# EDGAR Filing Document

**Accession Number:** 0000912577
**File Stem:** 0001623632-23-000354
**Filing Date:** 2023-2
**Character Count:** 1050717
**Document Hash:** 7f1d0d260443daef28b5617a8b9e3880
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001623632-23-000354.hdr.sgml**: 20230223

**ACCESSION NUMBER**: 0001623632-23-000354

**CONFORMED SUBMISSION TYPE**: N-CSR

**PUBLIC DOCUMENT COUNT**: 17

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230223

**DATE AS OF CHANGE**: 20230223

**EFFECTIVENESS DATE**: 20230223

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** FEDERATED HERMES INSURANCE SERIES
- **CENTRAL INDEX KEY:** 0000912577
- **IRS NUMBER:** 256425525
- **STATE OF INCORPORATION:** MA
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** N-CSR
- **SEC ACT:** 1940 Act
- **SEC FILE NUMBER:** 811-08042
- **FILM NUMBER:** 23659400

**BUSINESS ADDRESS:**
- **STREET 1:** 4000 ERICSSON DRIVE
- **CITY:** WARRENDALE
- **STATE:** PA
- **ZIP:** 15086-7561
- **BUSINESS PHONE:** 8003417400

**MAIL ADDRESS:**
- **STREET 1:** 4000 ERICSSON DRIVE
- **CITY:** WARRENDALE
- **STATE:** PA
- **ZIP:** 15086-7561

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** FEDERATED INSURANCE SERIES
- **DATE OF NAME CHANGE:** 19960328

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** INSURANCE MANAGEMENT SERIES
- **DATE OF NAME CHANGE:** 19930924

## Series and Classes Contracts Data

### Federated Hermes Government Money Fund II (Series ID: S000009743)

| Class ID   | Class Name     | Ticker Symbol   |
|:---|:---|:---|
| C000026768 | Service Shares |  |

### Federated Hermes Quality Bond Fund II (Series ID: S000009744)

| Class ID   | Class Name     | Ticker Symbol   |
|:---|:---|:---|
| C000026769 | Primary Shares |  |
| C000026770 | Service Shares |  |

### Federated Hermes Managed Volatility Fund II (Series ID: S000009746)

| Class ID   | Class Name     | Ticker Symbol   |
|:---|:---|:---|
| C000026773 | Primary Shares |  |
| C000199834 | Service Shares |  |

### Federated Hermes Fund for U.S. Government Securities II (Series ID: S000009748)

| Class ID   | Class Name                                              | Ticker Symbol   |
|:---|:---|:---|
| C000026775 | Federated Hermes Fund for U.S. Government Securities II |  |

### Federated Hermes High Income Bond Fund II (Series ID: S000009749)

| Class ID   | Class Name     | Ticker Symbol   |
|:---|:---|:---|
| C000026776 | Primary Shares |  |
| C000026777 | Service Shares |  |

### Federated Hermes Kaufmann Fund II (Series ID: S000009751)

| Class ID   | Class Name     | Ticker Symbol   |
|:---|:---|:---|
| C000026779 | Primary Shares |  |
| C000026780 | Service Shares |  |

**United States**

**Securities and Exchange Commission**

**Washington, D.C. 20549**

**Form N-CSR**

**Certified Shareholder Report of Registered Management Investment Companies**

<u>811-8042</u>

(Investment Company Act File Number)

**Federated Hermes Insurance Series**

_______________________________________________________________

(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: <u>12/31/22</u>

Date of Reporting Period: <u>12/31/22</u>

**Item 1.** **Reports to Stockholders**

**Annual Shareholder Report**

***December 31, 2022***

![](img639fc5821.gif)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| **Share Class** | **Service**  |

---

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Federated Hermes Government Money Fund II

------

A Portfolio of Federated Hermes Insurance Series

Dear Valued Shareholder,

We are pleased to present the Annual Shareholder Report for your fund covering the period from January 1, 2022 through December 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, <br> ![](fisherjohnsigsmall.jpg)

John B. Fisher, President

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**Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee**

------

**CONTENTS** 

---

| | |
|:---|:---|
| [Portfolio of Investments Summary Tables](#xx_daf9c355-c758-4ec9-bc38-c34a53c50247_1) | &nbsp;&nbsp; [1](#xx_daf9c355-c758-4ec9-bc38-c34a53c50247_1)  |
| [Portfolio of Investments](#xx_daf9c355-c758-4ec9-bc38-c34a53c50247_2) | &nbsp;&nbsp; [2](#xx_daf9c355-c758-4ec9-bc38-c34a53c50247_2)  |
| [Financial Highlights](#xx_9fc15c2a-bf3e-4d51-a38b-011e84f3dc78_1) | &nbsp;&nbsp; [4](#xx_9fc15c2a-bf3e-4d51-a38b-011e84f3dc78_1)  |
| [Statement of Assets and Liabilities](#xx_52664e82-472b-45ec-965c-92a457303e70_1) | &nbsp;&nbsp; [5](#xx_52664e82-472b-45ec-965c-92a457303e70_1)  |
| [Statement of Operations](#xx_52664e82-472b-45ec-965c-92a457303e70_2) | &nbsp;&nbsp; [6](#xx_52664e82-472b-45ec-965c-92a457303e70_2)  |
| [Statement of Changes in Net Assets](#xx_52664e82-472b-45ec-965c-92a457303e70_3) | &nbsp;&nbsp; [7](#xx_52664e82-472b-45ec-965c-92a457303e70_3)  |
| [Notes to Financial Statements](#xx_67fa5492-e6f4-4a0c-a063-e8230216d49a_1) | &nbsp;&nbsp; [8](#xx_67fa5492-e6f4-4a0c-a063-e8230216d49a_1)  |
| [Report of Independent Registered Public Accounting Firm](#xx_8ebb8fe0-4607-4216-8dc6-53fe79d7671a_1) | [12](#xx_8ebb8fe0-4607-4216-8dc6-53fe79d7671a_1)  |
| [Shareholder Expense Example](#xx_b019ef27-6bca-4b5d-9a3d-84112abc118f_1) | [13](#xx_b019ef27-6bca-4b5d-9a3d-84112abc118f_1)  |
| [Board of Trustees and Trust Officers](#xx_9bdd2260-269a-4116-add4-76656172d1ef_1) | [14](#xx_9bdd2260-269a-4116-add4-76656172d1ef_1)  |
| [Evaluation and Approval of Advisory Contract](#xx_3b8e2f20-5ca9-43d0-94eb-b466d1f89fbb_1) | [18](#xx_3b8e2f20-5ca9-43d0-94eb-b466d1f89fbb_1)  |
| [Voting Proxies on Fund Portfolio Securities](#xx_cb181a91-f444-4c04-8b05-edf919ae3e5d_1) | [24](#xx_cb181a91-f444-4c04-8b05-edf919ae3e5d_1)  |
| [Portfolio Schedule](#xx_cb181a91-f444-4c04-8b05-edf919ae3e5d_1) | [24](#xx_cb181a91-f444-4c04-8b05-edf919ae3e5d_1) |

---

------

Portfolio of Investments Summary Tables (unaudited)

At December 31, 2022, the Fund's portfolio composition<sup>1</sup> was as follows:

---

| | |
|:---|:---|
| **Security Type** | **Percentage of** <br>**Total Net Assets**<br>|
| U.S. Government Agency Securities | 18.5% |
| U.S. Treasury Securities | &nbsp;&nbsp; 9.3% |
| Repurchase Agreements | 71.8% |
| Other Assets and Liabilities—Net<sup>2</sup> <br>| &nbsp;&nbsp; 0.4% |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | **100%** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 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 December 31, 2022, the Fund's effective maturity schedule<sup>1</sup> was as follows:

---

| | |
|:---|:---|
| **Securities With an** <br>**Effective Maturity of:**<br>| **Percentage of** <br>**Total Net Assets**<br>|
| 1-7 Days | 92.0% |
| 8-30 Days | &nbsp;&nbsp; 1.0% |
| 31-90 Days | &nbsp;&nbsp; 1.6% |
| 91-180 Days | &nbsp;&nbsp; 1.0% |
| 181 Days or more | &nbsp;&nbsp; 4.0% |
| Other Assets and Liabilities—Net<sup>2</sup> <br>| &nbsp;&nbsp; 0.4% |
| &nbsp;&nbsp;&nbsp;&nbsp; Total | **100%** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 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* <br> *mutual funds.*<br>|
| 2 | *Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.* |

---

Annual Shareholder Report

**1**

------

Portfolio of Investments

December 31, 2022

---

| | | |
|:---|:---|:---|
| **Principal** <br>**Amount**<br>|  | **Value** |
|  | GOVERNMENT AGENCIES—18.5% |  |
| $925000<br><sup>1</sup> <br>| Federal Farm Credit System Floating Rate Notes, 4.325% (Secured Overnight Financing Rate +0.025%), 1/2/2023 | $924997 |
| &nbsp;&nbsp; 400000<br><sup>1</sup> <br>| Federal Farm Credit System Floating Rate Notes, 4.327% (Secured Overnight Financing Rate +0.027%), 1/2/2023 | &nbsp;&nbsp; 399963 |
| &nbsp;&nbsp; 350000<br><sup>1</sup> <br>| Federal Farm Credit System Floating Rate Notes, 4.340% (Secured Overnight Financing Rate +0.040%), 1/2/2023 | &nbsp;&nbsp; 350000 |
| &nbsp;&nbsp; 350000<br><sup>1</sup> <br>| Federal Farm Credit System Floating Rate Notes, 4.345% (Secured Overnight Financing Rate +0.045%), 1/2/2023 | &nbsp;&nbsp; 350000 |
| &nbsp;&nbsp; 925000<br><sup>1</sup> <br>| Federal Farm Credit System Floating Rate Notes, 4.350% (Secured Overnight Financing Rate +0.050%), 1/2/2023 | &nbsp;&nbsp; 925005 |
| &nbsp;&nbsp; 325000<br><sup>1</sup> <br>| Federal Farm Credit System Floating Rate Notes, 4.360% (Secured Overnight Financing Rate +0.060%), 1/2/2023 | &nbsp;&nbsp; 324977 |
| &nbsp;&nbsp; 500000<br><sup>1</sup> <br>| Federal Farm Credit System Floating Rate Notes, 4.375% (Secured Overnight Financing Rate +0.075%), 1/2/2023 | &nbsp;&nbsp; 499970 |
| &nbsp;&nbsp; 500000<br><sup>1</sup> <br>| Federal Farm Credit System Floating Rate Notes, 4.380% (Secured Overnight Financing Rate +0.080%), 1/2/2023 - 1/3/2023 | &nbsp;&nbsp; 499989 |
| &nbsp;&nbsp; 400000<br><sup>1</sup> <br>| Federal Farm Credit System Floating Rate Notes, 4.385% (Secured Overnight Financing Rate +0.085%), 1/2/2023 | &nbsp;&nbsp; 399993 |
| &nbsp;&nbsp; 250000<br><sup>1</sup> <br>| Federal Farm Credit System Floating Rate Notes, 4.390% (Secured Overnight Financing Rate +0.090%), 1/2/2023 | &nbsp;&nbsp; 250000 |
| &nbsp;&nbsp; 250000<br><sup>1</sup> <br>| Federal Farm Credit System Floating Rate Notes, 4.395% (Secured Overnight Financing Rate +0.095%), 1/2/2023 | &nbsp;&nbsp; 250000 |
| &nbsp;&nbsp; 250000<br><sup>1</sup> <br>| Federal Farm Credit System Floating Rate Notes, 4.400% (Secured Overnight Financing Rate +0.100%), 1/2/2023 | &nbsp;&nbsp; 250000 |
| &nbsp;&nbsp; 300000<br><sup>1</sup> <br>| Federal Farm Credit System Floating Rate Notes, 4.405% (Secured Overnight Financing Rate +0.105%), 1/2/2023 | &nbsp;&nbsp; 300000 |
| &nbsp;&nbsp; 200000<br><sup>1</sup> <br>| Federal Farm Credit System Floating Rate Notes, 4.410% (Secured Overnight Financing Rate +0.110%), 1/2/2023 | &nbsp;&nbsp; 200000 |
| &nbsp;&nbsp; 250000<br><sup>1</sup> <br>| Federal Farm Credit System Floating Rate Notes, 4.420% (Secured Overnight Financing Rate +0.120%), 1/2/2023 | &nbsp;&nbsp; 250000 |
| &nbsp;&nbsp; 500000<br><sup>1</sup> <br>| Federal Farm Credit System Floating Rate Notes, 4.430% (Secured Overnight Financing Rate +0.130%), 1/2/2023 | &nbsp;&nbsp; 500000 |
| &nbsp;&nbsp; 400000<br><sup>1</sup> <br>| Federal Home Loan Bank System Floating Rate Notes, 4.340% (Secured Overnight Financing Rate +0.040%), 1/2/2023 | &nbsp;&nbsp; 400000 |
| &nbsp;&nbsp; 500000<br><sup>1</sup> <br>| Federal Home Loan Bank System Floating Rate Notes, 4.350% (Secured Overnight Financing Rate +0.050%), 1/2/2023 | &nbsp;&nbsp; 500000 |
| &nbsp;&nbsp; 1250000<br><sup>1</sup> <br>| Federal Home Loan Bank System Floating Rate Notes, 4.355% (Secured Overnight Financing Rate +0.055%), 1/2/2023 | &nbsp;&nbsp; 1250000 |
| &nbsp;&nbsp; 725000<br><sup>1</sup> <br>| Federal Home Loan Bank System Floating Rate Notes, 4.360% (Secured Overnight Financing Rate +0.060%), 1/2/2023 | &nbsp;&nbsp; 725000 |
| &nbsp;&nbsp; 850000<br><sup>1</sup> <br>| Federal Home Loan Bank System Floating Rate Notes, 4.370% (Secured Overnight Financing Rate +0.070%), 1/2/2023 | &nbsp;&nbsp; 850000 |
| &nbsp;&nbsp; 250000<br><sup>1</sup> <br>| Federal Home Loan Bank System Floating Rate Notes, 4.400% (Secured Overnight Financing Rate +0.100%), 1/2/2023 | &nbsp;&nbsp; 250000 |
| &nbsp;&nbsp; 4150000 | Federal Home Loan Bank System, 2.080% - 4.500%, 2/13/2023 - 10/13/2023 | &nbsp;&nbsp; 4149808 |
| &nbsp;&nbsp; 100000 | Federal National Mortgage Association Notes, 0.250%, 7/10/2023 | &nbsp;&nbsp; 98008 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL GOVERNMENT AGENCIES | &nbsp;&nbsp; 14897710 |
|  | U.S. TREASURIES—9.3% |  |
|  | **U.S. Treasury Bills—2.2%** |  |
| &nbsp;&nbsp; 300000<br><sup>2</sup> <br>| United States Treasury Bill, 0.630%, 1/26/2023 | &nbsp;&nbsp; 299869 |
| &nbsp;&nbsp; 1000000<br><sup>2</sup> <br>| United States Treasury Bill, 3.020%, 2/16/2023 | &nbsp;&nbsp; 996141 |
| &nbsp;&nbsp; 500000<br><sup>2</sup> <br>| United States Treasury Bill, 3.623%, 1/17/2023 | &nbsp;&nbsp; 499211 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp; 1795221 |
|  | **U.S. Treasury Notes—7.1%** |  |
| &nbsp;&nbsp; 500000<br><sup>1</sup> <br>| United States Treasury Floating Rate Notes, 4.323% (91-day T-Bill -0.075%), 1/4/2023 | &nbsp;&nbsp; 500000 |
| &nbsp;&nbsp; 750000<br><sup>1</sup> <br>| United States Treasury Floating Rate Notes, 4.383% (91-day T-Bill -0.015%), 1/4/2023 | &nbsp;&nbsp; 750332 |
| &nbsp;&nbsp; 1400000<br><sup>1</sup> <br>| United States Treasury Floating Rate Notes, 4.427% (91-day T-Bill +0.029%), 1/4/2023 | &nbsp;&nbsp; 1400135 |
| &nbsp;&nbsp; 850000<br><sup>1</sup> <br>| United States Treasury Floating Rate Notes, 4.432% (91-day T-Bill +0.034%), 1/4/2023 | &nbsp;&nbsp; 850005 |
| &nbsp;&nbsp; 750000<br><sup>1</sup> <br>| United States Treasury Floating Rate Notes, 4.435% (91-day T-Bill +0.037%), 1/4/2023 | &nbsp;&nbsp; 749360 |
| &nbsp;&nbsp; 1150000<br><sup>1</sup> <br>| United States Treasury Floating Rate Notes, 4.447% (91-day T-Bill +0.049%), 1/4/2023 | &nbsp;&nbsp; 1150004 |
| &nbsp;&nbsp; 250000<br><sup>1</sup> <br>| United States Treasury Floating Rate Notes, 4.538% (91-day T-Bill +0.140%), 1/4/2023 | &nbsp;&nbsp; 249640 |
| &nbsp;&nbsp; 100000 | United States Treasury Note, 0.125%, 5/31/2023 | &nbsp;&nbsp; 99179 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp; 5748655 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL U.S. TREASURIES | &nbsp;&nbsp;&nbsp; 7543876 |
|  | REPURCHASE AGREEMENTS—71.8% |  |
| &nbsp;&nbsp; 20000000 | Interest in $775,000,000 joint repurchase agreement 4.31%, dated 12/30/2022 under which ABN Amro Bank N.V., Netherlands <br> will repurchase securities provided as collateral for $775,371,139 on 1/3/2023. The securities provided as collateral at the end <br> of the period held with BNY Mellon as tri-party agent, were U.S. Government Agency and U.S. Treasury securities with various <br> maturities to 12/1/2052 and the market value of those underlying securities was $792,068,062.<br>| &nbsp;&nbsp; 20000000 |

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Annual Shareholder Report

**2**

------

---

| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br>|  | **Value** |
|  | REPURCHASE AGREEMENTS—continued |  |
| $20000000 | Interest in $1,850,000,000 joint repurchase agreement 4.31%, dated 12/30/2022 under which Wells Fargo Securities LLC will <br> repurchase securities provided as collateral for $1,850,885,944 on 1/3/2023. The securities provided as collateral at the end of <br> the period held with BNY Mellon as tri-party agent, were U.S. Government Agency and U.S. Treasury securities with various <br> maturities to 9/15/2065 and the market value of those underlying securities was $1,887,903,953.<br>| $20000000 |
| &nbsp;&nbsp; 17786000 | Interest in $2,000,000,000 joint repurchase agreement 4.30%, dated 12/30/2022 under which Sumitomo Mitsui Banking Corp <br> will repurchase securities provided as collateral for $2,000,955,556 on 1/3/2023. The securities provided as collateral at the <br> end of the period held with BNY Mellon as tri-party agent, were U.S. Government Agency securities with various maturities to <br> 10/20/2052 and the market value of those underlying securities was $2,049,109,529.<br>| &nbsp;&nbsp; 17786000 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL REPURCHASE AGREEMENTS | &nbsp;&nbsp; 57786000 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL INVESTMENT IN SECURITIES—99.6% <br>(AT AMORTIZED COST)<sup>3</sup> <br>| &nbsp;&nbsp; 80227586 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; OTHER ASSETS AND LIABILITIES - NET—0.4%<sup>4</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 286500 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL NET ASSETS—100% | $80514086 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | |
|:---|:---|
| 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 December 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 December 31, 2022, all investments of the Fund are valued at amortized cost, which is a methodology utilizing Level 2 inputs.

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**3**

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Financial Highlights–Service Shares

(For a Share Outstanding Throughout Each Period)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 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) | &nbsp;&nbsp;&nbsp; 0.011 | &nbsp;&nbsp;&nbsp; 0.000<sup>1</sup> <br>| &nbsp;&nbsp;&nbsp; 0.002 | &nbsp;&nbsp;&nbsp; 0.016 | &nbsp;&nbsp;&nbsp;&nbsp; 0.012 |
| Net realized gain (loss) | &nbsp;&nbsp;&nbsp; 0.001 | &nbsp;&nbsp; (0.000)<sup>1</sup> <br>| &nbsp;&nbsp;&nbsp; 0.000<sup>1</sup> <br>| &nbsp;&nbsp;&nbsp; 0.000<sup>1</sup> <br>| &nbsp;&nbsp;&nbsp; (0.000)<sup>1</sup> <br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total From Investment Operations | &nbsp;&nbsp;&nbsp; 0.012 | &nbsp;&nbsp;&nbsp; 0.000<sup>1</sup> <br>| &nbsp;&nbsp;&nbsp; 0.002 | &nbsp;&nbsp;&nbsp; 0.016 | &nbsp;&nbsp;&nbsp;&nbsp; 0.012 |
| **Less Distributions:** |  |  |  |  |  |
| Distributions from net investment income | &nbsp;&nbsp; (0.012) | &nbsp;&nbsp; (0.000)<sup>1</sup> <br>| &nbsp;&nbsp; (0.002) | &nbsp;&nbsp; (0.016) | &nbsp;&nbsp;&nbsp; (0.012) |
| **Net Asset Value, End of Period** | **$1.00** | **$1.00** | **$1.00** | **$1.00** | **$1.00** |
| **Total Return**<sup>2</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.16% | &nbsp;&nbsp;&nbsp;&nbsp; 0.00%<sup>3</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.20% | &nbsp;&nbsp;&nbsp;&nbsp; 1.64% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.25% |
| **Ratios to Average Net Assets:** |  |  |  |  |  |
| Net expenses<sup>4</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.48% | &nbsp;&nbsp;&nbsp;&nbsp; 0.07% | &nbsp;&nbsp;&nbsp;&nbsp; 0.31% | &nbsp;&nbsp;&nbsp;&nbsp; 0.63% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.63% |
| Net investment income | &nbsp;&nbsp;&nbsp;&nbsp; 1.14% | &nbsp;&nbsp;&nbsp;&nbsp; 0.00%<sup>3</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.18% | &nbsp;&nbsp;&nbsp;&nbsp; 1.66% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.26% |
| Expense waiver/reimbursement<sup>5</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.24% | &nbsp;&nbsp;&nbsp;&nbsp; 0.66% | &nbsp;&nbsp;&nbsp;&nbsp; 0.40% | &nbsp;&nbsp;&nbsp;&nbsp; 0.09% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.11% |
| **Supplemental Data:** |  |  |  |  |  |
| Net assets, end of period (000 omitted) | $80514 | $81245 | $90591 | $80054 | $130261 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | |
|:---|:---|
| 1 | *Represents less than $0.001.* |
| 2 | *Based on net asset value. Total returns do not reflect any additional fees or expenses that may be imposed by separate accounts of insurance companies or in* <br> *connection with any variable annuity or variable life insurance contract.*<br>|
| 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/*<br> *reimbursement recorded by investment companies in which the Fund may invest.*<br>|

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**4**

------

Statement of Assets and Liabilities <br>December 31, 2022

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| **Assets:** |  |
| Investment in repurchase agreements | $57786000 |
| Investment in securities, at amortized cost and fair value | &nbsp;&nbsp; 22441586 |
| Total investment in securities, at amortized cost and fair value | &nbsp;&nbsp; 80227586 |
| Income receivable | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 138801 |
| Receivable for investments sold | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 200000 |
| Receivable for shares sold | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9433 |
| Prepaid expenses | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 10296 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Assets | &nbsp;&nbsp; 80586116 |
| **Liabilities:** |  |
| Payable for shares redeemed | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 14463 |
| Payable to bank | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4247 |
| Payable for investment adviser fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 409 |
| Payable for administrative fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 344 |
| Payable for legal fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3921 |
| Payable for custodian fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2883 |
| Payable for portfolio accounting fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 20938 |
| Payable for other service fees (Notes 2 and 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 16911 |
| Payable for printing and postage | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6129 |
| Accrued expenses (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1785 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Liabilities | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 72030 |
| Net assets for 80,514,422 shares outstanding | $80514086 |
| **Net Assets Consist of:** |  |
| Paid-in capital | $80513971 |
| Total distributable earnings (loss) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 115 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Net Assets | $80514086 |
| **Net Asset Value, Offering Price and Redemption Proceeds Per Share:** |  |
| **Service Shares:** |  |
| $80,514,086 ÷ 80,514,422 shares outstanding, no par value, unlimited shares authorized | $1.00 |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**5**

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Statement of Operations <br>Year Ended December 31, 2022

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | |
|:---|:---|
| **Investment Income:** |  |
| Interest | $1334050 |
| **Expenses:** |  |
| Investment adviser fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp; 164361 |
| Administrative fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 64644 |
| Custodian fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 8629 |
| Transfer agent fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5657 |
| Directors'/Trustees' fees (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1641 |
| Auditing fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 20088 |
| Legal fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9145 |
| Portfolio accounting fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 75597 |
| Other service fees (Notes 2 and 5) | &nbsp;&nbsp;&nbsp;&nbsp; 203525 |
| Printing and postage | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 34944 |
| Miscellaneous (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6213 |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL EXPENSES | &nbsp;&nbsp;&nbsp;&nbsp; 594444 |
| **Waivers and Reimbursements:** |  |
| Waiver of investment adviser fee (Note 5) | &nbsp;&nbsp;&nbsp; (101844) |
| Waivers/reimbursements of other operating expenses (Notes 2 and 5) | &nbsp;&nbsp;&nbsp;&nbsp; (97076) |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL WAIVERS AND REIMBURSEMENTS | &nbsp;&nbsp;&nbsp; (198920) |
| Net expenses | &nbsp;&nbsp;&nbsp;&nbsp; 395524 |
| Net investment income | &nbsp;&nbsp;&nbsp;&nbsp; 938526 |
| Net realized gain on investments | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 989 |
| Change in net assets resulting from operations | $939515 |

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See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**6**

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Statement of Changes in Net Assets

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | | |
|:---|:---|:---|
| **Year Ended December 31** | **2022** | **2021** |
| **Increase (Decrease) in Net Assets** |  |  |
| **Operations:** |  |  |
| Net investment income | $938526 | $1450 |
| Net realized gain (loss) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 989 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (23) |
| &nbsp;&nbsp;&nbsp;&nbsp; CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 939515 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1427 |
| **Distributions to Shareholders:** |  |  |
| Service Shares | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (938522) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (1439) |
| **Share Transactions:** |  |  |
| Proceeds from sale of shares | &nbsp;&nbsp; 30810447 | &nbsp;&nbsp; 31331222 |
| Net asset value of shares issued to shareholders in payment of distributions declared | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 938520 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1439 |
| Cost of shares redeemed | &nbsp;&nbsp; (32480761) | &nbsp;&nbsp; (40679211) |
| &nbsp;&nbsp;&nbsp;&nbsp; CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (731794) | &nbsp;&nbsp;&nbsp; (9346550) |
| Change in net assets | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (730801) | &nbsp;&nbsp;&nbsp; (9346562) |
| **Net Assets:** |  |  |
| Beginning of period | &nbsp;&nbsp; 81244887 | &nbsp;&nbsp; 90591449 |
| End of period | $80514086 | $81244887 |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**7**

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Notes to Financial Statements

December 31, 2022

**1. ORGANIZATION** 

Federated Hermes Insurance Series (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 six portfolios. The financial statements included herein are only those of Federated Hermes Government Money Fund II (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 one class of shares: Service Shares. Fund shares are available exclusively as a funding vehicle for life insurance companies writing variable life insurance policies and variable annuity contracts. 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.

On August 11, 2022, the Fund's Board of Trustees (the "Trustees") approved the closure of the Primary Shares. Effective August 17, 2022, the Primary Shares were liquidated.

**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. The amortized cost method of valuation generally prescribes that an investment is valued at its acquisition cost as adjusted daily for amortization of premium or accretion of discount to the specified redemption value on the nearest call, demand or maturity date, as appropriate. 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.

Pursuant to Rule 2a-5 under the Act, the Trustees have designated Federated Investment Management Company (the "Adviser") as the Fund's valuation designee to perform any fair value determinations for securities and other assets held by the Fund. The Adviser is subject to the Trustees' oversight and certain reporting and other requirements intended to provide the Trustees the information needed to oversee the Adviser's fair value determinations.

The Adviser, acting through its valuation committee ("Valuation Committee"), is responsible for determining the fair value of investments. The Valuation Committee is comprised of officers of the Adviser and certain of the Adviser's affiliated companies and determines fair value of securities and oversees the comparison of amortized cost to market-based value. The Valuation Committee is also authorized to use pricing services 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 Adviser. The Trustees periodically review the fair valuations made by the Valuation Committee. The Trustees have also approved the Adviser's fair valuation and significant events procedures as part of the Fund's compliance program and will review any changes made to the procedures.

**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.

Annual Shareholder Report

**8**

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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 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 $198,920 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 Service Shares to unaffiliated financial intermediaries for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, the Adviser 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 December 31, 2022, other service fees for the Fund were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Other Service** <br>**Fees Incurred**<br>| **Other Service** <br>**Fees Reimbursed**<br>| **Other Service Fees** <br>**Waived by Unaffiliated** <br>**Third Parties**<br>|
| Service Shares | $203525 | $(1799) | $(67118) |

---

**Federal Taxes** 

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code of 1986 (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 December 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 December 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

**9**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**3. SHARES OF BENEFICIAL INTEREST** 

The following tables summarize share activity:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended** <br>**12/31/2022** | **Year Ended** <br>**12/31/2022** | **Year Ended** <br>**12/31/2021** | **Year Ended** <br>**12/31/2021** |
| **Primary Shares:** | **Shares** | **Amount** | **Shares** | **Amount** |
| Shares sold | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | $— | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | $— |
| Shares issued to shareholders in payment of distributions declared | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — |
| Shares redeemed | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (100) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (100) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — |
| &nbsp;&nbsp;&nbsp;&nbsp; NET CHANGE RESULTING FROM PRIMARY SHARE TRANSACTIONS | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (100) | $(100) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | $— |
|  | **Year Ended** <br>**12/31/2022** | **Year Ended** <br>**12/31/2022** | **Year Ended** <br>**12/31/2021** | **Year Ended** <br>**12/31/2021** |
| **Service Shares:** | **Shares** | **Amount** | **Shares** | **Amount** |
| Shares sold | 30810447 | $30810447 | 31331222 | $31331222 |
| Shares issued to shareholders in payment of distributions declared | &nbsp;&nbsp;&nbsp;&nbsp; 938520 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 938520 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1439 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1439 |
| Shares redeemed | (32480661) | &nbsp;&nbsp; (32480661) | (40679211) | &nbsp;&nbsp; (40679211) |
| &nbsp;&nbsp;&nbsp;&nbsp; NET CHANGE RESULTING FROM SERVICE SHARE TRANSACTIONS | &nbsp;&nbsp;&nbsp;&nbsp; (731694) | $(731694) | &nbsp;&nbsp; (9346550) | $(9346550) |
| &nbsp;&nbsp;&nbsp;&nbsp; NET CHANGE RESULTING FROM TOTAL FUND SHARE TRANSACTIONS | &nbsp;&nbsp;&nbsp;&nbsp; (731794) | $(731794) | &nbsp;&nbsp; (9346550) | $(9346550) |

---

**4. FEDERAL TAX INFORMATION** 

The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended December 31, 2022 and 2021, was as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Ordinary income | $938522 | $1439 |

---

As of December 31, 2022, the components of distributable earnings on a tax-basis were as follows:

---

| | |
|:---|:---|
| Undistributed ordinary income | $115 |
| TOTAL | $115 |

---

The Fund used capital loss carryforwards of $889 to offset capital gains realized during the year ended December 31, 2022.

**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 December 31, 2022, the Adviser voluntarily waived $101,844 of its fee and voluntarily reimbursed $28,159 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** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Average Daily Net Assets** <br>**of the Investment Complex**<br>|
| 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 December 31, 2022, the annualized fee paid to FAS was 0.079% of average daily net assets of the Fund.

In addition, FAS may charge certain out-of-pocket expenses to the Fund.

Annual Shareholder Report

**10**

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**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 FSC) 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 Service Shares (after the voluntary waivers and/or reimbursements) will not exceed 0.63% (the "Fee Limit"), up to but not including the later of (the "Termination Date"): (a) May 1, 2023; or (b) the date of the Fund's next effective Prospectus. Prior to August 17, 2022, the Fee Limit for the Primary Shares was 0.38%. 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 December 31, 2022, there were no outstanding loans. During the year ended December 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, and may continue to result in, closed borders, enhanced health screenings, disruptions to healthcare service preparation and delivery, quarantines, cancellations, and disruptions to supply chains, workflow operations and consumer activity, as well as general concern and uncertainty. The impact of this coronavirus has resulted in substantial economic volatility. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could continue to negatively affect the worldwide economy, as well as the economies of individual countries, individual companies (including certain Fund service providers and issuers of the Fund's investments) and the markets in general in significant and unforeseen ways. In addition, governments, their regulatory agencies, or self-regulatory organizations may take actions in response to the pandemic, including significant fiscal and monetary policy changes, that may affect the instruments in which the Fund invests or the issuers of such investments. Any such impact could adversely affect the Fund's performance.

Annual Shareholder Report

**11**

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Report of Independent Registered Public Accounting Firm

**To the Board of Trustees of Federated Hermes Insurance Series and the Shareholders of Federated Hermes Government Money Fund II:**

**Opinion on the Financial Statements**

We have audited the accompanying statement of assets and liabilities of Federated Hermes Government Money Fund II (the Fund), a portfolio of Federated Hermes Insurance Series, including the portfolio of investments, as of December 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 December 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.

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 December 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> ![](kpmgsig.jpg)

We have served as the auditor for one or more of Federated Hermes' investment companies since 2006.

Boston, Massachusetts <br>February 15, 2023

Annual Shareholder Report

**12**

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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 funds used as variable investment options. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from July 1, 2022 to December 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.

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| | | | |
|:---|:---|:---|:---|
|  | **Beginning** <br>**Account Value** <br>**7/1/2022**<br>| **Ending** <br>**Account Value** <br>**12/31/2022**<br>| **Expenses Paid** <br>**During Period**<sup>1</sup> <br>|
| **Actual:** |  |  |  |
| Service Shares | $1000 | $1011.10 | $3.19 |
| **Hypothetical (assuming a 5% return before expenses):** |  |  |  |
| Service Shares | $1000 | $1022.03 | $3.21 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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|:---|:---|
| 1 | *Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the* <br> *one-half-year period). The expenses shown in the table do not include the charges and expenses imposed by the insurance company under the variable insurance* <br> *product contract. Please refer to the variable insurance product prospectus for a complete listing of these expenses. The annualized net expense ratio is as* <br> *follows:*<br>|

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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|:---|:---|
| Service Shares | 0.63% |

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Annual Shareholder Report

**13**

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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, 2022, the Trust comprised six 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**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held and Previous Position(s)**<br>|
| **J. Christopher Donahue\***<br> Birth Date: April 11, 1949<br> Trustee<br> Indefinite Term<br> Began serving: <br> September 1993<br>| &nbsp;&nbsp; **Principal Occupations**: Principal Executive Officer and President of certain of the Funds in the Federated Hermes Fund <br> Family; Director or Trustee of the Funds in the Federated Hermes Fund Family; President, Chief Executive Officer and <br> Director, Federated Hermes, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated <br> Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman and Trustee, <br> Federated Equity Management Company of Pennsylvania; Trustee, Federated Shareholder Services Company; Director, <br> Federated Services Company.<br> **Previous Positions**: President, Federated Investment Counseling; President and Chief Executive Officer, Federated <br> Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd; Chairman, <br> Passport Research, Ltd.<br>|
| **Thomas R. Donahue\***<br> Birth Date: October 20, 1958<br> Trustee<br> Indefinite Term<br> Began serving: May 2016<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of certain of the funds in the Federated Hermes Fund Family; Chief Financial <br> Officer, Treasurer, Vice President and Assistant Secretary, Federated Hermes, Inc.; Chairman and Trustee, Federated <br> Administrative Services; Chairman and Director, Federated Administrative Services, Inc.; Trustee and Treasurer, Federated <br> Advisory Services Company; Director or Trustee and Treasurer, Federated Equity Management Company of Pennsylvania, <br> Federated Global Investment Management Corp., Federated Investment Counseling, and Federated Investment <br> Management Company; Director, MDTA LLC; Director, Executive Vice President and Assistant Secretary, Federated Securities <br> Corp.; Director or Trustee and Chairman, Federated Services Company and Federated Shareholder Services Company; and <br> Director and President, FII Holdings, Inc.<br> **Previous Positions**: Director, Federated Hermes, Inc.; Assistant Secretary, Federated Investment Management Company, <br> Federated Global Investment Management Company and Passport Research, LTD; Treasurer, Passport Research, LTD; <br> Executive Vice President, Federated Securities Corp.; and Treasurer, FII Holdings, Inc.<br>|

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\*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*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**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held, Previous Position(s) and Qualifications**<br>|
| **John T. Collins**<br> Birth Date: January 24, 1947<br> Trustee<br> Indefinite Term<br> Began serving: October 2013<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee, and Chair of the Board of Directors or Trustees, of the Federated Hermes Fund <br> Family; formerly, Chairman and CEO, The Collins Group, Inc. (a private equity firm) (Retired).<br> **Other Directorships Held**: Director, KLX Energy Services Holdings, Inc. (oilfield services); former Director of <br> KLX Corp. (aerospace).<br> **Qualifications**: Mr. Collins has served in several business and financial management roles and directorship positions <br> throughout his career. Mr. Collins previously served as Chairman and CEO of The Collins Group, Inc. (a private equity firm) <br> and as a Director of KLX Corp. Mr. Collins serves as Chairman Emeriti, Bentley University. Mr. Collins previously served as <br> Director and Audit Committee Member, Bank of America Corp.; Director, FleetBoston Financial Corp.; and Director, Beth <br> Israel Deaconess Medical Center (Harvard University Affiliate Hospital). <br>|

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Annual Shareholder Report

**14**

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held, Previous Position(s) and Qualifications**<br>|
| **G. Thomas Hough**<br> Birth Date: February 28, 1955<br> Trustee<br> Indefinite Term<br> Began serving: August 2015<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee, Chair of the Audit Committee of the Federated Hermes Fund Family; formerly, <br> Vice Chair, Ernst & Young LLP (public accounting firm) (Retired). <br> **Other Directorships Held**: Director, Chair of the Audit Committee, Equifax, Inc.; Lead Director, Member of the Audit and <br> Nominating and Corporate Governance Committees, Haverty Furniture Companies, Inc.; formerly, Director, Member of <br> Governance and Compensation Committees, Publix Super Markets, Inc.<br> **Qualifications**: Mr. Hough has served in accounting, business management and directorship positions throughout his career. <br> Mr. Hough most recently held the position of Americas Vice Chair of Assurance with Ernst & Young LLP (public accounting <br> firm). Mr. Hough serves on the President's Cabinet and Business School Board of Visitors for the University of Alabama. <br> Mr. Hough previously served on the Business School Board of Visitors for Wake Forest University, and he previously served as <br> an Executive Committee member of the United States Golf Association. <br>|
| **Maureen Lally-Green**<br> Birth Date: July 5, 1949<br> Trustee<br> Indefinite Term<br> Began serving: August 2009<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; Adjunct Professor Emerita of Law, <br> Duquesne University School of Law; formerly, Dean of the Duquesne University School of Law and Professor of Law and <br> Interim Dean of the Duquesne University School of Law; formerly, Associate General Secretary and Director, Office of Church <br> Relations, Diocese of Pittsburgh.<br> **Other Directorships Held**: Director, CNX Resources Corporation (natural gas).<br> **Qualifications**: Judge Lally-Green has served in various legal and business roles and directorship positions throughout her <br> career. Judge Lally-Green previously held the position of Dean of the School of Law of Duquesne University (as well as <br> Interim Dean). Judge Lally-Green previously served as Associate General Secretary of the Diocese of Pittsburgh, a member of <br> the Superior Court of Pennsylvania and as a Professor of Law, Duquesne University School of Law. Judge Lally-Green was <br> appointed by the Supreme Court of Pennsylvania to serve on the Supreme Court's Board of Continuing Judicial Education <br> and the Supreme Court's Appellate Court Procedural Rules Committee. Judge Lally-Green also currently holds the positions <br> on not for profit or for profit boards of directors as follows: Director and Chair, UPMC Mercy Hospital; Regent, Saint Vincent <br> Seminary; Member, Pennsylvania State Board of Education (public); Director, Catholic Charities, Pittsburgh; and Director CNX <br> Resources Corporation (natural gas). Judge Lally-Green has held the positions of: Director, Auberle; Director, Epilepsy <br> Foundation of Western and Central Pennsylvania; Director, Ireland Institute of Pittsburgh; Director, Saint Thomas More <br> Society; Director and Chair, Catholic High Schools of the Diocese of Pittsburgh, Inc.; Director, Pennsylvania Bar Institute; <br> Director, St. Vincent College; Director and Chair, North Catholic High School, Inc.; Director and Vice Chair, Our Campaign for <br> the Church Alive!, Inc.; and Director and Vice Chair, Saint Francis University.<br>|
| **Thomas M. O'Neill**<br> Birth Date: June 14, 1951<br> Trustee<br> Indefinite Term<br> Began serving: August 2006<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; Sole Proprietor, Navigator Management <br> Company (investment and strategic consulting).<br> **Other Directorships Held**: None.<br> **Qualifications**: Mr. O'Neill has served in several business, mutual fund and financial management roles and directorship <br> positions throughout his career. Mr. O'Neill serves as Director, Medicines for Humanity. Mr. O'Neill previously served as Chief <br> Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and <br> Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, <br> MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director <br> and Consultant, EZE Castle Software (investment order management software); Director, Midway Pacific (lumber); and <br> Director, The Golisano Children's Museum of Naples, Florida.<br>|
| **Madelyn A. Reilly**<br> Birth Date: February 2, 1956<br> Trustee<br> Indefinite Term<br> Began serving: <br> November 2020<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; formerly, Senior Vice President for Legal <br> Affairs, General Counsel and Secretary of Board of Directors, Duquesne University (Retired).<br> **Other Directorships Held**: None.<br> **Qualifications**: Ms. Reilly has served in various business and legal management roles throughout her career. Ms. Reilly <br> previously served as Senior Vice President for Legal Affairs, General Counsel and Secretary of Board of Directors and Director <br> of Risk Management and Associate General Counsel, Duquesne University. Prior to her work at Duquesne University, <br> Ms. Reilly served as Assistant General Counsel of Compliance and Enterprise Risk as well as Senior Counsel of Environment, <br> Health and Safety, PPG Industries. Ms. Reilly currently serves as a member of the Board of Directors of UPMC <br> Mercy Hospital.<br>|
| **P. Jerome Richey**<br> Birth Date: February 23, 1949<br> Trustee<br> Indefinite Term<br> Began serving: October 2013<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; Retired; formerly, Senior Vice Chancellor <br> and Chief Legal Officer, University of Pittsburgh and Executive Vice President and Chief Legal Officer, CONSOL Energy Inc. <br> (now split into two separate publicly traded companies known as CONSOL Energy Inc. and CNX Resources Corp.).<br> **Other Directorships Held**: None.<br> **Qualifications**: Mr. Richey has served in several business and legal management roles and directorship positions throughout <br> his career. Mr. Richey most recently held the positions of Senior Vice Chancellor and Chief Legal Officer, University of <br> Pittsburgh. Mr. Richey previously served as Chairman of the Board, Epilepsy Foundation of Western Pennsylvania and <br> Chairman of the Board, World Affairs Council of Pittsburgh. Mr. Richey previously served as Chief Legal Officer and Executive <br> Vice President, CONSOL Energy Inc. and CNX Gas Company; and Board Member, Ethics Counsel and Shareholder, Buchanan <br> Ingersoll & Rooney PC (a law firm). <br>|

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Annual Shareholder Report

**15**

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held, Previous Position(s) and Qualifications**<br>|
| **John S. Walsh**<br> Birth Date:<br> November 28, 1957<br> Trustee<br> Indefinite Term<br> Began serving: January 1999<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; President and Director, Heat Wagon, Inc. <br> (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of <br> portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. <br> **Other Directorships Held**: None.<br> **Qualifications**: Mr. Walsh has served in several business management roles and directorship positions throughout his career. <br> Mr. Walsh previously served as Vice President, Walsh & Kelly, Inc. (paving contractors).<br>|

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**OFFICERS** 

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Address**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years**<br> **and Previous Position(s)**<br>|
| **Lori A. Hensler**<br> Birth Date: January 6, 1967<br> TREASURER<br> Officer since: April 2013<br>| &nbsp;&nbsp; **Principal Occupations**: Principal Financial Officer and Treasurer of the Federated Hermes Fund Family; Senior Vice President, <br> Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp.; and Assistant Treasurer, <br> Federated Investors Trust Company. Ms. Hensler has received the Certified Public Accountant designation.<br> **Previous Positions**: Controller of Federated Hermes, Inc.; Senior Vice President and Assistant Treasurer, Federated Investors <br> Management Company; Treasurer, Federated Investors Trust Company; Assistant Treasurer, Federated Administrative <br> Services, Federated Administrative Services, Inc., Federated Securities Corp., Edgewood Services, Inc., Federated Advisory <br> Services Company, Federated Equity Management Company of Pennsylvania, Federated Global Investment Management <br> Corp., Federated Investment Counseling, Federated Investment Management Company, Passport Research, Ltd., and <br> Federated MDTA, LLC; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and <br> Southpointe Distribution Services, Inc.<br>|
| **Peter J. Germain**<br> Birth Date:<br> September 3, 1959<br> CHIEF LEGAL OFFICER, <br> SECRETARY and EXECUTIVE <br> VICE PRESIDENT<br> Officer since: January 2005<br>| &nbsp;&nbsp; **Principal Occupations**: Mr. Germain is Chief Legal Officer, Secretary and Executive Vice President of the Federated Hermes <br> Fund Family. He is General Counsel, Chief Legal Officer, Secretary and Executive Vice President, Federated Hermes, Inc.; <br> Trustee and Senior Vice President, Federated Investors Management Company; Trustee and President, Federated <br> Administrative Services; Director and President, Federated Administrative Services, Inc.; Director and Vice President, <br> Federated Securities Corp.; Director and Secretary, Federated Private Asset Management, Inc.; Secretary, Federated <br> Shareholder Services Company; and Secretary, Retirement Plan Service Company of America. Mr. Germain joined Federated <br> Hermes, Inc. in 1984 and is a member of the Pennsylvania Bar Association.<br> **Previous Positions**: Deputy General Counsel, Special Counsel, Managing Director of Mutual Fund Services, Federated <br> Hermes, Inc.; Senior Vice President, Federated Services Company; and Senior Corporate Counsel, Federated Hermes, Inc.<br>|
| **John B. Fisher**<br> Birth Date: May 16, 1956<br> PRESIDENT<br> Officer since: November 2004<br>| &nbsp;&nbsp; **Principal Occupations**: Principal Executive Officer and President of certain of the Funds in the Federated Hermes Fund <br> Family; Director or Trustee of certain of the Funds in the Federated Hermes Fund Family; Director and Vice President, <br> Federated Hermes, Inc.; President, Director/Trustee and CEO, Federated Advisory Services Company, Federated Equity <br> Management Company of Pennsylvania, Federated Global Investment Management Corp., Federated Investment Counseling, <br> Federated Investment Management Company, and Federated MDTA LLC; Director, Federated Investors Trust Company.<br> **Previous Positions**: President and Director of the Institutional Sales Division of Federated Securities Corp.; President and <br> CEO of Passport Research, Ltd.; Director and President, Technology, Federated Services Company.<br>|
| **Stephen Van Meter**<br> Birth Date: June 5, 1975<br> CHIEF COMPLIANCE OFFICER <br> AND SENIOR VICE PRESIDENT<br> Officer since: July 2015<br>| &nbsp;&nbsp; **Principal Occupations**: Senior Vice President and Chief Compliance Officer of the Federated Hermes Fund Family; Vice <br> President and Chief Compliance Officer of Federated Hermes, Inc. and Chief Compliance Officer of certain of its subsidiaries. <br> Mr. Van Meter joined Federated Hermes, Inc. in October 2011. He holds FINRA licenses under Series 3, 7, 24 and 66. <br> **Previous Positions**: Mr. Van Meter previously held the position of Compliance Operating Officer, Federated Hermes, Inc. <br> Prior to joining Federated Hermes, Inc., Mr. Van Meter served at the United States Securities and Exchange Commission in <br> the positions of Senior Counsel, Office of Chief Counsel, Division of Investment Management and Senior Counsel, Division <br> of Enforcement.<br>|
| **Stephen F. Auth**<br> Birth Date: <br> September 13, 1956<br> 101 Park Avenue<br> 41<sup>st</sup> Floor<br> New York, NY 10178<br> CHIEF INVESTMENT OFFICER<br> Officer since: November 2002<br>| &nbsp;&nbsp; **Principal Occupations**: Stephen F. Auth is Chief Investment Officer of various Funds in the Federated Hermes Fund Family; <br> Executive Vice President, Federated Investment Counseling, Federated Global Investment Management Corp. and Federated <br> Equity Management Company of Pennsylvania.<br> **Previous Positions**: Executive Vice President, Federated Investment Management Company and Passport Research, Ltd. <br> (investment advisory subsidiary of Federated); Senior Vice President, Global Portfolio Management Services Division; Senior <br> Vice President, Federated Investment Management Company and Passport Research, Ltd.; Senior Managing Director and <br> Portfolio Manager, Prudential Investments.<br>|
| **Robert J. Ostrowski**<br> Birth Date: April 26, 1963<br> Chief Investment Officer<br> Officer since: May 2004<br>| &nbsp;&nbsp; **Principal Occupations**: Robert J. Ostrowski joined Federated Hermes, Inc. in 1987 as an Investment Analyst and became a <br> Portfolio Manager in 1990. He was named Chief Investment Officer of Federated Hermes' taxable fixed-income products in <br> 2004 and also serves as a Senior Portfolio Manager. Mr. Ostrowski became an Executive Vice President of the Fund's Adviser <br> in 2009 and served as a Senior Vice President of the Fund's Adviser from 1997 to 2009. Mr. Ostrowski has received the <br> Chartered Financial Analyst designation. He received his M.S. in Industrial Administration from Carnegie Mellon University.<br>|

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Annual Shareholder Report

**16**

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Address**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years**<br> **and Previous Position(s)**<br>|
| **Deborah A. Cunningham**<br> Birth Date:<br> September 15, 1959<br> Chief Investment Officer<br> Officer since: June 2012<br>| &nbsp;&nbsp; **Principal Occupations**: Deborah A. Cunningham was named Chief Investment Officer of Federated Hermes' money market <br> products in 2004. She joined Federated Hermes in 1981 and has been a Senior Portfolio Manager since 1997 <br> and an Executive Vice President of the Fund's Adviser since 2009. Ms. Cunningham has received the Chartered Financial <br> Analyst designation and holds an M.S.B.A. in Finance from Robert Morris College.<br>|

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Annual Shareholder Report

**17**

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Evaluation and Approval of Advisory Contract–May 2022

**Federated Hermes Government Money Fund II (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.

***<u>Information Received and Review Process</u>***

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 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

Annual Shareholder Report

**18**

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Commission ("SEC") disclosure requirements 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.

***<u>Nature, Extent and Quality of Services</u>***

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.

Annual Shareholder Report

**19**

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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 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.

***<u>Fund Investment Performance</u>***

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 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.

***<u>Fund Expenses</u>***

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, 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

Annual Shareholder Report

**20**

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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 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 contractual advisory fee rate and other expenses 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.

***<u>Profitability</u>***

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.

Annual Shareholder Report

**21**

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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.

***<u>Economies of Scale</u>***

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 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.

***<u>Other Benefits</u>***

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.

***<u>Conclusions</u>***

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

Annual Shareholder Report

**22**

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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

**23**

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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.

Annual Shareholder Report

**24**

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*Variable investment options are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in variable investment options involves investment risk, including the possible loss of principal.* 

*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.

![](fhilogok11p.jpg)

Federated Hermes Government Money Fund II <br>Federated Hermes Funds <br>4000 Ericsson Drive <br>Warrendale, PA 15086-7561

Contact us at **FederatedInvestors.com** <br>or call 1-800-341-7400.

Federated Securities Corp., Distributor

*CUSIP 313916504*

*G00842-01 (2/23)*© 2023 Federated Hermes, Inc.

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**Annual Shareholder Report**

***December 31, 2022***

![](imgcccd57f51.gif)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | | |
|:---|:---|:---|
| **Share Class** | Primary  | Service  |

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Federated Hermes High Income Bond Fund II

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A Portfolio of Federated Hermes Insurance Series

Dear Valued Shareholder,

We are pleased to present the Annual Shareholder Report for your fund covering the period from January 1, 2022 through December 31, 2022. This report includes Management's Discussion of Fund Performance, 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, <br> ![](fisherjohnsigsmall.jpg)

John B. Fisher, President

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**Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee**

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**CONTENTS** 

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| | |
|:---|:---|
| [Management's Discussion of Fund Performance](#xx_53e001ca-c72c-4092-8216-31edd6bd5c0e_1) | &nbsp;&nbsp; [1](#xx_53e001ca-c72c-4092-8216-31edd6bd5c0e_1)  |
| [Portfolio of Investments Summary Table](#xx_87a2aa41-1de5-4807-b282-965890c3c7b7_1) | &nbsp;&nbsp; [4](#xx_87a2aa41-1de5-4807-b282-965890c3c7b7_1)  |
| [Portfolio of Investments](#xx_87a2aa41-1de5-4807-b282-965890c3c7b7_2) | &nbsp;&nbsp; [5](#xx_87a2aa41-1de5-4807-b282-965890c3c7b7_2)  |
| [Financial Highlights](#xx_c519ce90-f4a5-4e05-b211-55765cbfe81a_1) | [17](#xx_c519ce90-f4a5-4e05-b211-55765cbfe81a_1)  |
| [Statement of Assets and Liabilities](#xx_9bb949eb-fd0b-456c-b4e1-8c68211defad_1) | [19](#xx_9bb949eb-fd0b-456c-b4e1-8c68211defad_1)  |
| [Statement of Operations](#xx_9bb949eb-fd0b-456c-b4e1-8c68211defad_2) | [20](#xx_9bb949eb-fd0b-456c-b4e1-8c68211defad_2)  |
| [Statement of Changes in Net Assets](#xx_9bb949eb-fd0b-456c-b4e1-8c68211defad_3) | [21](#xx_9bb949eb-fd0b-456c-b4e1-8c68211defad_3)  |
| [Notes to Financial Statements](#xx_21b2e418-b876-4019-ba89-422bf1104573_1) | [22](#xx_21b2e418-b876-4019-ba89-422bf1104573_1)  |
| [Report of Independent Registered Public Accounting Firm](#xx_edcec9b8-0f93-4557-aa26-ff4da6d26e7e_1) | [27](#xx_edcec9b8-0f93-4557-aa26-ff4da6d26e7e_1)  |
| [Shareholder Expense Example](#xx_058aba2e-ff33-43da-9a7d-e5919d747341_1) | [28](#xx_058aba2e-ff33-43da-9a7d-e5919d747341_1)  |
| [Board of Trustees and Trust Officers](#xx_f5a0395e-7842-4b03-a5d5-0158d5c30744_1) | [29](#xx_f5a0395e-7842-4b03-a5d5-0158d5c30744_1)  |
| [Evaluation and Approval of Advisory Contract](#xx_5bd2a5ea-fa62-44a3-8575-e59ef704859a_1) | [33](#xx_5bd2a5ea-fa62-44a3-8575-e59ef704859a_1)  |
| [Liquidity Risk Management Program](#xx_a8eff98e-704f-448f-bdee-95a01fbfdaa8_1)[–](#xx_a8eff98e-704f-448f-bdee-95a01fbfdaa8_1)<br> [Annual Evaluation of Adequacy and Effectiveness](#xx_a8eff98e-704f-448f-bdee-95a01fbfdaa8_1)<br>| [38](#xx_a8eff98e-704f-448f-bdee-95a01fbfdaa8_1)  |
| [Voting Proxies on Fund Portfolio Securities](#xx_df70dbf1-7218-4d47-a151-f5bf8cc345ec_1) | [39](#xx_df70dbf1-7218-4d47-a151-f5bf8cc345ec_1)  |
| [Quarterly Portfolio Schedule](#xx_df70dbf1-7218-4d47-a151-f5bf8cc345ec_1) | [39](#xx_df70dbf1-7218-4d47-a151-f5bf8cc345ec_1) |

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Management's Discussion of Fund Performance (unaudited)

The total return of Federated Hermes High Income Bond Fund II (the "Fund"), based on net asset value for the 12-month reporting period ended December 31, 2022, was -11.78% for the Primary Shares and -11.92% for the Service Shares. The total return of the Fund's Primary Shares consisted of 4.65% current income and -16.43% of depreciation in the net asset value of the Fund's shares. The total return of the Bloomberg US Corporate High Yield 2% Issuer Capped Index (BHY2%ICI),<sup>1</sup> a broad-based securities market index, was -11.18% during the same period. The total return of the Lipper Variable Underlying High Yield Funds Average (LVHYFA),<sup>2</sup> a peer group average for the Fund, was -9.47% during the period. The Fund's and LVHYFA's total returns for the most recently completed fiscal year reflected actual cash flows, transaction costs and expenses which were not reflected in the total return of the BHY2%ICI.

During the reporting period, the most significant factors affecting the Fund's performance relative to the BHY2%ICI were: (1) the allocation among industry sectors, (2) the selection of individual securities and (3) the duration<sup>3</sup> of the Fund's holdings.

The following discussion will focus on the performance of the Fund's Primary Shares relative to the BHY2%ICI.

**MARKET OVERVIEW**

The major factors influencing markets during the period under review were concerns about the economy and inflation. Economic growth started the year slowly as the lingering impact of the pandemic, the outbreak of war in Ukraine, supply chain issues and surging prices, especially for energy and food, caused major distortions. Global central banks, including the Federal Reserve, responded to the surge in prices by aggressively raising short term interest rates. Longer term rates also rose, although less than short term rates, which resulted in an inverted yield curve.<sup>4</sup> This raised further concerns about the economy. However, the second half of the year saw economic growth surprise to the upside as a robust job market, rising wages, declining pandemic concerns and normalizing supply chains provided support. Corporate earnings also proved resilient as companies were able to aggressively raise prices to offset surging input costs and rising wages while demand was supported by the strong jobs market and the benefits of the reopening from the pandemic. Default rates and credit spreads for high yield securities both climbed modestly higher. The overall impact of these factors can be illustrated by the change in credit spreads between the Credit Suisse High Yield Bond Index<sup>5</sup> and U.S. Treasury securities with similar maturities which began the period at 355 basis points, peaked in early July at 606 basis points before declining to end the fiscal year at 499 basis points. Within the high-yield<sup>6</sup> market, major industry sectors that substantially outperformed the overall BHY2%ICI during the reporting period included: Oil Field Services, Aerospace and Defense, Gaming, Independent Energy and Metals & Mining. Major industry sectors that substantially underperformed the overall BHY2%ICI during the reporting period included: Pharmaceuticals, Retail, Wireless Telecommunications, Media & Entertainment and Cable & Satellite. From a quality perspective, the B-rated sector led the way with a total return of -10.26% followed by the BB-rated sector at -10.77%. The CCC-rated sector, perhaps reflecting some economic concerns, lagged with a return of -16.29%.

**Sector Allocation**

The Fund was positively impacted by its sector allocation relative to the BHY2%ICI. The Fund was positively impacted by its overweight positions in the strong performing Insurance - P&C, Oil Field Services and Packaging industry sectors. The Fund was also positively impacted by its underweight positions in the poor performing Retail, Wireline Telecommunications and Wireless Telecommunications sectors. The Fund's cash holdings also positively impacted performance during the period. The Fund was negatively impacted by its overweight positions in the poor performing Pharmaceuticals, Media & Entertainment and Cable & Satellite sectors. It was also negatively impacted by its underweight positions in the Refining, Other Industrials and Airline sectors.

Annual Shareholder Report

**1**

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**Security Selection**

The Fund's security selection had a negative impact on performance relative to the BHY2%ICI. Security selection in the Technology, Pharmaceuticals, Media & Entertainment, Healthcare, Chemicals, Gaming, Building Materials, Finance Companies, Midstream and Consumer Cyclical Services sectors negatively impacted performance. Specific high-yield issuers held by the Fund that negatively impacted performance relative to the BBHY2%ICI included: Audacy, Inc., Mallinckrodt International, Rackspace Technology, Inc., CSC Holdings and Bausch Health Companies. The Fund was positively impacted by security selection in the Insurance–P&C, Retail, Independent Energy, Wireless Telecommunications, Oil Field Services, Food & Beverage, Consumer Products and Automotive sectors. Specific high-yield issuers held by the Fund that positively impacted performance relative to the BHY2%ICI included: Hub International Limited, Clarios Global LP, USIS Merger Subsidiary, Inc., Garda World Security Services and Flex Acquisition. The Fund also benefitted from its equity position in Superior Energy Services, Inc.

**DURATION**

The Fund began the fiscal year with a duration shorter than the BHY2%ICI. Given the substantial increase in the general interest rate<sup>7</sup> level during the reporting period as well as the increase in credit spreads, the shorter duration had a positive impact early in the period. At the end of the fiscal year, the Fund's duration was modestly less than the BHY2%ICI.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Please see the footnotes to the line graph below for definitions of, and further information about, the BHY2%ICI.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Please see the footnotes to the line graph below for definitions of, and further information about, the Lipper Peer Group.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Duration is a measure of a security's price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter durations.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The yield curve is a graph showing the comparative yields of securities in a particular class according to maturity. Securities on the long end of the yield curve have longer maturities.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Credit Suisse High Yield Bond Index serves as a benchmark to evaluate the performance of low-quality bonds. Low-quality is defined as those bonds in the range from "BB" to "CCC" and defaults. The index is unmanaged, and it is not possible to invest directly in an index.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*High-yield, lower-rated securities generally entail greater market, credit and liquidity risks than investment-grade securities and may include higher volatility and a higher risk of default.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Bond prices are sensitive to changes in interest rates, and a rise in interest rates can cause a decline in their prices.*

Annual Shareholder Report

**2**

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**FUND PERFORMANCE AND GROWTH OF A $10,000 INVESTMENT**

The graph below illustrates the hypothetical investment of $10,000<sup>1</sup> in the Federated Hermes High Income Bond Fund II (the "Fund") from December 31, 2012 to December 31, 2022, compared to the Bloomberg U.S. Corporate High Yield 2% Issuer Capped Index (BHY2%ICI)<sup>2</sup> and the Lipper Variable Underlying High Yield Funds Average (LVHYFA).<sup>3</sup> The Average Annual Total Returns table below shows returns for each class averaged over the stated periods.

**Growth of a $10,000 Investment**

**Growth of $10,000 as of December 31, 2022** <br> ![](ifhibfarg0084401.jpg)

**Average Annual Total Returns for the Period Ended 12/31/2022** 

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| | | | |
|:---|:---|:---|:---|
|  | **1 Year** | **5 Years** | **10 Years** |
| **Primary Shares** | -11.78% | 1.59% | 3.58% |
| **Service Shares** | -11.92% | 1.35% | 3.33% |
| BHY2%ICI | -11.18% | 2.30% | 4.03% |
| LVHYFA | &nbsp;&nbsp; -9.47% | 1.91% | 3.39% |

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**Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance of a variable investment option changes over time and current performance may be lower or higher than what is stated. For current to the most recent month end performance, contact your insurance company. The performance information presented does not include the charges and expenses imposed by the insurance company under the variable insurance product contract. The inclusion of such charges would lower performance. Please refer to the variable insurance product prospectus for a complete listing of these expenses. Fund shares are available exclusively as a funding vehicle for life insurance companies writing variable life insurance policies and variable annuity contracts. Variable investment options are not obligations of or guaranteed by any bank and are not federally insured.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The Fund's performance assumes the reinvestment of all dividends and distributions. The BHY2%ICI and the LVHYFA have been adjusted to reflect reinvestment of dividends on securities in the index and average.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The BHY2%ICI is an issuer-constrained version of the Bloomberg U.S. Corporate High Yield Index that measures the market of USD-denominated, noninvestment-grade, fixed-rate, taxable corporate bonds. The index follows the same rules as the uncapped index but limits the exposure of each issuer to 2% of the total market value and redistributes any excess market value index-wide on a pro-rata basis. The BHY2%ICI is not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission (SEC) requires to be reflected in the Fund's performance. The index is unmanaged and unlike the Fund, is not affected by cash flows. It is not possible to invest directly in an index.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Lipper figures represent the average of the total returns reported by all funds designated by Lipper, Inc., as falling into the respective category and is not adjusted to reflect any sales charges. The Lipper figures in the Growth of a $10,000 Investment line graph are based on historical return information published by Lipper and reflect the return of the funds comprising the category in the year of publication. Because the funds designated by Lipper as falling into the category can change over time, the Lipper figures in the line graph may not match the Lipper figures in the Average Annual Total Returns table, which reflect the return of the funds that currently comprise the category.*

Annual Shareholder Report

**3**

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Portfolio of Investments Summary Table (unaudited)

At December 31, 2022, the Fund's index composition<sup>1</sup> was as follows:

---

| | |
|:---|:---|
| **Index Classification** | **Percentage of** <br>**Total Net Assets**<br>|
| Technology | &nbsp;&nbsp; 8.6% |
| Cable Satellite | &nbsp;&nbsp; 8.3% |
| Media Entertainment | &nbsp;&nbsp; 7.0% |
| Midstream | &nbsp;&nbsp; 6.9% |
| Insurance - P&C | &nbsp;&nbsp; 6.3% |
| Health Care | &nbsp;&nbsp; 6.2% |
| Automotive | &nbsp;&nbsp; 5.5% |
| Packaging | &nbsp;&nbsp; 5.2% |
| Independent Energy | &nbsp;&nbsp; 4.8% |
| Gaming | &nbsp;&nbsp; 4.2% |
| Building Materials | &nbsp;&nbsp; 3.6% |
| Other<sup>2</sup> <br>| 29.4% |
| Cash Equivalents<sup>3</sup> <br>| &nbsp;&nbsp; 2.3% |
| Other Assets and Liabilities - Net<sup>4</sup> <br>| &nbsp;&nbsp; 1.7% |
| &nbsp;&nbsp;&nbsp;&nbsp; Total | **100%** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 1 | *Index classifications are based upon, and individual portfolio securities are assigned to, the classifications and sub-classifications of the Bloomberg U.S. Corporate* <br> *High Yield 2% Issuer Capped Index (BHY2%ICI). Individual portfolio securities that are not included in the BHY2%ICI are assigned to an index classification by the* <br> *Fund's Adviser.*<br>|
| 2 | *For purposes of this table, index classifications which constitute less than 3.5% of the Fund's total net assets have been aggregated under the designation* <br> *"Other."*<br>|
| 3 | *Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements.* |
| 4 | *Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.* |

---

Annual Shareholder Report

**4**

------

Portfolio of Investments

December 31, 2022

---

| | | |
|:---|:---|:---|
| **Principal** <br>**Amount** <br>**or Shares**<br>|  | **Value** |
|  | CORPORATE BONDS—95.3% |  |
|  | **Aerospace/Defense—1.6%** |  |
| $475000 | TransDigm, Inc., Sec. Fac. Bond, 144A, 6.250%, 3/15/2026 | $469485 |
| &nbsp;&nbsp; 450000 | TransDigm, Inc., Sr. Sub., 6.875%, 5/15/2026 | &nbsp;&nbsp; 440129 |
| &nbsp;&nbsp; 775000 | TransDigm, Inc., Sr. Sub., Series WI, 5.500%, 11/15/2027 | &nbsp;&nbsp; 729337 |
| &nbsp;&nbsp; 100000 | TransDigm, Inc., Sr. Sub., Series WI, 7.500%, 3/15/2027 | &nbsp;&nbsp; 99099 |
| &nbsp;&nbsp; 175000 | TransDigm, Inc., Sr. Sub. Note, Series WI, 4.625%, 1/15/2029 | &nbsp;&nbsp; 154179 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 1892229 |
|  | **Airlines—0.3%** |  |
| &nbsp;&nbsp; 225000 | American Airlines, Inc./AAdvantage Loyalty IP Ltd., 144A, 5.500%, 4/20/2026 | &nbsp;&nbsp; 216765 |
| &nbsp;&nbsp; 150000 | American Airlines, Inc./AAdvantage Loyalty IP Ltd., 144A, 5.750%, 4/20/2029 | &nbsp;&nbsp; 137364 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 354129 |
|  | **Automotive—5.5%** |  |
| &nbsp;&nbsp; 550000 | Adient Global Holdings Ltd., Sr. Unsecd. Note, 144A, 4.875%, 8/15/2026 | &nbsp;&nbsp; 512842 |
| &nbsp;&nbsp; 22000 | Clarios Global LP, Sec. Fac. Bond, 144A, 6.750%, 5/15/2025 | &nbsp;&nbsp; 22083 |
| &nbsp;&nbsp; 50000 | Dana Financing Lux Sarl, Sr. Unsecd. Note, 144A, 5.750%, 4/15/2025 | &nbsp;&nbsp; 49009 |
| &nbsp;&nbsp; 25000 | Dana, Inc., Sr. Unsecd. Note, 4.250%, 9/1/2030 | &nbsp;&nbsp; 20177 |
| &nbsp;&nbsp; 150000 | Dana, Inc., Sr. Unsecd. Note, 4.500%, 2/15/2032 | &nbsp;&nbsp; 120163 |
| &nbsp;&nbsp; 125000 | Dana, Inc., Sr. Unsecd. Note, 5.375%, 11/15/2027 | &nbsp;&nbsp; 116167 |
| &nbsp;&nbsp; 600000 | Dornoch Debt Merger Sub, Inc., Sr. Unsecd. Note, 144A, 6.625%, 10/15/2029 | &nbsp;&nbsp; 421684 |
| &nbsp;&nbsp; 550000 | Ford Motor Credit Co. LLC, Sr. Unsecd. Note, 3.375%, 11/13/2025 | &nbsp;&nbsp; 498181 |
| &nbsp;&nbsp; 200000 | Ford Motor Credit Co. LLC, Sr. Unsecd. Note, 4.000%, 11/13/2030 | &nbsp;&nbsp; 164561 |
| &nbsp;&nbsp; 300000 | Ford Motor Credit Co. LLC, Sr. Unsecd. Note, 4.063%, 11/1/2024 | &nbsp;&nbsp; 288682 |
| &nbsp;&nbsp; 275000 | Ford Motor Credit Co. LLC, Sr. Unsecd. Note, 4.125%, 8/17/2027 | &nbsp;&nbsp; 246756 |
| &nbsp;&nbsp; 200000 | Ford Motor Credit Co. LLC, Sr. Unsecd. Note, 4.271%, 1/9/2027 | &nbsp;&nbsp; 181240 |
| &nbsp;&nbsp; 450000 | Ford Motor Credit Co. LLC, Sr. Unsecd. Note, 5.113%, 5/3/2029 | &nbsp;&nbsp; 408510 |
| &nbsp;&nbsp; 325000 | Ford Motor Credit Co. LLC, Sr. Unsecd. Note, 5.125%, 6/16/2025 | &nbsp;&nbsp; 313151 |
| &nbsp;&nbsp; 500000 | Ford Motor Credit Co. LLC, Sr. Unsecd. Note, Series GMTN, 4.389%, 1/8/2026 | &nbsp;&nbsp; 466877 |
| &nbsp;&nbsp; 200000 | IHO Verwaltungs GmbH, Sec. Fac. Bond, 144A, 6.000%, 5/15/2027 | &nbsp;&nbsp; 175905 |
| &nbsp;&nbsp; 350000 | IHO Verwaltungs GmbH, Sec. Fac. Bond, 144A, 6.375%, 5/15/2029 | &nbsp;&nbsp; 296389 |
| &nbsp;&nbsp; 22000 | KAR Auction Services, Inc., Sr. Unsecd. Note, 144A, 5.125%, 6/1/2025 | &nbsp;&nbsp; 21527 |
| &nbsp;&nbsp; 1325000 | Panther BF Aggregator 2 LP, Sr. Unsecd. Note, 144A, 8.500%, 5/15/2027 | &nbsp;&nbsp; 1296587 |
| &nbsp;&nbsp; 725000 | Real Hero Merger Sub 2, Inc., Sr. Unsecd. Note, 144A, 6.250%, 2/1/2029 | &nbsp;&nbsp; 497930 |
| &nbsp;&nbsp; 300000 | Schaeffler Verwaltung ZW, 144A, 4.750%, 9/15/2026 | &nbsp;&nbsp; 260083 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 6378504 |
|  | **Building Materials—3.6%** |  |
| &nbsp;&nbsp; 25000 | Abc Supply Co., Inc., Sr. Unsecd. Note, 144A, 3.875%, 11/15/2029 | &nbsp;&nbsp; 20468 |
| &nbsp;&nbsp; 150000 | American Builders & Contractors Supply Co., Inc., 144A, 4.000%, 1/15/2028 | &nbsp;&nbsp; 134088 |
| &nbsp;&nbsp; 225000 | Camelot Return Merger SU, Sec. Fac. Bond, 144A, 8.750%, 8/1/2028 | &nbsp;&nbsp; 206758 |
| &nbsp;&nbsp; 175000 | Cornerstone Building Brands, Sr. Unsecd. Note, 144A, 6.125%, 1/15/2029 | &nbsp;&nbsp; 123527 |
| &nbsp;&nbsp; 625000 | Cp Atlas Buyer, Inc., Sr. Unsecd. Note, 144A, 7.000%, 12/1/2028 | &nbsp;&nbsp; 465003 |
| &nbsp;&nbsp; 525000 | Foundation Building Materials, Inc., Sr. Unsecd. Note, 144A, 6.000%, 3/1/2029 | &nbsp;&nbsp; 395442 |
| &nbsp;&nbsp; 350000 | Gyp Holdings III Corp., Sr. Unsecd. Note, 144A, 4.625%, 5/1/2029 | &nbsp;&nbsp; 286219 |
| &nbsp;&nbsp; 175000 | Interface, Inc., Sr. Unsecd. Note, 144A, 5.500%, 12/1/2028 | &nbsp;&nbsp; 144731 |
| &nbsp;&nbsp; 75000 | MIWD Holdco II LLC/MIWD Finance Corp., Sr. Unsecd. Note, 144A, 5.500%, 2/1/2030 | &nbsp;&nbsp; 59809 |
| &nbsp;&nbsp; 500000 | SRS Distribution, Inc., Sr. Unsecd. Note, 144A, 6.000%, 12/1/2029 | &nbsp;&nbsp; 398577 |
| &nbsp;&nbsp; 400000 | SRS Distribution, Inc., Sr. Unsecd. Note, 144A, 6.125%, 7/1/2029 | &nbsp;&nbsp; 323928 |
| &nbsp;&nbsp; 375000 | Standard Industries, Inc., Sr. Unsecd. Note, 144A, 3.375%, 1/15/2031 | &nbsp;&nbsp; 282971 |
| &nbsp;&nbsp; 125000 | Standard Industries, Inc., Sr. Unsecd. Note, 144A, 4.375%, 7/15/2030 | &nbsp;&nbsp; 102126 |

---

Annual Shareholder Report

**5**

------

---

| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br> **or Shares**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Building Materials—continued** |  |
| $750000 | Standard Industries, Inc., Sr. Unsecd. Note, 144A, 5.000%, 2/15/2027 | $693164 |
| &nbsp;&nbsp; 400000 | White Cap Buyer LLC, Sr. Unsecd. Note, 144A, 6.875%, 10/15/2028 | &nbsp;&nbsp; 346657 |
| &nbsp;&nbsp; 200000 | White Cap Parent LLC, Sr. Sub. Secd. Note, 144A, 8.250%, 3/15/2026 | &nbsp;&nbsp; 173148 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 4156616 |
|  | **Cable Satellite—8.3%** |  |
| &nbsp;&nbsp; 275000 | CCO Holdings LLC/Cap Corp., Sr. Unsecd. Note, 144A, 4.250%, 2/1/2031 | &nbsp;&nbsp; 221210 |
| &nbsp;&nbsp; 250000 | CCO Holdings LLC/Cap Corp., Sr. Unsecd. Note, 144A, 4.250%, 1/15/2034 | &nbsp;&nbsp; 185000 |
| &nbsp;&nbsp; 225000 | CCO Holdings LLC/Cap Corp., Sr. Unsecd. Note, 144A, 4.500%, 6/1/2033 | &nbsp;&nbsp; 173080 |
| &nbsp;&nbsp; 900000 | CCO Holdings LLC/Cap Corp., Sr. Unsecd. Note, 144A, 4.750%, 3/1/2030 | &nbsp;&nbsp; 778230 |
| &nbsp;&nbsp; 750000 | CCO Holdings LLC/Cap Corp., Sr. Unsecd. Note, 144A, 5.000%, 2/1/2028 | &nbsp;&nbsp; 682646 |
| &nbsp;&nbsp; 75000 | CCO Holdings LLC/Cap Corp., Sr. Unsecd. Note, 144A, 5.125%, 5/1/2027 | &nbsp;&nbsp; 70070 |
| &nbsp;&nbsp; 275000 | CCO Holdings LLC/Cap Corp., Sr. Unsecd. Note, 144A, 5.375%, 6/1/2029 | &nbsp;&nbsp; 249294 |
| &nbsp;&nbsp; 250000 | CSC Holdings LLC, Sr. Unsecd. Note, 5.250%, 6/1/2024 | &nbsp;&nbsp; 233125 |
| &nbsp;&nbsp; 225000 | CSC Holdings LLC, Sr. Unsecd. Note, 144A, 3.375%, 2/15/2031 | &nbsp;&nbsp; 147098 |
| &nbsp;&nbsp; 325000 | CSC Holdings LLC, Sr. Unsecd. Note, 144A, 4.125%, 12/1/2030 | &nbsp;&nbsp; 230111 |
| &nbsp;&nbsp; 300000 | CSC Holdings LLC, Sr. Unsecd. Note, 144A, 4.500%, 11/15/2031 | &nbsp;&nbsp; 208707 |
| &nbsp;&nbsp; 450000 | CSC Holdings LLC, Sr. Unsecd. Note, 144A, 4.625%, 12/1/2030 | &nbsp;&nbsp; 249678 |
| &nbsp;&nbsp; 475000 | CSC Holdings LLC, Sr. Unsecd. Note, 144A, 5.750%, 1/15/2030 | &nbsp;&nbsp; 268943 |
| &nbsp;&nbsp; 450000 | CSC Holdings LLC, Sr. Unsecd. Note, 144A, 6.500%, 2/1/2029 | &nbsp;&nbsp; 368827 |
| &nbsp;&nbsp; 350000 | CSC Holdings LLC, Sr. Unsecd. Note, 144A, 7.500%, 4/1/2028 | &nbsp;&nbsp; 238770 |
| &nbsp;&nbsp; 275000 | DIRECTV Holdings LLC, Sec. Fac. Bond, 144A, 5.875%, 8/15/2027 | &nbsp;&nbsp; 246554 |
| &nbsp;&nbsp; 225000 | DISH DBS Corp., Sec. Fac. Bond, 144A, 5.750%, 12/1/2028 | &nbsp;&nbsp; 180000 |
| &nbsp;&nbsp; 50000 | DISH DBS Corp., Sr. Unsecd. Note, 7.375%, 7/1/2028 | &nbsp;&nbsp; 35456 |
| &nbsp;&nbsp; 275000 | DISH DBS Corp., Sr. Unsecd. Note, 7.750%, 7/1/2026 | &nbsp;&nbsp; 222324 |
| &nbsp;&nbsp; 575000 | DISH DBS Corp., Sr. Unsecd. Note, Series WI, 5.125%, 6/1/2029 | &nbsp;&nbsp; 372017 |
| &nbsp;&nbsp; 175000 | DISH Network Corp., Sec. Fac. Bond, 144A, 11.750%, 11/15/2027 | &nbsp;&nbsp; 180451 |
| &nbsp;&nbsp; 325000<br><sup>1,2,3</sup> <br>| Intelsat Jackson Holdings S.A., Sr. Unsecd. Note, 5.500%, 8/1/2023 | &nbsp;&nbsp; 0 |
| &nbsp;&nbsp; 225000<br><sup>1,2,3</sup> <br>| Intelsat Jackson Holdings S.A., Sr. Unsecd. Note, 144A, 8.500%, 10/15/2024 | &nbsp;&nbsp; 0 |
| &nbsp;&nbsp; 75000 | Sirius XM Radio, Inc., Sr. Unsecd. Note, 144A, 3.125%, 9/1/2026 | &nbsp;&nbsp; 66689 |
| &nbsp;&nbsp; 300000 | Sirius XM Radio, Inc., Sr. Unsecd. Note, 144A, 3.875%, 9/1/2031 | &nbsp;&nbsp; 234628 |
| &nbsp;&nbsp; 150000 | Sirius XM Radio, Inc., Sr. Unsecd. Note, 144A, 4.000%, 7/15/2028 | &nbsp;&nbsp; 130833 |
| &nbsp;&nbsp; 300000 | Sirius XM Radio, Inc., Sr. Unsecd. Note, 144A, 4.125%, 7/1/2030 | &nbsp;&nbsp; 248240 |
| &nbsp;&nbsp; 50000 | Sirius XM Radio, Inc., Sr. Unsecd. Note, 144A, 5.000%, 8/1/2027 | &nbsp;&nbsp; 46328 |
| &nbsp;&nbsp; 450000 | Sirius XM Radio, Inc., Sr. Unsecd. Note, 144A, 5.500%, 7/1/2029 | &nbsp;&nbsp; 411766 |
| &nbsp;&nbsp; 850000 | Telenet Finance Luxembourg, Sec. Fac. Bond, 144A, 5.500%, 3/1/2028 | &nbsp;&nbsp; 773500 |
| &nbsp;&nbsp; 625000 | UPC Broadband Finco BV, Sr. Note, 144A, 4.875%, 7/15/2031 | &nbsp;&nbsp; 521131 |
| &nbsp;&nbsp; 325000 | Virgin Media Finance PLC, Sr. Unsecd. Note, 144A, 5.000%, 7/15/2030 | &nbsp;&nbsp; 261201 |
| &nbsp;&nbsp; 200000 | Virgin Media Secured Finance PLC, Sec. Fac. Bond, 144A, 4.500%, 8/15/2030 | &nbsp;&nbsp; 167440 |
| &nbsp;&nbsp; 200000 | Virgin Media Secured Finance PLC, Sec. Fac. Bond, 144A, 5.500%, 5/15/2029 | &nbsp;&nbsp; 179613 |
| &nbsp;&nbsp; 200000 | Vmed O2 UK Financing I PLC, Sec. Fac. Bond, 144A, 4.250%, 1/31/2031 | &nbsp;&nbsp; 162354 |
| &nbsp;&nbsp; 250000 | Vmed O2 UK Financing I PLC, Sr. Note, 144A, 4.750%, 7/15/2031 | &nbsp;&nbsp; 203576 |
| &nbsp;&nbsp; 375000 | VZ Secured Financing B.V., Sec. Fac. Bond, 144A, 5.000%, 1/15/2032 | &nbsp;&nbsp; 305412 |
| &nbsp;&nbsp; 200000 | Ziggo Bond Co. BV, Sr. Unsecd. Note, 144A, 5.125%, 2/28/2030 | &nbsp;&nbsp; 161827 |
| &nbsp;&nbsp; 275000 | Ziggo Finance BV, Sr. Unsecd. Note, 144A, 6.000%, 1/15/2027 | &nbsp;&nbsp; 256300 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 9672429 |
|  | **Chemicals—2.8%** |  |
| &nbsp;&nbsp; 150000 | Ashland LLC, Sr. Unsecd. Note, 144A, 3.375%, 9/1/2031 | &nbsp;&nbsp; 120086 |
| &nbsp;&nbsp; 150000 | Axalta Coat/Dutch Holding BV, Sr. Unsecd. Note, 144A, 4.750%, 6/15/2027 | &nbsp;&nbsp; 138893 |
| &nbsp;&nbsp; 200000 | Cheever Escrow Issuer, Sec. Fac. Bond, 144A, 7.125%, 10/1/2027 | &nbsp;&nbsp; 191759 |
| &nbsp;&nbsp; 425000 | Compass Minerals International, Inc., Sr. Unsecd. Note, 144A, 4.875%, 7/15/2024 | &nbsp;&nbsp; 411209 |

---

Annual Shareholder Report

**6**

------

---

| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br> **or Shares**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Chemicals—continued** |  |
| $300000 | Element Solutions, Inc., Sr. Unsecd. Note, 144A, 3.875%, 9/1/2028 | $255480 |
| &nbsp;&nbsp; 175000 | H.B. Fuller Co., Sr. Unsecd. Note, 4.250%, 10/15/2028 | &nbsp;&nbsp; 155473 |
| &nbsp;&nbsp; 500000 | Herens Holdco S.a.r.l., Sec. Fac. Bond, 144A, 4.750%, 5/15/2028 | &nbsp;&nbsp; 374352 |
| &nbsp;&nbsp; 125000 | Illuminate Buyer LLC/Illuminate Holdings IV, Inc., Sr. Unsecd. Note, 144A, 9.000%, 7/1/2028 | &nbsp;&nbsp; 104856 |
| &nbsp;&nbsp; 675000 | Koppers, Inc., Sr. Unsecd. Note, 144A, 6.000%, 2/15/2025 | &nbsp;&nbsp; 642316 |
| &nbsp;&nbsp; 200000 | Olympus Water US Holding Corp., Sec. Fac. Bond, 144A, 4.250%, 10/1/2028 | &nbsp;&nbsp; 162631 |
| &nbsp;&nbsp; 350000 | Olympus Water US Holding Corp., Sr. Unsecd. Note, 144A, 6.250%, 10/1/2029 | &nbsp;&nbsp; 266177 |
| &nbsp;&nbsp; 350000 | Polar US Borrower LLC, Sr. Unsecd. Note, 144A, 6.750%, 5/15/2026 | &nbsp;&nbsp; 130296 |
| &nbsp;&nbsp; 200000 | SPCM SA, Sr. Unsecd. Note, 144A, 3.375%, 3/15/2030 | &nbsp;&nbsp; 161260 |
| &nbsp;&nbsp; 200000 | WR Grace Holdings LLC, Sr. Unsecd. Note, 144A, 5.625%, 8/15/2029 | &nbsp;&nbsp; 161954 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 3276742 |
|  | **Construction Machinery—0.7%** |  |
| &nbsp;&nbsp; 475000 | H&E Equipment Services, Inc., Sr. Unsecd. Note, 144A, 3.875%, 12/15/2028 | &nbsp;&nbsp; 405434 |
| &nbsp;&nbsp; 175000 | United Rentals North America, Inc., Sr. Unsecd. Note, 3.750%, 1/15/2032 | &nbsp;&nbsp; 142998 |
| &nbsp;&nbsp; 75000 | United Rentals North America, Inc., Sr. Unsecd. Note, 4.000%, 7/15/2030 | &nbsp;&nbsp; 64243 |
| &nbsp;&nbsp; 25000 | United Rentals, Inc., Sr. Unsecd. Note, 3.875%, 2/15/2031 | &nbsp;&nbsp; 21014 |
| &nbsp;&nbsp; 138000 | United Rentals, Inc., Sr. Unsecd. Note, 5.500%, 5/15/2027 | &nbsp;&nbsp; 136458 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 770147 |
|  | **Consumer Cyclical Services—2.6%** |  |
| &nbsp;&nbsp; 225000 | Allied Universal Holdco LLC, Sec. Fac. Bond, 144A, 6.625%, 7/15/2026 | &nbsp;&nbsp; 206338 |
| &nbsp;&nbsp; 425000 | Allied Universal Holdco LLC, Sr. Unsecd. Note, 144A, 6.000%, 6/1/2029 | &nbsp;&nbsp; 309000 |
| &nbsp;&nbsp; 850000 | Allied Universal Holdco LLC, Sr. Unsecd. Note, 144A, 9.750%, 7/15/2027 | &nbsp;&nbsp; 741327 |
| &nbsp;&nbsp; 125000 | Garda World Security Corp., Sec. Fac. Bond, 144A, 4.625%, 2/15/2027 | &nbsp;&nbsp; 110587 |
| &nbsp;&nbsp; 325000 | Garda World Security Corp., Sr. Unsecd. Note, 144A, 6.000%, 6/1/2029 | &nbsp;&nbsp; 264501 |
| &nbsp;&nbsp; 325000 | Go Daddy Operating Co. LLC/GD Finance Co., Inc., Sr. Unsecd. Note, 144A, 5.250%, 12/1/2027 | &nbsp;&nbsp; 308159 |
| &nbsp;&nbsp; 979000 | GW B-CR Security Corp., Sr. Unsecd. Note, 144A, 9.500%, 11/1/2027 | &nbsp;&nbsp; 944345 |
| &nbsp;&nbsp; 375000 | Signal Parent, Inc., Sr. Unsecd. Note, 144A, 6.125%, 4/1/2029 | &nbsp;&nbsp; 114844 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 2999101 |
|  | **Consumer Products—2.0%** |  |
| &nbsp;&nbsp; 800000 | BCPE Empire Holdings, Inc., Sr. Unsecd. Note, 144A, 7.625%, 5/1/2027 | &nbsp;&nbsp; 718424 |
| &nbsp;&nbsp; 600000 | Diamond BC BV, Sr. Unsecd. Note, 144A, 4.625%, 10/1/2029 | &nbsp;&nbsp; 482280 |
| &nbsp;&nbsp; 200000 | Edgewell Personal Care Co., Sr. Unsecd. Note, 144A, 4.125%, 4/1/2029 | &nbsp;&nbsp; 170785 |
| &nbsp;&nbsp; 150000 | Edgewell Personal Care Co., Sr. Unsecd. Note, 144A, 5.500%, 6/1/2028 | &nbsp;&nbsp; 140550 |
| &nbsp;&nbsp; 375000 | Energizer Holdings, Inc., Sr. Unsecd. Note, 144A, 4.375%, 3/31/2029 | &nbsp;&nbsp; 318622 |
| &nbsp;&nbsp; 275000 | Energizer Holdings, Inc., Sr. Unsecd. Note, 144A, 4.750%, 6/15/2028 | &nbsp;&nbsp; 238756 |
| &nbsp;&nbsp; 175000 | Energizer Holdings, Inc., Sr. Unsecd. Note, 144A, 6.500%, 12/31/2027 | &nbsp;&nbsp; 166764 |
| &nbsp;&nbsp; 125000 | Prestige Brands, Inc., Sr. Unsecd. Note, 144A, 3.750%, 4/1/2031 | &nbsp;&nbsp; 103243 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 2339424 |
|  | **Diversified Manufacturing—1.0%** |  |
| &nbsp;&nbsp; 850000 | Gates Global LLC, Sr. Unsecd. Note, 144A, 6.250%, 1/15/2026 | &nbsp;&nbsp; 821567 |
| &nbsp;&nbsp; 125000 | WESCO Distribution, Inc., Sr. Unsecd. Note, 144A, 7.125%, 6/15/2025 | &nbsp;&nbsp; 126839 |
| &nbsp;&nbsp; 200000 | WESCO Distribution, Inc., Sr. Unsecd. Note, 144A, 7.250%, 6/15/2028 | &nbsp;&nbsp; 203044 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 1151450 |
|  | **Finance Companies—1.9%** |  |
| &nbsp;&nbsp; 450000 | Navient Corp., Sr. Unsecd. Note, 5.500%, 3/15/2029 | &nbsp;&nbsp; 367862 |
| &nbsp;&nbsp; 125000 | Navient Corp., Sr. Unsecd. Note, 6.750%, 6/25/2025 | &nbsp;&nbsp; 120207 |
| &nbsp;&nbsp; 175000 | Navient Corp., Sr. Unsecd. Note, 6.750%, 6/15/2026 | &nbsp;&nbsp; 166169 |
| &nbsp;&nbsp; 200000 | Quicken Loans LLC/Quicken Loans Co-Issuer, Inc., Sr. Unsecd. Note, 144A, 3.625%, 3/1/2029 | &nbsp;&nbsp; 158820 |
| &nbsp;&nbsp; 225000 | Quicken Loans LLC/Quicken Loans Co-Issuer, Inc., Sr. Unsecd. Note, 144A, 3.875%, 3/1/2031 | &nbsp;&nbsp; 172271 |
| &nbsp;&nbsp; 225000 | Rocket Mortgage Co-Issuer, Inc., Sr. Unsecd. Note, 144A, 2.875%, 10/15/2026 | &nbsp;&nbsp; 193244 |

