously approved the continuation of the investment advisory contract between the Fund and Federated Investment Management Company (the “Adviser”) (the “Contract”) for an additional one-year term. The Board’s determination to approve the continuation of the Contract reflects the exercise of its business judgment after considering all of the information and factors believed to be relevant and appropriate on whether to approve the continuation of the existing arrangement. The information, factors and conclusions that formed the basis for the Board’s approval are summarized below.
Information Received and Review Process
At the request of the Independent Trustees, the Fund’s Chief Compliance Officer (the “CCO”) furnished to the Board in advance of its May Meetings an independent written evaluation presenting on the topics discussed below. The Board considered the CCO’s independent written evaluation (the “CCO Fee Evaluation Report”), along with other information, in evaluating the reasonableness of the Fund’s management fee and in determining to approve the continuation of the Contract. The CCO, in preparing the CCO Fee Evaluation Report, has the authority to retain consultants, experts or staff as reasonably necessary to assist in the performance of his duties, reports directly to the Board, and can be terminated only with the approval of a majority of the Independent Trustees. At the request of the Independent Trustees, the CCO Fee Evaluation Report followed the same general approach and covered the same topics as that of the report that had previously been delivered by the CCO in his capacity as “Senior Officer” prior to the elimination of the Senior Officer position in December 2017.
In addition to the extensive materials that comprise and accompany the CCO Fee Evaluation Report, the Board considered information specifically prepared in connection with the approval of the continuation of the Contract that was presented at the May Meetings. In this regard, in the months preceding the May Meetings, the Board requested and reviewed written responses and supporting materials prepared by the Adviser and its affiliates (collectively, “Federated Hermes”) in response to requests posed to Federated Hermes by independent legal counsel on behalf of the Independent Trustees encompassing a wide variety of topics, including those summarized below. The Board also considered such additional matters as the Independent Trustees deemed
Annual Shareholder Report
37
reasonably necessary to evaluate the Contract, which included detailed information about the Fund and Federated Hermes furnished to the Board at its meetings throughout the year and in between regularly scheduled meetings on particular matters as the need arose.
The Board’s consideration of the Contract included review of materials and information covering the following matters, among others: the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates; Federated Hermes’ business and operations; the Adviser’s investment philosophy, personnel and processes; the Fund’s investment objectives and strategies; the Fund’s short-term and long-term performance (in absolute terms, both on a gross basis and net of expenses, and relative to the Fund’s particular investment program and a group of its peer funds and/or its benchmark, as appropriate); the Fund’s investment objectives; the Fund’s fees and expenses, including the advisory fee and the overall expense structure of the Fund (both in absolute terms and relative to a group of its peer funds), with due regard for contractual or voluntary expense limitations (if any); the financial condition of Federated Hermes; the Adviser’s profitability with respect to the Fund; distribution and sales activity for the Fund; and the use and allocation of brokerage commissions derived from trading the Fund’s portfolio securities (if any).
The Board also considered judicial decisions concerning allegedly excessive investment advisory fees charged to other registered funds in determining to approve the Contract. Using these judicial decisions as a guide, the Board observed that the following factors may be relevant to an adviser’s fiduciary duty with respect to its receipt of compensation from a fund: (1) the nature and quality of the services provided by the adviser to the fund and its shareholders, including the performance of the fund, its benchmark and comparable funds; (2) the adviser’s cost of providing the services and the profitability to the adviser of providing advisory services to the fund; (3) the extent to which the adviser may realize “economies of scale” as the fund grows larger and, if such economies of scale exist, whether they have been appropriately shared with the fund and its shareholders or the family of funds; (4) any “fall-out” benefits that accrue to the adviser because of its relationship with the fund, including research services received from brokers that execute fund trades and any fees paid to affiliates of the adviser for services rendered to the fund; (5) comparative fee and expense structures, including a comparison of management fees paid to the adviser with those paid by similar funds both internally and externally as well as management fees charged to institutional and other advisory clients of the adviser for what might be viewed as like services; and (6) the extent of care, conscientiousness and independence with which the fund’s board members perform their duties and their expertise, including whether they are fully informed about all facts the board deems relevant to its consideration of the adviser’s services and fees. The Board noted that the Securities and Exchange Commission (“SEC”) disclosure requirements
Annual Shareholder Report
38
regarding the basis for a fund board’s approval of the fund’s investment advisory contract generally align with the factors listed above. The Board was guided by these factors in its review of the Contract to the extent it considered them to be appropriate and relevant, as discussed further below. The Board considered and weighed these factors in light of its substantial accumulated experience in governing the Fund and working with Federated Hermes on matters relating to the oversight of the other funds advised by Federated Hermes (each, a “Federated Hermes Fund” and, collectively, the (“Federated Hermes Funds”).
In addition to considering the above-referenced factors, the Board was mindful of the preferences and expectations of Fund shareholders and the potential disruptions of the Fund’s operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew the Contract. In particular, the Board recognized that many shareholders likely have invested in the Fund on the strength of Federated Hermes’ industry standing and reputation and with the expectation that Federated Hermes will have a continuing role in providing advisory services to the Fund. Thus, the Board observed that in the marketplace there are a range of investment options available to the Fund’s shareholders and such shareholders, having had the opportunity to consider other investment options, have effectively selected Federated Hermes by virtue of investing in the Fund.
In determining to approve the continuation of the Contract, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the continuation of the Contract was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Contract. The Board recognized that its evaluation process is evolutionary and that the factors considered and emphasis placed on relevant factors may change in recognition of changing circumstances in the registered fund marketplace. The Independent Trustees were assisted throughout the evaluation process by independent legal counsel. In connection with their deliberations at the May Meetings, the Independent Trustees met separately in executive session with their independent legal counsel and without management present to review the relevant materials and consider their responsibilities under applicable laws. In addition, senior management representatives of Federated Hermes also met with the Independent Trustees and their independent legal counsel to discuss the materials and presentations furnished to the Board at the May Meetings. The Board considered the approval of the Contract for the Fund as part of its consideration of agreements for funds across the family of Federated Hermes Funds, but its approvals were made on a fund-by-fund basis.
Annual Shareholder Report
39
Nature, Extent and Quality of Services
The Board considered the nature, extent and quality of the services provided to the Fund by the Adviser and the resources of Federated Hermes dedicated to the Fund. In this regard, the Board evaluated, among other things, the terms of the Contract and the range of services provided to the Fund by Federated Hermes. The Board considered the Adviser’s personnel, investment philosophy and process, investment research capabilities and resources, trade operations capabilities, experience and performance track record. The Board reviewed the qualifications, backgrounds and responsibilities of the portfolio management team primarily responsible for the day-to-day management of the Fund and Federated Hermes’ ability and experience in attracting and retaining qualified personnel to service the Fund. In addition, the Board noted that the Fund is a money market mutual fund that operates in accordance with the limitations set forth in Rule 2a-7 under the 1940 Act. In this connection, the Board considered the expertise of the Adviser in managing money market funds, its extensive experience with the requirements of Rule 2a-7 and its commitment to managing the Fund in accordance with these requirements. The Board also considered the Adviser’s ability to deliver competitive investment performance for the Fund when compared to the Fund’s Performance Peer Group (as defined below), which was deemed by the Board to be a useful indicator of how the Adviser is executing the Fund’s investment program. The Board also considered the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, in order to maintain a positive yield for the Fund in the low interest rate environment.
In addition, the Board considered the financial resources and overall reputation of Federated Hermes and its willingness to consider and make investments in personnel, infrastructure, technology, cybersecurity, business continuity planning and operational enhancements that are designed to benefit the Federated Hermes Funds. The Board noted the significant acquisition of Hermes Fund Managers Limited by Federated Hermes, which has deepened the organization’s investment management expertise and capabilities and expanded the investment process for all of the Federated Hermes Funds to have access to analytical resources related to environmental, social and governance (“ESG”) factors and issuer engagement on ESG matters. The Board considered the quality of Federated Hermes’ communications with the Board and responsiveness to Board inquiries and requests made from time to time with respect to the Fund and other Federated Hermes Funds. In this regard, the Board took into account Federated Hermes’ communications with the Board in light of the pandemic. The Board also considered that Federated Hermes is responsible for providing the Federated Hermes Funds’ officers.
The Board received and evaluated information regarding Federated Hermes’ regulatory and compliance environment. The Board considered Federated Hermes’ compliance program and compliance history and reports from the CCO about Federated Hermes’ compliance with applicable laws and
Annual Shareholder Report
40
regulations, including responses to regulatory developments and any compliance or other issues raised by regulatory agencies. The Board also noted Federated Hermes’ support of the Federated Hermes Funds’ compliance control structure and the compliance-related resources devoted by Federated Hermes in support of the Fund’s obligations pursuant to Rule 38a-1 under the Investment Company Act of 1940, including Federated Hermes’ commitment to respond to rulemaking and other regulatory initiatives of the SEC. The Board considered Federated Hermes’ approach to internal audits and risk management with respect to the Federated Hermes Funds and its day-to-day oversight of the Federated Hermes Funds’ compliance with their investment objectives and policies as well as with applicable laws and regulations, noting that regulatory and other developments had over time led to an increase in the scope of Federated Hermes’ oversight in this regard, including in connection with the designation of the Federated Hermes Funds’ investment advisers as the administrators of the Federated Hermes Funds’ liquidity risk management program.
The Board also considered the implementation of Federated Hermes’ business continuity plans and recognized steps taken by Federated Hermes to continue to provide the same nature, extent and quality of services to the Federated Hermes Funds during the pandemic. In addition, the Board noted Federated Hermes’ commitment to maintaining high quality systems and expending substantial resources to prepare for and respond to ongoing changes due to the market, regulatory and control environments in which the Fund and its service providers operate, including changes associated with the pandemic.
The Board considered Federated Hermes’ efforts to provide shareholders in the Federated Hermes Funds with a comprehensive array of funds with different investment objectives, policies and strategies. The Board considered the expenses that Federated Hermes had incurred, as well as the entrepreneurial and other risks assumed by Federated Hermes, in sponsoring and providing on-going services to new funds to expand these opportunities for shareholders. The Board noted the benefits to shareholders of being part of the family of Federated Hermes Funds, which include the general right to exchange investments between the same class of shares without the incurrence of additional sales charges.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided by the Adviser to the Fund.
Fund Investment Performance
The Board considered the investment performance of the Fund. In evaluating the Fund’s investment performance, the Board considered performance results in light of the Fund’s investment objective, strategies and risks. The Board considered detailed investment reports on, and the Adviser’s analysis of, the Fund’s performance over different time periods that were
Annual Shareholder Report
41
provided to the Board throughout the year and in connection with the May Meetings. These reports include, among other items, information on the Fund’s gross and net returns, the Fund’s investment performance compared to one or more relevant categories or groups of peer funds and the Fund’s benchmark index, performance attribution information and commentary on the effect of market conditions.
The Board also reviewed comparative information regarding the performance of other registered funds in the category of peer funds selected by iMoneyNet, an independent fund ranking organization (the “Performance Peer Group”). The Board noted the CCO’s view that comparisons to fund peer groups may be helpful, though not conclusive, in evaluating the performance of the Adviser in managing the Fund. The Board considered, in evaluating such comparisons, that in some cases there may be differences in the funds’ objectives or investment management techniques, or the costs to implement the funds, even within the same Performance Peer Group.
For the one-year period ended December 31, 2021, the Fund’s performance was above the median of the Performance Peer Group. The Board also considered the relatively tight dispersion of performance data with respect to the Fund and its Performance Peer Group.
Based on these considerations, the Board concluded that it had continued confidence in the Adviser’s overall capabilities to manage the Fund.
Fund Expenses
The Board considered the advisory fee and overall expense structure of the Fund and the comparative fee and expense information that had been provided in connection with the May Meetings. In this regard, the Board was presented with, and considered, information regarding the contractual advisory fee rates, net advisory fee rates, total expense ratios and each element of the Fund’s total expense ratio (i.e., gross and net advisory fees, administrative fees, custody fees, portfolio accounting fees and transfer agency fees) relative to an appropriate group of peer funds compiled by Federated Hermes from the category of peer funds selected by iMoneyNet (the “Expense Peer Group”). The Board received a description of the methodology used to select the Expense Peer Group from the overall iMoneyNet category. The Board also reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall iMoneyNet category.
While mindful that courts have cautioned against giving too much weight to comparative information concerning fees charged by other advisers for managing funds with comparable investment programs, the Board noted that it found the use of such comparisons to be relevant to its evaluation. The Board focused on comparisons with other similar registered funds more heavily than non-registered fund products or services because such comparisons are believed to be more relevant. The Board considered that other registered funds are the products most like the Fund, in that they are readily available to Fund
Annual Shareholder Report
42
shareholders as alternative investment vehicles, and they are the type of investment vehicle, in fact, chosen and maintained by the Fund’s shareholders. The Board noted that the range of such other registered funds’ fees and expenses, therefore, appears to be a relevant indicator of what investors have found to be reasonable in the marketplace in which the Fund competes.
The Board reviewed the contractual advisory fee rate, net advisory fee rate and other expenses of the Fund and noted the position of the Fund’s fee rates relative to its Expense Peer Group. In this regard, the Board noted that the contractual advisory fee rate was above the median of the Expense Peer Group, but the Board noted the applicable waivers and reimbursements, and that the overall expense structure of the Fund remained competitive in the context of other factors considered by the Board.
The Board also received and considered information about the fees charged by Federated Hermes for providing advisory services to other types of clients with investment strategies similar to those of the Federated Hermes Funds, including non-registered fund clients (such as institutional separate accounts) and third-party unaffiliated registered funds for which the Adviser or its affiliates serve as sub-adviser. The Board noted the CCO’s conclusion that non-registered fund clients are inherently different products due to the following differences, among others: (i) different types of targeted investors; (ii) different applicable laws and regulations; (iii) different legal structures; (iv) different average account sizes and portfolio management techniques made necessary by different cash flows and different associated costs; (v) the time spent by portfolio managers and their teams (among other personnel across various departments, including legal, compliance and risk management) in reviewing securities pricing and fund liquidity; (vi) different administrative responsibilities; (vii) different degrees of risk associated with management; and (viii) a variety of different costs. The Board also considered information regarding the differences in the nature of the services required for Federated Hermes to manage its proprietary registered fund business versus managing a discrete pool of assets as a sub-adviser to another institution’s registered fund, noting the CCO’s view that Federated Hermes generally performs significant additional services and assumes substantially greater risks in managing the Fund and other Federated Hermes Funds than in its role as sub-adviser to an unaffiliated third-party registered fund. The Board noted that the CCO did not consider the fees for providing advisory services to other types of clients to be determinative in judging the appropriateness of the Federated Hermes Funds’ advisory fees.
Based on these considerations, the Board concluded that the fees and total operating expenses of the Fund, in conjunction with other matters considered, are reasonable in light of the services provided.
Annual Shareholder Report
43
Profitability
The Board received and considered profitability information furnished by Federated Hermes, as requested by the CCO. Such profitability information included revenues reported on a fund-by-fund basis and estimates of the allocation of expenses made on a fund-by-fund basis, using allocation methodologies specified by the CCO and described to the Board. The Board considered the CCO’s view that, while these cost allocation reports apply consistent allocation processes, the inherent difficulties in allocating costs on a fund-by-fund basis continues to cause the CCO to question the precision of the process and to conclude that such reports may be unreliable because a single change in an allocation estimate may dramatically alter the resulting estimate of cost and/or profitability of a Federated Hermes Fund and may produce unintended consequences. In addition, the Board considered the CCO’s view that the allocation methodologies used by Federated Hermes in estimating profitability for purposes of reporting to the Board in connection with the continuation of the Contract are consistent with the methodologies previously reviewed by an independent consultant. The Board noted that the independent consultant had previously conducted a review of the allocation methodologies and reported that, although there is no single best method to allocate expenses, the methodologies used by Federated Hermes are reasonable. The Board noted the impact of the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, on the profitability of the Fund to the Adviser.
The Board also reviewed information compiled by Federated Hermes comparing its profitability information to other publicly held fund management companies, including information regarding profitability trends over time. The Board considered the CCO’s conclusion that, based on such profitability information, Federated Hermes’ profit margins did not appear to be excessive. The Board also considered the CCO’s view that Federated Hermes appeared financially sound, with the resources necessary to fulfill its obligations under its contracts with the Federated Hermes Funds.
Economies of Scale
The Board received and considered information about the notion of possible realization of “economies of scale” as a fund grows larger, the difficulties of calculating economies of scale at an individual fund level, and the extent to which potential scale benefits are shared with shareholders. In this regard, the Board considered that Federated Hermes has made significant and long-term investments in areas that support all of the Federated Hermes Funds, such as: personnel, processes and tools for portfolio management, including the use of market data on which portfolio managers make investment decisions; trading operations; ESG integration and issuer engagement on ESG matters; shareholder services; compliance; business continuity; cybersecurity; internal audit and risk management functions; and technology that supports the provision of investment management services. The Board noted that Federated
Annual Shareholder Report
44
Hermes’ investments in these areas are extensive and are designed to provide enhanced services to the Federated Hermes Funds and their shareholders. The Board considered that the benefits of these investments are likely to be shared with the family of Federated Hermes Funds as a whole. In addition, the Board considered that fee waivers and expense reimbursements are another means for potential economies of scale to be shared with shareholders and can provide protection from an increase in expenses if a Federated Hermes Fund’s assets decline. The Board considered that, in order for the Federated Hermes Funds to remain competitive in the marketplace, Federated Hermes has frequently waived fees and/or reimbursed expenses for the Federated Hermes Funds and has disclosed to shareholders and/or reported to the Board its intention to do so (or continue to do so) in the future. The Board also considered Federated Hermes’ reductions in contractual management fees for certain Federated Hermes Funds during the prior year, including in response to the CCO’s recommendations in the prior year’s CCO Fee Evaluation Report, which have resulted in benefits being realized by shareholders.
The Board also considered reports on adviser-paid fees (commonly referred to as “revenue sharing”) that were provided to the Board throughout the year and in connection with the May Meetings. The Board considered that Federated Hermes and the CCO believe that this information should be viewed to determine if there was an incentive to either not apply breakpoints, or to apply breakpoints at higher levels, and should not be viewed to evaluate the reasonableness of advisory fees. The Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which is compounded by the lack of any uniform methodology or pattern with respect to structuring fund advisory fees with breakpoints that serve to reduce the fees as a fund attains a certain size.
Other Benefits
The Board considered information regarding the compensation and other ancillary (or “fall-out”) benefits that Federated Hermes derived from its relationships with the Federated Hermes Funds. The Board noted that, in addition to receiving advisory fees under the Federated Hermes Funds’ investment advisory contracts, Federated Hermes’ affiliates also receive fees for providing other services to the Federated Hermes Funds under separate contracts (e.g., for serving as the Federated Hermes Funds’ administrator and distributor). In this regard, the Board considered that certain of Federated Hermes’ affiliates provide distribution and shareholder services to the Federated Hermes Funds, for which they may be compensated through distribution and servicing fees paid pursuant to Rule 12b-1 plans or otherwise. The Board also received and considered information detailing any indirect benefit that Federated Hermes may derive from its receipt of research services from brokers who execute portfolio trades for the Federated Hermes Funds.
Annual Shareholder Report
45
Conclusions
The Board considered: (i) the CCO’s conclusion that his observations and the information accompanying the CCO Fee Evaluation Report show that the management fee for the Fund is reasonable; and (ii) the CCO’s recommendation that the Board approve the management fee. The Board noted that, under these circumstances, no changes were recommended to, and no objection was raised to the continuation of, the Contract by the CCO. The CCO also recognized that the Board’s evaluation of the Federated Hermes Funds’ advisory and sub-advisory arrangements is a continuing and ongoing process that is informed by the information that the Board requests and receives from management throughout the course of the year and, in this regard, the CCO noted certain items for future reporting to the Board or further consideration by management as the Board continues its ongoing oversight of the Federated Hermes Funds.
On the basis of the information and factors summarized above, among other information and factors deemed relevant by the Board, and the evaluation thereof, the Board, including the Independent Trustees, unanimously voted to approve the continuation of the Contract. The Board based its determination to approve the Contract on the totality of the circumstances and relevant factors and with a view of past and future long-term considerations. Not all of the factors and considerations identified above were necessarily deemed to be relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were deemed to be relevant, the Board’s determination to approve the continuation of the Contract reflects its view that Federated Hermes’ performance and actions provided a satisfactory basis to support the determination to approve the continuation of the existing arrangement.
Annual Shareholder Report
46
Voting Proxies on Fund Portfolio Securities
A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund’s portfolio is available, without charge and upon request, by calling 1-800-341-7400, Option #4. A report on “Form N-PX” of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available via the Proxy Voting Record (Form N-PX) link associated with the Fund and share class name at FederatedInvestors.com/FundInformation. Form N-PX filings are also available at the SEC’s website at sec.gov.
Portfolio Schedule
The Fund files with the SEC a complete schedule of its portfolio holdings as of the close of each month on “Form N-MFP.” Form N-MFP is available on the SEC’s website at sec.gov. You may access Form N-MFP via the link to the Fund and share class name at FederatedInvestors.com.
Annual Shareholder Report
47
You could lose money by investing in the Fund. Because the share price of the Fund will fluctuate, when you sell your shares they may be worth more or less than what you originally paid for them. The Fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
This Report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund’s Prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.
Federated Hermes Institutional Prime Obligations Fund
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at FederatedInvestors.com
or call 1-800-341-7400.
or call 1-800-341-7400.
Federated Securities Corp., Distributor
CUSIP 60934N203
Q454500 (9/22)
© 2022 Federated Hermes, Inc.
Annual Shareholder Report
July 31, 2022
|
Share Class | Ticker
|
Institutional | PVOXX
|
Service | PVSXX
|
Capital | PVCXX
|
|
Federated Hermes Institutional Prime Value Obligations Fund
A Portfolio of Federated Hermes Money Market Obligations Trust
Dear Valued Shareholder,
We are pleased to present the Annual Shareholder Report for your fund covering the period from August 1, 2021 through July 31, 2022. This report includes a complete listing of your fund’s holdings, performance information and financial statements along with other important fund information.
As a global leader in active, responsible investment management, Federated Hermes is guided by our conviction that responsible investing is the best way to create wealth over the long term. The company provides capabilities across a wide range of asset classes to investors around the world.
In addition, FederatedInvestors.com offers quick and easy access to valuable resources that include timely fund updates, economic and market insights from our investment strategists and financial planning tools. You can also access many of those insights by following us on Twitter (@FederatedHermes) and LinkedIn.
Thank you for investing with us. We hope you find this information useful and look forward to keeping you informed.
Sincerely,
J. Christopher Donahue, President
The Fund operates as a “Floating Net Asset Value” Money Market Fund.
The Share Price will fluctuate. It is possible to lose money by investing in the Fund.
The Share Price will fluctuate. It is possible to lose money by investing in the Fund.
Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee
Portfolio of Investments Summary Table (unaudited)
At July 31, 2022, the Fund’s portfolio composition1 was as follows:
|
Security Type
|
Percentage of
Total Net Assets2
|
|
Other Repurchase Agreements and Repurchase Agreements
|
37.2%
|
|
Variable Rate Instruments
|
27.2%
|
|
Bank Instruments
|
21.5%
|
|
Commercial Paper
|
14.0%
|
|
U.S. Treasury
|
0.3%
|
|
Other Assets and Liabilities—Net3
|
(0.2)%
|
|
TOTAL
|
100%
|
|
1
|
See the Fund’s Prospectus and Statement of Additional Information for more complete
information regarding these security types.
|
|
2
|
As of the date specified above, the Fund owned shares of one or more affiliated investment
companies. For purposes of this table, the affiliated investment company is not treated as a
single portfolio security, but rather the Fund is treated as owning a pro rata portion of each
security and each other asset and liability owned by the affiliated investment company.
Accordingly, the percentages of total net assets shown in the table will differ from those
presented on the Portfolio of Investments.
|
|
3
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
Annual Shareholder Report
1
Portfolio of Investments
July 31, 2022
|
Shares or
Principal
Amount
|
|
|
Value
|
|
|
|
INVESTMENT COMPANY— 99.7%
|
|
|
10,296,214,894
|
|
Federated Hermes Institutional Prime Obligations Fund, 1.84%1
(IDENTIFIED COST $10,302,294,148)
|
$10,294,155,651
|
|
|
|
OTHER REPURCHASE AGREEMENTS— 0.2%
|
|
|
|
|
Finance - Banking— 0.2%
|
|
|
$ 26,000,000
|
|
Societe Generale, Paris, 2.47%, dated 7/29/2022, interest in a
$650,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $650,133,792 on 8/1/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, treasury bills and medium-term notes with a
market value of $663,136,856 have been received as collateral and
held with BNY Mellon as tri-party agent.
(IDENTIFIED COST $26,000,000)
|
26,000,000
|
|
|
|
TOTAL INVESTMENT IN SECURITIES—99.9%
(IDENTIFIED COST $10,328,294,148)2
|
10,320,155,651
|
|
|
|
OTHER ASSETS AND LIABILITIES - NET—0.1%3
|
8,189,565
|
|
|
|
TOTAL NET ASSETS—100%
|
$10,328,345,216
|
Affiliated fund holdings are investment companies which are managed by Federated Investment Management Company (the “Adviser”) or an affiliate of the Adviser. Transactions with affiliated fund holdings during the period ended July 31, 2022, were as follows:
|
|
Federated Hermes
Institutional Prime
Obligations Fund,
Institutional Shares
|
|
Value as of 7/31/2021
|
$12,792,147,546
|
|
Purchases at Cost
|
$10,846,413,708
|
|
Proceeds from Sales
|
$(13,337,407,099)
|
|
Change in Unrealized Appreciation/Depreciation
|
$(6,111,897)
|
|
Net Realized Gain/(Loss)
|
$(886,607)
|
|
Value as of 7/31/2022
|
$10,294,155,651
|
|
Shares Held as of 7/31/2022
|
10,296,214,894
|
|
Dividend Income
|
$34,863,371
|
The Fund invests in Federated Hermes Institutional Prime Obligations Fund (POF), a diversified portfolio of Federated Hermes Money Market Obligations Trust (MMOT) which is also managed by the Adviser. MMOT is an open-end management investment company, registered under the Investment Company Act of 1940, as amended. The investment objective of POF is to provide current income consistent with stability of principal. Income distributions from POF are declared daily and paid monthly. All income distributions are recorded by the Fund as dividend income. Capital gain distributions of POF, if any, are declared and paid annually, and are recorded by the
Annual Shareholder Report
2
Fund as capital gains received. At July 31, 2022, POF represents 99.7% of the Fund’s net assets. Therefore, the performance of the Fund is directly affected by the performance of POF. To illustrate the security holdings, financial condition, results of operations and changes in net assets of POF, its financial statements are included within this report. The financial statements of POF should be read in conjunction with the Fund’s financial statements. The valuation of securities held by POF is discussed in the notes to its financial statements.
|
1
|
7-day net yield.
|
|
2
|
Also represents cost of investments for federal tax purposes.
|
|
3
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
Note: The categories of investments are shown as a percentage of total net assets at July 31, 2022.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Level 1—quoted prices in active markets for identical securities.
Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Also includes securities valued at amortized cost.
Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used, as of July 31, 2022, in valuing the Fund’s assets carried at fair value:
|
Valuation Inputs
|
||||
|
|
Level 1—
Quoted
Prices
|
Level 2—
Other
Significant
Observable
Inputs
|
Level 3—
Significant
Unobservable
Inputs
|
Total
|
|
Investment Company
|
$10,294,155,651
|
$—
|
$—
|
$10,294,155,651
|
|
Repurchase Agreement
|
—
|
26,000,000
|
—
|
26,000,000
|
|
TOTAL SECURITIES
|
$10,294,155,651
|
$26,000,000
|
$—
|
$10,320,155,651
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
3
Financial Highlights–Institutional Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.0004
|
$1.0006
|
$1.0003
|
$1.0002
|
$1.0002
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income (loss)
|
0.0036
|
0.0008
|
0.0136
|
0.0239
|
0.0156
|
|
Net realized and unrealized gain (loss)
|
(0.0008)
|
(0.0002)
|
0.0003
|
0.0001
|
(0.0000)1
|
|
Total From Investment
Operations
|
0.0028
|
0.0006
|
0.0139
|
0.0240
|
0.0156
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.0036)
|
(0.0008)
|
(0.0136)
|
(0.0239)
|
(0.0156)
|
|
Distributions from net realized gain
|
(0.0001)
|
(0.0000)1
|
(0.0000)1
|
(0.0000)1
|
(0.0000)1
|
|
Total Distributions
|
(0.0037)
|
(0.0008)
|
(0.0136)
|
(0.0239)
|
(0.0156)
|
|
Net Asset Value, End of Period
|
$0.9995
|
$1.0004
|
$1.0006
|
$1.0003
|
$1.0002
|
|
Total Return2
|
0.28%
|
0.06%
|
1.39%
|
2.43%
|
1.57%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
—%
|
—%
|
0.00%4
|
—%
|
0.00%4
|
|
Net investment income
|
0.35%
|
0.08%
|
1.36%
|
2.41%
|
1.59%
|
|
Expense waiver/reimbursement5
|
0.29%
|
0.29%
|
0.29%
|
0.29%
|
0.29%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$9,946,892
|
$12,120,572
|
$15,937,441
|
$13,599,422
|
$6,992,551
|
|
1
|
Represents less than $0.0001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
Represents less than 0.01%.
|
|
5
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
4
Financial Highlights–Service Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.0003
|
$1.0006
|
$1.0003
|
$1.0002
|
$1.0002
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income (loss)
|
0.0025
|
0.0002
|
0.0111
|
0.0214
|
0.0131
|
|
Net realized and unrealized gain (loss)
|
(0.0007)
|
(0.0003)
|
0.0003
|
0.0001
|
(0.0000)1
|
|
Total From Investment Operations
|
0.0018
|
(0.0001)
|
0.0114
|
0.0215
|
0.0131
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.0025)
|
(0.0002)
|
(0.0111)
|
(0.0214)
|
(0.0131)
|
|
Distributions from net realized gain
|
(0.0001)
|
(0.0000)1
|
(0.0000)1
|
(0.0000)1
|
(0.0000)1
|
|
Total Distributions
|
(0.0026)
|
(0.0002)
|
(0.0111)
|
(0.0214)
|
(0.0131)
|
|
Net Asset Value, End of Period
|
$0.9995
|
$1.0003
|
$1.0006
|
$1.0003
|
$1.0002
|
|
Total Return2
|
0.18%
|
(0.01)%
|
1.14%
|
2.18%
|
1.31%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.09%
|
0.08%
|
0.25%
|
0.25%
|
0.25%
|
|
Net investment income
|
0.19%
|
0.01%
|
1.04%
|
2.20%
|
1.26%
|
|
Expense waiver/reimbursement4
|
0.45%
|
0.46%
|
0.29%
|
0.29%
|
0.29%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$372,511
|
$701,955
|
$1,687,886
|
$1,055,438
|
$186,643
|
|
1
|
Represents less than $0.0001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
5
Financial Highlights–Capital Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.0003
|
$1.0006
|
$1.0003
|
$1.0002
|
$1.0002
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income (loss)
|
0.0028
|
0.0003
|
0.0126
|
0.0230
|
0.0146
|
|
Net realized and unrealized gain (loss)
|
(0.0006)
|
(0.0003)
|
0.0003
|
(0.0000)1
|
(0.0000)1
|
|
Total From Investment Operations
|
0.0022
|
—
|
0.0129
|
0.0230
|
0.0146
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.0030)
|
(0.0003)
|
(0.0126)
|
(0.0229)
|
(0.0146)
|
|
Distributions from net realized gain
|
(0.0001)
|
(0.0000)1
|
(0.0000)1
|
(0.0000)1
|
(0.0000)1
|
|
Total Distributions
|
(0.0031)
|
(0.0003)
|
(0.0126)
|
(0.0229)
|
(0.0146)
|
|
Net Asset Value, End of Period
|
$0.9994
|
$1.0003
|
$1.0006
|
$1.0003
|
$1.0002
|
|
Total Return2
|
0.23%
|
0.00%3
|
1.29%
|
2.33%
|
1.47%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses4
|
0.05%
|
0.06%
|
0.10%
|
0.10%
|
0.10%
|
|
Net investment income
|
0.19%
|
0.02%
|
1.24%
|
2.31%
|
1.40%
|
|
Expense waiver/reimbursement5
|
0.34%
|
0.33%
|
0.29%
|
0.29%
|
0.29%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$8,942
|
$20,922
|
$19,074
|
$16,566
|
$12,185
|
|
1
|
Represents less than $0.0001.
|
|
2
|
Based on net asset value.
|
|
3
|
Represents less than 0.01%.
|
|
4
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
5
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
6
Statement of Assets and Liabilities
July 31, 2022
July 31, 2022
|
Assets:
|
|
|
Investment in securities, at value including $10,294,155,651 of investments in an
affiliated holding* (identified cost $10,328,294,148)
|
$10,320,155,651
|
|
Cash
|
48,397
|
|
Income receivable
|
5,352
|
|
Income receivable from an affiliated holding
|
13,318,531
|
|
Receivable for shares sold
|
13,637,000
|
|
Total Assets
|
10,347,164,931
|
|
Liabilities:
|
|
|
Payable for shares redeemed
|
9,032,768
|
|
Income distribution payable
|
9,419,273
|
|
Payable for administrative fee (Note 5)
|
66,578
|
|
Payable for Directors’/Trustees’ fees (Note 5)
|
872
|
|
Payable for other service fees (Notes 2 and 5)
|
53,928
|
|
Accrued expenses (Note 5)
|
246,296
|
|
Total Liabilities
|
18,819,715
|
|
Net assets for 10,333,701,154 shares outstanding
|
$10,328,345,216
|
|
Net Assets Consist of:
|
|
|
Paid-in capital
|
$10,337,918,939
|
|
Total distributable earnings (loss)
|
(9,573,723)
|
|
Total Net Assets
|
$10,328,345,216
|
|
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
|
|
|
Institutional Shares:
|
|
|
$9,946,891,975 ÷ 9,952,050,838 shares outstanding, no par value, unlimited
shares authorized
|
$0.9995
|
|
Service Shares:
|
|
|
$372,511,438 ÷ 372,703,508 shares outstanding, no par value, unlimited
shares authorized
|
$0.9995
|
|
Capital Shares:
|
|
|
$8,941,802 ÷ 8,946,808 shares outstanding, no par value, unlimited
shares authorized
|
$0.9994
|
|
*
|
See information listed after the Fund’s Portfolio of Investments.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
7
Statement of Operations
Year Ended July 31, 2022
Year Ended July 31, 2022
|
Investment Income:
|
|
|
Dividends received from an affiliated holding*
|
$34,863,371
|
|
Interest
|
251,103
|
|
TOTAL INCOME
|
35,114,474
|
|
Expenses:
|
|
|
Investment adviser fee (Note 5)
|
20,286,345
|
|
Administrative fee (Note 5)
|
7,938,349
|
|
Custodian fees
|
282,040
|
|
Transfer agent fees
|
103,760
|
|
Directors’/Trustees’ fees (Note 5)
|
60,299
|
|
Auditing fees
|
25,109
|
|
Legal fees
|
7,361
|
|
Portfolio accounting fees
|
219,297
|
|
Other service fees (Notes 2 and 5)
|
1,224,396
|
|
Share registration costs
|
85,914
|
|
Printing and postage
|
32,957
|
|
Miscellaneous (Note 5)
|
115,982
|
|
TOTAL EXPENSES
|
30,381,809
|
|
Waivers and Reimbursements:
|
|
|
Waiver/reimbursement of investment adviser fee (Note 5)
|
(20,286,345)
|
|
Waiver/reimbursements of other operating expenses (Notes 2 and 5)
|
(9,646,075)
|
|
TOTAL WAIVERS AND REIMBURSEMENTS
|
(29,932,420)
|
|
Net expenses
|
449,389
|
|
Net investment income
|
34,665,085
|
|
Realized and Unrealized Gain (Loss) on Investments:
|
|
|
Net realized loss on investments (including net realized loss of $(886,607) on sales of
investments in an affiliated holding*)
|
(1,328,799)
|
|
Net change in unrealized depreciation of investments in an affiliated holding*
|
(6,111,897)
|
|
Net realized and unrealized gain (loss) on investments
|
(7,440,696)
|
|
Change in net assets resulting from operations
|
$27,224,389
|
|
*
|
See information listed after the Fund’s Portfolio of Investments.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
8
Statement of Changes in Net Assets
|
Year Ended July 31
|
2022
|
2021
|
|
Increase (Decrease) in Net Assets
|
|
|
|
Operations:
|
|
|
|
Net investment income
|
$34,665,085
|
$11,908,591
|
|
Net realized gain (loss)
|
(1,328,799)
|
2,616,301
|
|
Net change in unrealized appreciation/depreciation
|
(6,111,897)
|
(6,530,073)
|
|
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS
|
27,224,389
|
7,994,819
|
|
Distributions to Shareholders:
|
|
|
|
Institutional Shares
|
(34,900,178)
|
(13,019,895)
|
|
Service Shares
|
(972,903)
|
(193,751)
|
|
Capital Shares
|
(35,840)
|
(6,051)
|
|
CHANGE IN NET ASSETS RESULTING FROM
DISTRIBUTIONS TO SHAREHOLDERS
|
(35,908,921)
|
(13,219,697)
|
|
Share Transactions:
|
|
|
|
Proceeds from sale of shares
|
38,690,164,420
|
49,680,032,925
|
|
Net asset value of shares issued to shareholders in payment
of distributions declared
|
10,482,549
|
4,229,653
|
|
Cost of shares redeemed
|
(41,207,066,452)
|
(54,479,989,537)
|
|
CHANGE IN NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
|
(2,506,419,483)
|
(4,795,726,959)
|
|
Change in net assets
|
(2,515,104,015)
|
(4,800,951,837)
|
|
Net Assets:
|
|
|
|
Beginning of period
|
12,843,449,231
|
17,644,401,068
|
|
End of period
|
$10,328,345,216
|
$12,843,449,231
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
9
Notes to Financial Statements
July 31, 2022
1. ORGANIZATION
Federated Hermes Money Market Obligations Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust consists of 16 portfolios. The financial statements included herein are only those of Federated Hermes Institutional Prime Value Obligations Fund (the “Fund”), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder’s interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers three classes of shares: Institutional Shares, Service Shares and Capital Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The investment objective of the Fund is to provide current income consistent with stability of principal and liquidity.
The Fund invests all or substantially all of its net assets in the Institutional Shares of POF (the “Underlying Fund”), an affiliated institutional money market fund with substantially similar investment objectives and strategies as the Fund. Therefore, the performance of the Fund is directly affected by the performance of the Underlying Fund. To illustrate the security holdings, financial condition, results of operations and changes in net assets of the Underlying Fund, its financial statements are included within this report and should be read in conjunction with the Fund’s financial statements.
The Fund operates as an institutional money market fund. As an institutional money market fund, the Fund: (1) will not be limited to institutional investors, but will continue to be available to retail investors; (2) will utilize current market-based prices (except as otherwise generally permitted to value individual portfolio securities with remaining maturities of 60 days or less at amortized cost in accordance with Securities and Exchange Commission (SEC) rules and guidance) to value its portfolio securities and transact at a floating net asset value (NAV) that uses four decimal-place precision ($1.0000); and (3) has adopted policies and procedures to impose liquidity fees on redemptions and/or temporary redemption gates in the event that the Fund’s weekly liquid assets were to fall below a designated threshold, if the Fund’s Board of Trustees (the “Trustees”) determine such liquidity fees or redemption gates are in the best interest of the Fund.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
In calculating its NAV, the Fund generally values investments as follows:
◾
Shares of other mutual funds or non-exchange-traded investment companies are valued based upon their reported NAVs, or NAV per share practical expedient, as applicable.
◾
Fixed-income securities with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Trustees.
Annual Shareholder Report
10
◾
Fixed-income securities with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium), unless the issuer’s creditworthiness is impaired or other factors indicate that amortized cost is not an accurate estimate of the investment’s fair value, in which case it would be valued in the same manner as a longer-term security. The Fund may only use this method to value a portfolio security when it can reasonably conclude, at each time it makes a valuation determination, that the amortized cost price of the portfolio security is approximately the same as the fair value of the security as determined without the use of amortized cost valuation.
◾
For securities that are fair valued in accordance with procedures established by and under the general supervision of the Trustees, certain factors may be considered, such as: the last traded or purchase price of the security, information obtained by contacting the issuer or dealers, analysis of the issuer’s financial statements or other available documents, fundamental analytical data, the nature and duration of restrictions on disposition, the movement of the market in which the security is normally traded, public trading in similar securities or derivative contracts of the issuer or comparable issuers, movement of a relevant index, or other factors including but not limited to industry changes and relevant government actions.
If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, if the Fund cannot obtain price evaluations from a pricing service or from more than one dealer for an investment within a reasonable period of time as set forth in the Fund’s valuation policies and procedures, or if information furnished by a pricing service, in the opinion of the valuation committee (“Valuation Committee”), is deemed not representative of the fair value of such security, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines its NAV per share, and the actual value obtained could be materially different.
Fair Valuation Procedures
The Trustees have ultimate responsibility for determining the fair value of investments for which market quotations are not readily available. The Trustees have appointed a Valuation Committee comprised of officers of the Fund, Federated Investment Management Company (the “Adviser”) and certain of the Adviser’s affiliated companies to assist in determining fair value and in overseeing the calculation of the NAV. The Trustees have also authorized the use of pricing services recommended by the Valuation Committee to provide fair value evaluations of the current value of certain investments for purposes of calculating the NAV. The Valuation Committee employs various methods for reviewing third-party pricing-service evaluations including periodic reviews of third-party pricing services’ policies, procedures and valuation methods (including key inputs, methods, models and assumptions), transactional back-testing, comparisons of evaluations of different pricing services, and review of price challenges by the Adviser based on recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee determines the fair value of the investment in accordance with procedures adopted by the Trustees. The Trustees periodically review and approve the fair valuations made by the Valuation Committee and any changes made to the procedures.
Annual Shareholder Report
11
Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a “bid” evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a “mid” evaluation). The Fund normally uses bid evaluations for any U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for any other types of fixed-income securities and any over-the-counter derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.
Repurchase Agreements
The Fund may invest in repurchase agreements for short-term liquidity purposes. It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund’s custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control” as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.
The insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.
The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund’s Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.
Repurchase agreements are subject to Master Netting Agreements which are agreements between the Fund and its counterparties that provide for the net settlement of all transactions and collateral with the Fund, through a single payment, in the event of default or termination. Amounts presented on the Portfolio of Investments and Statement of Assets and Liabilities are not net settlement amounts but gross. As indicated above, the cash or securities to be repurchased, as shown on the Portfolio of Investments, exceeds the repurchase price to be paid under the agreement reducing the net settlement amount to zero.
Annual Shareholder Report
12
Investment Income, Gains and Losses, Expenses and Distributions
Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis. Interest income and expenses are accrued daily. Distributions of net investment income, if any, are declared daily and paid monthly. Amortization/accretion of premium and discount is included in investment income. Investment income, realized and unrealized gains and losses, and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that select classes will bear certain expenses unique to those classes. The detail of the total fund expense waivers and reimbursements of $29,932,420 is disclosed in various locations in this Note 2 and Note 5.
Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.
Other Service Fees
The Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund’s Institutional Shares, Service Shares and Capital Shares to unaffiliated financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for other service fees. In addition, unaffiliated third-party financial intermediaries may waive other service fees. This waiver can be modified or terminated at any time.
For the year ended July 31, 2022, other service fees for the Fund were as follows:
|
|
Other Service
Fees Incurred
|
Other Service
Fees Reimbursed
|
Other Service Fees
Waived by Unaffiliated
Third Parties
|
|
Service Shares
|
$1,207,280
|
$(35,800)
|
$(730,147)
|
|
Capital Shares
|
17,116
|
—
|
(9,059)
|
|
TOTAL
|
$1,224,396
|
$(35,800)
|
$(739,206)
|
For the year ended July 31, 2022, the Fund’s Institutional Shares did not incur other service fees.
Federal Taxes
It is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code (the “Code”) and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. As of and during the year ended July 31, 2022, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2022, tax years 2019 through 2022 remain subject to examination by the Fund’s major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.
Annual Shareholder Report
13
When-Issued and Delayed-Delivery Transactions
The Fund may engage in when-issued or delayed-delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed-delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
Restricted Securities
The Fund may purchase securities which are considered restricted. Restricted securities are securities that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) are subject to contractual restrictions on public sales. In some cases, when a security cannot be offered for public sale without first being registered, the issuer of the restricted security has agreed to register such securities for resale, at the issuer’s expense, either upon demand by the Fund or in connection with another registered offering of the securities. Many such restricted securities may be resold in the secondary market in transactions exempt from registration. Restricted securities may be determined to be liquid under criteria established by the Trustees. The Fund will not incur any registration costs upon such resales. The Fund’s restricted securities, like other securities, are priced in accordance with procedures established by and under the general supervision of the Trustees.
Other
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ materially from those estimated. The Fund applies investment company accounting and reporting guidance.
3. SHARES OF BENEFICIAL INTEREST
The following tables summarize share activity:
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Institutional Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
38,562,278,787
|
$38,557,456,148
|
48,981,048,371
|
$48,998,521,164
|
|
Shares issued to shareholders
in payment of
distributions declared
|
9,493,387
|
9,489,444
|
4,030,582
|
4,032,084
|
|
Shares redeemed
|
(40,735,979,904)
|
(40,732,381,207)
|
(52,796,548,875)
|
(52,814,602,302)
|
|
NET CHANGE RESULTING
FROM INSTITUTIONAL
SHARE TRANSACTIONS
|
(2,164,207,730)
|
$(2,165,435,615)
|
(3,811,469,922)
|
$(3,812,049,054)
|
Annual Shareholder Report
14
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Service Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
127,450,141
|
$127,416,583
|
664,745,362
|
$664,998,659
|
|
Shares issued to shareholders
in payment of
distributions declared
|
957,705
|
957,294
|
192,418
|
192,481
|
|
Shares redeemed
|
(457,418,370)
|
(457,394,097)
|
(1,650,094,556)
|
(1,650,722,974)
|
|
NET CHANGE RESULTING
FROM SERVICE
SHARE TRANSACTIONS
|
(329,010,524)
|
$(329,020,220)
|
(985,156,776)
|
$(985,531,834)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Capital Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
5,292,088
|
$5,291,689
|
16,507,178
|
$16,513,102
|
|
Shares issued to shareholders
in payment of
distributions declared
|
35,826
|
35,811
|
5,086
|
5,088
|
|
Shares redeemed
|
(17,295,855)
|
(17,291,148)
|
(14,659,841)
|
(14,664,261)
|
|
NET CHANGE RESULTING
FROM CAPITAL
SHARE TRANSACTIONS
|
(11,967,941)
|
$(11,963,648)
|
1,852,423
|
$1,853,929
|
|
NET CHANGE RESULTING
FROM TOTAL FUND
SHARE TRANSACTIONS
|
(2,505,186,195)
|
$(2,506,419,483)
|
(4,794,774,275)
|
$(4,795,726,959)
|
4. FEDERAL TAX INFORMATION
The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2022 and 2021, was as follows:
|
|
2022
|
2021
|
|
Ordinary income
|
$34,608,506
|
$12,030,928
|
|
Long-term capital gains
|
$1,300,415
|
$1,188,769
|
As of July 31, 2022, the components of distributable earnings on a tax-basis were as follows:
|
Distributions payable
|
$(106,427)
|
|
Net unrealized depreciation
|
$(8,138,497)
|
|
Capital loss carryforwards
|
$(1,328,799)
|
At July 31, 2022, the cost of investments for federal tax purposes was $10,328,294,148. The net unrealized depreciation of investments for federal tax purposes was $8,138,497. This consists entirely of net unrealized depreciation from investments for those securities having an excess of cost over value of $8,138,497.
Annual Shareholder Report
15
As of July 31, 2022, the Fund had a capital loss carryforward of $1,328,799 which will reduce the Fund’s taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code, thereby reducing the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, these net capital losses retain their character as either short-term or long-term and do not expire.
The following schedule summarizes the Fund’s capital loss carryforwards:
|
Short-Term
|
Long-Term
|
Total
|
|
$1,328,799
|
$—
|
$1,328,799
|
5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.20% of the Fund’s average daily net assets. The Underlying Fund also has an investment advisory agreement with the Adviser by which the Adviser is entitled to an investment adviser fee with respect to the Underlying Fund’s average daily net assets. To avoid charging duplicative fees, the Adviser has agreed to waive and/or reimburse its fee with respect to the Fund’s net assets invested in the Underlying Fund. For the year ended July 31, 2022, the Adviser voluntarily waived and/or reimbursed all of its fee.
In addition, subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive and/or reimburse certain operating expenses of the Fund for competitive reasons such as to maintain the Fund’s expense ratio, or as and when appropriate, to maintain positive or zero net yields. For the year ended July 31, 2022, the Adviser voluntarily reimbursed $8,871,069 of other operating expenses.
Administrative Fee
Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated Hermes Funds subject to a fee under the Administrative Services Agreement. The fee paid to FAS is based on the average daily net assets of the Investment Complex as specified below:
|
Administrative Fee
|
Average Daily Net Assets
of the Investment Complex
|
|
0.100%
|
on assets up to $50 billion
|
|
0.075%
|
on assets over $50 billion
|
Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2022, the annualized fee paid to FAS was 0.078% of average daily net assets of the Fund.
In addition, FAS may charge certain out-of-pocket expenses to the Fund.
Annual Shareholder Report
16
Other Service Fees
For the year ended July 31, 2022, FSSC reimbursed $35,800 of the other service fees disclosed in Note 2.
Expense Limitation
Due to the possibility of changes in market conditions and other factors, there can be no assurance that the level of waivers and/or reimbursements of Fund expenses reflected in the financial highlights will be maintained in the future. However, the Adviser and certain of its affiliates (which may include FAS and FSSC) on their own initiative have agreed to waive certain amounts of their respective fees and/or reimburse expenses. Total annual fund operating expenses (as shown in the financial highlights, excluding interest expense, extraordinary expenses and proxy-related expenses paid by the Fund, if any) and the Fund’s share of the fees and expenses of the Underlying Fund paid by the Fund’s Institutional Shares, Service Shares and Capital Shares (after the voluntary waivers and/or reimbursements) will not exceed 0.20%, 0.45% and 0.30% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) October 1, 2023; or (b) the date of the Fund’s next effective Prospectus. While the Adviser and its applicable affiliates currently do not anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or the Fee Limit increased prior to the Termination Date with the agreement of the Trustees.
Directors’/Trustees’ and Miscellaneous Fees
Certain Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate payment, Independent Directors’/Trustees’ fees and certain expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses are paid by an affiliate of the Adviser which in due course are reimbursed by the Fund. These expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses may be included in Accrued and Miscellaneous Expenses on the Statement of Assets and Liabilities and Statement of Operations, respectively.
Affiliated Shares of Beneficial Interest
As of July 31, 2022, a majority of the shares of beneficial interest outstanding are owned by other affiliated investment companies.
6. CONCENTRATION OF RISK
A substantial part of the Fund’s portfolio invested in the Underlying Fund may be comprised of obligations of banks. As a result, the Fund may be more susceptible to any economic, business, political or other developments which generally affect these entities.
7. LINE OF CREDIT
The Fund participates with certain other Federated Hermes Funds, on a several basis, in an up to $500,000,000 unsecured, 364-day, committed, revolving line of credit (LOC) agreement dated June 22, 2022. The LOC was made available to temporarily finance the repurchase or redemption of shares of the Fund, failed trades, payment of dividends, settlement of trades and for other short-term, temporary or emergency general business purposes. The Fund cannot borrow under the LOC if an inter-fund loan is outstanding. The Fund’s ability to borrow under the LOC also is subject to the
Annual Shareholder Report
17
limitations of the Act and various conditions precedent that must be satisfied before the Fund can borrow. Loans under the LOC are charged interest at a fluctuating rate per annum equal to (a) the highest, on any day, of (i) the federal funds effective rate, (ii) the published secured overnight financing rate plus an assigned percentage, and (iii) 0.0%, plus (b) a margin. Any fund eligible to borrow under the LOC pays its pro rata share of a commitment fee based on the amount of the lenders’ commitment that has not been utilized, quarterly in arrears and at maturity. As of July 31, 2022, the Fund had no outstanding loans. During the year ended July 31, 2022, the Fund did not utilize the LOC.
8. INTERFUND LENDING
Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other funds advised by subsidiaries of Federated Hermes, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating affiliated funds. As of July 31, 2022, there were no outstanding loans. During the year ended July 31, 2022, the program was not utilized.
9. INDEMNIFICATIONS
Under the Fund’s organizational documents, its Officers and Directors/Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund (other than liabilities arising out of their willful misfeasance, bad faith, gross negligence or reckless disregard of their duties to the Fund). In addition, in the normal course of business, the Fund provides certain indemnifications under arrangements with third parties. Typically, obligations to indemnify a third party arise in the context of an arrangement entered into by the Fund under which the Fund agrees to indemnify such third party for certain liabilities arising out of actions taken pursuant to the arrangement, provided the third party’s actions are not deemed to have breached an agreed-upon standard of care (such as willful misfeasance, bad faith, gross negligence or reckless disregard of their duties under the contract). The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet arisen. The Fund does not anticipate any material claims or losses pursuant to these arrangements at this time, and accordingly expects the risk of loss to be remote.
10. OTHER MATTERS
An outbreak of respiratory disease caused by a novel coronavirus was first detected in China in late 2019 and subsequently spread globally. As of the date of the issuance of these financial statements, this coronavirus has resulted in closing borders, enhanced health screenings, disruptions to healthcare service preparation and delivery, quarantines, cancellations, and disruptions to supply chains, workflow operations and consumer activity, as well as general concern and uncertainty. The impact of this coronavirus may continue for an extended period of time and has resulted in substantial economic volatility. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could continue to negatively affect the worldwide economy, as well as the economies of individual countries, individual companies (including certain Fund service providers and issuers of the Fund’s investments) and the markets in general in significant and unforeseen ways. Any such impact could adversely affect the Fund’s performance.
Annual Shareholder Report
18
11. FEDERAL TAX INFORMATION (UNAUDITED)
For the year ended July 31, 2022, the amount of long-term capital gains designated by the Fund was $1,300,415.
For the fiscal year ended July 31, 2022, 75.77% of dividends paid by the Fund are interest-related dividends, as provided by the American Jobs Creation Act of 2004.
Annual Shareholder Report
19
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Federated Hermes Money Market Obligations Trust and the Shareholders of Federated Hermes Institutional Prime Value Obligations Fund:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of the Federated Hermes Institutional Prime Value Obligations Fund (the Fund), a portfolio of Federated Hermes Money Market Obligations Trust, including the portfolio of investments, as of July 31, 2022, the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the related notes (collectively, the financial statements) and the financial highlights for each of the years in the five-year period then ended. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of July 31, 2022, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
Annual Shareholder Report
20
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Such procedures also included confirmation of securities owned as of July 31, 2022, by correspondence with custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of Federated Hermes’ investment companies since 2006.
Boston, Massachusetts
September 23, 2022
September 23, 2022
Annual Shareholder Report
21
Shareholder Expense Example (unaudited)
As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or other service fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2022 to July 31, 2022.
