SELECT SECTOR SPDR TRUST
THE SELECT SECTOR SPDR® TRUST (THE TRUST
STATEMENT OF ADDITIONAL INFORMATION
January 31, 2023
This Statement of Additional Information (SAI) is not a prospectus. With respect to each of the Trust's series listed below, this SAI should be read in conjunction with the prospectus dated January 31, 2023 (the Prospectus), as may be revised from time to time.
FUND
TICKER
THE COMMUNICATION SERVICES SELECT SECTOR SPDR® FUND
XLC
THE CONSUMER DISCRETIONARY SELECT SECTOR SPDR® FUND
XLY
THE CONSUMER STAPLES SELECT SECTOR SPDR® FUND
XLP
THE ENERGY SELECT SECTOR SPDR® FUND
XLE
THE FINANCIAL SELECT SECTOR SPDR® FUND
XLF
THE HEALTH CARE SELECT SECTOR SPDR® FUND
XLV
THE INDUSTRIAL SELECT SECTOR SPDR® FUND
XLI
THE MATERIALS SELECT SECTOR SPDR® FUND
XLB
THE REAL ESTATE SELECT SECTOR SPDR® FUND
XLRE
THE TECHNOLOGY SELECT SECTOR SPDR® FUND
XLK
THE UTILITIES SELECT SECTOR SPDR® FUND
XLU
Principal U.S. Listing Exchange for each ETF: NYSE Arca, Inc.
Capitalized terms used herein that are not defined have the same meaning as in the Prospectus, unless otherwise noted. Copies of the Prospectus and the Trust's Annual Report to Shareholders for the fiscal year ended September 30, 2022 may be obtained without charge by writing to the Trust's Distributor, ALPS Portfolio Solutions Distributor, Inc., at 1290 Broadway, Suite 1000, Denver, Colorado 80203, by visiting the Funds' website at https://www.sectorspdr.com or by calling 1-866-732-8673. The Report of Independent Registered Public Accounting Firm, financial highlights and financial statements of the Funds included in the Trust's Annual Report to Shareholders for the fiscal year ended September 30, 2022 are incorporated by reference into this SAI.
S&P®, S&P 500®, Standard & Poor's Depositary Receipts® and SPDR® are trademarks of Standard & Poor's Financial Services LLC, and Select Sector® is a trademark of S&P Dow Jones Indices LLC. Each of these trademarks have been licensed for use in connection with the listing and trading of Select Sector SPDRs on NYSE Arca, Inc. (the Exchange), a national securities exchange. The stocks included in each Select Sector Index (upon which the Select Sector SPDRs are based) are selected by S&P Dow Jones Indices LLC (S&P DJI and sometimes referred to as the Index Compilation Agent) from the universe of companies represented by the S&P 500 Index (S&P 500). The composition and weighting of the stocks included in each Select Sector Index can be expected to differ from the composition and weighting of stocks included in any similar S&P 500 sector index that is published and disseminated by S&P DJI (sometimes referred to as the Index Provider) because, unlike the Select Sector Indices, the S&P 500 sector indices do not limit the weight of any stocks in the indices.
SSSPDRSAI
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TABLE OF CONTENTS
The information contained herein regarding the Select Sector Indices, securities markets and The Depository Trust Company (DTC) was obtained from publicly available sources.
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DISCLAIMERS
Each Select Sector Index is based on equity securities of public companies that are components of the S&P 500, selected and included in the particular Select Sector Indices on the basis of its GICS (Global Industry Classification Standard) classification, with certain exceptions described below, by the Index Compilation Agent. S&P DJI also acts as Index Calculation Agent in connection with the calculation and dissemination of each Select Sector Index.
Select Sector SPDRs are not sponsored, endorsed, sold or marketed by S&P DJI or any of its affiliates. S&P DJI and its affiliates make no representation or warranty, express or implied, to the owners of the Select Sector SPDRs or any member of the public regarding the advisability of investing in securities generally or in the Select Sector SPDRs particularly or the ability of a Select Sector SPDR Fund to track the performance of the various sectors represented in the stock market. The stocks included in each Select Sector Index were selected by the Index Compilation Agent from a universe of companies represented by the S&P 500. Select Sector Indices use a modified market capitalization weighting which limits the weight of each Component Stock in the index. As such, the weightings of each Select Sector index can be expected to differ from the weightings of stocks included in the corresponding S&P 500 sector index that is published and disseminated by S&P DJI, as the S&P 500 sector indices use a float adjusted market capitalization which does not limit the weight of any stocks in the index.
With respect to the Select Sector Indices, S&P DJI's only relationship to the Trust is the licensing of certain trademarks and trade names of S&P, the S&P 500 Index and Select Sector Indices which are determined, composed and calculated by S&P DJI. S&P® and S&P 500® are trademarks of Standard & Poor's Financial Services LLC, an affiliate of S&P DJI; Select Sector® is a trademark of S&P DJI; and Dow Jones® is a trademark of Dow Jones Trademark Holdings LLC. Each of these trademarks have been licensed for use by S&P DJI and sublicensed for certain purposes by the Trust. S&P DJI and its affiliates have no obligation to take the needs of SSGA FM, the Trust or the owners of Fund Shares into consideration in determining, composing or calculating the S&P 500 or the Select Sector Indices. S&P DJI and its affiliates are not responsible for and have not participated in any determination or calculation made with respect to issuance or redemption of the Select Sector SPDRs. S&P DJI and its affiliates have no obligation or liability in connection with the administration, marketing or trading of the Select Sector SPDRs.
Although S&P DJI seeks to obtain and use information from sources which it considers reliable, S&P DJI and its affiliates do not guarantee the accuracy and/or completeness of the S&P 500, the Select Sector Indices or any data related thereto. S&P DJI and its affiliates make no warranty, express or implied, as to results to be obtained by the Trust, owners of the Select Sector SPDRs, or any other person or entity from the use of the S&P 500, the Select Sector Indices or any data related thereto in connection with the rights licensed under the license agreement or for any other use. S&P DJI and its affiliates make no express or implied warranties, and hereby expressly disclaim all warranties of merchantability or fitness for a particular purpose, with respect to the S&P 500, the Select Sector Indices or any data related thereto. Without limiting any of the foregoing, in no event shall S&P DJI and its affiliates have any liability for any special, punitive, indirect or consequential damages (including lost profits), even if notified of the possibility of such damages.
The shares are not sponsored or marketed by S&P DJI or its respective affiliates.
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General Description of the Trust
The Trust is an open-end management investment company registered with the U.S. Securities and Exchange Commission (the SEC) under the Investment Company Act of 1940, as amended (the 1940 Act), and the offering of each Fund's shares (Shares or Fund Shares) is registered with the SEC under the Securities Act of 1933, as amended (the Securities Act). The Trust currently consists of 11 series (each, a Select Sector SPDR Fund or Fund and collectively, the Select Sector SPDR Funds or Funds) as identified on the front cover and described below.
The Trust was organized as a Massachusetts business trust on June 10, 1998. The Trust is governed by a Board of Trustees (the Board). The Select Sector SPDR Funds offered by the Trust are: The Communication Services Select Sector SPDR Fund; The Consumer Discretionary Select Sector SPDR Fund; The Consumer Staples Select Sector SPDR Fund; The Energy Select Sector SPDR Fund; The Financial Select Sector SPDR Fund; The Health Care Select Sector SPDR Fund; The Industrial Select Sector SPDR Fund; The Materials Select Sector SPDR Fund; The Real Estate Select Sector SPDR Fund; The Technology Select Sector SPDR Fund; and The Utilities Select Sector SPDR Fund. The investment objective of each Select Sector SPDR Fund is to provide investment results that, before expenses, correspond generally to the price and yield performance of publicly traded equity securities of companies in a particular sector or group of industries, as represented by a corresponding benchmark index referred to herein as a Select Sector Index. SSGA Funds Management, Inc. (SSGA FM or the Adviser) manages each Select Sector SPDR Fund.
Each Select Sector SPDR Fund offers and issues Shares at their net asset value (sometimes referred to herein as NAV) only in aggregations of a specified number of Shares (each, a Creation Unit). Each Select Sector SPDR Fund offers and issues Creation Units generally in exchange for a basket of equity securities designated by the Fund (Deposit Securities) together with the deposit of a specified cash payment (Cash Component). The Shares are listed on the Exchange and trade at market prices. These prices may differ from the Shares' net asset values. The Shares are also redeemable only in Creation Unit aggregations (except upon termination of a Select Sector SPDR Fund), and generally in exchange for portfolio securities and a specified cash payment (Cash Redemption Amount).
The Trust reserves the right to offer a cash option for purchases and redemptions of Creation Units (subject to applicable legal requirements) although it has no current intention of doing so. Creation Units may be issued in advance of receipt of all Deposit Securities subject to various conditions including a requirement to maintain on deposit with the Trust cash in an amount at least equal to a specified percentage of the market value of the missing Deposit Securities as set forth in the Participant Agreement (as defined below). See Purchase and Redemption of Creation Units. The Trust may impose a transaction fee for each creation or redemption. In all cases, such fees will be limited in accordance with the requirements of the SEC applicable to management investment companies offering redeemable securities.
THE SELECT SECTOR INDICES AND RELEVANT EQUITY MARKETS
Each Select Sector Index is the benchmark for its respective Select Sector SPDR Fund and is intended to give investors an efficient, modified market capitalization-based way to track the movement of baskets of equity securities of public companies that are components of the S&P 500 and are included in a particular sector or group of industries.
CONSTRUCTION AND MAINTENANCE STANDARDS FOR THE SELECT SECTOR INDICES
Selection Criteria
Each Select Sector Index was developed and is maintained in accordance with the following criteria:
Each of the component stocks in a Select Sector Index (the Component Stocks) has been selected from the universe of companies defined by the S&P 500.
The Select Sector Indices include all of the companies represented in the S&P 500.
The Index Compilation Agent assigns each constituent stock of the S&P 500 Index to a Select Sector Index based on GICS. S&P DJI has sole control over the removal of stocks from the S&P 500 and the selection of replacement stocks to be added to the S&P 500.
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Each Select Sector Index is weighted, on a quarterly basis, based on the float-adjusted market capitalization of each of the Component Stocks, subject to the following asset diversification requirements: (i) the market capitalization-based weighted value of any single Component Stock measured with prices as of the reference date and membership, shares outstanding and investable weight factors as of the rebalancing effective date may not exceed 25% of the total value of its respective Select Sector Index; and (ii) the sum of the constituent stocks with weight greater than 4.8% cannot exceed 50% of the total Index weight.
Rebalancing the Select Sector Indices to meet the asset diversification requirements will be the responsibility of S&P. If on the second Friday of any calendar quarter-end month (a Quarterly Qualification Date), a Component Stock (or two or more Component Stocks) approaches the maximum allowable value limits set forth above (the Asset Diversification Limits), the percentage that such Component Stock (or Component Stocks) represents in the Select Sector Index will be reduced and the market capitalization-based weighted value of such Component Stock (or Component Stocks) will be redistributed across the Component Stocks that do not closely approach the Asset Diversification Limits in accordance with the following methodology: First, each Component Stock that exceeds 24% of the total value of the Select Sector Index will be reduced to 23% of the total value of the Select Sector Index and the excess amount will be redistributed proportionally across the remaining Component Stocks that each represent less than 23% of the total value of the Select Sector Index. If as a result of this redistribution, another Component Stock then exceeds 23%, the redistribution will be repeated as necessary until no company breaches the 23% weight cap. Second, if the sum of Component Stocks that each exceed 4.8% of the total value of the Select Sector Index exceeds 50% of the total value of the Index, the Component Stocks will be ranked in descending order of their float-adjusted market capitalization, and the first Component Stock to cause the 50% limit to be breached will be reduced to 4.5% and the excess amount will be distributed proportionally across all remaining Component Stocks that represent less than 4.5% of the total value of the Select Sector Index. This redistribution process will be repeated as necessary until at least 50% of the value of the Select Sector Index is accounted for by Component Stocks representing no more than 4.8% of the total value of the Select Sector Index. If necessary, this reallocation process may take place more than once to ensure that the Select Sector Index and the Select Sector SPDR Fund portfolio based upon it conform to the requirements for qualification of the Select Sector SPDR Fund as a regulated investment company (RIC), under the Internal Revenue Code of 1986, as amended (the Internal Revenue Code).
The rebalancing of the Select Sector Indices, based on the processes described above, occurs at the closing prices of the second Friday of March, June, September and December. Changes will become effective after the market close on the third Friday of March, June, September and December.
Additionally, if, on the second to last business day of March, June, September, or December a company has a weight greater than 24% or the sum of the companies with weights greater than 4.8% exceeds 50%, a secondary rebalancing will be triggered with the rebalancing effective date being after the close of the last business day of the month. This secondary rebalancing will use the closing prices as of the second to last business day of March, June, September, or December, and membership, shares outstanding, and investable weight factors as of the rebalancing effective date.
Periodically, the Index Compilation Agent will supply S&P with sector designations for a number of stocks deemed likely candidates for replacement selection by the S&P Dow Jones Indices' 500 Index Committee. If a replacement not on the current list is selected by the S&P Dow Jones Indices' 500 Index Committee, S&P will ask the Index Compilation Agent to assign the stock to one or more of the 11 sectors promptly. S&P will disseminate information on this assignment and on consequent changes in the Select Sector Index(es).
The Index Compilation Agent at any time may determine that a Component Stock which has been assigned to a Select Sector Index has undergone such a transformation in the composition of its business that it should be removed from that Select Sector Index and assigned to a different Select Sector Index, or that it should remain in the Select Sector Index and be assigned to an additional Select Sector Index. In the event that the Index Compilation Agent notifies S&P that a Component Stock's Select Sector Index assignment should be changed, S&P will disseminate notice of the change following its standard procedure for announcing index changes and will implement the change in the affected Select Sector Indices on a date no less than one week after the initial dissemination of information on the sector change to the maximum extent practicable. It is not anticipated that Component Stocks will change sectors frequently.
Component Stocks removed from and added to the S&P 500 will be deleted from and added to the appropriate Select Sector Index(es) on the same schedule used by S&P DJI for additions and deletions from the S&P 500 insofar as practicable.
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A Component Stock may move from one Select Sector Index to another when a GICS reclassification is made. A Component Stock is deleted from the relevant Select Sector Index and added to the other at the time this reclassification occurs for the S&P 500.
Select Sector Index Calculations
With the exception of the weighting constraints described above, each Select Sector Index is calculated using the same methodology utilized by S&P DJI in calculating the S&P 500. In particular:
Each Select Sector Index is calculated using a base-weighted aggregate methodology; that means the level of the Select Sector Index reflects the total market value of all of its Component Stocks relative to a particular base period. Statisticians refer to this type of index, one with a set of combined variables (such as price and number of shares), as a composite index.
The total market value of a company is determined by multiplying the price of the stock by the number of common shares outstanding. An indexed number is used to represent the results of the aggregate market value calculation in order to make the value easier to work with and track over time.
The daily calculation of each Select Sector Index is computed by dividing the total market value of the companies in the Select Sector Index by a number called the Index Divisor. By itself, the Index Divisor is an arbitrary number. However, in the context of the calculation of the Select Sector Index, it is the only link to the original base period value of the Select Sector Index. The Index Divisor keeps the Select Sector Index comparable over time and adjustments to the Index Divisor ensure that there are no changes in the Select Sector Index level as a result of non-market forces (corporate actions, replacements of stocks in a Select Sector Index, weighting changes, etc.).
Four times a year on a Friday close to the end of each calendar quarter, the share totals of the companies in the S&P 500 are updated by S&P DJI. This information is utilized to update the share totals of companies in each Select Sector Index. After the totals are updated, the Index Divisor is adjusted to compensate for the net change in the market value of the Select Sector Index.
Certain mandatory actions, such as merger and acquisition driven share/investable weight factor changes, stock splits, and mandatory distributions, are not subject to a minimum threshold for implementation. Material share/investable weight factor changes of at least 5% and $150 million resulting from certain non-mandatory actions follow the accelerated implementation rule with sufficient advance notification, and share/investable weight factor changes deemed non-material are implemented quarterly. Changes are reviewed by S&P DJI and, when appropriate, an immediate adjustment is made to the number of shares outstanding used to calculate the Select Sector Index. Any adjustment made by S&P DJI in shares outstanding will result in a corresponding adjustment to each affected Select Sector Index.
S&P DJI handles corporate actions which may arise from time to time and which may have an impact on the calculation of the S&P 500 and, consequently, on the calculation of the Select Sector Index. Corporate actions such as a merger or acquisition, stock splits, spin-offs, etc., require adjustments in the Select Sector Index calculation. Index Divisor adjustments, calculated when necessary, are handled by S&P DJI in its maintenance of the S&P 500. In the event a merger or acquisition changes the relative importance of a company's participation in two or more sectors in a major way, the Select Sector Index assignment of the stock may change. In any event, a new Index Divisor for affected Select Sector Indices will be disseminated promptly by S&P DJI.
Select Sector Index Dissemination
Similar to other published stock index values, the value of each Select Sector Index will be calculated continuously and disseminated at least every 5 seconds via the Consolidated Tape Association. The major electronic financial data vendors – Bloomberg and Reuters—are expected to publish information on each Select Sector Index for their subscribers.
Brief descriptions of the Select Sector Indices on which the Select Sector SPDR Funds are based and the equity markets in which the Select Sector SPDR Funds are invested are provided below. A list of the Component Stocks included in each Select Sector SPDR Fund as of September 30, 2022 is included in the Trust's Annual Report to Shareholders for the fiscal year ended September 30, 2022.
There is no assurance that any Select Sector SPDR Fund holds any particular security, is invested in any particular industry or is invested in a particular security/industry in any certain percentage. Holdings in the Select Sector SPDR Funds will change.
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Select Sector Index Descriptions
THE COMMUNICATION SERVICES SELECT SECTOR INDEX
The Communication Services Select Sector Index is intended to give investors an efficient, modified market capitalization-based way to track the movements of certain public companies that are components of the S&P 500 and are involved in the development and production of communication services products.
THE CONSUMER DISCRETIONARY SELECT SECTOR INDEX
The Consumer Discretionary Select Sector Index is intended to give investors an efficient, modified market capitalization-based way to track the movements of certain public companies that are components of the S&P 500 and are involved in the development and production of consumer discretionary products.
THE CONSUMER STAPLES SELECT SECTOR INDEX
The Consumer Staples Select Sector Index is intended to give investors an efficient, modified market capitalization-based way to track the movements of certain public companies that are components of the S&P 500 and are involved in the development and production of consumer staples products.
THE ENERGY SELECT SECTOR INDEX
The Energy Select Sector Index is intended to give investors an efficient, modified market capitalization-based way to track the movements of certain public companies that are components of the S&P 500 and are involved in the development and production of energy products.
THE FINANCIAL SELECT SECTOR INDEX
The Financial Select Sector Index is intended to give investors an efficient, modified market capitalization-based way to track the movements of certain public companies that are components of the S&P 500 and are involved in the development and production of financial products.
THE HEALTH CARE SELECT SECTOR INDEX
The Health Care Select Sector Index is intended to give investors an efficient, modified market capitalization-based way to track the movements of certain public companies that are components of the S&P 500 and are health care related firms.
THE INDUSTRIAL SELECT SECTOR INDEX
The Industrial Select Sector Index is intended to give investors an efficient, modified market capitalization-based way to track the movements of certain public companies that are components of the S&P 500 and are industrials.
THE MATERIALS SELECT SECTOR INDEX
The Materials Select Sector Index is intended to give investors an efficient, modified market capitalization-based way to track the movements of certain public companies that are components of the S&P 500 and are in basic materials industries.
THE REAL ESTATE SELECT SECTOR INDEX
The Real Estate Select Sector Index is intended to give investors an efficient, modified market capitalization-based way to track the movements of certain public companies that are components of the S&P 500 and are involved in the investment in and/or management and development of real estate.
THE TECHNOLOGY SELECT SECTOR INDEX
The Technology Select Sector Index is intended to give investors an efficient, modified market capitalization-based way to track the movements of certain public companies that are components of the S&P 500 and are involved in the development and production of technology products.
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THE UTILITIES SELECT SECTOR INDEX
The Utilities Select Sector Index is intended to give investors an efficient, modified market capitalization-based way to track the movements of certain public companies that are components of the S&P 500 and are in the utilities industry.
Investment Policies
DIVERSIFICATION STATUS
Each Select Sector SPDR Fund is classified as a non-diversified investment company under the 1940 Act. A non-diversified classification means that a Fund is not limited by the 1940 Act with regard to the percentage of its assets that may be invested in the securities of a single issuer. This means that a Select Sector SPDR Fund may invest a greater portion of its assets in the securities of a single issuer than a diversified fund. The securities of a particular issuer may constitute a greater portion of an Index of each Select Sector SPDR Fund and, therefore, the securities may constitute a greater portion of a Select Sector SPDR Fund's portfolio. This may have an adverse effect on a Fund's performance or subject a Select Sector SPDR Fund's Shares to greater price volatility than more diversified investment companies.
Although each Select Sector SPDR Fund is non-diversified for purposes of the 1940 Act, each Select Sector SPDR Fund intends to maintain the required level of diversification and otherwise conduct its operations so as to qualify as a RIC for purposes of the Internal Revenue Code, and to relieve the Select Sector SPDR Fund of any liability for federal income tax to the extent that its earnings are distributed to shareholders. Compliance with the diversification requirements of the Internal Revenue Code may severely limit the investment flexibility of a Select Sector SPDR Fund and may make it less likely that the Select Sector SPDR Fund will meet its investment objective.
LENDING PORTFOLIO SECURITIES
Each Select Sector SPDR Fund may lend portfolio securities to certain creditworthy borrowers in U.S. and non-U.S. markets in an amount not to exceed forty percent (40%) of the value of its net assets. The borrowers provide collateral that is marked to market daily in an amount at least equal to the current market value of the securities loaned. A Select Sector SPDR Fund may terminate a loan at any time and obtain the securities loaned. A Select Sector SPDR Fund receives the value of any interest or cash or non-cash distributions paid on the loaned securities. A Select Sector SPDR Fund cannot vote proxies for securities on loan, but may recall loans to vote proxies if a material issue affecting a Select Sector SPDR Fund's economic interest in the investment is to be voted upon. Distributions received on loaned securities in lieu of dividend payments (i.e., substitute payments) would not be considered qualified dividend income.
With respect to loans that are collateralized by cash, the borrower may be entitled to receive a fee based on the amount of cash collateral. A Select Sector SPDR Fund is compensated by the difference between the amount earned on the reinvestment of cash collateral and the fee paid to the borrower. In the case of collateral other than cash, a Select Sector SPDR Fund is compensated by a fee paid by the borrower equal to a percentage of the market value of the loaned securities. Any cash collateral may be reinvested in certain short-term instruments and highly liquid instruments either directly on behalf of each lending Select Sector SPDR Fund or through one or more joint accounts or money market funds, which may include those managed by the Adviser.
A Select Sector SPDR Fund may pay a portion of the interest or fees earned from securities lending to a borrower as described above, and to one or more securities lending agents approved by the Board who administer the lending program for the Select Sector SPDR Funds in accordance with guidelines approved by the Board. In such capacity, the lending agent causes the delivery of loaned securities from a Select Sector SPDR Fund to borrowers, arranges for the return of loaned securities to the Select Sector SPDR Fund at the termination of a loan, requests deposit of collateral, monitors the daily value of the loaned securities and collateral, requests that borrowers add to the collateral when required by the loan agreements, and provides recordkeeping and accounting services necessary for the operation of the program. State Street Bank and Trust Company (State Street), an affiliate of the Trust, has been approved by the Board to serve as a securities lending agent for each Select Sector SPDR Fund and the Trust has entered into an agreement with State Street for such services. Among other matters, the Trust has agreed to indemnify State Street for certain liabilities. State Street has received an order of exemption from the SEC under Sections 17(a) and 12(d)(1) under the 1940 Act to serve as the lending agent for affiliated investment companies such as the Trust and to invest the cash collateral received from loan transactions to be invested in an affiliated cash collateral fund.
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Securities lending involves exposure to certain risks, including operational risk (i.e., the risk of losses resulting from problems in the settlement and accounting process), gap risk (i.e., the risk of a mismatch between the return on cash collateral reinvestments and the fees a Select Sector SPDR Fund has agreed to pay a borrower), risk of loss of collateral, credit, legal, counterparty and market risk. Although State Street has agreed to provide a Select Sector SPDR Fund with indemnification in the event of a borrower default, a Select Sector SPDR Fund is still exposed to the risk of losses in the event a borrower does not return a Select Sector SPDR Fund's securities as agreed. For example, delays in recovery of lent securities may cause a Select Sector SPDR Fund to lose the opportunity to sell the securities at a desirable price.
COMMON STOCK
Risks inherent in investing in equity securities include the risk that the financial condition of issuers may become impaired or that the general condition of the stock market may deteriorate (either of which may cause a decrease in the value of a Fund's portfolio securities and therefore a decrease in the value of Shares of the Fund). Common stock is susceptible to general stock market fluctuation and to volatile increases and decreases in value as market confidence and perceptions change. These investor perceptions are based on various and unpredictable factors, including expectations regarding government, economic, monetary and fiscal policies; inflation and interest rates; economic expansion or contraction; and global or regional political, economic or banking crises.
Holders of common stock incur more risk than holders of preferred stock and debt obligations because common stockholders, as owners of the issuer, have generally inferior rights to receive payments from the issuer in comparison with the rights of creditors of, or holders of debt obligations or preferred stock issued by, the issuer. Further, unlike debt securities which typically have a stated principal amount payable at maturity (whose value, however, will be subject to market fluctuations prior thereto), or preferred stock which typically has a liquidation preference and which may have stated optional or mandatory redemption provisions, common stock has neither a fixed principal amount nor a maturity. Common stock values are subject to market fluctuations as long as the common stock remains outstanding.
REAL ESTATE INVESTMENT TRUSTS (REITs)
The Financial Select Sector SPDR Fund may invest a portion of its assets in mortgage REITS (Mortgage REITs). The Real Estate Select Sector SPDR Fund may invest a portion of its assets in REITs, excluding Mortgage REITs. REITs pool investors' funds for investment primarily in income producing real estate or real estate loans or interests. A REIT is not taxed on income distributed to shareholders if it complies with several requirements relating to its organization, ownership, assets, and income and a requirement that it distribute to its shareholders at least 90% of its taxable income (other than net capital gains) for each taxable year. REITs can generally be classified as Equity REITs, Mortgage REITs and Hybrid REITs. Equity REITs, which invest the majority of their assets directly in real property, derive their income primarily from rents. Equity REITs can also realize capital gains by selling properties that have appreciated in value. Mortgage REITs, which invest the majority of their assets in real estate mortgages, derive their income primarily from interest payments. Hybrid REITs combine the characteristics of both Equity REITs and Mortgage REITs. The Funds will not invest in real estate directly, but only in securities issued by real estate companies. However, the Funds may be subject to risks similar to those associated with the direct ownership of real estate (in addition to securities markets risks) to the extent they invest in the securities of companies in the real estate industry. These include declines in the value of real estate, risks related to general and local economic conditions, dependency on management skill, heavy cash flow dependency, possible lack of availability of mortgage funds, overbuilding, extended vacancies of properties, increased competition, increases in property taxes and operating expenses, changes in zoning laws, losses due to costs resulting from the clean-up of environmental problems, liability to third parties for damages resulting from environmental problems, casualty or condemnation losses, limitations on rents, changes in neighborhood values, the appeal of properties to tenants and changes in interest rates. Investments in REITs may subject Fund shareholders to duplicate management and administrative fees.
In addition to these risks, Equity REITs may be affected by changes in the value of the underlying property owned by the trusts, while Mortgage REITs may be affected by the quality of any credit extended. Further, Equity and Mortgage REITs are dependent upon management skills and may not be diversified. Equity and Mortgage REITs are also subject to heavy cash flow dependency, defaults by borrowers and self-liquidation. In addition, Equity and Mortgage REITs could possibly fail to qualify for the beneficial tax treatment available to REITs under the Internal Revenue Code, or to maintain their exemptions from registration under the 1940 Act. The above factors may also adversely affect a borrower's or a lessee's ability to meet its obligations to the REIT. In the event of a default by a borrower or lessee, the REIT may experience delays in enforcing its rights as a mortgagee or lessor and may incur substantial costs associated with protecting investments.
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REPURCHASE AGREEMENTS
Each Select Sector SPDR Fund may invest in repurchase agreements with commercial banks, brokers or dealers to generate income from its excess cash balances and to invest securities lending cash collateral. A repurchase agreement is an agreement under which a Select Sector SPDR Fund acquires a financial instrument (e.g., a security issued by the U.S. government or an agency thereof, a banker's acceptance or a certificate of deposit) from a seller, subject to resale to the seller at an agreed upon price and date (normally, the next Business Day—as defined below). A repurchase agreement may be considered a loan collateralized by securities. The resale price reflects an agreed upon interest rate effective for the period the instrument is held by a Select Sector SPDR Fund and is unrelated to the interest rate on the underlying instrument.
In these repurchase agreement transactions, the securities acquired by a Select Sector SPDR Fund (including accrued interest earned thereon) must have a total value in excess of the value of the repurchase agreement and are held by the Custodian until repurchased. No more than an aggregate of 15% of a Select Sector SPDR Fund's net assets will be invested in illiquid investments, including repurchase agreements having maturities longer than seven days and securities subject to legal or contractual restrictions on resale, or for which there are no readily available market quotations.
The use of repurchase agreements involves certain risks. For example, if the other party to the agreement defaults on its obligation to repurchase the underlying security at a time when the value of the security has declined, a Select Sector SPDR Fund may incur a loss upon disposition of the security. If the other party to the agreement becomes insolvent and subject to liquidation or reorganization under the U.S. Bankruptcy Code or other laws, a court may determine that the underlying security is collateral for a loan by a Select Sector SPDR Fund not within the control of the Select Sector SPDR Fund and, therefore, the Select Sector SPDR Fund may not be able to substantiate its interest in the underlying security and may be deemed an unsecured creditor of the other party to the agreement.
OTHER SHORT-TERM INSTRUMENTS
In addition to repurchase agreements, each Select Sector SPDR Fund may invest in short-term instruments, including money market instruments (including money market funds advised by the Adviser), repurchase agreements, cash and cash equivalents, on an ongoing basis to provide liquidity or for other reasons. Money market instruments are generally short-term investments that may include but are not limited to: (i) shares of money market funds (including those advised by the Adviser); (ii) obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities (including government-sponsored enterprises); (iii) negotiable certificates of deposit (CDs), bankers' acceptances, fixed time deposits and other obligations of U.S. and foreign banks (including foreign branches) and similar institutions; (iv) commercial paper rated at the date of purchase Prime-1 by Moody's or A-1 by S&P, or if unrated, of comparable quality as determined by the Adviser; (v) non-convertible corporate debt securities (e.g., bonds and debentures) with remaining maturities at the date of purchase of not more than 397 days and that satisfy any rating requirements set forth in Rule 2a-7 under the 1940 Act; and (vi) short-term U.S. dollar-denominated obligations of foreign banks (including U.S. branches) that, in the opinion of the Adviser, are of comparable quality to obligations of U.S. banks which may be purchased by a Fund. Any of these instruments may be purchased on a current or a forward-settled basis. Time deposits are non-negotiable deposits maintained in banking institutions for specified periods of time at stated interest rates. Bankers' acceptances are time drafts drawn on commercial banks by borrowers, usually in connection with international transactions.
INVESTMENT COMPANIES
Each Select Sector SPDR Fund may invest in the securities of other investment companies, including money market funds (including those advised by the Adviser or otherwise affiliated with the Adviser), subject to applicable limitations under Section 12(d)(1) of the 1940 Act, SEC rules, and the Select Sector SPDR Fund's investment restrictions.
If a Fund invests in and, thus, is a shareholder of, another investment company, the Fund's shareholders will indirectly bear the Fund's proportionate share of the fees and expenses paid by such other investment company, including advisory fees, in addition to both the management fees payable directly by the Fund to the Fund's own investment adviser and the other expenses that the Fund bears directly in connection with the Fund's own operations.
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FUTURES CONTRACTS, OPTIONS AND SWAP AGREEMENTS
Each Select Sector SPDR Fund may invest up to 5% of its assets in derivatives, including exchange-traded futures on indices, exchange-traded futures on Treasuries or Eurodollars, U.S. exchange-traded or OTC put and call options contracts and exchange-traded or OTC swap transactions (including NDFs, interest rate swaps, total return swaps, excess return swaps, and credit default swaps).
Futures and Options on Futures: Futures contracts generally provide for the future sale by one party and purchase by another party of a specified commodity or security at a specified future time and at a specified price. Index futures contracts are settled daily with a payment by one party to the other of a cash amount based on the difference between the level of the index specified in the contract from one day to the next. A futures contract on an index is an agreement pursuant to which two parties agree to take or make delivery of an amount of cash equal to the difference between the value of the index at the close of the last trading day of the contract and the price at which the index contract originally was written. Although the value of an index might be a function of the value of certain specified securities, physical delivery of these securities is not always made. A public market exists in futures contracts covering a number of indexes, as well as financial instruments, including, without limitation: U.S. Treasury bonds; U.S. Treasury notes; GNMA Certificates; three-month U.S. Treasury bills; 90-day commercial paper; bank certificates of deposit; Eurodollar certificates of deposit; the Australian Dollar; the Canadian Dollar; the British Pound; the Japanese Yen; the Swiss Franc; the Mexican Peso; and certain multinational currencies, such as the Euro. It is expected that other futures contracts will be developed and traded in the future. Futures contracts are standardized as to maturity date and underlying instrument and are traded on futures exchanges.
Each Select Sector SPDR Fund may purchase and write (sell) call and put options on futures. Options on futures give the holder the right, in return for the premium paid, to assume a long position (call) or short position (put) in a futures contract at a specified exercise price upon expiration of, or at any time during the period of, the option. Upon exercise of a call option, the holder acquires a long position in the futures contract and the writer is assigned the opposite short position. In the case of a put option, the opposite is true.
Each Select Sector SPDR Fund is required to make a good faith margin deposit in cash or U.S. government securities (or other eligible collateral) with a broker or custodian to initiate and maintain open positions in futures contracts. A margin deposit is intended to assure completion of the contract (delivery or acceptance of the underlying commodity or payment of the cash settlement amount) if it is not terminated prior to the specified delivery date. Brokers may establish deposit requirements which are higher than the exchange minimums. Futures contracts are customarily purchased and sold on margin deposits which may range upward from less than 5% of the value of the contract being traded.
After a futures contract position is opened, the value of the contract is marked to market daily. If the futures contract price changes to the extent that the margin on deposit does not satisfy price changes, additional payments will be required. Conversely, change in the contract value may reduce the required margin, resulting in a repayment of excess margin to the contract holder. Variation margin payments are made to and from the futures broker for as long as the contract remains open. In such case, a Select Sector SPDR Fund would expect to earn interest income on its margin deposits. Although some futures contracts call for making or taking delivery of the underlying commodity, generally these obligations are closed out prior to delivery by offsetting purchases or sales of matching futures contracts (involving the same exchange, underlying commodity, security or index and delivery month). If an offsetting purchase price is less than the original sale price, a Select Sector SPDR Fund realizes a capital gain, or if it is more, the Select Sector SPDR Fund realizes a capital loss. Conversely, if an offsetting sale price is more than the original purchase price, a Select Sector SPDR Fund realizes a capital gain, or if it is less, the Select Sector SPDR Fund realizes a capital loss. The transaction costs also must be included in these calculations.
Options: Each Select Sector SPDR Fund may purchase and sell put and call options. Such options may relate to particular securities and may or may not be listed on a national securities exchange and issued by the Options Clearing Corporation. Options trading is a highly specialized activity that entails greater than ordinary investment risk. Options on particular securities may be more volatile than the underlying securities, and therefore, on a percentage basis, an investment in options may be subject to greater fluctuation than an investment in the underlying securities themselves.
Swap Transactions: Each Select Sector SPDR Fund may enter into swap transactions, including interest rate swap, credit default swap, NDF, and total return swap transactions. Swap transactions are contracts between parties in which one party agrees to make periodic payments to the other party based on the change in market value or level of a specified rate, index or asset. In return, the other party agrees to make payments to the first party based on the return of a different specified rate, index or asset. Swap transactions will usually be done on a net basis, i.e., where the two parties make net
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payments with a Select Sector SPDR Fund receiving or paying, as the case may be, only the net amount of the two payments. The net amount of the excess, if any, of a Select Sector SPDR Fund's obligations over its entitlements with respect to each swap is accrued on a daily basis and an amount of cash or equivalents having an aggregate value at least equal to the accrued excess is maintained by the Select Sector SPDR Fund. Swaps may be used in conjunction with other instruments to offset interest rate, currency or other underlying risks. For example, interest rate swaps may be offset with caps, floors or collars. A cap is essentially a call option which places a limit on the amount of floating rate interest that must be paid on a certain principal amount. A floor is essentially a put option which places a limit on the minimum amount that would be paid on a certain principal amount. A collar is essentially a combination of a long cap and a short floor where the limits are set at different levels.
The use of swap transactions by the Select Sector SPDR Fund entails certain risks, which may be different from, or possibly greater than, the risks associated with investing directly in the securities and other investments that are the referenced asset for the swap agreement. Swaps are highly specialized instruments that require investment techniques, risk analyses, and tax planning different from those associated with stocks, bonds, and other traditional investments. The use of a swap requires an understanding not only of the referenced asset, reference rate, or index, but also of the swap itself, without the benefit of observing the performance of the swap under all the possible market conditions. Because some swap transactions have a leverage component, adverse changes in the value or level of the underlying asset, reference rate, or index can result in a loss substantially greater than the amount invested in the swap itself. Certain swaps have the potential for unlimited loss, regardless of the size of the initial investment.
Bilateral OTC transactions differ from exchange-traded or cleared derivatives transactions in several respects. Bilateral OTC transactions are transacted directly with dealers and not with a clearing corporation. Without the availability of a clearing corporation, bilateral OTC transaction pricing is normally done by reference to information from market makers and/or available index data, which information is carefully monitored by the Adviser and verified in appropriate cases. As bilateral OTC transactions are entered into directly with a dealer, there is a risk of nonperformance by the dealer as a result of its insolvency or otherwise. Under regulations adopted by the CFTC and federal banking regulators (Margin Rules), each Select Sector SPDR Fund is required to post collateral (known as variation margin) to cover the mark-to-market exposure in respect of its uncleared swaps. The Margin Rules also mandate that collateral in the form of initial margin be posted to cover potential future exposure attributable to uncleared swap transactions. In the event a Select Sector SPDR Fund is required to post collateral in the form of initial margin or variation margin in respect of its uncleared swap transactions, all such collateral will be posted with a third party custodian pursuant to a triparty custody agreement between the Select Sector SPDR Fund, its dealer counterparty and an unaffiliated custodian.
The requirement to execute certain OTC derivatives contracts on exchanges or electronic trading platforms called swap execution facilities (SEFs) may offer certain advantages over traditional bilateral OTC trading, such as ease of execution, price transparency, increased liquidity and/or favorable pricing. However, SEF trading may make it more difficult and costly for a Select Sector SPDR Fund to enter into highly tailored or customized transactions and may result in additional costs and risks. Market participants such as the Select Sector SPDR Funds that execute derivatives contracts through a SEF, whether directly or through a broker intermediary, are required to submit to the jurisdiction of the SEF and comply with SEF and CFTC rules and regulations which impose, among other things disclosure and recordkeeping obligations. In addition, a Select Sector SPDR Fund will generally incur SEF or broker intermediary fees when it trades on a SEF. A Select Sector SPDR Fund may also be required to indemnify the SEF or broker intermediary for any losses or costs that may result from the Select Sector SPDR Fund's transactions on the SEF.
Total Return Swaps: Each Select Sector SPDR Fund may enter into total return swap transactions for investment purposes. Total return swaps are transactions in which one party agrees to make periodic payments based on the change in market value of the underlying assets, which may include a specified security, basket of securities or security indexes during the specified period, in return for periodic payments based on a fixed or variable interest rate of the total return from other underlying assets. Total return swaps may be used to obtain exposure to a security or market without owning or taking physical custody of such security or market, including in cases in which there may be disadvantages associated with direct ownership of a particular security. In a typical total return equity swap, payments made by a Select Sector SPDR Fund or the counterparty are based on the total return of a particular reference asset or assets (such as an equity security, a combination of such securities, or an index). That is, one party agrees to pay another party the return on a stock, basket of stocks, or stock index in return for a specified interest rate. By entering into an equity index swap, for example, the index receiver can gain exposure to stocks making up the index of securities without actually purchasing those stocks. Total return swaps involve not only the risk associated with the investment in the underlying securities, but also the risk of the counterparty not fulfilling its obligations under the agreement.
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Credit Default Swaps: Each Select Sector SPDR Fund may enter into credit default swap transactions for investment purposes. A credit default swap transaction may have as reference obligations one or more securities that are not currently held by a Select Sector SPDR Fund. A Select Sector SPDR Fund may be either the protection buyer or protection seller in the transaction. Credit default swaps may also be structured based on the debt of a basket of issuers, rather than a single issuer, and may be customized with respect to the default event that triggers purchase or other factors. As a protection seller, a Select Sector SPDR Fund would generally receive an upfront payment or a fixed rate of income throughout the term of the swap, which typically is between six months and three years, provided that there is no credit event. If a credit event occurs, generally the protection seller must pay the protection buyer the full face amount of the reference obligations that may have little or no value. If a Select Sector SPDR Fund were a protection buyer and no credit event occurred during the term of the swap, the Select Sector SPDR Fund would recover nothing if the swap were held through its termination date. However, if a credit event occurred, the protection buyer may elect to receive the full notional value of the swap in exchange for an equal face amount of the reference obligation that may have little or no value. Where a Select Sector SPDR Fund is the protection buyer, credit default swaps involve the risk that the seller may fail to satisfy its payment obligations to the Select Sector SPDR Fund in the event of a default. The purchase of credit default swaps involves costs, which will reduce a Select Sector SPDR Fund's return.
Currency Swaps: Each Select Sector SPDR Fund may enter into currency swap transactions for investment purposes. Currency swaps are similar to interest rate swaps, except that they involve multiple currencies. Each Select Sector SPDR Fund may enter into a currency swap when it has exposure to one currency and desires exposure to a different currency. Typically, the interest rates that determine the currency swap payments are fixed, although occasionally one or both parties may pay a floating rate of interest. Unlike an interest rate swap, however, the principal amounts are exchanged at the beginning of the contract and returned at the end of the contract. In addition to paying and receiving amounts at the beginning and end of the transaction, both sides will have to pay in full on a periodic basis based upon the currency they have borrowed. Change in foreign exchange rates and changes in interest rates, as described above, may negatively affect currency swaps.
Interest Rate Swaps: Each Select Sector SPDR Fund may enter into an interest rate swap in an effort to protect against declines in the value of fixed income securities held by the Select Sector SPDR Fund. In such an instance, a Select Sector SPDR Fund may agree to pay a fixed rate (multiplied by a notional amount) while a counterparty agrees to pay a floating rate (multiplied by the same notional amount). If interest rates rise, resulting in a diminution in the value of a Select Sector SPDR Fund's portfolio, the Select Sector SPDR Fund would receive payments under the swap that would offset, in whole or in part, such diminution in value.
Options on Swaps: An option on a swap agreement, or a swaption, is a contract that gives a counterparty the right (but not the obligation) to enter into a new swap agreement or to shorten, extend, cancel or otherwise modify an existing swap agreement, at some designated future time on specified terms. In return, the purchaser pays a premium to the seller of the contract. The seller of the contract receives the premium and bears the risk of unfavorable changes on the underlying swap. Each Select Sector SPDR Fund may write (sell) and purchase put and call swaptions. Each Select Sector SPDR Fund may also enter into swaptions on either an asset-based or liability-based basis, depending on whether the Select Sector SPDR Fund is hedging its assets or its liabilities. Each Select Sector SPDR Fund may write (sell) and purchase put and call swaptions to the same extent it may make use of standard options on securities or other instruments. Each Select Sector SPDR Fund may enter into these transactions primarily to preserve a return or spread on a particular investment or portion of its holdings, as a duration management technique, to protect against an increase in the price of securities the Select Sector SPDR Fund anticipates purchasing at a later date, or for any other purposes, such as for speculation to increase returns. Swaptions are generally subject to the same risks involved in a Select Sector SPDR Fund's use of options.
Depending on the terms of the particular option agreement, a Select Sector SPDR Fund will generally incur a greater degree of risk when it writes a swaption than it will incur when it purchases a swaption. When a Select Sector SPDR Fund purchases a swaption, it risks losing only the amount of the premium it has paid should it decide to let the option expire unexercised. However, when a Select Sector SPDR Fund writes a swaption, upon exercise of the option the Select Sector SPDR Fund will become obligated according to the terms of the underlying agreement.
Government Regulation: The Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) that was signed into law on July 21, 2010 created a new statutory framework that comprehensively regulated the over-the-counter (OTC) derivatives markets for the first time. Prior to the Dodd-Frank Act, the OTC derivatives markets were traditionally traded on a bilateral basis (so-called bilateral OTC transactions). Under the Dodd-Frank Act, certain OTC derivatives transactions are now required to be centrally cleared and traded on SEFs.
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On October 28, 2020, the SEC adopted Rule 18f-4 (the Derivatives Rule) under the 1940 Act which replaced prior SEC and staff guidance with an updated, comprehensive framework for registered funds' use of derivatives. The Derivatives Rule permits a Select Sector SPDR Fund to enter into derivatives transactions and certain other transactions notwithstanding the restrictions on the issuance of senior securities under Section 18 of the 1940 Act. The Derivatives Rule requires the Select Sector SPDR Funds to trade derivatives and certain other instruments that create future payment or delivery obligations subject to a value-at-risk (VaR) leverage limit, develop and implement a derivatives risk management program and new testing requirements, and comply with new requirements related to board and SEC reporting. These requirements apply unless a Select Sector SPDR Fund qualifies as a limited derivatives user, as defined in the Derivatives Rule. To the extent a Select Sector SPDR Fund uses derivatives, complying with the Derivatives Rule may increase the cost of a Select Sector SPDR Fund's investments and cost of doing business, which could adversely affect investors. Other new regulations could adversely affect the value, availability and performance of certain derivative instruments, may make them more costly, and may limit or restrict their use by the Select Sector SPDR Funds.
Regulation Under the Commodity Exchange Act: Each Select Sector SPDR Fund intends to use commodity interests, such as futures, swaps and options on futures in accordance with Rule 4.5 of the Commodity Exchange Act (CEA). A Select Sector SPDR Fund may use exchange-traded futures and options on futures, together with positions in cash and money market instruments, to simulate full investment in the Index. Exchange-traded futures and options on futures contracts may not be currently available for the Index. Under such circumstances, the Adviser may seek to utilize other instruments that it believes to be correlated to the applicable Index components or a subset of the components. An exclusion from the definition of the term commodity pool operator has been claimed with respect to each series of the Trust in accordance with Rule 4.5 such that registration or regulation as a commodity pool operator under the CEA is not necessary.
Restrictions on Trading in Commodity Interests: Each Select Sector SPDR Fund reserves the right to engage in transactions involving futures, options thereon and swaps to the extent allowed by the CFTC regulations in effect from time to time and in accordance with the Select Sector SPDR Funds' policies. A Select Sector SPDR Fund would take steps to prevent its futures positions from leveraging its securities holdings. When it has a long futures position, it will maintain with its custodian bank assets substantially identical to those underlying the contract or cash and equivalents (or a combination of the foregoing) having a value equal to the net obligation of the Select Sector SPDR Fund under the contract (less the value of any margin deposits in connection with the position. When it has a short futures position, it will maintain with its custodian bank assets substantially identical to those underlying the contract or cash and equivalents (or a combination of the foregoing) having a value equal to the net obligation of the Select Sector SPDR Fund under the contract (less the value of any margin deposits in connection with the position).
Certain additional risk factors related to derivatives are discussed below:
Derivatives Risk: Under recently adopted rules by the CFTC, transactions in some types of interest rate swaps and index credit default swaps on North American and European indices are required to be cleared. In addition, the CFTC may promulgate additional regulations that require clearing of other classes of swaps. In a cleared derivatives transaction (which includes futures, options on futures, and cleared swaps transactions), a Select Sector SPDR Fund's counterparty is a clearing house (such as CME, ICE Clear Credit or LCH.Clearnet), rather than a bank or broker. Since the Select Sector SPDR Funds are not members of a clearing house and only members of a clearing house can participate directly in the clearing house, each Select Sector SPDR Fund holds cleared derivatives through accounts at clearing members, who are futures commission merchants that are members of the clearing houses and who have the appropriate regulatory approvals to engage in cleared derivatives transactions. Each Select Sector SPDR Fund makes and receives payments owed under cleared derivatives transactions (including margin payments) through its accounts at clearing members. Clearing members guarantee performance of their clients' obligations to the clearing house. In contrast to bilateral OTC transactions, clearing members generally can require termination of existing cleared derivatives transactions at any time and increases in margin above the margin that it required at the beginning of a transaction. Clearing houses also have broad rights to increase margin requirements for existing transactions and to terminate transactions in accordance with their rules. Any such increase or termination could interfere with the ability of a Select Sector SPDR Fund to pursue its investment strategy. Also, each Select Sector SPDR Fund is subject to execution risk if it enters into a derivatives transaction that is required to be cleared (or that the Advisor expects to be cleared), and no clearing member is willing or able to clear the transaction on a Select Sector SPDR Fund's behalf. While the documentation in place between a Select Sector SPDR Fund and their clearing members generally provides that the clearing members will accept for clearing all transactions submitted for clearing that are within credit limits specified by the clearing members in advance, the Select Sector SPDR Fund could be
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subject to this execution risk if the Select Sector SPDR Fund submits for clearing transactions that exceed such credit limits, if the clearing house does not accept the transactions for clearing, or if the clearing members do not comply with their agreement to clear such transactions. In that case, the transaction might have to be terminated, and a Select Sector SPDR Fund could lose some or all of the benefit of any increase in the value of the transaction after the time of the transaction. In addition, new regulations could, among other things, restrict a Select Sector SPDR Fund's ability to engage in, or increase the cost to the Select Sector SPDR Fund of, derivatives transactions, for example, by making some types of derivatives no longer available to the Select Sector SPDR Fund or increasing margin or capital requirements. If a Select Sector SPDR Fund is not able to enter into a particular derivatives transaction, the Select Sector SPDR Fund's investment performance and risk profile could be adversely affected as a result.
Counterparty Risk: Counterparty risk with respect to OTC derivatives may be affected by new regulations promulgated by the CFTC and SEC affecting the derivatives market. As described under Derivatives Risk above, all futures and options on futures and some swap transactions are required to be cleared, and a party to a cleared derivatives transaction is subject to the credit risk of the clearing house and the clearing member through which it holds its cleared derivatives position, rather than the credit risk of its original counterparty to the derivative transaction. Clearing members are required to segregate all funds received from customers with respect to cleared derivatives transactions from the clearing member's proprietary assets. However, all funds and other property received by a clearing broker from its customers are generally held by the clearing broker on a commingled basis in an omnibus account, and the clearing broker may also invest those funds in certain instruments permitted under the applicable regulations. Also, the clearing member transfers to the clearing house the amount of margin required by the clearing house for cleared derivatives transactions, which amounts are generally held in the relevant omnibus account at the clearing house for all customers of the clearing member.
For commodities futures positions, the clearing house may use all of the collateral held in the clearing member's omnibus account to meet a loss in that account, without regard to which customer in fact supplied that collateral. Accordingly, in addition to bearing the credit risk of its clearing member, each customer to a futures transaction also bears fellow customer risk from other customers of the clearing member. However, with respect to cleared swaps positions, recent regulations promulgated by the CFTC require that the clearing member notify the clearing house of the amount of initial margin provided by the clearing member to the clearing house that is attributable to each customer. Because margin in respect of cleared swaps must be earmarked for specific clearing member customers, the clearing house may not use the collateral of one customer to cover the obligations of another customer. However, if the clearing member does not provide accurate reporting, a Select Sector SPDR Fund is subject to the risk that a clearing house will use the Select Sector SPDR Fund's assets held in an omnibus account at the clearing house to satisfy payment obligations of a defaulting customer of the clearing member to the clearing house. In addition, clearing members may generally choose to provide to the clearing house the net amount of variation margin required for cleared swaps for all of its customers in the aggregate, rather than the gross amount for each customer.
ILLIQUID INVESTMENTS
Each Fund may invest in illiquid investments. A Fund may not acquire any illiquid investment if, immediately after the acquisition, the Fund would have invested more than 15% of its net assets in illiquid investments. An illiquid investment means any investment that a Fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. If illiquid investments exceed 15% of a Fund's net assets, certain remedial actions will be taken as required by Rule 22e-4 under the 1940 Act and the Funds' policies and procedures.
Special Considerations and Risks
A discussion of the risks associated with an investment in each Fund is contained in the Prospectus. The discussion below supplements, and should be read in conjunction with, the Prospectus.
GENERAL
Investment in a Select Sector SPDR Fund should be made with an understanding that the value of a Select Sector SPDR Fund's portfolio securities may fluctuate in accordance with changes in the financial condition of the issuers of the portfolio securities, the value of securities generally and other factors.
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An investment in a Select Sector SPDR Fund should also be made with an understanding of the risks inherent in an investment in equity securities, including the risk that the financial condition of issuers may become impaired or that the general condition of the securities markets may deteriorate (either of which may cause a decrease in the value of the portfolio securities and thus in the value of Shares). Securities are susceptible to general market fluctuations and to volatile increases and decreases in value as market confidence in and perceptions of their issuers change. These investor perceptions are based on various and unpredictable factors, including expectations regarding government, economic, monetary and fiscal policies, inflation and interest rates, economic expansion or contraction, and global or regional political, economic and banking crises. Securities of issuers traded on exchanges may be suspended on certain exchanges by the issuers themselves, by an exchange or by government authorities. Trading suspensions may be applied from time to time to the securities of individual issuers for reasons specific to that issuer, or may be applied broadly by exchanges or governmental authorities in response to market events. Suspensions may last for significant periods of time, during which trading in the securities and instruments that reference the securities, such as derivative instruments, may be halted.
While S&P DJI often chooses a replacement company for the S&P 500 with some characteristics in common with a company or companies removed from the index, it is not uncommon for a replacement company to have little in common with the company it replaces. Consequently, the removal of one company and its replacement by another may affect two Select Sector Indices and two Select Sector SPDR Funds, one of which included a company now removed from the S&P 500 and another which may have a company added to it.
Although most of the securities in the Select Sector Indices are listed on a national securities exchange, the principal trading market for some of the securities in a Select Sector Index may be in the over-the-counter market. The existence of a liquid trading market for certain securities may depend on whether dealers will make a market in such securities. There can be no assurance that a market will be made or maintained or that any such market will be or remain liquid. The price at which securities may be sold and the value of a Select Sector SPDR Fund's Shares will be adversely affected if trading markets for a Select Sector SPDR Fund's portfolio securities are limited or absent or if bid/ask spreads are wide.
FUTURES AND OPTIONS TRANSACTIONS
There can be no assurance that a liquid secondary market will exist for any particular futures contract or option at any specific time. Thus, it may not be possible to close a futures or options position. In the event of adverse price movements, a Select Sector SPDR Fund would continue to be required to make daily cash payments to maintain its required margin. In such situations, if a Select Sector SPDR Fund has insufficient cash, it may have to sell portfolio securities to meet daily margin requirements at a time when it may be disadvantageous to do so. In addition, a Select Sector SPDR Fund may be required to make delivery of the instruments underlying futures contracts it has sold.
Each Select Sector SPDR Fund will minimize the risk that it will be unable to close out a futures or options contract by only entering into futures and options for which there appears to be a liquid secondary market.
The risk of loss in trading futures contracts or uncovered call options in some strategies (e.g., selling uncovered index futures contracts) is potentially unlimited. The Select Sector SPDR Funds do not plan to use futures and options contracts, when available, in this manner. The risk of a futures position may still be large as traditionally measured due to the low margin deposits required. In many cases, a relatively small price movement in a futures contract may result in immediate and substantial loss or gain to the investor relative to the size of a required margin deposit. A Select Sector SPDR Fund, however, may utilize futures and options contracts in a manner designed to limit its risk exposure to that which is comparable to what it would have incurred through direct investment in securities.
Utilization of futures transactions by a Select Sector SPDR Fund involves the risk of imperfect or even negative correlation to its Select Sector Index if the index underlying the futures contracts differs from the Select Sector Index or if the futures contracts do not track the Select Sector Index as expected. There is also the risk of loss by a Select Sector SPDR Fund of margin deposits in the event of bankruptcy of a broker with whom a Select Sector SPDR Fund has an open position in the futures contract or option.
Certain financial futures exchanges limit the amount of fluctuation permitted in futures contract prices during a single trading day. The daily price fluctuation limit or daily limit establishes the maximum amount that the price of a futures contract may vary either up or down from the previous day's settlement price at the end of a trading session. Once the daily limit has been reached in a particular type of contract, generally no trades may be made on that day at a price beyond that limit. The daily limit governs only price movement during a particular trading day and therefore does not limit
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potential losses, because the limit may prevent the liquidation of unfavorable positions. Futures contract prices have occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of futures positions and subjecting some futures traders to substantial losses.
RISKS OF SWAP AGREEMENTS
Swap agreements are subject to the risk that the swap counterparty will default on its obligations. If such a default occurs, a Select Sector SPDR Fund will have contractual remedies pursuant to the agreements related to the transaction, but such remedies may be subject to bankruptcy and insolvency laws which could affect the Select Sector SPDR Fund's rights as a creditor.
The use of interest-rate and index swaps is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio security transactions. The use of a swap requires an understanding not only of the referenced asset, reference rate, or index, but also of the swap itself, without the benefit of observing the performance of the swap under all possible market conditions. These transactions generally do not involve the delivery of securities or other underlying assets or principal.
The absence of a regulated execution facility or contract market and lack of liquidity for swap transactions has led, in some instances, to difficulties in trading and valuation, especially in the event of market disruptions. Under recently adopted rules and regulations, transactions in some types of swaps are required to be centrally cleared. In a cleared derivatives transaction, a Select Sector SPDR Fund's counterparty to the transaction is a central derivatives clearing organization, or clearing house, rather than a bank or broker. Because the Select Sector SPDR Funds are not members of a clearing house, and only members of a clearing house can participate directly in the clearing house, each Select Sector SPDR Fund holds cleared derivatives through accounts at clearing members. In cleared derivatives transactions, a Select Sector SPDR Fund will make payments (including margin payments) to and receive payments from a clearing house through its accounts at clearing members. Clearing members guarantee performance of their clients' obligations to the clearing house. Centrally cleared derivative arrangements may be less favorable to a Select Sector SPDR Fund than bilateral (non-cleared) arrangements. For example, a Select Sector SPDR Fund may be required to provide greater amounts of margin for cleared derivatives transactions than for bilateral derivatives transactions. Also, in contrast to bilateral derivatives transactions, in some cases following a period of notice to a Select Sector SPDR Fund, a clearing member generally can require termination of existing cleared derivatives transactions at any time or an increase in margin requirements above the margin that the clearing member required at the beginning of a transaction. Clearing houses also have broad rights to increase margin requirements for existing transactions or to terminate transactions at any time in accordance with their rules. A Select Sector SPDR Fund is subject to risk if it enters into a derivatives transaction that is required to be cleared (or which SSGA FM expects to be cleared), and no clearing member is willing or able to clear the transaction on the Select Sector SPDR Fund's behalf. In that case, the transaction might have to be terminated, and the Select Sector SPDR Fund could lose some or all of the benefit of the transaction, including loss of an increase in the value of the transaction and loss of hedging protection. In addition, the documentation governing the relationship between a Select Sector SPDR Fund and clearing members is drafted by the clearing members and generally is less favorable to the Select Sector SPDR Fund than typical bilateral derivatives documentation.
These clearing rules and other new rules and regulations could, among other things, restrict a Select Sector SPDR Fund's ability to engage in, or increase the cost to the Select Sector SPDR Fund of, derivatives transactions, for example, by making some types of derivatives no longer available to the Select Sector SPDR Fund, increasing margin or capital requirements, or otherwise limiting liquidity or increasing transaction costs. These regulations, as applicable to swaps, are relatively new and evolving, so their potential impact on a Select Sector SPDR Fund and the financial system are not yet known.
Because they are two party contracts that may be subject to contractual restrictions on transferability and termination and because they may have terms of greater than seven days, swap agreements may be considered to be illiquid and subject to a Select Sector SPDR Fund's limitation on investments in illiquid investments. To the extent that a swap is not liquid, it may not be possible to initiate a transaction or liquidate a position at an advantageous time or price, which may result in significant losses. Like most other investments, swap agreements are subject to the risk that the market value of the instrument will change in a way detrimental to a Select Sector SPDR Fund's interest.
17