---

Annual Shareholder Report

**7**

------

---

| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br> **or Shares**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Finance Companies—continued** |  |
| $250000 | Rocket Mortgage Co-Issuer, Inc., Sr. Unsecd. Note, 144A, 4.000%, 10/15/2033 | $187076 |
| &nbsp;&nbsp; 425000 | United Shore Financial Services, Sr. Unsecd. Note, 144A, 5.500%, 11/15/2025 | &nbsp;&nbsp; 383384 |
| &nbsp;&nbsp; 350000 | United Wholesale Mortgage LLC, Sr. Unsecd. Note, 144A, 5.500%, 4/15/2029 | &nbsp;&nbsp; 278933 |
| &nbsp;&nbsp; 225000 | United Wholesale Mortgage LLC, Sr. Unsecd. Note, 144A, 5.750%, 6/15/2027 | &nbsp;&nbsp; 194020 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 2221986 |
|  | **Food & Beverage—1.9%** |  |
| &nbsp;&nbsp; 400000 | Aramark Services, Inc., Sr. Unsecd. Note, 144A, 5.000%, 4/1/2025 | &nbsp;&nbsp; 390935 |
| &nbsp;&nbsp; 350000 | Bellring Brands, Inc., Sr. Unsecd. Note, 144A, 7.000%, 3/15/2030 | &nbsp;&nbsp; 337234 |
| &nbsp;&nbsp; 200000 | Performance Food Group, Inc., Sr. Unsecd. Note, 144A, 4.250%, 8/1/2029 | &nbsp;&nbsp; 173560 |
| &nbsp;&nbsp; 25000 | Performance Food Group, Inc., Sr. Unsecd. Note, 144A, 5.500%, 10/15/2027 | &nbsp;&nbsp; 23632 |
| &nbsp;&nbsp; 200000 | Post Holdings, Inc., Sr. Unsecd. Note, 144A, 5.500%, 12/15/2029 | &nbsp;&nbsp; 181400 |
| &nbsp;&nbsp; 200000 | Post Holdings, Inc., Sr. Unsecd. Note, 144A, 5.625%, 1/15/2028 | &nbsp;&nbsp; 188561 |
| &nbsp;&nbsp; 330000 | Post Holdings, Inc., Sr. Unsecd. Note, 144A, 5.750%, 3/1/2027 | &nbsp;&nbsp; 319618 |
| &nbsp;&nbsp; 200000 | US Foods, Inc., Sr. Unsecd. Note, 144A, 4.625%, 6/1/2030 | &nbsp;&nbsp; 176378 |
| &nbsp;&nbsp; 475000 | US Foods, Inc., Sr. Unsecd. Note, 144A, 4.750%, 2/15/2029 | &nbsp;&nbsp; 422322 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 2213640 |
|  | **Gaming—4.2%** |  |
| &nbsp;&nbsp; 425000 | Affinity Gaming LLC, 144A, 6.875%, 12/15/2027 | &nbsp;&nbsp; 360863 |
| &nbsp;&nbsp; 275000 | Boyd Gaming Corp., Sr. Unsecd. Note, 4.750%, 12/1/2027 | &nbsp;&nbsp; 256531 |
| &nbsp;&nbsp; 100000 | Boyd Gaming Corp., Sr. Unsecd. Note, 144A, 4.750%, 6/15/2031 | &nbsp;&nbsp; 87118 |
| &nbsp;&nbsp; 75000 | Caesars Entertainment Corp., Sr. Unsecd. Note, 144A, 4.625%, 10/15/2029 | &nbsp;&nbsp; 61170 |
| &nbsp;&nbsp; 100000 | CCM Merger, Inc., Sr. Unsecd. Note, 144A, 6.375%, 5/1/2026 | &nbsp;&nbsp; 94361 |
| &nbsp;&nbsp; 150000 | Colt Merger Sub, Inc., Sr. Secd. Note, 144A, 5.750%, 7/1/2025 | &nbsp;&nbsp; 147055 |
| &nbsp;&nbsp; 375000 | Colt Merger Sub, Inc., Sr. Secd. Note, 144A, 6.250%, 7/1/2025 | &nbsp;&nbsp; 365139 |
| &nbsp;&nbsp; 475000 | Colt Merger Sub, Inc., Sr. Unsecd. Note, 144A, 8.125%, 7/1/2027 | &nbsp;&nbsp; 467690 |
| &nbsp;&nbsp; 425000 | MGM Resorts International, Sr. Unsecd. Note, 6.000%, 3/15/2023 | &nbsp;&nbsp; 424354 |
| &nbsp;&nbsp; 225000 | Midwest Gaming Borrower LLC, 144A, 4.875%, 5/1/2029 | &nbsp;&nbsp; 191737 |
| &nbsp;&nbsp; 750000 | Mohegan Tribal Gaming Authority, 144A, 8.000%, 2/1/2026 | &nbsp;&nbsp; 702765 |
| &nbsp;&nbsp; 125000 | Penn National Gaming, Inc., Sr. Unsecd. Note, 144A, 4.125%, 7/1/2029 | &nbsp;&nbsp; 98913 |
| &nbsp;&nbsp; 50000 | Penn National Gaming, Inc., Sr. Unsecd. Note, 144A, 5.625%, 1/15/2027 | &nbsp;&nbsp; 45416 |
| &nbsp;&nbsp; 50000 | Raptor Acquisition Corp./Raptor Co-Issuer LLC, Sec. Fac. Bond, 144A, 4.875%, 11/1/2026 | &nbsp;&nbsp; 44491 |
| &nbsp;&nbsp; 300000 | Scientific Games Holdings Corp., Sr. Unsecd. Note, 144A, 6.625%, 3/1/2030 | &nbsp;&nbsp; 253800 |
| &nbsp;&nbsp; 300000 | Scientific Games International, Inc., Sr. Unsecd. Note, 144A, 8.625%, 7/1/2025 | &nbsp;&nbsp; 306577 |
| &nbsp;&nbsp; 225000 | Scientific Games International, Inc., Sr. Unsecd. Note, 144A, 7.250%, 11/15/2029 | &nbsp;&nbsp; 216405 |
| &nbsp;&nbsp; 475000 | Station Casinos, Inc., Sr. Unsecd. Note, 144A, 4.500%, 2/15/2028 | &nbsp;&nbsp; 413692 |
| &nbsp;&nbsp; 250000 | Station Casinos, Inc., Sr. Unsecd. Note, 144A, 4.625%, 12/1/2031 | &nbsp;&nbsp; 200862 |
| &nbsp;&nbsp; 25000 | VICI Properties LP/ VICI Note Co., Inc., Sr. Unsecd. Note, 144A, 3.500%, 2/15/2025 | &nbsp;&nbsp; 23611 |
| &nbsp;&nbsp; 50000 | VICI Properties LP/ VICI Note Co., Inc., Sr. Unsecd. Note, 144A, 3.875%, 2/15/2029 | &nbsp;&nbsp; 43894 |
| &nbsp;&nbsp; 50000 | VICI Properties LP/VICI Note Co., Inc., Sr. Unsecd. Note, 144A, 5.625%, 5/1/2024 | &nbsp;&nbsp; 49607 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 4856051 |
|  | **Health Care—6.2%** |  |
| &nbsp;&nbsp; 300000 | AdaptHealth LLC, Sr. Unsecd. Note, 144A, 4.625%, 8/1/2029 | &nbsp;&nbsp; 251565 |
| &nbsp;&nbsp; 250000 | AdaptHealth LLC, Sr. Unsecd. Note, 144A, 5.125%, 3/1/2030 | &nbsp;&nbsp; 213147 |
| &nbsp;&nbsp; 175000 | Ardent Health Services, Sr. Unsecd. Note, 144A, 5.750%, 7/15/2029 | &nbsp;&nbsp; 137454 |
| &nbsp;&nbsp; 550000 | Avantor Funding, Inc., Sec. Fac. Bond, 144A, 4.625%, 7/15/2028 | &nbsp;&nbsp; 500896 |
| &nbsp;&nbsp; 225000 | Avantor Funding, Inc., Sr. Unsecd. Note, 144A, 3.875%, 11/1/2029 | &nbsp;&nbsp; 189231 |
| &nbsp;&nbsp; 50000 | Charles River Laboratories International, Inc., Sr. Unsecd. Note, 144A, 3.750%, 3/15/2029 | &nbsp;&nbsp; 44292 |
| &nbsp;&nbsp; 100000 | Charles River Laboratories International, Inc., Sr. Unsecd. Note, 144A, 4.000%, 3/15/2031 | &nbsp;&nbsp; 86644 |
| &nbsp;&nbsp; 175000 | CHS/Community Health Systems, Inc., 144A, 6.125%, 4/1/2030 | &nbsp;&nbsp; 86984 |
| &nbsp;&nbsp; 550000 | CHS/Community Health Systems, Inc., 2nd Lien, 144A, 6.875%, 4/15/2029 | &nbsp;&nbsp; 283708 |

---

Annual Shareholder Report

**8**

------

---

| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br> **or Shares**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Health Care—continued** |  |
| $150000 | CHS/Community Health Systems, Inc., Sec. Fac. Bond, 144A, 5.625%, 3/15/2027 | $128892 |
| &nbsp;&nbsp; 50000 | CHS/Community Health Systems, Inc., Sec. Fac. Bond, 144A, 6.000%, 1/15/2029 | &nbsp;&nbsp; 41889 |
| &nbsp;&nbsp; 250000 | CHS/Community Health Systems, Inc., Sec. Fac. Bond, 144A, 8.000%, 3/15/2026 | &nbsp;&nbsp; 228125 |
| &nbsp;&nbsp; 125000 | CHS/Community Health Systems, Inc., Sr. Note, 144A, 5.250%, 5/15/2030 | &nbsp;&nbsp; 94478 |
| &nbsp;&nbsp; 100000 | Embecta Corp., Sec. Fac. Bond, 144A, 5.000%, 2/15/2030 | &nbsp;&nbsp; 84772 |
| &nbsp;&nbsp; 200000 | Embecta Corp., Sr. Note, 144A, 6.750%, 2/15/2030 | &nbsp;&nbsp; 181907 |
| &nbsp;&nbsp; 50000 | Garden Spinco Corp., Sr. Unsecd. Note, 144A, 8.625%, 7/20/2030 | &nbsp;&nbsp; 53072 |
| &nbsp;&nbsp; 475000 | Global Medical Response, Inc., Sec. Fac. Bond, 144A, 6.500%, 10/1/2025 | &nbsp;&nbsp; 340713 |
| &nbsp;&nbsp; 125000 | HCA, Inc., Sr. Unsecd. Note, 5.375%, 2/1/2025 | &nbsp;&nbsp; 124950 |
| &nbsp;&nbsp; 350000 | HCA, Inc., Sr. Unsecd. Note, 5.875%, 2/15/2026 | &nbsp;&nbsp; 352561 |
| &nbsp;&nbsp; 300000 | IMS Health, Inc., Sr. Unsecd. Note, 144A, 5.000%, 10/15/2026 | &nbsp;&nbsp; 287115 |
| &nbsp;&nbsp; 175000 | LifePoint Health, Inc., 144A, 6.750%, 4/15/2025 | &nbsp;&nbsp; 164967 |
| &nbsp;&nbsp; 100000 | LifePoint Health, Inc., Sr. Unsecd. Note, 144A, 5.375%, 1/15/2029 | &nbsp;&nbsp; 56644 |
| &nbsp;&nbsp; 300000 | LifePoint Health, Inc., Sr. Unsecd. Note, 144A, 9.750%, 12/1/2026 | &nbsp;&nbsp; 242058 |
| &nbsp;&nbsp; 225000 | MEDNAX, Inc., Sr. Unsecd. Note, 144A, 5.375%, 2/15/2030 | &nbsp;&nbsp; 195843 |
| &nbsp;&nbsp; 300000 | Mozart Debt Merger Sub, Inc., Sec. Fac. Bond, 144A, 3.875%, 4/1/2029 | &nbsp;&nbsp; 242323 |
| &nbsp;&nbsp; 1050000 | Mozart Debt Merger Sub, Inc., Sr. Unsecd. Note, 144A, 5.250%, 10/1/2029 | &nbsp;&nbsp; 835858 |
| &nbsp;&nbsp; 150000 | MPH Acquisition Holdings LLC, Sr. Note, 144A, 5.500%, 9/1/2028 | &nbsp;&nbsp; 117321 |
| &nbsp;&nbsp; 350000 | MPH Acquisition Holdings LLC, Sr. Unsecd. Note, 144A, 5.750%, 11/1/2028 | &nbsp;&nbsp; 233524 |
| &nbsp;&nbsp; 175000 | Team Health Holdings, Inc., Sr. Unsecd. Note, 144A, 6.375%, 2/1/2025 | &nbsp;&nbsp; 101118 |
| &nbsp;&nbsp; 50000 | Teleflex, Inc., Sr. Unsecd. Note, 4.625%, 11/15/2027 | &nbsp;&nbsp; 47741 |
| &nbsp;&nbsp; 50000 | Teleflex, Inc., Sr. Unsecd. Note, 144A, 4.250%, 6/1/2028 | &nbsp;&nbsp; 45732 |
| &nbsp;&nbsp; 125000 | Tenet Healthcare Corp., 144A, 4.250%, 6/1/2029 | &nbsp;&nbsp; 108518 |
| &nbsp;&nbsp; 25000 | Tenet Healthcare Corp., 144A, 4.625%, 6/15/2028 | &nbsp;&nbsp; 22409 |
| &nbsp;&nbsp; 175000 | Tenet Healthcare Corp., 144A, 4.875%, 1/1/2026 | &nbsp;&nbsp; 165843 |
| &nbsp;&nbsp; 300000 | Tenet Healthcare Corp., 144A, 5.125%, 11/1/2027 | &nbsp;&nbsp; 279681 |
| &nbsp;&nbsp; 50000 | Tenet Healthcare Corp., 144A, 6.125%, 6/15/2030 | &nbsp;&nbsp; 47728 |
| &nbsp;&nbsp; 100000 | Tenet Healthcare Corp., 144A, 6.250%, 2/1/2027 | &nbsp;&nbsp; 96254 |
| &nbsp;&nbsp; 500000 | Tenet Healthcare Corp., Sr. Unsecd. Note, 144A, 6.125%, 10/1/2028 | &nbsp;&nbsp; 448715 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 7164672 |
|  | **Health Insurance—0.7%** |  |
| &nbsp;&nbsp; 250000 | Centene Corp., Sr. Unsecd. Note, Series WI, 4.250%, 12/15/2027 | &nbsp;&nbsp; 235017 |
| &nbsp;&nbsp; 575000 | Centene Corp., Sr. Unsecd. Note, Series WI, 4.625%, 12/15/2029 | &nbsp;&nbsp; 526752 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 761769 |
|  | **Independent Energy—4.6%** |  |
| &nbsp;&nbsp; 75000 | Antero Resources Corp., Sr. Unsecd. Note, 144A, 5.375%, 3/1/2030 | &nbsp;&nbsp; 69635 |
| &nbsp;&nbsp; 13000 | Antero Resources Corp., Sr. Unsecd. Note, 144A, 7.625%, 2/1/2029 | &nbsp;&nbsp; 13089 |
| &nbsp;&nbsp; 125000 | Ascent Resources Utica Holdings LLC/ARU Finance Corp., Sr. Unsecd. Note, 144A, 5.875%, 6/30/2029 | &nbsp;&nbsp; 111616 |
| &nbsp;&nbsp; 175000 | Ascent Resources Utica Holdings LLC/ARU Finance Corp., Sr. Unsecd. Note, 144A, 8.250%, 12/31/2028 | &nbsp;&nbsp; 171763 |
| &nbsp;&nbsp; 98000 | Ascent Resources Utica Holdings LLC/ARU Finance Corp., Sr. Unsecd. Note, 144A, 9.000%, 11/1/2027 | &nbsp;&nbsp; 121113 |
| &nbsp;&nbsp; 175000 | Berry Petroleum Co., Sr. Unsecd. Note, 144A, 7.000%, 2/15/2026 | &nbsp;&nbsp; 161003 |
| &nbsp;&nbsp; 25000 | Callon Petroleum Corp., Sr. Unsecd. Note, 144A, 7.500%, 6/15/2030 | &nbsp;&nbsp; 22908 |
| &nbsp;&nbsp; 275000 | Carrizo Oil & Gas, Inc., Sr. Unsecd. Note, 8.250%, 7/15/2025 | &nbsp;&nbsp; 275347 |
| &nbsp;&nbsp; 300000 | Permian Resources Operating LLC, Sr. Unsecd. Note, 144A, 6.875%, 4/1/2027 | &nbsp;&nbsp; 283469 |
| &nbsp;&nbsp; 50000 | Chord Energy Corp., Sr. Unsecd. Note, 144A, 6.375%, 6/1/2026 | &nbsp;&nbsp; 48766 |
| &nbsp;&nbsp; 50000 | Comstock Resources, Inc., Sr. Unsecd. Note, 144A, 5.875%, 1/15/2030 | &nbsp;&nbsp; 43050 |
| &nbsp;&nbsp; 475000 | Comstock Resources, Inc., Sr. Unsecd. Note, 144A, 6.750%, 3/1/2029 | &nbsp;&nbsp; 429547 |
| &nbsp;&nbsp; 50000 | Crownrock LP/ Crownrock F, Sr. Unsecd. Note, 144A, 5.000%, 5/1/2029 | &nbsp;&nbsp; 45192 |
| &nbsp;&nbsp; 525000 | Crownrock LP/ Crownrock F, Sr. Unsecd. Note, 144A, 5.625%, 10/15/2025 | &nbsp;&nbsp; 507693 |
| &nbsp;&nbsp; 25000 | Endeavor Energy Resources LP, Sr. Unsecd. Note, 144A, 5.750%, 1/30/2028 | &nbsp;&nbsp; 23979 |

---

Annual Shareholder Report

**9**

------

---

| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br> **or Shares**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Independent Energy—continued** |  |
| $250000 | Occidental Petroleum Corp., Sr. Unsecd. Note, 5.875%, 9/1/2025 | $249502 |
| &nbsp;&nbsp; 125000 | Occidental Petroleum Corp., Sr. Unsecd. Note, 6.125%, 1/1/2031 | &nbsp;&nbsp; 126389 |
| &nbsp;&nbsp; 250000 | Occidental Petroleum Corp., Sr. Unsecd. Note, 6.450%, 9/15/2036 | &nbsp;&nbsp; 255564 |
| &nbsp;&nbsp; 275000 | Occidental Petroleum Corp., Sr. Unsecd. Note, 6.625%, 9/1/2030 | &nbsp;&nbsp; 284800 |
| &nbsp;&nbsp; 75000 | Occidental Petroleum Corp., Sr. Unsecd. Note, 8.875%, 7/15/2030 | &nbsp;&nbsp; 84801 |
| &nbsp;&nbsp; 75000 | PDC Energy, Inc., Sr. Unsecd. Note, 6.125%, 9/15/2024 | &nbsp;&nbsp; 74702 |
| &nbsp;&nbsp; 225000 | PDC Energy, Inc., Sr. Unsecd. Note, Series WI, 5.750%, 5/15/2026 | &nbsp;&nbsp; 215145 |
| &nbsp;&nbsp; 125000 | Permian Resources Operating LLC, Sr. Unsecd. Note, 144A, 5.375%, 1/15/2026 | &nbsp;&nbsp; 113983 |
| &nbsp;&nbsp; 75000 | Range Resources Corp., Sr. Unsecd. Note, 4.875%, 5/15/2025 | &nbsp;&nbsp; 71365 |
| &nbsp;&nbsp; 75000 | Range Resources Corp., Sr. Unsecd. Note, 144A, 4.750%, 2/15/2030 | &nbsp;&nbsp; 66191 |
| &nbsp;&nbsp; 200000 | Range Resources Corp., Sr. Unsecd. Note, 8.250%, 1/15/2029 | &nbsp;&nbsp; 206358 |
| &nbsp;&nbsp; 225000 | Rockcliff Energy II LLC, Sr. Unsecd. Note, 144A, 5.500%, 10/15/2029 | &nbsp;&nbsp; 206151 |
| &nbsp;&nbsp; 150000 | SM Energy Co., Sr. Unsecd. Note, 5.625%, 6/1/2025 | &nbsp;&nbsp; 144231 |
| &nbsp;&nbsp; 125000 | SM Energy Co., Sr. Unsecd. Note, 6.500%, 7/15/2028 | &nbsp;&nbsp; 120004 |
| &nbsp;&nbsp; 50000 | SM Energy Co., Sr. Unsecd. Note, 6.625%, 1/15/2027 | &nbsp;&nbsp; 48240 |
| &nbsp;&nbsp; 100000 | SM Energy Co., Sr. Unsecd. Note, 6.750%, 9/15/2026 | &nbsp;&nbsp; 97243 |
| &nbsp;&nbsp; 125000 | Southwestern Energy Co., Sr. Unsecd. Note, 4.750%, 2/1/2032 | &nbsp;&nbsp; 107064 |
| &nbsp;&nbsp; 50000 | Southwestern Energy Co., Sr. Unsecd. Note, 5.375%, 3/15/2030 | &nbsp;&nbsp; 45697 |
| &nbsp;&nbsp; 200000 | Southwestern Energy Co., Sr. Unsecd. Note, 8.375%, 9/15/2028 | &nbsp;&nbsp; 206541 |
| &nbsp;&nbsp; 250000 | Tap Rock Resources LLC., Sr. Unsecd. Note, 144A, 7.000%, 10/1/2026 | &nbsp;&nbsp; 232838 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 5284979 |
|  | **Industrial - Other—1.3%** |  |
| &nbsp;&nbsp; 25000 | Madison Iaq LLC, Sec. Fac. Bond, 144A, 4.125%, 6/30/2028 | &nbsp;&nbsp; 20937 |
| &nbsp;&nbsp; 850000 | Madison Iaq LLC, Sr. Unsecd. Note, 144A, 5.875%, 6/30/2029 | &nbsp;&nbsp; 584187 |
| &nbsp;&nbsp; 425000 | Redwood Star Merger Sub, Sr. Unsecd. Note, 144A, 8.750%, 4/1/2030 | &nbsp;&nbsp; 335733 |
| &nbsp;&nbsp; 202000 | Vertical Holdco GmbH, Sr. Unsecd. Note, 144A, 7.625%, 7/15/2028 | &nbsp;&nbsp; 165264 |
| &nbsp;&nbsp; 425000 | Vertical U.S. Newco, Inc., Sr. Unsecd. Note, 144A, 5.250%, 7/15/2027 | &nbsp;&nbsp; 378080 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 1484201 |
|  | **Insurance - P&C—6.3%** |  |
| &nbsp;&nbsp; 475000 | AmWINS Group, Inc., Sr. Unsecd. Note, 144A, 4.875%, 6/30/2029 | &nbsp;&nbsp; 403487 |
| &nbsp;&nbsp; 494567 | Ardonagh Midco 2 PLC, Sr. Unsecd. Note, 144A, 11.500% / 12.750% PIK, 1/15/2027 | &nbsp;&nbsp; 472311 |
| &nbsp;&nbsp; 275000 | AssuredPartners, Inc., Sr. Unsecd. Note, 144A, 5.625%, 1/15/2029 | &nbsp;&nbsp; 226693 |
| &nbsp;&nbsp; 600000 | AssuredPartners, Inc., Sr. Unsecd. Note, 144A, 7.000%, 8/15/2025 | &nbsp;&nbsp; 581198 |
| &nbsp;&nbsp; 1025000 | Broadstreet Partners, Inc., Sr. Unsecd. Note, 144A, 5.875%, 4/15/2029 | &nbsp;&nbsp; 873691 |
| &nbsp;&nbsp; 225000 | GTCR AP Finance, Inc., Sr. Unsecd. Note, 144A, 8.000%, 5/15/2027 | &nbsp;&nbsp; 215879 |
| &nbsp;&nbsp; 425000 | Hub International Ltd., Sr. Unsecd. Note, 144A, 5.625%, 12/1/2029 | &nbsp;&nbsp; 371740 |
| &nbsp;&nbsp; 1750000 | Hub International Ltd., Sr. Unsecd. Note, 144A, 7.000%, 5/1/2026 | &nbsp;&nbsp; 1716785 |
| &nbsp;&nbsp; 300000 | Jones Deslauriers Insurance Management, Inc., Sr. Unsecd. Note, 144A, 10.500%, 12/15/2030 | &nbsp;&nbsp; 295846 |
| &nbsp;&nbsp; 125000 | NFP Corp., Sec. Fac. Bond, 144A, 7.500%, 10/1/2030 | &nbsp;&nbsp; 118322 |
| &nbsp;&nbsp; 1300000 | NFP Corp., Sr. Unsecd. Note, 144A, 6.875%, 8/15/2028 | &nbsp;&nbsp; 1074423 |
| &nbsp;&nbsp; 75000 | Ryan Specialty Group, Sec. Fac. Bond, 144A, 4.375%, 2/1/2030 | &nbsp;&nbsp; 65036 |
| &nbsp;&nbsp; 900000 | USIS Merger Subsidiary, Inc., Sr. Unsecd. Note, 144A, 6.875%, 5/1/2025 | &nbsp;&nbsp; 868432 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 7283843 |
|  | **Leisure—0.4%** |  |
| &nbsp;&nbsp; 450000 | SeaWorld Parks & Entertainment, Inc., Sr. Unsecd. Note, 144A, 5.250%, 8/15/2029 | &nbsp;&nbsp; 392399 |
| &nbsp;&nbsp; 150000 | Six Flags Entertainment Corp., Sr. Unsecd. Note, 144A, 5.500%, 4/15/2027 | &nbsp;&nbsp; 135330 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 527729 |
|  | **Lodging—0.5%** |  |
| &nbsp;&nbsp; 100000 | Hilton Domestic Operating Company, Inc., Sr. Unsecd. Note, 144A, 3.625%, 2/15/2032 | &nbsp;&nbsp; 80258 |
| &nbsp;&nbsp; 75000 | Hilton Domestic Operating Company, Inc., Sr. Unsecd. Note, 144A, 5.375%, 5/1/2025 | &nbsp;&nbsp; 74423 |

---

Annual Shareholder Report

**10**

------

---

| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br> **or Shares**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Lodging—continued** |  |
| $100000 | Hilton Domestic Operating Company, Inc., Sr. Unsecd. Note, 144A, 5.750%, 5/1/2028 | $97176 |
| &nbsp;&nbsp; 175000 | Hilton Domestic Operating Company, Inc., Sr. Unsecd. Note, Series WI, 4.875%, 1/15/2030 | &nbsp;&nbsp; 158881 |
| &nbsp;&nbsp; 200000 | Wyndham Hotels & Resorts, Inc., Sr. Unsecd. Note, 144A, 4.375%, 8/15/2028 | &nbsp;&nbsp; 179760 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 590498 |
|  | **Media Entertainment—6.9%** |  |
| &nbsp;&nbsp; 350000 | Audacy Capital Corp., 144A, 6.500%, 5/1/2027 | &nbsp;&nbsp; 66403 |
| &nbsp;&nbsp; 350000 | Audacy Capital Corp., 144A, 6.750%, 3/31/2029 | &nbsp;&nbsp; 61076 |
| &nbsp;&nbsp; 300000 | Cumulus Media News Holdings, Inc., 144A, 6.750%, 7/1/2026 | &nbsp;&nbsp; 252474 |
| &nbsp;&nbsp; 125000 | Diamond Sports Group LLC/Diamond Sports Finance Co., 144A, 5.375%, 8/15/2026 | &nbsp;&nbsp; 14844 |
| &nbsp;&nbsp; 350000 | Diamond Sports Group LLC/Diamond Sports Finance Co., Sec. Fac. Bond, 144A, 6.625%, 8/15/2027 | &nbsp;&nbsp; 3937 |
| &nbsp;&nbsp; 300000 | Gray Escrow II, Inc., Sr. Unsecd. Note, 144A, 5.375%, 11/15/2031 | &nbsp;&nbsp; 216730 |
| &nbsp;&nbsp; 75000 | Gray Escrow, Inc., Sr. Unsecd. Note, 144A, 7.000%, 5/15/2027 | &nbsp;&nbsp; 66630 |
| &nbsp;&nbsp; 275000 | Gray Television, Inc., Sr. Unsecd. Note, 144A, 4.750%, 10/15/2030 | &nbsp;&nbsp; 199375 |
| &nbsp;&nbsp; 250000 | Gray Television, Inc., Sr. Unsecd. Note, 144A, 5.875%, 7/15/2026 | &nbsp;&nbsp; 223125 |
| &nbsp;&nbsp; 100000 | iHeartCommunications, Inc., 144A, 4.750%, 1/15/2028 | &nbsp;&nbsp; 81592 |
| &nbsp;&nbsp; 175000 | iHeartCommunications, Inc., 144A, 5.250%, 8/15/2027 | &nbsp;&nbsp; 148516 |
| &nbsp;&nbsp; 931114 | iHeartCommunications, Inc., Sr. Unsecd. Note, 8.375%, 5/1/2027 | &nbsp;&nbsp; 793763 |
| &nbsp;&nbsp; 100000 | Lamar Media Corp., Sr. Unsecd. Note, 4.875%, 1/15/2029 | &nbsp;&nbsp; 92190 |
| &nbsp;&nbsp; 100000 | Lamar Media Corp., Sr. Unsecd. Note, Series WI, 3.625%, 1/15/2031 | &nbsp;&nbsp; 82803 |
| &nbsp;&nbsp; 450000 | Match Group, Inc., Sr. Unsecd. Note, 144A, 4.125%, 8/1/2030 | &nbsp;&nbsp; 368164 |
| &nbsp;&nbsp; 275000 | Match Group, Inc., Sr. Unsecd. Note, 144A, 5.000%, 12/15/2027 | &nbsp;&nbsp; 253473 |
| &nbsp;&nbsp; 900000 | Midas Opco Holdings LLC, Sr. Unsecd. Note, 144A, 5.625%, 8/15/2029 | &nbsp;&nbsp; 743809 |
| &nbsp;&nbsp; 50000 | News Corp., Sr. Unsecd. Note, 144A, 5.125%, 2/15/2032 | &nbsp;&nbsp; 45572 |
| &nbsp;&nbsp; 400000 | Nexstar Broadcasting, Inc., Sr. Unsecd. Note, 144A, 4.750%, 11/1/2028 | &nbsp;&nbsp; 346604 |
| &nbsp;&nbsp; 425000 | Nexstar Escrow Corp., Sr. Unsecd. Note, 144A, 5.625%, 7/15/2027 | &nbsp;&nbsp; 390740 |
| &nbsp;&nbsp; 50000 | Outfront Media Capital LLC/Outfront Media Capital Corp., Sr. Unsecd. Note, 144A, 4.250%, 1/15/2029 | &nbsp;&nbsp; 41550 |
| &nbsp;&nbsp; 325000 | Outfront Media Capital LLC/Outfront Media Capital Corp., Sr. Unsecd. Note, 144A, 4.625%, 3/15/2030 | &nbsp;&nbsp; 269402 |
| &nbsp;&nbsp; 300000 | ROBLOX Corp., Sr. Unsecd. Note, 144A, 3.875%, 5/1/2030 | &nbsp;&nbsp; 236850 |
| &nbsp;&nbsp; 50000 | Scripps Escrow II, Inc., Sr. Unsecd. Note, 144A, 3.875%, 1/15/2029 | &nbsp;&nbsp; 40198 |
| &nbsp;&nbsp; 175000 | Scripps Escrow II, Inc., Sr. Unsecd. Note, 144A, 5.375%, 1/15/2031 | &nbsp;&nbsp; 140492 |
| &nbsp;&nbsp; 250000 | Scripps Escrow II, Inc., Sr. Unsecd. Note, 144A, 5.875%, 7/15/2027 | &nbsp;&nbsp; 223520 |
| &nbsp;&nbsp; 375000 | Sinclair Television Group, Sr. Unsecd. Note, 144A, 5.125%, 2/15/2027 | &nbsp;&nbsp; 306447 |
| &nbsp;&nbsp; 275000 | Sinclair Television Group, Sr. Unsecd. Note, 144A, 5.500%, 3/1/2030 | &nbsp;&nbsp; 192738 |
| &nbsp;&nbsp; 275000 | Tegna, Inc., Sr. Unsecd. Note, 144A, 4.625%, 3/15/2028 | &nbsp;&nbsp; 261550 |
| &nbsp;&nbsp; 325000 | Tegna, Inc., Sr. Unsecd. Note, 144A, 5.000%, 9/15/2029 | &nbsp;&nbsp; 309093 |
| &nbsp;&nbsp; 925000 | Terrier Media Buyer, Inc., Sr. Unsecd. Note, 144A, 8.875%, 12/15/2027 | &nbsp;&nbsp; 697709 |
| &nbsp;&nbsp; 250000 | Univision Communications, Inc., Sec. Fac. Bond, 144A, 4.500%, 5/1/2029 | &nbsp;&nbsp; 209534 |
| &nbsp;&nbsp; 125000 | Univision Communications, Inc., Sec. Fac. Bond, 144A, 7.375%, 6/30/2030 | &nbsp;&nbsp; 119614 |
| &nbsp;&nbsp; 375000 | Urban One, Inc., Sec. Fac. Bond, 144A, 7.375%, 2/1/2028 | &nbsp;&nbsp; 317460 |
| &nbsp;&nbsp; 150000 | WMG Acquisition Corp., Sec. Fac. Bond, 144A, 3.750%, 12/1/2029 | &nbsp;&nbsp; 129195 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 7947172 |
|  | **Metals & Mining—0.4%** |  |
| &nbsp;&nbsp; 225000 | Cleveland-Cliffs, Inc., Sr. Unsecd. Note, 144A, 4.625%, 3/1/2029 | &nbsp;&nbsp; 200013 |
| &nbsp;&nbsp; 100000 | Cleveland-Cliffs, Inc., Sr. Unsecd. Note, 144A, 4.875%, 3/1/2031 | &nbsp;&nbsp; 88443 |
| &nbsp;&nbsp; 300000 | Coeur Mining, Inc., Sr. Unsecd. Note, 144A, 5.125%, 2/15/2029 | &nbsp;&nbsp; 234518 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 522974 |
|  | **Midstream—6.9%** |  |
| &nbsp;&nbsp; 175000 | AmeriGas Partners LP, Sr. Unsecd. Note, 5.750%, 5/20/2027 | &nbsp;&nbsp; 162910 |
| &nbsp;&nbsp; 400000 | AmeriGas Partners LP, Sr. Unsecd. Note, 5.875%, 8/20/2026 | &nbsp;&nbsp; 380504 |
| &nbsp;&nbsp; 475000 | Antero Midstream Partners LP, Sr. Unsecd. Note, 144A, 5.375%, 6/15/2029 | &nbsp;&nbsp; 434905 |

---

Annual Shareholder Report

**11**

------

---

| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br> **or Shares**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Midstream—continued** |  |
| $275000 | Antero Midstream Partners LP, Sr. Unsecd. Note, 144A, 5.750%, 3/1/2027 | $260446 |
| &nbsp;&nbsp; 400000 | Antero Midstream Partners LP, Sr. Unsecd. Note, 144A, 5.750%, 1/15/2028 | &nbsp;&nbsp; 371732 |
| &nbsp;&nbsp; 250000 | Antero Midstream Partners LP, Sr. Unsecd. Note, 144A, 7.875%, 5/15/2026 | &nbsp;&nbsp; 253425 |
| &nbsp;&nbsp; 125000 | Cheniere Energy Partners LP, Sr. Unsecd. Note, 4.000%, 3/1/2031 | &nbsp;&nbsp; 106589 |
| &nbsp;&nbsp; 175000 | Cheniere Energy Partners LP, Sr. Unsecd. Note, Series WI, 3.250%, 1/31/2032 | &nbsp;&nbsp; 139310 |
| &nbsp;&nbsp; 125000 | Cheniere Energy Partners LP, Sr. Unsecd. Note, Series WI, 4.500%, 10/1/2029 | &nbsp;&nbsp; 112685 |
| &nbsp;&nbsp; 175000 | Cheniere Energy, Inc., Sec. Fac. Bond, Series WI, 4.625%, 10/15/2028 | &nbsp;&nbsp; 158514 |
| &nbsp;&nbsp; 250000 | CNX Midstream Partners LP, Sr. Unsecd. Note, 144A, 4.750%, 4/15/2030 | &nbsp;&nbsp; 205491 |
| &nbsp;&nbsp; 275000 | DT Midstream, Inc., Sr. Unsecd. Note, 144A, 4.375%, 6/15/2031 | &nbsp;&nbsp; 231069 |
| &nbsp;&nbsp; 75000 | EQM Midstream Partners LP, Sr. Unsecd. Note, 144A, 4.500%, 1/15/2029 | &nbsp;&nbsp; 63105 |
| &nbsp;&nbsp; 325000 | EQM Midstream Partners LP, Sr. Unsecd. Note, 144A, 4.750%, 1/15/2031 | &nbsp;&nbsp; 266323 |
| &nbsp;&nbsp; 375000 | EQM Midstream Partners LP, Sr. Unsecd. Note, 144A, 6.500%, 7/1/2027 | &nbsp;&nbsp; 359062 |
| &nbsp;&nbsp; 275000 | EQT Midstream Partners LP, Sr. Unsecd. Note, 5.500%, 7/15/2028 | &nbsp;&nbsp; 246387 |
| &nbsp;&nbsp; 200000 | EQT Midstream Partners LP, Sr. Unsecd. Note, 6.500%, 7/15/2048 | &nbsp;&nbsp; 150275 |
| &nbsp;&nbsp; 65000 | EQT Midstream Partners LP, Sr. Unsecd. Note, 144A, 6.000%, 7/1/2025 | &nbsp;&nbsp; 62837 |
| &nbsp;&nbsp; 75000 | EQT Midstream Partners LP, Sr. Unsecd. Note, 144A, 7.500%, 6/1/2027 | &nbsp;&nbsp; 73544 |
| &nbsp;&nbsp; 100000 | Hess Midstream Operations LP, Sr. Unsecd. Note, 144A, 5.500%, 10/15/2030 | &nbsp;&nbsp; 91621 |
| &nbsp;&nbsp; 100000 | Hess Midstream Operations LP, Sr. Unsecd. Note, 144A, 4.250%, 2/15/2030 | &nbsp;&nbsp; 85627 |
| &nbsp;&nbsp; 275000 | Hess Midstream Partners LP, Sr. Unsecd. Note, 144A, 5.125%, 6/15/2028 | &nbsp;&nbsp; 254778 |
| &nbsp;&nbsp; 275000 | Holly Energy Partners LP, Sr. Unsecd. Note, 144A, 5.000%, 2/1/2028 | &nbsp;&nbsp; 250862 |
| &nbsp;&nbsp; 325000 | NuStar Logistics LP, Sr. Unsecd. Note, 5.625%, 4/28/2027 | &nbsp;&nbsp; 304453 |
| &nbsp;&nbsp; 250000 | Oasis Midstream Partners, Sr. Unsecd. Note, 144A, 8.000%, 4/1/2029 | &nbsp;&nbsp; 249138 |
| &nbsp;&nbsp; 150000 | Solaris Midstream Holdings LLC, Sr. Unsecd. Note, 144A, 7.625%, 4/1/2026 | &nbsp;&nbsp; 149377 |
| &nbsp;&nbsp; 450000 | Suburban Propane Partners LP, Sr. Unsecd. Note, 5.875%, 3/1/2027 | &nbsp;&nbsp; 430518 |
| &nbsp;&nbsp; 175000 | Suburban Propane Partners LP, Sr. Unsecd. Note, 144A, 5.000%, 6/1/2031 | &nbsp;&nbsp; 148970 |
| &nbsp;&nbsp; 250000 | Summit Midstream Holdings LLC, Sr. Unsecd. Note, 5.750%, 4/15/2025 | &nbsp;&nbsp; 212682 |
| &nbsp;&nbsp; 75000 | Targa Resources Partners LP/Targa Resources Partners Finance Corp., Sr. Unsecd. Note, 5.000%, 1/15/2028 | &nbsp;&nbsp; 71669 |
| &nbsp;&nbsp; 75000 | Targa Resources Partners LP/Targa Resources Partners Finance Corp., Sr. Unsecd. Note, 6.500%, 7/15/2027 | &nbsp;&nbsp; 75598 |
| &nbsp;&nbsp; 575000 | Targa Resources Partners LP/Targa Resources Partners Finance Corp., Sr. Unsecd. Note, 144A, 5.500%, 3/1/2030 | &nbsp;&nbsp; 541883 |
| &nbsp;&nbsp; 250000 | TransMontaigne Partners LP/TLP Finance Corp., Sr. Unsecd. Note, 6.125%, 2/15/2026 | &nbsp;&nbsp; 216802 |
| &nbsp;&nbsp; 200000 | Western Gas Partners LP, Sr. Unsecd. Note, 4.500%, 3/1/2028 | &nbsp;&nbsp; 184588 |
| &nbsp;&nbsp; 25000 | Western Gas Partners LP, Sr. Unsecd. Note, 4.650%, 7/1/2026 | &nbsp;&nbsp; 23769 |
| &nbsp;&nbsp; 150000 | Western Gas Partners LP, Sr. Unsecd. Note, 4.750%, 8/15/2028 | &nbsp;&nbsp; 137259 |
| &nbsp;&nbsp; 475000 | Western Gas Partners LP, Sr. Unsecd. Note, 5.300%, 3/1/2048 | &nbsp;&nbsp; 391401 |
| &nbsp;&nbsp; 125000 | Western Gas Partners LP, Sr. Unsecd. Note, 5.450%, 4/1/2044 | &nbsp;&nbsp; 104062 |
| &nbsp;&nbsp; 75000 | Western Gas Partners LP, Sr. Unsecd. Note, 5.500%, 8/15/2048 | &nbsp;&nbsp; 62474 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 8026644 |
|  | **Oil Field Services—2.1%** |  |
| &nbsp;&nbsp; 200000 | Archrock Partners LP/Archrock Partners Finance Corp., Sr. Unsecd. Note, 144A, 6.250%, 4/1/2028 | &nbsp;&nbsp; 183327 |
| &nbsp;&nbsp; 700000 | Archrock Partners LP/Archrock Partners Finance Corp., Sr. Unsecd. Note, 144A, 6.875%, 4/1/2027 | &nbsp;&nbsp; 669371 |
| &nbsp;&nbsp; 225000 | Nabors Industries Ltd., Sr. Unsecd. Note, 144A, 7.250%, 1/15/2026 | &nbsp;&nbsp; 212395 |
| &nbsp;&nbsp; 175000 | Nabors Industries Ltd., Sr. Unsecd. Note, 144A, 7.500%, 1/15/2028 | &nbsp;&nbsp; 160383 |
| &nbsp;&nbsp; 50000 | Nabors Industries, Inc., Sr. Unsecd. Note, 144A, 7.375%, 5/15/2027 | &nbsp;&nbsp; 48493 |
| &nbsp;&nbsp; 100000 | Precision Drilling Corp., Sr. Unsecd. Note, 144A, 6.875%, 1/15/2029 | &nbsp;&nbsp; 93231 |
| &nbsp;&nbsp; 225000 | Precision Drilling Corp., Sr. Unsecd. Note, 144A, 7.125%, 1/15/2026 | &nbsp;&nbsp; 218043 |
| &nbsp;&nbsp; 425000 | USA Compression Partners LP, Sr. Unsecd. Note, 6.875%, 9/1/2027 | &nbsp;&nbsp; 398057 |
| &nbsp;&nbsp; 500000 | USA Compression Partners LP, Sr. Unsecd. Note, Series WI, 6.875%, 4/1/2026 | &nbsp;&nbsp; 480448 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 2463748 |
|  | **Packaging—5.2%** |  |
| &nbsp;&nbsp; 622108 | ARD Finance SA, Sec. Fac. Bond, 144A, 6.500%, 6/30/2027 | &nbsp;&nbsp; 433679 |

---

Annual Shareholder Report

**12**

------

---

| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br> **or Shares**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Packaging—continued** |  |
| $300000 | Ardagh Metal Packaging, Sr. Unsecd. Note, 144A, 4.000%, 9/1/2029 | $238321 |
| &nbsp;&nbsp; 725000 | Ardagh Packaging Finance PLC/Ardagh Holdings, Sec. Fac. Bond, 144A, 5.250%, 8/15/2027 | &nbsp;&nbsp; 543259 |
| &nbsp;&nbsp; 375000 | Ardagh Packaging Finance PLC/Ardagh Holdings, Sr. Unsecd. Note, 144A, 5.250%, 8/15/2027 | &nbsp;&nbsp; 280996 |
| &nbsp;&nbsp; 275000 | Ball Corp., Sr. Unsecd. Note, 2.875%, 8/15/2030 | &nbsp;&nbsp; 220056 |
| &nbsp;&nbsp; 75000 | Ball Corp., Sr. Unsecd. Note, 3.125%, 9/15/2031 | &nbsp;&nbsp; 60332 |
| &nbsp;&nbsp; 100000 | Ball Corp., Sr. Unsecd. Note, 6.875%, 3/15/2028 | &nbsp;&nbsp; 102847 |
| &nbsp;&nbsp; 225000 | Berry Global Escrow Corp., 144A, 5.625%, 7/15/2027 | &nbsp;&nbsp; 219883 |
| &nbsp;&nbsp; 175000 | Bway Holding Co., Sec. Fac. Bond, 144A, 5.500%, 4/15/2024 | &nbsp;&nbsp; 170521 |
| &nbsp;&nbsp; 375000 | Bway Holding Co., Sr. Unsecd. Note, 144A, 7.250%, 4/15/2025 | &nbsp;&nbsp; 347541 |
| &nbsp;&nbsp; 1200000 | Clydesdale Acquisition Holdings, Inc., Sr. Unsecd. Note, 144A, 8.750%, 4/15/2030 | &nbsp;&nbsp; 1029416 |
| &nbsp;&nbsp; 175000 | Crown Americas LLC/Crown Americas Capital Corp. VI, Sr. Unsecd. Note, 4.750%, 2/1/2026 | &nbsp;&nbsp; 170182 |
| &nbsp;&nbsp; 75000 | OI European Group BV, Sr. Unsecd. Note, 144A, 4.750%, 2/15/2030 | &nbsp;&nbsp; 65786 |
| &nbsp;&nbsp; 425000 | Owens-Brockway Glass Container, Inc., Sr. Unsecd. Note, 144A, 5.375%, 1/15/2025 | &nbsp;&nbsp; 408404 |
| &nbsp;&nbsp; 45000 | Owens-Brockway Glass Container, Inc., Sr. Unsecd. Note, 144A, 5.875%, 8/15/2023 | &nbsp;&nbsp; 44862 |
| &nbsp;&nbsp; 200000 | Owens-Brockway Glass Container, Inc., Sr. Unsecd. Note, 144A, 6.375%, 8/15/2025 | &nbsp;&nbsp; 196288 |
| &nbsp;&nbsp; 75000 | Owens-Brockway Glass Container, Inc., Sr. Unsecd. Note, 144A, 6.625%, 5/13/2027 | &nbsp;&nbsp; 72882 |
| &nbsp;&nbsp; 100000 | Sealed Air Corp., Sr. Unsecd. Note, 144A, 5.000%, 4/15/2029 | &nbsp;&nbsp; 94145 |
| &nbsp;&nbsp; 500000 | Trident Merger Subsidiary, Inc., Sr. Unsecd. Note, 144A, 6.625%, 11/1/2025 | &nbsp;&nbsp; 436773 |
| &nbsp;&nbsp; 175000 | Trident Merger Subsidiary, Inc., Sr. Unsecd. Note, 144A, 9.250%, 8/1/2024 | &nbsp;&nbsp; 167538 |
| &nbsp;&nbsp; 375000 | Trivium Packaging Finance BV, Sec. Fac. Bond, 144A, 5.500%, 8/15/2026 | &nbsp;&nbsp; 344657 |
| &nbsp;&nbsp; 425000 | Trivium Packaging Finance BV, Sr. Unsecd. Note, 144A, 8.500%, 8/15/2027 | &nbsp;&nbsp; 390620 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 6038988 |
|  | **Paper—0.5%** |  |
| &nbsp;&nbsp; 350000 | Clearwater Paper Corp., Sr. Unsecd. Note, 144A, 5.375%, 2/1/2025 | &nbsp;&nbsp; 341876 |
| &nbsp;&nbsp; 150000 | Graphic Packaging International LLC, Sr. Unsecd. Note, 144A, 3.500%, 3/1/2029 | &nbsp;&nbsp; 128397 |
| &nbsp;&nbsp; 25000 | Graphic Packaging International LLC, Sr. Unsecd. Note, 144A, 3.750%, 2/1/2030 | &nbsp;&nbsp; 21281 |
| &nbsp;&nbsp; 125000 | Graphic Packaging International LLC, Sr. Unsecd. Note, 144A, 4.750%, 7/15/2027 | &nbsp;&nbsp; 117850 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 609404 |
|  | **Pharmaceuticals—2.1%** |  |
| &nbsp;&nbsp; 75000 | Bausch Health Cos., Inc., Sec. Fac. Bond, 144A, 6.125%, 2/1/2027 | &nbsp;&nbsp; 51816 |
| &nbsp;&nbsp; 175000 | Bausch Health Cos., Inc., Sr. Unsecd. Note, 144A, 5.000%, 1/30/2028 | &nbsp;&nbsp; 84276 |
| &nbsp;&nbsp; 150000 | Bausch Health Cos., Inc., Sr. Unsecd. Note, 144A, 5.000%, 2/15/2029 | &nbsp;&nbsp; 72088 |
| &nbsp;&nbsp; 275000 | Bausch Health Cos., Inc., Sr. Unsecd. Note, 144A, 5.250%, 1/30/2030 | &nbsp;&nbsp; 132356 |
| &nbsp;&nbsp; 425000 | Bausch Health Cos., Inc., Sr. Unsecd. Note, 144A, 5.250%, 2/15/2031 | &nbsp;&nbsp; 206514 |
| &nbsp;&nbsp; 75000 | Bausch Health Cos., Inc., Sr. Unsecd. Note, 144A, 6.250%, 2/15/2029 | &nbsp;&nbsp; 36230 |
| &nbsp;&nbsp; 300000 | Bausch Health Cos., Inc., Sr. Unsecd. Note, 144A, 7.250%, 5/30/2029 | &nbsp;&nbsp; 145328 |
| &nbsp;&nbsp; 400000 | Bausch Health Cos., Inc., Sr. Unsecd. Note, 144A, 8.500%, 1/31/2027 | &nbsp;&nbsp; 209892 |
| &nbsp;&nbsp; 175000 | Catalent Pharma Solutions, Inc., Sr. Unsecd. Note, 144A, 3.500%, 4/1/2030 | &nbsp;&nbsp; 138401 |
| &nbsp;&nbsp; 250000 | Grifols Escrow Issuer SA, 144A, 4.750%, 10/15/2028 | &nbsp;&nbsp; 216162 |
| &nbsp;&nbsp; 350000 | Jazz Securities Designated Activity Co., 144A, 4.375%, 1/15/2029 | &nbsp;&nbsp; 312576 |
| &nbsp;&nbsp; 373000 | Mallinckrodt International Finance SA/Mallinckrodt CB LLC, 144A, 10.000%, 6/15/2029 | &nbsp;&nbsp; 202349 |
| &nbsp;&nbsp; 450000 | Organon Finance 1 LLC, Sr. Unsecd. Note, 144A, 5.125%, 4/30/2031 | &nbsp;&nbsp; 390436 |
| &nbsp;&nbsp; 250000 | Syneos Health, Inc., Sr. Unsecd. Note, 144A, 3.625%, 1/15/2029 | &nbsp;&nbsp; 199422 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 2397846 |
|  | **Restaurant—1.6%** |  |
| &nbsp;&nbsp; 225000 | 1011778 BC Unltd. Liability Co./New Red Finance, Inc., 1st Lien, 144A, 3.500%, 2/15/2029 | &nbsp;&nbsp; 193289 |
| &nbsp;&nbsp; 1100000 | 1011778 BC Unltd. Liability Co./New Red Finance, Inc., 2nd Lien, 144A, 4.000%, 10/15/2030 | &nbsp;&nbsp; 893085 |
| &nbsp;&nbsp; 250000 | 1011778 BC Unltd. Liability Co./New Red Finance, Inc., 144A, 4.375%, 1/15/2028 | &nbsp;&nbsp; 224216 |
| &nbsp;&nbsp; 75000 | KFC Holding Co./Pizza Hut Holdings LLC/Taco Bell of America LLC, Sr. Unsecd. Note, 144A, 4.750%, 6/1/2027 | &nbsp;&nbsp; 72129 |
| &nbsp;&nbsp; 375000 | Yum! Brands, Inc., Sr. Unsecd. Note, 4.625%, 1/31/2032 | &nbsp;&nbsp; 332194 |

---

Annual Shareholder Report

**13**

------

---

| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br> **or Shares**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Restaurant—continued** |  |
| $75000 | Yum! Brands, Inc., Sr. Unsecd. Note, 5.375%, 4/1/2032 | $69570 |
| &nbsp;&nbsp; 75000 | Yum! Brands, Inc., Sr. Unsecd. Note, 144A, 4.750%, 1/15/2030 | &nbsp;&nbsp; 68939 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 1853422 |
|  | **Retailers—0.6%** |  |
| &nbsp;&nbsp; 225000 | Academy Ltd., Sec. Fac. Bond, 144A, 6.000%, 11/15/2027 | &nbsp;&nbsp; 215731 |
| &nbsp;&nbsp; 200000 | Asbury Automotive Group, Inc., Sr. Unsecd. Note, 144A, 4.625%, 11/15/2029 | &nbsp;&nbsp; 168764 |
| &nbsp;&nbsp; 150000 | Asbury Automotive Group, Inc., Sr. Unsecd. Note, 144A, 5.000%, 2/15/2032 | &nbsp;&nbsp; 123600 |
| &nbsp;&nbsp; 50000 | Gap (The), Inc., Sr. Unsecd. Note, 144A, 3.625%, 10/1/2029 | &nbsp;&nbsp; 35337 |
| &nbsp;&nbsp; 75000 | Gap (The), Inc., Sr. Unsecd. Note, 144A, 3.875%, 10/1/2031 | &nbsp;&nbsp; 52432 |
| &nbsp;&nbsp; 75000 | Kontoor Brands, Inc., Sr. Unsecd. Note, 144A, 4.125%, 11/15/2029 | &nbsp;&nbsp; 61395 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 657259 |
|  | **Supermarkets—0.6%** |  |
| &nbsp;&nbsp; 625000 | Albertsons Cos. LLC/SAFEW, Sr. Unsecd. Note, 144A, 3.500%, 3/15/2029 | &nbsp;&nbsp; 525744 |
| &nbsp;&nbsp; 75000 | Albertsons Cos. LLC/SAFEW, Sr. Unsecd. Note, 144A, 5.875%, 2/15/2028 | &nbsp;&nbsp; 71430 |
| &nbsp;&nbsp; 50000 | Albertsons Cos. LLC/SAFEW, Sr. Unsecd. Note, 144A, 7.500%, 3/15/2026 | &nbsp;&nbsp; 51138 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 648312 |
|  | **Technology—8.6%** |  |
| &nbsp;&nbsp; 275000 | Black Knight InfoServ LLC, Sr. Unsecd. Note, 144A, 3.625%, 9/1/2028 | &nbsp;&nbsp; 239250 |
| &nbsp;&nbsp; 300000 | Boxer Parent Co., Inc., 144A, 9.125%, 3/1/2026 | &nbsp;&nbsp; 283498 |
| &nbsp;&nbsp; 375000 | Cars.com, Inc., Sr. Unsecd. Note, 144A, 6.375%, 11/1/2028 | &nbsp;&nbsp; 333558 |
| &nbsp;&nbsp; 250000 | Centerfield Media Parent, Sr. Note, 144A, 6.625%, 8/1/2026 | &nbsp;&nbsp; 160325 |
| &nbsp;&nbsp; 325000 | Central Parent, Inc./Central Merger Sub, Inc., 144A, 7.250%, 6/15/2029 | &nbsp;&nbsp; 318304 |
| &nbsp;&nbsp; 50000 | Ciena Corp., Sr. Unsecd. Note, 144A, 4.000%, 1/31/2030 | &nbsp;&nbsp; 44069 |
| &nbsp;&nbsp; 350000 | Clarivate Science Holdings Corp., Sr. Unsecd. Note, 144A, 4.875%, 7/1/2029 | &nbsp;&nbsp; 298078 |
| &nbsp;&nbsp; 375000 | Coherent Corp., Sr. Unsecd. Note, 144A, 5.000%, 12/15/2029 | &nbsp;&nbsp; 323899 |
| &nbsp;&nbsp; 150000 | Consensus Cloud Solutions, Inc., Sr. Unsecd. Note, 144A, 6.000%, 10/15/2026 | &nbsp;&nbsp; 140926 |
| &nbsp;&nbsp; 275000 | Consensus Cloud Solutions, Inc., Sr. Unsecd. Note, 144A, 6.500%, 10/15/2028 | &nbsp;&nbsp; 253294 |
| &nbsp;&nbsp; 150000 | Dun & Bradstreet Corp., Sr. Unsecd. Note, 144A, 5.000%, 12/15/2029 | &nbsp;&nbsp; 128559 |
| &nbsp;&nbsp; 450000 | Elastic N.V., Sr. Unsecd. Note, 144A, 4.125%, 7/15/2029 | &nbsp;&nbsp; 364039 |
| &nbsp;&nbsp; 125000 | Entegris Escrow Corp., Sr. Unsecd. Note, 144A, 5.950%, 6/15/2030 | &nbsp;&nbsp; 115438 |
| &nbsp;&nbsp; 100000 | Gartner, Inc., Sr. Unsecd. Note, 144A, 3.750%, 10/1/2030 | &nbsp;&nbsp; 86350 |
| &nbsp;&nbsp; 25000 | Gartner, Inc., Sr. Unsecd. Note, 144A, 4.500%, 7/1/2028 | &nbsp;&nbsp; 23353 |
| &nbsp;&nbsp; 300000 | HealthEquity, Inc., Sr. Unsecd. Note, 144A, 4.500%, 10/1/2029 | &nbsp;&nbsp; 262545 |
| &nbsp;&nbsp; 350000 | Helios Software Holdings, Sec. Fac. Bond, 144A, 4.625%, 5/1/2028 | &nbsp;&nbsp; 267383 |
| &nbsp;&nbsp; 550000 | Logan Merger Sub, Inc., Sr. Secd. Note, 144A, 5.500%, 9/1/2027 | &nbsp;&nbsp; 296671 |
| &nbsp;&nbsp; 975000 | McAfee Corp., Sr. Unsecd. Note, 144A, 7.375%, 2/15/2030 | &nbsp;&nbsp; 785671 |
| &nbsp;&nbsp; 1025000 | Minerva Merger Sub, Inc., Sr. Unsecd. Note, 144A, 6.500%, 2/15/2030 | &nbsp;&nbsp; 757277 |
| &nbsp;&nbsp; 300000 | NCR Corp., 144A, 5.125%, 4/15/2029 | &nbsp;&nbsp; 251432 |
| &nbsp;&nbsp; 250000 | NCR Corp., Sr. Unsecd. Note, 144A, 5.000%, 10/1/2028 | &nbsp;&nbsp; 213541 |
| &nbsp;&nbsp; 350000 | NCR Corp., Sr. Unsecd. Note, 144A, 5.250%, 10/1/2030 | &nbsp;&nbsp; 289322 |
| &nbsp;&nbsp; 50000 | NCR Corp., Sr. Unsecd. Note, 144A, 5.750%, 9/1/2027 | &nbsp;&nbsp; 47924 |
| &nbsp;&nbsp; 25000 | Open Text Corp., 144A, 6.900%, 12/1/2027 | &nbsp;&nbsp; 25033 |
| &nbsp;&nbsp; 275000 | Open Text Holdings, Inc. / Open Text Corp., Sr. Unsecd. Note, 144A, 4.125%, 12/1/2031 | &nbsp;&nbsp; 214154 |
| &nbsp;&nbsp; 400000 | Picard Midco, Inc., Sec. Fac. Bond, 144A, 6.500%, 3/31/2029 | &nbsp;&nbsp; 337627 |
| &nbsp;&nbsp; 325000 | Rackspace Technology, Inc., 144A, 3.500%, 2/15/2028 | &nbsp;&nbsp; 189270 |
| &nbsp;&nbsp; 475000 | Rackspace Technology, Inc., Sr. Unsecd. Note, 144A, 5.375%, 12/1/2028 | &nbsp;&nbsp; 207801 |
| &nbsp;&nbsp; 600000 | Rocket Software, Inc., Sr. Unsecd. Note, 144A, 6.500%, 2/15/2029 | &nbsp;&nbsp; 473776 |
| &nbsp;&nbsp; 75000 | Science Applications International Corp., Sr. Unsecd. Note, 144A, 4.875%, 4/1/2028 | &nbsp;&nbsp; 69494 |
| &nbsp;&nbsp; 406125 | Seagate HDD Cayman, Sr. Unsecd. Note, 144A, 9.625%, 12/1/2032 | &nbsp;&nbsp; 445984 |
| &nbsp;&nbsp; 200000 | Sensata Technologies B.V., Sr. Unsecd. Note, 144A, 4.000%, 4/15/2029 | &nbsp;&nbsp; 172770 |

---

Annual Shareholder Report

**14**

------

---

| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br> **or Shares**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Technology—continued** |  |
| $200000 | Sensata Technologies B.V., Sr. Unsecd. Note, 144A, 5.875%, 9/1/2030 | $189834 |
| &nbsp;&nbsp; 75000 | Sensata Technologies, Inc., Sr. Unsecd. Note, 144A, 3.750%, 2/15/2031 | &nbsp;&nbsp; 61813 |
| &nbsp;&nbsp; 625000 | SS&C Technologies, Inc., Sr. Unsecd. Note, 144A, 5.500%, 9/30/2027 | &nbsp;&nbsp; 586516 |
| &nbsp;&nbsp; 100000 | Synaptics, Inc., Sr. Unsecd. Note, 144A, 4.000%, 6/15/2029 | &nbsp;&nbsp; 84399 |
| &nbsp;&nbsp; 200000 | TTM Technologies, Inc., Sr. Unsecd. Note, 144A, 4.000%, 3/1/2029 | &nbsp;&nbsp; 171798 |
| &nbsp;&nbsp; 375000 | Veritas US, Inc./Veritas Bermuda Ltd., Sr. Secd. Note, 144A, 7.500%, 9/1/2025 | &nbsp;&nbsp; 259076 |
| &nbsp;&nbsp; 75000 | Viavi Solutions, Inc., Sr. Unsecd. Note, 144A, 3.750%, 10/1/2029 | &nbsp;&nbsp; 63157 |
| &nbsp;&nbsp; 175000 | ZipRecruiter, Inc., Sr. Unsecd. Note, 144A, 5.000%, 1/15/2030 | &nbsp;&nbsp; 144501 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 9981709 |
|  | **Transportation Services—0.3%** |  |
| &nbsp;&nbsp; 375000 | Watco Cos. LLC/Finance Co., Sr. Unsecd. Note, 144A, 6.500%, 6/15/2027 | &nbsp;&nbsp; 356843 |
|  | **Utility - Electric—2.7%** |  |
| &nbsp;&nbsp; 300000 | Calpine Corp., 144A, 4.500%, 2/15/2028 | &nbsp;&nbsp; 268255 |
| &nbsp;&nbsp; 67000 | Calpine Corp., 144A, 5.250%, 6/1/2026 | &nbsp;&nbsp; 63929 |
| &nbsp;&nbsp; 325000 | Calpine Corp., Sr. Secd. Note, 144A, 3.750%, 3/1/2031 | &nbsp;&nbsp; 262098 |
| &nbsp;&nbsp; 25000 | Calpine Corp., Sr. Unsecd. Note, 144A, 4.625%, 2/1/2029 | &nbsp;&nbsp; 21492 |
| &nbsp;&nbsp; 25000 | Calpine Corp., Sr. Unsecd. Note, 144A, 5.000%, 2/1/2031 | &nbsp;&nbsp; 21013 |
| &nbsp;&nbsp; 175000 | Calpine Corp., Sr. Unsecd. Note, 144A, 5.125%, 3/15/2028 | &nbsp;&nbsp; 156507 |
| &nbsp;&nbsp; 650000 | Enviva Partners LP/Enviva Partners Finance Corp., Sr. Unsecd. Note, 144A, 6.500%, 1/15/2026 | &nbsp;&nbsp; 613223 |
| &nbsp;&nbsp; 50000 | NRG Energy, Inc., Sr. Unsecd. Note, 144A, 3.625%, 2/15/2031 | &nbsp;&nbsp; 38101 |
| &nbsp;&nbsp; 425000 | NRG Energy, Inc., Sr. Unsecd. Note, 144A, 3.875%, 2/15/2032 | &nbsp;&nbsp; 320014 |
| &nbsp;&nbsp; 300000 | NRG Energy, Inc., Sr. Unsecd. Note, 144A, 5.250%, 6/15/2029 | &nbsp;&nbsp; 265326 |
| &nbsp;&nbsp; 50000 | NRG Energy, Inc., Sr. Unsecd. Note, Series WI, 5.750%, 1/15/2028 | &nbsp;&nbsp; 47015 |
| &nbsp;&nbsp; 50000 | TerraForm Power Operating LLC, Sr. Unsecd. Note, 144A, 4.750%, 1/15/2030 | &nbsp;&nbsp; 43589 |
| &nbsp;&nbsp; 475000 | TerraForm Power Operating LLC, Sr. Unsecd. Note, 144A, 5.000%, 1/31/2028 | &nbsp;&nbsp; 428312 |
| &nbsp;&nbsp; 25000 | TransAlta Corp., Sr. Unsecd. Note, 7.750%, 11/15/2029 | &nbsp;&nbsp; 25566 |
| &nbsp;&nbsp; 175000 | Vistra Operations Co. LLC, Sr. Unsecd. Note, 144A, 5.500%, 9/1/2026 | &nbsp;&nbsp; 168883 |
| &nbsp;&nbsp; 400000 | Vistra Operations Co. LLC, Sr. Unsecd. Note, 144A, 5.625%, 2/15/2027 | &nbsp;&nbsp; 380345 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 3123668 |
|  | **Wireless Communications—0.4%** |  |
| &nbsp;&nbsp; 150000 | T-Mobile USA, Inc., Sr. Unsecd. Note, 2.625%, 2/15/2029 | &nbsp;&nbsp; 127182 |
| &nbsp;&nbsp; 125000 | T-Mobile USA, Inc., Sr. Unsecd. Note, 2.875%, 2/15/2031 | &nbsp;&nbsp; 103460 |
| &nbsp;&nbsp; 250000 | T-Mobile USA, Inc., Sr. Unsecd. Note, 4.750%, 2/1/2028 | &nbsp;&nbsp; 243623 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 474265 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL CORPORATE BONDS <br>(IDENTIFIED COST $129,465,598)<br>| &nbsp;&nbsp; 110482393 |
|  | COMMON STOCKS—0.5% |  |
|  | **Cable Satellite—0.0%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 545<br><sup>2,3</sup> <br>| Intelsat Jackson Holdings S.A. | &nbsp;&nbsp; 3542 |
|  | **Independent Energy—0.0%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 182<br><sup>2,3</sup> <br>| Ultra Resources, Inc. | &nbsp;&nbsp; 0 |
|  | **Media Entertainment—0.1%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7915<br><sup>3</sup> <br>| iHeartMedia, Inc. | &nbsp;&nbsp; 48519 |
|  | **Oil Field Services—0.3%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6337<br><sup>2,3</sup> <br>| Superior Energy Services, Inc. | &nbsp;&nbsp; 380220 |
|  | **Pharmaceuticals—0.1%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 13145<br><sup>3</sup> <br>| Mallinckrodt PLC | &nbsp;&nbsp; 101874 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL COMMON STOCKS <br>(IDENTIFIED COST $969,474)<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 534155 |

---

Annual Shareholder Report

**15**

------

---

| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br> **or Shares**<br>|  | **Value** |
|  | FLOATING RATE LOAN—0.2% |  |
|  | **Independent Energy—0.2%** |  |
| $202000<br><sup>4</sup> <br>| Ascent Resources Utica Holdings, LLC, 2020 Fixed 2nd Lien Term Loan, 12.941% (3-month USLIBOR + 9.000%), 11/1/2025 <br>(IDENTIFIED COST $202,000)<br>| $214120 |
|  | REPURCHASE AGREEMENT—2.3% |  |
| &nbsp;&nbsp; 2718000 | Interest in $1,350,000,000 joint repurchase agreement 4.30%, dated 12/30/2022 under which Bank of Montreal will repurchase <br> securities provided as collateral for $1,350,645,000 on 1/3/2023. The securities provided as collateral at the end of the period <br> held with BNY Mellon as tri-party agent, were U.S. Government Agency securities with various maturities to 5/20/2072 and the <br> market value of those underlying securities was $1,379,047,631. <br>(IDENTIFIED COST $2,718,000)<br>| &nbsp;&nbsp; 2718000 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL INVESTMENT IN SECURITIES—98.3% <br>(IDENTIFIED COST $133,355,072)<sup>5</sup> <br>| &nbsp;&nbsp; 113948668 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; OTHER ASSETS AND LIABILITIES - NET—1.7%<sup>6</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; 1962736 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL NET ASSETS—100% | $115911404 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 1 | *Issuer in default.* |
| 2 | *Market quotations and price evaluations are not available. Fair value determined using significant unobservable inputs in accordance with procedures established* <br> *by and under the general supervision of the Fund's Adviser acting through its Valuation Committee.*<br>|
| 3 | *Non-income-producing security.* |
| 4 | *Floating/variable note with current rate and current maturity or next reset date shown.* |
| 5 | *The cost of investments for federal tax purposes amounts to $133,744,800.* |
| 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 December 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br>The following is a summary of the inputs used, as of December 31, 2022, in valuing the Fund's assets carried at fair value:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Valuation Inputs** | **Valuation Inputs** | **Valuation Inputs** | **Valuation Inputs** | **Valuation Inputs** |
|  | **Level 1—** <br>**Quoted** <br>**Prices**<br>| **Level 2—** <br>**Other** <br>**Significant** <br>**Observable** <br>**Inputs**<br>| **Level 3—** <br>**Significant** <br>**Unobservable** <br>**Inputs**<br>| **Total** |
| **Debt Securities:** |  |  |  |  |
| Corporate Bonds | $— | $110482393 | $0 | $110482393 |
| Floating Rate Loan | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 214120 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 214120 |
| **Equity Securities:** |  |  |  |  |
| Common Stocks |  |  |  |  |
| &nbsp;&nbsp; Domestic | &nbsp;&nbsp;&nbsp; 48519 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp; 380220 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 428739 |
| &nbsp;&nbsp; International | &nbsp;&nbsp; 101874 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp; 3542 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 105416 |
| **Repurchase Agreement** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp; 2718000 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp; 2718000 |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL SECURITIES | $150393 | $113414513 | $383762 | $113948668 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| The following acronym(s) are used throughout this portfolio: | The following acronym(s) are used throughout this portfolio: |
| GMTN | —Global Medium Term Note |
| LIBOR | —London Interbank Offered Rate |
| PIK | —Payment in Kind |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**16**

------

Financial Highlights–Primary Shares

(For a Share Outstanding Throughout Each Period)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | **$6.39** | **$6.41** | **$6.53** | **$6.07** | **$6.82** |
| **Income From Investment Operations:** |  |  |  |  |  |
| Net investment income (loss)<sup>1</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.29 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.28 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.30 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.33 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.34 |
| Net realized and unrealized gain (loss) | &nbsp;&nbsp;&nbsp; (1.02) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.02 | &nbsp;&nbsp;&nbsp;&nbsp; (0.05) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.53 | &nbsp;&nbsp;&nbsp;&nbsp; (0.55) |
| &nbsp;&nbsp;&nbsp;&nbsp; Total From Investment Operations | &nbsp;&nbsp;&nbsp; (0.73) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.30 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.25 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.86 | &nbsp;&nbsp;&nbsp;&nbsp; (0.21) |
| **Less Distributions:** |  |  |  |  |  |
| Distributions from net investment income | &nbsp;&nbsp;&nbsp; (0.32) | &nbsp;&nbsp;&nbsp;&nbsp; (0.32) | &nbsp;&nbsp;&nbsp;&nbsp; (0.37) | &nbsp;&nbsp;&nbsp;&nbsp; (0.40) | &nbsp;&nbsp;&nbsp;&nbsp; (0.54) |
| **Net Asset Value, End of Period** | **$5.34** | **$6.39** | **$6.41** | **$6.53** | **$6.07** |
| **Total Return**<sup>2</sup> <br>| &nbsp;&nbsp; (11.78)% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4.85% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5.59% | &nbsp;&nbsp;&nbsp;&nbsp; 14.54% | &nbsp;&nbsp;&nbsp;&nbsp; (3.29)% |
| **Ratios to Average Net Assets:** |  |  |  |  |  |
| Net expenses<sup>3</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.81% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.81% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.81% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.81% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.81% |
| Net investment income | &nbsp;&nbsp;&nbsp;&nbsp; 5.15% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4.42% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4.95% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5.26% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5.27% |
| Expense waiver/reimbursement<sup>4</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.05% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.04% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.03% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.02% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.01% |
| **Supplemental Data:** |  |  |  |  |  |
| Net assets, end of period (000 omitted) | $68740 | $103152 | $109888 | $109538 | $106628 |
| Portfolio turnover<sup>5</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 13% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 39% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 36% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 31% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 18% |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 1 | *Per share numbers have been calculated using the average shares method.* |
| 2 | *Based on net asset value. Total returns do not reflect any additional fees or expenses that may be imposed by separate accounts of insurance companies or in* <br> *connection with any variable annuity or variable life insurance contract.*<br>|
| 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/*<br> *reimbursement recorded by investment companies in which the Fund may invest.*<br>|
| 5 | *Securities that mature are considered sales for purposes of this calculation.* |

---

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 December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | **$6.35** | **$6.38** | **$6.49** | **$6.04** | **$6.78** |
| **Income From Investment Operations:** |  |  |  |  |  |
| Net investment income (loss)<sup>1</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.27 | &nbsp;&nbsp;&nbsp;&nbsp; 0.26 | &nbsp;&nbsp;&nbsp;&nbsp; 0.28 | &nbsp;&nbsp;&nbsp;&nbsp; 0.31 | &nbsp;&nbsp;&nbsp;&nbsp; 0.32 |
| Net realized and unrealized gain (loss) | &nbsp;&nbsp;&nbsp; (1.00) | &nbsp;&nbsp;&nbsp;&nbsp; 0.01 | &nbsp;&nbsp;&nbsp; (0.03) | &nbsp;&nbsp;&nbsp;&nbsp; 0.52 | &nbsp;&nbsp;&nbsp; (0.54) |
| &nbsp;&nbsp;&nbsp;&nbsp; Total From Investment Operations | &nbsp;&nbsp;&nbsp; (0.73) | &nbsp;&nbsp;&nbsp;&nbsp; 0.27 | &nbsp;&nbsp;&nbsp;&nbsp; 0.25 | &nbsp;&nbsp;&nbsp;&nbsp; 0.83 | &nbsp;&nbsp;&nbsp; (0.22) |
| **Less Distributions:** |  |  |  |  |  |
| Distributions from net investment income | &nbsp;&nbsp;&nbsp; (0.31) | &nbsp;&nbsp;&nbsp; (0.30) | &nbsp;&nbsp;&nbsp; (0.36) | &nbsp;&nbsp;&nbsp; (0.38) | &nbsp;&nbsp;&nbsp; (0.52) |
| **Net Asset Value, End of Period** | **$5.31** | **$6.35** | **$6.38** | **$6.49** | **$6.04** |
| **Total Return**<sup>2</sup> <br>| &nbsp;&nbsp; (11.92)% | &nbsp;&nbsp;&nbsp;&nbsp; 4.44% | &nbsp;&nbsp;&nbsp;&nbsp; 5.46% | &nbsp;&nbsp;&nbsp; 14.13% | &nbsp;&nbsp;&nbsp; (3.43)% |
| **Ratios to Average Net Assets:** |  |  |  |  |  |
| Net expenses<sup>3</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.06% | &nbsp;&nbsp;&nbsp;&nbsp; 1.06% | &nbsp;&nbsp;&nbsp;&nbsp; 1.06% | &nbsp;&nbsp;&nbsp;&nbsp; 1.06% | &nbsp;&nbsp;&nbsp;&nbsp; 1.06% |
| Net investment income | &nbsp;&nbsp;&nbsp;&nbsp; 4.92% | &nbsp;&nbsp;&nbsp;&nbsp; 4.16% | &nbsp;&nbsp;&nbsp;&nbsp; 4.70% | &nbsp;&nbsp;&nbsp;&nbsp; 4.99% | &nbsp;&nbsp;&nbsp;&nbsp; 5.03% |
| Expense waiver/reimbursement<sup>4</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.05% | &nbsp;&nbsp;&nbsp;&nbsp; 0.04% | &nbsp;&nbsp;&nbsp;&nbsp; 0.03% | &nbsp;&nbsp;&nbsp;&nbsp; 0.02% | &nbsp;&nbsp;&nbsp;&nbsp; 0.01% |
| **Supplemental Data:** |  |  |  |  |  |
| Net assets, end of period (000 omitted) | $47172 | $57578 | $50322 | $58591 | $43012 |
| Portfolio turnover<sup>5</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 13% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 39% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 36% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 31% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 18% |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 1 | *Per share numbers have been calculated using the average shares method.* |
| 2 | *Based on net asset value. Total returns do not reflect any additional fees or expenses that may be imposed by separate accounts of insurance companies or in* <br> *connection with any variable annuity or variable life insurance contract.*<br>|
| 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/*<br> *reimbursement recorded by investment companies in which the Fund may invest.*<br>|
| 5 | *Securities that mature are considered sales for purposes of this calculation.* |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**18**

------

Statement of Assets and Liabilities <br>December 31, 2022

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| **Assets:** |  |
| Investment in securities, at value (identified cost $133,355,072) | $113948668 |
| Income receivable | &nbsp;&nbsp;&nbsp;&nbsp; 2097270 |
| Receivable for investments sold | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1350 |
| Receivable for shares sold | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 43269 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Assets | &nbsp;&nbsp; 116090557 |
| **Liabilities:** |  |
| Payable for shares redeemed | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 123003 |
| Payable to bank | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1624 |
| Payable for investment adviser fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3317 |
| Payable for administrative fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 498 |
| Payable for portfolio accounting fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 28290 |
| Payable for distribution services fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 10197 |
| Payable for printing and postage | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9552 |
| Accrued expenses (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2672 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Liabilities | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 179153 |
| Net assets for 21,749,991 shares outstanding | $115911404 |
| **Net Assets Consist of:** |  |
| Paid-in capital | $144138607 |
| Total distributable earnings (loss) | &nbsp;&nbsp; (28227203) |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Net Assets | $115911404 |
| **Net Asset Value, Offering Price and Redemption Proceeds Per Share:** |  |
| **Primary Shares:** |  |
| $68,739,676 ÷ 12,868,155 shares outstanding, no par value, unlimited shares authorized | $5.34 |
| **Service Shares:** |  |
| $47,171,728 ÷ 8,881,836 shares outstanding, no par value, unlimited shares authorized | $5.31 |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**19**

------

Statement of Operations <br>Year Ended December 31, 2022

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| **Investment Income:** |  |
| Interest | $7712103 |
| **Expenses:** |  |
| Investment adviser fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 774585 |
| Administrative fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 106128 |
| Custodian fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 14111 |
| Transfer agent fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 14838 |
| Directors'/Trustees' fees (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1990 |
| Auditing fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 34020 |
| Legal fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9145 |
| Portfolio accounting fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 107899 |
| Distribution services fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 127939 |
| Printing and postage | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 36474 |
| Miscellaneous (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 22491 |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL EXPENSES | &nbsp;&nbsp;&nbsp;&nbsp; 1249620 |
| Waiver of investment adviser fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (69666) |
| Net expenses | &nbsp;&nbsp;&nbsp;&nbsp; 1179954 |
| Net investment income | &nbsp;&nbsp;&nbsp;&nbsp; 6532149 |
| **Realized and Unrealized Gain (Loss) on Investments:** |  |
| Net realized loss on investments | &nbsp;&nbsp;&nbsp; (1351738) |
| Net change in unrealized appreciation of investments | &nbsp;&nbsp; (22618212) |
| Net realized and unrealized gain (loss) on investments | &nbsp;&nbsp; (23969950) |
| Change in net assets resulting from operations | $(17437801) |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**20**

------

Statement of Changes in Net Assets

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | |
|:---|:---|:---|
| **Year Ended December 31** | **2022** | **2021** |
| **Increase (Decrease) in Net Assets** |  |  |
| **Operations:** |  |  |
| Net investment income | $6532149 | $6802923 |
| Net realized gain (loss) | &nbsp;&nbsp;&nbsp;&nbsp; (1351738) | &nbsp;&nbsp;&nbsp;&nbsp; 1224804 |
| Net change in unrealized appreciation/depreciation | &nbsp;&nbsp; (22618212) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (648867) |
| &nbsp;&nbsp;&nbsp;&nbsp; CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | &nbsp;&nbsp; (17437801) | &nbsp;&nbsp;&nbsp;&nbsp; 7378860 |
| **Distributions to Shareholders:** |  |  |
| Primary Shares | &nbsp;&nbsp;&nbsp;&nbsp; (4434390) | &nbsp;&nbsp;&nbsp;&nbsp; (5363823) |
| Service Shares | &nbsp;&nbsp;&nbsp;&nbsp; (2815712) | &nbsp;&nbsp;&nbsp;&nbsp; (2367247) |
| &nbsp;&nbsp;&nbsp;&nbsp; CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS | &nbsp;&nbsp;&nbsp;&nbsp; (7250102) | &nbsp;&nbsp;&nbsp;&nbsp; (7731070) |
| **Share Transactions:** |  |  |
| Proceeds from sale of shares | &nbsp;&nbsp;&nbsp; 17048944 | &nbsp;&nbsp;&nbsp; 39605192 |
| Net asset value of shares issued to shareholders in payment of distributions declared | &nbsp;&nbsp;&nbsp;&nbsp; 7250097 | &nbsp;&nbsp;&nbsp;&nbsp; 7731066 |
| Cost of shares redeemed | &nbsp;&nbsp; (44429214) | &nbsp;&nbsp; (46465306) |
| &nbsp;&nbsp;&nbsp;&nbsp; CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS | &nbsp;&nbsp; (20130173) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 870952 |
| Change in net assets | &nbsp;&nbsp; (44818076) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 518742 |
| **Net Assets:** |  |  |
| Beginning of period | &nbsp;&nbsp; 160729480 | &nbsp;&nbsp; 160210738 |
| End of period | $115911404 | $160729480 |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**21**

------

Notes to Financial Statements

December 31, 2022

**1. ORGANIZATION** 

Federated Hermes Insurance Series (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 six portfolios. The financial statements included herein are only those of Federated Hermes High Income Bond Fund II (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 two classes of shares: Primary Shares and Service Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. Fund shares are available exclusively as a funding vehicle for life insurance companies writing variable life insurance policies and variable annuity contracts. The investment objective of the Fund is to seek high current income.

**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 net asset value (NAV), the Fund generally values investments as follows:

◾ <br>

Fixed-income securities are fair valued using price evaluations provided by a pricing service approved by Federated Investment Management Company (the "Adviser").

◾ <br>

Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.

◾ <br>

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.

◾ <br>

Derivative contracts listed on exchanges are valued at their reported settlement or closing price, except that options are valued at the mean of closing bid and ask quotations.

◾ <br>

Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Adviser.

◾ <br>

For securities that are fair valued in accordance with procedures established by and under the general supervision of the Adviser, 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 Adviser's valuation policies and procedures for the Fund, or if information furnished by a pricing service, in the opinion of the Adviser's 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 and Significant Events Procedures** 

Pursuant to Rule 2a-5 under the Act, the Fund's Board of Trustees (the "Trustees") has designated the Adviser as the Fund's valuation designee to perform any fair value determinations for securities and other assets held by the Fund. The Adviser is subject to the Trustees' oversight and certain reporting and other requirements intended to provide the Trustees the information needed to oversee the Adviser's fair value determinations.

The Adviser, acting through its Valuation Committee, is responsible for determining the fair value of investments for which market quotations are not readily available. The Valuation Committee is comprised of officers of the Adviser and certain of the Adviser's affiliated companies and determines fair value and oversees the calculation of the NAV. The Valuation Committee is also authorized to use pricing services 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 Adviser. The Trustees periodically review the fair valuations made by the Valuation Committee. The Trustees have also approved the Adviser's fair valuation and significant events procedures as part of the Fund's compliance program and will review any changes made to the procedures.

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

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the prices bid and ask 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 OTC 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 Adviser.

The Adviser has also adopted procedures requiring an investment to be priced at its fair value whenever the Valuation Committee determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

◾ <br>

With respect to securities traded principally in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures contracts;

◾ <br>

Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded;

◾ <br>

Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, or a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.