ACTUAL EXPENSES
The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses attributable to your investment during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Annual Shareholder Report
22
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
|
|
Beginning
Account Value
2/1/2022
|
Ending
Account Value
7/31/2022
|
Expenses Paid
During Period1
|
|
Actual:
|
|
|
|
|
Institutional Shares
|
$1,000
|
$1,003.00
|
$—2
|
|
Service Shares
|
$1,000
|
$1,002.00
|
$0.993
|
|
Capital Shares
|
$1,000
|
$1,002.50
|
$0.454
|
|
Hypothetical (assuming a 5% return
before expenses):
|
|
|
|
|
Institutional Shares
|
$1,000
|
$1,024.79
|
$—2
|
|
Service Shares
|
$1,000
|
$1,023.80
|
$1.003
|
|
Capital Shares
|
$1,000
|
$1,024.35
|
$0.454
|
|
1
|
Expenses are equal to the Fund’s annualized net expense ratios, multiplied by the average
account value over the period, multiplied by 181/365 (to reflect the one-half-year period). The
annualized net expense ratios are as follows:
|
|
Institutional Shares
|
0.00%
|
|
Service Shares
|
0.20%
|
|
Capital Shares
|
0.09%
|
|
2
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Institutional Shares
current Fee Limit of 0.20% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $0.99 and $1.00, respectively.
|
|
3
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Service Shares
current Fee Limit of 0.45% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $2.23 and $2.26, respectively.
|
|
4
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Capital Shares
current Fee Limit of 0.30% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $1.49 and $1.51, respectively.
|
Annual Shareholder Report
23
Federated Hermes Institutional Prime Obligations Fund
Financial INFORMATION
Federated Hermes Institutional Prime Value Obligations Fund invests primarily in Federated Hermes Institutional Prime Obligations Fund. Therefore, the Federated Hermes Institutional Prime Obligations Fund’s financial information is included on pages 25 through 53.
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
24
Portfolio of Investments Summary Tables (unaudited)
At July 31, 2022, the Fund’s portfolio composition1 was as follows:
|
Security Type
|
Percentage of
Total Net Assets
|
|
Other Repurchase Agreements and Repurchase Agreements
|
37.0%
|
|
Variable Rate Instruments
|
27.3%
|
|
Bank Instruments
|
21.7%
|
|
Commercial Paper
|
14.0%
|
|
U.S. Treasury Securities
|
0.3%
|
|
Other Assets and Liabilities—Net2
|
(0.3)%
|
|
TOTAL
|
100%
|
|
1
|
See the Fund’s Prospectus and Statement of Additional Information for a description of these
security types.
|
|
2
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
At July 31, 2022, the Fund’s effective maturity schedule1 was as follows:
|
Securities With an
Effective Maturity of:
|
Percentage of
Total Net Assets
|
|
1-7 Days2
|
79.5%
|
|
8-30 Days
|
5.3%
|
|
31-90 Days
|
9.9%
|
|
91-180 Days
|
2.1%
|
|
181 Days or more
|
3.5%
|
|
Other Assets and Liabilities—Net3
|
(0.3)%
|
|
Total
|
100%
|
|
1
|
Effective maturity is determined in accordance with the requirements of Rule 2a-7 under the
Investment Company Act of 1940, which regulates money market mutual funds.
|
|
2
|
Overnight securities comprised 35.6% of the Fund’s portfolio.
|
|
3
|
Assets, other than investments in securities, less liabilities. See Statement of Assets
and Liabilities.
|
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
25
Portfolio of Investments
July 31, 2022
|
Principal
Amount
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— 27.3%
|
|
|
|
|
Finance - Banking— 23.3%
|
|
|
$ 90,000,000
|
|
Anglesea Funding LLC, (Bank of Nova Scotia, Toronto
COL)/(Nordea Bank Abp COL)/(Societe Generale, Paris COL),
2.460% (SOFR+0.180%), 8/10/2022
|
$ 90,000,000
|
|
6,500,000
|
|
Anglesea Funding LLC, (Bank of Nova Scotia, Toronto
COL)/(Nordea Bank Abp COL)/(Societe Generale, Paris COL),
2.680% (Overnight Banking Fund Rate +0.360%), 12/23/2022
|
6,500,000
|
|
30,000,000
|
|
ASB Bank Ltd., 2.000% (SOFR +0.470%), 8/2/2022
|
30,008,140
|
|
110,000,000
|
|
Bank of Montreal, 2.230% (SOFR +0.700%), 8/1/2022
|
110,036,615
|
|
104,000,000
|
|
Bank of Montreal, 2.430% (SOFR +0.150%), 8/1/2022
|
103,955,840
|
|
30,000,000
|
|
Bank of Montreal, 2.840% (SOFR +0.560%), 8/1/2022
|
29,963,024
|
|
60,000,000
|
|
Bank of Montreal, 2.930% (SOFR +0.650%), 8/1/2022
|
59,632,964
|
|
100,000,000
|
|
Bank of Nova Scotia, Toronto, 2.430% (SOFR +0.150%), 8/1/2022
|
100,000,000
|
|
50,000,000
|
|
Bank of Nova Scotia, Toronto, 2.530% (SOFR +0.250%), 8/1/2022
|
49,909,739
|
|
25,000,000
|
|
Bank of Nova Scotia, Toronto, 2.780% (SOFR +0.500%), 8/1/2022
|
24,968,645
|
|
33,500,000
|
|
Bank of Nova Scotia, Toronto, 2.800% (SOFR +0.520%), 8/2/2022
|
33,500,000
|
|
20,000,000
|
|
Bank of Nova Scotia, Toronto, 2.860% (SOFR +0.580%), 8/1/2022
|
20,007,378
|
|
125,000,000
|
|
Bank of Nova Scotia, Toronto, 2.950% (SOFR +0.670%), 8/1/2022
|
124,975,245
|
|
25,000,000
|
|
Canadian Imperial Bank of Commerce, 2.490% (SOFR
+0.210%), 8/1/2022
|
24,983,767
|
|
54,000,000
|
|
Canadian Imperial Bank of Commerce, 2.780% (SOFR
+0.500%), 8/1/2022
|
53,923,257
|
|
120,000,000
|
|
Canadian Imperial Bank of Commerce, 2.780% (SOFR
+0.500%), 8/1/2022
|
119,833,600
|
|
120,000,000
|
|
Canadian Imperial Bank of Commerce, 2.830% (SOFR
+0.550%), 8/1/2022
|
119,843,012
|
|
50,000,000
|
|
Canadian Imperial Bank of Commerce, 2.920% (SOFR
+0.640%), 8/1/2022
|
50,000,000
|
|
50,000,000
|
|
Canadian Imperial Holdings, Inc., 2.800% (SOFR
+0.520%), 8/1/2022
|
49,930,476
|
|
4,025,000
|
|
Centra State Medical Arts Building LLC, (TD Bank, N.A. LOC),
2.410%, 8/3/2022
|
4,025,000
|
|
55,000,000
|
|
Collateralized Commercial Paper V Co. LLC, (J.P. Morgan Securities
LLC COL), 2.780% (SOFR +0.500%), 8/1/2022
|
55,014,030
|
|
35,000,000
|
|
Collateralized Commercial Paper V Co. LLC, (J.P. Morgan Securities
LLC COL), 2.830% (SOFR +0.550%), 8/1/2022
|
35,000,000
|
|
45,000,000
|
|
Commonwealth Bank of Australia, 2.710% (SOFR
+0.430%), 8/2/2022
|
44,958,374
|
|
50,000,000
|
|
Commonwealth Bank of Australia, 2.780% (SOFR
+0.500%), 8/1/2022
|
49,973,325
|
|
25,000,000
|
|
Commonwealth Bank of Australia, 2.820% (SOFR
+0.540%), 8/1/2022
|
24,990,651
|
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
26
|
Principal
Amount
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 16,700,000
|
|
Greene County Development Authority, Reynolds Lodge, LLC
Series 2000B, (U.S. Bank, N.A. LOC), 1.800%, 8/3/2022
|
$ 16,700,000
|
|
3,000,000
|
|
Griffin-Spalding County, GA Development Authority, Norcom, Inc.
Project 2013A, (Bank of America N.A. LOC), 2.450%, 8/4/2022
|
3,000,000
|
|
7,000,000
|
|
Griffin-Spalding County, GA Development Authority, Norcom, Inc.
Project, (Bank of America N.A. LOC), 2.450%, 8/4/2022
|
7,000,000
|
|
7,595,000
|
|
Gulf Gate Apartments LLC, Series 2003, (Wells Fargo Bank, N.A.
LOC), 2.370%, 8/4/2022
|
7,595,000
|
|
12,320,000
|
|
Hamilton Station Park and Ride, Series 2005, (Wells Fargo Bank,
N.A. LOC), 2.370%, 8/4/2022
|
12,320,000
|
|
15,365,000
|
|
Los Angeles County Fair Association, (Wells Fargo Bank, N.A. LOC),
2.340%, 8/3/2022
|
15,365,000
|
|
9,000,000
|
|
Michael Dennis Sullivan Irrevocable Trust, (Wells Fargo Bank, N.A.
LOC), 2.450%, 8/4/2022
|
9,000,000
|
|
100,000,000
|
|
MUFG Bank Ltd., 1.860% (SOFR +0.330%), 8/1/2022
|
100,000,000
|
|
79,000,000
|
|
National Australia Bank Ltd., Melbourne, 2.460% (SOFR
+0.180%), 8/2/2022
|
79,000,000
|
|
110,000,000
|
|
Nordea Bank Abp, 1.680% (SOFR +0.150%), 8/1/2022
|
110,000,000
|
|
115,000,000
|
|
Nordea Bank Abp, 1.690% (SOFR +0.160%), 8/1/2022
|
115,000,000
|
|
109,000,000
|
|
Nordea Bank Abp, 2.080% (SOFR +0.550%), 8/1/2022
|
109,000,000
|
|
34,000,000
|
|
Nuveen Floating Rate Income Fund, (Series A), (Sumitomo Mitsui
Banking Corp. LOC), 2.470%, 8/4/2022
|
34,000,000
|
|
3,115,000
|
|
Public Building Corp. Springfield, MO, Jordan Valley Ice Park, Series
2003, (U.S. Bank, N.A. LOC), 2.380%, 8/4/2022
|
3,115,000
|
|
150,000,000
|
|
Royal Bank of Canada, 2.830% (SOFR +0.550%), 8/1/2022
|
149,837,175
|
|
62,500,000
|
|
Royal Bank of Canada, 3.030% (SOFR +0.750%), 8/1/2022
|
62,500,000
|
|
152,500,000
|
|
Royal Bank of Canada, New York Branch, 2.430% (SOFR
+0.150%), 8/2/2022
|
152,427,909
|
|
18,965,000
|
|
Salem Green, LLP, Salem Green Apartments Project, Series 2010,
(Wells Fargo Bank, N.A. LOC), 2.370%, 8/4/2022
|
18,965,000
|
|
150,000,000
|
|
Svenska Handelsbanken, Stockholm, 2.080% (SOFR
+0.550%), 8/1/2022
|
150,000,000
|
|
62,284,973
|
|
Taxable Tender Option Bond Trust 2021-MIZ9060TX,
(Series 2021-MIZ9060TX) VRDNs, (GTD by Mizuho Bank
Ltd.)/(Mizuho Bank Ltd. LIQ), 2.590%, 8/1/2022
|
62,284,973
|
|
25,000,000
|
|
Taxable Tender Option Bond Trust 2021-MIZ9071TX,
(Series 2021-MIZ9071TX) VRDNs, (GTD by Mizuho Bank
Ltd.)/(Mizuho Bank Ltd. LIQ), 2.720%, 8/1/2022
|
25,000,000
|
|
10,000,000
|
|
Taxable Tender Option Bond Trust 2021-MIZ9075TX,
(Series MIZ-9075TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho Bank
Ltd. LOC), 2.590%, 8/1/2022
|
10,000,000
|
|
4,680,000
|
|
Taxable Tender Option Bond Trust 2021-MIZ9077TX,
(Series 2021-MIZ9077TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho
Bank Ltd. LOC), 2.590%, 8/1/2022
|
4,680,000
|
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
27
|
Principal
Amount
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 3,000,000
|
|
Taxable Tender Option Bond Trust 2021-MIZ9078TX,
(Series 2021-MIZ9078TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho
Bank Ltd. LOC), 2.590%, 8/1/2022
|
$ 3,000,000
|
|
3,954,172
|
|
Taxable Tender Option Bond Trust 2021-MIZ9083TX,
(Series 2021-MIZ9083TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho
Bank Ltd. LOC), 2.590%, 8/1/2022
|
3,954,172
|
|
18,750,000
|
|
Taxable Tender Option Bond Trust 2022-MIZ9087TX,
(Series 2022-MIZ9096TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho
Bank Ltd. LOC), 2.640%, 8/4/2022
|
18,750,000
|
|
30,000,000
|
|
Taxable Tender Option Bond Trust2021-MIZ9070TX,
(Series 2021-MIZ9070TX) VRDNs, (GTD by Mizuho Bank
Ltd.)/(Mizuho Bank Ltd. LIQ), 2.720%, 8/1/2022
|
30,000,000
|
|
68,300,000
|
|
Triborough Bridge & Tunnel Authority, NY, (Taxable Series E)
Weekly VRDNs, (Bank of America N.A. LOC), 2.310%, 8/4/2022
|
68,300,000
|
|
3,600,000
|
|
Village Green Finance Co. LLC, (Series 1997), (Wells Fargo Bank,
N.A. LOC), 2.660%, 8/3/2022
|
3,600,000
|
|
99,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.730% (SOFR
+0.450%), 8/1/2022
|
98,900,322
|
|
150,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.730%
(SOFR+0.450%), 8/2/2022
|
149,841,945
|
|
80,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.780% (SOFR
+0.500%), 8/1/2022
|
80,004,166
|
|
40,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.780% (SOFR
+0.500%), 8/1/2022
|
39,976,808
|
|
136,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.780% (SOFR
+0.500%), 8/2/2022
|
135,917,855
|
|
5,870,000
|
|
Yeshivas Novominsk, Series 2008, (TD Bank, N.A. LOC),
2.450%, 8/4/2022
|
5,870,000
|
|
|
|
TOTAL
|
3,310,838,407
|
|
|
|
Finance - Retail— 2.3%
|
|
|
70,000,000
|
|
Chariot Funding LLC, 1.710% (SOFR +0.180%), 8/1/2022
|
70,000,000
|
|
45,000,000
|
|
Chariot Funding LLC, 2.680% (SOFR +0.400%), 8/1/2022
|
44,997,621
|
|
45,000,000
|
|
Old Line Funding, LLC, 2.080% (SOFR +0.550%), 1/9/2023
|
44,994,657
|
|
100,000,000
|
|
Old Line Funding, LLC, 2.830% (SOFR +0.550%), 10/3/2022
|
100,016,040
|
|
47,500,000
|
|
Thunder Bay Funding, LLC, 2.080% (SOFR +0.550%), 9/26/2022
|
47,500,000
|
|
25,000,000
|
|
Thunder Bay Funding, LLC, 2.880% (SOFR +0.600%), 10/20/2022
|
25,006,354
|
|
|
|
TOTAL
|
332,514,672
|
|
|
|
Government Agency— 1.7%
|
|
|
5,285,000
|
|
1320 W Jefferson LLC, (Federal Home Loan Bank of San Francisco
LOC), 2.450%, 8/3/2022
|
5,285,000
|
|
42,450,000
|
|
Archer 1 LLC, (Federal Home Loan Bank of San Francisco LOC),
2.450%, 8/4/2022
|
42,450,000
|
|
9,015,000
|
|
Austen Children’s Gift Trust, (Federal Home Loan Bank of Dallas
LOC), 2.450%, 8/4/2022
|
9,015,000
|
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
28
|
Principal
Amount
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— continued
|
|
|
|
|
Government Agency— continued
|
|
|
$ 6,830,000
|
|
Baker Life Insurance Trust, (Federal Home Loan Bank of Des Moines
LOC), 2.450%, 8/4/2022
|
$ 6,830,000
|
|
34,850,000
|
|
BWF Forge TL Properties Owner LLC, (Federal Home Loan Bank of
Des Moines LOC)/(Federal Home Loan Bank of San Francisco LOC),
2.450%, 8/4/2022
|
34,850,000
|
|
5,705,000
|
|
Catania Family Trust, (Federal Home Loan Bank of Dallas LOC),
2.450%, 8/4/2022
|
5,705,000
|
|
4,270,000
|
|
Jim Brooks Irrevocable Trust, (Federal Home Loan Bank of Dallas
LOC), 2.440%, 8/4/2022
|
4,270,000
|
|
11,570,000
|
|
Joseph L. Goggins Irrevocable Insurance Trust, (Federal Home Loan
Bank of Des Moines LOC), 2.450%, 8/4/2022
|
11,570,000
|
|
3,655,000
|
|
Karyn Brooks Descendants Trust, (Federal Home Loan Bank of
Dallas LOC), 2.440%, 8/4/2022
|
3,655,000
|
|
6,380,000
|
|
MHF DKF Insurance Trust, (Federal Home Loan Bank of Dallas
LOC), 2.450%, 8/3/2022
|
6,380,000
|
|
17,030,000
|
|
Mohr Green Associates L.P., 2012-A, (Federal Home Loan Bank of
San Francisco LOC), 2.450%, 8/4/2022
|
17,030,000
|
|
22,610,000
|
|
NWD 2017 Family Trust No. 1, (Federal Home Loan Bank of Dallas
LOC), 2.450%, 8/4/2022
|
22,610,000
|
|
9,080,000
|
|
Park Stanton Place LP, (Federal Home Loan Bank of San Francisco
LOC), 2.450%, 8/4/2022
|
9,080,000
|
|
5,010,000
|
|
R.J. Brooks Jr. Irrevocable Trust, (Federal Home Loan Bank of Dallas
LOC), 2.440%, 8/4/2022
|
5,010,000
|
|
6,980,000
|
|
RK Trust, (Federal Home Loan Bank of Dallas LOC),
2.450%, 8/4/2022
|
6,980,000
|
|
6,255,000
|
|
Sibley Family Irrevocable Insurance Trust, (Federal Home Loan Bank
of Des Moines LOC), 2.450%, 8/4/2022
|
6,255,000
|
|
6,610,000
|
|
The CLC Irrevocable Insurance Trust, (Federal Home Loan Bank of
Des Moines LOC), 2.450%, 8/4/2022
|
6,610,000
|
|
5,120,000
|
|
The Eugene Kim Irrevocable Life Insurance Trust, (Federal Home
Loan Bank of Dallas LOC), 2.450%, 8/4/2022
|
5,120,000
|
|
22,830,000
|
|
The Gregory P. Berry Trust, (Federal Home Loan Bank of Des
Moines LOC), 2.450%, 8/3/2022
|
22,830,000
|
|
5,740,000
|
|
The Leopold Family Insurance Trust, (Federal Home Loan Bank of
Dallas LOC), 2.450%, 8/4/2022
|
5,740,000
|
|
5,975,000
|
|
The Thompson 2018 Family Trust, (Federal Home Loan Bank of
Dallas LOC), 2.440%, 8/4/2022
|
5,975,000
|
|
|
|
TOTAL
|
243,250,000
|
|
|
|
TOTAL NOTES - VARIABLE
(IDENTIFIED COST $3,888,274,137)
|
3,886,603,079
|
|
|
2
|
COMMERCIAL PAPER— 14.0%
|
|
|
|
|
Finance - Banking— 10.7%
|
|
|
63,970,000
|
|
Antalis S.A., (Societe Generale, Paris LIQ), 1.773% - 1.853%,
8/1/2022 - 8/5/2022
|
63,965,027
|
|
60,000,000
|
|
Bank of Montreal, 2.800%, 5/9/2023
|
60,003,463
|
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
29
|
Principal
Amount
|
|
|
Value
|
|
|
2
|
COMMERCIAL PAPER— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 200,000,000
|
|
Bank of Nova Scotia, Toronto, 0.200% - 0.210%, 9/8/2022 -
9/29/2022
|
$ 199,336,437
|
|
100,000,000
|
|
Bennington Stark Capital Co., LLC, (Societe Generale, Paris LIQ),
2.120%, 8/2/2022
|
99,994,111
|
|
104,000,000
|
|
Canadian Imperial Bank of Commerce, 0.503% - 2.070%,
12/1/2022 - 3/20/2023
|
102,483,433
|
|
50,000,000
|
|
Canadian Imperial Holdings, Inc., 0.351%, 11/8/2022
|
49,631,666
|
|
42,500,000
|
|
Chesham Finance LLC Series III, (Societe Generale, Paris COL),
2.404%, 8/31/2022
|
42,415,000
|
|
107,500,000
|
|
Gotham Funding Corp., (MUFG Bank Ltd. LIQ), 1.405% - 2.416%,
8/1/2022 - 10/3/2022
|
107,015,267
|
|
200,000,000
|
|
Lloyds Bank PLC, London, 1.413% - 2.419%, 8/5/2022 - 9/23/2022
|
199,765,183
|
|
5,000,000
|
|
LMA-Americas LLC, (Credit Agricole Corporate and Investment
Bank LIQ), 1.455%, 8/12/2022
|
4,997,785
|
|
92,000,000
|
|
Matchpoint Finance PLC, (BNP Paribas SA LIQ), 2.310% - 2.567%,
8/1/2022 - 10/11/2022
|
91,752,562
|
|
82,000,000
|
|
National Australia Bank Ltd., Melbourne, 1.005% - 3.844%,
9/6/2022 - 6/15/2023
|
81,133,799
|
|
85,000,000
|
|
Nationwide Building Society, 2.020%, 8/1/2022
|
85,000,000
|
|
145,000,000
|
|
Royal Bank of Canada, 0.251% - 2.229%, 10/14/2022 - 3/29/2023
|
143,538,329
|
|
80,000,000
|
|
Royal Bank of Canada, New York Branch, 0.371% - 0.402%,
11/9/2022 - 11/15/2022
|
79,285,026
|
|
122,000,000
|
|
Toronto Dominion Bank, 2.903%, 5/31/2023
|
118,207,691
|
|
|
|
TOTAL
|
1,528,524,779
|
|
|
|
Finance - Retail— 1.7%
|
|
|
69,000,000
|
|
Fairway Finance Co. LLC, 1.005%, 9/6/2022
|
68,817,535
|
|
60,000,000
|
|
Old Line Funding, LLC, 1.659%, 9/13/2022
|
59,804,347
|
|
60,000,000
|
|
Old Line Funding, LLC, 1.659%, 9/19/2022
|
59,775,187
|
|
50,000,000
|
|
Sheffield Receivables Company LLC, 1.976%, 8/18/2022
|
49,958,958
|
|
|
|
TOTAL
|
238,356,027
|
|
|
|
Oil & Oil Finance— 0.5%
|
|
|
70,000,000
|
|
TotalEnergies Capital Canada Ltd., 2.200%, 8/3/2022
|
69,991,445
|
|
|
|
Sovereign— 1.1%
|
|
|
160,000,000
|
|
BNG Bank N.V., 2.201% - 2.311%, 8/3/2022 - 8/4/2022
|
159,976,228
|
|
|
|
TOTAL COMMERCIAL PAPER
(IDENTIFIED COST $2,001,640,522)
|
1,996,848,479
|
|
|
|
TIME DEPOSITS— 11.1%
|
|
|
|
|
Finance - Banking— 11.1%
|
|
|
500,000,000
|
|
ABN Amro Bank NV, 2.220% - 2.330%, 8/3/2022 - 8/5/2022
|
500,000,000
|
|
275,000,000
|
|
Australia & New Zealand Banking Group, Melbourne,
2.210%, 8/3/2022
|
275,000,000
|
|
440,000,000
|
|
Australia & New Zealand Banking Group, Melbourne,
2.320%, 8/1/2022
|
440,000,000
|
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
30
|
Principal
Amount
|
|
|
Value
|
|
|
|
TIME DEPOSITS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 360,000,000
|
|
Mizuho Bank Ltd., 2.320%, 8/1/2022
|
$ 360,000,000
|
|
|
|
TOTAL TIME DEPOSITS
(IDENTIFIED COST $1,575,000,000)
|
1,575,000,000
|
|
|
|
CERTIFICATES OF DEPOSIT— 10.6%
|
|
|
|
|
Finance - Banking— 10.6%
|
|
|
26,500,000
|
|
Bank of Montreal, 2.850%, 5/24/2023
|
26,336,767
|
|
210,000,000
|
|
Credit Agricole Corporate and Investment Bank, 1.560% - 2.320%,
8/5/2022 - 8/12/2022
|
210,000,000
|
|
115,000,000
|
|
DNB Bank ASA, 1.100%, 9/6/2022
|
114,843,595
|
|
100,000,000
|
|
Mizuho Bank Ltd., 2.600%, 10/20/2022
|
100,000,000
|
|
165,000,000
|
|
MUFG Bank Ltd., 1.420% - 1.450%, 8/18/2022 - 8/19/2022
|
164,962,798
|
|
70,000,000
|
|
Sumitomo Mitsui Banking Corp., 1.450%, 8/5/2022
|
70,000,000
|
|
515,000,000
|
|
Sumitomo Mitsui Trust Bank Ltd., 1.450% - 2.530%, 8/18/2022 -
9/29/2022
|
514,947,924
|
|
305,000,000
|
|
Toronto Dominion Bank, 0.220% - 4.070%, 10/14/2022 - 7/18/2023
|
303,829,965
|
|
|
|
TOTAL CERTIFICATES OF DEPOSIT
(IDENTIFIED COST $1,506,500,000)
|
1,504,921,049
|
|
|
|
U.S. TREASURY— 0.3%
|
|
|
|
|
U.S. Treasury Notes— 0.3%
|
|
|
50,000,000
|
1
|
United States Treasury Floating Rate Notes, 2.570% (91-day T-Bill
+0.034%), 8/2/2022
(IDENTIFIED COST $50,003,021)
|
50,137,907
|
|
|
|
OTHER REPURCHASE AGREEMENTS— 17.8%
|
|
|
|
|
Finance - Banking— 17.8%
|
|
|
100,000,000
|
|
BMO Capital Markets Corp., 2.05%, dated 2/8/2021, interest in a
$200,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $200,706,111 on 9/12/2022, in
which corporate bonds and medium-term notes with a market value
of $204,755,998 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
100,000,000
|
|
439,000,000
|
|
BNP Paribas S.A., 2.40%, dated 7/29/2022, interest in a
$500,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $500,100,000 on 8/1/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds and medium-term note with a market value of
$510,102,000 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
439,000,000
|
|
100,000,000
|
|
Bofa Securities, Inc., 2.39%, dated 7/29/2022, interest in a
$150,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $150,029,875 on 8/1/2022, in
which corporate bonds and medium-term notes with a market value
of $153,030,602 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
100,000,000
|
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
31
|
Principal
Amount
|
|
|
Value
|
|
|
|
OTHER REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 100,000,000
|
|
Bofa Securities, Inc., 2.94%, dated 9/4/2020, interest in a
$100,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $100,735,000 on 10/31/2022, in
which convertible bonds with a market value of $102,199,120 have
been received as collateral and held with BNY Mellon as tri-party
agent.
|
$ 100,000,000
|
|
250,000,000
|
|
Bofa Securities, Inc., 2.94%, dated 9/9/2020, interest in a
$250,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $251,837,500 on 10/31/2022, in
which convertible bonds, medium-term notes and Sovereign with a
market value of $255,496,826 have been received as collateral and
held with BNY Mellon as tri-party agent.
|
250,000,000
|
|
25,000,000
|
|
Bofa Securities, Inc., 2.35%, dated 7/29/2022, interest in a
$25,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $25,004,896 on 8/1/2022, in which
commercial paper with a market value of $25,505,956 have been
received as collateral and held with BNY Mellon as tri-party agent.
|
25,000,000
|
|
125,000,000
|
|
Credit Agricole S.A., 2.47%, dated 6/24/2022, interest in a
$300,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $300,144,083 on 8/9/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, commercial paper, treasury notes, treasury bills
medium-term notes, U.S. Government Agency securities and
sovereign debt with a market value of $306,063,090 have been
received as collateral and held with BNY Mellon as tri-party agent.
|
125,000,000
|
|
280,000,000
|
|
Credit Agricole S.A., 2.37%, dated 6/24/2022, interest in a
$800,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $800,368,667 on 8/9/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, commercial paper, treasury notes, treasury bill,
medium-term notes and sovereign debt with a market value of
$816,161,433 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
280,000,000
|
|
70,000,000
|
|
HSBC Securities (USA), Inc., 2.42%, dated 7/29/2022, interest in a
$70,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $70,014,117 on 8/1/2022, in which
corporate bonds, medium-term notes and Sovereign debt with a
market value of $71,400,029 have been received as collateral and
held with BNY Mellon as tri-party agent.
|
70,000,000
|
|
49,490,000
|
|
ING Financial Markets LLC, 2.39%, dated 7/29/2022, interest in a
$50,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $50,009,958 on 8/1/2022, in which
corporate bonds with a market value of $51,010,957 have been
received as collateral and held with BNY Mellon as tri-party agent.
|
49,490,000
|
|
100,000,000
|
|
ING Financial Markets LLC, 2.40%, dated 7/29/2022, interest in a
$100,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $100,020,000 on 8/1/2022, in
which common stocks, corporate bonds and medium-term notes
with a market value of $102,020,404 have been received as
collateral and held with BNY Mellon as tri-party agent.
|
100,000,000
|
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
32
|
Principal
Amount
|
|
|
Value
|
|
|
|
OTHER REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 65,000,000
|
|
J.P. Morgan Securities LLC, 2.56%, dated 7/6/2022, interest in a
$250,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $250,480,000 on 8/2/2022, in
which corporate bonds and medium-term notes with a market value
of $255,000,001 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
$ 65,000,000
|
|
45,000,000
|
|
Mizuho Securities USA, Inc., 2.52%, dated 7/29/2022, interest in a
$75,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $75,015,750 on 8/1/2022, in which
common stocks with a market value of $76,516,072 have been
received as collateral and held with BNY Mellon as tri-party agent.
|
45,000,000
|
|
50,000,000
|
|
Mizuho Securities USA, Inc., 2.42%, dated 7/29/2022, interest in a
$100,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $100,020,167 on 8/1/2022, in
which commercial paper and municipal bonds with a market value
of $102,022,014 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
50,000,000
|
|
81,000,000
|
|
Mitsubishi UFG Securities Americas, Inc., 2.47%, dated 7/29/2022,
interest in a $300,000,000 collateralized loan agreement will
repurchase securities provided as collateral for $300,061,750 on
8/1/2022, in which American depositary receipts, common stocks,
corporate bonds, exchange-traded funds and unit investment trust,
medium-term notes and municipal bonds with a market value of
$306,063,397 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
81,000,000
|
|
135,000,000
|
|
Pershing LLC, 2.57%, dated 7/14/2022, interest in a $300,000,000
collateralized loan agreement will repurchase securities provided as
collateral for $300,149,917 on 8/9/2022, in which asset-backed
securities, collateralized mortgage obligations, corporate bonds,
commercial paper, common stocks, convertible bond, certificate of
deposit, exchange-traded funds, medium-term notes and municipal
bonds and U.S. Government Agency securities with a market value
of $306,100,946 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
135,000,000
|
|
125,000,000
|
|
Societe Generale, Paris, 2.38%, dated 7/29/2022, interest in a
$350,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $350,069,417 on 8/1/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, medium-term notes, municipal bonds, sovereign
securities and treasury bill with a market value of $357,071,176
have been received as collateral and held with BNY Mellon as
tri-party agent.
|
125,000,000
|
|
277,000,000
|
|
Societe Generale, Paris, 2.47%, dated 7/29/2022, interest in a
$650,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $650,133,792 on 8/1/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, medium-term notes and treasury bill with a
market value of $663,136,856 have been received as collateral and
held with BNY Mellon as tri-party agent.
|
277,000,000
|
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
33
|
Principal
Amount
|
|
|
Value
|
|
|
|
OTHER REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 125,000,000
|
|
Wells Fargo Securities LLC, 3.20%, dated 2/3/2022, interest in a
$125,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $126,000,000 on 8/1/2022, in
which sovereign securities with a market value of $127,614,209
have been received as collateral and held with BNY Mellon as
tri-party agent.
|
$ 125,000,000
|
|
|
|
TOTAL OTHER REPURCHASE AGREEMENTS
(IDENTIFIED COST $2,541,490,000)
|
2,541,490,000
|
|
|
|
REPURCHASE AGREEMENTS— 19.2%
|
|
|
|
|
Finance - Banking— 19.2%
|
|
|
150,000,000
|
|
Repurchase agreement 2.40%, dated 7/29/2022 under which ABN
Amro Bank N.V., Netherlands will repurchase securities provided as
collateral for $150,030,000 on 8/1/2022. The securities provided as
collateral at the end of the period held with BNY Mellon as tri-party
agent, were U.S. Government Agency securities with various
maturities to 7/25/2052 and the market value of those underlying
securities was $153,030,600.
|
150,000,000
|
|
299,000,000
|
|
Interest in $1,650,000,000 joint repurchase agreement 2.29%,
dated 7/29/2022 under which Mitsubishi UFJ Securities (USA), Inc.
will repurchase securities provided as collateral for $1,650,314,875
on 8/1/2022. The securities provided as collateral at the end of the
period held with BNY Mellon as tri-party agent, were
U.S. Government Agency securities with various maturities to
1/1/2057 and the market value of those underlying securities
was $1,683,321,173.
|
299,000,000
|
|
500,000,000
|
|
Interest in $1,650,000,000 joint repurchase agreement 2.29%,
dated 7/29/2022 under which Mitsubishi UFJ Securities (USA), Inc.
will repurchase securities provided as collateral for $1,650,314,875
on 8/1/2022. The securities provided as collateral at the end of the
period held with BNY Mellon as tri-party agent, were
U.S. Government Agency securities with various maturities to
1/1/2057 and the market value of those underlying securities
was $1,683,321,173.
|
500,000,000
|
|
700,000,000
|
|
Interest in $1,800,000,000 joint repurchase agreement 2.30%,
dated 7/29/2022 under which Natixis Financial Products LLC will
repurchase securities provided as collateral for $1,800,345,000 on
8/1/2022. The securities provided as collateral at the end of the
period held with BNY Mellon as tri-party agent, were
U.S. Government Agency and U.S. Treasury securities with various
maturities to 6/16/2064 and the market value of those underlying
securities was $1,841,376,235.
|
700,000,000
|
|
1,000,000,000
|
|
Repurchase agreement 2.30%, dated 7/29/2022 under which
Federal Reserve Bank of New York will repurchase securities
provided as collateral for $1,000,191,667 on 8/1/2022. The
securities provided as collateral at the end of the period held with
BNY Mellon as tri-party agent, were U.S. Treasury securities with
various maturities to 2/15/2036 and the market value of those
underlying securities was $1,000,191,722.
|
1,000,000,000
|
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
34
|
Principal
Amount
|
|
|
Value
|
|
|
|
REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 87,000,000
|
|
Interest in $150,000,000 joint repurchase agreement 2.39%, dated
7/29/2022 under which Standard Chartered Bank will repurchase
securities provided as collateral for $150,029,875 on 8/1/2022. The
securities provided as collateral at the end of the period held with
BNY Mellon as tri-party agent, were U.S. Government Agency
securities with various maturities to 2/16/2064 and the market value
of those underlying securities was $153,030,473.
|
$ 87,000,000
|
|
|
|
TOTAL REPURCHASE AGREEMENTS
(IDENTIFIED COST $2,736,000,000)
|
2,736,000,000
|
|
|
|
TOTAL INVESTMENT IN SECURITIES—100.3%
(IDENTIFIED COST $14,298,907,680)3
|
14,291,000,514
|
|
|
|
OTHER ASSETS AND LIABILITIES - NET—(0.3)%4
|
(46,154,429)
|
|
|
|
TOTAL NET ASSETS—100%
|
$14,244,846,085
|
|
1
|
Floating/variable note with current rate and current maturity or next reset date shown. Certain
variable rate securities are not based on a published reference rate and spread but are
determined by the issuer or agent and are based on current market conditions. These securities
do not indicate a reference rate and spread in their description above.
|
|
2
|
Discount rate at time of purchase for discount issues, or the coupon for interest-bearing issues.
|
|
3
|
Also represents cost of investments for federal tax purposes.
|
|
4
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
Note: The categories of investments are shown as a percentage of total net assets at July 31, 2022.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Level 1—quoted prices in active markets for identical securities.
Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Also includes securities valued at amortized cost.
Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
35
As of July 31, 2022, all investments of the Fund utilized Level 2 inputs in valuing the Fund’s assets carried at fair value.
|
The following acronym(s) are used throughout this portfolio:
|
|
|
|
COL
|
—Collateralized
|
|
|
GTD
|
—Guaranteed
|
|
|
LIQ
|
—Liquidity Agreement
|
|
|
LLP
|
—Limited Liability Partnership
|
|
|
LOC
|
—Letter of Credit
|
|
|
MHF
|
—Maryland Housing Fund
|
|
|
PLC
|
—Public Limited Company
|
|
|
SOFR
|
—Secured Overnight Financing Rate
|
|
|
VRDNs
|
—Variable Rate Demand Notes
|
|
See Notes which are an integral part of the Financial Statements
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
36
Financial Highlights–Institutional Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.0005
|
$1.0007
|
$1.0004
|
$1.0003
|
$1.0003
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income (loss)
|
0.00371
|
0.0008
|
0.0136
|
0.0239
|
0.0156
|
|
Net realized and unrealized gain (loss)
|
(0.0008)
|
(0.0002)
|
0.0003
|
0.0001
|
0.00002
|
|
Total From Investment
Operations
|
0.0029
|
0.0006
|
0.0139
|
0.0240
|
0.0156
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment
income
|
(0.0036)
|
(0.0008)
|
(0.0136)
|
(0.0239)
|
(0.0156)
|
|
Net Asset Value, End of Period
|
$0.9998
|
$1.0005
|
$1.0007
|
$1.0004
|
$1.0003
|
|
Total Return3
|
0.29%
|
0.05%
|
1.39%
|
2.43%
|
1.57%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses4
|
0.16%
|
0.15%
|
0.15%
|
0.15%
|
0.17%
|
|
Net investment income
|
0.38%
|
0.08%
|
1.37%
|
2.41%
|
1.62%
|
|
Expense waiver/reimbursement5
|
0.12%
|
0.13%
|
0.13%
|
0.13%
|
0.12%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$14,232,133
|
$15,298,656
|
$23,611,390
|
$21,146,776
|
$10,941,508
|
|
1
|
Per share numbers have been calculated using the average shares method.
|
|
2
|
Represents less than $0.0001.
|
|
3
|
Based on net asset value.
|
|
4
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
5
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
The financial highlights of the Service Shares and Capital Shares are presented separately.
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
37
Statement of Assets and Liabilities
July 31, 2022
July 31, 2022
|
Assets:
|
|
|
Investment in repurchase agreements and other repurchase agreements
|
$5,277,490,000
|
|
Investment in securities
|
9,013,510,514
|
|
Investment in securities, at value (identified cost $14,298,907,680)
|
14,291,000,514
|
|
Cash
|
553,403
|
|
Income receivable
|
12,267,528
|
|
Total Assets
|
14,303,821,445
|
|
Liabilities:
|
|
|
Payable for investments purchased
|
42,415,000
|
|
Income distribution payable
|
15,954,638
|
|
Payable for investment adviser fee (Note 5)
|
117,280
|
|
Payable for administrative fee (Note 5)
|
91,887
|
|
Accrued expenses (Note 5)
|
396,555
|
|
Total Liabilities
|
58,975,360
|
|
Net assets for 14,248,059,005 shares outstanding
|
$14,244,846,085
|
|
Net Assets Consist of:
|
|
|
Paid-in capital
|
$14,254,096,547
|
|
Total distributable earnings (loss)
|
(9,250,462)
|
|
Total Net Assets
|
$14,244,846,085
|
|
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
|
|
|
Institutional Shares:
|
|
|
$14,232,132,569 ÷ 14,235,341,975 shares outstanding, no par value, unlimited
shares authorized
|
$0.9998
|
|
Service Shares:
|
|
|
$12,713,416 ÷ 12,716,930 shares outstanding, no par value, unlimited
shares authorized
|
$0.9997
|
|
Capital Shares:
|
|
|
$100 ÷ 100 shares outstanding, no par value, unlimited shares authorized
|
$1.0012*
|
|
*
|
Actual net asset value per share presented differs from calculated net asset value per share due
to rounding.
|
See Notes which are an integral part of the Financial Statements
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
38
Statement of Operations
Year Ended July 31, 2022
Year Ended July 31, 2022
|
Investment Income:
|
|
|
Interest
|
$72,199,266
|
|
Expenses:
|
|
|
Investment adviser fee (Note 5)
|
26,847,301
|
|
Administrative fee (Note 5)
|
10,508,115
|
|
Custodian fees
|
427,458
|
|
Transfer agent fees
|
115,442
|
|
Directors’/Trustees’ fees (Note 5)
|
77,727
|
|
Auditing fees
|
25,110
|
|
Legal fees
|
7,362
|
|
Portfolio accounting fees
|
271,093
|
|
Other service fees (Notes 2 and 5)
|
51,845
|
|
Share registration costs
|
57,131
|
|
Printing and postage
|
19,010
|
|
Miscellaneous (Note 5)
|
113,955
|
|
TOTAL EXPENSES
|
38,521,549
|
|
Waivers and Reimbursement:
|
|
|
Waiver of investment adviser fee (Note 5)
|
(16,595,747)
|
|
Waiver/reimbursement of other operating expenses (Notes 2 and 5)
|
(28,684)
|
|
TOTAL WAIVERS AND REIMBURSEMENT
|
(16,624,431)
|
|
Net expenses
|
21,897,118
|
|
Net investment income
|
50,302,148
|
|
Realized and Unrealized Gain (Loss) on Investments:
|
|
|
Net realized gain on investments
|
54,512
|
|
Net change in unrealized appreciation of investments
|
(9,036,105)
|
|
Net realized and unrealized gain (loss) on investments
|
(8,981,593)
|
|
Change in net assets resulting from operations
|
$41,320,555
|
See Notes which are an integral part of the Financial Statements
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
39
Statement of Changes in Net Assets
|
Year Ended July 31
|
2022
|
2021
|
|
Increase (Decrease) in Net Assets
|
|
|
|
Operations:
|
|
|
|
Net investment income
|
$50,302,148
|
$17,271,664
|
|
Net realized gain (loss)
|
54,512
|
113,108
|
|
Net change in unrealized appreciation/depreciation
|
(9,036,105)
|
(6,131,457)
|
|
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS
|
41,320,555
|
11,253,315
|
|
Distributions to Shareholders:
|
|
|
|
Institutional Shares
|
(50,220,717)
|
(17,245,644)
|
|
Service Shares
|
(41,365)
|
(4,862)
|
|
Capital Shares
|
(48)
|
(8,147)
|
|
CHANGE IN NET ASSETS RESULTING FROM
DISTRIBUTIONS TO SHAREHOLDERS
|
(50,262,130)
|
(17,258,653)
|
|
Share Transactions:
|
|
|
|
Proceeds from sale of shares
|
24,614,918,258
|
36,831,815,005
|
|
Net asset value of shares issued to shareholders in payment
of distributions declared
|
8,299,365
|
3,142,765
|
|
Cost of shares redeemed
|
(25,705,000,012)
|
(45,212,117,547)
|
|
CHANGE IN NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
|
(1,081,782,389)
|
(8,377,159,777)
|
|
Change in net assets
|
(1,090,723,964)
|
(8,383,165,115)
|
|
Net Assets:
|
|
|
|
Beginning of period
|
15,335,570,049
|
23,718,735,164
|
|
End of period
|
$14,244,846,085
|
$15,335,570,049
|
See Notes which are an integral part of the Financial Statements
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
40
Notes to Financial Statements
July 31, 2022
1. ORGANIZATION
Federated Hermes Money Market Obligations Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust consists of 16 portfolios. The financial statements included herein are only those of Federated Hermes Institutional Prime Obligations Fund (the “Fund”), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder’s interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers three classes of shares: Institutional Shares, Service Shares and Capital Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The investment objective of the Fund is to provide current income consistent with stability of principal.
The Fund operates as an institutional money market fund. As an institutional money market fund, the Fund: (1) will not be limited to institutional investors, but will continue to be available to retail investors; (2) will utilize current market-based prices (except as otherwise generally permitted to value individual portfolio securities with remaining maturities of 60 days or less at amortized cost in accordance with Securities and Exchange Commission (SEC) rules and guidance) to value its portfolio securities and transact at a floating net asset value (NAV) that uses four decimal-place precision ($1.0000); and (3) has adopted policies and procedures to impose liquidity fees on redemptions and/or temporary redemption gates in the event that the Fund’s weekly liquid assets were to fall below a designated threshold, if the Fund’s Board of Trustees (the “Trustees”) determine such liquidity fees or redemption gates are in the best interest of the Fund.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
In calculating its NAV, the Fund generally values investments as follows:
◾
Fixed-income securities with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Trustees.
◾
Fixed-income securities with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium), unless the issuer’s creditworthiness is impaired or other factors indicate that amortized cost is not an accurate estimate of the investment’s fair value, in which case it would be valued in the same manner as a longer-term security. The Fund may only use this method to value a portfolio security when it can reasonably conclude, at each time it makes a valuation determination, that the amortized cost price of the portfolio security is approximately the same as the fair value of the security as determined without the use of amortized cost valuation.
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◾
Shares of other mutual funds or non-exchange-traded investment companies are valued based upon their reported NAVs, or NAV per share practical expedient, as applicable.
◾
For securities that are fair valued in accordance with procedures established by and under the general supervision of the Trustees, certain factors may be considered, such as: the last traded or purchase price of the security, information obtained by contacting the issuer or dealers, analysis of the issuer’s financial statements or other available documents, fundamental analytical data, the nature and duration of restrictions on disposition, the movement of the market in which the security is normally traded, public trading in similar securities or derivative contracts of the issuer or comparable issuers, movement of a relevant index, or other factors including but not limited to industry changes and relevant government actions.
If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, if the Fund cannot obtain price evaluations from a pricing service or from more than one dealer for an investment within a reasonable period of time as set forth in the Fund’s valuation policies and procedures, or if information furnished by a pricing service, in the opinion of the valuation committee (“Valuation Committee”), is deemed not representative of the fair value of such security, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines its NAV per share, and the actual value obtained could be materially different.
Fair Valuation Procedures
The Trustees have ultimate responsibility for determining the fair value of investments for which market quotations are not readily available. The Trustees have appointed a Valuation Committee comprised of officers of the Fund, Federated Investment Management Company (the “Adviser”) and certain of the Adviser’s affiliated companies to assist in determining fair value and in overseeing the calculation of the NAV. The Trustees have also authorized the use of pricing services recommended by the Valuation Committee to provide fair value evaluations of the current value of certain investments for purposes of calculating the NAV. The Valuation Committee employs various methods for reviewing third-party pricing-service evaluations including periodic reviews of third-party pricing services’ policies, procedures and valuation methods (including key inputs, methods, models and assumptions), transactional back-testing, comparisons of evaluations of different pricing services and review of price challenges by the Adviser based on recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee determines the fair value of the investment in accordance with procedures adopted by the Trustees. The Trustees periodically review and approve the fair valuations made by the Valuation Committee and any changes made to the procedures.
Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a “bid” evaluation). Other pricing services offer both bid evaluations and price evaluations
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indicative of a price between the prices bid and asked for the investment (a “mid” evaluation). The Fund normally uses bid evaluations for any U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for any other types of fixed-income securities and any over-the-counter derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.
Repurchase Agreements
The Fund may invest in repurchase agreements for short-term liquidity purposes. It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund’s custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control” as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.
The insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.
The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund’s Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.
Repurchase agreements are subject to Master Netting Agreements which are agreements between the Fund and its counterparties that provide for the net settlement of all transactions and collateral with the Fund, through a single payment, in the event of default or termination. Amounts presented on the Portfolio of Investments and Statement of Assets and Liabilities are not net settlement amounts but gross. As indicated above, the cash or securities to be repurchased, as shown on the Portfolio of Investments, exceeds the repurchase price to be paid under the agreement reducing the net settlement amount to zero.
Investment Income, Gains and Losses, Expenses and Distributions
Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis. Interest income and expenses are accrued daily. Distributions to shareholders are recorded on the ex-dividend date. Distributions of net investment income, if any, are declared daily and paid monthly. Amortization/accretion of premium and discount is included in investment income. Investment income, realized and unrealized gains and losses, and
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certain fund-level expenses are allocated to each class based on relative average daily net assets, except that select classes will bear certain expenses unique to those classes. The detail of the total fund expense waivers and reimbursement of $16,624,431 is disclosed in various locations in this Note 2 and Note 5.
Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.
Other Service Fees
The Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund’s Institutional Shares, Service Shares and Capital Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for other service fees. In addition, unaffiliated third-party financial intermediaries may waive other service fees. This waiver can be modified or terminated at any time.
For the year ended July 31, 2022, other service fees for the Fund were as follows:
|
|
Other Service
Fees Incurred
|
Other Service
Fees Reimbursed
|
Other Service Fees
Waived by Unaffiliated
Third Parties
|
|
Service Shares
|
$51,604
|
$(3,382)
|
$(25,103)
|
|
Capital Shares
|
241
|
(112)
|
(87)
|
|
TOTAL
|
$51,845
|
$(3,494)
|
$(25,190)
|
For the year ended July 31, 2022, the Fund’s Institutional Shares did not incur other service fees.
Federal Taxes
It is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code (the “Code”) and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. As of and during the year ended July 31, 2022, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2022, tax years 2019 through 2022 remain subject to examination by the Fund’s major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.
When-Issued and Delayed-Delivery Transactions
The Fund may engage in when-issued or delayed-delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed-delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
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Restricted Securities
The Fund may purchase securities which are considered restricted. Restricted securities are securities that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) are subject to contractual restrictions on public sales. In some cases, when a security cannot be offered for public sale without first being registered, the issuer of the restricted security has agreed to register such securities for resale, at the issuer’s expense, either upon demand by the Fund or in connection with another registered offering of the securities. Many such restricted securities may be resold in the secondary market in transactions exempt from registration. Restricted securities may be determined to be liquid under criteria established by the Trustees. The Fund will not incur any registration costs upon such resales. The Fund’s restricted securities, like other securities, are priced in accordance with procedures established by and under the general supervision of the Trustees.
Other
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ materially from those estimated. The Fund applies investment company accounting and reporting guidance.
3. SHARES OF BENEFICIAL INTEREST
The following tables summarize share activity:
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Institutional Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
24,232,087,166
|
$24,233,003,776
|
36,196,687,324
|
$36,215,427,054
|
|
Shares issued to shareholders
in payment of
distributions declared
|
8,283,360
|
8,282,176
|
3,128,894
|
3,130,517
|
|
Shares redeemed
|
(25,296,641,390)
|
(25,298,888,431)
|
(44,503,031,101)
|
(44,525,308,528)
|
|
NET CHANGE RESULTING
FROM INSTITUTIONAL
SHARE TRANSACTIONS
|
(1,056,270,864)
|
$(1,057,602,479)
|
(8,303,214,883)
|
$(8,306,750,957)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Service Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
381,843,923
|
$381,914,482
|
320,686,975
|
$320,849,653
|
|
Shares issued to shareholders
in payment of
distributions declared
|
17,154
|
17,151
|
4,099
|
4,101
|
|
Shares redeemed
|
(401,541,566)
|
(401,611,014)
|
(372,056,896)
|
(372,241,775)
|
|
NET CHANGE RESULTING
FROM SERVICE
SHARE TRANSACTIONS
|
(19,680,489)
|
$(19,679,381)
|
(51,365,822)
|
$(51,388,021)
|
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|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Capital Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
—
|
$—
|
295,358,986
|
$295,538,298
|
|
Shares issued to shareholders
in payment of
distributions declared
|
38
|
38
|
8,141
|
8,147
|
|
Shares redeemed
|
(4,498,390)
|
(4,500,567)
|
(314,377,023)
|
(314,567,244)
|
|
NET CHANGE RESULTING
FROM CAPITAL
SHARE TRANSACTIONS
|
(4,498,352)
|
$(4,500,529)
|
(19,009,896)
|
$(19,020,799)
|
|
NET CHANGE RESULTING
FROM TOTAL FUND
SHARE TRANSACTIONS
|
(1,080,449,705)
|
$(1,081,782,389)
|
(8,373,590,601)
|
$(8,377,159,777)
|
4. FEDERAL TAX INFORMATION
The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2022 and 2021, was as follows:
|
|
2022
|
2021
|
|
Ordinary income
|
$50,262,130
|
$17,258,653
|
As of July 31, 2022, the components of distributable earnings on a tax-basis were as follows:
|
Undistributed ordinary income
|
$57,427
|
|
Net unrealized depreciation
|
$(7,907,166)
|
|
Capital loss carryforwards
|
$(1,400,723)
|
At July 31, 2022, the cost of investments for federal tax purposes was $14,298,907,680. The net unrealized depreciation of investments for federal tax purposes was $7,907,166. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $451,830 and net unrealized depreciation from investments for those securities having an excess of cost over value of $8,358,996.
As of July 31, 2022, the Fund had a capital loss carryforward of $1,400,723 which will reduce the Fund’s taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code, thereby reducing the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, these net capital losses retain their character as either short-term or long-term and do not expire.
The following schedule summarizes the Fund’s capital loss carryforwards:
|
Short-Term
|
Long-Term
|
Total
|
|
$1,400,723
|
$—
|
$1,400,723
|
The Fund used capital loss carryforwards of $54,512 to offset capital gains realized during the year ended July 31, 2022.
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5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.20% of the Fund’s average daily net assets. Subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee for competitive reasons such as to maintain the Fund’s expense ratio, or as and when appropriate, to maintain positive or zero net yields. For the year ended July 31, 2022, the Adviser voluntarily waived $16,595,747 of its fee.
Administrative Fee
Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated Hermes Funds subject to a fee under the Administrative Services Agreement. The fee paid to FAS is based on the average daily net assets of the Investment Complex as specified below:
|
Administrative Fee
|
Average Daily Net Assets
of the Investment Complex
|
|
0.100%
|
on assets up to $50 billion
|
|
0.075%
|
on assets over $50 billion
|
Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2022, the annualized fee paid to FAS was 0.078% of average daily net assets of the Fund.
In addition, FAS may charge certain out-of-pocket expenses to the Fund.
Other Service Fees
For the year ended July 31, 2022, FSSC received $132 and reimbursed $3,494 of the other service fees disclosed in Note 2.
Expense Limitation
Due to the possibility of changes in market conditions and other factors, there can be no assurance that the level of waivers/reimbursement/reduction of Fund expenses reflected in the financial highlights will be maintained in the future. However, the Adviser and certain of its affiliates (which may include FSSC and FAS) on their own initiative have agreed to waive certain amounts of their respective fees and/or reimburse expenses. Total annual fund operating expenses (as shown in the financial highlights, excluding interest expense, extraordinary expenses and proxy-related expenses paid by the Fund, if any) paid by the Fund’s Institutional Shares, Service Shares and Capital Shares (after the voluntary waivers and/or reimbursements) will not exceed 0.20%, 0.45% and 0.25% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) October 1, 2023; or (b) the date of the Fund’s next effective Prospectus. While the Adviser and its applicable affiliates currently do not anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or the Fee Limit increased prior to the Termination Date with the agreement of the Trustees.
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Interfund Transactions
During the year ended July 31, 2022, the Fund engaged in sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees and/or common Officers. These sale transactions complied with Rule 17a-7 under the Act and amounted to $14,500,000. Net realized gain/loss recognized on these transactions was $0.
Directors’/Trustees’ and Miscellaneous Fees
Certain Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate payment, Independent Directors’/Trustees’ fees and certain expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses are paid by an affiliate of the Adviser which in due course are reimbursed by the Fund. These expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses may be included in Accrued and Miscellaneous Expenses on the Statement of Assets and Liabilities and Statement of Operations, respectively.
