Form 497K Federated Hermes Total
Summary Prospectus
November 30, 2020
Disclosure contained herein relates to all classes of the Fund, as listed below, unless otherwise noted.
|
Share Class | Ticker
|
A | FULAX
|
Institutional | FULIX
|
Service | FULBX
|
R6 FULLX
|
Federated Hermes Ultrashort Bond Fund
(formerly, Federated Ultrashort Bond Fund)
A Portfolio of Federated Hermes Total Return Series, Inc.
(formerly, Federated Total Return Series, Inc.)
Before you invest, you may want to review the Fund’s Prospectus, which
contains more information about the Fund and its risks. You can find the Fund’s
Prospectus and other information about the Fund, including the Statement of
Additional Information and most recent reports to shareholders, online at
FederatedInvestors.com/FundInformation. You can also get this information at
no cost by calling 1-800-341-7400 or by sending an email request to
[email protected] or from a financial intermediary through
which Shares of the Fund may be bought or sold. The Fund’s Prospectus and
Statement of Additional Information, both dated November 30, 2020, are
incorporated by reference into this Summary Prospectus.
IMPORTANT NOTICE TO SHAREHOLDERS
Beginning on January 1, 2021, as permitted by regulations adopted by the
Securities and Exchange Commission, paper copies of the Fund’s shareholder
reports will no longer be sent by mail, unless you specifically request paper
copies of the reports from the Fund or from your financial intermediary, such as
a broker-dealer or bank. Instead, the reports will be made available on a
website, and you will be notified by mail each time a report is posted and
provided with a website link to access the report. If you already elected to
receive shareholder reports electronically, you will not be affected by this
change and you need not take any action. You may elect to receive shareholder
reports and other communications from the Fund or your financial intermediary
electronically by contacting your financial intermediary (such as a broker-dealer
or bank); other shareholders may call the Fund at 1-800-341-7400, Option 4.
You may elect to receive all future reports in paper free of charge. You can
inform the Fund or your financial intermediary that you wish to continue
receiving paper copies of your shareholder reports by contacting your financial
intermediary (such as a broker-dealer or bank); other shareholders may call the
Fund at 1-800-341-7400, Option 4. Your election to receive reports in paper
will apply to all funds held with the Fund complex or your
financial intermediary.
(Additional information contained on the inside cover.)
Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee
A mutual fund seeking to provide total return consistent with current income by
investing primarily in a diversified portfolio of investment-grade
debt securities.
As with all mutual funds, the Securities and Exchange Commission (SEC) has
not approved or disapproved these securities or passed upon the adequacy of
this Prospectus. Any representation to the contrary is a criminal offense.
Fund Summary Information
Federated Hermes Ultrashort Bond Fund (the “Fund”)
RISK/RETURN SUMMARY: INVESTMENT OBJECTIVE
The Fund’s investment objective is to provide total return consistent with
current income.
RISK/RETURN SUMMARY: FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold Class A Shares (A), Institutional Shares (IS), Service Shares (SS) and
Class R6 Shares (R6) of the Fund. If you purchase the Fund’s IS, SS or
R6 Shares through a broker acting as an agent on behalf of its customers, you
may be required to pay a commission to such broker; such commissions, if any,
are not reflected in the Example below.
Shareholder Fees (fees paid directly from your investment)
|
|
A
|
IS
|
SS
|
R6
|
|
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of
offering price)
|
None
|
None
|
None
|
None
|
|
Maximum Deferred Sales Charge (Load) (as a percentage of original
purchase price or redemption proceeds, as applicable)
|
None
|
None
|
None
|
None
|
|
Maximum Sales Charge (Load) Imposed on Reinvested Dividends
(and other Distributions) (as a percentage of offering price)
|
None
|
None
|
None
|
None
|
|
Redemption Fee (as a percentage of amount redeemed, if applicable)
|
None
|
None
|
None
|
None
|
|
Exchange Fee
|
None
|
None
|
None
|
None
|
Annual Fund Operating Expenses (expenses that you pay each year as
a percentage of the value of your investment)
|
|
A
|
IS
|
SS
|
R6
|
|
Management Fee
|
0.30%
|
0.30%
|
0.30%
|
0.30%
|
|
Distribution (12b-1) Fee
|
None
|
None
|
None
|
None
|
|
Other Expenses
|
10.31%
|
20.16%
|
30.27%
|
0.12%
|
|
Total Annual Fund Operating Expenses
|
0.61%
|
0.46%
|
0.57%
|
0.42%
|
|
Fee Waivers and/or Expense Reimbursements4
|
(0.09)%
|
(0.09)%
|
(0.10)%
|
(0.06)%
|
|
Total Annual Fund Operating Expenses After Fee Waivers and/or
Expense Reimbursements
|
0.52%
|
0.37%
|
0.47%
|
0.36%
|
1
The Fund will only incur and pay up to 0.15% of certain service fees (shareholder services/account
administrations fees) for the A class of the Fund. The Fund may incur and pay such fees on its A class
of up to a maximum of 0.25%. The A class of the Fund will not incur and pay such fees to exceed
0.15% until such time as approved by the Fund’s Board of Directors (the “Directors”).