The Adviser has adopted procedures whereby the Valuation Committee uses a pricing service to provide factors to update the fair value of equity securities traded principally in foreign markets from the time of the close of their respective foreign stock exchanges to the pricing time of the Fund. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Valuation Committee will determine the fair value of the investment in accordance with the fair valuation procedures approved by the Adviser. The Trustees periodically review fair valuations made in response to significant events.

**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. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income, if any, are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. 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. 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 waiver of $69,666 is disclosed in Note 5.

**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 December 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 December 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.

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**23**

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**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 Adviser.

**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** <br>**12/31/2022** | **Year Ended** <br>**12/31/2022** | **Year Ended** <br>**12/31/2021** | **Year Ended** <br>**12/31/2021** |
| **Primary Shares:** | **Shares** | **Amount** | **Shares** | **Amount** |
| Shares sold | 2111750 | $11833606 | 4174668 | $26549890 |
| Shares issued to shareholders in payment of distributions declared | &nbsp;&nbsp;&nbsp; 769859 | &nbsp;&nbsp;&nbsp;&nbsp; 4434390 | &nbsp;&nbsp;&nbsp; 875012 | &nbsp;&nbsp;&nbsp;&nbsp; 5363823 |
| Shares redeemed | (6157435) | &nbsp;&nbsp; (35688342) | (6051898) | &nbsp;&nbsp; (38301626) |
| &nbsp;&nbsp;&nbsp;&nbsp; NET CHANGE RESULTING FROM PRIMARY SHARE TRANSACTIONS | (3275826) | $(19420346) | (1002218) | $(6387913) |
|  | **Year Ended** <br>**12/31/2022** | **Year Ended** <br>**12/31/2022** | **Year Ended** <br>**12/31/2021** | **Year Ended** <br>**12/31/2021** |
| **Service Shares:** | **Shares** | **Amount** | **Shares** | **Amount** |
| Shares sold | &nbsp;&nbsp;&nbsp; 910215 | $5215338 | 2074882 | $13055302 |
| Shares issued to shareholders in payment of distributions declared | &nbsp;&nbsp;&nbsp; 490541 | &nbsp;&nbsp;&nbsp;&nbsp; 2815707 | &nbsp;&nbsp;&nbsp; 387437 | &nbsp;&nbsp;&nbsp;&nbsp; 2367243 |
| Shares redeemed | (1579698) | &nbsp;&nbsp;&nbsp; (8740872) | (1294328) | &nbsp;&nbsp;&nbsp; (8163680) |
| &nbsp;&nbsp;&nbsp;&nbsp; NET CHANGE RESULTING FROM SERVICE SHARE TRANSACTIONS | &nbsp;&nbsp; (178942) | $(709827) | 1167991 | $7258865 |
| &nbsp;&nbsp;&nbsp;&nbsp; NET CHANGE RESULTING FROM TOTAL FUND SHARE TRANSACTIONS | (3454768) | $(20130173) | &nbsp;&nbsp;&nbsp; 165773 | $870952 |

---

**4. FEDERAL TAX INFORMATION** 

The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended December 31, 2022 and 2021, was as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Ordinary income | $7250102 | $7731070 |

---

As of December 31, 2022, the components of distributable earnings on a tax-basis were as follows:

---

| | |
|:---|:---|
| Undistributed ordinary income | $6772839 |
| Net unrealized depreciation | $(19796346) |
| Capital loss carryforwards | $(15203910) |
| TOTAL | $(28227417) |

---

At December 31, 2022, the cost of investments for federal tax purposes was $133,744,800. The net unrealized depreciation of investments for federal tax purposes was $19,796,132. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $874,530 and net unrealized depreciation from investments for those securities having an excess of cost over value of $20,670,662. The difference between book-basis and tax-basis net unrealized appreciation is attributable to differing treatments for defaulted securities and discount accretion/premium amortization on debt securities.

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As of December 31, 2022, the Fund had a capital loss carryforward of $15,203,910 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code of 1986, 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** |
| $235769 | $14968141 | $15203910 |

---

**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 0.60% 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 December 31, 2022, the Adviser voluntarily waived $69,666 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** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Average Daily Net Assets** <br>**of the Investment Complex**<br>|
| 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 December 31, 2022, the annualized fee paid to FAS was 0.082% 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 Service 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. For the year ended December 31, 2022, distribution services fees for the Fund were as follows:

---

| | |
|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp; **Distribution Services** <br>**Fees Incurred**<br>|
| Service Shares | $127939 |

---

When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. 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 December 31, 2022, FSC did not retain any fees paid by the Fund.

**Expense Limitation** 

The Adviser and certain of its affiliates (which may include FAS and FSC) 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 Primary Shares and Service Shares (after the voluntary waivers and/or reimbursements) will not exceed 0.81% and 1.06% (the "Fee Limit"), respectively, up to but not including the later of (the "Termination Date"): (a) May 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 December 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 $187,375.

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**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. INVESTMENT TRANSACTIONS** 

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the year ended December 31, 2022, were as follows:

---

| | |
|:---|:---|
| Purchases | $15818526 |
| Sales | $34942900 |

---

**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 December 31, 2022, the Fund had no outstanding loans. During the year ended December 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 December 31, 2022, there were no outstanding loans. During the year ended December 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, and may continue to result in, closed borders, enhanced health screenings, disruptions to healthcare service preparation and delivery, quarantines, cancellations, and disruptions to supply chains, workflow operations and consumer activity, as well as general concern and uncertainty. The impact of this coronavirus has resulted in substantial economic volatility. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could continue to negatively affect the worldwide economy, as well as the economies of individual countries, individual companies (including certain Fund service providers and issuers of the Fund's investments) and the markets in general in significant and unforeseen ways. In addition, governments, their regulatory agencies, or self-regulatory organizations may take actions in response to the pandemic, including significant fiscal and monetary policy changes, that may affect the instruments in which the Fund invests or the issuers of such investments. Any such impact could adversely affect the Fund's performance.

**11. Recent Accounting Pronouncements** 

In December 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2022-06 "Reference Rate Reform (Topic 848)". ASU No. 2022-06 updates and clarifies ASU No. 2020-04, which provides optional, temporary relief with respect to the financial reporting of contracts subject to certain types of modifications due to the planned discontinuation of LIBOR and other interbank-offered reference rates. The temporary relief provided by ASU No. 2022-06 is effective immediately for certain reference rate-related contract modifications that occur through December 31, 2024. Management does not expect ASU No. 2022-06 to have a material impact on the financial statements.

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Report of Independent Registered Public Accounting Firm

**To the Board of Trustees of Federated Hermes Insurance Series and Shareholders of Federated Hermes High Income Bond Fund II:**

**Opinion on the Financial Statements**

We have audited the accompanying statement of assets and liabilities of Federated Hermes High Income Bond Fund II (the Fund), a portfolio of Federated Hermes Insurance Series, including the portfolio of investments, as of December 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 December 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.

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 December 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. <br> ![](kpmgsig.jpg)

We have served as the auditor for one or more of Federated Hermes' investment companies since 2006.

Boston, Massachusetts <br>February 15, 2023

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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 funds used as variable investment options. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from July 1, 2022 to December 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.

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| | | | |
|:---|:---|:---|:---|
|  | **Beginning** <br>**Account Value** <br>**7/1/2022**<br>| **Ending** <br>**Account Value** <br>**12/31/2022**<br>| **Expenses Paid** <br>**During Period**<sup>1</sup> <br>|
| **Actual:** |  |  |  |
| Primary Shares | $1000 | $1023.00 | $4.13 |
| Service Shares | $1000 | $1021.20 | $5.40 |
| **Hypothetical (assuming a 5% return before expenses):** |  |  |  |
| Primary Shares | $1000 | $1021.12 | $4.13 |
| Service Shares | $1000 | $1019.86 | $5.40 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 1 | *Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the* <br> *one-half-year period). The expenses shown in the table do not include the charges and expenses imposed by the insurance company under the variable insurance* <br> *product contract. Please refer to the variable insurance product prospectus for a complete listing of these expenses. The annualized net expense ratios are as* <br> *follows:*<br>|

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | |
|:---|:---|
| Primary Shares | 0.81% |
| Service Shares | 1.06% |

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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, 2022, the Trust comprised six 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**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held and Previous Position(s)**<br>|
| **J. Christopher Donahue\***<br> Birth Date: April 11, 1949<br> Trustee<br> Indefinite Term<br> Began serving: September <br> 1993<br>| &nbsp;&nbsp; **Principal Occupations**: Principal Executive Officer and President of certain of the Funds in the Federated Hermes Fund <br> Family; Director or Trustee of the Funds in the Federated Hermes Fund Family; President, Chief Executive Officer and <br> Director, Federated Hermes, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated <br> Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman and Trustee, <br> Federated Equity Management Company of Pennsylvania; Trustee, Federated Shareholder Services Company; Director, <br> Federated Services Company.<br> **Previous Positions**: President, Federated Investment Counseling; President and Chief Executive Officer, Federated <br> Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd; Chairman, <br> Passport Research, Ltd.<br>|
| **Thomas R. Donahue\***<br> Birth Date: October 20, 1958<br> Trustee<br> Indefinite Term<br> Began serving: May 2016<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of certain of the funds in the Federated Hermes Fund Family; Chief Financial <br> Officer, Treasurer, Vice President and Assistant Secretary, Federated Hermes, Inc.; Chairman and Trustee, Federated <br> Administrative Services; Chairman and Director, Federated Administrative Services, Inc.; Trustee and Treasurer, Federated <br> Advisory Services Company; Director or Trustee and Treasurer, Federated Equity Management Company of Pennsylvania, <br> Federated Global Investment Management Corp., Federated Investment Counseling, and Federated Investment <br> Management Company; Director, MDTA LLC; Director, Executive Vice President and Assistant Secretary, Federated Securities <br> Corp.; Director or Trustee and Chairman, Federated Services Company and Federated Shareholder Services Company; and <br> Director and President, FII Holdings, Inc.<br> **Previous Positions**: Director, Federated Hermes, Inc.; Assistant Secretary, Federated Investment Management Company, <br> Federated Global Investment Management Company and Passport Research, LTD; Treasurer, Passport Research, LTD; <br> Executive Vice President, Federated Securities Corp.; and Treasurer, FII Holdings, Inc.<br>|

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\*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*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**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held, Previous Position(s) and Qualifications**<br>|
| **John T. Collins**<br> Birth Date: January 24, 1947<br> Trustee<br> Indefinite Term<br> Began serving: October 2013<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee, and Chair of the Board of Directors or Trustees, of the Federated Hermes Fund <br> Family; formerly, Chairman and CEO, The Collins Group, Inc. (a private equity firm) (Retired).<br> **Other Directorships Held**: Director, KLX Energy Services Holdings, Inc. (oilfield services); former Director of <br> KLX Corp. (aerospace).<br> **Qualifications**: Mr. Collins has served in several business and financial management roles and directorship positions <br> throughout his career. Mr. Collins previously served as Chairman and CEO of The Collins Group, Inc. (a private equity firm) <br> and as a Director of KLX Corp. Mr. Collins serves as Chairman Emeriti, Bentley University. Mr. Collins previously served as <br> Director and Audit Committee Member, Bank of America Corp.; Director, FleetBoston Financial Corp.; and Director, Beth <br> Israel Deaconess Medical Center (Harvard University Affiliate Hospital). <br>|

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held, Previous Position(s) and Qualifications**<br>|
| **G. Thomas Hough**<br> Birth Date: February 28, 1955<br> Trustee<br> Indefinite Term<br> Began serving: August 2015<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee, Chair of the Audit Committee of the Federated Hermes Fund Family; formerly, <br> Vice Chair, Ernst & Young LLP (public accounting firm) (Retired). <br> **Other Directorships Held**: Director, Chair of the Audit Committee, Equifax, Inc.; Lead Director, Member of the Audit and <br> Nominating and Corporate Governance Committees, Haverty Furniture Companies, Inc.; formerly, Director, Member of <br> Governance and Compensation Committees, Publix Super Markets, Inc.<br> **Qualifications**: Mr. Hough has served in accounting, business management and directorship positions throughout his career. <br> Mr. Hough most recently held the position of Americas Vice Chair of Assurance with Ernst & Young LLP (public accounting <br> firm). Mr. Hough serves on the President's Cabinet and Business School Board of Visitors for the University of Alabama. <br> Mr. Hough previously served on the Business School Board of Visitors for Wake Forest University, and he previously served as <br> an Executive Committee member of the United States Golf Association. <br>|
| **Maureen Lally-Green**<br> Birth Date: July 5, 1949<br> Trustee<br> Indefinite Term<br> Began serving: August 2009<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; Adjunct Professor Emerita of Law, <br> Duquesne University School of Law; formerly, Dean of the Duquesne University School of Law and Professor of Law and <br> Interim Dean of the Duquesne University School of Law; formerly, Associate General Secretary and Director, Office of Church <br> Relations, Diocese of Pittsburgh.<br> **Other Directorships Held**: Director, CNX Resources Corporation (natural gas).<br> **Qualifications**: Judge Lally-Green has served in various legal and business roles and directorship positions throughout her <br> career. Judge Lally-Green previously held the position of Dean of the School of Law of Duquesne University (as well as <br> Interim Dean). Judge Lally-Green previously served as Associate General Secretary of the Diocese of Pittsburgh, a member of <br> the Superior Court of Pennsylvania and as a Professor of Law, Duquesne University School of Law. Judge Lally-Green was <br> appointed by the Supreme Court of Pennsylvania to serve on the Supreme Court's Board of Continuing Judicial Education <br> and the Supreme Court's Appellate Court Procedural Rules Committee. Judge Lally-Green also currently holds the positions <br> on not for profit or for profit boards of directors as follows: Director and Chair, UPMC Mercy Hospital; Regent, Saint Vincent <br> Seminary; Member, Pennsylvania State Board of Education (public); Director, Catholic Charities, Pittsburgh; and Director CNX <br> Resources Corporation (natural gas). Judge Lally-Green has held the positions of: Director, Auberle; Director, Epilepsy <br> Foundation of Western and Central Pennsylvania; Director, Ireland Institute of Pittsburgh; Director, Saint Thomas More <br> Society; Director and Chair, Catholic High Schools of the Diocese of Pittsburgh, Inc.; Director, Pennsylvania Bar Institute; <br> Director, St. Vincent College; Director and Chair, North Catholic High School, Inc.; Director and Vice Chair, Our Campaign for <br> the Church Alive!, Inc.; and Director and Vice Chair, Saint Francis University.<br>|
| **Thomas M. O'Neill**<br> Birth Date: June 14, 1951<br> Trustee<br> Indefinite Term<br> Began serving: August 2006<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; Sole Proprietor, Navigator Management <br> Company (investment and strategic consulting).<br> **Other Directorships Held**: None.<br> **Qualifications**: Mr. O'Neill has served in several business, mutual fund and financial management roles and directorship <br> positions throughout his career. Mr. O'Neill serves as Director, Medicines for Humanity. Mr. O'Neill previously served as Chief <br> Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and <br> Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, <br> MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director <br> and Consultant, EZE Castle Software (investment order management software); Director, Midway Pacific (lumber); and <br> Director, The Golisano Children's Museum of Naples, Florida.<br>|
| **Madelyn A. Reilly**<br> Birth Date: February 2, 1956<br> Trustee<br> Indefinite Term<br> Began serving: <br> November 2020<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; formerly, Senior Vice President for Legal <br> Affairs, General Counsel and Secretary of Board of Directors, Duquesne University (Retired).<br> **Other Directorships Held**: None.<br> **Qualifications**: Ms. Reilly has served in various business and legal management roles throughout her career. Ms. Reilly <br> previously served as Senior Vice President for Legal Affairs, General Counsel and Secretary of Board of Directors and Director <br> of Risk Management and Associate General Counsel, Duquesne University. Prior to her work at Duquesne University, <br> Ms. Reilly served as Assistant General Counsel of Compliance and Enterprise Risk as well as Senior Counsel of Environment, <br> Health and Safety, PPG Industries. Ms. Reilly currently serves as a member of the Board of Directors of UPMC <br> Mercy Hospital.<br>|
| **P. Jerome Richey**<br> Birth Date: February 23, 1949<br> Trustee<br> Indefinite Term<br> Began serving: October 2013<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; Retired; formerly, Senior Vice Chancellor <br> and Chief Legal Officer, University of Pittsburgh and Executive Vice President and Chief Legal Officer, CONSOL Energy Inc. <br> (now split into two separate publicly traded companies known as CONSOL Energy Inc. and CNX Resources Corp.).<br> **Other Directorships Held**: None.<br> **Qualifications**: Mr. Richey has served in several business and legal management roles and directorship positions throughout <br> his career. Mr. Richey most recently held the positions of Senior Vice Chancellor and Chief Legal Officer, University of <br> Pittsburgh. Mr. Richey previously served as Chairman of the Board, Epilepsy Foundation of Western Pennsylvania and <br> Chairman of the Board, World Affairs Council of Pittsburgh. Mr. Richey previously served as Chief Legal Officer and Executive <br> Vice President, CONSOL Energy Inc. and CNX Gas Company; and Board Member, Ethics Counsel and Shareholder, Buchanan <br> Ingersoll & Rooney PC (a law firm). <br>|

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held, Previous Position(s) and Qualifications**<br>|
| **John S. Walsh**<br> Birth Date:<br> November 28, 1957<br> Trustee<br> Indefinite Term<br> Began serving: January 1999<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; President and Director, Heat Wagon, Inc. <br> (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of <br> portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. <br> **Other Directorships Held**: None.<br> **Qualifications**: Mr. Walsh has served in several business management roles and directorship positions throughout his career. <br> Mr. Walsh previously served as Vice President, Walsh & Kelly, Inc. (paving contractors).<br>|

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**OFFICERS** 

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Address**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years**<br> **and Previous Position(s)**<br>|
| **Lori A. Hensler**<br> Birth Date: January 6, 1967<br> TREASURER<br> Officer since: April 2013<br>| &nbsp;&nbsp; **Principal Occupations**: Principal Financial Officer and Treasurer of the Federated Hermes Fund Family; Senior Vice President, <br> Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp.; and Assistant Treasurer, <br> Federated Investors Trust Company. Ms. Hensler has received the Certified Public Accountant designation.<br> **Previous Positions**: Controller of Federated Hermes, Inc.; Senior Vice President and Assistant Treasurer, Federated Investors <br> Management Company; Treasurer, Federated Investors Trust Company; Assistant Treasurer, Federated Administrative <br> Services, Federated Administrative Services, Inc., Federated Securities Corp., Edgewood Services, Inc., Federated Advisory <br> Services Company, Federated Equity Management Company of Pennsylvania, Federated Global Investment Management <br> Corp., Federated Investment Counseling, Federated Investment Management Company, Passport Research, Ltd., and <br> Federated MDTA, LLC; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and <br> Southpointe Distribution Services, Inc.<br>|
| **Peter J. Germain**<br> Birth Date:<br> September 3, 1959<br> CHIEF LEGAL OFFICER, <br> SECRETARY and EXECUTIVE <br> VICE PRESIDENT<br> Officer since: January 2005<br>| &nbsp;&nbsp; **Principal Occupations**: Mr. Germain is Chief Legal Officer, Secretary and Executive Vice President of the Federated Hermes <br> Fund Family. He is General Counsel, Chief Legal Officer, Secretary and Executive Vice President, Federated Hermes, Inc.; <br> Trustee and Senior Vice President, Federated Investors Management Company; Trustee and President, Federated <br> Administrative Services; Director and President, Federated Administrative Services, Inc.; Director and Vice President, <br> Federated Securities Corp.; Director and Secretary, Federated Private Asset Management, Inc.; Secretary, Federated <br> Shareholder Services Company; and Secretary, Retirement Plan Service Company of America. Mr. Germain joined Federated <br> Hermes, Inc. in 1984 and is a member of the Pennsylvania Bar Association.<br> **Previous Positions**: Deputy General Counsel, Special Counsel, Managing Director of Mutual Fund Services, Federated <br> Hermes, Inc.; Senior Vice President, Federated Services Company; and Senior Corporate Counsel, Federated Hermes, Inc.<br>|
| **John B. Fisher**<br> Birth Date: May 16, 1956<br> PRESIDENT<br> Officer since: November 2004<br>| &nbsp;&nbsp; **Principal Occupations**: Principal Executive Officer and President of certain of the Funds in the Federated Hermes Fund <br> Family; Director or Trustee of certain of the Funds in the Federated Hermes Fund Family; Director and Vice President, <br> Federated Hermes, Inc.; President, Director/Trustee and CEO, Federated Advisory Services Company, Federated Equity <br> Management Company of Pennsylvania, Federated Global Investment Management Corp., Federated Investment Counseling, <br> Federated Investment Management Company, and Federated MDTA LLC; Director, Federated Investors Trust Company.<br> **Previous Positions**: President and Director of the Institutional Sales Division of Federated Securities Corp.; President and <br> CEO of Passport Research, Ltd.; Director and President, Technology, Federated Services Company.<br>|
| **Stephen Van Meter**<br> Birth Date: June 5, 1975<br> CHIEF COMPLIANCE OFFICER <br> AND SENIOR VICE PRESIDENT<br> Officer since: July 2015<br>| &nbsp;&nbsp; **Principal Occupations**: Senior Vice President and Chief Compliance Officer of the Federated Hermes Fund Family; Vice <br> President and Chief Compliance Officer of Federated Hermes, Inc. and Chief Compliance Officer of certain of its subsidiaries. <br> Mr. Van Meter joined Federated Hermes, Inc. in October 2011. He holds FINRA licenses under Series 3, 7, 24 and 66. <br> **Previous Positions**: Mr. Van Meter previously held the position of Compliance Operating Officer, Federated Hermes, Inc. <br> Prior to joining Federated Hermes, Inc., Mr. Van Meter served at the United States Securities and Exchange Commission in <br> the positions of Senior Counsel, Office of Chief Counsel, Division of Investment Management and Senior Counsel, Division <br> of Enforcement.<br>|
| **Stephen F. Auth**<br> Birth Date: <br> September 13, 1956<br> 101 Park Avenue<br> 41<sup>st</sup> Floor<br> New York, NY 10178<br> CHIEF INVESTMENT OFFICER<br> Officer since: November 2002<br>| &nbsp;&nbsp; **Principal Occupations**: Stephen F. Auth is Chief Investment Officer of various Funds in the Federated Hermes Fund Family; <br> Executive Vice President, Federated Investment Counseling, Federated Global Investment Management Corp. and Federated <br> Equity Management Company of Pennsylvania.<br> **Previous Positions**: Executive Vice President, Federated Investment Management Company and Passport Research, Ltd. <br> (investment advisory subsidiary of Federated); Senior Vice President, Global Portfolio Management Services Division; Senior <br> Vice President, Federated Investment Management Company and Passport Research, Ltd.; Senior Managing Director and <br> Portfolio Manager, Prudential Investments.<br>|
| **Robert J. Ostrowski**<br> Birth Date: April 26, 1963<br> Chief Investment Officer<br> Officer since: May 2004<br>| &nbsp;&nbsp; **Principal Occupations**: Robert J. Ostrowski joined Federated Hermes, Inc. in 1987 as an Investment Analyst and became a <br> Portfolio Manager in 1990. He was named Chief Investment Officer of Federated Hermes' taxable fixed-income products in <br> 2004 and also serves as a Senior Portfolio Manager. Mr. Ostrowski became an Executive Vice President of the Fund's Adviser <br> in 2009 and served as a Senior Vice President of the Fund's Adviser from 1997 to 2009. Mr. Ostrowski has received the <br> Chartered Financial Analyst designation. He received his M.S. in Industrial Administration from Carnegie Mellon University.<br>|

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Address**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years**<br> **and Previous Position(s)**<br>|
| **Deborah A. Cunningham**<br> Birth Date:<br> September 15, 1959<br> Chief Investment Officer<br> Officer since: June 2012<br>| &nbsp;&nbsp; **Principal Occupations**: Deborah A. Cunningham was named Chief Investment Officer of Federated Hermes' money market <br> products in 2004. She joined Federated Hermes in 1981 and has been a Senior Portfolio Manager since 1997 <br> and an Executive Vice President of the Fund's Adviser since 2009. Ms. Cunningham has received the Chartered Financial <br> Analyst designation and holds an M.S.B.A. in Finance from Robert Morris College.<br>|

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Evaluation and Approval of Advisory Contract–May 2022

**Federated Hermes High Income Bond Fund II (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.

***<u>Information Received and Review Process</u>***

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 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 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

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Commission ("SEC") disclosure requirements 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.

***<u>Nature, Extent and Quality of Services</u>***

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. 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.

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 Federated Hermes' oversight of the securities lending program for the Federated Hermes Funds that engage in securities lending and noted the income earned by the Federated Hermes Funds that participate in such program. In addition, 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 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

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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.

***<u>Fund Investment Performance</u>***

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 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 Morningstar, Inc. (the "Morningstar"), 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, three-year and five-year periods ended December 31, 2021, the Fund's performance was above the median of the 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.

***<u>Fund Expenses</u>***

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, 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 Morningstar (the "Expense Peer Group"). The Board received a description of the methodology used to select the Expense Peer Group from the overall Morningstar category. The Board also reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall Morningstar 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.

Annual Shareholder Report

**35**

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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 contractual advisory fee rate and other expenses 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.

***<u>Profitability</u>***

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 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.

***<u>Economies of Scale</u>***

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 Hermes' investments in these areas are extensive and are designed to provide enhanced services to the Federated Hermes Funds and their shareholders.

Annual Shareholder Report

**36**

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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.

***<u>Other Benefits</u>***

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.

***<u>Conclusions</u>***

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

**37**

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Liquidity Risk Management Program– <br>Annual Evaluation of Adequacy and Effectiveness

In accordance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), Federated Hermes Insurance Series (the "Trust") has adopted and implemented a liquidity risk management program (the "Program") for Federated Hermes High Income Bond Fund II (the "Fund" and, collectively with the other non-money market open-end funds advised by Federated Hermes, the "Federated Hermes Funds"). The Program seeks to assess and manage the Fund's liquidity risk. "Liquidity risk" is defined under the Liquidity Rule as the risk that the Fund is unable to meet redemption requests without significantly diluting remaining investors' interests in the Fund. The Board of Trustees of the Trust (the "Board") has approved the designation of each Federated Hermes Fund's investment adviser as the administrator for the Program (the "Administrator") with respect to that Fund. The Administrator, in turn, has delegated day-to-day responsibility for the administration of the Program to multiple Liquidity Risk Management Committees, which are comprised of representatives from certain divisions within Federated Hermes.

The Program is comprised of various components designed to support the assessment and/or management of liquidity risk, including: (1) the periodic assessment (no less frequently than annually) of certain factors that influence the Fund's liquidity risk; (2) the periodic classification (no less frequently than monthly) of the Fund's investments into one of four liquidity categories that reflect an estimate of their liquidity under current market conditions; (3) a 15% limit on the acquisition of "illiquid investments" (as defined under the Liquidity Rule); (4) to the extent a Fund does not invest primarily in "highly liquid investments" (as defined under the Liquidity Rule), the determination of a minimum percentage of the Fund's assets that generally will be invested in highly liquid investments (an "HLIM"); (5) if a Fund has established an HLIM, the periodic review (no less frequently than annually) of the HLIM and the adoption of policies and procedures for responding to a shortfall of the Fund's highly liquid investments below its HLIM; and (6) periodic reporting to the Board.

At its meetings in May 2022, the Board received and reviewed a written report (the "Report") from the Federated Hermes Funds' Chief Compliance Officer and Chief Risk Officer, on behalf of the Administrator, concerning the operation of the Program for the period from April 1, 2021 through March 31, 2022 (the "Period"). The Report addressed the operation of the Program and assessed its adequacy and effectiveness, including, where applicable, the operation of any HLIM established for a Federated Hermes Fund and each Federated Hermes Fund's access to other available funding sources such as the Federated Hermes Funds' interfund lending facility, redemptions in-kind, reverse repurchase agreement transactions, redemptions delayed beyond the normal T+1 settlement, but within seven days of the redemption request, and committed lines of credit. There were no material changes to the Program during the Period. The Report summarized the operation of the Program and the information and factors considered by the Administrator in assessing whether the Program has been adequately and effectively implemented with respect to the Federated Hermes Funds. Such information and factors included, among other things:

◾ confirmation that it was not necessary for the Fund to utilize, and the Fund did not utilize, alternative funding sources during the Period;

◾ the periodic classifications of the Fund's investments into one of four liquidity categories and the methodologies and inputs used to classify the investments, including the Fund's reasonably anticipated trade size;

◾ the analysis received from a third-party liquidity assessment vendor that is taken into account in the process of determining the liquidity classifications of the Fund's investments and the results of an evaluation of the services performed by the vendor in support of this process;

◾ the fact that the Fund invested primarily in highly liquid investments during the Period and, therefore, was not required to establish, and has not established, an HLIM and the procedures for monitoring the status of the Fund as investing primarily in highly liquid investments;

◾ the fact that the Fund invested no more than 15% of its assets in illiquid investments during the Period and the procedures for monitoring this limit;

◾ the fact that there were no liquidity events during the Period, that materially affected the Fund's liquidity risk;

◾ the impact on liquidity and management of liquidity risk caused by extended non-U.S. market closures and confirmation that there were no issues for any of the affected Federated Hermes Funds in meeting shareholder redemptions at any time during these temporary non-U.S. market closures;

◾ circumstances during the Period under which the Administrator convened meetings of the Liquidity Risk Management Committees more frequently than normal to conduct enhanced liquidity risk monitoring, including prior to the Russian invasion of Ukraine.

Based on this review, the Administrator concluded that the Program is operating effectively to assess and manage the Fund's liquidity risk, and that the Program has been and continues to be adequately and effectively implemented to monitor and, as applicable, respond to the Fund's liquidity developments.

Annual Shareholder Report

**38**

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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.

Quarterly Portfolio Schedule

Each fiscal quarter, the Fund will file with the SEC a complete schedule of its monthly portfolio holdings on "Form N-PORT." The Fund's holdings as of the end of the third month of every fiscal quarter, as reported on Form N-PORT, will be publicly available on the SEC's website at sec.gov within 60 days of the end of the fiscal quarter upon filing. You may also access this information via the link to the Fund and share class name at FederatedInvestors.com.

Annual Shareholder Report

**39**

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*Variable investment options are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in variable investment options involves investment risk, including the possible loss of principal.*

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.

![](fhilogok11p.jpg)

Federated Hermes High Income Bond Fund II <br>Federated Hermes Funds <br>4000 Ericsson Drive <br>Warrendale, PA 15086-7561

Contact us at **FederatedInvestors.com** <br>or call 1-800-341-7400.

Federated Securities Corp., Distributor

*CUSIP 313916306* <br>*CUSIP 313916843*

*G00844-01 (2/23)*© 2023 Federated Hermes, Inc.

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**Annual Shareholder Report**

***December 31, 2022***

![](img1beb1b111.gif)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | | |
|:---|:---|:---|
| **Share Class** | Primary  | Service  |

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Federated Hermes Kaufmann Fund II

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A Portfolio of Federated Hermes Insurance Series

Dear Valued Shareholder,

We are pleased to present the Annual Shareholder Report for your fund covering the period from January 1, 2022 through December 31, 2022. This report includes Management's Discussion of Fund Performance, 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, <br> ![](fisherjohnsigsmall.jpg)

John B. Fisher, President

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**Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee**

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**CONTENTS** 

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| | |
|:---|:---|
| [Management's Discussion of Fund Performance](#xx_38dc6919-83a4-4065-bddc-f5610fa6e605_1) | &nbsp;&nbsp; [1](#xx_38dc6919-83a4-4065-bddc-f5610fa6e605_1)  |
| [Portfolio of Investments Summary Table](#xx_ac2317aa-79b3-4930-8048-c30655c8eeb3_1) | &nbsp;&nbsp; [3](#xx_ac2317aa-79b3-4930-8048-c30655c8eeb3_1)  |
| [Portfolio of Investments](#xx_ac2317aa-79b3-4930-8048-c30655c8eeb3_2) | &nbsp;&nbsp; [4](#xx_ac2317aa-79b3-4930-8048-c30655c8eeb3_2)  |
| [Financial Highlights](#xx_2c12c09f-b903-4fd5-b4da-06996f823b6d_1) | [10](#xx_2c12c09f-b903-4fd5-b4da-06996f823b6d_1)  |
| [Statement of Assets and Liabilities](#xx_04e7e2eb-0bb9-42d9-a4fe-88208807920b_1) | [12](#xx_04e7e2eb-0bb9-42d9-a4fe-88208807920b_1)  |
| [Statement of Operations](#xx_04e7e2eb-0bb9-42d9-a4fe-88208807920b_2) | [13](#xx_04e7e2eb-0bb9-42d9-a4fe-88208807920b_2)  |
| [Statement of Changes in Net Assets](#xx_04e7e2eb-0bb9-42d9-a4fe-88208807920b_3) | [14](#xx_04e7e2eb-0bb9-42d9-a4fe-88208807920b_3)  |
| [Notes to Financial Statements](#xx_c0647370-08ab-4ef5-97b2-165070b68074_1) | [15](#xx_c0647370-08ab-4ef5-97b2-165070b68074_1)  |
| [Report of Independent Registered Public Accounting Firm](#xx_c76983e9-455e-45e7-948a-579ff7aa058e_1) | [22](#xx_c76983e9-455e-45e7-948a-579ff7aa058e_1)  |
| [Shareholder Expense Example](#xx_2bf7f26c-e59d-451e-86ee-63bf28920cd7_1) | [23](#xx_2bf7f26c-e59d-451e-86ee-63bf28920cd7_1)  |
| [Board of Trustees and Trust Officers](#xx_bd2e6a50-00dd-40a5-b749-a9f42d5316b4_1) | [24](#xx_bd2e6a50-00dd-40a5-b749-a9f42d5316b4_1)  |
| [Evaluation and Approval of Advisory Contract](#xx_6836e76c-e36f-4ee3-80a1-aacf78b2f0ca_1) | [28](#xx_6836e76c-e36f-4ee3-80a1-aacf78b2f0ca_1)  |
| [Liquidity Risk Management Program](#xx_fc927f72-016d-4c01-9c51-147efd22aa8a_1)[–](#xx_fc927f72-016d-4c01-9c51-147efd22aa8a_1)<br> [Annual Evaluation of Adequacy and Effectiveness](#xx_fc927f72-016d-4c01-9c51-147efd22aa8a_1)<br>| [33](#xx_fc927f72-016d-4c01-9c51-147efd22aa8a_1)  |
| [Voting Proxies on Fund Portfolio Securities](#xx_14cdd4c3-2efe-4591-8e07-5efc75d3f8cb_1) | [34](#xx_14cdd4c3-2efe-4591-8e07-5efc75d3f8cb_1)  |
| [Quarterly Portfolio Schedule](#xx_14cdd4c3-2efe-4591-8e07-5efc75d3f8cb_1) | [34](#xx_14cdd4c3-2efe-4591-8e07-5efc75d3f8cb_1) |

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Management's Discussion of Fund Performance (unaudited)

The total return of Federated Hermes Kaufmann Fund II (the "Fund"), based on net asset value for the 12-month reporting period ended December 31, 2022, was -30.09% for the Primary Shares and -30.26% for the Service Shares. The Fund's benchmark, the Russell Midcap<sup>®</sup> Growth Index (RMCGI),<sup>1</sup> a broad-based securities market index, had a total return of -26.72% for the period. The total return of the Morningstar Insurance Mid-Cap Growth Funds Average (MIMCGFA),<sup>2</sup> the peer group average for the Fund, was -29.17%. The Fund's and MIMCGFA's total returns for the most recently completed fiscal year reflected actual cash flows, transaction costs and expenses, which were not reflected in the total return of the RMCGI.

During the reporting period, the Fund's investment strategy focused on stock selection, sector exposure and country allocation. These were the most significant factors affecting the Fund's performance relative to the RMCGI.

The following discussion will focus on the Fund's Primary Shares relative to the RMCGI.

**MARKET OVERVIEW**

During the reporting period, the U.S. economy and most significant westernized economies saw inflation continue to be the primary headwind to economic growth. Inflationary pressures persisted again due to the impact from record monetary and fiscal stimulus as well as the Eastern European conflict along with regulatory restrictions causing supply disruptions. This inflationary pressure caused most global central banks to pursue aggressive monetary tightening policies in 2022. This pressure seemed to ease a bit at the end of the year as some economic statistics showed potential signs of inflation peaking and heading lower.

The U.S. equity markets were negative for the reporting period, led by mid-cap stocks represented by the Russell Midcap<sup>®</sup> Index<sup>3</sup> (-17.32%), followed by the S&P 500 Index<sup>4</sup> (-18.11%), followed by large-cap stocks represented by the Russell 1000<sup>®</sup> Index<sup>5</sup> (-19.13%), followed by small-cap stocks represented by the Russell 2000<sup>®</sup> Index<sup>6</sup> (-20.44%). Mid-cap growth stocks underperformed mid-cap value stocks during the period.

The best-performing RMCGI sectors during the reporting period were Energy (+59.15%), Utilities (+2.87%) and Consumer Staples (-3.72%). The weakest-performing sectors during the reporting period were Communication Services (-55.59%), Information Technology (-33.11%) and Consumer Discretionary (-29.20%).

**STOCK SELECTION**

The five stocks that contributed the most to the Fund's performance versus the RMCGI were: arGEN-X SE, Rhythm Pharmaceuticals Inc., New Fortress Energy Inc., Match Group, Inc. and Datadog Inc.

The five stocks that most negatively affected Fund performance were: Shopify Inc., Tandem Diabetes Care Inc., Enphase Energy Inc., Advanced Micro Devices Inc. and GDS Holdings Ltd.

**SECTOR EXPOSURE**

At the end of the reporting period, approximately 57% of the portfolio was invested in four large sectors: Health Care, Information Technology, Consumer Discretionary and Financials. These sectors have historically provided good opportunities for bottom-up growth investors. During the reporting period, stock selection in Health Care and Technology had a negative impact on performance. The cash position of the Fund was approximately 10% on average throughout the reporting period, which aided relative performance during a down market period.

**COUNTRY ALLOCATION**

The reporting period ended with approximately 13% of the Fund invested in non-U.S. holdings. During the reporting period, stock selection in foreign companies<sup>7</sup> was a negative contributor to Fund performance. However, the allocation outside the U.S. helped Fund performance relative to the RMCGI.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Please see the footnotes to the line graph below for definitions of, and further information about, the RMCGI.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Please see the footnotes to the line graph below for definitions of, and further information about, the MIMCGFA.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The Russell Midcap*<sup>®</sup> *Index measures the performance of the mid-cap segment of the U.S. equity universe. The Russell Midcap*<sup>®</sup> *Index is a subset of the Russell 1000*<sup>®</sup> *Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership.\**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The S&P 500 is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.\**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The Russell 1000*<sup>®</sup> *Index measures the performance of the large-cap segment of the U.S. equity universe. It includes approximately 1000 of the largest securities based on a combination of their market cap and current index membership.\**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The Russell 2000*<sup>®</sup> *Index measures the performance of the small-cap segment of the U.S. equity universe. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.\**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*International investing involves special risks including currency risk, increased volatility, political risks and differences in auditing and other financial standards.*

\*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The index is unmanaged, and it is not possible to invest directly in an index.*

Annual Shareholder Report

**1**

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**FUND PERFORMANCE AND GROWTH OF A $10,000 INVESTMENT**

The graph below illustrates the hypothetical investment of $10,000<sup>1</sup> in the Federated Hermes Kaufmann Fund II (the "Fund") from December 31, 2012 to December 31, 2022, compared to the Russell Midcap<sup>®</sup> Growth Index (RMCGI)<sup>2</sup> and the Morningstar Insurance Mid-Cap Growth Funds Average (MIMCGFA).<sup>3</sup> The Average Annual Total Return table below shows returns for each class averaged over the stated periods.

**Growth of a $10,000 Investment**

**Growth of $10,000 as of December 31, 2022** <br> ![](ifkaufar28136.jpg) <br>The Fund offers multiple share classes whose performance may be greater than or less than its other share class(es) due to differences in sales charges and expenses.

**Average Annual Total Returns for the Period Ended 12/31/2022** 

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| | | | |
|:---|:---|:---|:---|
|  | **1 Year** | **5 Years** | **10 Years** |
| **Primary Shares** | -30.09% | 5.10%  | 10.81% |
| **Service Shares** | -30.26% | 4.85% | 10.53% |
| RMCGI | -26.72% | 7.64% | 11.41% |
| MIMCGFA | -29.17% | 7.11% | 10.22% |

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**Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance of a variable investment option changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance, contact your insurance company. The performance information presented does not include the charges and expenses imposed by the insurance company under the variable insurance product contract. The inclusion of such charges would lower performance. Please refer to the variable insurance product prospectus for a complete listing of these expenses. Fund shares are available exclusively as a funding vehicle for life insurance companies writing variable life insurance policies and variable annuity contracts. Variable investment options are not obligations of or guaranteed by any bank and are not federally insured.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The Fund's performance assumes the reinvestment of all dividends and distributions. The RMCGI and MIMCGFA have been adjusted to reflect reinvestment of dividends on securities in the index and average.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The RMCGI measures the performance of the mid-cap growth segment of the U.S. equity universe. It includes those Russell Midcap*<sup>®</sup> *Index companies with higher price-to-book ratios and higher forecasted growth values. The RMCGI is constructed to provide a comprehensive and unbiased barometer of the mid-cap growth market. The RMCGI is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true mid-cap growth market. The RMCGI is not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in the Fund's performance. The index is unmanaged and unlike the Fund, is not affected by cash flows. It is not possible to invest directly in an index.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Morningstar figures represent the average of the total returns reported by all the funds designated by Morningstar as falling into the respective category indicated. They do not reflect sales charges. The Morningstar figures in the Growth of a $10,000 Investment line graph are based on historical return information published by Morningstar and reflect the return of the funds comprising the category in the year of publication. Because the funds designated by Morningstar as falling into the category can change over time, the Morningstar figures in the line graph may not match the Morningstar figures in the Average Annual Total Returns table, which reflect the return of the funds that currently comprise the category.*

Annual Shareholder Report

**2**

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Portfolio of Investments Summary Table (unaudited)

At December 31, 2022, the Fund's sector composition<sup>1</sup> was as follows:

---

| | |
|:---|:---|
| **Sector Composition** | **Percentage of** <br>**Total Net Assets**<br>|
| Health Care | 39.2% |
| Financials | &nbsp;&nbsp; 7.9% |
| Consumer Discretionary | &nbsp;&nbsp; 6.3% |
| Industrials | &nbsp;&nbsp; 5.5% |
| Real Estate | &nbsp;&nbsp; 5.4% |
| Information Technology | &nbsp;&nbsp; 4.3% |
| Energy | &nbsp;&nbsp; 4.2% |
| Materials | &nbsp;&nbsp; 4.1% |
| Utilities | &nbsp;&nbsp; 2.8% |
| Consumer Staples | &nbsp;&nbsp; 1.8% |
| Communication Services | &nbsp;&nbsp; 0.3% |
| U.S. Treasury Notes | &nbsp;&nbsp; 2.7% |
| Securities Lending Collateral<sup>2</sup> <br>| &nbsp;&nbsp; 0.3% |
| Cash Equivalents<sup>3</sup> <br>| 16.1% |
| Other Assets and Liabilities—Net<sup>4</sup> <br>| (0.9)% |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | **100%** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 1 | *Except for Securities Lending Collateral, Cash Equivalents and Other Assets and Liabilities, sector classifications are based upon, and individual portfolio securities* <br> *are assigned to, the classifications of the Global Industry Classification Standard (GICS), except that the Adviser assigns a classification to securities not classified* <br> *by the GICS and to securities for which the Adviser does not have access to the classification made by the GICS.*<br>|
| 2 | *Represents cash collateral received for portfolio securities on loan that may be invested in affiliated money market funds, other money market instruments and/or* <br> *repurchase agreements.*<br>|
| 3 | *Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements other than those representing securities* <br> *lending collateral.*<br>|
| 4 | *Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.* |

---

Annual Shareholder Report

**3**

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Portfolio of Investments

December 31, 2022

---

| | | |
|:---|:---|:---|
| **Shares or** <br>**Principal** <br>**Amount**<br>|  | **Value** |
|  | COMMON STOCKS—81.4% |  |
|  | **Communication Services—0.3%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2000<br><sup>1</sup> <br>| Take-Two Interactive Software, Inc. | $208260 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5300<br><sup>1</sup> <br>| ZoomInfo Technologies, Inc. | &nbsp;&nbsp; 159583 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 367843 |
|  | **Consumer Discretionary—6.3%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7500<br><sup>1</sup> <br>| Airbnb, Inc. | &nbsp;&nbsp; 641250 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3000<br><sup>1</sup> <br>| Alibaba Group Holding Ltd., ADR | &nbsp;&nbsp; 264270 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 11900<br><sup>1</sup> <br>| Amazon.com, Inc. | &nbsp;&nbsp; 999600 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 466<br><sup>1</sup> <br>| Chipotle Mexican Grill, Inc. | &nbsp;&nbsp; 646570 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4156 | Choice Hotels International, Inc. | &nbsp;&nbsp; 468132 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1500<br><sup>1</sup> <br>| Etsy, Inc. | &nbsp;&nbsp; 179670 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5900<br><sup>1</sup> <br>| Floor & Decor Holdings, Inc. | &nbsp;&nbsp; 410817 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7400<br><sup>1</sup> <br>| Las Vegas Sands Corp. | &nbsp;&nbsp; 355718 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1700<br><sup>1</sup> <br>| Lululemon Athletica, Inc. | &nbsp;&nbsp; 544646 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 300<br><sup>1</sup> <br>| Mercadolibre, Inc. | &nbsp;&nbsp; 253872 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7230 | Moncler SPA | &nbsp;&nbsp; 384858 |
| &nbsp;&nbsp;&nbsp;&nbsp; 617686 | NagaCorp Ltd. | &nbsp;&nbsp; 544539 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 11100<br><sup>1</sup> <br>| Planet Fitness, Inc. | &nbsp;&nbsp; 874680 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 32100<br><sup>1,2</sup> <br>| Sportradar Group AG | &nbsp;&nbsp; 319716 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 261 | Vail Resorts, Inc. | &nbsp;&nbsp; 62209 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 13300 | Wingstop, Inc. | &nbsp;&nbsp; 1830346 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5100<br><sup>1</sup> <br>| YETI Holdings, Inc. | &nbsp;&nbsp; 210681 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 8991574 |
|  | **Consumer Staples—1.8%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 910 | Costco Wholesale Corp. | &nbsp;&nbsp; 415415 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 17800 | Philip Morris International, Inc. | &nbsp;&nbsp; 1801538 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 26700<br><sup>1</sup> <br>| The Duckhorn Portfolio, Inc. | &nbsp;&nbsp; 442419 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 2659372 |
|  | **Energy—4.2%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 12000 | Cheniere Energy, Inc. | &nbsp;&nbsp; 1799520 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 69300<br><sup>2</sup> <br>| New Fortress Energy, Inc. | &nbsp;&nbsp; 2939706 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5270 | Pioneer Natural Resources, Inc. | &nbsp;&nbsp; 1203615 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3012 | Williams Cos., Inc. | &nbsp;&nbsp; 99095 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 6041936 |
|  | **Financials—7.9%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 27900 | Apollo Global Management, Inc. | &nbsp;&nbsp; 1779741 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1740 | BlackRock, Inc. | &nbsp;&nbsp; 1233016 |
| &nbsp;&nbsp;&nbsp;&nbsp; 234158<br><sup>1</sup> <br>| Blue Owl Capital, Inc. | &nbsp;&nbsp; 2482075 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 62400 | FinecoBank Banca Fineco SPA | &nbsp;&nbsp; 1039930 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 20700 | Hamilton Lane Alliance Holdings I, Inc. | &nbsp;&nbsp; 1322316 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 20600 | KKR & Co., Inc., Class Common | &nbsp;&nbsp; 956252 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2222 | MSCI, Inc., Class A | &nbsp;&nbsp; 1033608 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4451 | S&P Global, Inc. | &nbsp;&nbsp; 1490818 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp; 11337756 |
|  | **Health Care—38.8%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4600 | Abbott Laboratories | &nbsp;&nbsp; 505034 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 23300<br><sup>1</sup> <br>| Acrivon Therapeutics, Inc. | &nbsp;&nbsp; 268416 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 32712<br><sup>1</sup> <br>| Albireo Pharma, Inc. | &nbsp;&nbsp; 706906 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 66400<br><sup>1</sup> <br>| Alector, Inc. | &nbsp;&nbsp; 612872 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 33480<br><sup>1</sup> <br>| Amphastar Pharmaceuticals, Inc. | &nbsp;&nbsp; 938110 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 22901<br><sup>1</sup> <br>| Amylyx Pharmaceuticals, Inc. | &nbsp;&nbsp; 846192 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 33186<br><sup>1,2</sup> <br>| AnaptysBio, Inc. | &nbsp;&nbsp; 1028434 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 57800<br><sup>1</sup> <br>| Annexon, Inc. | &nbsp;&nbsp; 298826 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4600<br><sup>1</sup> <br>| Apellis Pharmaceuticals, Inc. | &nbsp;&nbsp; 237866 |

---

Annual Shareholder Report

**4**

------

---

| | | |
|:---|:---|:---|
| **Shares or**<br> **Principal**<br> **Amount**<br>|  | **Value** |
|  | COMMON STOCKS—continued |  |
|  | **Health Care—continued** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 8000<br><sup>1</sup> <br>| Apollo Endosurgery, Inc. | $79760 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 65229<br><sup>1,2</sup> <br>| Arcturus Therapeutics Holdings, Inc. | &nbsp;&nbsp; 1106284 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 21149<br><sup>1</sup> <br>| Argenx SE | &nbsp;&nbsp; 7969434 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 66600<br><sup>1</sup> <br>| aTyr Pharma, Inc. | &nbsp;&nbsp; 145854 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 36300<br><sup>1,2</sup> <br>| Avidity Biosciences LLC | &nbsp;&nbsp; 805497 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7000<br><sup>1</sup> <br>| Century Therapeutics, Inc. | &nbsp;&nbsp; 35910 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7369<br><sup>1</sup> <br>| Century Therapeutics, Inc. | &nbsp;&nbsp; 37803 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 13352<br><sup>1</sup> <br>| Cerevel Therapeutics Holdings | &nbsp;&nbsp; 421122 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 12900<br><sup>1</sup> <br>| Chinook Therapeutics, Inc. | &nbsp;&nbsp; 337980 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 56475<br><sup>1,3</sup> <br>| Contra Akouos, Inc., Rights | &nbsp;&nbsp; 44615 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 93806<br><sup>1</sup> <br>| Corcept Therapeutics, Inc. | &nbsp;&nbsp; 1905200 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5758<br><sup>1,2</sup> <br>| CRISPR Therapeutics AG | &nbsp;&nbsp; 234063 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 14500 | Danaher Corp. | &nbsp;&nbsp; 3848590 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3500<br><sup>1</sup> <br>| Denali Therapeutics, Inc. | &nbsp;&nbsp; 97335 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 32100<br><sup>1</sup> <br>| Dexcom, Inc. | &nbsp;&nbsp; 3635004 |
| &nbsp;&nbsp;&nbsp;&nbsp; 194638<br><sup>1</sup> <br>| Dynavax Technologies Corp. | &nbsp;&nbsp; 2070948 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2900<br><sup>1</sup> <br>| EDAP TMS SA, ADR | &nbsp;&nbsp; 30914 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6800 | Eli Lilly & Co. | &nbsp;&nbsp; 2487712 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3200<br><sup>1</sup> <br>| Fate Therapeutics, Inc. | &nbsp;&nbsp; 32288 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 14100<br><sup>1</sup> <br>| Fusion Pharmaceuticals, Inc. | &nbsp;&nbsp; 44415 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 47600<br><sup>1,2</sup> <br>| Gamida Cell Ltd. | &nbsp;&nbsp; 61404 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3750<br><sup>1</sup> <br>| Genmab A/S | &nbsp;&nbsp; 1588416 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 14700<br><sup>1</sup> <br>| Genmab A/S, ADR | &nbsp;&nbsp; 622986 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 18728<br><sup>1</sup> <br>| Gracell Biotechnologies, Inc., ADR | &nbsp;&nbsp; 43074 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 8060<br><sup>1,2</sup> <br>| Graphite Bio, Inc. | &nbsp;&nbsp; 26759 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7582<br><sup>1</sup> <br>| Guardant Health, Inc. | &nbsp;&nbsp; 206230 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 36200<br><sup>1</sup> <br>| IDEAYA Biosciences, Inc. | &nbsp;&nbsp; 657754 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1175<br><sup>1</sup> <br>| IDEXX Laboratories, Inc. | &nbsp;&nbsp; 479353 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2800<br><sup>1</sup> <br>| Illumina, Inc. | &nbsp;&nbsp; 566160 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 10000<br><sup>1,4</sup> <br>| Immatics N.V. | &nbsp;&nbsp; 87100 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4901<br><sup>1</sup> <br>| Insulet Corp. | &nbsp;&nbsp; 1442805 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 28579<br><sup>1</sup> <br>| Intellia Therapeutics, Inc. | &nbsp;&nbsp; 997121 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1800<br><sup>1</sup> <br>| Intuitive Surgical, Inc. | &nbsp;&nbsp; 477630 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4307<br><sup>1,3</sup> <br>| Laronde, Inc. | &nbsp;&nbsp; 93397 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 33800<br><sup>1</sup> <br>| Legend Biotech Corp., ADR | &nbsp;&nbsp; 1687296 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 13200<br><sup>1,2</sup> <br>| Lyell Immunopharma, Inc. | &nbsp;&nbsp; 45804 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 49295<br><sup>1,2</sup> <br>| Merus N.V. | &nbsp;&nbsp; 762594 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 17225<br><sup>1</sup> <br>| Minerva Neurosciences, Inc. | &nbsp;&nbsp; 27388 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5700<br><sup>1</sup> <br>| Morphic Holding, Inc. | &nbsp;&nbsp; 152475 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3700<br><sup>1</sup> <br>| Natera, Inc. | &nbsp;&nbsp; 148629 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3200 | Novo Nordisk A/S | &nbsp;&nbsp; 433280 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 14887<br><sup>1</sup> <br>| Orchard Therapeutics PLC | &nbsp;&nbsp; 5523 |
| &nbsp;&nbsp;&nbsp;&nbsp; 195900<br><sup>1</sup> <br>| Orchard Therapeutics PLC, ADR | &nbsp;&nbsp; 72679 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6500<br><sup>1</sup> <br>| Privia Health Group, Inc. | &nbsp;&nbsp; 147615 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2975<br><sup>1</sup> <br>| Prometheus Biosciences, Inc. | &nbsp;&nbsp; 327250 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 35326<br><sup>1</sup> <br>| Regulus Therapeutics, Inc. | &nbsp;&nbsp; 48397 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5350<br><sup>1</sup> <br>| Repligen Corp. | &nbsp;&nbsp; 905809 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 84174<br><sup>1</sup> <br>| Rezolute, Inc. | &nbsp;&nbsp; 174240 |
| &nbsp;&nbsp;&nbsp;&nbsp; 113900<br><sup>1,2</sup> <br>| Rhythm Pharmaceuticals, Inc. | &nbsp;&nbsp; 3316768 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2514<br><sup>1</sup> <br>| Sana Biotechnology, Inc. | &nbsp;&nbsp; 9930 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 10600<br><sup>1</sup> <br>| Sarepta Therapeutics, Inc. | &nbsp;&nbsp; 1373548 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 40914<br><sup>1</sup> <br>| Scynexis, Inc. | &nbsp;&nbsp; 63826 |
| &nbsp;&nbsp;&nbsp;&nbsp; 353300<br><sup>1</sup> <br>| Seres Therapeutics, Inc. | &nbsp;&nbsp; 1978480 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1750 | Stryker Corp. | &nbsp;&nbsp; 427858 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 44500<br><sup>1</sup> <br>| Ultragenyx Pharmaceutical, Inc. | &nbsp;&nbsp; 2061685 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 14900<br><sup>1</sup> <br>| Veeva Systems, Inc. | &nbsp;&nbsp; 2404562 |

---

Annual Shareholder Report

**5**

------

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| | | |
|:---|:---|:---|
| **Shares or**<br> **Principal**<br> **Amount**<br>|  | **Value** |
|  | COMMON STOCKS—continued |  |
|  | **Health Care—continued** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 32900<br><sup>1,2</sup> <br>| Verve Therapeutics, Inc. | $636615 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 14800<br><sup>1,2</sup> <br>| Zentalis Pharmaceuticals, LLC | &nbsp;&nbsp; 298072 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp; 55673896 |
|  | **Industrials—5.5%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 40000<br><sup>1</sup> <br>| CoStar Group, Inc. | &nbsp;&nbsp; 3091200 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1600 | Deere & Co. | &nbsp;&nbsp; 686016 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9975 | HEICO Corp. | &nbsp;&nbsp; 1532559 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 15130<br><sup>1</sup> <br>| Mercury Systems, Inc. | &nbsp;&nbsp; 676916 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4154 | Quanta Services, Inc. | &nbsp;&nbsp; 591945 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3700 | Trane Technologies PLC | &nbsp;&nbsp; 621933 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 11639<br><sup>1</sup> <br>| Upwork, Inc. | &nbsp;&nbsp; 121511 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5415 | Wabtec Corp. | &nbsp;&nbsp; 540471 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 7862551 |
|  | **Information Technology—4.3%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1000<br><sup>1</sup> <br>| Adobe, Inc. | &nbsp;&nbsp; 336530 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 400<br><sup>1</sup> <br>| Advanced Micro Devices, Inc. | &nbsp;&nbsp; 25908 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 8916<br><sup>1</sup> <br>| Coupa Software, Inc. | &nbsp;&nbsp; 705879 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 260<br><sup>1</sup> <br>| Crowdstrike Holdings, Inc. | &nbsp;&nbsp; 27376 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 50300<br><sup>1,2</sup> <br>| GDS Holdings Ltd., ADR | &nbsp;&nbsp; 1037186 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 200<br><sup>1</sup> <br>| Keysight Technologies, Inc. | &nbsp;&nbsp; 34214 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 700 | Marvell Technology, Inc. | &nbsp;&nbsp; 25928 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 300<br><sup>1</sup> <br>| Okta, Inc. | &nbsp;&nbsp; 20499 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 308<br><sup>1</sup> <br>| Palo Alto Networks, Inc. | &nbsp;&nbsp; 42978 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7600<br><sup>1</sup> <br>| Q2 Holdings, Inc. | &nbsp;&nbsp; 204212 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2237<br><sup>1</sup> <br>| ServiceNow, Inc. | &nbsp;&nbsp; 868560 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 18000<br><sup>1</sup> <br>| Shopify, Inc. | &nbsp;&nbsp; 624780 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 122<br><sup>1</sup> <br>| ShotSpotter, Inc. | &nbsp;&nbsp; 4127 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2089<br><sup>1</sup> <br>| Splunk, Inc. | &nbsp;&nbsp; 179842 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5630<br><sup>1</sup> <br>| Tyler Technologies, Inc. | &nbsp;&nbsp; 1815169 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1500<br><sup>1</sup> <br>| Workday, Inc. | &nbsp;&nbsp; 250995 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 6204183 |
|  | **Materials—4.1%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 32100 | Agnico Eagle Mines Ltd. | &nbsp;&nbsp; 1668879 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1750 | Albemarle Corp. | &nbsp;&nbsp; 379505 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 48100 | Barrick Gold Corp. | &nbsp;&nbsp; 826358 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 30097 | Newmont Corp. | &nbsp;&nbsp; 1420578 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7000 | Sherwin-Williams Co. | &nbsp;&nbsp; 1661310 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 5956630 |
|  | **Real Estate—5.4%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 26600 | Americold Realty Trust, Inc. | &nbsp;&nbsp; 753046 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9650 | Crown Castle International Corp. | &nbsp;&nbsp; 1308926 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 24650 | Easterly Government Properties, Inc. | &nbsp;&nbsp; 351756 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 8900 | National Storage Affiliates Trust | &nbsp;&nbsp; 321468 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 54177 | Physicians Realty Trust | &nbsp;&nbsp; 783941 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 11900 | ProLogis, Inc. | &nbsp;&nbsp; 1341487 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7300 | Ryman Hospitality Properties, Inc. | &nbsp;&nbsp; 596994 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 17842 | STAG Industrial, Inc. | &nbsp;&nbsp; 576475 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1526 | Sun Communities, Inc. | &nbsp;&nbsp; 218218 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 44400 | VICI Properties, Inc. | &nbsp;&nbsp; 1438560 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 7690871 |
|  | **Utilities—2.8%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7300 | American Electric Power Co., Inc. | &nbsp;&nbsp; 693135 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 11400 | Duke Energy Corp. | &nbsp;&nbsp; 1174086 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 25200 | NextEra Energy, Inc. | &nbsp;&nbsp; 2106720 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 3973941 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL COMMON STOCKS <br>(IDENTIFIED COST $80,559,026)<br>| &nbsp;&nbsp; 116760553 |

---

Annual Shareholder Report

**6**

------

---

| | | |
|:---|:---|:---|
| **Shares or**<br> **Principal**<br> **Amount**<br>|  | **Value** |
|  | U.S. TREASURIES—2.7% |  |
|  | **U.S. Treasury Notes—2.7%** |  |
| $3500000 | United States Treasury Note, 4.125%, 11/15/2032 | $3569453 |
| &nbsp;&nbsp; 300000 | United States Treasury Note, 4.375%, 10/31/2024 | &nbsp;&nbsp; 299112 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL U.S. TREASURIES <br>(IDENTIFIED COST $3,892,625)<br>| &nbsp;&nbsp;&nbsp;&nbsp; 3868565 |
|  | PREFERRED STOCKS—0.3% |  |
|  | **Health Care—0.3%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 53840<br><sup>3</sup> <br>| CeQur SA | &nbsp;&nbsp; 297410 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 32229 | Regulus Therapeutics, Inc. | &nbsp;&nbsp; 44154 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL PREFERRED STOCKS <br>(IDENTIFIED COST $409,029)<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 341564 |
| <sup>1</sup> <br>| WARRANTS—0.1% |  |
|  | **Health Care—0.1%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 21500 | Catabasis Pharmaceuticals, Inc., Warrants, Expiration Date 6/22/2023 | &nbsp;&nbsp; 150 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 11450 | Catabasis Pharmaceuticals, Inc., Warrants, Expiration Date 2/8/2024 | &nbsp;&nbsp; 3237 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5696 | Rezolute, Inc., Warrants, Expiration Date 10/8/2027 | &nbsp;&nbsp; 3452 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1400 | Rezolute, Inc., Warrants, Expiration Date 1/1/2099 | &nbsp;&nbsp; 2898 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 44952 | Rezolute, Inc., Warrants, Expiration Date 12/31/2099 | &nbsp;&nbsp; 93051 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2520 | Scynexis, Inc., Warrants, Expiration Date 3/8/2023 | &nbsp;&nbsp; 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 26500 | Scynexis, Inc., Warrants, Expiration Date 5/21/2024 | &nbsp;&nbsp; 1200 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 53000 | Scynexis, Inc., Warrants, Expiration Date 1/1/2099 | &nbsp;&nbsp; 82680 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 644 | Scynexis, Inc., Warrants, Expiration Date 4/26/2029 | &nbsp;&nbsp; 570 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL WARRANTS <br>(IDENTIFIED COST $511,056)<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 187238 |
|  | REPURCHASE AGREEMENTS—16.4% |  |
| $388239 | Interest in $1,350,000,000 joint repurchase agreement 4.30%, dated 12/30/2022 under which Bank of Montreal will repurchase <br> securities provided as collateral for $1,350,645,000 on 1/3/2023. The securities provided as collateral at the end of the period <br> held with BNY Mellon as tri-party agent, were U.S. Government Agency securities with various maturities to 5/20/2072 and the <br> market value of those underlying securities was $1,379,047,631 (purchased with proceeds from securities lending collateral).<br>| &nbsp;&nbsp; 388239 |
| &nbsp;&nbsp; 23168000 | Interest in $1,350,000,000 joint repurchase agreement 4.30%, dated 12/30/2022 under which Bank of Montreal will repurchase <br> securities provided as collateral for $1,350,645,000 on 1/3/2023. The securities provided as collateral at the end of the period <br> held with BNY Mellon as tri-party agent, were U.S. Government Agency securities with various maturities to 5/20/2072 and the <br> market value of those underlying securities was $1,379,047,631.<br>| &nbsp;&nbsp; 23168000 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL REPURCHASE AGREEMENTS <br>(IDENTIFIED COST $23,556,239)<br>| &nbsp;&nbsp;&nbsp; 23556239 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL INVESTMENT IN SECURITIES—100.9% <br>(IDENTIFIED COST $108,927,975)<sup>5</sup> <br>| &nbsp;&nbsp; 144714159 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; OTHER ASSETS AND LIABILITIES - NET—(0.9)%<sup>6</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; (1303660) |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL NET ASSETS—100% | $143410499 |

---

Annual Shareholder Report

**7**

------

An affiliated company is a company in which the Fund, alone or in combination with other funds, has ownership of at least 5% of the voting shares. Transactions with the affiliated companies during the period ended December 31, 2022, were as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Affiliated** | **Value as of** <br>**12/31/2021**<br>| **Purchases** <br>**at Cost\***<br>| **Proceeds** <br>**from Sales\***<br>| **Change in** <br>**Unrealized** <br>**Appreciation/** <br>**Depreciation\***<br>| **Net** <br>**Realized Gain/** <br>**(Loss)\***<br>| **Value as of** <br>**12/31/2022**<br>| **Shares** <br>**Held as of** <br>**12/31/2022**<br>| **Dividend** <br>**Income\***<br>|
| **Health Care:** |  |  |  |  |  |  |  |  |
| Albireo Pharma, Inc. | $805834 | $102642 | $(140530) | $23130 | $(84170) | $706906 | &nbsp;&nbsp;&nbsp;&nbsp; 32712 | $— |
| Alector, Inc. | $1355239 | $95497 | $(66387) | $(694171) | $(77306) | $612872 | &nbsp;&nbsp;&nbsp;&nbsp; 66400 | $— |
| Amphastar Pharmaceuticals, Inc. | $768570 | $123361 | $(98840) | $102159 | $42860 | $938110 | &nbsp;&nbsp;&nbsp;&nbsp; 33480 | $— |
| AnaptysBio, Inc. | $522779 | $416261 | $— | $89394 | $— | $1028434 | &nbsp;&nbsp;&nbsp;&nbsp; 33186 | $— |
| Annexon, Inc. | $294144 | $246403 | $— | $(241721) | $— | $298826 | &nbsp;&nbsp;&nbsp;&nbsp; 57800 | $— |
| Arcturus Therapeutics Holdings, Inc. | $1772261 | $324022 | $— | $(989999) | $— | $1106284 | &nbsp;&nbsp;&nbsp;&nbsp; 65229 | $— |
| aTyr Pharma, Inc. | $427658 | $20391 | $— | $(302195) | $— | $145854 | &nbsp;&nbsp;&nbsp;&nbsp; 66600 | $— |
| Avidity Biosciences LLC\*\* | $701215 | $135694 | $— | $(31412) | $— | $805497 | &nbsp;&nbsp;&nbsp;&nbsp; 36300 | $— |
| Dynavax Technologies Corp. | $2924281 | $392667 | $(586426) | $(556095) | $(103479) | $2070948 | &nbsp;&nbsp; 194638 | $— |
| Fusion Pharmaceuticals, Inc. | $— | $108687 | $— | $(64272) | $— | $44415 | &nbsp;&nbsp;&nbsp;&nbsp; 14100 | $— |
| Gamida Cell Ltd.\*\* | $297901 | $41338 | $(229648) | $251459 | $(299646) | $61404 | &nbsp;&nbsp;&nbsp;&nbsp; 47600 | $— |
| IDEAYA Biosciences, Inc. | $562419 | $145654 | $— | $(50319) | $— | $657754 | &nbsp;&nbsp;&nbsp;&nbsp; 36200 | $— |
| Merus N.V. | $1326060 | $188139 | $(32048) | $(706214) | $(13343) | $762594 | &nbsp;&nbsp;&nbsp;&nbsp; 49295 | $— |
| Minerva Neurosciences, Inc. | $110378 | $— | $— | $(82990) | $— | $27388 | &nbsp;&nbsp;&nbsp;&nbsp; 17225 | $— |
| Orchard Therapeutics PLC\*\* | $19651 | $— | $— | $(14128) | $— | $5523 | &nbsp;&nbsp;&nbsp;&nbsp; 14887 | $— |
| Orchard Therapeutics PLC, ADR | $229775 | $10305 | $— | $(167401) | $— | $72679 | &nbsp;&nbsp; 195900 | $— |
| Regulus Therapeutics, Inc.\*\* | $101521 | $— | $— | $(57367) | $— | $44154 | &nbsp;&nbsp;&nbsp;&nbsp; 32229 | $— |
| Regulus Therapeutics, Inc. | $111279 | $— | $— | $(62882) | $— | $48397 | &nbsp;&nbsp;&nbsp;&nbsp; 35326 | $— |
| Rezolute, Inc. | $187481 | $170818 | $— | $(184059) | $— | $174240 | &nbsp;&nbsp;&nbsp;&nbsp; 84174 | $— |
| Rezolute, Inc., Warrants, Expiration Date 10/8/<br> 2027<br>| $18278 | $— | $— | $(14826) | $— | $3452 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5696 | $— |
| Rezolute, Inc., Warrants, Expiration Date 1/1/<br> 2099<br>| $6692 | $— | $— | $(3794) | $— | $2898 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1400 | $— |
| Rezolute, Inc., Warrants, Expiration Date 12/31/<br> 2099<br>| $— | $170773 | $— | $(77722) | $— | $93051 | &nbsp;&nbsp;&nbsp;&nbsp; 44952 | $— |
| Rhythm Pharmaceuticals, Inc. | $351765 | $1254485 | $(345057) | $2182950 | $(127375) | $3316768 | &nbsp;&nbsp; 113900 | $— |
| Scynexis, Inc. | $245647 | $1932 | $— | $(183753) | $— | $63826 | &nbsp;&nbsp;&nbsp;&nbsp; 40914 | $— |
| Scynexis, Inc., Warrants, Expiration Date 3/8/<br> 2023<br>| $648 | $— | $— | $(648) | $— | $— | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2520 | $— |
| Scynexis, Inc., Warrants, Expiration Date 5/21/<br> 2024<br>| $57375 | $— | $— | $(56175) | $— | $1200 | &nbsp;&nbsp;&nbsp;&nbsp; 26500 | $— |
| Scynexis, Inc., Warrants, Expiration Date 1/1/<br> 2099<br>| $323300 | $— | $— | $(240620) | $— | $82680 | &nbsp;&nbsp;&nbsp;&nbsp; 53000 | $— |
| Scynexis, Inc., Warrants, Expiration Date 4/26/<br> 2029<br>| $— | $— | $— | $570 | $— | $570 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 644 | $— |
| Seres Therapeutics, Inc. | $1303645 | $696237 | $(22682) | $25828 | $(24548) | $1978480 | &nbsp;&nbsp; 353300 | $— |
| Ultragenyx Pharmaceutical, Inc.\*\* | $3666324 | $251891 | $(267486) | $(1662706) | $73662 | $2061685 | &nbsp;&nbsp;&nbsp;&nbsp; 44500 | $— |
| **Information Technology:** |  |  |  |  |  |  |  |  |
| ShotSpotter, Inc. | $— | $3942 | $— | $185 | $— | $4127 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 122 | $— |
| Affiliated Issuers no longer in the portfolio at <br> period end<br>| $3520606 | $907214 | $(2791441) | $528112 | $(2164491) | $— | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | $13160 |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL OF AFFILIATED COMPANIES <br>TRANSACTIONS<br>| $22012726 | $5808353 | $(4580545) | $(3241682) | $(2777836) | $17221016 | 1800729 | $13160 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

\* *A portion of the amount shown was recorded when the Fund no longer had ownership of at least 5% of the voting shares.*

\*\* *At December 31, 2022, the Fund no longer has ownership of at least 5% voting shares.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 1 | *Non-income-producing security.* |
| 2 | *All or a portion of these securities are temporarily on loan to unaffiliated broker/dealers.* |
| 3 | *Market quotations and price valuations are not available. Fair value determined using significant unobservable inputs in accordance with procedures established* <br> *by and under the supervision of the Fund's Adviser acting through its Valuation Committee.*<br>|
| 4 | *Denotes a restricted security that either: (a) cannot be offered for public sale without first being registered, or availing of an exemption from registration, under* <br> *the Securities Act of 1933; or (b) is subject to a contractual restriction on public sales. At December 31, 2022, these restricted securities amounted to $87,100,* <br> *which represented 0.1% of total net assets.*<br>|
| 5 | *The cost of investments for federal tax purposes amounts to $109,373,174.* |
| 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 December 31, 2022.

Annual Shareholder Report

**8**

------

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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br>The following is a summary of the inputs used, as of December 31, 2022, in valuing the Fund's assets carried at fair value:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Valuation Inputs** | **Valuation Inputs** | **Valuation Inputs** | **Valuation Inputs** | **Valuation Inputs** |
|  | **Level 1—** <br>**Quoted** <br>**Prices**<br>| **Level 2—** <br>**Other** <br>**Significant** <br>**Observable** <br>**Inputs**<br>| **Level 3—** <br>**Significant** <br>**Unobservable** <br>**Inputs**<br>| **Total** |
| **Equity Securities:** |  |  |  |  |
| Common Stocks |  |  |  |  |
| &nbsp;&nbsp; Domestic | $95739537 | $— | $138012 | $95877549 |
| &nbsp;&nbsp; International | &nbsp;&nbsp;&nbsp;&nbsp; 8922547 | &nbsp;&nbsp; 11960457 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp; 20883004 |
| Preferred Stocks |  |  |  |  |
| &nbsp;&nbsp; International | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp; 297410 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 297410 |
| &nbsp;&nbsp; Domestic | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 44154 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 44154 |
| **Debt Securities:** |  |  |  |  |
| U.S. Treasuries | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp; 3868565 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp; 3868565 |
| Warrants | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 95949 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 91289 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 187238 |
| **Repurchase Agreements** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp; 23556239 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp; 23556239 |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL SECURITIES | $104802187 | $39476550 | $435422 | $144714159 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

The following acronym(s) are used throughout this portfolio: <br> ADR —American Depositary Receipt

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**9**

------

Financial Highlights–Primary Shares

(For a Share Outstanding Throughout Each Period)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | **$24.31** | **$25.46** | **$22.63** | **$18.55** | **$19.16** |
| **Income From Investment Operations:** |  |  |  |  |  |
| Net investment income (loss)<sup>1</sup> <br>| &nbsp;&nbsp;&nbsp; (0.08) | &nbsp;&nbsp;&nbsp; (0.24) | &nbsp;&nbsp;&nbsp; (0.22) | &nbsp;&nbsp;&nbsp; (0.10) | &nbsp;&nbsp;&nbsp; (0.11) |
| Net realized and unrealized gain (loss) | &nbsp;&nbsp;&nbsp; (6.87) | &nbsp;&nbsp;&nbsp;&nbsp; 0.83 | &nbsp;&nbsp;&nbsp;&nbsp; 5.27 | &nbsp;&nbsp;&nbsp;&nbsp; 6.15 | &nbsp;&nbsp;&nbsp;&nbsp; 0.95 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total From Investment Operations | &nbsp;&nbsp;&nbsp; (6.95) | &nbsp;&nbsp;&nbsp;&nbsp; 0.59 | &nbsp;&nbsp;&nbsp;&nbsp; 5.05 | &nbsp;&nbsp;&nbsp;&nbsp; 6.05 | &nbsp;&nbsp;&nbsp;&nbsp; 0.84 |
| **Less Distributions:** |  |  |  |  |  |
| Distributions from net realized gain | &nbsp;&nbsp;&nbsp; (2.26) | &nbsp;&nbsp;&nbsp; (1.74) | &nbsp;&nbsp;&nbsp; (2.22) | &nbsp;&nbsp;&nbsp; (1.97) | &nbsp;&nbsp;&nbsp; (1.45) |
| **Net Asset Value, End of Period** | **$15.10** | **$24.31** | **$25.46** | **$22.63** | **$18.55** |
| **Total Return**<sup>2</sup> <br>| &nbsp;&nbsp; (30.09)% | &nbsp;&nbsp;&nbsp;&nbsp; 2.51% | &nbsp;&nbsp;&nbsp; 28.79% | &nbsp;&nbsp;&nbsp; 33.82% | &nbsp;&nbsp;&nbsp;&nbsp; 3.84% |
| **Ratios to Average Net Assets:** |  |  |  |  |  |
| Net expenses<sup>3</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; 1.54% | &nbsp;&nbsp;&nbsp;&nbsp; 1.50% | &nbsp;&nbsp;&nbsp;&nbsp; 1.50% | &nbsp;&nbsp;&nbsp;&nbsp; 1.51% | &nbsp;&nbsp;&nbsp;&nbsp; 1.52% |
| Net investment loss | &nbsp;&nbsp;&nbsp; (0.51)% | &nbsp;&nbsp;&nbsp; (0.99)% | &nbsp;&nbsp;&nbsp; (1.01)% | &nbsp;&nbsp;&nbsp; (0.49)% | &nbsp;&nbsp;&nbsp; (0.53)% |
| Expense waiver/reimbursement<sup>4</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.00%<sup>5</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; —% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; —% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; —% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; —% |
| **Supplemental Data:** |  |  |  |  |  |
| Net assets, end of period (000 omitted) | $34430 | $55366 | $63502 | $57988 | $46160 |
| Portfolio turnover<sup>6</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 41% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 34% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 45% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 43% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 41% |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 1 | *Per share numbers have been calculated using the average shares method.* |
| 2 | *Based on net asset value. Total returns do not reflect any additional fees or expenses that may be imposed by separate accounts of insurance companies or in* <br> *connection with any variable annuity or variable life insurance contract.*<br>|
| 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/*<br> *reimbursement recorded by investment companies in which the Fund may invest.*<br>|
| 5 | *Represents less than 0.01%.* |
| 6 | *Securities that mature are considered sales for purposes of this calculation.* |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**10**

------

Financial Highlights–Service Shares

(For a Share Outstanding Throughout Each Period)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | **$22.40** | **$23.65** | **$21.27** | **$17.57** | **$18.26** |
| **Income From Investment Operations:** |  |  |  |  |  |
| Net investment income (loss)<sup>1</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; (0.11) | &nbsp;&nbsp;&nbsp;&nbsp; (0.28) | &nbsp;&nbsp;&nbsp;&nbsp; (0.26) | &nbsp;&nbsp;&nbsp;&nbsp; (0.15) | &nbsp;&nbsp;&nbsp;&nbsp; (0.15) |
| Net realized and unrealized gain (loss) | &nbsp;&nbsp;&nbsp;&nbsp; (6.30) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.77 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4.86 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5.82 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.91 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total From Investment Operations | &nbsp;&nbsp;&nbsp;&nbsp; (6.41) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.49 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4.60 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5.67 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.76 |
| **Less Distributions:** |  |  |  |  |  |
| Distributions from net realized gain | &nbsp;&nbsp;&nbsp;&nbsp; (2.26) | &nbsp;&nbsp;&nbsp;&nbsp; (1.74) | &nbsp;&nbsp;&nbsp;&nbsp; (2.22) | &nbsp;&nbsp;&nbsp;&nbsp; (1.97) | &nbsp;&nbsp;&nbsp;&nbsp; (1.45) |
| **Net Asset Value, End of Period** | **$13.73** | **$22.40** | **$23.65** | **$21.27** | **$17.57** |
| **Total Return**<sup>2</sup> <br>| &nbsp;&nbsp;&nbsp; (30.26)% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2.26% | &nbsp;&nbsp;&nbsp;&nbsp; 28.48% | &nbsp;&nbsp;&nbsp;&nbsp; 33.52% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3.58% |
| **Ratios to Average Net Assets:** |  |  |  |  |  |
| Net expenses<sup>3</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.79% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.75% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.75% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.76% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.77% |
| Net investment loss | &nbsp;&nbsp;&nbsp;&nbsp; (0.73)% | &nbsp;&nbsp;&nbsp;&nbsp; (1.24)% | &nbsp;&nbsp;&nbsp;&nbsp; (1.26)% | &nbsp;&nbsp;&nbsp;&nbsp; (0.74)% | &nbsp;&nbsp;&nbsp;&nbsp; (0.77)% |
| Expense waiver/reimbursement<sup>4</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.00%<sup>5</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; —% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; —% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; —% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; —% |
| **Supplemental Data:** |  |  |  |  |  |
| Net assets, end of period (000 omitted) | $108981 | $150983 | $169061 | $129327 | $105132 |
| Portfolio turnover<sup>6</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 41% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 34% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 45% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 43% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 41% |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 1 | *Per share numbers have been calculated using the average shares method.* |
| 2 | *Based on net asset value. Total returns do not reflect any additional fees or expenses that may be imposed by separate accounts of insurance companies or in* <br> *connection with any variable annuity or variable life insurance contract.*<br>|
| 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/*<br> *reimbursement recorded by investment companies in which the Fund may invest.*<br>|
| 5 | *Represents less than 0.01%.* |
| 6 | *Securities that mature are considered sales for purposes of this calculation.* |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**11**

------

Statement of Assets and Liabilities <br>December 31, 2022

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| **Assets:** |  |
| Investment in repurchase agreements | $23556239 |
| Investment in securities | &nbsp;&nbsp; 121157920 |
| Investment in securities, at value including $368,981 of securities loaned and $17,221,016 of investments in affiliated companies\* (identified <br> cost $108,927,975)<br>| &nbsp;&nbsp; 144714159 |
| Income receivable | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 96280 |
| Receivable for investments sold | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 45947 |
| Receivable for shares sold | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 17711 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Assets | &nbsp;&nbsp; 144874097 |
| **Liabilities:** |  |
| Payable for investments purchased | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 866084 |
| Payable for shares redeemed | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 68896 |
| Payable to bank | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 19128 |
| Payable for collateral due to broker for securities lending (Note 2) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 388239 |
| Payable for investment adviser fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 26852 |
| Payable for administrative fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 617 |
| Payable for auditing fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 29038 |
| Payable for distribution services fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 23596 |
| Accrued expenses (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 41148 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Liabilities | &nbsp;&nbsp;&nbsp;&nbsp; 1463598 |
| Net assets for 10,218,596 shares outstanding | $143410499 |
| **Net Assets Consist of:** |  |
| Paid-in capital | $108790767 |
| Total distributable earnings (loss) | &nbsp;&nbsp;&nbsp; 34619732 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Net Assets | $143410499 |
| **Net Asset Value, Offering Price and Redemption Proceeds Per Share:** |  |
| **Primary Shares:** |  |
| $34,429,703 ÷ 2,279,713 shares outstanding, no par value, unlimited shares authorized | $15.10 |
| **Service Shares:** |  |
| $108,980,796 ÷ 7,938,883 shares outstanding, no par value, unlimited shares authorized | $13.73 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

\* *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 <br>Year Ended December 31, 2022

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| **Investment Income:** |  |
| Dividends (including $13,160 received from affiliated companies\* and net of foreign taxes withheld of $23,587) | $1195759 |
| Interest | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 418796 |
| Net income on securities loaned (Note 2) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 26288 |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL INCOME | &nbsp;&nbsp;&nbsp;&nbsp; 1640843 |
| **Expenses:** |  |
| Investment adviser fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp; 2023216 |
| Administrative fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 123658 |
| Custodian fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 42008 |
| Transfer agent fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 14475 |
| Directors'/Trustees' fees (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2211 |
| Auditing fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 36298 |
| Legal fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 11568 |
| Portfolio accounting fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 67087 |
| Distribution services fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 289503 |
| Printing and postage | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 45941 |
| Miscellaneous (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 39477 |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL EXPENSES | &nbsp;&nbsp;&nbsp;&nbsp; 2695442 |
| Waiver of investment adviser fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (1648) |
| Net expenses | &nbsp;&nbsp;&nbsp;&nbsp; 2693794 |
| Net investment income (loss) | &nbsp;&nbsp;&nbsp; (1052951) |
| **Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions:** |  |
| Net realized loss on investments (including net realized loss of $(2777836) on sales of investments in affiliated companies\*) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (655016) |
| Net realized loss on foreign currency transactions | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (7458) |
| Net change in unrealized appreciation of investments (including net change in unrealized appreciation of $(3241682) on investments in <br> affiliated companies\*)<br>| &nbsp;&nbsp; (60249715) |
| Net change in unrealized appreciation/depreciation of translation of assets and liabilities in foreign currency | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (91) |
| Net realized and unrealized gain (loss) on investments and foreign currency transactions | &nbsp;&nbsp; (60912280) |
| Change in net assets resulting from operations | $(61965231) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

\* *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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | |
|:---|:---|:---|
| **Year Ended December 31** | **2022** | **2021** |
| **Increase (Decrease) in Net Assets** |  |  |
| **Operations:** |  |  |
| Net investment loss | $(1052951) | $(2635104) |
| Net realized gain (loss) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (662474) | &nbsp;&nbsp;&nbsp; 21835489 |
| Net change in unrealized appreciation/depreciation | &nbsp;&nbsp; (60249806) | &nbsp;&nbsp; (13043996) |
| &nbsp;&nbsp;&nbsp;&nbsp; CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | &nbsp;&nbsp; (61965231) | &nbsp;&nbsp;&nbsp;&nbsp; 6156389 |
| **Distributions to Shareholders:** |  |  |
| Primary Shares | &nbsp;&nbsp;&nbsp;&nbsp; (5000707) | &nbsp;&nbsp;&nbsp;&nbsp; (4188149) |
| Service Shares | &nbsp;&nbsp; (15209394) | &nbsp;&nbsp; (12290249) |
| &nbsp;&nbsp;&nbsp;&nbsp; CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS | &nbsp;&nbsp; (20210101) | &nbsp;&nbsp; (16478398) |
| **Share Transactions:** |  |  |
| Proceeds from sale of shares | &nbsp;&nbsp;&nbsp; 30701378 | &nbsp;&nbsp;&nbsp; 31737876 |
| Net asset value of shares issued to shareholders in payment of distributions declared | &nbsp;&nbsp;&nbsp; 20210085 | &nbsp;&nbsp;&nbsp; 16478386 |
| Cost of shares redeemed | &nbsp;&nbsp; (31674352) | &nbsp;&nbsp; (64108774) |
| &nbsp;&nbsp;&nbsp;&nbsp; CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS | &nbsp;&nbsp;&nbsp; 19237111 | &nbsp;&nbsp; (15892512) |
| Change in net assets | &nbsp;&nbsp; (62938221) | &nbsp;&nbsp; (26214521) |
| **Net Assets:** |  |  |
| Beginning of period | &nbsp;&nbsp; 206348720 | &nbsp;&nbsp; 232563241 |
| End of period | $143410499 | $206348720 |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**14**

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Notes to Financial Statements

December 31, 2022

**1. ORGANIZATION** 

Federated Hermes Insurance Series (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 six portfolios. The financial statements included herein are only those of Federated Hermes Kaufmann Fund II (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 two classes of shares: Primary Shares and Service Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. Fund shares are available exclusively as a funding vehicle for life insurance companies writing variable life insurance policies and variable annuity contracts. The investment objective of the Fund is capital appreciation.

**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 net asset value (NAV), the Fund generally values investments as follows:

◾ <br>

Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.

◾ <br>

Fixed-income securities are fair valued using price evaluations provided by a pricing service approved by Federated Equity Management Company of Pennsylvania (the "Adviser").

◾ <br>

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.

◾ <br>

Derivative contracts listed on exchanges are valued at their reported settlement or closing price, except that options are valued at the mean of closing bid and ask quotations.

◾ <br>

Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Adviser.

◾ <br>

For securities that are fair valued in accordance with procedures established by and under the general supervision of the Adviser, 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 Adviser's valuation policies and procedures for the Fund, or if information furnished by a pricing service, in the opinion of the Adviser's 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 and Significant Events Procedures** 

Pursuant to Rule 2a-5 under the Act, the Fund's Board of Trustees (the "Trustees") has designated the Adviser as the Fund's valuation designee to perform any fair value determinations for securities and other assets held by the Fund. The Adviser is subject to the Trustees' oversight and certain reporting and other requirements intended to provide the Trustees the information needed to oversee the Adviser's fair value determinations.