Affiliated Shares of Beneficial Interest
As of July 31, 2022, a majority of the shares of beneficial interest outstanding are owned by other affiliated investment companies.
6. CONCENTRATION OF RISK
A substantial part of the Fund’s portfolio may be comprised of obligations of banks. As a result, the Fund may be more susceptible to any economic, business, political or other developments which generally affect these entities.
7. LINE OF CREDIT
The Fund participates with certain other Federated Hermes Funds, on a several basis, in an up to $500,000,000 unsecured, 364-day, committed, revolving line of credit (LOC) agreement dated June 22, 2022. The LOC was made available to temporarily finance the repurchase or redemption of shares of the Fund, failed trades, payment of dividends, settlement of trades and for other short-term, temporary or emergency general business purposes. The Fund cannot borrow under the LOC if an inter-fund loan is outstanding. The Fund’s ability to borrow under the LOC also is subject to the limitations of the Act and various conditions precedent that must be satisfied before the Fund can borrow. Loans under the LOC are charged interest at a fluctuating rate per annum equal to (a) the highest, on any day, of (i) the federal funds effective rate, (ii) the published secured overnight financing rate plus an assigned percentage, and (iii) 0.0%, plus (b) a margin. Any fund eligible to borrow under the LOC pays its pro rata share of a commitment fee based on the amount of the lenders’ commitment that has not been utilized, quarterly in arrears and at maturity. As of July 31, 2022, the Fund had no outstanding loans. During the year ended July 31, 2022, the Fund did not utilize the LOC.
8. INTERFUND LENDING
Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other funds advised by subsidiaries of Federated Hermes, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating affiliated funds. As of July 31, 2022, there were no outstanding loans. During the year ended July 31, 2022, the program was not utilized.
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9. INDEMNIFICATIONS
Under the Fund’s organizational documents, its Officers and Directors/Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund (other than liabilities arising out of their willful misfeasance, bad faith, gross negligence or reckless disregard of their duties to the Fund). In addition, in the normal course of business, the Fund provides certain indemnifications under arrangements with third parties. Typically, obligations to indemnify a third party arise in the context of an arrangement entered into by the Fund under which the Fund agrees to indemnify such third party for certain liabilities arising out of actions taken pursuant to the arrangement, provided the third party’s actions are not deemed to have breached an agreed-upon standard of care (such as willful misfeasance, bad faith, gross negligence or reckless disregard of their duties under the contract). The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet arisen. The Fund does not anticipate any material claims or losses pursuant to these arrangements at this time, and accordingly expects the risk of loss to be remote.
10. OTHER MATTERS
An outbreak of respiratory disease caused by a novel coronavirus was first detected in China in late 2019 and subsequently spread globally. As of the date of the issuance of these financial statements, this coronavirus has resulted in closing borders, enhanced health screenings, disruptions to healthcare service preparation and delivery, quarantines, cancellations, and disruptions to supply chains, workflow operations and consumer activity, as well as general concern and uncertainty. The impact of this coronavirus may continue for an extended period of time and has resulted in substantial economic volatility. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could continue to negatively affect the worldwide economy, as well as the economies of individual countries, individual companies (including certain Fund service providers and issuers of the Fund’s investments) and the markets in general in significant and unforeseen ways. Any such impact could adversely affect the Fund’s performance.
11. FEDERAL TAX INFORMATION (UNAUDITED)
For the fiscal year ended July 31, 2022, 77.09% of dividends paid by the Fund are interest-related dividends, as provided by the American Jobs Creation Act of 2004.
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Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Federated Hermes Money Market Obligations Trust and the Shareholders of Federated Hermes Institutional Prime Obligations Fund:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of the Federated Hermes Institutional Prime Obligations Fund (the Fund), a portfolio of Federated Hermes Money Market Obligations Trust, including the portfolio of investments, as of July 31, 2022, the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the related notes (collectively, the financial statements) and the financial highlights for each of the years in the five-year period then ended. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of July 31, 2022, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
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We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Such procedures also included confirmation of securities owned as of July 31, 2022, by correspondence with custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of Federated Hermes’ investment companies since 2006.
Boston, Massachusetts
September 23, 2022
September 23, 2022
Federated Hermes Institutional Prime Obligations Fund
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51
Shareholder Expense Example (unaudited)
As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or other service fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2022 to July 31, 2022.
ACTUAL EXPENSES
The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses attributable to your investment during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
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Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
|
|
Beginning
Account Value
2/1/2022
|
Ending
Account Value
7/31/2022
|
Expenses Paid
During Period1
|
|
Actual
|
$1,000.00
|
$1,003.00
|
$0.842
|
|
Hypothetical (assuming a 5% return
before expenses)
|
$1,000.00
|
$1,023.95
|
$0.852
|
|
1
|
Expenses are equal to the Fund’s Institutional Shares annualized net expense ratio of 0.17%,
multiplied by the average account value over the period, multiplied by 181/365 (to reflect the
one-half-year period).
|
|
2
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Institutional Shares
current Fee Limit of 0.20% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $0.99 and $1.00, respectively.
|
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
53
Board of Trustees and Trust Officers
The Board of Trustees is responsible for managing the Trust’s business affairs and for exercising all the Trust’s powers except those reserved for the shareholders. The following tables give information about each Trustee and the senior officers of the Fund. Where required, the tables separately list Trustees who are “interested persons” of the Fund (i.e., “Interested” Trustees) and those who are not (i.e., “Independent” Trustees). Unless otherwise noted, the address of each person listed is 1001 Liberty Avenue, Pittsburgh, PA 15222-3779. The address of all Independent Trustees listed is 4000 Ericsson Drive, Warrendale, PA 15086-7561; Attention: Mutual Fund Board. As of December 31, 2021, the Trust comprised 16 portfolio(s), and the Federated Hermes Fund Family consisted of 33 investment companies (comprising 102 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Trustee oversees all portfolios in the Federated Hermes Fund Family and serves for an indefinite term. The Fund’s Statement of Additional Information includes additional information about Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400, Option #4.
Interested TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
J. Christopher Donahue*
Birth Date: April 11, 1949
President and Trustee
Indefinite Term
Began serving: April 1989
|
Principal Occupations: Principal Executive Officer and President of
certain of the Funds in the Federated Hermes Fund Family; Director or
Trustee of the Funds in the Federated Hermes Fund Family; President,
Chief Executive Officer and Director, Federated Hermes, Inc.;
Chairman and Trustee, Federated Investment Management Company;
Trustee, Federated Investment Counseling; Chairman and Director,
Federated Global Investment Management Corp.; Chairman and
Trustee, Federated Equity Management Company of Pennsylvania;
Trustee, Federated Shareholder Services Company; Director,
Federated Services Company.
Previous Positions: President, Federated Investment Counseling;
President and Chief Executive Officer, Federated Investment
Management Company, Federated Global Investment Management
Corp. and Passport Research, Ltd; Chairman, Passport Research, Ltd.
|
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|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
Thomas R. Donahue*
Birth Date: October 20, 1958
Trustee
Indefinite Term
Began serving: May 2016
|
Principal Occupations: Director or Trustee of certain of the funds in
the Federated Hermes Fund Family; Chief Financial Officer, Treasurer,
Vice President and Assistant Secretary, Federated Hermes, Inc.;
Chairman and Trustee, Federated Administrative Services; Chairman
and Director, Federated Administrative Services, Inc.; Trustee and
Treasurer, Federated Advisory Services Company; Director or Trustee
and Treasurer, Federated Equity Management Company of
Pennsylvania, Federated Global Investment Management Corp.,
Federated Investment Counseling, and Federated Investment
Management Company; Director, MDTA LLC; Director, Executive Vice
President and Assistant Secretary, Federated Securities Corp.;
Director or Trustee and Chairman, Federated Services Company and
Federated Shareholder Services Company; and Director and
President, FII Holdings, Inc.
Previous Positions: Director, Federated Hermes, Inc.; Assistant
Secretary, Federated Investment Management Company, Federated
Global Investment Management Company and Passport Research,
LTD; Treasurer, Passport Research, LTD; Executive Vice President,
Federated Securities Corp.; and Treasurer, FII Holdings, Inc.
|
*
Family relationships and reasons for “interested” status: J. Christopher Donahue and Thomas R. Donahue are brothers. Both are “interested” due to their beneficial ownership of shares of Federated Hermes, Inc. and the positions they hold with Federated Hermes, Inc. and its subsidiaries.
INDEPENDENT TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
John T. Collins
Birth Date: January 24, 1947
Trustee
Indefinite Term
Began serving:
September 2013
|
Principal Occupations: Director or Trustee, and Chair of the Board
of Directors or Trustees, of the Federated Hermes Fund Family;
formerly, Chairman and CEO, The Collins Group, Inc. (a private equity
firm) (Retired).
Other Directorships Held: Director, KLX Energy Services Holdings,
Inc. (oilfield services); former Director of KLX Corp. (aerospace).
Qualifications: Mr. Collins has served in several business and financial
management roles and directorship positions throughout his career.
Mr. Collins previously served as Chairman and CEO of The Collins
Group, Inc. (a private equity firm) and as a Director of KLX Corp.
Mr. Collins serves as Chairman Emeriti, Bentley University. Mr. Collins
previously served as Director and Audit Committee Member, Bank of
America Corp.; Director, FleetBoston Financial Corp.; and Director,
Beth Israel Deaconess Medical Center (Harvard University
Affiliate Hospital).
|
Annual Shareholder Report
55
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
G. Thomas Hough
Birth Date: February 28, 1955
Trustee
Indefinite Term
Began serving: August 2015
|
Principal Occupations: Director or Trustee, Chair of the Audit
Committee of the Federated Hermes Fund Family; formerly, Vice
Chair, Ernst & Young LLP (public accounting firm) (Retired).
Other Directorships Held: Director, Chair of the Audit Committee,
Equifax, Inc.; Lead Director, Member of the Audit and Nominating and
Corporate Governance Committees, Haverty Furniture Companies,
Inc.; formerly, Director, Member of Governance and Compensation
Committees, Publix Super Markets, Inc.
Qualifications: Mr. Hough has served in accounting, business
management and directorship positions throughout his career.
Mr. Hough most recently held the position of Americas Vice Chair of
Assurance with Ernst & Young LLP (public accounting firm). Mr. Hough
serves on the President’s Cabinet and Business School Board of
Visitors for the University of Alabama. Mr. Hough previously served on
the Business School Board of Visitors for Wake Forest University, and
he previously served as an Executive Committee member of the
United States Golf Association.
|
|
Maureen Lally-Green
Birth Date: July 5, 1949
Trustee
Indefinite Term
Began serving: August 2009
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Adjunct Professor Emerita of Law, Duquesne University
School of Law; formerly, Dean of the Duquesne University School of
Law and Professor of Law and Interim Dean of the Duquesne
University School of Law; formerly, Associate General Secretary and
Director, Office of Church Relations, Diocese of Pittsburgh.
Other Directorships Held: Director, CNX Resources Corporation
(formerly known as CONSOL Energy Inc.).
Qualifications: Judge Lally-Green has served in various legal and
business roles and directorship positions throughout her career. Judge
Lally-Green previously held the position of Dean of the School of Law
of Duquesne University (as well as Interim Dean). Judge Lally-Green
previously served as a member of the Superior Court of Pennsylvania
and as a Professor of Law, Duquesne University School of Law. Judge
Lally-Green was appointed by the Supreme Court of Pennsylvania to
serve on the Supreme Court’s Board of Continuing Judicial Education
and the Supreme Court’s Appellate Court Procedural Rules
Committee. Judge Lally-Green also currently holds the positions on
not for profit or for profit boards of directors as follows: Director
and Chair, UPMC Mercy Hospital; Regent, Saint Vincent Seminary;
Member, Pennsylvania State Board of Education (public); Director,
Catholic Charities, Pittsburgh; and Director CNX Resources
Corporation (formerly known as CONSOL Energy Inc.). Judge
Lally-Green has held the positions of: Director, Auberle; Director,
Epilepsy Foundation of Western and Central Pennsylvania; Director,
Ireland Institute of Pittsburgh; Director, Saint Thomas More Society;
Director and Chair, Catholic High Schools of the Diocese of
Pittsburgh, Inc.; Director, Pennsylvania Bar Institute; Director,
St. Vincent College; Director and Chair, North Catholic High
School, Inc.; Director and Vice Chair, Our Campaign for the Church
Alive!, Inc.; and Director, Saint Francis University.
|
Annual Shareholder Report
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|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
Thomas M. O’Neill
Birth Date: June 14, 1951
Trustee
Indefinite Term
Began serving: August 2006
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Sole Proprietor, Navigator Management Company
(investment and strategic consulting).
Other Directorships Held: None.
Qualifications: Mr. O’Neill has served in several business, mutual fund
and financial management roles and directorship positions throughout
his career. Mr. O’Neill serves as Director, Medicines for Humanity.
Mr. O’Neill previously served as Chief Executive Officer and President,
Managing Director and Chief Investment Officer, Fleet Investment
Advisors; President and Chief Executive Officer, Aeltus Investment
Management, Inc.; General Partner, Hellman, Jordan Management
Co., Boston, MA; Chief Investment Officer, The Putnam Companies,
Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director
and Consultant, EZE Castle Software (investment order management
software); Director, The Golisano Children’s Museum of Naples,
Florida; and Director, Midway Pacific (lumber).
|
|
Madelyn A. Reilly
Birth Date: February 2, 1956
Trustee
Indefinite Term
Began serving:
November 2020
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; formerly, Executive Vice President for Legal Affairs,
General Counsel and Secretary to the Board of Directors, Duquesne
University (Retired).
Other Directorships Held: None.
Qualifications: Ms. Reilly has served in various business and legal
management roles throughout her career. Ms. Reilly previously served
as Senior Vice President for Legal Affairs, General Counsel and
Secretary to the Board of Directors and Assistant General Counsel and
Director of Risk Management, Duquesne University. Prior to her work
at Duquesne University, Ms. Reilly served as Assistant General
Counsel of Compliance and Enterprise Risk as well as Senior Counsel
of Environment, Health and Safety, PPG Industries. Ms. Reilly currently
serves as a member of the Board of Directors of UPMC
Mercy Hospital.
|
Annual Shareholder Report
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|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
P. Jerome Richey
Birth Date: February 23, 1949
Trustee
Indefinite Term
Began serving:
September 2013
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Management Consultant; Retired; formerly, Senior Vice
Chancellor and Chief Legal Officer, University of Pittsburgh and
Executive Vice President and Chief Legal Officer, CONSOL Energy Inc.
(now split into two separate publicly traded companies known as
CONSOL Energy Inc. and CNX Resources Corp.).
Other Directorships Held: None.
Qualifications: Mr. Richey has served in several business and legal
management roles and directorship positions throughout his career.
Mr. Richey most recently held the positions of Senior Vice Chancellor
and Chief Legal Officer, University of Pittsburgh. Mr. Richey previously
served as Chairman of the Board, Epilepsy Foundation of Western
Pennsylvania and Chairman of the Board, World Affairs Council of
Pittsburgh. Mr. Richey previously served as Chief Legal Officer and
Executive Vice President, CONSOL Energy Inc. and CNX Gas
Company; and Board Member, Ethics Counsel and Shareholder,
Buchanan Ingersoll & Rooney PC (a law firm).
|
|
John S. Walsh
Birth Date:
November 28, 1957
Trustee
Indefinite Term
Began serving: January 1999
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; President and Director, Heat Wagon, Inc. (manufacturer
of construction temporary heaters); President and Director,
Manufacturers Products, Inc. (distributor of portable construction
heaters); President, Portable Heater Parts, a division of Manufacturers
Products, Inc.
Other Directorships Held: None.
Qualifications: Mr. Walsh has served in several business management
roles and directorship positions throughout his career. Mr. Walsh
previously served as Vice President, Walsh & Kelly, Inc.
(paving contractors).
|
Annual Shareholder Report
58
OFFICERS
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Lori A. Hensler
Birth Date: January 6, 1967
TREASURER
Officer since: April 2013
|
Principal Occupations: Principal Financial Officer and Treasurer of the
Federated Hermes Fund Family; Senior Vice President, Federated
Administrative Services; Financial and Operations Principal for
Federated Securities Corp.; and Assistant Treasurer, Federated
Investors Trust Company. Ms. Hensler has received the Certified
Public Accountant designation.
Previous Positions: Controller of Federated Hermes, Inc.; Senior Vice
President and Assistant Treasurer, Federated Investors Management
Company; Treasurer, Federated Investors Trust Company; Assistant
Treasurer, Federated Administrative Services, Federated
Administrative Services, Inc., Federated Securities Corp., Edgewood
Services, Inc., Federated Advisory Services Company, Federated
Equity Management Company of Pennsylvania, Federated Global
Investment Management Corp., Federated Investment Counseling,
Federated Investment Management Company, Passport Research,
Ltd., and Federated MDTA, LLC; Financial and Operations Principal for
Federated Securities Corp., Edgewood Services, Inc. and Southpointe
Distribution Services, Inc.
|
|
Peter J. Germain
Birth Date:
September 3, 1959
CHIEF LEGAL OFFICER,
SECRETARY and EXECUTIVE
VICE PRESIDENT
Officer since: January 2005
|
Principal Occupations: Mr. Germain is Chief Legal Officer, Secretary
and Executive Vice President of the Federated Hermes Fund Family.
He is General Counsel, Chief Legal Officer, Secretary and Executive
Vice President, Federated Hermes, Inc.; Trustee and Senior Vice
President, Federated Investors Management Company; Trustee and
President, Federated Administrative Services; Director and President,
Federated Administrative Services, Inc.; Director and Vice President,
Federated Securities Corp.; Director and Secretary, Federated Private
Asset Management, Inc.; Secretary, Federated Shareholder Services
Company; and Secretary, Retirement Plan Service Company of
America. Mr. Germain joined Federated Hermes, Inc. in 1984 and is a
member of the Pennsylvania Bar Association.
Previous Positions: Deputy General Counsel, Special Counsel,
Managing Director of Mutual Fund Services, Federated Hermes, Inc.;
Senior Vice President, Federated Services Company; and Senior
Corporate Counsel, Federated Hermes, Inc.
|
|
Stephen Van Meter
Birth Date: June 5, 1975
CHIEF COMPLIANCE
OFFICER AND SENIOR
VICE PRESIDENT
Officer since: July 2015
|
Principal Occupations: Senior Vice President and Chief Compliance
Officer of the Federated Hermes Fund Family; Vice President and
Chief Compliance Officer of Federated Hermes, Inc. and Chief
Compliance Officer of certain of its subsidiaries. Mr. Van Meter joined
Federated Hermes, Inc. in October 2011. He holds FINRA licenses
under Series 3, 7, 24 and 66.
Previous Positions: Mr. Van Meter previously held the position of
Compliance Operating Officer, Federated Hermes, Inc. Prior to joining
Federated Hermes, Inc., Mr. Van Meter served at the United States
Securities and Exchange Commission in the positions of Senior
Counsel, Office of Chief Counsel, Division of Investment Management
and Senior Counsel, Division of Enforcement.
|
Annual Shareholder Report
59
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Deborah A. Cunningham
Birth Date:
September 15, 1959
Chief Investment Officer
Officer since: May 2004
Portfolio Manager since:
November 1996
|
Principal Occupations: Deborah A. Cunningham has been the Fund’s
Portfolio Manager since November 1996. Ms. Cunningham was named
Chief Investment Officer of Federated Hermes’ money market
products in 2004. She joined Federated Hermes in 1981 and has been
a Senior Portfolio Manager since 1997 and an Executive Vice President
of the Fund’s Adviser since 2009. Ms. Cunningham has received the
Chartered Financial Analyst designation and holds an M.S.B.A. in
Finance from Robert Morris College.
|
Annual Shareholder Report
60
Evaluation and Approval of Advisory Contract–May 2022
Federated Hermes Institutional Prime Value Obligations Fund (the “Fund”)
At its meetings in May 2022 (the “May Meetings”), the Fund’s Board of Trustees (the “Board”), including those Trustees who are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940 (the “Independent Trustees”), reviewed and unanimously approved the continuation of the investment advisory contract between the Fund and Federated Investment Management Company (the “Adviser”) (the “Contract”) for an additional one-year term. The Board’s determination to approve the continuation of the Contract reflects the exercise of its business judgment after considering all of the information and factors believed to be relevant and appropriate on whether to approve the continuation of the existing arrangement. The information, factors and conclusions that formed the basis for the Board’s approval are summarized below.
Information Received and Review Process
At the request of the Independent Trustees, the Fund’s Chief Compliance Officer (the “CCO”) furnished to the Board in advance of its May Meetings an independent written evaluation presenting on the topics discussed below. The Board considered the CCO’s independent written evaluation (the “CCO Fee Evaluation Report”), along with other information, in evaluating the reasonableness of the Fund’s management fee and in determining to approve the continuation of the Contract. The CCO, in preparing the CCO Fee Evaluation Report, has the authority to retain consultants, experts or staff as reasonably necessary to assist in the performance of his duties, reports directly to the Board, and can be terminated only with the approval of a majority of the Independent Trustees. At the request of the Independent Trustees, the CCO Fee Evaluation Report followed the same general approach and covered the same topics as that of the report that had previously been delivered by the CCO in his capacity as “Senior Officer” prior to the elimination of the Senior Officer position in December 2017.
In addition to the extensive materials that comprise and accompany the CCO Fee Evaluation Report, the Board considered information specifically prepared in connection with the approval of the continuation of the Contract that was presented at the May Meetings. In this regard, in the months preceding the May Meetings, the Board requested and reviewed written responses and supporting materials prepared by the Adviser and its affiliates (collectively, “Federated Hermes”) in response to requests posed to Federated Hermes by independent legal counsel on behalf of the Independent Trustees encompassing a wide variety of topics, including those summarized below. The Board also considered such additional matters as the Independent Trustees deemed
Annual Shareholder Report
61
reasonably necessary to evaluate the Contract, which included detailed information about the Fund and Federated Hermes furnished to the Board at its meetings throughout the year and in between regularly scheduled meetings on particular matters as the need arose.
The Board’s consideration of the Contract included review of materials and information covering the following matters, among others: the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates; Federated Hermes’ business and operations; the Adviser’s investment philosophy, personnel and processes; the Fund’s investment objectives and strategies; the Fund’s short-term and long-term performance (in absolute terms, both on a gross basis and net of expenses, and relative to the Fund’s particular investment program and a group of its peer funds and/or its benchmark, as appropriate); the Fund’s investment objectives; the Fund’s fees and expenses, including the advisory fee and the overall expense structure of the Fund (both in absolute terms and relative to a group of its peer funds), with due regard for contractual or voluntary expense limitations (if any); the financial condition of Federated Hermes; the Adviser’s profitability with respect to the Fund; distribution and sales activity for the Fund; and the use and allocation of brokerage commissions derived from trading the Fund’s portfolio securities (if any).
The Board also considered judicial decisions concerning allegedly excessive investment advisory fees charged to other registered funds in determining to approve the Contract. Using these judicial decisions as a guide, the Board observed that the following factors may be relevant to an adviser’s fiduciary duty with respect to its receipt of compensation from a fund: (1) the nature and quality of the services provided by the adviser to the fund and its shareholders, including the performance of the fund, its benchmark and comparable funds; (2) the adviser’s cost of providing the services and the profitability to the adviser of providing advisory services to the fund; (3) the extent to which the adviser may realize “economies of scale” as the fund grows larger and, if such economies of scale exist, whether they have been appropriately shared with the fund and its shareholders or the family of funds; (4) any “fall-out” benefits that accrue to the adviser because of its relationship with the fund, including research services received from brokers that execute fund trades and any fees paid to affiliates of the adviser for services rendered to the fund; (5) comparative fee and expense structures, including a comparison of management fees paid to the adviser with those paid by similar funds both internally and externally as well as management fees charged to institutional and other advisory clients of the adviser for what might be viewed as like services; and (6) the extent of care, conscientiousness and independence with which the fund’s board members perform their duties and their expertise, including whether they are fully informed about all facts the board deems relevant to its consideration of the adviser’s services and fees. The Board noted that the Securities and Exchange Commission (“SEC”) disclosure requirements
Annual Shareholder Report
62
regarding the basis for a fund board’s approval of the fund’s investment advisory contract generally align with the factors listed above. The Board was guided by these factors in its review of the Contract to the extent it considered them to be appropriate and relevant, as discussed further below. The Board considered and weighed these factors in light of its substantial accumulated experience in governing the Fund and working with Federated Hermes on matters relating to the oversight of the other funds advised by Federated Hermes (each, a “Federated Hermes Fund” and, collectively, the (“Federated Hermes Funds”).
In addition to considering the above-referenced factors, the Board was mindful of the preferences and expectations of Fund shareholders and the potential disruptions of the Fund’s operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew the Contract. In particular, the Board recognized that many shareholders likely have invested in the Fund on the strength of Federated Hermes’ industry standing and reputation and with the expectation that Federated Hermes will have a continuing role in providing advisory services to the Fund. Thus, the Board observed that in the marketplace there are a range of investment options available to the Fund’s shareholders and such shareholders, having had the opportunity to consider other investment options, have effectively selected Federated Hermes by virtue of investing in the Fund.
In determining to approve the continuation of the Contract, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the continuation of the Contract was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Contract. The Board recognized that its evaluation process is evolutionary and that the factors considered and emphasis placed on relevant factors may change in recognition of changing circumstances in the registered fund marketplace. The Independent Trustees were assisted throughout the evaluation process by independent legal counsel. In connection with their deliberations at the May Meetings, the Independent Trustees met separately in executive session with their independent legal counsel and without management present to review the relevant materials and consider their responsibilities under applicable laws. In addition, senior management representatives of Federated Hermes also met with the Independent Trustees and their independent legal counsel to discuss the materials and presentations furnished to the Board at the May Meetings. The Board considered the approval of the Contract for the Fund as part of its consideration of agreements for funds across the family of Federated Hermes Funds, but its approvals were made on a fund-by-fund basis.
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63
Nature, Extent and Quality of Services
The Board considered the nature, extent and quality of the services provided to the Fund by the Adviser and the resources of Federated Hermes dedicated to the Fund. In this regard, the Board evaluated, among other things, the terms of the Contract and the range of services provided to the Fund by Federated Hermes. The Board considered the Adviser’s personnel, investment philosophy and process, investment research capabilities and resources, trade operations capabilities, experience and performance track record. The Board reviewed the qualifications, backgrounds and responsibilities of the portfolio management team primarily responsible for the day-to-day management of the Fund and Federated Hermes’ ability and experience in attracting and retaining qualified personnel to service the Fund. In addition, the Board noted that the Fund is a money market mutual fund that operates in accordance with the limitations set forth in Rule 2a-7 under the 1940 Act. In this connection, the Board considered the expertise of the Adviser in managing money market funds, its extensive experience with the requirements of Rule 2a-7 and its commitment to managing the Fund in accordance with these requirements. The Board also considered the Adviser’s ability to deliver competitive investment performance for the Fund when compared to the Fund’s Performance Peer Group (as defined below), which was deemed by the Board to be a useful indicator of how the Adviser is executing the Fund’s investment program. The Board also considered the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, in order to maintain a positive yield for the Fund in the low interest rate environment.
In addition, the Board considered the financial resources and overall reputation of Federated Hermes and its willingness to consider and make investments in personnel, infrastructure, technology, cybersecurity, business continuity planning and operational enhancements that are designed to benefit the Federated Hermes Funds. The Board noted the significant acquisition of Hermes Fund Managers Limited by Federated Hermes, which has deepened the organization’s investment management expertise and capabilities and expanded the investment process for all of the Federated Hermes Funds to have access to analytical resources related to environmental, social and governance (“ESG”) factors and issuer engagement on ESG matters. The Board considered the quality of Federated Hermes’ communications with the Board and responsiveness to Board inquiries and requests made from time to time with respect to the Fund and other Federated Hermes Funds. In this regard, the Board took into account Federated Hermes’ communications with the Board in light of the pandemic. The Board also considered that Federated Hermes is responsible for providing the Federated Hermes Funds’ officers.
The Board received and evaluated information regarding Federated Hermes’ regulatory and compliance environment. The Board considered Federated Hermes’ compliance program and compliance history and reports from the CCO about Federated Hermes’ compliance with applicable laws and
Annual Shareholder Report
64
regulations, including responses to regulatory developments and any compliance or other issues raised by regulatory agencies. The Board also noted Federated Hermes’ support of the Federated Hermes Funds’ compliance control structure and the compliance-related resources devoted by Federated Hermes in support of the Fund’s obligations pursuant to Rule 38a-1 under the Investment Company Act of 1940, including Federated Hermes’ commitment to respond to rulemaking and other regulatory initiatives of the SEC. The Board considered Federated Hermes’ approach to internal audits and risk management with respect to the Federated Hermes Funds and its day-to-day oversight of the Federated Hermes Funds’ compliance with their investment objectives and policies as well as with applicable laws and regulations, noting that regulatory and other developments had over time led to an increase in the scope of Federated Hermes’ oversight in this regard, including in connection with the designation of the Federated Hermes Funds’ investment advisers as the administrators of the Federated Hermes Funds’ liquidity risk management program.
The Board also considered the implementation of Federated Hermes’ business continuity plans and recognized steps taken by Federated Hermes to continue to provide the same nature, extent and quality of services to the Federated Hermes Funds during the pandemic. In addition, the Board noted Federated Hermes’ commitment to maintaining high quality systems and expending substantial resources to prepare for and respond to ongoing changes due to the market, regulatory and control environments in which the Fund and its service providers operate, including changes associated with the pandemic.
The Board considered Federated Hermes’ efforts to provide shareholders in the Federated Hermes Funds with a comprehensive array of funds with different investment objectives, policies and strategies. The Board considered the expenses that Federated Hermes had incurred, as well as the entrepreneurial and other risks assumed by Federated Hermes, in sponsoring and providing on-going services to new funds to expand these opportunities for shareholders. The Board noted the benefits to shareholders of being part of the family of Federated Hermes Funds, which include the general right to exchange investments between the same class of shares without the incurrence of additional sales charges.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided by the Adviser to the Fund.
Fund Investment Performance
The Board considered the investment performance of the Fund. In evaluating the Fund’s investment performance, the Board considered performance results in light of the Fund’s investment objective, strategies and risks. The Board considered detailed investment reports on, and the Adviser’s analysis of, the Fund’s performance over different time periods that were
Annual Shareholder Report
65
provided to the Board throughout the year and in connection with the May Meetings. These reports include, among other items, information on the Fund’s gross and net returns, the Fund’s investment performance compared to one or more relevant categories or groups of peer funds and the Fund’s benchmark index, performance attribution information and commentary on the effect of market conditions.
The Board also reviewed comparative information regarding the performance of other registered funds in the category of peer funds selected by iMoneyNet, an independent fund ranking organization (the “Performance Peer Group”). The Board noted the CCO’s view that comparisons to fund peer groups may be helpful, though not conclusive, in evaluating the performance of the Adviser in managing the Fund. The Board considered, in evaluating such comparisons, that in some cases there may be differences in the funds’ objectives or investment management techniques, or the costs to implement the funds, even within the same Performance Peer Group.
For the one-year period ended December 31, 2021, the Fund’s performance was above the median of the Performance Peer Group. The Board also considered the relatively tight dispersion of performance data with respect to the Fund and its Performance Peer Group.
Based on these considerations, the Board concluded that it had continued confidence in the Adviser’s overall capabilities to manage the Fund.
Fund Expenses
The Board considered the advisory fee and overall expense structure of the Fund and the comparative fee and expense information that had been provided in connection with the May Meetings. In this regard, the Board was presented with, and considered, information regarding the contractual advisory fee rates, net advisory fee rates, total expense ratios and each element of the Fund’s total expense ratio (i.e., gross and net advisory fees, administrative fees, custody fees, portfolio accounting fees and transfer agency fees) relative to an appropriate group of peer funds compiled by Federated Hermes from the category of peer funds selected by iMoneyNet (the “Expense Peer Group”). The Board received a description of the methodology used to select the Expense Peer Group from the overall iMoneyNet category. The Board also reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall iMoneyNet category.
While mindful that courts have cautioned against giving too much weight to comparative information concerning fees charged by other advisers for managing funds with comparable investment programs, the Board noted that it found the use of such comparisons to be relevant to its evaluation. The Board focused on comparisons with other similar registered funds more heavily than non-registered fund products or services because such comparisons are believed to be more relevant. The Board considered that other registered funds are the products most like the Fund, in that they are readily available to Fund
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66
shareholders as alternative investment vehicles, and they are the type of investment vehicle, in fact, chosen and maintained by the Fund’s shareholders. The Board noted that the range of such other registered funds’ fees and expenses, therefore, appears to be a relevant indicator of what investors have found to be reasonable in the marketplace in which the Fund competes.
The Board noted that, for the year ended December 31, 2021, the Fund’s investment advisory fee was waived in its entirety. The Board reviewed the contractual advisory fee rate, net advisory fee rate and other expenses of the Fund with the Adviser and noted the position of the Fund’s fee rates relative to its Expense Peer Group. In this regard, the Board noted that the contractual advisory fee rate was above the median of the Expense Peer Group, but the Board noted that the investment advisory fee was waived in its entirety, and that the overall expense structure of the Fund remained competitive in the context of other factors considered by the Board.
The Board also received and considered information about the fees charged by Federated Hermes for providing advisory services to other types of clients with investment strategies similar to those of the Federated Hermes Funds, including non-registered fund clients (such as institutional separate accounts) and third-party unaffiliated registered funds for which the Adviser or its affiliates serve as sub-adviser. The Board noted the CCO’s conclusion that non-registered fund clients are inherently different products due to the following differences, among others: (i) different types of targeted investors; (ii) different applicable laws and regulations; (iii) different legal structures; (iv) different average account sizes and portfolio management techniques made necessary by different cash flows and different associated costs; (v) the time spent by portfolio managers and their teams (among other personnel across various departments, including legal, compliance and risk management) in reviewing securities pricing and fund liquidity; (vi) different administrative responsibilities; (vii) different degrees of risk associated with management; and (viii) a variety of different costs. The Board also considered information regarding the differences in the nature of the services required for Federated Hermes to manage its proprietary registered fund business versus managing a discrete pool of assets as a sub-adviser to another institution’s registered fund, noting the CCO’s view that Federated Hermes generally performs significant additional services and assumes substantially greater risks in managing the Fund and other Federated Hermes Funds than in its role as sub-adviser to an unaffiliated third-party registered fund. The Board noted that the CCO did not consider the fees for providing advisory services to other types of clients to be determinative in judging the appropriateness of the Federated Hermes Funds’ advisory fees.
Based on these considerations, the Board concluded that the fees and total operating expenses of the Fund, in conjunction with other matters considered, are reasonable in light of the services provided.
Annual Shareholder Report
67
Profitability
The Board received and considered profitability information furnished by Federated Hermes, as requested by the CCO. Such profitability information included revenues reported on a fund-by-fund basis and estimates of the allocation of expenses made on a fund-by-fund basis, using allocation methodologies specified by the CCO and described to the Board. The Board considered the CCO’s view that, while these cost allocation reports apply consistent allocation processes, the inherent difficulties in allocating costs on a fund-by-fund basis continues to cause the CCO to question the precision of the process and to conclude that such reports may be unreliable because a single change in an allocation estimate may dramatically alter the resulting estimate of cost and/or profitability of a Federated Hermes Fund and may produce unintended consequences. In addition, the Board considered the CCO’s view that the allocation methodologies used by Federated Hermes in estimating profitability for purposes of reporting to the Board in connection with the continuation of the Contract are consistent with the methodologies previously reviewed by an independent consultant. The Board noted that the independent consultant had previously conducted a review of the allocation methodologies and reported that, although there is no single best method to allocate expenses, the methodologies used by Federated Hermes are reasonable. The Board noted the impact of the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, on the profitability of the Fund to the Adviser.
The Board also reviewed information compiled by Federated Hermes comparing its profitability information to other publicly held fund management companies, including information regarding profitability trends over time. The Board considered the CCO’s conclusion that, based on such profitability information, Federated Hermes’ profit margins did not appear to be excessive. The Board also considered the CCO’s view that Federated Hermes appeared financially sound, with the resources necessary to fulfill its obligations under its contracts with the Federated Hermes Funds.
Economies of Scale
The Board received and considered information about the notion of possible realization of “economies of scale” as a fund grows larger, the difficulties of calculating economies of scale at an individual fund level, and the extent to which potential scale benefits are shared with shareholders. In this regard, the Board considered that Federated Hermes has made significant and long-term investments in areas that support all of the Federated Hermes Funds, such as: personnel, processes and tools for portfolio management, including the use of market data on which portfolio managers make investment decisions; trading operations; ESG integration and issuer engagement on ESG matters; shareholder services; compliance; business continuity; cybersecurity; internal audit and risk management functions; and technology that supports the provision of investment management services. The Board noted that Federated
Annual Shareholder Report
68
Hermes’ investments in these areas are extensive and are designed to provide enhanced services to the Federated Hermes Funds and their shareholders. The Board considered that the benefits of these investments are likely to be shared with the family of Federated Hermes Funds as a whole. In addition, the Board considered that fee waivers and expense reimbursements are another means for potential economies of scale to be shared with shareholders and can provide protection from an increase in expenses if a Federated Hermes Fund’s assets decline. The Board considered that, in order for the Federated Hermes Funds to remain competitive in the marketplace, Federated Hermes has frequently waived fees and/or reimbursed expenses for the Federated Hermes Funds and has disclosed to shareholders and/or reported to the Board its intention to do so (or continue to do so) in the future. The Board also considered Federated Hermes’ reductions in contractual management fees for certain Federated Hermes Funds during the prior year, including in response to the CCO’s recommendations in the prior year’s CCO Fee Evaluation Report, which have resulted in benefits being realized by shareholders.
The Board also considered reports on adviser-paid fees (commonly referred to as “revenue sharing”) that were provided to the Board throughout the year and in connection with the May Meetings. The Board considered that Federated Hermes and the CCO believe that this information should be viewed to determine if there was an incentive to either not apply breakpoints, or to apply breakpoints at higher levels, and should not be viewed to evaluate the reasonableness of advisory fees. The Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which is compounded by the lack of any uniform methodology or pattern with respect to structuring fund advisory fees with breakpoints that serve to reduce the fees as a fund attains a certain size.
Other Benefits
The Board considered information regarding the compensation and other ancillary (or “fall-out”) benefits that Federated Hermes derived from its relationships with the Federated Hermes Funds. The Board noted that, in addition to receiving advisory fees under the Federated Hermes Funds’ investment advisory contracts, Federated Hermes’ affiliates also receive fees for providing other services to the Federated Hermes Funds under separate contracts (e.g., for serving as the Federated Hermes Funds’ administrator and distributor). In this regard, the Board considered that certain of Federated Hermes’ affiliates provide distribution and shareholder services to the Federated Hermes Funds, for which they may be compensated through distribution and servicing fees paid pursuant to Rule 12b-1 plans or otherwise. The Board also received and considered information detailing any indirect benefit that Federated Hermes may derive from its receipt of research services from brokers who execute portfolio trades for the Federated Hermes Funds.
Annual Shareholder Report
69
Conclusions
The Board considered: (i) the CCO’s conclusion that his observations and the information accompanying the CCO Fee Evaluation Report show that the management fee for the Fund is reasonable; and (ii) the CCO’s recommendation that the Board approve the management fee. The Board noted that, under these circumstances, no changes were recommended to, and no objection was raised to the continuation of, the Contract by the CCO. The CCO also recognized that the Board’s evaluation of the Federated Hermes Funds’ advisory and sub-advisory arrangements is a continuing and ongoing process that is informed by the information that the Board requests and receives from management throughout the course of the year and, in this regard, the CCO noted certain items for future reporting to the Board or further consideration by management as the Board continues its ongoing oversight of the Federated Hermes Funds.
On the basis of the information and factors summarized above, among other information and factors deemed relevant by the Board, and the evaluation thereof, the Board, including the Independent Trustees, unanimously voted to approve the continuation of the Contract. The Board based its determination to approve the Contract on the totality of the circumstances and relevant factors and with a view of past and future long-term considerations. Not all of the factors and considerations identified above were necessarily deemed to be relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were deemed to be relevant, the Board’s determination to approve the continuation of the Contract reflects its view that Federated Hermes’ performance and actions provided a satisfactory basis to support the determination to approve the continuation of the existing arrangement.
Annual Shareholder Report
70
Voting Proxies on Fund Portfolio Securities
A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund’s portfolio is available, without charge and upon request, by calling 1-800-341-7400, Option #4. A report on “Form N-PX” of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available via the Proxy Voting Record (Form N-PX) link associated with the Fund and share class name at FederatedInvestors.com/FundInformation. Form N-PX filings are also available at the SEC’s website at sec.gov.
Portfolio Schedule
The Fund files with the SEC a complete schedule of its portfolio holdings as of the close of each month on “Form N-MFP.” Form N-MFP is available on the SEC’s website at sec.gov. You may access Form N-MFP via the link to the Fund and share class name at FederatedInvestors.com.
Annual Shareholder Report
71
You could lose money by investing in the Fund. Because the share price of the Fund will fluctuate, when you sell your shares they may be worth more or less than what you originally paid for them. The Fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
This Report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund’s Prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.
Federated Hermes Institutional Prime Value Obligations Fund
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at FederatedInvestors.com
or call 1-800-341-7400.
or call 1-800-341-7400.
Federated Securities Corp., Distributor
CUSIP 60934N583
CUSIP 60934N575
CUSIP 60934N567
CUSIP 60934N575
CUSIP 60934N567
Q450527 (9/22)
© 2022 Federated Hermes, Inc.
Annual Shareholder Report
July 31, 2022
|
Share Class | Ticker
|
Institutional | PVOXX
|
|
|
|
Federated Hermes Institutional Prime Value Obligations Fund
A Portfolio of Federated Hermes Money Market Obligations Trust
Dear Valued Shareholder,
We are pleased to present the Annual Shareholder Report for your fund covering the period from August 1, 2021 through July 31, 2022. This report includes a complete listing of your fund’s holdings, performance information and financial statements along with other important fund information.
As a global leader in active, responsible investment management, Federated Hermes is guided by our conviction that responsible investing is the best way to create wealth over the long term. The company provides capabilities across a wide range of asset classes to investors around the world.
In addition, FederatedInvestors.com offers quick and easy access to valuable resources that include timely fund updates, economic and market insights from our investment strategists and financial planning tools. You can also access many of those insights by following us on Twitter (@FederatedHermes) and LinkedIn.
Thank you for investing with us. We hope you find this information useful and look forward to keeping you informed.
Sincerely,
J. Christopher Donahue, President
The Fund operates as a “Floating Net Asset Value” Money Market Fund.
The Share Price will fluctuate. It is possible to lose money by investing in the Fund.
The Share Price will fluctuate. It is possible to lose money by investing in the Fund.
Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee
Portfolio of Investments Summary Table (unaudited)
At July 31, 2022, the Fund’s portfolio composition1 was as follows:
|
Security Type
|
Percentage of
Total Net Assets2
|
|
Other Repurchase Agreements and Repurchase Agreements
|
37.2%
|
|
Variable Rate Instruments
|
27.2%
|
|
Bank Instruments
|
21.5%
|
|
Commercial Paper
|
14.0%
|
|
U.S. Treasury
|
0.3%
|
|
Other Assets and Liabilities—Net3
|
(0.2)%
|
|
TOTAL
|
100%
|
|
1
|
See the Fund’s Prospectus and Statement of Additional Information for more complete
information regarding these security types.
|
|
2
|
As of the date specified above, the Fund owned shares of one or more affiliated investment
companies. For purposes of this table, the affiliated investment company is not treated as a
single portfolio security, but rather the Fund is treated as owning a pro rata portion of each
security and each other asset and liability owned by the affiliated investment company.
Accordingly, the percentages of total net assets shown in the table will differ from those
presented on the Portfolio of Investments.
|
|
3
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
Annual Shareholder Report
1
Portfolio of Investments
July 31, 2022
|
Shares or
Principal
Amount
|
|
|
Value
|
|
|
|
INVESTMENT COMPANY— 99.7%
|
|
|
10,296,214,894
|
|
Federated Hermes Institutional Prime Obligations Fund, 1.84%1
(IDENTIFIED COST $10,302,294,148)
|
$10,294,155,651
|
|
|
|
OTHER REPURCHASE AGREEMENTS— 0.2%
|
|
|
|
|
Finance - Banking— 0.2%
|
|
|
$ 26,000,000
|
|
Societe Generale, Paris, 2.47%, dated 7/29/2022, interest in a
$650,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $650,133,792 on 8/1/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, treasury bills and medium-term notes with a
market value of $663,136,856 have been received as collateral and
held with BNY Mellon as tri-party agent.
(IDENTIFIED COST $26,000,000)
|
26,000,000
|
|
|
|
TOTAL INVESTMENT IN SECURITIES—99.9%
(IDENTIFIED COST $10,328,294,148)2
|
10,320,155,651
|
|
|
|
OTHER ASSETS AND LIABILITIES - NET—0.1%3
|
8,189,565
|
|
|
|
TOTAL NET ASSETS—100%
|
$10,328,345,216
|
Affiliated fund holdings are investment companies which are managed by Federated Investment Management Company (the “Adviser”) or an affiliate of the Adviser. Transactions with affiliated fund holdings during the period ended July 31, 2022, were as follows:
|
|
Federated Hermes
Institutional Prime
Obligations Fund,
Institutional Shares
|
|
Value as of 7/31/2021
|
$12,792,147,546
|
|
Purchases at Cost
|
$10,846,413,708
|
|
Proceeds from Sales
|
$(13,337,407,099)
|
|
Change in Unrealized Appreciation/Depreciation
|
$(6,111,897)
|
|
Net Realized Gain/(Loss)
|
$(886,607)
|
|
Value as of 7/31/2022
|
$10,294,155,651
|
|
Shares Held as of 7/31/2022
|
10,296,214,894
|
|
Dividend Income
|
$34,863,371
|
The Fund invests in Federated Hermes Institutional Prime Obligations Fund (POF), a diversified portfolio of Federated Hermes Money Market Obligations Trust (MMOT) which is also managed by the Adviser. MMOT is an open-end management investment company, registered under the Investment Company Act of 1940, as amended. The investment objective of POF is to provide current income consistent with stability of principal. Income distributions from POF are declared daily and paid monthly. All income distributions are recorded by the Fund as dividend income. Capital gain distributions of POF, if any, are declared and paid annually, and are recorded by the
Annual Shareholder Report
2
Fund as capital gains received. At July 31, 2022, POF represents 99.7% of the Fund’s net assets. Therefore, the performance of the Fund is directly affected by the performance of POF. To illustrate the security holdings, financial condition, results of operations and changes in net assets of POF, its financial statements are included within this report. The financial statements of POF should be read in conjunction with the Fund’s financial statements. The valuation of securities held by POF is discussed in the notes to its financial statements.
|
1
|
7-day net yield.
|
|
2
|
Also represents cost of investments for federal tax purposes.
|
|
3
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
Note: The categories of investments are shown as a percentage of total net assets at July 31, 2022.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Level 1—quoted prices in active markets for identical securities.
Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Also includes securities valued at amortized cost.
Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used, as of July 31, 2022, in valuing the Fund’s assets carried at fair value:
|
Valuation Inputs
|
||||
|
|
Level 1—
Quoted
Prices
|
Level 2—
Other
Significant
Observable
Inputs
|
Level 3—
Significant
Unobservable
Inputs
|
Total
|
|
Investment Company
|
$10,294,155,651
|
$—
|
$—
|
$10,294,155,651
|
|
Repurchase Agreement
|
—
|
26,000,000
|
—
|
26,000,000
|
|
TOTAL SECURITIES
|
$10,294,155,651
|
$26,000,000
|
$—
|
$10,320,155,651
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
3
Financial Highlights–Institutional Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.0004
|
$1.0006
|
$1.0003
|
$1.0002
|
$1.0002
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income (loss)
|
0.0036
|
0.0008
|
0.0136
|
0.0239
|
0.0156
|
|
Net realized and unrealized gain (loss)
|
(0.0008)
|
(0.0002)
|
0.0003
|
0.0001
|
(0.0000)1
|
|
Total From Investment
Operations
|
0.0028
|
0.0006
|
0.0139
|
0.0240
|
0.0156
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.0036)
|
(0.0008)
|
(0.0136)
|
(0.0239)
|
(0.0156)
|
|
Distributions from net realized gain
|
(0.0001)
|
(0.0000)1
|
(0.0000)1
|
(0.0000)1
|
(0.0000)1
|
|
Total Distributions
|
(0.0037)
|
(0.0008)
|
(0.0136)
|
(0.0239)
|
(0.0156)
|
|
Net Asset Value, End of Period
|
$0.9995
|
$1.0004
|
$1.0006
|
$1.0003
|
$1.0002
|
|
Total Return2
|
0.28%
|
0.06%
|
1.39%
|
2.43%
|
1.57%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
—%
|
—%
|
0.00%4
|
—%
|
0.00%4
|
|
Net investment income
|
0.35%
|
0.08%
|
1.36%
|
2.41%
|
1.59%
|
|
Expense waiver/reimbursement5
|
0.29%
|
0.29%
|
0.29%
|
0.29%
|
0.29%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$9,946,892
|
$12,120,572
|
$15,937,441
|
$13,599,422
|
$6,992,551
|
|
1
|
Represents less than $0.0001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
Represents less than 0.01%.
|
|
5
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
The financial highlights of the Service Shares and Capital Shares are presented separately.
Annual Shareholder Report
4
Statement of Assets and Liabilities
July 31, 2022
July 31, 2022
|
Assets:
|
|
|
Investment in securities, at value including $10,294,155,651 of investments in an
affiliated holding* (identified cost $10,328,294,148)
|
$10,320,155,651
|
|
Cash
|
48,397
|
|
Income receivable
|
5,352
|
|
Income receivable from an affiliated holding
|
13,318,531
|
|
Receivable for shares sold
|
13,637,000
|
|
Total Assets
|
10,347,164,931
|
|
Liabilities:
|
|
|
Payable for shares redeemed
|
9,032,768
|
|
Income distribution payable
|
9,419,273
|
|
Payable for administrative fee (Note 5)
|
66,578
|
|
Payable for Directors’/Trustees’ fees (Note 5)
|
872
|
|
Payable for other service fees (Notes 2 and 5)
|
53,928
|
|
Accrued expenses (Note 5)
|
246,296
|
|
Total Liabilities
|
18,819,715
|
|
Net assets for 10,333,701,154 shares outstanding
|
$10,328,345,216
|
|
Net Assets Consist of:
|
|
|
Paid-in capital
|
$10,337,918,939
|
|
Total distributable earnings (loss)
|
(9,573,723)
|
|
Total Net Assets
|
$10,328,345,216
|
|
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
|
|
|
Institutional Shares:
|
|
|
$9,946,891,975 ÷ 9,952,050,838 shares outstanding, no par value, unlimited
shares authorized
|
$0.9995
|
|
Service Shares:
|
|
|
$372,511,438 ÷ 372,703,508 shares outstanding, no par value, unlimited
shares authorized
|
$0.9995
|
|
Capital Shares:
|
|
|
$8,941,802 ÷ 8,946,808 shares outstanding, no par value, unlimited
shares authorized
|
$0.9994
|
|
*
|
See information listed after the Fund’s Portfolio of Investments.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
5
Statement of Operations
Year Ended July 31, 2022
Year Ended July 31, 2022
|
Investment Income:
|
|
|
Dividends received from an affiliated holding*
|
$34,863,371
|
|
Interest
|
251,103
|
|
TOTAL INCOME
|
35,114,474
|
|
Expenses:
|
|
|
Investment adviser fee (Note 5)
|
20,286,345
|
|
Administrative fee (Note 5)
|
7,938,349
|
|
Custodian fees
|
282,040
|
|
Transfer agent fees
|
103,760
|
|
Directors’/Trustees’ fees (Note 5)
|
60,299
|
|
Auditing fees
|
25,109
|
|
Legal fees
|
7,361
|
|
Portfolio accounting fees
|
219,297
|
|
Other service fees (Notes 2 and 5)
|
1,224,396
|
|
Share registration costs
|
85,914
|
|
Printing and postage
|
32,957
|
|
Miscellaneous (Note 5)
|
115,982
|
|
TOTAL EXPENSES
|
30,381,809
|
|
Waivers and Reimbursements:
|
|
|
Waiver/reimbursement of investment adviser fee (Note 5)
|
(20,286,345)
|
|
Waiver/reimbursements of other operating expenses (Notes 2 and 5)
|
(9,646,075)
|
|
TOTAL WAIVERS AND REIMBURSEMENTS
|
(29,932,420)
|
|
Net expenses
|
449,389
|
|
Net investment income
|
34,665,085
|
|
Realized and Unrealized Gain (Loss) on Investments:
|
|
|
Net realized loss on investments (including net realized loss of $(886,607) on sales of
investments in an affiliated holding*)
|
(1,328,799)
|
|
Net change in unrealized depreciation of investments in an affiliated holding*
|
(6,111,897)
|
|
Net realized and unrealized gain (loss) on investments
|
(7,440,696)
|
|
Change in net assets resulting from operations
|
$27,224,389
|
|
*
|
See information listed after the Fund’s Portfolio of Investments.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
6
Statement of Changes in Net Assets
|
Year Ended July 31
|
2022
|
2021
|
|
Increase (Decrease) in Net Assets
|
|
|
|
Operations:
|
|
|
|
Net investment income
|
$34,665,085
|
$11,908,591
|
|
Net realized gain (loss)
|
(1,328,799)
|
2,616,301
|
|
Net change in unrealized appreciation/depreciation
|
(6,111,897)
|
(6,530,073)
|
|
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS
|
27,224,389
|
7,994,819
|
|
Distributions to Shareholders:
|
|
|
|
Institutional Shares
|
(34,900,178)
|
(13,019,895)
|
|
Service Shares
|
(972,903)
|
(193,751)
|
|
Capital Shares
|
(35,840)
|
(6,051)
|
|
CHANGE IN NET ASSETS RESULTING FROM
DISTRIBUTIONS TO SHAREHOLDERS
|
(35,908,921)
|
(13,219,697)
|
|
Share Transactions:
|
|
|
|
Proceeds from sale of shares
|
38,690,164,420
|
49,680,032,925
|
|
Net asset value of shares issued to shareholders in payment
of distributions declared
|
10,482,549
|
4,229,653
|
|
Cost of shares redeemed
|
(41,207,066,452)
|
(54,479,989,537)
|
|
CHANGE IN NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
|
(2,506,419,483)
|
(4,795,726,959)
|
|
Change in net assets
|
(2,515,104,015)
|
(4,800,951,837)
|
|
Net Assets:
|
|
|
|
Beginning of period
|
12,843,449,231
|
17,644,401,068
|
|
End of period
|
$10,328,345,216
|
$12,843,449,231
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
7
Notes to Financial Statements
July 31, 2022
1. ORGANIZATION
Federated Hermes Money Market Obligations Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust consists of 16 portfolios. The financial statements included herein are only those of Federated Hermes Institutional Prime Value Obligations Fund (the “Fund”), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder’s interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers three classes of shares: Institutional Shares, Service Shares and Capital Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The investment objective of the Fund is to provide current income consistent with stability of principal and liquidity.
The Fund invests all or substantially all of its net assets in the Institutional Shares of POF (the “Underlying Fund”), an affiliated institutional money market fund with substantially similar investment objectives and strategies as the Fund. Therefore, the performance of the Fund is directly affected by the performance of the Underlying Fund. To illustrate the security holdings, financial condition, results of operations and changes in net assets of the Underlying Fund, its financial statements are included within this report and should be read in conjunction with the Fund’s financial statements.