If a Select Sector SPDR Fund uses a swap as a hedge against, or as a substitute for, a portfolio investment, the Select Sector SPDR Fund will be exposed to the risk that the swap will have or will develop imperfect or no correlation with the portfolio investment. This could cause substantial losses for the Select Sector SPDR Fund. While hedging strategies involving swap instruments can reduce the risk of loss, they can also reduce the opportunity for gain or even result in losses by offsetting favorable price movements in other Select Sector SPDR Fund investments. Many swaps are complex and often valued subjectively.
CYBER SECURITY RISK
With the increased use of technologies such as the Internet and the dependence on computer systems to perform business and operational functions, investment companies (such as the Funds) and their service providers (including the Adviser) may be prone to operational and information security risks resulting from cyber-attacks and/or technological malfunctions. In general, cyber-attacks are deliberate, but unintentional events may have similar effects. Cyber-attacks include, among others, stealing or corrupting data maintained online or digitally, preventing legitimate users from accessing information or services on a website, releasing confidential information without authorization, and causing operational disruption. Successful cyber-attacks against, or security breakdowns of, a Fund, the Adviser, or a custodian, transfer agent, or other affiliated or third-party service provider may adversely affect a Fund or its shareholders. For instance, cyber-attacks may interfere with the processing of shareholder transactions, affect a Fund's ability to calculate its NAV, cause the release of private shareholder information or confidential Fund information, impede trading, cause reputational damage, and subject the Fund to regulatory fines, penalties or financial losses, reimbursement or other compensation costs, and additional compliance costs. Cyber-attacks may render records of Fund assets and transactions, shareholder ownership of Fund Shares, and other data integral to the functioning of the Fund inaccessible or inaccurate or incomplete. The Funds may also incur substantial costs for cyber security risk management in order to prevent cyber incidents in the future. The Funds and their shareholders could be negatively impacted as a result. While the Adviser has established business continuity plans and systems designed to minimize the risk of cyber-attacks through the use of technology, processes and controls, there are inherent limitations in such plans and systems, including the possibility that certain risks have not been identified given the evolving nature of this threat. The Funds rely on third-party service providers for many of their day-to-day operations, and will be subject to the risk that the protections and protocols implemented by those service providers will be ineffective to protect the Fund from cyber-attack. Similar types of cyber security risks also are present for issuers of securities in which the Funds invest, which could result in material adverse consequences for such issuers, and may cause a Fund's investment in such securities to lose value.
CONTINUOUS OFFERING
The method by which Creation Units are purchased and traded may raise certain issues under applicable securities laws. Because new Creation Units are issued and sold by each Fund on an ongoing basis, at any point a distribution, as such term is used in the Securities Act, may occur.
Broker-dealers and other persons are cautioned that some activities on their part may, depending on the circumstances, result in their being deemed participants in a distribution in a manner which could render them statutory underwriters and subject them to the prospectus delivery and liability provisions of the Securities Act. For example, a broker-dealer firm or its client may be deemed a statutory underwriter if it takes Creation Units after placing an order with the principal underwriter, breaks them down into individual Fund Shares, and sells such Fund Shares directly to customers, or if it chooses to couple the creation of a supply of new Fund Shares with an active selling effort involving solicitation of secondary market demand for Fund Shares. A determination of whether one is an underwriter for purposes of the Securities Act must take into account all the facts and circumstances pertaining to the activities of the broker-dealer or its client in the particular case, and the examples mentioned above should not be considered a complete description of all the activities that could lead to categorization as an underwriter.
Broker-dealer firms should also note that dealers who are not underwriters but are effecting transactions in Fund Shares, whether or not participating in the distribution of Shares, are generally required to deliver a prospectus or summary prospectus. This is because the prospectus delivery exemption in Section 4(a)(3) of the Securities Act is not available with respect to such transactions as a result of Section 24(d) of the 1940 Act. Firms that incur a prospectus-delivery obligation with respect to Fund Shares are reminded that under Securities Act Rule 153, a prospectus-delivery obligation under Section 5(b)(2) of the Securities Act owed to an exchange member in connection with a sale on the Exchange is satisfied by the fact that a Fund's Prospectus is available at the Exchange upon request. The prospectus delivery mechanism provided in Rule 153 is only available with respect to transactions on an exchange.
18

SSGA or its affiliates (the Selling Shareholder) may purchase Creation Units through a broker-dealer to seed (in whole or in part) Select Sector SPDR Funds as they are launched, or may purchase shares from broker-dealers or other investors that have previously provided seed for Select Sector SPDR Funds when they were launched or otherwise in secondary market transactions, and because the Selling Shareholder may be deemed an affiliate of such Select Sector SPDR Funds, the Fund Shares are being registered to permit the resale of these shares from time to time after purchase. The Select Sector SPDR Funds will not receive any of the proceeds from the resale by the Selling Shareholders of these Fund Shares.
The Selling Shareholder intends to sell all or a portion of the Fund Shares owned by it and offered hereby from time to time directly or through one or more broker-dealers, and may also hedge such positions. The Fund Shares may be sold on any national securities exchange on which the Fund Shares may be listed or quoted at the time of sale, in the over-the-counter market or in transactions other than on these exchanges or systems at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. These sales may be effected in transactions, which may involve cross or block transactions.
The Selling Shareholder may also loan or pledge Fund Shares to broker-dealers that in turn may sell such Fund Shares, to the extent permitted by applicable law. The Selling Shareholder may also enter into options or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of Fund Shares, which Fund Shares such broker-dealer or other financial institution may resell.
The Selling Shareholder and any broker-dealer or agents participating in the distribution of Fund Shares may be deemed to be underwriters within the meaning of Section 2(11) of the Securities Act in connection with such sales. In such event, any commissions paid to any such broker-dealer or agent and any profit on the resale of the Fund Shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. The Selling Shareholder who may be deemed an underwriter within the meaning of Section 2(11) of the Securities Act will be subject to the applicable prospectus delivery requirements of the Securities Act.
EUROPE – RECENT EVENTS
A number of countries in Europe, including Greece, Spain, Ireland, Italy, and Portugal, have experienced rising government debt levels. The concern over these debt levels has led to volatility in the European financial markets, which has adversely affected the exchange rate of the euro and may continue to significantly affect every country in Europe. For some countries, the ability to repay sovereign debt is in question, and default is possible, which could affect their ability to borrow in the future. Several countries have agreed to multi-year bailout loans from the European Central Bank, the IMF, and other institutions. A default or debt restructuring by any European country can adversely impact holders of that country's debt and can affect exposures to other European Union (EU) countries and their financial companies as well. These financial difficulties may continue, worsen or spread within or outside Europe. Responses to the financial problems by European governments, central banks and others, including austerity measures and reforms, may not work, may result in social unrest and may limit future growth and economic recovery or have other unintended consequences.
Uncertainties regarding the viability of the EU have impacted and may continue to impact markets in the United States and around the world. On January 31, 2020, the United Kingdom formally withdrew from the EU (commonly referred to as Brexit) and entered an 11-month transition period. The transition period concluded on December 31, 2020, and the United Kingdom left the EU single market and customs union under the terms of a new trade agreement. The agreement governs the new relationship between the United Kingdom and EU with respect to trading goods and services, but critical aspects of the relationship remain unresolved and subject to further negotiation and agreement. The full scope and nature of the consequences of the exit are not at this time known and are unlikely to be known for a significant period of time. It is also unknown whether the United Kingdom's exit will increase the likelihood of other countries also departing the EU. Any additional exits from the EU, or the possibility of such exits, may have a significant impact on the United Kingdom, Europe, and global economies, which may result in increased volatility and illiquidity, new legal and regulatory uncertainties and potentially lower economic growth for such economies that could potentially have an adverse effect on the value of a Select Sector SPDR Fund's investments.
MARKET TURBULENCE RESULTING FROM COVID-19
An outbreak of a respiratory disease caused by a novel coronavirus (known as COVID-19) first detected in China in December 2019 has spread globally. In an organized attempt to contain and mitigate the effects of the spread of COVID-19, governments and businesses world-wide took and may continue to take aggressive measures, including closing
19

borders, restricting international and domestic travel, and the imposition of prolonged quarantines of large populations. COVID-19 has resulted in and may continue to result in the disruption of and delays in the delivery of healthcare services and processes, the cancellation of organized events and educational institutions, the disruption of production and supply chains, a decline in consumer demand for certain goods and services, and general concern and uncertainty, all of which have contributed to increased volatility in global markets. The effects of COVID-19 will likely affect certain sectors and industries more dramatically than others, which may adversely affect the value of a Select Sector SPDR Fund's investments in those sectors or industries. COVID-19, and other epidemics and pandemics that may arise in the future, could adversely affect the economies of many nations, the global economy, individual companies and capital markets in ways that cannot be foreseen at the present time. In addition, the impact of infectious diseases in developing or emerging market countries may be greater due to limited health care resources. Political, economic and social stresses caused by COVID-19 also may exacerbate other pre-existing political, social and economic risks in certain countries. The duration of COVID-19 and its effects cannot be determined at this time, but the effects could be present for an extended period of time.
RUSSIA SANCTIONS RISK
Sanctions threatened or imposed by a number of jurisdictions, including the United States, the European Union and the United Kingdom, and other intergovernmental actions that have been or may be undertaken in the future, against Russia, Russian entities or Russian individuals, may result in the devaluation of Russian currency, a downgrade in the country's credit rating, an immediate freeze of Russian assets, a decline in the value and liquidity of Russian securities, property or interests, and/or other adverse consequences to the Russian economy or a Fund. The scope and scale of sanctions in place at a particular time may be expanded or otherwise modified in a way that have negative effects on a Fund. Sanctions, or the threat of new or modified sanctions, could impair the ability of a Fund to buy, sell, hold, receive, deliver or otherwise transact in certain affected securities or other investment instruments. Sanctions could also result in Russia taking counter measures or other actions in response, which may further impair the value and liquidity of Russian securities. These sanctions, and the resulting disruption of the Russian economy, may cause volatility in other regional and global markets and may negatively impact the performance of various sectors and industries, as well as companies in other countries, which could have a negative effect on the performance of a Fund, even if a Fund does not have direct exposure to securities of Russian issuers. As a collective result of the imposition of sanctions, Russian government countermeasures and the impact that they have had on the trading markets for Russian securities, certain Funds have used, and may in the future use, fair valuation procedures approved by the Fund's Board to value certain Russian securities, which could result in such securities being deemed to have a zero value.
A reduction in liquidity of certain Fund holdings as a result of sanctions and related actions may cause a Fund to experience increased premiums or discounts to its NAV and/or wider bid-ask spreads. Additionally, if it becomes impracticable or unlawful for a Fund to hold securities subject to, or otherwise affected by, sanctions, or if deemed appropriate by the Fund's investment adviser, the Fund may prohibit in-kind deposits of the affected securities in connection with creation transactions and instead require a cash deposit, which may also increase the Fund's transaction costs.
Investment Restrictions
The Trust has adopted the following investment restrictions as fundamental policies with respect to each Select Sector SPDR Fund. These restrictions cannot be changed with respect to a Select Sector SPDR Fund without the approval of the holders of a majority of such Select Sector SPDR Fund's outstanding voting securities. For purposes of the 1940 Act, a majority of the outstanding voting securities of a Select Sector SPDR Fund means the vote, at an annual or a special meeting of the security holders of the Trust, of the lesser of (1) 67% or more of the voting securities of the Select Sector SPDR Fund present at such meeting, if the holders of more than 50% of the outstanding voting securities of such Select Sector SPDR Fund are present or represented by proxy, or (2) more than 50% of the outstanding voting securities of the Select Sector SPDR Fund. Except with the approval of a majority of the outstanding voting securities, a Select Sector SPDR Fund may not:
1.
Change its investment objective;
2.
Lend any funds or other assets except through the purchase of all or a portion of an issue of securities or obligations of the type in which it is permitted to invest (including participation interests in such securities or obligations) and except that a Select Sector SPDR Fund may lend its portfolio securities in an amount not to exceed 33 1/3% of the value of its total assets;
20