The Adviser, acting through its Valuation Committee, is responsible for determining the fair value of investments for which market quotations are not readily available. The Valuation Committee is comprised of officers of the Adviser and certain of the Adviser's affiliated companies and determines fair value and oversees the calculation of the NAV. The Valuation Committee is also authorized to use pricing services 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 Adviser. The Trustees periodically review the fair valuations made by the Valuation Committee. The Trustees have also approved the Adviser's fair valuation and significant events procedures as part of the Fund's compliance program and will review any changes made to the procedures.

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

Annual Shareholder Report

**15**

------

the prices bid and ask 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 OTC 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 Adviser.

The Adviser has also adopted procedures requiring an investment to be priced at its fair value whenever the Valuation Committee determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

◾ <br>

With respect to securities traded principally in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures contracts;

◾ <br>

Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded;

◾ <br>

Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, or a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.

The Adviser has adopted procedures whereby the Valuation Committee uses a pricing service to provide factors to update the fair value of equity securities traded principally in foreign markets from the time of the close of their respective foreign stock exchanges to the pricing time of the Fund. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Valuation Committee will determine the fair value of the investment in accordance with the fair valuation procedures approved by the Adviser. The Trustees periodically review fair valuations made in response to significant events.

**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 (MNA) 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. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Amortization/accretion of premium and discount is included in investment income. Distributions of net investment income, if any, are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. 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. 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 waiver of $1,648 is disclosed in Note 5.

**Federal Taxes** 

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code of 1986 (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 December 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 December 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

**16**

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The Fund may be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The Fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or gains are earned.

**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.

**Futures Contracts** 

The Fund purchases and sells financial futures contracts to manage currency risk and market risks. Upon entering into a financial futures contract with a broker. the Fund is required to deposit with a broker, either U.S. government securities or a specified amount of cash, which is shown as due from broker in the Statement of Assets and Liabilities. Futures contracts are valued daily and unrealized gains or losses are recorded in a "variation margin" account. The Fund receives from or pays to the broker a specified amount of cash based upon changes in the variation margin account. When a contract is closed, the Fund recognizes a realized gain or loss. Futures contracts have market risks, including the risk that the change in the value of the contract may not correlate with the changes in the value of the underlying securities. There is minimal counterparty risk to the Fund since futures contracts are exchange traded and the exchange's clearing house, as counterparty to all exchange traded futures contracts, guarantees the futures contracts against default.

During the year ended December 31, 2022, the Fund held no futures contracts.

**Foreign Exchange Contracts** 

The Fund enters into foreign exchange contracts for the delayed-delivery of securities or foreign currency exchange transactions. The Fund also enters into foreign exchange contracts to protect assets against adverse changes in foreign currency exchange rates or exchange control regulations. Purchased contracts are used to acquire exposure to foreign currencies, whereas, contracts to sell are used to hedge the Fund's securities against currency fluctuations. Risks may arise upon entering into these transactions from the potential inability of counterparties to meet the terms of their commitments and from unanticipated movements in security prices or foreign exchange rates. The foreign exchange contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized until the settlement date.

During the year ended December 31, 2022, the Fund held no foreign exchange contracts.

**Foreign Currency Translation** 

The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the rates of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, income and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at period end, resulting from changes in the exchange rate.

**Securities Lending** 

The Fund participates in a securities lending program providing for the lending of equity securities to qualified brokers. The term of the loans within the program is one year or less. The Fund normally receives cash collateral for securities loaned that is invested in affiliated money market funds, other money market instruments and/or repurchase agreements. Investments in money market funds may include funds with a "floating" NAV that can impose redemption fees and liquidity gates, impose certain operational impediments to investing cash collateral, and, if the investee fund's NAV decreases, result in the Fund recognizing losses and being required to cover the decrease in the value of the cash collateral. Collateral is maintained at a minimum level of 100% of the market value of investments loaned, plus interest, if applicable. In accordance with the Fund's securities lending agreement, the market value of securities on loan is determined each day at the close of business and any additional collateral required to cover the value of securities on loan is delivered to the Fund on the next business day. Earnings on collateral are allocated between the borrower of the security, the securities lending agent, as a fee for its services under the program and the Fund, according to agreed-upon rates. The Fund will not have the right to vote on securities while they are on loan. However, the Fund will attempt to terminate a loan in an effort to reacquire the securities in time to vote on matters that are deemed to be material by the Adviser. There can be no assurance that the Fund will have sufficient notice of such matters to be able to terminate the loan in time to vote thereon.

Securities lending transactions are subject to MNA. Amounts presented on the Portfolio of Investments and Statement of Assets and Liabilities are not net settlement amounts but gross. As indicated below, the cash collateral received by the Fund exceeds the market value of the securities loaned reducing the net settlement amount to zero. The chart below identifies the amount of collateral received as well as the market value of securities on loan. Additionally, the securities lending agreement executed by the Fund includes an indemnification clause. This clause stipulates that the borrower will reimburse the Fund for any losses as a result of any failure of the borrower to return equivalent securities to the Fund.

Annual Shareholder Report

**17**

------

As of December 31, 2022, securities subject to this type of arrangement and related collateral were as follows:

---

| | |
|:---|:---|
| **Fair Value of** <br>**Securities Loaned**<br>| **Collateral** <br>**Received**<br>|
| $368981 | $388239 |

---

**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 Adviser.

Additional information on restricted securities, held at December 31, 2022, is as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Security** | **Acquisition** <br>**Date**<br>| **Cost** | **Value** |
| Immatics N.V. | 6/30/2020 | $100000 | $87100 |

---

**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** <br>**12/31/2022** | **Year Ended** <br>**12/31/2022** | **Year Ended** <br>**12/31/2021** | **Year Ended** <br>**12/31/2021** |
| **Primary Shares:** | **Shares** | **Amount** | **Shares** | **Amount** |
| Shares sold | &nbsp;&nbsp;&nbsp; 126871 | $2146304 | &nbsp;&nbsp;&nbsp;&nbsp; 79728 | $1955393 |
| Shares issued to shareholders in payment of distributions declared | &nbsp;&nbsp;&nbsp; 277971 | &nbsp;&nbsp;&nbsp;&nbsp; 5000705 | &nbsp;&nbsp;&nbsp; 177614 | &nbsp;&nbsp;&nbsp;&nbsp; 4188147 |
| Shares redeemed | &nbsp;&nbsp; (402248) | &nbsp;&nbsp;&nbsp; (6715513) | &nbsp;&nbsp; (474074) | &nbsp;&nbsp; (11765919) |
| &nbsp;&nbsp;&nbsp;&nbsp; NET CHANGE RESULTING FROM PRIMARY SHARE TRANSACTIONS | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2594 | $431496 | &nbsp;&nbsp; (216732) | $(5622379) |
|  | **Year Ended** <br>**12/31/2022** | **Year Ended** <br>**12/31/2022** | **Year Ended** <br>**12/31/2021** | **Year Ended** <br>**12/31/2021** |
| **Service Shares:** | **Shares** | **Amount** | **Shares** | **Amount** |
| Shares sold | 1893686 | $28555074 | 1311017 | $29782483 |
| Shares issued to shareholders in payment of distributions declared | &nbsp;&nbsp;&nbsp; 928534 | &nbsp;&nbsp; 15209380 | &nbsp;&nbsp;&nbsp; 564549 | &nbsp;&nbsp; 12290239 |
| Shares redeemed | (1623969) | &nbsp;&nbsp; (24958839) | (2283278) | &nbsp;&nbsp; (52342855) |
| &nbsp;&nbsp;&nbsp;&nbsp; NET CHANGE RESULTING FROM SERVICE SHARE TRANSACTIONS | 1198251 | $18805615 | &nbsp;&nbsp; (407712) | $(10270133) |
| &nbsp;&nbsp;&nbsp;&nbsp; NET CHANGE RESULTING FROM TOTAL FUND SHARE TRANSACTIONS | 1200845 | $19237111 | &nbsp;&nbsp; (624444) | $(15892512) |

---

**4. FEDERAL TAX INFORMATION** 

The accounting treatment of certain items in accordance with income tax regulations may differ from the accounting treatment in accordance with GAAP which may result in permanent differences. In the case of the Fund, such differences primarily result from net operating losses.

For the year ended December 31, 2022, permanent differences identified and reclassified among the components of net assets were as follows:

---

| | |
|:---|:---|
| **Increase (Decrease)** | **Increase (Decrease)** |
| **Paid-In Capital**  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Distributable** <br>**Earnings (Loss)** <br>|
| $(1236369) | $1236369 |

---

Annual Shareholder Report

**18**

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The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended December 31, 2022 and 2021, was as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Long-term capital gains | $20210101 | $16478398 |

---

As of December 31, 2022, the components of distributable earnings on a tax-basis were as follows:

---

| | |
|:---|:---|
| Net unrealized appreciation | $35340771 |
| Capital loss carryforwards | $(721039) |
| TOTAL | $34619732 |

---

At December 31, 2022, the cost of investments for federal tax purposes was $109,373,174. The net unrealized appreciation of investments for federal tax purposes was $35,340,985. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $45,537,742 and net unrealized depreciation from investments for those securities having an excess of cost over value of $10,196,757. The difference between book-basis and tax-basis net unrealized appreciation is attributable to differing treatments for deferral of losses on wash sales, passive foreign investment company adjustments and discount accretion/premium amortization on debt securities.

As of December 31, 2022, the Fund had a capital loss carryforward of $721,039 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** |
| $721039 | $— | $721039 |

---

**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 1.30% of the Fund's average daily net assets. 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 December 31, 2022, the Adviser voluntarily waived $1,648 of its fee.

Certain of the Fund's assets are managed by Federated Global Investment Management Corp. (the "Sub-Adviser"). Under the terms of a sub-advisory agreement between the Adviser and the Sub-Adviser, the Sub-Adviser receives an allocable portion of the Fund's adviser fee. The fee is paid by the Adviser out of its resources and is not an incremental Fund expense. For the year ended December 31, 2022, the Sub-Adviser earned a fee of $1,659,037.

**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:

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| | |
|:---|:---|
| **Administrative Fee** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Average Daily Net Assets** <br>**of the Investment Complex**<br>|
| 0.100% | on assets up to $50 billion |
| 0.075% | on assets over $50 billion |

---

FAS may voluntarily choose to waive any portion of its fee. For the year ended December 31, 2022, the annualized fee paid to FAS was 0.079% of average daily net assets of the Fund.

In addition, FAS may charge certain out-of-pocket expenses to the Fund.

Annual Shareholder Report

**19**

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**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 Primary Shares and Service 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:

---

| | |
|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp; **Percentage of Average Daily** <br>**Net Assets of Class**<br>|
| Primary Shares | 0.25% |
| Service Shares | 0.25% |

---

FSC may voluntarily choose to waive any portion of its fee. For the year ended December 31, 2022, distribution services fees for the Fund were as follows:

---

| | |
|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp; **Distribution Services** <br>**Fees Incurred**<br>|
| Service Shares | $289503 |

---

When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended December 31, 2022, FSC retained $268 of fees paid by the Fund. For the year ended December 31, 2022, the Fund's Primary Shares did not incur a distribution services fee; however, it may begin to incur this fee upon approval of the Trustees.

**Interfund Transactions** 

During the year ended December 31, 2022, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees and/or common Officers. These purchase and sale transactions complied with Rule 17a-7 under the Act and amounted to $445,707 and $567,897, respectively. Net realized loss recognized on these transactions was $133,139.

**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. INVESTMENT TRANSACTIONS** 

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the year ended December 31, 2022, were as follows:

---

| | |
|:---|:---|
| Purchases | $49034759 |
| Sales | $71871112 |

---

**7. CONCENTRATION OF RISK** 

The Fund may invest a portion of its assets in securities of companies that are deemed by the Fund's management to be classified in similar business sectors. Economic developments may have an effect on the liquidity and volatility of the portfolio securities. A substantial portion of the Fund's portfolio may be comprised of entities in the Health Care sector. As a result, the Fund may be more susceptible to any economic, business, political or other developments which generally affect these entities.

**8. 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 December 31, 2022, the Fund had no outstanding loans. During the year ended December 31, 2022, the Fund did not utilize the LOC.

Annual Shareholder Report

**20**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**9. 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 December 31, 2022, there were no outstanding loans. During the year ended December 31, 2022, the program was not utilized.

**10. 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.

**11. 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, and may continue to result in, closed borders, enhanced health screenings, disruptions to healthcare service preparation and delivery, quarantines, cancellations, and disruptions to supply chains, workflow operations and consumer activity, as well as general concern and uncertainty. The impact of this coronavirus has resulted in substantial economic volatility. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could continue to negatively affect the worldwide economy, as well as the economies of individual countries, individual companies (including certain Fund service providers and issuers of the Fund's investments) and the markets in general in significant and unforeseen ways. In addition, governments, their regulatory agencies, or self-regulatory organizations may take actions in response to the pandemic, including significant fiscal and monetary policy changes, that may affect the instruments in which the Fund invests or the issuers of such investments. Any such impact could adversely affect the Fund's performance.

**12. FEDERAL TAX INFORMATION (UNAUDITED)** 

For the year ended December 31, 2022, the amount of long-term capital gains designated by the Fund was $20,210,101.

Annual Shareholder Report

**21**

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Report of Independent Registered Public Accounting Firm

**To the Board of Trustees of Federated Hermes Insurance Series and the Shareholders of Federated Hermes Kaufmann Fund II:**

**Opinion on the Financial Statements**

We have audited the accompanying statement of assets and liabilities of Federated Hermes Kaufmann Fund II (the Fund), a portfolio of Federated Hermes Insurance Series, including the portfolio of investments, as of December 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 December 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.

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 December 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> ![](kpmgsig.jpg)

We have served as the auditor for one or more of Federated Hermes' investment companies since 2006.

Boston, Massachusetts <br>February 15, 2023

Annual Shareholder Report

**22**

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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 funds used as variable investment options. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from July 1, 2022 to December 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.

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| | | | |
|:---|:---|:---|:---|
|  | **Beginning** <br>**Account Value** <br>**7/1/2022**<br>| **Ending** <br>**Account Value** <br>**12/31/2022**<br>| **Expenses Paid** <br>**During Period**<sup>1</sup> <br>|
| **Actual:** |  |  |  |
| Primary Shares | $1000 | $1020.30 | $7.79 |
| Service Shares | $1000 | $1019.30 | $9.06 |
| **Hypothetical (assuming a 5% return before expenses):** |  |  |  |
| Primary Shares | $1000 | $1017.49 | $7.78 |
| Service Shares | $1000 | $1016.23 | $9.05 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 1 | *Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the* <br> *one-half-year period). The expenses shown in the table do not include the charges and expenses imposed by the insurance company under the variable insurance* <br> *product contract. Please refer to the variable insurance product prospectus for a complete listing of these expenses. The annualized net expense ratios are as* <br> *follows:*<br>|

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| Primary Shares | 1.53% |
| Service Shares | 1.78% |

---

Annual Shareholder Report

**23**

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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, 2022, the Trust comprised six 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**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held and Previous Position(s)**<br>|
| **J. Christopher Donahue\***<br> Birth Date: April 11, 1949<br> Trustee<br> Indefinite Term<br> Began serving: <br> September 1993<br>| &nbsp;&nbsp; **Principal Occupations**: Principal Executive Officer and President of certain of the Funds in the Federated Hermes Fund <br> Family; Director or Trustee of the Funds in the Federated Hermes Fund Family; President, Chief Executive Officer and <br> Director, Federated Hermes, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated <br> Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman and Trustee, <br> Federated Equity Management Company of Pennsylvania; Trustee, Federated Shareholder Services Company; Director, <br> Federated Services Company.<br> **Previous Positions**: President, Federated Investment Counseling; President and Chief Executive Officer, Federated <br> Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd; Chairman, <br> Passport Research, Ltd.<br>|
| **Thomas R. Donahue\***<br> Birth Date: October 20, 1958<br> Trustee<br> Indefinite Term<br> Began serving: May 2016<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of certain of the funds in the Federated Hermes Fund Family; Chief Financial <br> Officer, Treasurer, Vice President and Assistant Secretary, Federated Hermes, Inc.; Chairman and Trustee, Federated <br> Administrative Services; Chairman and Director, Federated Administrative Services, Inc.; Trustee and Treasurer, Federated <br> Advisory Services Company; Director or Trustee and Treasurer, Federated Equity Management Company of Pennsylvania, <br> Federated Global Investment Management Corp., Federated Investment Counseling, and Federated Investment <br> Management Company; Director, MDTA LLC; Director, Executive Vice President and Assistant Secretary, Federated Securities <br> Corp.; Director or Trustee and Chairman, Federated Services Company and Federated Shareholder Services Company; and <br> Director and President, FII Holdings, Inc.<br> **Previous Positions**: Director, Federated Hermes, Inc.; Assistant Secretary, Federated Investment Management Company, <br> Federated Global Investment Management Company and Passport Research, LTD; Treasurer, Passport Research, LTD; <br> Executive Vice President, Federated Securities Corp.; and Treasurer, FII Holdings, Inc.<br>|

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\*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*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**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held, Previous Position(s) and Qualifications**<br>|
| **John T. Collins**<br> Birth Date: January 24, 1947<br> Trustee<br> Indefinite Term<br> Began serving: October 2013<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee, and Chair of the Board of Directors or Trustees, of the Federated Hermes Fund <br> Family; formerly, Chairman and CEO, The Collins Group, Inc. (a private equity firm) (Retired).<br> **Other Directorships Held**: Director, KLX Energy Services Holdings, Inc. (oilfield services); former Director of <br> KLX Corp. (aerospace).<br> **Qualifications**: Mr. Collins has served in several business and financial management roles and directorship positions <br> throughout his career. Mr. Collins previously served as Chairman and CEO of The Collins Group, Inc. (a private equity firm) <br> and as a Director of KLX Corp. Mr. Collins serves as Chairman Emeriti, Bentley University. Mr. Collins previously served as <br> Director and Audit Committee Member, Bank of America Corp.; Director, FleetBoston Financial Corp.; and Director, Beth <br> Israel Deaconess Medical Center (Harvard University Affiliate Hospital). <br>|

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Annual Shareholder Report

**24**

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held, Previous Position(s) and Qualifications**<br>|
| **G. Thomas Hough**<br> Birth Date: February 28, 1955<br> Trustee<br> Indefinite Term<br> Began serving: August 2015<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee, Chair of the Audit Committee of the Federated Hermes Fund Family; formerly, <br> Vice Chair, Ernst & Young LLP (public accounting firm) (Retired). <br> **Other Directorships Held**: Director, Chair of the Audit Committee, Equifax, Inc.; Lead Director, Member of the Audit and <br> Nominating and Corporate Governance Committees, Haverty Furniture Companies, Inc.; formerly, Director, Member of <br> Governance and Compensation Committees, Publix Super Markets, Inc.<br> **Qualifications**: Mr. Hough has served in accounting, business management and directorship positions throughout his career. <br> Mr. Hough most recently held the position of Americas Vice Chair of Assurance with Ernst & Young LLP (public accounting <br> firm). Mr. Hough serves on the President's Cabinet and Business School Board of Visitors for the University of Alabama. <br> Mr. Hough previously served on the Business School Board of Visitors for Wake Forest University, and he previously served as <br> an Executive Committee member of the United States Golf Association. <br>|
| **Maureen Lally-Green**<br> Birth Date: July 5, 1949<br> Trustee<br> Indefinite Term<br> Began serving: August 2009<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; Adjunct Professor Emerita of Law, <br> Duquesne University School of Law; formerly, Dean of the Duquesne University School of Law and Professor of Law and <br> Interim Dean of the Duquesne University School of Law; formerly, Associate General Secretary and Director, Office of Church <br> Relations, Diocese of Pittsburgh.<br> **Other Directorships Held**: Director, CNX Resources Corporation (natural gas).<br> **Qualifications**: Judge Lally-Green has served in various legal and business roles and directorship positions throughout her <br> career. Judge Lally-Green previously held the position of Dean of the School of Law of Duquesne University (as well as <br> Interim Dean). Judge Lally-Green previously served as Associate General Secretary of the Diocese of Pittsburgh, a member of <br> the Superior Court of Pennsylvania and as a Professor of Law, Duquesne University School of Law. Judge Lally-Green was <br> appointed by the Supreme Court of Pennsylvania to serve on the Supreme Court's Board of Continuing Judicial Education <br> and the Supreme Court's Appellate Court Procedural Rules Committee. Judge Lally-Green also currently holds the positions <br> on not for profit or for profit boards of directors as follows: Director and Chair, UPMC Mercy Hospital; Regent, Saint Vincent <br> Seminary; Member, Pennsylvania State Board of Education (public); Director, Catholic Charities, Pittsburgh; and Director CNX <br> Resources Corporation (natural gas). Judge Lally-Green has held the positions of: Director, Auberle; Director, Epilepsy <br> Foundation of Western and Central Pennsylvania; Director, Ireland Institute of Pittsburgh; Director, Saint Thomas More <br> Society; Director and Chair, Catholic High Schools of the Diocese of Pittsburgh, Inc.; Director, Pennsylvania Bar Institute; <br> Director, St. Vincent College; Director and Chair, North Catholic High School, Inc.; Director and Vice Chair, Our Campaign for <br> the Church Alive!, Inc.; and Director and Vice Chair, Saint Francis University.<br>|
| **Thomas M. O'Neill**<br> Birth Date: June 14, 1951<br> Trustee<br> Indefinite Term<br> Began serving: August 2006<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; Sole Proprietor, Navigator Management <br> Company (investment and strategic consulting).<br> **Other Directorships Held**: None.<br> **Qualifications**: Mr. O'Neill has served in several business, mutual fund and financial management roles and directorship <br> positions throughout his career. Mr. O'Neill serves as Director, Medicines for Humanity. Mr. O'Neill previously served as Chief <br> Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and <br> Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, <br> MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director <br> and Consultant, EZE Castle Software (investment order management software); Director, Midway Pacific (lumber); and <br> Director, The Golisano Children's Museum of Naples, Florida.<br>|
| **Madelyn A. Reilly**<br> Birth Date: February 2, 1956<br> Trustee<br> Indefinite Term<br> Began serving: <br> November 2020<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; formerly, Senior Vice President for Legal <br> Affairs, General Counsel and Secretary of Board of Directors, Duquesne University (Retired).<br> **Other Directorships Held**: None.<br> **Qualifications**: Ms. Reilly has served in various business and legal management roles throughout her career. Ms. Reilly <br> previously served as Senior Vice President for Legal Affairs, General Counsel and Secretary of Board of Directors and Director <br> of Risk Management and Associate General Counsel, Duquesne University. Prior to her work at Duquesne University, <br> Ms. Reilly served as Assistant General Counsel of Compliance and Enterprise Risk as well as Senior Counsel of Environment, <br> Health and Safety, PPG Industries. Ms. Reilly currently serves as a member of the Board of Directors of UPMC <br> Mercy Hospital.<br>|
| **P. Jerome Richey**<br> Birth Date: February 23, 1949<br> Trustee<br> Indefinite Term<br> Began serving: October 2013<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; Retired; formerly, Senior Vice Chancellor <br> and Chief Legal Officer, University of Pittsburgh and Executive Vice President and Chief Legal Officer, CONSOL Energy Inc. <br> (now split into two separate publicly traded companies known as CONSOL Energy Inc. and CNX Resources Corp.).<br> **Other Directorships Held**: None.<br> **Qualifications**: Mr. Richey has served in several business and legal management roles and directorship positions throughout <br> his career. Mr. Richey most recently held the positions of Senior Vice Chancellor and Chief Legal Officer, University of <br> Pittsburgh. Mr. Richey previously served as Chairman of the Board, Epilepsy Foundation of Western Pennsylvania and <br> Chairman of the Board, World Affairs Council of Pittsburgh. Mr. Richey previously served as Chief Legal Officer and Executive <br> Vice President, CONSOL Energy Inc. and CNX Gas Company; and Board Member, Ethics Counsel and Shareholder, Buchanan <br> Ingersoll & Rooney PC (a law firm). <br>|

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Annual Shareholder Report

**25**

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held, Previous Position(s) and Qualifications**<br>|
| **John S. Walsh**<br> Birth Date:<br> November 28, 1957<br> Trustee<br> Indefinite Term<br> Began serving: January 1999<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; President and Director, Heat Wagon, Inc. <br> (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of <br> portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. <br> **Other Directorships Held**: None.<br> **Qualifications**: Mr. Walsh has served in several business management roles and directorship positions throughout his career. <br> Mr. Walsh previously served as Vice President, Walsh & Kelly, Inc. (paving contractors).<br>|

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**OFFICERS** 

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Address**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years**<br> **and Previous Position(s)**<br>|
| **Lori A. Hensler**<br> Birth Date: January 6, 1967<br> TREASURER<br> Officer since: April 2013<br>| &nbsp;&nbsp; **Principal Occupations**: Principal Financial Officer and Treasurer of the Federated Hermes Fund Family; Senior Vice President, <br> Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp.; and Assistant Treasurer, <br> Federated Investors Trust Company. Ms. Hensler has received the Certified Public Accountant designation.<br> **Previous Positions**: Controller of Federated Hermes, Inc.; Senior Vice President and Assistant Treasurer, Federated Investors <br> Management Company; Treasurer, Federated Investors Trust Company; Assistant Treasurer, Federated Administrative <br> Services, Federated Administrative Services, Inc., Federated Securities Corp., Edgewood Services, Inc., Federated Advisory <br> Services Company, Federated Equity Management Company of Pennsylvania, Federated Global Investment Management <br> Corp., Federated Investment Counseling, Federated Investment Management Company, Passport Research, Ltd., and <br> Federated MDTA, LLC; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and <br> Southpointe Distribution Services, Inc.<br>|
| **Peter J. Germain**<br> Birth Date:<br> September 3, 1959<br> CHIEF LEGAL OFFICER, <br> SECRETARY and EXECUTIVE <br> VICE PRESIDENT<br> Officer since: January 2005<br>| &nbsp;&nbsp; **Principal Occupations**: Mr. Germain is Chief Legal Officer, Secretary and Executive Vice President of the Federated Hermes <br> Fund Family. He is General Counsel, Chief Legal Officer, Secretary and Executive Vice President, Federated Hermes, Inc.; <br> Trustee and Senior Vice President, Federated Investors Management Company; Trustee and President, Federated <br> Administrative Services; Director and President, Federated Administrative Services, Inc.; Director and Vice President, <br> Federated Securities Corp.; Director and Secretary, Federated Private Asset Management, Inc.; Secretary, Federated <br> Shareholder Services Company; and Secretary, Retirement Plan Service Company of America. Mr. Germain joined Federated <br> Hermes, Inc. in 1984 and is a member of the Pennsylvania Bar Association.<br> **Previous Positions**: Deputy General Counsel, Special Counsel, Managing Director of Mutual Fund Services, Federated <br> Hermes, Inc.; Senior Vice President, Federated Services Company; and Senior Corporate Counsel, Federated Hermes, Inc.<br>|
| **John B. Fisher**<br> Birth Date: May 16, 1956<br> PRESIDENT<br> Officer since: November 2004<br>| &nbsp;&nbsp; **Principal Occupations**: Principal Executive Officer and President of certain of the Funds in the Federated Hermes Fund <br> Family; Director or Trustee of certain of the Funds in the Federated Hermes Fund Family; Director and Vice President, <br> Federated Hermes, Inc.; President, Director/Trustee and CEO, Federated Advisory Services Company, Federated Equity <br> Management Company of Pennsylvania, Federated Global Investment Management Corp., Federated Investment Counseling, <br> Federated Investment Management Company, and Federated MDTA LLC; Director, Federated Investors Trust Company.<br> **Previous Positions**: President and Director of the Institutional Sales Division of Federated Securities Corp.; President and <br> CEO of Passport Research, Ltd.; Director and President, Technology, Federated Services Company.<br>|
| **Stephen Van Meter**<br> Birth Date: June 5, 1975<br> CHIEF COMPLIANCE OFFICER <br> AND SENIOR VICE PRESIDENT<br> Officer since: July 2015<br>| &nbsp;&nbsp; **Principal Occupations**: Senior Vice President and Chief Compliance Officer of the Federated Hermes Fund Family; Vice <br> President and Chief Compliance Officer of Federated Hermes, Inc. and Chief Compliance Officer of certain of its subsidiaries. <br> Mr. Van Meter joined Federated Hermes, Inc. in October 2011. He holds FINRA licenses under Series 3, 7, 24 and 66. <br> **Previous Positions**: Mr. Van Meter previously held the position of Compliance Operating Officer, Federated Hermes, Inc. <br> Prior to joining Federated Hermes, Inc., Mr. Van Meter served at the United States Securities and Exchange Commission in <br> the positions of Senior Counsel, Office of Chief Counsel, Division of Investment Management and Senior Counsel, Division <br> of Enforcement.<br>|
| **Stephen F. Auth**<br> Birth Date: <br> September 13, 1956<br> 101 Park Avenue<br> 41<sup>st</sup> Floor<br> New York, NY 10178<br> CHIEF INVESTMENT OFFICER<br> Officer since: November 2002<br>| &nbsp;&nbsp; **Principal Occupations**: Stephen F. Auth is Chief Investment Officer of various Funds in the Federated Hermes Fund Family; <br> Executive Vice President, Federated Investment Counseling, Federated Global Investment Management Corp. and Federated <br> Equity Management Company of Pennsylvania.<br> **Previous Positions**: Executive Vice President, Federated Investment Management Company and Passport Research, Ltd. <br> (investment advisory subsidiary of Federated); Senior Vice President, Global Portfolio Management Services Division; Senior <br> Vice President, Federated Investment Management Company and Passport Research, Ltd.; Senior Managing Director and <br> Portfolio Manager, Prudential Investments.<br>|
| **Robert J. Ostrowski**<br> Birth Date: April 26, 1963<br> Chief Investment Officer<br> Officer since: May 2004<br>| &nbsp;&nbsp; **Principal Occupations**: Robert J. Ostrowski joined Federated Hermes, Inc. in 1987 as an Investment Analyst and became a <br> Portfolio Manager in 1990. He was named Chief Investment Officer of Federated Hermes' taxable fixed-income products in <br> 2004 and also serves as a Senior Portfolio Manager. Mr. Ostrowski became an Executive Vice President of the Fund's Adviser <br> in 2009 and served as a Senior Vice President of the Fund's Adviser from 1997 to 2009. Mr. Ostrowski has received the <br> Chartered Financial Analyst designation. He received his M.S. in Industrial Administration from Carnegie Mellon University.<br>|

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Address**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years**<br> **and Previous Position(s)**<br>|
| **Deborah A. Cunningham**<br> Birth Date:<br> September 15, 1959<br> Chief Investment Officer<br> Officer since: June 2012<br>| &nbsp;&nbsp; **Principal Occupations**: Deborah A. Cunningham was named Chief Investment Officer of Federated Hermes' money market <br> products in 2004. She joined Federated Hermes in 1981 and has been a Senior Portfolio Manager since 1997 <br> and an Executive Vice President of the Fund's Adviser since 2009. Ms. Cunningham has received the Chartered Financial <br> Analyst designation and holds an M.S.B.A. in Finance from Robert Morris College.<br>|

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Evaluation and Approval of Advisory Contract–May 2022

**Federated Hermes Kaufmann Fund II (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 Equity Management Company of Pennsylvania (the "Adviser") and the investment subadvisory contract between the Adviser and Federated Global Investment Management Corp. (the "Sub-Adviser" and together with the Adviser, the "Advisers") with respect to the Fund (together, the "Contracts") for an additional one-year term. The Board's determination to approve the continuation of the Contracts 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 arrangements. The information, factors and conclusions that formed the basis for the Board's approval are summarized below.

***<u>Information Received and Review Process</u>***

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 Contracts. 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 Contracts 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 Advisers and their 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 reasonably necessary to evaluate the Contracts, 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 Contracts 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 Advisers and their affiliates; Federated Hermes' business and operations; the Advisers' 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 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 Contracts. 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

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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 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 Contracts 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 Contracts. 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 Contracts, 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 Contracts 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 Contracts. 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 Contracts 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.

***<u>Nature, Extent and Quality of Services</u>***

The Board considered the nature, extent and quality of the services provided to the Fund by the Advisers and the resources of Federated Hermes dedicated to the Fund. In this regard, the Board evaluated, among other things, the terms of the Contracts and the range of services provided to the Fund by Federated Hermes. The Board considered the Advisers' 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. The Board also considered the Advisers' 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 Advisers are executing the Fund's investment program.

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 Federated Hermes' oversight of the securities lending program for the Federated Hermes Funds that engage in securities lending and noted the income earned by the Federated Hermes Funds that participate in such program. In addition, 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.

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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 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 Advisers to the Fund.

***<u>Fund Investment Performance</u>***

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 Advisers' analysis of, the Fund's performance over different time periods that were 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 Morningstar, Inc. (the "Morningstar"), 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 Advisers 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. In this connection, the Board considered that the longevity and experience of the Fund's portfolio management team and its extensive bottom-up approach to investing may limit the utility of comparisons to other equity mutual funds.

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 Advisers and recognized the efforts being taken by the Advisers in the context of other factors considered relevant by the Board.

Based on these considerations, the Board concluded that it had continued confidence in the Advisers' overall capabilities to manage the Fund.

***<u>Fund Expenses</u>***

The Board considered the advisory fee, sub-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, 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

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from the category of peer funds selected by Morningstar (the "Expense Peer Group"). The Board received a description of the methodology used to select the Expense Peer Group from the overall Morningstar category. The Board also reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall Morningstar 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 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, and other expenses of the Fund and noted the position of the Fund's contractual advisory fee rate and other expenses 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 any of the Advisers or their 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.

***<u>Profitability</u>***

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 Contracts 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 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.

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***<u>Economies of Scale</u>***

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 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.

***<u>Other Benefits</u>***

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.

***<u>Conclusions</u>***

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 Contracts 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 Contracts. The Board based its determination to approve the Contracts 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 Contracts reflects its view that Federated Hermes' performance and actions provided a satisfactory basis to support the determination to approve the continuation of the existing arrangements.

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Liquidity Risk Management Program– <br>Annual Evaluation of Adequacy and Effectiveness

In accordance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), Federated Hermes Insurance Series (the "Trust") has adopted and implemented a liquidity risk management program (the "Program") for Federated Hermes Kaufmann Fund II (the "Fund" and, collectively with the other non-money market open-end funds advised by Federated Hermes, the "Federated Hermes Funds"). The Program seeks to assess and manage the Fund's liquidity risk. "Liquidity risk" is defined under the Liquidity Rule as the risk that the Fund is unable to meet redemption requests without significantly diluting remaining investors' interests in the Fund. The Board of Trustees of the Trust (the "Board") has approved the designation of each Federated Hermes Fund's investment adviser as the administrator for the Program (the "Administrator") with respect to that Fund. The Administrator, in turn, has delegated day-to-day responsibility for the administration of the Program to multiple Liquidity Risk Management Committees, which are comprised of representatives from certain divisions within Federated Hermes.

The Program is comprised of various components designed to support the assessment and/or management of liquidity risk, including: (1) the periodic assessment (no less frequently than annually) of certain factors that influence the Fund's liquidity risk; (2) the periodic classification (no less frequently than monthly) of the Fund's investments into one of four liquidity categories that reflect an estimate of their liquidity under current market conditions; (3) a 15% limit on the acquisition of "illiquid investments" (as defined under the Liquidity Rule); (4) to the extent a Fund does not invest primarily in "highly liquid investments" (as defined under the Liquidity Rule), the determination of a minimum percentage of the Fund's assets that generally will be invested in highly liquid investments (an "HLIM"); (5) if a Fund has established an HLIM, the periodic review (no less frequently than annually) of the HLIM and the adoption of policies and procedures for responding to a shortfall of the Fund's highly liquid investments below its HLIM; and (6) periodic reporting to the Board.

At its meetings in May 2022, the Board received and reviewed a written report (the "Report") from the Federated Hermes Funds' Chief Compliance Officer and Chief Risk Officer, on behalf of the Administrator, concerning the operation of the Program for the period from April 1, 2021 through March 31, 2022 (the "Period"). The Report addressed the operation of the Program and assessed its adequacy and effectiveness, including, where applicable, the operation of any HLIM established for a Federated Hermes Fund and each Federated Hermes Fund's access to other available funding sources such as the Federated Hermes Funds' interfund lending facility, redemptions in-kind, reverse repurchase agreement transactions, redemptions delayed beyond the normal T+1 settlement, but within seven days of the redemption request, and committed lines of credit. There were no material changes to the Program during the Period. The Report summarized the operation of the Program and the information and factors considered by the Administrator in assessing whether the Program has been adequately and effectively implemented with respect to the Federated Hermes Funds. Such information and factors included, among other things:

◾ confirmation that it was not necessary for the Fund to utilize, and the Fund did not utilize, alternative funding sources during the Period;

◾ the periodic classifications of the Fund's investments into one of four liquidity categories and the methodologies and inputs used to classify the investments, including the Fund's reasonably anticipated trade size;

◾ the analysis received from a third-party liquidity assessment vendor that is taken into account in the process of determining the liquidity classifications of the Fund's investments and the results of an evaluation of the services performed by the vendor in support of this process;

◾ the fact that the Fund invested primarily in highly liquid investments during the Period and, therefore, was not required to establish, and has not established, an HLIM and the procedures for monitoring the status of the Fund as investing primarily in highly liquid investments;

◾ the fact that the Fund invested no more than 15% of its assets in illiquid investments during the Period and the procedures for monitoring this limit;

◾ the fact that there were no liquidity events during the Period, that materially affected the Fund's liquidity risk;

◾ the impact on liquidity and management of liquidity risk caused by extended non-U.S. market closures and confirmation that there were no issues for any of the affected Federated Hermes Funds in meeting shareholder redemptions at any time during these temporary non-U.S. market closures;

◾ circumstances during the Period under which the Administrator convened meetings of the Liquidity Risk Management Committees more frequently than normal to conduct enhanced liquidity risk monitoring, including prior to the Russian invasion of Ukraine.

Based on this review, the Administrator concluded that the Program is operating effectively to assess and manage the Fund's liquidity risk, and that the Program has been and continues to be adequately and effectively implemented to monitor and, as applicable, respond to the Fund's liquidity developments.

Annual Shareholder Report

**33**

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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.

Quarterly Portfolio Schedule

Each fiscal quarter, the Fund will file with the SEC a complete schedule of its monthly portfolio holdings on "Form N-PORT." The Fund's holdings as of the end of the third month of every fiscal quarter, as reported on Form N-PORT, will be publicly available on the SEC's website at sec.gov within 60 days of the end of the fiscal quarter upon filing. You may also access this information via the link to the Fund and share class name at FederatedInvestors.com.

Annual Shareholder Report

**34**

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*Variable investment options are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in variable investment options involves investment risk, including the possible loss of principal.*

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.

![](fhilogok11p.jpg)

Federated Hermes Kaufmann Fund II <br>Federated Hermes Funds <br>4000 Ericsson Drive <br>Warrendale, PA 15086-7561

Contact us at **FederatedInvestors.com** <br>or call 1-800-341-7400.

Federated Securities Corp., Distributor

*CUSIP 313916827* <br>*CUSIP 313916777*

*28136 (2/23)*© 2023 Federated Hermes, Inc.

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**Annual Shareholder Report**

***December 31, 2022***

![](img7809a6741.gif)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | | |
|:---|:---|:---|
| **Share Class** | **Primary**  | **Service**  |

---

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Federated Hermes Managed Volatility Fund II

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A Portfolio of Federated Hermes Insurance Series

Dear Valued Shareholder,

We are pleased to present the Annual Shareholder Report for your fund covering the period from January 1, 2022 through December 31, 2022. This report includes Management's Discussion of Fund Performance, 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, <br> ![](fisherjohnsigsmall.jpg)

John B. Fisher, President

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**Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee**

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**CONTENTS** 

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| | |
|:---|:---|
| [Management's Discussion of Fund Performance](#xx_160fcbae-2d38-4a6c-9e7b-fbfd37578cb6_1) | &nbsp;&nbsp; [1](#xx_160fcbae-2d38-4a6c-9e7b-fbfd37578cb6_1)  |
| [Portfolio of Investments Summary Tables](#xx_83c362f5-23f0-40d0-aa44-815b411ed942_1) | &nbsp;&nbsp; [6](#xx_83c362f5-23f0-40d0-aa44-815b411ed942_1)  |
| [Portfolio of Investments](#xx_83c362f5-23f0-40d0-aa44-815b411ed942_2) | &nbsp;&nbsp; [7](#xx_83c362f5-23f0-40d0-aa44-815b411ed942_2)  |
| [Financial Highlights](#xx_59646fb5-8f8f-4157-9099-94c597c368e2_1) | [22](#xx_59646fb5-8f8f-4157-9099-94c597c368e2_1)  |
| [Statement of Assets and Liabilities](#xx_2ce73bf4-9736-4c18-90b2-10ba097dbdfb_1) | [24](#xx_2ce73bf4-9736-4c18-90b2-10ba097dbdfb_1)  |
| [Statement of Operations](#xx_2ce73bf4-9736-4c18-90b2-10ba097dbdfb_2) | [25](#xx_2ce73bf4-9736-4c18-90b2-10ba097dbdfb_2)  |
| [Statement of Changes in Net Assets](#xx_2ce73bf4-9736-4c18-90b2-10ba097dbdfb_3) | [26](#xx_2ce73bf4-9736-4c18-90b2-10ba097dbdfb_3)  |
| [Notes to Financial Statements](#xx_579cc135-e8f6-434d-b9ef-2bb0b42c62a5_1) | [27](#xx_579cc135-e8f6-434d-b9ef-2bb0b42c62a5_1)  |
| [Report of Independent Registered Public Accounting Firm](#xx_32a94efc-a008-469d-ad9f-d52d8a296095_1) | [34](#xx_32a94efc-a008-469d-ad9f-d52d8a296095_1)  |
| [Shareholder Expense Example](#xx_b22a46d4-92a6-400a-8776-1f48b5d87581_1) | [35](#xx_b22a46d4-92a6-400a-8776-1f48b5d87581_1)  |
| [Board of Trustees and Trust Officers](#xx_dc303335-2748-4f52-9819-a297fd94720f_1) | [36](#xx_dc303335-2748-4f52-9819-a297fd94720f_1)  |
| [Evaluation and Approval of Advisory Contract](#xx_94430827-5013-4009-aa3f-3f62c73811fa_1) | [40](#xx_94430827-5013-4009-aa3f-3f62c73811fa_1)  |
| [Liquidity Risk Management Program](#xx_fc1e0232-de6f-44a5-82a8-95f3d3896845_1)[–](#xx_fc1e0232-de6f-44a5-82a8-95f3d3896845_1)<br> [Annual Evaluation of Adequacy and Effectiveness](#xx_fc1e0232-de6f-44a5-82a8-95f3d3896845_1)<br>| [46](#xx_fc1e0232-de6f-44a5-82a8-95f3d3896845_1)  |
| [Voting Proxies on Fund Portfolio Securities](#xx_022d1163-ea89-4041-b503-fc24f6cb8b3a_1) | [47](#xx_022d1163-ea89-4041-b503-fc24f6cb8b3a_1)  |
| [Quarterly Portfolio Schedule](#xx_022d1163-ea89-4041-b503-fc24f6cb8b3a_1) | [47](#xx_022d1163-ea89-4041-b503-fc24f6cb8b3a_1) |

---

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Management's Discussion of Fund Performance (unaudited)

The total return of Federated Hermes Managed Volatility Fund II (the "Fund"), based on net asset value for the 12-month reporting period ended December 31, 2022, was -13.75% for the Primary Shares and -14.00% for the Service Shares. For the same period, the Standard & Poor's 500 Index (S&P 500)<sup>1</sup> returned -18.11%, the Russell 1000<sup>®</sup> Value Index (R1000V) returned -7.54%, and the Bloomberg U.S. Aggregate Bond Index (BAB) returned -13.01%. Weighting these benchmarks (40% R1000V, 60% BAB) with daily rebalancing, the Fund's custom benchmark (the "Blended Index")<sup>2</sup> return for the period was -10.57%. The total return of the Morningstar US Insurance Tactical Allocation Funds Average (MUITA)<sup>3</sup>, a peer group average for the Fund, was -13.81% during the same period. The Fund's and the MUITA's total returns for the most recently completed fiscal year reflected actual cash flows, transaction costs and expenses, which are not reflected in the total return of the Blended Index.

The Fund's investment strategy focused on income-earning investments, specifically equity and fixed-income<sup>4</sup> securities that have high income potential, and managing the realized volatility of the overall portfolio through: (1) derivatives; (2) sector and security selection for bonds, and; (3) sector and security selection for equities. These are the factors that most affected Fund performance relative to the Blended Index in the period. These factors were used in pursuit of the Fund objectives of high current income and moderate capital appreciation, while managing the volatility of the overall portfolio.

The following discussion will focus on the performance of the Fund's Primary Shares relative to the Blended Index.

**MARKET OVERVIEW**

The reporting period was defined by global central bankers raising interest rates, which pushed the prices of most asset classes, including stocks and bonds, lower. The first three quarters of 2022 were characterized by negative returns for both stocks and bonds as well as heightened volatility of both asset classes. There was some relief in the fourth quarter of 2022 as some market participants perceived that the central banks' work in raising rates was nearing an end. In the fourth quarter, stocks and bonds produced their first positive return quarter of the year, and volatility was somewhat reduced, particularly for stocks.

Large amounts of fiscal stimulus in the U.S. and large amounts of fiscal and monetary stimulus in China drove solid credit growth in the world's two largest countries. In the U.S., the labor market was very strong in terms of both low unemployment and wage gains. The services side of the U.S. economy was resilient to the Federal Reserve (the "Fed") monetary tightening, whereas the manufacturing side of the economy decelerated notably during the period.

On the bond side, the total return of -13.01% for 2022 was the worst total return in BAB history, far worse than the previous record low of -2.92% in 1994. Significantly higher U.S. Treasury rates across the curve and wider credit spreads drove the negative returns in the year. Despite the Consumer Price Index ending 2021 at a decade high 6.8%, the Fed was slow to recognize the persistency of inflation in the U.S. Once the Fed acknowledged the increase in inflation was no longer transitory, the Fed accelerated the taper of its asset purchase program to end in March and began an aggressive Fed Funds hiking cycle. Specifically, the Fed initially raised the Fed Funds target rate by 25 basis points (bps) in March, but quickly accelerated rate hikes to include four successive 75 bps hikes. In 2022, the Fed Funds target rate increased by 425 bps from 0% - 0.25% at the start of the reporting period to 4.25% - 4.50% at the end of the reporting period. In addition, the Fed began reducing the size of its balance sheet by $47.5 billion a month in June and increased to the monthly reduction cap to $95 billion in September. The Fed was not the only central bank fighting inflation in 2022, and higher global rates also put upward pressure on U.S. rates. Against this backdrop of higher inflation and tighter monetary policy, U.S. Treasury rates were up materially across the curve. The yield-to-maturity on the Bloomberg U.S. Treasury Index<sup>5</sup> began the year at 1.23% and ended the year at 4.18%. The U.S. Treasury curve "bear flattened" in 2022 with short-term rates up more than longer-term rates and ended the year "inverted" with short-term rates higher than longer-term rates. The increase in U.S. Treasury rates led to negative total returns for all major U.S. fixed income markets in 2022. The Bloomberg U.S. Treasury Index 2022 total return was -12.46%, compared to the Bloomberg High Yield Index total return of -11.18%, the Bloomberg Emerging Markets USD Aggregate Index<sup>6</sup> total return of -15.26%, the Bloomberg U.S. Corporate Investment Grade Index<sup>7</sup> of -15.76% and the Bloomberg MBS Index<sup>8</sup> of -11.81%.

On the equity side, 2022 was the largest down year since 2008, with the Russell 1000<sup>®</sup> Index<sup>9</sup> total return of -19.13%. Perhaps the most notable skew to U.S. equities in 2022 was the relative outperformance of value versus growth as interest rates surged higher. The total returns of the R1000V and Russell 1000 Growth indices for the year were -7.54% and -29.14%, respectively. In terms of sectors, the top performing equity sectors were Energy, Utilities and Health Care, while the worst performing sectors were Information Technology and Communications Services.

Annual Shareholder Report

**1**

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**DERIVATIVES**<sup>10</sup>

During the reporting period, the Fund invested in S&P 500 futures contracts (SP5FUT) for volatility risk management purposes. The goal of all SP5FUT trades was to attempt to achieve a realized Fund annualized volatility of returns of 10%. The actual realized volatility of daily returns for the Fund for the reporting period was 10.35%, near the middle of the target range of 8% to 12%. To achieve this, the Fund was long SP5FUT for most of the reporting period, with an average, minimum and maximum weight of 7%, -16% and 44%, respectively. The decrease in the 2022 Fund return relative to the Blended Index due to the SP5FUT holdings was -8.21% (gross of fees). This was the largest factor affecting Fund performance relative to the Blended Index.

Also, during the reporting period, the Fund invested in S&P 500 equity put options (SP5EPO) for volatility risk management purposes. Fund management deemed the market environment for most of the reporting period to be favorable for being long (owning) SP5EPO securities, and these securities served as a partial hedge/offset against the SP5FUT holdings mentioned above. Fund management was active in trading the SP5EPO holdings, attempting to buy when the implied volatilities were relatively low and sell after the SP5EPO holdings went into the money. This strategy was generally successful during the reporting period. The increase in the 2022 Fund return relative to the Blended Index due to the SP5EPO holdings was 3.10% (gross of fees). This was the second largest factor affecting Fund performance relative to the Blended Index.

Also, during the reporting period, the Fund invested in U.S. Treasury Note Futures (USTFUT). The primary usage of the USTFUT holdings was to express Fund management's duration<sup>11</sup> view in relation to the Blended Index. In the reporting period, fund management expressed the view that interest rates would shift up, which turned out to be correct. The secondary usage category of the USTFUT holdings was to express yield curve twist bets relative to the Blended Index. Yield curve<sup>12</sup> twists pertains to changes over time in the shape of the U.S. Treasury yield curve, either "flatter" or "steeper." The USTFUT active strategies were generally successful during the reporting period. The increase in the 2022 Fund return relative to its benchmark due to the USTFUT duration views was 2.40% (gross of fees), a portion of which is discussed in the Sector and Security Selection—Bonds section below. This was the third largest factor affecting Fund performance relative to its benchmark. The impact to fund performance relative to the benchmark for the USTFUT yield curve views was not material in the reporting period.

**SECTOR AND SECURITY SELECTION–bonds**

For the 12 months ended December 31, 2022, the fixed income component of the Fund outperformed the return of its benchmark, the BAB. The fixed income portfolio's duration during the year averaged 92% of its benchmark, resulting in the largest positive contribution to performance in a rising rate environment. Security selection in investment-grade<sup>13</sup> corporates, agency mortgage-backed securities (MBS) and emerging market credits were negative contributors to performance. Sector allocation was a negative contributor to the fund's fixed income performance in 2022 due primarily to the allocations to high yield,<sup>14</sup> bank loans and trade finance loans which more than offset the positive contribution from tactical over-weights during the year to the agency MBS sector.

**SECTOR SELECTION–equitieS**

The equity component of the Fund contributed to the Fund's current income objective and outperformed the R1000V during the reporting period. Fund management focused on realization of the Fund's income and total return objectives by purchasing and holding benchmark securities with favorable forward return prospects based on our quantitative framework. Relative to the equity component of the blended index, the main positive contributor to Fund performance was stock selection. This stock selection was helped by holdings in the Health Care, Information Technology and Financials sectors and hindered by holdings in the Communications Services sector.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Please see the footnotes to the line graph under "Fund Performance and Growth of a $10,000 Investment" below for the definition of, and more information about, the S&P 500 Index.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Please see the footnotes to the line graph under "Fund Performance and Growth of a $10,000 Investment" below for the definition of, and more information about, the Blended Index.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Please see the footnotes to the line graphs below for definitions of, and further information about, the Morningstar peer group average.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Bond prices are sensitive to changes in interest rates and a rise in interest rates can cause a decline in their prices.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The Bloomberg U.S. Treasury Index measures U.S dollar-denominated, fixed-rate, nominal debt issued by the U.S. Treasury.\**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The Bloomberg Emerging Markets USD Aggregate Index tracks total returns for external-currency-denominated debt instruments of the emerging markets.\**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The Bloomberg U.S. Corporate Investment Grade Index measures the investment-grade, fixed-rate, taxable corporate bond market. It includes USD-denominated securities publicly issued by U.S. and non-U.S. industrial, utility and financial issuers.\**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The Bloomberg MBS Index covers agency mortgage-backed pass-through securities (both fixed-rate and hybrid ARM) issued by Ginnie Mae, Fannie Mae and Freddie Mac.\**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The Russell 1000*<sup>®</sup> *Index measures the performance of the large-cap segment of the U.S. equity universe. It includes approximately 1000 of the largest securities based on a combination of their market cap and current index membership.\**

Annual Shareholder Report

**2**

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10 *The Fund's use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities or other traditional instruments.*

11 *Duration is a measure of a security's price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter durations.*

12 *The yield curve is a graph showing the comparative yields of securities in a particular class according to maturity. Securities on the long end of the yield curve have longer maturities.*

13 *Investment-grade securities are securities that are rated at least "BBB- (minus)" or unrated securities of a comparable quality. Noninvestment-grade securities are securities that are not rated at least "BBB- (minus)" or unrated securities of a comparable quality. Credit ratings are an indication of the risk that a security will default. They do not protect a security from credit risk. Lower-rated bonds typically offer higher yields to help compensate investors for the increased risk associated with them. Among these risks are lower credit-worthiness, greater price volatility, more risk to principal and income than with higher-rated securities and increased possibilities of default.*

14 *High-yield, lower-rated securities generally entail greater market, credit and liquidity risks than investment-grade securities and may include higher volatility and a higher risk of default.*

\*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The index is unmanaged, and it is not possible to invest directly in an index.*

Annual Shareholder Report

**3**

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**FUND PERFORMANCE AND GROWTH OF A $10,000 INVESTMENT**

The graph below illustrates the hypothetical investment of $10,000<sup>1</sup> in the Federated Hermes Managed Volatility Fund II (the "Fund") from December 31, 2012 to December 31, 2022, compared to the Standard & Poor's 500 Index (S&P 500),<sup>2,3</sup> the Russell 1000<sup>®</sup> Value Index (R1000V),<sup>3,4</sup> both broad-based securities market indexes, a blend of indexes comprised of 40% R1000V/60% Bloomberg U.S. Aggregate Bond Index (BAB) ("Blended Index"),<sup>3,4</sup> and the Morningstar US Insurance Tactical Allocation Funds Average (MUITA).<sup>5</sup> The Average Annual Total Return table below shows returns averaged over the stated periods.

**GROWTH of a $10,000 Investment**

**Growth of $10,000 as of December 31, 2022** <br> ![](ifmvfarg0084501.jpg)

\*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The performance of the Primary Shares and Service Shares is substantially similar for the time period shown and, therefore, only one line appears in the graph.* 

**Average Annual Total Returns for the Period Ended 12/31/2022** 

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| | | | |
|:---|:---|:---|:---|
|  | **1 Year** | **5 Years** | **10 Years** |
| **Primary Shares** | -13.75% | 2.56% | &nbsp;&nbsp; 5.38% |
| **Service Shares**<sup>6</sup> | -14.00% | 2.34% | &nbsp;&nbsp; 5.26% |
| S&P 500 | -18.11% | 9.43% | 12.56% |
| R1000V | &nbsp;&nbsp; -7.54% | 6.67% | 10.29% |
| Blended Index | -10.57% | 3.05% | &nbsp;&nbsp; 4.95% |
| MUITA | -13.81% | 1.78% | &nbsp;&nbsp; 3.45% |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance of a variable investment option changes over time and current performance may be lower or higher than what is stated. For current to the most recent month end performance, contact your insurance company. The performance information presented does not include the charges and expenses imposed by the insurance company under the variable insurance product contract. The inclusion of such charges would lower performance. Please refer to the variable insurance product prospectus for a complete listing of these expenses. Fund shares are available exclusively as a funding vehicle for life insurance companies writing variable life insurance policies and variable annuity contracts. Variable investment options are not obligations of or guaranteed by any bank and are not federally insured.**

Annual Shareholder Report

**4**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The Fund's performance assumes the reinvestment of all dividends and distributions. The S&P 500, R1000V and the Blended Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The S&P 500 is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The S&P 500, R1000V and the Blended Index are not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission (SEC) requires to be reflected in the Fund's performance. The indexes are unmanaged and, unlike the Fund, are not affected by cash flows. It is not possible to invest directly in an index.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The R1000V measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000*<sup>®</sup> *Index companies with lower price-to-book ratios and lower expected growth values. The R1000V is constructed to provide a comprehensive and unbiased barometer for the large-cap value segment. The R1000V is completely reconstituted annually to ensure new and growing equities are included and that the represented companies continue to reflect value characteristics. The Bloomberg U.S. Aggregate Bond Index measures the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid ARM pass-throughs), asset-backed securities and commercial mortgage-backed securities.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Morningstar figures represent the average of the total returns reported by all the funds designated by Morningstar as falling into the respective category indicated. They do not reflect sales charges. The Morningstar figures in the Growth of a $10,000 Investment line graph are based on historical return information published by Morningstar and reflect the return of the funds comprising the category in the year of publication. Because the funds designated by Morningstar as falling into the category can change over time, the Morningstar figures in the line graph may not match the Morningstar figures in the Average Annual Total Returns table, which reflect the return of the funds that currently comprise the category.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The Fund's Service (S) Class commenced operations on April 26, 2018. For the periods prior to the commencement of operations of the Fund's S class, the performance information shown is for the Fund's Primary (P) class. The performance of the P class has not been adjusted to reflect the expenses applicable to the S class. The total returns of the S class would have been substantially similar to the annual returns for the P class over the same period because the classes are invested in the same portfolio of securities and would differ only to the extent the classes do not have the same expenses. The expenses of the S class are higher than those of the P class; accordingly, the performance of the S class is anticipated to be lower than the performance of the P class.*

Annual Shareholder Report

**5**

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Portfolio of Investments Summary Tables (unaudited)

At December 31, 2022, the Fund's portfolio composition<sup>1</sup> was as follows:

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| | |
|:---|:---|
| **Portfolio Composition** | **Percentage of** <br>**Total Net Assets**<br>|
| Domestic Fixed-Income Securities | 45.8% |
| Domestic Equity Securities | 36.6% |
| International Equity Securities | &nbsp;&nbsp; 2.4% |
| Other<sup>2</sup> <br>| &nbsp;&nbsp; 0.1% |
| Project and Trade Finance Core Fund | &nbsp;&nbsp; 2.0% |
| Federated Hermes High Income Bond Fund II, Class P | &nbsp;&nbsp; 1.6% |
| Emerging Markets Core Fund | &nbsp;&nbsp; 1.4% |
| Bank Loan Core Fund<sup>3</sup> <br>| &nbsp;&nbsp; 0.0% |
| Federated Hermes Short-Intermediate Government Fund, Institutional Shares<sup>3</sup> <br>| &nbsp;&nbsp; 0.0% |
| Cash Equivalents<sup>4</sup> <br>| &nbsp;&nbsp; 9.9% |
| Derivative Contracts<sup>5</sup> <br>| &nbsp;&nbsp; 0.3% |
| Other Assets and Liabilities—Net<sup>6</sup> <br>| (0.1)% |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | **100%** |

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At December 31, 2022, the Fund's sector composition<sup>7</sup> of the Fund's equity holdings was as follows:

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| | |
|:---|:---|
| **Sector Composition** <br>**of Equity Holdings**<br>| **Percentage of** <br>**Equity Securities**<br>|
| Financials | 20.0% |
| Health Care | 17.5% |
| Industrials | 10.7% |
| Energy | &nbsp;&nbsp; 8.6% |
| Information Technology | &nbsp;&nbsp; 8.1% |
| Consumer Staples | &nbsp;&nbsp; 7.4% |
| Communication Services | &nbsp;&nbsp; 7.3% |
| Consumer Discretionary | &nbsp;&nbsp; 6.0% |
| Utilities | &nbsp;&nbsp; 5.8% |
| Real Estate | &nbsp;&nbsp; 4.3% |
| Materials | &nbsp;&nbsp; 4.3% |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | **100%** |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | |
|:---|:---|
| 1 | *See the Fund's Prospectus and Statement of Additional Information for a description of the types of securities in which the Fund invests. As of the date specified* <br> *above, the Fund owned shares of one or more affiliated investment companies. For purposes of this table, affiliated investment companies (other than an* <br> *affiliated money market mutual fund) in which the Fund invested greater than 10% of its net assets are not treated as a single portfolio security, but rather the* <br> *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* <br> *percentages of total net assets shown in the table will differ from those presented on the Portfolio of Investments. Affiliated investment companies (other than an* <br> *affiliated money market mutual fund) in which the Fund invested less than 10% of its net assets are listed individually in the table.*<br>|
| 2 | *Other Security Type consists of purchased put options.* |
| 3 | *Represents less than 0.1%.* |
| 4 | *Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements.* |
| 5 | *Based upon net unrealized appreciation (depreciation) or value of the derivative contracts as applicable. Derivative contracts may consist of futures, forwards,* <br> *options and swaps. The impact of a derivative contract on the Fund's performance may be larger than its unrealized appreciation (depreciation) or value may* <br> *indicate. In many cases, the notional value or amount of a derivative contract may provide a better indication of the contract's significance to the portfolio. More* <br> *complete information regarding the Fund's direct investments in derivative contracts, including unrealized appreciation (depreciation), value and notional values* <br> *or amounts of such contracts, can be found in the table at the end of the Portfolio of Investments included in this Report.*<br>|
| 6 | *Assets, other than investments in securities and derivative contracts, less liabilities. See Statement of Assets and Liabilities.* |
| 7 | *Sector classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification Standard (GICS)* <br> *except that the Co-Advisers assign a classification to securities not classified by the GICS and to securities for which the Co-Advisers do not have access to the* <br> *classification made by the GICS.*<br>|

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Annual Shareholder Report

**6**

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Portfolio of Investments

December 31, 2022

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| | | |
|:---|:---|:---|
| **Shares,** <br>**Principal** <br>**Amount** <br>**or Contracts**<br>|  | **Value** |
|  | COMMON STOCKS—39.0% |  |
|  | **Communication Services—2.8%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5438<br><sup>1</sup> <br>| Alphabet, Inc., Class A | $479795 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3673<br><sup>1</sup> <br>| Alphabet, Inc., Class C | &nbsp;&nbsp; 325905 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1320<br><sup>1</sup> <br>| AMC Entertainment Holdings, Inc. | &nbsp;&nbsp; 5372 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 14447 | AT&T, Inc. | &nbsp;&nbsp; 265969 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6 | Cable One, Inc. | &nbsp;&nbsp; 4271 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 19877 | Comcast Corp., Class A | &nbsp;&nbsp; 695099 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2386 | Electronic Arts, Inc. | &nbsp;&nbsp; 291522 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1169 | Fox Corp | &nbsp;&nbsp; 33258 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 854 | Interpublic Group of Cos., Inc. | &nbsp;&nbsp; 28447 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 332<br><sup>1</sup> <br>| Live Nation Entertainment, Inc. | &nbsp;&nbsp; 23154 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 28432 | Lumen Technologies, Inc. | &nbsp;&nbsp; 148415 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 456<br><sup>1</sup> <br>| Madison Square Garden Sports Corp. | &nbsp;&nbsp; 83598 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6888<br><sup>1</sup> <br>| Meta Platforms, Inc. | &nbsp;&nbsp; 828902 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 393 | Nexstar Media Group, Inc., Class A | &nbsp;&nbsp; 68787 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 621<br><sup>1</sup> <br>| Pinterest, Inc. | &nbsp;&nbsp; 15078 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3124<br><sup>1</sup> <br>| Playtika Holding Corp. | &nbsp;&nbsp; 26585 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2489<br><sup>1</sup> <br>| T-Mobile USA, Inc. | &nbsp;&nbsp; 348460 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6546<br><sup>1</sup> <br>| TripAdvisor, Inc. | &nbsp;&nbsp; 117697 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 16268 | Verizon Communications, Inc. | &nbsp;&nbsp; 640959 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6046 | Walt Disney Co. | &nbsp;&nbsp; 525277 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 4956550 |
|  | **Consumer Discretionary—2.3%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 30 | ADT, Inc. | &nbsp;&nbsp; 272 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2565<br><sup>1</sup> <br>| Aptiv PLC | &nbsp;&nbsp; 238878 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 108<br><sup>1</sup> <br>| AutoZone, Inc. | &nbsp;&nbsp; 266347 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 366 | Best Buy Co., Inc. | &nbsp;&nbsp; 29357 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 868<br><sup>1</sup> <br>| Bright Horizons Family Solutions, Inc. | &nbsp;&nbsp; 54771 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 275 | Domino's Pizza, Inc. | &nbsp;&nbsp; 95260 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 44<br><sup>1</sup> <br>| DoorDash, Inc. | &nbsp;&nbsp; 2148 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6824 | eBay, Inc. | &nbsp;&nbsp; 282991 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 10133 | Ford Motor Co. | &nbsp;&nbsp; 117847 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 41 | General Motors Co. | &nbsp;&nbsp; 1379 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1334 | Genuine Parts Co. | &nbsp;&nbsp; 231462 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2199<br><sup>1</sup> <br>| Grand Canyon Education, Inc. | &nbsp;&nbsp; 232346 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 559 | Home Depot, Inc. | &nbsp;&nbsp; 176566 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 316 | Lear Corp. | &nbsp;&nbsp; 39190 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1155 | LKQ Corp. | &nbsp;&nbsp; 61689 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 548 | Lowe's Cos., Inc. | &nbsp;&nbsp; 109183 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3764 | Macy's, Inc. | &nbsp;&nbsp; 77727 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2675 | McDonald's Corp. | &nbsp;&nbsp; 704943 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 255<br><sup>1</sup> <br>| O'Reilly Automotive, Inc. | &nbsp;&nbsp; 215228 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1788 | PVH Corp. | &nbsp;&nbsp; 126215 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7685<br><sup>1</sup> <br>| Rivian Automotive, Inc. | &nbsp;&nbsp; 141634 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 90<br><sup>1</sup> <br>| Royal Caribbean Cruises, Ltd. | &nbsp;&nbsp; 4449 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 170 | Starbucks Corp. | &nbsp;&nbsp; 16864 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7107 | Tapestry, Inc. | &nbsp;&nbsp; 270635 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 668 | Target Corp. | &nbsp;&nbsp; 99559 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 452 | Toll Brothers, Inc. | &nbsp;&nbsp; 22564 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7945<br><sup>1</sup> <br>| Under Armour, Inc., Class A | &nbsp;&nbsp; 80721 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1734<br><sup>1</sup> <br>| Under Armour, Inc., Class C | &nbsp;&nbsp; 15467 |

---

Annual Shareholder Report

**7**

------

---

| | | |
|:---|:---|:---|
| **Shares,**<br> **Principal**<br> **Amount**<br> **or Contracts**<br>|  | **Value** |
|  | COMMON STOCKS—continued |  |
|  | **Consumer Discretionary—continued** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 95 | Vail Resorts, Inc. | $22643 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 660 | Whirlpool Corp. | &nbsp;&nbsp; 93364 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1518 | Wyndham Hotels & Resorts, Inc. | &nbsp;&nbsp; 108249 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1018 | Yum! Brands, Inc. | &nbsp;&nbsp; 130385 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 4070333 |
|  | **Consumer Staples—2.9%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 13 | Albertsons Cos., Inc. | &nbsp;&nbsp; 269 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 13883 | Altria Group, Inc. | &nbsp;&nbsp; 634592 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3242 | Archer-Daniels-Midland Co. | &nbsp;&nbsp; 301020 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 864 | Casey's General Stores, Inc. | &nbsp;&nbsp; 193838 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1520 | Hershey Foods Corp. | &nbsp;&nbsp; 351986 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9 | Kimberly-Clark Corp. | &nbsp;&nbsp; 1222 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 260 | Kraft Heinz Co./The | &nbsp;&nbsp; 10584 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9602 | Kroger Co. | &nbsp;&nbsp; 428057 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3661 | Mondelez International, Inc. | &nbsp;&nbsp; 244006 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2059 | PepsiCo, Inc. | &nbsp;&nbsp; 371979 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4943 | Philip Morris International, Inc. | &nbsp;&nbsp; 500281 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6819 | Procter & Gamble Co. | &nbsp;&nbsp; 1033488 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 8644 | The Coca-Cola Co. | &nbsp;&nbsp; 549845 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 75 | Tyson Foods, Inc., Class A | &nbsp;&nbsp; 4669 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2992 | WalMart, Inc. | &nbsp;&nbsp; 424236 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 5050072 |
|  | **Energy—3.4%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5252 | APA Corp. | &nbsp;&nbsp; 245163 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2501 | Cheniere Energy, Inc. | &nbsp;&nbsp; 375050 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5959 | Chevron Corp. | &nbsp;&nbsp; 1069581 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7350 | ConocoPhillips | &nbsp;&nbsp; 867300 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3503 | EQT Corp. | &nbsp;&nbsp; 118507 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 16031 | Exxon Mobil Corp. | &nbsp;&nbsp; 1768219 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 80769<br><sup>1</sup> <br>| Ithaca Energy PLC | &nbsp;&nbsp; 178594 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5427 | Kinder Morgan, Inc. | &nbsp;&nbsp; 98120 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 14083 | Marathon Oil Corp. | &nbsp;&nbsp; 381227 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2121 | Marathon Petroleum Corp. | &nbsp;&nbsp; 246863 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1116 | Occidental Petroleum Corp. | &nbsp;&nbsp; 70297 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1952 | ONEOK, Inc. | &nbsp;&nbsp; 128246 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3895 | Schlumberger Ltd. | &nbsp;&nbsp; 208227 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 965 | Valero Energy Corp. | &nbsp;&nbsp; 122420 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 5877814 |
|  | **Financials—7.8%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2335 | Affiliated Managers Group | &nbsp;&nbsp; 369934 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 352 | Allstate Corp. | &nbsp;&nbsp; 47731 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9742 | Ally Financial, Inc. | &nbsp;&nbsp; 238192 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 687 | American Express Co. | &nbsp;&nbsp; 101504 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1023 | American Financial Group, Inc. | &nbsp;&nbsp; 140438 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 8248 | American International Group, Inc. | &nbsp;&nbsp; 521604 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 839 | Ameriprise Financial, Inc. | &nbsp;&nbsp; 261239 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5790 | Annaly Capital Management, Inc. | &nbsp;&nbsp; 122053 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5130 | Axis Capital Holdings Ltd. | &nbsp;&nbsp; 277892 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 21409 | Bank of America Corp. | &nbsp;&nbsp; 709066 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7861 | Bank of New York Mellon Corp. | &nbsp;&nbsp; 357833 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5678<br><sup>1</sup> <br>| Berkshire Hathaway, Inc., Class B | &nbsp;&nbsp; 1753934 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 267 | BlackRock, Inc. | &nbsp;&nbsp; 189204 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 827<br><sup>1</sup> <br>| Brighthouse Financial, Inc. | &nbsp;&nbsp; 42400 |

---

Annual Shareholder Report

**8**

------

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| | | |
|:---|:---|:---|
| **Shares,**<br> **Principal**<br> **Amount**<br> **or Contracts**<br>|  | **Value** |
|  | COMMON STOCKS—continued |  |
|  | **Financials—continued** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 516 | Capital One Financial Corp. | $47967 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1358 | Charles Schwab Corp. | &nbsp;&nbsp; 113067 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3067 | Chubb Ltd. | &nbsp;&nbsp; 676580 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 12732 | Citigroup, Inc. | &nbsp;&nbsp; 575868 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1269 | CME Group, Inc. | &nbsp;&nbsp; 213395 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1984 | Discover Financial Services | &nbsp;&nbsp; 194095 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 618 | East West Bancorp, Inc. | &nbsp;&nbsp; 40726 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 12989 | Equitable Holdings, Inc. | &nbsp;&nbsp; 372784 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1268 | Goldman Sachs Group, Inc. | &nbsp;&nbsp; 435406 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3516 | Hartford Financial Services Group, Inc. | &nbsp;&nbsp; 266618 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 10311 | JPMorgan Chase & Co. | &nbsp;&nbsp; 1382705 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9050 | KeyCorp | &nbsp;&nbsp; 157651 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3434 | Lincoln National Corp. | &nbsp;&nbsp; 105493 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1180 | MetLife, Inc. | &nbsp;&nbsp; 85397 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7402 | MGIC Investment Corp. | &nbsp;&nbsp; 96226 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2234 | Morgan Stanley | &nbsp;&nbsp; 189935 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4794 | OneMain Holdings, Inc. | &nbsp;&nbsp; 159688 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5627 | Popular, Inc. | &nbsp;&nbsp; 373183 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 18310 | Regions Financial Corp. | &nbsp;&nbsp; 394764 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 240 | S&P Global, Inc. | &nbsp;&nbsp; 80386 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1232 | Signature Bank | &nbsp;&nbsp; 141951 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 17712 | SLM Corp. | &nbsp;&nbsp; 294019 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2184 | State Street Corp. | &nbsp;&nbsp; 169413 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5942 | Synchrony Financial | &nbsp;&nbsp; 195254 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1951 | The Travelers Cos., Inc. | &nbsp;&nbsp; 365793 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7077 | Truist Financial Corp. | &nbsp;&nbsp; 304523 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1345 | U.S. Bancorp | &nbsp;&nbsp; 58656 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 16256 | Virtu Financial, Inc. | &nbsp;&nbsp; 331785 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7080 | Wells Fargo & Co. | &nbsp;&nbsp; 292333 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6086 | Western Alliance Bancorp | &nbsp;&nbsp; 362482 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 404 | Zions Bancorporation, N.A. | &nbsp;&nbsp; 19861 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp; 13631028 |
|  | **Health Care—6.8%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4644 | Abbott Laboratories | &nbsp;&nbsp; 509865 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 428 | Agilent Technologies, Inc. | &nbsp;&nbsp; 64050 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 641<br><sup>1</sup> <br>| Biogen, Inc. | &nbsp;&nbsp; 177506 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 439<br><sup>1</sup> <br>| Bio-Rad Laboratories, Inc., Class A | &nbsp;&nbsp; 184595 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 11982 | Bristol-Myers Squibb Co. | &nbsp;&nbsp; 862105 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4024 | Cardinal Health, Inc. | &nbsp;&nbsp; 309325 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1092<br><sup>1</sup> <br>| Centene Corp. | &nbsp;&nbsp; 89555 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 112 | CIGNA Corp. | &nbsp;&nbsp; 37110 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3753 | CVS Health Corp. | &nbsp;&nbsp; 349742 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2089 | Danaher Corp. | &nbsp;&nbsp; 554462 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 289 | Dentsply Sirona, Inc. | &nbsp;&nbsp; 9202 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1283 | Elevance Health, Inc. | &nbsp;&nbsp; 658141 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 423 | Eli Lilly & Co. | &nbsp;&nbsp; 154750 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 8532 | Gilead Sciences, Inc. | &nbsp;&nbsp; 732472 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 791 | HCA Healthcare, Inc. | &nbsp;&nbsp; 189808 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5426<br><sup>1</sup> <br>| Hologic, Inc. | &nbsp;&nbsp; 405919 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 450 | Humana, Inc. | &nbsp;&nbsp; 230486 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 796<br><sup>1</sup> <br>| Illumina, Inc. | &nbsp;&nbsp; 160951 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9720 | Johnson & Johnson | &nbsp;&nbsp; 1717038 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 636 | Laboratory Corp. of America Holdings | &nbsp;&nbsp; 149765 |

---

Annual Shareholder Report

**9**

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| | | |
|:---|:---|:---|
| **Shares,**<br> **Principal**<br> **Amount**<br> **or Contracts**<br>|  | **Value** |
|  | COMMON STOCKS—continued |  |
|  | **Health Care—continued** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1172 | McKesson Corp. | $439641 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2017 | Medtronic PLC | &nbsp;&nbsp; 156761 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 8496 | Merck & Co., Inc. | &nbsp;&nbsp; 942631 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 232<br><sup>1</sup> <br>| Moderna, Inc. | &nbsp;&nbsp; 41672 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 59<br><sup>1</sup> <br>| Molina Healthcare, Inc. | &nbsp;&nbsp; 19483 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 16484 | Pfizer, Inc. | &nbsp;&nbsp; 844640 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9478 | Premier, Inc. | &nbsp;&nbsp; 331540 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 255 | Quest Diagnostics, Inc. | &nbsp;&nbsp; 39892 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 216<br><sup>1</sup> <br>| Regeneron Pharmaceuticals, Inc. | &nbsp;&nbsp; 155842 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 8870<br><sup>1</sup> <br>| Teladoc Health, Inc. | &nbsp;&nbsp; 209776 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 896 | Thermo Fisher Scientific, Inc. | &nbsp;&nbsp; 493418 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 26600<br><sup>1</sup> <br>| TMS Co., Ltd. | &nbsp;&nbsp; 125663 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 716 | UnitedHealth Group, Inc. | &nbsp;&nbsp; 379609 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 641<br><sup>1</sup> <br>| Vertex Pharmaceuticals, Inc. | &nbsp;&nbsp; 185108 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp; 11912523 |
|  | **Industrials—4.2%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2530 | 3M Co. | &nbsp;&nbsp; 303398 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2707 | AECOM | &nbsp;&nbsp; 229906 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2784 | Allison Transmission Holdings, Inc. | &nbsp;&nbsp; 115814 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 167<br><sup>1</sup> <br>| Avis Budget Group, Inc. | &nbsp;&nbsp; 27376 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1599<br><sup>1</sup> <br>| Boeing Co. | &nbsp;&nbsp; 304593 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5536<br><sup>1</sup> <br>| Builders Firstsource, Inc. | &nbsp;&nbsp; 359176 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 529<br><sup>1</sup> <br>| CACI International, Inc., Class A | &nbsp;&nbsp; 159012 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 319 | Caterpillar, Inc. | &nbsp;&nbsp; 76420 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3374 | CSX Corp. | &nbsp;&nbsp; 104527 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1245 | Eaton Corp. PLC | &nbsp;&nbsp; 195403 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 424 | Emerson Electric Co. | &nbsp;&nbsp; 40729 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 439 | Expeditors International Washington, Inc. | &nbsp;&nbsp; 45621 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2278 | General Dynamics Corp. | &nbsp;&nbsp; 565195 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2271 | General Electric Co. | &nbsp;&nbsp; 190287 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3359 | Honeywell International, Inc. | &nbsp;&nbsp; 719834 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1589 | Ingersoll-Rand, Inc. | &nbsp;&nbsp; 83025 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6439 | Johnson Controls International PLC | &nbsp;&nbsp; 412096 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2097 | L3Harris Technologies, Inc. | &nbsp;&nbsp; 436616 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 104 | Leidos Holdings, Inc. | &nbsp;&nbsp; 10940 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1153 | Manpower, Inc. | &nbsp;&nbsp; 95941 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 47 | Masco Corp. | &nbsp;&nbsp; 2193 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2161 | Norfolk Southern Corp. | &nbsp;&nbsp; 532514 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3468 | OshKosh Truck Corp. | &nbsp;&nbsp; 305843 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1689 | Otis Worldwide Corp. | &nbsp;&nbsp; 132266 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 236 | Owens Corning, Inc. | &nbsp;&nbsp; 20131 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 692 | Parker-Hannifin Corp. | &nbsp;&nbsp; 201372 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4296 | Raytheon Technologies Corp. | &nbsp;&nbsp; 433552 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 266 | Republic Services, Inc. | &nbsp;&nbsp; 34311 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 13800<br><sup>1</sup> <br>| Skymark Airlines, Inc. | &nbsp;&nbsp; 151207 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1013 | Textron, Inc. | &nbsp;&nbsp; 71720 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 944 | Trane Technologies PLC | &nbsp;&nbsp; 158677 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 11439<br><sup>1</sup> <br>| Uber Technologies, Inc. | &nbsp;&nbsp; 282886 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 566<br><sup>1</sup> <br>| United Rentals, Inc. | &nbsp;&nbsp; 201168 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1865 | Waste Management, Inc. | &nbsp;&nbsp; 292581 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 7296330 |
|  | **Information Technology—3.2%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1486<br><sup>1</sup> <br>| Advanced Micro Devices, Inc. | &nbsp;&nbsp; 96248 |

---

Annual Shareholder Report

**10**

------

---

| | | |
|:---|:---|:---|
| **Shares,**<br> **Principal**<br> **Amount**<br> **or Contracts**<br>|  | **Value** |
|  | COMMON STOCKS—continued |  |
|  | **Information Technology—continued** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 263 | Automatic Data Processing, Inc. | $62820 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 15724 | Cisco Systems, Inc. | &nbsp;&nbsp; 749091 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2597 | Cognizant Technology Solutions Corp. | &nbsp;&nbsp; 148522 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2353<br><sup>1</sup> <br>| Coupa Software, Inc. | &nbsp;&nbsp; 186287 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3056 | Dell Technologies, Inc. | &nbsp;&nbsp; 122912 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6234<br><sup>1</sup> <br>| Dropbox, Inc. | &nbsp;&nbsp; 139517 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3669<br><sup>1</sup> <br>| DXC Technology Co. | &nbsp;&nbsp; 97229 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3132 | Fidelity National Information Services, Inc. | &nbsp;&nbsp; 212506 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 897<br><sup>1</sup> <br>| Fiserv, Inc. | &nbsp;&nbsp; 90660 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 157<br><sup>1</sup> <br>| GoDaddy, Inc. | &nbsp;&nbsp; 11747 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 26297 | Hewlett Packard Enterprise Co. | &nbsp;&nbsp; 419700 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1546 | HP, Inc. | &nbsp;&nbsp; 41541 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 16634 | Intel Corp. | &nbsp;&nbsp; 439637 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4106 | Juniper Networks, Inc. | &nbsp;&nbsp; 131228 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1784<br><sup>1</sup> <br>| Kyndryl Holdings, Inc. | &nbsp;&nbsp; 19838 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 826<br><sup>1</sup> <br>| Manhattan Associates, Inc. | &nbsp;&nbsp; 100276 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6758 | Marvell Technology, Inc. | &nbsp;&nbsp; 250316 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 978 | Microchip Technology, Inc. | &nbsp;&nbsp; 68705 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9131 | Micron Technology, Inc. | &nbsp;&nbsp; 456367 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 8275<br><sup>1</sup> <br>| Nutanix, Inc. | &nbsp;&nbsp; 215564 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 312<br><sup>1</sup> <br>| Okta, Inc. | &nbsp;&nbsp; 21319 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1608<br><sup>1</sup> <br>| ON Semiconductor Corp. | &nbsp;&nbsp; 100291 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 754 | Oracle Corp. | &nbsp;&nbsp; 61632 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2534<br><sup>1</sup> <br>| PayPal Holdings, Inc. | &nbsp;&nbsp; 180472 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 271 | Roper Technologies, Inc. | &nbsp;&nbsp; 117096 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2505<br><sup>1</sup> <br>| Salesforce, Inc. | &nbsp;&nbsp; 332138 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 682<br><sup>1</sup> <br>| Snowflake, Inc. | &nbsp;&nbsp; 97894 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3373<br><sup>1</sup> <br>| Teradata Corp. | &nbsp;&nbsp; 113535 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1092<br><sup>1</sup> <br>| Unity Software, Inc. | &nbsp;&nbsp; 31220 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 482<br><sup>1</sup> <br>| Verisign, Inc. | &nbsp;&nbsp; 99022 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5310<br><sup>1</sup> <br>| Western Digital Corp. | &nbsp;&nbsp; 167531 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 830<br><sup>1</sup> <br>| WEX, Inc. | &nbsp;&nbsp; 135830 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 187<br><sup>1</sup> <br>| Wolfspeed, Inc. | &nbsp;&nbsp; 12911 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 5531602 |
|  | **Materials—1.7%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 129 | Air Products & Chemicals, Inc. | &nbsp;&nbsp; 39765 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 578 | Alcoa Corp. | &nbsp;&nbsp; 26282 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1079 | Avery Dennison Corp. | &nbsp;&nbsp; 195299 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1326<br><sup>1</sup> <br>| Axalta Coating Systems Ltd. | &nbsp;&nbsp; 33773 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 548<br><sup>1</sup> <br>| Cleveland-Cliffs, Inc. | &nbsp;&nbsp; 8828 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1109 | Corteva, Inc. | &nbsp;&nbsp; 65187 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5374 | Dow, Inc. | &nbsp;&nbsp; 270796 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1663 | Ecolab, Inc. | &nbsp;&nbsp; 242066 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6327 | Freeport-McMoRan, Inc. | &nbsp;&nbsp; 240426 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1497 | Huntsman Corp. | &nbsp;&nbsp; 41138 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2484 | Linde PLC | &nbsp;&nbsp; 810231 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1791 | LyondellBasell Industries N.V. | &nbsp;&nbsp; 148707 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3113 | Newmont Corp. | &nbsp;&nbsp; 146934 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1027 | Nucor Corp. | &nbsp;&nbsp; 135369 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2687 | Olin Corp. | &nbsp;&nbsp; 142250 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 670 | Steel Dynamics, Inc. | &nbsp;&nbsp; 65459 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1425 | United States Steel Corp. | &nbsp;&nbsp; 35696 |

---

Annual Shareholder Report

**11**

------

---

| | | |
|:---|:---|:---|
| **Shares,**<br> **Principal**<br> **Amount**<br> **or Contracts**<br>|  | **Value** |
|  | COMMON STOCKS—continued |  |
|  | **Materials—continued** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7612 | WestRock Co. | $267638 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 2915844 |
|  | **Real Estate—1.7%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 293 | American Tower Corp. | &nbsp;&nbsp; 62075 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 8635 | Apartment Income REIT Corp. | &nbsp;&nbsp; 296267 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4644<br><sup>1</sup> <br>| CBRE Group, Inc. | &nbsp;&nbsp; 357402 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1776 | Extra Space Storage, Inc. | &nbsp;&nbsp; 261392 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1277 | First Industrial Realty Trust | &nbsp;&nbsp; 61628 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6139 | Host Hotels & Resorts, Inc. | &nbsp;&nbsp; 98531 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 896 | Jones Lang LaSalle, Inc. | &nbsp;&nbsp; 142795 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6244 | ProLogis, Inc. | &nbsp;&nbsp; 703886 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1254 | Public Storage | &nbsp;&nbsp; 351358 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 262 | SBA Communications Corp. | &nbsp;&nbsp; 73441 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4246 | UDR, Inc. | &nbsp;&nbsp; 164448 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 12373 | Weyerhaeuser Co. | &nbsp;&nbsp; 383563 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 2956786 |
|  | **Utilities—2.2%** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 13826 | AES Corp. | &nbsp;&nbsp; 397636 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5 | Brookfield Renewable Corp. | &nbsp;&nbsp; 138 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 856 | Consolidated Edison Co. | &nbsp;&nbsp; 81585 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2801 | DTE Energy Co. | &nbsp;&nbsp; 329201 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5909 | Duke Energy Corp. | &nbsp;&nbsp; 608568 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 161 | FirstEnergy Corp. | &nbsp;&nbsp; 6752 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 11021 | NextEra Energy, Inc. | &nbsp;&nbsp; 921355 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 13980 | PPL Corp. | &nbsp;&nbsp; 408496 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3409 | Public Service Enterprises Group, Inc. | &nbsp;&nbsp; 208869 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5431 | Southern Co. | &nbsp;&nbsp; 387828 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5448 | Vistra Corp. | &nbsp;&nbsp; 126394 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6807 | Xcel Energy, Inc. | &nbsp;&nbsp; 477239 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 3954061 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL COMMON STOCKS <br>(IDENTIFIED COST $56,321,859)<br>| &nbsp;&nbsp;&nbsp; 68152943 |
|  | U.S. TREASURIES—22.7% |  |
|  | **Treasury Inflation-Indexed Note—0.0%** |  |
| $12576 | U.S. Treasury Inflation-Protected Notes, 1.000%, 2/15/2046 | &nbsp;&nbsp; 10646 |
|  | **U.S. Treasury Bond—3.3%** |  |
| &nbsp;&nbsp; 150000 | United States Treasury Bond, 1.375%, 11/15/2040 | &nbsp;&nbsp; 97565 |
| &nbsp;&nbsp; 760000 | United States Treasury Bond, 1.625%, 11/15/2050 | &nbsp;&nbsp; 454682 |
| &nbsp;&nbsp; 860000 | United States Treasury Bond, 2.375%, 2/15/2042 | &nbsp;&nbsp; 656921 |
| &nbsp;&nbsp; 20000 | United States Treasury Bond, 2.750%, 11/15/2047 | &nbsp;&nbsp; 15685 |
| &nbsp;&nbsp; 3450000 | United States Treasury Bond, 2.875%, 5/15/2052 | &nbsp;&nbsp; 2776710 |
| &nbsp;&nbsp; 1000 | United States Treasury Bond, 3.000%, 11/15/2044 | &nbsp;&nbsp; 828 |
| &nbsp;&nbsp; 900000 | United States Treasury Bond, 3.000%, 2/15/2049 | &nbsp;&nbsp; 744895 |
| &nbsp;&nbsp; 1100000 | United States Treasury Bond, 3.125%, 5/15/2048 | &nbsp;&nbsp; 928349 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 5675635 |
|  | **U.S. Treasury Note—19.4%** |  |
| &nbsp;&nbsp; 500000 | United States Treasury Note, 0.125%, 4/30/2023 | &nbsp;&nbsp; 493012 |
| &nbsp;&nbsp; 1900000 | United States Treasury Note, 0.125%, 6/30/2023 | &nbsp;&nbsp; 1858304 |
| &nbsp;&nbsp; 2000000 | United States Treasury Note, 0.250%, 9/30/2023 | &nbsp;&nbsp; 1934633 |
| &nbsp;&nbsp; 5200000 | United States Treasury Note, 0.500%, 3/15/2023 | &nbsp;&nbsp; 5161139 |
| &nbsp;&nbsp; 330000 | United States Treasury Note, 0.625%, 7/31/2026 | &nbsp;&nbsp; 291479 |
| &nbsp;&nbsp; 900000 | United States Treasury Note, 0.625%, 8/15/2030 | &nbsp;&nbsp; 708222 |
| &nbsp;&nbsp; 400000 | United States Treasury Note, 0.875%, 11/15/2030 | &nbsp;&nbsp; 319704 |