2
The Fund may incur and pay certain service fees (shareholder services/account administration fees)
on its IS class of up to a maximum amount of 0.25%. No such fees are currently incurred and paid by
the IS class of the Fund. The IS class of the Fund will not incur and pay such fees until such time as
approved by the Directors.
1
3
The Fund will only incur and pay up to 0.10% of certain service fees (shareholder services/account
administrations fees) for the SS class of the Fund. The Fund may incur and pay such fees on its
SS class of up to a maximum of 0.25%. The SS class of the Fund will not incur and pay such fees to
exceed 0.10% until such time as approved by the Directors.
4
The Adviser and certain of its affiliates on their own initiative have agreed to waive certain amounts
of their respective fees and/or reimburse expenses. Total annual fund operating expenses (excluding
acquired fund fees and expenses, interest expense, extraordinary expenses, and proxy-related
expenses paid by the Fund, if any) paid by the Fund’s A, IS, SS and R6 classes (after the voluntary
waivers and/or reimbursements) will not exceed 0.51%, 0.36%, 0.46%, and 0.35% (the “Fee Limit”),
respectively, up to but not including later of (the “Termination Date”): (a) December 1, 2021; or
(b) the date of the Fund’s next effective Prospectus. While the Adviser and its 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 Directors.
Example
This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 for the time periods indicated
and then redeem all of your Shares at the end of those periods. The Example
also assumes that your investment has a 5% return each year and that operating
expenses (excluding any fee waivers and/or expense reimbursements) are as
shown in the table above and remain the same. Although your actual costs and
returns may be higher or lower, based on these assumptions your costs
would be:
|
Share Class
|
1 Year
|
3 Years
|
5 Years
|
10 Years
|
|
A
|
$62
|
$195
|
$340
|
$762
|
|
IS
|
$47
|
$148
|
$258
|
$579
|
|
SS
|
$58
|
$183
|
$318
|
$714
|
|
R6
|
$43
|
$135
|
$235
|
$530
|
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs and may result in higher taxes when Fund
Shares are held in a taxable account. These costs, which are not reflected in
Annual Fund Operating Expenses or in the Example, affect the Fund’s
performance. During the most recent fiscal year, the Fund’s portfolio turnover
rate was 47% of the average value of its portfolio.
RISK/RETURN SUMMARY: INVESTMENTS, RISKS and PERFORMANCE
What are the Fund’s Main Investment Strategies?
The Fund invests primarily (that is, more than 50%) in investment-grade,
fixed-income securities, including but not limited to asset-backed (including
mortgage-backed) securities and corporate debt securities, but may invest up to
35% of its assets in noninvestment-grade, fixed-income securities. The Fund’s
investment adviser (the “Adviser”) seeks to enhance the Fund’s performance by
2
allocating relatively more of its portfolio to the sector that the Adviser expects
to offer the best balance between total return and risk. The Adviser may invest a
portion of the Fund’s assets in foreign securities (both investment-grade and
noninvestment-grade, including, but not limited to, government and corporate
investments). The Fund may invest in hybrid instruments and derivative
contracts to implement its investment strategies as more fully described below.
There can be no assurance that the Fund’s use of derivative contracts or hybrid
instruments will work as intended. Derivative investments made by the Fund
are included within the Fund’s 80% policy (as described below) and are
calculated at market value. The Fund may also use Collateralized Mortgage
Obligations (CMOs) for hedging purposes.
Although the value of the Fund’s Shares will fluctuate, the Adviser actively
manages the Fund’s portfolio seeking to manage the magnitude of fluctuation
by limiting the Fund’s dollar-weighted average effective duration to one year or
less. Duration measures the price sensitivity of a fixed-income security to
changes in interest rates. Under normal market conditions, the Fund’s dollar-weighted
average effective maturity is expected to be 18 months or less.