3.
Issue senior securities or borrow money, except borrowings from banks for temporary or emergency purposes in an amount up to 10% of the value of the Select Sector SPDR Fund's total assets (including the amount borrowed), valued at market, less liabilities (not including the amount borrowed) valued at the time the borrowing is made, and the Select Sector SPDR Fund will not purchase securities while borrowings in excess of 5% of the Select Sector SPDR Fund's total assets are outstanding, provided, that for purposes of this restriction, short-term credits necessary for the clearance of transactions are not considered borrowings (this limitation on purchases does not apply to acceptance by the Select Sector SPDR Fund of a deposit principally of securities included in the relevant Select Sector Index for creation of Creation Units);
4.
Pledge, hypothecate, mortgage or otherwise encumber its assets, except to secure permitted borrowings. (The deposit of underlying securities and other assets in escrow and collateral arrangements with respect to initial or variation margin for futures contracts or options contracts will not be deemed to be pledges of the Select Sector SPDR Fund's assets);
5.
Purchase, hold or deal in real estate, or oil, gas or mineral interests or leases, but a Select Sector SPDR Fund may purchase and sell securities that are issued by companies that invest or deal in such assets;
6.
Act as an underwriter of securities of other issuers, except to the extent the Select Sector SPDR Fund may be deemed an underwriter in connection with the sale of securities in its portfolio;
7.
Purchase securities on margin, except for such short-term credits as are necessary for the clearance of transactions, except that a Select Sector SPDR Fund may make margin deposits in connection with transactions in options, futures and options on futures;
8.
Sell securities short;
9.
Invest in commodities or commodity contracts, except that a Select Sector SPDR Fund may transact in exchange traded futures contracts on securities, stock indexes and options on such futures contracts and make margin deposits in connection with such contracts.; or
10.
Concentrate its investments in securities of issuers in the same industry or group of industries, except that a Select Sector SPDR Fund will be concentrated in an industry or group of industries to the extent that such Fund's underlying index concentrates in a particular industry or group of industries.(1)
In addition to the investment restrictions adopted as fundamental policies as set forth above, each Select Sector SPDR Fund observes the following restrictions, which may be changed by the Board without a shareholder vote. A Select Sector SPDR Fund:
1.
Will not invest in the securities of a company for the purpose of exercising management or control, provided that the Trust may vote the investment securities owned by each Select Sector SPDR Fund in accordance with its views.
2.
Will, under normal circumstances, invest at least 95% of its total assets in common stocks that compose its relevant Select Sector Index. Prior to any change in a Fund's 95% investment policy, a Fund will provide shareholders with at least 60 days' written notice.
3.
Will not invest in securities issued by other investment companies so that, as determined immediately after a purchase of such securities is made: (i) not more than 5% of the value of the Fund's total assets will be invested in the securities of any one investment company; (ii) not more than 10% of the value of its total assets will be invested in the aggregate in securities of investment companies as a group; and (iii) not more than 3% of the outstanding voting stock of any one investment company will be owned by the Fund.
If a percentage limitation is adhered to at the time of investment or contract, a later increase or decrease in percentage resulting from any change in value or total or net assets will not result in a violation of such restriction, except that the percentage limitations with respect to the borrowing of money will be observed continuously.
(1)
The SEC Staff considers concentration to involve the investment of more than 25% of a fund's assets in an industry or group of industries.
21

Exchange Listing and Trading
A discussion of exchange listing and trading matters associated with an investment in the Select Sector SPDR Funds is contained in the Prospectus under PURCHASE AND SALE INFORMATION and ADDITIONAL PURCHASE AND SALE INFORMATION. The discussion below supplements, and should be read in conjunction with, the Prospectus.
The Shares of each Select Sector SPDR Fund are approved for listing and trading on the Exchange. Shares trade on the Exchange at prices that may differ to some degree from their net asset value. There can be no assurance that the requirements of the Exchange necessary to maintain the listing of Shares of a Select Sector SPDR Fund will continue to be met.
The Exchange may consider the suspension of trading in, and may initiate delisting proceedings of, the Shares of a Select Sector SPDR Fund under any of the following circumstances: (i) if the Exchange becomes aware that the Select Sector SPDR Fund is no longer eligible to operate in reliance on Rule 6c-11 under the 1940 Act; (ii) if the Select Sector SPDR Fund no longer complies with the applicable listing requirements set forth in the Exchange's rules; (iii) if, following the initial twelve-month period after commencement of trading on the Exchange of the Select Sector SPDR Fund, there are fewer than 50 beneficial holders of the Select Sector SPDR Fund; or (iv) if such other event shall occur or condition exists which, in the opinion of the Exchange, makes further dealings on the Exchange inadvisable. The Exchange will remove the Shares from listing and trading upon termination of a Select Sector SPDR Fund.
The Trust reserves the right to adjust the Share price of a Select Sector SPDR Fund in the future to maintain convenient trading ranges for investors. Any adjustments would be accomplished through stock splits or reverse stock splits, which would have no effect on the net assets of the Select Sector SPDR Fund or an investor's equity interest in the Select Sector SPDR Fund.
As in the case of other publicly traded securities, brokers' commissions on transactions will be based on negotiated commission rates at customary levels.
Management of the Trust
The following information supplements and should be read in conjunction with the section in the Prospectus entitled MANAGEMENT.
The Board has responsibility for the oversight of the management, operations and business affairs of the Trust, including general oversight of its investment activities. The Trustees elect the officers of the Trust who are responsible for administering the day-to-day operations of the Trust and the Select Sector SPDR Funds.
The Trustees and executive officers of the Trust, along with their year of birth, principal occupations over the past five years, length of time served, total number of portfolios overseen in the fund complex, public and fund directorships held over the past five years and other positions and their affiliations, if any, with the Adviser, are listed below:
TRUSTEES
Name, Address
and Year of Birth
Position(s)
With
Trust
Term of
Office and
Length of
Time Served
Principal
Occupation(s)
During Past
Five Years
Number of
Portfolios
in Fund
Complex
Overseen
by Trustee†
Other
Directorships
Held by
Trustee
During Past
Five Years
INDEPENDENT TRUSTEES
ASHLEY T. RABUN
c/o The Select Sector
SPDR Trust
One Iron Street
Boston, MA 02210
1952
Trustee, Chair
of the Board;
Member of the
Audit
Committee,
Member of the
Nominating and
Governance
Committee
Term:
Indefinite
Appointed:
October
2015
Elected:
October
2021
Retired; President and
Founder, InvestorReach,
Inc., a financial services
consulting firm (1996 -
2015).
11
Chairperson of the
Board and Member of
the Audit, Nominating
and Valuation
Committees, Investment
Managers Series Trust
(2007 - present).
ALLISON GRANT WILLIAMS
c/o The Select Sector
SPDR Trust
Trustee;
Member of the
Audit
Term:
Indefinite
Elected:
Retired; Practice
Executive, Global
Strategic Relationship
11
Leadership Advisory
Committee (2019 -
present) and
22

Name, Address
and Year of Birth
Position(s)
With
Trust
Term of
Office and
Length of
Time Served
Principal
Occupation(s)
During Past
Five Years
Number of
Portfolios
in Fund
Complex
Overseen
by Trustee†
Other
Directorships
Held by
Trustee
During Past
Five Years
One Iron Street
Boston, MA 02210
1956
Committee,
Member of the
Nominating and
Governance
Committee
October
2021
Management/Asset
Management -
Corporate & Institutional
Services (C&IS)
Division, Northern Trust
Corporation (2017 -
2021); and Chief
Operating Officer &
Chief Administrative
Officer, Institutional
Investor Group, N.A.,
C&IS Division, Northern
Trust Corporation (2016
- 2017).
 
Membership Committee
Chair (2021 - present),
Art Institute of Chicago;
Academic Affairs Chair
and Executive
Committee Member
(2018 - Present) and
Board of Trustees and
Investment Committee
Member (2012 -
present), Columbia
College Chicago.
SHEILA HARTNETT-DEVLIN
c/o The Select Sector
SPDR Trust
One Iron Street
Boston, MA 02210
1958
Trustee;
Member of the
Audit
Committee,
Member of the
Nominating and
Governance
Committee
Term:
Indefinite
Elected:
October
2021
Retired; Senior Vice
President and Head of
the U.S. Institutional
Business, American
Century Investments,
Inc. (2008 - 2017).
11
Director, South Jersey
Industries, Inc. (energy
services) (1999 -
present) and Director,
Mannington Mills
(flooring products) (2005
- present).
JAMES JESSEE
c/o The Select Sector
SPDR Trust
One Iron Street
Boston, MA 02210
1958
Trustee;
Member of the
Audit
Committee,
Member of the
Nominating and
Governance
Committee
Term:
Indefinite
Elected:
October
2021
Retired; Strategic
Advisor, MFS Investment
Management (2018);
and Co-Head, Global
Distribution and
President MFS Fund
Distributors, Inc. (2011 -
2017).
11
Trustee, Yieldstreet
Prism Fund (investment
company) (2019 -
present); Board Member,
Board of Governors,
Investment Company
Institute (2014 - 2018);
Director, Waddell &
Reed Financial, Inc.
(investment
management) (2019 -
2021).
TERESA POLLEY
c/o The Select Sector
SPDR Trust
One Iron Street
Boston, MA 02210
1960
Trustee; Chair
of the Audit
Committee,
Member of the
Nominating and
Governance
Committee
Term:
Indefinite
Elected:
October
2021
Retired. Terri Polley
Consulting (2019 to
2021); President and
Chief Executive Officer
of the Financial
Accounting Foundation
(FAF) (2008 - 2019).
11
Director, Fairfield County
Band (2023 – Present);
Trustee (2018 to
present), Academic
Affairs Committee
Member (2018 -
present), Audit
Committee Chair (2021 -
present), Executive
Committee Member
(2021 - present),
Finance and Operations
Committee Member
(2018 - present), St.
Francis University.
R. CHARLES TSCHAMPION
c/o The Select Sector
SPDR Trust
One Iron Street
Boston, MA 02210
1946
Trustee,
Member of the
Audit
Committee,
Chair of the
Nominating and
Governance
Committee
Term:
Indefinite
Elected:
October
1998
Retired.
11
Trustee Emeritus of
Lehigh University.
23

Name, Address
and Year of Birth
Position(s)
With
Trust
Term of
Office and
Length of
Time Served
Principal
Occupation(s)
During Past
Five Years
Number of
Portfolios
in Fund
Complex
Overseen
by Trustee†
Other
Directorships
Held by
Trustee
During Past
Five Years
INTERESTED TRUSTEES
JAMES E. ROSS*
c/o The Select Sector
SPDR Trust
One Iron Street
Boston, MA 02210
1965
Trustee
Term:
Indefinite
Appointed:
November
2005
Elected:
October
2021
President, Winnisquam
Capital LLC (December
2022 – present);
Non-Executive
Chairman, Fusion
Acquisition Corp. (June
2020 - September
2021); Non-Executive
Chairman, Fusion
Acquisition Corp II
(February 2020 -
present): Retired
Chairman and Director,
SSGA Funds
Management, Inc. (2005
- March 2020); Retired
Executive Vice
President, State Street
Global Advisors (2012 -
March 2020); Retired
Chief Executive Officer
and Manager, State
Street Global Advisors
Funds Distributors, LLC
(May 2017 - March
2020); Director, State
Street Global Markets,
LLC (2013 - April 2017);
President, SSGA Funds
Management, Inc. (2005
- 2012); Principal, State
Street Global Advisors
(2000 - 2005).
136
Investment Managers
Series Trust (December
2022 – present); SSGA
SPDR ETFs Europe I
plc (Director) (November
2016 – March 2020);
SSGA SPDR ETFs
Europe II plc (Director)
(November 2016 –
March 2020); State
Street Navigator
Securities Lending Trust
(July 2016 – March
2020); SSGA Funds
(January 2014 – March
2020); SSGA Active
Trust (2011 - March
2020); State Street
Institutional Investment
Trust (February 2007 –
March 2020); State
Street Master Funds
(February 2007 – March
2020); SPDR Series
Trust (November 2005 -
December 2009; April
2010 - March 2020);
SPDR Index Shares
Funds (November 2005
- December 2009; April
2010 - March 2020);
Elfun Funds (July 2016 –
December 2018).
RORY TOBIN*
c/o The Select Sector
SPDR Trust
One Iron Street
Boston, MA 02210
1965
Trustee
Term:
Indefinite
Elected:
October
2021
Executive Vice President
and Head of Business
EMEA, Head of Global
SPDR ETF, Member of
the SSGA Global
Executive Management
Group (2014 - present).
11
None
For the purpose of determining the number of portfolios overseen by the Trustees, Fund Complex comprises registered investment companies for which SSGA Funds Management, Inc. serves as investment adviser.
*
Mr. Ross and Mr. Tobin are each an interested person of the Trust, as defined in the 1940 Act. Mr. Ross is an interested person because of his ownership interest in an affiliate of the Adviser. Mr. Tobin is an interested person because of his position with an affiliate of the Adviser.
OFFICERS
Name, Address
and Year of Birth
Position(s)
With Trust
Term of
Office and
Length of
Time Served
Principal Occupation(s)
During Past Five Years
ELLEN M. NEEDHAM
SSGA Funds Management, Inc.
One Iron Street
Boston, MA 02210
1967
President and
Principal Executive
Officer
Term: Indefinite
Served: since
May 2013
Chairman, SSGA Funds Management, Inc. (March 2020
- present); President and Director, SSGA Funds
Management, Inc. (2001 - present)*; Senior Managing
Director, State Street Global Advisors (1992 - present)*;
Manager, State Street Global Advisors Funds
Distributors, LLC (May 2017 - present).
24

Name, Address
and Year of Birth
Position(s)
With Trust
Term of
Office and
Length of
Time Served
Principal Occupation(s)
During Past Five Years
MICHAEL P. RILEY
SSGA Funds Management, Inc.
One Iron Street
Boston, MA 02210
1969
Vice President
Term: Indefinite
Served: since
February 2005
Managing Director, State Street Global Advisors (2005 -
present).*
CHAD C. HALLETT
SSGA Funds Management, Inc.
One Iron Street
Boston, MA 02210
1969
Treasurer and
Principal Financial
Officer
Term: Indefinite
Served: since
November 2007
Vice President, State Street Global Advisors and SSGA
Funds Management, Inc. (November 2014 - present).
ANN M. CARPENTER
SSGA Funds Management, Inc.
One Iron Street
Boston, MA 02210
1966
Deputy Treasurer
Term: Indefinite
Served: since
April 2015
Chief Operating Officer, SSGA Funds Management, Inc.
(April 2005 - present)*; Managing Director, State Street
Global Advisors (April 2005 - present).*
BRUCE S. ROSENBERG
SSGA Funds Management, Inc.
One Iron Street
Boston, MA 02210
1961
Deputy Treasurer
Term: Indefinite
Served: since
February 2016
Managing Director, State Street Global Advisors and
SSGA Funds Management, Inc. (July 2015 - present);
Director, Credit Suisse (April 2008 - July 2015).
DARLENE ANDERSON-VASQUEZ
SSGA Funds Management, Inc.
One Iron Street
Boston, MA 02210
1968
Deputy Treasurer
Term: Indefinite
Served: since
February 2017
Managing Director, State Street Global Advisors and
SSGA Funds Management, Inc. (May 2016 - present);
Senior Vice President, John Hancock Investments
(September 2007 - May 2016).
ARTHUR A. JENSEN
SSGA Funds Management, Inc.
1600 Summer Street
Stamford, CT 06905
1966
Deputy Treasurer
Term: Indefinite
Served: since
November 2017
Vice President, State Street Global Advisors and SSGA
Funds Management, Inc. (July 2016 - present); Mutual
Funds Controller, GE Asset Management Incorporated
(April 2011 - July 2016).
DAVID LANCASTER
SSGA Funds Management, Inc.
One Iron Street
Boston, MA 02210
1971
Assistant Treasurer
Term: Indefinite
Served: since
November 2020
Vice President, State Street Global Advisors and SSGA
Funds Management, Inc. (July 2017 – present);
Assistant Vice President, State Street Bank and Trust
Company (November 2011 – July 2017).*
RYAN HILL
SSGA Funds Management, Inc.
One Iron Street
Boston, MA 02210
1982
Assistant Treasurer
Term: Indefinite
Served: since
May 2022
Vice President, State Street Global Advisors and SSGA
Funds Management Inc. (May 2017 – present);
Assistant Vice President, State Street Bank and Trust
Co. (May 2014 – May 2017).
JOHN BETTENCOURT
SSGA Funds Management, Inc.
One Iron Street
Boston, MA 02210
1976
Assistant Treasurer
Term: Indefinite
Served: since
May 2022
Vice President, State Street Global Advisors and SSGA
Funds Management Inc. (March 2020 – present);
Assistant Vice President, State Street Global Advisors
(June 2007 – March 2020).
SEAN O'MALLEY
SSGA Funds Management, Inc.
One Iron Street
Boston, MA 02210
1969
Chief Legal Officer
Term: Indefinite
Served: since
August 2019
Senior Vice President and Deputy General Counsel,
State Street Global Advisors (November 2013 –
present).
DAVID BARR
SSGA Funds Management, Inc.
One Iron Street
Boston, MA 02210
1974
Assistant Secretary
Term: Indefinite
Served: since
November 2020
Vice President and Senior Counsel, State Street Global
Advisors (October 2019 - present); Vice President and
Counsel, Eaton Vance Corp. (October 2010 - October
2019).
DAVID URMAN
SSGA Funds Management, Inc.
One Iron Street
Boston, MA 02210
1985
Secretary
Term: Indefinite
Served: since
August 2022
Vice President and Senior Counsel, State Street Global
Advisors (April 2019 - present); Vice President and
Counsel, State Street Global Advisors (August 2015 -
April 2019); Associate, Ropes & Gray LLP (November
2012 - August 2015).
25

Name, Address
and Year of Birth
Position(s)
With Trust
Term of
Office and
Length of
Time Served
Principal Occupation(s)
During Past Five Years
BRIAN HARRIS
SSGA Funds Management, Inc.
One Iron Street
Boston, MA 02210
1973
Chief Compliance
Officer, Anti-Money
Laundering Officer
and Code of Ethics
Compliance Officer
Term: Indefinite
Served: since
November 2013
Managing Director, State Street Global Advisors and
SSGA Funds Management, Inc. (June 2013 - present).*
*
Served in various capacities and/or with various affiliated entities during the noted time period.
LEADERSHIP STRUCTURE AND BOARD OF TRUSTEES
The Board has general oversight responsibility with respect to the business and affairs of the Trust. The Board is responsible for overseeing the operations of the Funds in accordance with the provisions of the 1940 Act, other applicable laws and the Trust's Declaration of Trust. The Board is composed of six Independent Trustees and two Interested Trustees. In accordance with the Board Governance Policies, the Board has appointed an Independent Trustee to serve as Chairman of the Board. Generally, the Board acts by majority vote of all of the Trustees, including a majority vote of the Independent Trustees if required by applicable law. The Trust's day-to-day operations are managed by the Adviser and other service providers who have been approved by the Board. The Board meets periodically throughout the year to oversee the Trust's activities, review contractual arrangements with service providers, oversee compliance with regulatory requirements, and review performance. The Board has determined that its leadership structure is appropriate given the size of the Board, the experience of each Trustee and the number and nature of Funds within the Trust.
The Trustees were selected to serve and continue on the Board based upon their skills, experience, judgment, analytical ability, diligence, ability to work effectively with other Trustees and a commitment to the interests of shareholders and, with respect to the Independent Trustees, a demonstrated willingness to take an independent and questioning view of management. Each Trustee also has familiarity with the Funds, the Adviser, the Administrator, the Sub-Administrator and the Distributor, and their operations. The Independent Trustees also have experience with the special regulatory requirements governing regulated investment companies and the special responsibilities of investment company directors as a result of his or her service as a Trustee of the Trust and/or as a director of other investment companies. In addition to those qualifications, the following is a brief summary of the specific experience, qualifications or skills that led to the conclusion that, as of the date of this SAI, each person identified below should serve as a Trustee for the Trust. References to the qualifications, attributes and skills of the Trustees are pursuant to requirements of the SEC, and do not constitute a representation that the Board or any Trustee has any special expertise and do not impose any greater responsibility or liability on any such person or on the Board by reason thereof. As required by rules the SEC has adopted under the 1940 Act, the Trust's Independent Trustees select and nominate all candidates for Independent Trustee positions.
Ashley T. Rabun. Ms. Rabun has served as a Trustee of the Trust since October 2015 and has served as Chair of the Board since June 2021. Ms. Rabun also serves on the Nominating and Governance Committee and the Audit Committee. Since 2007, she has also served as Chairperson of the Board and Member of the Audit Committee, Valuation Committee and Nominating Committee of Investment Managers Series Trust. From 1996 to 2015, Ms. Rabun served as President and Chief Executive Officer of InvestorReach, Inc., a financial services consulting firm. She served as Partner and President of Mutual Funds advised by Nicholas Applegate Capital Management from 1992 to 1996. From 1990 to 1992, Ms. Rabun served as Marketing Director at InterInvest, Inc. Prior thereto, she was employed as a registered representative for several brokerage firms.
Allison Grant Williams. Ms. Williams has served as a Trustee of the Trust since October 2021. Ms. Williams also serves on the Nominating and Governance Committee and the Audit Committee. Ms. Williams previously served as Senior Vice President in the Global Strategic Relationship Management Group at Northern Trust/Corporate & Institutional Services (C&IS) Division from 2017 to 2021. Prior to that, Ms. Williams served as Chief Operating Officer of Northern Trust's Global Funds Services Group from 2014 to 2017, where she also served as Chief Administrative Officer of Northern Trust's Institutional Investor Services Group from 2016 to 2017. In addition, Ms. Williams served as Chief Administrative Officer and Chief Marketing Strategy Officer in Northern Trust's Exchange-Traded Funds Group/Asset Management Division from 2011 to 2014. Prior to that, Ms. Williams held several positions with UBS O'Connor.
26

Sheila Hartnett-Devlin. Ms. Hartnett-Devlin has served as a Trustee of the Trust since October 2021. Ms. Hartnett-Devlin also serves on the Nominating and Governance Committee and the Audit Committee. Ms. Hartnett-Devlin previously served as a Vice President and Client Portfolio Manager from 2008 to 2011 and a Senior Vice President and Head of U.S. Institutional Business from 2011 to 2017 for American Century Investments, a large investment product provider. From 2005 to 2008, she served as Managing Director and Global Portfolio Manager at Cohen, Klingenstein & Marks, Inc., a small investment management firm and from 2002 to 2008, as Director at Mercy Investment Services, a ministry of the Sisters of Mercy. Prior to 2002, Ms. Hartnett-Devlin served in several roles, including Chief Global Equity Strategist for Fiduciary Trust Company International. Additionally, she has served on the board of directors of South Jersey Industries since 1999, where she chairs the Environmental Social and Governance Committee and sits on the Audit Committee (Chair from 2007 to 2017) and Strategy and Finance Committees. Ms. Hartnett-Devlin also serves on the board of directors of Mannington Mills since 2005 and is the Chair of the Personnel and Compensation Committee.
James Jessee. Mr. Jesse has served as a Trustee of the Trust since October 2021. Mr. Jessee also serves on the Nominating and Governance Committee and the Audit Committee. From 1987 to 2018, Mr. Jessee served in numerous senior leadership roles in the intermediary distribution space at MFS Investment Management, including as President of MFS Funds Distributors, Inc. and Co-Head of Global Distribution. Prior to 1987, Mr. Jessee served as an insurance wholesaler. Since October 2019, Mr. Jessee has served as member of the Board of Trustees of the Yieldstreet Prism Fund. From 2019-2021, Mr. Jessee served on the Board of Directors for Waddell and Reed. From 2014-2018, Mr. Jessee served as a Board Member to the Board of Governors of the Investment Company Institute.
Teresa Polley. Ms. Polley has served as a Trustee of the Trust since October 2021 and has been designated by the Board as an audit committee financial expert, as defined in SEC rules. Ms. Polley previously served as President and Chief Executive Officer of the Financial Accounting Foundation (FAF) from 2008 until her retirement in 2019. As President/CEO of FAF, Ms. Polley advised and collaborated with FAF's governing body and committees on audit, finance, investments, compensation, governance, and nominations, including appointments to its standard-setting bodies, the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB). She is a certified public accountant licensed by the Commonwealth of Pennsylvania and is an experienced audit committee chair.
James E. Ross. Mr. Ross has served as a Trustee of the Trust since 2005 and served as President from November 2010 to May 2013. Mr. Ross served in various executive capacities at the Adviser and its affiliates from 2005 until his retirement in 2020. Mr. Ross also serves as a Trustee of SPDR Series Trust, SPDR Index Shares Funds and SSGA Active Trust, for which SSGA FM serves as investment adviser. Since June 2010, Mr. Ross has chaired the Investment Company Institute's Exchange-Traded Funds Committee. Mr. Ross is also on the Board of Governors of the Investment Company Institute.
R. Charles Tschampion, CFA. Mr. Tschampion has served as a Trustee of the Trust since inception in 1998. He also serves as Chair to the Nominating and Governance Committee and as a member of the Audit Committee. Mr. Tschampion is a CFA charterholder and served on the staff at the CFA Institute beginning in 2005 until August 2014. He retired from General Motors after a 37-year career, including 28 years at General Motors Asset Management, where his last position was Managing Director of Investment Research and of Defined Contribution Plans. Mr. Tschampion sat on the AIMR Board of Governors from 1995 to 2001 and served as Chairman from 1999 to 2000. Mr. Tschampion was a Trustee of Lehigh University from 1998 to 2010 and served as Chair of the Investment Sub-Committee for the Lehigh University Endowment Fund from 1998 to 2008; he currently is Trustee Emeritus of Lehigh University. Mr. Tschampion also served as a Director, Chairman of the Audit Committee and a member of the Nominating Committee of db-X Exchange-Traded Funds Inc. (formerly known as TDX Independence Funds, Inc.) from 2007 to 2015.
Rory Tobin. Mr. Tobin has served as a Trustee of the Trust since October 2021. He currently serves as Executive Vice President and Head of Business in Europe, the Middle East and Africa (EMEA) and head of the Global SPDR Exchange Traded Fund (ETF) business at SSGA since 2014. In addition. Mr. Tobin is a member of the SSGA Global Executive Management Group. Prior to joining SSGA, Mr. Tobin served as CEO and Global Head of the Investments and Solutions business at Barclays Asset Management. From 2004 to 2014, Mr. Tobin held several roles at BlackRock/Barclays Global Investors (BGI), including as co-CEO of the Global iShares ETF business and as head of the Global Index and Markets Group. Prior to joining BGI, Mr. Tobin spent 14 years at Goldman Sachs where he held numerous roles, including in equity capital markets, equity derivative distribution, and distribution leadership.
RISK OVERSIGHT
The day-to-day operations of the Funds, including the management of risk, are performed by third party service providers, such as the Adviser, Distributor, Administrator and Sub-Administrator. The Trustees are responsible for overseeing the Trust's service providers and thus have oversight responsibilities with respect to risk management performed by those
27

service providers. Risk management seeks to identify and address risks, i.e., events or circumstances that could have material adverse effects on the business, operations, shareholder services, investment performance or reputation of the Funds. The Trust and its service providers employ a variety of processes, procedures and controls to identify certain of those possible events or circumstances, to lessen the probability of their occurrence and/or to mitigate the effects of such events or circumstances if they do occur.
Not all risks that may affect the Funds can be identified nor can controls be developed to eliminate or mitigate their occurrence or effects. It may not be practical or cost effective to eliminate or mitigate certain risks, the processes and controls employed to address certain risks may be limited in their effectiveness, and some risks are simply beyond the reasonable control of the Funds or the Adviser or other service providers. Moreover, it is necessary to bear certain risks (such as investment-related risks) to achieve a Fund's goals. As a result of the foregoing and other factors, the Funds' ability to manage risk is subject to substantial limitations.
Risk oversight forms part of the Board's general oversight of the Funds and is addressed as part of various Board and Committee activities. As part of its regular oversight of the Funds, the Board, directly or through a Committee, interacts with and reviews reports from, among others, the Adviser, the Trust's Chief Compliance Officer and the independent registered public accounting firm, as appropriate, regarding risks faced by the Funds. The Board is responsible for overseeing the nature, extent and quality of the services provided to the Funds by the Adviser and receives information about those services at its regular meetings. The Board has met with the Adviser's Chief Risk Officer to review the Adviser's approach to addressing risks. In addition, on an annual basis, in connection with its consideration of whether to renew the Advisory Agreement, the Board meets with the Adviser to review the services provided. Among other things, the Board regularly considers the Adviser's adherence to the Funds' investment restrictions and compliance with various Fund policies and procedures and with applicable securities regulations. The Board has appointed a Chief Compliance Officer who oversees the implementation and testing of the Trust's compliance program and reports to the Board regarding compliance matters for the Trust and its service providers. The Board, with the assistance of the Adviser, reviews investment policies and risks in connection with its review of the Funds' performance. In addition, as part of the Board's oversight of the Funds' advisory and other service provider agreements, the Board may periodically consider risk management aspects of their operations and the functions for which they are responsible.
The Board has established the following Committees and the membership of each Committee to assist in its oversight functions, including its oversight of the risks the Funds face. Committee membership is identified below. Each Committee must report its activities to the Board on a regular basis.
Audit Committee: The Board has an Audit Committee consisting of all Trustees who are not interested persons (as defined by the 1940 Act) of the Trust. Ms. Polley serves as the Chairman. The primary purpose of the Committee is to assist the Board in fulfilling certain of its responsibilities. The Audit Committee serves as an independent and objective party to monitor the Funds' accounting policies, financial reporting and internal control system, as well as the work of the independent registered public accounting firm. The Audit Committee assists Board oversight of (1) the quality and integrity of the Funds' financial statements and the independent audit thereof; (2) the Funds' accounting and financial reporting processes and internal control over financial reporting; (3) the Funds' compliance with legal and regulatory requirements that relate to the Funds' accounting and financial reporting, internal control over financial reporting and independent audits; and (4) the qualifications, independence and performance of the Funds' independent registered public accounting firm. The Audit Committee meets with the Trust's independent auditors to review and approve the scope and results of their professional services; to review the procedures for evaluating the adequacy of the Trust's accounting controls; to consider the range of audit fees; and to make recommendations to the Board regarding the engagement of the Trust's independent auditors. The Audit Committee met three (3) times during the fiscal year ended September 30, 2022.
Nominating and Governance Committee: The Board has a Nominating and Governance Committee consisting of all Trustees who are not interested persons (as defined by the 1940 Act) of the Trust. Mr. Tschampion serves as Chairman. The Nominating and Governance Committee oversees administration of the Board Governance Policies and will consider proposals for candidates to serve as independent Trustees. Any such proposals should be sent to the Trust in care of the Nominating and Governance Committee Chairman. The final recommendation of a prospective independent Trustee rests solely with the Nominating and Governance Committee. The Nominating and Governance Committee also periodically reviews Independent Trustee compensation. The Nominating and Governance Committee met two (2) times during the fiscal year ended September 30, 2022.
When evaluating a person as a potential nominee to serve as an independent Trustee, the Committee will generally consider, among other factors: age; education; relevant business experience; geographical factors; whether the person is independent and otherwise qualified under applicable laws and regulations to serve as a Trustee; and whether the
28

person is willing to serve, and willing and able to commit the time necessary for attendance at meetings and the performance of the duties of an independent Trustee. The Committee also meets personally with the nominees and conducts a reference check. The final decision is based on a combination of factors, including the strengths and the experience an individual may bring to the Board. The Committee believes the Board generally benefits from diversity of background, experience and views among its members, and considers this a factor in evaluating the composition of the Board, but has not adopted any specific policy in this regard.
REMUNERATION OF TRUSTEES
The Trust pays each Trustee an annual retainer plus a per meeting fee for each regularly scheduled meeting of the Board attended by the Trustee (whether in person or telephonically) and any other telephonic meeting. The Chairman of the Board (who is an Independent Trustee) receives an additional fee. Audit Committee and Nominating and Governance Committee members receive per meeting fees and the Chairman of the Audit Committee and the Chairman of the Nominating and Governance Committee also receive an additional fee. The Trust may also reimburse each Trustee for travel and other out-of-pocket expenses incurred by him/her in connection with attending such meetings and in connection with attending industry seminars and meetings.
The following table sets forth the total fees accrued with respect to the remuneration of Trustees of the Trust for the fiscal year ended September 30, 2022:
Name of
Trustee
Aggregate
Compensation
from the Trust
Pension or
Retirement
Benefits
Accrued
as Part
of Trust
Expenses
Estimated
Annual
Benefits
Upon
Retirement
Total
Compensation
from the
Trust and
Fund Complex
Paid to
Trustees
Independent Trustees:
Cheryl Burgermeister(1)
$327,000
  N/A
  N/A
$327,000
Allison Grant Williams(2)
$292,000
  N/A
  N/A
$292,000
Sheila Hartnett-Devlin(2)
$292,000
  N/A
  N/A
$292,000
James Jessee(2)
$292,000
  N/A
  N/A
$292,000
Teresa Polley(2)
$304,500
  N/A
  N/A
$304,500
Ashley T. Rabun
$352,000
  N/A
  N/A
$352,000
Ernest J. Scalberg(3)
$55,750
  N/A
  N/A
$55,750
R. Charles Tschampion
$302,500
  N/A
  N/A
$302,500
Interested Trustees:
James E. Ross
$272,000
  N/A
  N/A
$272,000
Rory Tobin(2),(4)
  N/A
  N/A
  N/A
  N/A
(1)
Effective December 31, 2022, Ms. Burgermeister resigned from her position as Trustee and no longer serves as a trustee to the Trust.
(2)
Commenced serving as Trustee of the Trust on October 29, 2021.
(3)
Effective December 31, 2021, Dr. Scalberg resigned from his position as Trustee and no longer serves as a trustee to the Trust.
(4)
As an officer of SSGA, Mr. Tobin does not receive any compensation from the Trust for serving as a Trustee of the Trust.
No officers receive compensation from the Trust and no Trustee or officer is entitled to any pension or retirement benefits from the Trust.
The Trustee fees with respect to the remuneration are allocated among the Funds based on net assets. For the fiscal year ended September 30, 2022, the Funds contributed the following amounts:
Fund
Amount
The Communication Services Select Sector SPDR Fund
$132,457
The Consumer Discretionary Select Sector SPDR Fund
$202,874
The Consumer Staples Select Sector SPDR Fund
$143,894
The Energy Select Sector SPDR Fund
$318,933
The Financial Select Sector SPDR Fund
$427,784
29

Fund
Amount
The Health Care Select Sector SPDR Fund
$353,026
The Industrial Select Sector SPDR Fund
$172,079
The Materials Select Sector SPDR Fund
$80,387
The Real Estate Select Sector SPDR Fund
$52,456
The Technology Select Sector SPDR Fund
$465,129
The Utilities Select Sector SPDR Fund
$140,731
OWNERSHIP OF FUND SHARES
As of December 31, 2022, neither the Independent Trustees nor their immediate family members owned beneficially or of record any securities in the Adviser, principal underwriter of the Funds or any person (other than a registered investment company) directly or indirectly controlling, controlled by, or under common control with the Adviser or principal underwriter of the Funds.
The following table sets forth information describing the dollar range of equity securities beneficially owned by each Trustee in the Trust as of December 31, 2022:
Name of Trustee
Fund
Dollar Range of Equity
Securities in the Trust
Aggregate Dollar Range of Equity
Securities in All
Funds Overseen
by Trustee in Family of
Investment Companies
Independent Trustees:
 
 
 
Allison Grant Williams
The Financial Select Sector SPDR Fund
$1 - $10,000
$1 - $10,000
Sheila Hartnett-Devlin
The Technology Select Sector SPDR Fund
Over $100,000
Over $100,000
James Jessee
The Energy Select Sector SPDR Fund
$10,001 - $50,000
$10,001 - $50,000
Teresa Polley
The Communication Services Select Sector SPDR Fund
$1 - $10,000
$10,001 - $50,000
 
The Consumer Discretionary Select Sector SPDR Fund
$1 - $10,000
 
 
The Consumer Staples Select Sector SPDR Fund
$1 - $10,000
 
 
The Energy Select Sector SPDR Fund
$1 - $10,000
 
 
The Financial Select Sector SPDR Fund
$1 - $10,000
 
 
The Health Care Select Sector SPDR Fund
$1 - $10,000
 
 
The Industrial Select Sector SPDR Fund
$1 - $10,000
 
 
The Materials Select Sector SPDR Fund
$1 - $10,000
 
Ashley T. Rabun
None
None
None
R. Charles Tschampion
The Utilities Select Sector SPDR Fund
Over $100,000
Over $100,000
Interested Trustees:
 