---

Annual Shareholder Report

**12**

------

---

| | | |
|:---|:---|:---|
| **Shares,**<br> **Principal**<br> **Amount**<br> **or Contracts**<br>|  | **Value** |
|  | U.S. TREASURIES—continued |  |
|  | **U.S. Treasury Note—continued** |  |
| $675000 | United States Treasury Note, 1.250%, 12/31/2026 | $604373 |
| &nbsp;&nbsp; 300000 | United States Treasury Note, 1.375%, 11/15/2031 | &nbsp;&nbsp; 244271 |
| &nbsp;&nbsp; 400000 | United States Treasury Note, 1.500%, 1/31/2027 | &nbsp;&nbsp; 361160 |
| &nbsp;&nbsp; 400000 | United States Treasury Note, 1.625%, 5/15/2031 | &nbsp;&nbsp; 336615 |
| &nbsp;&nbsp; 900000 | United States Treasury Note, 1.750%, 12/31/2024 | &nbsp;&nbsp; 854267 |
| &nbsp;&nbsp; 775000 | United States Treasury Note, 1.750%, 3/15/2025 | &nbsp;&nbsp; 732295 |
| &nbsp;&nbsp; 900000 | United States Treasury Note, 2.125%, 11/30/2024 | &nbsp;&nbsp; 861471 |
| &nbsp;&nbsp; 1150000 | United States Treasury Note, 2.250%, 3/31/2024 | &nbsp;&nbsp; 1115654 |
| &nbsp;&nbsp; 50000 | United States Treasury Note, 2.250%, 11/15/2027 | &nbsp;&nbsp; 46070 |
| &nbsp;&nbsp; 3500000 | United States Treasury Note, 2.500%, 4/30/2024 | &nbsp;&nbsp; 3400075 |
| &nbsp;&nbsp; 500000 | United States Treasury Note, 2.500%, 5/31/2024 | &nbsp;&nbsp; 484980 |
| &nbsp;&nbsp; 3800000 | United States Treasury Note, 2.625%, 5/31/2027 | &nbsp;&nbsp; 3581668 |
| &nbsp;&nbsp; 500000 | United States Treasury Note, 2.750%, 4/30/2027 | &nbsp;&nbsp; 473928 |
| &nbsp;&nbsp; 5700000 | United States Treasury Note, 2.750%, 7/31/2027 | &nbsp;&nbsp; 5392970 |
| &nbsp;&nbsp; 40000 | United States Treasury Note, 2.875%, 5/31/2025 | &nbsp;&nbsp; 38669 |
| &nbsp;&nbsp; 300000 | United States Treasury Note, 2.875%, 5/15/2028 | &nbsp;&nbsp; 283174 |
| &nbsp;&nbsp; 780000 | United States Treasury Note, 3.000%, 6/30/2024 | &nbsp;&nbsp; 761185 |
| &nbsp;&nbsp; 110000 | United States Treasury Note, 3.125%, 8/31/2027 | &nbsp;&nbsp; 105819 |
| &nbsp;&nbsp; 3500000 | United States Treasury Note, 3.875%, 11/30/2027 | &nbsp;&nbsp; 3480734 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp; 33925871 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL U.S. TREASURIES <br>(IDENTIFIED COST $42,507,621)<br>| &nbsp;&nbsp;&nbsp; 39612152 |
|  | CORPORATE BONDS—10.3% |  |
|  | **Basic Industry - Chemicals—0.1%** |  |
| &nbsp;&nbsp; 50000 | Albemarle Corp., Sr. Unsecd. Note, 5.450%, 12/1/2044 | &nbsp;&nbsp; 45431 |
| &nbsp;&nbsp; 75000 | RPM International, Inc., Sr. Unsecd. Note, 4.550%, 3/1/2029 | &nbsp;&nbsp; 69592 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 115023 |
|  | **Basic Industry - Metals & Mining—0.2%** |  |
| &nbsp;&nbsp; 50000 | Glencore Funding LLC, Sr. Unsecd. Note, 144A, 1.625%, 4/27/2026 | &nbsp;&nbsp; 44113 |
| &nbsp;&nbsp; 20000 | Glencore Funding LLC, Sr. Unsecd. Note, 144A, 3.375%, 9/23/2051 | &nbsp;&nbsp; 13057 |
| &nbsp;&nbsp; 225000 | Reliance Steel & Aluminum Co., Sr. Unsecd. Note, 4.500%, 4/15/2023 | &nbsp;&nbsp; 224962 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 282132 |
|  | **Capital Goods - Aerospace & Defense—0.2%** |  |
| &nbsp;&nbsp; 100000 | Boeing Co., Sr. Unsecd. Note, 2.700%, 2/1/2027 | &nbsp;&nbsp; 90409 |
| &nbsp;&nbsp; 20000 | Boeing Co., Sr. Unsecd. Note, 3.950%, 8/1/2059 | &nbsp;&nbsp; 13518 |
| &nbsp;&nbsp; 75000 | Boeing Co., Sr. Unsecd. Note, 4.875%, 5/1/2025 | &nbsp;&nbsp; 74493 |
| &nbsp;&nbsp; 60000 | Huntington Ingalls Industries, Inc., Sr. Unsecd. Note, 3.483%, 12/1/2027 | &nbsp;&nbsp; 54556 |
| &nbsp;&nbsp; 25000 | Leidos, Inc., Sr. Unsecd. Note, Series WI, 3.625%, 5/15/2025 | &nbsp;&nbsp; 24033 |
| &nbsp;&nbsp; 100000 | Leidos, Inc., Sr. Unsecd. Note, Series WI, 4.375%, 5/15/2030 | &nbsp;&nbsp; 90407 |
| &nbsp;&nbsp; 100000 | Textron, Inc., Sr. Unsecd. Note, 3.650%, 3/15/2027 | &nbsp;&nbsp; 93394 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 440810 |
|  | **Capital Goods - Building Materials—0.1%** |  |
| &nbsp;&nbsp; 10000 | Allegion PLC, Sr. Unsecd. Note, 3.500%, 10/1/2029 | &nbsp;&nbsp; 8638 |
| &nbsp;&nbsp; 20000 | Allegion US Holdings Co., Inc., Sr. Unsecd. Note, 3.200%, 10/1/2024 | &nbsp;&nbsp; 19246 |
| &nbsp;&nbsp; 90000 | Allegion US Holdings Co., Inc., Sr. Unsecd. Note, 3.550%, 10/1/2027 | &nbsp;&nbsp; 81376 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 109260 |
|  | **Capital Goods - Construction Machinery—0.1%** |  |
| &nbsp;&nbsp; 100000 | CNH Industrial NV, Sr. Unsecd. Note, Series MTN, 3.850%, 11/15/2027 | &nbsp;&nbsp; 93835 |
| &nbsp;&nbsp; 150000 | John Deere Capital Corp., Sr. Unsecd. Note, Series MTN, 3.450%, 3/7/2029 | &nbsp;&nbsp; 139469 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 233304 |
|  | **Capital Goods - Diversified Manufacturing—0.1%** |  |
| &nbsp;&nbsp; 35000 | Honeywell International, Inc., Sr. Unsecd. Note, 1.350%, 6/1/2025 | &nbsp;&nbsp; 32387 |
| &nbsp;&nbsp; 35000 | Honeywell International, Inc., Sr. Unsecd. Note, 2.800%, 6/1/2050 | &nbsp;&nbsp; 25052 |

---

Annual Shareholder Report

**13**

------

---

| | | |
|:---|:---|:---|
| **Shares,**<br> **Principal**<br> **Amount**<br> **or Contracts**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Capital Goods - Diversified Manufacturing—continued** |  |
| $55000 | Valmont Industries, Inc., Sr. Unsecd. Note, 5.000%, 10/1/2044 | $47522 |
| &nbsp;&nbsp; 60000 | Vontier Corp., Sr. Unsecd. Note, Series WI, 1.800%, 4/1/2026 | &nbsp;&nbsp; 50827 |
| &nbsp;&nbsp; 45000 | Xylem, Inc., Sr. Unsecd. Note, 2.250%, 1/30/2031 | &nbsp;&nbsp; 36613 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 192401 |
|  | **Capital Goods - Packaging—0.1%** |  |
| &nbsp;&nbsp; 125000 | Packaging Corp., of America, Sr. Unsecd. Note, 3.650%, 9/15/2024 | &nbsp;&nbsp; 121864 |
|  | **Communications - Cable & Satellite—0.2%** |  |
| &nbsp;&nbsp; 50000 | CCO Safari II LLC, 6.484%, 10/23/2045 | &nbsp;&nbsp; 45301 |
| &nbsp;&nbsp; 25000 | Charter Communications Operating, LLC/Charter Communications Operating Capital Corp., Sec. Fac. Bond, 3.850%, 4/1/2061 | &nbsp;&nbsp; 14547 |
| &nbsp;&nbsp; 225000 | Comcast Corp., Sr. Unsecd. Note, 3.300%, 2/1/2027 | &nbsp;&nbsp; 212362 |
| &nbsp;&nbsp; 100000 | Comcast Corp., Sr. Unsecd. Note, 3.950%, 10/15/2025 | &nbsp;&nbsp; 98037 |
| &nbsp;&nbsp; 75000 | Time Warner Cable, Inc., Company Guarantee, 5.500%, 9/1/2041 | &nbsp;&nbsp; 62522 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 432769 |
|  | **Communications - Media & Entertainment—0.4%** |  |
| &nbsp;&nbsp; 115000 | Alphabet, Inc., Sr. Unsecd. Note, 2.050%, 8/15/2050 | &nbsp;&nbsp; 67730 |
| &nbsp;&nbsp; 200000 | British Sky Broadcasting Group PLC, Sr. Unsecd. Note, 144A, 3.750%, 9/16/2024 | &nbsp;&nbsp; 195357 |
| &nbsp;&nbsp; 75000 | Meta Platforms, Inc., Sr. Unsecd. Note, 3.500%, 8/15/2027 | &nbsp;&nbsp; 70027 |
| &nbsp;&nbsp; 75000 | Meta Platforms, Inc., Sr. Unsecd. Note, 3.850%, 8/15/2032 | &nbsp;&nbsp; 66210 |
| &nbsp;&nbsp; 75000 | Netflix, Inc., Sr. Unsecd. Note, 4.875%, 4/15/2028 | &nbsp;&nbsp; 72588 |
| &nbsp;&nbsp; 50000 | Paramount Global, Sr. Unsecd. Note, 4.200%, 6/1/2029 | &nbsp;&nbsp; 44619 |
| &nbsp;&nbsp; 40000 | S&P Global, Inc., Sr. Unsecd. Note, 144A, 2.900%, 3/1/2032 | &nbsp;&nbsp; 34230 |
| &nbsp;&nbsp; 40000 | Walt Disney Co., Sr. Unsecd. Note, 3.600%, 1/13/2051 | &nbsp;&nbsp; 30660 |
| &nbsp;&nbsp; 45000 | Walt Disney Co., Sr. Unsecd. Note, 3.800%, 5/13/2060 | &nbsp;&nbsp; 34527 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 615948 |
|  | **Communications - Telecom Wireless—0.2%** |  |
| &nbsp;&nbsp; 50000 | American Tower Corp., Sr. Unsecd. Note, 2.700%, 4/15/2031 | &nbsp;&nbsp; 40820 |
| &nbsp;&nbsp; 50000 | American Tower Corp., Sr. Unsecd. Note, 3.100%, 6/15/2050 | &nbsp;&nbsp; 31668 |
| &nbsp;&nbsp; 75000 | American Tower Corp., Sr. Unsecd. Note, 5.000%, 2/15/2024 | &nbsp;&nbsp; 74757 |
| &nbsp;&nbsp; 75000 | Crown Castle International Corp., Sr. Unsecd. Note, 3.250%, 1/15/2051 | &nbsp;&nbsp; 49083 |
| &nbsp;&nbsp; 90000 | T-Mobile USA, Inc., Series WI, 3.000%, 2/15/2041 | &nbsp;&nbsp; 63847 |
| &nbsp;&nbsp; 75000 | T-Mobile USA, Inc., Sr. Unsecd. Note, 5.200%, 1/15/2033 | &nbsp;&nbsp; 74564 |
| &nbsp;&nbsp; 50000 | Vodafone Group PLC, Sr. Unsecd. Note, 4.125%, 5/30/2025 | &nbsp;&nbsp; 49250 |
| &nbsp;&nbsp; 60000 | Vodafone Group PLC, Sr. Unsecd. Note, 5.250%, 5/30/2048 | &nbsp;&nbsp; 53135 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 437124 |
|  | **Communications - Telecom Wirelines—0.2%** |  |
| &nbsp;&nbsp; 100000 | AT&T, Inc., Sr. Unsecd. Note, 1.700%, 3/25/2026 | &nbsp;&nbsp; 90235 |
| &nbsp;&nbsp; 153000 | AT&T, Inc., Sr. Unsecd. Note, 3.800%, 12/1/2057 | &nbsp;&nbsp; 106269 |
| &nbsp;&nbsp; 45000 | Rogers Communications, Inc., Sr. Unsecd. Note, 144A, 4.500%, 3/15/2042 | &nbsp;&nbsp; 36862 |
| &nbsp;&nbsp; 55000 | Verizon Communications, Inc., Sr. Unsecd. Note, 3.400%, 3/22/2041 | &nbsp;&nbsp; 41572 |
| &nbsp;&nbsp; 100000 | Verizon Communications, Inc., Sr. Unsecd. Note, 4.125%, 8/15/2046 | &nbsp;&nbsp; 79908 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 354846 |
|  | **Consumer Cyclical - Automotive—0.2%** |  |
| &nbsp;&nbsp; 150000 | Daimler Trucks Financial NA, Sr. Unsecd. Note, 144A, 2.375%, 12/14/2028 | &nbsp;&nbsp; 126331 |
| &nbsp;&nbsp; 100000 | General Motors Co., Sr. Unsecd. Note, 6.125%, 10/1/2025 | &nbsp;&nbsp; 101874 |
| &nbsp;&nbsp; 75000 | General Motors Financial Co., Inc., Sr. Unsecd. Note, 2.400%, 4/10/2028 | &nbsp;&nbsp; 63207 |
| &nbsp;&nbsp; 150000 | Mercedes-Benz Finance NA LLC, Sr. Unsecd. Note, 144A, 3.350%, 2/22/2023 | &nbsp;&nbsp; 149452 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 440864 |
|  | **Consumer Cyclical - Leisure—0.1%** |  |
| &nbsp;&nbsp; 75000 | Warnermedia Holdings, Inc., Sr. Unsecd. Note, 144A, 4.279%, 3/15/2032 | &nbsp;&nbsp; 61970 |
| &nbsp;&nbsp; 75000 | Warnermedia Holdings, Inc., Sr. Unsecd. Note, 144A, 5.050%, 3/15/2042 | &nbsp;&nbsp; 57647 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 119617 |
|  | **Consumer Cyclical - Retailers—0.2%** |  |
| &nbsp;&nbsp; 45000 | Advance Auto Parts, Inc., Sr. Unsecd. Note, 1.750%, 10/1/2027 | &nbsp;&nbsp; 37846 |

---

Annual Shareholder Report

**14**

------

---

| | | |
|:---|:---|:---|
| **Shares,**<br> **Principal**<br> **Amount**<br> **or Contracts**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Consumer Cyclical - Retailers—continued** |  |
| $75000 | Advance Auto Parts, Inc., Sr. Unsecd. Note, Series WI, 3.900%, 4/15/2030 | $65904 |
| &nbsp;&nbsp; 50000 | AutoNation, Inc., Sr. Unsecd. Note, 3.850%, 3/1/2032 | &nbsp;&nbsp; 40032 |
| &nbsp;&nbsp; 15000 | AutoZone, Inc., Sr. Unsecd. Note, 3.625%, 4/15/2025 | &nbsp;&nbsp; 14527 |
| &nbsp;&nbsp; 75000 | CVS Health Corp., Sr. Unsecd. Note, 4.250%, 4/1/2050 | &nbsp;&nbsp; 60059 |
| &nbsp;&nbsp; 30000 | Home Depot, Inc., Sr. Unsecd. Note, 2.950%, 6/15/2029 | &nbsp;&nbsp; 27205 |
| &nbsp;&nbsp; 150000 | Home Depot, Inc., Sr. Unsecd. Note, 3.300%, 4/15/2040 | &nbsp;&nbsp; 120051 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 365624 |
|  | **Consumer Cyclical - Services—0.1%** |  |
| &nbsp;&nbsp; 65000 | Amazon.com, Inc., Sr. Unsecd. Note, 2.500%, 6/3/2050 | &nbsp;&nbsp; 41261 |
| &nbsp;&nbsp; 125000 | Amazon.com, Inc., Sr. Unsecd. Note, 3.875%, 8/22/2037 | &nbsp;&nbsp; 111240 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 152501 |
|  | **Consumer Non-Cyclical - Food/Beverage—0.3%** |  |
| &nbsp;&nbsp; 30000 | Anheuser-Busch InBev Finance, Inc., Sr. Unsecd. Note, 4.900%, 2/1/2046 | &nbsp;&nbsp; 27424 |
| &nbsp;&nbsp; 75000 | Constellation Brands, Inc., Sr. Unsecd. Note, 3.750%, 5/1/2050 | &nbsp;&nbsp; 56485 |
| &nbsp;&nbsp; 25000 | Flowers Foods, Inc., Sr. Unsecd. Note, 2.400%, 3/15/2031 | &nbsp;&nbsp; 20188 |
| &nbsp;&nbsp; 100000 | Flowers Foods, Inc., Sr. Unsecd. Note, 3.500%, 10/1/2026 | &nbsp;&nbsp; 93740 |
| &nbsp;&nbsp; 145000 | International Flavors & Fragrances, Inc., Sr. Unsecd. Note, 144A, 2.300%, 11/1/2030 | &nbsp;&nbsp; 115372 |
| &nbsp;&nbsp; 70000 | Kraft Heinz Foods Co., Sr. Unsecd. Note, 4.375%, 6/1/2046 | &nbsp;&nbsp; 57204 |
| &nbsp;&nbsp; 70000 | PepsiCo, Inc., Sr. Unsecd. Note, 2.750%, 10/21/2051 | &nbsp;&nbsp; 48765 |
| &nbsp;&nbsp; 75000 | Sysco Corp., Sr. Unsecd. Note, 4.450%, 3/15/2048 | &nbsp;&nbsp; 61908 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 481086 |
|  | **Consumer Non-Cyclical - Health Care—0.1%** |  |
| &nbsp;&nbsp; 27000 | Becton Dickinson & Co., Sr. Unsecd. Note, 3.794%, 5/20/2050 | &nbsp;&nbsp; 20852 |
| &nbsp;&nbsp; 17000 | Becton Dickinson & Co., Sr. Unsecd. Note, 4.685%, 12/15/2044 | &nbsp;&nbsp; 15277 |
| &nbsp;&nbsp; 65000 | Danaher Corp., Sr. Unsecd. Note, 2.600%, 10/1/2050 | &nbsp;&nbsp; 41751 |
| &nbsp;&nbsp; 30000 | DH Europe Finance II S.a.r.l., Sr. Unsecd. Note, 2.600%, 11/15/2029 | &nbsp;&nbsp; 26348 |
| &nbsp;&nbsp; 55000 | HCA, Inc., Sec. Fac. Bond, 3.500%, 7/15/2051 | &nbsp;&nbsp; 35509 |
| &nbsp;&nbsp; 10000 | Stryker Corp., Sr. Unsecd. Note, 3.500%, 3/15/2026 | &nbsp;&nbsp; 9610 |
| &nbsp;&nbsp; 100000 | Thermo Fisher Scientific, Inc., Sr. Unsecd. Note, 1.215%, 10/18/2024 | &nbsp;&nbsp; 93919 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 243266 |
|  | **Consumer Non-Cyclical - Pharmaceuticals—0.3%** |  |
| &nbsp;&nbsp; 83000 | Abbott Laboratories, Sr. Unsecd. Note, 3.750%, 11/30/2026 | &nbsp;&nbsp; 80924 |
| &nbsp;&nbsp; 75000 | AstraZeneca PLC, Sr. Unsecd. Note, 1.375%, 8/6/2030 | &nbsp;&nbsp; 59426 |
| &nbsp;&nbsp; 200000 | Bayer US Finance LLC, Sr. Unsecd. Note, 144A, 3.375%, 10/8/2024 | &nbsp;&nbsp; 193398 |
| &nbsp;&nbsp; 70000 | Biogen, Inc., Sr. Unsecd. Note, 2.250%, 5/1/2030 | &nbsp;&nbsp; 57184 |
| &nbsp;&nbsp; 75000 | Biogen, Inc., Sr. Unsecd. Note, 3.150%, 5/1/2050 | &nbsp;&nbsp; 49074 |
| &nbsp;&nbsp; 40000 | Bristol-Myers Squibb Co., Sr. Unsecd. Note, Series WI, 4.250%, 10/26/2049 | &nbsp;&nbsp; 34589 |
| &nbsp;&nbsp; 91000 | Regeneron Pharmaceuticals, Inc., Sr. Unsecd. Note, 2.800%, 9/15/2050 | &nbsp;&nbsp; 56828 |
| &nbsp;&nbsp; 100000 | Zoetis, Inc., Sr. Unsecd. Note, 3.000%, 5/15/2050 | &nbsp;&nbsp; 68033 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 599456 |
|  | **Consumer Non-Cyclical - Tobacco—0.1%** |  |
| &nbsp;&nbsp; 75000 | Altria Group, Inc., Sr. Unsecd. Note, 3.700%, 2/4/2051 | &nbsp;&nbsp; 47255 |
| &nbsp;&nbsp; 50000 | BAT Capital Corp., Sr. Unsecd. Note, Series WI, 4.540%, 8/15/2047 | &nbsp;&nbsp; 35517 |
| &nbsp;&nbsp; 115000 | Philip Morris International, Inc., Sr. Unsecd. Note, 2.100%, 5/1/2030 | &nbsp;&nbsp; 93257 |
| &nbsp;&nbsp; 25000 | Philip Morris International, Inc., Sr. Unsecd. Note, 5.750%, 11/17/2032 | &nbsp;&nbsp; 25564 |
| &nbsp;&nbsp; 55000 | Reynolds American, Inc., Sr. Unsecd. Note, 7.000%, 8/4/2041 | &nbsp;&nbsp; 54616 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 256209 |
|  | **Energy - Independent—0.1%** |  |
| &nbsp;&nbsp; 40000 | Diamondback Energy, Inc., Sr. Unsecd. Note, 6.250%, 3/15/2033 | &nbsp;&nbsp; 40723 |
| &nbsp;&nbsp; 70000 | Hess Corp., Sr. Unsecd. Note, 5.600%, 2/15/2041 | &nbsp;&nbsp; 66476 |
| &nbsp;&nbsp; 75000 | Marathon Oil Corp., Sr. Unsecd. Note, 4.400%, 7/15/2027 | &nbsp;&nbsp; 71744 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 178943 |

---

Annual Shareholder Report

**15**

------

---

| | | |
|:---|:---|:---|
| **Shares,**<br> **Principal**<br> **Amount**<br> **or Contracts**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Energy - Integrated—0.2%** |  |
| $35000 | BP Capital Markets America, Inc., Sr. Unsecd. Note, 3.119%, 5/4/2026 | $33219 |
| &nbsp;&nbsp; 80000 | Chevron Corp., Sr. Unsecd. Note, 3.078%, 5/11/2050 | &nbsp;&nbsp; 57810 |
| &nbsp;&nbsp; 185000 | ConocoPhillips Co., Sr. Unsecd. Note, 2.400%, 3/7/2025 | &nbsp;&nbsp; 175983 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 267012 |
|  | **Energy - Midstream—0.4%** |  |
| &nbsp;&nbsp; 25000 | Boardwalk Pipeline Partners LP, Sr. Unsecd. Note, 3.600%, 9/1/2032 | &nbsp;&nbsp; 20756 |
| &nbsp;&nbsp; 20000 | Boardwalk Pipeline Partners LP, Sr. Unsecd. Note, 4.800%, 5/3/2029 | &nbsp;&nbsp; 18867 |
| &nbsp;&nbsp; 35000 | Eastern Gas Transmission & Storage, Inc., Sr. Unsecd. Note, 3.000%, 11/15/2029 | &nbsp;&nbsp; 30291 |
| &nbsp;&nbsp; 115000 | Eastern Gas Transmission & Storage, Inc., Sr. Unsecd. Note, 3.900%, 11/15/2049 | &nbsp;&nbsp; 81756 |
| &nbsp;&nbsp; 50000 | Energy Transfer LP, Sr. Unsecd. Note, 5.750%, 2/15/2033 | &nbsp;&nbsp; 49014 |
| &nbsp;&nbsp; 15000 | Energy Transfer Partners LP, Sr. Unsecd. Note, 4.900%, 2/1/2024 | &nbsp;&nbsp; 14921 |
| &nbsp;&nbsp; 85000 | Energy Transfer LP, Sr. Unsecd. Note, Series 10Y, 4.950%, 6/15/2028 | &nbsp;&nbsp; 82355 |
| &nbsp;&nbsp; 50000 | Kinder Morgan Energy Partners LP, Sr. Unsecd. Note, 6.375%, 3/1/2041 | &nbsp;&nbsp; 49677 |
| &nbsp;&nbsp; 100000 | MPLX LP, Sr. Unsecd. Note, 4.950%, 9/1/2032 | &nbsp;&nbsp; 94063 |
| &nbsp;&nbsp; 65000 | ONEOK, Inc., Sr. Unsecd. Note, 4.950%, 7/13/2047 | &nbsp;&nbsp; 52650 |
| &nbsp;&nbsp; 20000 | ONEOK, Inc., Sr. Unsecd. Note, 6.100%, 11/15/2032 | &nbsp;&nbsp; 20061 |
| &nbsp;&nbsp; 80000 | Targa Resources, Inc., Sr. Unsecd. Note, 4.200%, 2/1/2033 | &nbsp;&nbsp; 69057 |
| &nbsp;&nbsp; 90000 | Williams Partners LP, Sr. Unsecd. Note, 4.900%, 1/15/2045 | &nbsp;&nbsp; 76964 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 660432 |
|  | **Energy - Oil Field Services—0.1%** |  |
| &nbsp;&nbsp; 75000 | Halliburton Co., Sr. Unsecd. Note, 5.000%, 11/15/2045 | &nbsp;&nbsp; 66768 |
| &nbsp;&nbsp; 100000 | Schlumberger Investment SA, Sr. Unsecd. Note, 2.650%, 6/26/2030 | &nbsp;&nbsp; 86018 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 152786 |
|  | **Energy - Refining—0.1%** |  |
| &nbsp;&nbsp; 50000 | Marathon Petroleum Corp., Sr. Unsecd. Note, 4.750%, 9/15/2044 | &nbsp;&nbsp; 41970 |
| &nbsp;&nbsp; 50000 | Phillips 66, Sr. Unsecd. Note, 4.875%, 11/15/2044 | &nbsp;&nbsp; 45931 |
| &nbsp;&nbsp; 50000 | Valero Energy Corp., Sr. Unsecd. Note, 2.800%, 12/1/2031 | &nbsp;&nbsp; 40882 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 128783 |
|  | **Financial Institution - Banking—2.2%** |  |
| &nbsp;&nbsp; 115000 | Associated Banc-Corp., Sub. Note, 4.250%, 1/15/2025 | &nbsp;&nbsp; 111934 |
| &nbsp;&nbsp; 235000 | Bank of America Corp., Sr. Unsecd. Note, 2.299%, 7/21/2032 | &nbsp;&nbsp; 181540 |
| &nbsp;&nbsp; 325000 | Bank of America Corp., Sr. Unsecd. Note, 3.419%, 12/20/2028 | &nbsp;&nbsp; 294846 |
| &nbsp;&nbsp; 75000 | Bank of America Corp., Sub. Note, Series MTN, 4.000%, 1/22/2025 | &nbsp;&nbsp; 73466 |
| &nbsp;&nbsp; 200000 | Bank of New York Mellon Corp., Sr. Unsecd. Note, Series MTN, 2.200%, 8/16/2023 | &nbsp;&nbsp; 196957 |
| &nbsp;&nbsp; 50000 | Bank of New York Mellon Corp., Sr. Unsecd. Note, Series MTN, 3.992%, 6/13/2028 | &nbsp;&nbsp; 47911 |
| &nbsp;&nbsp; 75000 | Capital One Financial Corp., Sr. Unsecd. Note, 3.273%, 3/1/2030 | &nbsp;&nbsp; 64268 |
| &nbsp;&nbsp; 70000 | Citigroup, Inc., Sr. Unsecd. Note, 3.057%, 1/25/2033 | &nbsp;&nbsp; 56671 |
| &nbsp;&nbsp; 180000 | Citigroup, Inc., Sr. Unsecd. Note, 3.352%, 4/24/2025 | &nbsp;&nbsp; 174634 |
| &nbsp;&nbsp; 170000 | Citigroup, Inc., Sr. Unsecd. Note, 3.400%, 5/1/2026 | &nbsp;&nbsp; 161336 |
| &nbsp;&nbsp; 90000 | Citigroup, Inc., Sr. Unsecd. Note, 3.668%, 7/24/2028 | &nbsp;&nbsp; 82797 |
| &nbsp;&nbsp; 100000 | Fifth Third Bancorp, Sr. Unsecd. Note, 6.361%, 10/27/2028 | &nbsp;&nbsp; 103066 |
| &nbsp;&nbsp; 40000 | FNB Corp. (PA), Sr. Unsecd. Note, 2.200%, 2/24/2023 | &nbsp;&nbsp; 39802 |
| &nbsp;&nbsp; 50000 | FNB Corp. (PA), Sr. Unsecd. Note, 5.150%, 8/25/2025 | &nbsp;&nbsp; 49455 |
| &nbsp;&nbsp; 100000 | Goldman Sachs Group, Inc., Sr. Unsecd. Note, 1.948%, 10/21/2027 | &nbsp;&nbsp; 87569 |
| &nbsp;&nbsp; 275000 | Goldman Sachs Group, Inc., Sr. Unsecd. Note, 1.992%, 1/27/2032 | &nbsp;&nbsp; 210128 |
| &nbsp;&nbsp; 275000 | HSBC Holdings PLC, Sr. Unsecd. Note, 3.900%, 5/25/2026 | &nbsp;&nbsp; 262256 |
| &nbsp;&nbsp; 100000 | Huntington Bancshares, Inc., Sr. Unsecd. Note, 4.443%, 8/4/2028 | &nbsp;&nbsp; 95414 |
| &nbsp;&nbsp; 120000 | JPMorgan Chase & Co., Sr. Unsecd. Note, 1.953%, 2/4/2032 | &nbsp;&nbsp; 92068 |
| &nbsp;&nbsp; 100000 | JPMorgan Chase & Co., Sr. Unsecd. Note, 2.963%, 1/25/2033 | &nbsp;&nbsp; 81651 |
| &nbsp;&nbsp; 325000 | JPMorgan Chase & Co., Sr. Unsecd. Note, 3.509%, 1/23/2029 | &nbsp;&nbsp; 295505 |
| &nbsp;&nbsp; 275000 | Morgan Stanley, Sr. Unsecd. Note, Series GMTN, 3.772%, 1/24/2029 | &nbsp;&nbsp; 252306 |
| &nbsp;&nbsp; 40000 | Morgan Stanley, Sr. Unsecd. Note, Series MTN, 1.794%, 2/13/2032 | &nbsp;&nbsp; 30154 |
| &nbsp;&nbsp; 55000 | Morgan Stanley, Sr. Unsecd. Note, Series MTN, 1.928%, 4/28/2032 | &nbsp;&nbsp; 41627 |

---

Annual Shareholder Report

**16**

------

---

| | | |
|:---|:---|:---|
| **Shares,**<br> **Principal**<br> **Amount**<br> **or Contracts**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Financial Institution - Banking—continued** |  |
| $80000 | Northern Trust Corp., Sub. Note, 6.125%, 11/2/2032 | $84611 |
| &nbsp;&nbsp; 100000 | PNC Financial Services Group, Sub., 4.626%, 6/6/2033 | &nbsp;&nbsp; 92670 |
| &nbsp;&nbsp; 75000 | Truist Financial Corp., Sr. Unsecd. Note, Series MTN, 3.750%, 12/6/2023 | &nbsp;&nbsp; 74230 |
| &nbsp;&nbsp; 100000 | US Bancorp, 4.967%, 7/22/2033 | &nbsp;&nbsp; 95174 |
| &nbsp;&nbsp; 450000 | Wells Fargo & Co., Sr. Unsecd. Note, Series MTN, 3.584%, 5/22/2028 | &nbsp;&nbsp; 418517 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 3852563 |
|  | **Financial Institution - Broker/Asset Mgr/Exchange—0.1%** |  |
| &nbsp;&nbsp; 65000 | Jefferies Group LLC, Sr. Unsecd. Note, 2.750%, 10/15/2032 | &nbsp;&nbsp; 49048 |
| &nbsp;&nbsp; 75000 | Raymond James Financial, Inc., Sr. Unsecd. Note, 4.650%, 4/1/2030 | &nbsp;&nbsp; 72395 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 121443 |
|  | **Financial Institution - Finance Companies—0.0%** |  |
| &nbsp;&nbsp; 60000 | Air Lease Corp., Sr. Unsecd. Note, 5.850%, 12/15/2027 | &nbsp;&nbsp; 60038 |
|  | **Financial Institution - Insurance - Health—0.1%** |  |
| &nbsp;&nbsp; 130000 | UnitedHealth Group, Inc., Sr. Unsecd. Note, 3.050%, 5/15/2041 | &nbsp;&nbsp; 98221 |
|  | **Financial Institution - Insurance - Life—0.2%** |  |
| &nbsp;&nbsp; 100000 | Lincoln National Corp., Sr. Unsecd. Note, 3.625%, 12/12/2026 | &nbsp;&nbsp; 93814 |
| &nbsp;&nbsp; 100000 | Massachusetts Mutual Life Insurance Co., Sub. Note, 144A, 4.900%, 4/1/2077 | &nbsp;&nbsp; 82268 |
| &nbsp;&nbsp; 70000 | Pacific Life Insurance Co., Sub. Note, 144A, 4.300%, 10/24/2067 | &nbsp;&nbsp; 53418 |
| &nbsp;&nbsp; 100000 | Principal Financial Group, Inc., Sr. Unsecd. Note, 2.125%, 6/15/2030 | &nbsp;&nbsp; 82164 |
| &nbsp;&nbsp; 75000 | Prudential Financial, Inc., Sr. Unsecd. Note, Series MTN, 4.600%, 5/15/2044 | &nbsp;&nbsp; 67044 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 378708 |
|  | **Financial Institution - Insurance - P&C—0.2%** |  |
| &nbsp;&nbsp; 30000 | Chubb INA Holdings, Inc., Sr. Unsecd. Note, 3.350%, 5/3/2026 | &nbsp;&nbsp; 28755 |
| &nbsp;&nbsp; 100000 | Chubb INA Holdings, Inc., Sr. Unsecd. Note, 1.375%, 9/15/2030 | &nbsp;&nbsp; 77855 |
| &nbsp;&nbsp; 200000 | Nationwide Mutual Insurance Co., Sub. Note, 144A, 9.375%, 8/15/2039 | &nbsp;&nbsp; 258313 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 364923 |
|  | **Financial Institution - REIT - Apartment—0.2%** |  |
| &nbsp;&nbsp; 125000 | Avalonbay Communities, Inc., Sr. Unsecd. Note, Series MTN, 3.350%, 5/15/2027 | &nbsp;&nbsp; 116314 |
| &nbsp;&nbsp; 125000 | Mid-America Apartment Communities LP, 4.000%, 11/15/2025 | &nbsp;&nbsp; 121572 |
| &nbsp;&nbsp; 100000 | UDR, Inc., Sr. Unsecd. Note, Series GMTN, 3.500%, 1/15/2028 | &nbsp;&nbsp; 91049 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 328935 |
|  | **Financial Institution - REIT - Healthcare—0.2%** |  |
| &nbsp;&nbsp; 100000 | Healthcare Trust of America, Sr. Unsecd. Note, 2.000%, 3/15/2031 | &nbsp;&nbsp; 75934 |
| &nbsp;&nbsp; 125000 | Physicians Realty Trust, Sr. Unsecd. Note, 3.950%, 1/15/2028 | &nbsp;&nbsp; 114394 |
| &nbsp;&nbsp; 75000 | Welltower, Inc., Sr. Unsecd. Note, 2.800%, 6/1/2031 | &nbsp;&nbsp; 59808 |
| &nbsp;&nbsp; 100000 | Welltower, Inc., Sr. Unsecd. Note, 4.250%, 4/1/2026 | &nbsp;&nbsp; 96820 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 346956 |
|  | **Financial Institution - REIT - Office—0.1%** |  |
| &nbsp;&nbsp; 130000 | Alexandria Real Estate Equities, Inc., Sr. Unsecd. Note, 1.875%, 2/1/2033 | &nbsp;&nbsp; 97018 |
| &nbsp;&nbsp; 100000 | Boston Properties LP, Sr. Unsecd. Note, 3.650%, 2/1/2026 | &nbsp;&nbsp; 94902 |
| &nbsp;&nbsp; 40000 | Piedmont Operating Partnership, LP, Sr. Unsecd. Note, 2.750%, 4/1/2032 | &nbsp;&nbsp; 28096 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 220016 |
|  | **Financial Institution - REIT - Other—0.1%** |  |
| &nbsp;&nbsp; 60000 | WP Carey, Inc., Sr. Unsecd. Note, 3.850%, 7/15/2029 | &nbsp;&nbsp; 54038 |
| &nbsp;&nbsp; 50000 | WP Carey, Inc., Sr. Unsecd. Note, 4.600%, 4/1/2024 | &nbsp;&nbsp; 49549 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 103587 |
|  | **Financial Institution - REIT - Retail—0.1%** |  |
| &nbsp;&nbsp; 125000 | Regency Centers LP, Sr. Unsecd. Note, 4.125%, 3/15/2028 | &nbsp;&nbsp; 116271 |
|  | **Technology—0.7%** |  |
| &nbsp;&nbsp; 150000 | Apple, Inc., Sr. Unsecd. Note, 2.375%, 2/8/2041 | &nbsp;&nbsp; 106614 |
| &nbsp;&nbsp; 65000 | Apple, Inc., Sr. Unsecd. Note, 2.400%, 8/20/2050 | &nbsp;&nbsp; 40727 |
| &nbsp;&nbsp; 92000 | Broadcom, Inc., Sr. Unsecd. Note, 4.110%, 9/15/2028 | &nbsp;&nbsp; 85737 |
| &nbsp;&nbsp; 20000 | Broadcom, Inc., Sr. Unsecd. Note, 4.150%, 11/15/2030 | &nbsp;&nbsp; 17972 |

---

Annual Shareholder Report

**17**

------

---

| | | |
|:---|:---|:---|
| **Shares,**<br> **Principal**<br> **Amount**<br> **or Contracts**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Technology—continued** |  |
| $5000 | Broadcom, Inc., Sr. Unsecd. Note, 144A, 3.187%, 11/15/2036 | $3607 |
| &nbsp;&nbsp; 50000 | CDW LLC / CDW Finance, Sr. Unsecd. Note, 2.670%, 12/1/2026 | &nbsp;&nbsp; 44485 |
| &nbsp;&nbsp; 100000 | Equifax, Inc., Sr. Unsecd. Note, 2.600%, 12/1/2024 | &nbsp;&nbsp; 95392 |
| &nbsp;&nbsp; 30000 | Fidelity National Information Services, Inc., Sr. Unsecd. Note, 4.700%, 7/15/2027 | &nbsp;&nbsp; 29317 |
| &nbsp;&nbsp; 10000 | Fidelity National Information Services, Inc., Sr. Unsecd. Note, 5.625%, 7/15/2052 | &nbsp;&nbsp; 9227 |
| &nbsp;&nbsp; 85000 | Fiserv, Inc., Sr. Unsecd. Note, 3.500%, 7/1/2029 | &nbsp;&nbsp; 76760 |
| &nbsp;&nbsp; 80000 | Fiserv, Inc., Sr. Unsecd. Note, 3.800%, 10/1/2023 | &nbsp;&nbsp; 79171 |
| &nbsp;&nbsp; 100000 | Lam Research Corp., Sr. Unsecd. Note, 4.000%, 3/15/2029 | &nbsp;&nbsp; 95436 |
| &nbsp;&nbsp; 65000 | Microsoft Corp., Sr. Unsecd. Note, 2.525%, 6/1/2050 | &nbsp;&nbsp; 43087 |
| &nbsp;&nbsp; 200000 | Microsoft Corp., Sr. Unsecd. Note, 3.125%, 11/3/2025 | &nbsp;&nbsp; 193420 |
| &nbsp;&nbsp; 100000 | Oracle Corp., Sr. Unsecd. Note, 3.600%, 4/1/2050 | &nbsp;&nbsp; 67745 |
| &nbsp;&nbsp; 100000 | Oracle Corp., Sr. Unsecd. Note, 6.250%, 11/9/2032 | &nbsp;&nbsp; 104978 |
| &nbsp;&nbsp; 100000 | Verisk Analytics, Inc., Sr. Unsecd. Note, 4.125%, 3/15/2029 | &nbsp;&nbsp; 93823 |
| &nbsp;&nbsp; 25000 | Verisk Analytics, Inc., Sr. Unsecd. Note, 5.500%, 6/15/2045 | &nbsp;&nbsp; 23605 |
| &nbsp;&nbsp; 40000 | VMware, Inc., Sr. Unsecd. Note, 1.400%, 8/15/2026 | &nbsp;&nbsp; 34921 |
| &nbsp;&nbsp; 35000 | VMware, Inc., Sr. Unsecd. Note, 2.200%, 8/15/2031 | &nbsp;&nbsp; 26644 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 1272668 |
|  | **Technology Services—0.1%** |  |
| &nbsp;&nbsp; 100000 | Fortinet, Inc., Sr. Unsecd. Note, 1.000%, 3/15/2026 | &nbsp;&nbsp; 87650 |
| &nbsp;&nbsp; 75000 | Global Payments, Inc., Sr. Unsecd. Note, 4.950%, 8/15/2027 | &nbsp;&nbsp; 72873 |
| &nbsp;&nbsp; 80000 | Verisign, Inc., Sr. Unsecd. Note, 2.700%, 6/15/2031 | &nbsp;&nbsp; 65354 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 225877 |
|  | **Transportation - Railroads—0.2%** |  |
| &nbsp;&nbsp; 75000 | Burlington Northern Santa Fe Corp., Sr. Unsecd. Note, 3.000%, 4/1/2025 | &nbsp;&nbsp; 72194 |
| &nbsp;&nbsp; 110000 | Kansas City Southern Industries, Inc., Sr. Unsecd. Note, 3.500%, 5/1/2050 | &nbsp;&nbsp; 78814 |
| &nbsp;&nbsp; 65000 | Union Pacific Corp., Sr. Unsecd. Note, 2.375%, 5/20/2031 | &nbsp;&nbsp; 54893 |
| &nbsp;&nbsp; 100000 | Union Pacific Corp., Sr. Unsecd. Note, 2.400%, 2/5/2030 | &nbsp;&nbsp; 85775 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 291676 |
|  | **Transportation - Services—0.2%** |  |
| &nbsp;&nbsp; 65000 | FedEx Corp., Sr. Unsecd. Note, 3.250%, 5/15/2041 | &nbsp;&nbsp; 46524 |
| &nbsp;&nbsp; 80000 | GXO Logistics, Inc., Sr. Unsecd. Note, Series WI, 1.650%, 7/15/2026 | &nbsp;&nbsp; 68593 |
| &nbsp;&nbsp; 80000 | GXO Logistics, Inc., Sr. Unsecd. Note, Series WI, 2.650%, 7/15/2031 | &nbsp;&nbsp; 59253 |
| &nbsp;&nbsp; 200000 | Penske Truck Leasing Co. LP & PTL Finance Corp., Sr. Unsecd. Note, 144A, 2.700%, 3/14/2023 | &nbsp;&nbsp; 198951 |
| &nbsp;&nbsp; 50000 | Ryder System, Inc., Sr. Unsecd. Note, Series MTN, 2.850%, 3/1/2027 | &nbsp;&nbsp; 45208 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 418529 |
|  | **Utility - Electric—1.1%** |  |
| &nbsp;&nbsp; 165000 | Ameren Corp., Sr. Unsecd. Note, 1.750%, 3/15/2028 | &nbsp;&nbsp; 139632 |
| &nbsp;&nbsp; 50000 | American Electric Power Co., Inc., Jr. Sub. Note, 2.031%, 3/15/2024 | &nbsp;&nbsp; 48233 |
| &nbsp;&nbsp; 100000 | Black Hills Corp., Sr. Unsecd. Note, 2.500%, 6/15/2030 | &nbsp;&nbsp; 80509 |
| &nbsp;&nbsp; 65000 | Dominion Energy, Inc., Jr. Sub. Note, 3.071%, 8/15/2024 | &nbsp;&nbsp; 62673 |
| &nbsp;&nbsp; 200000 | Duke Energy Corp., Sr. Unsecd. Note, 2.650%, 9/1/2026 | &nbsp;&nbsp; 184987 |
| &nbsp;&nbsp; 125000 | Duke Energy Corp., Sr. Unsecd. Note, 3.750%, 9/1/2046 | &nbsp;&nbsp; 93293 |
| &nbsp;&nbsp; 75000 | Emera US Finance LP, Sr. Unsecd. Note, 3.550%, 6/15/2026 | &nbsp;&nbsp; 70346 |
| &nbsp;&nbsp; 50000 | Emera US Finance LP, Sr. Unsecd. Note, 4.750%, 6/15/2046 | &nbsp;&nbsp; 38782 |
| &nbsp;&nbsp; 100000 | Enel Finance International SA, Company Guarantee, 144A, 6.000%, 10/7/2039 | &nbsp;&nbsp; 91432 |
| &nbsp;&nbsp; 100000 | Exelon Corp., Sr. Unsecd. Note, 4.700%, 4/15/2050 | &nbsp;&nbsp; 87632 |
| &nbsp;&nbsp; 25000 | Exelon Corp., Sr. Unsecd. Note, 144A, 4.100%, 3/15/2052 | &nbsp;&nbsp; 20110 |
| &nbsp;&nbsp; 100000 | FirstEnergy Transmission LLC, Sr. Unsecd. Note, 144A, 4.550%, 4/1/2049 | &nbsp;&nbsp; 81387 |
| &nbsp;&nbsp; 93000 | Fortis, Inc./Canada, Sr. Unsecd. Note, 3.055%, 10/4/2026 | &nbsp;&nbsp; 86391 |
| &nbsp;&nbsp; 190000 | Kansas City Power and Light Co., Sr. Unsecd. Note, 4.200%, 3/15/2048 | &nbsp;&nbsp; 155100 |
| &nbsp;&nbsp; 50000 | National Rural Utilities Cooperative Finance Corp., Sr. Sub. Note, 5.250%, 4/20/2046 | &nbsp;&nbsp; 45066 |
| &nbsp;&nbsp; 200000 | NextEra Energy Capital Holdings, Inc., Sr. Unsecd. Note, 2.250%, 6/1/2030 | &nbsp;&nbsp; 164925 |
| &nbsp;&nbsp; 65000 | NiSource Finance Corp., Sr. Unsecd. Note, 4.375%, 5/15/2047 | &nbsp;&nbsp; 54665 |

---

Annual Shareholder Report

**18**

------

---

| | | |
|:---|:---|:---|
| **Shares,**<br> **Principal**<br> **Amount**<br> **or Contracts**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Utility - Electric—continued** |  |
| $300000 | PPL Capital Funding, Inc., Sr. Unsecd. Note, 3.100%, 5/15/2026 | $280740 |
| &nbsp;&nbsp; 125000 | Puget Energy, Inc., Sec. Fac. Bond, 2.379%, 6/15/2028 | &nbsp;&nbsp; 106580 |
| &nbsp;&nbsp; 100000 | Southern Co., Jr. Sub. Note, Series B, 4.000%, 1/15/2051 | &nbsp;&nbsp; 91250 |
| &nbsp;&nbsp; 20000 | WEC Energy Group, Inc., Sr. Unsecd. Note, 5.150%, 10/1/2027 | &nbsp;&nbsp; 20250 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 2003983 |
|  | **Utility - Natural Gas—0.3%** |  |
| &nbsp;&nbsp; 100000 | Enbridge Energy Partners LP, Sr. Unsecd. Note, 5.500%, 9/15/2040 | &nbsp;&nbsp; 93942 |
| &nbsp;&nbsp; 40000 | National Fuel Gas Co., Sr. Unsecd. Note, 2.950%, 3/1/2031 | &nbsp;&nbsp; 31438 |
| &nbsp;&nbsp; 70000 | National Fuel Gas Co., Sr. Unsecd. Note, 5.500%, 1/15/2026 | &nbsp;&nbsp; 69720 |
| &nbsp;&nbsp; 130000 | Sempra Energy, Sr. Unsecd. Note, 3.700%, 4/1/2029 | &nbsp;&nbsp; 118762 |
| &nbsp;&nbsp; 120000 | Southern Natural Gas, Sr. Unsecd. Note, 144A, 4.800%, 3/15/2047 | &nbsp;&nbsp; 97934 |
| &nbsp;&nbsp; 90000 | TransCanada PipeLines Ltd., Sr. Secd. Note, 5.100%, 3/15/2049 | &nbsp;&nbsp; 82064 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 493860 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL CORPORATE BONDS <br>(IDENTIFIED COST $20,468,312)<br>| &nbsp;&nbsp;&nbsp; 18080314 |
|  | COMMERCIAL MORTGAGE-BACKED SECURITIES—0.6% |  |
|  | **Agency Commercial Mortgage-Backed Securities—0.1%** |  |
| &nbsp;&nbsp; 290000 | FREMF Mortgage Trust 2015-K49 REMIC, Class B, 3.724%, 10/25/2048 | &nbsp;&nbsp; 274971 |
|  | **Commercial Mortgage—0.4%** |  |
| &nbsp;&nbsp; 85000 | Bank, Class A4, 3.488%, 11/15/2050 | &nbsp;&nbsp; 78335 |
| &nbsp;&nbsp; 110000 | Bank, Class A4, 3.507%, 3/15/2064 | &nbsp;&nbsp; 97067 |
| &nbsp;&nbsp; 200000 | Benchmark Mortgage Trust 2020-B19, Class A5, 1.850%, 9/15/2053 | &nbsp;&nbsp; 161198 |
| &nbsp;&nbsp; 50000 | Commercial Mortgage Trust 2015-DC1, Class AM, 3.724%, 2/10/2048 | &nbsp;&nbsp; 47168 |
| &nbsp;&nbsp; 200000 | Fontainebleau Miami Beach Trust, Class B, 3.447%, 12/10/2036 | &nbsp;&nbsp; 185437 |
| &nbsp;&nbsp; 100000 | JPMDB Commercial Mortgage Securities Trust 2016-C4, Class A3, 3.141%, 12/15/2049 | &nbsp;&nbsp; 91632 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 660837 |
|  | **Federal Home Loan Mortgage Corporation REMIC—0.1%** |  |
| &nbsp;&nbsp; 230338 | Federal Home Loan Mortgage Corp. REMIC, Series K105, Class A1, 1.536%, 9/25/2029 | &nbsp;&nbsp; 202939 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES <br>(IDENTIFIED COST $1,296,524)<br>| &nbsp;&nbsp;&nbsp;&nbsp; 1138747 |
|  | FOREIGN GOVERNMENTS/AGENCIES—0.2% |  |
|  | **Sovereign—0.2%** |  |
| &nbsp;&nbsp; 200000 | Mexico, Government of, 3.750%, 1/11/2028 | &nbsp;&nbsp; 188756 |
| &nbsp;&nbsp; 100000 | Poland, Government of, Sr. Unsecd. Note, 4.000%, 1/22/2024 | &nbsp;&nbsp; 98610 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL FOREIGN GOVERNMENTS/AGENCIES <br>(IDENTIFIED COST $301,950)<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 287366 |
|  | MORTGAGE-BACKED SECURITIES—0.0% |  |
|  | **Government National Mortgage Association—0.0%** |  |
| &nbsp;&nbsp; 3435 | Government National Mortgage Association, Pool 2796, 7.000%, 8/20/2029 | &nbsp;&nbsp; 3557 |
| &nbsp;&nbsp; 2128 | Government National Mortgage Association, Pool 3040, 7.000%, 2/20/2031 | &nbsp;&nbsp; 2220 |
| &nbsp;&nbsp; 6008 | Government National Mortgage Association, Pool 3188, 6.500%, 1/20/2032 | &nbsp;&nbsp; 6252 |
| &nbsp;&nbsp; 7067 | Government National Mortgage Association, Pool 3239, 6.500%, 5/20/2032 | &nbsp;&nbsp; 7370 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL MORTGAGE-BACKED SECURITIES <br>(IDENTIFIED COST $18,624)<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 19399 |
|  | ADJUSTABLE RATE MORTGAGE—0.0% |  |
|  | **Federal National Mortgage Association—0.0%** |  |
| &nbsp;&nbsp; 1591<br><sup>2</sup> <br>| Federal National Mortgage Association ARM, 4.094%, 9/1/2037 <br>(IDENTIFIED COST $1,603)<br>| &nbsp;&nbsp; 1608 |
|  | PURCHASED PUT OPTIONS—0.1% |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 30000 | SPDR S&P 500 ETF Trust (PUT-Option), Notional Amount $38,243,000, Exercise Price $370, Expiration Date 1/11/2023 | &nbsp;&nbsp; 43200 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 30000 | SPDR S&P 500 ETF Trust (PUT-Option), Notional Amount $38,243,000, Exercise Price $380, Expiration Date 1/5/2023 | &nbsp;&nbsp; 60300 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL PURCHASED PUT OPTIONS <br>(IDENTIFIED COST $126,923)<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 103500 |
|  | INVESTMENT COMPANIES—17.4% |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1582 | Bank Loan Core Fund | &nbsp;&nbsp; 13706 |

---

Annual Shareholder Report

**19**

------

---

| | | |
|:---|:---|:---|
| **Shares,**<br> **Principal**<br> **Amount**<br> **or Contracts**<br>|  | **Value** |
|  | INVESTMENT COMPANIES—continued |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 300979 | Emerging Markets Core Fund | $2389776 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 515669 | Federated Hermes High Income Bond Fund II | &nbsp;&nbsp; 2753671 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1084 | Federated Hermes Short-Intermediate Government Fund, Institutional Shares | &nbsp;&nbsp; 10633 |
| &nbsp;&nbsp;&nbsp; 2582585 | Mortgage Core Fund | &nbsp;&nbsp; 21642062 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 411979 | Project and Trade Finance Core Fund | &nbsp;&nbsp; 3567737 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL INVESTMENT COMPANIES <br>(IDENTIFIED COST $32,499,547)<br>| &nbsp;&nbsp;&nbsp; 30377585 |
|  | REPURCHASE AGREEMENT—9.4% |  |
| $16454000 | Interest in $1,350,000,000 joint repurchase agreement 4.30%, dated 12/30/2022 under which Bank of Montreal will <br> repurchase securities provided as collateral for $1,350,645,000 on 1/3/2023. The securities provided as collateral at the end of <br> the period held with BNY Mellon as tri-party agent, were U.S. Government Agency securities with various maturities to <br> 5/20/2072 and the market value of those underlying securities was $1,379,047,631. <br>(IDENTIFIED COST $16,454,000)<br>| &nbsp;&nbsp; 16454000 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL INVESTMENT IN SECURITIES—99.7% <br>(IDENTIFIED COST $169,996,963)<sup>3</sup> <br>| &nbsp;&nbsp; 174227614 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; OTHER ASSETS AND LIABILITIES - NET—0.3%<sup>4</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 542069 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL NET ASSETS—100% | $174769683 |

---

At December 31, 2022, the Fund had the following outstanding futures contracts:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Description** | **Number of** <br>**Contracts**<br>| &nbsp;&nbsp; **Notional** <br>**Value**<br>| &nbsp;&nbsp;&nbsp; **Expiration** <br>**Date**<br>| &nbsp;&nbsp; **Value and** <br>**Unrealized** <br>**Appreciation** <br>**(Depreciation)**<br>|
| **Long Futures:** |  |  |  |  |
| United States Treasury Notes 10-Year Ultra Long Futures | &nbsp;&nbsp; 50 | $5914063 | March 2023 | $(8670) |
| S&P 500 E-Mini Long Futures | &nbsp;&nbsp; 54 | $10424700 | March 2023 | $(38146) |
| United States Treasury Notes 2-Year Long Futures | &nbsp;&nbsp; 50 | $10253906 | March 2023 | $9313 |
| **Short Futures:** |  |  |  |  |
| United States Treasury Notes 5-Year Short Futures | &nbsp;&nbsp; 30 | $3237891 | March 2023 | $3501 |
| United States Treasury Notes 10-Year Short Futures | 221 | $24817609 | March 2023 | $517181 |
| &nbsp;&nbsp;&nbsp;&nbsp; NET UNREALIZED APPRECIATION ON FUTURES CONTRACTS | &nbsp;&nbsp;&nbsp;&nbsp; NET UNREALIZED APPRECIATION ON FUTURES CONTRACTS | &nbsp;&nbsp;&nbsp;&nbsp; NET UNREALIZED APPRECIATION ON FUTURES CONTRACTS | &nbsp;&nbsp;&nbsp;&nbsp; NET UNREALIZED APPRECIATION ON FUTURES CONTRACTS | $483179 |

---

Net Unrealized Appreciation on Futures Contracts is included in "Other Assets and Liabilities—Net."

Affiliated fund holdings are investment companies which are managed by Federated Global Investment Management Corp., Federated Investment Management Company and Federated Equity Management Company of Pennsylvania (collectively, the "Co-Advisers") or an affiliate of the Co-Advisers. Transactions with affiliated fund holdings during the period ended December 31, 2022, were as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Affiliates** | **Value as of** <br>**12/31/2021**<br>| **Purchases** <br>**at Cost**<br>| **Proceeds** <br>**from Sales**<br>| **Change in** <br>**Unrealized** <br>**Appreciation/** <br>**Depreciation**<br>| **Net** <br>**Realized** <br>**Gain/** <br>**(Loss)**<br>| **Value as of** <br>**12/31/2022**<br>| **Shares** <br>**Held as of** <br>**12/31/2022**<br>| **Dividend** <br>**Income**<br>|
| Bank Loan Core Fund | $4642689 | $113990 | $(4400000) | $(121381) | $(221592) | $13706 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1582 | $113989 |
| Emerging Markets Core Fund | $3587549 | $1029520 | $(1700000) | $(295262) | $(232031) | $2389776 | &nbsp;&nbsp; 300979 | $179521 |
| Federated Hermes High Income Bond Fund II, <br> Class P<br>| $6958443 | $282542 | $(3600000) | $(1373969) | $486655 | $2753671 | &nbsp;&nbsp; 515669 | $282542 |
| Federated Hermes Short-Intermediate <br> Government Fund, Institutional Shares<br>| $11649 | $221 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; N/A | $(1237) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; N/A | $10633 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1084 | $221 |
| Mortgage Core Fund | $25374632 | $10898834 | $(10925000) | $(2664453) | $(1041951) | $21642062 | 2582585 | $773834 |
| Project and Trade Finance Core Fund | $3423115 | $195468 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; N/A | $(50846) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; N/A | $3567737 | &nbsp;&nbsp; 411979 | $195405 |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL OF AFFILIATED TRANSACTIONS | $43998077 | $12520575 | $(20625000) | $(4507148) | $(1008919) | $30377585 | 3813878 | $1545512 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 1 | *Non-income-producing security.* |
| 2 | *Floating/adjustable note with current rate and current maturity or next reset date shown. Adjustable rate mortgage security coupons are based on the weighted* <br> *average note rates of the underlying mortgages less the guarantee and servicing fees. These securities do not indicate an index and spread in their description* <br> *above.*<br>|
| 3 | *The cost of investments for federal tax purposes amounts to $173,005,443.* |
| 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 December 31, 2022.

Annual Shareholder Report

**20**

------

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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br>The following is a summary of the inputs used, as of December 31, 2022, in valuing the Fund's assets carried at fair value:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Valuation Inputs** | **Valuation Inputs** | **Valuation Inputs** | **Valuation Inputs** | **Valuation Inputs** |
|  | **Level 1—** <br>**Quoted** <br>**Prices**<br>| **Level 2—** <br>**Other** <br>**Significant** <br>**Observable** <br>**Inputs**<br>| **Level 3—** <br>**Significant** <br>**Unobservable** <br>**Inputs**<br>| **Total** |
| **Equity Securities:** |  |  |  |  |
| Common Stocks |  |  |  |  |
| &nbsp;&nbsp; Domestic | $64375667 | $— | $— | $64375667 |
| &nbsp;&nbsp; International | &nbsp;&nbsp;&nbsp; 3777276 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp; 3777276 |
| **Debt Securities:** |  |  |  |  |
| U.S. Treasuries | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp; 39612152 | &nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp; 39612152 |
| Corporate Bonds | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp; 18080314 | &nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp; 18080314 |
| Commercial Mortgage-Backed Securities | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp; 1138747 | &nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp; 1138747 |
| Foreign Governments/Agencies | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 287366 | &nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 287366 |
| Mortgage-Backed Securities | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 19399 | &nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 19399 |
| Adjustable Rate Mortgage | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1608 | &nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1608 |
| **Purchased Put Options** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 103500 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 103500 |
| **Investment Companies**<sup>1</sup> <br>| &nbsp;&nbsp; 26809848 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp; 30377585 |
| **Repurchase Agreement** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp; 16454000 | &nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp; 16454000 |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL SECURITIES | $95066291 | $75593586 | $— | $174227614 |
| **Other Financial Instruments:**<sup>2</sup> <br>|  |  |  |  |
| Assets | $529995 | $— | $— | $529995 |
| Liabilities | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (46816) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (46816) |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL OTHER FINANCIAL INSTRUMENTS | $483179 | $— | $— | $483179 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 1 | *As permitted by U.S. generally accepted accounting principles (GAAP), an Investment Company valued at $3,567,737 is measured at fair value using the net asset* <br> *value (NAV) per share practical expedient and has not been categorized in the chart above but is included in the Total column. The price of shares redeemed of* <br> *Project and Trade Finance Core Fund may be determined as of the closing NAV of the fund up to twenty-four days after receipt of a shareholder redemption* <br> *request.*<br>|
| 2 | *Other financial instruments are futures contracts.* |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| The following acronym(s) are used throughout this portfolio: | The following acronym(s) are used throughout this portfolio: |
| ARM | —Adjustable Rate Mortgage |
| ETF | —Exchange-Traded Fund |
| FREMF | —Freddie Mac Multifamily K-Deals |
| GMTN | —Global Medium Term Note |
| MTN | —Medium Term Note |
| REIT | —Real Estate Investment Trust |
| REMIC | —Real Estate Mortgage Investment Conduit |
| SPDR | —Standard & Poor's Depositary Receipt |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**21**

------

Financial Highlights–Primary Shares

(For a Share Outstanding Throughout Each Period)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | **$12.90** | **$11.09** | **$11.30** | **$9.60** | **$10.80** |
| **Income From Investment Operations:** |  |  |  |  |  |
| Net investment income (loss)<sup>1</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.16 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.19 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.19 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.24 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.23 |
| Net realized and unrealized gain (loss) | &nbsp;&nbsp;&nbsp;&nbsp; (1.72) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.83 | &nbsp;&nbsp;&nbsp;&nbsp; (0.13) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.68 | &nbsp;&nbsp;&nbsp;&nbsp; (1.13) |
| &nbsp;&nbsp;&nbsp;&nbsp; Total From Investment Operations | &nbsp;&nbsp;&nbsp;&nbsp; (1.56) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2.02 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.06 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.92 | &nbsp;&nbsp;&nbsp;&nbsp; (0.90) |
| **Less Distributions:** |  |  |  |  |  |
| Distributions from net investment income | &nbsp;&nbsp;&nbsp;&nbsp; (0.21) | &nbsp;&nbsp;&nbsp;&nbsp; (0.21) | &nbsp;&nbsp;&nbsp;&nbsp; (0.27) | &nbsp;&nbsp;&nbsp;&nbsp; (0.22) | &nbsp;&nbsp;&nbsp;&nbsp; (0.30) |
| Distributions from net realized gain | &nbsp;&nbsp;&nbsp;&nbsp; (2.67) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions | &nbsp;&nbsp;&nbsp;&nbsp; (2.88) | &nbsp;&nbsp;&nbsp;&nbsp; (0.21) | &nbsp;&nbsp;&nbsp;&nbsp; (0.27) | &nbsp;&nbsp;&nbsp;&nbsp; (0.22) | &nbsp;&nbsp;&nbsp;&nbsp; (0.30) |
| **Net Asset Value, End of Period** | **$8.46** | **$12.90** | **$11.09** | **$11.30** | **$9.60** |
| **Total Return**<sup>2</sup> <br>| &nbsp;&nbsp;&nbsp; (13.75)% | &nbsp;&nbsp;&nbsp;&nbsp; 18.51% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.93% | &nbsp;&nbsp;&nbsp;&nbsp; 20.23% | &nbsp;&nbsp;&nbsp;&nbsp; (8.49)% |
| **Ratios to Average Net Assets:** |  |  |  |  |  |
| Net expenses<sup>3</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.95% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.93% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.92% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.91% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.89% |
| Net investment income | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.72% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.58% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.82% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2.28% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2.26% |
| Expense waiver/reimbursement<sup>4</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.11% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.02% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.01% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.02% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.03% |
| **Supplemental Data:** |  |  |  |  |  |
| Net assets, end of period (000 omitted) | $173194 | $217682 | $586281 | $651498 | $632957 |
| Portfolio turnover<sup>5</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 51% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 60% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 61% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 47% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 96% |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 1 | *Per share numbers have been calculated using the average shares method.* |
| 2 | *Based on net asset value. Total returns do not reflect any additional fees or expenses that may be imposed by separate accounts of insurance companies or in* <br> *connection with any variable annuity or variable life insurance contract.*<br>|
| 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/*<br> *reimbursement recorded by investment companies in which the Fund may invest.*<br>|
| 5 | *Securities that mature are considered sales for purposes of this calculation.* |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**22**

------

Financial Highlights–Service Shares

(For a Share Outstanding Throughout Each Period)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Period** <br>**Ended** <br>**12/31/2018**<sup>1</sup> |
|  | **2022** | **2021** | **2020** | **2019** | **Period** <br>**Ended** <br>**12/31/2018**<sup>1</sup> |
| **Net Asset Value, Beginning of Period** | **$12.90** | **$11.09** | **$11.27** | **$9.59** | **$10.08** |
| **Income From Investment Operations:** |  |  |  |  |  |
| Net investment income (loss)<sup>2</sup> <br>| &nbsp;&nbsp;&nbsp; 0.14 | &nbsp;&nbsp;&nbsp; 0.16 | &nbsp;&nbsp;&nbsp;&nbsp; 0.16 | &nbsp;&nbsp;&nbsp;&nbsp; 0.21 | &nbsp;&nbsp;&nbsp;&nbsp; 0.13 |
| Net realized and unrealized gain (loss) | &nbsp;&nbsp;&nbsp; (1.74) | &nbsp;&nbsp;&nbsp; 1.84 | &nbsp;&nbsp;&nbsp; (0.12) | &nbsp;&nbsp;&nbsp;&nbsp; 1.68 | &nbsp;&nbsp;&nbsp; (0.62) |
| &nbsp;&nbsp;&nbsp;&nbsp; Total From Investment Operations | &nbsp;&nbsp;&nbsp; (1.60) | &nbsp;&nbsp;&nbsp; 2.00 | &nbsp;&nbsp;&nbsp;&nbsp; 0.04 | &nbsp;&nbsp;&nbsp;&nbsp; 1.89 | &nbsp;&nbsp;&nbsp; (0.49) |
| **Less Distributions:** |  |  |  |  |  |
| Distributions from net investment income | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp; (0.19) | &nbsp;&nbsp;&nbsp; (0.22) | &nbsp;&nbsp;&nbsp; (0.21) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — |
| Distributions from net realized gain | &nbsp;&nbsp;&nbsp; (2.67) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions | &nbsp;&nbsp;&nbsp; (2.67) | &nbsp;&nbsp;&nbsp; (0.19) | &nbsp;&nbsp;&nbsp; (0.22) | &nbsp;&nbsp;&nbsp; (0.21) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — |
| **Net Asset Value, End of Period** | **$8.63** | **$12.90** | **$11.09** | **$11.27** | **$9.59** |
| **Total Return**<sup>3</sup> <br>| (14.00)% | &nbsp;&nbsp; 18.25% | &nbsp;&nbsp;&nbsp;&nbsp; 0.71% | &nbsp;&nbsp;&nbsp; 19.92% | &nbsp;&nbsp;&nbsp; (4.86)% |
| **Ratios to Average Net Assets:** |  |  |  |  |  |
| Net expenses<sup>4</sup> <br>| &nbsp;&nbsp;&nbsp; 1.20% | &nbsp;&nbsp;&nbsp; 1.16% | &nbsp;&nbsp;&nbsp;&nbsp; 1.17% | &nbsp;&nbsp;&nbsp;&nbsp; 1.16% | &nbsp;&nbsp;&nbsp;&nbsp; 1.15%<sup>5</sup> <br>|
| Net investment income | &nbsp;&nbsp;&nbsp; 1.47% | &nbsp;&nbsp;&nbsp; 1.38% | &nbsp;&nbsp;&nbsp;&nbsp; 1.57% | &nbsp;&nbsp;&nbsp;&nbsp; 2.03% | &nbsp;&nbsp;&nbsp;&nbsp; 1.91%<sup>5</sup> <br>|
| Expense waiver/reimbursement<sup>6</sup> <br>| &nbsp;&nbsp;&nbsp; 0.11% | &nbsp;&nbsp;&nbsp; 0.02% | &nbsp;&nbsp;&nbsp;&nbsp; 0.01% | &nbsp;&nbsp;&nbsp;&nbsp; 0.02% | &nbsp;&nbsp;&nbsp;&nbsp; 0.02%<sup>5</sup> <br>|
| **Supplemental Data:** |  |  |  |  |  |
| Net assets, end of period (000 omitted) | $1576 | $1949 | $39680 | $44161 | $44037 |
| Portfolio turnover<sup>7</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; 51% | &nbsp;&nbsp;&nbsp;&nbsp; 60% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 61% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 47% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 96%<sup>8</sup> <br>|

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 1 | *Reflects operations for the period from April 26, 2018 (commencement of operations) to December 31, 2018.* |
| 2 | *Per share numbers have been calculated using the average shares method.* |
| 3 | *Based on net asset value. Total returns do not reflect any additional fees or expenses that may be imposed by separate accounts of insurance companies or in* <br> *connection with any variable annuity or variable life insurance contract. Total returns for periods of less than one year are not annualized.*<br>|
| 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/*<br> *reimbursement recorded by investment companies in which the Fund may invest.*<br>|
| 7 | *Securities that mature are considered sales for purposes of this calculation.* |
| 8 | *Portfolio turnover is calculated at the Fund level. Percentage indicated was calculated for the year ended December 31, 2018.* |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**23**

------

Statement of Assets and Liabilities <br>December 31, 2022

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| **Assets:** |  |
| Investment in securities, at value including $30,377,585 of investments in affiliated holdings\* (identified cost $169,996,963) | $174227614 |
| Cash | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 302 |
| Cash denominated in foreign currencies (identified cost $1,146) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1221 |
| Due from broker (Note 2) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2000 |
| Income receivable | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 509383 |
| Income receivable from affiliated holdings | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 118607 |
| Receivable for investments sold | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 267956 |
| Receivable for shares sold | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 15157 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Assets | &nbsp;&nbsp; 175142240 |
| **Liabilities:** |  |
| Payable for investments purchased | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 245592 |
| Payable for shares redeemed | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 23169 |
| Payable for variation margin on futures contracts | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6279 |
| Payable for investment adviser fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6054 |
| Payable for administrative fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1436 |
| Payable for auditing fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 29038 |
| Payable for custodian fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 10358 |
| Payable for portfolio accounting fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 32510 |
| Payable for distribution services fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 339 |
| Accrued expenses (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 17782 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Liabilities | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 372557 |
| Net assets for 20,644,425 shares outstanding | $174769683 |
| **Net Assets Consist of:** |  |
| Paid-in capital | $191811506 |
| Total distributable earnings (loss) | &nbsp;&nbsp; (17041823) |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Net Assets | $174769683 |
| **Net Asset Value, Offering Price and Redemption Proceeds Per Share:** |  |
| **Primary Shares:** |  |
| $173,193,588 ÷ 20,461,863 shares outstanding, no par value, unlimited shares authorized | $8.46 |
| **Service Shares:** |  |
| $1,576,095 ÷ 182,562 shares outstanding, no par value, unlimited shares authorized | $8.63 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

\* *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 <br>Year Ended December 31, 2022

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| **Investment Income:** |  |
| Dividends (including $1,545,512 received from affiliated holdings\* and net of foreign taxes withheld of $1,497) | $3234881 |
| Interest | &nbsp;&nbsp;&nbsp;&nbsp; 1803529 |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL INCOME | &nbsp;&nbsp;&nbsp;&nbsp; 5038410 |
| **Expenses:** |  |
| Investment adviser fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp; 1411707 |
| Administrative fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 277337 |
| Custodian fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 38248 |
| Transfer agent fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 18339 |
| Directors'/Trustees' fees (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2343 |
| Auditing fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 36298 |
| Legal fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 12659 |
| Portfolio accounting fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 129648 |
| Distribution services fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4185 |
| Printing and postage | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 38363 |
| Miscellaneous (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 33549 |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL EXPENSES | &nbsp;&nbsp;&nbsp;&nbsp; 2002676 |
| Waiver/reimbursement of investment adviser fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (197998) |
| Net expenses | &nbsp;&nbsp;&nbsp;&nbsp; 1804678 |
| Net investment income | &nbsp;&nbsp;&nbsp;&nbsp; 3233732 |
| **Realized and Unrealized Gain (Loss) on Investments, Foreign Currency Transactions, Futures Contracts and Written Options:** |  |
| Net realized gain on investments (including net realized loss of $(1008919) on sales of investments in affiliated holdings\*) | &nbsp;&nbsp;&nbsp;&nbsp; 4641786 |
| Net realized loss on foreign currency transactions | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (666) |
| Net realized loss on futures contracts | &nbsp;&nbsp; (13879501) |
| Net realized gain on written options | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 84036 |
| Net change in unrealized appreciation of investments (including net change in unrealized appreciation of $(4507148) on investments in <br> affiliated holdings\*)<br>| &nbsp;&nbsp; (23109172) |
| Net change in unrealized appreciation of translation of assets and liabilities in foreign currency | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 75 |
| Net change in unrealized appreciation of futures contracts | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (628851) |
| Net change in unrealized appreciation of written options | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (41826) |
| Net realized and unrealized gain (loss) on investments, foreign currency transactions, futures contracts and written options | &nbsp;&nbsp; (32934119) |
| Change in net assets resulting from operations | $(29700387) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

\* *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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | |
|:---|:---|:---|
| **Year Ended December 31** | **2022** | **2021** |
| **Increase (Decrease) in Net Assets** |  |  |
| **Operations:** |  |  |
| Net investment income | $3233732 | $6554594 |
| Net realized gain (loss) | &nbsp;&nbsp;&nbsp;&nbsp; (9154345) | &nbsp;&nbsp; 127552982 |
| Net change in unrealized appreciation/depreciation | &nbsp;&nbsp; (23779774) | &nbsp;&nbsp;&nbsp; (56776535) |
| &nbsp;&nbsp;&nbsp;&nbsp; CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | &nbsp;&nbsp; (29700387) | &nbsp;&nbsp;&nbsp;&nbsp; 77331041 |
| **Distributions to Shareholders:** |  |  |
| Primary Shares | &nbsp;&nbsp; (47808168) | &nbsp;&nbsp;&nbsp; (10815186) |
| Service Shares | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (400234) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (645526) |
| &nbsp;&nbsp;&nbsp;&nbsp; CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS | &nbsp;&nbsp; (48208402) | &nbsp;&nbsp;&nbsp; (11460712) |
| **Share Transactions:** |  |  |
| Proceeds from sale of shares | &nbsp;&nbsp;&nbsp;&nbsp; 5130009 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 8889313 |
| Net asset value of shares issued to shareholders in payment of distributions declared | &nbsp;&nbsp;&nbsp; 48208376 | &nbsp;&nbsp;&nbsp;&nbsp; 11460710 |
| Cost of shares redeemed | &nbsp;&nbsp; (20291100) | &nbsp;&nbsp; (492550413) |
| &nbsp;&nbsp;&nbsp;&nbsp; CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS | &nbsp;&nbsp;&nbsp; 33047285 | &nbsp;&nbsp; (472200390) |
| Change in net assets | &nbsp;&nbsp; (44861504) | &nbsp;&nbsp; (406330061) |
| **Net Assets:** |  |  |
| Beginning of period | &nbsp;&nbsp; 219631187 | &nbsp;&nbsp; 625961248 |
| End of period | $174769683 | $219631187 |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**26**

------

Notes to Financial Statements

December 31, 2022

**1. ORGANIZATION** 

Federated Hermes Insurance Series (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 six portfolios. The financial statements included herein are only those of Federated Hermes Managed Volatility Fund II (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 two classes of shares: Primary Shares and Service Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. Fund shares are available exclusively as a funding vehicle for life insurance companies writing variable life insurance policies and variable annuity contracts. The investment objective of the Fund is to achieve high current income and moderate capital appreciation. The Co-Advisers each are registered as a "commodity pool operator" with respect to operation 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 net asset value (NAV), the Fund generally values investments as follows:

◾ <br>

Fixed-income securities are fair valued using price evaluations provided by a pricing service approved by the Co-Advisers.

◾ <br>

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.

◾ <br>

Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.

◾ <br>

Derivative contracts listed on exchanges are valued at their reported settlement or closing price, except that options are valued at the mean of closing bid and ask quotations.

◾ <br>

Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Co-Advisers.

◾ <br>

For securities that are fair valued in accordance with procedures established by and under the general supervision of the Co-Advisers, 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 Co-Advisers' valuation policies and procedures for the Fund, or if information furnished by a pricing service, in the opinion of the Co-Advisers' 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 and Significant Events Procedures** 

Pursuant to Rule 2a-5 under the Act, the Fund's Board of Trustees (the "Trustees") has designated the Co-Advisers as the Fund's valuation designee to perform any fair value determinations for securities and other assets held by the Fund. The Co-Advisers are subject to the Trustees oversight and certain reporting and other requirements intended to provide the Trustees the information needed to oversee the Co-Advisers' fair value determinations.

The Co-Advisers acting through their Valuation Committee, are responsible for determining the fair value of investments for which market quotations are not readily available. The Valuation Committee is comprised of officers of the Co-Advisers and certain of the Co-Advisers' affiliated companies and determines fair value and oversees the calculation of the NAV. The Valuation Committee is also authorized to use pricing services 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 Co-Advisers 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 Co-Advisers. The Trustees periodically review the fair valuations made by the Valuation Committee. The Trustees have also approved the Co-Advisers' fair valuation and significant events procedures as part of the Fund's compliance program and will review 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 indicative of a price between

Annual Shareholder Report

**27**

------

the prices bid and ask 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 OTC 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 Co-Advisers.

The Co-Advisers have also adopted procedures requiring an investment to be priced at its fair value whenever the Valuation Committee determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

◾ <br>

With respect to securities traded principally in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures contracts;

◾ <br>

Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded;

◾ <br>

Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, or a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.

The Co-Advisers have adopted procedures whereby the Valuation Committee uses a pricing service to provide factors to update the fair value of equity securities traded principally in foreign markets from the time of the close of their respective foreign stock exchanges to the pricing time of the Fund. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Valuation Committee will determine the fair value of the investment in accordance with the fair valuation procedures approved by the Co-Advisers. The Trustees periodically review fair valuations made in response to significant events.

**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 Co-Advisers and their 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. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Positive or negative inflation adjustments on Treasury Inflation-Protected Securities are included in interest income. Distributions of net investment income, if any, are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Amortization/accretion of premium and discount is included in investment income. Gains and losses realized on principal payment of mortgage-backed securities (paydown gains and losses) are classified as part of 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. 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 reimbursement of $197,998 is disclosed in Note 5.

**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 December 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 December 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.

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The Fund may be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The Fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or gains are earned.

**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.

**Futures Contracts** 

The Fund purchases and sells financial futures contracts to manage duration, market and yield curve risks. Upon entering into a financial futures contract with a broker, the Fund is required to deposit with a broker, either U.S. government securities or a specified amount of cash, which is shown as due from broker in the Statement of Assets and Liabilities. Futures contracts are valued daily and unrealized gains or losses are recorded in a "variation margin" account. The Fund receives from or pays to the broker a specified amount of cash based upon changes in the variation margin account. When a contract is closed, the Fund recognizes a realized gain or loss. Futures contracts have market risks, including the risk that the change in the value of the contract may not correlate with the changes in the value of the underlying securities. There is minimal counterparty risk to the Fund since futures contracts are exchange traded and the exchange's clearinghouse, as counterparty to all exchange traded futures contracts, guarantees the futures contracts against default.

Futures contracts outstanding at period end are listed after the Fund's Portfolio of Investments.

The average notional value of long and short futures contracts held by the Fund throughout the period was $37,082,741 and $21,434,500, respectively. This is based on amounts held as of each month-end throughout the fiscal period.

**Foreign Exchange Contracts** 

The Fund enters into foreign exchange contracts to manage currency risk. Purchased contracts are used to acquire exposure to foreign currencies, whereas, contracts to sell are used to hedge the Fund's securities against currency fluctuations. Risks may arise upon entering into these transactions from the potential inability of counterparties to meet the terms of their commitments and from unanticipated movements in security prices or foreign exchange rates. The foreign exchange contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized until the settlement date.

At December 31, 2022, the Fund had no outstanding foreign exchange contracts and no activity during the fiscal year.

**Foreign Currency Translation** 

The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the rates of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, income and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate.

**Option Contracts** 

The Fund buys or sells put and call options to manage market risk. The seller ("writer") of an option receives a payment or premium, from the buyer, which the writer keeps regardless of whether the buyer exercises the option. When the Fund writes a put or call option, an amount equal to the premium received is recorded as a liability and subsequently marked to market to reflect the current value of the option written. Premiums received from writing options which expire are treated as realized gains. The Fund, as a writer of an option, bears the market risk of an unfavorable change in the price of the underlying reference instrument. When the Fund purchases a put or call option, an amount equal to the premium paid is recorded as an increase to the cost of the investment and subsequently marked to market to reflect the current value of the option purchased. Premiums paid for purchasing options which expire are treated as realized losses. Premiums received/paid for writing/purchasing options which are exercised or closed are added to the proceeds or offset against amounts paid on the underlying reference instrument to determine the realized gain or loss. The risk associated with purchasing put and call options is limited to the premium paid. Options can trade on securities or commodities exchanges. In this case, the exchange sets all the terms of the contract except for the price. Most exchanges require investors to maintain margin accounts through their brokers to cover their potential obligations to the exchange. This protects investors against potential defaults by the counterparty.

Purchased option contracts outstanding at period-end are listed in the Fund's Portfolio of Investments.

At December 31, 2022, the Fund had no outstanding written option contracts.

The average market value of purchased put options held by the Fund throughout the period was $291,865. This is based on amounts held as of each month-end throughout the fiscal period.

The average market value of written put options held by the Fund throughout the period was $4,569. This is based on amounts held as of each month-end throughout the fiscal period.

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**29**

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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 Co-Advisers.

**Additional Disclosure Related to Derivative Instruments** 

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Fair Value of Derivative Instruments** | **Fair Value of Derivative Instruments** | **Fair Value of Derivative Instruments** | **Fair Value of Derivative Instruments** | **Fair Value of Derivative Instruments** |
|  | **Assets** | **Assets** | **Liabilities** | **Liabilities** |
|  | &nbsp;&nbsp; **Statement of** <br>**Assets and** <br>**Liabilities** <br>**Location**<br>| **Fair** <br>**Value**<br>| &nbsp;&nbsp; **Statement of** <br>**Assets and** <br>**Liabilities** <br>**Location**<br>| **Fair** <br>**Value**<br>|
| Derivatives not accounted for as hedging <br>instruments under ASC Topic 815<br>|  |  |  |  |
| Interest rate contracts |  | $— | &nbsp;&nbsp; Payable for variation margin <br>on futures contracts<br>| $(521325)\* |
| Equity contracts |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp; Payable for variation margin <br>on futures contracts<br>| &nbsp;&nbsp;&nbsp; 38,146\* |
| Equity contracts | &nbsp;&nbsp; Purchased options, within <br>Investment in securities at value<br>| &nbsp;&nbsp; 103500 |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — |
| &nbsp;&nbsp;&nbsp;&nbsp; Total derivatives not accounted for as hedging instruments <br> under ASC Topic 815<br>|  | $103500 |  | $(483179) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

\* *Includes cumulative appreciation/(depreciation) of futures contracts as reported in the footnotes to the Portfolio of Investments. Only the current day's variation* *margin is reported within the Statement of Assets and Liabilities.* 

**The Effect of Derivative Instruments on the Statement of Operations for the Year Ended December 31, 2022** 

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Amount of Realized Gain or (Loss) on Derivatives Recognized in Income** | **Amount of Realized Gain or (Loss) on Derivatives Recognized in Income** | **Amount of Realized Gain or (Loss) on Derivatives Recognized in Income** | **Amount of Realized Gain or (Loss) on Derivatives Recognized in Income** | **Amount of Realized Gain or (Loss) on Derivatives Recognized in Income** |
|  | **Futures** <br>**Contracts**<br>| **Purchased** <br>**Options** <br>**Contracts**<sup>1</sup> <br>| **Written** <br>**Options** <br>**Contracts**<br>| **Total** |
| Interest rate contracts | $1869340 | $— | $— | $1869340 |
| Equity contracts | &nbsp;&nbsp; (15748841) | &nbsp;&nbsp; 5697648 | &nbsp;&nbsp; 84036 | &nbsp;&nbsp; (9967157) |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | $(13879501) | $5697648 | $84036 | $(8097817) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

1 *The net realized gain on Purchased Options Contracts is found within the Net realized gain on investments on the Statement of Operations.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income** | **Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income** | **Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income** | **Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income** | **Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income** |
|  | **Futures** <br>**Contracts**<br>| **Purchased** <br>**Options** <br>**Contracts**<sup>1</sup> <br>| **Written** <br>**Options** <br>**Contracts**<br>| **Total** |
| Interest rate contracts | $756057 | $— | $— | $756057 |
| Equity contracts | &nbsp;&nbsp; (1384908) | &nbsp;&nbsp; 75001 | &nbsp;&nbsp; (41826) | &nbsp;&nbsp; (1351733) |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | $(628851) | $75001 | $(41826) | $(595676) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

1 *The net change in unrealized appreciation of Purchased Options Contracts is found within the Net change in unrealized appreciation of investments on the* *Statement of Operations.*

**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.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**3. SHARES OF BENEFICIAL INTEREST** 

The following tables summarize share activity:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended** <br>**12/31/2022** | **Year Ended** <br>**12/31/2022** | **Year Ended** <br>**12/31/2021** | **Year Ended** <br>**12/31/2021** |
| **Primary Shares:** | **Shares** | **Amount** | **Shares** | **Amount** |
| Shares sold | &nbsp;&nbsp;&nbsp; 530991 | $4916770 | &nbsp;&nbsp;&nbsp;&nbsp; 703724 | $8356386 |
| Shares issued to shareholders in payment of distributions declared | 5219233 | &nbsp;&nbsp; 47808168 | &nbsp;&nbsp;&nbsp;&nbsp; 954562 | &nbsp;&nbsp;&nbsp;&nbsp; 10815186 |
| Shares redeemed | (2158898) | &nbsp;&nbsp; (19972108) | (37675286) | &nbsp;&nbsp; (450315015) |
| &nbsp;&nbsp;&nbsp;&nbsp; NET CHANGE RESULTING FROM PRIMARY SHARE TRANSACTIONS | 3591326 | $32752830 | (36017000) | $(431143443) |
|  | **Year Ended** <br>**12/31/2022** | **Year Ended** <br>**12/31/2022** | **Year Ended** <br>**12/31/2021** | **Year Ended** <br>**12/31/2021** |
| **Service Shares:** | **Shares** | **Amount** | **Shares** | **Amount** |
| Shares sold | &nbsp;&nbsp;&nbsp;&nbsp; 21072 | $213239 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 43013 | $532927 |
| Shares issued to shareholders in payment of distributions declared | &nbsp;&nbsp;&nbsp;&nbsp; 42757 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 400208 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 56874 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 645524 |
| Shares redeemed | &nbsp;&nbsp;&nbsp;&nbsp; (32386) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (318992) | &nbsp;&nbsp; (3527411) | &nbsp;&nbsp;&nbsp; (42235398) |
| &nbsp;&nbsp;&nbsp;&nbsp; NET CHANGE RESULTING FROM SERVICE SHARE TRANSACTIONS | &nbsp;&nbsp;&nbsp;&nbsp; 31443 | $294455 | &nbsp;&nbsp; (3427524) | $(41056947) |
| &nbsp;&nbsp;&nbsp;&nbsp; NET CHANGE RESULTING FROM TOTAL FUND SHARE TRANSACTIONS | 3622769 | $33047285 | (39444524) | $(472200390) |

---

**4. FEDERAL TAX INFORMATION** 

The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended December 31, 2022 and 2021, was as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Ordinary income | $20666153 | $11460712 |
| Long-term capital gains | $27542249 | $— |

---

As of December 31, 2022, the components of distributable earnings on a tax-basis were as follows:

---

| | |
|:---|:---|
| Undistributed ordinary income | $3229137 |
| Net unrealized appreciation | $1222246 |
| Capital loss carryforwards and deferrals | $(21493206) |
| TOTAL | $(17041823) |

---

At December 31, 2022, the cost of investments for federal tax purposes was $173,005,443. The net unrealized appreciation of investments for federal tax purposes was $1,222,171. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $13,192,920 and net unrealized depreciation from investments for those securities having an excess of cost over value of $11,970,749. The amounts presented are inclusive of derivative contracts. The difference between book-basis and tax-basis net unrealized appreciation is attributable to differing treatments for discount accretion/premium amortization on debt securities, the deferral of losses on wash sales and mark-to-market of futures contracts.