Certain of the government securities in which the Fund invests are not
backed by the full faith and credit of the U.S. government, such as those issued
by the Federal Home Loan Mortgage Corporation (“Freddie Mac”), the
Federal National Mortgage Association (“Fannie Mae”) and the Federal Home
Loan Bank System. These entities are, however, supported through federal
subsidies, loans or other benefits. The Fund may also invest in government
securities that are supported by the full faith and credit of the U.S. government,
such as those issued by the Government National Mortgage Association
(“Ginnie Mae”). Finally, the Fund may invest in government securities that
have no explicit financial support, but that are regarded as having implied
support because the federal government sponsors their activities.
The Fund will invest at least 80% of its net assets (plus the amount of any
borrowings for investment purposes) in fixed-income investments. The Fund
will notify shareholders at least 60 days in advance of any change in its
investment policy that would enable the Fund to normally invest less than 80%
of its net assets (plus the amount of any borrowings for investment purposes) in
fixed-income investments.
What are the Main Risks of Investing in the Fund?
All mutual funds take investment risks. Therefore, it is possible to lose
money by investing in the Fund. The primary factors that may reduce the
Fund’s returns include:
■ Interest Rate Risk. Prices of fixed-income securities generally fall when
interest rates rise. The longer the duration of a fixed-income security, the
more susceptible it is to interest-rate risk. Recent and potential future
changes in monetary policy made by central banks and/or their governments
are likely to affect the level of interest rates.
3
■ Issuer Credit Risk. It is possible that interest or principal on securities will
not be paid when due. Non-investment grade securities generally have a
higher default risk than investment grade securities. Such non-payment or
default may reduce the value of the Fund’s portfolio holdings, its share price
and its performance.
■ Counterparty Credit Risk. Credit risk includes the possibility that a party
to a transaction involving the Fund will fail to meet its obligations. This
could cause the Fund to lose money or to lose the benefit of the transaction
or prevent the Fund from selling or buying other securities to implement its
investment strategy.
■ Prepayment and Extension Risk. When homeowners prepay their
mortgages in response to lower interest rates, the Fund will be required to
reinvest the proceeds at the lower interest rates available. Also, when interest
rates fall, the price of mortgage-backed securities may not rise to as great an
extent as that of other fixed-income securities. When interest rates rise,
homeowners are less likely to prepay their mortgages. A decreased rate of
prepayments lengthens the expected maturity of a mortgage-backed security,
and the price of mortgage-backed securities may decrease more than the
price of other fixed income securities when interest rates rise.
■ Call Risk. Call risk is the possibility that an issuer may redeem a fixed-income
security before maturity (a “call”) at a price below its current market
price. An increase in the likelihood of a call may reduce the security’s price.
■ Liquidity Risk. The noninvestment-grade securities and collateralized
mortgage obligations (CMOs) in which the Fund invests may be less readily
marketable and may be subject to greater fluctuation in price than other
securities. Liquidity risk also refers to the possibility that the Fund may not
be able to sell a security or close out a derivative contract when it wants to. If
this happens, the Fund will be required to continue to hold the security or
keep the position open, and the Fund could incur losses.
■ Risk Associated with Complex CMOs. CMOs with complex or highly
variable prepayment terms, such as companion classes, IOs, POs, Inverse
Floaters and residuals, generally entail greater market, prepayment and
liquidity risks than other mortgage-backed securities.
■ Risk Associated with Noninvestment-Grade Securities. Securities rated
below investment grade, may be subject to greater economic, interest rate,
credit and liquidity risks than investment-grade securities. These securities
are considered speculative with respect to the issuer’s ability to pay interest
and repay principal.
■ Risk Related to the Economy. The value of the Fund’s portfolio may
decline in tandem with a drop in the overall value of the markets in which the
Fund invests and/or other markets. Economic, political and financial
conditions, industry or economic trends and developments or public health
risks, such as epidemics or pandemics, may, from time to time and for
varying periods of time, cause the Fund to experience volatility, illiquidity,
4
shareholder redemptions or other potentially adverse effects. Among other
investments, lower-grade bonds may be particularly sensitive to changes in
the economy.
■ Risk of Foreign Investing. Because the Fund invests in securities issued by
foreign companies and national governments, the Fund’s Share price may be
more affected by foreign economic and political conditions, taxation policies
and accounting and auditing standards than would otherwise be the case.
■ Leverage Risk. Leverage risk is created when an investment, which
includes, for example, an investment in a derivative contract, exposes the
Fund to a level of risk that exceeds the amount invested. Changes in the
value of such an investment magnify the Fund’s risk of loss and potential
for gain.
■ Risk of Investing in Derivative Contracts and Hybrid Instruments.