 
 
James E. Ross
The Consumer Discretionary Select Sector SPDR Fund
Over $100,000
Over $100,000
 
The Energy Select Sector SPDR Fund
$10,001 - $50,000
 
 
The Financial Select Sector SPDR Fund
Over $100,000
 
 
The Health Care Select Sector SPDR Fund
$50,001 - $100,000
 
 
The Technology Select Sector SPDR Fund
$50,001 - $100,000
 
Rory Tobin
None
None
None
CODES OF ETHICS
The Trust, the Adviser and the Distributor each have adopted a Code of Ethics pursuant to Rule 17j-1 of the 1940 Act, which is designed to prevent affiliated persons of the Trust, the Adviser and the Distributor from engaging in deceptive, manipulative or fraudulent activities in connection with securities held or to be acquired by the Funds (which may also be held by persons subject to the Codes of Ethics). Each Code of Ethics permits personnel, subject to that Code of Ethics, to invest in securities for their personal investment accounts, subject to certain limitations, including securities that may be purchased or held by the Funds.
There can be no assurance that the Codes of Ethics will be effective in preventing such activities. Each Code of Ethics, filed as exhibits to the Trust's registration statement, may be examined at the office of the SEC in Washington, D.C. or on the Internet at the SEC's website at https://www.sec.gov.
30

PROXY VOTING POLICIES
The Board believes that the voting of proxies on securities held by the Funds is an important element of the overall investment process. As such, the Board has delegated the responsibility to vote such proxies to the Adviser for all Funds. The Trust's proxy voting policy and the Adviser's proxy voting policy are attached to this SAI as Appendix A and Appendix B, respectively. Information regarding how a Fund voted proxies relating to its portfolio securities during the most recent 12-month period ended June 30 is available: (1) without charge by calling 1-866-732-8673; (2) on the Funds' website at https://www.sectorspdr.com; and (3) on the SEC's website at https://www.sec.gov.
DISCLOSURE OF PORTFOLIO HOLDINGS POLICY
The Trust has adopted a policy regarding the disclosure of information about the Trust's portfolio holdings. The Board must approve all material amendments to this policy. The Funds' portfolio holdings are publicly disseminated each day a Fund is open for business through financial reporting and news services including publicly accessible Internet web sites. In addition, a basket composition file, which includes the security names and share quantities to deliver in exchange for Shares, together with estimates and actual cash components, is publicly disseminated daily prior to the opening of the Exchange via the National Securities Clearing Corporation (NSCC). The basket represents one Creation Unit of a Fund. The Trust, the Adviser or State Street will not disseminate non-public information concerning the Trust, except information may be made available prior to its public availability: (i) to a party for a legitimate business purpose related to the day-to-day operations of the Funds, including (a) a service provider, (b) the stock exchanges upon which an ETF is listed, (c) the NSCC, (d) the Depository Trust Company, and (e) financial data/research companies such as Morningstar, Bloomberg L.P., and Reuters, or (ii) to any other party for a legitimate business or regulatory purpose, upon waiver or exception, with the consent of an applicable Trust officer.
Investment Advisory and Other Services
THE INVESTMENT ADVISER
SSGA FM acts as investment adviser to the Trust and, subject to the oversight of the Board, is responsible for the investment management of each Select Sector SPDR Fund. As of September 30, 2022, the Adviser managed approximately $768.42 billion in assets. The Adviser's principal address is One Iron Street, Boston, Massachusetts 02210. The Adviser, a Massachusetts corporation, is a wholly-owned subsidiary of State Street Global Advisors, Inc., which itself is a wholly-owned subsidiary of State Street Corporation, a publicly held financial holding company. State Street Global Advisors (SSGA), consisting of the Adviser and other investment advisory affiliates of State Street Corporation, is the investment management arm of State Street Corporation.
The Adviser serves as investment adviser to each Select Sector SPDR Fund pursuant to an investment advisory agreement (Investment Advisory Agreement) between the Trust and the Adviser. Under the Investment Advisory Agreement, the Adviser, subject to the oversight of the Board and in conformity with the stated investment policies of each Select Sector SPDR Fund, manages the investment of each Select Sector SPDR Fund's assets. The Adviser is responsible for placing purchase and sale orders and providing continuous supervision of the investment portfolio of each Select Sector SPDR Fund.
Pursuant to the Investment Advisory Agreement, the Adviser is not liable for certain liabilities, including certain liabilities arising under the federal securities laws, unless such loss or liability results from willful misfeasance, bad faith or gross negligence in the performance of its duties or the reckless disregard of its obligations and duties.
The Investment Advisory Agreement with respect to each Select Sector SPDR Fund continues in effect for one year from its effective date, and thereafter is subject to annual approval by (1) the Board or (2) vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of a Select Sector SPDR Fund, provided that in either event such continuance also is approved by a majority of the Trustees who are not interested persons (as defined in the 1940 Act) of the Trust by a vote cast in person at a meeting called for the purpose of voting on such approval. The Investment Advisory Agreement with respect to each Select Sector SPDR Fund is terminable without penalty, on 60 days' notice, by the Board or by a vote of the holders of a majority of the applicable Select Sector SPDR Fund's outstanding voting securities (as defined in the 1940 Act). The Investment Advisory Agreement is also terminable upon 60 days' notice by the Adviser and will terminate automatically in the event of its assignment (as defined in the 1940 Act).
A discussion regarding the basis for the Board's approval of the continuation of the Investment Advisory Agreement regarding all Funds is available in the Trust's Annual Report to Shareholders for the period ended September 30, 2022.
31

For the services provided to each Fund under the Investment Advisory Agreement, each Fund pays the Adviser a fee accrued daily and payable monthly based on the Trust's average daily net assets at the following annual rates: 0.05% of the first $12.5 billion of average daily net assets of the Trust, 0.04% of the next $17.5 billion of average daily net assets of the Trust, 0.035% of the next $20.0 billion of average daily net assets of the Trust, 0.03% of the next $50 billion of average daily net assets of the Trust, 0.0285% of the next $50.0 billion of average daily net assets of the Trust, 0.0271% of the next $50 billion of average daily net assets of the Trust, and 0.0256% of average daily net assets on the remainder of net assets of the Trust. The advisory fee is allocated to each series of the Trust pro rata based upon the net assets of each series of the Trust. For the fiscal year ended September 30, 2022, the fee pursuant to the Investment Advisory Agreement was equivalent to an effective rate of 0.0305% of average daily net assets for each Fund.
From time to time, the Adviser may waive all or a portion of its management fee, although it does not currently intend to do so. The Adviser did not waive any fees during the periods noted in the table below.
For the past three fiscal years ended September 30, the Funds paid the following amounts to the Adviser:
Fund
2022
2021
2020
The Communication Services Select Sector SPDR Fund
$3,566,909
$4,078,380
$2,652,472
The Consumer Discretionary Select Sector SPDR Fund
$5,742,805
$5,961,510
$4,577,683
The Consumer Staples Select Sector SPDR Fund
$4,473,735
$3,852,682
$4,565,846
The Energy Select Sector SPDR Fund
$10,297,847
$6,014,735
$3,255,205
The Financial Select Sector SPDR Fund
$11,983,348
$10,617,796
$6,718,402
The Health Care Select Sector SPDR Fund
$10,951,801
$8,480,719
$7,131,363
The Industrial Select Sector SPDR Fund
$4,688,537
$5,560,310
$3,298,512
The Materials Select Sector SPDR Fund
$2,194,112
$2,225,224
$1,231,222
The Real Estate Select Sector SPDR Fund
$1,635,946
$909,394
$1,181,266
The Technology Select Sector SPDR Fund
$13,589,572
$12,433,163
$9,334,180
The Utilities Select Sector SPDR Fund
$4,476,805
$3,803,234
$3,779,441
PORTFOLIO MANAGERS
The Adviser manages the Select Sector SPDR Funds using a team of investment professionals. The professionals primarily responsible for the day-to-day portfolio management of each Fund are:
Portfolio Management Team
Fund
Michael Feehily1, Karl Schneider and Amy Cheng
The Real Estate Select Sector SPDR Fund
Karl Schneider, David Chin and Kala O'Donnell
The Technology Select Sector SPDR Fund
Michael Feehily1, Karl Schneider and Dwayne Hancock
The Consumer Staples Select Sector SPDR Fund
The Health Care Select Sector SPDR Fund
The Utilities Select Sector SPDR Fund
Michael Feehily1, Karl Schneider and Ted Janowsky
The Energy Select Sector SPDR Fund
The Materials Select Sector SPDR Fund
Karl Schneider, Dwayne Hancock and Kala O'Donnell
The Financial Select Sector SPDR Fund
Michael Feehily1, Karl Schneider and Kala O'Donnell
The Communication Services Select Sector SPDR Fund
The Consumer Discretionary Select Sector SPDR Fund
Michael Feehily1, Karl Schneider, Emiliano Rabinovich and
Amy Cheng
The Industrial Select Sector SPDR Fund
1
Effective March 1, 2023, Mr. Feehily will no longer serve as a portfolio manager of the Funds.
The following table lists the number and types of accounts managed by each of the key professionals involved in the day-to-day portfolio management for the Funds and assets under management in those accounts. The total number of accounts and assets have been allocated to each respective manager. Therefore, some accounts and assets have been counted twice.
32

Other Accounts Managed as of September 30, 2022
Portfolio Manager
Registered
Investment
Company
Accounts
Assets
Managed
(billions)*
Other Pooled
Investment
Vehicle
Accounts
Assets
Managed
(billions)*
Other
Accounts
Assets
Managed
(billions)*
Total
Assets
Managed
(billions)
Michael Feehily**
123
$550.00
379
$633.69
517
$420.11
$1,603.80
Karl Schneider
123
$550.00
379
$633.69
517
$420.11
$1,603.80
Amy Cheng
123
$550.00
379
$633.69
517
$420.11
$1,603.80
David Chin
123
$550.00
379
$633.69
517
$420.11
$1,603.80
Dwayne Hancock
123
$550.00
379
$633.69
517
$420.11
$1,603.80
Ted Janowsky
123
$550.00
379
$633.69
517
$420.11
$1,603.80
Kala O'Donnell
123
$550.00
379
$633.69
517
$420.11
$1,603.80
Emiliano Rabinovich
123
$550.00
379
$633.69
517
$420.11
$1,603.80
*
There are no performance-based fees associated with these accounts.
**
Effective March 1, 2023, Mr. Feehily will no longer serve as a portfolio manager for the Funds.
None of the portfolio managers listed above beneficially owned Fund Shares as of September 30, 2022, except as noted in the table below:
Portfolio Manager
Fund
Dollar Range of Fund
Shares
Beneficially Owned
Dwayne Hancock
The Utilities Select Sector SPDR Fund
$50,001 - $100,000
A portfolio manager that has responsibility for managing more than one account may be subject to potential conflicts of interest because he or she is responsible for other accounts in addition to the Funds. Those conflicts could include preferential treatment of one account over others in terms of: (a) the portfolio manager's execution of different investment strategies for various accounts; or (b) the allocation of resources or of investment opportunities.
Portfolio managers may manage numerous accounts for multiple clients. These accounts may include registered investment companies, other types of pooled accounts (e.g., collective investment funds), and separate accounts (i.e., accounts managed on behalf of individuals or public or private institutions). Portfolio managers make investment decisions for each account based on the investment objectives and policies and other relevant investment considerations applicable to that portfolio. A potential conflict of interest may arise as a result of a portfolio manager's responsibility for multiple accounts with similar investment guidelines. Under these circumstances, a potential investment may be suitable for more than one of the portfolio manager's accounts, but the quantity of the investment available for purchase is less than the aggregate amount the accounts would ideally devote to the opportunity. Similar conflicts may arise when multiple accounts seek to dispose of the same investment. The portfolio managers may also manage accounts whose objectives and policies differ from that of the Funds. These differences may be such that under certain circumstances, trading activity appropriate for one account managed by the portfolio manager may have adverse consequences for another account managed by the portfolio manager. For example, an account may sell a significant position in a security, which could cause the market price of that security to decrease, while a Fund maintained its position in that security.
A potential conflict may arise when the portfolio managers are responsible for accounts that have different advisory fees—the difference in fees could create an incentive for the portfolio manager to favor one account over another, for example, in terms of access to investment opportunities. This conflict may be heightened if an account is subject to a performance-based fee, as applicable. Another potential conflict may arise when the portfolio manager has an investment in one or more accounts that participate in transactions with other accounts. His or her investment(s) may create an incentive for the portfolio manager to favor one account over another. The Adviser has adopted policies and procedures reasonably designed to address these potential material conflicts. For instance, portfolio managers are normally responsible for all accounts within a certain investment discipline, and do not, absent special circumstances, differentiate among the various accounts when allocating resources. Additionally, the Adviser and its advisory affiliates have processes and procedures for allocating investment opportunities among portfolios that are designed to provide a fair and equitable allocation. With respect to conflicts arising from personal investments, all employees, including portfolio managers, must comply with personal trading controls established by each of the Adviser's and Trust's Code of Ethics.
SSGA's culture is complemented and reinforced by a total rewards strategy that is based on a pay for performance philosophy which seeks to offer a competitive pay mix of base salary, benefits, cash incentives and deferred compensation.
33

Salary is based on a number of factors, including external benchmarking data and market trends, and performance both at the business and individual level. SSGA's Global Human Resources department regularly participates in compensation surveys in order to provide SSGA with market-based compensation information that helps support individual pay decisions.
Additionally, subject to State Street and SSGA business results, an incentive pool is allocated to SSGA to reward its employees. The size of the incentive pool for most business units is based on the firm's overall profitability and other factors, including performance against risk-related goals. For most SSGA investment teams, SSGA recognizes and rewards performance by linking annual incentive decisions for investment teams to the firm's or business unit's profitability and business unit investment performance over a multi-year period.
Incentive pool funding for most active investment teams is driven in part by the post-tax investment performance of fund(s) managed by the team versus the return levels of the benchmark index(es) of the fund(s) on a one-, three- and, in some cases, five-year basis. For most active investment teams, a material portion of incentive compensation for senior staff is deferred over a four-year period into the SSGA Long-Term Incentive (SSGA LTI) program. For these teams, The SSGA LTI program indexes the performance of these deferred awards against the post-tax investment performance of fund(s) managed by the team. This is intended to align our investment team's compensation with client interests, both through annual incentive compensation awards and through the long-term value of deferred awards in the SSGA LTI program.
For the index equity investment team, incentive pool funding is driven in part by the post-tax 1 and 3-year tracking error of the funds managed by the team against the benchmark indexes of the funds.
The discretionary allocation of the incentive pool to the business units within SSGA is influenced by market-based compensation data, as well as the overall performance of each business unit. Individual compensation decisions are made by the employee's manager, in conjunction with the senior management of the employee's business unit. These decisions are based on the overall performance of the employee and, as mentioned above, on the performance of the firm and business unit. Depending on the job level, a portion of the annual incentive may be awarded in deferred compensation, which may include cash and/or Deferred Stock Awards (State Street stock), which typically vest over a four-year period. This helps to retain staff and further aligns SSGA employees' interests with SSGA clients' and shareholders' long-term interests.
SSGA recognizes and rewards outstanding performance by:
Promoting employee ownership to connect employees directly to the company's success.
Using rewards to reinforce mission, vision, values and business strategy.
Seeking to recognize and preserve the firm's unique culture and team orientation.
Providing all employees the opportunity to share in the success of SSGA.
THE ADMINISTRATOR, SUB-ADMINISTRATOR, CUSTODIAN AND TRANSFER AGENT
The Administrator: SSGA FM serves as the administrator to each series of the Trust, pursuant to an Administration Agreement dated June 1, 2015, as amended, between SSGA FM and the Trust (the SSGA Administration Agreement). Pursuant to the SSGA Administration Agreement, SSGA FM is obligated to continuously provide business management services to the Trust and its series and will generally, subject to the general oversight of the Trustees and, except as otherwise provided in the SSGA Administration Agreement, manage all of the business and affairs of the Trust. For its administration services to the Funds, each Fund pays SSGA FM a fee accrued daily and paid monthly at a rate of 0.0006% of its average daily net assets.
The amount of fees paid by each Fund to SSGA FM pursuant to the SSGA Administration Agreement for the three most recently completed fiscal years is set forth in the table below:
Fund
2022
2021
2020
The Communication Services Select Sector SPDR Fund
$70,172
$78,057
$47,992
The Consumer Discretionary Select Sector SPDR Fund
$112,998
$113,971
$82,800
The Consumer Staples Select Sector SPDR Fund
$87,921
$73,490
$82,500
The Energy Select Sector SPDR Fund
$202,367
$115,529
$58,867
The Financial Select Sector SPDR Fund
$235,848
$203,874
$121,464
The Health Care Select Sector SPDR Fund
$215,215
$162,257
$128,932
The Industrial Select Sector SPDR Fund
$92,235
$106,453
$59,675
34

Fund
2022
2021
2020
The Materials Select Sector SPDR Fund
$43,164
$42,706
$22,262
The Real Estate Select Sector SPDR Fund
$32,167
$17,449
$21,330
The Technology Select Sector SPDR Fund
$267,272
$237,786
$168,852
The Utilities Select Sector SPDR Fund
$87,939
$72,645
$68,295
The Sub-Administrator, Custodian and Transfer Agent: State Street serves as the sub-administrator to each series of the Trust, pursuant to a Sub-Administration Agreement dated June 1, 2015, as amended (the Sub-Administration Agreement). Under the Sub-Administration Agreement, State Street is obligated to provide certain sub-administrative services to the Trust and its series. State Street is a wholly-owned subsidiary of State Street Corporation, a publicly held financial holding company, and is affiliated with SSGA FM. State Street's mailing address is State Street Financial Center, One Lincoln Street, Boston, Massachusetts 02111.
State Street also serves as Custodian for the Trust's series pursuant to a custodian agreement (Custodian Agreement). As Custodian, State Street holds the Funds' assets, calculates the net asset value of each Select Sector SPDR Fund's Shares and calculates net income and realized capital gains or losses. State Street and the Trust will comply with the self-custodian provisions of Rule 17f-2 under the 1940 Act.
State Street also serves as Transfer Agent for each series of the Trust pursuant to a transfer agency agreement (Transfer Agency Agreement).
Compensation: A unitary fee is paid by each Select Sector SPDR Fund to State Street for custody, sub-administration and transfer agency services provided to the Select Sector SPDR Funds. The unitary fee is calculated based upon the average daily net assets of the Trust and allocated pro rata to each Select Sector SPDR Fund based upon the relative net assets of each Select Sector SPDR Fund. The unitary fee is calculated as follows: 0.015% for the first $50 billion of net assets of the Trust, 0.0125% for the next $25 billion of net assets of the Trust, 0.01% for the next $25 billion of net assets of the Trust, 0.0040% for the next $300 billion of net assets of the Trust, and 0.0025% thereafter. In addition, State Street shall receive global safekeeping and transaction fees, which are calculated on a per-country basis, in-kind creation (purchase) and redemption transaction fees (as described below) and revenue on certain cash balances. State Street may be reimbursed by the series of the Trust for its out-of-pocket expenses.
Additional Sub-Administration Services: Also under the Sub-Administration Agreement, each Select Sector SPDR Fund pays a fee to State Street for certain services required in the preparation (including preparing a schedule of quarterly portfolio investments) and filing of Form N-PORT and Form N-CEN with the SEC (N-PORT Related Services). Additionally, each Select Sector SPDR Fund pays a fee to State Street for services regarding certain liquidity analytics (Liquidity Risk Measurement Services) under the Sub-Administration Agreement. For N-PORT Related Services, each Select Sector SPDR Fund pays State Street a fee of $10,300 per year. For Liquidity Risk Measurement Services, each Select Sector SPDR Fund pays State Street a fee of $1,800 per year.
SECURITIES LENDING ACTIVITIES
The Trust's Board has approved each Fund's participation in a securities lending program. Under the securities lending program, each Fund has retained State Street to serve as the securities lending agent.
35

For the fiscal year ended September 30, 2022, the income earned by each Fund as well as the fees and/or compensation paid by each Fund (in dollars) pursuant to the Amended and Restated Securities Lending Authorization Agreement between the Trust, on behalf of its series, and State Street (the Securities Lending Authorization Agreement) were as follows:
 
Gross
income
earned by
the Fund
from
securities
lending
activities
Fees and/or compensation paid by the Fund for securities lending activities and
related services
Aggregate
fees
and/or
compensation
paid by
the Fund
for
securities
lending
activities
and related
services
Net income
from
securities
lending
activities
 
Fees
paid
to State
Street
from a
revenue
split
Fees
paid for
any cash
collateral
management
service
(including
fees
deducted
from a
pooled cash
collateral
reinvestment
vehicle)
that are not
included in a
revenue split
Admini-
strative
fees not
included
in a
revenue
split
Indemnifi-
cation
fees
not
included in
a revenue
split
Rebate
(paid to
borrower)
Other
fees
not
included
in a
revenue
split
The
Communication
Services
Select Sector
SPDR Fund
$1,145,275
$54,144
$45,833
$0
$0
$738,469
$0
$838,446
$306,829
The Consumer
Discretionary
Select Sector
SPDR Fund
$1,266,292
$65,885
$41,988
$0
$0
$785,032
$0
$892,905
$373,387
The Consumer
Staples Select
Sector SPDR
Fund
$176,623
$6,861
$7,341
$0
$0
$123,543
$0
$137,745
$38,878
The Energy
Select Sector
SPDR Fund
$971,436
$28,409
$28,707
$0
$0
$753,331
$0
$810,448
$160,988
The Financial
Select Sector
SPDR Fund
$917,840
$32,870
$23,922
$0
$0
$674,775
$0
$731,567
$186,273
The Health Care
Select Sector
SPDR Fund
$872,870
$28,940
$24,241
$0
$0
$655,684
$0
$708,865
$164,005
The Industrial
Select Sector
SPDR Fund
$2,198,989
$174,199
$34,647
$0
$0
$1,002,998
$0
$1,211,845
$987,144
The Materials
Select Sector
SPDR Fund
$167,777
$15,419
$3,629
$0
$0
$61,350
$0
$80,398
$87,379
The Real Estate
Select Sector
SPDR Fund
$27,362
$2,328
$3,170
$0
$0
$8,667
$0
$14,166
$13,196
The Technology
Select Sector
SPDR Fund
$1,636,764
$95,336
$38,919
$0
$0
$962,261
$0
$1,096,517
$540,247
The Utilities
Select Sector
SPDR Fund
$722,628
$19,048
$22,444
$0
$0
$573,178
$0
$614,671
$107,957
For the fiscal year ended September 30, 2022, State Street, acting as agent of the Funds, provided the following services to the Funds in connection with the Funds' securities lending activities: (i) locating borrowers among an approved list of prospective borrowers; (ii) causing the delivery of loaned securities from a Fund to borrowers; (iii) monitoring the value of loaned securities, the value of collateral received, and other lending parameters; (iv) seeking additional collateral, as
36

necessary, from borrowers; (v) receiving and holding collateral from borrowers, and facilitating the investment and reinvestment of all or substantially all cash collateral in an investment vehicle designated by the Funds; (vi) returning collateral to borrowers; (vii) facilitating substitute dividend, interest, and other distribution payments to the Funds from borrowers; (viii) negotiating the terms of each loan of securities, including but not limited to the amount of any loan premium, and monitoring the terms of securities loan agreements with prospective borrowers for consistency with the requirements of the Funds' Securities Lending Authorization Agreement; (ix) selecting securities, including amounts (percentages), to be loaned; (x) recordkeeping and accounting services; and (xi) arranging for return of loaned securities to a Fund in accordance with the terms of the Securities Lending Authorization Agreement.
THE DISTRIBUTOR
ALPS Portfolio Solutions Distributor, Inc. (the Distributor) is the principal underwriter and Distributor of Shares. Its principal address is 1290 Broadway, Suite 1000, Denver, Colorado 80203. Investor information can be obtained by calling 1-866-732-8673. The Distributor has entered into a distribution agreement (Distribution Agreement) with the Trust pursuant to which it distributes Shares of each Select Sector SPDR Fund. The Distribution Agreement will continue for one year from its effective date and is renewable annually thereafter. Shares will be continuously offered for sale by the Trust through the Distributor only in Creation Units, as described in the Prospectus and below under PURCHASE AND REDEMPTION OF CREATION UNITS. Shares in less than Creation Units are not distributed by the Distributor. The Distributor will deliver the Prospectus to persons purchasing Creation Units and will maintain records of both orders placed with it and confirmations of acceptance furnished by it. The Distributor is a broker-dealer registered under the Securities Exchange Act of 1934, as amended (the Exchange Act), and is a member of the Financial Industry Regulatory Authority (FINRA). The Distributor has no role in determining the investment policies of the Trust or which securities are to be purchased or sold by the Trust.
The Adviser or Distributor, or an affiliate of the Adviser or Distributor, may directly or indirectly make cash payments to certain broker-dealers for participating in activities that are designed to make registered representatives and other professionals more knowledgeable about exchange traded products, including the SPDR funds, or for other activities, such as participation in marketing activities and presentations, educational training programs, conferences, the development of technology platforms and reporting systems.
The Board has adopted a distribution and service plan pursuant to Rule 12b-1 under the 1940 Act (each, a Plan) for each Select Sector SPDR Fund. The terms of each Plan are described in the Prospectus.
Under its terms, each Select Sector SPDR Fund's Plan remains in effect from year to year, provided such continuance is approved annually by vote of the Board, including a majority of the Independent Trustees who have no direct or indirect financial interest in the operation of the Plan or any agreement related to the Plan. The Plan may not be amended to increase materially the amount to be spent for the services provided by the Distributor without approval by the shareholders of the Select Sector SPDR Fund to which the Plan applies, and all material amendments of the Plan also require Board approval (as described above). Each Plan may be terminated at any time, without penalty, by vote of a majority of the Independent Trustees, or by a vote of a majority of the outstanding voting securities of such Select Sector SPDR Fund (as such vote is defined in the 1940 Act). Pursuant to the Distribution Agreement, the Distributor will provide the Board with periodic reports of any amounts expended under the Plan and the purpose for which such expenditures were made.
The Distribution Agreement provides that it may be terminated at any time, without the payment of any penalty, as to each Select Sector SPDR Fund: (i) by vote of a majority of the Independent Trustees or (ii) by vote of a majority (as defined in the 1940 Act) of the outstanding voting securities of the Select Sector SPDR Fund, on at least 60 days written notice to the Distributor. The Distribution Agreement is also terminable upon 60 days' notice by the Distributor and will terminate automatically in the event of its assignment (as defined in the 1940 Act).
Pursuant to agreements entered into with such persons, the Distributor will make payments under each Select Sector SPDR Fund's Plan to certain broker-dealers or other persons (Investor Services Organizations) that enter into agreements with the Distributor in the form approved by the Board to provide distribution assistance and shareholder support, account maintenance and educational and promotional services (which may include compensation and sales incentives to the registered brokers or other sales personnel of the broker-dealer or other financial entity that is a party to an investor services agreement) (Investor Services Agreements). Each Investor Services Agreement will be a related agreement under the Plan of the relevant Select Sector SPDR Fund. No Investor Services Agreement will provide for annual fees of more than 0.10% of a Select Sector SPDR Fund's average daily net assets per annum attributable to Shares subject to such agreement.
37

Subject to an aggregate limitation of 0.25% of a Select Sector SPDR Fund's average net assets per annum, the fees paid by a Select Sector SPDR Fund under its Plan will be compensation for distribution, investor services or marketing services for that Fund. To the extent the Plan fees aggregate less than 0.25% per annum of the average daily net assets of a Select Sector SPDR Fund, each Fund may also reimburse the Distributor and other persons for their respective costs incurred in printing prospectuses and producing advertising or marketing material prepared at the request of the Fund. The aggregate payments under each Plan will not exceed, on an annualized basis, 0.25% of average daily net assets of any Select Sector SPDR Fund. Notwithstanding the foregoing, the Board has voted to limit payments under each Plan to an annual rate of 0.02% of a Fund's average daily net assets, effective February 1, 2022. This limitation is in effect through at least January 31, 2024. Prior to February 1, 2022, the Board had voted to limit payments under each Plan to an annual rate of 0.03% of a Fund's average daily net assets.
For the fiscal year ended September 30, 2022, each Select Sector SPDR Fund paid the following amount under its Plan:
Fund
Distributor's Fee
(including 12b-1
Administration Fee)
Advertising
Other*
The Communication Services Select Sector SPDR Fund
$1,720,171
$922,459
$60,440
The Consumer Discretionary Select Sector SPDR Fund
$2,764,559
$1,474,745
$97,699
The Consumer Staples Select Sector SPDR Fund
$2,110,677
$1,016,137
$78,682
The Energy Select Sector SPDR Fund
$4,847,200
$2,387,016
$181,585
The Financial Select Sector SPDR Fund
$5,746,975
$3,031,548
$202,921
The Health Care Select Sector SPDR Fund
$5,185,455
$2,576,251
$192,899
The Industrial Select Sector SPDR Fund
$2,250,717
$1,200,793
$79,855
The Materials Select Sector SPDR Fund
$1,051,185
$562,869
$37,439
The Real Estate Select Sector SPDR Fund
$777,366
$386,359
$28,463
The Technology Select Sector SPDR Fund
$6,499,081
$3,353,897
$234,175
The Utilities Select Sector SPDR Fund
$2,112,888
$1,032,262
$79,454
*
Aggregate amount paid for printing and mailing of prospectuses and other expenses.
The continuation of the Distribution Agreement, any Investor Services Agreements and any other related agreements is subject to annual approval of the Board, including by a majority of the Independent Trustees, as described above.
Each of the Investor Services Agreements will provide that it may be terminated at any time, without the payment of any penalty, (i) by vote of a majority of the Independent Trustees or (ii) by vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of the Select Sector SPDR Fund, on at least 60 days' written notice to the other party. Each of the Distribution Agreement and the Investor Services Agreements is also terminable upon 60 days' notice by the Distributor and will terminate automatically in the event of its assignment (as defined in the 1940 Act). Each Investor Services Agreement is also terminable by the applicable Investor Service Organization upon 60 days' notice to the other party thereto.
The allocation among the Trust's series of fees and expenses payable under the Distribution Agreement and the Investor Services Agreements will be made pro rata in accordance with the daily net assets of the respective series.
The Distributor may also enter into agreements with securities dealers (Soliciting Dealers) who will solicit purchases of Creation Unit aggregations of Select Sector SPDR Fund Shares. Such Soliciting Dealers may also be Participating Parties (as defined in the Book Entry Only System section below), DTC Participants (as defined below) and/or Investor Services Organizations.
Pursuant to the Distribution Agreement, the Trust has agreed to indemnify the Distributor, and may indemnify Soliciting Dealers and Authorized Participants (as described below) entering into agreements with the Distributor, for certain liabilities, including certain liabilities arising under the federal securities laws, unless such loss or liability results from willful misfeasance, bad faith or gross negligence in the performance of its duties or the reckless disregard of its obligations and duties under the Distribution Agreement or other agreement, as applicable.
INDEX LICENSE
S&P Opco, LLC, a subsidiary of S&P DJI and S&P Global (S&P) and NYSE Arca, Inc. (either directly or through affiliates) have entered into a license agreement with respect to each Fund's Select Sector Index. The Trust has entered into a sublicense agreement with S&P whereby each Fund pays an annual sub-license fee to S&P based on a percentage of the Fund's total expense ratio for the most recent fiscal year and applied to the Fund's average daily net assets.
38

Brokerage Transactions
All portfolio transactions are placed on behalf of the Funds by the Adviser. Purchases and sales of securities on a securities exchange are affected through brokers who charge a commission for their services. Ordinarily commissions are not charged on over the counter orders (e.g., fixed income securities) because the Funds pay a spread which is included in the cost of the security and represents the difference between the dealer's quoted price at which it is willing to sell the security and the dealer's quoted price at which it is willing to buy the security. When a Fund executes an over the counter order with an electronic communications network or an alternative trading system, a commission is charged by such electronic communications networks and alternative trading systems as they execute such orders on an agency basis. Securities may be purchased from underwriters at prices that include underwriting fees.
In placing a portfolio transaction, the Adviser seeks to achieve best execution. The Adviser's duty to seek best execution requires the Adviser to take reasonable steps to obtain for the client as favorable an overall result as possible for Fund portfolio transactions under the circumstances, taking into account various factors that are relevant to the particular transaction.
The Adviser refers to and selects from the list of approved trading counterparties maintained by the Adviser's Credit Risk Management team. In selecting a trading counterparty for a particular trade, the Adviser seeks to weigh relevant factors including, but not limited to the following:
Prompt and reliable execution;
The competitiveness of commission rates and spreads, if applicable;
The financial strength, stability and/or reputation of the trading counterparty;
The willingness and ability of the executing trading counterparty to execute transactions (and commit capital) of size in liquid and illiquid markets without disrupting the market for the security;
Local laws, regulations or restrictions;
The ability of the trading counterparty to maintain confidentiality;
The availability and capability of execution venues, including electronic communications networks for trading and execution management systems made available to Adviser;
Market share;
Liquidity;
Price;
Execution related costs;
History of execution of orders;
Likelihood of execution and settlement;
Order size and nature;
Clearance and settlement capabilities, especially in high volatility market environments;
Availability of lendable securities;
Sophistication of the trading counterparty's trading capabilities and infrastructure/facilities;
The operational efficiency with which transactions are processed and cleared, taking into account the order size and complexity;
Speed and responsiveness to the Adviser;
Access to secondary markets;
Counterparty exposure; and
Depending upon the circumstances, the Adviser may take other relevant factors into account if the Adviser believes that these are important in taking all sufficient steps to obtain the best possible result for execution of the order.
In selecting a trading counterparty, the price of the transaction and costs related to the execution of the transaction typically merit a high relative importance, depending on the circumstances. The Adviser does not necessarily select a trading counterparty based upon price and costs but may take other relevant factors into account if it believes that these are important in taking reasonable steps to obtain the best possible result for a Fund under the circumstances.
39

Consequently, the Adviser may cause a client to pay a trading counterparty more than another trading counterparty might have charged for the same transaction in recognition of the value and quality of the brokerage services provided. The following matters may influence the relative importance that the Adviser places upon the relevant factors:
(i)
The nature and characteristics of the order or transaction. For example, size of order, market impact of order, limits, or other instructions relating to the order;
(ii)
The characteristics of the financial instrument(s) or other assets which are the subject of that order. For example, whether the order pertains to an equity, fixed income, derivative or convertible instrument;
(iii)
The characteristics of the execution venues to which that order can be directed, if relevant. For example, availability and capabilities of electronic trading systems;
(iv)
Whether the transaction is a ‘delivery versus payment' or ‘over the counter' transaction. The creditworthiness of the trading counterparty, the amount of existing exposure to a trading counterparty and trading counterparty settlement capabilities may be given a higher relative importance in the case of ‘over the counter' transactions; and/or
(v)
Any other circumstances that the Adviser believes are relevant at the time.
The process by which trading counterparties are selected to effect transactions is designed to exclude consideration of the sales efforts conducted by broker-dealers in relation to the Funds.
The Adviser does not currently use the Funds' assets in connection with third party soft dollar arrangements. While the Adviser does not currently use soft or commission dollars paid by the Funds for the purchase of third party research, the Adviser reserves the right to do so in the future.
The Select Sector SPDR Funds will not deal with affiliates in principal transactions unless permitted by exemptive order or applicable rule or regulation.
The table below shows the aggregate dollar amount of brokerage commissions paid by the Funds for the past three fiscal years ended September 30. Brokerage commissions paid by a Fund may be substantially different from year to year for multiple reasons, including market volatility, the demand for a particular Fund, or increases or decreases in trading volume.
Fund
2022
2021
2020
The Communication Services Select Sector SPDR Fund
$225,060
$174,492
$203,941
The Consumer Discretionary Select Sector SPDR Fund
$172,216
$300,700
$143,858
The Consumer Staples Select Sector SPDR Fund
$96,695
$54,167
$79,167
The Energy Select Sector SPDR Fund
$431,232
$471,073
$306,342
The Financial Select Sector SPDR Fund
$98,086
$90,945
$104,833
The Health Care Select Sector SPDR Fund
$28,774
$38,252
$72,955
The Industrial Select Sector SPDR Fund
$53,171
$29,059
$30,014
The Materials Select Sector SPDR Fund
$13,546
$26,817
$17,786
The Real Estate Select Sector SPDR Fund
$58,817
$14,078
$17,394
The Technology Select Sector SPDR Fund
$217,884
$123,255
$67,103
The Utilities Select Sector SPDR Fund
$113,818
$44,356
$42,091
Securities of Regular Broker-Dealers: The Select Sector SPDR Funds are required to identify any securities of their regular brokers and dealers (as such term is defined in the 1940 Act) which they may hold at the close of their most recent fiscal year. Regular brokers or dealers of the Trust are the ten brokers or dealers that, during the most recent fiscal year: (i) received the greatest dollar amounts of brokerage commissions from the Trust's portfolio transactions; (ii) engaged as principal in the largest dollar amounts of portfolio transactions of the Trust; or (iii) sold the largest dollar amounts of the Trust's Shares.
The Trust's holdings in Securities of Regular Broker-Dealers as of September 30, 2022:
JPMorgan Chase & Co.
$4,741,969,166
Bank of America Corp.
$3,047,492,759
Citigroup, Inc.
$1,378,967,592
Morgan Stanley
$1,377,012,694
Goldman Sachs Group, Inc.
$1,235,361,591
40