The Fund operates as an institutional money market fund. As an institutional money market fund, the Fund: (1) will not be limited to institutional investors, but will continue to be available to retail investors; (2) will utilize current market-based prices (except as otherwise generally permitted to value individual portfolio securities with remaining maturities of 60 days or less at amortized cost in accordance with Securities and Exchange Commission (SEC) rules and guidance) to value its portfolio securities and transact at a floating net asset value (NAV) that uses four decimal-place precision ($1.0000); and (3) has adopted policies and procedures to impose liquidity fees on redemptions and/or temporary redemption gates in the event that the Fund’s weekly liquid assets were to fall below a designated threshold, if the Fund’s Board of Trustees (the “Trustees”) determine such liquidity fees or redemption gates are in the best interest of the Fund.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
In calculating its NAV, the Fund generally values investments as follows:
◾
Shares of other mutual funds or non-exchange-traded investment companies are valued based upon their reported NAVs, or NAV per share practical expedient, as applicable.
◾
Fixed-income securities with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Trustees.
Annual Shareholder Report
8
◾
Fixed-income securities with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium), unless the issuer’s creditworthiness is impaired or other factors indicate that amortized cost is not an accurate estimate of the investment’s fair value, in which case it would be valued in the same manner as a longer-term security. The Fund may only use this method to value a portfolio security when it can reasonably conclude, at each time it makes a valuation determination, that the amortized cost price of the portfolio security is approximately the same as the fair value of the security as determined without the use of amortized cost valuation.
◾
For securities that are fair valued in accordance with procedures established by and under the general supervision of the Trustees, certain factors may be considered, such as: the last traded or purchase price of the security, information obtained by contacting the issuer or dealers, analysis of the issuer’s financial statements or other available documents, fundamental analytical data, the nature and duration of restrictions on disposition, the movement of the market in which the security is normally traded, public trading in similar securities or derivative contracts of the issuer or comparable issuers, movement of a relevant index, or other factors including but not limited to industry changes and relevant government actions.
If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, if the Fund cannot obtain price evaluations from a pricing service or from more than one dealer for an investment within a reasonable period of time as set forth in the Fund’s valuation policies and procedures, or if information furnished by a pricing service, in the opinion of the valuation committee (“Valuation Committee”), is deemed not representative of the fair value of such security, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines its NAV per share, and the actual value obtained could be materially different.
Fair Valuation Procedures
The Trustees have ultimate responsibility for determining the fair value of investments for which market quotations are not readily available. The Trustees have appointed a Valuation Committee comprised of officers of the Fund, Federated Investment Management Company (the “Adviser”) and certain of the Adviser’s affiliated companies to assist in determining fair value and in overseeing the calculation of the NAV. The Trustees have also authorized the use of pricing services recommended by the Valuation Committee to provide fair value evaluations of the current value of certain investments for purposes of calculating the NAV. The Valuation Committee employs various methods for reviewing third-party pricing-service evaluations including periodic reviews of third-party pricing services’ policies, procedures and valuation methods (including key inputs, methods, models and assumptions), transactional back-testing, comparisons of evaluations of different pricing services, and review of price challenges by the Adviser based on recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee determines the fair value of the investment in accordance with procedures adopted by the Trustees. The Trustees periodically review and approve the fair valuations made by the Valuation Committee and any changes made to the procedures.
Annual Shareholder Report
9
Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a “bid” evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a “mid” evaluation). The Fund normally uses bid evaluations for any U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for any other types of fixed-income securities and any over-the-counter derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.
Repurchase Agreements
The Fund may invest in repurchase agreements for short-term liquidity purposes. It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund’s custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control” as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.
The insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.
The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund’s Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.
Repurchase agreements are subject to Master Netting Agreements which are agreements between the Fund and its counterparties that provide for the net settlement of all transactions and collateral with the Fund, through a single payment, in the event of default or termination. Amounts presented on the Portfolio of Investments and Statement of Assets and Liabilities are not net settlement amounts but gross. As indicated above, the cash or securities to be repurchased, as shown on the Portfolio of Investments, exceeds the repurchase price to be paid under the agreement reducing the net settlement amount to zero.
Annual Shareholder Report
10
Investment Income, Gains and Losses, Expenses and Distributions
Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis. Interest income and expenses are accrued daily. Distributions of net investment income, if any, are declared daily and paid monthly. Amortization/accretion of premium and discount is included in investment income. Investment income, realized and unrealized gains and losses, and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that select classes will bear certain expenses unique to those classes. The detail of the total fund expense waivers and reimbursements of $29,932,420 is disclosed in various locations in this Note 2 and Note 5.
Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.
Other Service Fees
The Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund’s Institutional Shares, Service Shares and Capital Shares to unaffiliated financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for other service fees. In addition, unaffiliated third-party financial intermediaries may waive other service fees. This waiver can be modified or terminated at any time.
For the year ended July 31, 2022, other service fees for the Fund were as follows:
|
|
Other Service
Fees Incurred
|
Other Service
Fees Reimbursed
|
Other Service Fees
Waived by Unaffiliated
Third Parties
|
|
Service Shares
|
$1,207,280
|
$(35,800)
|
$(730,147)
|
|
Capital Shares
|
17,116
|
—
|
(9,059)
|
|
TOTAL
|
$1,224,396
|
$(35,800)
|
$(739,206)
|
For the year ended July 31, 2022, the Fund’s Institutional Shares did not incur other service fees.
Federal Taxes
It is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code (the “Code”) and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. As of and during the year ended July 31, 2022, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2022, tax years 2019 through 2022 remain subject to examination by the Fund’s major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.
Annual Shareholder Report
11
When-Issued and Delayed-Delivery Transactions
The Fund may engage in when-issued or delayed-delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed-delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
Restricted Securities
The Fund may purchase securities which are considered restricted. Restricted securities are securities that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) are subject to contractual restrictions on public sales. In some cases, when a security cannot be offered for public sale without first being registered, the issuer of the restricted security has agreed to register such securities for resale, at the issuer’s expense, either upon demand by the Fund or in connection with another registered offering of the securities. Many such restricted securities may be resold in the secondary market in transactions exempt from registration. Restricted securities may be determined to be liquid under criteria established by the Trustees. The Fund will not incur any registration costs upon such resales. The Fund’s restricted securities, like other securities, are priced in accordance with procedures established by and under the general supervision of the Trustees.
Other
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ materially from those estimated. The Fund applies investment company accounting and reporting guidance.
3. SHARES OF BENEFICIAL INTEREST
The following tables summarize share activity:
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Institutional Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
38,562,278,787
|
$38,557,456,148
|
48,981,048,371
|
$48,998,521,164
|
|
Shares issued to shareholders
in payment of
distributions declared
|
9,493,387
|
9,489,444
|
4,030,582
|
4,032,084
|
|
Shares redeemed
|
(40,735,979,904)
|
(40,732,381,207)
|
(52,796,548,875)
|
(52,814,602,302)
|
|
NET CHANGE RESULTING
FROM INSTITUTIONAL
SHARE TRANSACTIONS
|
(2,164,207,730)
|
$(2,165,435,615)
|
(3,811,469,922)
|
$(3,812,049,054)
|
Annual Shareholder Report
12
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Service Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
127,450,141
|
$127,416,583
|
664,745,362
|
$664,998,659
|
|
Shares issued to shareholders
in payment of
distributions declared
|
957,705
|
957,294
|
192,418
|
192,481
|
|
Shares redeemed
|
(457,418,370)
|
(457,394,097)
|
(1,650,094,556)
|
(1,650,722,974)
|
|
NET CHANGE RESULTING
FROM SERVICE
SHARE TRANSACTIONS
|
(329,010,524)
|
$(329,020,220)
|
(985,156,776)
|
$(985,531,834)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Capital Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
5,292,088
|
$5,291,689
|
16,507,178
|
$16,513,102
|
|
Shares issued to shareholders
in payment of
distributions declared
|
35,826
|
35,811
|
5,086
|
5,088
|
|
Shares redeemed
|
(17,295,855)
|
(17,291,148)
|
(14,659,841)
|
(14,664,261)
|
|
NET CHANGE RESULTING
FROM CAPITAL
SHARE TRANSACTIONS
|
(11,967,941)
|
$(11,963,648)
|
1,852,423
|
$1,853,929
|
|
NET CHANGE RESULTING
FROM TOTAL FUND
SHARE TRANSACTIONS
|
(2,505,186,195)
|
$(2,506,419,483)
|
(4,794,774,275)
|
$(4,795,726,959)
|
4. FEDERAL TAX INFORMATION
The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2022 and 2021, was as follows:
|
|
2022
|
2021
|
|
Ordinary income
|
$34,608,506
|
$12,030,928
|
|
Long-term capital gains
|
$1,300,415
|
$1,188,769
|
As of July 31, 2022, the components of distributable earnings on a tax-basis were as follows:
|
Distributions payable
|
$(106,427)
|
|
Net unrealized depreciation
|
$(8,138,497)
|
|
Capital loss carryforwards
|
$(1,328,799)
|
At July 31, 2022, the cost of investments for federal tax purposes was $10,328,294,148. The net unrealized depreciation of investments for federal tax purposes was $8,138,497. This consists entirely of net unrealized depreciation from investments for those securities having an excess of cost over value of $8,138,497.
Annual Shareholder Report
13
As of July 31, 2022, the Fund had a capital loss carryforward of $1,328,799 which will reduce the Fund’s taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code, thereby reducing the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, these net capital losses retain their character as either short-term or long-term and do not expire.
The following schedule summarizes the Fund’s capital loss carryforwards:
|
Short-Term
|
Long-Term
|
Total
|
|
$1,328,799
|
$—
|
$1,328,799
|
5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.20% of the Fund’s average daily net assets. The Underlying Fund also has an investment advisory agreement with the Adviser by which the Adviser is entitled to an investment adviser fee with respect to the Underlying Fund’s average daily net assets. To avoid charging duplicative fees, the Adviser has agreed to waive and/or reimburse its fee with respect to the Fund’s net assets invested in the Underlying Fund. For the year ended July 31, 2022, the Adviser voluntarily waived and/or reimbursed all of its fee.
In addition, subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive and/or reimburse certain operating expenses of the Fund for competitive reasons such as to maintain the Fund’s expense ratio, or as and when appropriate, to maintain positive or zero net yields. For the year ended July 31, 2022, the Adviser voluntarily reimbursed $8,871,069 of other operating expenses.
Administrative Fee
Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated Hermes Funds subject to a fee under the Administrative Services Agreement. The fee paid to FAS is based on the average daily net assets of the Investment Complex as specified below:
|
Administrative Fee
|
Average Daily Net Assets
of the Investment Complex
|
|
0.100%
|
on assets up to $50 billion
|
|
0.075%
|
on assets over $50 billion
|
Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2022, the annualized fee paid to FAS was 0.078% of average daily net assets of the Fund.
In addition, FAS may charge certain out-of-pocket expenses to the Fund.
Annual Shareholder Report
14
Other Service Fees
For the year ended July 31, 2022, FSSC reimbursed $35,800 of the other service fees disclosed in Note 2.
Expense Limitation
Due to the possibility of changes in market conditions and other factors, there can be no assurance that the level of waivers and/or reimbursements of Fund expenses reflected in the financial highlights will be maintained in the future. However, the Adviser and certain of its affiliates (which may include FAS and FSSC) on their own initiative have agreed to waive certain amounts of their respective fees and/or reimburse expenses. Total annual fund operating expenses (as shown in the financial highlights, excluding interest expense, extraordinary expenses and proxy-related expenses paid by the Fund, if any) and the Fund’s share of the fees and expenses of the Underlying Fund paid by the Fund’s Institutional Shares, Service Shares and Capital Shares (after the voluntary waivers and/or reimbursements) will not exceed 0.20%, 0.45% and 0.30% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) October 1, 2023; or (b) the date of the Fund’s next effective Prospectus. While the Adviser and its applicable affiliates currently do not anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or the Fee Limit increased prior to the Termination Date with the agreement of the Trustees.
Directors’/Trustees’ and Miscellaneous Fees
Certain Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate payment, Independent Directors’/Trustees’ fees and certain expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses are paid by an affiliate of the Adviser which in due course are reimbursed by the Fund. These expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses may be included in Accrued and Miscellaneous Expenses on the Statement of Assets and Liabilities and Statement of Operations, respectively.
Affiliated Shares of Beneficial Interest
As of July 31, 2022, a majority of the shares of beneficial interest outstanding are owned by other affiliated investment companies.
6. CONCENTRATION OF RISK
A substantial part of the Fund’s portfolio invested in the Underlying Fund may be comprised of obligations of banks. As a result, the Fund may be more susceptible to any economic, business, political or other developments which generally affect these entities.
7. LINE OF CREDIT
The Fund participates with certain other Federated Hermes Funds, on a several basis, in an up to $500,000,000 unsecured, 364-day, committed, revolving line of credit (LOC) agreement dated June 22, 2022. The LOC was made available to temporarily finance the repurchase or redemption of shares of the Fund, failed trades, payment of dividends, settlement of trades and for other short-term, temporary or emergency general business purposes. The Fund cannot borrow under the LOC if an inter-fund loan is outstanding. The Fund’s ability to borrow under the LOC also is subject to the
Annual Shareholder Report
15
limitations of the Act and various conditions precedent that must be satisfied before the Fund can borrow. Loans under the LOC are charged interest at a fluctuating rate per annum equal to (a) the highest, on any day, of (i) the federal funds effective rate, (ii) the published secured overnight financing rate plus an assigned percentage, and (iii) 0.0%, plus (b) a margin. Any fund eligible to borrow under the LOC pays its pro rata share of a commitment fee based on the amount of the lenders’ commitment that has not been utilized, quarterly in arrears and at maturity. As of July 31, 2022, the Fund had no outstanding loans. During the year ended July 31, 2022, the Fund did not utilize the LOC.
8. INTERFUND LENDING
Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other funds advised by subsidiaries of Federated Hermes, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating affiliated funds. As of July 31, 2022, there were no outstanding loans. During the year ended July 31, 2022, the program was not utilized.
9. INDEMNIFICATIONS
Under the Fund’s organizational documents, its Officers and Directors/Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund (other than liabilities arising out of their willful misfeasance, bad faith, gross negligence or reckless disregard of their duties to the Fund). In addition, in the normal course of business, the Fund provides certain indemnifications under arrangements with third parties. Typically, obligations to indemnify a third party arise in the context of an arrangement entered into by the Fund under which the Fund agrees to indemnify such third party for certain liabilities arising out of actions taken pursuant to the arrangement, provided the third party’s actions are not deemed to have breached an agreed-upon standard of care (such as willful misfeasance, bad faith, gross negligence or reckless disregard of their duties under the contract). The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet arisen. The Fund does not anticipate any material claims or losses pursuant to these arrangements at this time, and accordingly expects the risk of loss to be remote.
10. OTHER MATTERS
An outbreak of respiratory disease caused by a novel coronavirus was first detected in China in late 2019 and subsequently spread globally. As of the date of the issuance of these financial statements, this coronavirus has resulted in closing borders, enhanced health screenings, disruptions to healthcare service preparation and delivery, quarantines, cancellations, and disruptions to supply chains, workflow operations and consumer activity, as well as general concern and uncertainty. The impact of this coronavirus may continue for an extended period of time and has resulted in substantial economic volatility. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could continue to negatively affect the worldwide economy, as well as the economies of individual countries, individual companies (including certain Fund service providers and issuers of the Fund’s investments) and the markets in general in significant and unforeseen ways. Any such impact could adversely affect the Fund’s performance.
Annual Shareholder Report
16
11. FEDERAL TAX INFORMATION (UNAUDITED)
For the year ended July 31, 2022, the amount of long-term capital gains designated by the Fund was $1,300,415.
For the fiscal year ended July 31, 2022, 75.77% of dividends paid by the Fund are interest-related dividends, as provided by the American Jobs Creation Act of 2004.
Annual Shareholder Report
17
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Federated Hermes Money Market Obligations Trust and the Shareholders of Federated Hermes Institutional Prime Value Obligations Fund:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of the Federated Hermes Institutional Prime Value Obligations Fund (the Fund), a portfolio of Federated Hermes Money Market Obligations Trust, including the portfolio of investments, as of July 31, 2022, the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the related notes (collectively, the financial statements) and the financial highlights for each of the years in the five-year period then ended. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of July 31, 2022, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
Annual Shareholder Report
18
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Such procedures also included confirmation of securities owned as of July 31, 2022, by correspondence with custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of Federated Hermes’ investment companies since 2006.
Boston, Massachusetts
September 23, 2022
September 23, 2022
Annual Shareholder Report
19
Shareholder Expense Example (unaudited)
As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or other service fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2022 to July 31, 2022.
ACTUAL EXPENSES
The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses attributable to your investment during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Annual Shareholder Report
20
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
|
|
Beginning
Account Value
2/1/2022
|
Ending
Account Value
7/31/2022
|
Expenses Paid
During Period1
|
|
Actual
|
$1,000.00
|
$1,003.00
|
$—2
|
|
Hypothetical (assuming a 5% return
before expenses)
|
$1,000.00
|
$1,024.79
|
$—2
|
|
1
|
Expenses are equal to the Fund’s Institutional Shares annualized net expense ratio of 0.00%,
multiplied by the average account value over the period, multiplied by 181/365 (to reflect the
one-half-year period).
|
|
2
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Institutional Shares
current Fee Limit of 0.20% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $0.99 and $1.00, respectively.
|
Annual Shareholder Report
21
Federated Hermes Institutional Prime Obligations Fund
Financial INFORMATION
Federated Hermes Institutional Prime Value Obligations Fund invests primarily in Federated Hermes Institutional Prime Obligations Fund. Therefore, the Federated Hermes Institutional Prime Obligations Fund’s financial information is included on pages 23 through 51.
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
22
Portfolio of Investments Summary Tables (unaudited)
At July 31, 2022, the Fund’s portfolio composition1 was as follows:
|
Security Type
|
Percentage of
Total Net Assets
|
|
Other Repurchase Agreements and Repurchase Agreements
|
37.0%
|
|
Variable Rate Instruments
|
27.3%
|
|
Bank Instruments
|
21.7%
|
|
Commercial Paper
|
14.0%
|
|
U.S. Treasury Securities
|
0.3%
|
|
Other Assets and Liabilities—Net2
|
(0.3)%
|
|
TOTAL
|
100%
|
|
1
|
See the Fund’s Prospectus and Statement of Additional Information for a description of these
security types.
|
|
2
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
At July 31, 2022, the Fund’s effective maturity schedule1 was as follows:
|
Securities With an
Effective Maturity of:
|
Percentage of
Total Net Assets
|
|
1-7 Days2
|
79.5%
|
|
8-30 Days
|
5.3%
|
|
31-90 Days
|
9.9%
|
|
91-180 Days
|
2.1%
|
|
181 Days or more
|
3.5%
|
|
Other Assets and Liabilities—Net3
|
(0.3)%
|
|
Total
|
100%
|
|
1
|
Effective maturity is determined in accordance with the requirements of Rule 2a-7 under the
Investment Company Act of 1940, which regulates money market mutual funds.
|
|
2
|
Overnight securities comprised 35.6% of the Fund’s portfolio.
|
|
3
|
Assets, other than investments in securities, less liabilities. See Statement of Assets
and Liabilities.
|
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
23
Portfolio of Investments
July 31, 2022
|
Principal
Amount
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— 27.3%
|
|
|
|
|
Finance - Banking— 23.3%
|
|
|
$ 90,000,000
|
|
Anglesea Funding LLC, (Bank of Nova Scotia, Toronto
COL)/(Nordea Bank Abp COL)/(Societe Generale, Paris COL),
2.460% (SOFR+0.180%), 8/10/2022
|
$ 90,000,000
|
|
6,500,000
|
|
Anglesea Funding LLC, (Bank of Nova Scotia, Toronto
COL)/(Nordea Bank Abp COL)/(Societe Generale, Paris COL),
2.680% (Overnight Banking Fund Rate +0.360%), 12/23/2022
|
6,500,000
|
|
30,000,000
|
|
ASB Bank Ltd., 2.000% (SOFR +0.470%), 8/2/2022
|
30,008,140
|
|
110,000,000
|
|
Bank of Montreal, 2.230% (SOFR +0.700%), 8/1/2022
|
110,036,615
|
|
104,000,000
|
|
Bank of Montreal, 2.430% (SOFR +0.150%), 8/1/2022
|
103,955,840
|
|
30,000,000
|
|
Bank of Montreal, 2.840% (SOFR +0.560%), 8/1/2022
|
29,963,024
|
|
60,000,000
|
|
Bank of Montreal, 2.930% (SOFR +0.650%), 8/1/2022
|
59,632,964
|
|
100,000,000
|
|
Bank of Nova Scotia, Toronto, 2.430% (SOFR +0.150%), 8/1/2022
|
100,000,000
|
|
50,000,000
|
|
Bank of Nova Scotia, Toronto, 2.530% (SOFR +0.250%), 8/1/2022
|
49,909,739
|
|
25,000,000
|
|
Bank of Nova Scotia, Toronto, 2.780% (SOFR +0.500%), 8/1/2022
|
24,968,645
|
|
33,500,000
|
|
Bank of Nova Scotia, Toronto, 2.800% (SOFR +0.520%), 8/2/2022
|
33,500,000
|
|
20,000,000
|
|
Bank of Nova Scotia, Toronto, 2.860% (SOFR +0.580%), 8/1/2022
|
20,007,378
|
|
125,000,000
|
|
Bank of Nova Scotia, Toronto, 2.950% (SOFR +0.670%), 8/1/2022
|
124,975,245
|
|
25,000,000
|
|
Canadian Imperial Bank of Commerce, 2.490% (SOFR
+0.210%), 8/1/2022
|
24,983,767
|
|
54,000,000
|
|
Canadian Imperial Bank of Commerce, 2.780% (SOFR
+0.500%), 8/1/2022
|
53,923,257
|
|
120,000,000
|
|
Canadian Imperial Bank of Commerce, 2.780% (SOFR
+0.500%), 8/1/2022
|
119,833,600
|
|
120,000,000
|
|
Canadian Imperial Bank of Commerce, 2.830% (SOFR
+0.550%), 8/1/2022
|
119,843,012
|
|
50,000,000
|
|
Canadian Imperial Bank of Commerce, 2.920% (SOFR
+0.640%), 8/1/2022
|
50,000,000
|
|
50,000,000
|
|
Canadian Imperial Holdings, Inc., 2.800% (SOFR
+0.520%), 8/1/2022
|
49,930,476
|
|
4,025,000
|
|
Centra State Medical Arts Building LLC, (TD Bank, N.A. LOC),
2.410%, 8/3/2022
|
4,025,000
|
|
55,000,000
|
|
Collateralized Commercial Paper V Co. LLC, (J.P. Morgan Securities
LLC COL), 2.780% (SOFR +0.500%), 8/1/2022
|
55,014,030
|
|
35,000,000
|
|
Collateralized Commercial Paper V Co. LLC, (J.P. Morgan Securities
LLC COL), 2.830% (SOFR +0.550%), 8/1/2022
|
35,000,000
|
|
45,000,000
|
|
Commonwealth Bank of Australia, 2.710% (SOFR
+0.430%), 8/2/2022
|
44,958,374
|
|
50,000,000
|
|
Commonwealth Bank of Australia, 2.780% (SOFR
+0.500%), 8/1/2022
|
49,973,325
|
|
25,000,000
|
|
Commonwealth Bank of Australia, 2.820% (SOFR
+0.540%), 8/1/2022
|
24,990,651
|
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
24
|
Principal
Amount
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 16,700,000
|
|
Greene County Development Authority, Reynolds Lodge, LLC
Series 2000B, (U.S. Bank, N.A. LOC), 1.800%, 8/3/2022
|
$ 16,700,000
|
|
3,000,000
|
|
Griffin-Spalding County, GA Development Authority, Norcom, Inc.
Project 2013A, (Bank of America N.A. LOC), 2.450%, 8/4/2022
|
3,000,000
|
|
7,000,000
|
|
Griffin-Spalding County, GA Development Authority, Norcom, Inc.
Project, (Bank of America N.A. LOC), 2.450%, 8/4/2022
|
7,000,000
|
|
7,595,000
|
|
Gulf Gate Apartments LLC, Series 2003, (Wells Fargo Bank, N.A.
LOC), 2.370%, 8/4/2022
|
7,595,000
|
|
12,320,000
|
|
Hamilton Station Park and Ride, Series 2005, (Wells Fargo Bank,
N.A. LOC), 2.370%, 8/4/2022
|
12,320,000
|
|
15,365,000
|
|
Los Angeles County Fair Association, (Wells Fargo Bank, N.A. LOC),
2.340%, 8/3/2022
|
15,365,000
|
|
9,000,000
|
|
Michael Dennis Sullivan Irrevocable Trust, (Wells Fargo Bank, N.A.
LOC), 2.450%, 8/4/2022
|
9,000,000
|
|
100,000,000
|
|
MUFG Bank Ltd., 1.860% (SOFR +0.330%), 8/1/2022
|
100,000,000
|
|
79,000,000
|
|
National Australia Bank Ltd., Melbourne, 2.460% (SOFR
+0.180%), 8/2/2022
|
79,000,000
|
|
110,000,000
|
|
Nordea Bank Abp, 1.680% (SOFR +0.150%), 8/1/2022
|
110,000,000
|
|
115,000,000
|
|
Nordea Bank Abp, 1.690% (SOFR +0.160%), 8/1/2022
|
115,000,000
|
|
109,000,000
|
|
Nordea Bank Abp, 2.080% (SOFR +0.550%), 8/1/2022
|
109,000,000
|
|
34,000,000
|
|
Nuveen Floating Rate Income Fund, (Series A), (Sumitomo Mitsui
Banking Corp. LOC), 2.470%, 8/4/2022
|
34,000,000
|
|
3,115,000
|
|
Public Building Corp. Springfield, MO, Jordan Valley Ice Park, Series
2003, (U.S. Bank, N.A. LOC), 2.380%, 8/4/2022
|
3,115,000
|
|
150,000,000
|
|
Royal Bank of Canada, 2.830% (SOFR +0.550%), 8/1/2022
|
149,837,175
|
|
62,500,000
|
|
Royal Bank of Canada, 3.030% (SOFR +0.750%), 8/1/2022
|
62,500,000
|
|
152,500,000
|
|
Royal Bank of Canada, New York Branch, 2.430% (SOFR
+0.150%), 8/2/2022
|
152,427,909
|
|
18,965,000
|
|
Salem Green, LLP, Salem Green Apartments Project, Series 2010,
(Wells Fargo Bank, N.A. LOC), 2.370%, 8/4/2022
|
18,965,000
|
|
150,000,000
|
|
Svenska Handelsbanken, Stockholm, 2.080% (SOFR
+0.550%), 8/1/2022
|
150,000,000
|
|
62,284,973
|
|
Taxable Tender Option Bond Trust 2021-MIZ9060TX,
(Series 2021-MIZ9060TX) VRDNs, (GTD by Mizuho Bank
Ltd.)/(Mizuho Bank Ltd. LIQ), 2.590%, 8/1/2022
|
62,284,973
|
|
25,000,000
|
|
Taxable Tender Option Bond Trust 2021-MIZ9071TX,
(Series 2021-MIZ9071TX) VRDNs, (GTD by Mizuho Bank
Ltd.)/(Mizuho Bank Ltd. LIQ), 2.720%, 8/1/2022
|
25,000,000
|
|
10,000,000
|
|
Taxable Tender Option Bond Trust 2021-MIZ9075TX,
(Series MIZ-9075TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho Bank
Ltd. LOC), 2.590%, 8/1/2022
|
10,000,000
|
|
4,680,000
|
|
Taxable Tender Option Bond Trust 2021-MIZ9077TX,
(Series 2021-MIZ9077TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho
Bank Ltd. LOC), 2.590%, 8/1/2022
|
4,680,000
|
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
25
|
Principal
Amount
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 3,000,000
|
|
Taxable Tender Option Bond Trust 2021-MIZ9078TX,
(Series 2021-MIZ9078TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho
Bank Ltd. LOC), 2.590%, 8/1/2022
|
$ 3,000,000
|
|
3,954,172
|
|
Taxable Tender Option Bond Trust 2021-MIZ9083TX,
(Series 2021-MIZ9083TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho
Bank Ltd. LOC), 2.590%, 8/1/2022
|
3,954,172
|
|
18,750,000
|
|
Taxable Tender Option Bond Trust 2022-MIZ9087TX,
(Series 2022-MIZ9096TX) VRDNs, (Mizuho Bank Ltd. LIQ)/(Mizuho
Bank Ltd. LOC), 2.640%, 8/4/2022
|
18,750,000
|
|
30,000,000
|
|
Taxable Tender Option Bond Trust2021-MIZ9070TX,
(Series 2021-MIZ9070TX) VRDNs, (GTD by Mizuho Bank
Ltd.)/(Mizuho Bank Ltd. LIQ), 2.720%, 8/1/2022
|
30,000,000
|
|
68,300,000
|
|
Triborough Bridge & Tunnel Authority, NY, (Taxable Series E)
Weekly VRDNs, (Bank of America N.A. LOC), 2.310%, 8/4/2022
|
68,300,000
|
|
3,600,000
|
|
Village Green Finance Co. LLC, (Series 1997), (Wells Fargo Bank,
N.A. LOC), 2.660%, 8/3/2022
|
3,600,000
|
|
99,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.730% (SOFR
+0.450%), 8/1/2022
|
98,900,322
|
|
150,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.730%
(SOFR+0.450%), 8/2/2022
|
149,841,945
|
|
80,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.780% (SOFR
+0.500%), 8/1/2022
|
80,004,166
|
|
40,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.780% (SOFR
+0.500%), 8/1/2022
|
39,976,808
|
|
136,000,000
|
|
Westpac Banking Corp. Ltd., Sydney, 2.780% (SOFR
+0.500%), 8/2/2022
|
135,917,855
|
|
5,870,000
|
|
Yeshivas Novominsk, Series 2008, (TD Bank, N.A. LOC),
2.450%, 8/4/2022
|
5,870,000
|
|
|
|
TOTAL
|
3,310,838,407
|
|
|
|
Finance - Retail— 2.3%
|
|
|
70,000,000
|
|
Chariot Funding LLC, 1.710% (SOFR +0.180%), 8/1/2022
|
70,000,000
|
|
45,000,000
|
|
Chariot Funding LLC, 2.680% (SOFR +0.400%), 8/1/2022
|
44,997,621
|
|
45,000,000
|
|
Old Line Funding, LLC, 2.080% (SOFR +0.550%), 1/9/2023
|
44,994,657
|
|
100,000,000
|
|
Old Line Funding, LLC, 2.830% (SOFR +0.550%), 10/3/2022
|
100,016,040
|
|
47,500,000
|
|
Thunder Bay Funding, LLC, 2.080% (SOFR +0.550%), 9/26/2022
|
47,500,000
|
|
25,000,000
|
|
Thunder Bay Funding, LLC, 2.880% (SOFR +0.600%), 10/20/2022
|
25,006,354
|
|
|
|
TOTAL
|
332,514,672
|
|
|
|
Government Agency— 1.7%
|
|
|
5,285,000
|
|
1320 W Jefferson LLC, (Federal Home Loan Bank of San Francisco
LOC), 2.450%, 8/3/2022
|
5,285,000
|
|
42,450,000
|
|
Archer 1 LLC, (Federal Home Loan Bank of San Francisco LOC),
2.450%, 8/4/2022
|
42,450,000
|
|
9,015,000
|
|
Austen Children’s Gift Trust, (Federal Home Loan Bank of Dallas
LOC), 2.450%, 8/4/2022
|
9,015,000
|
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
26
|
Principal
Amount
|
|
|
Value
|
|
|
1
|
NOTES - VARIABLE— continued
|
|
|
|
|
Government Agency— continued
|
|
|
$ 6,830,000
|
|
Baker Life Insurance Trust, (Federal Home Loan Bank of Des Moines
LOC), 2.450%, 8/4/2022
|
$ 6,830,000
|
|
34,850,000
|
|
BWF Forge TL Properties Owner LLC, (Federal Home Loan Bank of
Des Moines LOC)/(Federal Home Loan Bank of San Francisco LOC),
2.450%, 8/4/2022
|
34,850,000
|
|
5,705,000
|
|
Catania Family Trust, (Federal Home Loan Bank of Dallas LOC),
2.450%, 8/4/2022
|
5,705,000
|
|
4,270,000
|
|
Jim Brooks Irrevocable Trust, (Federal Home Loan Bank of Dallas
LOC), 2.440%, 8/4/2022
|
4,270,000
|
|
11,570,000
|
|
Joseph L. Goggins Irrevocable Insurance Trust, (Federal Home Loan
Bank of Des Moines LOC), 2.450%, 8/4/2022
|
11,570,000
|
|
3,655,000
|
|
Karyn Brooks Descendants Trust, (Federal Home Loan Bank of
Dallas LOC), 2.440%, 8/4/2022
|
3,655,000
|
|
6,380,000
|
|
MHF DKF Insurance Trust, (Federal Home Loan Bank of Dallas
LOC), 2.450%, 8/3/2022
|
6,380,000
|
|
17,030,000
|
|
Mohr Green Associates L.P., 2012-A, (Federal Home Loan Bank of
San Francisco LOC), 2.450%, 8/4/2022
|
17,030,000
|
|
22,610,000
|
|
NWD 2017 Family Trust No. 1, (Federal Home Loan Bank of Dallas
LOC), 2.450%, 8/4/2022
|
22,610,000
|
|
9,080,000
|
|
Park Stanton Place LP, (Federal Home Loan Bank of San Francisco
LOC), 2.450%, 8/4/2022
|
9,080,000
|
|
5,010,000
|
|
R.J. Brooks Jr. Irrevocable Trust, (Federal Home Loan Bank of Dallas
LOC), 2.440%, 8/4/2022
|
5,010,000
|
|
6,980,000
|
|
RK Trust, (Federal Home Loan Bank of Dallas LOC),
2.450%, 8/4/2022
|
6,980,000
|
|
6,255,000
|
|
Sibley Family Irrevocable Insurance Trust, (Federal Home Loan Bank
of Des Moines LOC), 2.450%, 8/4/2022
|
6,255,000
|
|
6,610,000
|
|
The CLC Irrevocable Insurance Trust, (Federal Home Loan Bank of
Des Moines LOC), 2.450%, 8/4/2022
|
6,610,000
|
|
5,120,000
|
|
The Eugene Kim Irrevocable Life Insurance Trust, (Federal Home
Loan Bank of Dallas LOC), 2.450%, 8/4/2022
|
5,120,000
|
|
22,830,000
|
|
The Gregory P. Berry Trust, (Federal Home Loan Bank of Des
Moines LOC), 2.450%, 8/3/2022
|
22,830,000
|
|
5,740,000
|
|
The Leopold Family Insurance Trust, (Federal Home Loan Bank of
Dallas LOC), 2.450%, 8/4/2022
|
5,740,000
|
|
5,975,000
|
|
The Thompson 2018 Family Trust, (Federal Home Loan Bank of
Dallas LOC), 2.440%, 8/4/2022
|
5,975,000
|
|
|
|
TOTAL
|
243,250,000
|
|
|
|
TOTAL NOTES - VARIABLE
(IDENTIFIED COST $3,888,274,137)
|
3,886,603,079
|
|
|
2
|
COMMERCIAL PAPER— 14.0%
|
|
|
|
|
Finance - Banking— 10.7%
|
|
|
63,970,000
|
|
Antalis S.A., (Societe Generale, Paris LIQ), 1.773% - 1.853%,
8/1/2022 - 8/5/2022
|
63,965,027
|
|
60,000,000
|
|
Bank of Montreal, 2.800%, 5/9/2023
|
60,003,463
|
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
27
|
Principal
Amount
|
|
|
Value
|
|
|
2
|
COMMERCIAL PAPER— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 200,000,000
|
|
Bank of Nova Scotia, Toronto, 0.200% - 0.210%, 9/8/2022 -
9/29/2022
|
$ 199,336,437
|
|
100,000,000
|
|
Bennington Stark Capital Co., LLC, (Societe Generale, Paris LIQ),
2.120%, 8/2/2022
|
99,994,111
|
|
104,000,000
|
|
Canadian Imperial Bank of Commerce, 0.503% - 2.070%,
12/1/2022 - 3/20/2023
|
102,483,433
|
|
50,000,000
|
|
Canadian Imperial Holdings, Inc., 0.351%, 11/8/2022
|
49,631,666
|
|
42,500,000
|
|
Chesham Finance LLC Series III, (Societe Generale, Paris COL),
2.404%, 8/31/2022
|
42,415,000
|
|
107,500,000
|
|
Gotham Funding Corp., (MUFG Bank Ltd. LIQ), 1.405% - 2.416%,
8/1/2022 - 10/3/2022
|
107,015,267
|
|
200,000,000
|
|
Lloyds Bank PLC, London, 1.413% - 2.419%, 8/5/2022 - 9/23/2022
|
199,765,183
|
|
5,000,000
|
|
LMA-Americas LLC, (Credit Agricole Corporate and Investment
Bank LIQ), 1.455%, 8/12/2022
|
4,997,785
|
|
92,000,000
|
|
Matchpoint Finance PLC, (BNP Paribas SA LIQ), 2.310% - 2.567%,
8/1/2022 - 10/11/2022
|
91,752,562
|
|
82,000,000
|
|
National Australia Bank Ltd., Melbourne, 1.005% - 3.844%,
9/6/2022 - 6/15/2023
|
81,133,799
|
|
85,000,000
|
|
Nationwide Building Society, 2.020%, 8/1/2022
|
85,000,000
|
|
145,000,000
|
|
Royal Bank of Canada, 0.251% - 2.229%, 10/14/2022 - 3/29/2023
|
143,538,329
|
|
80,000,000
|
|
Royal Bank of Canada, New York Branch, 0.371% - 0.402%,
11/9/2022 - 11/15/2022
|
79,285,026
|
|
122,000,000
|
|
Toronto Dominion Bank, 2.903%, 5/31/2023
|
118,207,691
|
|
|
|
TOTAL
|
1,528,524,779
|
|
|
|
Finance - Retail— 1.7%
|
|
|
69,000,000
|
|
Fairway Finance Co. LLC, 1.005%, 9/6/2022
|
68,817,535
|
|
60,000,000
|
|
Old Line Funding, LLC, 1.659%, 9/13/2022
|
59,804,347
|
|
60,000,000
|
|
Old Line Funding, LLC, 1.659%, 9/19/2022
|
59,775,187
|
|
50,000,000
|
|
Sheffield Receivables Company LLC, 1.976%, 8/18/2022
|
49,958,958
|
|
|
|
TOTAL
|
238,356,027
|
|
|
|
Oil & Oil Finance— 0.5%
|
|
|
70,000,000
|
|
TotalEnergies Capital Canada Ltd., 2.200%, 8/3/2022
|
69,991,445
|
|
|
|
Sovereign— 1.1%
|
|
|
160,000,000
|
|
BNG Bank N.V., 2.201% - 2.311%, 8/3/2022 - 8/4/2022
|
159,976,228
|
|
|
|
TOTAL COMMERCIAL PAPER
(IDENTIFIED COST $2,001,640,522)
|
1,996,848,479
|
|
|
|
TIME DEPOSITS— 11.1%
|
|
|
|
|
Finance - Banking— 11.1%
|
|
|
500,000,000
|
|
ABN Amro Bank NV, 2.220% - 2.330%, 8/3/2022 - 8/5/2022
|
500,000,000
|
|
275,000,000
|
|
Australia & New Zealand Banking Group, Melbourne,
2.210%, 8/3/2022
|
275,000,000
|
|
440,000,000
|
|
Australia & New Zealand Banking Group, Melbourne,
2.320%, 8/1/2022
|
440,000,000
|
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
28
|
Principal
Amount
|
|
|
Value
|
|
|
|
TIME DEPOSITS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 360,000,000
|
|
Mizuho Bank Ltd., 2.320%, 8/1/2022
|
$ 360,000,000
|
|
|
|
TOTAL TIME DEPOSITS
(IDENTIFIED COST $1,575,000,000)
|
1,575,000,000
|
|
|
|
CERTIFICATES OF DEPOSIT— 10.6%
|
|
|
|
|
Finance - Banking— 10.6%
|
|
|
26,500,000
|
|
Bank of Montreal, 2.850%, 5/24/2023
|
26,336,767
|
|
210,000,000
|
|
Credit Agricole Corporate and Investment Bank, 1.560% - 2.320%,
8/5/2022 - 8/12/2022
|
210,000,000
|
|
115,000,000
|
|
DNB Bank ASA, 1.100%, 9/6/2022
|
114,843,595
|
|
100,000,000
|
|
Mizuho Bank Ltd., 2.600%, 10/20/2022
|
100,000,000
|
|
165,000,000
|
|
MUFG Bank Ltd., 1.420% - 1.450%, 8/18/2022 - 8/19/2022
|
164,962,798
|
|
70,000,000
|
|
Sumitomo Mitsui Banking Corp., 1.450%, 8/5/2022
|
70,000,000
|
|
515,000,000
|
|
Sumitomo Mitsui Trust Bank Ltd., 1.450% - 2.530%, 8/18/2022 -
9/29/2022
|
514,947,924
|
|
305,000,000
|
|
Toronto Dominion Bank, 0.220% - 4.070%, 10/14/2022 - 7/18/2023
|
303,829,965
|
|
|
|
TOTAL CERTIFICATES OF DEPOSIT
(IDENTIFIED COST $1,506,500,000)
|
1,504,921,049
|
|
|
|
U.S. TREASURY— 0.3%
|
|
|
|
|
U.S. Treasury Notes— 0.3%
|
|
|
50,000,000
|
1
|
United States Treasury Floating Rate Notes, 2.570% (91-day T-Bill
+0.034%), 8/2/2022
(IDENTIFIED COST $50,003,021)
|
50,137,907
|
|
|
|
OTHER REPURCHASE AGREEMENTS— 17.8%
|
|
|
|
|
Finance - Banking— 17.8%
|
|
|
100,000,000
|
|
BMO Capital Markets Corp., 2.05%, dated 2/8/2021, interest in a
$200,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $200,706,111 on 9/12/2022, in
which corporate bonds and medium-term notes with a market value
of $204,755,998 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
100,000,000
|
|
439,000,000
|
|
BNP Paribas S.A., 2.40%, dated 7/29/2022, interest in a
$500,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $500,100,000 on 8/1/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds and medium-term note with a market value of
$510,102,000 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
439,000,000
|
|
100,000,000
|
|
Bofa Securities, Inc., 2.39%, dated 7/29/2022, interest in a
$150,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $150,029,875 on 8/1/2022, in
which corporate bonds and medium-term notes with a market value
of $153,030,602 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
100,000,000
|
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
29
|
Principal
Amount
|
|
|
Value
|
|
|
|
OTHER REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 100,000,000
|
|
Bofa Securities, Inc., 2.94%, dated 9/4/2020, interest in a
$100,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $100,735,000 on 10/31/2022, in
which convertible bonds with a market value of $102,199,120 have
been received as collateral and held with BNY Mellon as tri-party
agent.
|
$ 100,000,000
|
|
250,000,000
|
|
Bofa Securities, Inc., 2.94%, dated 9/9/2020, interest in a
$250,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $251,837,500 on 10/31/2022, in
which convertible bonds, medium-term notes and Sovereign with a
market value of $255,496,826 have been received as collateral and
held with BNY Mellon as tri-party agent.
|
250,000,000
|
|
25,000,000
|
|
Bofa Securities, Inc., 2.35%, dated 7/29/2022, interest in a
$25,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $25,004,896 on 8/1/2022, in which
commercial paper with a market value of $25,505,956 have been
received as collateral and held with BNY Mellon as tri-party agent.
|
25,000,000
|
|
125,000,000
|
|
Credit Agricole S.A., 2.47%, dated 6/24/2022, interest in a
$300,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $300,144,083 on 8/9/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, commercial paper, treasury notes, treasury bills
medium-term notes, U.S. Government Agency securities and
sovereign debt with a market value of $306,063,090 have been
received as collateral and held with BNY Mellon as tri-party agent.
|
125,000,000
|
|
280,000,000
|
|
Credit Agricole S.A., 2.37%, dated 6/24/2022, interest in a
$800,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $800,368,667 on 8/9/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, commercial paper, treasury notes, treasury bill,
medium-term notes and sovereign debt with a market value of
$816,161,433 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
280,000,000
|
|
70,000,000
|
|
HSBC Securities (USA), Inc., 2.42%, dated 7/29/2022, interest in a
$70,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $70,014,117 on 8/1/2022, in which
corporate bonds, medium-term notes and Sovereign debt with a
market value of $71,400,029 have been received as collateral and
held with BNY Mellon as tri-party agent.
|
70,000,000
|
|
49,490,000
|
|
ING Financial Markets LLC, 2.39%, dated 7/29/2022, interest in a
$50,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $50,009,958 on 8/1/2022, in which
corporate bonds with a market value of $51,010,957 have been
received as collateral and held with BNY Mellon as tri-party agent.
|
49,490,000
|
|
100,000,000
|
|
ING Financial Markets LLC, 2.40%, dated 7/29/2022, interest in a
$100,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $100,020,000 on 8/1/2022, in
which common stocks, corporate bonds and medium-term notes
with a market value of $102,020,404 have been received as
collateral and held with BNY Mellon as tri-party agent.
|
100,000,000
|
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
30
|
Principal
Amount
|
|
|
Value
|
|
|
|
OTHER REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 65,000,000
|
|
J.P. Morgan Securities LLC, 2.56%, dated 7/6/2022, interest in a
$250,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $250,480,000 on 8/2/2022, in
which corporate bonds and medium-term notes with a market value
of $255,000,001 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
$ 65,000,000
|
|
45,000,000
|
|
Mizuho Securities USA, Inc., 2.52%, dated 7/29/2022, interest in a
$75,000,000 collateralized loan agreement will repurchase securities
provided as collateral for $75,015,750 on 8/1/2022, in which
common stocks with a market value of $76,516,072 have been
received as collateral and held with BNY Mellon as tri-party agent.
|
45,000,000
|
|
50,000,000
|
|
Mizuho Securities USA, Inc., 2.42%, dated 7/29/2022, interest in a
$100,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $100,020,167 on 8/1/2022, in
which commercial paper and municipal bonds with a market value
of $102,022,014 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
50,000,000
|
|
81,000,000
|
|
Mitsubishi UFG Securities Americas, Inc., 2.47%, dated 7/29/2022,
interest in a $300,000,000 collateralized loan agreement will
repurchase securities provided as collateral for $300,061,750 on
8/1/2022, in which American depositary receipts, common stocks,
corporate bonds, exchange-traded funds and unit investment trust,
medium-term notes and municipal bonds with a market value of
$306,063,397 have been received as collateral and held with BNY
Mellon as tri-party agent.
|
81,000,000
|
|
135,000,000
|
|
Pershing LLC, 2.57%, dated 7/14/2022, interest in a $300,000,000
collateralized loan agreement will repurchase securities provided as
collateral for $300,149,917 on 8/9/2022, in which asset-backed
securities, collateralized mortgage obligations, corporate bonds,
commercial paper, common stocks, convertible bond, certificate of
deposit, exchange-traded funds, medium-term notes and municipal
bonds and U.S. Government Agency securities with a market value
of $306,100,946 have been received as collateral and held with
BNY Mellon as tri-party agent.
|
135,000,000
|
|
125,000,000
|
|
Societe Generale, Paris, 2.38%, dated 7/29/2022, interest in a
$350,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $350,069,417 on 8/1/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, medium-term notes, municipal bonds, sovereign
securities and treasury bill with a market value of $357,071,176
have been received as collateral and held with BNY Mellon as
tri-party agent.
|
125,000,000
|
|
277,000,000
|
|
Societe Generale, Paris, 2.47%, dated 7/29/2022, interest in a
$650,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $650,133,792 on 8/1/2022, in
which asset-backed securities, collateralized mortgage obligations,
corporate bonds, medium-term notes and treasury bill with a
market value of $663,136,856 have been received as collateral and
held with BNY Mellon as tri-party agent.
|
277,000,000
|
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
31
|
Principal
Amount
|
|
|
Value
|
|
|
|
OTHER REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 125,000,000
|
|
Wells Fargo Securities LLC, 3.20%, dated 2/3/2022, interest in a
$125,000,000 collateralized loan agreement will repurchase
securities provided as collateral for $126,000,000 on 8/1/2022, in
which sovereign securities with a market value of $127,614,209
have been received as collateral and held with BNY Mellon as
tri-party agent.
|
$ 125,000,000
|
|
|
|
TOTAL OTHER REPURCHASE AGREEMENTS
(IDENTIFIED COST $2,541,490,000)
|
2,541,490,000
|
|
|
|
REPURCHASE AGREEMENTS— 19.2%
|
|
|
|
|
Finance - Banking— 19.2%
|
|
|
150,000,000
|
|
Repurchase agreement 2.40%, dated 7/29/2022 under which ABN
Amro Bank N.V., Netherlands will repurchase securities provided as
collateral for $150,030,000 on 8/1/2022. The securities provided as
collateral at the end of the period held with BNY Mellon as tri-party
agent, were U.S. Government Agency securities with various
maturities to 7/25/2052 and the market value of those underlying
securities was $153,030,600.
|
150,000,000
|
|
299,000,000
|
|
Interest in $1,650,000,000 joint repurchase agreement 2.29%,
dated 7/29/2022 under which Mitsubishi UFJ Securities (USA), Inc.
will repurchase securities provided as collateral for $1,650,314,875
on 8/1/2022. The securities provided as collateral at the end of the
period held with BNY Mellon as tri-party agent, were
U.S. Government Agency securities with various maturities to
1/1/2057 and the market value of those underlying securities
was $1,683,321,173.
|
299,000,000
|
|
500,000,000
|
|
Interest in $1,650,000,000 joint repurchase agreement 2.29%,
dated 7/29/2022 under which Mitsubishi UFJ Securities (USA), Inc.
will repurchase securities provided as collateral for $1,650,314,875
on 8/1/2022. The securities provided as collateral at the end of the
period held with BNY Mellon as tri-party agent, were
U.S. Government Agency securities with various maturities to
1/1/2057 and the market value of those underlying securities
was $1,683,321,173.
|
500,000,000
|
|
700,000,000
|
|
Interest in $1,800,000,000 joint repurchase agreement 2.30%,
dated 7/29/2022 under which Natixis Financial Products LLC will
repurchase securities provided as collateral for $1,800,345,000 on
8/1/2022. The securities provided as collateral at the end of the
period held with BNY Mellon as tri-party agent, were
U.S. Government Agency and U.S. Treasury securities with various
maturities to 6/16/2064 and the market value of those underlying
securities was $1,841,376,235.
|
700,000,000
|
|
1,000,000,000
|
|
Repurchase agreement 2.30%, dated 7/29/2022 under which
Federal Reserve Bank of New York will repurchase securities
provided as collateral for $1,000,191,667 on 8/1/2022. The
securities provided as collateral at the end of the period held with
BNY Mellon as tri-party agent, were U.S. Treasury securities with
various maturities to 2/15/2036 and the market value of those
underlying securities was $1,000,191,722.
|
1,000,000,000
|
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
32
|
Principal
Amount
|
|
|
Value
|
|
|
|
REPURCHASE AGREEMENTS— continued
|
|
|
|
|
Finance - Banking— continued
|
|
|
$ 87,000,000
|
|
Interest in $150,000,000 joint repurchase agreement 2.39%, dated
7/29/2022 under which Standard Chartered Bank will repurchase
securities provided as collateral for $150,029,875 on 8/1/2022. The
securities provided as collateral at the end of the period held with
BNY Mellon as tri-party agent, were U.S. Government Agency
securities with various maturities to 2/16/2064 and the market value
of those underlying securities was $153,030,473.
|
$ 87,000,000
|
|
|
|
TOTAL REPURCHASE AGREEMENTS
(IDENTIFIED COST $2,736,000,000)
|
2,736,000,000
|
|
|
|
TOTAL INVESTMENT IN SECURITIES—100.3%
(IDENTIFIED COST $14,298,907,680)3
|
14,291,000,514
|
|
|
|
OTHER ASSETS AND LIABILITIES - NET—(0.3)%4
|
(46,154,429)
|
|
|
|
TOTAL NET ASSETS—100%
|
$14,244,846,085
|
|
1
|
Floating/variable note with current rate and current maturity or next reset date shown. Certain
variable rate securities are not based on a published reference rate and spread but are
determined by the issuer or agent and are based on current market conditions. These securities
do not indicate a reference rate and spread in their description above.
|
|
2
|
Discount rate at time of purchase for discount issues, or the coupon for interest-bearing issues.
|
|
3
|
Also represents cost of investments for federal tax purposes.
|
|
4
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
Note: The categories of investments are shown as a percentage of total net assets at July 31, 2022.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Level 1—quoted prices in active markets for identical securities.
Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Also includes securities valued at amortized cost.
Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
33
As of July 31, 2022, all investments of the Fund utilized Level 2 inputs in valuing the Fund’s assets carried at fair value.
|
The following acronym(s) are used throughout this portfolio:
|
|
|
|
COL
|
—Collateralized
|
|
|
GTD
|
—Guaranteed
|
|
|
LIQ
|
—Liquidity Agreement
|
|
|
LLP
|
—Limited Liability Partnership
|
|
|
LOC
|
—Letter of Credit
|
|
|
MHF
|
—Maryland Housing Fund
|
|
|
PLC
|
—Public Limited Company
|
|
|
SOFR
|
—Secured Overnight Financing Rate
|
|
|
VRDNs
|
—Variable Rate Demand Notes
|
|
See Notes which are an integral part of the Financial Statements
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
34
Financial Highlights–Institutional Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.0005
|
$1.0007
|
$1.0004
|
$1.0003
|
$1.0003
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income (loss)
|
0.00371
|
0.0008
|
0.0136
|
0.0239
|
0.0156
|
|
Net realized and unrealized gain (loss)
|
(0.0008)
|
(0.0002)
|
0.0003
|
0.0001
|
0.00002
|
|
Total From Investment
Operations
|
0.0029
|
0.0006
|
0.0139
|
0.0240
|
0.0156
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment
income
|
(0.0036)
|
(0.0008)
|
(0.0136)
|
(0.0239)
|
(0.0156)
|
|
Net Asset Value, End of Period
|
$0.9998
|
$1.0005
|
$1.0007
|
$1.0004
|
$1.0003
|
|
Total Return3
|
0.29%
|
0.05%
|
1.39%
|
2.43%
|
1.57%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses4
|
0.16%
|
0.15%
|
0.15%
|
0.15%
|
0.17%
|
|
Net investment income
|
0.38%
|
0.08%
|
1.37%
|
2.41%
|
1.62%
|
|
Expense waiver/reimbursement5
|
0.12%
|
0.13%
|
0.13%
|
0.13%
|
0.12%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$14,232,133
|
$15,298,656
|
$23,611,390
|
$21,146,776
|
$10,941,508
|
|
1
|
Per share numbers have been calculated using the average shares method.
|
|
2
|
Represents less than $0.0001.
|
|
3
|
Based on net asset value.
|
|
4
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
5
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
The financial highlights of the Service Shares and Capital Shares are presented separately.