As of December 31, 2022, the Fund had a capital loss carryforward of $21,493,206 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code of 1986, 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** |
| $4527589 | $16965617 | $21493206 |

---

**5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES** 

**Investment Adviser Fee** 

The co-advisory agreement between the Fund and the Co-Advisers provides for an annual fee equal to 0.75% of the Fund's average daily net assets. The Co-Advisers may voluntarily choose to waive any portion of their 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 December 31, 2022, the Co-Advisers voluntarily waived $175,930 of their fee.

The Co-Advisers have agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated investment companies. For the year ended December 31, 2022, the Co-Advisers reimbursed $22,068.

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**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** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Average Daily Net Assets** <br>**of the Investment Complex**<br>|
| 0.100% | on assets up to $50 billion |
| 0.075% | on assets over $50 billion |

---

In addition to the fees described above, the Fund agrees to pay FAS an annual Administrative Service Charge of $125,000 for administrative and compliance services related to commodities Futures Trading Commission Rule 4.5. For the year ended December 31, 2022, the annualized fee paid to FAS was 0.147% 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 Service 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. For the year ended December 31, 2022, distribution services fees for the Fund were as follows:

---

| | |
|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp; **Distribution Services** <br>**Fees Incurred**<br>|
| Service Shares | $4185 |

---

When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended December 31, 2022, FSC did not retain any fees paid by the Fund.

**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 Co-Advisers 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. INVESTMENT TRANSACTIONS** 

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the year ended December 31, 2022, were as follows:

---

| | |
|:---|:---|
| Purchases | $53208503 |
| Sales | $84028262 |

---

**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 December 31, 2022, the Fund had no outstanding loans. During the year ended December 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 December 31, 2022, there were no outstanding loans. During the year ended December 31, 2022, the program was not utilized.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**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, and may continue to result in, closed borders, enhanced health screenings, disruptions to healthcare service preparation and delivery, quarantines, cancellations, and disruptions to supply chains, workflow operations and consumer activity, as well as general concern and uncertainty. The impact of this coronavirus has resulted in substantial economic volatility. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could continue to negatively affect the worldwide economy, as well as the economies of individual countries, individual companies (including certain Fund service providers and issuers of the Fund's investments) and the markets in general in significant and unforeseen ways. In addition, governments, their regulatory agencies, or self-regulatory organizations may take actions in response to the pandemic, including significant fiscal and monetary policy changes, that may affect the instruments in which the Fund invests or the issuers of such investments. Any such impact could adversely affect the Fund's performance.

**11. SUBSEQUENT EVENT** 

On February 14, 2023, the Trustees accepted the resignation of Federated Global Investment Management Corp. as a Co-Adviser of the Fund. On the same date, the Trustees approved the termination of a service agreement between Federated Investment Management Company (FIMCO) and Federated Hermes (UK) LLP (Federated UK) pursuant to which Federated UK provided certain non-discretionary credit research and analysis services to FIMCO. Fees, if any, paid to Federated UK for these services were paid by FIMCO and not by the Fund. These changes are effective on or about April 30, 2023.

**12. FEDERAL TAX INFORMATION (UNAUDITED)** 

Of the ordinary income distributions made by the Fund during the year ended December 31, 2022, 7.82% qualify for the dividend received deduction available to corporate shareholders.

For the year ended December 31, 2022, the amount of long-term capital gains designated by the Fund was $27,542,249.

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Report of Independent Registered Public Accounting Firm

**To the Board of Trustees of Federated Hermes Insurance Series and THE Shareholders of Federated Hermes Managed Volatility Fund II:**

**Opinion on the Financial Statements**

We have audited the accompanying statement of assets and liabilities of Federated Hermes Managed Volatility Fund II (the Fund), a portfolio of Federated Hermes Insurance Series, including the portfolio of investments, as of December 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 December 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.

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 December 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> ![](kpmgsig.jpg)

We have served as the auditor for one or more of Federated Hermes' investment companies since 2006.

Boston, Massachusetts <br>February 15, 2023

Annual Shareholder Report

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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 funds used as variable investment options. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from July 1, 2022 to December 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.

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| | | | |
|:---|:---|:---|:---|
|  | **Beginning** <br>**Account Value** <br>**7/1/2022**<br>| **Ending** <br>**Account Value** <br>**12/31/2022**<br>| **Expenses Paid** <br>**During Period**<sup>1</sup> <br>|
| **Actual:** |  |  |  |
| Primary Shares | $1000 | $995.30 | $4.78 |
| Service Shares | $1000 | $994.20 | $6.03 |
| **Hypothetical (assuming a 5% return before expenses):** |  |  |  |
| Primary Shares | $1000 | $1020.42 | $4.84 |
| Service Shares | $1000 | $1019.16 | $6.11 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | |
|:---|:---|
| 1 | *Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the* <br> *one-half-year period). The expenses shown in the table do not include the charges and expenses imposed by the insurance company under the variable insurance* <br> *product contract. Please refer to the variable insurance product prospectus for a complete listing of these expenses. The annualized net expense ratios are as* <br> *follows:*<br>|

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | |
|:---|:---|
| Primary Shares | 0.95% |
| Service Shares | 1.20% |

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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, 2022, the Trust comprised six 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**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held and Previous Position(s)**<br>|
| **J. Christopher Donahue\***<br> Birth Date: April 11, 1949<br> Trustee<br> Indefinite Term<br> Began serving: September <br> 1993<br>| &nbsp;&nbsp; **Principal Occupations**: Principal Executive Officer and President of certain of the Funds in the Federated Hermes Fund <br> Family; Director or Trustee of the Funds in the Federated Hermes Fund Family; President, Chief Executive Officer and <br> Director, Federated Hermes, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated <br> Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman and Trustee, <br> Federated Equity Management Company of Pennsylvania; Trustee, Federated Shareholder Services Company; Director, <br> Federated Services Company.<br> **Previous Positions**: President, Federated Investment Counseling; President and Chief Executive Officer, Federated <br> Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd; Chairman, <br> Passport Research, Ltd.<br>|
| **Thomas R. Donahue\***<br> Birth Date: October 20, 1958<br> Trustee<br> Indefinite Term<br> Began serving: May 2016<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of certain of the funds in the Federated Hermes Fund Family; Chief Financial <br> Officer, Treasurer, Vice President and Assistant Secretary, Federated Hermes, Inc.; Chairman and Trustee, Federated <br> Administrative Services; Chairman and Director, Federated Administrative Services, Inc.; Trustee and Treasurer, Federated <br> Advisory Services Company; Director or Trustee and Treasurer, Federated Equity Management Company of Pennsylvania, <br> Federated Global Investment Management Corp., Federated Investment Counseling, and Federated Investment <br> Management Company; Director, MDTA LLC; Director, Executive Vice President and Assistant Secretary, Federated Securities <br> Corp.; Director or Trustee and Chairman, Federated Services Company and Federated Shareholder Services Company; and <br> Director and President, FII Holdings, Inc.<br> **Previous Positions**: Director, Federated Hermes, Inc.; Assistant Secretary, Federated Investment Management Company, <br> Federated Global Investment Management Company and Passport Research, LTD; Treasurer, Passport Research, LTD; <br> Executive Vice President, Federated Securities Corp.; and Treasurer, FII Holdings, Inc.<br>|

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\*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*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**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held, Previous Position(s) and Qualifications**<br>|
| **John T. Collins**<br> Birth Date: January 24, 1947<br> Trustee<br> Indefinite Term<br> Began serving: October 2013<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee, and Chair of the Board of Directors or Trustees, of the Federated Hermes Fund <br> Family; formerly, Chairman and CEO, The Collins Group, Inc. (a private equity firm) (Retired).<br> **Other Directorships Held**: Director, KLX Energy Services Holdings, Inc. (oilfield services); former Director of <br> KLX Corp. (aerospace).<br> **Qualifications**: Mr. Collins has served in several business and financial management roles and directorship positions <br> throughout his career. Mr. Collins previously served as Chairman and CEO of The Collins Group, Inc. (a private equity firm) <br> and as a Director of KLX Corp. Mr. Collins serves as Chairman Emeriti, Bentley University. Mr. Collins previously served as <br> Director and Audit Committee Member, Bank of America Corp.; Director, FleetBoston Financial Corp.; and Director, Beth <br> Israel Deaconess Medical Center (Harvard University Affiliate Hospital). <br>|

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held, Previous Position(s) and Qualifications**<br>|
| **G. Thomas Hough**<br> Birth Date: February 28, 1955<br> Trustee<br> Indefinite Term<br> Began serving: August 2015<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee, Chair of the Audit Committee of the Federated Hermes Fund Family; formerly, <br> Vice Chair, Ernst & Young LLP (public accounting firm) (Retired). <br> **Other Directorships Held**: Director, Chair of the Audit Committee, Equifax, Inc.; Lead Director, Member of the Audit and <br> Nominating and Corporate Governance Committees, Haverty Furniture Companies, Inc.; formerly, Director, Member of <br> Governance and Compensation Committees, Publix Super Markets, Inc.<br> **Qualifications**: Mr. Hough has served in accounting, business management and directorship positions throughout his career. <br> Mr. Hough most recently held the position of Americas Vice Chair of Assurance with Ernst & Young LLP (public accounting <br> firm). Mr. Hough serves on the President's Cabinet and Business School Board of Visitors for the University of Alabama. <br> Mr. Hough previously served on the Business School Board of Visitors for Wake Forest University, and he previously served as <br> an Executive Committee member of the United States Golf Association. <br>|
| **Maureen Lally-Green**<br> Birth Date: July 5, 1949<br> Trustee<br> Indefinite Term<br> Began serving: August 2009<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; Adjunct Professor Emerita of Law, <br> Duquesne University School of Law; formerly, Dean of the Duquesne University School of Law and Professor of Law and <br> Interim Dean of the Duquesne University School of Law; formerly, Associate General Secretary and Director, Office of Church <br> Relations, Diocese of Pittsburgh.<br> **Other Directorships Held**: Director, CNX Resources Corporation (natural gas).<br> **Qualifications**: Judge Lally-Green has served in various legal and business roles and directorship positions throughout her <br> career. Judge Lally-Green previously held the position of Dean of the School of Law of Duquesne University (as well as <br> Interim Dean). Judge Lally-Green previously served as Associate General Secretary of the Diocese of Pittsburgh, a member of <br> the Superior Court of Pennsylvania and as a Professor of Law, Duquesne University School of Law. Judge Lally-Green was <br> appointed by the Supreme Court of Pennsylvania to serve on the Supreme Court's Board of Continuing Judicial Education <br> and the Supreme Court's Appellate Court Procedural Rules Committee. Judge Lally-Green also currently holds the positions <br> on not for profit or for profit boards of directors as follows: Director and Chair, UPMC Mercy Hospital; Regent, Saint Vincent <br> Seminary; Member, Pennsylvania State Board of Education (public); Director, Catholic Charities, Pittsburgh; and Director CNX <br> Resources Corporation (natural gas). Judge Lally-Green has held the positions of: Director, Auberle; Director, Epilepsy <br> Foundation of Western and Central Pennsylvania; Director, Ireland Institute of Pittsburgh; Director, Saint Thomas More <br> Society; Director and Chair, Catholic High Schools of the Diocese of Pittsburgh, Inc.; Director, Pennsylvania Bar Institute; <br> Director, St. Vincent College; Director and Chair, North Catholic High School, Inc.; Director and Vice Chair, Our Campaign for <br> the Church Alive!, Inc.; and Director and Vice Chair, Saint Francis University.<br>|
| **Thomas M. O'Neill**<br> Birth Date: June 14, 1951<br> Trustee<br> Indefinite Term<br> Began serving: August 2006<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; Sole Proprietor, Navigator Management <br> Company (investment and strategic consulting).<br> **Other Directorships Held**: None.<br> **Qualifications**: Mr. O'Neill has served in several business, mutual fund and financial management roles and directorship <br> positions throughout his career. Mr. O'Neill serves as Director, Medicines for Humanity. Mr. O'Neill previously served as Chief <br> Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and <br> Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, <br> MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director <br> and Consultant, EZE Castle Software (investment order management software); Director, Midway Pacific (lumber); and <br> Director, The Golisano Children's Museum of Naples, Florida.<br>|
| **Madelyn A. Reilly**<br> Birth Date: February 2, 1956<br> Trustee<br> Indefinite Term<br> Began serving: <br> November 2020<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; formerly, Senior Vice President for Legal <br> Affairs, General Counsel and Secretary of Board of Directors, Duquesne University (Retired).<br> **Other Directorships Held**: None.<br> **Qualifications**: Ms. Reilly has served in various business and legal management roles throughout her career. Ms. Reilly <br> previously served as Senior Vice President for Legal Affairs, General Counsel and Secretary of Board of Directors and Director <br> of Risk Management and Associate General Counsel, Duquesne University. Prior to her work at Duquesne University, <br> Ms. Reilly served as Assistant General Counsel of Compliance and Enterprise Risk as well as Senior Counsel of Environment, <br> Health and Safety, PPG Industries. Ms. Reilly currently serves as a member of the Board of Directors of UPMC <br> Mercy Hospital.<br>|
| **P. Jerome Richey**<br> Birth Date: February 23, 1949<br> Trustee<br> Indefinite Term<br> Began serving: October 2013<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; Retired; formerly, Senior Vice Chancellor <br> and Chief Legal Officer, University of Pittsburgh and Executive Vice President and Chief Legal Officer, CONSOL Energy Inc. <br> (now split into two separate publicly traded companies known as CONSOL Energy Inc. and CNX Resources Corp.).<br> **Other Directorships Held**: None.<br> **Qualifications**: Mr. Richey has served in several business and legal management roles and directorship positions throughout <br> his career. Mr. Richey most recently held the positions of Senior Vice Chancellor and Chief Legal Officer, University of <br> Pittsburgh. Mr. Richey previously served as Chairman of the Board, Epilepsy Foundation of Western Pennsylvania and <br> Chairman of the Board, World Affairs Council of Pittsburgh. Mr. Richey previously served as Chief Legal Officer and Executive <br> Vice President, CONSOL Energy Inc. and CNX Gas Company; and Board Member, Ethics Counsel and Shareholder, Buchanan <br> Ingersoll & Rooney PC (a law firm). <br>|

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held, Previous Position(s) and Qualifications**<br>|
| **John S. Walsh**<br> Birth Date:<br> November 28, 1957<br> Trustee<br> Indefinite Term<br> Began serving: January 1999<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; President and Director, Heat Wagon, Inc. <br> (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of <br> portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. <br> **Other Directorships Held**: None.<br> **Qualifications**: Mr. Walsh has served in several business management roles and directorship positions throughout his career. <br> Mr. Walsh previously served as Vice President, Walsh & Kelly, Inc. (paving contractors).<br>|

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**OFFICERS** 

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Address**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years**<br> **and Previous Position(s)**<br>|
| **Lori A. Hensler**<br> Birth Date: January 6, 1967<br> TREASURER<br> Officer since: April 2013<br>| &nbsp;&nbsp; **Principal Occupations**: Principal Financial Officer and Treasurer of the Federated Hermes Fund Family; Senior Vice President, <br> Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp.; and Assistant Treasurer, <br> Federated Investors Trust Company. Ms. Hensler has received the Certified Public Accountant designation.<br> **Previous Positions**: Controller of Federated Hermes, Inc.; Senior Vice President and Assistant Treasurer, Federated Investors <br> Management Company; Treasurer, Federated Investors Trust Company; Assistant Treasurer, Federated Administrative <br> Services, Federated Administrative Services, Inc., Federated Securities Corp., Edgewood Services, Inc., Federated Advisory <br> Services Company, Federated Equity Management Company of Pennsylvania, Federated Global Investment Management <br> Corp., Federated Investment Counseling, Federated Investment Management Company, Passport Research, Ltd., and <br> Federated MDTA, LLC; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and <br> Southpointe Distribution Services, Inc.<br>|
| **Peter J. Germain**<br> Birth Date:<br> September 3, 1959<br> CHIEF LEGAL OFFICER, <br> SECRETARY and EXECUTIVE <br> VICE PRESIDENT<br> Officer since: January 2005<br>| &nbsp;&nbsp; **Principal Occupations**: Mr. Germain is Chief Legal Officer, Secretary and Executive Vice President of the Federated Hermes <br> Fund Family. He is General Counsel, Chief Legal Officer, Secretary and Executive Vice President, Federated Hermes, Inc.; <br> Trustee and Senior Vice President, Federated Investors Management Company; Trustee and President, Federated <br> Administrative Services; Director and President, Federated Administrative Services, Inc.; Director and Vice President, <br> Federated Securities Corp.; Director and Secretary, Federated Private Asset Management, Inc.; Secretary, Federated <br> Shareholder Services Company; and Secretary, Retirement Plan Service Company of America. Mr. Germain joined Federated <br> Hermes, Inc. in 1984 and is a member of the Pennsylvania Bar Association.<br> **Previous Positions**: Deputy General Counsel, Special Counsel, Managing Director of Mutual Fund Services, Federated <br> Hermes, Inc.; Senior Vice President, Federated Services Company; and Senior Corporate Counsel, Federated Hermes, Inc.<br>|
| **John B. Fisher**<br> Birth Date: May 16, 1956<br> President<br> Officer since: November 2004<br>| &nbsp;&nbsp; **Principal Occupations**: Principal Executive Officer and President of certain of the Funds in the Federated Hermes Fund <br> Family; Director or Trustee of certain of the Funds in the Federated Hermes Fund Family; Director and Vice President, <br> Federated Hermes, Inc.; President, Director/Trustee and CEO, Federated Advisory Services Company, Federated Equity <br> Management Company of Pennsylvania, Federated Global Investment Management Corp., Federated Investment Counseling, <br> Federated Investment Management Company, and Federated MDTA LLC; Director, Federated Investors Trust Company.<br> **Previous Positions**: President and Director of the Institutional Sales Division of Federated Securities Corp.; President and <br> CEO of Passport Research, Ltd.; Director and President, Technology, Federated Services Company.<br>|
| **Stephen Van Meter**<br> Birth Date: June 5, 1975<br> CHIEF COMPLIANCE OFFICER <br> AND SENIOR VICE PRESIDENT<br> Officer since: July 2015<br>| &nbsp;&nbsp; **Principal Occupations**: Senior Vice President and Chief Compliance Officer of the Federated Hermes Fund Family; Vice <br> President and Chief Compliance Officer of Federated Hermes, Inc. and Chief Compliance Officer of certain of its subsidiaries. <br> Mr. Van Meter joined Federated Hermes, Inc. in October 2011. He holds FINRA licenses under Series 3, 7, 24 and 66. <br> **Previous Positions**: Mr. Van Meter previously held the position of Compliance Operating Officer, Federated Hermes, Inc. <br> Prior to joining Federated Hermes, Inc., Mr. Van Meter served at the United States Securities and Exchange Commission in <br> the positions of Senior Counsel, Office of Chief Counsel, Division of Investment Management and Senior Counsel, Division <br> of Enforcement.<br>|
| **Stephen F. Auth**<br> Birth Date: <br> September 13, 1956<br> 101 Park Avenue<br> 41<sup>st</sup> Floor<br> New York, NY 10178<br> CHIEF INVESTMENT OFFICER<br> Officer since: November 2002<br>| &nbsp;&nbsp; **Principal Occupations**: Stephen F. Auth is Chief Investment Officer of various Funds in the Federated Hermes Fund Family; <br> Executive Vice President, Federated Investment Counseling, Federated Global Investment Management Corp. and Federated <br> Equity Management Company of Pennsylvania.<br> **Previous Positions**: Executive Vice President, Federated Investment Management Company and Passport Research, Ltd. <br> (investment advisory subsidiary of Federated); Senior Vice President, Global Portfolio Management Services Division; Senior <br> Vice President, Federated Investment Management Company and Passport Research, Ltd.; Senior Managing Director and <br> Portfolio Manager, Prudential Investments.<br>|
| **Robert J. Ostrowski**<br> Birth Date: April 26, 1963<br> Chief Investment Officer<br> Officer since: May 2004<br>| &nbsp;&nbsp; **Principal Occupations**: Robert J. Ostrowski joined Federated Hermes, Inc. in 1987 as an Investment Analyst and became a <br> Portfolio Manager in 1990. He was named Chief Investment Officer of Federated Hermes' taxable fixed-income products in <br> 2004 and also serves as a Senior Portfolio Manager. Mr. Ostrowski became an Executive Vice President of the Fund's Adviser <br> in 2009 and served as a Senior Vice President of the Fund's Adviser from 1997 to 2009. Mr. Ostrowski has received the <br> Chartered Financial Analyst designation. He received his M.S. in Industrial Administration from Carnegie Mellon University.<br>|

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Address**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years**<br> **and Previous Position(s)**<br>|
| **Deborah A. Cunningham**<br> Birth Date:<br> September 15, 1959<br> Chief Investment Officer<br> Officer since: June 2012<br>| &nbsp;&nbsp; **Principal Occupations**: Deborah A. Cunningham was named Chief Investment Officer of Federated Hermes' money market <br> products in 2004. She joined Federated Hermes in 1981 and has been a Senior Portfolio Manager since 1997 <br> and an Executive Vice President of the Fund's Adviser since 2009. Ms. Cunningham has received the Chartered Financial <br> Analyst designation and holds an M.S.B.A. in Finance from Robert Morris College.<br>|

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Evaluation and Approval of Advisory Contract–May 2022

**Federated Hermes Managed Volatility Fund II (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 Global Investment Management Corp., Federated Investment Management Company and Federated Equity Management Company of Pennsylvania (the "Adviser"), under which they will serve as co-advisers to the Fund (the "Co-Advisers"), for an additional one-year term (the "Contract"). 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 arrangements. The information, factors and conclusions that formed the basis for the Board's approval are summarized below.

***<u>Information Received and Review Process</u>***

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 Co-Advisers and their 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 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 Co-Advisers and their affiliates; Federated Hermes' business and operations; the Co-Advisers' 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 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 Co-Advisers' 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

Annual Shareholder Report

**40**

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deems relevant to its consideration of the adviser's services and fees. The Board noted that the Securities and Exchange Commission ("SEC") disclosure requirements 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. Also, in weighing these factors, the Board considered the aggregate advisory fee paid by the Fund for the services of all Co-Advisers in addition to considering the allocation of that aggregate fee among the Co-Advisers and the rationale for that allocation. 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 Contracts, 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.

***<u>Nature, Extent and Quality of Services</u>***

The Board considered the nature, extent and quality of the services provided to the Fund by the Co-Advisers 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. In particular, the Board considered the services provided by the Co-Advisers in the aggregate, to the extent that the Co-Advisers collaborate in the implementation of the Fund's strategy, as well as separately, to the extent to which specific services provided by a Co-Adviser are distinguishable and subject to meaningful assessment. The Board considered the Co-Advisers' 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. The Board also considered the Co-Advisers' 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 Co-Advisers are executing the Fund's investment program.

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 Federated Hermes' oversight of the securities lending program for the Federated Hermes Funds that engage in securities lending and noted the income earned by the Federated Hermes Funds that participate in such program. In addition, the Board considered the quality of Federated Hermes' communications with the

Annual Shareholder Report

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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 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 Co-Advisers to the Fund.

***<u>Fund Investment Performance</u>***

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 Co-Advisers' analysis of, the Fund's performance over different time periods that were 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 Morningstar, Inc. (the "Morningstar"), 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 Co-Advisers 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. In this connection, the Board considered that the longevity and experience of the Fund's portfolio management team and their extensive bottom-up approach to investing may limit the utility of comparisons to other equity mutual funds.

For the one-year, three-year and five-year periods ended December 31, 2021, the Fund's performance was above the median of the Performance Peer Group.

Based on these considerations, the Board concluded that it had continued confidence in the Co-Advisers' overall capabilities to manage the Fund.

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***<u>Fund Expenses</u>***

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, 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 Morningstar (the "Expense Peer Group"). The Board received a description of the methodology used to select the Expense Peer Group from the overall Morningstar category. The Board also reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall Morningstar 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 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 contractual advisory fee rate and other expenses 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 any of the Co-Advisers or their 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.

***<u>Profitability</u>***

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.

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The Board considered that the Contract provides for payment of a single advisory fee by the Fund for all services provided by the Co-Advisers. The Board further considered that the Contract permits the Co-Advisers to allocate the advisory fee in a manner commensurate with the services they provide to the Fund. Throughout the year, as well as in connection with its May Meetings, the Board considered the fee allocation and the Co-Advisers' analysis as to whether the allocation of fees among the Co-Advisers continued to be a reasonable proxy for and measurement of the level of resources and services provided by each Co-Adviser toward the management of the Fund.

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.

***<u>Economies of Scale</u>***

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 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.

***<u>Other Benefits</u>***

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.

***<u>Conclusions</u>***

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

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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 arrangements.

Annual Shareholder Report

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Liquidity Risk Management Program– <br>Annual Evaluation of Adequacy and Effectiveness

In accordance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), Federated Hermes Insurance Series (the "Trust") has adopted and implemented a liquidity risk management program (the "Program") for Federated Hermes Managed Volatility Fund II (the "Fund" and, collectively with the other non-money market open-end funds advised by Federated Hermes, the "Federated Hermes Funds"). The Program seeks to assess and manage the Fund's liquidity risk. "Liquidity risk" is defined under the Liquidity Rule as the risk that the Fund is unable to meet redemption requests without significantly diluting remaining investors' interests in the Fund. The Board of Trustees of the Trust (the "Board") has approved the designation of each Federated Hermes Fund's investment adviser as the administrator for the Program (the "Administrator") with respect to that Fund. The Administrator, in turn, has delegated day-to-day responsibility for the administration of the Program to multiple Liquidity Risk Management Committees, which are comprised of representatives from certain divisions within Federated Hermes.

The Program is comprised of various components designed to support the assessment and/or management of liquidity risk, including: (1) the periodic assessment (no less frequently than annually) of certain factors that influence the Fund's liquidity risk; (2) the periodic classification (no less frequently than monthly) of the Fund's investments into one of four liquidity categories that reflect an estimate of their liquidity under current market conditions; (3) a 15% limit on the acquisition of "illiquid investments" (as defined under the Liquidity Rule); (4) to the extent a Fund does not invest primarily in "highly liquid investments" (as defined under the Liquidity Rule), the determination of a minimum percentage of the Fund's assets that generally will be invested in highly liquid investments (an "HLIM"); (5) if a Fund has established an HLIM, the periodic review (no less frequently than annually) of the HLIM and the adoption of policies and procedures for responding to a shortfall of the Fund's highly liquid investments below its HLIM; and (6) periodic reporting to the Board.

At its meetings in May 2022, the Board received and reviewed a written report (the "Report") from the Federated Hermes Funds' Chief Compliance Officer and Chief Risk Officer, on behalf of the Administrator, concerning the operation of the Program for the period from April 1, 2021 through March 31, 2022 (the "Period"). The Report addressed the operation of the Program and assessed its adequacy and effectiveness, including, where applicable, the operation of any HLIM established for a Federated Hermes Fund and each Federated Hermes Fund's access to other available funding sources such as the Federated Hermes Funds' interfund lending facility, redemptions in-kind, reverse repurchase agreement transactions, redemptions delayed beyond the normal T+1 settlement, but within seven days of the redemption request, and committed lines of credit. There were no material changes to the Program during the Period. The Report summarized the operation of the Program and the information and factors considered by the Administrator in assessing whether the Program has been adequately and effectively implemented with respect to the Federated Hermes Funds. Such information and factors included, among other things:

◾ confirmation that it was not necessary for the Fund to utilize, and the Fund did not utilize, alternative funding sources during the Period;

◾ the periodic classifications of the Fund's investments into one of four liquidity categories and the methodologies and inputs used to classify the investments, including the Fund's reasonably anticipated trade size;

◾ the analysis received from a third-party liquidity assessment vendor that is taken into account in the process of determining the liquidity classifications of the Fund's investments and the results of an evaluation of the services performed by the vendor in support of this process;

◾ the fact that the Fund invested primarily in highly liquid investments during the Period and, therefore, was not required to establish, and has not established, an HLIM and the procedures for monitoring the status of the Fund as investing primarily in highly liquid investments;

◾ the fact that the Fund invested no more than 15% of its assets in illiquid investments during the Period and the procedures for monitoring this limit;

◾ the fact that there were no liquidity events during the Period, that materially affected the Fund's liquidity risk;

◾ the impact on liquidity and management of liquidity risk caused by extended non-U.S. market closures and confirmation that there were no issues for any of the affected Federated Hermes Funds in meeting shareholder redemptions at any time during these temporary non-U.S. market closures;

◾ circumstances during the Period under which the Administrator convened meetings of the Liquidity Risk Management Committees more frequently than normal to conduct enhanced liquidity risk monitoring, including prior to the Russian invasion of Ukraine.

Based on this review, the Administrator concluded that the Program is operating effectively to assess and manage the Fund's liquidity risk, and that the Program has been and continues to be adequately and effectively implemented to monitor and, as applicable, respond to the Fund's liquidity developments.

Annual Shareholder Report

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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.

Quarterly Portfolio Schedule

Each fiscal quarter, the Fund will file with the SEC a complete schedule of its monthly portfolio holdings on "Form N-PORT." The Fund's holdings as of the end of the third month of every fiscal quarter, as reported on Form N-PORT, will be publicly available on the SEC's website at sec.gov within 60 days of the end of the fiscal quarter upon filing. You may also access this information via the link to the Fund and share class name at FederatedInvestors.com.

Annual Shareholder Report

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*Variable investment options are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in variable investment options involves investment risk, including the possible loss of principal.*

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.

![](fhilogok11p.jpg)

Federated Hermes Managed Volatility Fund II <br>Federated Hermes Funds <br>4000 Ericsson Drive <br>Warrendale, PA 15086-7561

Contact us at **FederatedInvestors.com** <br>or call 1-800-341-7400.

Federated Securities Corp., Distributor

*CUSIP 313916108* <br>*CUSIP 313916744*

*G00845-01 (2/23)*© 2023 Federated Hermes, Inc.

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**Annual Shareholder Report**

***December 31, 2022***

![](img97b755101.gif)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | | |
|:---|:---|:---|
| **Share Class** | Primary  | Service  |

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Federated Hermes Quality Bond Fund II

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A Portfolio of Federated Hermes Insurance Series

Dear Valued Shareholder,

We are pleased to present the Annual Shareholder Report for your fund covering the period from January 1, 2022 through December 31, 2022. This report includes Management's Discussion of Fund Performance, 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, <br> ![](fisherjohnsigsmall.jpg)

John B. Fisher, President

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**Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee**

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**CONTENTS** 

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| | |
|:---|:---|
| [Management's Discussion of Fund Performance](#xx_60a07967-5907-4c69-9de0-827af6a5340b_1) | &nbsp;&nbsp; [1](#xx_60a07967-5907-4c69-9de0-827af6a5340b_1)  |
| [Portfolio of Investments Summary Table](#xx_2c66115b-cf08-4d02-a3b5-412087e88eef_1) | &nbsp;&nbsp; [4](#xx_2c66115b-cf08-4d02-a3b5-412087e88eef_1)  |
| [Portfolio of Investments](#xx_2c66115b-cf08-4d02-a3b5-412087e88eef_2) | &nbsp;&nbsp; [5](#xx_2c66115b-cf08-4d02-a3b5-412087e88eef_2)  |
| [Financial Highlights](#xx_ae441531-ab35-44d1-afd8-c34cfe3f0a32_1) | [16](#xx_ae441531-ab35-44d1-afd8-c34cfe3f0a32_1)  |
| [Statement of Assets and Liabilities](#xx_32fd6920-5bb2-497f-897a-9dfca86b37c3_1) | [18](#xx_32fd6920-5bb2-497f-897a-9dfca86b37c3_1)  |
| [Statement of Operations](#xx_32fd6920-5bb2-497f-897a-9dfca86b37c3_2) | [19](#xx_32fd6920-5bb2-497f-897a-9dfca86b37c3_2)  |
| [Statement of Changes in Net Assets](#xx_32fd6920-5bb2-497f-897a-9dfca86b37c3_3) | [20](#xx_32fd6920-5bb2-497f-897a-9dfca86b37c3_3)  |
| [Notes to Financial Statements](#xx_77c7ba32-f8cf-44e5-b164-9f633fe7f0f5_1) | [21](#xx_77c7ba32-f8cf-44e5-b164-9f633fe7f0f5_1)  |
| [Report of Independent Registered Public Accounting Firm](#xx_d7a6f23f-f150-41f9-bb38-bf2d2d35228c_1) | [27](#xx_d7a6f23f-f150-41f9-bb38-bf2d2d35228c_1)  |
| [Shareholder Expense Example](#xx_9621c93f-4a1e-4823-a9d2-d7a0927b037e_1) | [28](#xx_9621c93f-4a1e-4823-a9d2-d7a0927b037e_1)  |
| [Board of Trustees and Trust Officers](#xx_b325deef-5400-481a-bb28-c89da94f4c56_1) | [29](#xx_b325deef-5400-481a-bb28-c89da94f4c56_1)  |
| [Evaluation and Approval of Advisory Contract](#xx_19a248d1-cecb-46aa-9e93-3c14cacc11b3_1) | [33](#xx_19a248d1-cecb-46aa-9e93-3c14cacc11b3_1)  |
| [Liquidity Risk Management Program](#xx_a73dd929-8303-403d-9dd5-cc9d8ee5581b_1)[–](#xx_a73dd929-8303-403d-9dd5-cc9d8ee5581b_1)<br> [Annual Evaluation of Adequacy and Effectiveness](#xx_a73dd929-8303-403d-9dd5-cc9d8ee5581b_1)<br>| [38](#xx_a73dd929-8303-403d-9dd5-cc9d8ee5581b_1)  |
| [Voting Proxies on Fund Portfolio Securities](#xx_abcb2c12-5ab9-41f8-a67a-2c34a0bf2f81_1) | [39](#xx_abcb2c12-5ab9-41f8-a67a-2c34a0bf2f81_1)  |
| [Quarterly Portfolio Schedule](#xx_abcb2c12-5ab9-41f8-a67a-2c34a0bf2f81_1) | [39](#xx_abcb2c12-5ab9-41f8-a67a-2c34a0bf2f81_1) |

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Management's Discussion of Fund Performance (unaudited)

The total return of Federated Hermes Quality Bond Fund II (the "Fund"), based on net asset value for the 12-month reporting period ended December 31, 2022, was -9.28% for the Primary Shares and -9.46% for the Service Shares. The total return of the Fund's broad-based benchmark, the Bloomberg US Intermediate Credit Index (BICI),<sup>1</sup> was -9.10% during the same period. The -9.28% total return of the Fund's Primary Shares consisted of 3.60% of taxable dividends and -12.88% of depreciation in the net asset value of shares. The Fund's total return for the most recently completed fiscal year reflected actual cash flows, transaction costs and expenses, which were not reflected in the total return of the BICI.

During the reporting period, the most significant factors affecting the Fund's performance relative to the BICI were: (a) individual security selection; (b) the selection of various industries and sectors of the corporate bond market;<sup>2</sup> and (c) overall interest rate sensitivity of the portfolio, as measured by the effective duration<sup>3</sup> of the Fund.

The following discussion will focus on the performance of the Fund's Primary Shares relative to the BICI.

**market overview**

The reporting period began with the transitory inflation argument intensifying, waning risk of virus variants and, early in the new year, a war in Ukraine. Debate about the Federal Reserve's (the "Fed") use of transitory to describe rising inflation over the course of 2021 was effectively rejected by the markets in March of 2022, when February's Consumer Price Index report showed consumer prices accelerating at their fastest pace in 40 years. The increase, and the likelihood inflation would worsen in the months ahead in part on spiking oil and commodity prices due to Russia's invasion of Ukraine, shifted market expectations from a potential of three rate hikes in 2022 to eight or more. After an initial quarter-point hike off its 0-0.25% federal funds target range in March, Chair Powell indicated the Fed would do whatever is necessary to slow inflation, even if it means slowing demand.

Chair Powell and the Fed proved true to their word, as they went on to raise the target range by 50 basis points in May, followed by larger and rarer 75 basis point hikes in each of the subsequent four policymaking Federal Open Market Committee (FOMC) meetings. The moves pushed the policy range up by 425 basis points to 4.25-4.50% in nine months, the fastest pace and largest magnitude of increases since the Chair Paul Volcker era (1979-1987). Additional smaller hikes are expected in early 2023 before a potential pause to allow the Fed to assess the impacts of its aggressive tightening. Throughout the reporting period, market hopes that the Fed may pause and pivot, i.e., begin to cut rates, were dashed by the pace of rate hikes and the hawkish rhetoric from FOMC members, including Chair Powell, at late August's Jackson Hole, Wyoming, symposium speech, where he said the Fed learned its lesson from inflation of the 1970s and early 1980s when tightening cycles were terminated too soon, only to be reenacted after inflation subsequently reaccelerated. The message for markets: this cycle will be higher for longer.

For much of the reporting period, the aggressive tightening coincided with an economy that, while slowing from its 2021 pace, continued to reflect strength. The labor market in particular added jobs at an elevated pace, with 2022 monthly nonfarm payroll gains averaging 375,000 through December, which was slower than 2021's rapid pace but historically strong. Along with leftover savings from pandemic stimulus, the job and subsequent wage and income gains helped keep consumer spending robust, particularly from a nominal perspective, as higher inflation cut into real spending. But as spring gave way to summer and fall, higher rates began to cut into rate-sensitive sectors, dramatically slowing housing as a doubling in the 30-year mortgage rate, unusually low inventories and unusually high home prices kept buyers away. By period end, pending home sales were declining at a record annualized pace and except for a brief period early in the pandemic, builder sentiment was at a 10-year low. Manufacturing also began to decelerate rapidly as consumers, having bulked up on goods during the stay-at-home pandemic, shifted spending to necessities and services such as travel, leisure and restaurants.

The combination of higher inflation and an extremely hawkish Fed made for a difficult environment for all risk assets, including bonds. The Bloomberg US Aggregate Bond Index at period end had its worst year ever, with 425 basis point increases in the policy rate driving up yields on the 2-year, 10-year and 30-year Treasuries, 370, 237 and 206 basis points, respectively, over the fiscal year. Credit spreads as measured by the Bloomberg US Intermediate Credit Index Option Adjusted Spread started the fiscal year at 61 basis points and peaked at 131 basis points in early October before rallying in the final weeks of the fiscal year on slower Fed hopes to close at 103 basis points.

**security and SECTOR/INDUSTRY selection**

During the reporting period, individual security selection was a slightly negative driver of performance relative to the BICI. Security selection was particularly strong in the Banking sector only to be largely offset by weaker selection in the Capital Goods sector. Specific credits that contributed the most to Fund performance included: Inter-American Development Bank, HSBC Holdings, Apple and Toyota Motor Corp. Specific credits that most negatively affected Fund performance included Wells Fargo, Smithfield Foods, Advance Auto Parts and Kroger Foods.

Annual Shareholder Report

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The decision to overweight or underweight positions to specific corporate sectors and/or ratings quality was a negative contributor to performance relative to the BICI. Drivers of positive sector selection were an underweight position in the Banking sector, which performed worse than the index, and an overweight position in Energy, which outperformed. The Fund's cash position was also a benefit to performance. These results were more than offset by a negative contribution to sector from an underweight position in Supranationals, which solidly outperformed the BICI during the year.

**Duration, YIELD CURVE and DeRIVATIVEs MANAGEMENT**

Duration was the driver of positive performance for the reporting period. As noted above, the aggressive rate moves throughout the fiscal year had a significant impact on interest rates across the yield curve.<sup>4</sup> The Fund was short duration relative to the BICI in the first half of the reporting period, shifting to a neutral-to-slightly long position in the latter third of the fiscal year. The magnitude of the short duration position varied throughout the first half, with the magnitude being the largest at the beginning of the period. For the year on average, the Fund was 97% of the interest rate-sensitivity of the BICI, which benefitted performance as interest rates rose.

Derivatives,<sup>5</sup> which were U.S. Treasury futures that were used to adjust duration targets, had a positive effect on Fund performance during the reporting period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Please see the footnotes to the line graph under "Fund Performance and Growth of a $10,000 Investment" below for the definition of, and more information about, the BICI.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Bond prices are sensitive to changes in interest rates, and a rise in interest rates can cause a decline in their prices.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Duration is a measure of a security's price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter durations.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The yield curve is a graph showing the comparative yields of securities in a particular class according to maturity. Securities on the long end of the yield curve have longer maturities.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The Fund's use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional instruments.*

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**FUND PERFORMANCE AND GROWTH OF A $10,000 INVESTMENT**

The graph below illustrates the hypothetical investment of $10,000<sup>1</sup> in the Federated Hermes Quality Bond Fund II (the "Fund") from December 31, 2012 to December 31, 2022, compared to the Bloomberg US Intermediate Credit Index (BICI).<sup>2</sup> The Average Annual Total Returns table below shows returns for each class averaged over the stated periods.

**Growth of a $10,000 Investment**

**Growth of $10,000 as of December 31, 2022** <br> ![](ifqbfarg0043314.jpg)

The Fund offers multiple share classes whose performance may be greater than or less than its other share class(es) due to differences in sales charges and expenses.

**Average Annual Total Returns for the Period Ended 12/31/2022** 

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| | | | |
|:---|:---|:---|:---|
|  | **1 Year** | **5 Years** | **10 Years** |
| **Primary Shares** | -9.28% | 1.02% | 1.75% |
| **Service Shares** | -9.46% | 0.79% | 1.50% |
| BICI | -9.10% | 1.08% | 1.76% |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance of a variable investment option changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance, contact your insurance company. The performance information presented does not include the charges and expenses imposed by the insurance company under the variable insurance product contract. The inclusion of such charges would lower performance. Please refer to the variable insurance product prospectus for a complete listing of these expenses. Fund shares are available exclusively as a funding vehicle for life insurance companies writing variable life insurance policies and variable annuity contracts. Variable investment options are not obligations of or guaranteed by any bank and are not federally insured.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The Fund's performance assumes the reinvestment of all dividends and distributions. The BICI has been adjusted to reflect reinvestment of dividends on securities in the index.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The BICI measures the investment-grade, U.S. dollar-denominated, fixed-rate, taxable corporate and government-related bond markets. The index only includes securities with maturity between one and ten years. It is composed of the Bloomberg US Corporate Index and a non-corporate component that includes foreign agencies, sovereigns, supranationals and local authorities. The index is not adjusted to reflect sales loads, expenses or other fees that the Securities and Exchange Commission requires to be reflected in the Fund's performance. The index is unmanaged and, unlike the Fund, is not affected by cash flows. It is not possible to invest directly in an index.*

Annual Shareholder Report

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Portfolio of Investments Summary Table (unaudited)

At December 31, 2022, the Fund's portfolio composition<sup>1</sup> was as follows:

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| | |
|:---|:---|
| **Security Type** | **Percentage of** <br>**Total Net Assets**<br>|
| Corporate Bonds | 97.3% |
| Mortgage-Backed Securities<sup>2,3</sup> <br>| &nbsp;&nbsp; 0.0% |
| Securities Lending Collateral<sup>4</sup> <br>| &nbsp;&nbsp; 1.1% |
| Cash Equivalents<sup>5</sup> <br>| &nbsp;&nbsp; 1.8% |
| Derivative Contracts<sup>3,6</sup> <br>| &nbsp;&nbsp; 0.0% |
| Other Assets and Liabilities—Net<sup>7</sup> <br>| (0.2)% |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | **100%** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | |
|:---|:---|
| 1 | *See the Fund's Prospectus and Statement of Additional Information for a description of these security types.* |
| 2 | *For purposes of this table, mortgage-backed securities include mortgage-backed securities guaranteed by Government Sponsored Entities.* |
| 3 | *Represents less than 0.1%.* |
| 4 | *Represents cash collateral received for portfolio securities on loan that may be invested in affiliated money market funds, other money market instruments and/or* <br> *repurchase agreements.*<br>|
| 5 | *Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements other than those representing cash collateral* <br> *for securities lending.*<br>|
| 6 | *Based upon net unrealized appreciation (depreciation) or value of the derivative contracts as applicable. Derivative contracts may consist of futures, forwards,* <br> *options and swaps. The impact of a derivative contract on the Fund's performance may be larger than its unrealized appreciation (depreciation) or value may* <br> *indicate. In many cases, the notional value or amount of a derivative contract may provide a better indication of the contract's significance to the portfolio. More* <br> *complete information regarding the Fund's direct investments in derivative contracts, including unrealized appreciation (depreciation), value and notional values* <br> *or amounts of such contracts, can be found in the table at the end of the Portfolio of Investments included in this Report.*<br>|
| 7 | *Assets, other than investments in securities and derivative contracts, less liabilities. See Statement of Assets and Liabilities.* |

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Annual Shareholder Report

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Portfolio of Investments

December 31, 2022

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| | | |
|:---|:---|:---|
| **Principal** <br>**Amount**<br>|  | **Value** |
|  | CORPORATE BONDS—97.3% |  |
|  | **Basic Industry - Chemicals—0.3%** |  |
| $500000 | RPM International, Inc., Sr. Unsecd. Note, 4.550%, 3/1/2029 | $463947 |
|  | **Basic Industry - Metals & Mining—0.5%** |  |
| &nbsp;&nbsp; 350000<br><sup>1</sup> <br>| Anglo American Capital PLC, Sr. Unsecd. Note, 144A, 2.250%, 3/17/2028 | &nbsp;&nbsp; 294920 |
| &nbsp;&nbsp; 200000 | Anglo American Capital PLC, Sr. Unsecd. Note, 144A, 2.875%, 3/17/2031 | &nbsp;&nbsp; 163784 |
| &nbsp;&nbsp; 350000 | Glencore Funding LLC, Sr. Unsecd. Note, 144A, 1.625%, 4/27/2026 | &nbsp;&nbsp; 308788 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 767492 |
|  | **Capital Goods - Aerospace & Defense—3.3%** |  |
| &nbsp;&nbsp; 600000 | Airbus Group SE, Sr. Unsecd. Note, 144A, 3.150%, 4/10/2027 | &nbsp;&nbsp; 558255 |
| &nbsp;&nbsp; 280000 | BAE Systems Holdings, Inc., Sr. Unsecd. Note, 144A, 3.850%, 12/15/2025 | &nbsp;&nbsp; 270259 |
| &nbsp;&nbsp; 200000 | BAE Systems PLC, Sr. Unsecd. Note, 144A, 3.400%, 4/15/2030 | &nbsp;&nbsp; 176946 |
| &nbsp;&nbsp; 450000<br><sup>1</sup> <br>| Boeing Co., Sr. Unsecd. Note, 1.875%, 6/15/2023 | &nbsp;&nbsp; 443246 |
| &nbsp;&nbsp; 600000 | Boeing Co., Sr. Unsecd. Note, 2.700%, 2/1/2027 | &nbsp;&nbsp; 542451 |
| &nbsp;&nbsp; 275000 | General Dynamics Corp., Sr. Unsecd. Note, 3.250%, 4/1/2025 | &nbsp;&nbsp; 266700 |
| &nbsp;&nbsp; 410000 | Huntington Ingalls Industries, Inc., Sr. Unsecd. Note, 3.483%, 12/1/2027 | &nbsp;&nbsp; 372799 |
| &nbsp;&nbsp; 145000 | Huntington Ingalls Industries, Inc., Sr. Unsecd. Note, Series WI, 3.844%, 5/1/2025 | &nbsp;&nbsp; 140228 |
| &nbsp;&nbsp; 600000 | Leidos, Inc., Sr. Unsecd. Note, Series WI, 2.300%, 2/15/2031 | &nbsp;&nbsp; 461001 |
| &nbsp;&nbsp; 335000 | Leidos, Inc., Sr. Unsecd. Note, Series WI, 3.625%, 5/15/2025 | &nbsp;&nbsp; 322044 |
| &nbsp;&nbsp; 800000 | Raytheon Technologies Corp., Sr. Unsecd. Note, 4.125%, 11/16/2028 | &nbsp;&nbsp; 767327 |
| &nbsp;&nbsp; 460000<br><sup>2</sup> <br>| Textron Financial Corp., Jr. Sub. Note, 144A, 6.341% (3-month USLIBOR +1.735%), 2/15/2042 | &nbsp;&nbsp; 330050 |
| &nbsp;&nbsp; 295000 | Textron, Inc., Sr. Unsecd. Note, 4.300%, 3/1/2024 | &nbsp;&nbsp; 291123 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 4942429 |
|  | **Capital Goods - Building Materials—1.1%** |  |
| &nbsp;&nbsp; 415000 | Allegion PLC, Sr. Unsecd. Note, 3.500%, 10/1/2029 | &nbsp;&nbsp; 358482 |
| &nbsp;&nbsp; 800000 | Allegion US Holdings Co., Inc., Sr. Unsecd. Note, 3.200%, 10/1/2024 | &nbsp;&nbsp; 769839 |
| &nbsp;&nbsp; 300000 | Masco Corp., Sr. Unsecd. Note, 2.000%, 10/1/2030 | &nbsp;&nbsp; 233263 |
| &nbsp;&nbsp; 300000 | Masco Corp., Sr. Unsecd. Note, 3.500%, 11/15/2027 | &nbsp;&nbsp; 278384 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 1639968 |
|  | **Capital Goods - Construction Machinery—1.7%** |  |
| &nbsp;&nbsp; 500000 | Ashtead Capital, Inc., Sr. Unsecd. Note, 144A, 1.500%, 8/12/2026 | &nbsp;&nbsp; 427304 |
| &nbsp;&nbsp; 600000 | CNH Industrial Capital America LLC, Sr. Unsecd. Note, 1.450%, 7/15/2026 | &nbsp;&nbsp; 529576 |
| &nbsp;&nbsp; 595000 | CNH Industrial NV, Sr. Unsecd. Note, Series MTN, 3.850%, 11/15/2027 | &nbsp;&nbsp; 558319 |
| &nbsp;&nbsp; 500000 | John Deere Capital Corp., Sr. Unsecd. Note, 3.400%, 6/6/2025 | &nbsp;&nbsp; 485523 |
| &nbsp;&nbsp; 510000 | Weir Group PLC/The, Sr. Unsecd. Note, 144A, 2.200%, 5/13/2026 | &nbsp;&nbsp; 452888 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 2453610 |
|  | **Capital Goods - Diversified Manufacturing—3.5%** |  |
| &nbsp;&nbsp; 700000 | GE Capital Funding LLC, Sr. Unsecd. Note, 4.400%, 5/15/2030 | &nbsp;&nbsp; 645044 |
| &nbsp;&nbsp; 205000 | Honeywell International, Inc., Sr. Unsecd. Note, 1.350%, 6/1/2025 | &nbsp;&nbsp; 189694 |
| &nbsp;&nbsp; 400000 | Honeywell International, Inc., Sr. Unsecd. Note, 1.950%, 6/1/2030 | &nbsp;&nbsp; 330995 |
| &nbsp;&nbsp; 555000 | Hubbell, Inc., Sr. Unsecd. Note, 2.300%, 3/15/2031 | &nbsp;&nbsp; 442428 |
| &nbsp;&nbsp; 585000 | Lennox International, Inc., Sr. Unsecd. Note, 1.700%, 8/1/2027 | &nbsp;&nbsp; 502453 |
| &nbsp;&nbsp; 1000000 | Lennox International, Inc., Sr. Unsecd. Note, 3.000%, 11/15/2023 | &nbsp;&nbsp; 982507 |
| &nbsp;&nbsp; 430000 | Roper Technologies, Inc., Sr. Unsecd. Note, 2.000%, 6/30/2030 | &nbsp;&nbsp; 345571 |
| &nbsp;&nbsp; 250000 | Roper Technologies, Inc., Sr. Unsecd. Note, 3.650%, 9/15/2023 | &nbsp;&nbsp; 247403 |
| &nbsp;&nbsp; 875000 | Roper Technologies, Inc., Sr. Unsecd. Note, 3.800%, 12/15/2026 | &nbsp;&nbsp; 839383 |
| &nbsp;&nbsp; 500000 | Vontier Corp., Sr. Unsecd. Note, 2.400%, 4/1/2028 | &nbsp;&nbsp; 401348 |
| &nbsp;&nbsp; 235000 | Wabtec Corp., Sr. Unsecd. Note, 3.200%, 6/15/2025 | &nbsp;&nbsp; 221459 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 5148285 |

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Annual Shareholder Report

**5**

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| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Capital Goods - Packaging—0.3%** |  |
| $500000 | WestRock Co., Sr. Unsecd. Note, Series WI, 3.750%, 3/15/2025 | $484001 |
|  | **Communications - Cable & Satellite—2.2%** |  |
| &nbsp;&nbsp; 1000000 | CCO Safari II LLC, 4.908%, 7/23/2025 | &nbsp;&nbsp; 981068 |
| &nbsp;&nbsp; 900000 | Comcast Corp., Sr. Unsecd. Note, 2.350%, 1/15/2027 | &nbsp;&nbsp; 819026 |
| &nbsp;&nbsp; 300000 | Comcast Corp., Sr. Unsecd. Note, 3.300%, 2/1/2027 | &nbsp;&nbsp; 283149 |
| &nbsp;&nbsp; 750000 | Comcast Corp., Sr. Unsecd. Note, 3.950%, 10/15/2025 | &nbsp;&nbsp; 735282 |
| &nbsp;&nbsp; 400000 | Time Warner Cable, Inc., Sr. Unsecd. Note, 8.375%, 3/15/2023 | &nbsp;&nbsp; 402531 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 3221056 |
|  | **Communications - Media & Entertainment—1.5%** |  |
| &nbsp;&nbsp; 300000 | British Sky Broadcasting Group PLC, Sr. Unsecd. Note, 144A, 3.750%, 9/16/2024 | &nbsp;&nbsp; 293035 |
| &nbsp;&nbsp; 220000 | Meta Platforms, Inc., Sr. Unsecd. Note, 3.500%, 8/15/2027 | &nbsp;&nbsp; 205412 |
| &nbsp;&nbsp; 250000 | Meta Platforms, Inc., Sr. Unsecd. Note, 3.850%, 8/15/2032 | &nbsp;&nbsp; 220702 |
| &nbsp;&nbsp; 500000 | Netflix, Inc., Sr. Unsecd. Note, 4.375%, 11/15/2026 | &nbsp;&nbsp; 482110 |
| &nbsp;&nbsp; 310000 | Paramount Global, Sr. Unsecd. Note, 4.200%, 5/19/2032 | &nbsp;&nbsp; 254510 |
| &nbsp;&nbsp; 805000 | S&P Global, Inc., Sr. Unsecd. Note, 144A, 2.900%, 3/1/2032 | &nbsp;&nbsp; 688871 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 2144640 |
|  | **Communications - Telecom Wireless—1.2%** |  |
| &nbsp;&nbsp; 500000 | American Tower Corp., Sr. Unsecd. Note, 1.450%, 9/15/2026 | &nbsp;&nbsp; 436912 |
| &nbsp;&nbsp; 180000 | Crown Castle Inc., Sr. Unsecd. Note, 2.250%, 1/15/2031 | &nbsp;&nbsp; 144831 |
| &nbsp;&nbsp; 450000 | T-Mobile USA, Inc., Series WI, 3.750%, 4/15/2027 | &nbsp;&nbsp; 424540 |
| &nbsp;&nbsp; 450000 | T-Mobile USA, Inc., Series WI, 3.875%, 4/15/2030 | &nbsp;&nbsp; 408672 |
| &nbsp;&nbsp; 395000 | Vodafone Group PLC, Sr. Unsecd. Note, 4.125%, 5/30/2025 | &nbsp;&nbsp; 389077 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 1804032 |
|  | **Communications - Telecom Wirelines—1.6%** |  |
| &nbsp;&nbsp; 300000 | AT&T, Inc., Sr. Unsecd. Note, 2.300%, 6/1/2027 | &nbsp;&nbsp; 267274 |
| &nbsp;&nbsp; 877000 | AT&T, Inc., Sr. Unsecd. Note, 2.550%, 12/1/2033 | &nbsp;&nbsp; 676553 |
| &nbsp;&nbsp; 250000 | Telefonica SA, Company Guarantee, 7.045%, 6/20/2036 | &nbsp;&nbsp; 257246 |
| &nbsp;&nbsp; 300000 | Verizon Communications, Inc., Sr. Unsecd. Note, 0.850%, 11/20/2025 | &nbsp;&nbsp; 267866 |
| &nbsp;&nbsp; 800000 | Verizon Communications, Inc., Sr. Unsecd. Note, 1.750%, 1/20/2031 | &nbsp;&nbsp; 622556 |
| &nbsp;&nbsp; 110000 | Verizon Communications, Inc., Sr. Unsecd. Note, 2.550%, 3/21/2031 | &nbsp;&nbsp; 90731 |
| &nbsp;&nbsp; 175000 | Verizon Communications, Inc., Sr. Unsecd. Note, 3.150%, 3/22/2030 | &nbsp;&nbsp; 154728 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 2336954 |
|  | **Consumer Cyclical - Automotive—4.1%** |  |
| &nbsp;&nbsp; 605000 | Daimler Trucks Financial NA, Sr. Unsecd. Note, 144A, 2.000%, 12/14/2026 | &nbsp;&nbsp; 533886 |
| &nbsp;&nbsp; 250000<br><sup>1</sup> <br>| Ford Motor Co., Sr. Unsecd. Note, 4.346%, 12/8/2026 | &nbsp;&nbsp; 237635 |
| &nbsp;&nbsp; 250000<br><sup>1</sup> <br>| General Motors Co., Sr. Unsecd. Note, 4.200%, 10/1/2027 | &nbsp;&nbsp; 235496 |
| &nbsp;&nbsp; 250000 | General Motors Co., Sr. Unsecd. Note, 6.125%, 10/1/2025 | &nbsp;&nbsp; 254686 |
| &nbsp;&nbsp; 500000 | General Motors Financial Co., Inc., 1.250%, 1/8/2026 | &nbsp;&nbsp; 440819 |
| &nbsp;&nbsp; 500000 | General Motors Financial Co., Inc., Sr. Unsecd. Note, 2.400%, 4/10/2028 | &nbsp;&nbsp; 421380 |
| &nbsp;&nbsp; 300000 | General Motors Financial Co., Inc., Sr. Unsecd. Note, 4.000%, 10/6/2026 | &nbsp;&nbsp; 282781 |
| &nbsp;&nbsp; 1000000 | Mercedes-Benz Finance NA LLC, Sr. Unsecd. Note, 144A, 3.250%, 8/1/2024 | &nbsp;&nbsp; 970494 |
| &nbsp;&nbsp; 680000 | Nissan Motor Acceptance Company LLC., Sr. Unsecd. Note, 144A, 1.125%, 9/16/2024 | &nbsp;&nbsp; 620042 |
| &nbsp;&nbsp; 200000 | Stellantis Finance US, Inc., Sr. Unsecd. Note, 144A, 1.711%, 1/29/2027 | &nbsp;&nbsp; 171887 |
| &nbsp;&nbsp; 500000 | Toyota Motor Credit Corp., Sr. Unsecd. Note, 3.950%, 6/30/2025 | &nbsp;&nbsp; 489957 |
| &nbsp;&nbsp; 650000 | Volkswagen Group of America Finance LLC, Sr. Unsecd. Note, 144A, 0.875%, 11/22/2023 | &nbsp;&nbsp; 625452 |
| &nbsp;&nbsp; 500000 | Volkswagen Group of America Finance LLC, Sr. Unsecd. Note, 144A, 1.250%, 11/24/2025 | &nbsp;&nbsp; 446242 |
| &nbsp;&nbsp; 300000 | Volkswagen Group of America Finance LLC, Sr. Unsecd. Note, 144A, 4.250%, 11/13/2023 | &nbsp;&nbsp; 297168 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 6027925 |
|  | **Consumer Cyclical - Leisure—0.5%** |  |
| &nbsp;&nbsp; 355000 | Warnermedia Holdings, Inc., Sr. Unsecd. Note, 144A, 3.755%, 3/15/2027 | &nbsp;&nbsp; 320194 |

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Annual Shareholder Report

**6**

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| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Consumer Cyclical - Leisure—continued** |  |
| $500000 | Warnermedia Holdings, Inc., Sr. Unsecd. Note, 144A, 4.054%, 3/15/2029 | $433520 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 753714 |
|  | **Consumer Cyclical - Retailers—3.8%** |  |
| &nbsp;&nbsp; 1000000 | Advance Auto Parts, Inc., Sr. Unsecd. Note, Series WI, 3.900%, 4/15/2030 | &nbsp;&nbsp; 878717 |
| &nbsp;&nbsp; 470000 | Alimentation Couche-Tard, Inc., Sr. Unsecd. Note, 144A, 2.950%, 1/25/2030 | &nbsp;&nbsp; 399334 |
| &nbsp;&nbsp; 265000 | AutoNation, Inc., Sr. Unsecd. Note, 4.750%, 6/1/2030 | &nbsp;&nbsp; 237035 |
| &nbsp;&nbsp; 275000 | Costco Wholesale Corp., Sr. Unsecd. Note, 1.375%, 6/20/2027 | &nbsp;&nbsp; 241285 |
| &nbsp;&nbsp; 1290000 | CVS Health Corp., Sr. Unsecd. Note, 4.300%, 3/25/2028 | &nbsp;&nbsp; 1250148 |
| &nbsp;&nbsp; 200000 | Dollar General Corp., Sr. Unsecd. Note, 4.150%, 11/1/2025 | &nbsp;&nbsp; 195786 |
| &nbsp;&nbsp; 500000 | Dollar Tree, Inc., Sr. Unsecd. Note, 4.000%, 5/15/2025 | &nbsp;&nbsp; 488587 |
| &nbsp;&nbsp; 800000 | Home Depot, Inc., Sr. Unsecd. Note, 2.125%, 9/15/2026 | &nbsp;&nbsp; 733114 |
| &nbsp;&nbsp; 410000 | Home Depot, Inc., Sr. Unsecd. Note, 2.875%, 4/15/2027 | &nbsp;&nbsp; 383044 |
| &nbsp;&nbsp; 320000 | O'Reilly Automotive, Inc., Sr. Unsecd. Note, 1.750%, 3/15/2031 | &nbsp;&nbsp; 249156 |
| &nbsp;&nbsp; 120000 | O'Reilly Automotive, Inc., Sr. Unsecd. Note, 4.200%, 4/1/2030 | &nbsp;&nbsp; 113549 |
| &nbsp;&nbsp; 580000 | Tractor Supply Co., Sr. Unsecd. Note, 1.750%, 11/1/2030 | &nbsp;&nbsp; 446855 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 5616610 |
|  | **Consumer Cyclical - Services—2.3%** |  |
| &nbsp;&nbsp; 200000<br><sup>1</sup> <br>| Alibaba Group Holding Ltd., Sr. Unsecd. Note, 2.125%, 2/9/2031 | &nbsp;&nbsp; 159714 |
| &nbsp;&nbsp; 500000 | Alibaba Group Holding Ltd., Sr. Unsecd. Note, 3.400%, 12/6/2027 | &nbsp;&nbsp; 460786 |
| &nbsp;&nbsp; 300000 | Amazon.com, Inc., Sr. Unsecd. Note, 3.000%, 4/13/2025 | &nbsp;&nbsp; 289747 |
| &nbsp;&nbsp; 170000 | Amazon.com, Inc., Sr. Unsecd. Note, 3.150%, 8/22/2027 | &nbsp;&nbsp; 160027 |
| &nbsp;&nbsp; 760000 | Amazon.com, Inc., Sr. Unsecd. Note, 3.300%, 4/13/2027 | &nbsp;&nbsp; 722426 |
| &nbsp;&nbsp; 400000 | Booking Holdings, Inc., Sr. Unsecd. Note, 4.625%, 4/13/2030 | &nbsp;&nbsp; 387294 |
| &nbsp;&nbsp; 750000 | Cintas Corp. No. 2, Sr. Unsecd. Note, 3.700%, 4/1/2027 | &nbsp;&nbsp; 724149 |
| &nbsp;&nbsp; 54000 | Expedia Group, Inc., Sr. Unsecd. Note, Series WI, 2.950%, 3/15/2031 | &nbsp;&nbsp; 43551 |
| &nbsp;&nbsp; 530000 | Visa, Inc., Sr. Unsecd. Note, 3.150%, 12/14/2025 | &nbsp;&nbsp; 511550 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 3459244 |
|  | **Consumer Non-Cyclical - Food/Beverage—5.4%** |  |
| &nbsp;&nbsp; 750000 | Anheuser-Busch InBev Worldwide, Inc., Sr. Unsecd. Note, 4.750%, 1/23/2029 | &nbsp;&nbsp; 741927 |
| &nbsp;&nbsp; 1015000 | Coca-Cola Femsa S.A.B. de C.V., Sr. Unsecd. Note, 2.750%, 1/22/2030 | &nbsp;&nbsp; 876554 |
| &nbsp;&nbsp; 250000 | Constellation Brands, Inc., Sr. Unsecd. Note, 4.350%, 5/9/2027 | &nbsp;&nbsp; 243847 |
| &nbsp;&nbsp; 750000 | Constellation Brands, Inc., Sr. Unsecd. Note, 4.650%, 11/15/2028 | &nbsp;&nbsp; 726942 |
| &nbsp;&nbsp; 380000 | Flowers Foods, Inc., Sr. Unsecd. Note, 3.500%, 10/1/2026 | &nbsp;&nbsp; 356213 |
| &nbsp;&nbsp; 500000 | Grupo Bimbo S.A.B. de CV, Sr. Unsecd. Note, 144A, 3.875%, 6/27/2024 | &nbsp;&nbsp; 489952 |
| &nbsp;&nbsp; 915000 | International Flavors & Fragrances, Inc., Sr. Unsecd. Note, 144A, 1.230%, 10/1/2025 | &nbsp;&nbsp; 809133 |
| &nbsp;&nbsp; 450000 | Keurig Dr Pepper, Inc., Sr. Unsecd. Note, 4.417%, 5/25/2025 | &nbsp;&nbsp; 445314 |
| &nbsp;&nbsp; 417000 | Kraft Heinz Foods Co., Sr. Unsecd. Note, 3.000%, 6/1/2026 | &nbsp;&nbsp; 390756 |
| &nbsp;&nbsp; 900000 | Kraft Heinz Foods Co., Sr. Unsecd. Note, Series WI, 3.875%, 5/15/2027 | &nbsp;&nbsp; 861277 |
| &nbsp;&nbsp; 300000 | PepsiCo, Inc., Sr. Unsecd. Note, 2.625%, 7/29/2029 | &nbsp;&nbsp; 265232 |
| &nbsp;&nbsp; 300000 | Smithfield Foods, Inc., Sr. Unsecd. Note, 144A, 2.625%, 9/13/2031 | &nbsp;&nbsp; 215305 |
| &nbsp;&nbsp; 510000 | Smithfield Foods, Inc., Sr. Unsecd. Note, 144A, 3.000%, 10/15/2030 | &nbsp;&nbsp; 389386 |
| &nbsp;&nbsp; 60000 | Smithfield Foods, Inc., Sr. Unsecd. Note, 144A, 4.250%, 2/1/2027 | &nbsp;&nbsp; 55338 |
| &nbsp;&nbsp; 450000 | Sysco Corp., Sr. Unsecd. Note, 3.250%, 7/15/2027 | &nbsp;&nbsp; 416640 |
| &nbsp;&nbsp; 700000 | Sysco Corp., Sr. Unsecd. Note, 3.300%, 7/15/2026 | &nbsp;&nbsp; 661199 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 7945015 |
|  | **Consumer Non-Cyclical - Health Care—1.5%** |  |
| &nbsp;&nbsp; 250000 | Becton Dickinson & Co., Sr. Unsecd. Note, 3.700%, 6/6/2027 | &nbsp;&nbsp; 236602 |
| &nbsp;&nbsp; 203000 | Becton Dickinson & Co., Sr. Unsecd. Note, 3.734%, 12/15/2024 | &nbsp;&nbsp; 198108 |
| &nbsp;&nbsp; 235000 | DH Europe Finance II S.a.r.l., Sr. Unsecd. Note, 2.600%, 11/15/2029 | &nbsp;&nbsp; 206393 |
| &nbsp;&nbsp; 470000 | DH Europe Finance II S.a.r.l., Sr. Unsecd. Note, Series 5YR, 2.200%, 11/15/2024 | &nbsp;&nbsp; 448156 |
| &nbsp;&nbsp; 300000 | GE Healthcare Holding LLC, Sr. Unsecd. Note, 144A, 5.857%, 3/15/2030 | &nbsp;&nbsp; 307743 |

---

Annual Shareholder Report

**7**

------

---

| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Consumer Non-Cyclical - Health Care—continued** |  |
| $300000 | GE Healthcare Holding LLC, Sr. Unsecd. Note, 144A, 5.905%, 11/22/2032 | $311812 |
| &nbsp;&nbsp; 85000 | HCA, Inc., Sec. Fac. Bond, 144A, 3.125%, 3/15/2027 | &nbsp;&nbsp; 77404 |
| &nbsp;&nbsp; 450000 | PerkinElmer, Inc., Sr. Unsecd. Note, 3.300%, 9/15/2029 | &nbsp;&nbsp; 392630 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 2178848 |
|  | **Consumer Non-Cyclical - Pharmaceuticals—3.9%** |  |
| &nbsp;&nbsp; 500000 | Abbott Laboratories, Sr. Unsecd. Note, 1.150%, 1/30/2028 | &nbsp;&nbsp; 425808 |
| &nbsp;&nbsp; 453000 | Abbott Laboratories, Sr. Unsecd. Note, 3.750%, 11/30/2026 | &nbsp;&nbsp; 441669 |
| &nbsp;&nbsp; 455000 | AbbVie, Inc., Sr. Unsecd. Note, 3.200%, 11/21/2029 | &nbsp;&nbsp; 411207 |
| &nbsp;&nbsp; 300000 | AbbVie, Inc., Sr. Unsecd. Note, 3.600%, 5/14/2025 | &nbsp;&nbsp; 291015 |
| &nbsp;&nbsp; 67000 | AbbVie, Inc., Sr. Unsecd. Note, 4.750%, 3/15/2045 | &nbsp;&nbsp; 60499 |
| &nbsp;&nbsp; 235000 | AstraZeneca PLC, Sr. Unsecd. Note, 0.700%, 4/8/2026 | &nbsp;&nbsp; 206866 |
| &nbsp;&nbsp; 600000 | AstraZeneca PLC, Sr. Unsecd. Note, 3.125%, 6/12/2027 | &nbsp;&nbsp; 564348 |
| &nbsp;&nbsp; 1000000 | Bayer US Finance II LLC, Sr. Unsecd. Note, 144A, 3.875%, 12/15/2023 | &nbsp;&nbsp; 985903 |
| &nbsp;&nbsp; 200000 | Bayer US Finance II LLC, Sr. Unsecd. Note, 144A, 4.250%, 12/15/2025 | &nbsp;&nbsp; 194006 |
| &nbsp;&nbsp; 235000 | Biogen, Inc., Sr. Unsecd. Note, 2.250%, 5/1/2030 | &nbsp;&nbsp; 191976 |
| &nbsp;&nbsp; 600000 | Biogen, Inc., Sr. Unsecd. Note, 4.050%, 9/15/2025 | &nbsp;&nbsp; 583862 |
| &nbsp;&nbsp; 152000 | Bristol-Myers Squibb Co., Sr. Unsecd. Note, Series WI, 5.000%, 8/15/2045 | &nbsp;&nbsp; 148064 |
| &nbsp;&nbsp; 220000 | Gilead Sciences, Inc., Sr. Unsecd. Note, 3.650%, 3/1/2026 | &nbsp;&nbsp; 212355 |
| &nbsp;&nbsp; 670000 | Regeneron Pharmaceuticals, Inc., Sr. Unsecd. Note, 1.750%, 9/15/2030 | &nbsp;&nbsp; 518994 |
| &nbsp;&nbsp; 240000 | Royalty Pharma PLC, Sr. Unsecd. Note, Series WI, 1.200%, 9/2/2025 | &nbsp;&nbsp; 215015 |
| &nbsp;&nbsp; 300000 | Teva Pharmaceutical Finance Netherlands III BV, Sr. Unsecd. Note, 3.150%, 10/1/2026 | &nbsp;&nbsp; 262959 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 5714546 |
|  | **Consumer Non-Cyclical - Supermarkets—0.5%** |  |
| &nbsp;&nbsp; 610000 | Kroger Co., Bond, 6.900%, 4/15/2038 | &nbsp;&nbsp; 670856 |
|  | **Consumer Non-Cyclical - Tobacco—1.5%** |  |
| &nbsp;&nbsp; 350000 | Altria Group, Inc., Sr. Unsecd. Note, 4.400%, 2/14/2026 | &nbsp;&nbsp; 343045 |
| &nbsp;&nbsp; 250000 | BAT Capital Corp., Sr. Unsecd. Note, 2.259%, 3/25/2028 | &nbsp;&nbsp; 207895 |
| &nbsp;&nbsp; 300000 | BAT Capital Corp., Sr. Unsecd. Note, 7.750%, 10/19/2032 | &nbsp;&nbsp; 323590 |
| &nbsp;&nbsp; 290000 | BAT International Finance PLC, Sr. Unsecd. Note, 144A, 3.950%, 6/15/2025 | &nbsp;&nbsp; 278776 |
| &nbsp;&nbsp; 300000 | Philip Morris International, Inc., Sr. Unsecd. Note, 5.125%, 11/17/2027 | &nbsp;&nbsp; 302722 |
| &nbsp;&nbsp; 140000 | Philip Morris International, Inc., Sr. Unsecd. Note, 5.625%, 11/17/2029 | &nbsp;&nbsp; 142356 |
| &nbsp;&nbsp; 300000 | Reynolds American, Inc., Sr. Unsecd. Note, 4.450%, 6/12/2025 | &nbsp;&nbsp; 293756 |
| &nbsp;&nbsp; 360000 | Reynolds American, Inc., Sr. Unsecd. Note, 7.000%, 8/4/2041 | &nbsp;&nbsp; 357485 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 2249625 |
|  | **Energy - Independent—2.4%** |  |
| &nbsp;&nbsp; 215000 | Cimarex Energy Co., Sr. Unsecd. Note, 4.375%, 3/15/2029 | &nbsp;&nbsp; 167886 |
| &nbsp;&nbsp; 500000 | Coterra Energy, Inc., Sr. Unsecd. Note, Series WI, 3.900%, 5/15/2027 | &nbsp;&nbsp; 467628 |
| &nbsp;&nbsp; 160000 | Diamondback Energy, Inc., Sr. Unsecd. Note, 6.250%, 3/15/2033 | &nbsp;&nbsp; 162894 |
| &nbsp;&nbsp; 700000 | Hess Corp., Sr. Unsecd. Note, 4.300%, 4/1/2027 | &nbsp;&nbsp; 669602 |
| &nbsp;&nbsp; 300000 | Marathon Oil Corp., Sr. Unsecd. Note, 4.400%, 7/15/2027 | &nbsp;&nbsp; 286975 |
| &nbsp;&nbsp; 100000 | Occidental Petroleum Corp., Sr. Unsecd. Note, 2.900%, 8/15/2024 | &nbsp;&nbsp; 95941 |
| &nbsp;&nbsp; 1000000 | Occidental Petroleum Corp., Sr. Unsecd. Note, 3.450%, 7/15/2024 | &nbsp;&nbsp; 975435 |
| &nbsp;&nbsp; 325000 | Pioneer Natural Resources, Inc., Sr. Unsecd. Note, 1.125%, 1/15/2026 | &nbsp;&nbsp; 290027 |
| &nbsp;&nbsp; 550000 | Pioneer Natural Resources, Inc., Sr. Unsecd. Note, 2.150%, 1/15/2031 | &nbsp;&nbsp; 436017 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 3552405 |
|  | **Energy - Integrated—2.0%** |  |
| &nbsp;&nbsp; 500000 | BP Capital Markets America, Inc., Sr. Unsecd. Note, 3.796%, 9/21/2025 | &nbsp;&nbsp; 491455 |
| &nbsp;&nbsp; 300000<br><sup>1</sup> <br>| Cenovus Energy, Inc., Sr. Unsecd. Note, 2.650%, 1/15/2032 | &nbsp;&nbsp; 240302 |
| &nbsp;&nbsp; 500000<br><sup>1</sup> <br>| Cenovus Energy, Inc., Sr. Unsecd. Note, 4.250%, 4/15/2027 | &nbsp;&nbsp; 478655 |
| &nbsp;&nbsp; 500000 | Chevron Corp., Sr. Unsecd. Note, 1.554%, 5/11/2025 | &nbsp;&nbsp; 465569 |
| &nbsp;&nbsp; 530000 | CNPC Hong Kong Overseas Capital Ltd., Company Guarantee, 144A, 5.950%, 4/28/2041 | &nbsp;&nbsp; 546653 |

---

Annual Shareholder Report

**8**

------

---

| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Energy - Integrated—continued** |  |
| $240000 | Husky Energy, Inc., Sr. Unsecd. Note, 4.400%, 4/15/2029 | $222190 |
| &nbsp;&nbsp; 175000 | Petroleos Mexicanos, Sr. Unsecd. Note, 4.875%, 1/18/2024 | &nbsp;&nbsp; 171348 |
| &nbsp;&nbsp; 325000 | Shell International Finance B.V., Sr. Unsecd. Note, 2.875%, 5/10/2026 | &nbsp;&nbsp; 306454 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 2922626 |
|  | **Energy - Midstream—2.5%** |  |
| &nbsp;&nbsp; 265000 | Boardwalk Pipeline Partners LP, Sr. Unsecd. Note, 3.400%, 2/15/2031 | &nbsp;&nbsp; 222289 |
| &nbsp;&nbsp; 500000 | Boardwalk Pipeline Partners LP, Sr. Unsecd. Note, 4.800%, 5/3/2029 | &nbsp;&nbsp; 471680 |
| &nbsp;&nbsp; 205000 | Eastern Energy Gas Holdings, Sr. Unsecd. Note, Series A, 2.500%, 11/15/2024 | &nbsp;&nbsp; 195420 |
| &nbsp;&nbsp; 150000 | Energy Transfer LP, Sr. Unsecd. Note, 5.550%, 2/15/2028 | &nbsp;&nbsp; 148984 |
| &nbsp;&nbsp; 300000 | Energy Transfer Operating, Sr. Unsecd. Note, 3.750%, 5/15/2030 | &nbsp;&nbsp; 265198 |
| &nbsp;&nbsp; 565000 | Energy Transfer Partners LP, Sr. Unsecd. Note, 4.900%, 2/1/2024 | &nbsp;&nbsp; 562032 |
| &nbsp;&nbsp; 290000 | MPLX LP, Sr. Unsecd. Note, 1.750%, 3/1/2026 | &nbsp;&nbsp; 258821 |
| &nbsp;&nbsp; 395000 | MPLX LP, Sr. Unsecd. Note, 4.125%, 3/1/2027 | &nbsp;&nbsp; 373667 |
| &nbsp;&nbsp; 345000 | ONEOK, Inc., Sr. Unsecd. Note, 4.000%, 7/13/2027 | &nbsp;&nbsp; 325138 |
| &nbsp;&nbsp; 120000 | ONEOK, Inc., Sr. Unsecd. Note, 6.100%, 11/15/2032 | &nbsp;&nbsp; 120362 |
| &nbsp;&nbsp; 140000 | Targa Resources, Inc., Sr. Unsecd. Note, 4.200%, 2/1/2033 | &nbsp;&nbsp; 120849 |
| &nbsp;&nbsp; 600000 | TC Pipelines, LP, Sr. Unsecd. Note, 3.900%, 5/25/2027 | &nbsp;&nbsp; 566333 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 3630773 |
|  | **Energy - Oil Field Services—0.2%** |  |
| &nbsp;&nbsp; 300000 | Schlumberger Holdings Corp., Sr. Unsecd. Note, 144A, 4.000%, 12/21/2025 | &nbsp;&nbsp; 291522 |
|  | **Energy - Refining—0.9%** |  |
| &nbsp;&nbsp; 600000 | Marathon Petroleum Corp., Sr. Unsecd. Note, 4.700%, 5/1/2025 | &nbsp;&nbsp; 591362 |
| &nbsp;&nbsp; 185000 | Phillips 66, Sr. Unsecd. Note, 1.300%, 2/15/2026 | &nbsp;&nbsp; 165941 |
| &nbsp;&nbsp; 335000 | Valero Energy Corp., Sr. Unsecd. Note, 6.625%, 6/15/2037 | &nbsp;&nbsp; 357888 |
| &nbsp;&nbsp; 215000 | Valero Energy Corp., Sr. Unsecd. Note, 7.500%, 4/15/2032 | &nbsp;&nbsp; 242346 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 1357537 |
|  | **Financial Institution - Banking—22.9%** |  |
| &nbsp;&nbsp; 745000 | American Express Co., Sr. Unsecd. Note, 3.375%, 5/3/2024 | &nbsp;&nbsp; 730222 |
| &nbsp;&nbsp; 1085000 | Associated Banc-Corp., Sub. Note, 4.250%, 1/15/2025 | &nbsp;&nbsp; 1056076 |
| &nbsp;&nbsp; 700000 | Bank of America Corp., Sr. Unsecd. Note, 1.734%, 7/22/2027 | &nbsp;&nbsp; 614142 |
| &nbsp;&nbsp; 1900000 | Bank of America Corp., Sr. Unsecd. Note, 2.592%, 4/29/2031 | &nbsp;&nbsp; 1551601 |
| &nbsp;&nbsp; 1250000 | Bank of America Corp., Sr. Unsecd. Note, 3.705%, 4/24/2028 | &nbsp;&nbsp; 1158625 |
| &nbsp;&nbsp; 500000 | Bank of America Corp., Sr. Unsecd. Note, Series MTN, 3.248%, 10/21/2027 | &nbsp;&nbsp; 462501 |
| &nbsp;&nbsp; 500000 | Bank of America Corp., Sr. Unsecd. Note, Series MTN, 4.271%, 7/23/2029 | &nbsp;&nbsp; 467194 |
| &nbsp;&nbsp; 250000 | Bank of New York Mellon Corp., Sr. Unsecd. Note, 2.050%, 1/26/2027 | &nbsp;&nbsp; 224841 |
| &nbsp;&nbsp; 300000<br><sup>1</sup> <br>| Bank of New York Mellon Corp., Sr. Unsecd. Note, 3.350%, 4/25/2025 | &nbsp;&nbsp; 290682 |
| &nbsp;&nbsp; 550000 | Bank of New York Mellon Corp., Sr. Unsecd. Note, Series MTN, 3.250%, 9/11/2024 | &nbsp;&nbsp; 535228 |
| &nbsp;&nbsp; 300000 | Bank of New York Mellon Corp., Sr. Unsecd. Note, Series MTN, 3.992%, 6/13/2028 | &nbsp;&nbsp; 287469 |
| &nbsp;&nbsp; 500000 | Citigroup, Inc., 4.125%, 7/25/2028 | &nbsp;&nbsp; 466319 |
| &nbsp;&nbsp; 250000 | Citigroup, Inc., Sr. Unsecd. Note, 1.122%, 1/28/2027 | &nbsp;&nbsp; 218138 |
| &nbsp;&nbsp; 1400000 | Citigroup, Inc., Sr. Unsecd. Note, 2.572%, 6/3/2031 | &nbsp;&nbsp; 1135395 |
| &nbsp;&nbsp; 480000 | Citigroup, Inc., Sr. Unsecd. Note, 3.400%, 5/1/2026 | &nbsp;&nbsp; 455537 |
| &nbsp;&nbsp; 500000 | Citigroup, Inc., Sr. Unsecd. Note, 3.700%, 1/12/2026 | &nbsp;&nbsp; 481526 |
| &nbsp;&nbsp; 500000 | Citigroup, Inc., Sr. Unsecd. Note, 4.075%, 4/23/2029 | &nbsp;&nbsp; 460980 |
| &nbsp;&nbsp; 250000 | Citigroup, Inc., Sr. Unsecd. Note, 4.658%, 5/24/2028 | &nbsp;&nbsp; 242335 |
| &nbsp;&nbsp; 90000 | Citizens Financial Group, Inc., Sr. Unsecd. Note, 2.500%, 2/6/2030 | &nbsp;&nbsp; 73370 |
| &nbsp;&nbsp; 300000 | Comerica, Inc., 3.800%, 7/22/2026 | &nbsp;&nbsp; 286825 |
| &nbsp;&nbsp; 500000 | Compass Bank, Birmingham, Sub. Note, Series BKNT, 3.875%, 4/10/2025 | &nbsp;&nbsp; 486711 |
| &nbsp;&nbsp; 140000<br><sup>1</sup> <br>| Fifth Third Bancorp, Sr. Unsecd. Note, 2.375%, 1/28/2025 | &nbsp;&nbsp; 132856 |
| &nbsp;&nbsp; 500000 | Fifth Third Bancorp, Sr. Unsecd. Note, 3.650%, 1/25/2024 | &nbsp;&nbsp; 492650 |
| &nbsp;&nbsp; 250000 | Fifth Third Bank, Sr. Unsecd. Note, Series BKNT, 2.250%, 2/1/2027 | &nbsp;&nbsp; 225415 |