The Financial Select Sector SPDR Fund invests in the shares of some of the Funds' regular broker-dealers because those issuers are components in the Financial Select Sector Index. In addition, a holding in The Financial Select Sector SPDR Fund is a security of an issuer affiliated with the Adviser and State Street.
Portfolio Turnover: Portfolio turnover may vary from year to year, as well as within a year. High turnover rates are likely to result in comparatively greater brokerage expenses or transaction costs. The overall reasonableness of brokerage commissions and transaction costs is evaluated by the Adviser based upon its knowledge of available information as to the general level of commissions and transaction costs paid by other institutional investors for comparable services.
Book Entry Only System
The following information supplements and should be read in conjunction with the section in the Prospectus entitled ADDITIONAL PURCHASE AND SALE INFORMATION.
DTC acts as securities depositary for the Shares. Shares of each Select Sector SPDR Fund are represented by securities registered in the name of DTC or its nominee, Cede & Co., and deposited with, or on behalf of, DTC. Except in the limited circumstance provided below, certificates will not be issued for Shares.
DTC, a limited-purpose trust company, was created to hold securities of its participants (the DTC Participants) and to facilitate the clearance and settlement of securities transactions among the DTC Participants in such securities through electronic book-entry changes in accounts of the DTC Participants, thereby eliminating the need for physical movement of securities certificates. DTC Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own DTC. More specifically, DTC is owned by a number of its DTC Participants and by the New York Stock Exchange (NYSE) and FINRA. Access to the DTC system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly (the Indirect Participants).
Beneficial ownership of Shares is limited to DTC Participants, Indirect Participants and persons holding interests through DTC Participants and Indirect Participants. Ownership of beneficial interests in Shares (owners of such beneficial interests are referred to herein as Beneficial Owners) is shown on, and the transfer of ownership is effected only through, records maintained by DTC (with respect to DTC Participants) and on the records of DTC Participants (with respect to Indirect Participants and Beneficial Owners that are not DTC Participants). Beneficial Owners will receive from or through the DTC Participant a written confirmation relating to their purchase of Shares.
Conveyance of all notices, statements and other communications to Beneficial Owners is effected as follows. Pursuant to the Depositary Agreement between the Trust and DTC, DTC is required to make available to the Trust upon request and for a fee to be charged to the Trust a listing of the Shares of each Fund held by each DTC Participant. The Trust, either directly or through a third party service, shall inquire of each such DTC Participant as to the number of Beneficial Owners holding Shares, directly or indirectly, through such DTC Participant. The Trust, either directly or through a third party service, shall provide each such DTC Participant with copies of such notice, statement or other communication, in such form, number and at such place as such DTC Participant may reasonably request, in order that such notice, statement or communication may be transmitted by such DTC Participant, directly or indirectly, to such Beneficial Owners. In addition, the Trust shall pay to each such DTC Participant and/or third party service a fair and reasonable amount as reimbursement for the expenses attendant to such transmittal, all subject to applicable statutory and regulatory requirements.
Share distributions shall be made to DTC or its nominee, Cede & Co., as the registered holder of all Shares. DTC or its nominee, upon receipt of any such distributions, shall credit immediately DTC Participants' accounts with payments in amounts proportionate to their respective beneficial interests in Shares of a Fund as shown on the records of DTC or its nominee. Payments by DTC Participants to Indirect Participants and Beneficial Owners of Shares held through such DTC Participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in a street name, and will be the responsibility of such DTC Participants.
The Trust has no responsibility or liability for any aspects of the records relating to or notices to Beneficial Owners, or payments made on account of beneficial ownership interests in such Shares, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests or for any other aspect of the relationship between DTC and the DTC Participants or the relationship between such DTC Participants and the Indirect Participants and Beneficial Owners owning through such DTC Participants.
41

DTC may determine to discontinue providing its service with respect to Shares at any time by giving reasonable notice to the Trust and discharging its responsibilities with respect thereto under applicable law. Under such circumstances, the Trust shall take action either to find a replacement for DTC to perform its functions at a comparable cost or, if such a replacement is unavailable, to issue and deliver printed certificates representing ownership of Shares, unless the Trust makes other arrangements with respect thereto satisfactory to the Exchange.
Control Persons and Principal Holders of Securities
Although the Select Sector SPDR Funds do not have information concerning their beneficial ownership held in the names of DTC Participants, as of January 6, 2023, the names, addresses and percentage ownership of each DTC Participant that owned of record 5% or more of the outstanding Shares of the Select Sector SPDR Funds were as follows:
Fund
Name and Address
% Ownership
THE COMMUNICATION SERVICES SELECT SECTOR
SPDR FUND
Merrill Lynch, Pierce, Fenner & Smith Incorporated
4803 Deer Lake Drive W
Jacksonville, FL 32246
25.49%
 
National Financial Services Corporation
200 Liberty Street
New York, NY 10281
7.59%
 
Charles Schwab & Co., Inc.
101 Montgomery Street
San Francisco, CA 94104
5.93%
 
Morgan Stanley Smith Barney LLC
1 Harborside Financial Center, Plaza II
Jersey City, NJ 07311
5.66%
THE CONSUMER DISCRETIONARY SELECT SECTOR
SPDR FUND
Merrill Lynch, Pierce, Fenner & Smith Incorporated
4803 Deer Lake Drive W
Jacksonville, FL 32246
23.00%
 
Charles Schwab & Co., Inc.
101 Montgomery Street
San Francisco, CA 94104
8.51%
 
National Financial Services Corporation
200 Liberty Street
New York, NY 10281
8.34%
 
Morgan Stanley Smith Barney LLC
1 Harborside Financial Center, Plaza II
Jersey City, NJ 07311
5.15%
THE CONSUMER STAPLES SELECT SECTOR SPDR FUND
Merrill Lynch, Pierce, Fenner & Smith Incorporated
4803 Deer Lake Drive W
Jacksonville, FL 32246
13.81%
 
Charles Schwab & Co., Inc.
101 Montgomery Street
San Francisco, CA 94104
10.59%
 
National Financial Services Corporation
200 Liberty Street
New York, NY 10281
10.42%
 
Morgan Stanley Smith Barney LLC
1 Harborside Financial Center, Plaza II
Jersey City, NJ 07311
7.27%
42

Fund
Name and Address
% Ownership
 
TD Ameritrade Clearing, Inc.
4211 South 102nd Street
Omaha, NE 68127
5.42%
THE ENERGY SELECT SECTOR SPDR FUND
Charles Schwab & Co., Inc.
101 Montgomery Street
San Francisco, CA 94104
11.35%
 
Merrill Lynch, Pierce, Fenner & Smith Incorporated
4803 Deer Lake Drive W
Jacksonville, FL 32246
10.53%
 
National Financial Services Corporation
200 Liberty Street
New York, NY 10281
9.93%
 
JPMorgan Chase Bank, National Association
14201 Dallas Parkway
Chase International Plaza
Dallas, TX 75254
8.17%
 
TD Ameritrade Clearing, Inc.
4211 South 102nd Street
Omaha, NE 68127
5.45%
THE FINANCIAL SELECT SECTOR SPDR FUND
Merrill Lynch, Pierce, Fenner & Smith Incorporated
4803 Deer Lake Drive W
Jacksonville, FL 32246
8.97%
 
Charles Schwab & Co., Inc.
101 Montgomery Street
San Francisco, CA 94104
8.84%
 
National Financial Services Corporation
200 Liberty Street
New York, NY 10281
8.29%
 
Citibank, N.A.
3800 Citigroup Center Tampa
Tampa, FL 33610
6.43%
 
Morgan Stanley Smith Barney LLC
1 Harborside Financial Center, Plaza II
Jersey City, NJ 07311
5.71%
THE HEALTH CARE SELECT SECTOR SPDR FUND
Merrill Lynch, Pierce, Fenner & Smith Incorporated
4803 Deer Lake Drive W
Jacksonville, FL 32246
14.43%
 
National Financial Services Corporation
200 Liberty Street
New York, NY 10281
9.12%
 
Charles Schwab & Co., Inc.
101 Montgomery Street
San Francisco, CA 94104
8.92%
 
Morgan Stanley Smith Barney LLC
1 Harborside Financial Center, Plaza II
Jersey City, NJ 07311
6.19%
43

Fund
Name and Address
% Ownership
 
JPMorgan Chase Bank, National Association
14201 Dallas Parkway
Chase International Plaza
Dallas, TX 75254
5.90%
 
Citibank, N.A.
3800 Citigroup Center Tampa
Tampa, FL 33610
5.02%
THE INDUSTRIAL SELECT SECTOR SPDR FUND
Merrill Lynch, Pierce, Fenner & Smith Incorporated
4803 Deer Lake Drive W
Jacksonville, FL 32246
12.76%
 
Charles Schwab & Co., Inc.
101 Montgomery Street
San Francisco, CA 94104
10.81%
 
National Financial Services Corporation
200 Liberty Street
New York, NY 10281
8.39%
 
JPMorgan Chase Bank, National Association
14201 Dallas Parkway
Chase International Plaza
Dallas, TX 75254
7.46%
 
Morgan Stanley Smith Barney LLC
1 Harborside Financial Center, Plaza II
Jersey City, NJ 07311
6.44%
 
TD Ameritrade Clearing, Inc.
4211 South 102nd Street
Omaha, NE 68127
5.64%
THE MATERIALS SELECT SECTOR SPDR FUND
Charles Schwab & Co., Inc.
101 Montgomery Street
San Francisco, CA 94104
12.44%
 
Merrill Lynch, Pierce, Fenner & Smith Incorporated
4803 Deer Lake Drive W
Jacksonville, FL 32246
9.91%
 
National Financial Services Corporation
200 Liberty Street
New York, NY 10281
8.10%
 
Morgan Stanley Smith Barney LLC
1 Harborside Financial Center, Plaza II
Jersey City, NJ 07311
6.37%
 
TD Ameritrade Clearing, Inc.
4211 South 102nd Street
Omaha, NE 68127
5.59%
 
Wells Fargo Clearing Services, LLC
1 North Jefferson Avenue
St. Louis, MO 63103
5.20%
THE REAL ESTATE SELECT SECTOR SPDR FUND
Merrill Lynch, Pierce, Fenner & Smith Incorporated
4803 Deer Lake Drive W
Jacksonville, FL 32246
16.48%
44

Fund
Name and Address
% Ownership
 
Charles Schwab & Co., Inc.
101 Montgomery Street
San Francisco, CA 94104
12.06%
 
National Financial Services Corporation
200 Liberty Street
New York, NY 10281
9.44%
 
TD Ameritrade Clearing, Inc.
4211 South 102nd Street
Omaha, NE 68127
6.48%
 
LPL Financial Corporation
4707 Executive Drive
San Diego, CA 92121
6.15%
 
Citibank, N.A.
3800 Citigroup Center Tampa
Tampa, FL 33610
5.51%
THE TECHNOLOGY SELECT SECTOR SPDR FUND
Charles Schwab & Co., Inc.
101 Montgomery Street
San Francisco, CA 94104
12.58%
 
National Financial Services Corporation
200 Liberty Street
New York, NY 10281
10.96%
 
Merrill Lynch, Pierce, Fenner & Smith Incorporated
4803 Deer Lake Drive W
Jacksonville, FL 32246
6.60%
 
TD Ameritrade Clearing, Inc.
4211 South 102nd Street
Omaha, NE 68127
5.58%
 
Wells Fargo Clearing Services, LLC
1 North Jefferson Avenue
St. Louis, MO 63103
5.27%
THE UTILITIES SELECT SECTOR SPDR FUND
JPMorgan Chase Bank, National Association
14201 Dallas Parkway
Chase International Plaza
Dallas, TX 75254
16.60%
 
National Financial Services Corporation
200 Liberty Street
New York, NY 10281
11.75%
 
Charles Schwab & Co., Inc.
101 Montgomery Street
San Francisco, CA 94104
9.92%
 
Morgan Stanley Smith Barney LLC
1 Harborside Financial Center, Plaza II
Jersey City, NJ 07311
8.48%
 
Merrill Lynch, Pierce, Fenner & Smith Incorporated
4803 Deer Lake Drive W
Jacksonville, FL 32246
8.43%
 
TD Ameritrade Clearing, Inc.
4211 South 102nd Street
Omaha, NE 68127
5.28%
45

An Authorized Participant (as defined below) may hold of record more than 25% of the outstanding Shares of a Fund. From time to time, Authorized Participants may be a beneficial and/or legal owner of certain Funds, may be affiliated with an index provider, may be deemed to have control of the applicable Fund and may be able to affect the outcome of matters presented for a vote of the shareholders of such Fund(s). Authorized Participants may execute an irrevocable proxy granting the Distributor, State Street or an affiliate (the Agent) power to vote or abstain from voting such Authorized Participant's beneficially or legally owned Shares of the applicable Fund. In such cases, the Agent shall mirror vote (or abstain from voting) such Shares in the same proportion as all other beneficial owners of the applicable Fund.
As of January 6, 2023, to the knowledge of the Trust, the following persons held of record or beneficially through one or more accounts 25% or more of the outstanding shares of the Fund:
Fund
Name and Address
% Ownership
THE COMMUNICATION SERVICES SELECT SECTOR
SPDR FUND
Merrill Lynch, Pierce, Fenner & Smith Incorporated
4803 Deer Lake Drive W
Jacksonville, FL 32246
25.49%
As of December 31, 2022, the Trustees and officers of the Trust, as a group, owned less than 1% of each Fund's outstanding Shares.
Purchase and Redemption of Creation Units
PURCHASE (CREATION)
The Trust issues and sells Shares of each Select Sector SPDR Fund only in Creation Units on a continuous basis through the Distributor, without a sales load (but subject to transaction fees), at their NAV per share next determined after receipt, on any Business Day (as defined below), of an order in proper form pursuant to the terms of the Authorized Participant Agreement (Participant Agreement). A Business Day with respect to each Select Sector SPDR Fund is generally any day on which the NYSE is open for business.
The consideration for purchase of a Creation Unit of a Select Sector SPDR Fund generally consists of the Deposit Securities and the Cash Component, computed as described below. Together, the Deposit Securities and the Cash Component constitute the Fund Deposit, which represents the minimum initial and subsequent investment amount for a Creation Unit of any Select Sector SPDR Fund. The Cash Component is an amount equal to the Dividend Equivalent Payment (as defined below), plus or minus, as the case may be, a Balancing Amount (as defined below). The Dividend Equivalent Payment enables each Fund to make a complete distribution of dividends on the day preceding the next dividend payment date, and is an amount equal, on a per Creation Unit basis, to the dividends on all the portfolio securities of the Fund (Dividend Securities) with ex-dividend dates within the accumulation period for such distribution (the Accumulation Period), net of expenses and liabilities for such period, as if all of the Dividend Securities had been held by the Fund for the entire Accumulation Period. The Accumulation Period begins on the ex-dividend date for each Fund and ends on the day preceding the next ex-dividend date. The Balancing Amount is an amount equal to the difference between the net asset value of the Shares (per Creation Unit) and the Deposit Amount — an amount equal to the sum of the market value of the Deposit Securities and the Dividend Equivalent Payment. If the Balancing Amount is a positive number (i.e., the net asset value per Creation Unit exceeds the Deposit Amount), the Cash Component shall be increased by such positive amount. If the Balancing Amount is a negative number (i.e., the net asset value per Creation Unit is less than the Deposit Amount), the Cash Component shall be decreased by such negative amount. If the negative number is greater than the Dividend Equivalent Payment, the creator will be entitled to receive cash in an amount equal to the differential. The Balancing Amount serves the function of compensating for any differences between the net asset value per Creation Unit and the Deposit Amount.
The Custodian, through the NSCC, makes available on each Business Day, prior to the opening of business on the Exchange (currently 9:30 a.m., Eastern time), the list of the names and the required number of shares of each Deposit Security to be included in the current standard Fund Deposit (based on information at the end of the previous Business Day) for each Select Sector SPDR Fund. Such standard Fund Deposit is subject to any applicable adjustments as described below, in order to effect purchases of Creation Units of a given Select Sector SPDR Fund until such time as the next-announced composition of the Deposit Securities is made available.
46

The identity and number of shares of the Deposit Securities required for a Fund Deposit for each Select Sector SPDR Fund may be changed from time to time with a view to the investment objective of the applicable Select Sector SPDR Fund. Information regarding the Fund Deposit necessary for the purchase of a Creation Unit is made available to Authorized Participants and other market participants seeking to transact in Creation Unit aggregations.
In addition, the Trust reserves the right to permit or require the substitution of an amount of cash — i.e., a cash in lieu amount — to be added to the Cash Component to replace any Deposit Security which may not be available in sufficient quantity for delivery or which may not be eligible for transfer through the Clearing Process (discussed below), or which may not be eligible for trading by an Authorized Participant (as defined below) or the investor for which it is acting (a non-standard order). Brokerage commissions incurred in connection with acquisition of Deposit Securities not eligible for transfer through the systems of DTC and hence not eligible for transfer through the Clearing Process (discussed below) will be at the expense of the Fund and will affect the value of all Shares; but the Adviser, subject to the approval of the Board, may adjust the transaction fee within the parameters described above to protect ongoing shareholders. The Trust also reserves the right to include or remove Deposit Securities from the basket in anticipation of portfolio changes. The adjustments described above will reflect changes, known to the Adviser on the date of announcement to be in effect by the time of delivery of the Fund Deposit, in the composition of the subject Select Sector Index being tracked by the relevant Select Sector SPDR Fund or resulting from certain corporate actions.
PROCEDURES FOR PURCHASE OF CREATION UNITS
To be eligible to place orders with the Distributor, as facilitated via the Transfer Agent, to purchase a Creation Unit of a Select Sector SPDR Fund, an entity must be (i) a Participating Party, i.e., a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the NSCC (the Clearing Process), a clearing agency that is registered with the SEC; or (ii) a DTC Participant (see BOOK ENTRY ONLY SYSTEM). In addition, each Participating Party or DTC Participant (each, an Authorized Participant) must execute a Participant Agreement that has been agreed to by the Distributor and the Transfer Agent, and that has been accepted by the Trust, with respect to purchases and redemptions of Creation Units. Each Authorized Participant will agree, pursuant to the terms of the Participant Agreement, on behalf of itself or any investor on whose behalf it will act, to certain conditions, including that it will pay to the Trust, an amount of cash sufficient to pay the Cash Component together with all applicable fees and taxes. All Shares of Select Sector SPDR Funds, however created, will be entered on the records of DTC in the name of Cede & Co. for the account of a DTC Participant.
All orders to purchase Shares directly from the Select Sector SPDR Funds, including non-standard orders, must be placed for one or more Creation Unit size aggregations of Shares and in the manner set forth in the Participant Agreement and/or applicable order form, which sets for specific procedures associated with purchases through the Clearing Process and outside the Clearing Process. Those placing orders through an Authorized Participant should allow sufficient time to permit proper submission of the purchase order by the cut-off time. SSGM may assist Authorized Participants in assembling shares to purchase Creation Units (or upon redemption), for which it may receive commissions or other fees from such Authorized Participants.
Investors should be aware that an Authorized Participant may require orders for purchases of Shares placed with it to be in the particular form required by the individual Authorized Participant. In addition, the Authorized Participant may request the investor to make certain representations or enter into agreements with respect to the order, e.g., to provide for payments of cash, when required. Investors should also be aware that their particular broker may not have executed a Participant Agreement, and that, therefore, orders to purchase Creation Units of Select Sector SPDR Funds have to be placed by the investor's broker through an Authorized Participant that has executed a Participant Agreement. At any given time there may be only a limited number of broker-dealers that have executed a Participant Agreement.
Creation Units may be purchased in advance of receipt by the Trust of all or a portion of the applicable Deposit Securities as described below. In these circumstances, the initial deposit will have a value greater than the net asset value of the Shares of a Select Sector SPDR Fund on the date the order is placed in proper form since in addition to available Deposit Securities, cash must be deposited in an amount equal to the sum of (i) the Cash Component, plus (ii) 115% of the market value of the undelivered Deposit Securities (the Additional Cash Deposit), which shall be maintained in a separate non-interest bearing collateral account, in accordance with the terms of the Participant Agreement. An additional amount of cash shall be required to be deposited with the Trust, pending delivery of the missing Deposit Securities to the extent necessary to maintain the Additional Cash Deposit with the Trust in an amount at least equal to 115% of the daily marked to market value of the missing Deposit Securities, in accordance with the terms of the Participant Agreement. The Participant Agreement will permit the Trust to buy the missing Deposit Securities at any time. Authorized Participants will
47

be liable to the Trust for all costs, expenses, dividends, income and taxes associated with missing Deposit Securities, including the costs incurred by the Trust in connection with any such purchases. These costs will be deemed to include the amount by which the actual purchase price of the Deposit Securities exceeds the market value of such Deposit Securities on the day the purchase order was deemed received by the Distributor plus the brokerage and related transaction costs associated with such purchases. The Trust will return any unused portion of the Additional Cash Deposit once all of the missing Deposit Securities have been properly received by the Custodian or purchased by the Trust and deposited into the Trust. The delivery of Creation Units so purchased will occur no later than the second Business Day following the day on which the purchase order is deemed received by the Distributor. A creation request is considered to be in proper form if all procedures set forth in the Participant Agreement, order form and this SAI are properly followed.
ACCEPTANCE OF ORDERS OF CREATION UNITS
The Trust reserves the right to reject an order for Creation Units in respect of any Select Sector SPDR Fund at its discretion, including, without limitation, if (a) the order is not in proper form or the Deposit Securities delivered do not consist of the securities that the Custodian specified; (b) the investor(s), upon obtaining the Shares ordered, would own 80% or more of the currently outstanding Shares of any Select Sector SPDR Fund; (c) the Deposit Securities delivered are not as disseminated through the facilities of the NSCC for that date by the Custodian, as described above; (d) the acceptance of the Fund Deposit would, in the opinion of counsel, be unlawful; (e) the acceptance or receipt of the order for a Creation Unit would, in the opinion of counsel to the Trust, be unlawful; or (f) in the event that circumstances outside the control of the Trust, the Custodian, the Transfer Agent, the Distributor and/or the Adviser make it for all practical purposes not feasible to process orders for Creation Units. Examples of such circumstances include acts of God or public service or utility problems such as fires, floods, extreme weather conditions and power outages resulting in telephone, telecopy and computer failures; market conditions or activities causing trading halts; systems failures involving computer or other information systems affecting the Trust, the Custodian, the Transfer Agent, the Adviser, the Distributor, DTC, NSCC or any other participant in the creation process, and similar extraordinary events. The Distributor shall communicate to the Authorized Participant its rejection of the order. The Trust, the Transfer Agent, the Custodian and the Distributor are under no duty, however, to give notification of any defects or irregularities in the delivery of Fund Deposits nor shall either of them incur any liability for the failure to give any such notification. The Trust, the Transfer Agent, the Custodian and the Distributor shall not be liable for the rejection of any purchase order for Creation Units. Given the importance of the ongoing issuance of Creation Units to maintaining a market price that is at or close to the underlying net asset value of a Fund, the Trust does not intend to suspend acceptance of orders for Creation Units.
All questions as to the number of shares of each security in the Deposit Securities and the validity, form, eligibility and acceptance for deposit of any securities to be delivered shall be determined by the Trust, and the Trust's determination shall be final and binding.
CREATION TRANSACTION FEE
Investors will be required to pay a fixed creation transaction fee of $500 for each Fund except The Communication Services Select Sector SPDR Fund. For The Communication Services Select Sector SPDR Fund, the fixed creation transaction fee is $250. An additional charge of up to three (3) times the fixed transaction fee (expressed as a percentage of the value of the Deposit Securities) may be imposed for (i) creations effected outside the Clearing Process; (ii) non-standard orders; and (iii) cash creations, for a total charge of up to $2,000 for each Fund except The Communication Services Select Sector SPDR Fund, and a total of up to $1,000 for The Communication Services Select Sector SPDR Fund. Investors are responsible for the costs of transferring the securities constituting the Deposit Securities to the account of the Trust.
REDEMPTION
Shares may be redeemed only in Creation Units at their net asset value next determined after receipt of a redemption request in proper form by the Select Sector SPDR Fund through the Transfer Agent and only on a Business Day. EXCEPT UPON LIQUIDATION OF A FUND, THE TRUST WILL NOT REDEEM SHARES IN AMOUNTS LESS THAN CREATION UNITS.
Investors must accumulate enough Shares in the secondary market to constitute a Creation Unit in order to have such Shares redeemed by the Trust. There can be no assurance, however, that there will be sufficient liquidity in the public trading market at any time to permit assembly of a Creation Unit. Investors should expect to incur brokerage and other costs in connection with assembling a sufficient number of Shares to constitute a redeemable Creation Unit.
48