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
35
Statement of Assets and Liabilities
July 31, 2022
July 31, 2022
|
Assets:
|
|
|
Investment in repurchase agreements and other repurchase agreements
|
$5,277,490,000
|
|
Investment in securities
|
9,013,510,514
|
|
Investment in securities, at value (identified cost $14,298,907,680)
|
14,291,000,514
|
|
Cash
|
553,403
|
|
Income receivable
|
12,267,528
|
|
Total Assets
|
14,303,821,445
|
|
Liabilities:
|
|
|
Payable for investments purchased
|
42,415,000
|
|
Income distribution payable
|
15,954,638
|
|
Payable for investment adviser fee (Note 5)
|
117,280
|
|
Payable for administrative fee (Note 5)
|
91,887
|
|
Accrued expenses (Note 5)
|
396,555
|
|
Total Liabilities
|
58,975,360
|
|
Net assets for 14,248,059,005 shares outstanding
|
$14,244,846,085
|
|
Net Assets Consist of:
|
|
|
Paid-in capital
|
$14,254,096,547
|
|
Total distributable earnings (loss)
|
(9,250,462)
|
|
Total Net Assets
|
$14,244,846,085
|
|
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
|
|
|
Institutional Shares:
|
|
|
$14,232,132,569 ÷ 14,235,341,975 shares outstanding, no par value, unlimited
shares authorized
|
$0.9998
|
|
Service Shares:
|
|
|
$12,713,416 ÷ 12,716,930 shares outstanding, no par value, unlimited
shares authorized
|
$0.9997
|
|
Capital Shares:
|
|
|
$100 ÷ 100 shares outstanding, no par value, unlimited shares authorized
|
$1.0012*
|
|
*
|
Actual net asset value per share presented differs from calculated net asset value per share due
to rounding.
|
See Notes which are an integral part of the Financial Statements
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
36
Statement of Operations
Year Ended July 31, 2022
Year Ended July 31, 2022
|
Investment Income:
|
|
|
Interest
|
$72,199,266
|
|
Expenses:
|
|
|
Investment adviser fee (Note 5)
|
26,847,301
|
|
Administrative fee (Note 5)
|
10,508,115
|
|
Custodian fees
|
427,458
|
|
Transfer agent fees
|
115,442
|
|
Directors’/Trustees’ fees (Note 5)
|
77,727
|
|
Auditing fees
|
25,110
|
|
Legal fees
|
7,362
|
|
Portfolio accounting fees
|
271,093
|
|
Other service fees (Notes 2 and 5)
|
51,845
|
|
Share registration costs
|
57,131
|
|
Printing and postage
|
19,010
|
|
Miscellaneous (Note 5)
|
113,955
|
|
TOTAL EXPENSES
|
38,521,549
|
|
Waivers and Reimbursement:
|
|
|
Waiver of investment adviser fee (Note 5)
|
(16,595,747)
|
|
Waiver/reimbursement of other operating expenses (Notes 2 and 5)
|
(28,684)
|
|
TOTAL WAIVERS AND REIMBURSEMENT
|
(16,624,431)
|
|
Net expenses
|
21,897,118
|
|
Net investment income
|
50,302,148
|
|
Realized and Unrealized Gain (Loss) on Investments:
|
|
|
Net realized gain on investments
|
54,512
|
|
Net change in unrealized appreciation of investments
|
(9,036,105)
|
|
Net realized and unrealized gain (loss) on investments
|
(8,981,593)
|
|
Change in net assets resulting from operations
|
$41,320,555
|
See Notes which are an integral part of the Financial Statements
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
37
Statement of Changes in Net Assets
|
Year Ended July 31
|
2022
|
2021
|
|
Increase (Decrease) in Net Assets
|
|
|
|
Operations:
|
|
|
|
Net investment income
|
$50,302,148
|
$17,271,664
|
|
Net realized gain (loss)
|
54,512
|
113,108
|
|
Net change in unrealized appreciation/depreciation
|
(9,036,105)
|
(6,131,457)
|
|
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS
|
41,320,555
|
11,253,315
|
|
Distributions to Shareholders:
|
|
|
|
Institutional Shares
|
(50,220,717)
|
(17,245,644)
|
|
Service Shares
|
(41,365)
|
(4,862)
|
|
Capital Shares
|
(48)
|
(8,147)
|
|
CHANGE IN NET ASSETS RESULTING FROM
DISTRIBUTIONS TO SHAREHOLDERS
|
(50,262,130)
|
(17,258,653)
|
|
Share Transactions:
|
|
|
|
Proceeds from sale of shares
|
24,614,918,258
|
36,831,815,005
|
|
Net asset value of shares issued to shareholders in payment
of distributions declared
|
8,299,365
|
3,142,765
|
|
Cost of shares redeemed
|
(25,705,000,012)
|
(45,212,117,547)
|
|
CHANGE IN NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
|
(1,081,782,389)
|
(8,377,159,777)
|
|
Change in net assets
|
(1,090,723,964)
|
(8,383,165,115)
|
|
Net Assets:
|
|
|
|
Beginning of period
|
15,335,570,049
|
23,718,735,164
|
|
End of period
|
$14,244,846,085
|
$15,335,570,049
|
See Notes which are an integral part of the Financial Statements
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
38
Notes to Financial Statements
July 31, 2022
1. ORGANIZATION
Federated Hermes Money Market Obligations Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust consists of 16 portfolios. The financial statements included herein are only those of Federated Hermes Institutional Prime Obligations Fund (the “Fund”), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder’s interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers three classes of shares: Institutional Shares, Service Shares and Capital Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The investment objective of the Fund is to provide current income consistent with stability of principal.
The Fund operates as an institutional money market fund. As an institutional money market fund, the Fund: (1) will not be limited to institutional investors, but will continue to be available to retail investors; (2) will utilize current market-based prices (except as otherwise generally permitted to value individual portfolio securities with remaining maturities of 60 days or less at amortized cost in accordance with Securities and Exchange Commission (SEC) rules and guidance) to value its portfolio securities and transact at a floating net asset value (NAV) that uses four decimal-place precision ($1.0000); and (3) has adopted policies and procedures to impose liquidity fees on redemptions and/or temporary redemption gates in the event that the Fund’s weekly liquid assets were to fall below a designated threshold, if the Fund’s Board of Trustees (the “Trustees”) determine such liquidity fees or redemption gates are in the best interest of the Fund.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
In calculating its NAV, the Fund generally values investments as follows:
◾
Fixed-income securities with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Trustees.
◾
Fixed-income securities with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium), unless the issuer’s creditworthiness is impaired or other factors indicate that amortized cost is not an accurate estimate of the investment’s fair value, in which case it would be valued in the same manner as a longer-term security. The Fund may only use this method to value a portfolio security when it can reasonably conclude, at each time it makes a valuation determination, that the amortized cost price of the portfolio security is approximately the same as the fair value of the security as determined without the use of amortized cost valuation.
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
39
◾
Shares of other mutual funds or non-exchange-traded investment companies are valued based upon their reported NAVs, or NAV per share practical expedient, as applicable.
◾
For securities that are fair valued in accordance with procedures established by and under the general supervision of the Trustees, certain factors may be considered, such as: the last traded or purchase price of the security, information obtained by contacting the issuer or dealers, analysis of the issuer’s financial statements or other available documents, fundamental analytical data, the nature and duration of restrictions on disposition, the movement of the market in which the security is normally traded, public trading in similar securities or derivative contracts of the issuer or comparable issuers, movement of a relevant index, or other factors including but not limited to industry changes and relevant government actions.
If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, if the Fund cannot obtain price evaluations from a pricing service or from more than one dealer for an investment within a reasonable period of time as set forth in the Fund’s valuation policies and procedures, or if information furnished by a pricing service, in the opinion of the valuation committee (“Valuation Committee”), is deemed not representative of the fair value of such security, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines its NAV per share, and the actual value obtained could be materially different.
Fair Valuation Procedures
The Trustees have ultimate responsibility for determining the fair value of investments for which market quotations are not readily available. The Trustees have appointed a Valuation Committee comprised of officers of the Fund, Federated Investment Management Company (the “Adviser”) and certain of the Adviser’s affiliated companies to assist in determining fair value and in overseeing the calculation of the NAV. The Trustees have also authorized the use of pricing services recommended by the Valuation Committee to provide fair value evaluations of the current value of certain investments for purposes of calculating the NAV. The Valuation Committee employs various methods for reviewing third-party pricing-service evaluations including periodic reviews of third-party pricing services’ policies, procedures and valuation methods (including key inputs, methods, models and assumptions), transactional back-testing, comparisons of evaluations of different pricing services and review of price challenges by the Adviser based on recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee determines the fair value of the investment in accordance with procedures adopted by the Trustees. The Trustees periodically review and approve the fair valuations made by the Valuation Committee and any changes made to the procedures.
Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a “bid” evaluation). Other pricing services offer both bid evaluations and price evaluations
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
40
indicative of a price between the prices bid and asked for the investment (a “mid” evaluation). The Fund normally uses bid evaluations for any U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for any other types of fixed-income securities and any over-the-counter derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.
Repurchase Agreements
The Fund may invest in repurchase agreements for short-term liquidity purposes. It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund’s custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control” as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.
The insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.
The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund’s Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.
Repurchase agreements are subject to Master Netting Agreements which are agreements between the Fund and its counterparties that provide for the net settlement of all transactions and collateral with the Fund, through a single payment, in the event of default or termination. Amounts presented on the Portfolio of Investments and Statement of Assets and Liabilities are not net settlement amounts but gross. As indicated above, the cash or securities to be repurchased, as shown on the Portfolio of Investments, exceeds the repurchase price to be paid under the agreement reducing the net settlement amount to zero.
Investment Income, Gains and Losses, Expenses and Distributions
Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis. Interest income and expenses are accrued daily. Distributions to shareholders are recorded on the ex-dividend date. Distributions of net investment income, if any, are declared daily and paid monthly. Amortization/accretion of premium and discount is included in investment income. Investment income, realized and unrealized gains and losses, and
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
41
certain fund-level expenses are allocated to each class based on relative average daily net assets, except that select classes will bear certain expenses unique to those classes. The detail of the total fund expense waivers and reimbursement of $16,624,431 is disclosed in various locations in this Note 2 and Note 5.
Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.
Other Service Fees
The Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund’s Institutional Shares, Service Shares and Capital Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for other service fees. In addition, unaffiliated third-party financial intermediaries may waive other service fees. This waiver can be modified or terminated at any time.
For the year ended July 31, 2022, other service fees for the Fund were as follows:
|
|
Other Service
Fees Incurred
|
Other Service
Fees Reimbursed
|
Other Service Fees
Waived by Unaffiliated
Third Parties
|
|
Service Shares
|
$51,604
|
$(3,382)
|
$(25,103)
|
|
Capital Shares
|
241
|
(112)
|
(87)
|
|
TOTAL
|
$51,845
|
$(3,494)
|
$(25,190)
|
For the year ended July 31, 2022, the Fund’s Institutional Shares did not incur other service fees.
Federal Taxes
It is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code (the “Code”) and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. As of and during the year ended July 31, 2022, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2022, tax years 2019 through 2022 remain subject to examination by the Fund’s major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.
When-Issued and Delayed-Delivery Transactions
The Fund may engage in when-issued or delayed-delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed-delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
42
Restricted Securities
The Fund may purchase securities which are considered restricted. Restricted securities are securities that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) are subject to contractual restrictions on public sales. In some cases, when a security cannot be offered for public sale without first being registered, the issuer of the restricted security has agreed to register such securities for resale, at the issuer’s expense, either upon demand by the Fund or in connection with another registered offering of the securities. Many such restricted securities may be resold in the secondary market in transactions exempt from registration. Restricted securities may be determined to be liquid under criteria established by the Trustees. The Fund will not incur any registration costs upon such resales. The Fund’s restricted securities, like other securities, are priced in accordance with procedures established by and under the general supervision of the Trustees.
Other
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ materially from those estimated. The Fund applies investment company accounting and reporting guidance.
3. SHARES OF BENEFICIAL INTEREST
The following tables summarize share activity:
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Institutional Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
24,232,087,166
|
$24,233,003,776
|
36,196,687,324
|
$36,215,427,054
|
|
Shares issued to shareholders
in payment of
distributions declared
|
8,283,360
|
8,282,176
|
3,128,894
|
3,130,517
|
|
Shares redeemed
|
(25,296,641,390)
|
(25,298,888,431)
|
(44,503,031,101)
|
(44,525,308,528)
|
|
NET CHANGE RESULTING
FROM INSTITUTIONAL
SHARE TRANSACTIONS
|
(1,056,270,864)
|
$(1,057,602,479)
|
(8,303,214,883)
|
$(8,306,750,957)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Service Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
381,843,923
|
$381,914,482
|
320,686,975
|
$320,849,653
|
|
Shares issued to shareholders
in payment of
distributions declared
|
17,154
|
17,151
|
4,099
|
4,101
|
|
Shares redeemed
|
(401,541,566)
|
(401,611,014)
|
(372,056,896)
|
(372,241,775)
|
|
NET CHANGE RESULTING
FROM SERVICE
SHARE TRANSACTIONS
|
(19,680,489)
|
$(19,679,381)
|
(51,365,822)
|
$(51,388,021)
|
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
43
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Capital Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
—
|
$—
|
295,358,986
|
$295,538,298
|
|
Shares issued to shareholders
in payment of
distributions declared
|
38
|
38
|
8,141
|
8,147
|
|
Shares redeemed
|
(4,498,390)
|
(4,500,567)
|
(314,377,023)
|
(314,567,244)
|
|
NET CHANGE RESULTING
FROM CAPITAL
SHARE TRANSACTIONS
|
(4,498,352)
|
$(4,500,529)
|
(19,009,896)
|
$(19,020,799)
|
|
NET CHANGE RESULTING
FROM TOTAL FUND
SHARE TRANSACTIONS
|
(1,080,449,705)
|
$(1,081,782,389)
|
(8,373,590,601)
|
$(8,377,159,777)
|
4. FEDERAL TAX INFORMATION
The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2022 and 2021, was as follows:
|
|
2022
|
2021
|
|
Ordinary income
|
$50,262,130
|
$17,258,653
|
As of July 31, 2022, the components of distributable earnings on a tax-basis were as follows:
|
Undistributed ordinary income
|
$57,427
|
|
Net unrealized depreciation
|
$(7,907,166)
|
|
Capital loss carryforwards
|
$(1,400,723)
|
At July 31, 2022, the cost of investments for federal tax purposes was $14,298,907,680. The net unrealized depreciation of investments for federal tax purposes was $7,907,166. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $451,830 and net unrealized depreciation from investments for those securities having an excess of cost over value of $8,358,996.
As of July 31, 2022, the Fund had a capital loss carryforward of $1,400,723 which will reduce the Fund’s taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code, thereby reducing the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, these net capital losses retain their character as either short-term or long-term and do not expire.
The following schedule summarizes the Fund’s capital loss carryforwards:
|
Short-Term
|
Long-Term
|
Total
|
|
$1,400,723
|
$—
|
$1,400,723
|
The Fund used capital loss carryforwards of $54,512 to offset capital gains realized during the year ended July 31, 2022.
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
44
5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.20% of the Fund’s average daily net assets. Subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee for competitive reasons such as to maintain the Fund’s expense ratio, or as and when appropriate, to maintain positive or zero net yields. For the year ended July 31, 2022, the Adviser voluntarily waived $16,595,747 of its fee.
Administrative Fee
Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated Hermes Funds subject to a fee under the Administrative Services Agreement. The fee paid to FAS is based on the average daily net assets of the Investment Complex as specified below:
|
Administrative Fee
|
Average Daily Net Assets
of the Investment Complex
|
|
0.100%
|
on assets up to $50 billion
|
|
0.075%
|
on assets over $50 billion
|
Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2022, the annualized fee paid to FAS was 0.078% of average daily net assets of the Fund.
In addition, FAS may charge certain out-of-pocket expenses to the Fund.
Other Service Fees
For the year ended July 31, 2022, FSSC received $132 and reimbursed $3,494 of the other service fees disclosed in Note 2.
Expense Limitation
Due to the possibility of changes in market conditions and other factors, there can be no assurance that the level of waivers/reimbursement/reduction of Fund expenses reflected in the financial highlights will be maintained in the future. However, the Adviser and certain of its affiliates (which may include FSSC and FAS) on their own initiative have agreed to waive certain amounts of their respective fees and/or reimburse expenses. Total annual fund operating expenses (as shown in the financial highlights, excluding interest expense, extraordinary expenses and proxy-related expenses paid by the Fund, if any) paid by the Fund’s Institutional Shares, Service Shares and Capital Shares (after the voluntary waivers and/or reimbursements) will not exceed 0.20%, 0.45% and 0.25% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) October 1, 2023; or (b) the date of the Fund’s next effective Prospectus. While the Adviser and its applicable affiliates currently do not anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or the Fee Limit increased prior to the Termination Date with the agreement of the Trustees.
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
45
Interfund Transactions
During the year ended July 31, 2022, the Fund engaged in sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees and/or common Officers. These sale transactions complied with Rule 17a-7 under the Act and amounted to $14,500,000. Net realized gain/loss recognized on these transactions was $0.
Directors’/Trustees’ and Miscellaneous Fees
Certain Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate payment, Independent Directors’/Trustees’ fees and certain expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses are paid by an affiliate of the Adviser which in due course are reimbursed by the Fund. These expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses may be included in Accrued and Miscellaneous Expenses on the Statement of Assets and Liabilities and Statement of Operations, respectively.
Affiliated Shares of Beneficial Interest
As of July 31, 2022, a majority of the shares of beneficial interest outstanding are owned by other affiliated investment companies.
6. CONCENTRATION OF RISK
A substantial part of the Fund’s portfolio may be comprised of obligations of banks. As a result, the Fund may be more susceptible to any economic, business, political or other developments which generally affect these entities.
7. LINE OF CREDIT
The Fund participates with certain other Federated Hermes Funds, on a several basis, in an up to $500,000,000 unsecured, 364-day, committed, revolving line of credit (LOC) agreement dated June 22, 2022. The LOC was made available to temporarily finance the repurchase or redemption of shares of the Fund, failed trades, payment of dividends, settlement of trades and for other short-term, temporary or emergency general business purposes. The Fund cannot borrow under the LOC if an inter-fund loan is outstanding. The Fund’s ability to borrow under the LOC also is subject to the limitations of the Act and various conditions precedent that must be satisfied before the Fund can borrow. Loans under the LOC are charged interest at a fluctuating rate per annum equal to (a) the highest, on any day, of (i) the federal funds effective rate, (ii) the published secured overnight financing rate plus an assigned percentage, and (iii) 0.0%, plus (b) a margin. Any fund eligible to borrow under the LOC pays its pro rata share of a commitment fee based on the amount of the lenders’ commitment that has not been utilized, quarterly in arrears and at maturity. As of July 31, 2022, the Fund had no outstanding loans. During the year ended July 31, 2022, the Fund did not utilize the LOC.
8. INTERFUND LENDING
Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other funds advised by subsidiaries of Federated Hermes, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating affiliated funds. As of July 31, 2022, there were no outstanding loans. During the year ended July 31, 2022, the program was not utilized.
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9. INDEMNIFICATIONS
Under the Fund’s organizational documents, its Officers and Directors/Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund (other than liabilities arising out of their willful misfeasance, bad faith, gross negligence or reckless disregard of their duties to the Fund). In addition, in the normal course of business, the Fund provides certain indemnifications under arrangements with third parties. Typically, obligations to indemnify a third party arise in the context of an arrangement entered into by the Fund under which the Fund agrees to indemnify such third party for certain liabilities arising out of actions taken pursuant to the arrangement, provided the third party’s actions are not deemed to have breached an agreed-upon standard of care (such as willful misfeasance, bad faith, gross negligence or reckless disregard of their duties under the contract). The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet arisen. The Fund does not anticipate any material claims or losses pursuant to these arrangements at this time, and accordingly expects the risk of loss to be remote.
10. OTHER MATTERS
An outbreak of respiratory disease caused by a novel coronavirus was first detected in China in late 2019 and subsequently spread globally. As of the date of the issuance of these financial statements, this coronavirus has resulted in closing borders, enhanced health screenings, disruptions to healthcare service preparation and delivery, quarantines, cancellations, and disruptions to supply chains, workflow operations and consumer activity, as well as general concern and uncertainty. The impact of this coronavirus may continue for an extended period of time and has resulted in substantial economic volatility. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could continue to negatively affect the worldwide economy, as well as the economies of individual countries, individual companies (including certain Fund service providers and issuers of the Fund’s investments) and the markets in general in significant and unforeseen ways. Any such impact could adversely affect the Fund’s performance.
11. FEDERAL TAX INFORMATION (UNAUDITED)
For the fiscal year ended July 31, 2022, 77.09% of dividends paid by the Fund are interest-related dividends, as provided by the American Jobs Creation Act of 2004.
Federated Hermes Institutional Prime Obligations Fund
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47
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Federated Hermes Money Market Obligations Trust and the Shareholders of Federated Hermes Institutional Prime Obligations Fund:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of the Federated Hermes Institutional Prime Obligations Fund (the Fund), a portfolio of Federated Hermes Money Market Obligations Trust, including the portfolio of investments, as of July 31, 2022, the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the related notes (collectively, the financial statements) and the financial highlights for each of the years in the five-year period then ended. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of July 31, 2022, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
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We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Such procedures also included confirmation of securities owned as of July 31, 2022, by correspondence with custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of Federated Hermes’ investment companies since 2006.
Boston, Massachusetts
September 23, 2022
September 23, 2022
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
49
Shareholder Expense Example (unaudited)
As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or other service fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2022 to July 31, 2022.
ACTUAL EXPENSES
The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses attributable to your investment during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Federated Hermes Institutional Prime Obligations Fund
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50
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
|
|
Beginning
Account Value
2/1/2022
|
Ending
Account Value
7/31/2022
|
Expenses Paid
During Period1
|
|
Actual
|
$1,000.00
|
$1,003.00
|
$0.842
|
|
Hypothetical (assuming a 5% return
before expenses)
|
$1,000.00
|
$1,023.95
|
$0.852
|
|
1
|
Expenses are equal to the Fund’s Institutional Shares annualized net expense ratio of 0.17%,
multiplied by the average account value over the period, multiplied by 181/365 (to reflect the
one-half-year period).
|
|
2
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Institutional Shares
current Fee Limit of 0.20% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $0.99 and $1.00, respectively.
|
Federated Hermes Institutional Prime Obligations Fund
Annual Shareholder Report
51
Board of Trustees and Trust Officers
The Board of Trustees is responsible for managing the Trust’s business affairs and for exercising all the Trust’s powers except those reserved for the shareholders. The following tables give information about each Trustee and the senior officers of the Fund. Where required, the tables separately list Trustees who are “interested persons” of the Fund (i.e., “Interested” Trustees) and those who are not (i.e., “Independent” Trustees). Unless otherwise noted, the address of each person listed is 1001 Liberty Avenue, Pittsburgh, PA 15222-3779. The address of all Independent Trustees listed is 4000 Ericsson Drive, Warrendale, PA 15086-7561; Attention: Mutual Fund Board. As of December 31, 2021, the Trust comprised 16 portfolio(s), and the Federated Hermes Fund Family consisted of 33 investment companies (comprising 102 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Trustee oversees all portfolios in the Federated Hermes Fund Family and serves for an indefinite term. The Fund’s Statement of Additional Information includes additional information about Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400, Option #4.
Interested TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
J. Christopher Donahue*
Birth Date: April 11, 1949
President and Trustee
Indefinite Term
Began serving: April 1989
|
Principal Occupations: Principal Executive Officer and President of
certain of the Funds in the Federated Hermes Fund Family; Director or
Trustee of the Funds in the Federated Hermes Fund Family; President,
Chief Executive Officer and Director, Federated Hermes, Inc.;
Chairman and Trustee, Federated Investment Management Company;
Trustee, Federated Investment Counseling; Chairman and Director,
Federated Global Investment Management Corp.; Chairman and
Trustee, Federated Equity Management Company of Pennsylvania;
Trustee, Federated Shareholder Services Company; Director,
Federated Services Company.
Previous Positions: President, Federated Investment Counseling;
President and Chief Executive Officer, Federated Investment
Management Company, Federated Global Investment Management
Corp. and Passport Research, Ltd; Chairman, Passport Research, Ltd.
|
Annual Shareholder Report
52
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
Thomas R. Donahue*
Birth Date: October 20, 1958
Trustee
Indefinite Term
Began serving: May 2016
|
Principal Occupations: Director or Trustee of certain of the funds in
the Federated Hermes Fund Family; Chief Financial Officer, Treasurer,
Vice President and Assistant Secretary, Federated Hermes, Inc.;
Chairman and Trustee, Federated Administrative Services; Chairman
and Director, Federated Administrative Services, Inc.; Trustee and
Treasurer, Federated Advisory Services Company; Director or Trustee
and Treasurer, Federated Equity Management Company of
Pennsylvania, Federated Global Investment Management Corp.,
Federated Investment Counseling, and Federated Investment
Management Company; Director, MDTA LLC; Director, Executive Vice
President and Assistant Secretary, Federated Securities Corp.;
Director or Trustee and Chairman, Federated Services Company and
Federated Shareholder Services Company; and Director and
President, FII Holdings, Inc.
Previous Positions: Director, Federated Hermes, Inc.; Assistant
Secretary, Federated Investment Management Company, Federated
Global Investment Management Company and Passport Research,
LTD; Treasurer, Passport Research, LTD; Executive Vice President,
Federated Securities Corp.; and Treasurer, FII Holdings, Inc.
|
*
Family relationships and reasons for “interested” status: J. Christopher Donahue and Thomas R. Donahue are brothers. Both are “interested” due to their beneficial ownership of shares of Federated Hermes, Inc. and the positions they hold with Federated Hermes, Inc. and its subsidiaries.
INDEPENDENT TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
John T. Collins
Birth Date: January 24, 1947
Trustee
Indefinite Term
Began serving:
September 2013
|
Principal Occupations: Director or Trustee, and Chair of the Board
of Directors or Trustees, of the Federated Hermes Fund Family;
formerly, Chairman and CEO, The Collins Group, Inc. (a private equity
firm) (Retired).
Other Directorships Held: Director, KLX Energy Services Holdings,
Inc. (oilfield services); former Director of KLX Corp. (aerospace).
Qualifications: Mr. Collins has served in several business and financial
management roles and directorship positions throughout his career.
Mr. Collins previously served as Chairman and CEO of The Collins
Group, Inc. (a private equity firm) and as a Director of KLX Corp.
Mr. Collins serves as Chairman Emeriti, Bentley University. Mr. Collins
previously served as Director and Audit Committee Member, Bank of
America Corp.; Director, FleetBoston Financial Corp.; and Director,
Beth Israel Deaconess Medical Center (Harvard University
Affiliate Hospital).
|
Annual Shareholder Report
53
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
G. Thomas Hough
Birth Date: February 28, 1955
Trustee
Indefinite Term
Began serving: August 2015
|
Principal Occupations: Director or Trustee, Chair of the Audit
Committee of the Federated Hermes Fund Family; formerly, Vice
Chair, Ernst & Young LLP (public accounting firm) (Retired).
Other Directorships Held: Director, Chair of the Audit Committee,
Equifax, Inc.; Lead Director, Member of the Audit and Nominating and
Corporate Governance Committees, Haverty Furniture Companies,
Inc.; formerly, Director, Member of Governance and Compensation
Committees, Publix Super Markets, Inc.
Qualifications: Mr. Hough has served in accounting, business
management and directorship positions throughout his career.
Mr. Hough most recently held the position of Americas Vice Chair of
Assurance with Ernst & Young LLP (public accounting firm). Mr. Hough
serves on the President’s Cabinet and Business School Board of
Visitors for the University of Alabama. Mr. Hough previously served on
the Business School Board of Visitors for Wake Forest University, and
he previously served as an Executive Committee member of the
United States Golf Association.
|
|
Maureen Lally-Green
Birth Date: July 5, 1949
Trustee
Indefinite Term
Began serving: August 2009
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Adjunct Professor Emerita of Law, Duquesne University
School of Law; formerly, Dean of the Duquesne University School of
Law and Professor of Law and Interim Dean of the Duquesne
University School of Law; formerly, Associate General Secretary and
Director, Office of Church Relations, Diocese of Pittsburgh.
Other Directorships Held: Director, CNX Resources Corporation
(formerly known as CONSOL Energy Inc.).
Qualifications: Judge Lally-Green has served in various legal and
business roles and directorship positions throughout her career. Judge
Lally-Green previously held the position of Dean of the School of Law
of Duquesne University (as well as Interim Dean). Judge Lally-Green
previously served as a member of the Superior Court of Pennsylvania
and as a Professor of Law, Duquesne University School of Law. Judge
Lally-Green was appointed by the Supreme Court of Pennsylvania to
serve on the Supreme Court’s Board of Continuing Judicial Education
and the Supreme Court’s Appellate Court Procedural Rules
Committee. Judge Lally-Green also currently holds the positions on
not for profit or for profit boards of directors as follows: Director
and Chair, UPMC Mercy Hospital; Regent, Saint Vincent Seminary;
Member, Pennsylvania State Board of Education (public); Director,
Catholic Charities, Pittsburgh; and Director CNX Resources
Corporation (formerly known as CONSOL Energy Inc.). Judge
Lally-Green has held the positions of: Director, Auberle; Director,
Epilepsy Foundation of Western and Central Pennsylvania; Director,
Ireland Institute of Pittsburgh; Director, Saint Thomas More Society;
Director and Chair, Catholic High Schools of the Diocese of
Pittsburgh, Inc.; Director, Pennsylvania Bar Institute; Director,
St. Vincent College; Director and Chair, North Catholic High
School, Inc.; Director and Vice Chair, Our Campaign for the Church
Alive!, Inc.; and Director, Saint Francis University.
|
Annual Shareholder Report
54
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
Thomas M. O’Neill
Birth Date: June 14, 1951
Trustee
Indefinite Term
Began serving: August 2006
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Sole Proprietor, Navigator Management Company
(investment and strategic consulting).
Other Directorships Held: None.
Qualifications: Mr. O’Neill has served in several business, mutual fund
and financial management roles and directorship positions throughout
his career. Mr. O’Neill serves as Director, Medicines for Humanity.
Mr. O’Neill previously served as Chief Executive Officer and President,
Managing Director and Chief Investment Officer, Fleet Investment
Advisors; President and Chief Executive Officer, Aeltus Investment
Management, Inc.; General Partner, Hellman, Jordan Management
Co., Boston, MA; Chief Investment Officer, The Putnam Companies,
Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director
and Consultant, EZE Castle Software (investment order management
software); Director, The Golisano Children’s Museum of Naples,
Florida; and Director, Midway Pacific (lumber).
|
|
Madelyn A. Reilly
Birth Date: February 2, 1956
Trustee
Indefinite Term
Began serving:
November 2020
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; formerly, Executive Vice President for Legal Affairs,
General Counsel and Secretary to the Board of Directors, Duquesne
University (Retired).
Other Directorships Held: None.
Qualifications: Ms. Reilly has served in various business and legal
management roles throughout her career. Ms. Reilly previously served
as Senior Vice President for Legal Affairs, General Counsel and
Secretary to the Board of Directors and Assistant General Counsel and
Director of Risk Management, Duquesne University. Prior to her work
at Duquesne University, Ms. Reilly served as Assistant General
Counsel of Compliance and Enterprise Risk as well as Senior Counsel
of Environment, Health and Safety, PPG Industries. Ms. Reilly currently
serves as a member of the Board of Directors of UPMC
Mercy Hospital.
|
Annual Shareholder Report
55
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
P. Jerome Richey
Birth Date: February 23, 1949
Trustee
Indefinite Term
Began serving:
September 2013
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Management Consultant; Retired; formerly, Senior Vice
Chancellor and Chief Legal Officer, University of Pittsburgh and
Executive Vice President and Chief Legal Officer, CONSOL Energy Inc.
(now split into two separate publicly traded companies known as
CONSOL Energy Inc. and CNX Resources Corp.).
Other Directorships Held: None.
Qualifications: Mr. Richey has served in several business and legal
management roles and directorship positions throughout his career.
Mr. Richey most recently held the positions of Senior Vice Chancellor
and Chief Legal Officer, University of Pittsburgh. Mr. Richey previously
served as Chairman of the Board, Epilepsy Foundation of Western
Pennsylvania and Chairman of the Board, World Affairs Council of
Pittsburgh. Mr. Richey previously served as Chief Legal Officer and
Executive Vice President, CONSOL Energy Inc. and CNX Gas
Company; and Board Member, Ethics Counsel and Shareholder,
Buchanan Ingersoll & Rooney PC (a law firm).
|
|
John S. Walsh
Birth Date:
November 28, 1957
Trustee
Indefinite Term
Began serving: January 1999
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; President and Director, Heat Wagon, Inc. (manufacturer
of construction temporary heaters); President and Director,
Manufacturers Products, Inc. (distributor of portable construction
heaters); President, Portable Heater Parts, a division of Manufacturers
Products, Inc.
Other Directorships Held: None.
Qualifications: Mr. Walsh has served in several business management
roles and directorship positions throughout his career. Mr. Walsh
previously served as Vice President, Walsh & Kelly, Inc.
(paving contractors).
|
Annual Shareholder Report
56
OFFICERS
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Lori A. Hensler
Birth Date: January 6, 1967
TREASURER
Officer since: April 2013
|
Principal Occupations: Principal Financial Officer and Treasurer of the
Federated Hermes Fund Family; Senior Vice President, Federated
Administrative Services; Financial and Operations Principal for
Federated Securities Corp.; and Assistant Treasurer, Federated
Investors Trust Company. Ms. Hensler has received the Certified
Public Accountant designation.
Previous Positions: Controller of Federated Hermes, Inc.; Senior Vice
President and Assistant Treasurer, Federated Investors Management
Company; Treasurer, Federated Investors Trust Company; Assistant
Treasurer, Federated Administrative Services, Federated
Administrative Services, Inc., Federated Securities Corp., Edgewood
Services, Inc., Federated Advisory Services Company, Federated
Equity Management Company of Pennsylvania, Federated Global
Investment Management Corp., Federated Investment Counseling,
Federated Investment Management Company, Passport Research,
Ltd., and Federated MDTA, LLC; Financial and Operations Principal for
Federated Securities Corp., Edgewood Services, Inc. and Southpointe
Distribution Services, Inc.
|
|
Peter J. Germain
Birth Date:
September 3, 1959
CHIEF LEGAL OFFICER,
SECRETARY and EXECUTIVE
VICE PRESIDENT
Officer since: January 2005
|
Principal Occupations: Mr. Germain is Chief Legal Officer, Secretary
and Executive Vice President of the Federated Hermes Fund Family.
He is General Counsel, Chief Legal Officer, Secretary and Executive
Vice President, Federated Hermes, Inc.; Trustee and Senior Vice
President, Federated Investors Management Company; Trustee and
President, Federated Administrative Services; Director and President,
Federated Administrative Services, Inc.; Director and Vice President,
Federated Securities Corp.; Director and Secretary, Federated Private
Asset Management, Inc.; Secretary, Federated Shareholder Services
Company; and Secretary, Retirement Plan Service Company of
America. Mr. Germain joined Federated Hermes, Inc. in 1984 and is a
member of the Pennsylvania Bar Association.
Previous Positions: Deputy General Counsel, Special Counsel,
Managing Director of Mutual Fund Services, Federated Hermes, Inc.;
Senior Vice President, Federated Services Company; and Senior
Corporate Counsel, Federated Hermes, Inc.
|
|
Stephen Van Meter
Birth Date: June 5, 1975
CHIEF COMPLIANCE
OFFICER AND SENIOR
VICE PRESIDENT
Officer since: July 2015
|
Principal Occupations: Senior Vice President and Chief Compliance
Officer of the Federated Hermes Fund Family; Vice President and
Chief Compliance Officer of Federated Hermes, Inc. and Chief
Compliance Officer of certain of its subsidiaries. Mr. Van Meter joined
Federated Hermes, Inc. in October 2011. He holds FINRA licenses
under Series 3, 7, 24 and 66.
Previous Positions: Mr. Van Meter previously held the position of
Compliance Operating Officer, Federated Hermes, Inc. Prior to joining
Federated Hermes, Inc., Mr. Van Meter served at the United States
Securities and Exchange Commission in the positions of Senior
Counsel, Office of Chief Counsel, Division of Investment Management
and Senior Counsel, Division of Enforcement.
|
Annual Shareholder Report
57
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Deborah A. Cunningham
Birth Date:
September 15, 1959
Chief Investment Officer
Officer since: May 2004
Portfolio Manager since:
November 1996
|
Principal Occupations: Deborah A. Cunningham has been the Fund’s
Portfolio Manager since November 1996. Ms. Cunningham was named
Chief Investment Officer of Federated Hermes’ money market
products in 2004. She joined Federated Hermes in 1981 and has been
a Senior Portfolio Manager since 1997 and an Executive Vice President
of the Fund’s Adviser since 2009. Ms. Cunningham has received the
Chartered Financial Analyst designation and holds an M.S.B.A. in
Finance from Robert Morris College.
|
Annual Shareholder Report
58
Evaluation and Approval of Advisory Contract–May 2022
Federated Hermes Institutional Prime Value Obligations Fund (the “Fund”)
At its meetings in May 2022 (the “May Meetings”), the Fund’s Board of Trustees (the “Board”), including those Trustees who are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940 (the “Independent Trustees”), reviewed and unanimously approved the continuation of the investment advisory contract between the Fund and Federated Investment Management Company (the “Adviser”) (the “Contract”) for an additional one-year term. The Board’s determination to approve the continuation of the Contract reflects the exercise of its business judgment after considering all of the information and factors believed to be relevant and appropriate on whether to approve the continuation of the existing arrangement. The information, factors and conclusions that formed the basis for the Board’s approval are summarized below.
Information Received and Review Process
At the request of the Independent Trustees, the Fund’s Chief Compliance Officer (the “CCO”) furnished to the Board in advance of its May Meetings an independent written evaluation presenting on the topics discussed below. The Board considered the CCO’s independent written evaluation (the “CCO Fee Evaluation Report”), along with other information, in evaluating the reasonableness of the Fund’s management fee and in determining to approve the continuation of the Contract. The CCO, in preparing the CCO Fee Evaluation Report, has the authority to retain consultants, experts or staff as reasonably necessary to assist in the performance of his duties, reports directly to the Board, and can be terminated only with the approval of a majority of the Independent Trustees. At the request of the Independent Trustees, the CCO Fee Evaluation Report followed the same general approach and covered the same topics as that of the report that had previously been delivered by the CCO in his capacity as “Senior Officer” prior to the elimination of the Senior Officer position in December 2017.
In addition to the extensive materials that comprise and accompany the CCO Fee Evaluation Report, the Board considered information specifically prepared in connection with the approval of the continuation of the Contract that was presented at the May Meetings. In this regard, in the months preceding the May Meetings, the Board requested and reviewed written responses and supporting materials prepared by the Adviser and its affiliates (collectively, “Federated Hermes”) in response to requests posed to Federated Hermes by independent legal counsel on behalf of the Independent Trustees encompassing a wide variety of topics, including those summarized below. The Board also considered such additional matters as the Independent Trustees deemed
Annual Shareholder Report
59
reasonably necessary to evaluate the Contract, which included detailed information about the Fund and Federated Hermes furnished to the Board at its meetings throughout the year and in between regularly scheduled meetings on particular matters as the need arose.
The Board’s consideration of the Contract included review of materials and information covering the following matters, among others: the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates; Federated Hermes’ business and operations; the Adviser’s investment philosophy, personnel and processes; the Fund’s investment objectives and strategies; the Fund’s short-term and long-term performance (in absolute terms, both on a gross basis and net of expenses, and relative to the Fund’s particular investment program and a group of its peer funds and/or its benchmark, as appropriate); the Fund’s investment objectives; the Fund’s fees and expenses, including the advisory fee and the overall expense structure of the Fund (both in absolute terms and relative to a group of its peer funds), with due regard for contractual or voluntary expense limitations (if any); the financial condition of Federated Hermes; the Adviser’s profitability with respect to the Fund; distribution and sales activity for the Fund; and the use and allocation of brokerage commissions derived from trading the Fund’s portfolio securities (if any).
The Board also considered judicial decisions concerning allegedly excessive investment advisory fees charged to other registered funds in determining to approve the Contract. Using these judicial decisions as a guide, the Board observed that the following factors may be relevant to an adviser’s fiduciary duty with respect to its receipt of compensation from a fund: (1) the nature and quality of the services provided by the adviser to the fund and its shareholders, including the performance of the fund, its benchmark and comparable funds; (2) the adviser’s cost of providing the services and the profitability to the adviser of providing advisory services to the fund; (3) the extent to which the adviser may realize “economies of scale” as the fund grows larger and, if such economies of scale exist, whether they have been appropriately shared with the fund and its shareholders or the family of funds; (4) any “fall-out” benefits that accrue to the adviser because of its relationship with the fund, including research services received from brokers that execute fund trades and any fees paid to affiliates of the adviser for services rendered to the fund; (5) comparative fee and expense structures, including a comparison of management fees paid to the adviser with those paid by similar funds both internally and externally as well as management fees charged to institutional and other advisory clients of the adviser for what might be viewed as like services; and (6) the extent of care, conscientiousness and independence with which the fund’s board members perform their duties and their expertise, including whether they are fully informed about all facts the board deems relevant to its consideration of the adviser’s services and fees. The Board noted that the Securities and Exchange Commission (“SEC”) disclosure requirements
Annual Shareholder Report
60
regarding the basis for a fund board’s approval of the fund’s investment advisory contract generally align with the factors listed above. The Board was guided by these factors in its review of the Contract to the extent it considered them to be appropriate and relevant, as discussed further below. The Board considered and weighed these factors in light of its substantial accumulated experience in governing the Fund and working with Federated Hermes on matters relating to the oversight of the other funds advised by Federated Hermes (each, a “Federated Hermes Fund” and, collectively, the (“Federated Hermes Funds”).
In addition to considering the above-referenced factors, the Board was mindful of the preferences and expectations of Fund shareholders and the potential disruptions of the Fund’s operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew the Contract. In particular, the Board recognized that many shareholders likely have invested in the Fund on the strength of Federated Hermes’ industry standing and reputation and with the expectation that Federated Hermes will have a continuing role in providing advisory services to the Fund. Thus, the Board observed that in the marketplace there are a range of investment options available to the Fund’s shareholders and such shareholders, having had the opportunity to consider other investment options, have effectively selected Federated Hermes by virtue of investing in the Fund.
In determining to approve the continuation of the Contract, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the continuation of the Contract was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Contract. The Board recognized that its evaluation process is evolutionary and that the factors considered and emphasis placed on relevant factors may change in recognition of changing circumstances in the registered fund marketplace. The Independent Trustees were assisted throughout the evaluation process by independent legal counsel. In connection with their deliberations at the May Meetings, the Independent Trustees met separately in executive session with their independent legal counsel and without management present to review the relevant materials and consider their responsibilities under applicable laws. In addition, senior management representatives of Federated Hermes also met with the Independent Trustees and their independent legal counsel to discuss the materials and presentations furnished to the Board at the May Meetings. The Board considered the approval of the Contract for the Fund as part of its consideration of agreements for funds across the family of Federated Hermes Funds, but its approvals were made on a fund-by-fund basis.
Annual Shareholder Report
61
Nature, Extent and Quality of Services
The Board considered the nature, extent and quality of the services provided to the Fund by the Adviser and the resources of Federated Hermes dedicated to the Fund. In this regard, the Board evaluated, among other things, the terms of the Contract and the range of services provided to the Fund by Federated Hermes. The Board considered the Adviser’s personnel, investment philosophy and process, investment research capabilities and resources, trade operations capabilities, experience and performance track record. The Board reviewed the qualifications, backgrounds and responsibilities of the portfolio management team primarily responsible for the day-to-day management of the Fund and Federated Hermes’ ability and experience in attracting and retaining qualified personnel to service the Fund. In addition, the Board noted that the Fund is a money market mutual fund that operates in accordance with the limitations set forth in Rule 2a-7 under the 1940 Act. In this connection, the Board considered the expertise of the Adviser in managing money market funds, its extensive experience with the requirements of Rule 2a-7 and its commitment to managing the Fund in accordance with these requirements. The Board also considered the Adviser’s ability to deliver competitive investment performance for the Fund when compared to the Fund’s Performance Peer Group (as defined below), which was deemed by the Board to be a useful indicator of how the Adviser is executing the Fund’s investment program. The Board also considered the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, in order to maintain a positive yield for the Fund in the low interest rate environment.
In addition, the Board considered the financial resources and overall reputation of Federated Hermes and its willingness to consider and make investments in personnel, infrastructure, technology, cybersecurity, business continuity planning and operational enhancements that are designed to benefit the Federated Hermes Funds. The Board noted the significant acquisition of Hermes Fund Managers Limited by Federated Hermes, which has deepened the organization’s investment management expertise and capabilities and expanded the investment process for all of the Federated Hermes Funds to have access to analytical resources related to environmental, social and governance (“ESG”) factors and issuer engagement on ESG matters. The Board considered the quality of Federated Hermes’ communications with the Board and responsiveness to Board inquiries and requests made from time to time with respect to the Fund and other Federated Hermes Funds. In this regard, the Board took into account Federated Hermes’ communications with the Board in light of the pandemic. The Board also considered that Federated Hermes is responsible for providing the Federated Hermes Funds’ officers.
The Board received and evaluated information regarding Federated Hermes’ regulatory and compliance environment. The Board considered Federated Hermes’ compliance program and compliance history and reports from the CCO about Federated Hermes’ compliance with applicable laws and
Annual Shareholder Report
62
regulations, including responses to regulatory developments and any compliance or other issues raised by regulatory agencies. The Board also noted Federated Hermes’ support of the Federated Hermes Funds’ compliance control structure and the compliance-related resources devoted by Federated Hermes in support of the Fund’s obligations pursuant to Rule 38a-1 under the Investment Company Act of 1940, including Federated Hermes’ commitment to respond to rulemaking and other regulatory initiatives of the SEC. The Board considered Federated Hermes’ approach to internal audits and risk management with respect to the Federated Hermes Funds and its day-to-day oversight of the Federated Hermes Funds’ compliance with their investment objectives and policies as well as with applicable laws and regulations, noting that regulatory and other developments had over time led to an increase in the scope of Federated Hermes’ oversight in this regard, including in connection with the designation of the Federated Hermes Funds’ investment advisers as the administrators of the Federated Hermes Funds’ liquidity risk management program.
The Board also considered the implementation of Federated Hermes’ business continuity plans and recognized steps taken by Federated Hermes to continue to provide the same nature, extent and quality of services to the Federated Hermes Funds during the pandemic. In addition, the Board noted Federated Hermes’ commitment to maintaining high quality systems and expending substantial resources to prepare for and respond to ongoing changes due to the market, regulatory and control environments in which the Fund and its service providers operate, including changes associated with the pandemic.
The Board considered Federated Hermes’ efforts to provide shareholders in the Federated Hermes Funds with a comprehensive array of funds with different investment objectives, policies and strategies. The Board considered the expenses that Federated Hermes had incurred, as well as the entrepreneurial and other risks assumed by Federated Hermes, in sponsoring and providing on-going services to new funds to expand these opportunities for shareholders. The Board noted the benefits to shareholders of being part of the family of Federated Hermes Funds, which include the general right to exchange investments between the same class of shares without the incurrence of additional sales charges.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided by the Adviser to the Fund.
Fund Investment Performance
The Board considered the investment performance of the Fund. In evaluating the Fund’s investment performance, the Board considered performance results in light of the Fund’s investment objective, strategies and risks. The Board considered detailed investment reports on, and the Adviser’s analysis of, the Fund’s performance over different time periods that were
Annual Shareholder Report
63
provided to the Board throughout the year and in connection with the May Meetings. These reports include, among other items, information on the Fund’s gross and net returns, the Fund’s investment performance compared to one or more relevant categories or groups of peer funds and the Fund’s benchmark index, performance attribution information and commentary on the effect of market conditions.
The Board also reviewed comparative information regarding the performance of other registered funds in the category of peer funds selected by iMoneyNet, an independent fund ranking organization (the “Performance Peer Group”). The Board noted the CCO’s view that comparisons to fund peer groups may be helpful, though not conclusive, in evaluating the performance of the Adviser in managing the Fund. The Board considered, in evaluating such comparisons, that in some cases there may be differences in the funds’ objectives or investment management techniques, or the costs to implement the funds, even within the same Performance Peer Group.
For the one-year period ended December 31, 2021, the Fund’s performance was above the median of the Performance Peer Group. The Board also considered the relatively tight dispersion of performance data with respect to the Fund and its Performance Peer Group.
Based on these considerations, the Board concluded that it had continued confidence in the Adviser’s overall capabilities to manage the Fund.
Fund Expenses
The Board considered the advisory fee and overall expense structure of the Fund and the comparative fee and expense information that had been provided in connection with the May Meetings. In this regard, the Board was presented with, and considered, information regarding the contractual advisory fee rates, net advisory fee rates, total expense ratios and each element of the Fund’s total expense ratio (i.e., gross and net advisory fees, administrative fees, custody fees, portfolio accounting fees and transfer agency fees) relative to an appropriate group of peer funds compiled by Federated Hermes from the category of peer funds selected by iMoneyNet (the “Expense Peer Group”). The Board received a description of the methodology used to select the Expense Peer Group from the overall iMoneyNet category. The Board also reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall iMoneyNet category.
While mindful that courts have cautioned against giving too much weight to comparative information concerning fees charged by other advisers for managing funds with comparable investment programs, the Board noted that it found the use of such comparisons to be relevant to its evaluation. The Board focused on comparisons with other similar registered funds more heavily than non-registered fund products or services because such comparisons are believed to be more relevant. The Board considered that other registered funds are the products most like the Fund, in that they are readily available to Fund
Annual Shareholder Report
64
shareholders as alternative investment vehicles, and they are the type of investment vehicle, in fact, chosen and maintained by the Fund’s shareholders. The Board noted that the range of such other registered funds’ fees and expenses, therefore, appears to be a relevant indicator of what investors have found to be reasonable in the marketplace in which the Fund competes.
The Board noted that, for the year ended December 31, 2021, the Fund’s investment advisory fee was waived in its entirety. The Board reviewed the contractual advisory fee rate, net advisory fee rate and other expenses of the Fund with the Adviser and noted the position of the Fund’s fee rates relative to its Expense Peer Group. In this regard, the Board noted that the contractual advisory fee rate was above the median of the Expense Peer Group, but the Board noted that the investment advisory fee was waived in its entirety, and that the overall expense structure of the Fund remained competitive in the context of other factors considered by the Board.
The Board also received and considered information about the fees charged by Federated Hermes for providing advisory services to other types of clients with investment strategies similar to those of the Federated Hermes Funds, including non-registered fund clients (such as institutional separate accounts) and third-party unaffiliated registered funds for which the Adviser or its affiliates serve as sub-adviser. The Board noted the CCO’s conclusion that non-registered fund clients are inherently different products due to the following differences, among others: (i) different types of targeted investors; (ii) different applicable laws and regulations; (iii) different legal structures; (iv) different average account sizes and portfolio management techniques made necessary by different cash flows and different associated costs; (v) the time spent by portfolio managers and their teams (among other personnel across various departments, including legal, compliance and risk management) in reviewing securities pricing and fund liquidity; (vi) different administrative responsibilities; (vii) different degrees of risk associated with management; and (viii) a variety of different costs. The Board also considered information regarding the differences in the nature of the services required for Federated Hermes to manage its proprietary registered fund business versus managing a discrete pool of assets as a sub-adviser to another institution’s registered fund, noting the CCO’s view that Federated Hermes generally performs significant additional services and assumes substantially greater risks in managing the Fund and other Federated Hermes Funds than in its role as sub-adviser to an unaffiliated third-party registered fund. The Board noted that the CCO did not consider the fees for providing advisory services to other types of clients to be determinative in judging the appropriateness of the Federated Hermes Funds’ advisory fees.
Based on these considerations, the Board concluded that the fees and total operating expenses of the Fund, in conjunction with other matters considered, are reasonable in light of the services provided.
Annual Shareholder Report
65
Profitability
The Board received and considered profitability information furnished by Federated Hermes, as requested by the CCO. Such profitability information included revenues reported on a fund-by-fund basis and estimates of the allocation of expenses made on a fund-by-fund basis, using allocation methodologies specified by the CCO and described to the Board. The Board considered the CCO’s view that, while these cost allocation reports apply consistent allocation processes, the inherent difficulties in allocating costs on a fund-by-fund basis continues to cause the CCO to question the precision of the process and to conclude that such reports may be unreliable because a single change in an allocation estimate may dramatically alter the resulting estimate of cost and/or profitability of a Federated Hermes Fund and may produce unintended consequences. In addition, the Board considered the CCO’s view that the allocation methodologies used by Federated Hermes in estimating profitability for purposes of reporting to the Board in connection with the continuation of the Contract are consistent with the methodologies previously reviewed by an independent consultant. The Board noted that the independent consultant had previously conducted a review of the allocation methodologies and reported that, although there is no single best method to allocate expenses, the methodologies used by Federated Hermes are reasonable. The Board noted the impact of the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, on the profitability of the Fund to the Adviser.
The Board also reviewed information compiled by Federated Hermes comparing its profitability information to other publicly held fund management companies, including information regarding profitability trends over time. The Board considered the CCO’s conclusion that, based on such profitability information, Federated Hermes’ profit margins did not appear to be excessive. The Board also considered the CCO’s view that Federated Hermes appeared financially sound, with the resources necessary to fulfill its obligations under its contracts with the Federated Hermes Funds.
Economies of Scale
The Board received and considered information about the notion of possible realization of “economies of scale” as a fund grows larger, the difficulties of calculating economies of scale at an individual fund level, and the extent to which potential scale benefits are shared with shareholders. In this regard, the Board considered that Federated Hermes has made significant and long-term investments in areas that support all of the Federated Hermes Funds, such as: personnel, processes and tools for portfolio management, including the use of market data on which portfolio managers make investment decisions; trading operations; ESG integration and issuer engagement on ESG matters; shareholder services; compliance; business continuity; cybersecurity; internal audit and risk management functions; and technology that supports the provision of investment management services. The Board noted that Federated
Annual Shareholder Report
66
Hermes’ investments in these areas are extensive and are designed to provide enhanced services to the Federated Hermes Funds and their shareholders. The Board considered that the benefits of these investments are likely to be shared with the family of Federated Hermes Funds as a whole. In addition, the Board considered that fee waivers and expense reimbursements are another means for potential economies of scale to be shared with shareholders and can provide protection from an increase in expenses if a Federated Hermes Fund’s assets decline. The Board considered that, in order for the Federated Hermes Funds to remain competitive in the marketplace, Federated Hermes has frequently waived fees and/or reimbursed expenses for the Federated Hermes Funds and has disclosed to shareholders and/or reported to the Board its intention to do so (or continue to do so) in the future. The Board also considered Federated Hermes’ reductions in contractual management fees for certain Federated Hermes Funds during the prior year, including in response to the CCO’s recommendations in the prior year’s CCO Fee Evaluation Report, which have resulted in benefits being realized by shareholders.
The Board also considered reports on adviser-paid fees (commonly referred to as “revenue sharing”) that were provided to the Board throughout the year and in connection with the May Meetings. The Board considered that Federated Hermes and the CCO believe that this information should be viewed to determine if there was an incentive to either not apply breakpoints, or to apply breakpoints at higher levels, and should not be viewed to evaluate the reasonableness of advisory fees. The Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which is compounded by the lack of any uniform methodology or pattern with respect to structuring fund advisory fees with breakpoints that serve to reduce the fees as a fund attains a certain size.
Other Benefits
The Board considered information regarding the compensation and other ancillary (or “fall-out”) benefits that Federated Hermes derived from its relationships with the Federated Hermes Funds. The Board noted that, in addition to receiving advisory fees under the Federated Hermes Funds’ investment advisory contracts, Federated Hermes’ affiliates also receive fees for providing other services to the Federated Hermes Funds under separate contracts (e.g., for serving as the Federated Hermes Funds’ administrator and distributor). In this regard, the Board considered that certain of Federated Hermes’ affiliates provide distribution and shareholder services to the Federated Hermes Funds, for which they may be compensated through distribution and servicing fees paid pursuant to Rule 12b-1 plans or otherwise. The Board also received and considered information detailing any indirect benefit that Federated Hermes may derive from its receipt of research services from brokers who execute portfolio trades for the Federated Hermes Funds.