Derivative contracts and hybrid instruments involve risks different from, or
possibly greater than, risks associated with investing directly in securities
and other traditional investments. Specific risk issues related to the use of
such contracts and instruments include valuation and tax issues, increased
potential for losses and/or costs to the Fund and a potential reduction in gains
to the Fund. Each of these issues is described in greater detail in this
Prospectus. Derivative contracts and hybrid instruments may also involve
other risks described in this Prospectus, such as interest rate, credit, liquidity
and leverage risks.
■ Mortgage-Backed Securities (MBS) Risk. MBS have unique risks. A rise
in interest rates may cause the value of MBS held by the Fund to decline.
The mortgage loans underlying MBS generally are subject to a greater rate of
principal prepayments in a declining interest rate environment and to a lesser
rate of principal prepayments in an increasing interest rate environment.
■ Asset-Backed Securities (ABS) Risk. The value of asset-backed securities
(ABS) may be affected by certain factors such as interest rate risk, credit
risk, prepayment risk and the availability of information concerning the pool
of underlying assets and its structure. Under certain market conditions, ABS
may be less liquid and may be difficult to value. Movements in interest rates
(both increases and decreases) may quickly and significantly reduce the
value of certain types of ABS. ABS can also be subject to the risk of default
on the underlying assets.
■ Credit Enhancement Risk. The securities in which the Fund invests may be
subject to credit enhancement (for example, guarantees, letters of credit or
bond insurance). If the credit quality of the credit enhancement provider (for
example, a bank or bond insurer) is downgraded, the rating on a security
credit enhanced by such credit enhancement provider also may be
downgraded. Having multiple securities credit enhanced by the same
enhancement provider will increase the adverse effects on the Fund that are
likely to result from a downgrading of, or a default by, such an enhancement
provider. Adverse developments in the banking and bond insurance
industries also may negatively affect the Fund.
5
■ Technology Risk. The Adviser uses various technologies in managing the
Fund, consistent with its investment objective(s) and strategy described in
this Prospectus. For example, proprietary and third-party data and systems
are utilized to support decision making for the Fund. Data imprecision,
software or other technology malfunctions, programming inaccuracies and
similar circumstances may impair the performance of these systems, which
may negatively affect Fund performance.
The Shares offered by this Prospectus are not deposits or obligations of any
bank, are not endorsed or 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.
Performance: Bar Chart and Table
Risk/Return Bar Chart
The bar chart and performance table below reflect historical performance
data for the Fund and are intended to help you analyze the Fund’s investment
risks in light of its historical returns. The bar chart shows the variability of the
Fund’s IS class total returns on a calendar year-by-year basis. The Average
Annual Total Return table shows returns averaged over the stated periods, and
includes comparative performance information for each class shown. The
Fund’s performance will fluctuate, and past performance (before and after
taxes) is not necessarily an indication of future results. Updated performance
information for the Fund is available under the “Products” section at
FederatedInvestors.com or by calling 1-800-341-7400.
The Fund’s IS class total return for the nine-month period from January 1, 2020 to
September 30, 2020, was 1.76%.
Within the periods shown in the bar chart, the Fund’s IS class highest quarterly return was 1.23%
(quarter ended March 31, 2019). Its lowest quarterly return was (0.42)% (quarter ended
June 30, 2013).
6
Average Annual Total Return Table
The Fund’s R6 class commenced operations on May 29, 2019. For the
periods prior to the commencement of operations of the Fund’s R6 class, the
performance information shown below is for the Fund’s IS class. The
performance of the IS class has not been adjusted to reflect the expenses
applicable to the R6 class since the R6 class has a lower expense ratio than the
expense ratio of the IS class. In addition to Return Before Taxes, Return After
Taxes is shown for the Fund’s IS class to illustrate the effect of federal taxes on
Fund returns. After-Tax returns are shown only for IS class, and
after-tax returns for A, SS and R6 classes will differ from those shown for the
IS class. Actual after-tax returns depend on each investor’s personal tax
situation, and are likely to differ from those shown. After-tax returns are
calculated using a standard set of assumptions. The stated returns assume the
highest historical federal income and capital gains tax rates. These after-tax
returns do not reflect the effect of any applicable state and local taxes. After-tax
returns are not relevant to investors holding Shares through a 401(k) plan,
an Individual Retirement Account or other tax-advantaged investment plan.