---

Annual Shareholder Report

**9**

------

---

| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Financial Institution - Banking—continued** |  |
| $685000 | FNB Corp. (PA), Sr. Unsecd. Note, 2.200%, 2/24/2023 | $681601 |
| &nbsp;&nbsp; 300000 | FNB Corp. (PA), Sr. Unsecd. Note, 5.150%, 8/25/2025 | &nbsp;&nbsp; 296729 |
| &nbsp;&nbsp; 200000 | Goldman Sachs Group, Inc., Sr. Unsecd. Note, 1.431%, 3/9/2027 | &nbsp;&nbsp; 175604 |
| &nbsp;&nbsp; 750000 | Goldman Sachs Group, Inc., Sr. Unsecd. Note, 1.992%, 1/27/2032 | &nbsp;&nbsp; 573077 |
| &nbsp;&nbsp; 250000 | Goldman Sachs Group, Inc., Sr. Unsecd. Note, 2.640%, 2/24/2028 | &nbsp;&nbsp; 222953 |
| &nbsp;&nbsp; 1250000 | Goldman Sachs Group, Inc., Sr. Unsecd. Note, 3.500%, 11/16/2026 | &nbsp;&nbsp; 1173466 |
| &nbsp;&nbsp; 500000 | Goldman Sachs Group, Inc., Sr. Unsecd. Note, 4.223%, 5/1/2029 | &nbsp;&nbsp; 466719 |
| &nbsp;&nbsp; 500000 | Goldman Sachs Group, Inc., Sub. Note, 4.250%, 10/21/2025 | &nbsp;&nbsp; 488503 |
| &nbsp;&nbsp; 1000000 | HSBC USA, Inc., Sr. Unsecd. Note, 3.500%, 6/23/2024 | &nbsp;&nbsp; 975437 |
| &nbsp;&nbsp; 240000 | Huntington Bancshares, Inc., Sr. Unsecd. Note, 2.550%, 2/4/2030 | &nbsp;&nbsp; 197931 |
| &nbsp;&nbsp; 1000000 | JPMorgan Chase & Co., Sr. Unsecd. Note, 1.045%, 11/19/2026 | &nbsp;&nbsp; 883054 |
| &nbsp;&nbsp; 500000 | JPMorgan Chase & Co., Sr. Unsecd. Note, 2.545%, 11/8/2032 | &nbsp;&nbsp; 396476 |
| &nbsp;&nbsp; 500000 | JPMorgan Chase & Co., Sr. Unsecd. Note, 2.580%, 4/22/2032 | &nbsp;&nbsp; 401728 |
| &nbsp;&nbsp; 500000 | JPMorgan Chase & Co., Sr. Unsecd. Note, 3.782%, 2/1/2028 | &nbsp;&nbsp; 467870 |
| &nbsp;&nbsp; 500000 | JPMorgan Chase & Co., Sr. Unsecd. Note, 3.845%, 6/14/2025 | &nbsp;&nbsp; 489143 |
| &nbsp;&nbsp; 500000 | JPMorgan Chase & Co., Sr. Unsecd. Note, 4.323%, 4/26/2028 | &nbsp;&nbsp; 478265 |
| &nbsp;&nbsp; 500000 | JPMorgan Chase & Co., Sr. Unsecd. Note, 4.452%, 12/5/2029 | &nbsp;&nbsp; 470680 |
| &nbsp;&nbsp; 500000 | JPMorgan Chase & Co., Sub. Note, 3.875%, 9/10/2024 | &nbsp;&nbsp; 489763 |
| &nbsp;&nbsp; 410000 | M&T Bank Corp., Sr. Unsecd. Note, 4.553%, 8/16/2028 | &nbsp;&nbsp; 400353 |
| &nbsp;&nbsp; 1000000 | Morgan Stanley, Sr. Unsecd. Note, 0.985%, 12/10/2026 | &nbsp;&nbsp; 877248 |
| &nbsp;&nbsp; 1000000 | Morgan Stanley, Sr. Unsecd. Note, 3.625%, 1/20/2027 | &nbsp;&nbsp; 944471 |
| &nbsp;&nbsp; 500000 | Morgan Stanley, Sr. Unsecd. Note, 6.342%, 10/18/2033 | &nbsp;&nbsp; 525502 |
| &nbsp;&nbsp; 500000 | Morgan Stanley, Sr. Unsecd. Note, Series GMTN, 2.239%, 7/21/2032 | &nbsp;&nbsp; 384794 |
| &nbsp;&nbsp; 165000 | Morgan Stanley, Sr. Unsecd. Note, Series GMTN, 2.699%, 1/22/2031 | &nbsp;&nbsp; 136702 |
| &nbsp;&nbsp; 500000 | PNC Financial Services Group, Inc., Sr. Unsecd. Note, 3.150%, 5/19/2027 | &nbsp;&nbsp; 467665 |
| &nbsp;&nbsp; 330000 | Regions Financial Corp., Sr. Unsecd. Note, 2.250%, 5/18/2025 | &nbsp;&nbsp; 308680 |
| &nbsp;&nbsp; 500000 | State Street Corp., Sr. Unsecd. Note, 2.203%, 2/7/2028 | &nbsp;&nbsp; 449863 |
| &nbsp;&nbsp; 700000 | State Street Corp., Sr. Unsecd. Note, 3.300%, 12/16/2024 | &nbsp;&nbsp; 683689 |
| &nbsp;&nbsp; 65000 | State Street Corp., Sr. Unsecd. Note, 4.421%, 5/13/2033 | &nbsp;&nbsp; 61702 |
| &nbsp;&nbsp; 300000 | Synovus Financial Corp., Sr. Unsecd. Note, 5.200%, 8/11/2025 | &nbsp;&nbsp; 296250 |
| &nbsp;&nbsp; 475000 | Truist Bank, Sr. Unsecd. Note, Series BKNT, 2.150%, 12/6/2024 | &nbsp;&nbsp; 451927 |
| &nbsp;&nbsp; 200000 | Truist Bank, Sub. Note, Series BKNT, 3.300%, 5/15/2026 | &nbsp;&nbsp; 187321 |
| &nbsp;&nbsp; 500000 | Truist Financial Corp., Sr. Unsecd. Note, Series MTN, 1.125%, 8/3/2027 | &nbsp;&nbsp; 422264 |
| &nbsp;&nbsp; 500000 | Truist Financial Corp., Sr. Unsecd. Note, Series MTN, 4.123%, 6/6/2028 | &nbsp;&nbsp; 479332 |
| &nbsp;&nbsp; 750000 | US Bancorp, Sr. Unsecd. Note, Series MTN, 2.215%, 1/27/2028 | &nbsp;&nbsp; 675217 |
| &nbsp;&nbsp; 750000 | Wells Fargo & Co., Sr. Unsecd. Note, 2.188%, 4/30/2026 | &nbsp;&nbsp; 698639 |
| &nbsp;&nbsp; 2120000 | Wells Fargo & Co., Sr. Unsecd. Note, 3.000%, 10/23/2026 | &nbsp;&nbsp; 1962223 |
| &nbsp;&nbsp; 250000 | Wells Fargo & Co., Sr. Unsecd. Note, Series MTN, 2.406%, 10/30/2025 | &nbsp;&nbsp; 236592 |
| &nbsp;&nbsp; 1000000 | Wells Fargo & Co., Sr. Unsecd. Note, Series MTN, 2.572%, 2/11/2031 | &nbsp;&nbsp; 830245 |
| &nbsp;&nbsp; 500000 | Wells Fargo & Co., Sr. Unsecd. Note, Series MTN, 3.584%, 5/22/2028 | &nbsp;&nbsp; 465019 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp; 33811335 |
|  | **Financial Institution - Broker/Asset Mgr/Exchange—1.4%** |  |
| &nbsp;&nbsp; 500000 | Charles Schwab Corp., Sr. Unsecd. Note, 3.625%, 4/1/2025 | &nbsp;&nbsp; 487180 |
| &nbsp;&nbsp; 220000 | Invesco Finance PLC, Sr. Unsecd. Note, 3.750%, 1/15/2026 | &nbsp;&nbsp; 210906 |
| &nbsp;&nbsp; 200000 | Jefferies Group LLC, Sr. Unsecd. Note, 6.500%, 1/20/2043 | &nbsp;&nbsp; 195774 |
| &nbsp;&nbsp; 245000 | Nuveen LLC, Sr. Unsecd. Note, 144A, 4.000%, 11/1/2028 | &nbsp;&nbsp; 228028 |
| &nbsp;&nbsp; 595000 | Raymond James Financial, Inc., Sr. Unsecd. Note, 4.650%, 4/1/2030 | &nbsp;&nbsp; 574334 |
| &nbsp;&nbsp; 390000 | Stifel Financial Corp., Sr. Unsecd. Note, 4.250%, 7/18/2024 | &nbsp;&nbsp; 382335 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 2078557 |
|  | **Financial Institution - Finance Companies—1.9%** |  |
| &nbsp;&nbsp; 190000 | AerCap Ireland Capital Ltd. / AerCap Global Aviation Trust, Sr. Unsecd. Note, 1.750%, 1/30/2026 | &nbsp;&nbsp; 167362 |

---

Annual Shareholder Report

**10**

------

---

| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Financial Institution - Finance Companies—continued** |  |
| $205000 | AerCap Ireland Capital Ltd. / AerCap Global Aviation Trust, Sr. Unsecd. Note, 3.000%, 10/29/2028 | $172115 |
| &nbsp;&nbsp; 500000 | AerCap Ireland Capital Ltd. / AerCap Global Aviation Trust, Sr. Unsecd. Note, 3.500%, 1/15/2025 | &nbsp;&nbsp; 476571 |
| &nbsp;&nbsp; 550000 | AerCap Ireland Capital Ltd. / AerCap Global Aviation Trust, Sr. Unsecd. Note, 4.625%, 10/15/2027 | &nbsp;&nbsp; 511715 |
| &nbsp;&nbsp; 700000 | Air Lease Corp., Sr. Unsecd. Note, 1.875%, 8/15/2026 | &nbsp;&nbsp; 608840 |
| &nbsp;&nbsp; 550000 | Air Lease Corp., Sr. Unsecd. Note, 3.625%, 12/1/2027 | &nbsp;&nbsp; 498407 |
| &nbsp;&nbsp; 140000 | Air Lease Corp., Sr. Unsecd. Note, 5.850%, 12/15/2027 | &nbsp;&nbsp; 140089 |
| &nbsp;&nbsp; 250000 | Discover Financial Services, Sr. Unsecd. Note, 4.100%, 2/9/2027 | &nbsp;&nbsp; 235612 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 2810711 |
|  | **Financial Institution - Insurance - Health—0.8%** |  |
| &nbsp;&nbsp; 645000 | Centene Corp., Sr. Unsecd. Note, 2.450%, 7/15/2028 | &nbsp;&nbsp; 545651 |
| &nbsp;&nbsp; 200000 | CIGNA Corp., Sr. Unsecd. Note, 4.375%, 10/15/2028 | &nbsp;&nbsp; 193292 |
| &nbsp;&nbsp; 405000 | UnitedHealth Group, Inc., Sr. Unsecd. Note, 3.750%, 7/15/2025 | &nbsp;&nbsp; 396306 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 1135249 |
|  | **Financial Institution - Insurance - Life—1.1%** |  |
| &nbsp;&nbsp; 350000 | AIA Group Ltd., Sr. Unsecd. Note, 144A, 3.600%, 4/9/2029 | &nbsp;&nbsp; 318682 |
| &nbsp;&nbsp; 800000 | American International Group, Inc., Sr. Unsecd. Note, 4.125%, 2/15/2024 | &nbsp;&nbsp; 791782 |
| &nbsp;&nbsp; 172000 | Massachusetts Mutual Life Insurance Co., Sub. Note, 144A, 8.875%, 6/1/2039 | &nbsp;&nbsp; 212016 |
| &nbsp;&nbsp; 290000 | Met Life Global Funding I, Sec. Fac. Bond, 144A, 0.550%, 6/7/2024 | &nbsp;&nbsp; 271631 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 1594111 |
|  | **Financial Institution - Insurance - P&C—0.7%** |  |
| &nbsp;&nbsp; 300000 | Chubb INA Holdings, Inc., Sr. Unsecd. Note, 3.350%, 5/15/2024 | &nbsp;&nbsp; 293774 |
| &nbsp;&nbsp; 250000 | CNA Financial Corp., Sr. Unsecd. Note, 3.450%, 8/15/2027 | &nbsp;&nbsp; 231984 |
| &nbsp;&nbsp; 95000 | CNA Financial Corp., Sr. Unsecd. Note, 3.900%, 5/1/2029 | &nbsp;&nbsp; 86669 |
| &nbsp;&nbsp; 300000 | Nationwide Mutual Insurance Co., Sub. Note, 144A, 9.375%, 8/15/2039 | &nbsp;&nbsp; 387469 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 999896 |
|  | **Financial Institution - REIT - Apartment—1.1%** |  |
| &nbsp;&nbsp; 395000 | Avalonbay Communities, Inc., Sr. Unsecd. Note, Series MTN, 3.350%, 5/15/2027 | &nbsp;&nbsp; 367551 |
| &nbsp;&nbsp; 115000 | Camden Property Trust, Sr. Unsecd. Note, 2.800%, 5/15/2030 | &nbsp;&nbsp; 99217 |
| &nbsp;&nbsp; 500000 | Mid-America Apartment Communities LP, Sr. Unsecd. Note, 3.750%, 6/15/2024 | &nbsp;&nbsp; 489904 |
| &nbsp;&nbsp; 320000 | Mid-America Apartment Communities LP, Sr. Unsub. Note, 1.700%, 2/15/2031 | &nbsp;&nbsp; 250259 |
| &nbsp;&nbsp; 500000 | UDR, Inc., Sr. Unsecd. Note, Series MTN, 2.950%, 9/1/2026 | &nbsp;&nbsp; 459679 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 1666610 |
|  | **Financial Institution - REIT - Healthcare—1.2%** |  |
| &nbsp;&nbsp; 445000 | Healthcare Trust of America, Sr. Unsecd. Note, 2.000%, 3/15/2031 | &nbsp;&nbsp; 337905 |
| &nbsp;&nbsp; 710000 | Physicians Realty Trust, Sr. Unsecd. Note, 4.300%, 3/15/2027 | &nbsp;&nbsp; 670567 |
| &nbsp;&nbsp; 375000 | Welltower, Inc., Sr. Unsecd. Note, 2.750%, 1/15/2031 | &nbsp;&nbsp; 300873 |
| &nbsp;&nbsp; 500000 | Welltower, Inc., Sr. Unsecd. Note, 3.100%, 1/15/2030 | &nbsp;&nbsp; 423084 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 1732429 |
|  | **Financial Institution - REIT - Office—0.6%** |  |
| &nbsp;&nbsp; 250000 | Alexandria Real Estate Equities, Inc., Sr. Unsecd. Note, 4.900%, 12/15/2030 | &nbsp;&nbsp; 244215 |
| &nbsp;&nbsp; 480000 | Boston Properties LP, Sr. Unsecd. Note, 3.200%, 1/15/2025 | &nbsp;&nbsp; 459473 |
| &nbsp;&nbsp; 80000 | Boston Properties LP, Sr. Unsecd. Note, 3.250%, 1/30/2031 | &nbsp;&nbsp; 66324 |
| &nbsp;&nbsp; 120000<br><sup>1</sup> <br>| Piedmont Operating Partnership, LP, Sr. Unsecd. Note, 2.750%, 4/1/2032 | &nbsp;&nbsp; 84286 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 854298 |
|  | **Financial Institution - REIT - Other—0.7%** |  |
| &nbsp;&nbsp; 320000 | ProLogis LP, Sr. Unsecd. Note, 4.375%, 2/1/2029 | &nbsp;&nbsp; 305879 |
| &nbsp;&nbsp; 275000 | WP Carey, Inc., Sr. Unsecd. Note, 2.400%, 2/1/2031 | &nbsp;&nbsp; 219761 |
| &nbsp;&nbsp; 450000 | WP Carey, Inc., Sr. Unsecd. Note, 4.600%, 4/1/2024 | &nbsp;&nbsp; 445942 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 971582 |
|  | **Financial Institution - REIT - Retail—0.5%** |  |
| &nbsp;&nbsp; 250000 | Kimco Realty Corp., Sr. Unsecd. Note, 1.900%, 3/1/2028 | &nbsp;&nbsp; 209736 |

---

Annual Shareholder Report

**11**

------

---

| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Financial Institution - REIT - Retail—continued** |  |
| $410000 | Kimco Realty Corp., Sr. Unsecd. Note, 2.700%, 3/1/2024 | $396997 |
| &nbsp;&nbsp; 250000 | Kimco Realty Corp., Sr. Unsecd. Note, 2.700%, 10/1/2030 | &nbsp;&nbsp; 204341 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 811074 |
|  | **Sovereign—0.4%** |  |
| &nbsp;&nbsp; 510000 | Inter-American Development Bank, Series MTN, 6.750%, 7/15/2027 | &nbsp;&nbsp; 556665 |
|  | **Technology—5.9%** |  |
| &nbsp;&nbsp; 315000 | Apple, Inc., Sr. Unsecd. Note, 1.125%, 5/11/2025 | &nbsp;&nbsp; 290281 |
| &nbsp;&nbsp; 125000 | Apple, Inc., Sr. Unsecd. Note, 4.450%, 5/6/2044 | &nbsp;&nbsp; 118458 |
| &nbsp;&nbsp; 340000 | Automatic Data Processing, Inc., Sr. Unsecd. Note, 3.375%, 9/15/2025 | &nbsp;&nbsp; 329634 |
| &nbsp;&nbsp; 280000 | Broadcom Corp., Sr. Unsecd. Note, Series WI, 3.875%, 1/15/2027 | &nbsp;&nbsp; 265255 |
| &nbsp;&nbsp; 666000 | Broadcom, Inc., Sr. Unsecd. Note, 4.110%, 9/15/2028 | &nbsp;&nbsp; 620665 |
| &nbsp;&nbsp; 135000 | Broadcom, Inc., Sr. Unsecd. Note, 144A, 3.419%, 4/15/2033 | &nbsp;&nbsp; 108606 |
| &nbsp;&nbsp; 250000 | Broadcom, Inc., Sr. Unsecd. Note, 144A, 4.000%, 4/15/2029 | &nbsp;&nbsp; 227625 |
| &nbsp;&nbsp; 250000 | CDW LLC / CDW Finance, Sr. Unsecd. Note, 2.670%, 12/1/2026 | &nbsp;&nbsp; 222423 |
| &nbsp;&nbsp; 750000 | Dell International LLC / EMC Corp., Sr. Unsecd. Note, 5.300%, 10/1/2029 | &nbsp;&nbsp; 735214 |
| &nbsp;&nbsp; 150000 | Dell International LLC / EMC Corp., Sr. Unsecd. Note, 5.850%, 7/15/2025 | &nbsp;&nbsp; 151737 |
| &nbsp;&nbsp; 480000 | Equifax, Inc., Sr. Unsecd. Note, 2.600%, 12/1/2024 | &nbsp;&nbsp; 457880 |
| &nbsp;&nbsp; 250000 | Fiserv, Inc., Sr. Unsecd. Note, 2.650%, 6/1/2030 | &nbsp;&nbsp; 210734 |
| &nbsp;&nbsp; 230000 | Fiserv, Inc., Sr. Unsecd. Note, 2.750%, 7/1/2024 | &nbsp;&nbsp; 222319 |
| &nbsp;&nbsp; 500000 | Fiserv, Inc., Sr. Unsecd. Note, 4.200%, 10/1/2028 | &nbsp;&nbsp; 473966 |
| &nbsp;&nbsp; 175000<br><sup>1</sup> <br>| Intel Corp., Sr. Unsecd. Note, 3.400%, 3/25/2025 | &nbsp;&nbsp; 170753 |
| &nbsp;&nbsp; 100000 | Keysight Technologies, Inc., Sr. Unsecd. Note, 3.000%, 10/30/2029 | &nbsp;&nbsp; 86882 |
| &nbsp;&nbsp; 460000 | Keysight Technologies, Inc., Sr. Unsecd. Note, 4.550%, 10/30/2024 | &nbsp;&nbsp; 453281 |
| &nbsp;&nbsp; 310000 | Lam Research Corp., Sr. Unsecd. Note, 4.000%, 3/15/2029 | &nbsp;&nbsp; 295853 |
| &nbsp;&nbsp; 750000 | Microsoft Corp., Sr. Unsecd. Note, 2.400%, 8/8/2026 | &nbsp;&nbsp; 700329 |
| &nbsp;&nbsp; 190000 | Molex Electronics Technologies LLC, Unsecd. Note, 144A, 3.900%, 4/15/2025 | &nbsp;&nbsp; 180897 |
| &nbsp;&nbsp; 500000 | Oracle Corp., Sr. Unsecd. Note, 1.650%, 3/25/2026 | &nbsp;&nbsp; 448185 |
| &nbsp;&nbsp; 750000 | Oracle Corp., Sr. Unsecd. Note, 3.400%, 7/8/2024 | &nbsp;&nbsp; 732138 |
| &nbsp;&nbsp; 230000 | Oracle Corp., Sr. Unsecd. Note, 6.150%, 11/9/2029 | &nbsp;&nbsp; 239276 |
| &nbsp;&nbsp; 260000 | Total System Services, Inc., Sr. Unsecd. Note, 4.450%, 6/1/2028 | &nbsp;&nbsp; 242403 |
| &nbsp;&nbsp; 600000 | Verisk Analytics, Inc., Sr. Unsecd. Note, 4.125%, 3/15/2029 | &nbsp;&nbsp; 562939 |
| &nbsp;&nbsp; 265000 | VMware, Inc., Sr. Unsecd. Note, 1.400%, 8/15/2026 | &nbsp;&nbsp; 231350 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 8779083 |
|  | **Technology Services—0.8%** |  |
| &nbsp;&nbsp; 255000 | Fortinet, Inc., Sr. Unsecd. Note, 1.000%, 3/15/2026 | &nbsp;&nbsp; 223507 |
| &nbsp;&nbsp; 320000 | Global Payments, Inc., Sr. Unsecd. Note, 1.200%, 3/1/2026 | &nbsp;&nbsp; 279282 |
| &nbsp;&nbsp; 600000 | Global Payments, Inc., Sr. Unsecd. Note, 2.150%, 1/15/2027 | &nbsp;&nbsp; 524234 |
| &nbsp;&nbsp; 90000 | Global Payments, Inc., Sr. Unsecd. Note, 2.900%, 5/15/2030 | &nbsp;&nbsp; 73941 |
| &nbsp;&nbsp; 145000 | Verisign, Inc., Sr. Unsecd. Note, 2.700%, 6/15/2031 | &nbsp;&nbsp; 118453 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 1219417 |
|  | **Transportation - Airlines—0.1%** |  |
| &nbsp;&nbsp; 215000 | Southwest Airlines Co., Sr. Unsecd. Note, 5.250%, 5/4/2025 | &nbsp;&nbsp; 215989 |
|  | **Transportation - Railroads—0.7%** |  |
| &nbsp;&nbsp; 250000 | Canadian Pacific Railway Co., Sr. Unsecd. Note, 1.750%, 12/2/2026 | &nbsp;&nbsp; 223129 |
| &nbsp;&nbsp; 500000 | Canadian Pacific Railway Co., Sr. Unsecd. Note, 2.450%, 12/2/2031 | &nbsp;&nbsp; 415450 |
| &nbsp;&nbsp; 500000 | Union Pacific Corp., Sr. Unsecd. Note, 2.150%, 2/5/2027 | &nbsp;&nbsp; 452217 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 1090796 |
|  | **Transportation - Services—1.8%** |  |
| &nbsp;&nbsp; 735000 | GXO Logistics, Inc., Sr. Unsecd. Note, Series WI, 1.650%, 7/15/2026 | &nbsp;&nbsp; 630195 |
| &nbsp;&nbsp; 315000 | GXO Logistics, Inc., Sr. Unsecd. Note, Series WI, 2.650%, 7/15/2031 | &nbsp;&nbsp; 233309 |
| &nbsp;&nbsp; 215000 | Penske Truck Leasing Co. LP & PTL Finance Corp., Sr. Unsecd. Note, 144A, 1.200%, 11/15/2025 | &nbsp;&nbsp; 189392 |

---

Annual Shareholder Report

**12**

------

---

| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br>|  | **Value** |
|  | CORPORATE BONDS—continued |  |
|  | **Transportation - Services—continued** |  |
| $250000 | Penske Truck Leasing Co. LP & PTL Finance Corp., Sr. Unsecd. Note, 144A, 1.700%, 6/15/2026 | $218995 |
| &nbsp;&nbsp; 300000 | Penske Truck Leasing Co. LP & PTL Finance Corp., Sr. Unsecd. Note, 144A, 3.450%, 7/1/2024 | &nbsp;&nbsp; 289868 |
| &nbsp;&nbsp; 250000 | Penske Truck Leasing Co. LP & PTL Finance Corp., Sr. Unsecd. Note, 144A, 4.450%, 1/29/2026 | &nbsp;&nbsp; 240911 |
| &nbsp;&nbsp; 350000 | Ryder System, Inc., Sr. Unsecd. Note, Series MTN, 1.750%, 9/1/2026 | &nbsp;&nbsp; 308088 |
| &nbsp;&nbsp; 590000<br><sup>1</sup> <br>| United Parcel Service, Inc., Sr. Unsecd. Note, 3.900%, 4/1/2025 | &nbsp;&nbsp; 581183 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 2691941 |
|  | **Utility - Electric—4.7%** |  |
| &nbsp;&nbsp; 310000 | AEP Texas, Inc., Sr. Unsecd. Note, 3.850%, 10/1/2025 | &nbsp;&nbsp; 298072 |
| &nbsp;&nbsp; 185000 | Ameren Corp., Sr. Unsecd. Note, 1.950%, 3/15/2027 | &nbsp;&nbsp; 163025 |
| &nbsp;&nbsp; 125000 | American Electric Power Co., Inc., Sr. Unsecd. Note, 2.300%, 3/1/2030 | &nbsp;&nbsp; 102987 |
| &nbsp;&nbsp; 500000<br><sup>1</sup> <br>| Berkshire Hathaway Energy Co., 3.500%, 2/1/2025 | &nbsp;&nbsp; 490887 |
| &nbsp;&nbsp; 130000 | Berkshire Hathaway Energy Co., Sr. Unsecd. Note, Series WI, 4.050%, 4/15/2025 | &nbsp;&nbsp; 128114 |
| &nbsp;&nbsp; 560000 | Dominion Energy, Inc., Jr. Sub. Note, 3.071%, 8/15/2024 | &nbsp;&nbsp; 539952 |
| &nbsp;&nbsp; 400000 | EDP Finance BV, Sr. Unsecd. Note, 144A, 1.710%, 1/24/2028 | &nbsp;&nbsp; 330777 |
| &nbsp;&nbsp; 500000 | EDP Finance BV, Sr. Unsecd. Note, 144A, 3.625%, 7/15/2024 | &nbsp;&nbsp; 482755 |
| &nbsp;&nbsp; 190000 | Emera US Finance LP, Sr. Unsecd. Note, 0.833%, 6/15/2024 | &nbsp;&nbsp; 177420 |
| &nbsp;&nbsp; 500000 | Enel Finance America LLC, Sr. Unsecd. Note, 144A, 7.100%, 10/14/2027 | &nbsp;&nbsp; 517886 |
| &nbsp;&nbsp; 330000 | Enel Finance International NV, Sr. Unsecd. Note, 144A, 1.375%, 7/12/2026 | &nbsp;&nbsp; 284779 |
| &nbsp;&nbsp; 385000 | Exelon Corp., Sr. Unsecd. Note, 4.050%, 4/15/2030 | &nbsp;&nbsp; 358356 |
| &nbsp;&nbsp; 500000 | Exelon Corp., Sr. Unsecd. Note, 144A, 2.750%, 3/15/2027 | &nbsp;&nbsp; 459287 |
| &nbsp;&nbsp; 250000 | Exelon Generation Co. LLC, Sr. Unsecd. Note, 3.250%, 6/1/2025 | &nbsp;&nbsp; 239415 |
| &nbsp;&nbsp; 240000 | Fortis, Inc./Canada, Sr. Unsecd. Note, 3.055%, 10/4/2026 | &nbsp;&nbsp; 222945 |
| &nbsp;&nbsp; 140000 | National Rural Utilities Cooperative Finance Corp., Sr. Unsecd. Note, 2.950%, 2/7/2024 | &nbsp;&nbsp; 136863 |
| &nbsp;&nbsp; 300000 | NextEra Energy Capital Holdings, Inc., Sr. Unsecd. Note, 3.550%, 5/1/2027 | &nbsp;&nbsp; 283102 |
| &nbsp;&nbsp; 260000 | NextEra Energy Capital Holdings, Inc., Sr. Unsecd. Note, 4.625%, 7/15/2027 | &nbsp;&nbsp; 256077 |
| &nbsp;&nbsp; 500000 | NiSource Finance Corp., Sr. Unsecd. Note, 3.490%, 5/15/2027 | &nbsp;&nbsp; 471734 |
| &nbsp;&nbsp; 245000 | Puget Energy, Inc., Sec. Fac. Bond, 2.379%, 6/15/2028 | &nbsp;&nbsp; 208897 |
| &nbsp;&nbsp; 250000 | Southern Co., Sr. Unsecd. Note, 3.250%, 7/1/2026 | &nbsp;&nbsp; 235393 |
| &nbsp;&nbsp; 300000 | Virginia Electric & Power Co., Sr. Unsecd. Note, Series B, 3.750%, 5/15/2027 | &nbsp;&nbsp; 286772 |
| &nbsp;&nbsp; 155000 | WEC Energy Group, Inc., Sr. Unsecd. Note, 2.200%, 12/15/2028 | &nbsp;&nbsp; 131514 |
| &nbsp;&nbsp; 108000 | Wisconsin Energy Corp., Sr. Unsecd. Note, 3.550%, 6/15/2025 | &nbsp;&nbsp; 103616 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 6910625 |
|  | **Utility - Natural Gas—1.0%** |  |
| &nbsp;&nbsp; 280000 | National Fuel Gas Co., Sr. Unsecd. Note, 2.950%, 3/1/2031 | &nbsp;&nbsp; 220063 |
| &nbsp;&nbsp; 420000 | National Fuel Gas Co., Sr. Unsecd. Note, 3.750%, 3/1/2023 | &nbsp;&nbsp; 418887 |
| &nbsp;&nbsp; 395000 | National Fuel Gas Co., Sr. Unsecd. Note, 5.500%, 1/15/2026 | &nbsp;&nbsp; 393418 |
| &nbsp;&nbsp; 500000 | Sempra Energy, Sr. Unsecd. Note, 3.250%, 6/15/2027 | &nbsp;&nbsp; 463308 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp; 1495676 |
|  | **Utility - Natural Gas Distributor—0.3%** |  |
| &nbsp;&nbsp; 450000 | Southern Co. Gas Capital, Sr. Unsecd. Note, 2.450%, 10/1/2023 | &nbsp;&nbsp; 440342 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL CORPORATE BONDS <br>(IDENTIFIED COST $156,123,723)<br>| &nbsp;&nbsp; 143644046 |
|  | MORTGAGE-BACKED SECURITIES—0.0% |  |
|  | **Federal Home Loan Mortgage Corporation—0.0%** |  |
| &nbsp;&nbsp; 280 | Federal Home Loan Mortgage Corp., Pool C01051, 8.000%, 9/1/2030 | &nbsp;&nbsp; 299 |
|  | **Government National Mortgage Association—0.0%** |  |
| &nbsp;&nbsp; 178 | Government National Mortgage Association, Pool 1512, 7.500%, 12/20/2023 | &nbsp;&nbsp; 178 |
| &nbsp;&nbsp; 971 | Government National Mortgage Association, Pool 2630, 6.500%, 8/20/2028 | &nbsp;&nbsp; 995 |
| &nbsp;&nbsp; 1398 | Government National Mortgage Association, Pool 2631, 7.000%, 8/20/2028 | &nbsp;&nbsp; 1439 |
| &nbsp;&nbsp; 1857 | Government National Mortgage Association, Pool 2658, 6.500%, 10/20/2028 | &nbsp;&nbsp; 1905 |
| &nbsp;&nbsp; 2950 | Government National Mortgage Association, Pool 2701, 6.500%, 1/20/2029 | &nbsp;&nbsp; 3027 |

---

Annual Shareholder Report

**13**

------

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| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br>|  | **Value** |
|  | MORTGAGE-BACKED SECURITIES—continued |  |
|  | **Government National Mortgage Association—continued** |  |
| $2290 | Government National Mortgage Association, Pool 2796, 7.000%, 8/20/2029 | $2371 |
| &nbsp;&nbsp; 422 | Government National Mortgage Association, Pool 3039, 6.500%, 2/20/2031 | &nbsp;&nbsp; 437 |
| &nbsp;&nbsp; 1702 | Government National Mortgage Association, Pool 3040, 7.000%, 2/20/2031 | &nbsp;&nbsp; 1776 |
| &nbsp;&nbsp; 6007 | Government National Mortgage Association, Pool 3188, 6.500%, 1/20/2032 | &nbsp;&nbsp; 6252 |
| &nbsp;&nbsp; 4220 | Government National Mortgage Association, Pool 3239, 6.500%, 5/20/2032 | &nbsp;&nbsp; 4401 |
| &nbsp;&nbsp; 9748 | Government National Mortgage Association, Pool 3261, 6.500%, 7/20/2032 | &nbsp;&nbsp; 10176 |
| &nbsp;&nbsp; 747 | Government National Mortgage Association, Pool 516688, 8.000%, 8/15/2029 | &nbsp;&nbsp; 788 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 33745 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL MORTGAGE-BACKED SECURITIES <br>(IDENTIFIED COST $32,788)<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 34044 |
|  | REPURCHASE AGREEMENTS—2.9% |  |
| &nbsp;&nbsp; 1647625 | Interest in $1,350,000,000 joint repurchase agreement 4.30%, dated 12/30/2022 under which Bank of Montreal will repurchase <br> securities provided as collateral for $1,350,645,000 on 1/3/2023. The securities provided as collateral at the end of the period <br> held with BNY Mellon as tri-party agent, were U.S. Government Agency securities with various maturities to 5/20/2072 and the <br> market value of those underlying securities was $1,379,047,631 (purchased with proceeds from securities lending collateral).<br>| &nbsp;&nbsp; 1647625 |
| &nbsp;&nbsp; 2646000 | Interest in $1,350,000,000 joint repurchase agreement 4.30%, dated 12/30/2022 under which Bank of Montreal will repurchase <br> securities provided as collateral for $1,350,645,000 on 1/3/2023. The securities provided as collateral at the end of the period <br> held with BNY Mellon as tri-party agent, were U.S. Government Agency securities with various maturities to 5/20/2072 and the <br> market value of those underlying securities was $1,379,047,631.<br>| &nbsp;&nbsp; 2646000 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL REPURCHASE AGREEMENTS <br>(IDENTIFIED COST $4,293,625)<br>| &nbsp;&nbsp;&nbsp;&nbsp; 4293625 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL INVESTMENT IN SECURITIES—100.2% <br>(IDENTIFIED COST $160,450,136)<sup>3</sup> <br>| &nbsp;&nbsp; 147971715 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; OTHER ASSETS AND LIABILITIES - NET—(0.2)%<sup>4</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (341798) |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL NET ASSETS—100% | $147629917 |

---

At December 31, 2022, the Fund had the following outstanding futures contracts:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Description** | **Number of** <br>**Contracts**<br>| &nbsp;&nbsp; **Notional** <br>**Value**<br>| &nbsp;&nbsp;&nbsp; **Expiration** <br>**Date**<br>| &nbsp;&nbsp; **Value and** <br>**Unrealized** <br>**Appreciation** <br>**(Depreciation)**<br>|
| **Long Futures:** |  |  |  |  |
| United States Treasury Notes 10-Year Ultra Long Futures | 36 | $4258125 | March 2023 | $(6243) |
| United States Treasury Notes 10-Year Long Futures | 25 | $2807422 | March 2023 | $(14509) |
| **Short Futures:** |  |  |  |  |
| United States Treasury Long Bond Short Futures | 12 | $1504125 | March 2023 | $5992 |
| United States Treasury Ultra Bond Short Futures | &nbsp;&nbsp; 1 | $134313 | March 2023 | $303 |
| &nbsp;&nbsp;&nbsp;&nbsp; NET UNREALIZED DEPRECIATION ON FUTURES CONTRACTS | &nbsp;&nbsp;&nbsp;&nbsp; NET UNREALIZED DEPRECIATION ON FUTURES CONTRACTS | &nbsp;&nbsp;&nbsp;&nbsp; NET UNREALIZED DEPRECIATION ON FUTURES CONTRACTS | &nbsp;&nbsp;&nbsp;&nbsp; NET UNREALIZED DEPRECIATION ON FUTURES CONTRACTS | $(14457) |

---

Net Unrealized Depreciation on Futures Contracts is included in "Other Assets and Liabilities—Net."

---

| | |
|:---|:---|
| 1 | *All or a portion of these securities are temporarily on loan to unaffiliated broker/dealers.* |
| 2 | *Floating/variable note with current rate and current maturity or next reset date shown.* |
| 3 | *The cost of investments for federal tax purposes amounts to $160,450,136.* |
| 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 December 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

**14**

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br>The following is a summary of the inputs used, as of December 31, 2022, in valuing the Fund's assets carried at fair value:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Valuation Inputs** | **Valuation Inputs** | **Valuation Inputs** | **Valuation Inputs** | **Valuation Inputs** |
|  | **Level 1—** <br>**Quoted** <br>**Prices**<br>| **Level 2—** <br>**Other** <br>**Significant** <br>**Observable** <br>**Inputs**<br>| **Level 3—** <br>**Significant** <br>**Unobservable** <br>**Inputs**<br>| **Total** |
| **Debt Securities:** |  |  |  |  |
| Corporate Bonds | $— | $143644046 | $— | $143644046 |
| Mortgage-Backed Securities | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 34044 | &nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 34044 |
| **Repurchase Agreements** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp; 4293625 | &nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp; 4293625 |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL SECURITIES | $— | $147971715 | $— | $147971715 |
| **Other Financial Instruments:**<sup>1</sup> <br>|  |  |  |  |
| Assets | $6295 | $— | $— | $6295 |
| Liabilities | &nbsp;&nbsp; (20752) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (20752) |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL OTHER FINANCIAL INSTRUMENTS | $(14457) | $— | $— | $(14457) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

1 *Other financial instruments are futures contracts.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| The following acronym(s) are used throughout this portfolio: | The following acronym(s) are used throughout this portfolio: |
| BKNT | —Bank Notes |
| GMTN | —Global Medium Term Note |
| LIBOR | —London Interbank Offered Rate |
| MTN | —Medium Term Note |
| REIT | —Real Estate Investment Trust |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**15**

------

Financial Highlights–Primary Shares

(For a Share Outstanding Throughout Each Period)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | **$11.26** | **$11.82** | **$11.31** | **$10.65** | **$11.05** |
| **Income From Investment Operations:** |  |  |  |  |  |
| Net investment income (loss)<sup>1</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.25 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.25 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.28 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.31 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.30 |
| Net realized and unrealized gain (loss) | &nbsp;&nbsp;&nbsp;&nbsp; (1.27) | &nbsp;&nbsp;&nbsp;&nbsp; (0.42) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.58 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.68 | &nbsp;&nbsp;&nbsp;&nbsp; (0.37) |
| &nbsp;&nbsp;&nbsp;&nbsp; Total From Investment Operations | &nbsp;&nbsp;&nbsp;&nbsp; (1.02) | &nbsp;&nbsp;&nbsp;&nbsp; (0.17) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.86 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.99 | &nbsp;&nbsp;&nbsp;&nbsp; (0.07) |
| **Less Distributions:** |  |  |  |  |  |
| Distributions from net investment income | &nbsp;&nbsp;&nbsp;&nbsp; (0.27) | &nbsp;&nbsp;&nbsp;&nbsp; (0.29) | &nbsp;&nbsp;&nbsp;&nbsp; (0.32) | &nbsp;&nbsp;&nbsp;&nbsp; (0.33) | &nbsp;&nbsp;&nbsp;&nbsp; (0.33) |
| Distributions from net realized gain | &nbsp;&nbsp;&nbsp;&nbsp; (0.16) | &nbsp;&nbsp;&nbsp;&nbsp; (0.10) | &nbsp;&nbsp;&nbsp;&nbsp; (0.03) | &nbsp;&nbsp;&nbsp;&nbsp; (0.00)<sup>2</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions | &nbsp;&nbsp;&nbsp;&nbsp; (0.43) | &nbsp;&nbsp;&nbsp;&nbsp; (0.39) | &nbsp;&nbsp;&nbsp;&nbsp; (0.35) | &nbsp;&nbsp;&nbsp;&nbsp; (0.33) | &nbsp;&nbsp;&nbsp;&nbsp; (0.33) |
| **Net Asset Value, End of Period** | **$9.81** | **$11.26** | **$11.82** | **$11.31** | **$10.65** |
| **Total Return**<sup>3</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; (9.28)% | &nbsp;&nbsp;&nbsp;&nbsp; (1.40)% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 8.12% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9.44% | &nbsp;&nbsp;&nbsp;&nbsp; (0.59)% |
| **Ratios to Average Net Assets:** |  |  |  |  |  |
| Net expenses<sup>4</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.74% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.74% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.74% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.74% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.74% |
| Net investment income | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2.44% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2.17% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2.50% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2.79% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2.83% |
| Expense waiver/reimbursement<sup>5</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.07% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.06% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.07% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.08% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.08% |
| **Supplemental Data:** |  |  |  |  |  |
| Net assets, end of period (000 omitted) | $134757 | $162034 | $170912 | $167625 | $162812 |
| Portfolio turnover<sup>6</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 15% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 27% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 24% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 21% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 19% |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 1 | *Per share numbers have been calculated using the average shares method.* |
| 2 | *Represents less than $0.01.* |
| 3 | *Based on net asset value. Total returns do not reflect any additional fees or expenses that may be imposed by separate accounts of insurance companies or in* <br> *connection with any variable annuity or variable life insurance contract.*<br>|
| 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/*<br> *reimbursement recorded by investment companies in which the Fund may invest.*<br>|
| 6 | *Securities that mature are considered sales for purposes of this calculation.* |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**16**

------

Financial Highlights–Service Shares

(For a Share Outstanding Throughout Each Period)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | **$11.23** | **$11.79** | **$11.28** | **$10.62** | **$11.01** |
| **Income From Investment Operations:** |  |  |  |  |  |
| Net investment income (loss)<sup>1</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.22 | &nbsp;&nbsp;&nbsp;&nbsp; 0.22 | &nbsp;&nbsp;&nbsp;&nbsp; 0.26 | &nbsp;&nbsp;&nbsp;&nbsp; 0.28 | &nbsp;&nbsp;&nbsp;&nbsp; 0.27 |
| Net realized and unrealized gain (loss) | &nbsp;&nbsp;&nbsp; (1.26) | &nbsp;&nbsp;&nbsp; (0.42) | &nbsp;&nbsp;&nbsp;&nbsp; 0.57 | &nbsp;&nbsp;&nbsp;&nbsp; 0.68 | &nbsp;&nbsp;&nbsp; (0.36) |
| &nbsp;&nbsp;&nbsp;&nbsp; Total From Investment Operations | &nbsp;&nbsp;&nbsp; (1.04) | &nbsp;&nbsp;&nbsp; (0.20) | &nbsp;&nbsp;&nbsp;&nbsp; 0.83 | &nbsp;&nbsp;&nbsp;&nbsp; 0.96 | &nbsp;&nbsp;&nbsp; (0.09) |
| **Less Distributions:** |  |  |  |  |  |
| Distributions from net investment income | &nbsp;&nbsp;&nbsp; (0.24) | &nbsp;&nbsp;&nbsp; (0.26) | &nbsp;&nbsp;&nbsp; (0.29) | &nbsp;&nbsp;&nbsp; (0.30) | &nbsp;&nbsp;&nbsp; (0.30) |
| Distributions from net realized gain | &nbsp;&nbsp;&nbsp; (0.16) | &nbsp;&nbsp;&nbsp; (0.10) | &nbsp;&nbsp;&nbsp; (0.03) | &nbsp;&nbsp;&nbsp; (0.00)<sup>2</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; — |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions | &nbsp;&nbsp;&nbsp; (0.40) | &nbsp;&nbsp;&nbsp; (0.36) | &nbsp;&nbsp;&nbsp; (0.32) | &nbsp;&nbsp;&nbsp; (0.30) | &nbsp;&nbsp;&nbsp; (0.30) |
| **Net Asset Value, End of Period** | **$9.79** | **$11.23** | **$11.79** | **$11.28** | **$10.62** |
| **Total Return**<sup>3</sup> <br>| &nbsp;&nbsp;&nbsp; (9.46)% | &nbsp;&nbsp;&nbsp; (1.66)% | &nbsp;&nbsp;&nbsp;&nbsp; 7.86% | &nbsp;&nbsp;&nbsp;&nbsp; 9.17% | &nbsp;&nbsp;&nbsp; (0.78)% |
| **Ratios to Average Net Assets:** |  |  |  |  |  |
| Net expenses<sup>4</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.99% | &nbsp;&nbsp;&nbsp;&nbsp; 0.99% | &nbsp;&nbsp;&nbsp;&nbsp; 0.99% | &nbsp;&nbsp;&nbsp;&nbsp; 0.99% | &nbsp;&nbsp;&nbsp;&nbsp; 0.99% |
| Net investment income | &nbsp;&nbsp;&nbsp;&nbsp; 2.19% | &nbsp;&nbsp;&nbsp;&nbsp; 1.92% | &nbsp;&nbsp;&nbsp;&nbsp; 2.25% | &nbsp;&nbsp;&nbsp;&nbsp; 2.54% | &nbsp;&nbsp;&nbsp;&nbsp; 2.58% |
| Expense waiver/reimbursement<sup>5</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.07% | &nbsp;&nbsp;&nbsp;&nbsp; 0.06% | &nbsp;&nbsp;&nbsp;&nbsp; 0.07% | &nbsp;&nbsp;&nbsp;&nbsp; 0.08% | &nbsp;&nbsp;&nbsp;&nbsp; 0.07% |
| **Supplemental Data:** |  |  |  |  |  |
| Net assets, end of period (000 omitted) | $12873 | $16287 | $18302 | $18776 | $19344 |
| Portfolio turnover<sup>6</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 15% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 27% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 24% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 21% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 19% |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 1 | *Per share numbers have been calculated using the average shares method.* |
| 2 | *Represents less than $0.01.* |
| 3 | *Based on net asset value. Total returns do not reflect any additional fees or expenses that may be imposed by separate accounts of insurance companies or in* <br> *connection with any variable annuity or variable life insurance contract.*<br>|
| 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/*<br> *reimbursement recorded by investment companies in which the Fund may invest.*<br>|
| 6 | *Securities that mature are considered sales for purposes of this calculation.* |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**17**

------

Statement of Assets and Liabilities <br>December 31, 2022

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| **Assets:** |  |
| Investment in securities, at value including $1,596,836 of securities loaned (identified cost $160,450,136) | $147971715 |
| Cash | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 738 |
| Due from broker (Note 2) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 126015 |
| Income receivable | &nbsp;&nbsp;&nbsp;&nbsp; 1282565 |
| Receivable for shares sold | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7946 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Assets | &nbsp;&nbsp; 149388979 |
| **Liabilities:** |  |
| Payable for shares redeemed | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 35777 |
| Payable for variation margin on futures contracts | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3347 |
| Payable for collateral due to broker for securities lending (Note 2) | &nbsp;&nbsp;&nbsp;&nbsp; 1647625 |
| Payable for investment adviser fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4382 |
| Payable for administrative fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 635 |
| Payable for distribution services fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2768 |
| Accrued expenses (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 64528 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Liabilities | &nbsp;&nbsp;&nbsp;&nbsp; 1759062 |
| Net assets for 15,052,124 shares outstanding | $147629917 |
| **Net Assets Consist of:** |  |
| Paid-in capital | $156956810 |
| Total distributable earnings (loss) | &nbsp;&nbsp;&nbsp;&nbsp; (9326893) |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Net Assets | $147629917 |
| **Net Asset Value, Offering Price and Redemption Proceeds Per Share:** |  |
| **Primary Shares:** |  |
| $134,756,505 ÷ 13,736,674 shares outstanding, no par value, unlimited shares authorized | $9.81 |
| **Service Shares:** |  |
| $12,873,412 ÷ 1,315,450 shares outstanding, no par value, unlimited shares authorized | $9.79 |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**18**

------

Statement of Operations <br>Year Ended December 31, 2022

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| **Investment Income:** |  |
| Interest | $5034737 |
| Net income on securities loaned (Note 2) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9233 |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL INCOME | &nbsp;&nbsp;&nbsp;&nbsp; 5043970 |
| **Expenses:** |  |
| Investment adviser fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 950461 |
| Administrative fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 127811 |
| Custodian fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 11328 |
| Transfer agent fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 15238 |
| Directors'/Trustees' fees (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2159 |
| Auditing fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 28172 |
| Legal fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9145 |
| Portfolio accounting fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 90026 |
| Distribution services fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 35924 |
| Printing and postage | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 23184 |
| Miscellaneous (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 25483 |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL EXPENSES | &nbsp;&nbsp;&nbsp;&nbsp; 1318931 |
| Waiver of investment adviser fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (103011) |
| Net expenses | &nbsp;&nbsp;&nbsp;&nbsp; 1215920 |
| Net investment income | &nbsp;&nbsp;&nbsp;&nbsp; 3828050 |
| **Realized and Unrealized Gain (Loss) on Investments and Futures Contracts:** |  |
| Net realized loss on investments | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (795242) |
| Net realized gain on futures contracts | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 117704 |
| Net change in unrealized appreciation of investments | &nbsp;&nbsp; (19481576) |
| Net change in unrealized depreciation of futures contracts | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1266 |
| Net realized and unrealized gain (loss) on investments and futures contracts | &nbsp;&nbsp; (20157848) |
| Change in net assets resulting from operations | $(16329798) |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**19**

------

Statement of Changes in Net Assets

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | |
|:---|:---|:---|
| **Year Ended December 31** | **2022** | **2021** |
| **Increase (Decrease) in Net Assets** |  |  |
| **Operations:** |  |  |
| Net investment income | $3828050 | $4084958 |
| Net realized gain (loss) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (677538) | &nbsp;&nbsp;&nbsp;&nbsp; 2544243 |
| Net change in unrealized appreciation/depreciation | &nbsp;&nbsp; (19480310) | &nbsp;&nbsp;&nbsp;&nbsp; (9307128) |
| &nbsp;&nbsp;&nbsp;&nbsp; CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | &nbsp;&nbsp; (16329798) | &nbsp;&nbsp;&nbsp;&nbsp; (2677927) |
| **Distributions to Shareholders:** |  |  |
| Primary Shares | &nbsp;&nbsp;&nbsp;&nbsp; (5969547) | &nbsp;&nbsp;&nbsp;&nbsp; (5661205) |
| Service Shares | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (565684) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (541939) |
| &nbsp;&nbsp;&nbsp;&nbsp; CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS | &nbsp;&nbsp;&nbsp;&nbsp; (6535231) | &nbsp;&nbsp;&nbsp;&nbsp; (6203144) |
| **Share Transactions:** |  |  |
| Proceeds from sale of shares | &nbsp;&nbsp;&nbsp;&nbsp; 6380104 | &nbsp;&nbsp;&nbsp; 28426242 |
| Net asset value of shares issued to shareholders in payment of distributions declared | &nbsp;&nbsp;&nbsp;&nbsp; 6535227 | &nbsp;&nbsp;&nbsp;&nbsp; 6203141 |
| Cost of shares redeemed | &nbsp;&nbsp; (20741748) | &nbsp;&nbsp; (36640783) |
| &nbsp;&nbsp;&nbsp;&nbsp; CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS | &nbsp;&nbsp;&nbsp;&nbsp; (7826417) | &nbsp;&nbsp;&nbsp;&nbsp; (2011400) |
| Change in net assets | &nbsp;&nbsp; (30691446) | &nbsp;&nbsp; (10892471) |
| **Net Assets:** |  |  |
| Beginning of period | &nbsp;&nbsp; 178321363 | &nbsp;&nbsp; 189213834 |
| End of period | $147629917 | $178321363 |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**20**

------

Notes to Financial Statements

December 31, 2022

**1. ORGANIZATION** 

Federated Hermes Insurance Series (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 six portfolios. The financial statements included herein are only those of Federated Hermes Quality Bond Fund II (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 two classes of shares: Primary Shares and Service Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. Fund shares are available exclusively as a funding vehicle for life insurance companies writing variable life insurance policies and variable annuity contracts. The investment objective of the Fund is to provide current income.

**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 net asset value (NAV), the Fund generally values investments as follows:

◾ <br>

Fixed-income securities are fair valued using price evaluations provided by a pricing service approved by Federated Investment Management Company (the "Adviser").

◾ <br>

Derivative contracts listed on exchanges are valued at their reported settlement or closing price, except that options are valued at the mean of closing bid and ask quotations.

◾ <br>

Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Adviser.

◾ <br>

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.

◾ <br>

For securities that are fair valued in accordance with procedures established by and under the general supervision of the Adviser, 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 Adviser's valuation policies and procedures for the Fund, or if information furnished by a pricing service, in the opinion of the Adviser's 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 and Significant Events Procedures** 

Pursuant to Rule 2a-5 under the Act, the Fund's Board of Trustees (the "Trustees") has designated the Adviser as the Fund's valuation designee to perform any fair value determinations for securities and other assets held by the Fund. The Adviser is subject to the Trustees' oversight and certain reporting and other requirements intended to provide the Trustees the information needed to oversee the Adviser's fair value determinations.

The Adviser, acting through its Valuation Committee, is responsible for determining the fair value of investments for which market quotations are not readily available. The Valuation Committee is comprised of officers of the Adviser and certain of the Adviser's affiliated companies and determines fair value and oversees the calculation of the NAV. The Valuation Committee is also authorized to use pricing services 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 Adviser. The Trustees periodically review the fair valuations made by the Valuation Committee. The Trustees have also approved the Adviser's fair valuation and significant events procedures as part of the Fund's compliance program and will review any changes made to the procedures.

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 ask 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 OTC 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 Adviser.

Annual Shareholder Report

**21**

------

The Adviser has also adopted procedures requiring an investment to be priced at its fair value whenever the Valuation Committee determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

◾ <br>

With respect to securities traded principally in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures contracts;

◾ <br>

Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded;

◾ <br>

Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, or a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.

The Adviser has adopted procedures whereby the Valuation Committee uses a pricing service to provide factors to update the fair value of equity securities traded principally in foreign markets from the time of the close of their respective foreign stock exchanges to the pricing time of the Fund. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Valuation Committee will determine the fair value of the investment in accordance with the fair valuation procedures approved by the Adviser. The Trustees periodically review fair valuations made in response to significant events.

**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 (MNA) 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. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income, if any, are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Amortization/accretion of premium and discount is included in investment income. Gains and losses realized on principal payment of mortgage-backed securities (paydown gains and losses) are classified as part of 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 waiver of $103,011 is disclosed in 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.

**Federal Taxes** 

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code of 1986 (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 December 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 December 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**

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**Futures Contracts** 

The Fund purchases and sells financial futures contracts to manage duration risk and yield curve risk. Upon entering into a financial futures contract with a broker, the Fund is required to deposit with a broker, either U.S. government securities or a specified amount of cash, which is shown as due from broker in the Statement of Assets and Liabilities. Futures contracts are valued daily and unrealized gains or losses are recorded in a "variation margin" account. The Fund receives from or pays to the broker a specified amount of cash based upon changes in the variation margin account. When a contract is closed, the Fund recognizes a realized gain or loss. Futures contracts have market risks, including the risk that the change in the value of the contract may not correlate with the changes in the value of the underlying securities. There is minimal counterparty risk to the Fund since futures contracts are exchange traded and the exchange's clearinghouse, as counterparty to all exchange traded futures contracts, guarantees the futures contracts against default.

Futures contracts outstanding at period end are listed after the Fund's Portfolio of Investments.

The average notional value of long and short futures contracts held by the Fund throughout the period was $6,027,981 and $3,242,195, respectively. This is based on amounts held as of each month-end throughout the fiscal period.

**Securities Lending** 

The Fund participates in a securities lending program providing for the lending of corporate bonds to qualified brokers. The term of the loans within the program is one year or less. The Fund normally receives cash collateral for securities loaned that may be invested in affiliated money market funds, other money market instruments and/or repurchase agreements. Investments in money market funds may include funds with a "floating" NAV that can impose redemption fees and liquidity gates, impose certain operational impediments to investing cash collateral, and, if the investee fund's NAV decreases, result in the Fund recognizing losses and being required to cover the decrease in the value of the cash collateral. Collateral is maintained at a minimum level of 100% of the market value of investments loaned, plus interest, if applicable. In accordance with the Fund's securities lending agreement, the market value of securities on loan is determined each day at the close of business and any additional collateral required to cover the value of securities on loan is delivered to the Fund on the next business day. Earnings on collateral are allocated between the borrower of the security, the securities lending agent, as a fee for its services under the program and the Fund, according to agreed-upon rates. The Fund will not have the right to vote on securities while they are on loan. However, the Fund will attempt to terminate a loan in an effort to reacquire the securities in time to vote on matters that are deemed to be material by the Adviser. There can be no assurance that the Fund will have sufficient notice of such matters to be able to terminate the loan in time to vote thereon.

Securities lending transactions are subject to MNA. Amounts presented on the Portfolio of Investments and Statement of Assets and Liabilities are not net settlement amounts but gross. As indicated below, the cash collateral received by the Fund exceeds the market value of the securities loaned reducing the net settlement amount to zero. The chart below identifies the amount of collateral received as well as the market value of securities on loan. Additionally, the securities lending agreement executed by the Fund includes an indemnification clause. This clause stipulates that the borrower will reimburse the Fund for any losses as a result of any failure of the borrower to return equivalent securities to the Fund.

As of December 31, 2022, securities subject to this type of arrangement and related collateral were as follows:

---

| | |
|:---|:---|
| **Fair Value of** <br>**Securities Loaned**<br>| **Collateral** <br>**Received**<br>|
| $1596836 | $1647625 |

---

**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 Adviser.

**Additional Disclosure Related to Derivative Instruments** 

---

| | | |
|:---|:---|:---|
| **Fair Value of Derivative Instruments** | **Fair Value of Derivative Instruments** | **Fair Value of Derivative Instruments** |
|  | **Liabilities** | **Liabilities** |
|  | &nbsp;&nbsp; **Statement of** <br>**Assets and** <br>**Liabilities** <br>**Location**<br>| **Fair** <br>**Value**<br>|
| Derivatives not accounted for as hedging <br>instruments under ASC Topic 815<br>|  |  |
| Interest rate contracts | &nbsp;&nbsp; Payable for variation margin <br>on futures contracts<br>| $14,457\* |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

\* *Includes cumulative net depreciation of futures contracts as reported in the footnotes to the Portfolio of Investments. Only the current day's variation margin is* *reported within the Statement of Assets and Liabilities.* 

Annual Shareholder Report

**23**

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**The Effect of Derivative Instruments on the Statement of Operations for the Year Ended December 31, 2022** 

---

| | |
|:---|:---|
| **Amount of Realized Gain or (Loss) on Derivatives Recognized in Income** | **Amount of Realized Gain or (Loss) on Derivatives Recognized in Income** |
|  | **Futures** <br>**Contracts**<br>|
| Interest rate contracts | $117704 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| **Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income** | **Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income** |
|  | **Futures** <br>**Contracts**<br>|
| Interest rate contracts | $1266 |

---

**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** <br>**12/31/2022** | **Year Ended** <br>**12/31/2022** | **Year Ended** <br>**12/31/2021** | **Year Ended** <br>**12/31/2021** |
| **Primary Shares:** | **Shares** | **Amount** | **Shares** | **Amount** |
| Shares sold | &nbsp;&nbsp;&nbsp; 602659 | $6152032 | 2404407 | $27396392 |
| Shares issued to shareholders in payment of distributions declared | &nbsp;&nbsp;&nbsp; 581827 | &nbsp;&nbsp;&nbsp;&nbsp; 5969547 | &nbsp;&nbsp;&nbsp; 505917 | &nbsp;&nbsp;&nbsp;&nbsp; 5661205 |
| Shares redeemed | (1835220) | &nbsp;&nbsp; (18635582) | (2979085) | &nbsp;&nbsp; (33876384) |
| &nbsp;&nbsp;&nbsp;&nbsp; NET CHANGE RESULTING FROM PRIMARY SHARE TRANSACTIONS | &nbsp;&nbsp; (650734) | $(6514003) | &nbsp;&nbsp;&nbsp;&nbsp; (68761) | $(818787) |
|  | **Year Ended** <br>**12/31/2022** | **Year Ended** <br>**12/31/2022** | **Year Ended** <br>**12/31/2021** | **Year Ended** <br>**12/31/2021** |
| **Service Shares:** | **Shares** | **Amount** | **Shares** | **Amount** |
| Shares sold | &nbsp;&nbsp;&nbsp;&nbsp; 21948 | $228072 | &nbsp;&nbsp;&nbsp;&nbsp; 89033 | $1029850 |
| Shares issued to shareholders in payment of distributions declared | &nbsp;&nbsp;&nbsp;&nbsp; 55135 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 565680 | &nbsp;&nbsp;&nbsp;&nbsp; 48430 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 541936 |
| Shares redeemed | &nbsp;&nbsp; (211485) | &nbsp;&nbsp;&nbsp; (2106166) | &nbsp;&nbsp; (239734) | &nbsp;&nbsp;&nbsp; (2764399) |
| &nbsp;&nbsp;&nbsp;&nbsp; NET CHANGE RESULTING FROM SERVICE SHARE TRANSACTIONS | &nbsp;&nbsp; (134402) | $(1312414) | &nbsp;&nbsp; (102271) | $(1192613) |
| &nbsp;&nbsp;&nbsp;&nbsp; NET CHANGE RESULTING FROM TOTAL FUND SHARE TRANSACTIONS | &nbsp;&nbsp; (785136) | $(7826417) | &nbsp;&nbsp; (171032) | $(2011400) |

---

**4. FEDERAL TAX INFORMATION** 

The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended December 31, 2022 and 2021, was as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Ordinary income<sup>1</sup> <br>| $4304512 | $4863670 |
| Long-term capital gains | $2230719 | $1339474 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

1 *For tax purposes, short-term capital gain distributions are considered ordinary income distributions.*

As of December 31, 2022, the components of distributable earnings on a tax-basis were as follows:

---

| | |
|:---|:---|
| Undistributed ordinary income<sup>2</sup> <br>| $3827948 |
| Net unrealized depreciation | $(12478421) |
| Capital loss carryforwards | $(676420) |
| TOTAL | $(9326893) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

2 *For tax purposes, short-term capital gains are considered ordinary income in determining distributable earnings.*

At December 31, 2022, the cost of investments for federal tax purposes was $160,450,136. The net unrealized depreciation of investments for federal tax purposes was $12,478,421. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $210,602 and net unrealized depreciation from investments for those securities having an excess of cost over value of $12,689,023. The amounts presented are inclusive of derivative contracts. The difference between book-basis and tax-basis net unrealized appreciation is attributable to differing treatments for mark-to-market of futures contracts.

Annual Shareholder Report

**24**

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As of December 31, 2022, the Fund had a capital loss carryforward of $676,420 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** |
| $34783 | $641637 | $676420 |

---

**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 0.60% 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 December 31, 2022, the Adviser voluntarily waived $103,011 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** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Average Daily Net Assets** <br>**of the Investment Complex**<br>|
| 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 December 31, 2022, the annualized fee paid to FAS was 0.081% 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 Primary Shares and Service 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:

---

| | |
|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp; **Percentage of Average Daily** <br>**Net Assets of Class**<br>|
| Primary Shares | 0.25% |
| Service Shares | 0.25% |

---

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 December 31, 2022, distribution services fees for the Fund were as follows:

---

| | |
|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp; **Distribution Services** <br>**Fees Incurred**<br>|
| Service Shares | $35924 |

---

When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended December 31, 2022, the Fund's Primary Shares did not incur a distribution services fee; however, it may begin to incur this fee upon approval of the Trustees.

**Expense Limitation** 

The Adviser and certain of its affiliates (which may include FSC 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 Primary Shares and Service Shares (after the voluntary waivers and/or reimbursements) will not exceed 0.74% and 0.99% (the "Fee Limit"), respectively, up to but not including the later of (the "Termination Date"): (a) May 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**

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**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. INVESTMENT TRANSACTIONS** 

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the year ended December 31, 2022, were as follows:

---

| | |
|:---|:---|
| Purchases | $22405405 |
| Sales | $31699430 |

---

**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 December 31, 2022, the Fund had no outstanding loans. During the year ended December 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 December 31, 2022, there were no outstanding loans. During the year ended December 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, and may continue to result in, closed borders, enhanced health screenings, disruptions to healthcare service preparation and delivery, quarantines, cancellations, and disruptions to supply chains, workflow operations and consumer activity, as well as general concern and uncertainty. The impact of this coronavirus has resulted in substantial economic volatility. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could continue to negatively affect the worldwide economy, as well as the economies of individual countries, individual companies (including certain Fund service providers and issuers of the Fund's investments) and the markets in general in significant and unforeseen ways. In addition, governments, their regulatory agencies, or self-regulatory organizations may take actions in response to the pandemic, including significant fiscal and monetary policy changes, that may affect the instruments in which the Fund invests or the issuers of such investments. Any such impact could adversely affect the Fund's performance.

**11. Recent Accounting Pronouncements** 

In December 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2022-06 "Reference Rate Reform (Topic 848)". ASU No. 2022-06 updates and clarifies ASU No. 2020-04, which provides optional, temporary relief with respect to the financial reporting of contracts subject to certain types of modifications due to the planned discontinuation of LIBOR and other interbank-offered reference rates. The temporary relief provided by ASU No. 2022-06 is effective immediately for certain reference rate-related contract modifications that occur through December 31, 2024. Management does not expect ASU No. 2022-06 to have a material impact on the financial statements.

**12. FEDERAL TAX INFORMATION (UNAUDITED)** 

For the year ended December 31, 2022, the amount of long-term capital gains designated by the Fund was $2,230,719.

Annual Shareholder Report

**26**

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Report of Independent Registered Public Accounting Firm

**To the Board of Trustees of Federated Hermes Insurance Series and the Shareholders of Federated Hermes Quality Bond Fund II:**

**Opinion on the Financial Statements**

We have audited the accompanying statement of assets and liabilities of Federated Hermes Quality Bond Fund II (the Fund), a portfolio of Federated Hermes Insurance Series, including the portfolio of investments, as of December 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 December 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.

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 December 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. <br> ![](kpmgsig.jpg)

We have served as the auditor for one or more of Federated Hermes' investment companies since 2006.

Boston, Massachusetts <br>February 15, 2023

Annual Shareholder Report

**27**

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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 funds used as variable investment options. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from July 1, 2022 to December 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** <br>**Account Value** <br>**7/1/2022**<br>| **Ending** <br>**Account Value** <br>**12/31/2022**<br>| **Expenses Paid** <br>**During Period**<sup>1</sup> <br>|
| **Actual:** |  |  |  |
| Primary Shares | $1000 | $991.90 | $3.72 |
| Service Shares | $1000 | $990.90 | $4.97 |
| **Hypothetical (assuming a 5% return before expenses):** |  |  |  |
| Primary Shares | $1000 | $1021.48 | $3.77 |
| Service Shares | $1000 | $1020.21 | $5.04 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 1 | *Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the* <br> *one-half-year period). The expenses shown in the table do not include the charges and expenses imposed by the insurance company under the variable insurance* <br> *product contract. Please refer to the variable insurance product prospectus for a complete listing of these expenses. The annualized net expense ratios are as* <br> *follows:*<br>|

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | |
|:---|:---|
| Primary Shares | 0.74% |
| Service Shares | 0.99% |

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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, 2022, the Trust comprised six 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**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held and Previous Position(s)**<br>|
| **J. Christopher Donahue\***<br> Birth Date: April 11, 1949<br> Trustee<br> Indefinite Term<br> Began serving: <br> September 1993<br>| &nbsp;&nbsp; **Principal Occupations**: Principal Executive Officer and President of certain of the Funds in the Federated Hermes Fund <br> Family; Director or Trustee of the Funds in the Federated Hermes Fund Family; President, Chief Executive Officer and <br> Director, Federated Hermes, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated <br> Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman and Trustee, <br> Federated Equity Management Company of Pennsylvania; Trustee, Federated Shareholder Services Company; Director, <br> Federated Services Company.<br> **Previous Positions**: President, Federated Investment Counseling; President and Chief Executive Officer, Federated <br> Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd; Chairman, <br> Passport Research, Ltd.<br>|
| **Thomas R. Donahue\***<br> Birth Date: October 20, 1958<br> Trustee<br> Indefinite Term<br> Began serving: May 2016<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of certain of the funds in the Federated Hermes Fund Family; Chief Financial <br> Officer, Treasurer, Vice President and Assistant Secretary, Federated Hermes, Inc.; Chairman and Trustee, Federated <br> Administrative Services; Chairman and Director, Federated Administrative Services, Inc.; Trustee and Treasurer, Federated <br> Advisory Services Company; Director or Trustee and Treasurer, Federated Equity Management Company of Pennsylvania, <br> Federated Global Investment Management Corp., Federated Investment Counseling, and Federated Investment <br> Management Company; Director, MDTA LLC; Director, Executive Vice President and Assistant Secretary, Federated Securities <br> Corp.; Director or Trustee and Chairman, Federated Services Company and Federated Shareholder Services Company; and <br> Director and President, FII Holdings, Inc.<br> **Previous Positions**: Director, Federated Hermes, Inc.; Assistant Secretary, Federated Investment Management Company, <br> Federated Global Investment Management Company and Passport Research, LTD; Treasurer, Passport Research, LTD; <br> Executive Vice President, Federated Securities Corp.; and Treasurer, FII Holdings, Inc.<br>|

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\*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*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**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held, Previous Position(s) and Qualifications**<br>|
| **John T. Collins**<br> Birth Date: January 24, 1947<br> Trustee<br> Indefinite Term<br> Began serving: October 2013<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee, and Chair of the Board of Directors or Trustees, of the Federated Hermes Fund <br> Family; formerly, Chairman and CEO, The Collins Group, Inc. (a private equity firm) (Retired).<br> **Other Directorships Held**: Director, KLX Energy Services Holdings, Inc. (oilfield services); former Director of <br> KLX Corp. (aerospace).<br> **Qualifications**: Mr. Collins has served in several business and financial management roles and directorship positions <br> throughout his career. Mr. Collins previously served as Chairman and CEO of The Collins Group, Inc. (a private equity firm) <br> and as a Director of KLX Corp. Mr. Collins serves as Chairman Emeriti, Bentley University. Mr. Collins previously served as <br> Director and Audit Committee Member, Bank of America Corp.; Director, FleetBoston Financial Corp.; and Director, Beth <br> Israel Deaconess Medical Center (Harvard University Affiliate Hospital). <br>|

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held, Previous Position(s) and Qualifications**<br>|
| **G. Thomas Hough**<br> Birth Date: February 28, 1955<br> Trustee<br> Indefinite Term<br> Began serving: August 2015<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee, Chair of the Audit Committee of the Federated Hermes Fund Family; formerly, <br> Vice Chair, Ernst & Young LLP (public accounting firm) (Retired). <br> **Other Directorships Held**: Director, Chair of the Audit Committee, Equifax, Inc.; Lead Director, Member of the Audit and <br> Nominating and Corporate Governance Committees, Haverty Furniture Companies, Inc.; formerly, Director, Member of <br> Governance and Compensation Committees, Publix Super Markets, Inc.<br> **Qualifications**: Mr. Hough has served in accounting, business management and directorship positions throughout his career. <br> Mr. Hough most recently held the position of Americas Vice Chair of Assurance with Ernst & Young LLP (public accounting <br> firm). Mr. Hough serves on the President's Cabinet and Business School Board of Visitors for the University of Alabama. <br> Mr. Hough previously served on the Business School Board of Visitors for Wake Forest University, and he previously served as <br> an Executive Committee member of the United States Golf Association. <br>|
| **Maureen Lally-Green**<br> Birth Date: July 5, 1949<br> Trustee<br> Indefinite Term<br> Began serving: August 2009<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; Adjunct Professor Emerita of Law, <br> Duquesne University School of Law; formerly, Dean of the Duquesne University School of Law and Professor of Law and <br> Interim Dean of the Duquesne University School of Law; formerly, Associate General Secretary and Director, Office of Church <br> Relations, Diocese of Pittsburgh.<br> **Other Directorships Held**: Director, CNX Resources Corporation (natural gas).<br> **Qualifications**: Judge Lally-Green has served in various legal and business roles and directorship positions throughout her <br> career. Judge Lally-Green previously held the position of Dean of the School of Law of Duquesne University (as well as <br> Interim Dean). Judge Lally-Green previously served as Associate General Secretary of the Diocese of Pittsburgh, a member of <br> the Superior Court of Pennsylvania and as a Professor of Law, Duquesne University School of Law. Judge Lally-Green was <br> appointed by the Supreme Court of Pennsylvania to serve on the Supreme Court's Board of Continuing Judicial Education <br> and the Supreme Court's Appellate Court Procedural Rules Committee. Judge Lally-Green also currently holds the positions <br> on not for profit or for profit boards of directors as follows: Director and Chair, UPMC Mercy Hospital; Regent, Saint Vincent <br> Seminary; Member, Pennsylvania State Board of Education (public); Director, Catholic Charities, Pittsburgh; and Director CNX <br> Resources Corporation (natural gas). Judge Lally-Green has held the positions of: Director, Auberle; Director, Epilepsy <br> Foundation of Western and Central Pennsylvania; Director, Ireland Institute of Pittsburgh; Director, Saint Thomas More <br> Society; Director and Chair, Catholic High Schools of the Diocese of Pittsburgh, Inc.; Director, Pennsylvania Bar Institute; <br> Director, St. Vincent College; Director and Chair, North Catholic High School, Inc.; Director and Vice Chair, Our Campaign for <br> the Church Alive!, Inc.; and Director and Vice Chair, Saint Francis University.<br>|
| **Thomas M. O'Neill**<br> Birth Date: June 14, 1951<br> Trustee<br> Indefinite Term<br> Began serving: August 2006<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; Sole Proprietor, Navigator Management <br> Company (investment and strategic consulting).<br> **Other Directorships Held**: None.<br> **Qualifications**: Mr. O'Neill has served in several business, mutual fund and financial management roles and directorship <br> positions throughout his career. Mr. O'Neill serves as Director, Medicines for Humanity. Mr. O'Neill previously served as Chief <br> Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and <br> Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, <br> MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director <br> and Consultant, EZE Castle Software (investment order management software); Director, Midway Pacific (lumber); and <br> Director, The Golisano Children's Museum of Naples, Florida.<br>|
| **Madelyn A. Reilly**<br> Birth Date: February 2, 1956<br> Trustee<br> Indefinite Term<br> Began serving: <br> November 2020<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; formerly, Senior Vice President for Legal <br> Affairs, General Counsel and Secretary of Board of Directors, Duquesne University (Retired).<br> **Other Directorships Held**: None.<br> **Qualifications**: Ms. Reilly has served in various business and legal management roles throughout her career. Ms. Reilly <br> previously served as Senior Vice President for Legal Affairs, General Counsel and Secretary of Board of Directors and Director <br> of Risk Management and Associate General Counsel, Duquesne University. Prior to her work at Duquesne University, <br> Ms. Reilly served as Assistant General Counsel of Compliance and Enterprise Risk as well as Senior Counsel of Environment, <br> Health and Safety, PPG Industries. Ms. Reilly currently serves as a member of the Board of Directors of UPMC <br> Mercy Hospital.<br>|
| **P. Jerome Richey**<br> Birth Date: February 23, 1949<br> Trustee<br> Indefinite Term<br> Began serving: October 2013<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; Retired; formerly, Senior Vice Chancellor <br> and Chief Legal Officer, University of Pittsburgh and Executive Vice President and Chief Legal Officer, CONSOL Energy Inc. <br> (now split into two separate publicly traded companies known as CONSOL Energy Inc. and CNX Resources Corp.).<br> **Other Directorships Held**: None.<br> **Qualifications**: Mr. Richey has served in several business and legal management roles and directorship positions throughout <br> his career. Mr. Richey most recently held the positions of Senior Vice Chancellor and Chief Legal Officer, University of <br> Pittsburgh. Mr. Richey previously served as Chairman of the Board, Epilepsy Foundation of Western Pennsylvania and <br> Chairman of the Board, World Affairs Council of Pittsburgh. Mr. Richey previously served as Chief Legal Officer and Executive <br> Vice President, CONSOL Energy Inc. and CNX Gas Company; and Board Member, Ethics Counsel and Shareholder, Buchanan <br> Ingersoll & Rooney PC (a law firm). <br>|

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held, Previous Position(s) and Qualifications**<br>|
| **John S. Walsh**<br> Birth Date:<br> November 28, 1957<br> Trustee<br> Indefinite Term<br> Began serving: January 1999<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; President and Director, Heat Wagon, Inc. <br> (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of <br> portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. <br> **Other Directorships Held**: None.<br> **Qualifications**: Mr. Walsh has served in several business management roles and directorship positions throughout his career. <br> Mr. Walsh previously served as Vice President, Walsh & Kelly, Inc. (paving contractors).<br>|

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**OFFICERS** 

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Address**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years**<br> **and Previous Position(s)**<br>|
| **Lori A. Hensler**<br> Birth Date: January 6, 1967<br> TREASURER<br> Officer since: April 2013<br>| &nbsp;&nbsp; **Principal Occupations**: Principal Financial Officer and Treasurer of the Federated Hermes Fund Family; Senior Vice President, <br> Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp.; and Assistant Treasurer, <br> Federated Investors Trust Company. Ms. Hensler has received the Certified Public Accountant designation.<br> **Previous Positions**: Controller of Federated Hermes, Inc.; Senior Vice President and Assistant Treasurer, Federated Investors <br> Management Company; Treasurer, Federated Investors Trust Company; Assistant Treasurer, Federated Administrative <br> Services, Federated Administrative Services, Inc., Federated Securities Corp., Edgewood Services, Inc., Federated Advisory <br> Services Company, Federated Equity Management Company of Pennsylvania, Federated Global Investment Management <br> Corp., Federated Investment Counseling, Federated Investment Management Company, Passport Research, Ltd., and <br> Federated MDTA, LLC; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and <br> Southpointe Distribution Services, Inc.<br>|
| **Peter J. Germain**<br> Birth Date:<br> September 3, 1959<br> CHIEF LEGAL OFFICER, <br> SECRETARY and EXECUTIVE <br> VICE PRESIDENT<br> Officer since: January 2005<br>| &nbsp;&nbsp; **Principal Occupations**: Mr. Germain is Chief Legal Officer, Secretary and Executive Vice President of the Federated Hermes <br> Fund Family. He is General Counsel, Chief Legal Officer, Secretary and Executive Vice President, Federated Hermes, Inc.; <br> Trustee and Senior Vice President, Federated Investors Management Company; Trustee and President, Federated <br> Administrative Services; Director and President, Federated Administrative Services, Inc.; Director and Vice President, <br> Federated Securities Corp.; Director and Secretary, Federated Private Asset Management, Inc.; Secretary, Federated <br> Shareholder Services Company; and Secretary, Retirement Plan Service Company of America. Mr. Germain joined Federated <br> Hermes, Inc. in 1984 and is a member of the Pennsylvania Bar Association.<br> **Previous Positions**: Deputy General Counsel, Special Counsel, Managing Director of Mutual Fund Services, Federated <br> Hermes, Inc.; Senior Vice President, Federated Services Company; and Senior Corporate Counsel, Federated Hermes, Inc.<br>|
| **John B. Fisher**<br> Birth Date: May 16, 1956<br> PRESIDENT<br> Officer since: November 2004<br>| &nbsp;&nbsp; **Principal Occupations**: Principal Executive Officer and President of certain of the Funds in the Federated Hermes Fund <br> Family; Director or Trustee of certain of the Funds in the Federated Hermes Fund Family; Director and Vice President, <br> Federated Hermes, Inc.; President, Director/Trustee and CEO, Federated Advisory Services Company, Federated Equity <br> Management Company of Pennsylvania, Federated Global Investment Management Corp., Federated Investment Counseling, <br> Federated Investment Management Company, and Federated MDTA LLC; Director, Federated Investors Trust Company.<br> **Previous Positions**: President and Director of the Institutional Sales Division of Federated Securities Corp.; President and <br> CEO of Passport Research, Ltd.; Director and President, Technology, Federated Services Company.<br>|
| **Stephen Van Meter**<br> Birth Date: June 5, 1975<br> CHIEF COMPLIANCE OFFICER <br> AND SENIOR VICE PRESIDENT<br> Officer since: July 2015<br>| &nbsp;&nbsp; **Principal Occupations**: Senior Vice President and Chief Compliance Officer of the Federated Hermes Fund Family; Vice <br> President and Chief Compliance Officer of Federated Hermes, Inc. and Chief Compliance Officer of certain of its subsidiaries. <br> Mr. Van Meter joined Federated Hermes, Inc. in October 2011. He holds FINRA licenses under Series 3, 7, 24 and 66. <br> **Previous Positions**: Mr. Van Meter previously held the position of Compliance Operating Officer, Federated Hermes, Inc. <br> Prior to joining Federated Hermes, Inc., Mr. Van Meter served at the United States Securities and Exchange Commission in <br> the positions of Senior Counsel, Office of Chief Counsel, Division of Investment Management and Senior Counsel, Division <br> of Enforcement.<br>|
| **Stephen F. Auth**<br> Birth Date: <br> September 13, 1956<br> 101 Park Avenue<br> 41<sup>st</sup> Floor<br> New York, NY 10178<br> CHIEF INVESTMENT OFFICER<br> Officer since: November 2002<br>| &nbsp;&nbsp; **Principal Occupations**: Stephen F. Auth is Chief Investment Officer of various Funds in the Federated Hermes Fund Family; <br> Executive Vice President, Federated Investment Counseling, Federated Global Investment Management Corp. and Federated <br> Equity Management Company of Pennsylvania.<br> **Previous Positions**: Executive Vice President, Federated Investment Management Company and Passport Research, Ltd. <br> (investment advisory subsidiary of Federated); Senior Vice President, Global Portfolio Management Services Division; Senior <br> Vice President, Federated Investment Management Company and Passport Research, Ltd.; Senior Managing Director and <br> Portfolio Manager, Prudential Investments.<br>|
| **Robert J. Ostrowski**<br> Birth Date: April 26, 1963<br> Chief Investment Officer<br> Officer since: May 2004<br>| &nbsp;&nbsp; **Principal Occupations**: Robert J. Ostrowski joined Federated Hermes, Inc. in 1987 as an Investment Analyst and became a <br> Portfolio Manager in 1990. He was named Chief Investment Officer of Federated Hermes' taxable fixed-income products in <br> 2004 and also serves as a Senior Portfolio Manager. Mr. Ostrowski became an Executive Vice President of the Fund's Adviser <br> in 2009 and served as a Senior Vice President of the Fund's Adviser from 1997 to 2009. Mr. Ostrowski has received the <br> Chartered Financial Analyst designation. He received his M.S. in Industrial Administration from Carnegie Mellon University.<br>|

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Address**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years**<br> **and Previous Position(s)**<br>|
| **Deborah A. Cunningham**<br> Birth Date:<br> September 15, 1959<br> Chief Investment Officer<br> Officer since: June 2012<br>| &nbsp;&nbsp; **Principal Occupations**: Deborah A. Cunningham was named Chief Investment Officer of Federated Hermes' money market <br> products in 2004. She joined Federated Hermes in 1981 and has been a Senior Portfolio Manager since 1997 <br> and an Executive Vice President of the Fund's Adviser since 2009. Ms. Cunningham has received the Chartered Financial <br> Analyst designation and holds an M.S.B.A. in Finance from Robert Morris College.<br>|

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Evaluation and Approval of Advisory Contract–May 2022

**Federated Hermes Quality Bond Fund II (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.

***<u>Information Received and Review Process</u>***

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 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 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

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Commission ("SEC") disclosure requirements 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.

***<u>Nature, Extent and Quality of Services</u>***

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. 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.

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 Federated Hermes' oversight of the securities lending program for the Federated Hermes Funds that engage in securities lending and noted the income earned by the Federated Hermes Funds that participate in such program. In addition, 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 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

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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.

***<u>Fund Investment Performance</u>***

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 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 Morningstar, Inc. (the "Morningstar"), 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 periods ended December 31, 2021, the Fund's performance for the three-year and five-year periods was above the median of the Performance Peer Group, and the Fund's performance fell below the median of the Performance Peer Group for the one-year period. 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.

Based on these considerations, the Board concluded that it had continued confidence in the Adviser's overall capabilities to manage the Fund.

***<u>Fund Expenses</u>***

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, 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 Morningstar (the "Expense Peer Group"). The Board received a description of the methodology used to select the Expense Peer Group from the overall Morningstar category. The Board also reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall Morningstar category.

Annual Shareholder Report

**35**

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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 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 contractual advisory fee rate and other expenses 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.

***<u>Profitability</u>***

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 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.

***<u>Economies of Scale</u>***

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,

Annual Shareholder Report

**36**

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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 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.

***<u>Other Benefits</u>***

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.

***<u>Conclusions</u>***

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

**37**

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Liquidity Risk Management Program– <br>Annual Evaluation of Adequacy and Effectiveness

In accordance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), Federated Hermes Insurance Series (the "Trust") has adopted and implemented a liquidity risk management program (the "Program") for Federated Hermes Quality Bond Fund II (the "Fund" and, collectively with the other non-money market open-end funds advised by Federated Hermes, the "Federated Hermes Funds"). The Program seeks to assess and manage the Fund's liquidity risk. "Liquidity risk" is defined under the Liquidity Rule as the risk that the Fund is unable to meet redemption requests without significantly diluting remaining investors' interests in the Fund. The Board of Trustees of the Trust (the "Board") has approved the designation of each Federated Hermes Fund's investment adviser as the administrator for the Program (the "Administrator") with respect to that Fund. The Administrator, in turn, has delegated day-to-day responsibility for the administration of the Program to multiple Liquidity Risk Management Committees, which are comprised of representatives from certain divisions within Federated Hermes.

The Program is comprised of various components designed to support the assessment and/or management of liquidity risk, including: (1) the periodic assessment (no less frequently than annually) of certain factors that influence the Fund's liquidity risk; (2) the periodic classification (no less frequently than monthly) of the Fund's investments into one of four liquidity categories that reflect an estimate of their liquidity under current market conditions; (3) a 15% limit on the acquisition of "illiquid investments" (as defined under the Liquidity Rule); (4) to the extent a Fund does not invest primarily in "highly liquid investments" (as defined under the Liquidity Rule), the determination of a minimum percentage of the Fund's assets that generally will be invested in highly liquid investments (an "HLIM"); (5) if a Fund has established an HLIM, the periodic review (no less frequently than annually) of the HLIM and the adoption of policies and procedures for responding to a shortfall of the Fund's highly liquid investments below its HLIM; and (6) periodic reporting to the Board.

At its meetings in May 2022, the Board received and reviewed a written report (the "Report") from the Federated Hermes Funds' Chief Compliance Officer and Chief Risk Officer, on behalf of the Administrator, concerning the operation of the Program for the period from April 1, 2021 through March 31, 2022 (the "Period"). The Report addressed the operation of the Program and assessed its adequacy and effectiveness, including, where applicable, the operation of any HLIM established for a Federated Hermes Fund and each Federated Hermes Fund's access to other available funding sources such as the Federated Hermes Funds' interfund lending facility, redemptions in-kind, reverse repurchase agreement transactions, redemptions delayed beyond the normal T+1 settlement, but within seven days of the redemption request, and committed lines of credit. There were no material changes to the Program during the Period. The Report summarized the operation of the Program and the information and factors considered by the Administrator in assessing whether the Program has been adequately and effectively implemented with respect to the Federated Hermes Funds. Such information and factors included, among other things:

◾ confirmation that it was not necessary for the Fund to utilize, and the Fund did not utilize, alternative funding sources during the Period;

◾ the periodic classifications of the Fund's investments into one of four liquidity categories and the methodologies and inputs used to classify the investments, including the Fund's reasonably anticipated trade size;

◾ the analysis received from a third-party liquidity assessment vendor that is taken into account in the process of determining the liquidity classifications of the Fund's investments and the results of an evaluation of the services performed by the vendor in support of this process;

◾ the fact that the Fund invested primarily in highly liquid investments during the Period and, therefore, was not required to establish, and has not established, an HLIM and the procedures for monitoring the status of the Fund as investing primarily in highly liquid investments;

◾ the fact that the Fund invested no more than 15% of its assets in illiquid investments during the Period and the procedures for monitoring this limit;

◾ the fact that there were no liquidity events during the Period, that materially affected the Fund's liquidity risk;

◾ the impact on liquidity and management of liquidity risk caused by extended non-U.S. market closures and confirmation that there were no issues for any of the affected Federated Hermes Funds in meeting shareholder redemptions at any time during these temporary non-U.S. market closures;

◾ circumstances during the Period under which the Administrator convened meetings of the Liquidity Risk Management Committees more frequently than normal to conduct enhanced liquidity risk monitoring, including prior to the Russian invasion of Ukraine.