With respect to each Select Sector SPDR Fund, the Custodian, through the NSCC, makes available prior to the opening of business on the Exchange (currently 9:30 a.m., Eastern time) on each Business Day, the list of the names and share quantities of securities designated by the Fund that will be applicable (subject to possible amendment or correction) to redemption requests received in proper form (as defined below) on that day (Redemption Securities). Redemption Securities received on redemption may not be identical to Deposit Securities which are applicable to purchases of Creation Units. The identity and number of shares of the Redemption Securities or the Cash Redemption Amount (defined below) may be changed from time to time with a view to the investment objective of a Select Sector SPDR Fund.
Unless cash redemptions are available or specified for a Select Sector SPDR Fund, the redemption proceeds for a Creation Unit generally consist of Redemption Securities plus cash in an amount equal to the difference between the net asset value of the Shares being redeemed, as next determined after a receipt of a request in proper form, and the value of the Redemption Securities (the Cash Redemption Amount), less a fixed redemption transaction fee of $500. In the event that the Redemption Securities have a value greater than the net asset value of the Shares, a compensating cash payment equal to the differential is required to be made by or through an Authorized Participant by the redeeming shareholder.
REDEMPTION TRANSACTION FEE
A fixed transaction fee of $500 is applicable to each redemption transaction regardless of the number of Creation Units redeemed in the transaction for each Fund except The Communication Services Select Sector SPDR Fund. For The Communication Services Select Sector SPDR Fund, the fixed redemption transaction fee is $250. An additional charge of up to three (3) times the fixed transaction fee (for a total charge of up to $2,000 for each Fund except The Communication Services Select Sector SPDR Fund, and a total of up to $1,000 for The Communication Services Select Sector SPDR Fund) may be charged with respect to (i) transactions effected outside the Clearing Process; (ii) non-standard orders; and (iii) in the limited circumstances specified in which any cash may be used in lieu of securities to redeem Creation Units.
PROCEDURES FOR REDEMPTION OF CREATION UNITS
Orders to redeem Creation Units must be submitted in proper form to the Transfer Agent prior to the time as set forth in the Participant Agreement and/or applicable order form. A redemption request is considered to be in proper form if all procedures set forth in the Participant Agreement, order form and this SAI are properly followed. If the Transfer Agent does not receive the investor's Shares through DTC's facilities by the times and pursuant to the other terms and conditions set forth in the Participant Agreement, the redemption request shall be rejected.
The Authorized Participant must transmit the request for redemption, in the form required by the Trust, to the Transfer Agent in accordance with procedures set forth in the Participant Agreement and in accordance with the applicable order form. Investors should be aware that their particular broker may not have executed a Participant Agreement, and that, therefore, requests to redeem Creation Units may have to be placed by the investor's broker through an Authorized Participant who has executed a Participant Agreement. Investors making a redemption request should be aware that such request must be in the form specified by such Authorized Participant. Investors making a request to redeem Creation Units should allow sufficient time to permit proper submission of the request by an Authorized Participant and transfer of the Shares to the Trust's Transfer Agent; such investors should allow for the additional time that may be required to effect redemptions through their banks, brokers or other financial intermediaries if such intermediaries are not Authorized Participants.
An Authorized Participant submitting a redemption request is deemed to represent to the Trust that, as of the close of that Business Day, it (or its client) will own (within the meaning of Rule 200 of Regulation SHO) or has arranged to borrow for delivery to the Trust on or prior to the settlement date of the redemption request, the requisite number of Shares of the relevant Fund to be redeemed as a Creation Unit. In either case, the Authorized Participant is deemed to acknowledge that: (i) it (or its client) has full legal authority and legal right to tender for redemption the requisite number of Shares of the applicable Fund and to receive the entire proceeds of the redemption; and (ii) if such Shares submitted for redemption have been loaned or pledged to another party or are the subject of a repurchase agreement, securities lending agreement or any other arrangement affecting legal or beneficial ownership of such Shares being tendered, there are no restrictions precluding the tender and delivery of such Shares (including borrowed shares, if any) for redemption, free and clear of liens, on the redemption settlement date. The Trust reserves the right to verify these representations at its discretion, but will typically require verification with respect to a redemption request from a Fund in connection with higher levels of
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redemption activity and/or short interest in the Fund. If the Authorized Participant, upon receipt of a verification request, does not provide sufficient verification of its representations as determined by the Trust, the redemption request will not be considered to have been received in proper form and may be rejected by the Trust.
Deliveries of redemption proceeds generally will be made within two business days.
In addition, a Shareholder may request a redemption in cash which the Select Sector SPDR Fund may, in its sole discretion, permit. In either case, the Shareholder will receive a cash payment equal to the net asset value of its Shares based on the net asset value of Shares of the relevant Select Sector SPDR Fund next determined after the redemption request is received in proper form (minus a redemption transaction fee and additional charge for requested cash redemptions specified above, to offset the Trust's brokerage and other transaction costs associated with the disposition of Redemption Securities). The Select Sector SPDR Fund may also, in its sole discretion, upon request of a shareholder, provide such redeemer a portfolio of securities that differs from the exact composition of the Redemption Securities but does not differ in net asset value.
Redemptions of Shares for Redemption Securities will be subject to compliance with applicable federal and state securities laws and each Select Sector SPDR Fund (whether or not it otherwise permits cash redemptions) reserves the right to redeem Creation Units for cash to the extent that the Trust could not lawfully deliver specific Redemption Securities upon redemptions or could not do so without first registering the Redemption Securities under such laws. An Authorized Participant or an investor for which it is acting subject to a legal restriction with respect to a particular security included in the Redemption Securities applicable to the redemption of a Creation Unit may be paid an equivalent amount of cash. The Authorized Participant may request the redeeming Shareholder to complete an order form or to enter into agreements with respect to such matters as compensating cash payment, beneficial ownership of Shares or delivery instructions.
The right of redemption may be suspended or the date of payment postponed with respect to any Select Sector SPDR Fund (1) for any period during which the NYSE is closed (other than customary weekend and holiday closings); (2) for any period during which trading on the NYSE is suspended or restricted; (3) for any period during which an emergency exists as a result of which disposal of the Shares of the Select Sector SPDR Fund or determination of the net asset value of the Shares is not reasonably practicable; or (4) in such other circumstance as is permitted by the SEC.
REQUIRED EARLY ACCEPTANCE OF ORDERS
The Trust may, but is not required to, accept orders until 4:00 p.m., Eastern time, or until the market close (in the event the Exchange closes early). Notwithstanding the foregoing, as described in the Participant Agreement and the applicable order form, Authorized Participants may be notified that the cut-off time for an order may be earlier on a particular Business Day.
Determination of Net Asset Value
The following information supplements and should be read in conjunction with the sections in the Prospectus entitled PURCHASE AND SALE INFORMATION and ADDITIONAL PURCHASE AND SALE INFORMATION.
Net asset value per Share for each Fund of the Trust is computed by dividing the value of the net assets of such Select Sector SPDR Fund (i.e., the value of its total assets less total liabilities) by the total number of Shares outstanding. Expenses and fees, including the management, administration and distribution fees, are accrued daily and taken into account for purposes of determining net asset value. The net asset value of each Fund is calculated by the Custodian and determined as of the close of the regular trading session on the NYSE (ordinarily 4:00 p.m. Eastern time) on each day that such exchange is open.
In calculating a Select Sector SPDR Fund's net asset value per Share, the Select Sector SPDR Fund's investments are generally valued using market valuations. A market valuation generally means a valuation (i) obtained from an exchange, a pricing service, or a major market maker (or dealer) or (ii) based on a price quotation or other equivalent indication of value supplied by an exchange, a pricing service, or a major market maker (or dealer). Each Select Sector SPDR Fund relies on a third-party service provider for assistance with the daily calculation of the Select Sector SPDR Fund's NAV. The third-party service provider, in turn, relies on other parties for certain pricing data and other inputs used in the calculation of the Select Sector SPDR Fund's NAV. Therefore, each Select Sector SPDR Fund is subject to certain operational risks associated with reliance on its service provider and that service provider's sources of pricing and other data. NAV calculation may be adversely affected by operational risks arising from factors such as errors or failures in systems and technology. Such errors or failures may result in inaccurately calculated NAVs, delays in the calculation of
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NAVs and/or the inability to calculate NAV over extended time periods. A Select Sector SPDR Fund may be unable to recover any losses associated with such failures. In the case of shares of other funds that are not traded on an exchange, a market valuation means such fund's published net asset value per share. Each Select Sector SPDR Fund may use various pricing services, or discontinue the use of any pricing service.
Pursuant to Board approved valuation procedures, the Board has designated the Adviser as the valuation designee for each Select Sector SPDR Fund. These procedures address, among other things, (i) determining (a) when market quotations are not readily available or reliable and (b) the methodologies to be used for determining the fair value of investments, and (ii) the use and oversight of third-party pricing services for fair valuation. The Adviser is responsible for periodically reviewing the procedures, and the selected methodologies used, for their continuing appropriateness and accuracy, and making any changes or adjustments to the procedures and methodologies as appropriate.
In the event that current market valuations are not readily available or are deemed unreliable, the Trust's procedures require the Adviser to determine a security's fair value. In determining a fair value, the Adviser may consider, among other things, (i) price comparisons among multiple sources, (ii) a review of corporate actions and news events, and (iii) a review of relevant financial indicators (e.g., movement in interest rates, market indices, and prices from the Index Provider). In these cases, a Select Sector SPDR Fund's net asset value may reflect certain portfolio securities' fair values rather than their market prices. The fair value of a portfolio instrument is generally the price which a Select Sector SPDR Fund might reasonably expect to receive upon its current sale in an orderly market between market participants. Ascertaining fair value requires a determination of the amount that an arm's-length buyer, under the circumstances, would currently pay for the portfolio instrument. Fair value pricing involves subjective judgments and it is possible that the fair value determination for a security is materially different than the value that could be realized upon the sale of the security. In addition, fair value pricing could result in a difference between the prices used to calculate a Select Sector SPDR Fund's net asset value and the prices used by the Select Sector SPDR Index. This may result in a difference between a Select Sector SPDR Fund's performance and the performance of the Select Sector SPDR Index.
Dividends and Distributions
The following information supplements and should be read in conjunction with the section in the Prospectus entitled DISTRIBUTIONS.
GENERAL POLICIES
Dividends from net investment income, if any, are declared and paid quarterly for each Select Sector SPDR Fund. Distributions of net realized securities gains, if any, generally are declared and paid once a year, but the Trust may make distributions on a more frequent basis for certain Select Sector SPDR Funds to improve index tracking or to comply with the distribution requirements of the Internal Revenue Code, in all events in a manner consistent with the provisions of the 1940 Act. In addition, the Trust intends to distribute at least annually amounts representing the full dividend yield on the underlying portfolio securities of each Fund, net of expenses of such Fund, as if such Fund owned such underlying portfolio securities for the entire dividend period. As a result, some portion of each distribution may result in a return of capital for tax purposes for shareholders.
Dividends and other distributions on Shares are distributed, as described below, on a pro rata basis to Beneficial Owners of such Shares. Dividend payments are made through DTC Participants and Indirect Participants to Beneficial Owners then of record with proceeds received from the Trust.
The Trust makes additional distributions to the extent necessary (i) to distribute the entire annual taxable income of the Trust, plus any net capital gains and (ii) to avoid imposition of the excise tax imposed by Section 4982 of the Internal Revenue Code. Management of the Trust reserves the right to declare special dividends if, in its reasonable discretion, such action is necessary or advisable to preserve the status of each Select Sector SPDR Fund as a RIC or to avoid imposition of income or excise taxes on undistributed income.
DIVIDEND REINVESTMENT
Broker dealers, at their own discretion, may offer a dividend reinvestment service under which Shares are purchased in the secondary market at current market prices. Investors should consult their broker dealer for further information regarding any dividend reinvestment service offered by such broker dealer.
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Taxes
The following is a summary of certain federal income tax considerations generally affecting the Funds and their shareholders that supplements the discussions in the Prospectus. No attempt is made to present a comprehensive explanation of the federal, state, local or foreign tax treatment of the Funds or their shareholders, and the discussion here and in the Prospectus is not intended to be a substitute for careful tax planning.
The following general discussion of certain federal income tax consequences is based on the Internal Revenue Code and the regulations issued thereunder as in effect on the date of this SAI. New legislation, as well as administrative changes or court decisions, may significantly change the conclusions expressed herein, and may have a retroactive effect with respect to the transactions contemplated herein.
The following information should be read in conjunction with the section in the Prospectus entitled ADDITIONAL TAX INFORMATION.
TAXATION OF THE FUNDS
Each Fund is treated as a separate corporation for federal income tax purposes. A Fund therefore is considered to be a separate entity in determining its treatment under the rules for RICs described herein and in the Prospectus. Losses in one series of the Trust do not offset gains in any other series of the Trust and the requirements (other than certain organizational requirements) for qualifying for treatment as a RIC are determined at the Fund level rather than at the Trust level. Each Fund has elected or will elect and intends to qualify each year to be treated as a separate RIC under Subchapter M of the Internal Revenue Code. As such, each Fund should not be subject to federal income tax on its net investment income and capital gains, if any, to the extent that it timely distributes such income and capital gains to its shareholders. In order to qualify for treatment as a RIC, a Fund must distribute annually to its shareholders at least the sum of 90% of its taxable net investment income (generally including the excess of net short-term capital gains over net long-term capital losses) and 90% of its net tax exempt interest income, if any (the Distribution Requirement) and also must meet several additional requirements. Among these requirements are the following: (i) at least 90% of a Fund's gross income each taxable year must be derived from dividends, interest, payments with respect to certain securities loans, gains from the sale or other disposition of stock, securities or foreign currencies, or other income derived with respect to its business of investing in such stock, securities or currencies, and net income derived from interests in qualified publicly traded partnerships (the Qualifying Income Requirement); and (ii) at the end of each quarter of a Fund's taxable year, its assets must be diversified so that (a) at least 50% of the market value of its total assets must be represented by cash and cash items, U.S. government securities, securities of other RICs and other securities, with such other securities limited, in respect to any one issuer, to an amount not greater in value than 5% of the value of the Fund's total assets and to not more than 10% of the outstanding voting securities of such issuer, and (b) not more than 25% of the value of its total assets is invested in the securities (other than U.S. government securities or securities of other RICs) of any one issuer, the securities (other than securities of other RICs) of two or more issuers that it controls and that are engaged in the same, similar, or related trades or businesses, or the securities of one or more qualified publicly traded partnerships (the Diversification Requirement).
If a Fund fails to satisfy the Qualifying Income Requirement or the Diversification Requirement in any taxable year, such Fund may be eligible for relief provisions if the failures are due to reasonable cause and not willful neglect and if a penalty tax is paid with respect to each failure to satisfy the applicable requirements. Additionally, relief is provided for certain de minimis failures of the Diversification Requirement where the Fund corrects the failure within a specified period of time. In order to be eligible for the relief provisions with respect to a failure to meet the Diversification Requirement, a Fund may be required to dispose of certain assets. If these relief provisions were not available to a Fund and it were to fail to qualify for treatment as a RIC for a taxable year, all of its taxable income would be subject to tax at the applicable corporate rate without any deduction for distributions to shareholders, and its distributions (including capital gains distributions) generally would be taxable as ordinary income dividends to its shareholders, subject to the dividends-received deduction for corporate shareholders and the lower tax rates on qualified dividend income received by noncorporate shareholders. To requalify for treatment as a RIC in a subsequent taxable year, the Fund would be required to satisfy the RIC qualification requirements for that year and to distribute any earnings and profits from any year in which the Fund failed to qualify for tax treatment as a RIC. If a Fund failed to qualify as a RIC for a period greater than two taxable years, it would generally be required to pay a Fund-level tax on certain net built-in gains recognized with respect to certain of its assets upon a disposition of such assets within five years of qualifying as a RIC in a subsequent year. The Board reserves the right not to maintain the qualification of a Fund for treatment as a RIC if it determines such course of action to be beneficial to shareholders.
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As discussed more fully below, each Fund intends to distribute substantially all of its net investment income and its capital gains for each taxable year.
If a Fund meets the Distribution Requirement but retains some or all of its income or gains, it will be subject to federal income tax to the extent any such income or gains are not distributed. A Fund may designate certain amounts retained as undistributed net capital gain in a notice to its shareholders, who (i) will be required to include in income for U.S. federal income tax purposes, as long-term capital gain, their proportionate shares of the undistributed amount so designated, (ii) will be entitled to credit their proportionate shares of the income tax paid by the Fund on that undistributed amount against their federal income tax liabilities and to claim refunds to the extent such credits exceed their liabilities and (iii) will be entitled to increase their tax basis, for federal income tax purposes, in their Fund Shares by an amount equal to the excess of the amount of undistributed net capital gain included in their respective income over their respective income tax credits. If a Fund failed to satisfy the Distribution Requirement for any taxable year, it would be taxed as a regular corporation, with consequences generally similar to those described in the preceding paragraph.
Given the concentration of certain of the Indexes in a relatively small number of securities, it may not be possible for certain Funds to fully implement sampling methodologies while satisfying the Diversification Requirement. A Fund's efforts to satisfy the Diversification Requirement may affect the Fund's execution of its investment strategy and may cause the Fund's return to deviate from that of the applicable Index, and the Fund's efforts to track the applicable Index may cause it inadvertently to fail to satisfy the Diversification Requirement.
A Fund will be subject to a 4% excise tax on certain undistributed income if it does not distribute to its shareholders in each calendar year an amount at least equal to 98% of its ordinary income for the calendar year plus 98.2% of its capital gain net income for the twelve months ended October 31 of such year, subject to an increase for any shortfall in the prior year's distribution. Each Fund intends to declare and distribute dividends and distributions in the amounts and at the times necessary to avoid the application of this 4% excise tax.
A Fund may elect to treat part or all of any qualified late year loss as if it had been incurred in the succeeding taxable year in determining the Fund's taxable income, net capital gain, net short-term capital gain, and earnings and profits. The effect of this election is to treat any such qualified late year loss as if it had been incurred in the succeeding taxable year in characterizing Fund distributions for any calendar year. A qualified late year loss generally includes net capital loss, net long-term capital loss, or net short-term capital loss incurred after October 31 of the current taxable year (commonly referred to as post-October losses) and certain other late-year losses.
Capital losses in excess of capital gains (net capital losses) are not permitted to be deducted against a RIC's net investment income. Instead, for U.S. federal income tax purposes, potentially subject to certain limitations, a Fund may carry a net capital loss from any taxable year forward indefinitely to offset its capital gains, if any, in years following the year of the loss. To the extent subsequent capital gains are offset by such losses, they will not result in U.S. federal income tax liability to the Fund and may not be distributed as capital gains to its shareholders. Generally, the Funds may not carry forward any losses other than net capital losses.
TAXATION OF SHAREHOLDERS—DISTRIBUTIONS
Each Fund intends to distribute annually to its shareholders substantially all of its investment company taxable income (computed without regard to the deduction for dividends paid), its net tax-exempt income, if any, and any net capital gain (net recognized long-term capital gains in excess of net recognized short-term capital losses, taking into account any capital loss carryforwards). Each Fund will report to shareholders annually the amounts of dividends paid from ordinary income, the amount of distributions of net capital gain, the portion of dividends which may qualify for the dividends-received deduction, and the portion of dividends which may qualify for treatment as qualified dividend income.
Subject to certain limitations, dividends reported by a Fund as qualified dividend income will be taxable to noncorporate shareholders at reduced rates. Dividends may be reported by a Fund as qualified dividend income if they are attributable to qualified dividend income received by the Fund. Qualified dividend income includes, in general, subject to certain holding period requirements and other requirements, dividend income from certain U.S. and foreign corporations. Subject to certain limitations, eligible foreign corporations include those incorporated in possessions of the United States, those incorporated in certain countries with comprehensive tax treaties with the United States and other foreign corporations if the stock with respect to which the dividends are paid is tradable on an established securities market in the United States. A dividend generally will not be treated as qualified dividend income to the extent that (i) the shareholder has not held the stock on which the dividend was paid for more than 60 days during the 121-day period that begins on the date that is 60 days before the date on which the stock becomes ex-dividend with respect to such dividend or, in the case of certain
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preferred stock, for more than 90 days during the 181-day period beginning 90 days before such date, (ii) the shareholder is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to substantially similar or related property, or (iii) the shareholder elects to treat such dividend as investment income under section 163(d)(4)(B) of the Internal Revenue Code. The holding period requirements described in this paragraph apply to shareholders' investments in the Funds and to the Funds' investments in underlying dividend-paying stocks. Dividends treated as received by a Fund from a REIT or another RIC may be treated as qualified dividend income generally only to the extent the dividend distributions are attributable to qualified dividend income received by such REIT or RIC. It is expected that any dividends received by a Fund from a REIT and distributed by that Fund to a shareholder generally will be taxable to the shareholder as ordinary income. Additionally, income derived in connection with a Fund's securities lending activities will, in general, not be treated as qualified dividend income. If 95% or more of a Fund's gross income (calculated without taking into account net capital gain derived from sales or other dispositions of stock or securities) consists of qualified dividend income, that Fund may report all distributions of such income as qualified dividend income.
Certain dividends received by a Fund from U.S. corporations (generally, dividends received by a Fund in respect of any share of stock (1) with a tax holding period of at least 46 days during the 91-day period beginning on the date that is 45 days before the date on which the stock becomes ex-dividend as to that dividend and (2) that is held in an unleveraged position) when distributed and appropriately so reported by the Fund may be eligible for the 50% dividends-received deduction generally available to corporations under the Internal Revenue Code. Dividends received by a Fund from REITs will not be eligible for that deduction. In order to qualify for the deduction, corporate shareholders must meet the minimum holding period requirement stated above with respect to their Fund Shares, taking into account any holding period reductions from certain hedging or other transactions or positions that diminish their risk of loss with respect to their Fund Shares, and, if they borrow to acquire or otherwise incur debt attributable to Fund Shares, they may be denied a portion of the dividends-received deduction with respect to those Fund Shares. Any corporate shareholder should consult its tax adviser regarding the possibility that its tax basis in its Fund Shares may be reduced, for U.S. federal income tax purposes, by reason of extraordinary dividends received with respect to the Fund Shares and, to the extent such basis would be reduced below zero, current recognition of income may be required.
Distributions from a Fund's net short-term capital gains will generally be taxable to shareholders as ordinary income. Distributions from a Fund's net capital gain will be taxable to shareholders at long-term capital gains rates, regardless of how long shareholders have held their Shares. Long-term capital gains are generally taxed to noncorporate shareholders at reduced rates. Certain capital gain dividends attributable to dividends a Fund receives from REITs may be taxable to noncorporate shareholders at a rate other than the reduced rates generally applicable to long-term capital gains.
Although dividends generally will be treated as distributed when paid, any dividend declared by a Fund in October, November or December and payable to shareholders of record in such a month that is paid during the following January will be treated for U.S. federal income tax purposes as received by shareholders on December 31 of the calendar year in which it was declared.
If a Fund's distributions exceed its earnings and profits, all or a portion of the distributions made in the taxable year may be treated as a return of capital to shareholders. A return of capital distribution generally will not be taxable but will reduce the shareholder's cost basis and result in a higher capital gain or lower capital loss when the Fund Shares on which the distribution was received are sold. After a shareholder's basis in the Fund Shares has been reduced to zero, distributions in excess of earnings and profits will be treated as gain from the sale of the shareholder's Fund Shares.
Under Section 163(j) of the Code, a taxpayer's business interest expense is generally deductible to the extent of its business interest income plus certain other amounts. If a Fund earns business interest income, it may report a portion of its dividends as Section 163(j) interest dividends, which its shareholders may be able to treat as business interest income for purposes of Section 163(j) of the Code. The Fund's Section 163(j) interest dividend for a tax year will be limited to the excess of its business interest income over the sum of its business interest expense and other deductions properly allocable to its business interest income. In general, a Fund's shareholders may treat a distribution reported as a Section 163(j) interest dividend as interest income only to the extent the distribution exceeds the sum of the portions of the distribution reported as other types of tax-favored income. To be eligible to treat a Section 163(j) interest dividend as interest income, a shareholder may need to meet certain holding period requirements in respect of Fund Shares and must not have hedged its position in Fund Shares in certain ways.
Distributions that are reinvested in additional Fund Shares through the means of a dividend reinvestment service, if offered by your broker-dealer, will nevertheless be taxable dividends to the same extent as if such dividends had been received in cash.
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A 3.8% Medicare contribution tax generally applies to all or a portion of the net investment income of a shareholder who is an individual and not a nonresident alien for federal income tax purposes and who has adjusted gross income (subject to certain adjustments) that exceeds a threshold amount ($250,000 if married filing jointly or if considered a surviving spouse for federal income tax purposes, $125,000 if married filing separately, and $200,000 in other cases). This 3.8% tax also applies to all or a portion of the undistributed net investment income of certain shareholders that are estates and trusts. For these purposes, dividends, interest and certain capital gains (generally including capital gain distributions and capital gains realized on the sale of Fund Shares) are generally taken into account in computing a shareholder's net investment income.
Distributions of ordinary income and capital gains may also be subject to foreign, state and local taxes depending on a shareholder's circumstances.
TAXATION OF SHAREHOLDERS – SALE OF FUND SHARES
In general, a sale of Fund Shares results in capital gain or loss, and for individual shareholders, is taxable at a federal rate dependent upon the length of time the Fund Shares were held. A sale of Fund Shares held for a period of one year or less at the time of such sale will, for tax purposes, generally result in short-term capital gains or losses, and a sale of those held for more than one year will generally result in long-term capital gains or losses. Long-term capital gains are generally taxed to noncorporate shareholders at reduced rates.
Gain or loss on the sale of Fund Shares is measured by the difference between the amount received and the adjusted tax basis of the Fund Shares. Shareholders should keep records of investments made (including Fund Shares acquired through reinvestment of dividends and distributions) so they can compute the tax basis of their Fund Shares.
A loss realized on a sale of Fund Shares may be disallowed if substantially identical Fund Shares are acquired (whether through the reinvestment of dividends or otherwise) within a sixty-one (61) day period beginning thirty (30) days before and ending thirty (30) days after the date that the Fund Shares are disposed of. In such a case, the basis of the Fund Shares acquired must be adjusted to reflect the disallowed loss. Any loss upon the sale of Fund Shares held for six (6) months or less is treated as long-term capital loss to the extent of any amounts treated as distributions to the shareholder of long-term capital gain (including any amounts credited to the shareholder as undistributed capital gains).
COST BASIS REPORTING
The cost basis of Fund Shares acquired by purchase will generally be based on the amount paid for the Fund Shares and then may be subsequently adjusted for other applicable transactions as required by the Internal Revenue Code. The difference between the selling price and the cost basis of Fund Shares generally determines the amount of the capital gain or loss realized on the sale or exchange of Fund Shares. Contact the broker through whom you purchased your Fund Shares to obtain information with respect to the available cost basis reporting methods and elections for your account.
TAXATION OF FUND INVESTMENTS
Dividends and interest received by a Fund on foreign securities may give rise to withholding and other taxes imposed by foreign countries. Tax conventions between certain countries and the United States may reduce or eliminate such taxes. No Fund expects to satisfy the requirements for passing through to its shareholders any share of any foreign taxes paid by the Fund, with the result that shareholders will not include such taxes in their gross incomes and will not be entitled to a tax deduction or credit for such taxes on their own returns.
Certain of the Funds' investments may be subject to complex provisions of the Internal Revenue Code (including provisions relating to hedging transactions, straddles, integrated transactions, foreign currency contracts, forward foreign currency contracts, and notional principal contracts) that, among other things, may affect the character of gains and losses realized by a Fund (e.g., may affect whether gains or losses are ordinary or capital), accelerate recognition of income to the Fund and defer losses. These rules could therefore affect the character, amount and timing of distributions to shareholders. These provisions also may require a Fund to mark-to-market certain types of positions in its portfolio (i.e., treat them as if they were closed out) which may cause the Fund to recognize income without receiving cash with which to make distributions to its shareholders in amounts necessary to satisfy the RIC distribution requirements for avoiding income and excise taxes. The Funds intend to monitor their transactions, intend to make appropriate tax elections, and intend to make appropriate entries in their books and records in order to mitigate the effect of these rules and preserve the Funds' qualification for treatment as RICs.
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Each Fund is required for federal income tax purposes to mark-to-market and recognize as income for each taxable year its net unrealized gains and losses on certain futures contracts as of the end of the year as well as those actually realized during the year. Gain or loss from futures and options contracts on broad-based indexes required to be marked to market will be 60% long-term and 40% short-term capital gain or loss. Application of this rule may alter the timing and character of distributions to shareholders. A Fund may be required to defer the recognition of losses on futures contracts, options contracts and swaps to the extent of any unrecognized gains on offsetting positions held by the Fund. It is anticipated that certain net gain realized from the closing out of futures or options contracts will be considered gain from the sale of securities and therefore will be qualifying income for purposes of the Qualifying Income Requirement.
For tax years beginning after December 31, 2017 and before January 1, 2026, a non-corporate taxpayer is generally eligible for a deduction of up to 20% of the taxpayer's qualified REIT dividends. If a Fund receives a dividend (other than a capital gain dividend) in respect of any share of U.S. REIT stock, the Fund may report its own dividends as eligible for the 20% deduction, to the extent the Fund's income is derived from such qualified REIT dividends, as reduced by allocable Fund expenses. In order for a Fund's dividends to be eligible for this deduction when received by a non-corporate shareholder, the Fund must meet certain holding period requirements with respect to the U.S. REIT shares on which the Fund received the eligible dividends, and the non-corporate shareholder must meet certain holding period requirements with respect to the Shares.
TAX-EXEMPT SHAREHOLDERS
Certain tax-exempt shareholders, including qualified pension plans, individual retirement accounts, salary deferral arrangements, 401(k) plans, and other tax-exempt entities, generally are exempt from federal income taxation except with respect to their unrelated business taxable income (UBTI). Under current law, a Fund generally serves to block UBTI from being realized by its tax-exempt shareholders. However, notwithstanding the foregoing, tax-exempt shareholders could realize UBTI by virtue of their investment in a Fund where, for example, (i) the Fund invests in REITs that hold residual interests in real estate mortgage investment conduits (REMICs) or (ii) Fund Shares constitute debt-financed property in the hands of the tax-exempt shareholders within the meaning of section 514(b) of the Internal Revenue Code. Charitable remainder trusts are subject to special rules and should consult their tax advisors. There are no restrictions preventing a Fund from holding investments in REITs that hold residual interests in REMICs, and a Fund may do so. The IRS has issued guidance with respect to these issues and prospective shareholders, especially charitable remainder trusts, are strongly encouraged to consult with their tax advisors regarding these issues.
Certain tax-exempt educational institutions will be subject to a 1.4% tax on net investment income. For these purposes, certain dividends and capital gain distributions, and certain gains from the disposition of Fund Shares (among other categories of income), are generally taken into account in computing a shareholder's net investment income.
FOREIGN SHAREHOLDERS
Dividends, other than capital gains dividends, short-term capital gain dividends and interest-related dividends (described below), paid by a Fund to shareholders who are nonresident aliens or foreign entities will be subject to a 30% United States withholding tax unless a reduced rate of withholding or a withholding exemption is provided under applicable treaty law to the extent derived from investment income and short-term capital gain or unless such income is effectively connected with a U.S. trade or business carried on through a permanent establishment in the United States. Nonresident shareholders are urged to consult their own tax advisors concerning the applicability of the United States withholding tax and the proper withholding form(s) to be submitted to a Fund. A non-U.S. shareholder who fails to provide an appropriate IRS Form W-8 may be subject to backup withholding at the appropriate rate.
Dividends reported by a Fund as (i) interest-related dividends, to the extent such dividends are derived from the Fund's qualified net interest income, or (ii) short-term capital gain dividends, to the extent such dividends are derived from the Fund's qualified short-term gain, are generally exempt from this 30% withholding tax. Qualified net interest income is a Fund's net income derived from U.S.-source interest and original issue discount, subject to certain exceptions and limitations. Qualified short-term gain generally means the excess of a Fund's net short-term capital gain for the taxable year over its net long-term capital loss, if any. In the case of Fund Shares held through an intermediary, the intermediary may withhold even if a Fund reports the payment as an interest-related dividend or as a short-term capital gain dividend. Non-U.S. shareholders should contact their intermediaries with respect to the application of these rules to their accounts.
56

Unless certain non-U.S. entities that hold Fund Shares comply with IRS requirements that will generally require them to report information regarding U.S. persons investing in, or holding accounts with, such entities, a 30% withholding tax may apply to Fund distributions payable to such entities. A non-U.S. shareholder may be exempt from the withholding described in this paragraph under an applicable intergovernmental agreement between the U.S. and a foreign government, provided that the shareholder and the applicable foreign government comply with the terms of such agreement.
Non-U.S. persons are subject to U.S. tax on disposition of a United States real property interest (a USRPI). Gain on such a disposition is sometimes referred to as FIRPTA gain. The Internal Revenue Code provides a look-through rule for distributions of FIRPTA gain if certain requirements are met. If the look-through rule applies, certain distributions attributable to income treated as received by a Fund from REITs may be treated as gain from the disposition of a USRPI, causing distributions to be subject to U.S. withholding taxes, and requiring non-U.S. investors to file nonresident U.S. income tax returns. Also, FIRPTA gain may be subject to a 30% branch profits tax in the hands of a non-U.S. shareholder that is treated as a corporation for federal income tax purposes. Under certain circumstances, Fund Shares may qualify as USRPIs, which could result in 15% withholding on certain distributions and gross redemption proceeds paid to certain non-U.S. investors.
BACKUP WITHHOLDING
A Fund will be required in certain cases to withhold (as backup withholding) on amounts payable to any shareholder who (1) has provided the Fund either an incorrect tax identification number or no number at all, (2) is subject to backup withholding by the IRS for failure to properly report payments of interest or dividends, (3) has failed to certify to the Fund that such shareholder is not subject to backup withholding, or (4) has not certified that such shareholder is a U.S. person (including a U.S. resident alien). The backup withholding rate is currently 24%. Backup withholding will not be applied to payments that have been subject to the 30% withholding tax on shareholders who are neither citizens nor permanent residents of the U.S.
CREATION UNITS
An Authorized Participant who exchanges securities for Creation Units generally will recognize a gain or a loss. The gain or loss will be equal to the difference between the market value of the Creation Units at the time and the sum of the exchanger's aggregate basis in the securities surrendered plus the amount of cash paid for such Creation Units. A person who redeems Creation Units will generally recognize a gain or loss equal to the difference between the exchanger's basis in the Creation Units and the sum of the aggregate market value of any securities received plus the amount of any cash received for such Creation Units. The IRS, however, may assert that a loss realized upon an exchange of securities for Creation Units cannot be deducted currently under the rules governing wash sales, or on the basis that there has been no significant change in economic position.
Any gain or loss realized upon a creation of Creation Units will be treated as capital gain or loss if the Authorized Participant holds the securities exchanged therefor as capital assets, and otherwise will be ordinary income or loss. Similarly, any gain or loss realized upon a redemption of Creation Units will be treated as capital gain or loss if the Authorized Participant holds the Fund Shares comprising the Creation Units as capital assets, and otherwise will be ordinary income or loss. Any capital gain or loss realized upon the creation of Creation Units will generally be treated as long-term capital gain or loss if the securities exchanged for such Creation Units have been held for more than one year, and otherwise will be short-term capital gain or loss. Any capital gain or loss realized upon the redemption of Creation Units will generally be treated as long-term capital gain or loss if the Fund Shares comprising the Creation Units have been held for more than one year, and otherwise, will generally be short-term capital gain or loss. Any capital loss realized upon a redemption of Creation Units held for six (6) months or less will be treated as a long-term capital loss to the extent of any amounts treated as distributions to the applicable Authorized Participant of long-term capital gains with respect to the Creation Units (including any amounts credited to the Authorized Participant as undistributed capital gains).
A Fund has the right to reject an order for Creation Units if the purchaser (or a group of purchasers) would, upon obtaining the Fund Shares so ordered, own 80% or more of the outstanding shares of the Fund and if, pursuant to section 351 of the Internal Revenue Code, the Fund would have a basis in any deposit securities different from the market value of such securities on the date of deposit. A Fund also has the right to require information necessary to determine beneficial Fund Share ownership for purposes of the 80% determination. If a Fund does issue Creation Units to a purchaser (or a group of purchasers) that would, upon obtaining the Fund Shares so ordered, own 80% or more of the outstanding shares of the Fund, the purchaser (or a group of purchasers) may not recognize gain or loss upon the exchange of securities for Creation Units.
57

If a Fund redeems Creation Units in cash, it may bear additional costs and recognize more capital gains than it would if it redeems Creation Units in-kind.
Persons purchasing or redeeming Creation Units should consult their own tax advisors with respect to the tax treatment of any creation or redemption transaction.
CERTAIN POTENTIAL TAX REPORTING REQUIREMENTS
Under promulgated Treasury regulations, if a shareholder recognizes a loss on disposition of a Fund's shares of $2 million or more for an individual shareholder or $10 million or more for a corporate shareholder (or certain greater amounts over a combination of years), the shareholder must file with the IRS a disclosure statement on IRS Form 8886. Direct shareholders of portfolio securities are in many cases excepted from this reporting requirement, but under current guidance, shareholders of a RIC are not excepted. A shareholder who fails to make the required disclosure to the IRS may be subject to adverse tax consequences, including significant penalties. The fact that a loss is reportable under these regulations does not affect the legal determination of whether the taxpayer's treatment of the loss is proper. Shareholders should consult their tax advisers to determine the applicability of these regulations in light of their individual circumstances.
The foregoing discussion is a summary only and is not intended as a substitute for careful tax planning. Purchasers of Fund Shares should consult their own tax advisors as to the tax consequences of investing in such Fund Shares, including under state, local and other tax laws. Finally, the foregoing discussion is based on applicable provisions of the Internal Revenue Code, regulations, judicial authority and administrative interpretations in effect on the date hereof. Changes in applicable authority could materially affect the conclusions discussed above, and such changes often occur.
Capital Stock and Other Securities
Each Select Sector SPDR Fund issues Shares of beneficial interest, par value $0.01 per Share. The Board may designate additional Select Sector SPDR Funds.
Each Share issued by the Trust has a pro rata interest in the assets of the corresponding Select Sector SPDR Fund. Shares have no preemptive, exchange, subscription or conversion rights and are freely transferable. Each Share is entitled to participate equally in dividends and distributions declared by the Board with respect to the relevant Select Sector SPDR Fund, and in the net distributable assets of such Select Sector SPDR Fund on liquidation.
Each Share has one vote with respect to matters upon which a shareholder vote is required consistent with the requirements of the 1940 Act and the rules promulgated thereunder. Shares of all Select Sector SPDR Funds vote together as a single class, except that if the matter being voted on affects only a particular Select Sector SPDR Fund, it will be voted on only by that Select Sector SPDR Fund, and if a matter affects a particular Select Sector SPDR Fund differently from other Select Sector SPDR Funds, that Select Sector SPDR Fund will vote separately on such matter. Under Massachusetts law, the Trust is not required to hold an annual meeting of shareholders unless required to do so under the 1940 Act. The policy of the Trust is not to hold an annual meeting of shareholders unless required to do so under the 1940 Act. All Shares of the Trust (regardless of the Select Sector SPDR Fund) have noncumulative voting rights for the election of Trustees. Under Massachusetts law, Trustees of the Trust may be removed by vote of the shareholders.
Under Massachusetts law, shareholders of a business trust may, under certain circumstances, be held personally liable as partners for obligations of the Trust. However, the Declaration of Trust contains an express disclaimer of shareholder liability for acts or obligations of the Trust, requires that Trust obligations include such disclaimer, and provides for indemnification and reimbursement of expenses out of the Trust's property for any shareholder held personally liable for the obligations of the Trust. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which the Trust itself would be unable to meet its obligations. Given the above limitations on shareholder personal liability, and the nature of each Fund's assets and operations, the risk to shareholders of personal liability is believed to be remote.
Shareholder inquiries may be made by writing to the Trust, c/o the Distributor, ALPS Portfolio Solutions Distributor, Inc., at 1290 Broadway, Suite 1000, Denver, Colorado 80203.
58

Counsel and Independent Registered Public Accounting Firm
Morgan, Lewis & Bockius LLP, located at 1111 Pennsylvania Avenue NW, Washington, DC 20004, serves as counsel to the Trust. Ernst & Young LLP, located at 200 Clarendon Street, Boston, MA 02116, serves as the independent registered public accounting firm of the Trust. Ernst & Young LLP performs annual audits of the Funds' financial statements and provides other audit, tax and related services.
Financial Statements
The financial statements for the Funds and the independent registered public accounting firm report thereon dated November 23, 2022, which is contained in the Trust's Annual Report for the fiscal year ended September 30, 2022 (as filed with the SEC on December 7, 2022 pursuant to Section 30(b) of the 1940 Act and Rule 30b2-1 thereunder), are incorporated herein by reference.
59

Appendix A
The Select Sector SPDR® Trust (the Trust)
PROXY VOTING POLICY AND PROCEDURES
The Board of Trustees of the Trust has adopted the following policy and procedures with respect to voting proxies relating to portfolio securities held by the Trust's investment portfolios.
1.
Proxy Voting Policy
The policy of the Trust is to delegate the responsibility for voting proxies relating to portfolio securities held by the Trust to SSgA Funds Management, Inc., the Trust's investment adviser (the Adviser), subject to the Trustees' continuing oversight.
2.
Fiduciary Duty
The right to vote proxies with respect to portfolio securities held by the Trust is an asset of the Trust. The Adviser acts as a fiduciary of the Trust and must vote proxies in a manner consistent with the best interest of the Trust and its shareholders.
3.
Proxy Voting Procedures
A.
At least annually, the Adviser shall present to the Board its policies, procedures and other guidelines for voting proxies (Policy). (See attached Schedule A) In addition, the Adviser shall notify the Trustees of material changes to its Policy promptly and no later than at the next regular meeting of the Board of Trustees after such amendment is implemented.
B.
At least annually, the Adviser shall present to the Board its policy for managing the conflicts of interests that may arise through the Adviser's proxy voting activities. In addition, the Adviser shall report any Policy overrides involving portfolio securities held by the Trust to the Trustees at the next regular meeting of the Board of Trustees after such override(s) occur.
C.
At least annually, the Adviser shall inform the Trustees that a record is available with respect to each proxy voted with respect to portfolio securities of the Trust during the year. Also see Section 5 below.
4.
Revocation of Authority to Vote
The delegation by the Trustees of the authority to vote proxies relating to portfolio securities of the Trust may be revoked by the Trustees, in whole or in part, at any time.
5.
Annual Filing of Proxy Voting Record
The Adviser shall provide the required data for each proxy voted with respect to portfolio securities of the Trust to the Trust or its designated service provider in a timely manner and in a format acceptable to be filed in the Trust's annual proxy voting report on Form N-PX for the twelve-month period ended June 30. Form N-PX is required to be filed not later than August 31 of each year.
6.
Retention and Oversight of Proxy Advisory Firms
A.
In considering whether to retain or continue retaining a particular proxy advisory firm, the Adviser will ascertain whether the proxy advisory firm has the capacity and competency to adequately analyze proxy issues, act as proxy voting agent as requested, and implement the Policy. In this regard, the Adviser will consider, at least annually, among other things, the adequacy and quality of the proxy advisory firm's staffing and personnel and the robustness of its policies and procedures regarding its ability to identify and address any conflicts of interest. The Adviser shall, at least annually, report to the Board regarding the results of this review.
B.
The Adviser will request quarterly and annual reporting from any proxy advisory firm retained by the Adviser, and hold ad hoc meetings with such proxy advisory firm, in order to determine whether there has been any business changes that might impact the proxy advisory firm's capacity or competency to provide proxy voting advice or services or changes to the proxy advisory firm's conflicts policies or procedures. The Adviser will also take reasonable steps to investigate any material factual error, notified to the Adviser by the proxy advisory firm or identified by the Adviser, made by the proxy advisory firm in providing proxy voting services.
A-1

7.
Periodic Sampling
The Adviser will periodically sample proxy votes to review whether they complied with the Policy. The Adviser shall, at least annually, report to the Board regarding the frequency and results of the sampling performed.
8.
Disclosures
A.
The Trust shall include in its registration statement:
1.
A description of this policy and of the policies and procedures used by the Adviser to determine how to vote proxies relating to portfolio securities; and
2.
A statement disclosing that information regarding how the Trust voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge, upon request, by calling the Trust's toll-free telephone number; or through a specified Internet address; or both; and on the Securities and Exchange Commission's (the SEC) website.
B.
The Trust shall include in its annual and semi-annual reports to shareholders:
1.
A statement disclosing that a description of the policies and procedures used by or on behalf of the Trust to determine how to vote proxies relating to portfolio securities of the Trust is available without charge, upon request, by calling the Trust's toll-free telephone number; through a specified Internet address, if applicable; and on the SEC's website; and
2.
A statement disclosing that information regarding how the Trust voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge, upon request, by calling the Trust's toll-free telephone number; or through a specified Internet address; or both; and on the SEC's website.
9.
Review of Policy
The Trustees shall review this policy to determine its continued sufficiency as necessary from time to time.
Adopted:
May 1, 2006
Amended:
May 12, 2009
Amended:
November 9, 2010
Amended:
February 9, 2016
A-2

APPENDIX B
 
 
 
December 2022
 
Global Proxy Voting and
Engagement Principles
 
State Street Global Advisors, one of the industry's
largest institutional asset managers, is the investment
management arm of State Street Corporation, a leading
provider of financial services to institutional investors. As
an investment manager, State Street Global Advisors
has discretionary proxy voting authority over most of its
client accounts, and State Street Global Advisors votes
these proxies in the manner that we believe will most
likely protect and promote the long-term economic value
of client investments, as described in this document.i
 
 

i
These Global Proxy Voting and Engagement Principles (the Principles) are also applicable to SSGA Funds Management, Inc., State Street Global Advisors Trust Company, and other advisory affiliates of State Street Corporation. Additionally, State Street Global Advisors maintains Proxy Voting and Engagement Guidelines for select markets, including: Australia, continental Europe, Japan, New Zealand, North America (Canada and the US), the UK and Ireland, and emerging markets. International markets not covered by our market-specific guidelines are reviewed and voted in a manner that is consistent with the Principles; however, State Street Global Advisors also endeavors to show sensitivity to local market practices when voting in these various markets.
B-1

 
 
 
 
State Street Global
Advisors' Authority and
Duties to Vote Client and
Fund Securities
Where State Street Global Advisors' clients have asked it to vote their shares on their
behalf or where a commingled fund fiduciary has delegated the responsibility to vote the
fund's securities to State Street Global Advisors, State Street Global Advisors votes those
client and fund-owned securities in a unified manner, consistent with the Principles
described in this document. Exceptions to this unified voting policy are: (1) where State
Street Global Advisors has made proxy voting choices (i.e., the proxy voting program)
available to investors within a commingled fund, in which case a pro rata portion of shares
held by the fund attributable to investors who choose to participate in the proxy voting
program would be voted consistent with the third-party proxy voting policies selected by
the investors, and (2) in the limited circumstances where a pooled investment vehicle
managed by State Street Global Advisors utilizes a third party proxy voting guideline as set
forth in that fund's organizational and/or offering documents. With respect to such funds
utilizing third-party proxy voting guidelines, the terms of the applicable third-party proxy
voting guidelines shall apply in place of the Principles described herein and the proxy
votes implemented with respect to such a fund may differ from and be contrary to those
votes implemented for other portfolios managed by State Street Global Advisors pursuant
to its proprietary proxy voting guidelines.
The Principles - State
Street Global Advisors'
Approach to Proxy Voting
and Issuer Engagement
At State Street Global Advisors, we take our fiduciary duties as an asset manager very
seriously. We have a dedicated team of corporate governance professionals who help us
carry out our duties as a responsible investor. These duties include engaging with
companies, developing and enhancing in-house corporate governance guidelines,
analyzing corporate governance issues on a case-by-case basis at the company level, and
exercising voting rights. The underlying goal is to maximize shareholder value.
 