Annual Shareholder Report
67
Conclusions
The Board considered: (i) the CCO’s conclusion that his observations and the information accompanying the CCO Fee Evaluation Report show that the management fee for the Fund is reasonable; and (ii) the CCO’s recommendation that the Board approve the management fee. The Board noted that, under these circumstances, no changes were recommended to, and no objection was raised to the continuation of, the Contract by the CCO. The CCO also recognized that the Board’s evaluation of the Federated Hermes Funds’ advisory and sub-advisory arrangements is a continuing and ongoing process that is informed by the information that the Board requests and receives from management throughout the course of the year and, in this regard, the CCO noted certain items for future reporting to the Board or further consideration by management as the Board continues its ongoing oversight of the Federated Hermes Funds.
On the basis of the information and factors summarized above, among other information and factors deemed relevant by the Board, and the evaluation thereof, the Board, including the Independent Trustees, unanimously voted to approve the continuation of the Contract. The Board based its determination to approve the Contract on the totality of the circumstances and relevant factors and with a view of past and future long-term considerations. Not all of the factors and considerations identified above were necessarily deemed to be relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were deemed to be relevant, the Board’s determination to approve the continuation of the Contract reflects its view that Federated Hermes’ performance and actions provided a satisfactory basis to support the determination to approve the continuation of the existing arrangement.
Annual Shareholder Report
68
Voting Proxies on Fund Portfolio Securities
A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund’s portfolio is available, without charge and upon request, by calling 1-800-341-7400, Option #4. A report on “Form N-PX” of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available via the Proxy Voting Record (Form N-PX) link associated with the Fund and share class name at FederatedInvestors.com/FundInformation. Form N-PX filings are also available at the SEC’s website at sec.gov.
Portfolio Schedule
The Fund files with the SEC a complete schedule of its portfolio holdings as of the close of each month on “Form N-MFP.” Form N-MFP is available on the SEC’s website at sec.gov. You may access Form N-MFP via the link to the Fund and share class name at FederatedInvestors.com.
Annual Shareholder Report
69
You could lose money by investing in the Fund. Because the share price of the Fund will fluctuate, when you sell your shares they may be worth more or less than what you originally paid for them. The Fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
This Report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund’s Prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.
Federated Hermes Institutional Prime Value Obligations Fund
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at FederatedInvestors.com
or call 1-800-341-7400.
or call 1-800-341-7400.
Federated Securities Corp., Distributor
CUSIP 60934N583
Q454506 (9/22)
© 2022 Federated Hermes, Inc.
Annual Shareholder Report
July 31, 2022
|
Share Class | Ticker
|
Automated | TOAXX
|
Institutional | TOIXX
|
Service | TOSXX
|
|
|
Capital | TOCXX
|
Trust | TOTXX
|
|
Federated Hermes Treasury Obligations Fund
A Portfolio of Federated Hermes Money Market Obligations Trust
Dear Valued Shareholder,
We are pleased to present the Annual Shareholder Report for your fund covering the period from August 1, 2021 through July 31, 2022. This report includes a complete listing of your fund’s holdings, performance information and financial statements along with other important fund information.
As a global leader in active, responsible investment management, Federated Hermes is guided by our conviction that responsible investing is the best way to create wealth over the long term. The company provides capabilities across a wide range of asset classes to investors around the world.
In addition, FederatedInvestors.com offers quick and easy access to valuable resources that include timely fund updates, economic and market insights from our investment strategists and financial planning tools. You can also access many of those insights by following us on Twitter (@FederatedHermes) and LinkedIn.
Thank you for investing with us. We hope you find this information useful and look forward to keeping you informed.
Sincerely,
J. Christopher Donahue, President
Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee
Portfolio of Investments Summary Tables (unaudited)
At July 31, 2022, the Fund’s portfolio composition1 was as follows:
|
Security Type
|
Percentage of
Total Net Assets
|
|
U.S. Treasury Securities
|
15.9%
|
|
Repurchase Agreements
|
78.6%
|
|
Other Assets and Liabilities—Net2
|
5.5%
|
|
TOTAL
|
100%
|
|
1
|
See the Fund’s Prospectus and Statement of Additional Information for a description of the
types of securities in which the Fund invests.
|
|
2
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
At July 31, 2022, the Fund’s effective maturity schedule1 was as follows:
|
Securities With an
Effective Maturity of:
|
Percentage of
Total Net Assets
|
|
1-7 Days
|
87.9%
|
|
8-30 Days
|
1.8%
|
|
31-90 Days
|
1.0%
|
|
91-180 Days
|
2.9%
|
|
181 Days or more
|
0.9%
|
|
Other Assets and Liabilities—Net2
|
5.5%
|
|
Total
|
100%
|
|
1
|
Effective maturity is determined in accordance with the requirements of Rule 2a-7 under the
Investment Company Act of 1940, which regulates money market mutual funds.
|
|
2
|
Assets, other than investments in securities, less liabilities. See Statement of Assets
and Liabilities.
|
Annual Shareholder Report
1
Portfolio of Investments
July 31, 2022
|
Principal
Amount
|
|
|
Value
|
|
|
|
U.S. TREASURIES— 15.9%
|
|
|
$ 380,000,000
|
1
|
United States Treasury Bill, 0.770%, 8/18/2022
|
$ 379,861,828
|
|
95,000,000
|
1
|
United States Treasury Bill, 0.122%, 10/6/2022
|
94,978,665
|
|
190,000,000
|
1
|
United States Treasury Bill, 0.630%, 1/26/2023
|
189,408,150
|
|
375,000,000
|
1
|
United States Treasury Bill, 1.530%, 11/25/2022
|
373,151,250
|
|
400,000,000
|
1
|
United States Treasury Bill, 1.580%, 12/1/2022
|
397,858,222
|
|
50,000,000
|
1
|
United States Treasury Bill, 2.512%, 1/5/2023
|
49,452,135
|
|
238,000,000
|
1
|
United States Treasury Bill, 2.680%, 1/12/2023
|
235,094,284
|
|
425,000,000
|
1
|
United States Treasury Bills, 1.465% - 1.490%, 11/17/2022
|
423,113,000
|
|
250,000,000
|
2
|
United States Treasury Floating Rate Notes, 2.461% (91-day T-Bill
-0.075%), 8/2/2022
|
249,999,979
|
|
510,000,000
|
2
|
United States Treasury Floating Rate Notes, 2.470% (91-day T-Bill
+0.037%), 8/2/2022
|
509,999,767
|
|
679,600,000
|
2
|
United States Treasury Floating Rate Notes, 2.521% (91-day T-Bill
-0.015%), 8/2/2022
|
679,969,501
|
|
1,216,000,000
|
2
|
United States Treasury Floating Rate Notes, 2.565% (91-day T-Bill
+0.029%), 8/2/2022
|
1,216,033,073
|
|
1,268,000,000
|
2
|
United States Treasury Floating Rate Notes, 2.570% (91-day T-Bill
+0.034%), 8/2/2022
|
1,268,032,912
|
|
563,000,000
|
2
|
United States Treasury Floating Rate Notes, 2.571% (91-day T-Bill
+0.035%), 8/2/2022
|
562,989,252
|
|
636,000,000
|
2
|
United States Treasury Floating Rate Notes, 2.585% (91-day T-Bill
+0.049%), 8/2/2022
|
636,017,037
|
|
25,000,000
|
|
United States Treasury Floating Rate Notes, 2.591%, 7/1/202
|
25,000,000
|
|
236,000,000
|
|
United States Treasury Note, 0.125%, 8/1/2022
|
236,008,510
|
|
65,000,000
|
|
United States Treasury Note, 0.125%, 2/28/2023
|
64,424,544
|
|
66,000,000
|
|
United States Treasury Note, 0.125%, 5/31/2023
|
64,905,115
|
|
50,000,000
|
|
United States Treasury Note, 0.125%, 6/30/2023
|
49,009,115
|
|
82,535,000
|
|
United States Treasury Note, 1.500%, 3/31/2023
|
82,461,787
|
|
23,000,000
|
|
United States Treasury Note, 1.625%, 8/31/2022
|
23,029,154
|
|
133,000,000
|
|
United States Treasury Note, 1.875%, 8/1/2022
|
133,196,506
|
|
|
|
TOTAL
|
7,943,993,786
|
|
|
|
REPURCHASE AGREEMENTS— 78.6%
|
|
|
2,119,789,000
|
|
Interest in $3,000,000,000 joint repurchase agreement 2.30%,
dated 7/29/2022 under which Sumitomo Mitsui Banking Corp will
repurchase securities provided as collateral for $3,000,575,000 on
8/1/2022. The securities provided as collateral at the end of the
period held with BNY Mellon as tri-party agent, were U.S. Treasury
securities with various maturities to 2/15/2050 and the market
value of those underlying securities was $3,060,586,535.
|
2,119,789,000
|
Annual Shareholder Report
2
|
Principal
Amount
|
|
|
Value
|
|
|
|
REPURCHASE AGREEMENTS— continued
|
|
|
$ 450,000,000
|
|
Interest in $1,850,000,000 joint repurchase agreement 1.47%,
dated 6/7/2022 under which BNP Paribas S.A. will repurchase
securities provided as collateral for $1,857,025,375 on 9/9/2022.
The securities provided as collateral at the end of the period held
with BNY Mellon as tri-party agent, were U.S. Treasury securities
with various maturities to 8/15/2051 and the market value of those
underlying securities was $1,891,160,894.
|
$ 450,000,000
|
|
400,000,000
|
|
Interest in $800,000,000 joint repurchase agreement 2.25%, dated
7/29/2022 under which Natixis Financial Products LLC will
repurchase securities provided as collateral for $800,150,000 on
8/1/2022. The securities provided as collateral at the end of the
period held with BNY Mellon as tri-party agent, were U.S. Treasury
securities with various maturities to 5/15/2052 and the market
value of those underlying securities was $816,153,045.
|
400,000,000
|
|
5,000,000
|
|
Repurchase agreement 2.23%, dated 7/29/2022 under which
Barclays Capital, Inc. will repurchase a security provided as
collateral for $5,000,929 on 8/1/2022. The security provided as
collateral at the end of the period held with BNY Mellon as
tri-party agent, were a U.S. Treasury security maturing on
2/15/2042 and the market value of that underlying securities
was $5,101,011.
|
5,000,000
|
|
500,000,000
|
|
Repurchase agreement 2.30%, dated 7/29/2022 under which
National Australia Bank Ltd., Melbourne will repurchase securities
provided as collateral for $500,095,833 on 8/1/2022. The
securities provided as collateral at the end of the period held with
BNY Mellon as tri-party agent, were U.S. Treasury securities with
various maturities to 11/15/2047 and the market value of those
underlying securities was $510,585,133.
|
500,000,000
|
|
358,765,375
|
|
Repurchase agreement 2.31%, dated 7/29/2022 under which
Prudential Insurance Co. of America will repurchase a security
provided as collateral for $358,834,437 on 8/1/2022. The security
provided as collateral the end of the period held with BNY Mellon
as tri-party agent, were a U.S. Treasury security maturing on
5/15/2052 and the market value of that underlying security
was $366,144,347.
|
358,765,375
|
|
106,680,000
|
|
Repurchase agreement 2.31%, dated 7/29/2022 under which
Prudential Legacy Insurance Co. of NJ will repurchase securities
provided as collateral for $106,700,536 on 8/1/2022. The
securities provided as collateral at the end of the period held with
BNY Mellon as tri-party agent, were U.S. Treasury securities with
various maturities to 8/15/2045 and the market value of those
underlying securities was $108,959,547.
|
106,680,000
|
|
250,000,000
|
|
Repurchase agreement 2.25%, dated 7/29/2022 under which
Citibank, N.A. will repurchase securities provided as collateral for
$250,046,875 on 8/1/2022. The securities provided as collateral at
the end of the period held with BNY Mellon as tri-party agent,
were U.S. Treasury securities with various maturities to 2/15/2052
and the market value of those underlying securities
was $255,048,206.
|
250,000,000
|
Annual Shareholder Report
3
|
Principal
Amount
|
|
|
Value
|
|
|
|
REPURCHASE AGREEMENTS— continued
|
|
|
$ 200,000,000
|
|
Interest in $225,000,000 joint repurchase agreement 1.69%, dated
5/20/2022 under which BNP Paribas S.A. will repurchase securities
provided as collateral for $226,954,063 on 11/21/2022. The
securities provided as collateral at the end of the period held with
BNY Mellon as tri-party agent, were U.S. Treasury securities with
various maturities to 8/15/2050 and the market value of those
underlying securities was $230,286,528.
|
$ 200,000,000
|
|
200,000,000
|
|
Interest in $225,000,000 joint repurchase agreement 1.79%, dated
6/1/2022 under which BNP Paribas S.A. will repurchase securities
provided as collateral for $227,047,313 on 12/2/2022. The
securities provided as collateral at the end of the period held with
BNY Mellon as tri-party agent, were U.S. Treasury securities with
various maturities to 8/15/2050 and the market value of those
underlying securities was $230,184,708.
|
200,000,000
|
|
420,000,000
|
|
Repurchase agreement 2.24%, dated 7/29/2022 under which BNP
Paribas S.A. will repurchase securities provided as collateral for
$420,078,400 on 8/1/2022. The securities provided as collateral at
the end of the period held with BNY Mellon as tri-party agent,
were U.S. Treasury securities with various maturities to 1/15/2027
and the market value of those underlying securities
was $428,480,039.
|
420,000,000
|
|
125,000,000
|
|
Repurchase agreement 2.25%, dated 7/29/2022 under which
Citigroup Global Markets, Inc. will repurchase securities provided
as collateral for $125,023,438 on 8/1/2022. The securities
provided as collateral at the end of the period held with BNY
Mellon as tri-party agent, were U.S. Treasury securities with various
maturities to 2/15/2050 and the market value of those underlying
securities was $127,523,929.
|
125,000,000
|
|
465,000,000
|
|
Interest in $500,000,000 joint repurchase agreement 2.30%, dated
1/7/2020 under which Citigroup Global Markets, Inc. will
repurchase securities provided as collateral for $500,223,611 on
8/9/2022. The securities provided as collateral at the end of the
period held with BNY Mellon as tri-party agent, were U.S. Treasury
securities with various maturities to 2/15/2050 and the market
value of those underlying securities was $510,003,005.
|
465,000,000
|
|
200,000,000
|
|
Repurchase agreement 2.23%, dated 7/29/2022 under which
NatWest Markets Securities, Inc. will repurchase securities
provided as collateral for $200,037,167 on 8/1/2022. The
securities provided as collateral at the end of the period held with
BNY Mellon as tri-party agent, were U.S. Treasury securities with
various maturities to 5/15/2052 and the market value of those
underlying securities was $204,000,016.
|
200,000,000
|
|
100,000,000
|
|
Repurchase agreement 2.30%, dated 7/29/2022 under which DNB
Bank ASA will repurchase securities provided as collateral for
$100,019,167 on 8/1/2022. The securities provided as collateral at
the end of the period held with BNY Mellon as tri-party agent,
were U.S. Treasury securities with various maturities to 2/15/2029
and the market value of those underlying securities
was $103,038,413.
|
100,000,000
|
Annual Shareholder Report
4
|
Principal
Amount
|
|
|
Value
|
|
|
|
REPURCHASE AGREEMENTS— continued
|
|
|
$32,000,000,000
|
|
Repurchase agreement 2.30%, dated 7/29/2022 under which
Federal Reserve Bank of New York will repurchase securities
provided as collateral for $32,006,133,333 on 8/1/2022. The
securities provided as collateral at the end of the period held with
BNY Mellon as tri-party agent, were U.S. Treasury securities with
various maturities to 2/15/2042 and the market value of those
underlying securities was $32,006,133,350.
|
$32,000,000,000
|
|
450,000,000
|
|
Interest in $750,000,000 joint repurchase agreement 2.22%, dated
7/29/2022 under which Standard Chartered Bank will repurchase
securities provided as collateral for $750,138,750 on 8/1/2022.
The securities provided as collateral at the end of the period held
with BNY Mellon as tri-party agent, were U.S. Treasury securities
with various maturities to 8/15/2049 and the market value of those
underlying securities was $765,141,594.
|
450,000,000
|
|
18,700,000
|
|
Repurchase agreement 2.31%, dated 7/29/2022 under which
United of Omaha Life Insurance Co. will repurchase securities
provided as collateral for $18,703,600 on 8/1/2022. The securities
provided as collateral at the end of the period held with BNY
Mellon as tri-party agent, were U.S. Treasury securities with various
maturities to 11/15/2024 and the market value of those underlying
securities was $19,109,630.
|
18,700,000
|
|
450,001,812
|
|
Repurchase agreement 2.30%, dated 7/29/2022 under which
Metropolitan Life Insurance Co. will repurchase securities provided
as collateral for $450,088,062 on 8/1/2022. The securities
provided as collateral at the end of the period held with BNY
Mellon as tri-party agent, were U.S. Treasury securities with various
maturities to 2/15/2051 and the market value of those underlying
securities was $460,182,533.
|
450,001,812
|
|
350,000,000
|
|
Repurchase agreement 2.27%, dated 7/29/2022 under which Bofa
Securities, Inc. will repurchase securities provided as collateral for
$350,066,209 on 8/1/2022. The securities provided as collateral at
the end of the period held with BNY Mellon as tri-party agent,
were U.S. Treasury securities with various maturities to 12/31/2026
and the market value of those underlying securities
was $357,067,396.
|
350,000,000
|
|
|
|
TOTAL REPURCHASE AGREEMENTS
|
39,168,936,187
|
|
|
|
TOTAL INVESTMENT IN SECURITIES—94.5%
(AT AMORTIZED COST)3
|
47,112,929,973
|
|
|
|
OTHER ASSETS AND LIABILITIES - NET—5.5%4
|
2,733,790,636
|
|
|
|
TOTAL NET ASSETS—100%
|
$49,846,720,609
|
|
1
|
Discount rate at time of purchase.
|
|
2
|
Floating/variable note with current rate and current maturity or next reset date shown.
|
|
3
|
Also represents cost for federal tax purposes.
|
|
4
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
Note: The categories of investments are shown as a percentage of total net assets at July 31, 2022.
Annual Shareholder Report
5
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Level 1—quoted prices in active markets for identical securities.
Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Also includes securities valued at amortized cost.
Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
In valuing the Fund’s assets as of July 31, 2022, all investments of the Fund are valued using amortized cost, which is a methodology utilizing Level 2 inputs.
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
6
Financial Highlights–Automated Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income (loss)
|
0.002
|
0.0001
|
0.008
|
0.019
|
0.010
|
|
Net realized gain (loss)
|
(0.000)1
|
0.0001
|
0.0001
|
0.0001
|
0.0001
|
|
Total From Investment Operations
|
0.002
|
0.0001
|
0.008
|
0.019
|
0.010
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.002)
|
(0.000)1
|
(0.008)
|
(0.019)
|
(0.010)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
|
Total Distributions
|
(0.002)
|
(0.000)1
|
(0.008)
|
(0.019)
|
(0.010)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.18%
|
0.01%
|
0.84%
|
1.88%
|
1.03%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.21%
|
0.11%
|
0.43%
|
0.48%
|
0.42%
|
|
Net investment income
|
0.13%
|
0.01%
|
0.82%
|
1.87%
|
1.02%
|
|
Expense waiver/reimbursement4
|
0.42%
|
0.52%
|
0.18%
|
0.11%
|
0.10%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$1,615,683
|
$2,390,301
|
$2,076,883
|
$2,138,942
|
$2,059,409
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
7
Financial Highlights–Institutional Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income (loss)
|
0.003
|
0.0001
|
0.011
|
0.022
|
0.013
|
|
Net realized gain (loss)
|
(0.000)1
|
0.0001
|
(0.000)1
|
0.0001
|
0.0001
|
|
Total From Investment
Operations
|
0.003
|
0.0001
|
0.011
|
0.022
|
0.013
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment
income
|
(0.003)
|
(0.000)1
|
(0.011)
|
(0.022)
|
(0.013)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
|
Total Distributions
|
(0.003)
|
(0.000)1
|
(0.011)
|
(0.022)
|
(0.013)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.29%
|
0.01%
|
1.09%
|
2.18%
|
1.25%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.12%
|
0.11%
|
0.19%
|
0.18%
|
0.19%
|
|
Net investment income
|
0.29%
|
0.01%
|
0.99%
|
2.17%
|
1.24%
|
|
Expense waiver/reimbursement4
|
0.16%
|
0.17%
|
0.10%
|
0.11%
|
0.10%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$40,500,072
|
$40,668,867
|
$49,615,082
|
$33,350,766
|
$25,992,845
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
8
Financial Highlights–Service Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income (loss)
|
0.002
|
0.0001
|
0.009
|
0.019
|
0.010
|
|
Net realized gain (loss)
|
(0.000)1
|
0.0001
|
(0.000)1
|
0.0001
|
0.0001
|
|
Total From Investment Operations
|
0.002
|
0.0001
|
0.009
|
0.019
|
0.010
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.002)
|
(0.000)1
|
(0.009)
|
(0.019)
|
(0.010)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
|
Total Distributions
|
(0.002)
|
(0.000)1
|
(0.009)
|
(0.019)
|
(0.010)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.20%
|
0.01%
|
0.88%
|
1.93%
|
1.00%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.20%
|
0.12%
|
0.39%
|
0.43%
|
0.44%
|
|
Net investment income
|
0.19%
|
0.01%
|
0.84%
|
1.92%
|
0.96%
|
|
Expense waiver/reimbursement4
|
0.33%
|
0.41%
|
0.15%
|
0.11%
|
0.10%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$4,833,929
|
$5,363,707
|
$5,512,396
|
$4,672,058
|
$3,584,885
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
9
Financial Highlights–Capital Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income (loss)
|
0.002
|
0.0001
|
0.010
|
0.021
|
0.012
|
|
Net realized gain (loss)
|
(0.000)1
|
0.0001
|
(0.000)1
|
0.0001
|
(0.000)1
|
|
Total From Investment Operations
|
0.002
|
0.0001
|
0.010
|
0.021
|
0.012
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.002)
|
(0.000)1
|
(0.010)
|
(0.021)
|
(0.012)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
|
Total Distributions
|
(0.002)
|
(0.000)1
|
(0.010)
|
(0.021)
|
(0.012)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.25%
|
0.01%
|
0.99%
|
2.08%
|
1.15%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.16%
|
0.11%
|
0.28%
|
0.28%
|
0.29%
|
|
Net investment income
|
0.25%
|
0.01%
|
0.90%
|
2.07%
|
1.12%
|
|
Expense waiver/reimbursement4
|
0.22%
|
0.27%
|
0.11%
|
0.11%
|
0.10%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$2,100,176
|
$1,859,069
|
$2,119,651
|
$1,250,599
|
$1,114,276
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
10
Financial Highlights–Trust Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income (loss)
|
0.001
|
0.0001
|
0.007
|
0.017
|
0.008
|
|
Net realized gain (loss)
|
(0.000)1
|
0.0001
|
(0.000)1
|
0.0001
|
(0.000)1
|
|
Total From Investment Operations
|
0.001
|
0.0001
|
0.007
|
0.017
|
0.008
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.001)
|
(0.000)1
|
(0.007)
|
(0.017)
|
(0.008)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
|
Total Distributions
|
(0.001)
|
(0.000)1
|
(0.007)
|
(0.017)
|
(0.008)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.14%
|
0.01%
|
0.72%
|
1.67%
|
0.75%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.27%
|
0.13%
|
0.54%
|
0.68%
|
0.69%
|
|
Net investment income
|
0.14%
|
0.01%
|
0.66%
|
1.67%
|
0.77%
|
|
Expense waiver/reimbursement4
|
0.51%
|
0.65%
|
0.25%
|
0.11%
|
0.10%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$796,860
|
$754,675
|
$1,379,716
|
$860,830
|
$512,289
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
11
Statement of Assets and Liabilities
July 31, 2022
July 31, 2022
|
Assets:
|
|
|
Investment in repurchase agreements
|
$39,168,936,187
|
|
Investment in securities
|
7,943,993,786
|
|
Investment in securities, at amortized cost and fair value
|
47,112,929,973
|
|
Cash
|
1,336,231,892
|
|
Income receivable
|
37,702,554
|
|
Receivable for investments sold
|
1,900,000,000
|
|
Receivable for shares sold
|
65,924,054
|
|
Total Assets
|
50,452,788,473
|
|
Liabilities:
|
|
|
Payable for investments purchased
|
510,036,220
|
|
Payable for shares redeemed
|
50,052,178
|
|
Income distribution payable
|
42,561,352
|
|
Payable for investment adviser fee (Note 5)
|
494,456
|
|
Payable for administrative fee (Note 5)
|
321,375
|
|
Payable for Directors’/Trustees’ fees (Note 5)
|
10,866
|
|
Payable for distribution services fee (Note 5)
|
172,719
|
|
Payable for other service fees (Notes 2 and 5)
|
1,613,457
|
|
Accrued expenses (Note 5)
|
805,241
|
|
Total Liabilities
|
606,067,864
|
|
Net assets for 49,869,597,874 shares outstanding
|
$49,846,720,609
|
|
Net Assets Consist of:
|
|
|
Paid-in capital
|
$49,869,790,877
|
|
Total distributable earnings (loss)
|
(23,070,268)
|
|
Total Net Assets
|
$49,846,720,609
|
Annual Shareholder Report
12
Statement of Assets and Liabilities–continued
|
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
|
|
|
Automated Shares:
|
|
|
$1,615,683,090 ÷ 1,616,424,043 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Institutional Shares:
|
|
|
$40,500,071,916 ÷ 40,518,650,708 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Service Shares:
|
|
|
$4,833,929,156 ÷ 4,836,148,293 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Capital Shares:
|
|
|
$2,100,176,360 ÷ 2,101,148,708 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Trust Shares:
|
|
|
$796,860,087 ÷ 797,226,122 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
13
Statement of Operations
Year Ended July 31, 2022
Year Ended July 31, 2022
|
Investment Income:
|
|
|
Interest
|
$201,143,077
|
|
Expenses:
|
|
|
Investment adviser fee (Note 5)
|
97,761,393
|
|
Administrative fee (Note 5)
|
38,257,569
|
|
Custodian fees
|
1,358,733
|
|
Transfer agent fees (Note 2)
|
2,576,718
|
|
Directors’/Trustees’ fees (Note 5)
|
293,961
|
|
Auditing fees
|
25,110
|
|
Legal fees
|
7,138
|
|
Portfolio accounting fees
|
239,419
|
|
Distribution services fee (Note 5)
|
2,077,569
|
|
Other service fees (Notes 2 and 5)
|
22,822,890
|
|
Share registration costs
|
169,863
|
|
Printing and postage
|
164,437
|
|
Miscellaneous (Note 5)
|
277,804
|
|
TOTAL EXPENSES
|
166,032,604
|
|
Waivers and Reimbursements:
|
|
|
Waiver of investment adviser fee (Note 5)
|
(73,378,825)
|
|
Waivers/reimbursements of other operating expenses (Notes 2 and 5)
|
(23,242,695)
|
|
TOTAL WAIVERS AND REIMBURSEMENTS
|
(96,621,520)
|
|
Net expenses
|
69,411,084
|
|
Net investment income
|
131,731,993
|
|
Net realized loss on investments
|
(23,055,939)
|
|
Change in net assets resulting from operations
|
$108,676,054
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
14
Statement of Changes in Net Assets
|
Year Ended July 31
|
2022
|
2021
|
|
Increase (Decrease) in Net Assets
|
|
|
|
Operations:
|
|
|
|
Net investment income
|
$131,731,993
|
$7,054,702
|
|
Net realized gain (loss)
|
(23,055,939)
|
73,708
|
|
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS
|
108,676,054
|
7,128,410
|
|
Distributions to Shareholders:
|
|
|
|
Automated Shares
|
(3,178,441)
|
(209,741)
|
|
Institutional Shares
|
(112,874,570)
|
(6,197,196)
|
|
Service Shares
|
(9,732,842)
|
(484,814)
|
|
Capital Shares
|
(4,902,590)
|
(166,570)
|
|
Trust Shares
|
(1,158,642)
|
(87,784)
|
|
CHANGE IN NET ASSETS RESULTING FROM
DISTRIBUTIONS TO SHAREHOLDERS
|
(131,847,085)
|
(7,146,105)
|
|
Share Transactions:
|
|
|
|
Proceeds from sale of shares
|
262,727,989,725
|
502,424,154,556
|
|
Net asset value of shares issued to shareholders in
payment of distributions declared
|
43,327,917
|
2,662,531
|
|
Cost of shares redeemed
|
(263,938,044,594)
|
(512,093,908,564)
|
|
CHANGE IN NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
|
(1,166,726,952)
|
(9,667,091,477)
|
|
Change in net assets
|
(1,189,897,983)
|
(9,667,109,172)
|
|
Net Assets:
|
|
|
|
Beginning of period
|
51,036,618,592
|
60,703,727,764
|
|
End of period
|
$49,846,720,609
|
$51,036,618,592
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
15
Notes to Financial Statements
July 31, 2022
1. ORGANIZATION
Federated Hermes Money Market Obligations Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust consists of 16 portfolios. The financial statements included herein are only those of Federated Hermes Treasury Obligations Fund (the “Fund”), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder’s interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers five classes of shares: Automated Shares, Institutional Shares, Service Shares, Capital Shares and Trust Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The investment objective of the Fund is to provide current income consistent with stability of principal.
The Fund operates as a government money market fund. As a government money market fund, the Fund: (1) invests at least 99.5% of its total assets in: (i) cash; (ii) securities issued or guaranteed by the United States or certain U.S. government agencies or instrumentalities; and/or (iii) repurchase agreements that are collateralized fully; (2) generally continues to use amortized cost to value its portfolio securities and transact at a stable $1.00 net asset value (NAV); and (3) has elected not to be subject to the liquidity fees and gates requirement at this time as permitted by Rule 2a-7 under the Act.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
Securities are valued at amortized cost. Under the amortized cost valuation method, an investment is valued initially at its cost as determined in accordance with GAAP. The Fund then adjusts the amount of interest income accrued each day over the term of the investment to account for any difference between the initial cost of the investment and the amount payable at its maturity. If amortized cost is determined not to approximate fair value, the value of the portfolio securities will be determined in accordance with the procedures described below. There can be no assurance that the Fund could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines its NAV per share, and the actual value obtained could be materially different.
The Fund’s Board of Trustees (the “Trustees”) have ultimate responsibility for determining the fair value of investments. The Trustees have appointed a valuation committee (“Valuation Committee”) comprised of officers of the Fund, Federated Investment Management Company (the “Adviser”) and certain of the Adviser’s affiliated companies to assist in determining fair value of securities and in overseeing the comparison of amortized cost to market-based value. The Trustees have also authorized the use of pricing services recommended by the Valuation Committee to provide fair
Annual Shareholder Report
16
value evaluations of the current value of certain investments for purposes of monitoring the relationship of market-based value and amortized cost. The Valuation Committee employs various methods for reviewing third-party pricing-service evaluations including periodic reviews of third-party pricing services’ policies, procedures and valuation methods (including key inputs and assumptions), and review of price challenges by the Adviser based on recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee determines the fair value of the investment in accordance with procedures adopted by the Trustees. The Trustees periodically review and approve the fair valuations made by the Valuation Committee and any changes made to the procedures.
Repurchase Agreements
The Fund may invest in repurchase agreements for short-term liquidity purposes. It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund’s custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control” as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.
The insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.
The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.
Repurchase agreements are subject to Master Netting Agreements which are agreements between the Fund and its counterparties that provide for the net settlement of all transactions and collateral with the Fund, through a single payment, in the event of default or termination. Amounts presented on the Portfolio of Investments and Statement of Assets and Liabilities are not net settlement amounts but gross. As indicated above, the cash or securities to be repurchased, as shown on the Portfolio of Investments, exceeds the repurchase price to be paid under the agreement reducing the net settlement amount to zero.
Annual Shareholder Report
17
Investment Income, Gains and Losses, Expenses and Distributions
Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis. Interest income and expenses are accrued daily. Distributions to shareholders are recorded on the ex-dividend date. Distributions of net investment income, if any, are declared daily and paid monthly. Amortization/accretion of premium and discount is included in investment income. Investment income, realized gains and losses, and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that select classes will bear certain expenses unique to those classes. The detail of the total fund expense waivers and reimbursements of $96,621,520 is disclosed in various locations in this Note 2 and Note 5.
Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.
Transfer Agent Fees
For the year ended July 31, 2022, transfer agent fees for the Fund were as follows:
|
|
Transfer Agent
Fees Incurred
|
Transfer Agent Fees
Waived by Unaffiliated
Third Parties
|
|
Automated Shares
|
$2,312,333
|
$(1,554,091)
|
|
Institutional Shares
|
218,936
|
—
|
|
Service Shares
|
29,360
|
—
|
|
Capital Shares
|
11,343
|
—
|
|
Trust Shares
|
4,746
|
—
|
|
TOTAL
|
$2,576,718
|
$(1,554,091)
|
Other Service Fees
The Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund’s Automated Shares, Institutional Shares, Service Shares, Capital Shares and Trust Shares to unaffiliated financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for other service fees. In addition, unaffiliated third-party financial intermediaries may waive other service fees. This waiver can be modified or terminated at any time.
For the year ended July 31, 2022, other service fees for the Fund were as follows:
|
|
Other Service
Fees Incurred
|
Other Service
Fees Reimbursed
|
Other Service Fees
Waived by Unaffiliated
Third Parties
|
|
Automated Shares
|
$5,957,693
|
$(21,465)
|
$(4,601,545)
|
|
Service Shares
|
12,838,593
|
—
|
(8,830,174)
|
|
Capital Shares
|
1,949,399
|
—
|
(1,211,763)
|
|
Trust Shares
|
2,077,205
|
—
|
(1,588,834)
|
|
TOTAL
|
$22,822,890
|
$(21,465)
|
$(16,232,316)
|
Annual Shareholder Report
18
For the year ended July 31, 2022, the Fund’s Institutional Shares did not incur other service fees; however it may begin to incur this fee upon approval of the Trustees.
Federal Taxes
It is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code (the “Code”) and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. As of and during the year ended July 31, 2022, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2022, tax years 2019 through 2022 remain subject to examination by the Fund’s major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.
When-Issued and Delayed-Delivery Transactions
The Fund may engage in when-issued or delayed-delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed-delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
Other
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ materially from those estimated. The Fund applies investment company accounting and reporting guidance.
3. SHARES OF BENEFICIAL INTEREST
The following tables summarize share activity:
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Automated Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
2,894,701,881
|
$2,894,701,881
|
3,534,186,315
|
$3,534,187,820
|
|
Shares issued to
shareholders in payment
of distributions declared
|
3,061,270
|
3,061,270
|
205,073
|
205,073
|
|
Shares redeemed
|
(3,671,626,586)
|
(3,671,626,586)
|
(3,220,977,585)
|
(3,220,977,585)
|
|
NET CHANGE
RESULTING FROM
AUTOMATED
SHARE TRANSACTIONS
|
(773,863,435)
|
$(773,863,435)
|
313,413,803
|
$313,415,308
|
Annual Shareholder Report
19
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Institutional Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
234,597,319,011
|
$234,597,319,011
|
475,862,853,089
|
$475,862,876,318
|
|
Shares issued to
shareholders in payment
of distributions declared
|
34,235,903
|
34,235,903
|
2,162,558
|
2,162,558
|
|
Shares redeemed
|
(234,781,536,709)
|
(234,781,536,709)
|
(484,811,234,930)
|
(484,811,234,930)
|
|
NET CHANGE
RESULTING FROM
INSTITUTIONAL
SHARE TRANSACTIONS
|
(149,981,795)
|
$(149,981,795)
|
(8,946,219,283)
|
$(8,946,196,054)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Service Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
19,049,431,252
|
$19,049,431,252
|
16,207,570,121
|
$16,207,573,365
|
|
Shares issued to
shareholders in payment
of distributions declared
|
2,979,735
|
2,979,735
|
165,128
|
165,128
|
|
Shares redeemed
|
(19,579,938,742)
|
(19,579,938,742)
|
(16,356,429,399)
|
(16,356,429,399)
|
|
NET CHANGE
RESULTING FROM
SERVICE
SHARE TRANSACTIONS
|
(527,527,755)
|
$(527,527,755)
|
(148,694,150)
|
$(148,690,906)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Capital Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
4,606,290,921
|
$4,606,290,921
|
4,834,374,253
|
$4,834,375,459
|
|
Shares issued to
shareholders in payment
of distributions declared
|
2,883,959
|
2,883,959
|
90,600
|
90,600
|
|
Shares redeemed
|
(4,367,084,030)
|
(4,367,084,030)
|
(5,095,047,779)
|
(5,095,047,779)
|
|
NET CHANGE
RESULTING FROM
CAPITAL
SHARE TRANSACTIONS
|
242,090,850
|
$242,090,850
|
(260,582,926)
|
$(260,581,720)
|
Annual Shareholder Report
20
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Trust Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
1,580,246,660
|
$1,580,246,660
|
1,985,141,150
|
$1,985,141,594
|
|
Shares issued to
shareholders in payment
of distributions declared
|
167,050
|
167,050
|
39,172
|
39,172
|
|
Shares redeemed
|
(1,537,858,527)
|
(1,537,858,527)
|
(2,610,218,871)
|
(2,610,218,871)
|
|
NET CHANGE
RESULTING FROM
TRUST
SHARE TRANSACTIONS
|
42,555,183
|
$42,555,183
|
(625,038,549)
|
$(625,038,105)
|
|
NET CHANGE
RESULTING FROM
TOTAL FUND
SHARE TRANSACTIONS
|
(1,166,726,952)
|
$(1,166,726,952)
|
(9,667,121,105)
|
$(9,667,091,477)
|
4. FEDERAL TAX INFORMATION
The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2022 and 2021, was as follows:
|
|
2022
|
2021
|
|
Ordinary income1
|
$131,836,915
|
$7,146,105
|
|
Long-term capital gains
|
$10,170
|
$—
|
|
1
|
For tax purposes, short-term capital gain distributions are considered ordinary
income distributions.
|
As of July 31, 2022, the components of distributable earnings on a tax-basis were as follows:
|
Distributions payable
|
$(14,329)
|
|
Capital loss carryforwards
|
$(23,055,939)
|
As of July 31, 2022, the Fund had a capital loss carryforward of $23,055,939 which will reduce the Fund’s taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code, thereby reducing the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, these net capital losses retain their character as either short-term or long-term and do not expire.
The following schedule summarizes the Fund’s capital loss carryforwards:
|
Short-Term
|
Long-Term
|
Total
|
|
$23,055,939
|
$—
|
$23,055,939
|
Annual Shareholder Report
21
5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.20% of the Fund’s average daily net assets. Subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund for competitive reasons such as to maintain the Fund’s expense ratio, or as and when appropriate, to maintain positive or zero net yields. For the year ended July 31, 2022, the Adviser voluntarily waived $73,378,825 of its fee and voluntarily reimbursed $4,029,629 of other operating expenses.
Administrative Fee
Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated Hermes Funds subject to a fee under the Administrative Services Agreement. The fee paid to FAS is based on the average daily net assets of the Investment Complex as specified below:
|
Administrative Fee
|
Average Daily Net Assets
of the Investment Complex
|
|
0.100%
|
on assets up to $50 billion
|
|
0.075%
|
on assets over $50 billion
|
Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2022, the annualized fee paid to FAS was 0.078% of average daily net assets of the Fund.
In addition, FAS may charge certain out-of-pocket expenses to the Fund.
Distribution Services Fee
The Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund’s Trust Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at 0.25% of average daily net assets, annually, to compensate FSC. Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2022, distribution services fees for the Fund were as follows:
|
|
Distribution Services
Fees Incurred
|
Distribution Services
Fees Waived
|
|
Trust Shares
|
$2,077,569
|
$(1,405,194)
|
When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares.
Other Service Fees
For the year ended July 31, 2022, FSSC received $1,793 and reimbursed $21,465 of the other service fees disclosed in Note 2.
Annual Shareholder Report
22
Expense Limitation
Due to the possibility of changes in market conditions and other factors, there can be no assurance that the level of waivers/reimbursement/reduction of Fund expenses reflected in the financial highlights will be maintained in the future. However, the Adviser and certain of its affiliates (which may include FSC, FAS and FSSC) on their own initiative have agreed to waive certain amounts of their respective fees and/or reimburse expenses. Total annual fund operating expenses (as shown in the financial highlights, excluding interest expense, extraordinary expenses and proxy-related expenses paid by the Fund, if any) paid by the Fund’s Automated Shares, Institutional Shares, Service Shares, Capital Shares and Trust Shares (after the voluntary waivers and/or reimbursements) will not exceed 0.55%, 0.20%, 0.45%, 0.30% and 0.70% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) October 1, 2023; or (b) the date of the Fund’s next effective Prospectus. While the Adviser and its applicable affiliates currently do not anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or the Fee Limit increased prior to the Termination Date with the agreement of the Trustees.
Interfund Transactions
During the year ended July 31, 2022, the Fund engaged in purchase transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees and/or common Officers. These purchase transactions complied with Rule 17a-7 under the Act and amounted to $162,530,150.
Directors’/Trustees’ and Miscellaneous Fees
Certain Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate payment, Independent Directors’/Trustees’ fees and certain expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses are paid by an affiliate of the Adviser which in due course are reimbursed by the Fund. These expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses may be included in Accrued and Miscellaneous Expenses on the Statement of Assets and Liabilities and Statement of Operations, respectively.
6. INTERFUND LENDING
Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other funds advised by subsidiaries of Federated Hermes, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating affiliated funds. As of July 31, 2022, there were no outstanding loans. During the year ended July 31, 2022, the program was not utilized.
7. INDEMNIFICATIONS
Under the Fund’s organizational documents, its Officers and Directors/Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund (other than liabilities arising out of their willful misfeasance, bad faith, gross negligence or reckless disregard of their duties to the Fund). In addition, in the normal course of business, the Fund provides certain indemnifications under arrangements with third parties. Typically, obligations to indemnify a third party arise in the context of an arrangement entered into by the Fund under which the Fund agrees to indemnify such
Annual Shareholder Report
23
third party for certain liabilities arising out of actions taken pursuant to the arrangement, provided the third party’s actions are not deemed to have breached an agreed-upon standard of care (such as willful misfeasance, bad faith, gross negligence or reckless disregard of their duties under the contract). The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet arisen. The Fund does not anticipate any material claims or losses pursuant to these arrangements at this time, and accordingly expects the risk of loss to be remote.
8. OTHER MATTERS
An outbreak of respiratory disease caused by a novel coronavirus was first detected in China in late 2019 and subsequently spread globally. As of the date of the issuance of these financial statements, this coronavirus has resulted in closing borders, enhanced health screenings, disruptions to healthcare service preparation and delivery, quarantines, cancellations, and disruptions to supply chains, workflow operations and consumer activity, as well as general concern and uncertainty. The impact of this coronavirus may continue for an extended period of time and has resulted in substantial economic volatility. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could continue to negatively affect the worldwide economy, as well as the economies of individual countries, individual companies (including certain Fund service providers and issuers of the Fund’s investments) and the markets in general in significant and unforeseen ways. Any such impact could adversely affect the Fund’s performance.
9. FEDERAL TAX INFORMATION (UNAUDITED)
For the fiscal year ended July 31, 2022, 100.00% of dividends paid by the Fund are interest-related dividends, as provided by the American Jobs Creation Act of 2004.
For the year ended July 31, 2022, the amount of long-term capital gains designated by the Fund was $10,170.
Annual Shareholder Report
24
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Federated Hermes Money Market Obligations Trust and the Shareholders of Federated Hermes Treasury Obligations Fund:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of the Federated Hermes Treasury Obligations Fund (the Fund), a portfolio of Federated Hermes Money Market Obligations Trust, including the portfolio of investments, as of July 31, 2022, the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the related notes (collectively, the financial statements) and the financial highlights for each of the years in the five-year period then ended. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of July 31, 2022, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
Annual Shareholder Report
25
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Such procedures also included confirmation of securities owned as of July 31, 2022, by correspondence with custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of Federated Hermes’ investment companies since 2006.
Boston, Massachusetts
September 23, 2022
September 23, 2022
Annual Shareholder Report
26
Shareholder Expense Example (unaudited)
As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or other service fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2022 to July 31, 2022.
ACTUAL EXPENSES
The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses attributable to your investment during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Annual Shareholder Report
27
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
|
|
Beginning
Account Value
2/1/2022
|
Ending
Account Value
7/31/2022
|
Expenses Paid
During Period1
|
|
Actual:
|
|
|
|
|
Automated Shares
|
$1,000
|
$1,001.80
|
$1.842
|
|
Institutional Shares
|
$1,000
|
$1,002.80
|
$0.94
|
|
Service Shares
|
$1,000
|
$1,002.00
|
$1.693
|
|
Capital Shares
|
$1,000
|
$1,002.40
|
$1.294
|
|
Trust Shares
|
$1,000
|
$1,001.40
|
$2.285
|
|
Hypothetical (assuming a 5% return
before expenses):
|
|
|
|
|
Automated Shares
|
$1,000
|
$1,022.96
|
$1.862
|
|
Institutional Shares
|
$1,000
|
$1,023.85
|
$0.95
|
|
Service Shares
|
$1,000
|
$1,023.11
|
$1.713
|
|
Capital Shares
|
$1,000
|
$1,023.51
|
$1.304
|
|
Trust Shares
|
$1,000
|
$1,022.51
|
$2.315
|
|
1
|
Expenses are equal to the Fund’s annualized net expense ratios, multiplied by the average
account value over the period, multiplied by 181/365 (to reflect the one-half-year period). The
annualized net expense ratios are as follows:
|
|
Automated Shares
|
0.37%
|
|
Institutional Shares
|
0.19%
|
|
Service Shares
|
0.34%
|
|
Capital Shares
|
0.26%
|
|
Trust Shares
|
0.46%
|
|
2
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Automated Shares
current Fee Limit of 0.55% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $2.73 and $2.76, respectively.
|
|
3
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Service Shares
current Fee Limit of 0.45% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $2.23 and $2.26, respectively.
|
Annual Shareholder Report
28
|
4
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Capital Shares
current Fee Limit of 0.30% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $1.49 and $1.51, respectively.
|
|
5
|
Actual and Hypothetical expenses paid during the period utilizing the Fund’s Trust Shares
current Fee Limit of 0.70% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $3.47 and $3.51, respectively.
|
Annual Shareholder Report
29
Board of Trustees and Trust Officers
The Board of Trustees is responsible for managing the Trust’s business affairs and for exercising all the Trust’s powers except those reserved for the shareholders. The following tables give information about each Trustee and the senior officers of the Fund. Where required, the tables separately list Trustees who are “interested persons” of the Fund (i.e., “Interested” Trustees) and those who are not (i.e., “Independent” Trustees). Unless otherwise noted, the address of each person listed is 1001 Liberty Avenue, Pittsburgh, PA 15222-3779. The address of all Independent Trustees listed is 4000 Ericsson Drive, Warrendale, PA 15086-7561; Attention: Mutual Fund Board. As of December 31, 2021, the Trust comprised 16 portfolio(s), and the Federated Hermes Fund Family consisted of 33 investment companies (comprising 102 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Trustee oversees all portfolios in the Federated Hermes Fund Family and serves for an indefinite term. The Fund’s Statement of Additional Information includes additional information about Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400, Option #4.
Interested TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
J. Christopher Donahue*
Birth Date: April 11, 1949
President and Trustee
Indefinite Term
Began serving: April 1989
|
Principal Occupations: Principal Executive Officer and President of
certain of the Funds in the Federated Hermes Fund Family; Director or
Trustee of the Funds in the Federated Hermes Fund Family; President,
Chief Executive Officer and Director, Federated Hermes, Inc.;
Chairman and Trustee, Federated Investment Management Company;
Trustee, Federated Investment Counseling; Chairman and Director,
Federated Global Investment Management Corp.; Chairman and
Trustee, Federated Equity Management Company of Pennsylvania;
Trustee, Federated Shareholder Services Company; Director,
Federated Services Company.
Previous Positions: President, Federated Investment Counseling;
President and Chief Executive Officer, Federated Investment
Management Company, Federated Global Investment Management
Corp. and Passport Research, Ltd; Chairman, Passport Research, Ltd.
|
Annual Shareholder Report
30
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
|
|
Thomas R. Donahue*
Birth Date: October 20, 1958
Trustee
Indefinite Term
Began serving: May 2016
|
Principal Occupations: Director or Trustee of certain of the funds in
the Federated Hermes Fund Family; Chief Financial Officer, Treasurer,
Vice President and Assistant Secretary, Federated Hermes, Inc.;
Chairman and Trustee, Federated Administrative Services; Chairman
and Director, Federated Administrative Services, Inc.; Trustee and
Treasurer, Federated Advisory Services Company; Director or Trustee
and Treasurer, Federated Equity Management Company of
Pennsylvania, Federated Global Investment Management Corp.,
Federated Investment Counseling, and Federated Investment
Management Company; Director, MDTA LLC; Director, Executive Vice
President and Assistant Secretary, Federated Securities Corp.;
Director or Trustee and Chairman, Federated Services Company and
Federated Shareholder Services Company; and Director and
President, FII Holdings, Inc.
Previous Positions: Director, Federated Hermes, Inc.; Assistant
Secretary, Federated Investment Management Company, Federated
Global Investment Management Company and Passport Research,
LTD; Treasurer, Passport Research, LTD; Executive Vice President,
Federated Securities Corp.; and Treasurer, FII Holdings, Inc.
|
*
Family relationships and reasons for “interested” status: J. Christopher Donahue and Thomas R. Donahue are brothers. Both are “interested” due to their beneficial ownership of shares of Federated Hermes, Inc. and the positions they hold with Federated Hermes, Inc. and its subsidiaries.
INDEPENDENT TRUSTEES Background
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
John T. Collins
Birth Date: January 24, 1947
Trustee
Indefinite Term
Began serving:
September 2013
|
Principal Occupations: Director or Trustee, and Chair of the Board
of Directors or Trustees, of the Federated Hermes Fund Family;
formerly, Chairman and CEO, The Collins Group, Inc. (a private equity
firm) (Retired).
Other Directorships Held: Director, KLX Energy Services Holdings,
Inc. (oilfield services); former Director of KLX Corp. (aerospace).
Qualifications: Mr. Collins has served in several business and financial
management roles and directorship positions throughout his career.
Mr. Collins previously served as Chairman and CEO of The Collins
Group, Inc. (a private equity firm) and as a Director of KLX Corp.
Mr. Collins serves as Chairman Emeriti, Bentley University. Mr. Collins
previously served as Director and Audit Committee Member, Bank of
America Corp.; Director, FleetBoston Financial Corp.; and Director,
Beth Israel Deaconess Medical Center (Harvard University
Affiliate Hospital).
|
Annual Shareholder Report
31
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
G. Thomas Hough
Birth Date: February 28, 1955
Trustee
Indefinite Term
Began serving: August 2015
|
Principal Occupations: Director or Trustee, Chair of the Audit
Committee of the Federated Hermes Fund Family; formerly, Vice
Chair, Ernst & Young LLP (public accounting firm) (Retired).
Other Directorships Held: Director, Chair of the Audit Committee,
Equifax, Inc.; Lead Director, Member of the Audit and Nominating and
Corporate Governance Committees, Haverty Furniture Companies,
Inc.; formerly, Director, Member of Governance and Compensation
Committees, Publix Super Markets, Inc.
Qualifications: Mr. Hough has served in accounting, business
management and directorship positions throughout his career.
Mr. Hough most recently held the position of Americas Vice Chair of
Assurance with Ernst & Young LLP (public accounting firm). Mr. Hough
serves on the President’s Cabinet and Business School Board of
Visitors for the University of Alabama. Mr. Hough previously served on
the Business School Board of Visitors for Wake Forest University, and
he previously served as an Executive Committee member of the
United States Golf Association.
|
|
Maureen Lally-Green
Birth Date: July 5, 1949
Trustee
Indefinite Term
Began serving: August 2009
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Adjunct Professor Emerita of Law, Duquesne University
School of Law; formerly, Dean of the Duquesne University School of
Law and Professor of Law and Interim Dean of the Duquesne
University School of Law; formerly, Associate General Secretary and
Director, Office of Church Relations, Diocese of Pittsburgh.
Other Directorships Held: Director, CNX Resources Corporation
(formerly known as CONSOL Energy Inc.).
Qualifications: Judge Lally-Green has served in various legal and
business roles and directorship positions throughout her career. Judge
Lally-Green previously held the position of Dean of the School of Law
of Duquesne University (as well as Interim Dean). Judge Lally-Green
previously served as a member of the Superior Court of Pennsylvania
and as a Professor of Law, Duquesne University School of Law. Judge
Lally-Green was appointed by the Supreme Court of Pennsylvania to
serve on the Supreme Court’s Board of Continuing Judicial Education
and the Supreme Court’s Appellate Court Procedural Rules
Committee. Judge Lally-Green also currently holds the positions on
not for profit or for profit boards of directors as follows: Director
and Chair, UPMC Mercy Hospital; Regent, Saint Vincent Seminary;
Member, Pennsylvania State Board of Education (public); Director,
Catholic Charities, Pittsburgh; and Director CNX Resources
Corporation (formerly known as CONSOL Energy Inc.). Judge
Lally-Green has held the positions of: Director, Auberle; Director,
Epilepsy Foundation of Western and Central Pennsylvania; Director,
Ireland Institute of Pittsburgh; Director, Saint Thomas More Society;
Director and Chair, Catholic High Schools of the Diocese of
Pittsburgh, Inc.; Director, Pennsylvania Bar Institute; Director,
St. Vincent College; Director and Chair, North Catholic High
School, Inc.; Director and Vice Chair, Our Campaign for the Church
Alive!, Inc.; and Director, Saint Francis University.
|
Annual Shareholder Report
32
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
Thomas M. O’Neill
Birth Date: June 14, 1951
Trustee
Indefinite Term
Began serving: August 2006
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Sole Proprietor, Navigator Management Company
(investment and strategic consulting).
Other Directorships Held: None.
Qualifications: Mr. O’Neill has served in several business, mutual fund
and financial management roles and directorship positions throughout
his career. Mr. O’Neill serves as Director, Medicines for Humanity.
Mr. O’Neill previously served as Chief Executive Officer and President,
Managing Director and Chief Investment Officer, Fleet Investment
Advisors; President and Chief Executive Officer, Aeltus Investment
Management, Inc.; General Partner, Hellman, Jordan Management
Co., Boston, MA; Chief Investment Officer, The Putnam Companies,
Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director
and Consultant, EZE Castle Software (investment order management
software); Director, The Golisano Children’s Museum of Naples,
Florida; and Director, Midway Pacific (lumber).
|
|
Madelyn A. Reilly
Birth Date: February 2, 1956
Trustee
Indefinite Term
Began serving:
November 2020
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; formerly, Executive Vice President for Legal Affairs,
General Counsel and Secretary to the Board of Directors, Duquesne
University (Retired).
Other Directorships Held: None.
Qualifications: Ms. Reilly has served in various business and legal
management roles throughout her career. Ms. Reilly previously served
as Senior Vice President for Legal Affairs, General Counsel and
Secretary to the Board of Directors and Assistant General Counsel and
Director of Risk Management, Duquesne University. Prior to her work
at Duquesne University, Ms. Reilly served as Assistant General
Counsel of Compliance and Enterprise Risk as well as Senior Counsel
of Environment, Health and Safety, PPG Industries. Ms. Reilly currently
serves as a member of the Board of Directors of UPMC
Mercy Hospital.
|
Annual Shareholder Report
33
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
P. Jerome Richey
Birth Date: February 23, 1949
Trustee
Indefinite Term
Began serving:
September 2013
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Management Consultant; Retired; formerly, Senior Vice
Chancellor and Chief Legal Officer, University of Pittsburgh and
Executive Vice President and Chief Legal Officer, CONSOL Energy Inc.