(For the Period Ended December 31, 2019)
|
Share Class
|
1 Year
|
5 Years
|
10 Years
|
|
A:
|
|
|
|
|
Return Before Taxes1
|
3.22%
|
1.29%
|
1.27%
|
|
IS:
|
|
|
|
|
Return Before Taxes
|
3.75%
|
1.86%
|
1.82%
|
|
Return After Taxes on Distributions
|
2.66%
|
1.09%
|
1.12%
|
|
Return After Taxes on Distributions and Sale of Fund Shares
|
2.21%
|
1.08%
|
1.11%
|
|
SS:
|
|
|
|
|
Return Before Taxes
|
3.32%
|
1.41%
|
1.37%
|
|
R6:
|
|
|
|
|
Return Before Taxes
|
3.76%
|
1.86%
|
1.83%
|
|
Bloomberg Barclays U.S. Short-Term Government/Corporate Index2
(reflects no deduction for fees, expenses or taxes)
|
2.69%
|
1.34%
|
0.85%
|
|
ICE BofA Merrill Lynch 1-Year Treasury Note Index3
(reflects no deduction for fees, expenses or taxes)
|
2.93%
|
1.25%
|
0.83%
|
|
Lipper Ultra-Short Obligations Funds Average4
|
2.89%
|
1.41%
|
1.13%
|
1
Effective December 1, 2019 the maximum 2% sales charge (load) imposed on Class A Shares
purchases (as a percentage of offering price) has been eliminated. The performance of the
A class has been adjusted to reflect the elimination of the sales charge.
2
The Bloomberg Barclays U.S. Short-Term Government/Corporate Index represents securities that
have fallen out of the U.S. Government/Corporate Index because of the standard minimum one
year maturity constraint. Sectors include treasuries, agencies, industrials, utilities and
financial institutions.
3
The ICE Bank of America Merrill Lynch 1-Year Treasury Note Index is an unmanaged index
tracking U.S. government securities.
7
4
Lipper figures represent the average of the total returns reported by all the mutual funds
designated by Lipper, Inc. as falling into the respective category indicated. They do not reflect
sales charges.
FUND MANAGEMENT
The Fund’s Investment Adviser is Federated Investment
Management Company.
Randall S. Bauer, CFA, Senior Portfolio Manager, has been the Fund’s
portfolio manager since October of 1998.
Nicholas S. Tripodes, CFA, has been the Fund’s portfolio manager since
November of 2017.
purchase and sale of fund shares
You may purchase, redeem or exchange Shares of the Fund on any day the
New York Stock Exchange is open. Shares may be purchased through a
financial intermediary firm that has entered into a Fund selling and/or servicing
agreement with the Distributor or an affiliate (“Financial Intermediary”) or
directly from the Fund, by wire or by check. Please note that certain purchase
restrictions may apply. Redeem or exchange Shares through a financial
intermediary or directly from the Fund by telephone at 1-800-341-7400 or
by mail.
A Class
The minimum investment amount for the Fund’s A class is generally
$1,500 for initial investments and $100 for subsequent investments. The
minimum initial and subsequent investment amounts for Individual Retirement
Accounts are generally $250 and $100, respectively. There is no minimum
initial or subsequent investment amount for employer-sponsored retirement
plans. Certain types of accounts are eligible for lower minimum investments.
The minimum investment for Systematic Investment Programs is $50.
IS & SS Class
The minimum initial investment amount for the Fund’s IS and SS classes is
generally $1,000,000 and there is no minimum subsequent investment amount.
Certain types of accounts are eligible for lower minimum investments. The
minimum investment amount for Systematic Investment Programs is $50.
R6 Class
There are no minimum initial or subsequent investment amounts required.
The minimum investment amount for Systematic Investment Programs is $50.
Tax Information
A, IS & SS Classes
The Fund’s distributions are taxable as ordinary income or capital gains
except when your investment is through a 401(k) plan, an Individual Retirement
Account or other tax-advantaged investment plan.
8
R6 Class
The Fund’s distributions are taxable as ordinary income or capital gains
except when your investment is through a tax-advantaged investment plan.
Payments to Broker-Dealers and Other
Financial Intermediaries
A, IS and SS Classes
If you purchase the Fund through a broker-dealer or other financial
intermediary (such as a bank), the Fund and/or its related companies may pay
the intermediary for the sale of Fund Shares and related services. These
payments may create a conflict of interest by influencing the broker-dealer or
other intermediary and your salesperson to recommend the Fund over another
investment. Ask your salesperson or visit your financial intermediary’s website
for more information.
Payments to Broker-Dealers and Other
Financial Intermediaries
R6 Class
Class R6 Shares do not make any payments to financial intermediaries, either
from Fund assets or from the investment adviser and its affiliates.
9
Federated Hermes Ultrashort Bond Fund
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561 Contact us at FederatedInvestors.com
or call 1-800-341-7400. Federated Securities Corp., Distributor Investment Company Act File No. 811-7115 CUSIP 31428Q762
CUSIP 31428Q747
CUSIP 31428Q754
CUSIP 31428Q713 Q450335 (11/20) © 2020 Federated Hermes, Inc.