The Principles may take different perspectives on common governance issues that vary
from one market to another. Similarly, engagement activity may take different forms in
order to best achieve long-term engagement goals. Rather than divesting from portfolio
companies, our approach is to engage with such companies. We believe that proxy voting
and engagement with portfolio companies is often the most direct and productive way for
shareholders to exercise their ownership rights. This comprehensive toolkit is an integral
part of the overall investment process.
 
We believe engagement and voting activity have a direct relationship. As a result, the
integration of our engagement activities, while leveraging the exercise of voting rights,
provides a meaningful shareholder tool that we believe protects and enhances the
long-term economic value of the holdings in our clients' accounts. We maximize voting
power and engagement by maintaining a centralized proxy voting and active ownership
process covering all holdings, regardless of strategy. Despite the vast array of investment
strategies and objectives across State Street Global Advisors, the fiduciary responsibilities
of share ownership and voting for which State Street Global Advisors has voting discretion
are carried out with a single voice and objective.
 
The Principles support governance structures that we believe add to, or maximize,
shareholder value for the companies held in our clients' portfolios. We conduct issuer
specific engagements with companies to discuss our principles, including sustainability-
related risks. In addition, we encourage issuers to find ways to increase the amount of
direct communication board members have with shareholders. Direct communication with
executive board members and independent non-executive directors is critical to helping
companies understand shareholder concerns.
B-2

 
In conducting our engagements, we also evaluate the various factors that influence the
corporate governance framework of a country, including the macroeconomic conditions
and broader political system, the quality of regulatory oversight, the enforcement of
property and shareholder rights, and the independence of the judiciary. We understand
that regulatory requirements and investor expectations relating to governance practices
and engagement activities differ from country to country. As a result, we engage with
issuers, regulators, or a combination of the two depending upon the market. We are also a
member of various investor associations that seek to address broader corporate
governance-related policy at the country level.
 
The State Street Global Advisors Asset Stewardship Team may consult with members of
various investment teams to engage with companies on corporate governance issues and
to address any specific concerns. This facilitates our comprehensive approach to
information gathering as it relates to shareholder items that are to be voted upon at
upcoming shareholder meetings. We also conduct issuer-specific engagements with
companies, covering various corporate governance and sustainability-related topics
outside of proxy season.
 
The Asset Stewardship Team employs a blend of quantitative and qualitative research,
analysis and data in order to support screens that identify issuers where active
engagement may be necessary to protect and promote shareholder value. Issuer
engagement may also be event driven, focusing on issuer-specific corporate governance,
sustainability concerns, or broader industry-related trends. We also consider the size of
our total position in the issuer in question and/or the potential negative governance,
performance profile, and circumstance at hand. As a result, we believe issuer engagement
can take many forms and be triggered by numerous circumstances. The following
approaches represent how we define engagement methods:
 
 
Active
We use screening tools designed to capture a mix of company-specific data, including
governance and sustainability profiles, to help us focus our voting and engagement activity.
 
We will actively seek direct dialogue with the board and management of companies that
we have identified through our screening processes. Such engagements may lead to
further monitoring to ensure that the company improves its governance or sustainability
practices. In these cases, the engagement process represents the most meaningful
opportunity for us to protect long-term shareholder value from excessive risk due to poor
governance and sustainability practices.
 
 
Reactive
Reactive engagement is initiated by issuers. We routinely discuss specific voting issues
and items with the issuer community. Reactive engagement is an opportunity to address
not only voting items, but also a wide range of governance and sustainability issues.
 
We have established an engagement protocol that further describes our approach to
issuer engagement.
B-3

 
 
Measurement
Assessing the effectiveness of our issuer engagement process is often difficult. In order to
limit the subjectivity of effectiveness measurement, we actively seek issuer feedback and
monitor the actions issuers take post-engagement in order to identify tangible changes.
Thus, we are able to establish indicators to gauge how issuers respond to our concerns
and to what degree these responses satisfy our requests. It is also important to note that
successful engagement activity can be measured over differing time periods depending
upon the relevant facts and circumstances. Engagements can last as briefly as a single
meeting or span multiple years.
 
Depending upon the issue and whether the engagement activity is reactive, active,
one-time, or recurring, engagement with issuers can take the form of written
communication, conference calls, or in-person meetings. We believe active engagement is
best conducted directly with company management or board members.
 
 
Proxy Voting Procedure
 
 
 
Oversight
The Asset Stewardship Team is responsible for developing and implementing State Street
Global Advisors' proprietary Proxy Voting and Engagement Guidelines (the Guidelines),
the implementation of third-party proxy voting guidelines where applicable, case-by-case
voting items, issuer engagement activities, and research and analysis of governance-
related issues. The Asset Stewardship Team's activities are overseen by the State Street
Global Advisors ESG Committee. The ESG Committee is responsible for reviewing State
Street Global Advisors' stewardship strategy, engagement priorities, and proxy voting
guidelines and monitoring the delivery of voting objectives.
 
 
Proxy Voting Process
In order to facilitate our proxy voting process, we retain Institutional Shareholder Services
Inc. (ISS), a firm with expertise in proxy voting and corporate governance. We utilize ISS
to: (1) act as our proxy voting agent (providing State Street Global Advisors with vote
execution and administration services), (2) assist in applying the Guidelines, (3) provide
research and analysis relating to general corporate governance issues and specific proxy
items, and (4) provide proxy voting guidelines in limited circumstances.
 
The Asset Stewardship Team reviews with ISS its Guidelines and the services that ISS
provides to State Street Global Advisors on an annual or case-by-case basis. As part of its
role as proxy agent and prior to providing vote execution services, ISS pre-populates on an
electronic platform certain preliminary proxy votes in accordance with the proxy voting
guidelines identified by State Street Global Advisors. On most routine proxy voting items
(e.g., ratification of auditors), ISS will shortly before applicable submission deadlines use
an automated process to affect the pre-populated proxy votes. To the extent the Asset
Stewardship Team becomes aware of material new information within a reasonable period
of time before ISS affects such votes, the Asset Stewardship Team will assess whether the
pre-populated votes should be updated.
 
In other cases, the Asset Stewardship Team will evaluate the proxy solicitation to
determine how to vote based upon the facts and circumstances, consist with our Principles
and accompanying Guidelines.
B-4

 
In some instances, the Asset Stewardship Team may refer significant issues to the ESG
Committee for a determination of the proxy vote. In addition, in determining whether to
refer a proxy vote to the ESG Committee, the Asset Stewardship Team will consider
whether a material conflict of interest exists between the interests of our client and those
of State Street Global Advisors or its affiliates (as explained in greater detail in our Conflict
Mitigation Guidelines).
 
We vote in all markets where it is feasible; however, we may refrain from voting when
power of attorney documentation is required, where voting will have a material impact on
our ability to trade the security, where voting is not permissible due to sanctions affecting a
company or an individual, where issuer-specific special documentation is required, or
where various market or issuer certifications are required. We are unable to vote proxies
when certain custodians, used by our clients, do not offer proxy voting in a jurisdiction or
when they charge a meeting specific fee in excess of the typical custody service
agreement.
 
 
Conflict of Interest
See our standalone Conflict Mitigation Guidelines.
 
 
Proxy Voting and
Engagement Principles
 
 
 
Directors and Boards
The election of directors is one of the most important fiduciary duties we perform on
behalf of our clients. We believe that well-governed companies can protect and pursue
shareholder interests better and withstand the challenges of an uncertain economic
environment. As such, we seek to vote director elections in a way that we believe will
maximize long-term value.
 
Principally, a board acts on behalf of shareholders by protecting their interests and
preserving their rights. This concept establishes the standard by which board and director
performance is measured. In order to achieve this fundamental principle, the role of the
board is to carry out its responsibilities in the best long-term interest of the company and
its shareholders. An independent and effective board oversees management, provides
guidance on strategic matters, selects the CEO and other senior executives, creates a
succession plan for the board and management, provides risk oversight, and assesses the
performance of the CEO and management. In contrast, management implements the
business and capital allocation strategies and runs the company's day-to-day operations.
As part of our engagement process, we routinely discuss the importance of these
responsibilities with the boards of issuers.
 
We believe the quality of a board is a measure of director independence, director
succession planning, board diversity, evaluations and refreshment, and company
governance practices. In voting to elect nominees, we consider many factors. We believe
independent directors are crucial to good corporate governance; they help management
establish sound corporate governance policies and practices. A sufficiently independent
board will effectively monitor management, maintain appropriate governance practices,
and perform oversight functions necessary to protect shareholder interests. We also
believe the right mix of skills, independence, diversity, and qualifications among directors
provides boards with the knowledge and direct experience to manage risks and operating
structures that are often complex and industry-specific.
B-5

 
 
Accounting and
Audit-Related Issues
We believe audit committees are critical and necessary as part of the board's risk
oversight role. The audit committee is responsible for setting out an internal audit function
that provides robust audit and internal control systems designed to effectively manage
potential and emerging risks to the company's operations and strategy. We believe audit
committees should have independent directors as members, and we will hold the members
of the audit committee responsible for overseeing the management of the audit function.
 
The disclosure and availability of reliable financial statements in a timely manner is
imperative for the investment process. As a result, board oversight of the internal controls
and the independence of the audit process are essential if investors are to rely upon
financial statements. It is important for the audit committee to appoint external auditors
who are independent from management; we expect auditors to provide assurance of a
company's financial condition.
 
 
Capital Structure,
Reorganization and Mergers
The ability to raise capital is critical for companies to carry out strategy, to grow, and to
achieve returns above their cost of capital. The approval of capital raising activities is
fundamental to a shareholder's ability to monitor the amounts of proceeds and to ensure
capital is deployed efficiently. Altering the capital structure of a company is a critical
decision for boards. When making such a decision, we believe the company should
disclose a comprehensive business rationale that is consistent with corporate strategy and
not overly dilutive to its shareholders.
 
Mergers or reorganization of the structure of a company often involve proposals relating to
reincorporation, restructurings, liquidations, and other major changes to the corporation.
 
Proposals that are in the best interests of shareholders, demonstrated by enhancing share
value or improving the effectiveness of the company's operations, will be supported. In
evaluating mergers and acquisitions, we consider the impact of the corporate governance
provisions to shareholders. In all cases, we use our discretion in order to maximize
shareholder value.
 
Occasionally, companies add anti-takeover provisions that reduce the chances of a
potential acquirer to make an offer, or to reduce the likelihood of a successful offer. We do
not support proposals that reduce shareholders' rights, entrench management, or reduce
the likelihood of shareholders' right to vote on reasonable offers.
 
 
Compensation
We consider it the board's responsibility to identify the appropriate level of executive
compensation. Despite the differences among the types of plans and the awards possible,
there is a simple underlying philosophy that guides our analysis of executive
compensation: we believe that there should be a direct relationship between executive
compensation and company performance over the long term.
 
Shareholders should have the opportunity to assess whether pay structures and levels are
aligned with business performance. When assessing remuneration reports, we consider
factors such as adequate disclosure of various remuneration elements, absolute and
relative pay levels, peer selection and benchmarking, the mix of long-term and short-term
incentives, alignment of pay structures with shareholder interests, as well as with
corporate strategy and performance. We may oppose remuneration reports where pay
seems misaligned with shareholders' interests. We may also consider executive
compensation practices when re-electing members of the remuneration committee.
B-6

 
We recognize that compensation policies and practices are unique from market to market;
often there are significant differences between the level of disclosures, the amount and
forms of compensation paid, and the ability of shareholders to approve executive
compensation practices. As a result, our ability to assess the appropriateness of executive
compensation is often dependent on market practices and laws.
 
 
Environmental and Social
Issues
As a fiduciary, State Street Global Advisors takes a comprehensive approach to engaging
with our portfolio companies about material environmental and social (together, sustain-
ability) issues. Our Asset Stewardship program prioritization process allows us to
proactively identify companies for engagement and voting in order to mitigate sustainability
risks in our portfolio. Through engagement, we address a broad range of topics relating to
the promotion of long-term shareholder value creation that are designed to build long-term
relationships with the issuers in which our clients invest. When voting, we fundamentally
consider whether the adoption of a shareholder proposal addressing a material sustain-
ability issue would promote long-term shareholder value in the context of the company's
existing practices and disclosures as well as existing market practice.
 
For more information on our approach to environmental and social issues, please see our
Global Proxy Voting and Engagement Guidelines for Environmental and Social Issues and
our Frameworks for Voting Environmental and Social Shareholder Proposals, both
available at ssga.com/about-us/asset-stewardship.html.
 
 
General/Routine
Although we do not seek involvement in the day-to-day operations of an organization, we
recognize the need for conscientious oversight and input into management decisions that
may affect a company's value. We support proposals that encourage economically
advantageous corporate practices and governance, while leaving decisions that are
deemed to be routine or constitute ordinary business to management and the board of
directors.
 
 
Fixed Income Stewardship
The two elements of our fixed income stewardship program are:
 
Proxy Voting:
 
While matters that arise for a vote at bondholder meetings vary by jurisdiction, examples of
common proxy voting resolutions at bondholder meetings include:
 
Approving amendments to debt covenants and/or terms of issuance
 
Authorizing procedural matters, such as filing of required documents/other formalities
 
Approving debt restructuring plans
 
Abstaining from challenging the bankruptcy trustees
 
Authorizing repurchase of issued debt security
 
Approving the placement of unissued debt securities under the control of directors
 
Approving spin-off/absorption proposals
 
Given the nature of the items that arise for vote at bondholder meetings, we take a
case-by-case approach to voting bondholder resolutions. Where necessary, we will engage
with issuers on voting matters prior to arriving at voting decisions. All voting decisions will
be made in the best interest of our clients.
B-7

 
Issuer Engagement:
 
We recognize that debt holders have limited leverage with companies on a day-to-day
basis. Our guidelines for engagement with fixed income issuers broadly follow the
engagement guidelines for our equity holdings as described above.
 
 
Securities on Loan
For funds in which we act as trustee, we may recall securities in instances where we
believe that a particular vote will have a material impact on the fund(s). Several factors
shape this process. First, we must receive notice of the vote in sufficient time to recall the
shares on or before the record date. In many cases, we do not receive timely notice, and
we are unable to recall the shares on or before the record date. Second, State Street
Global Advisors may exercise its discretion and recall shares if it believes that the benefit
of voting shares will outweigh the foregone lending income. This determination requires
State Street Global Advisors, with the information available at the time, to form judgments
about events or outcomes that are difficult to quantify. Given our expertise and vast
experience, we believe that the recall of securities will rarely provide an economic benefit
that outweighs the cost of the foregone lending income.
 
 
Reporting
Any client who wishes to receive information on how its proxies were voted should contact
its State Street Global Advisors relationship manager.
 
 
About State Street Global
Advisors
For four decades, State Street Global Advisors has served the world's governments,
institutions and financial advisors. With a rigorous, risk-aware approach built on research,
analysis and market-tested experience, we build from a breadth of index and active
strategies to create cost-effective solutions. And, as pioneers in index, ETF, and ESG
investing, we are always inventing new ways to invest. As a result, we have become the
world's fourth-largest asset manager* with US $3.26 trillion† under our care.

*
Pensions & Investments Research Center, as of December 31, 2021.
This figure is presented as of September 30, 2022 and includes approximately $55.12 billion USD of assets with respect to SPDR products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated. Please note all AUM is unaudited.


ssga.com
State Street Global Advisors Worldwide Entities
Australia: State Street Global Advisors, Australia, Limited (ABN 42 003 914 225) is the holder of an Australian Financial Services Licence (AFSL Number 238276). Registered Office: Level 17, 420 George Street, Sydney, NSW 2000, Australia. T: +612 9240 7600. F: +612 9240 7611. Belgium: State Street Global Advisors Belgium, Chausse de La
Hulpe 120, 1000 Brussels, Belgium. T: +32 2 663 2036, F: +32 2 672 2077. SSGA Belgium is a branch office of State Street Global Advisors Limited. State Street Global Advisors Limited is authorised and regulated by the Financial Conduct Authority in the United Kingdom. Canada: State Street Global Advisors, Ltd., 770 Sherbrooke Street West, Suite 1200 Montreal, Quebec, H3A 1G1, T: +514 282 2400 and 30 Adelaide Street East Suite 500, Toronto, Ontario M5C 3G6. T:
+647 775 5900. Dubai: State Street Bank and Trust Company (Representative Office), Boulevard Plaza 1, 17th Floor, Office 1703 Near Dubai Mall & Burj Khalifa, P.O Box 26838, Dubai, United Arab Emirates. T: +971 (0)4 4372800. F: +971 (0)4 4372818. France: State Street Global Advisors France. Authorised and regulated by the Autorité des Marchés Financiers. Registered with the Register of Commerce and Companies of Nanterre under the number: 412 052 680.
Registered Office: Immeuble Défense Plaza, 23-25 rue Delarivière-Lefoullon, 92064 Paris La Défense Cedex, France. T: +33 1 44 45 40 00. F: +33 1 44 45 41 92. Germany: State Street Global Advisors GmbH, Brienner Strasse 59, D-80333 Munich. T: +49 (0)89 55878 100. F: +49 (0)89 55878 440. Hong Kong: State Street Global Advisors Asia Limited, 68/F, Two International Finance Centre, 8 Finance Street, Central, Hong Kong. T: +852 2103 0288. F: +852 2103 0200. Ireland: State
B-8

Street Global Advisors Ireland Limited is regulated by the Central Bank of Ireland. Incorporated and registered in Ireland at Two Park Place, Upper Hatch Street, Dublin 2. Registered Number: 145221. Member of the Irish Association of Investment Managers. T: +353 (0)1 776 3000. F: +353 (0)1 776 3300. Italy: State Street Global Advisors Limited, Milan Branch (Sede Secondaria di Milano) is a branch of State Street Global Advisors Limited, a company registered in the UK, authorised and regulated by the Financial Conduct Authority (FCA ), with a capital of GBP 71'650'000.00, and whose registered office is at 20 Churchill Place, London E14 5HJ. State Street Global Advisors Limited, Milan Branch (Sede Secondaria di Milano), is registered in Italy with company
number 06353340968 - R.E.A. 1887090 and VAT number 06353340968 and whose office is at Via dei Bossi, 4 - 20121 Milano, Italy. T: 39 02 32066 100. F: 39 02 32066 155. Japan: State Street Global Advisors (Japan) Co., Ltd., 9-7-1 Akasaka, Minato-ku, Tokyo 107-6239. T: +813 4530 7380. Financial Instruments Business Operator, Kanto Local Financial Bureau (Kinsho #345). Japan Investment Advisers Association, Investment Trusts Association Japan, Japan Securities Dealers Association. Netherlands: State Street Global Advisors Netherlands, Adam Smith Building, Thomas Malthusstraat 1-3, 1066 JR Amsterdam, Netherlands. T: +31 (0)20 7181701. State Street Global Advisors Netherlands is a branch office of State Street Global
Advisors Limited. State Street Global Advisors Limited is authorised and regulated by the Financial Conduct Authority in the United Kingdom. Singapore: State Street Global Advisors Singapore Limited, 168, Robinson Road, #33-01 Capital Tower, Singapore 068912 (Company Registered Number: 200002719D). T: +65 6826 7500. F: +65 6826 7501. Switzerland: State Street Global Advisors AG, Beethovenstr. 19, CH-8027 Zurich. T: +41 (0)44 245 70 00. F: +41 (0)44 245 70 16. United Kingdom: State Street Global Advisors Limited. Authorised and regulated by the Financial Conduct Authority. Registered in England. Registered Number: 2509928. VAT Number: 5776591 81. Registered Office: 20 Churchill Place, Canary Wharf, London, E14 5HJ. T: +020 3395
6000. F: +020 3395 6350. United States: State Street Global Advisors, One Lincoln Street, Boston, MA 02111-2900. T: +617 786 3000.
Investing involves risk including the risk of loss of principal.
The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without State Street Global Advisors' express written consent.
© 2022 State Street Corporation.
All Rights Reserved.
ID1317003-3479888.5.1.GBL.RTL 1222
Exp. Date: 12/31/2023
B-9

 
 
 
November 2022
 
Managing Conflicts of Interest
Arising From State Street
Global Advisors' Proxy
Voting and Engagement
Activity
 
State Street Corporation has a comprehensive
standalone Conflicts of Interest Policy and other policies
that address a range of identified conflicts of interests.
In addition, State Street Global Advisors, the asset
management business of State Street Corporation,
maintains a conflicts register that identifies key conflicts
and describes systems in place to mitigate the conflicts.
This documenti is designed to act in conjunction with
related policies and practices employed by other groups
within the organization. Further, it complements those
policies and practices by providing information about
managing the conflicts of interests that may arise
through State Street Global Advisors' proxy voting and
engagement activities.
 
 

i
These Managing Conflicts of Interest Arising From State Street Global Advisors' Proxy Voting and Engagement Activity Guidelines are also applicable to SSGA Funds Management, Inc. SSGA Funds Management, Inc. is an SEC-registered investment adviser. SSGA Funds Management, Inc., State Street Global Advisors Trust Company, and other advisory affiliates of State Street make up State Street Global Advisors, the investment management arm of State Street Corporation.
B-10

 
 
 
 
Managing Conflicts of
Interest Related to Proxy
Voting and Engagement
State Street Global Advisors has implemented processes designed to prevent undue
influence on State Street Global Advisors' voting and engagement activities that may arise
from relationships between proxy issuers or companies and State Street Corporation,
State Street Global Advisors, State Street Global Advisors affiliates, State Street Global
Advisors Funds or State Street Global Advisors Fund affiliates.
 
State Street Global Advisors assigns sole responsibility for the implementation of proxy
voting guidelines to members of its Asset Stewardship Team, a team that is independent
from other functions within the organization, such as sales and marketing, investment, or
client facing teams. Proxy voting is undertaken in accordance with the Proxy Voting
Guidelines, which are reviewed and overseen by our internal governance body, State
Street Global Advisors' ESG Committee (the ESG Committee). Any changes to the
guidelines are communicated to Asset Stewardship employees in a timely manner to
ensure that they understand the potential impact to their proxy voting activities. In rare
circumstances where nuances within specific resolutions fall outside of the scope of
existing voting guidelines, requiring case-by-case analysis, such resolutions are escalated
to the head of Asset Stewardship and reported to the ESG Committee. Voting consistently
with guidelines helps mitigate potential conflicts of interest, as the guidelines are
determined without reference to any specific entities or relationships.
 
Members of the Asset Stewardship Team may from time to time discuss views on proxy
voting matters, company performance, strategy, etc. with other State Street Corporation or
State Street Global Advisors employees, including portfolio managers, senior executives,
and relationship managers. However, final voting decisions are made solely by the Asset
Stewardship Team, in accordance with the Proxy Voting Guidelines and in a manner
consistent with the best interest of its clients, taking into account various perspectives on
risks and opportunities with the goal of maximizing the value of client assets. Furthermore,
Asset Stewardship employees are prohibited from disclosing voting decisions prior to the
meetings. In addition, State Street Global Advisors generally exercises a singular vote
decision for each ballot item regardless of investment strategy.ii In certain cases, where a
material conflict of interest is identified, the matter may be referred to the ESG Committee,
for review.

ii
State Street Global Advisors believes such an approach is generally in our clients' best interest as our proxy voting principles are focused on enhancing long-term shareholder value and a unified voting approach maximizes our clients' voice and promotes firm-wide integration and sharing of insights between teams to the benefit of clients. In limited circumstances, certain pooled investment vehicles for which State Street Global Advisors acts as investment manager may, pursuant to their governing documents, utilize proxy voting guidelines developed by third-party advisors.
B-11

Other protocols designed to help mitigate potential conflicts of interest include:
 
 
 
Types of Potential Conflict
Stewardship Conflict of Interest Description
Typical Conflict Mitigation
Protocols That We Employ
Business Relationships
A conflict of interest may arise where, for example, we hold
investments in companies with which we, or our affiliates,
have material business relationships.
Assigning sole responsibility
for the implementation of
proxy voting guidelines to
members of Asset
Stewardship Team and
voting in accordance with
the Proxy Voting Guidelines
are our primary conflict
mitigation protocols.
Furthermore, the voting
rationale is recorded to
provide transparency.
 
 
Additional mitigation steps
may be implemented on a
case-by-case basis. This
may include, for example,
blackout periods for
communications with
issuers/clients.
Equity Investments
A conflict of interest may arise where client accounts
and/or State Street Global Advisors pooled funds, where
State Street Global Advisors acts as trustee, may hold
shares in State Street Corporation or other State Street
Global Advisors affiliated entities, such as mutual funds
affiliated with State Street Global Advisors Funds
Management, Inc.
Mitigants may include, for
example, outsourcing voting
decisions relating to a
shareholder meeting of
State Street Corporation or
other State Street Global
Advisors affiliated entities to
independent outside third
parties. In such cases,
delegated third parties
exercise vote decisions
based upon State Street
Global Advisors' Proxy
Voting and Engagement
Guidelines.
B-12

Outside Business Interest
A conflict of interest may arise where an Asset
Stewardship employee or a key employee in the firm has
an outside business interest (such as a director role in a
company we invest in, or in the same industry as we
invest).
State Street Global Advisors
maintains an Outside
Activities Policy and
employees must submit a
request requiring approval
before undertaking any
outside activities that are
captured by the Outside
Activities Policy. The request
will be reviewed by the
employee's manager and
the Conduct Risk
Management Office to
ensure compliance with
applicable policies and
procedures (such as the
Global Anti-Corruption
Policy and the Standard of
Conduct) and ensure
potential conflicts are
mitigated.
 
 
Additional mitigation steps
may be implemented on a
case-by-case basis. This
may include, for example,
retaining an independent
fiduciary to make a voting
decision where we believe
we may be conflicted from
voting due to an outside
business interest.
Other Personal Conflicts
A conflict of interest may arise where a family member or
other personal contact of an employee is employed by a
company in which we invest.
Mitigation steps may be
implemented for personal
conflicts on a case-by-case
basis. This may include, for
example, filing a Personal
Conflicts declaration with a
mitigation strategy to
document how the conflict
will be avoided. Such
strategies may include, for
example, a member of the
Asset Stewardship Team
with a conflict recusing
him/herself from voting and
participating in engagement
activities at the relevant
company, and implementing
blackout periods for
communications with
issuers/clients.
B-13

Securities Lending
We may lend securities that we hold in one of our portfolios
to another financial counterparty. This may create a conflict
of interest when deciding whether to recall those securities
to enable us to vote in a shareholder resolution, which may
impact the intended securities lending income.
Our approach to securities
lending, and any potential
conflicts that may be
created through our
securities lending activity, is
governed by the Proxy
Voting/Securities Lending
Recall Procedure, which is
owned by the Asset
Stewardship Team and
Proxy Operations Group.
The conflict mitigation
protocols include periodical
review of the procedure by
relevant stakeholders,
designating Asset
Stewardship Team to make
the final decision whether or
not to recall shares, and
escalation of any overrides
to the procedure.
 
 
 
 
About State Street Global
Advisors
For four decades, State Street Global Advisors has served the world's governments,
institutions and financial advisors. With a rigorous, risk-aware approach built on research,
analysis and market-tested experience, we build from a breadth of index and active
strategies to create cost-effective solutions. As stewards, we help portfolio companies see
that what is fair for people and sustainable for the planet can deliver long-term
performance. And, as pioneers in index, ETF, and ESG investing, we are always inventing
new ways to invest. As a result, we have become the world's fourth-largest asset manager*
with US $3.26 trillion† under our care.

*
Pensions & Investments Research Center, as of December 31, 2021.
This figure is presented as of September 30, 2022 and includes approximately $55.12 billion USD of assets with respect to SPDR products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated. Please note all AUM is unaudited.


ssga.com
Marketing Communication
State Street Global Advisors Worldwide Entities
Abu Dhabi: State Street Global Advisors Limited, ADGM Branch, Al Khatem Tower, Suite 42801, Level 28, ADGM Square, Al Maryah Island, P.O Box 76404,
Abu Dhabi, United Arab Emirates. Regulated by the ADGM Financial Services Regulatory Authority. T: +971 2 245 9000. Australia: State Street Global Advisors, Australia, Limited (ABN 42 003 914 225) is the holder of an Australian Financial Services License (AFSL Number 238276). Registered office: Level 14, 420 George Street, Sydney, NSW 2000,
Australia. T: +612 9240-7600. F: +612 9240-7611. Belgium: State Street Global Advisors Belgium, Chaussée de La Hulpe 185, 1170 Brussels, Belgium. T: +32 2 663 2036. State Street Global Advisors Belgium is a branch office of State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorised and
regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. Canada: State Street Global Advisors, Ltd., 1981 McGill College Avenue, Suite 500, Montreal, Qc, H3A 3A8, T: +514 282 2400 and 30 Adelaide Street East Suite 800, Toronto, Ontario M5C 3G6. T: +647 775 5900. France: State Street Global
B-14

Advisors Europe Limited, France Branch (State Street Global Advisors France) is a branch of State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorised and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. State Street Global Advisors France is registered in France with company number RCS Nanterre 899 183 289, and its office is located at Coeur Défense — Tour A — La Défense 4, 33e étage, 100, Esplanade du Général de Gaulle, 92 931 Paris La Défense Cedex, France. T: +33 1 44 45 40 00. F: +33 1 44 45 41 92. Germany: State Street Global Advisors Europe Limited, Branch in Germany, Brienner Strasse 59, D-80333 Munich, Germany (State Street Global Advisors Germany). T: +49 (0)89 55878 400. State Street Global Advisors Germany is a branch of State Street Global Advisors Europe Limited, registered in Ireland with company number 49934,
authorised and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. Hong Kong: State Street Global Advisors Asia Limited, 68/F, Two International Finance Centre, 8 Finance Street, Central, Hong Kong. T: +852 2103-0288. F: +852 2103-0200. Ireland: State Street Global Advisors Europe Limited is regulated by the Central Bank of Ireland. Registered office address 78 Sir John Rogerson's Quay, Dublin 2. Registered Number: 49934. T: +353 (0)1 776 3000. F: +353 (0)1 776 3300. Italy: State Street Global Advisors Europe Limited, Italy Branch (State Street Global Advisors Italy) is a branch of State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorised and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. State Street Global Advisors Italy is registered in Italy with company number 11871450968 — REA: 2628603
and VAT number 11871450968, and its office is located at Via Ferrante Aporti, 10 -20125 Milan, Italy. T: +39 02 32066 100. F: +39 02 32066 155. Japan: State Street Global Advisors (Japan) Co., Ltd., Toranomon Hills Mori Tower 25F 1-23-1 Toranomon, Minato-ku, Tokyo 105-6325 Japan. T: +81-3-4530-7380. Financial Instruments Business Operator, Kanto Local Financial Bureau (Kinsho #345), Membership: Japan Investment Advisers Association, The Investment Trust Association, Japan, Japan Securities Dealers' Association. Netherlands: State Street Global Advisors Netherlands, Apollo Building 7th floor, Herikerbergweg 29, 1101 CN Amsterdam, Netherlands. T: +31 20 7181 000. State Street Global Advisors Netherlands is a branch office of State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorised and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay,
Dublin 2. Singapore: State Street Global Advisors Singapore Limited, 168, Robinson Road, #33-01 Capital Tower, Singapore 068912 (Company Reg. No: 200002719D, regulated by the Monetary Authority of Singapore). T: +65 6826-7555. F: +65 6826-7501. Switzerland: State Street Global Advisors AG, Beethovenstr. 19, CH-8027 Zurich. Registered with the Register of Commerce Zurich CHE-105.078.458. T: +41 (0)44 245 70 00. F: +41 (0)44 245 70 16. United Kingdom: State Street Global Advisors Limited. Authorised and regulated by the Financial Conduct Authority. Registered in England. Registered No. 2509928. VAT No. 5776591 81. Registered office: 20 Churchill Place, Canary Wharf, London, E14 5HJ. T: 020 3395 6000. F: 020 3395 6350. United States: State Street Global Advisors, 1 Iron Street, Boston, MA 02210-1641. T: +1 617 786 3000.


Important Risk Information
Investing involves risk including the risk of loss of principal.
The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA's express written consent.
All information is from SSGA unless otherwise noted and has been obtained from sources
believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.
The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to
sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor.
The information contained in this communication is not a research recommendation or ‘investment research' and is classified as a ‘Marketing Communication' in accordance with the Markets in Financial
Instruments Directive (2014/65/ EU) or applicable Swiss regulation. This means that this marketing communication
(a)
has not been prepared in accordance with legal requirements designed to promote the independence of investment research
(b)
is not subject to any prohibition on dealing
B-15

ahead of the dissemination of investment research.
This communication is directed at professional clients (this includes eligible counterparties as defined by the appropriate the EU regulator) who are deemed both knowledgeable and experienced in matters relating to investments. The products and services to which this communication relates
are only available to such persons and persons of any other description (including retail clients) should not rely on this communication.
The returns on a portfolio of securities which exclude companies that do not meet the portfolio's specified ESG criteria may trail the returns on a portfolio of securities which include such companies. A portfolio's ESG
criteria may result in the portfolio investing in industry sectors or securities which underperform the market as a whole.
© 2022 State Street Corporation.
All Rights Reserved.
ID1282151-3479898.3.1.GBL.RTL 1122 Exp. Date: 11/30/2023
B-16

 
 
 
March 2022
 
Global Proxy Voting and
Engagement Guidelines for
Environmental and Social
Issues
B-17

 
 
 
 
Overview
Our primary fiduciary obligation to our clients is to maximize the long-term returns of their
investments. It is our view that material environmental and social (sustainability) issues can
present risks and/or opportunities that impact long-term value creation. This philosophy
provides the foundation for our value-based approach to Asset Stewardship.
 
We use our voice and our vote through engagement, proxy voting, and thought leadership
in order to communicate with issuers and educate market participants about our
perspective on important sustainability topics.
 
Our stewardship efforts are rooted in the three pillars of ESG and their intersections. We
regularly identify E, S, and G focus areas that guide our proxy voting and engagement
efforts. Within these focus areas, we elevate outcome-oriented stewardship priorities each
year based on factors including client demand, stakeholder interest, market trends,
financial materiality, and portfolio impact.
 
In limited circumstances, State Street Global Advisors may act as investment manager to
pooled investment vehicles that, pursuant to their governing documents, utilize guidelines
developed by a third-party advisor. With respect to such funds utilizing third-party
guidelines, the voting practices described in the applicable third-party guidelines will apply
in place of the voting practices described herein.
 
 
Our Approach to
Assessing Materiality and
Relevance of Sustain-
ability Issues
While we believe that sustainability-related factors can expose potential investment risks
as well as drive long-term value creation, the materiality of specific sustainability issues
varies from industry to industry and company by company. With this in mind, we leverage
several distinct frameworks as well as additional resources to inform our views on the
materiality of a sustainability issue at a given company, including:
 
The Sustainability Accounting Standards Board's (SASB) Industry Standards
 
The Task Force on Climate-related Financial Disclosures (TCFD) Framework
 
Disclosure expectations in a company's given regulatory environment
 
Market expectations for the sector and industry
 
Other existing third party frameworks, such as the CDP (formally the Carbon
Disclosure Project) or the Global Reporting Initiative
 
Our proprietary R-FactorTM1 score
 
We expect companies to disclose information regarding their approach to identifying
material sustainability-related risks and the management policies and practices in place to
address such issues. We support efforts by companies to demonstrate the ways in which
sustainability is incorporated into operations, business activities, and most importantly,
long-term business strategy.

1
State Street Global Advisors' proprietary scoring model, which aligns with SASB's Sustainability Accounting Standards, and measures the performance of a company's business operations and governance as it relates to financially material ESG factors facing the company's industry.
B-18

 
 
Our Approach to Sustain-
ability Through
Engagements
Our Asset Stewardship program prioritization process allows us to proactively identify
companies for engagement and voting in order to mitigate sustainability risks in our
portfolio. Our approach is driven by:
 
1.Proprietary Screens
 
We have developed proprietary in-house sustainability screens to help identify companies
for proactive engagement. These screens leverage our proprietary R-FactorTM score to
identify sector and industry outliers for engagement and voting on sustainability issues.
 