(now split into two separate publicly traded companies known as
CONSOL Energy Inc. and CNX Resources Corp.).
Other Directorships Held: None.
Qualifications: Mr. Richey has served in several business and legal
management roles and directorship positions throughout his career.
Mr. Richey most recently held the positions of Senior Vice Chancellor
and Chief Legal Officer, University of Pittsburgh. Mr. Richey previously
served as Chairman of the Board, Epilepsy Foundation of Western
Pennsylvania and Chairman of the Board, World Affairs Council of
Pittsburgh. Mr. Richey previously served as Chief Legal Officer and
Executive Vice President, CONSOL Energy Inc. and CNX Gas
Company; and Board Member, Ethics Counsel and Shareholder,
Buchanan Ingersoll & Rooney PC (a law firm).
|
|
John S. Walsh
Birth Date:
November 28, 1957
Trustee
Indefinite Term
Began serving: January 1999
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; President and Director, Heat Wagon, Inc. (manufacturer
of construction temporary heaters); President and Director,
Manufacturers Products, Inc. (distributor of portable construction
heaters); President, Portable Heater Parts, a division of Manufacturers
Products, Inc.
Other Directorships Held: None.
Qualifications: Mr. Walsh has served in several business management
roles and directorship positions throughout his career. Mr. Walsh
previously served as Vice President, Walsh & Kelly, Inc.
(paving contractors).
|
Annual Shareholder Report
34
OFFICERS
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Lori A. Hensler
Birth Date: January 6, 1967
TREASURER
Officer since: April 2013
|
Principal Occupations: Principal Financial Officer and Treasurer of the
Federated Hermes Fund Family; Senior Vice President, Federated
Administrative Services; Financial and Operations Principal for
Federated Securities Corp.; and Assistant Treasurer, Federated
Investors Trust Company. Ms. Hensler has received the Certified
Public Accountant designation.
Previous Positions: Controller of Federated Hermes, Inc.; Senior Vice
President and Assistant Treasurer, Federated Investors Management
Company; Treasurer, Federated Investors Trust Company; Assistant
Treasurer, Federated Administrative Services, Federated
Administrative Services, Inc., Federated Securities Corp., Edgewood
Services, Inc., Federated Advisory Services Company, Federated
Equity Management Company of Pennsylvania, Federated Global
Investment Management Corp., Federated Investment Counseling,
Federated Investment Management Company, Passport Research,
Ltd., and Federated MDTA, LLC; Financial and Operations Principal for
Federated Securities Corp., Edgewood Services, Inc. and Southpointe
Distribution Services, Inc.
|
|
Peter J. Germain
Birth Date:
September 3, 1959
CHIEF LEGAL OFFICER,
SECRETARY and EXECUTIVE
VICE PRESIDENT
Officer since: January 2005
|
Principal Occupations: Mr. Germain is Chief Legal Officer, Secretary
and Executive Vice President of the Federated Hermes Fund Family.
He is General Counsel, Chief Legal Officer, Secretary and Executive
Vice President, Federated Hermes, Inc.; Trustee and Senior Vice
President, Federated Investors Management Company; Trustee and
President, Federated Administrative Services; Director and President,
Federated Administrative Services, Inc.; Director and Vice President,
Federated Securities Corp.; Director and Secretary, Federated Private
Asset Management, Inc.; Secretary, Federated Shareholder Services
Company; and Secretary, Retirement Plan Service Company of
America. Mr. Germain joined Federated Hermes, Inc. in 1984 and is a
member of the Pennsylvania Bar Association.
Previous Positions: Deputy General Counsel, Special Counsel,
Managing Director of Mutual Fund Services, Federated Hermes, Inc.;
Senior Vice President, Federated Services Company; and Senior
Corporate Counsel, Federated Hermes, Inc.
|
|
Stephen Van Meter
Birth Date: June 5, 1975
CHIEF COMPLIANCE
OFFICER AND SENIOR
VICE PRESIDENT
Officer since: July 2015
|
Principal Occupations: Senior Vice President and Chief Compliance
Officer of the Federated Hermes Fund Family; Vice President and
Chief Compliance Officer of Federated Hermes, Inc. and Chief
Compliance Officer of certain of its subsidiaries. Mr. Van Meter joined
Federated Hermes, Inc. in October 2011. He holds FINRA licenses
under Series 3, 7, 24 and 66.
Previous Positions: Mr. Van Meter previously held the position of
Compliance Operating Officer, Federated Hermes, Inc. Prior to joining
Federated Hermes, Inc., Mr. Van Meter served at the United States
Securities and Exchange Commission in the positions of Senior
Counsel, Office of Chief Counsel, Division of Investment Management
and Senior Counsel, Division of Enforcement.
|
Annual Shareholder Report
35
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Deborah A. Cunningham
Birth Date:
September 15, 1959
Chief Investment Officer
Officer since: May 2004
Portfolio Manager since:
January 1994
|
Principal Occupations: Deborah A. Cunningham has been the Fund’s
Portfolio Manager since January 1994. Ms. Cunningham was named
Chief Investment Officer of Federated Hermes’ money market
products in 2004. She joined Federated Hermes in 1981 and has been
a Senior Portfolio Manager since 1997 and an Executive Vice President
of the Fund’s Adviser since 2009. Ms. Cunningham has received the
Chartered Financial Analyst designation and holds an M.S.B.A. in
Finance from Robert Morris College.
|
Annual Shareholder Report
36
Evaluation and Approval of Advisory Contract–May 2022
Federated Hermes Treasury Obligations Fund (the “Fund”)
At its meetings in May 2022 (the “May Meetings”), the Fund’s Board of Trustees (the “Board”), including those Trustees who are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940 (the “Independent Trustees”), reviewed and unanimously approved the continuation of the investment advisory contract between the Fund and Federated Investment Management Company (the “Adviser”) (the “Contract”) for an additional one-year term. The Board’s determination to approve the continuation of the Contract reflects the exercise of its business judgment after considering all of the information and factors believed to be relevant and appropriate on whether to approve the continuation of the existing arrangement. The information, factors and conclusions that formed the basis for the Board’s approval are summarized below.
Information Received and Review Process
At the request of the Independent Trustees, the Fund’s Chief Compliance Officer (the “CCO”) furnished to the Board in advance of its May Meetings an independent written evaluation presenting on the topics discussed below. The Board considered the CCO’s independent written evaluation (the “CCO Fee Evaluation Report”), along with other information, in evaluating the reasonableness of the Fund’s management fee and in determining to approve the continuation of the Contract. The CCO, in preparing the CCO Fee Evaluation Report, has the authority to retain consultants, experts or staff as reasonably necessary to assist in the performance of his duties, reports directly to the Board, and can be terminated only with the approval of a majority of the Independent Trustees. At the request of the Independent Trustees, the CCO Fee Evaluation Report followed the same general approach and covered the same topics as that of the report that had previously been delivered by the CCO in his capacity as “Senior Officer” prior to the elimination of the Senior Officer position in December 2017.
In addition to the extensive materials that comprise and accompany the CCO Fee Evaluation Report, the Board considered information specifically prepared in connection with the approval of the continuation of the Contract that was presented at the May Meetings. In this regard, in the months preceding the May Meetings, the Board requested and reviewed written responses and supporting materials prepared by the Adviser and its affiliates (collectively, “Federated Hermes”) in response to requests posed to Federated Hermes by independent legal counsel on behalf of the Independent Trustees encompassing a wide variety of topics, including those summarized below. The Board also considered such additional matters as the Independent Trustees deemed
Annual Shareholder Report
37
reasonably necessary to evaluate the Contract, which included detailed information about the Fund and Federated Hermes furnished to the Board at its meetings throughout the year and in between regularly scheduled meetings on particular matters as the need arose.
The Board’s consideration of the Contract included review of materials and information covering the following matters, among others: the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates; Federated Hermes’ business and operations; the Adviser’s investment philosophy, personnel and processes; the Fund’s investment objectives and strategies; the Fund’s short-term and long-term performance (in absolute terms, both on a gross basis and net of expenses, and relative to the Fund’s particular investment program and a group of its peer funds and/or its benchmark, as appropriate); the Fund’s investment objectives; the Fund’s fees and expenses, including the advisory fee and the overall expense structure of the Fund (both in absolute terms and relative to a group of its peer funds), with due regard for contractual or voluntary expense limitations (if any); the financial condition of Federated Hermes; the Adviser’s profitability with respect to the Fund; distribution and sales activity for the Fund; and the use and allocation of brokerage commissions derived from trading the Fund’s portfolio securities (if any).
The Board also considered judicial decisions concerning allegedly excessive investment advisory fees charged to other registered funds in determining to approve the Contract. Using these judicial decisions as a guide, the Board observed that the following factors may be relevant to an adviser’s fiduciary duty with respect to its receipt of compensation from a fund: (1) the nature and quality of the services provided by the adviser to the fund and its shareholders, including the performance of the fund, its benchmark and comparable funds; (2) the adviser’s cost of providing the services and the profitability to the adviser of providing advisory services to the fund; (3) the extent to which the adviser may realize “economies of scale” as the fund grows larger and, if such economies of scale exist, whether they have been appropriately shared with the fund and its shareholders or the family of funds; (4) any “fall-out” benefits that accrue to the adviser because of its relationship with the fund, including research services received from brokers that execute fund trades and any fees paid to affiliates of the adviser for services rendered to the fund; (5) comparative fee and expense structures, including a comparison of management fees paid to the adviser with those paid by similar funds both internally and externally as well as management fees charged to institutional and other advisory clients of the adviser for what might be viewed as like services; and (6) the extent of care, conscientiousness and independence with which the fund’s board members perform their duties and their expertise, including whether they are fully informed about all facts the board deems relevant to its consideration of the adviser’s services and fees. The Board noted that the Securities and Exchange Commission (“SEC”) disclosure requirements
Annual Shareholder Report
38
regarding the basis for a fund board’s approval of the fund’s investment advisory contract generally align with the factors listed above. The Board was guided by these factors in its review of the Contract to the extent it considered them to be appropriate and relevant, as discussed further below. The Board considered and weighed these factors in light of its substantial accumulated experience in governing the Fund and working with Federated Hermes on matters relating to the oversight of the other funds advised by Federated Hermes (each, a “Federated Hermes Fund” and, collectively, the (“Federated Hermes Funds”).
In addition to considering the above-referenced factors, the Board was mindful of the preferences and expectations of Fund shareholders and the potential disruptions of the Fund’s operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew the Contract. In particular, the Board recognized that many shareholders likely have invested in the Fund on the strength of Federated Hermes’ industry standing and reputation and with the expectation that Federated Hermes will have a continuing role in providing advisory services to the Fund. Thus, the Board observed that in the marketplace there are a range of investment options available to the Fund’s shareholders and such shareholders, having had the opportunity to consider other investment options, have effectively selected Federated Hermes by virtue of investing in the Fund.
In determining to approve the continuation of the Contract, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the continuation of the Contract was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Contract. The Board recognized that its evaluation process is evolutionary and that the factors considered and emphasis placed on relevant factors may change in recognition of changing circumstances in the registered fund marketplace. The Independent Trustees were assisted throughout the evaluation process by independent legal counsel. In connection with their deliberations at the May Meetings, the Independent Trustees met separately in executive session with their independent legal counsel and without management present to review the relevant materials and consider their responsibilities under applicable laws. In addition, senior management representatives of Federated Hermes also met with the Independent Trustees and their independent legal counsel to discuss the materials and presentations furnished to the Board at the May Meetings. The Board considered the approval of the Contract for the Fund as part of its consideration of agreements for funds across the family of Federated Hermes Funds, but its approvals were made on a fund-by-fund basis.
Annual Shareholder Report
39
Nature, Extent and Quality of Services
The Board considered the nature, extent and quality of the services provided to the Fund by the Adviser and the resources of Federated Hermes dedicated to the Fund. In this regard, the Board evaluated, among other things, the terms of the Contract and the range of services provided to the Fund by Federated Hermes. The Board considered the Adviser’s personnel, investment philosophy and process, investment research capabilities and resources, trade operations capabilities, experience and performance track record. The Board reviewed the qualifications, backgrounds and responsibilities of the portfolio management team primarily responsible for the day-to-day management of the Fund and Federated Hermes’ ability and experience in attracting and retaining qualified personnel to service the Fund. In addition, the Board noted that the Fund is a money market mutual fund that operates in accordance with the limitations set forth in Rule 2a-7 under the 1940 Act. In this connection, the Board considered the expertise of the Adviser in managing money market funds, its extensive experience with the requirements of Rule 2a-7 and its commitment to managing the Fund in accordance with these requirements. The Board also considered the Adviser’s ability to deliver competitive investment performance for the Fund when compared to the Fund’s Performance Peer Group (as defined below), which was deemed by the Board to be a useful indicator of how the Adviser is executing the Fund’s investment program. The Board also considered the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, in order to maintain a positive yield for the Fund in the low interest rate environment.
In addition, the Board considered the financial resources and overall reputation of Federated Hermes and its willingness to consider and make investments in personnel, infrastructure, technology, cybersecurity, business continuity planning and operational enhancements that are designed to benefit the Federated Hermes Funds. The Board noted the significant acquisition of Hermes Fund Managers Limited by Federated Hermes, which has deepened the organization’s investment management expertise and capabilities and expanded the investment process for all of the Federated Hermes Funds to have access to analytical resources related to environmental, social and governance (“ESG”) factors and issuer engagement on ESG matters. The Board considered the quality of Federated Hermes’ communications with the Board and responsiveness to Board inquiries and requests made from time to time with respect to the Fund and other Federated Hermes Funds. In this regard, the Board took into account Federated Hermes’ communications with the Board in light of the pandemic. The Board also considered that Federated Hermes is responsible for providing the Federated Hermes Funds’ officers.
The Board received and evaluated information regarding Federated Hermes’ regulatory and compliance environment. The Board considered Federated Hermes’ compliance program and compliance history and reports from the CCO about Federated Hermes’ compliance with applicable laws and
Annual Shareholder Report
40
regulations, including responses to regulatory developments and any compliance or other issues raised by regulatory agencies. The Board also noted Federated Hermes’ support of the Federated Hermes Funds’ compliance control structure and the compliance-related resources devoted by Federated Hermes in support of the Fund’s obligations pursuant to Rule 38a-1 under the Investment Company Act of 1940, including Federated Hermes’ commitment to respond to rulemaking and other regulatory initiatives of the SEC. The Board considered Federated Hermes’ approach to internal audits and risk management with respect to the Federated Hermes Funds and its day-to-day oversight of the Federated Hermes Funds’ compliance with their investment objectives and policies as well as with applicable laws and regulations, noting that regulatory and other developments had over time led to an increase in the scope of Federated Hermes’ oversight in this regard, including in connection with the designation of the Federated Hermes Funds’ investment advisers as the administrators of the Federated Hermes Funds’ liquidity risk management program.
The Board also considered the implementation of Federated Hermes’ business continuity plans and recognized steps taken by Federated Hermes to continue to provide the same nature, extent and quality of services to the Federated Hermes Funds during the pandemic. In addition, the Board noted Federated Hermes’ commitment to maintaining high quality systems and expending substantial resources to prepare for and respond to ongoing changes due to the market, regulatory and control environments in which the Fund and its service providers operate, including changes associated with the pandemic.
The Board considered Federated Hermes’ efforts to provide shareholders in the Federated Hermes Funds with a comprehensive array of funds with different investment objectives, policies and strategies. The Board considered the expenses that Federated Hermes had incurred, as well as the entrepreneurial and other risks assumed by Federated Hermes, in sponsoring and providing on-going services to new funds to expand these opportunities for shareholders. The Board noted the benefits to shareholders of being part of the family of Federated Hermes Funds, which include the general right to exchange investments between the same class of shares without the incurrence of additional sales charges.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided by the Adviser to the Fund.
Fund Investment Performance
The Board considered the investment performance of the Fund. In evaluating the Fund’s investment performance, the Board considered performance results in light of the Fund’s investment objective, strategies and risks. The Board considered detailed investment reports on, and the Adviser’s analysis of, the Fund’s performance over different time periods that were
Annual Shareholder Report
41
provided to the Board throughout the year and in connection with the May Meetings. These reports include, among other items, information on the Fund’s gross and net returns, the Fund’s investment performance compared to one or more relevant categories or groups of peer funds and the Fund’s benchmark index, performance attribution information and commentary on the effect of market conditions.
The Board also reviewed comparative information regarding the performance of other registered funds in the category of peer funds selected by iMoneyNet, an independent fund ranking organization (the “Performance Peer Group”). The Board noted the CCO’s view that comparisons to fund peer groups may be helpful, though not conclusive, in evaluating the performance of the Adviser in managing the Fund. The Board considered, in evaluating such comparisons, that in some cases there may be differences in the funds’ objectives or investment management techniques, or the costs to implement the funds, even within the same Performance Peer Group.
The Fund’s performance fell below the median of the Performance Peer Group for the one-year period ended December 31, 2021. The Board discussed the Fund’s performance with the Adviser and recognized the efforts being taken by the Adviser in the context of other factors considered relevant by the Board. The Board also considered the relatively tight dispersion of performance data with respect to the Fund and its Peer Group.
Based on these considerations, the Board concluded that it had continued confidence in the Adviser’s overall capabilities to manage the Fund.
Fund Expenses
The Board considered the advisory fee and overall expense structure of the Fund and the comparative fee and expense information that had been provided in connection with the May Meetings. In this regard, the Board was presented with, and considered, information regarding the contractual advisory fee rates, net advisory fee rates, total expense ratios and each element of the Fund’s total expense ratio (i.e., gross and net advisory fees, administrative fees, custody fees, portfolio accounting fees and transfer agency fees) relative to an appropriate group of peer funds compiled by Federated Hermes from the category of peer funds selected by iMoneyNet (the “Expense Peer Group”). The Board received a description of the methodology used to select the Expense Peer Group from the overall iMoneyNet category. The Board also reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall iMoneyNet category.
While mindful that courts have cautioned against giving too much weight to comparative information concerning fees charged by other advisers for managing funds with comparable investment programs, the Board noted that it found the use of such comparisons to be relevant to its evaluation. The Board focused on comparisons with other similar registered funds more heavily than non-registered fund products or services because such comparisons are
Annual Shareholder Report
42
believed to be more relevant. The Board considered that other registered funds are the products most like the Fund, in that they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle, in fact, chosen and maintained by the Fund’s shareholders. The Board noted that the range of such other registered funds’ fees and expenses, therefore, appears to be a relevant indicator of what investors have found to be reasonable in the marketplace in which the Fund competes.
The Board reviewed the contractual advisory fee rate, net advisory fee rate and other expenses of the Fund and noted the position of the Fund’s fee rates relative to its Expense Peer Group. In this regard, the Board noted that the contractual advisory fee rate was above the median of the Expense Peer Group, but the Board noted the applicable waivers and reimbursements, and that the overall expense structure of the Fund remained competitive in the context of other factors considered by the Board.
The Board also received and considered information about the fees charged by Federated Hermes for providing advisory services to other types of clients with investment strategies similar to those of the Federated Hermes Funds, including non-registered fund clients (such as institutional separate accounts) and third-party unaffiliated registered funds for which the Adviser or its affiliates serve as sub-adviser. The Board noted the CCO’s conclusion that non-registered fund clients are inherently different products due to the following differences, among others: (i) different types of targeted investors; (ii) different applicable laws and regulations; (iii) different legal structures; (iv) different average account sizes and portfolio management techniques made necessary by different cash flows and different associated costs; (v) the time spent by portfolio managers and their teams (among other personnel across various departments, including legal, compliance and risk management) in reviewing securities pricing and fund liquidity; (vi) different administrative responsibilities; (vii) different degrees of risk associated with management; and (viii) a variety of different costs. The Board also considered information regarding the differences in the nature of the services required for Federated Hermes to manage its proprietary registered fund business versus managing a discrete pool of assets as a sub-adviser to another institution’s registered fund, noting the CCO’s view that Federated Hermes generally performs significant additional services and assumes substantially greater risks in managing the Fund and other Federated Hermes Funds than in its role as sub-adviser to an unaffiliated third-party registered fund. The Board noted that the CCO did not consider the fees for providing advisory services to other types of clients to be determinative in judging the appropriateness of the Federated Hermes Funds’ advisory fees.
Based on these considerations, the Board concluded that the fees and total operating expenses of the Fund, in conjunction with other matters considered, are reasonable in light of the services provided.
Annual Shareholder Report
43
Profitability
The Board received and considered profitability information furnished by Federated Hermes, as requested by the CCO. Such profitability information included revenues reported on a fund-by-fund basis and estimates of the allocation of expenses made on a fund-by-fund basis, using allocation methodologies specified by the CCO and described to the Board. The Board considered the CCO’s view that, while these cost allocation reports apply consistent allocation processes, the inherent difficulties in allocating costs on a fund-by-fund basis continues to cause the CCO to question the precision of the process and to conclude that such reports may be unreliable because a single change in an allocation estimate may dramatically alter the resulting estimate of cost and/or profitability of a Federated Hermes Fund and may produce unintended consequences. In addition, the Board considered the CCO’s view that the allocation methodologies used by Federated Hermes in estimating profitability for purposes of reporting to the Board in connection with the continuation of the Contract are consistent with the methodologies previously reviewed by an independent consultant. The Board noted that the independent consultant had previously conducted a review of the allocation methodologies and reported that, although there is no single best method to allocate expenses, the methodologies used by Federated Hermes are reasonable. The Board noted the impact of the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, on the profitability of the Fund to the Adviser.
The Board also reviewed information compiled by Federated Hermes comparing its profitability information to other publicly held fund management companies, including information regarding profitability trends over time. The Board considered the CCO’s conclusion that, based on such profitability information, Federated Hermes’ profit margins did not appear to be excessive. The Board also considered the CCO’s view that Federated Hermes appeared financially sound, with the resources necessary to fulfill its obligations under its contracts with the Federated Hermes Funds.
Economies of Scale
The Board received and considered information about the notion of possible realization of “economies of scale” as a fund grows larger, the difficulties of calculating economies of scale at an individual fund level, and the extent to which potential scale benefits are shared with shareholders. In this regard, the Board considered that Federated Hermes has made significant and long-term investments in areas that support all of the Federated Hermes Funds, such as: personnel, processes and tools for portfolio management, including the use of market data on which portfolio managers make investment decisions; trading operations; ESG integration and issuer engagement on ESG matters; shareholder services; compliance; business continuity; cybersecurity; internal audit and risk management functions; and technology that supports the provision of investment management services. The Board noted that Federated
Annual Shareholder Report
44
Hermes’ investments in these areas are extensive and are designed to provide enhanced services to the Federated Hermes Funds and their shareholders. The Board considered that the benefits of these investments are likely to be shared with the family of Federated Hermes Funds as a whole. In addition, the Board considered that fee waivers and expense reimbursements are another means for potential economies of scale to be shared with shareholders and can provide protection from an increase in expenses if a Federated Hermes Fund’s assets decline. The Board considered that, in order for the Federated Hermes Funds to remain competitive in the marketplace, Federated Hermes has frequently waived fees and/or reimbursed expenses for the Federated Hermes Funds and has disclosed to shareholders and/or reported to the Board its intention to do so (or continue to do so) in the future. The Board also considered Federated Hermes’ reductions in contractual management fees for certain Federated Hermes Funds during the prior year, including in response to the CCO’s recommendations in the prior year’s CCO Fee Evaluation Report, which have resulted in benefits being realized by shareholders.
The Board also considered reports on adviser-paid fees (commonly referred to as “revenue sharing”) that were provided to the Board throughout the year and in connection with the May Meetings. The Board considered that Federated Hermes and the CCO believe that this information should be viewed to determine if there was an incentive to either not apply breakpoints, or to apply breakpoints at higher levels, and should not be viewed to evaluate the reasonableness of advisory fees. The Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which is compounded by the lack of any uniform methodology or pattern with respect to structuring fund advisory fees with breakpoints that serve to reduce the fees as a fund attains a certain size.
Other Benefits
The Board considered information regarding the compensation and other ancillary (or “fall-out”) benefits that Federated Hermes derived from its relationships with the Federated Hermes Funds. The Board noted that, in addition to receiving advisory fees under the Federated Hermes Funds’ investment advisory contracts, Federated Hermes’ affiliates also receive fees for providing other services to the Federated Hermes Funds under separate contracts (e.g., for serving as the Federated Hermes Funds’ administrator and distributor). In this regard, the Board considered that certain of Federated Hermes’ affiliates provide distribution and shareholder services to the Federated Hermes Funds, for which they may be compensated through distribution and servicing fees paid pursuant to Rule 12b-1 plans or otherwise. The Board also received and considered information detailing any indirect benefit that Federated Hermes may derive from its receipt of research services from brokers who execute portfolio trades for the Federated Hermes Funds.
Annual Shareholder Report
45
Conclusions
The Board considered: (i) the CCO’s conclusion that his observations and the information accompanying the CCO Fee Evaluation Report show that the management fee for the Fund is reasonable; and (ii) the CCO’s recommendation that the Board approve the management fee. The Board noted that, under these circumstances, no changes were recommended to, and no objection was raised to the continuation of, the Contract by the CCO. The CCO also recognized that the Board’s evaluation of the Federated Hermes Funds’ advisory and sub-advisory arrangements is a continuing and ongoing process that is informed by the information that the Board requests and receives from management throughout the course of the year and, in this regard, the CCO noted certain items for future reporting to the Board or further consideration by management as the Board continues its ongoing oversight of the Federated Hermes Funds.
On the basis of the information and factors summarized above, among other information and factors deemed relevant by the Board, and the evaluation thereof, the Board, including the Independent Trustees, unanimously voted to approve the continuation of the Contract. The Board based its determination to approve the Contract on the totality of the circumstances and relevant factors and with a view of past and future long-term considerations. Not all of the factors and considerations identified above were necessarily deemed to be relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were deemed to be relevant, the Board’s determination to approve the continuation of the Contract reflects its view that Federated Hermes’ performance and actions provided a satisfactory basis to support the determination to approve the continuation of the existing arrangement.
Annual Shareholder Report
46
Voting Proxies on Fund Portfolio Securities
A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund’s portfolio is available, without charge and upon request, by calling 1-800-341-7400, Option #4. A report on “Form N-PX” of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available via the Proxy Voting Record (Form N-PX) link associated with the Fund and share class name at FederatedInvestors.com/FundInformation. Form N-PX filings are also available at the SEC’s website at sec.gov.
Portfolio Schedule
The Fund files with the SEC a complete schedule of its portfolio holdings as of the close of each month on “Form N-MFP.” Form N-MFP is available on the SEC’s website at sec.gov. You may access Form N-MFP via the link to the Fund and share class name at FederatedInvestors.com.
Annual Shareholder Report
47
You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
This Report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund’s Prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.
Federated Hermes Treasury Obligations Fund
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at FederatedInvestors.com
or call 1-800-341-7400.
or call 1-800-341-7400.
Federated Securities Corp., Distributor
CUSIP 608919726
CUSIP 60934N500
CUSIP 60934N872
CUSIP 60934N823
CUSIP 60934N120
CUSIP 60934N500
CUSIP 60934N872
CUSIP 60934N823
CUSIP 60934N120
Q450531 (9/22)
© 2022 Federated Hermes, Inc.
Annual Shareholder Report
July 31, 2022
|
Share Class | Ticker
|
Institutional | TTOXX
|
Cash II | TTIXX
|
Cash Series | TCSXX
|
|
Federated Hermes Trust for U.S. Treasury Obligations
A Portfolio of Federated Hermes Money Market Obligations Trust
Dear Valued Shareholder,
We are pleased to present the Annual Shareholder Report for your fund covering the period from August 1, 2021 through July 31, 2022. This report includes a complete listing of your fund’s holdings, performance information and financial statements along with other important fund information.
As a global leader in active, responsible investment management, Federated Hermes is guided by our conviction that responsible investing is the best way to create wealth over the long term. The company provides capabilities across a wide range of asset classes to investors around the world.
In addition, FederatedInvestors.com offers quick and easy access to valuable resources that include timely fund updates, economic and market insights from our investment strategists and financial planning tools. You can also access many of those insights by following us on Twitter (@FederatedHermes) and LinkedIn.
Thank you for investing with us. We hope you find this information useful and look forward to keeping you informed.
Sincerely,
J. Christopher Donahue, President
Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee
Portfolio of Investments Summary Tables (unaudited)
At July 31, 2022, the Fund’s portfolio composition1 was as follows:
|
Security Type
|
Percentage of
Total Net Assets
|
|
U.S. Treasury Securities
|
29.0%
|
|
Repurchase Agreements
|
66.7%
|
|
Other Assets and Liabilities—Net2
|
4.3%
|
|
TOTAL
|
100%
|
|
1
|
See the Fund’s Prospectus and Statement of Additional Information for a description of the
types of securities in which the Fund invests.
|
|
2
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
At July 31, 2022, the Fund’s effective maturity schedule1 was as follows:
|
Securities With an
Effective Maturity of:
|
Percentage of
Total Net Assets
|
|
1-7 Days
|
79.7%
|
|
8-30 Days
|
3.1%
|
|
31-90 Days
|
4.7%
|
|
91-180 Days
|
7.5%
|
|
181 Days or more
|
0.7%
|
|
Other Assets and Liabilities—Net2
|
4.3%
|
|
Total
|
100%
|
|
1
|
Effective maturity is determined in accordance with the requirements of Rule 2a-7 under the
Investment Company Act of 1940, which regulates money market mutual funds.
|
|
2
|
Assets, other than investments in securities, less liabilities. See Statement of Assets
and Liabilities.
|
Annual Shareholder Report
1
Portfolio of Investments
July 31, 2022
|
Principal
Amount
|
|
|
Value
|
|
|
|
U.S. TREASURIES— 29.0%
|
|
|
$ 35,000,000
|
1
|
United States Treasury Bills, 0.080%, 8/11/2022
|
$ 34,999,222
|
|
5,000,000
|
1
|
United States Treasury Bills, 0.122%, 10/6/2022
|
4,998,877
|
|
22,000,000
|
1
|
United States Treasury Bills, 0.160% - 0.163%, 11/3/2022
|
21,990,757
|
|
24,000,000
|
1
|
United States Treasury Bills, 0.240% - 1.580%, 12/1/2022
|
23,889,658
|
|
10,000,000
|
1
|
United States Treasury Bills, 0.630%, 1/26/2023
|
9,968,850
|
|
20,000,000
|
1
|
United States Treasury Bills, 0.770%, 8/18/2022
|
19,992,728
|
|
23,000,000
|
1
|
United States Treasury Bills, 0.910% - 0.935%, 9/22/2022
|
22,969,479
|
|
25,000,000
|
1
|
United States Treasury Bills, 1.490%, 11/17/2022
|
24,888,250
|
|
23,250,000
|
1
|
United States Treasury Bills, 1.530%, 11/25/2022
|
23,135,378
|
|
12,000,000
|
1
|
United States Treasury Bills, 2.680%, 1/12/2023
|
11,853,493
|
|
10,000,000
|
1
|
United States Treasury Bills, 3.020%, 6/15/2023
|
9,733,233
|
|
30,180,000
|
2
|
United States Treasury Floating Rate Notes, 2.461% (91-day T-Bills
-0.075%), 8/2/2022
|
30,158,066
|
|
25,000,000
|
2
|
United States Treasury Floating Rate Notes, 2.470% (91-day T-Bills
+0.037%), 8/2/2022
|
24,999,989
|
|
37,500,000
|
2
|
United States Treasury Floating Rate Notes, 2.521% (91-day T-Bills
-0.015%), 8/2/2022
|
37,519,640
|
|
61,000,000
|
2
|
United States Treasury Floating Rate Notes, 2.565% (91-day T-Bills
+0.029%), 8/2/2022
|
61,001,535
|
|
69,500,000
|
2
|
United States Treasury Floating Rate Notes, 2.570% (91-day T-Bills
+0.034%), 8/2/2022
|
69,501,767
|
|
33,000,000
|
2
|
United States Treasury Floating Rate Notes, 2.571% (91-day T-Bills
+0.035%), 8/2/2022
|
32,999,354
|
|
52,000,000
|
2
|
United States Treasury Floating Rate Notes, 2.585% (91-day T-Bills
+0.049%), 8/2/2022
|
52,001,473
|
|
30,750,000
|
|
United States Treasury Notes, 0.125%, 10/31/2022
|
30,752,041
|
|
4,000,000
|
|
United States Treasury Notes, 0.125%, 2/28/2023
|
3,964,587
|
|
3,900,000
|
|
United States Treasury Notes, 0.125%, 5/31/2023
|
3,835,302
|
|
23,000,000
|
|
United States Treasury Notes, 0.125% - 1.750%, 9/30/2022
|
23,020,904
|
|
31,000,000
|
|
United States Treasury Notes, 0.125% - 1.875%, 8/31/2022
|
31,025,622
|
|
15,000,000
|
|
United States Treasury Notes, 0.125% - 2.125%, 12/31/2022
|
15,069,621
|
|
14,354,000
|
|
United States Treasury Notes, 1.375%, 10/15/2022
|
14,392,073
|
|
23,000,000
|
|
United States Treasury Notes, 1.500%, 9/15/2022
|
23,040,146
|
|
5,000,000
|
|
United States Treasury Notes, 1.500%, 3/31/2023
|
4,995,565
|
|
14,000,000
|
|
United States Treasury Notes, 1.625%, 11/15/2022
|
14,061,299
|
|
41,000,000
|
|
United States Treasury Notes, 1.875%, 10/31/2022
|
40,999,928
|
|
15,000,000
|
|
United States Treasury Notes, 2.000%, 11/30/2022
|
15,091,758
|
|
|
|
TOTAL
|
736,850,595
|
Annual Shareholder Report
2
|
Principal
Amount
|
|
|
Value
|
|
|
|
REPURCHASE AGREEMENTS— 66.7%
|
|
|
$ 238,300,000
|
|
Interest in $3,000,000,000 joint repurchase agreement 2.30%, dated
7/29/2022 under which Sumitomo Mitsui Banking Corp will
repurchase securities provided as collateral for $3,000,575,000 on
8/1/2022. The securities provided as collateral at the end of the
period held with BNY Mellon as tri-party agent, were U.S. Treasury
securities with various maturities to 2/15/2050 and the market value
of those underlying securities was $3,060,586,535.
|
$ 238,300,000
|
|
50,000,000
|
|
Interest in $1,850,000,000 joint repurchase agreement 1.47%, dated
6/7/2022 under which BNP Paribas S.A. will repurchase securities
provided as collateral for $1,857,025,375 on 9/9/2022. The securities
provided as collateral at the end of the period held with BNY Mellon
as tri-party agent, were U.S. Treasury securities with various
maturities to 8/15/2051 and the market value of those underlying
securities was $1,891,160,894
|
50,000,000
|
|
25,000,000
|
|
Interest in $25,000,000 joint repurchase agreement 1.64%, dated
5/16/2022 under which BNP Paribas S.A. will repurchase securities
provided as collateral for $25,209,556 on 11/16/2022. The securities
provided as collateral at the end of the period held with BNY Mellon
as tri-party agent, were U.S. Treasury securities with various
maturities to 2/15/2047 and the market value of those underlying
securities was $25,589,485.
|
25,000,000
|
|
25,000,000
|
|
Interest in $225,000,000 joint repurchase agreement 1.69%, dated
5/20/2022 under which BNP Paribas S.A. will repurchase securities
provided as collateral for $226,954,063 on 11/21/2022. The
securities provided as collateral at the end of the period held with
BNY Mellon as tri-party agent, were U.S. Treasury securities with
various maturities to 8/15/2050 and the market value of those
underlying securities was $230,286,528.
|
25,000,000
|
|
25,000,000
|
|
Interest in $225,000,000 joint repurchase agreement 1.79%, dated
6/1/2022 under which BNP Paribas S.A. will repurchase securities
provided as collateral for $227,047,313 on 12/2/2022. The securities
provided as collateral at the end of the period held with BNY Mellon
as tri-party agent, were U.S. Treasury securities with various
maturities to 8/15/2050 and the market value of those underlying
securities was $230,184,708.
|
25,000,000
|
|
35,000,000
|
|
Interest in $500,000,000 joint repurchase agreement 2.30%, dated
1/7/2020 under which Citigroup Global Markets, Inc. will repurchase
securities provided as collateral for $500,223,611 on 8/9/2022. The
securities provided as collateral at the end of the period held with
BNY Mellon as tri-party agent, were U.S. Treasury securities with
various maturities to 2/15/2050 and the market value of those
underlying securities was $510,003,005.
|
35,000,000
|
|
1,000,000,000
|
|
Interest in $1,000,000,000 joint repurchase agreement 2.30%, dated
7/29/2022 under which Federal Reserve Bank of New York will
repurchase securities provided as collateral for $1,000,191,667 on
8/1/2022. The securities provided as collateral at the end of the
period held with BNY Mellon as tri-party agent, were U.S. Treasury
securities with various maturities to 2/15/2042 and the market value
of those underlying securities was $1,000,191,761.
|
1,000,000,000
|
Annual Shareholder Report
3
|
Principal
Amount
|
|
|
Value
|
|
|
|
REPURCHASE AGREEMENTS— continued
|
|
|
$ 300,000,000
|
|
Interest in $750,000,000 joint repurchase agreement 2.22%, dated
7/29/2022 under which Standard Chartered Bank will repurchase
securities provided as collateral for $750,138,750 on 8/1/2022. The
securities provided as collateral at the end of the period held with
BNY Mellon as tri-party agent, were U.S. Treasury securities with
various maturities to 8/15/2049 and the market value of those
underlying securities was $765,141,594.
|
$ 300,000,000
|
|
|
|
TOTAL REPURCHASE AGREEMENTS
|
1,698,300,000
|
|
|
|
TOTAL INVESTMENT IN SECURITIES—95.7%
(AT AMORTIZED COST)3
|
2,435,150,595
|
|
|
|
OTHER ASSETS AND LIABILITIES - NET—4.3%4
|
109,308,460
|
|
|
|
TOTAL NET ASSETS—100%
|
$2,544,459,055
|
|
1
|
Discount rate(s) at time of purchase.
|
|
2
|
Floating/variable note with current rate and current maturity or next reset date shown.
|
|
3
|
Also represents cost of investments for federal tax purposes.
|
|
4
|
Assets, other than investments in securities, less liabilities. See Statement of Assets and
Liabilities.
|
Note: The categories of investments are shown as a percentage of total net assets at July 31, 2022.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Level 1—quoted prices in active markets for identical securities.
Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Also includes securities valued at amortized cost.
Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
In valuing the Fund’s assets as of July 31, 2022, all investments of the Fund are valued using amortized cost, which is a methodology utilizing Level 2 inputs.
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
4
Financial Highlights–Institutional Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.003
|
0.0001
|
0.011
|
0.021
|
0.012
|
|
Net realized gain (loss)
|
(0.000)1
|
0.0001
|
(0.000)1
|
0.0001
|
0.0001
|
|
Total From Investment Operations
|
0.003
|
0.0001
|
0.011
|
0.021
|
0.012
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.003)
|
(0.000)1
|
(0.011)
|
(0.021)
|
(0.012)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
|
Total Distributions
|
(0.003)
|
(0.000)1
|
(0.011)
|
(0.021)
|
(0.012)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.26%
|
0.01%
|
1.07%
|
2.16%
|
1.25%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses3
|
0.12%
|
0.13%
|
0.20%
|
0.20%
|
0.20%
|
|
Net investment income
|
0.22%
|
0.01%
|
0.94%
|
2.18%
|
1.23%
|
|
Expense waiver/reimbursement4
|
0.18%
|
0.17%
|
0.11%
|
0.11%
|
0.13%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$1,134,075
|
$1,464,865
|
$2,334,139
|
$1,344,393
|
$360,889
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
4
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
5
Financial Highlights–Cash II Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.001
|
0.0001
|
0.006
|
0.014
|
0.005
|
|
Net realized gain (loss)
|
(0.000)1
|
0.0001
|
(0.000)1
|
0.0001
|
0.0001
|
|
Total From Investment Operations
|
0.001
|
0.0001
|
0.006
|
0.014
|
0.005
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.001)
|
(0.000)1
|
(0.006)
|
(0.014)
|
(0.005)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
|
Total Distributions
|
(0.001)
|
(0.000)1
|
(0.006)
|
(0.014)
|
(0.005)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.08%
|
0.00%3
|
0.58%
|
1.45%
|
0.54%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses4
|
0.30%
|
0.13%
|
0.67%
|
0.90%
|
0.90%
|
|
Net investment income
|
0.08%
|
0.00%3
|
0.53%
|
1.44%
|
0.53%
|
|
Expense waiver/reimbursement5
|
0.70%
|
0.87%
|
0.34%
|
0.11%
|
0.13%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$691,193
|
$735,469
|
$750,118
|
$591,844
|
$635,165
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Represents less than 0.01%.
|
|
4
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
5
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
6
Financial Highlights–Cash Series Shares
(For a Share Outstanding Throughout Each Period)
|
|
Year Ended July 31,
|
||||
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net Asset Value, Beginning of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Income From Investment Operations:
|
|
|
|
|
|
|
Net investment income
|
0.001
|
0.0001
|
0.005
|
0.013
|
0.004
|
|
Net realized gain (loss)
|
(0.000)1
|
0.0001
|
(0.000)1
|
0.0001
|
0.0001
|
|
Total From Investment Operations
|
0.001
|
0.0001
|
0.005
|
0.013
|
0.004
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions from net investment income
|
(0.001)
|
(0.000)1
|
(0.005)
|
(0.013)
|
(0.004)
|
|
Distributions from net realized gain
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
(0.000)1
|
|
Total Distributions
|
(0.001)
|
(0.000)1
|
(0.005)
|
(0.013)
|
(0.004)
|
|
Net Asset Value, End of Period
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
$1.00
|
|
Total Return2
|
0.06%
|
0.00%3
|
0.50%
|
1.31%
|
0.40%
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
Net expenses4
|
0.33%
|
0.13%
|
0.76%
|
1.04%
|
1.05%
|
|
Net investment income
|
0.06%
|
0.00%3
|
0.47%
|
1.32%
|
0.30%
|
|
Expense waiver/reimbursement5
|
0.92%
|
1.10%
|
0.48%
|
0.21%
|
0.23%
|
|
Supplemental Data:
|
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$719,191
|
$767,050
|
$653,747
|
$496,252
|
$341,124
|
|
1
|
Represents less than $0.001.
|
|
2
|
Based on net asset value.
|
|
3
|
Represents less than 0.01%.
|
|
4
|
Amount does not reflect net expenses incurred by investment companies in which the Fund
may invest.
|
|
5
|
This expense decrease is reflected in both the net expense and the net investment income ratios
shown above. Amount does not reflect expense waiver/reimbursement recorded by investment
companies in which the Fund may invest.
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
7
Statement of Assets and Liabilities
July 31, 2022
July 31, 2022
|
Assets:
|
|
|
Investment in repurchase agreements
|
$1,698,300,000
|
|
Investment in securities
|
736,850,595
|
|
Investment in securities, at amortized cost and fair value
|
2,435,150,595
|
|
Cash
|
186,768
|
|
Income receivable
|
3,085,412
|
|
Receivable for investments sold
|
128,250,000
|
|
Receivable for shares sold
|
6,860,046
|
|
Total Assets
|
2,573,532,821
|
|
Liabilities:
|
|
|
Payable for investments purchased
|
25,001,775
|
|
Payable for shares redeemed
|
2,193,305
|
|
Income distribution payable
|
665,172
|
|
Payable for investment adviser fee (Note 5)
|
19,702
|
|
Payable for administrative fee (Note 5)
|
16,378
|
|
Payable for Directors’/Trustees’ fees (Note 5)
|
244
|
|
Payable for distribution services fee (Note 5)
|
538,854
|
|
Payable for other service fees (Notes 2 and 5)
|
320,490
|
|
Accrued expenses (Note 5)
|
317,846
|
|
Total Liabilities
|
29,073,766
|
|
Net assets for 2,544,500,464 shares outstanding
|
$2,544,459,055
|
|
Net Assets Consist of:
|
|
|
Paid-in capital
|
$2,544,500,494
|
|
Total distributable earnings (loss)
|
(41,439)
|
|
Total Net Assets
|
$2,544,459,055
|
|
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
|
|
|
Institutional Shares:
|
|
|
$1,134,075,046 ÷ 1,134,093,457 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Cash II Shares:
|
|
|
$691,193,073 ÷ 691,204,345 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
|
Cash Series Shares:
|
|
|
$719,190,936 ÷ 719,202,662 shares outstanding, no par value, unlimited
shares authorized
|
$1.00
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
8
Statement of Operations
Year Ended July 31, 2022
Year Ended July 31, 2022
|
Investment Income:
|
|
|
Interest
|
$10,061,255
|
|
Expenses:
|
|
|
Investment adviser fee (Note 5)
|
5,515,817
|
|
Administrative fee (Note 5)
|
2,158,826
|
|
Custodian fees
|
83,286
|
|
Transfer agent fees (Note 2)
|
1,496,111
|
|
Directors’/Trustees’ fees (Note 5)
|
16,670
|
|
Auditing fees
|
20,299
|
|
Legal fees
|
9,087
|
|
Portfolio accounting fees
|
200,436
|
|
Distribution services fee (Note 5)
|
7,360,399
|
|
Other service fees (Notes 2 and 5)
|
3,817,194
|
|
Share registration costs
|
147,005
|
|
Printing and postage
|
69,257
|
|
Miscellaneous (Note 5)
|
85,238
|
|
TOTAL EXPENSES
|
20,979,625
|
|
Waivers and Reimbursements:
|
|
|
Waiver of investment adviser fee (Note 5)
|
(4,425,646)
|
|
Waivers/reimbursements of other operating expenses (Notes 2 and 5)
|
(10,193,833)
|
|
TOTAL WAIVERS AND REIMBURSEMENTS
|
(14,619,479)
|
|
Net expenses
|
6,360,146
|
|
Net investment income
|
3,701,109
|
|
Net realized loss on investments
|
(41,775)
|
|
Change in net assets resulting from operations
|
$3,659,334
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
9
Statement of Changes in Net Assets
|
Year Ended July 31
|
2022
|
2021
|
|
Increase (Decrease) in Net Assets
|
|
|
|
Operations:
|
|
|
|
Net investment income
|
$3,701,109
|
$127,278
|
|
Net realized gain (loss)
|
(41,775)
|
3,411
|
|
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
|
3,659,334
|
130,689
|
|
Distributions to Shareholders:
|
|
|
|
Institutional Shares
|
(2,692,020)
|
(128,157)
|
|
Cash II Shares
|
(549,322)
|
(678)
|
|
Cash Series Shares
|
(463,531)
|
(544)
|
|
CHANGE IN NET ASSETS RESULTING FROM
DISTRIBUTIONS TO SHAREHOLDERS
|
(3,704,873)
|
(129,379)
|
|
Share Transactions:
|
|
|
|
Proceeds from sale of shares
|
4,421,748,130
|
5,025,976,951
|
|
Net asset value of shares issued to shareholders in payment of
distributions declared
|
2,286,934
|
66,790
|
|
Cost of shares redeemed
|
(4,846,914,198)
|
(5,796,664,885)
|
|
CHANGE IN NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
|
(422,879,134)
|
(770,621,144)
|
|
Change in net assets
|
(422,924,673)
|
(770,619,834)
|
|
Net Assets:
|
|
|
|
Beginning of period
|
2,967,383,728
|
3,738,003,562
|
|
End of period
|
$2,544,459,055
|
$2,967,383,728
|
See Notes which are an integral part of the Financial Statements
Annual Shareholder Report
10
Notes to Financial Statements
July 31, 2022
1. ORGANIZATION
Federated Hermes Money Market Obligations Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust consists of 16 portfolios. The financial statements included herein are only those of Federated Hermes Trust for U.S. Treasury Obligations (the “Fund”), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder’s interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers three classes of shares: Institutional Shares, Cash II Shares and Cash Series Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The investment objective of the Fund is to provide stability of principal and current income consistent with stability of principal.
The Fund operates as a government money market fund. As a government money market fund, the Fund: (1) invests at least 99.5% of its total assets in: (i) cash; (ii) securities issued or guaranteed by the United States or certain U.S. government agencies or instrumentalities; and/or (iii) repurchase agreements that are collateralized fully; (2) generally continues to use amortized cost to value its portfolio securities and transact at a stable $1.00 net asset value (NAV); and (3) has elected not to be subject to the liquidity fees and gates requirement at this time as permitted by Rule 2a-7 under the Act.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
Securities are valued at amortized cost. Under the amortized cost valuation method, an investment is valued initially at its cost as determined in accordance with GAAP. The Fund then adjusts the amount of interest income accrued each day over the term of the investment to account for any difference between the initial cost of the investment and the amount payable at its maturity. If amortized cost is determined not to approximate fair value, the value of the portfolio securities will be determined in accordance with the procedures described below. There can be no assurance that the Fund could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines its NAV per share, and the actual value obtained could be materially different.
The Fund’s Board of Trustees (the “Trustees”) have ultimate responsibility for determining the fair value of investments. The Trustees have appointed a valuation committee (“Valuation Committee”) comprised of officers of the Fund, Federated Investment Management Company (the “Adviser”) and certain of the Adviser’s affiliated companies to assist in determining fair value of securities and in overseeing the comparison of amortized cost to market-based value. The Trustees have also authorized the use of pricing services recommended by the Valuation Committee to provide fair
Annual Shareholder Report
11
value evaluations of the current value of certain investments for purposes of monitoring the relationship of market-based value and amortized cost. The Valuation Committee employs various methods for reviewing third-party pricing-service evaluations including periodic reviews of third-party pricing services’ policies, procedures and valuation methods (including key inputs and assumptions), and review of price challenges by the Adviser based on recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee determines the fair value of the investment in accordance with procedures adopted by the Trustees. The Trustees periodically review and approve the fair valuations made by the Valuation Committee and any changes made to the procedures.
Repurchase Agreements
The Fund may invest in repurchase agreements for short-term liquidity purposes. It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund’s custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control” as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.
The insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.
The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund’s Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.
Repurchase agreements are subject to Master Netting Agreements which are agreements between the Fund and its counterparties that provide for the net settlement of all transactions and collateral with the Fund, through a single payment, in the event of default or termination. Amounts presented on the Portfolio of Investments and Statement of Assets and Liabilities are not net settlement amounts but gross. As indicated above, the cash or securities to be repurchased, as shown on the Portfolio of Investments, exceeds the repurchase price to be paid under the agreement reducing the net settlement amount to zero.
Annual Shareholder Report
12
Investment Income, Gains and Losses, Expenses and Distributions
Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis. Interest income and expenses are accrued daily. Distributions to shareholders are recorded on the ex-dividend date. Distributions of net investment income, if any, are declared daily and paid monthly. Amortization/accretion of premium and discount is included in investment income. Investment income, realized gains and losses, and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that select classes will bear certain expenses unique to those classes. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses. The detail of the total fund expense waivers and reimbursements of $14,619,479 is disclosed in various locations in Note 2 and Note 5.
Transfer Agent Fees
For the year ended July 31, 2022, transfer agent fees for the Fund were as follows:
|
|
Transfer Agent
Fees Incurred
|
Transfer Agent
Fees Reimbursed
|
Transfer Agent Fees
Waived by Unaffiliated
Third Parties
|
|
Institutional Shares
|
$11,442
|
$(29)
|
$—
|
|
Cash II Shares
|
724,321
|
(120)
|
(458,710)
|
|
Cash Series Shares
|
760,348
|
(559)
|
(480,104)
|
|
TOTAL
|
$1,496,111
|
$(708)
|
$(938,814)
|
Other Service Fees
The Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund’s Institutional Shares, Cash II Shares and Cash Series Shares to unaffiliated financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for other service fees. In addition, unaffiliated third-party financial intermediaries may waive other service fees. This waiver can be modified or terminated at any time. For the year ended July 31, 2022, other service fees for the Fund were as follows:
|
|
Other Service
Fees Incurred
|
Other Service
Fees Reimbursed
|
Other Service Fees
Waived by Unaffiliated
Third Parties
|
|
Cash II Shares
|
$1,801,851
|
$—
|
$(1,468,985)
|
|
Cash Series Shares
|
2,015,343
|
(8,903)
|
(1,740,091)
|
|
TOTAL
|
$3,817,194
|
$(8,903)
|
$(3,209,076)
|
For the year ended July 31, 2022, the Fund’s Institutional Shares did not incur other service fees; however it may begin to incur this fee upon approval of the Trustees.
Annual Shareholder Report
13
Federal Taxes
It is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code (the “Code”) and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. As of and during the year ended July 31, 2022, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2022, tax years 2019 through 2022 remain subject to examination by the Fund’s major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.
When-Issued and Delayed-Delivery Transactions
The Fund may engage in when-issued or delayed-delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed-delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
Other
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ materially from those estimated. The Fund applies investment company accounting and reporting guidance.
3. SHARES OF BENEFICIAL INTEREST
The following tables summarize share activity:
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Institutional Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
2,009,686,596
|
$2,009,686,596
|
2,318,100,584
|
$2,318,100,584
|
|
Shares issued to shareholders in
payment of distributions declared
|
1,286,508
|
1,286,508
|
65,594
|
65,594
|
|
Shares redeemed
|
(2,341,742,449)
|
(2,341,742,449)
|
(3,187,440,884)
|
(3,187,440,884)
|
|
NET CHANGE RESULTING FROM
INSTITUTIONAL
SHARE TRANSACTIONS
|
(330,769,345)
|
$(330,769,345)
|
(869,274,706)
|
$(869,274,706)
|
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Cash II Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
312,738,480
|
$312,738,480
|
839,112,903
|
$839,112,903
|
|
Shares issued to shareholders in
payment of distributions declared
|
541,911
|
541,911
|
656
|
656
|
|
Shares redeemed
|
(357,543,870)
|
(357,543,870)
|
(853,762,845)
|
(853,762,845)
|
|
NET CHANGE RESULTING FROM
CASH II SHARE TRANSACTIONS
|
(44,263,479)
|
$(44,263,479)
|
(14,649,286)
|
$(14,649,286)
|
Annual Shareholder Report
14
|
|
Year Ended
7/31/2022
|
Year Ended
7/31/2021
|
||
|
Cash Series Shares:
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares sold
|
2,099,323,054
|
$2,099,323,054
|
1,868,763,464
|
$1,868,763,464
|
|
Shares issued to shareholders in
payment of distributions declared
|
458,515
|
458,515
|
540
|
540
|
|
Shares redeemed
|
(2,147,627,879)
|
(2,147,627,879)
|
(1,755,461,156)
|
(1,755,461,156)
|
|
NET CHANGE RESULTING FROM
CASH SERIES
SHARE TRANSACTIONS
|
(47,846,310)
|
$(47,846,310)
|
113,302,848
|
$113,302,848
|
|
NET CHANGE RESULTING FROM
TOTAL FUND
SHARE TRANSACTIONS
|
(422,879,134)
|
$(422,879,134)
|
(770,621,144)
|
$(770,621,144)
|
4. FEDERAL TAX INFORMATION
The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2022 and 2021, was as follows:
|
|
2022
|
2021
|
|
Ordinary income1
|
$3,704,873
|
$129,379
|
|
1
|
For tax purposes, short-term capital gain distributions are considered ordinary
income distributions.
|
As of July 31, 2022, the components of distributable earnings on a tax-basis were as follows:
|
Undistributed ordinary income1
|
$336
|
|
Capital loss carryforwards
|
$(41,775)
|
|
1
|
For tax purposes, short-term capital gains are considered ordinary income in determining
distributable earnings.
|
As of July 31, 2022, the Fund had a capital loss carryforward of $41,775 which will reduce the Fund’s taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code, thereby reducing the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, these net capital losses retain their character as either short-term or long-term and do not expire.