Based on this review, the Administrator concluded that the Program is operating effectively to assess and manage the Fund's liquidity risk, and that the Program has been and continues to be adequately and effectively implemented to monitor and, as applicable, respond to the Fund's liquidity developments.

Annual Shareholder Report

**38**

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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.

Quarterly Portfolio Schedule

Each fiscal quarter, the Fund will file with the SEC a complete schedule of its monthly portfolio holdings on "Form N-PORT." The Fund's holdings as of the end of the third month of every fiscal quarter, as reported on Form N-PORT, will be publicly available on the SEC's website at sec.gov within 60 days of the end of the fiscal quarter upon filing. You may also access this information via the link to the Fund and share class name at FederatedInvestors.com.

Annual Shareholder Report

**39**

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*Variable investment options are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in variable investment options involves investment risk, including the possible loss of principal.*

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.

![](fhilogok11p.jpg)

Federated Hermes Quality Bond Fund II <br>Federated Hermes Funds <br>4000 Ericsson Drive <br>Warrendale, PA 15086-7561

Contact us at **FederatedInvestors.com** <br>or call 1-800-341-7400.

Federated Securities Corp., Distributor

*CUSIP 313916884* <br>*CUSIP 313916785*

*G00433-14 (2/23)*© 2023 Federated Hermes, Inc.

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**Annual Shareholder Report**

***December 31, 2022***

![](img020095231.gif)

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Federated Hermes Fund for U.S. Government Securities II

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A Portfolio of Federated Hermes Insurance Series

Dear Valued Shareholder,

We are pleased to present the Annual Shareholder Report for your fund covering the period from January 1, 2022 through December 31, 2022. This report includes Management's Discussion of Fund Performance, 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, <br> ![](fisherjohnsigsmall.jpg)

John B. Fisher, President

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**Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee**

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**CONTENTS** 

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| | |
|:---|:---|
| [Management's Discussion of Fund Performance](#xx_38a69458-37b0-4010-9bcd-1e31d7ad01a4_1) | &nbsp;&nbsp; [1](#xx_38a69458-37b0-4010-9bcd-1e31d7ad01a4_1)  |
| [Portfolio of Investments Summary Table](#xx_59876d0f-b1dc-43d4-ae17-9d7e3f78b59c_1) | &nbsp;&nbsp; [3](#xx_59876d0f-b1dc-43d4-ae17-9d7e3f78b59c_1)  |
| [Portfolio of Investments](#xx_59876d0f-b1dc-43d4-ae17-9d7e3f78b59c_2) | &nbsp;&nbsp; [4](#xx_59876d0f-b1dc-43d4-ae17-9d7e3f78b59c_2)  |
| [Financial Highlights](#xx_84a1407c-26dc-4fcc-903c-866d912a4546_1) | [10](#xx_84a1407c-26dc-4fcc-903c-866d912a4546_1)  |
| [Statement of Assets and Liabilities](#xx_538c76eb-e02b-426e-b4e8-2d57bc54f5d0_1) | [11](#xx_538c76eb-e02b-426e-b4e8-2d57bc54f5d0_1)  |
| [Statement of Operations](#xx_538c76eb-e02b-426e-b4e8-2d57bc54f5d0_2) | [12](#xx_538c76eb-e02b-426e-b4e8-2d57bc54f5d0_2)  |
| [Statement of Changes in Net Assets](#xx_538c76eb-e02b-426e-b4e8-2d57bc54f5d0_3) | [13](#xx_538c76eb-e02b-426e-b4e8-2d57bc54f5d0_3)  |
| [Notes to Financial Statements](#xx_9d0bc27e-d8c1-4890-9e0d-ed6e4ad79e32_1) | [14](#xx_9d0bc27e-d8c1-4890-9e0d-ed6e4ad79e32_1)  |
| [Report of Independent Registered Public Accounting Firm](#xx_278ab929-8d67-4c78-9514-0edd6b345ab5_1) | [19](#xx_278ab929-8d67-4c78-9514-0edd6b345ab5_1)  |
| [Shareholder Expense Example](#xx_b2a16e91-b9fc-4cdb-a30e-1684fd037038_1) | [20](#xx_b2a16e91-b9fc-4cdb-a30e-1684fd037038_1)  |
| [Board of Trustees and Trust Officers](#xx_dfa7b749-4e9a-44e8-97a6-8cfd2aa552a8_1) | [21](#xx_dfa7b749-4e9a-44e8-97a6-8cfd2aa552a8_1)  |
| [Evaluation and Approval of Advisory Contract](#xx_470e7743-98d1-4cb5-97c5-9f1f59740d26_1) | [25](#xx_470e7743-98d1-4cb5-97c5-9f1f59740d26_1)  |
| [Liquidity Risk Management Program](#xx_d04642bc-3d02-4d07-a454-fc952c7bcecc_1)[–](#xx_d04642bc-3d02-4d07-a454-fc952c7bcecc_1)<br> [Annual Evaluation of Adequacy and Effectiveness](#xx_d04642bc-3d02-4d07-a454-fc952c7bcecc_1)<br>| [30](#xx_d04642bc-3d02-4d07-a454-fc952c7bcecc_1)  |
| [Voting Proxies on Fund Portfolio Securities](#xx_9243556d-fb5d-48cf-a309-115253143a2e_1) | [31](#xx_9243556d-fb5d-48cf-a309-115253143a2e_1)  |
| [Quarterly Portfolio Schedule](#xx_9243556d-fb5d-48cf-a309-115253143a2e_1) | [31](#xx_9243556d-fb5d-48cf-a309-115253143a2e_1) |

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Management's Discussion of Fund Performance (unaudited)

The total return of Federated Hermes Fund for U.S. Government Securities II (the "Fund"), based on net asset value for the 12-month reporting period ended December 31, 2022, was -12.55%. The Fund's custom benchmark ("Blended Index"),<sup>1</sup> which consists of a 67%/33% blend of the Bloomberg US Mortgage-Backed Securities Index and the Bloomberg US Government Bond Index, returned -11.97% for the same period. The Fund's total return for the most recently completed fiscal year reflected actual cash flows, transaction costs and expenses not reflected in the total return of the Blended Index.

During the reporting period, the most significant factors affecting the Fund's performance relative to the Blended Index included: (a) interest rate strategy; (b) sector allocation; and (c) security selection.

The following discussion will focus on the performance of the Fund relative to the Blended Index.

**MARKET OVERVIEW**

Citing elevated inflation which resulted from pandemic-induced supply/demand imbalances and the Russian invasion of Ukraine, as well as low unemployment, the Federal Reserve (the "Fed") aggressively tightened monetary policy. From accommodative monetary policy at period outset, the Fed moved at a historically rapid pace with seven rate hikes to reduce inflationary pressures. Additionally, quantitative easing policy purchases of securities reached a conclusion, and the portfolio of agency debt, mortgage-backed securities<sup>2</sup> (MBS) and Treasury securities declined as securities matured. These steps were taken to combat inflation which reached the highest level in 40 years. Market yields spiked in response to Fed actions.

Treasury yields increased across the maturity spectrum and fixed-income investments outside of Treasury securities—the spread sectors—reeled, as slack demand produced wider yield spreads and negative excess returns. Virtually all spread sectors underperformed similar duration Treasury securities with corporate debt (both high-grade and high-yield), MBS (residential and commercial), asset-backed securities (ABS) and agency debt posting lackluster results. The mortgage sector suffered from a lack of demand as commercial bank buying decreased, and the Fed ceased portfolio purchases allowing portfolio holdings to decline as quantitative easing evolved to quantitative tightening. As Treasury yields and mortgage rates increased, mortgage refinance activity decreased and MBS securities average lives extended as homeowners' existing mortgage rates fell below the available market rate for 30-year fixed mortgages.

During the reporting period, the 2- and 10-year U.S. Treasury yields increased 370 and 237 basis points to yield 4.43% and 3.88%, respectively.<sup>3</sup>

**Interest rate strategy**

The Fund decreased effective duration,<sup>4</sup> relative to the Blended Index, to reduce the anticipated impact of higher market yields. The lower portfolio sensitivity to interest rates proved beneficial as Treasury yields climbed. Interest rate strategy made a positive contribution to Fund performance during the reporting period.

**Sector ALLOCATION**

Allocations to securities outside the Blended Index, notably non-agency MBS and student loan ABS, proved detrimental as yield spreads widened to a greater degree than their government-guaranteed counterparts.<sup>5</sup> Sector allocation acted as a drag on Fund performance.

**SECURITY SELECTION**

As the market yields increased, securities offering varying degrees of protection against prepayments underperformed as call protection value declined. Security selection acted as a drag on Fund performance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The Bloomberg US Mortgage-Backed Securities Index (BMBS) and the Bloomberg US Government Bond Index (BGI) returned -11.81% and -12.32%, respectively. The Blended Index is being used for comparison purposes because, although it is not the Fund's broad-based securities market index, the Fund's Adviser believes it more closely reflects the market sectors in which the Fund invests. The Fund's broad-based securities market index is the BMBS. Please see the footnotes to the line graph under "Fund Performance and Growth of a $10,000 Investment" below for the definition of, and more information about, the Blended Index.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The value of some mortgage-backed securities may be particularly sensitive to changes in prevailing interest rates, and although the securities are generally supported by some form of government or private insurance, there is no assurance that private guarantors or insurers will meet their obligations.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Bond prices are sensitive to changes in interest rates, and a rise in interest rates can cause a decline in their prices.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Duration is a measure of a security's price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter durations.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Fund shares are not guaranteed by the U.S. government.*

Federated Hermes Fund for U.S. Government Securities II

Annual Shareholder Report

**1**

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**FUND PERFORMANCE AND GROWTH OF A $10,000 INVESTMENT**

The graph below illustrates the hypothetical investment of $10,000<sup>1</sup> in the Federated Hermes Fund for U.S. Government Securities II (the "Fund") from December 31, 2012 to December 31, 2022, compared to the Bloomberg US Mortgage-Backed Securities Index (BMBS),<sup>2</sup> the Bloomberg US Government Bond Index (BGI)<sup>3</sup> and a blended index comprised of 67% BMBS and 33% BGI ("Blended Index").<sup>2,3</sup> The Average Annual Total Return table below shows returns averaged over the stated periods.

**GROWTH OF A $10,000 INVESTMENT**

**Growth of $10,000 as of December 31, 2022** <br> ![](ifusgarg0084601.jpg)

**Average Annual Total Returns for the Period Ended 12/31/2022** 

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| | | | |
|:---|:---|:---|:---|
|  | **1 Year** | **5 Years** | **10 Years** |
| **Fund** | -12.55% | -0.84% | 0.23% |
| BMBS | -11.81% | -0.53% | 0.74% |
| BGI | -12.32% | -0.06% | 0.60% |
| Blended Index | -11.97% | -0.37% | 0.70% |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance of a variable investment option changes over time and current performance may be lower or higher than what is stated. For current to the most recent month end performance, contact your insurance company. The performance information presented does not include the charges and expenses imposed by the insurance company under the variable insurance product contract. The inclusion of such charges would lower performance. Please refer to the variable insurance product prospectus for a complete listing of these expenses. Fund shares are available exclusively as a funding vehicle for life insurance companies writing variable life insurance policies and variable annuity contracts. Variable investment options are not obligations of or guaranteed by any bank and are not federally insured.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The Fund's performance assumes the reinvestment of all dividends and distributions. The BMBS, BGI and Blended Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The BMBS covers agency mortgage-backed pass-through securities (both fixed-rate and hybrid ARM) issued by Ginnie Mae (GNMA), Fannie Mae (FNMA) and Freddie Mac (FHLMC). The index is not adjusted to reflect sales loads, expenses or other fees that the Securities and Exchange Commission (SEC) requires to be reflected in the Fund's performance. The index is unmanaged and, unlike the Fund, is not affected by cash flows. It is not possible to invest directly in an index.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*The BGI is a market value weighted index of U.S. government and government agency securities (other than mortgage securities) with maturities of one year or more. The index is not adjusted to reflect sales loads, expenses or other fees that the SEC requires to be reflected in the Fund's performance. The index is unmanaged and, unlike the Fund, is not affected by cash flows. It is not possible to invest directly in an index.*

Federated Hermes Fund for U.S. Government Securities II

Annual Shareholder Report

**2**

------

Portfolio of Investments Summary Table (unaudited)

At December 31, 2022, the Fund's portfolio composition<sup>1</sup> was as follows:

---

| | |
|:---|:---|
| **Type of Investments** | **Percentage of** <br>**Total Net Assets**<br>|
| U.S. Government Agency Mortgage-Backed Securities | 62.0% |
| U.S. Treasury Securities | 14.9% |
| Non-Agency Mortgage-Backed Securities | &nbsp;&nbsp; 6.5% |
| U.S. Government Agency Securities | &nbsp;&nbsp; 5.4% |
| Asset-Backed Securities | &nbsp;&nbsp; 4.8% |
| U.S. Government Agency Commercial Mortgage-Backed Securities  | &nbsp;&nbsp; 1.5% |
| Cash Equivalents<sup>2</sup> <br>| &nbsp;&nbsp; 4.6% |
| Other Assets and Liabilities—Net<sup>3</sup> <br>| &nbsp;&nbsp; 0.3% |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | **100%** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 1 | *See the Fund's Prospectus and Statement of Additional Information for a description of these investments.* |
| 2 | *Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements.* |
| 3 | *Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.* |

---

Federated Hermes Fund for U.S. Government Securities II

Annual Shareholder Report

**3**

------

Portfolio of Investments

December 31, 2022

---

| | | |
|:---|:---|:---|
| **Principal** <br>**Amount**<br>|  | **Value** |
|  | MORTGAGE-BACKED SECURITIES—61.6% |  |
|  | **Federal Home Loan Mortgage Corporation—24.8%** |  |
| $952749 | 2.000%, 9/1/2050 | $789127 |
| &nbsp;&nbsp; 974546 | 2.000%, 1/1/2052 | &nbsp;&nbsp; 803526 |
| &nbsp;&nbsp; 6227977 | 2.000%, 1/1/2052 | &nbsp;&nbsp; 5117531 |
| &nbsp;&nbsp; 1620946 | 2.500%, 9/1/2050 | &nbsp;&nbsp; 1387086 |
| &nbsp;&nbsp; 918980 | 2.500%, 10/1/2051 | &nbsp;&nbsp; 781369 |
| &nbsp;&nbsp; 2147918 | 2.500%, 4/1/2052 | &nbsp;&nbsp; 1843734 |
| &nbsp;&nbsp; 284987 | 3.000%, 11/1/2045 | &nbsp;&nbsp; 257340 |
| &nbsp;&nbsp; 553496 | 3.000%, 10/1/2046 | &nbsp;&nbsp; 497725 |
| &nbsp;&nbsp; 366482 | 3.000%, 10/1/2046 | &nbsp;&nbsp; 330699 |
| &nbsp;&nbsp; 55376 | 3.000%, 11/1/2046 | &nbsp;&nbsp; 49796 |
| &nbsp;&nbsp; 638564 | 3.500%, 7/1/2042 | &nbsp;&nbsp; 597715 |
| &nbsp;&nbsp; 549022 | 3.500%, 9/1/2043 | &nbsp;&nbsp; 513444 |
| &nbsp;&nbsp; 154003 | 3.500%, 5/1/2046 | &nbsp;&nbsp; 143005 |
| &nbsp;&nbsp; 649707 | 3.500%, 11/1/2047 | &nbsp;&nbsp; 602091 |
| &nbsp;&nbsp; 76375 | 4.000%, 1/1/2042 | &nbsp;&nbsp; 73861 |
| &nbsp;&nbsp; 366033 | 4.000%, 3/1/2046 | &nbsp;&nbsp; 352424 |
| &nbsp;&nbsp; 124161 | 4.000%, 11/1/2047 | &nbsp;&nbsp; 118885 |
| &nbsp;&nbsp; 57247 | 4.000%, 12/1/2047 | &nbsp;&nbsp; 54778 |
| &nbsp;&nbsp; 110625 | 4.000%, 4/1/2048 | &nbsp;&nbsp; 105053 |
| &nbsp;&nbsp; 308177 | 4.000%, 7/1/2048 | &nbsp;&nbsp; 293829 |
| &nbsp;&nbsp; 2716349 | 4.000%, 3/1/2052 | &nbsp;&nbsp; 2553389 |
| &nbsp;&nbsp; 2314176 | 4.500%, 11/1/2037 | &nbsp;&nbsp; 2300948 |
| &nbsp;&nbsp; 138028 | 4.500%, 8/1/2040 | &nbsp;&nbsp; 136732 |
| &nbsp;&nbsp; 319606 | 4.500%, 12/1/2040 | &nbsp;&nbsp; 316675 |
| &nbsp;&nbsp; 404603 | 4.500%, 4/1/2041 | &nbsp;&nbsp; 400891 |
| &nbsp;&nbsp; 971365 | 4.500%, 7/1/2052 | &nbsp;&nbsp; 941012 |
| &nbsp;&nbsp; 193363 | 5.000%, 1/1/2034 | &nbsp;&nbsp; 194130 |
| &nbsp;&nbsp; 57415 | 5.000%, 5/1/2034 | &nbsp;&nbsp; 57643 |
| &nbsp;&nbsp; 42911 | 5.000%, 4/1/2036 | &nbsp;&nbsp; 43223 |
| &nbsp;&nbsp; 14784 | 5.000%, 5/1/2036 | &nbsp;&nbsp; 14883 |
| &nbsp;&nbsp; 9775 | 5.000%, 6/1/2036 | &nbsp;&nbsp; 9845 |
| &nbsp;&nbsp; 35347 | 5.000%, 6/1/2040 | &nbsp;&nbsp; 35721 |
| &nbsp;&nbsp; 324901 | 5.500%, 5/1/2034 | &nbsp;&nbsp; 332459 |
| &nbsp;&nbsp; 11931 | 5.500%, 12/1/2035 | &nbsp;&nbsp; 12267 |
| &nbsp;&nbsp; 72887 | 5.500%, 2/1/2036 | &nbsp;&nbsp; 75099 |
| &nbsp;&nbsp; 48047 | 5.500%, 5/1/2036 | &nbsp;&nbsp; 49443 |
| &nbsp;&nbsp; 3177 | 5.500%, 5/1/2036 | &nbsp;&nbsp; 3280 |
| &nbsp;&nbsp; 5665 | 5.500%, 5/1/2036 | &nbsp;&nbsp; 5836 |
| &nbsp;&nbsp; 3497 | 5.500%, 6/1/2036 | &nbsp;&nbsp; 3611 |
| &nbsp;&nbsp; 912 | 5.500%, 6/1/2036 | &nbsp;&nbsp; 941 |
| &nbsp;&nbsp; 46801 | 5.500%, 11/1/2037 | &nbsp;&nbsp; 48321 |
| &nbsp;&nbsp; 93953 | 5.500%, 1/1/2038 | &nbsp;&nbsp; 96983 |
| &nbsp;&nbsp; 3809 | 6.000%, 1/1/2032 | &nbsp;&nbsp; 3908 |
| &nbsp;&nbsp; 13785 | 6.000%, 2/1/2032 | &nbsp;&nbsp; 14193 |
| &nbsp;&nbsp; 53365 | 6.000%, 4/1/2036 | &nbsp;&nbsp; 55534 |
| &nbsp;&nbsp; 5578 | 6.000%, 5/1/2036 | &nbsp;&nbsp; 5804 |
| &nbsp;&nbsp; 133000 | 6.000%, 6/1/2037 | &nbsp;&nbsp; 139266 |
| &nbsp;&nbsp; 10243 | 6.000%, 7/1/2037 | &nbsp;&nbsp; 10707 |

---

Federated Hermes Fund for U.S. Government Securities II

Annual Shareholder Report

**4**

------

---

| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br>|  | **Value** |
|  | MORTGAGE-BACKED SECURITIES—continued |  |
|  | **Federal Home Loan Mortgage Corporation—continued** |  |
| $3381 | 6.500%, 3/1/2029 | $3478 |
| &nbsp;&nbsp; 1877 | 6.500%, 6/1/2029 | &nbsp;&nbsp; 1934 |
| &nbsp;&nbsp; 1346 | 6.500%, 7/1/2029 | &nbsp;&nbsp; 1385 |
| &nbsp;&nbsp; 378 | 6.500%, 9/1/2029 | &nbsp;&nbsp; 386 |
| &nbsp;&nbsp; 870 | 7.000%, 12/1/2029 | &nbsp;&nbsp; 908 |
| &nbsp;&nbsp; 600 | 7.000%, 6/1/2030 | &nbsp;&nbsp; 623 |
| &nbsp;&nbsp; 130 | 7.000%, 11/1/2030 | &nbsp;&nbsp; 137 |
| &nbsp;&nbsp; 149938 | 7.000%, 4/1/2032 | &nbsp;&nbsp; 159614 |
| &nbsp;&nbsp; 14403 | 7.500%, 12/1/2030 | &nbsp;&nbsp; 15302 |
| &nbsp;&nbsp; 7267 | 7.500%, 1/1/2031 | &nbsp;&nbsp; 7715 |
| &nbsp;&nbsp; 1348 | 8.500%, 5/1/2030 | &nbsp;&nbsp; 1429 |
| &nbsp;&nbsp; 243 | 9.000%, 2/1/2025 | &nbsp;&nbsp; 248 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp; 22768921 |
|  | **Federal National Mortgage Association—22.3%** |  |
| &nbsp;&nbsp; 1282153 | 2.000%, 6/1/2050 | &nbsp;&nbsp; 1055549 |
| &nbsp;&nbsp; 2254187 | 2.000%, 7/1/2050 | &nbsp;&nbsp; 1854380 |
| &nbsp;&nbsp; 774273 | 2.000%, 11/1/2050 | &nbsp;&nbsp; 636946 |
| &nbsp;&nbsp; 950602 | 2.000%, 7/1/2051 | &nbsp;&nbsp; 782001 |
| &nbsp;&nbsp; 2002988 | 2.000%, 8/1/2051 | &nbsp;&nbsp; 1646482 |
| &nbsp;&nbsp; 939754 | 2.000%, 2/1/2052 | &nbsp;&nbsp; 768085 |
| &nbsp;&nbsp; 1981393 | 2.000%, 2/1/2052 | &nbsp;&nbsp; 1626254 |
| &nbsp;&nbsp; 408089 | 3.000%, 10/1/2046 | &nbsp;&nbsp; 366969 |
| &nbsp;&nbsp; 622463 | 3.000%, 11/1/2046 | &nbsp;&nbsp; 559742 |
| &nbsp;&nbsp; 142337 | 3.000%, 11/1/2046 | &nbsp;&nbsp; 127194 |
| &nbsp;&nbsp; 50109 | 3.000%, 1/1/2047 | &nbsp;&nbsp; 45029 |
| &nbsp;&nbsp; 453096 | 3.000%, 1/1/2047 | &nbsp;&nbsp; 407441 |
| &nbsp;&nbsp; 39325 | 3.000%, 2/1/2047 | &nbsp;&nbsp; 35449 |
| &nbsp;&nbsp; 593255 | 3.000%, 2/1/2048 | &nbsp;&nbsp; 527730 |
| &nbsp;&nbsp; 337273 | 3.000%, 2/1/2048 | &nbsp;&nbsp; 300338 |
| &nbsp;&nbsp; 870356 | 3.000%, 5/1/2051 | &nbsp;&nbsp; 766610 |
| &nbsp;&nbsp; 944626 | 3.000%, 10/1/2051 | &nbsp;&nbsp; 831289 |
| &nbsp;&nbsp; 1627140 | 3.000%, 2/1/2052 | &nbsp;&nbsp; 1431278 |
| &nbsp;&nbsp; 1390854 | 3.500%, 9/1/2042 | &nbsp;&nbsp; 1300769 |
| &nbsp;&nbsp; 600751 | 3.500%, 8/1/2046 | &nbsp;&nbsp; 555295 |
| &nbsp;&nbsp; 470649 | 3.500%, 9/1/2046 | &nbsp;&nbsp; 439686 |
| &nbsp;&nbsp; 576382 | 3.500%, 12/1/2046 | &nbsp;&nbsp; 533780 |
| &nbsp;&nbsp; 360955 | 3.500%, 12/1/2047 | &nbsp;&nbsp; 335855 |
| &nbsp;&nbsp; 265533 | 3.500%, 1/1/2048 | &nbsp;&nbsp; 244744 |
| &nbsp;&nbsp; 155991 | 4.000%, 2/1/2041 | &nbsp;&nbsp; 150949 |
| &nbsp;&nbsp; 136665 | 4.000%, 2/1/2048 | &nbsp;&nbsp; 130687 |
| &nbsp;&nbsp; 116750 | 4.000%, 2/1/2048 | &nbsp;&nbsp; 111643 |
| &nbsp;&nbsp; 296342 | 4.000%, 2/1/2048 | &nbsp;&nbsp; 283750 |
| &nbsp;&nbsp; 478497 | 4.000%, 5/1/2052 | &nbsp;&nbsp; 449791 |
| &nbsp;&nbsp; 128573 | 4.500%, 10/1/2041 | &nbsp;&nbsp; 127700 |
| &nbsp;&nbsp; 140826 | 5.000%, 7/1/2034 | &nbsp;&nbsp; 141423 |
| &nbsp;&nbsp; 16091 | 5.000%, 11/1/2035 | &nbsp;&nbsp; 16191 |
| &nbsp;&nbsp; 1493251 | 5.000%, 9/1/2052 | &nbsp;&nbsp; 1474180 |
| &nbsp;&nbsp; 75077 | 5.500%, 9/1/2034 | &nbsp;&nbsp; 77010 |
| &nbsp;&nbsp; 29837 | 5.500%, 1/1/2036 | &nbsp;&nbsp; 30709 |
| &nbsp;&nbsp; 40622 | 5.500%, 4/1/2036 | &nbsp;&nbsp; 41824 |
| &nbsp;&nbsp; 1516 | 6.000%, 7/1/2029 | &nbsp;&nbsp; 1543 |

---

Federated Hermes Fund for U.S. Government Securities II

Annual Shareholder Report

**5**

------

---

| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br>|  | **Value** |
|  | MORTGAGE-BACKED SECURITIES—continued |  |
|  | **Federal National Mortgage Association—continued** |  |
| $1049 | 6.000%, 5/1/2031 | $1079 |
| &nbsp;&nbsp; 6349 | 6.000%, 5/1/2036 | &nbsp;&nbsp; 6616 |
| &nbsp;&nbsp; 98181 | 6.000%, 7/1/2036 | &nbsp;&nbsp; 102575 |
| &nbsp;&nbsp; 3029 | 6.000%, 7/1/2036 | &nbsp;&nbsp; 3157 |
| &nbsp;&nbsp; 27403 | 6.000%, 9/1/2037 | &nbsp;&nbsp; 28668 |
| &nbsp;&nbsp; 19590 | 6.000%, 11/1/2037 | &nbsp;&nbsp; 20529 |
| &nbsp;&nbsp; 12995 | 6.000%, 12/1/2037 | &nbsp;&nbsp; 13400 |
| &nbsp;&nbsp; 1374 | 6.500%, 6/1/2029 | &nbsp;&nbsp; 1421 |
| &nbsp;&nbsp; 110 | 6.500%, 6/1/2029 | &nbsp;&nbsp; 113 |
| &nbsp;&nbsp; 120 | 6.500%, 7/1/2029 | &nbsp;&nbsp; 124 |
| &nbsp;&nbsp; 166 | 6.500%, 7/1/2029 | &nbsp;&nbsp; 171 |
| &nbsp;&nbsp; 2238 | 6.500%, 7/1/2029 | &nbsp;&nbsp; 2301 |
| &nbsp;&nbsp; 222 | 6.500%, 7/1/2029 | &nbsp;&nbsp; 228 |
| &nbsp;&nbsp; 110 | 6.500%, 8/1/2029 | &nbsp;&nbsp; 112 |
| &nbsp;&nbsp; 3270 | 6.500%, 9/1/2030 | &nbsp;&nbsp; 3394 |
| &nbsp;&nbsp; 13770 | 6.500%, 6/1/2031 | &nbsp;&nbsp; 14361 |
| &nbsp;&nbsp; 10450 | 6.500%, 4/1/2032 | &nbsp;&nbsp; 10955 |
| &nbsp;&nbsp; 215 | 7.000%, 2/1/2024 | &nbsp;&nbsp; 216 |
| &nbsp;&nbsp; 1329 | 7.000%, 10/1/2029 | &nbsp;&nbsp; 1384 |
| &nbsp;&nbsp; 9984 | 7.000%, 10/1/2029 | &nbsp;&nbsp; 10476 |
| &nbsp;&nbsp; 3458 | 7.000%, 11/1/2030 | &nbsp;&nbsp; 3655 |
| &nbsp;&nbsp; 73168 | 7.000%, 4/1/2032 | &nbsp;&nbsp; 77847 |
| &nbsp;&nbsp; 449 | 7.500%, 8/1/2028 | &nbsp;&nbsp; 468 |
| &nbsp;&nbsp; 133 | 7.500%, 9/1/2028 | &nbsp;&nbsp; 139 |
| &nbsp;&nbsp; 2896 | 7.500%, 2/1/2030 | &nbsp;&nbsp; 3065 |
| &nbsp;&nbsp; 1407 | 8.000%, 7/1/2030 | &nbsp;&nbsp; 1499 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp; 20524248 |
|  | **Government National Mortgage Association—14.5%** |  |
| &nbsp;&nbsp; 1947558 | 2.000%, 6/20/2052 | &nbsp;&nbsp; 1633151 |
| &nbsp;&nbsp; 3800479 | 2.500%, 2/20/2051 | &nbsp;&nbsp; 3270732 |
| &nbsp;&nbsp; 638495 | 3.000%, 11/20/2047 | &nbsp;&nbsp; 577567 |
| &nbsp;&nbsp; 1123693 | 3.500%, 1/20/2048 | &nbsp;&nbsp; 1041109 |
| &nbsp;&nbsp; 528024 | 3.500%, 2/20/2048 | &nbsp;&nbsp; 489218 |
| &nbsp;&nbsp; 214757 | 4.500%, 6/20/2039 | &nbsp;&nbsp; 212444 |
| &nbsp;&nbsp; 168025 | 4.500%, 10/15/2039 | &nbsp;&nbsp; 165361 |
| &nbsp;&nbsp; 240113 | 4.500%, 8/20/2040 | &nbsp;&nbsp; 237673 |
| &nbsp;&nbsp; 995665 | 4.500%, 10/20/2052 | &nbsp;&nbsp; 966352 |
| &nbsp;&nbsp; 125277 | 5.000%, 7/15/2034 | &nbsp;&nbsp; 125048 |
| &nbsp;&nbsp; 995489 | 5.000%, 9/20/2052 | &nbsp;&nbsp; 986821 |
| &nbsp;&nbsp; 996089 | 5.500%, 10/20/2052 | &nbsp;&nbsp; 1001634 |
| &nbsp;&nbsp; 7889 | 6.000%, 4/15/2032 | &nbsp;&nbsp; 8081 |
| &nbsp;&nbsp; 19424 | 6.000%, 5/15/2032 | &nbsp;&nbsp; 20064 |
| &nbsp;&nbsp; 69384 | 6.000%, 4/15/2036 | &nbsp;&nbsp; 72336 |
| &nbsp;&nbsp; 62594 | 6.000%, 5/15/2036 | &nbsp;&nbsp; 65245 |
| &nbsp;&nbsp; 19263 | 6.000%, 7/20/2036 | &nbsp;&nbsp; 20140 |
| &nbsp;&nbsp; 19295 | 6.000%, 5/20/2037 | &nbsp;&nbsp; 20230 |
| &nbsp;&nbsp; 110877 | 6.000%, 7/20/2038 | &nbsp;&nbsp; 116602 |
| &nbsp;&nbsp; 1993394 | 6.000%, 10/20/2052 | &nbsp;&nbsp; 2026338 |
| &nbsp;&nbsp; 414 | 6.500%, 12/15/2023 | &nbsp;&nbsp; 415 |
| &nbsp;&nbsp; 1183 | 6.500%, 5/15/2024 | &nbsp;&nbsp; 1186 |
| &nbsp;&nbsp; 1475 | 6.500%, 6/15/2029 | &nbsp;&nbsp; 1517 |

---

Federated Hermes Fund for U.S. Government Securities II

Annual Shareholder Report

**6**

------

---

| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br>|  | **Value** |
|  | MORTGAGE-BACKED SECURITIES—continued |  |
|  | **Government National Mortgage Association—continued** |  |
| $2113 | 6.500%, 6/15/2031 | $2144 |
| &nbsp;&nbsp; 2615 | 6.500%, 7/20/2031 | &nbsp;&nbsp; 2721 |
| &nbsp;&nbsp; 2489 | 6.500%, 8/20/2031 | &nbsp;&nbsp; 2587 |
| &nbsp;&nbsp; 20282 | 6.500%, 10/15/2031 | &nbsp;&nbsp; 21111 |
| &nbsp;&nbsp; 23565 | 6.500%, 12/15/2031 | &nbsp;&nbsp; 24472 |
| &nbsp;&nbsp; 2341 | 6.500%, 4/15/2032 | &nbsp;&nbsp; 2434 |
| &nbsp;&nbsp; 16126 | 6.500%, 5/15/2032 | &nbsp;&nbsp; 16791 |
| &nbsp;&nbsp; 142524 | 6.500%, 5/15/2032 | &nbsp;&nbsp; 148688 |
| &nbsp;&nbsp; 296 | 7.500%, 10/15/2029 | &nbsp;&nbsp; 310 |
| &nbsp;&nbsp; 2511 | 7.500%, 3/20/2030 | &nbsp;&nbsp; 2629 |
| &nbsp;&nbsp; 798 | 8.000%, 4/15/2030 | &nbsp;&nbsp; 845 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp; 13283996 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL MORTGAGE-BACKED SECURITIES <br>(IDENTIFIED COST $59,399,512)<br>| &nbsp;&nbsp; 56577165 |
|  | U.S. TREASURIES—14.9% |  |
|  | **U.S. Treasury Bonds—4.7%** |  |
| &nbsp;&nbsp; 1000000 | 1.875%, 11/15/2051 | &nbsp;&nbsp; 636245 |
| &nbsp;&nbsp; 400000 | 2.250%, 5/15/2041 | &nbsp;&nbsp; 300733 |
| &nbsp;&nbsp; 700000 | 2.375%, 11/15/2049 | &nbsp;&nbsp; 509259 |
| &nbsp;&nbsp; 1200000 | 2.875%, 8/15/2045 | &nbsp;&nbsp; 968205 |
| &nbsp;&nbsp; 1025000 | 2.875%, 5/15/2049 | &nbsp;&nbsp; 828264 |
| &nbsp;&nbsp; 650000 | 3.125%, 8/15/2044 | &nbsp;&nbsp; 549993 |
| &nbsp;&nbsp; 600000 | 3.250%, 5/15/2042 | &nbsp;&nbsp; 526513 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp; 4319212 |
|  | **U.S. Treasury Notes—10.2%** |  |
| &nbsp;&nbsp; 1000000 | 0.250%, 8/31/2025 | &nbsp;&nbsp; 899420 |
| &nbsp;&nbsp; 2500000 | 0.500%, 10/31/2027 | &nbsp;&nbsp; 2114463 |
| &nbsp;&nbsp; 2000000 | 1.500%, 2/15/2025 | &nbsp;&nbsp; 1882197 |
| &nbsp;&nbsp; 750000 | 1.875%, 2/28/2027 | &nbsp;&nbsp; 686761 |
| &nbsp;&nbsp; 1000000 | 2.500%, 4/30/2024 | &nbsp;&nbsp; 971450 |
| &nbsp;&nbsp; 250000 | 2.500%, 2/28/2026 | &nbsp;&nbsp; 237462 |
| &nbsp;&nbsp; 750000 | 2.625%, 7/31/2029 | &nbsp;&nbsp; 690644 |
| &nbsp;&nbsp; 1500000 | 2.750%, 5/31/2029 | &nbsp;&nbsp; 1393325 |
| &nbsp;&nbsp; 500000 | 2.875%, 5/15/2032 | &nbsp;&nbsp; 460926 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp; 9336648 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL U.S. TREASURIES <br>(IDENTIFIED COST $15,498,010)<br>| &nbsp;&nbsp; 13655860 |
|  | COLLATERALIZED MORTGAGE OBLIGATIONS—6.9% |  |
|  | **Government National Mortgage Association—0.4%** |  |
| &nbsp;&nbsp; 364614 | REMIC, Series 2015-47, Class AE, 2.900%, 11/16/2055 | &nbsp;&nbsp; 342164 |
|  | **Non-Agency Mortgage-Backed Securities—6.5%** |  |
| &nbsp;&nbsp; 58896 | Credit Suisse Mortgage Trust 2007-4, Class 4A2, 5.500%, 6/25/2037 | &nbsp;&nbsp; 6130 |
| &nbsp;&nbsp; 76221 | Credit Suisse Mortgage Trust 2015-WIN1, Class A6, 3.500%, 12/25/2044 | &nbsp;&nbsp; 67842 |
| &nbsp;&nbsp; 1043241 | GS Mortgage-Backed Securities 2022-PJ3, Class A4, 2.500%, 8/25/2052 | &nbsp;&nbsp; 834837 |
| &nbsp;&nbsp; 1144328<br><sup>1</sup> <br>| JP Morgan Mortgage Trust 2021-1, Class A11, 4.170% (30-DAY AVERAGE SOFR +0.650%), 6/25/2051 | &nbsp;&nbsp; 1020592 |
| &nbsp;&nbsp; 1309271 | JP Morgan Mortgage Trust 2022-1, Class A2, 3.000%, 7/25/2052 | &nbsp;&nbsp; 1095083 |
| &nbsp;&nbsp; 1413032 | JP Morgan Mortgage Trust 2022-2, Class A3, 2.500%, 8/25/2052 | &nbsp;&nbsp; 1129874 |
| &nbsp;&nbsp; 1224344 | JP Morgan Mortgage Trust 2022-3, Class A3, 2.500%, 8/25/2052 | &nbsp;&nbsp; 978997 |
| &nbsp;&nbsp; 1114177 | Sequoia Mortgage Trust 2021-3, Class A1, 2.500%, 5/25/2051 | &nbsp;&nbsp; 896477 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp; 6029832 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS <br>(IDENTIFIED COST $7,482,612)<br>| &nbsp;&nbsp;&nbsp; 6371996 |

---

Federated Hermes Fund for U.S. Government Securities II

Annual Shareholder Report

**7**

------

---

| | | |
|:---|:---|:---|
| **Principal**<br> **Amount**<br>|  | **Value** |
|  | GOVERNMENT AGENCIES—5.4% |  |
|  | **Federal Farm Credit System—1.2%** |  |
| $1000000 | 5.750%, 12/7/2028 | $1082169 |
|  | **Tennessee Valley Authority Bonds—4.2%** |  |
| &nbsp;&nbsp; 1700000 | 2.875%, 2/1/2027 | &nbsp;&nbsp; 1611226 |
| &nbsp;&nbsp; 2000000 | 4.650%, 6/15/2035 | &nbsp;&nbsp; 1979686 |
| &nbsp;&nbsp; 250000 | 4.875%, 1/15/2048 | &nbsp;&nbsp; 246892 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp; 3837804 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL GOVERNMENT AGENCIES <br>(IDENTIFIED COST $4,997,619)<br>| &nbsp;&nbsp;&nbsp; 4919973 |
|  | ASSET-BACKED SECURITIES—4.8% |  |
|  | **Auto Receivables—1.0%** |  |
| &nbsp;&nbsp; 311000 | AmeriCredit Automobile Receivables Trust 2020-2, Class C, 1.480%, 2/18/2026 | &nbsp;&nbsp; 294848 |
| &nbsp;&nbsp; 591000 | Chase Auto Owner Trust 2022-AA, Class A2, 4.210%, 10/27/2025 | &nbsp;&nbsp; 586185 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 881033 |
|  | **Single Family Rental Securities—0.9%** |  |
| &nbsp;&nbsp; 605000 | Progress Residential Trust 2022-SFR1, Class E1, 3.930%, 2/17/2041 | &nbsp;&nbsp; 473193 |
| &nbsp;&nbsp; 409212 | Progress Residential Trust 2022-SFR4, Class B, 4.788%, 5/17/2041 | &nbsp;&nbsp; 367806 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 840999 |
|  | **Student Loans—2.9%** |  |
| &nbsp;&nbsp; 210128 | Navient Student Loan Trust 2020-FA, Class A, 1.220%, 7/15/2069 | &nbsp;&nbsp; 192125 |
| &nbsp;&nbsp; 432264 | Navient Student Loan Trust 2020-GA, Class A, 1.170%, 9/16/2069 | &nbsp;&nbsp; 372603 |
| &nbsp;&nbsp; 248379 | Navient Student Loan Trust 2020-HA, Class A, 1.310%, 1/15/2069 | &nbsp;&nbsp; 220686 |
| &nbsp;&nbsp; 710889 | Navient Student Loan Trust 2021-FA, Class A, 1.110%, 2/18/2070 | &nbsp;&nbsp; 601283 |
| &nbsp;&nbsp; 905093 | Navient Student Loan Trust 2021-GA, Class A, 1.580%, 4/15/2070 | &nbsp;&nbsp; 774744 |
| &nbsp;&nbsp; 539458<br><sup>1</sup> <br>| SMB Private Education Loan Trust 2020-BA, Class A1B, 5.417% (1-month USLIBOR +1.100%), 7/15/2053 | &nbsp;&nbsp; 528037 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL | &nbsp;&nbsp;&nbsp; 2689478 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL ASSET-BACKED SECURITIES <br>(IDENTIFIED COST $4,954,764)<br>| &nbsp;&nbsp;&nbsp; 4411510 |
|  | COMMERCIAL MORTGAGE-BACKED SECURITIES—1.5% |  |
|  | **Agency Commercial Mortgage-Backed Securities—1.5%** |  |
| &nbsp;&nbsp; 457000 | FHLMC REMIC, Series K151, Class A2, 3.800%, 10/25/2032 | &nbsp;&nbsp; 432749 |
| &nbsp;&nbsp; 1000000 | FHLMC REMIC, Series K750, Class A2, 3.000%, 9/25/2029 | &nbsp;&nbsp; 919274 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES <br>(IDENTIFIED COST $1,327,154)<br>| &nbsp;&nbsp;&nbsp; 1352023 |
|  | REPURCHASE AGREEMENT—4.6% |  |
| &nbsp;&nbsp; 4244000 | Interest in $1,350,000,000 joint repurchase agreement 4.30%, dated 12/30/2022 under which Bank of Montreal will repurchase <br> securities provided as collateral for $1,350,645,000 on 1/3/2023. The securities provided as collateral at the end of the period <br> held with BNY Mellon as tri-party agent, were U.S. Government Agency securities with various maturities to 5/20/2072 and the <br> market value of those underlying securities was $1,379,047,631. <br>(IDENTIFIED COST $4,244,000)<br>| &nbsp;&nbsp; 4244000 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL INVESTMENT IN SECURITIES—99.7% <br>(IDENTIFIED COST $97,903,671)<sup>2</sup> <br>| &nbsp;&nbsp; 91532527 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; OTHER ASSETS AND LIABILITIES - NET—0.3%<sup>3</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 307938 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; TOTAL NET ASSETS—100% | $91840465 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 1 | *Floating/variable note with current rate and current maturity or next reset date shown.* |
| 2 | *The cost of investments for federal tax purposes amounts to $97,870,537.* |
| 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 December 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.

Federated Hermes Fund for U.S. Government Securities II

Annual Shareholder Report

**8**

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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 December 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: | The following acronym(s) are used throughout this portfolio: |
| FHLMC | —Federal Home Loan Mortgage Corporation |
| LIBOR | —London Interbank Offered Rate |
| REMIC | —Real Estate Mortgage Investment Conduit |
| SOFR | —Secured Overnight Financing Rate |

---

See Notes which are an integral part of the Financial Statements

Federated Hermes Fund for U.S. Government Securities II

Annual Shareholder Report

**9**

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Financial Highlights

(For a Share Outstanding Throughout Each Period)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | **$10.71** | **$11.16** | **$10.87** | **$10.52** | **$10.73** |
| **Income From Investment Operations:** |  |  |  |  |  |
| Net investment income (loss)<sup>1</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.21 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.15 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.20 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.27 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.24 |
| Net realized and unrealized gain (loss) | &nbsp;&nbsp;&nbsp; (1.54) | &nbsp;&nbsp;&nbsp;&nbsp; (0.38) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.36 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.34 | &nbsp;&nbsp;&nbsp;&nbsp; (0.20) |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL FROM INVESTMENT OPERATIONS | &nbsp;&nbsp;&nbsp; (1.33) | &nbsp;&nbsp;&nbsp;&nbsp; (0.23) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.56 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.61 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.04 |
| **Less Distributions:** |  |  |  |  |  |
| Distributions from net investment income | &nbsp;&nbsp;&nbsp; (0.18) | &nbsp;&nbsp;&nbsp;&nbsp; (0.22) | &nbsp;&nbsp;&nbsp;&nbsp; (0.27) | &nbsp;&nbsp;&nbsp;&nbsp; (0.26) | &nbsp;&nbsp;&nbsp;&nbsp; (0.25) |
| **Net Asset Value, End of Period** | **$9.20** | **$10.71** | **$11.16** | **$10.87** | **$10.52** |
| **Total Return**<sup>2</sup> <br>| &nbsp;&nbsp; (12.55)% | &nbsp;&nbsp;&nbsp;&nbsp; (2.04)% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5.21% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5.90% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.45% |
| **Ratios to Average Net Assets:** |  |  |  |  |  |
| Net expenses<sup>3</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.78% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.78% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.78% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.78% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.78% |
| Net investment income | &nbsp;&nbsp;&nbsp;&nbsp; 2.12% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.34% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.79% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2.49% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2.28% |
| Expense waiver/reimbursement<sup>4</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; 0.13% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.09% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.08% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.10% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.08% |
| **Supplemental Data:** |  |  |  |  |  |
| Net assets, end of period (000 omitted) | $91840 | $114594 | $130306 | $116935 | $120654 |
| Portfolio turnover<sup>5</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp; 122% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 166% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 139% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 65% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 64% |
| Portfolio turnover (excluding purchases and sales from dollar-roll transactions)<sup>5</sup> <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 96% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 31% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 37% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 61% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 64% |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 1 | *Per share numbers have been calculated using the average shares method.* |
| 2 | *Based on net asset value. Total returns do not reflect any additional fees or expenses that may be imposed by separate accounts of insurance companies or in* <br> *connection with any variable annuity or variable life insurance contract.*<br>|
| 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/*<br> *reimbursement recorded by investment companies in which the Fund may invest.*<br>|
| 5 | *Securities that mature are considered sales for purposes of this calculation.* |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**10**

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Statement of Assets and Liabilities <br>December 31, 2022

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| **Assets:** |  |
| Investment in securities, at value including (identified cost $97,903,671) | $91532527 |
| Income receivable | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 302267 |
| Receivable for shares sold | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 112678 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Assets | &nbsp;&nbsp;&nbsp; 91947472 |
| **Liabilities:** |  |
| Payable for shares redeemed | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 58125 |
| Payable to bank | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2514 |
| Payable for investment adviser fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2258 |
| Payable for administrative fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 395 |
| Payable for portfolio accounting fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 26996 |
| Payable for printing and postage | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 11574 |
| Accrued expenses (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5145 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Liabilities | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 107007 |
| Net assets for 9,983,260 shares outstanding | $91840465 |
| **Net Assets Consist of:** |  |
| Paid-in capital | $103209818 |
| Total distributable earnings (loss) | &nbsp;&nbsp; (11369353) |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Net Assets | $91840465 |
| **Net Asset Value, Offering Price and Redemption Proceeds Per Share:** |  |
| $91,840,465 ÷ 9,983,260 shares outstanding, no par value, unlimited shares authorized | $9.20 |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**11**

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Statement of Operations <br>Year Ended December 31, 2022

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| **Investment Income:** |  |
| Interest | $2935623 |
| Net income on securities loaned (Note 2) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 436 |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL INCOME | &nbsp;&nbsp;&nbsp;&nbsp; 2936059 |
| **Expenses:** |  |
| Investment adviser fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 607156 |
| Administrative fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 81176 |
| Custodian fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 18314 |
| Transfer agent fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 10605 |
| Directors'/Trustees' fees (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1796 |
| Auditing fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 26250 |
| Legal fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9145 |
| Portfolio accounting fees | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 104204 |
| Printing and postage | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 40525 |
| Miscellaneous (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 22141 |
| &nbsp;&nbsp;&nbsp;&nbsp; TOTAL EXPENSES | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 921312 |
| Waiver of investment adviser fee (Note 5) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (127051) |
| Net expenses | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 794261 |
| Net investment income | &nbsp;&nbsp;&nbsp;&nbsp; 2141798 |
| **Realized and Unrealized Gain (Loss) on Investments:** |  |
| Net realized loss on investments | &nbsp;&nbsp;&nbsp; (6371670) |
| Net change in unrealized appreciation of investments | &nbsp;&nbsp;&nbsp; (9883732) |
| Net realized and unrealized gain (loss) on investments | &nbsp;&nbsp; (16255402) |
| Change in net assets resulting from operations | $(14113604) |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**12**

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Statement of Changes in Net Assets

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | |
|:---|:---|:---|
| **Year Ended December 31** | **2022** | **2021** |
| **Increase (Decrease) in Net Assets** |  |  |
| **Operations:** |  |  |
| Net investment income | $2141798 | $1617162 |
| Net realized gain (loss) | &nbsp;&nbsp;&nbsp;&nbsp; (6371670) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 320515 |
| Net change in unrealized appreciation/depreciation | &nbsp;&nbsp;&nbsp;&nbsp; (9883732) | &nbsp;&nbsp;&nbsp;&nbsp; (4479025) |
| &nbsp;&nbsp;&nbsp;&nbsp; CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | &nbsp;&nbsp; (14113604) | &nbsp;&nbsp;&nbsp;&nbsp; (2541348) |
| **Distributions to Shareholders** | &nbsp;&nbsp;&nbsp;&nbsp; (1919363) | &nbsp;&nbsp;&nbsp;&nbsp; (2510504) |
| **Share Transactions:** |  |  |
| Proceeds from sale of shares | &nbsp;&nbsp;&nbsp; 10329104 | &nbsp;&nbsp;&nbsp; 12882518 |
| Net asset value of shares issued to shareholders in payment of distributions declared | &nbsp;&nbsp;&nbsp;&nbsp; 1919363 | &nbsp;&nbsp;&nbsp;&nbsp; 2510504 |
| Cost of shares redeemed | &nbsp;&nbsp; (18969052) | &nbsp;&nbsp; (26052654) |
| &nbsp;&nbsp;&nbsp;&nbsp; CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS | &nbsp;&nbsp;&nbsp;&nbsp; (6720585) | &nbsp;&nbsp; (10659632) |
| Change in net assets | &nbsp;&nbsp; (22753552) | &nbsp;&nbsp; (15711484) |
| **Net Assets:** |  |  |
| Beginning of period | &nbsp;&nbsp; 114594017 | &nbsp;&nbsp; 130305501 |
| End of period | $91840465 | $114594017 |

---

See Notes which are an integral part of the Financial Statements

Annual Shareholder Report

**13**

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Notes to Financial Statements

December 31, 2022

**1. ORGANIZATION** 

Federated Hermes Insurance Series (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 six portfolios. The financial statements included herein are only those of Federated Hermes Fund for U.S. Government Securities II (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. Fund shares are available exclusively as a funding vehicle for life insurance companies writing variable life insurance policies and variable annuity contracts. The investment objective of the Fund is to provide current income.

**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 net asset value (NAV), the Fund generally values investments as follows:

◾ <br>

Fixed-income securities are fair valued using price evaluations provided by a pricing service approved by Federated Investment Management Company (the "Adviser").

◾ <br>

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.

◾ <br>

Derivative contracts listed on exchanges are valued at their reported settlement or closing price, except that options are valued at the mean of closing bid and ask quotations.

◾ <br>

Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Adviser.

◾ <br>

For securities that are fair valued in accordance with procedures established by and under the general supervision of the Adviser, 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 Adviser's valuation policies and procedures for the Fund, or if information furnished by a pricing service, in the opinion of the Adviser's 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** 

Pursuant to Rule 2a-5 under the Act, the Fund's Board of Trustees (the "Trustees") has designated the Adviser as the Fund's valuation designee to perform any fair value determinations for securities and other assets held by the Fund. The Adviser is subject to the Trustees' oversight and certain reporting and other requirements intended to provide the Trustees the information needed to oversee the Adviser's fair value determinations.

The Adviser, acting through its Valuation Committee, is responsible for determining the fair value of investments for which market quotations are not readily available. The Valuation Committee is comprised of officers of the Adviser and certain of the Adviser's affiliated companies and determines fair value and oversees the calculation of the NAV. The Valuation Committee is also authorized to use pricing services 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 Adviser. The Trustees periodically review the fair valuations made by the Valuation Committee. The Trustees have also approved the Adviser's fair valuation and significant events procedures as part of the Fund's compliance program and will review any changes made to the procedures.

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 ask 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 OTC 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 Adviser.

Annual Shareholder Report

**14**

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**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 (MNA) 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. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Distributions of net investment income, if any, are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Amortization/accretion of premium and discount is included in investment income. Gains and losses realized on principal payment of mortgage-backed securities (paydown gains and losses) are classified as part of investment income. The detail of the total fund expense waiver of $127,051 is disclosed in Note 5.

**Federal Taxes** 

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code of 1986 (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 December 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 December 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.

The Fund may transact in To Be Announced Securities (TBAs). As with other delayed-delivery transactions, a seller agrees to issue TBAs at a future date. However, the seller does not specify the particular securities to be delivered. Instead, the Fund agrees to accept any security that meets specified terms such as issuer, interest rate and terms of underlying mortgages. The Fund records TBAs on the trade date utilizing information associated with the specified terms of the transaction as opposed to the specific mortgages. TBAs are marked to market daily and begin earning interest on the settlement date. Losses may occur due to the fact that the actual underlying mortgages received may be less favorable than those anticipated by the Fund.

**Dollar-Roll Transactions** 

The Fund may engage in dollar-roll transactions in which the Fund sells mortgage-backed securities with a commitment to buy similar (same type, coupon and maturity), but not identical mortgage-backed securities on a future date. Both securities involved are TBA mortgage-backed securities. The Fund treats dollar-roll transactions as purchases and sales. Dollar-rolls are subject to interest rate risks and credit risks.

**Securities Lending** 

The Fund participates in a securities lending program providing for the lending of government securities to qualified brokers. The term of the loans within the program is one year or less. The Fund normally receives cash collateral for securities loaned that may be invested in affiliated money market funds, other money market instruments and/or repurchase agreements. Investments in money market funds may include funds with a "floating" NAV that can impose redemption fees and liquidity gates, impose certain operational impediments to investing cash collateral, and, if the investee fund's NAV decreases, result in the Fund recognizing losses and being required to cover the decrease in the value of the cash collateral. Collateral is maintained at a minimum level of 100% of the market value of investments loaned, plus interest, if applicable. In accordance with the Fund's securities lending agreement, the market value of securities on loan is

Annual Shareholder Report

**15**

------

determined each day at the close of business and any additional collateral required to cover the value of securities on loan is delivered to the Fund on the next business day. Earnings on collateral are allocated between the borrower of the security, the securities lending agent, as a fee for its services under the program and the Fund, according to agreed-upon rates. The Fund will not have the right to vote on securities while they are on loan. However, the Fund will attempt to terminate a loan in an effort to reacquire the securities in time to vote on matters that are deemed to be material by the Adviser. There can be no assurance that the Fund will have sufficient notice of such matters to be able to terminate the loan in time to vote thereon.

As of December 31, 2022, the Fund had no outstanding securities on loan.

**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 Adviser.

**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** <br>**12/31/2022**<br>| **Year Ended** <br>**12/31/2021**<br>|
| Shares sold | 1043424 | 1185531 |
| Shares issued to shareholders in payment of distributions declared | &nbsp;&nbsp;&nbsp; 191744 | &nbsp;&nbsp;&nbsp; 233971 |
| Shares redeemed | (1949011) | (2398368) |
| &nbsp;&nbsp;&nbsp;&nbsp; NET CHANGE RESULTING FROM FUND SHARE TRANSACTIONS | &nbsp;&nbsp; (713843) | &nbsp;&nbsp; (978866) |

---

**4. FEDERAL TAX INFORMATION** 

The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended December 31, 2022 and 2021, was as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Ordinary income | $1919363 | $2510504 |

---

As of December 31, 2022, the components of distributable earnings on a tax-basis were as follows:

---

| | |
|:---|:---|
| Undistributed ordinary income | $2190160 |
| Net unrealized depreciation | $(6338010) |
| Capital loss carryforwards | $(7221503) |
| TOTAL | $(11369353) |

---

At December 31, 2022, the cost of investments for federal tax purposes was $97,870,537. The net unrealized depreciation of investments for federal tax purposes was $6,338,010. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $501,007 and net unrealized depreciation from investments for those securities having an excess of cost over value of $6,839,017. The difference between book-basis and tax-basis net unrealized depreciation is attributable to differing treatments for dollar-roll transactions.

As of December 31, 2022, the Fund had a capital loss carryforward of $7,221,503 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** |
| $4865823 | $2355680 | $7221503 |

---

Annual Shareholder Report

**16**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**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 0.60% 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 December 31, 2022, the Adviser voluntarily waived $127,051 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:

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| | |
|:---|:---|
| **Administrative Fee** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Average Daily Net Assets** <br>**of the Investment Complex**<br>|
| 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 December 31, 2022, the annualized fee paid to FAS was 0.080% of average daily net assets of the Fund.

In addition, FAS may charge certain out-of-pocket expenses to the Fund.

**Expense Limitation** 

The Adviser and certain of its affiliates (which may include 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 (after the voluntary waivers and/or reimbursements) will not exceed 0.78% (the "Fee Limit") up to but not including the later of (the "Termination Date"): (a) May 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. INVESTMENT TRANSACTIONS** 

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the year ended December 31, 2022, were as follows:

---

| | |
|:---|:---|
| Purchases | $9072280 |
| Sales | $8668781 |

---

**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 December 31, 2022, the Fund had no outstanding loans. During the year ended December 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 December 31, 2022, there were no outstanding loans. During the year ended December 31, 2022, the program was not utilized.

Annual Shareholder Report

**17**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**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, and may continue to result in, closed borders, enhanced health screenings, disruptions to healthcare service preparation and delivery, quarantines, cancellations, and disruptions to supply chains, workflow operations and consumer activity, as well as general concern and uncertainty. The impact of this coronavirus has resulted in substantial economic volatility. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could continue to negatively affect the worldwide economy, as well as the economies of individual countries, individual companies (including certain Fund service providers and issuers of the Fund's investments) and the markets in general in significant and unforeseen ways. In addition, governments, their regulatory agencies, or self-regulatory organizations may take actions in response to the pandemic, including significant fiscal and monetary policy changes, that may affect the instruments in which the Fund invests or the issuers of such investments. Any such impact could adversely affect the Fund's performance.

**11. Recent Accounting Pronouncements** 

In December 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2022-06 "Reference Rate Reform (Topic 848)". ASU No. 2022-06 updates and clarifies ASU No. 2020-04, which provides optional, temporary relief with respect to the financial reporting of contracts subject to certain types of modifications due to the planned discontinuation of LIBOR and other interbank-offered reference rates. The temporary relief provided by ASU No. 2022-06 is effective immediately for certain reference rate-related contract modifications that occur through December 31, 2024. Management does not expect ASU No. 2022-06 to have a material impact on the financial statements.

Annual Shareholder Report

**18**

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Report of Independent Registered Public Accounting Firm

**To the Board of Trustees of Federated Hermes Insurance Series and the Shareholders of Federated Hermes Fund for U.S. Government Securities II:**

**Opinion on the Financial Statements**

We have audited the accompanying statement of assets and liabilities of Federated Hermes Fund for U.S. Government Securities II (the Fund), a portfolio of Federated Hermes Insurance Series, including the portfolio of investments, as of December 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 December 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.

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 December 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. <br> ![](kpmgsig.jpg)

We have served as the auditor for one or more of Federated Hermes' investment companies since 2006.

Boston, Massachusetts <br>February 15, 2023

Annual Shareholder Report

**19**

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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 funds used as variable investment options. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from July 1, 2022 to December 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** <br>**Account Value** <br>**7/1/2022**<br>| **Ending** <br>**Account Value** <br>**12/31/2022**<br>| **Expenses Paid** <br>**During Period**<sup>1</sup> <br>|
| **Actual** | $1000 | $960.30 | $3.85 |
| **Hypothetical (assuming a 5% return before expenses)** | $1000 | $1021.27 | $3.97 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | |
|:---|:---|
| 1 | *Expenses are equal to the Fund's annualized net expense ratio of 0.78%, multiplied by the average account value over the period, multiplied by 184/365 (to* <br> *reflect the one-half-year period). The expenses shown in the table do not include the charges and expenses imposed by the insurance company under the* <br> *variable insurance product contract. Please refer to the variable insurance product prospectus for a complete listing of these expenses.*<br>|

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Annual Shareholder Report

**20**

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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, 2022, the Trust comprised six 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**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held and Previous Position(s)**<br>|
| **J. Christopher Donahue\***<br> Birth Date: April 11, 1949<br> Trustee<br> Indefinite Term<br> Began serving: <br> September 1993<br>| &nbsp;&nbsp; **Principal Occupations**: Principal Executive Officer and President of certain of the Funds in the Federated Hermes Fund <br> Family; Director or Trustee of the Funds in the Federated Hermes Fund Family; President, Chief Executive Officer and <br> Director, Federated Hermes, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated <br> Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman and Trustee, <br> Federated Equity Management Company of Pennsylvania; Trustee, Federated Shareholder Services Company; Director, <br> Federated Services Company.<br> **Previous Positions**: President, Federated Investment Counseling; President and Chief Executive Officer, Federated <br> Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd; Chairman, <br> Passport Research, Ltd.<br>|
| **Thomas R. Donahue\***<br> Birth Date: October 20, 1958<br> Trustee<br> Indefinite Term<br> Began serving: May 2016<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of certain of the funds in the Federated Hermes Fund Family; Chief Financial <br> Officer, Treasurer, Vice President and Assistant Secretary, Federated Hermes, Inc.; Chairman and Trustee, Federated <br> Administrative Services; Chairman and Director, Federated Administrative Services, Inc.; Trustee and Treasurer, Federated <br> Advisory Services Company; Director or Trustee and Treasurer, Federated Equity Management Company of Pennsylvania, <br> Federated Global Investment Management Corp., Federated Investment Counseling, and Federated Investment <br> Management Company; Director, MDTA LLC; Director, Executive Vice President and Assistant Secretary, Federated Securities <br> Corp.; Director or Trustee and Chairman, Federated Services Company and Federated Shareholder Services Company; and <br> Director and President, FII Holdings, Inc.<br> **Previous Positions**: Director, Federated Hermes, Inc.; Assistant Secretary, Federated Investment Management Company, <br> Federated Global Investment Management Company and Passport Research, LTD; Treasurer, Passport Research, LTD; <br> Executive Vice President, Federated Securities Corp.; and Treasurer, FII Holdings, Inc.<br>|

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\*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*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**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held, Previous Position(s) and Qualifications**<br>|
| **John T. Collins**<br> Birth Date: January 24, 1947<br> Trustee<br> Indefinite Term<br> Began serving: October 2013<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee, and Chair of the Board of Directors or Trustees, of the Federated Hermes Fund <br> Family; formerly, Chairman and CEO, The Collins Group, Inc. (a private equity firm) (Retired).<br> **Other Directorships Held**: Director, KLX Energy Services Holdings, Inc. (oilfield services); former Director of <br> KLX Corp. (aerospace).<br> **Qualifications**: Mr. Collins has served in several business and financial management roles and directorship positions <br> throughout his career. Mr. Collins previously served as Chairman and CEO of The Collins Group, Inc. (a private equity firm) <br> and as a Director of KLX Corp. Mr. Collins serves as Chairman Emeriti, Bentley University. Mr. Collins previously served as <br> Director and Audit Committee Member, Bank of America Corp.; Director, FleetBoston Financial Corp.; and Director, Beth <br> Israel Deaconess Medical Center (Harvard University Affiliate Hospital). <br>|

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Annual Shareholder Report

**21**

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held, Previous Position(s) and Qualifications**<br>|
| **G. Thomas Hough**<br> Birth Date: February 28, 1955<br> Trustee<br> Indefinite Term<br> Began serving: August 2015<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee, Chair of the Audit Committee of the Federated Hermes Fund Family; formerly, <br> Vice Chair, Ernst & Young LLP (public accounting firm) (Retired). <br> **Other Directorships Held**: Director, Chair of the Audit Committee, Equifax, Inc.; Lead Director, Member of the Audit and <br> Nominating and Corporate Governance Committees, Haverty Furniture Companies, Inc.; formerly, Director, Member of <br> Governance and Compensation Committees, Publix Super Markets, Inc.<br> **Qualifications**: Mr. Hough has served in accounting, business management and directorship positions throughout his career. <br> Mr. Hough most recently held the position of Americas Vice Chair of Assurance with Ernst & Young LLP (public accounting <br> firm). Mr. Hough serves on the President's Cabinet and Business School Board of Visitors for the University of Alabama. <br> Mr. Hough previously served on the Business School Board of Visitors for Wake Forest University, and he previously served as <br> an Executive Committee member of the United States Golf Association. <br>|
| **Maureen Lally-Green**<br> Birth Date: July 5, 1949<br> Trustee<br> Indefinite Term<br> Began serving: August 2009<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; Adjunct Professor Emerita of Law, <br> Duquesne University School of Law; formerly, Dean of the Duquesne University School of Law and Professor of Law and <br> Interim Dean of the Duquesne University School of Law; formerly, Associate General Secretary and Director, Office of Church <br> Relations, Diocese of Pittsburgh.<br> **Other Directorships Held**: Director, CNX Resources Corporation (natural gas).<br> **Qualifications**: Judge Lally-Green has served in various legal and business roles and directorship positions throughout her <br> career. Judge Lally-Green previously held the position of Dean of the School of Law of Duquesne University (as well as <br> Interim Dean). Judge Lally-Green previously served as Associate General Secretary of the Diocese of Pittsburgh, a member of <br> the Superior Court of Pennsylvania and as a Professor of Law, Duquesne University School of Law. Judge Lally-Green was <br> appointed by the Supreme Court of Pennsylvania to serve on the Supreme Court's Board of Continuing Judicial Education <br> and the Supreme Court's Appellate Court Procedural Rules Committee. Judge Lally-Green also currently holds the positions <br> on not for profit or for profit boards of directors as follows: Director and Chair, UPMC Mercy Hospital; Regent, Saint Vincent <br> Seminary; Member, Pennsylvania State Board of Education (public); Director, Catholic Charities, Pittsburgh; and Director CNX <br> Resources Corporation (natural gas). Judge Lally-Green has held the positions of: Director, Auberle; Director, Epilepsy <br> Foundation of Western and Central Pennsylvania; Director, Ireland Institute of Pittsburgh; Director, Saint Thomas More <br> Society; Director and Chair, Catholic High Schools of the Diocese of Pittsburgh, Inc.; Director, Pennsylvania Bar Institute; <br> Director, St. Vincent College; Director and Chair, North Catholic High School, Inc.; Director and Vice Chair, Our Campaign for <br> the Church Alive!, Inc.; and Director and Vice Chair, Saint Francis University.<br>|
| **Thomas M. O'Neill**<br> Birth Date: June 14, 1951<br> Trustee<br> Indefinite Term<br> Began serving: August 2006<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; Sole Proprietor, Navigator Management <br> Company (investment and strategic consulting).<br> **Other Directorships Held**: None.<br> **Qualifications**: Mr. O'Neill has served in several business, mutual fund and financial management roles and directorship <br> positions throughout his career. Mr. O'Neill serves as Director, Medicines for Humanity. Mr. O'Neill previously served as Chief <br> Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and <br> Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, <br> MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director <br> and Consultant, EZE Castle Software (investment order management software); Director, Midway Pacific (lumber); and <br> Director, The Golisano Children's Museum of Naples, Florida.<br>|
| **Madelyn A. Reilly**<br> Birth Date: February 2, 1956<br> Trustee<br> Indefinite Term<br> Began serving: <br> November 2020<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; formerly, Senior Vice President for Legal <br> Affairs, General Counsel and Secretary of Board of Directors, Duquesne University (Retired).<br> **Other Directorships Held**: None.<br> **Qualifications**: Ms. Reilly has served in various business and legal management roles throughout her career. Ms. Reilly <br> previously served as Senior Vice President for Legal Affairs, General Counsel and Secretary of Board of Directors and Director <br> of Risk Management and Associate General Counsel, Duquesne University. Prior to her work at Duquesne University, <br> Ms. Reilly served as Assistant General Counsel of Compliance and Enterprise Risk as well as Senior Counsel of Environment, <br> Health and Safety, PPG Industries. Ms. Reilly currently serves as a member of the Board of Directors of UPMC <br> Mercy Hospital.<br>|
| **P. Jerome Richey**<br> Birth Date: February 23, 1949<br> Trustee<br> Indefinite Term<br> Began serving: October 2013<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; Retired; formerly, Senior Vice Chancellor <br> and Chief Legal Officer, University of Pittsburgh and Executive Vice President and Chief Legal Officer, CONSOL Energy Inc. <br> (now split into two separate publicly traded companies known as CONSOL Energy Inc. and CNX Resources Corp.).<br> **Other Directorships Held**: None.<br> **Qualifications**: Mr. Richey has served in several business and legal management roles and directorship positions throughout <br> his career. Mr. Richey most recently held the positions of Senior Vice Chancellor and Chief Legal Officer, University of <br> Pittsburgh. Mr. Richey previously served as Chairman of the Board, Epilepsy Foundation of Western Pennsylvania and <br> Chairman of the Board, World Affairs Council of Pittsburgh. Mr. Richey previously served as Chief Legal Officer and Executive <br> Vice President, CONSOL Energy Inc. and CNX Gas Company; and Board Member, Ethics Counsel and Shareholder, Buchanan <br> Ingersoll & Rooney PC (a law firm). <br>|

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Annual Shareholder Report

**22**

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years,**<br> **Other Directorships Held, Previous Position(s) and Qualifications**<br>|
| **John S. Walsh**<br> Birth Date:<br> November 28, 1957<br> Trustee<br> Indefinite Term<br> Began serving: January 1999<br>| &nbsp;&nbsp; **Principal Occupations**: Director or Trustee of the Federated Hermes Fund Family; President and Director, Heat Wagon, Inc. <br> (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of <br> portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. <br> **Other Directorships Held**: None.<br> **Qualifications**: Mr. Walsh has served in several business management roles and directorship positions throughout his career. <br> Mr. Walsh previously served as Vice President, Walsh & Kelly, Inc. (paving contractors).<br>|

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**OFFICERS** 

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Address**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years**<br> **and Previous Position(s)**<br>|
| **Lori A. Hensler**<br> Birth Date: January 6, 1967<br> TREASURER<br> Officer since: April 2013<br>| &nbsp;&nbsp; **Principal Occupations**: Principal Financial Officer and Treasurer of the Federated Hermes Fund Family; Senior Vice President, <br> Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp.; and Assistant Treasurer, <br> Federated Investors Trust Company. Ms. Hensler has received the Certified Public Accountant designation.<br> **Previous Positions**: Controller of Federated Hermes, Inc.; Senior Vice President and Assistant Treasurer, Federated Investors <br> Management Company; Treasurer, Federated Investors Trust Company; Assistant Treasurer, Federated Administrative <br> Services, Federated Administrative Services, Inc., Federated Securities Corp., Edgewood Services, Inc., Federated Advisory <br> Services Company, Federated Equity Management Company of Pennsylvania, Federated Global Investment Management <br> Corp., Federated Investment Counseling, Federated Investment Management Company, Passport Research, Ltd., and <br> Federated MDTA, LLC; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and <br> Southpointe Distribution Services, Inc.<br>|
| **Peter J. Germain**<br> Birth Date:<br> September 3, 1959<br> CHIEF LEGAL OFFICER, <br> SECRETARY and EXECUTIVE <br> VICE PRESIDENT<br> Officer since: January 2005<br>| &nbsp;&nbsp; **Principal Occupations**: Mr. Germain is Chief Legal Officer, Secretary and Executive Vice President of the Federated Hermes <br> Fund Family. He is General Counsel, Chief Legal Officer, Secretary and Executive Vice President, Federated Hermes, Inc.; <br> Trustee and Senior Vice President, Federated Investors Management Company; Trustee and President, Federated <br> Administrative Services; Director and President, Federated Administrative Services, Inc.; Director and Vice President, <br> Federated Securities Corp.; Director and Secretary, Federated Private Asset Management, Inc.; Secretary, Federated <br> Shareholder Services Company; and Secretary, Retirement Plan Service Company of America. Mr. Germain joined Federated <br> Hermes, Inc. in 1984 and is a member of the Pennsylvania Bar Association.<br> **Previous Positions**: Deputy General Counsel, Special Counsel, Managing Director of Mutual Fund Services, Federated <br> Hermes, Inc.; Senior Vice President, Federated Services Company; and Senior Corporate Counsel, Federated Hermes, Inc.<br>|
| **John B. Fisher**<br> Birth Date: May 16, 1956<br> PRESIDENT<br> Officer since: November 2004<br>| &nbsp;&nbsp; **Principal Occupations**: Principal Executive Officer and President of certain of the Funds in the Federated Hermes Fund <br> Family; Director or Trustee of certain of the Funds in the Federated Hermes Fund Family; Director and Vice President, <br> Federated Hermes, Inc.; President, Director/Trustee and CEO, Federated Advisory Services Company, Federated Equity <br> Management Company of Pennsylvania, Federated Global Investment Management Corp., Federated Investment Counseling, <br> Federated Investment Management Company, and Federated MDTA LLC; Director, Federated Investors Trust Company.<br> **Previous Positions**: President and Director of the Institutional Sales Division of Federated Securities Corp.; President and <br> CEO of Passport Research, Ltd.; Director and President, Technology, Federated Services Company.<br>|
| **Stephen Van Meter**<br> Birth Date: June 5, 1975<br> CHIEF COMPLIANCE OFFICER <br> AND SENIOR VICE PRESIDENT<br> Officer since: July 2015<br>| &nbsp;&nbsp; **Principal Occupations**: Senior Vice President and Chief Compliance Officer of the Federated Hermes Fund Family; Vice <br> President and Chief Compliance Officer of Federated Hermes, Inc. and Chief Compliance Officer of certain of its subsidiaries. <br> Mr. Van Meter joined Federated Hermes, Inc. in October 2011. He holds FINRA licenses under Series 3, 7, 24 and 66. <br> **Previous Positions**: Mr. Van Meter previously held the position of Compliance Operating Officer, Federated Hermes, Inc. <br> Prior to joining Federated Hermes, Inc., Mr. Van Meter served at the United States Securities and Exchange Commission in <br> the positions of Senior Counsel, Office of Chief Counsel, Division of Investment Management and Senior Counsel, Division <br> of Enforcement.<br>|
| **Stephen F. Auth**<br> Birth Date: <br> September 13, 1956<br> 101 Park Avenue<br> 41<sup>st</sup> Floor<br> New York, NY 10178<br> CHIEF INVESTMENT OFFICER<br> Officer since: November 2002<br>| &nbsp;&nbsp; **Principal Occupations**: Stephen F. Auth is Chief Investment Officer of various Funds in the Federated Hermes Fund Family; <br> Executive Vice President, Federated Investment Counseling, Federated Global Investment Management Corp. and Federated <br> Equity Management Company of Pennsylvania.<br> **Previous Positions**: Executive Vice President, Federated Investment Management Company and Passport Research, Ltd. <br> (investment advisory subsidiary of Federated); Senior Vice President, Global Portfolio Management Services Division; Senior <br> Vice President, Federated Investment Management Company and Passport Research, Ltd.; Senior Managing Director and <br> Portfolio Manager, Prudential Investments.<br>|
| **Robert J. Ostrowski**<br> Birth Date: April 26, 1963<br> Chief Investment Officer<br> Officer since: May 2004<br>| &nbsp;&nbsp; **Principal Occupations**: Robert J. Ostrowski joined Federated Hermes, Inc. in 1987 as an Investment Analyst and became a <br> Portfolio Manager in 1990. He was named Chief Investment Officer of Federated Hermes' taxable fixed-income products in <br> 2004 and also serves as a Senior Portfolio Manager. Mr. Ostrowski became an Executive Vice President of the Fund's Adviser <br> in 2009 and served as a Senior Vice President of the Fund's Adviser from 1997 to 2009. Mr. Ostrowski has received the <br> Chartered Financial Analyst designation. He received his M.S. in Industrial Administration from Carnegie Mellon University.<br>|

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| | |
|:---|:---|
| **Name**<br> **Birth Date**<br> **Address**<br> **Positions Held with Trust**<br> **Date Service Began**<br>| &nbsp;&nbsp; **Principal Occupation(s) for Past Five Years**<br> **and Previous Position(s)**<br>|
| **Deborah A. Cunningham**<br> Birth Date:<br> September 15, 1959<br> Chief Investment Officer<br> Officer since: June 2012<br>| &nbsp;&nbsp; **Principal Occupations**: Deborah A. Cunningham was named Chief Investment Officer of Federated Hermes' money market <br> products in 2004. She joined Federated Hermes in 1981 and has been a Senior Portfolio Manager since 1997 <br> and an Executive Vice President of the Fund's Adviser since 2009. Ms. Cunningham has received the Chartered Financial <br> Analyst designation and holds an M.S.B.A. in Finance from Robert Morris College.<br>|

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Evaluation and Approval of Advisory Contract–May 2022

**Federated Hermes Fund for U.S. Government Securities II (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.

***<u>Information Received and Review Process</u>***

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 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 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

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Commission ("SEC") disclosure requirements 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.

***<u>Nature, Extent and Quality of Services</u>***

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. 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.

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 Federated Hermes' oversight of the securities lending program for the Federated Hermes Funds that engage in securities lending and noted the income earned by the Federated Hermes Funds that participate in such program. In addition, 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 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

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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.

***<u>Fund Investment Performance</u>***

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 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 Morningstar, Inc. (the "Morningstar"), 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 and recognized the efforts being taken by the Adviser in the context of other factors considered relevant by the Board.

Based on these considerations, the Board concluded that it had continued confidence in the Adviser's overall capabilities to manage the Fund.

***<u>Fund Expenses</u>***

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, 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 Morningstar (the "Expense Peer Group"). The Board received a description of the methodology used to select the Expense Peer Group from the overall Morningstar category. The Board also reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall Morningstar 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.

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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 contractual advisory fee rate and other expenses 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.

***<u>Profitability</u>***

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 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.

***<u>Economies of Scale</u>***

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 Hermes' investments in these

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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.

***<u>Other Benefits</u>***

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.

***<u>Conclusions</u>***

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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Liquidity Risk Management Program– <br>Annual Evaluation of Adequacy and Effectiveness

In accordance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), Federated Hermes Insurance Series (the "Trust") has adopted and implemented a liquidity risk management program (the "Program") for Federated Hermes Fund for U.S. Government Securities II (the "Fund" and, collectively with the other non-money market open-end funds advised by Federated Hermes, the "Federated Hermes Funds"). The Program seeks to assess and manage the Fund's liquidity risk. "Liquidity risk" is defined under the Liquidity Rule as the risk that the Fund is unable to meet redemption requests without significantly diluting remaining investors' interests in the Fund. The Board of Trustees of the Trust (the "Board") has approved the designation of each Federated Hermes Fund's investment adviser as the administrator for the Program (the "Administrator") with respect to that Fund. The Administrator, in turn, has delegated day-to-day responsibility for the administration of the Program to multiple Liquidity Risk Management Committees, which are comprised of representatives from certain divisions within Federated Hermes.

The Program is comprised of various components designed to support the assessment and/or management of liquidity risk, including: (1) the periodic assessment (no less frequently than annually) of certain factors that influence the Fund's liquidity risk; (2) the periodic classification (no less frequently than monthly) of the Fund's investments into one of four liquidity categories that reflect an estimate of their liquidity under current market conditions; (3) a 15% limit on the acquisition of "illiquid investments" (as defined under the Liquidity Rule); (4) to the extent a Fund does not invest primarily in "highly liquid investments" (as defined under the Liquidity Rule), the determination of a minimum percentage of the Fund's assets that generally will be invested in highly liquid investments (an "HLIM"); (5) if a Fund has established an HLIM, the periodic review (no less frequently than annually) of the HLIM and the adoption of policies and procedures for responding to a shortfall of the Fund's highly liquid investments below its HLIM; and (6) periodic reporting to the Board.

At its meetings in May 2022, the Board received and reviewed a written report (the "Report") from the Federated Hermes Funds' Chief Compliance Officer and Chief Risk Officer, on behalf of the Administrator, concerning the operation of the Program for the period from April 1, 2021 through March 31, 2022 (the "Period"). The Report addressed the operation of the Program and assessed its adequacy and effectiveness, including, where applicable, the operation of any HLIM established for a Federated Hermes Fund and each Federated Hermes Fund's access to other available funding sources such as the Federated Hermes Funds' interfund lending facility, redemptions in-kind, reverse repurchase agreement transactions, redemptions delayed beyond the normal T+1 settlement, but within seven days of the redemption request, and committed lines of credit. There were no material changes to the Program during the Period. The Report summarized the operation of the Program and the information and factors considered by the Administrator in assessing whether the Program has been adequately and effectively implemented with respect to the Federated Hermes Funds. Such information and factors included, among other things:

◾ confirmation that it was not necessary for the Fund to utilize, and the Fund did not utilize, alternative funding sources during the Period;

◾ the periodic classifications of the Fund's investments into one of four liquidity categories and the methodologies and inputs used to classify the investments, including the Fund's reasonably anticipated trade size;

◾ the analysis received from a third-party liquidity assessment vendor that is taken into account in the process of determining the liquidity classifications of the Fund's investments and the results of an evaluation of the services performed by the vendor in support of this process;

◾ the fact that the Fund invested primarily in highly liquid investments during the Period and, therefore, was not required to establish, and has not established, an HLIM and the procedures for monitoring the status of the Fund as investing primarily in highly liquid investments;

◾ the fact that the Fund invested no more than 15% of its assets in illiquid investments during the Period and the procedures for monitoring this limit;

◾ the fact that there were no liquidity events during the Period, that materially affected the Fund's liquidity risk;

◾ the impact on liquidity and management of liquidity risk caused by extended non-U.S. market closures and confirmation that there were no issues for any of the affected Federated Hermes Funds in meeting shareholder redemptions at any time during these temporary non-U.S. market closures;

◾ circumstances during the Period under which the Administrator convened meetings of the Liquidity Risk Management Committees more frequently than normal to conduct enhanced liquidity risk monitoring, including prior to the Russian invasion of Ukraine.

Based on this review, the Administrator concluded that the Program is operating effectively to assess and manage the Fund's liquidity risk, and that the Program has been and continues to be adequately and effectively implemented to monitor and, as applicable, respond to the Fund's liquidity developments.

Annual Shareholder Report

**30**

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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.

Quarterly Portfolio Schedule

Each fiscal quarter, the Fund will file with the SEC a complete schedule of its monthly portfolio holdings on "Form N-PORT." The Fund's holdings as of the end of the third month of every fiscal quarter, as reported on Form N-PORT, will be publicly available on the SEC's website at sec.gov within 60 days of the end of the fiscal quarter upon filing. You may also access this information via the link to the Fund and share class name at FederatedInvestors.com.

Annual Shareholder Report

**31**

------

*Variable investment options are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in variable investment options involves investment risk, including the possible loss of principal.*

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.

![](fhilogok11p.jpg)

Federated Hermes Fund for U.S. Government Securities II <br>Federated Hermes Funds <br>4000 Ericsson Drive <br>Warrendale, PA 15086-7561

Contact us at **FederatedInvestors.com** <br>or call 1-800-341-7400.

Federated Securities Corp., Distributor

*CUSIP 313916207*

*G00846-01 (2/23)*© 2023 Federated Hermes, Inc.

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**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 – $190,417

Fiscal year ended 2021 - $181,350

(b) Audit-Related 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.

(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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Such services were not recognized by the issuer or RIC
at the time of the engagement to be non-audit services; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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 - $28,340

Fiscal year ended 2021 - $19,249

(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.](cert302.htm)

(a)(3) Not Applicable.

[(b) Certifications pursuant to 18 U.S.C. Section 1350.](cert906.htm)

**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 <u>Federated Hermes Insurance Series</u>**

**By <u>/S/ Lori A. Hensler</u>** 

**Lori A. Hensler, Principal Financial Officer**

**Date <u>February 15, 2023</u>**

**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 <u>/S/ John B. Fisher</u>**

**John B. Fisher, Principal Executive Officer**

**Date <u>February 15, 2023</u>**

**By <u>/S/ Lori A. Hensler</u>**

**Lori A. Hensler, Principal Financial Officer**

**Date <u>February 15, 2023</u>**

## Ex-99.Cert

N-CSR Item 13(a)(2) - Exhibits: Certifications

I, John B. Fisher, certify that:

* I have reviewed this report on Form N-CSR of Federated Hermes Insurance
Series on behalf of: Federated Hermes Fund for U.S. Government Securities II, Federated Hermes Government Money Fund II, Federated Hermes
High Income Bond Fund II, Federated Hermes Kaufmann Fund II, Federated Hermes Managed Volatility Fund II, Federated Hermes Quality Bond
Fund II ("registrant");

* Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;

* Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the financial condition, results of operations, changes in
net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and
for, the periods presented in this report;

* The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940)
and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant
and have:

* designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report
is being prepared;

* designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;

* evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a
date within 90 days prior to the filing date of this report based on such evaluation; and

* disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over financial reporting; and

* The registrant's other certifying officers and I have disclosed to the
registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

* all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability
to record, process, summarize, and report financial information; and

* any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 15, 2023

/S/ John B. Fisher

John B. Fisher

President - Principal Executive Officer

N-CSR Item 13(a)(2) - Exhibits: Certifications

I, Lori A. Hensler, certify that:

* I have reviewed this report on Form N-CSR of Federated Hermes Insurance
Series on behalf of: Federated Hermes Fund for U.S. Government Securities II, Federated Hermes Government Money Fund II, Federated Hermes
High Income Bond Fund II, Federated Hermes Kaufmann Fund II, Federated Hermes Managed Volatility Fund II, Federated Hermes Quality Bond
Fund II ("registrant");

* Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;

* Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the financial condition, results of operations, changes in
net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and
for, the periods presented in this report;

* The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940)
and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant
and have:

* designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report
is being prepared;

* designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;

* evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a
date within 90 days prior to the filing date of this report based on such evaluation; and

* disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over financial reporting; and

* The registrant's other certifying officers and I have disclosed to the
registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

* all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability
to record, process, summarize, and report financial information; and

* any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 15, 2023

/S/ Lori A. Hensler

Lori A. Hensler, Treasurer - Principal Financial Officer

## Exhibit 99.906

N-CSR Item 13(b) - Exhibits: Certifications

 **SECTION 906 CERTIFICATION**

Pursuant to 18 U.S.C.§ 1350, the undersigned officers of **Federated Hermes Insurance Series** on behalf of **Federated Hermes Fund for U.S. Government Securities II, Federated Hermes Government Money Fund II, Federated Hermes High Income Bond Fund II, Federated Hermes Kaufmann Fund II, Federated Hermes Managed Volatility Fund II, Federated Hermes Quality Bond Fund II** (the "Registrant"), hereby certify, to the best of our knowledge, that the Registrant's Report on Form N-CSR for the period ended December 31, 2022 (the "Report") fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities and Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Dated: F<u>ebruary 15, 2023</u>

/s/ John B. Fisher

John B. Fisher

Title: President, Principal Executive Officer

Dated: F<u>ebruary 15, 2023</u>

/s/ Lori A. Hensler

Lori A. Hensler

Title: Treasurer, Principal Financial Officer

This certification is being furnished solely pursuant to 18 U.S.C.§ 1350 and is not being filed as part of the Report or as a separate disclosure document.