The following schedule summarizes the Fund’s capital loss carryforwards:
|
Short-Term
|
Long-Term
|
Total
|
|
$41,775
|
$—
|
$41,775
|
Annual Shareholder Report
15
5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.20% of the Fund’s average daily net assets. Under the investment advisory contract, which is subject to annual review by the Trustees, the Adviser will reimburse the amount, limited to the amount of the advisory fee, by which the Fund’s Institutional Shares aggregate annual operating expenses, including the investment advisory fee, but excluding interest, taxes, brokerage commissions, expenses of registering and qualifying the Fund and its shares under federal and state laws and regulations, expenses of withholding taxes and extraordinary expenses, exceed 0.45% of the Fund’s Institutional Shares average daily net assets. To comply with the 0.45% limitation imposed under the investment advisory contract, the Adviser may waive its advisory fee and/or reimburse its advisory fee or other Fund expenses, affiliates of the Adviser may waive, reimburse or reduce amounts otherwise included in the aggregate annual operating expenses of the Fund, or there may be a combination of waivers, reimbursements and/or reductions by the Adviser and its affiliates. The amount that the Adviser waives/reimburses under the investment advisory contract will be reduced to the extent that affiliates of the Adviser waive, reimburse or reduce amounts that would otherwise be included in the aggregate annual operating expenses of the Fund. Subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund. For the year ended July 31, 2022, the Adviser voluntarily waived $4,425,646 of its fee. In addition, the Adviser voluntarily reimbursed $708 and $362,661 of transfer agent fees and other operating expenses, respectively.
Administrative Fee
Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated Hermes Funds subject to a fee under the Administrative Services Agreement. The fee paid to FAS is based on the average daily net assets of the Investment Complex as specified below:
|
Administrative Fee
|
Average Daily Net Assets
of the Investment Complex
|
|
0.100%
|
on assets up to $50 billion
|
|
0.075%
|
on assets over $50 billion
|
Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2022, the annualized fee paid to FAS was 0.078% of average daily net assets of the Fund.
In addition, FAS may charge certain out-of-pocket expenses to the Fund.
Annual Shareholder Report
16
Distribution Services Fee
The Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund’s Cash II Shares and Cash Series Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:
|
|
Percentage of Average Daily
Net Assets of Class
|
|
Cash II Shares
|
0.35%
|
|
Cash Series Shares
|
0.60%
|
Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2022, distribution services fees for the Fund were as follows:
|
|
Distribution Services
Fees Incurred
|
Distribution Services
Fees Waived
|
|
Cash II Shares
|
$2,522,895
|
$(1,860,914)
|
|
Cash Series Shares
|
4,837,504
|
(3,812,757)
|
|
TOTAL
|
$7,360,399
|
$(5,673,671)
|
When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares.
Other Service Fees
For the year ended July 31, 2022, FSSC reimbursed $8,903 of the other service fees disclosed in Note 2.
Expense Limitation
In addition to the contractual fee waiver described under “Investment Adviser Fee” above with regard to the Fund’s Institutional Shares, the Adviser and certain of its affiliates (which may include FSC, FAS and FSSC) on their own initiative have agreed to waive certain amounts of their respective fees and/or reimburse expenses. Total annual fund operating expenses (as shown in the financial highlights, excluding interest expense, extraordinary expenses and proxy-related expenses paid by the Fund, if any) paid by the Fund’s Institutional Shares, Cash II Shares and Cash Series Shares (after the voluntary waivers and/or reimbursements) will not exceed 0.20%, 0.90% and 1.05% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) October 1, 2023; or (b) the date of the Fund’s next effective Prospectus. While the Adviser and its applicable affiliates currently do not anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or the Fee Limit increased prior to the Termination Date with the agreement of the Trustees.
Annual Shareholder Report
17
Interfund Transactions
During the year ended July 31, 2022, the Fund engaged in sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees and/or common Officers. These sale transactions complied with Rule 17a-7 under the Act and amounted to $162,530,150. Net realized loss recognized on these transactions was $12,040.
Directors’/Trustees’ and Miscellaneous Fees
Certain Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate payment, Independent Directors’/Trustees’ fees and certain expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses are paid by an affiliate of the Adviser which in due course are reimbursed by the Fund. These expenses related to conducting meetings of the Directors/Trustees and other miscellaneous expenses may be included in Accrued and Miscellaneous Expenses on the Statement of Assets and Liabilities and Statement of Operations, respectively.
6. INTERFUND LENDING
Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other funds advised by subsidiaries of Federated Hermes, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating affiliated funds. As of July 31, 2022, there were no outstanding loans. During the year ended July 31, 2022, the program was not utilized.
7. INDEMNIFICATIONS
Under the Fund’s organizational documents, its Officers and Directors/Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund (other than liabilities arising out of their willful misfeasance, bad faith, gross negligence or reckless disregard of their duties to the Fund). In addition, in the normal course of business, the Fund provides certain indemnifications under arrangements with third parties. Typically, obligations to indemnify a third party arise in the context of an arrangement entered into by the Fund under which the Fund agrees to indemnify such third party for certain liabilities arising out of actions taken pursuant to the arrangement, provided the third party’s actions are not deemed to have breached an agreed-upon standard of care (such as willful misfeasance, bad faith, gross negligence or reckless disregard of their duties under the contract). The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet arisen. The Fund does not anticipate any material claims or losses pursuant to these arrangements at this time, and accordingly expects the risk of loss to be remote.
8. OTHER MATTERS
An outbreak of respiratory disease caused by a novel coronavirus was first detected in China in late 2019 and subsequently spread globally. As of the date of the issuance of these financial statements, this coronavirus has resulted in closing borders, enhanced health screenings, disruptions to healthcare service preparation and delivery, quarantines, cancellations, and disruptions to supply chains, workflow operations and consumer activity, as well as general concern and uncertainty. The impact of this coronavirus may continue for an extended period of time and has resulted in substantial
Annual Shareholder Report
18
economic volatility. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could continue to negatively affect the worldwide economy, as well as the economies of individual countries, individual companies (including certain Fund service providers and issuers of the Fund’s investments) and the markets in general in significant and unforeseen ways. Any such impact could adversely affect the Fund’s performance.
Annual Shareholder Report
19
Report of Independent Registered Public Accounting Firm
TO THE BOARD OF TRUSTEES OF FEDERATED HERMES MONEY MARKET OBLIGATIONS TRUST AND SHAREHOLDERS OF FEDERATED HERMES TRUST FOR U.S. TREASURY OBLIGATIONS:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of Federated Hermes Trust for U.S. Treasury Obligations (the “Fund”) (one of the portfolios constituting Federated Hermes Money Market Obligations Trust (the “Trust”)), including the portfolio of investments, as of July 31, 2022, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the portfolios constituting Federated Hermes Money Market Obligations Trust) at July 31, 2022, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
Annual Shareholder Report
20
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of July 31, 2022, by correspondence with the custodian and others or by other appropriate auditing procedures where replies from others were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more Federated Hermes investment companies since 1979.
Boston, Massachusetts
September 23, 2022
September 23, 2022
Annual Shareholder Report
21
Shareholder Expense Example (unaudited)
As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or other service fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2022 to July 31, 2022.
ACTUAL EXPENSES
The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses attributable to your investment during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Annual Shareholder Report
22
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
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Beginning
Account Value
2/1/2022
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Ending
Account Value
7/31/2022
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Expenses Paid
During Period1
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Actual:
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|
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|
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Institutional Shares
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$1,000
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$1,002.60
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$0.94
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Cash II Shares
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$1,000
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$1,000.80
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$2.682
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Cash Series Shares
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$1,000
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$1,000.60
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$2.883
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Hypothetical (assuming a 5% return
before expenses):
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|
|
|
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Institutional Shares
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$1,000
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$1,023.85
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$0.95
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Cash II Shares
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$1,000
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$1,022.12
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$2.712
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Cash Series Shares
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$1,000
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$1,021.92
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$2.913
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1
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Expenses are equal to the Fund’s annualized net expense ratios, multiplied by the average
account value over the period, multiplied by 181/365 (to reflect the one-half-year period). The
annualized net expense ratios are as follows:
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Institutional Shares
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0.19%
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Cash II Shares
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0.54%
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Cash Series Shares
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0.58%
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2
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Actual and Hypothetical expenses paid during the period utilizing the Fund’s Cash II Shares
current Fee Limit of 0.90% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $4.46 and $4.51, respectively.
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3
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Actual and Hypothetical expenses paid during the period utilizing the Fund’s Cash Series Shares
current Fee Limit of 1.05% (as reflected in the Notes to Financial Statements, Note 5 under
Expense Limitation), multiplied by the average account value over the period, multiplied by
181/365 (to reflect expenses paid as if they had been in effect throughout the most recent
one-half-year period) would be $5.21 and $5.26, respectively.
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Annual Shareholder Report
23
Board of Trustees and Trust Officers
The Board of Trustees is responsible for managing the Trust’s business affairs and for exercising all the Trust’s powers except those reserved for the shareholders. The following tables give information about each Trustee and the senior officers of the Fund. Where required, the tables separately list Trustees who are “interested persons” of the Fund (i.e., “Interested” Trustees) and those who are not (i.e., “Independent” Trustees). Unless otherwise noted, the address of each person listed is 1001 Liberty Avenue, Pittsburgh, PA 15222-3779. The address of all Independent Trustees listed is 4000 Ericsson Drive, Warrendale, PA 15086-7561; Attention: Mutual Fund Board. As of December 31, 2021, the Trust comprised 16 portfolio(s), and the Federated Hermes Fund Family consisted of 33 investment companies (comprising 102 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Trustee oversees all portfolios in the Federated Hermes Fund Family and serves for an indefinite term. The Fund’s Statement of Additional Information includes additional information about Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400, Option #4.
Interested TRUSTEES Background
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Name
Birth Date
Positions Held with Trust
Date Service Began
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Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
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J. Christopher Donahue*
Birth Date: April 11, 1949
President and Trustee
Indefinite Term
Began serving: April 1989
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Principal Occupations: Principal Executive Officer and President of
certain of the Funds in the Federated Hermes Fund Family; Director or
Trustee of the Funds in the Federated Hermes Fund Family; President,
Chief Executive Officer and Director, Federated Hermes, Inc.;
Chairman and Trustee, Federated Investment Management Company;
Trustee, Federated Investment Counseling; Chairman and Director,
Federated Global Investment Management Corp.; Chairman and
Trustee, Federated Equity Management Company of Pennsylvania;
Trustee, Federated Shareholder Services Company; Director,
Federated Services Company.
Previous Positions: President, Federated Investment Counseling;
President and Chief Executive Officer, Federated Investment
Management Company, Federated Global Investment Management
Corp. and Passport Research, Ltd; Chairman, Passport Research, Ltd.
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Annual Shareholder Report
24
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Name
Birth Date
Positions Held with Trust
Date Service Began
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Principal Occupation(s) for Past Five Years,
Other Directorships Held and Previous Position(s)
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Thomas R. Donahue*
Birth Date: October 20, 1958
Trustee
Indefinite Term
Began serving: May 2016
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Principal Occupations: Director or Trustee of certain of the funds in
the Federated Hermes Fund Family; Chief Financial Officer, Treasurer,
Vice President and Assistant Secretary, Federated Hermes, Inc.;
Chairman and Trustee, Federated Administrative Services; Chairman
and Director, Federated Administrative Services, Inc.; Trustee and
Treasurer, Federated Advisory Services Company; Director or Trustee
and Treasurer, Federated Equity Management Company of
Pennsylvania, Federated Global Investment Management Corp.,
Federated Investment Counseling, and Federated Investment
Management Company; Director, MDTA LLC; Director, Executive Vice
President and Assistant Secretary, Federated Securities Corp.;
Director or Trustee and Chairman, Federated Services Company and
Federated Shareholder Services Company; and Director and
President, FII Holdings, Inc.
Previous Positions: Director, Federated Hermes, Inc.; Assistant
Secretary, Federated Investment Management Company, Federated
Global Investment Management Company and Passport Research,
LTD; Treasurer, Passport Research, LTD; Executive Vice President,
Federated Securities Corp.; and Treasurer, FII Holdings, Inc.
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*
Family relationships and reasons for “interested” status: J. Christopher Donahue and Thomas R. Donahue are brothers. Both are “interested” due to their beneficial ownership of shares of Federated Hermes, Inc. and the positions they hold with Federated Hermes, Inc. and its subsidiaries.
INDEPENDENT TRUSTEES Background
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Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
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|
John T. Collins
Birth Date: January 24, 1947
Trustee
Indefinite Term
Began serving: September
2013
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Principal Occupations: Director or Trustee, and Chair of the Board
of Directors or Trustees, of the Federated Hermes Fund Family;
formerly, Chairman and CEO, The Collins Group, Inc. (a private equity
firm) (Retired).
Other Directorships Held: Director, KLX Energy Services Holdings,
Inc. (oilfield services); former Director of KLX Corp. (aerospace).
Qualifications: Mr. Collins has served in several business and financial
management roles and directorship positions throughout his career.
Mr. Collins previously served as Chairman and CEO of The Collins
Group, Inc. (a private equity firm) and as a Director of KLX Corp.
Mr. Collins serves as Chairman Emeriti, Bentley University. Mr. Collins
previously served as Director and Audit Committee Member, Bank of
America Corp.; Director, FleetBoston Financial Corp.; and Director,
Beth Israel Deaconess Medical Center (Harvard University
Affiliate Hospital).
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Annual Shareholder Report
25
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Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
G. Thomas Hough
Birth Date: February 28, 1955
Trustee
Indefinite Term
Began serving: August 2015
|
Principal Occupations: Director or Trustee, Chair of the Audit
Committee of the Federated Hermes Fund Family; formerly, Vice
Chair, Ernst & Young LLP (public accounting firm) (Retired).
Other Directorships Held: Director, Chair of the Audit Committee,
Equifax, Inc.; Lead Director, Member of the Audit and Nominating and
Corporate Governance Committees, Haverty Furniture Companies,
Inc.; formerly, Director, Member of Governance and Compensation
Committees, Publix Super Markets, Inc.
Qualifications: Mr. Hough has served in accounting, business
management and directorship positions throughout his career.
Mr. Hough most recently held the position of Americas Vice Chair of
Assurance with Ernst & Young LLP (public accounting firm). Mr. Hough
serves on the President’s Cabinet and Business School Board of
Visitors for the University of Alabama. Mr. Hough previously served on
the Business School Board of Visitors for Wake Forest University, and
he previously served as an Executive Committee member of the
United States Golf Association.
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Maureen Lally-Green
Birth Date: July 5, 1949
Trustee
Indefinite Term
Began serving: August 2009
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Adjunct Professor Emerita of Law, Duquesne University
School of Law; formerly, Dean of the Duquesne University School of
Law and Professor of Law and Interim Dean of the Duquesne
University School of Law; formerly, Associate General Secretary and
Director, Office of Church Relations, Diocese of Pittsburgh.
Other Directorships Held: Director, CNX Resources Corporation
(formerly known as CONSOL Energy Inc.).
Qualifications: Judge Lally-Green has served in various legal and
business roles and directorship positions throughout her career. Judge
Lally-Green previously held the position of Dean of the School of Law
of Duquesne University (as well as Interim Dean). Judge Lally-Green
previously served as a member of the Superior Court of Pennsylvania
and as a Professor of Law, Duquesne University School of Law. Judge
Lally-Green was appointed by the Supreme Court of Pennsylvania to
serve on the Supreme Court’s Board of Continuing Judicial Education
and the Supreme Court’s Appellate Court Procedural Rules
Committee. Judge Lally-Green also currently holds the positions on
not for profit or for profit boards of directors as follows: Director
and Chair, UPMC Mercy Hospital; Regent, Saint Vincent Seminary;
Member, Pennsylvania State Board of Education (public); Director,
Catholic Charities, Pittsburgh; and Director CNX Resources
Corporation (formerly known as CONSOL Energy Inc.). Judge
Lally-Green has held the positions of: Director, Auberle; Director,
Epilepsy Foundation of Western and Central Pennsylvania; Director,
Ireland Institute of Pittsburgh; Director, Saint Thomas More Society;
Director and Chair, Catholic High Schools of the Diocese of
Pittsburgh, Inc.; Director, Pennsylvania Bar Institute; Director,
St. Vincent College; Director and Chair, North Catholic High
School, Inc.; Director and Vice Chair, Our Campaign for the Church
Alive!, Inc.; and Director, Saint Francis University.
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Annual Shareholder Report
26
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Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
Thomas M. O’Neill
Birth Date: June 14, 1951
Trustee
Indefinite Term
Began serving: August 2006
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Sole Proprietor, Navigator Management Company
(investment and strategic consulting).
Other Directorships Held: None.
Qualifications: Mr. O’Neill has served in several business, mutual fund
and financial management roles and directorship positions throughout
his career. Mr. O’Neill serves as Director, Medicines for Humanity.
Mr. O’Neill previously served as Chief Executive Officer and President,
Managing Director and Chief Investment Officer, Fleet Investment
Advisors; President and Chief Executive Officer, Aeltus Investment
Management, Inc.; General Partner, Hellman, Jordan Management
Co., Boston, MA; Chief Investment Officer, The Putnam Companies,
Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director
and Consultant, EZE Castle Software (investment order management
software); Director, The Golisano Children’s Museum of Naples,
Florida; and Director, Midway Pacific (lumber).
|
|
Madelyn A. Reilly
Birth Date: February 2, 1956
Trustee
Indefinite Term
Began serving:
November 2020
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; formerly, Executive Vice President for Legal Affairs,
General Counsel and Secretary to the Board of Directors, Duquesne
University (Retired).
Other Directorships Held: None.
Qualifications: Ms. Reilly has served in various business and legal
management roles throughout her career. Ms. Reilly previously served
as Senior Vice President for Legal Affairs, General Counsel and
Secretary to the Board of Directors and Assistant General Counsel and
Director of Risk Management, Duquesne University. Prior to her work
at Duquesne University, Ms. Reilly served as Assistant General
Counsel of Compliance and Enterprise Risk as well as Senior Counsel
of Environment, Health and Safety, PPG Industries. Ms. Reilly currently
serves as a member of the Board of Directors of UPMC
Mercy Hospital.
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Annual Shareholder Report
27
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years,
Other Directorships Held, Previous Position(s) and Qualifications
|
|
P. Jerome Richey
Birth Date: February 23, 1949
Trustee
Indefinite Term
Began serving: September
2013
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; Management Consultant; Retired; formerly, Senior Vice
Chancellor and Chief Legal Officer, University of Pittsburgh and
Executive Vice President and Chief Legal Officer, CONSOL Energy Inc.
(now split into two separate publicly traded companies known as
CONSOL Energy Inc. and CNX Resources Corp.).
Other Directorships Held: None.
Qualifications: Mr. Richey has served in several business and legal
management roles and directorship positions throughout his career.
Mr. Richey most recently held the positions of Senior Vice Chancellor
and Chief Legal Officer, University of Pittsburgh. Mr. Richey previously
served as Chairman of the Board, Epilepsy Foundation of Western
Pennsylvania and Chairman of the Board, World Affairs Council of
Pittsburgh. Mr. Richey previously served as Chief Legal Officer and
Executive Vice President, CONSOL Energy Inc. and CNX Gas
Company; and Board Member, Ethics Counsel and Shareholder,
Buchanan Ingersoll & Rooney PC (a law firm).
|
|
John S. Walsh
Birth Date:
November 28, 1957
Trustee
Indefinite Term
Began serving: January 1999
|
Principal Occupations: Director or Trustee of the Federated Hermes
Fund Family; President and Director, Heat Wagon, Inc. (manufacturer
of construction temporary heaters); President and Director,
Manufacturers Products, Inc. (distributor of portable construction
heaters); President, Portable Heater Parts, a division of Manufacturers
Products, Inc.
Other Directorships Held: None.
Qualifications: Mr. Walsh has served in several business management
roles and directorship positions throughout his career. Mr. Walsh
previously served as Vice President, Walsh & Kelly, Inc.
(paving contractors).
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Annual Shareholder Report
28
OFFICERS
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Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Lori A. Hensler
Birth Date: January 6, 1967
TREASURER
Officer since: April 2013
|
Principal Occupations: Principal Financial Officer and Treasurer of the
Federated Hermes Fund Family; Senior Vice President, Federated
Administrative Services; Financial and Operations Principal for
Federated Securities Corp.; and Assistant Treasurer, Federated
Investors Trust Company. Ms. Hensler has received the Certified
Public Accountant designation.
Previous Positions: Controller of Federated Hermes, Inc.; Senior Vice
President and Assistant Treasurer, Federated Investors Management
Company; Treasurer, Federated Investors Trust Company; Assistant
Treasurer, Federated Administrative Services, Federated
Administrative Services, Inc., Federated Securities Corp., Edgewood
Services, Inc., Federated Advisory Services Company, Federated
Equity Management Company of Pennsylvania, Federated Global
Investment Management Corp., Federated Investment Counseling,
Federated Investment Management Company, Passport Research,
Ltd., and Federated MDTA, LLC; Financial and Operations Principal for
Federated Securities Corp., Edgewood Services, Inc. and Southpointe
Distribution Services, Inc.
|
|
Peter J. Germain
Birth Date:
September 3, 1959
CHIEF LEGAL OFFICER,
SECRETARY and EXECUTIVE
VICE PRESIDENT
Officer since: January 2005
|
Principal Occupations: Mr. Germain is Chief Legal Officer, Secretary
and Executive Vice President of the Federated Hermes Fund Family.
He is General Counsel, Chief Legal Officer, Secretary and Executive
Vice President, Federated Hermes, Inc.; Trustee and Senior Vice
President, Federated Investors Management Company; Trustee and
President, Federated Administrative Services; Director and President,
Federated Administrative Services, Inc.; Director and Vice President,
Federated Securities Corp.; Director and Secretary, Federated Private
Asset Management, Inc.; Secretary, Federated Shareholder Services
Company; and Secretary, Retirement Plan Service Company of
America. Mr. Germain joined Federated Hermes, Inc. in 1984 and is a
member of the Pennsylvania Bar Association.
Previous Positions: Deputy General Counsel, Special Counsel,
Managing Director of Mutual Fund Services, Federated Hermes, Inc.;
Senior Vice President, Federated Services Company; and Senior
Corporate Counsel, Federated Hermes, Inc.
|
|
Stephen Van Meter
Birth Date: June 5, 1975
CHIEF COMPLIANCE
OFFICER AND SENIOR VICE
PRESIDENT
Officer since: July 2015
|
Principal Occupations: Senior Vice President and Chief Compliance
Officer of the Federated Hermes Fund Family; Vice President and
Chief Compliance Officer of Federated Hermes, Inc. and Chief
Compliance Officer of certain of its subsidiaries. Mr. Van Meter joined
Federated Hermes, Inc. in October 2011. He holds FINRA licenses
under Series 3, 7, 24 and 66.
Previous Positions: Mr. Van Meter previously held the position of
Compliance Operating Officer, Federated Hermes, Inc. Prior to joining
Federated Hermes, Inc., Mr. Van Meter served at the United States
Securities and Exchange Commission in the positions of Senior
Counsel, Office of Chief Counsel, Division of Investment Management
and Senior Counsel, Division of Enforcement.
|
Annual Shareholder Report
29
|
Name
Birth Date
Positions Held with Trust
Date Service Began
|
Principal Occupation(s) for Past Five Years
and Previous Position(s)
|
|
Deborah A. Cunningham
Birth Date:
September 15, 1959
Chief Investment Officer
Officer since: May 2004
Portfolio Manager since:
January 1994
|
Principal Occupations: Deborah A. Cunningham has been the Fund’s
Portfolio Manager since January 1994. Ms. Cunningham was named
Chief Investment Officer of Federated Hermes’ money market
products in 2004. She joined Federated Hermes in 1981 and has been
a Senior Portfolio Manager since 1997 and an Executive Vice President
of the Fund’s Adviser since 2009. Ms. Cunningham has received the
Chartered Financial Analyst designation and holds an M.S.B.A. in
Finance from Robert Morris College.
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Annual Shareholder Report
30
Evaluation and Approval of Advisory Contract–May 2022
Federated Hermes Trust for U.S. Treasury Obligations (the “Fund”)
At its meetings in May 2022 (the “May Meetings”), the Fund’s Board of Trustees (the “Board”), including those Trustees who are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940 (the “Independent Trustees”), reviewed and unanimously approved the continuation of the investment advisory contract between the Fund and Federated Investment Management Company (the “Adviser”) (the “Contract”) for an additional one-year term. The Board’s determination to approve the continuation of the Contract reflects the exercise of its business judgment after considering all of the information and factors believed to be relevant and appropriate on whether to approve the continuation of the existing arrangement. The information, factors and conclusions that formed the basis for the Board’s approval are summarized below.
Information Received and Review Process
At the request of the Independent Trustees, the Fund’s Chief Compliance Officer (the “CCO”) furnished to the Board in advance of its May Meetings an independent written evaluation presenting on the topics discussed below. The Board considered the CCO’s independent written evaluation (the “CCO Fee Evaluation Report”), along with other information, in evaluating the reasonableness of the Fund’s management fee and in determining to approve the continuation of the Contract. The CCO, in preparing the CCO Fee Evaluation Report, has the authority to retain consultants, experts or staff as reasonably necessary to assist in the performance of his duties, reports directly to the Board, and can be terminated only with the approval of a majority of the Independent Trustees. At the request of the Independent Trustees, the CCO Fee Evaluation Report followed the same general approach and covered the same topics as that of the report that had previously been delivered by the CCO in his capacity as “Senior Officer” prior to the elimination of the Senior Officer position in December 2017.
In addition to the extensive materials that comprise and accompany the CCO Fee Evaluation Report, the Board considered information specifically prepared in connection with the approval of the continuation of the Contract that was presented at the May Meetings. In this regard, in the months preceding the May Meetings, the Board requested and reviewed written responses and supporting materials prepared by the Adviser and its affiliates (collectively, “Federated Hermes”) in response to requests posed to Federated Hermes by independent legal counsel on behalf of the Independent Trustees encompassing a wide variety of topics, including those summarized below. The Board also considered such additional matters as the Independent Trustees deemed
Annual Shareholder Report
31
reasonably necessary to evaluate the Contract, which included detailed information about the Fund and Federated Hermes furnished to the Board at its meetings throughout the year and in between regularly scheduled meetings on particular matters as the need arose.
The Board’s consideration of the Contract included review of materials and information covering the following matters, among others: the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates; Federated Hermes’ business and operations; the Adviser’s investment philosophy, personnel and processes; the Fund’s investment objectives and strategies; the Fund’s short-term and long-term performance (in absolute terms, both on a gross basis and net of expenses, and relative to the Fund’s particular investment program and a group of its peer funds and/or its benchmark, as appropriate); the Fund’s investment objectives; the Fund’s fees and expenses, including the advisory fee and the overall expense structure of the Fund (both in absolute terms and relative to a group of its peer funds), with due regard for contractual or voluntary expense limitations (if any); the financial condition of Federated Hermes; the Adviser’s profitability with respect to the Fund; distribution and sales activity for the Fund; and the use and allocation of brokerage commissions derived from trading the Fund’s portfolio securities (if any).
The Board also considered judicial decisions concerning allegedly excessive investment advisory fees charged to other registered funds in determining to approve the Contract. Using these judicial decisions as a guide, the Board observed that the following factors may be relevant to an adviser’s fiduciary duty with respect to its receipt of compensation from a fund: (1) the nature and quality of the services provided by the adviser to the fund and its shareholders, including the performance of the fund, its benchmark and comparable funds; (2) the adviser’s cost of providing the services and the profitability to the adviser of providing advisory services to the fund; (3) the extent to which the adviser may realize “economies of scale” as the fund grows larger and, if such economies of scale exist, whether they have been appropriately shared with the fund and its shareholders or the family of funds; (4) any “fall-out” benefits that accrue to the adviser because of its relationship with the fund, including research services received from brokers that execute fund trades and any fees paid to affiliates of the adviser for services rendered to the fund; (5) comparative fee and expense structures, including a comparison of management fees paid to the adviser with those paid by similar funds both internally and externally as well as management fees charged to institutional and other advisory clients of the adviser for what might be viewed as like services; and (6) the extent of care, conscientiousness and independence with which the fund’s board members perform their duties and their expertise, including whether they are fully informed about all facts the board deems relevant to its consideration of the adviser’s services and fees. The Board noted that the Securities and Exchange Commission (“SEC”) disclosure requirements
Annual Shareholder Report
32
regarding the basis for a fund board’s approval of the fund’s investment advisory contract generally align with the factors listed above. The Board was guided by these factors in its review of the Contract to the extent it considered them to be appropriate and relevant, as discussed further below. The Board considered and weighed these factors in light of its substantial accumulated experience in governing the Fund and working with Federated Hermes on matters relating to the oversight of the other funds advised by Federated Hermes (each, a “Federated Hermes Fund” and, collectively, the (“Federated Hermes Funds”).
In addition to considering the above-referenced factors, the Board was mindful of the preferences and expectations of Fund shareholders and the potential disruptions of the Fund’s operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew the Contract. In particular, the Board recognized that many shareholders likely have invested in the Fund on the strength of Federated Hermes’ industry standing and reputation and with the expectation that Federated Hermes will have a continuing role in providing advisory services to the Fund. Thus, the Board observed that in the marketplace there are a range of investment options available to the Fund’s shareholders and such shareholders, having had the opportunity to consider other investment options, have effectively selected Federated Hermes by virtue of investing in the Fund.
In determining to approve the continuation of the Contract, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the continuation of the Contract was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Contract. The Board recognized that its evaluation process is evolutionary and that the factors considered and emphasis placed on relevant factors may change in recognition of changing circumstances in the registered fund marketplace. The Independent Trustees were assisted throughout the evaluation process by independent legal counsel. In connection with their deliberations at the May Meetings, the Independent Trustees met separately in executive session with their independent legal counsel and without management present to review the relevant materials and consider their responsibilities under applicable laws. In addition, senior management representatives of Federated Hermes also met with the Independent Trustees and their independent legal counsel to discuss the materials and presentations furnished to the Board at the May Meetings. The Board considered the approval of the Contract for the Fund as part of its consideration of agreements for funds across the family of Federated Hermes Funds, but its approvals were made on a fund-by-fund basis.
Annual Shareholder Report
33
Nature, Extent and Quality of Services
The Board considered the nature, extent and quality of the services provided to the Fund by the Adviser and the resources of Federated Hermes dedicated to the Fund. In this regard, the Board evaluated, among other things, the terms of the Contract and the range of services provided to the Fund by Federated Hermes. The Board considered the Adviser’s personnel, investment philosophy and process, investment research capabilities and resources, trade operations capabilities, experience and performance track record. The Board reviewed the qualifications, backgrounds and responsibilities of the portfolio management team primarily responsible for the day-to-day management of the Fund and Federated Hermes’ ability and experience in attracting and retaining qualified personnel to service the Fund. In addition, the Board noted that the Fund is a money market mutual fund that operates in accordance with the limitations set forth in Rule 2a-7 under the 1940 Act. In this connection, the Board considered the expertise of the Adviser in managing money market funds, its extensive experience with the requirements of Rule 2a-7 and its commitment to managing the Fund in accordance with these requirements. The Board also considered the Adviser’s ability to deliver competitive investment performance for the Fund when compared to the Fund’s Performance Peer Group (as defined below), which was deemed by the Board to be a useful indicator of how the Adviser is executing the Fund’s investment program. The Board also considered the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, in order to maintain a positive yield for the Fund in the low interest rate environment.
In addition, the Board considered the financial resources and overall reputation of Federated Hermes and its willingness to consider and make investments in personnel, infrastructure, technology, cybersecurity, business continuity planning and operational enhancements that are designed to benefit the Federated Hermes Funds. The Board noted the significant acquisition of Hermes Fund Managers Limited by Federated Hermes, which has deepened the organization’s investment management expertise and capabilities and expanded the investment process for all of the Federated Hermes Funds to have access to analytical resources related to environmental, social and governance (“ESG”) factors and issuer engagement on ESG matters. The Board considered the quality of Federated Hermes’ communications with the Board and responsiveness to Board inquiries and requests made from time to time with respect to the Fund and other Federated Hermes Funds. In this regard, the Board took into account Federated Hermes’ communications with the Board in light of the pandemic. The Board also considered that Federated Hermes is responsible for providing the Federated Hermes Funds’ officers.
The Board received and evaluated information regarding Federated Hermes’ regulatory and compliance environment. The Board considered Federated Hermes’ compliance program and compliance history and reports from the CCO about Federated Hermes’ compliance with applicable laws and
Annual Shareholder Report
34
regulations, including responses to regulatory developments and any compliance or other issues raised by regulatory agencies. The Board also noted Federated Hermes’ support of the Federated Hermes Funds’ compliance control structure and the compliance-related resources devoted by Federated Hermes in support of the Fund’s obligations pursuant to Rule 38a-1 under the Investment Company Act of 1940, including Federated Hermes’ commitment to respond to rulemaking and other regulatory initiatives of the SEC. The Board considered Federated Hermes’ approach to internal audits and risk management with respect to the Federated Hermes Funds and its day-to-day oversight of the Federated Hermes Funds’ compliance with their investment objectives and policies as well as with applicable laws and regulations, noting that regulatory and other developments had over time led to an increase in the scope of Federated Hermes’ oversight in this regard, including in connection with the designation of the Federated Hermes Funds’ investment advisers as the administrators of the Federated Hermes Funds’ liquidity risk management program.
The Board also considered the implementation of Federated Hermes’ business continuity plans and recognized steps taken by Federated Hermes to continue to provide the same nature, extent and quality of services to the Federated Hermes Funds during the pandemic. In addition, the Board noted Federated Hermes’ commitment to maintaining high quality systems and expending substantial resources to prepare for and respond to ongoing changes due to the market, regulatory and control environments in which the Fund and its service providers operate, including changes associated with the pandemic.
The Board considered Federated Hermes’ efforts to provide shareholders in the Federated Hermes Funds with a comprehensive array of funds with different investment objectives, policies and strategies. The Board considered the expenses that Federated Hermes had incurred, as well as the entrepreneurial and other risks assumed by Federated Hermes, in sponsoring and providing on-going services to new funds to expand these opportunities for shareholders. The Board noted the benefits to shareholders of being part of the family of Federated Hermes Funds, which include the general right to exchange investments between the same class of shares without the incurrence of additional sales charges.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided by the Adviser to the Fund.
Fund Investment Performance
The Board considered the investment performance of the Fund. In evaluating the Fund’s investment performance, the Board considered performance results in light of the Fund’s investment objective, strategies and risks. The Board considered detailed investment reports on, and the Adviser’s analysis of, the Fund’s performance over different time periods that were
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provided to the Board throughout the year and in connection with the May Meetings. These reports include, among other items, information on the Fund’s gross and net returns, the Fund’s investment performance compared to one or more relevant categories or groups of peer funds and the Fund’s benchmark index, performance attribution information and commentary on the effect of market conditions.
The Board also reviewed comparative information regarding the performance of other registered funds in the category of peer funds selected by iMoneyNet, an independent fund ranking organization (the “Performance Peer Group”). The Board noted the CCO’s view that comparisons to fund peer groups may be helpful, though not conclusive, in evaluating the performance of the Adviser in managing the Fund. The Board considered, in evaluating such comparisons, that in some cases there may be differences in the funds’ objectives or investment management techniques, or the costs to implement the funds, even within the same Performance Peer Group.
The Fund’s performance fell below the median of the Performance Peer Group for the one-year period ended December 31, 2021. The Board discussed the Fund’s performance with the Adviser and recognized the efforts being taken by the Adviser in the context of other factors considered relevant by the Board. The Board also considered the relatively tight dispersion of performance data with respect to the Fund and its Peer Group.
Based on these considerations, the Board concluded that it had continued confidence in the Adviser’s overall capabilities to manage the Fund.
Fund Expenses
The Board considered the advisory fee and overall expense structure of the Fund and the comparative fee and expense information that had been provided in connection with the May Meetings. In this regard, the Board was presented with, and considered, information regarding the contractual advisory fee rates, net advisory fee rates, total expense ratios and each element of the Fund’s total expense ratio (i.e., gross and net advisory fees, administrative fees, custody fees, portfolio accounting fees and transfer agency fees) relative to an appropriate group of peer funds compiled by Federated Hermes from the category of peer funds selected by iMoneyNet (the “Expense Peer Group”). The Board received a description of the methodology used to select the Expense Peer Group from the overall iMoneyNet category. The Board also reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall iMoneyNet category.
While mindful that courts have cautioned against giving too much weight to comparative information concerning fees charged by other advisers for managing funds with comparable investment programs, the Board noted that it found the use of such comparisons to be relevant to its evaluation. The Board focused on comparisons with other similar registered funds more heavily than non-registered fund products or services because such comparisons are
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believed to be more relevant. The Board considered that other registered funds are the products most like the Fund, in that they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle, in fact, chosen and maintained by the Fund’s shareholders. The Board noted that the range of such other registered funds’ fees and expenses, therefore, appears to be a relevant indicator of what investors have found to be reasonable in the marketplace in which the Fund competes.
The Board reviewed the contractual advisory fee rate, net advisory fee rate and other expenses of the Fund and noted the position of the Fund’s fee rates relative to its Expense Peer Group. In this regard, the Board noted that the contractual advisory fee rate was above the median of the Expense Peer Group, but the Board noted the applicable waivers and reimbursements, and that the overall expense structure of the Fund remained competitive in the context of other factors considered by the Board.
The Board also received and considered information about the fees charged by Federated Hermes for providing advisory services to other types of clients with investment strategies similar to those of the Federated Hermes Funds, including non-registered fund clients (such as institutional separate accounts) and third-party unaffiliated registered funds for which the Adviser or its affiliates serve as sub-adviser. The Board noted the CCO’s conclusion that non-registered fund clients are inherently different products due to the following differences, among others: (i) different types of targeted investors; (ii) different applicable laws and regulations; (iii) different legal structures; (iv) different average account sizes and portfolio management techniques made necessary by different cash flows and different associated costs; (v) the time spent by portfolio managers and their teams (among other personnel across various departments, including legal, compliance and risk management) in reviewing securities pricing and fund liquidity; (vi) different administrative responsibilities; (vii) different degrees of risk associated with management; and (viii) a variety of different costs. The Board also considered information regarding the differences in the nature of the services required for Federated Hermes to manage its proprietary registered fund business versus managing a discrete pool of assets as a sub-adviser to another institution’s registered fund, noting the CCO’s view that Federated Hermes generally performs significant additional services and assumes substantially greater risks in managing the Fund and other Federated Hermes Funds than in its role as sub-adviser to an unaffiliated third-party registered fund. The Board noted that the CCO did not consider the fees for providing advisory services to other types of clients to be determinative in judging the appropriateness of the Federated Hermes Funds’ advisory fees.
Based on these considerations, the Board concluded that the fees and total operating expenses of the Fund, in conjunction with other matters considered, are reasonable in light of the services provided.
Annual Shareholder Report
37
Profitability
The Board received and considered profitability information furnished by Federated Hermes, as requested by the CCO. Such profitability information included revenues reported on a fund-by-fund basis and estimates of the allocation of expenses made on a fund-by-fund basis, using allocation methodologies specified by the CCO and described to the Board. The Board considered the CCO’s view that, while these cost allocation reports apply consistent allocation processes, the inherent difficulties in allocating costs on a fund-by-fund basis continues to cause the CCO to question the precision of the process and to conclude that such reports may be unreliable because a single change in an allocation estimate may dramatically alter the resulting estimate of cost and/or profitability of a Federated Hermes Fund and may produce unintended consequences. In addition, the Board considered the CCO’s view that the allocation methodologies used by Federated Hermes in estimating profitability for purposes of reporting to the Board in connection with the continuation of the Contract are consistent with the methodologies previously reviewed by an independent consultant. The Board noted that the independent consultant had previously conducted a review of the allocation methodologies and reported that, although there is no single best method to allocate expenses, the methodologies used by Federated Hermes are reasonable. The Board noted the impact of the additional yield support provided by Federated Hermes, in the form of voluntary fee waivers and/or expense reimbursements, on the profitability of the Fund to the Adviser.
The Board also reviewed information compiled by Federated Hermes comparing its profitability information to other publicly held fund management companies, including information regarding profitability trends over time. The Board considered the CCO’s conclusion that, based on such profitability information, Federated Hermes’ profit margins did not appear to be excessive. The Board also considered the CCO’s view that Federated Hermes appeared financially sound, with the resources necessary to fulfill its obligations under its contracts with the Federated Hermes Funds.
Economies of Scale
The Board received and considered information about the notion of possible realization of “economies of scale” as a fund grows larger, the difficulties of calculating economies of scale at an individual fund level, and the extent to which potential scale benefits are shared with shareholders. In this regard, the Board considered that Federated Hermes has made significant and long-term investments in areas that support all of the Federated Hermes Funds, such as: personnel, processes and tools for portfolio management, including the use of market data on which portfolio managers make investment decisions; trading operations; ESG integration and issuer engagement on ESG matters; shareholder services; compliance; business continuity; cybersecurity; internal audit and risk management functions; and technology that supports the provision of investment management services. The Board noted that Federated
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38
Hermes’ investments in these areas are extensive and are designed to provide enhanced services to the Federated Hermes Funds and their shareholders. The Board considered that the benefits of these investments are likely to be shared with the family of Federated Hermes Funds as a whole. In addition, the Board considered that fee waivers and expense reimbursements are another means for potential economies of scale to be shared with shareholders and can provide protection from an increase in expenses if a Federated Hermes Fund’s assets decline. The Board considered that, in order for the Federated Hermes Funds to remain competitive in the marketplace, Federated Hermes has frequently waived fees and/or reimbursed expenses for the Federated Hermes Funds and has disclosed to shareholders and/or reported to the Board its intention to do so (or continue to do so) in the future. The Board also considered Federated Hermes’ reductions in contractual management fees for certain Federated Hermes Funds during the prior year, including in response to the CCO’s recommendations in the prior year’s CCO Fee Evaluation Report, which have resulted in benefits being realized by shareholders.
The Board also considered reports on adviser-paid fees (commonly referred to as “revenue sharing”) that were provided to the Board throughout the year and in connection with the May Meetings. The Board considered that Federated Hermes and the CCO believe that this information should be viewed to determine if there was an incentive to either not apply breakpoints, or to apply breakpoints at higher levels, and should not be viewed to evaluate the reasonableness of advisory fees. The Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which is compounded by the lack of any uniform methodology or pattern with respect to structuring fund advisory fees with breakpoints that serve to reduce the fees as a fund attains a certain size.
Other Benefits
The Board considered information regarding the compensation and other ancillary (or “fall-out”) benefits that Federated Hermes derived from its relationships with the Federated Hermes Funds. The Board noted that, in addition to receiving advisory fees under the Federated Hermes Funds’ investment advisory contracts, Federated Hermes’ affiliates also receive fees for providing other services to the Federated Hermes Funds under separate contracts (e.g., for serving as the Federated Hermes Funds’ administrator and distributor). In this regard, the Board considered that certain of Federated Hermes’ affiliates provide distribution and shareholder services to the Federated Hermes Funds, for which they may be compensated through distribution and servicing fees paid pursuant to Rule 12b-1 plans or otherwise. The Board also received and considered information detailing any indirect benefit that Federated Hermes may derive from its receipt of research services from brokers who execute portfolio trades for the Federated Hermes Funds.
Annual Shareholder Report
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Conclusions
The Board considered: (i) the CCO’s conclusion that his observations and the information accompanying the CCO Fee Evaluation Report show that the management fee for the Fund is reasonable; and (ii) the CCO’s recommendation that the Board approve the management fee. The Board noted that, under these circumstances, no changes were recommended to, and no objection was raised to the continuation of, the Contract by the CCO. The CCO also recognized that the Board’s evaluation of the Federated Hermes Funds’ advisory and sub-advisory arrangements is a continuing and ongoing process that is informed by the information that the Board requests and receives from management throughout the course of the year and, in this regard, the CCO noted certain items for future reporting to the Board or further consideration by management as the Board continues its ongoing oversight of the Federated Hermes Funds.
On the basis of the information and factors summarized above, among other information and factors deemed relevant by the Board, and the evaluation thereof, the Board, including the Independent Trustees, unanimously voted to approve the continuation of the Contract. The Board based its determination to approve the Contract on the totality of the circumstances and relevant factors and with a view of past and future long-term considerations. Not all of the factors and considerations identified above were necessarily deemed to be relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were deemed to be relevant, the Board’s determination to approve the continuation of the Contract reflects its view that Federated Hermes’ performance and actions provided a satisfactory basis to support the determination to approve the continuation of the existing arrangement.
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40
Voting Proxies on Fund Portfolio Securities
A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund’s portfolio is available, without charge and upon request, by calling 1-800-341-7400, Option #4. A report on “Form N-PX” of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available via the Proxy Voting Record (Form N-PX) link associated with the Fund and share class name at FederatedInvestors.com/FundInformation. Form N-PX filings are also available at the SEC’s website at sec.gov.
Portfolio Schedule
The Fund files with the SEC a complete schedule of its portfolio holdings as of the close of each month on “Form N-MFP.” Form N-MFP is available on the SEC’s website at sec.gov. You may access Form N-MFP via the link to the Fund and share class name at FederatedInvestors.com.
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41
You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
This Report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund’s Prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.
Federated Hermes Trust for U.S. Treasury Obligations
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at FederatedInvestors.com
or call 1-800-341-7400.
or call 1-800-341-7400.
Federated Securities Corp., Distributor
CUSIP 60934N799
CUSIP 608919551
CUSIP 608919569
CUSIP 608919551
CUSIP 608919569
28731 (9/22)
© 2022 Federated Hermes, Inc.
| Item 2. | Code of Ethics |
(a) As of the end of the period covered by this report, the registrant has adopted a code of ethics (the "Section 406 Standards for Investment Companies - Ethical Standards for Principal Executive and Financial Officers") that applies to the registrant's Principal Executive Officer and Principal Financial Officer; the registrant's Principal Financial Officer also serves as the Principal Accounting Officer.
(c) There was no amendment to the registrant’s code of ethics described in Item 2(a) above during the period covered by the report.
(d) There was no waiver granted, either actual or implicit, from a provision to the registrant’s code of ethics described in Item 2(a) above during the period covered by the report.
(e) Not Applicable
(f)(3) The registrant hereby undertakes to provide any person, without charge, upon request, a copy of the code of ethics. To request a copy of the code of ethics, contact the registrant at 1-800-341-7400, and ask for a copy of the Section 406 Standards for Investment Companies - Ethical Standards for Principal Executive and Financial Officers.
Item 3. Audit Committee Financial Expert
The registrant's Board has determined that each of the following members of the Board's Audit Committee is an “audit committee financial expert,” and is "independent," for purposes of this Item: G. Thomas Hough and Thomas M. O'Neill.
| Item 4. | Principal Accountant Fees and Services |
(a) Audit Fees billed to the registrant for the two most recent fiscal years:
Fiscal year ended 2022 – $371,896
Fiscal year ended 2021 - $441,180
(b) Audit-Related Fees billed to the registrant for the two most recent fiscal years:
Fiscal year ended 2022 - $4,690
Fiscal year ended 2021 - $0
Fiscal year ended 2022- Audit consent fee for N-1A filing.
Amount requiring approval of the registrant’s Audit Committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $0 and $0 respectively.
(c) Tax Fees billed to the registrant for the two most recent fiscal years:
Fiscal year ended 2022 - $0
Fiscal year ended 2021 - $0
Amount requiring approval of the registrant’s Audit Committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $0 and $0 respectively.
(d) All Other Fees billed to the registrant for the two most recent fiscal years:
Fiscal year ended 2022 - $0
Fiscal year ended 2021 - $0
Amount requiring approval of the registrant’s Audit Committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $0 and $0 respectively.
(e)(1) Audit Committee Policies regarding Pre-approval of Services.
The Audit Committee is required to pre-approve audit and non-audit services performed by the independent auditor in order to assure that the provision of such services do not impair the auditor’s independence. Unless a type of service to be provided by the independent auditor has received general pre-approval, it will require specific pre-approval by the Audit Committee. Any proposed services exceeding pre-approved cost levels will require specific pre-approval by the Audit Committee.
Certain services have the general pre-approval of the Audit Committee. The term of the general pre-approval is 12 months from the date of pre-approval, unless the Audit Committee specifically provides for a different period. The Audit Committee will annually review the services that may be provided by the independent auditor without obtaining specific pre-approval from the Audit Committee and may grant general pre-approval for such services. The Audit Committee will revise the list of general pre-approved services from time to time, based on subsequent determinations. The Audit Committee will not delegate to management its responsibilities to pre-approve services performed by the independent auditor.
The Audit Committee has delegated pre-approval authority to its chairman (the “Chairman”) for services that do not exceed a specified dollar threshold. The Chairman or Chief Audit Executive will report any such pre-approval decisions to the Audit Committee at its next scheduled meeting. The Committee will designate another member with such pre-approval authority when the Chairman is unavailable.
AUDIT SERVICES
The annual audit services engagement terms and fees will be subject to the specific pre-approval of the Audit Committee. The Audit Committee will approve, if necessary, any changes in terms, conditions and fees resulting from changes in audit scope, registered investment company (RIC) structure or other matters.
In addition to the annual audit services engagement specifically approved by the Audit Committee, the Audit Committee may grant general pre-approval for other audit services, which are those services that only the independent auditor reasonably can provide. The Audit Committee has pre-approved certain audit services; with limited exception, all other audit services must be specifically pre-approved by the Audit Committee.
AUDIT-RELATED SERVICES
Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of the RIC’s financial statements or that are traditionally performed by the independent auditor. The Audit Committee believes that the provision of audit-related services does not impair the independence of the auditor, and has pre-approved certain audit-related services; all other audit-related services must be specifically pre-approved by the Audit Committee.
TAX SERVICES
The Audit Committee believes that the independent auditor can provide tax services to the RIC such as tax compliance, tax planning and tax advice without impairing the auditor’s independence. However, the Audit Committee will not permit the retention of the independent auditor in connection with a transaction initially recommended by the independent auditor, the purpose of which may be tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Audit Committee has pre-approved certain tax services; with limited exception, all tax services involving large and complex transactions must be specifically pre-approved by the Audit Committee.
ALL OTHER SERVICES
With respect to the provision of permissible services other than audit, review or attest services the pre-approval requirement is waived if:
| (1) | With respect to such services rendered to the Funds, the aggregate amount of all such services provided constitutes no more than five percent of the total amount of revenues paid by the audit client to its accountant during the fiscal year in which the services are provided; and, |
| (2) | With respect to such services rendered to the Fund’s investment adviser ( the “Adviser”)and any entity controlling, controlled by to under common control with the Adviser such as affiliated non-U.S. and U.S. funds not under the Audit Committee’s purview and which do not fall within a category of service which has been determined by the Audit Committee not to have a direct impact on the operations or financial reporting of the RIC, the aggregate amount of all services provided constitutes no more than five percent of the total amount of revenues paid to the RIC’s auditor by the RIC, its Adviser and any entity controlling, controlled by, or under common control with the Adviser during the fiscal year in which the services are provided; and |
| (3) | Such services were not recognized by the issuer or RIC at the time of the engagement to be non-audit services; and |
| (4) | Such services are promptly brought to the attention of the Audit Committee and approved prior to the completion of the audit by the Audit Committee or by one or more members of the Audit Committee who are members of the Board of Directors to whom authority to grant such approvals has been delegated by the Audit Committee. |
The Audit Committee may grant general pre-approval to those permissible non-audit services which qualify for pre-approval and which it believes are routine and recurring services, and would not impair the independence of the auditor.
The Securities and Exchange Commission’s (the “SEC”) rules and relevant guidance should be consulted to determine the precise definitions of these services and applicability of exceptions to certain of the prohibitions.
PRE-APPROVAL FEE LEVELS
Pre-approval fee levels for all services to be provided by the independent auditor will be established annually by the Audit Committee. Any proposed services exceeding these levels will require specific pre-approval by the Audit Committee.
PROCEDURES
Requests or applications to provide services that require specific approval by the Audit Committee will be submitted to the Audit Committee by the Fund’s Principal Accounting Officer and/or the Chief Audit Executive of Federated Hermes, Inc., only after those individuals have determined that the request or application is consistent with the SEC’s rules on auditor independence.
(e)(2) Percentage of services identified in items 4(b) through 4(d) that were approved by the registrant’s Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X:
4(b)
Fiscal year ended 2022 – 0%
Fiscal year ended 2021 - 0%
Percentage of services provided to the registrant’s Adviser and any entity controlling, controlled by, or under common control with the Adviser that provides ongoing services to the registrant that were approved by the registrant’s Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, 0% and 0% respectively.
4(c)
Fiscal year ended 2022 – 0%
Fiscal year ended 2021 – 0%
Percentage of services provided to the registrant’s Adviser and any entity controlling, controlled by, or under common control with the Adviser that provides ongoing services to the registrant that were approved by the registrant’s Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, 0% and 0% respectively.
4(d)
Fiscal year ended 2022 – 0%
Fiscal year ended 2021 – 0%
Percentage of services provided to the registrant’s Adviser and any entity controlling, controlled by, or under common control with the Adviser that provides ongoing services to the registrant that were approved by the registrant’s Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, 0% and 0% respectively.
| (f) | NA |
| (g) | Non-Audit Fees billed to the registrant, the registrant’s Adviser, and certain entities controlling, controlled by or under common control with the Adviser: |
Fiscal year ended 2022 - $214,080
Fiscal year ended 2021 - $72,568
| (h) | The registrant’s Audit Committee has considered that the provision of non-audit services that were rendered to the registrant’s Adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the Adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence. |
| Item 5. | Audit Committee of Listed Registrants |
Not Applicable
| Item 6. | Schedule of Investments |
(a) The registrant’s Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this form.
(b) Not Applicable; Fund had no divestments during the reporting period covered since the previous Form N-CSR filing.
| Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies |
Not Applicable
| Item 8. | Portfolio Managers of Closed-End Management Investment Companies |
Not Applicable
| Item 9. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers |
Not Applicable
| Item 10. | Submission of Matters to a Vote of Security Holders |
No Changes to Report
| Item 11. | Controls and Procedures |
(a) The registrant’s President and Treasurer have concluded that the
registrant’s disclosure controls and procedures (as defined in rule 30a-3(c) under the Act) are effective in design and operation and are sufficient to form the basis of the certifications required by Rule 30a-(2) under the Act, based on their evaluation of these disclosure controls and procedures within 90 days of the filing date of this report on Form N-CSR.
(b) There were no changes in the registrant’s internal control over financial reporting (as defined in rule 30a-3(d) under the Act) during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
| Item 12. | Disclosure of Securities Lending Activities for Closed-End Management Investment Companies |
Not Applicable
| Item 13. | Exhibits |
(a)(1) Code of Ethics- Not Applicable to this Report.
(a)(2) Certifications of Principal Executive Officer and Principal Financial Officer.
(a)(3) Not Applicable.
(b) Certifications pursuant to 18 U.S.C. Section 1350.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant Federated Hermes Money Market Obligations Trust
By /S/ Lori A. Hensler
Lori A. Hensler, Principal Financial Officer
Date September 23, 2022
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By /S/ J. Christopher Donahue
J. Christopher Donahue, Principal Executive Officer
Date September 23, 2022
By /S/ Lori A. Hensler
Lori A. Hensler, Principal Financial Officer
Date September 23, 2022