2.Thematic Prioritization
 
As part of our annual stewardship planning process we identify thematic sustainability
priorities that will be addressed during most engagement meetings. We develop our
priorities based upon several factors, including client feedback, emerging sustainability
trends, developing macroeconomic conditions, and evolving regulations. These
engagements not only inform our voting decisions but also allow us to monitor
improvement over time and to contribute to our evolving perspectives on priority areas.
 
During the ‘voting season,' we prioritize conversations with companies that have triggered
our E&S director voting policies or have received an E&S shareholder proposal on their
proxy. In the ‘off-season,' we discuss our thematic focus areas and stewardship priorities
with companies for which these topics are most material.
 
Through engagement, we address a broad range of topics that align with our thematic
priorities and seek to build long-term relationships with issuers. We view engagements as
part of an ongoing dialogue, versus a series of one-off conversations. During
conversations with issuers, we share expectations and perspectives on of key dimensions
of E&S, and seek to understand how companies and their boards manage and oversee
related risks.
 
We also pursue proactive, targeted engagement campaigns with companies for which our
focus areas are most material, and/or where improvement is most needed. Through these
campaigns, we might make specific asks of companies and measure their progress
against our expectations. If we feel a company is making insufficient progress on effective
E&S risk management, we will consider taking voting action through relevant shareholder
proposals or by targeting directors responsible for oversight.
 
 
Analyzing Sustainability
Proposals
We take a case-by-case approach to analyzing shareholder proposals related to sustain-
ability topics and consider the following factors:
 
The materiality of the sustainability topic in the proposal to the company's business
and sector (see Our Approach to Assessing Materiality and Relevance of Sustain-
ability Issues above)
 
The content and intent of the proposal
 
Whether the adoption of such a proposal would promote long-term shareholder value
in the context of the company's disclosure and practices
 
The strength of board oversight of the company's relevant sustainability practices
 
Quality of public disclosures on the topic
B-19

 
Quality of engagement and responsiveness to our feedback
 
Binding nature of proposal or prescriptiveness of proposal
 
We also leverage frameworks to analyze certain E&S shareholder proposals. These
frameworks, which are not considered formal voting guidelines, can be found on our
website.
 
 
Vote Options for Sustain-
ability Proposals
For (support for proposal) if the issue is material and the company has poor disclosure
and/or practices relative to our expectations
 
Abstain (some reservations) if the issue is material and the company's disclosure
and/or practices could be improved relative to our expectations.
 
Against (no support for proposal) if the issue is non-material and/or the company's
disclosure and/or practices meet our expectations.
 
 
About State Street Global
Advisors
For four decades, State Street Global Advisors has served the world's governments,
institutions and financial advisors. With a rigorous, risk-aware approach built on research,
analysis and market-tested experience, we build from a breadth of active and index
strategies to create cost-effective solutions. As stewards, we help portfolio companies see
that what is fair for people and sustainable for the planet can deliver long-term
performance. And, as pioneers in index, ETF, and ESG investing, we are always inventing
new ways to invest. As a result, we have become the world's fourth-largest asset manager*
with US $4.14 trillion† under our care.

*
Pensions & Investments Research Center, as of December 31, 2020.
This figure is presented as of December 31, 2021 and includes approximately $61.43 billion of assets with respect to SPDR products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated.


ssga.com
State Street Global Advisors Worldwide Entities
Abu Dhabi: State Street Global Advisors Limited, ADGM Branch, Al Khatem Tower, Suite 42801, Level 28, ADGM Square, Al Maryah Island, P.O Box 76404, Abu Dhabi, United Arab Emirates. Regulated by the ADGM Financial Services Regulatory Authority. T: +971 2 245 9000. Australia: State Street Global Advisors, Australia, Limited (ABN 42 003 914 225) is the holder of an Australian Financial Services License (AFSL Number 238276). Registered office: Level 14, 420 George Street, Sydney, NSW 2000, Australia. T: +612 9240-
7600. F: +612 9240-7611. Belgium: State Street Global Advisors Belgium, Chaussée de La Hulpe 185, 1170 Brussels, Belgium. T: +32 2 663 2036. State Street Global Advisors Belgium is a branch office of State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorized and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. Canada: State Street Global Advisors, Ltd., 1981 McGill College Avenue, Suite 500, Montreal, Qc, H3A 3A8, T: +514 282 2400 and 30 Adelaide Street East Suite 800, Toronto, Ontario M5C 3G6. T: +647 775 5900. France: State Street Global
Advisors Europe Limited, France Branch (State Street Global Advisors France) is a branch of State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorized and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. State Street Global Advisors France is registered in France with company number RCS Nanterre 899 183 289, and its office is located at Coeur Défense — Tour A — La Défense 4, 33e étage, 100, Esplanade du Général de Gaulle, 92 932 Paris La Défense Cedex, France. T: +33 1 44 45 40 00. F: +33 1 44 45 41 92. Germany: State Street Global
Advisors Europe Limited, Branch in Germany, Brienner Strasse 59, D-80333 Munich, Germany (State Street Global Advisors Germany). T: +49 (0)89 55878 400. State Street Global Advisors Germany is a branch of State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorized and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. Hong Kong: State Street Global Advisors Asia Limited, 68/F, Two International Finance Centre, 8 Finance Street, Central, Hong Kong. T: +852 2103-0288. F: +852 2103-0200. Ireland: State Street Global Advisors Europe
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Limited is regulated by the Central Bank of Ireland. Registered office address 78 Sir John Rogerson's Quay, Dublin 2. Registered Number: 49934. T: +353 (0)1 776 3000. F: +353 (0)1 776 3300. Italy: State Street Global Advisors Europe Limited, Italy Branch (State Street Global Advisors Italy) is a branch of State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorized and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. State Street Global Advisors Italy is registered in Italy with company number 11871450968 — REA: 2628603 and VAT number 11871450968, and its office is located at Via Ferrante Aporti, 10 - 20125 Milan,
Italy. T: +39 02 32066 100. F: +39 02 32066 155. Japan: State Street Global Advisors (Japan) Co., Ltd., Toranomon Hills Mori Tower 25F 1-23-1 Toranomon, Minato-ku, Tokyo 105-6325 Japan. T: +81-3-4530-7380. Financial Instruments Business Operator, Kanto Local Financial Bureau (Kinsho #345), Membership: Japan Investment Advisers Association, The Investment Trust Association, Japan, Japan Securities Dealers' Association. Netherlands: State Street Global Advisors Netherlands, Apollo Building 7th floor, Herikerbergweg 29, 1101 CN Amsterdam, Netherlands. T: +31 20 7181 000. State Street Global Advisors Netherlands is a branch office of State Street Global Advisors Europe Limited, registered in
Ireland with company number 49934, authorized and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. Singapore: State Street Global Advisors Singapore Limited, 168, Robinson Road, #33-01 Capital Tower, Singapore 068912 (Company Reg. No: 200002719D, regulated by the Monetary Authority of Singapore). T: +65 6826-7555. F: +65 6826-7501. Switzerland: State Street Global Advisors AG, Beethovenstr. 19, CH-8027 Zurich. Registered with the Register of Commerce Zurich CHE-105.078.458. T: +41 (0)44 245 70 00. F: +41 (0)44 245 70 16. United Kingdom: State Street Global Advisors Limited. Authorized and regulated by the Financial Conduct Authority.
Registered in England. Registered No. 2509928. VAT No. 5776591 81. Registered office: 20 Churchill Place, Canary Wharf, London, E14 5HJ. T: 020 3395 6000. F: 020 3395 6350. United States: State Street Global Advisors, 1 Iron Street, Boston, MA 02210-1641. T: +1 617 786 3000.
The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without State Street Global Advisors' express written consent.
© 2022 State Street Corporation.
All Rights Reserved.
ID949700-3479887.3.1.GBL.RTL 0322
Exp. Date: 03/31/2023
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March 2022
 
Australia and New Zealand
 
Proxy Voting and
Engagement Guidelines
 
State Street Global Advisors' Australia and New Zealand
Proxy Voting and Engagement Guidelinesi outline our
expectations of companies listed on stock exchanges in
Australia and New Zealand. These Guidelines
complement and should be read in conjunction with
State Street Global Advisors' Global Proxy Voting and
Engagement Principles, which provide a detailed
explanation of our approach to voting and engaging with
companies, and State Street Global Advisors' Conflict
Mitigation Guidelines.
 
 

i
These Proxy Voting and Engagement Guidelines are also applicable to SSGA Funds Management, Inc. SSGA Funds Management, Inc. is an SEC-registered investment adviser. SSGA Funds Management, Inc., State Street Global Advisors Trust Company, and other advisory affiliates of State Street make up State Street Global Advisors, the investment management arm of State Street Corporation.
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State Street Global Advisors' Australia and New Zealand Proxy Voting and Engagement
Guidelines address areas including board structure, audit related issues, capital structure,
remuneration, environmental, social, and other governance related issues.
 
When voting and engaging with companies in global markets, we consider market specific
nuances in the manner that we believe will best protect and promote the long-term
economic value of client investments. We expect companies to observe the relevant laws
and regulations of their respective markets as well as country specific best practice
guidelines, and corporate governance codes. We may hold companies in such markets to
our global standards when we feel that a country's regulatory requirements do not address
some of the key philosophical principles that we believe are fundamental to our global
voting guidelines.
 
In our analysis and research into corporate governance issues in Australia and New
Zealand, we expect all companies at a minimum to comply with the ASX Corporate
Governance Principles and proactively monitor companies' adherence to the principles.
Consistent with the ‘comply or explain' expectations established by the Principles, we
encourage companies to proactively disclose their level of compliance with the Principles.
In instances of non-compliance when companies cannot explain the nuances of their
governance structure effectively, either publicly or through engagement, we may vote
against the independent board leader.
 
 
State Street Global
Advisors' Proxy Voting
and Engagement
Philosophy
In our view, corporate governance and sustainability issues are an integral part of the
investment process. The Asset Stewardship Team consists of investment professionals
with expertise in corporate governance and company law, remuneration, accounting, and
environmental and social issues. We have established robust corporate governance
principles and practices that are backed with extensive analytical expertise in order to
understand the complexities of the corporate governance landscape. We engage with
companies to provide insight on the principles and practices that drive our voting decisions.
We also conduct proactive engagement to address significant shareholder concerns and
environmental, social and governance (ESG) issues in a manner consistent with
maximizing shareholder value.
 
The team works alongside members of State Street Global Advisors' Active Fundamental
and Asia-Pacific (APAC) investment teams, collaborating on issuer engagement and
providing input on company specific fundamentals. We are also a member of various
investor associations that seek to address broader corporate governance related policy
issues in the region.
 
State Street Global Advisors is a signatory to the United Nations Principles of Responsible
Investment (UNPRI). We are committed to sustainable investing and are working to
further integrate ESG principles into investment and corporate governance practices where
applicable and consistent with our fiduciary duty.
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Directors and Boards
Principally we believe the primary responsibility of the board of directors is to preserve and
enhance shareholder value and protect shareholder interests. In order to carry out their
primary responsibilities, directors have to undertake activities that range from setting
strategy and overseeing executive management to monitoring the risks that arise from a
company's business, including risks related to sustainability issues. Further, good
corporate governance necessitates the existence of effective internal controls and risk
management systems, which should be governed by the board.
 
State Street Global Advisors believes that a well constituted board of directors with a good
balance of skills, expertise, and independence provides the foundations for a well
governed company. We view board quality as a measure of director independence, director
succession planning, board diversity, evaluations and refreshment, and company
governance practices. We vote for the (re-)election of directors on a case-by-case basis
after considering various factors including board quality, general market practice, and
availability of information on director skills and expertise.
In our analysis of boards, we consider whether board members have adequate skills to
provide effective oversight of corporate strategy, operations, and risks, including
environmental and social issues. Boards should also have a regular evaluation process in
place to assess the effectiveness of the board and the skills of board members to address
issues, such as emerging risks, changes to corporate strategy, and diversification of
operations and geographic footprint.
We may also consider board performance and directors who appear to be remiss in the
performance of their oversight responsibilities when analyzing their suitability for
reappointment (e.g. fraud, criminal wrongdoing and breach of fiduciary responsibilities).
 
Board Independence
 
In principle, we believe independent directors are crucial to corporate governance and help
management establish sound ESG policies and practices. A sufficiently independent board
will most effectively monitor management and perform oversight functions necessary to
protect shareholder interests. We expect boards of ASX 300 and New Zealand listed
companies to be comprised of at least a majority of independent directors. At all other
Australian listed companies, we expect boards to be comprised of at least one-third
independent directors.
 
Our broad criteria for director independence in Australia and New Zealand include factors
such as:
 
Participation in related-party transactions and other business relations with the
company
 
Employment history with company
 
Relations with controlling shareholders
 
Family ties with any of the company's advisers, directors, or senior employees
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While we are generally supportive of having the roles of chairman and CEO separated in
the Australian and New Zealand markets, we assess the division of responsibilities
between chairman and CEO on a case-by-case basis, giving consideration to factors such
as company-specific circumstances, overall level of independence on the board and
general corporate governance standards in the company. Similarly, we will monitor for
circumstances in which a combined chairman/CEO is appointed or where a former CEO
becomes chairman.
 
Director Time Commitments
 
When voting on the election or re-election of a director, we also consider the number of
outside board directorships that a non-executive and an executive may undertake. Thus,
State Street Global Advisors may take voting action against a director who exceeds the
number of board mandates listed below:
 
Named Executive Officers (NEOs) of a public company who sit on more than two
public company boards
 
Non-executive board chairs or lead independent directors who sit on more than three
public company boards
 
Director nominees who sit on more than four public company boards
 
For non-executive board chairs/lead independent directors and director nominees who hold
excessive commitments, as defined above, we may consider waiving our policy and vote in
support of a director if a company discloses its director commitment policy in a publicly
available manner (e.g., corporate governance guidelines, proxy statement, company
website). This policy or associated disclosure must include:
 
A numerical limit on public company board seats a director can serve on
 
This limit cannot exceed our policy by more than one seat
 
Consideration of public company board leadership positions (e.g., Committee Chair)
 
Affirmation that all directors are currently compliant with the company policy
 
Description of an annual policy review process undertaken by the Nominating
Committee to evaluate outside director time commitments
 
If a director is imminently leaving a board and this departure is disclosed in a written,
time-bound and publicly-available manner, we may consider waiving our withhold vote
when evaluating the director for excessive time commitments.
 
Service on a mutual fund board, the board of a UK investment trust or a Special Purpose
Acquisition Company (SPAC) board is not considered when evaluating directors for
excessive commitments. However, we do expect these roles to be considered by
nominating committees when evaluating director time commitments.
 
Director Attendance at Board Meetings
 
We also consider attendance at board meetings and may withhold votes from directors
who attend less than 75 percent of board meetings without appropriate explanation or
providing reason for their failure to meet the attendance threshold. In addition, we monitor
other factors that may influence the independence of a non-executive director, such as
performance-related pay, cross-directorships, significant shareholdings, and tenure. We
support the annual election of directors and encourage Australian and New Zealand
companies to adopt this practice.
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Board Committees
 
We believe companies should have committees for audit, remuneration, and nomination
oversight. The audit committee is responsible for monitoring the integrity of the financial
statements of the company, appointing external auditors, monitoring their qualifications
and independence, and their effectiveness and resource levels. ASX Corporate
Governance Principles requires listed companies to have an audit committee of at least
three members all of whom are non-executive directors and a majority of whom are
independent directors. It also requires that the committee be chaired by an independent
director who is not the chair of the board. We hold Australian and New Zealand companies
to our global standards for developed financial markets by requiring that all members of
the audit committee be independent directors.
 
The nomination committee is responsible for evaluating and reviewing the balance of
skills, knowledge, and experience of the board. It also ensures that adequate succession
plans are in place for directors and the CEO. We may vote against the re-election of
members of the nomination committee if the board has failed to address concerns over
board structure or succession.
 
Board Gender Diversity
 
We expect boards of all listed companies to have at least one female board member. If a
company fails to meet this expectation, State Street Global Advisors may vote against the
Chair of the board's nominating committee or the board leader in the absence of a
nominating committee, if necessary. Additionally, if a company fails to meet this
expectation for three consecutive years, State Street Global Advisors may vote against all
incumbent members of the nominating committee.
 
Board Responsiveness to High Dissent against Pay
 
Proposals
 
Executive pay is another important aspect of corporate governance. We believe that
executive pay should be determined by the board of directors. We expect companies to
have in place remuneration committees to provide independent oversight over executive
pay. ASX Corporate Governance Principles require listed companies to have a
remuneration committee of at least three members all of whom are non-executive
directors and a majority of whom are independent directors. Since Australia has a
non-binding vote on pay with a two-strike rule requiring a board spill vote in the event of a
second strike, we believe that the vote provides investors a mechanism to address
concerns they may have on the quality of oversight provided by the board on remuneration
issues. Accordingly, our voting guidelines accommodate local market practice.
 
Poorly structured executive compensation plans pose increasing reputational risk to
companies. Ongoing high level of dissent against a company's compensation proposals
may indicate that the company is not receptive to investor concerns. If the level of dissent
against a company's remuneration report and/or remuneration policy is consistently high,
and we have determined that a vote against a pay-related proposal is warranted in the
third consecutive year, we will vote against the Chair of the remuneration committee.
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Incorporating R-Factor™ into Director Votes
 
R-Factor™ is a scoring system created by State Street Global Advisors that measures the
performance of a company's business operations and governance as it relates to
financially material ESG factors facing the company's industry. R-Factor™ encourages
companies to manage and disclose material, industry-specific ESG risks and
opportunities, thereby reducing investment risk across our own portfolio and the broader
market. State Street Global Advisors may take voting action against the independent board
leader at companies on the ASX 100 that are R-Factor™ laggards1 and momentum
underperformers2 and cannot articulate how they plan to improve their score.
 
Climate-related Disclosure
 
We believe climate change poses a systemic risk to all companies in our portfolio.
 
State Street Global Advisors has publicly supported the global regulatory efforts to
establish a mandatory baseline of climate risk disclosures for all companies. Until these
consistent disclosure standards are established, we find that the recommendations of the
Taskforce on Climate-related Financial Disclosures (TCFD) provide the most effective
framework by which companies can develop strategies to plan for climate-related risks and
make their businesses more resilient to the impacts of climate change.
 
As such, we may vote against the independent board leader at companies in the ASX 100
that fail to provide sufficient disclosure in accordance with the TCFD framework, including:
 
Board oversight of climate-related risks and opportunities
 
Total Scope 1 and Scope 2 greenhouse gas emissions
 
Targets for reducing greenhouse gas emissions
 
Indemnification and Limitations on Liability
 
Generally, State Street Global Advisors supports proposals to limit directors' liability and/or
expand indemnification and liability protection up to the limit provided by law, if he or she
has not acted in bad faith, gross negligence, or reckless disregard of the duties involved in
the conduct of his or her office.
 
 
Audit-Related Issues
Companies should have robust internal audit and internal control systems designed for
effective management of any potential and emerging risks to company operations and
strategy. The responsibility of setting out an internal audit function lies with the audit
committee, which should have independent non-executive directors designated as
members.

1
Bottom 10 percent of scores relative to industry peers.
2
Have consistently underperformed their peers over the last two years; bottom 30 percent of scores relative to industry peers.
B-27

 
Appointment of External Auditors
 
State Street Global Advisors believes that a company's auditor is an essential feature of
an effective and transparent system of external supervision. Shareholders should be given
the opportunity to vote on their appointment or to re-appoint at the annual meeting. When
appointing external auditors and approving audit fees, we will take into consideration the
level of detail in company disclosures. We will generally not support resolutions if
adequate breakdown is not provided and if non-audit fees are more than 50 percent of
audit fees. In addition, we may vote against members of the audit committee if we have
concerns with audit-related issues or if the level of non-audit fees to audit fees is
significant. In certain circumstances, we may consider auditor tenure when evaluating the
audit process.
 
Approval of Financial Statements
 
The disclosure and availability of reliable financial statements in a timely manner is
imperative for the investment process. We expect external auditors to provide assurance of
a company's financial condition. Hence, we will vote against the approval of financial
statements if i) they have not been disclosed or audited; ii) the auditor opinion is qualified/
adverse, or the auditor has issued a disclaimer of opinion; or iii) the auditor opinion is not
disclosed.
 
 
Shareholder Rights and
Capital-Related Issues
Share Issuances
 
The ability to raise capital is critical for companies to carry out strategy, to grow, and to
achieve returns above their cost of capital. The approval of capital raising activities is
fundamental to shareholders' ability to monitor the returns and to ensure capital is
deployed efficiently. State Street Global Advisors supports capital increases that have
sound business reasons and are not excessive relative to a company's existing capital
base.
 
Pre-emption rights are a fundamental right for shareholders to protect their investment in a
company. Where companies seek to issue new shares without pre-emption rights, we may
vote against if such authorities are greater than 20 percent of the issued share capital. We
may also vote against resolutions seeking authority to issue capital with pre-emption rights
if the aggregate amount allowed seems excessive and is not justified by the board.
Generally, we are against capital issuance proposals greater than 100 percent of the
issued share capital when the proceeds are not intended for specific purpose.
 
Share Repurchase Programs
 
We generally support proposals to repurchase shares, unless the issuer does not clearly
state the business purpose for the program, a definitive number of shares to be
repurchased, and the timeframe for the repurchase. We may vote against share
repurchase requests that allow share repurchases during a takeover period.
 
Dividends
 
We generally support dividend payouts that constitute 30 percent or more of net income.
We may vote against the dividend payouts if the dividend payout ratio has been
consistently below 30 percent without adequate explanation. We may also vote against if
the payout is excessive given the company's financial position. Particular attention will be
warranted when the payment may damage the company's long-term financial health.
B-28

 
Mergers and Acquisitions
 
Mergers or reorganization of the company structure often involve proposals relating to
reincorporation, restructurings, liquidations, and other major changes to the corporation.
Proposals that are in the best interests of shareholders, demonstrated by enhancing share
value or improving the effectiveness of the company's operations, will be supported. In
general, provisions that are not viewed as financially sound or are thought to be destructive
to shareholders' rights are not supported. We will generally support transactions that
maximize shareholder value. Some of the considerations include:
 
Offer premium
 
Strategic rationale
 
Board oversight of the process for the recommended transaction, including, director
and/ or management conflicts of interest
 
Offers made at a premium and where there are no other higher bidders
 
Offers in which the secondary market price is substantially lower than the net asset
value
 
We may vote against a transaction considering the following:
 
Offers with potentially damaging consequences for minority shareholders because of
illiquid stock
 
Offers where we believe there is a reasonable prospect for an enhanced bid or other
bidders
 
The current market price of the security exceeds the bid price at the time of voting
 
Anti-Takeover Measures
 
We oppose anti-takeover defenses, such as authorities for the board to issue warrants
convertible into shares to existing shareholders during a hostile takeover.
 
 
Remuneration
Executive Pay
 
There is a simple underlying philosophy that guides State Street Global Advisors' analysis
of executive pay; there should be a direct relationship between remuneration and company
performance over the long term. Shareholders should have the opportunity to assess
whether pay structures and levels are aligned with business performance. When assessing
remuneration reports, we consider various factors, such as adequate disclosure of
different remuneration elements, absolute and relative pay levels, peer selection and
benchmarking, the mix of long-term and short-term incentives, alignment of pay structures
with shareholder interests as well as with corporate strategy and performance. SSGA may
oppose remuneration reports in which there seems to be a misalignment between pay and
shareholders' interests and where incentive policies and schemes have a re-test option or
feature. We may also vote against the re-election of members of the remuneration
committee if we have serious concerns about remuneration practices and if the company
has not been responsive to shareholder pressure to review its approach.
B-29

 
Equity Incentive Plans
 
We may not support proposals on equity-based incentive plans where insufficient
information is provided on matters, such as grant limits, performance metrics,
performance, and vesting periods and overall dilution. Generally, we do not support options
under such plans being issued at a discount to market price nor plans that allow for
re-testing of performance metrics.
 
Non-Executive Director Pay
 
Authorities that seek shareholder approval for non-executive directors' fees generally are
not controversial. We generally support resolutions regarding directors' fees unless
disclosure is poor and we are unable to determine whether the fees are excessive relative
to fees paid by other comparable companies. We will evaluate any non-cash or
performance-related pay to non-executive directors on a company-by-company basis.
 
 
Risk Management
State Street Global Advisors believes that risk management is a key function of the board,
which is responsible for setting the overall risk appetite of a company and for providing
oversight on the risk management process established by senior executives at a company.
We allow boards to have discretion over the ways in which they provide oversight in this
area. However, we expect companies to disclose ways in which the board provides
oversight on its risk management system and to identify key risks facing the company.
Boards should also review existing and emerging risks that evolve in tandem with the
political and economic landscape or as companies diversify or expand their operations into
new areas.
 
Environmental and Social Issues
 
As a fiduciary, State Street Global Advisors takes a comprehensive approach to engaging
with our portfolio companies about material environmental and social (sustainability)
issues. We use our voice and our vote through engagement, proxy voting, and thought
leadership in order to communicate with issuers and educate market participants about
our perspective on important sustainability topics. Our Asset Stewardship program
prioritization process allows us to proactively identify companies for engagement and
voting in order to mitigate sustainability risks in our portfolio. Through engagement, we
address a broad range of topics that align with our stewardship priorities and build
long-term relationships with issuers. When voting, we fundamentally consider whether the
adoption of a shareholder proposal addressing a material sustainability issue would
promote long-term shareholder value in the context of the company's existing practices
and disclosures as well as existing market practice.
 
For more information on our approach to environmental and social issues, please see our
Global Proxy Voting and Engagement Guidelines for Environmental and Social Issues and
our Frameworks for Voting Environmental and Social Shareholder Proposals available at
ssga.com/about-us/asset-stewardship.html.
 
 
More Information
Any client who wishes to receive information on how its proxies were voted should contact
its State Street Global Advisors relationship manager.
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About State Street Global
Advisors
For four decades, State Street Global Advisors has served the world's governments,
institutions and financial advisors. With a rigorous, risk-aware approach built on research,
analysis and market-tested experience, we build from a breadth of active and index
strategies to create cost-effective solutions. As stewards, we help portfolio companies see
that what is fair for people and sustainable for the planet can deliver long-term
performance. And, as pioneers in index, ETF, and ESG investing, we are always inventing
new ways to invest. As a result, we have become the world's fourth-largest asset manager*
with US $4.14 trillion† under our care.

*
Pensions & Investments Research Center, as of December 31, 2020.
This figure is presented as of December 31, 2021 and includes approximately $61.43 billion of assets with respect to SPDR products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated.


ssga.com
State Street Global Advisors Worldwide Entities
Australia: State Street Global Advisors, Australia, Limited (ABN 42 003 914 225) is the holder of an Australian Financial Services Licence (AFSL Number 238276). Registered Office: Level 17, 420 George Street, Sydney, NSW 2000, Australia. T: +612 9240 7600. F: +612 9240 7611. Belgium: State Street Global Advisors Belgium, Chausse de La Hulpe 120, 1000 Brussels, Belgium. T: +32 2 663 2036, F: +32 2 672 2077. SSGA Belgium is a branch office of State Street Global Advisors Limited. State Street Global Advisors Limited is authorised and regulated by the Financial Conduct Authority in the United Kingdom. Canada: State Street Global Advisors, Ltd., 770 Sherbrooke Street West, Suite 1200 Montreal, Quebec, H3A 1G1, T: +514 282 2400 and 30 Adelaide Street East Suite 500, Toronto, Ontario M5C 3G6. T: +647 775 5900. Dubai: State Street Bank and Trust Company (Representative Office), Boulevard
Plaza 1, 17th Floor, Office 1703 Near Dubai Mall & Burj Khalifa, P.O Box 26838, Dubai, United Arab Emirates. T: +971 (0)4 4372800. F: +971 (0)4 4372818. France: State Street Global Advisors France. Authorised and regulated by the Autorité des Marchés Financiers. Registered with the Register of Commerce and Companies of Nanterre under the number: 412 052 680. Registered Office: Immeuble Défense Plaza, 23-25 rue Delarivière-Lefoullon, 92064 Paris La Défense Cedex, France. T: +33 1 44 45 40 00. F: +33 1 44 45 41 92. Germany: State Street Global Advisors GmbH, Brienner Strasse 59, D-80333 Munich. T: +49 (0)89 55878 100. F: +49 (0)89 55878 440. Hong Kong: State Street Global Advisors Asia Limited, 68/F, Two International Finance Centre, 8 Finance Street, Central, Hong Kong. T: +852 2103 0288. F: +852 2103 0200. Ireland: State Street Global Advisors Ireland Limited is regulated by the Central Bank of Ireland. Incorporated and registered in Ireland at Two Park Place, Upper Hatch Street, Dublin 2. Registered Number: 145221.
Member of the Irish Association of Investment Managers. T: +353 (0)1 776 3000. F: +353 (0)1 776 3300. Italy: State Street Global Advisors Limited, Milan Branch (Sede Secondaria di Milano) is a branch of State Street Global Advisors Limited, a company registered in the UK, authorised and regulated by the Financial Conduct Authority (FCA ), with a capital of GBP 71'650'000.00, and whose registered office is at 20 Churchill Place, London E14 5HJ. State Street Global Advisors Limited, Milan Branch (Sede Secondaria di Milano), is registered in Italy with company number 06353340968 - R.E.A. 1887090 and VAT number 06353340968 and whose office is at Via dei Bossi, 4 -20121 Milano, Italy. T: 39 02 32066 100. F: 39 02 32066 155. Japan: State Street Global Advisors (Japan) Co., Ltd., 9-7-1 Akasaka, Minato-ku, Tokyo 107-6239. T: +813 4530 7380. Financial Instruments Business Operator, Kanto Local Financial Bureau (Kinsho #345). Japan Investment Advisers Association, Investment Trusts Association Japan, Japan Securities Dealers
Association. Netherlands: State Street Global Advisors Netherlands, Adam Smith Building, Thomas Malthusstraat 1-3, 1066 JR Amsterdam, Netherlands. T: +31 (0)20 7181701. State Street Global Advisors Netherlands is a branch office of State Street Global Advisors Limited. State Street Global Advisors Limited is authorised and regulated by the Financial Conduct Authority in the United Kingdom. Singapore: State Street Global Advisors Singapore Limited, 168, Robinson Road, #33-01 Capital Tower, Singapore 068912 (Company Registered Number: 200002719D). T: +65 6826 7500. F: +65 6826 7501. Switzerland: State Street Global Advisors AG, Beethovenstr. 19, CH-8027 Zurich. T: +41 (0)44 245 70 00. F: +41 (0)44 245 70 16. United Kingdom: State Street Global Advisors Limited. Authorised and regulated by the Financial Conduct Authority. Registered in England. Registered Number: 2509928. VAT Number: 5776591 81. Registered Office: 20 Churchill Place, Canary Wharf, London, E14 5HJ. T: +020 3395
B-31

6000. F: +020 3395 6350. United States: State Street Global Advisors, One Lincoln Street, Boston, MA 02111-2900. T: +617 786 3000.
The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without State Street Global Advisors' express written consent.
© 2022 State Street Corporation.
All Rights Reserved.
ID949706-3479907.2.1.GBL.RTL 0322
Exp. Date: 03/31/2023
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March 2022
 
Europe
 
Proxy Voting and
Engagement Guidelines
 
State Street Global Advisors' European Proxy Voting
and Engagement Guidelinesi cover different corporate
governance frameworks and practices in European
markets, excluding the United Kingdom and Ireland.
These guidelines complement and should be read in
conjunction with State Street Global Advisors' Global
Proxy Voting and Engagement Principles, which provide
a detailed explanation of our approach to voting and
engaging with companies, and State Street Global
Advisors' Conflict Mitigation Guidelines.
 
 

i
These Proxy Voting and Engagement Guidelines are also applicable to SSGA Funds Management, Inc. SSGA Funds Management, Inc. is an SEC-registered investment adviser. SSGA Funds Management, Inc., State Street Global Advisors Trust Company, and other advisory affiliates of State Street make up State Street Global Advisors, the investment management arm of State Street Corporation.
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State Street Global Advisors' Proxy Voting and Engagement Guidelines in European
markets address areas such as board structure, audit-related issues, capital structure,
remuneration, as well as environmental, social and other governance-related issues.
 
When voting and engaging with companies in European markets, we consider
market-specific nuances in the manner that we believe will most likely protect and promote
the long-term financial value of client investments. We expect companies to observe the
relevant laws and regulations of their respective markets, as well as country-specific best
practice guidelines and corporate governance codes. We may hold companies in some
markets to our global standards when we feel that a country's regulatory requirements do
not address some of the key philosophical principles that we believe are fundamental to
our global voting guidelines.
 
In our analysis and research into corporate governance issues in European companies, we
also consider guidance issued by the European Commission and country-specific
governance codes. We proactively monitor companies' adherence to applicable guidance
and requirements. Consistent with the diverse comply-or-explain expectations
established by guidance and codes, we encourage companies to proactively disclose their
level of compliance with applicable provisions and requirements. In cases of
non-compliance, when companies cannot explain the nuances of their governance
structures effectively, either publicly or through engagement, we may vote against the
independent board leader.
 
 
State Street Global
Advisors' Proxy Voting
and Engagement
Philosophy
Corporate governance and sustainability issues are an integral part of the investment
process. The Asset Stewardship Team consists of investment professionals with expertise
in corporate governance and company law, remuneration, accounting, and environmental
and social issues. We have established robust corporate governance principles and
practices that are backed with extensive analytical expertise in order to understand the
complexities of the corporate governance landscape. We engage with companies to
provide insight on the principles and practices that drive our voting decisions. We also
conduct proactive engagements to address significant shareholder concerns and
environmental, social, and governance (ESG) issues in a manner consistent with
maximizing shareholder value.
 
The team works alongside members of State Street Global Advisors' Active Fundamental
and Europe, Middle East and Africa (EMEA) investment teams, collaborating on issuer
engagements and providing input on company-specific fundamentals.
 
State Street Global Advisors is a signatory to the United Nations Principles for
Responsible Investment (UNPRI). We are committed to sustainable investing, and are
working to further integrate ESG principles into investment and corporate governance
practices where applicable and consistent with our fiduciary duty.
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Directors and Boards
Principally, we believe the primary responsibility of the board of directors is to preserve
and enhance shareholder value, and to protect shareholder interests. In order to carry out
their primary responsibilities, directors have to undertake activities that range from setting
strategy and overseeing executive management, to monitoring the risks that arise from a
company's business, including risks related to sustainability issues. Further, good
corporate governance necessitates the existence of effective internal controls and risk
management systems, which should be governed by the board.
 
We believe that a well-constituted board of directors with a balance of skills, expertise and
independence, provides the foundations for a well governed company. We view board
quality as a measure of director independence, director succession planning, board
diversity, evaluations and refreshment, and company governance practices. We vote for the
(re-)election of directors on a case-by-case basis after considering various factors,
including board quality, general market practice, and availability of information on director
skills and expertise.
 
In our analysis of boards, we consider whether board members have adequate skills to
provide effective oversight of corporate strategy, operations, and risks, including
environmental and social issues. Boards should also have a regular evaluation process in
place to assess the effectiveness of the board and the skills of board members to address
issues such as emerging risks, changes to corporate strategy, and diversification of
operations and geographic footprint.
 
We may also consider factors such as board performance and directors who appear to be
remiss in the performance of their oversight responsibilities (e.g. fraud, criminal
wrongdoing and/or breach of fiduciary responsibilities).
 
 
Board Independence
In principle, we believe independent directors are crucial to good corporate governance
and help management establish sound corporate governance policies and practices. A
sufficiently independent board will most effectively monitor management and perform
oversight functions necessary to protect shareholder interests.
 
Our broad criteria for director independence in European companies include factors such
as:
 
Participation in related–party transactions and other business relations with the
company
 
Employment history with the company
 
Relations with controlling shareholders
 
Family ties with any of the company's advisers, directors or senior employees
 
Serving as an employee or government representative
 
Overall average board tenure and individual director tenure at issuers with classified
and de-classified boards, respectively, and
 
Company classification of a director as non-independent
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While overall board independence requirements and board structures differ from market to
market, we consider voting against directors we deem non-independent if overall board
independence is below 33 percent or if overall independence level is below 50 percent
after excluding employee representatives and/or directors elected in accordance with local
laws who are not elected by shareholders. We may withhold support for a proposal to
discharge the board if a company fails to meet adequate governance standards or board
level independence.
 
We also assess the division of responsibilities between chair and CEO on a case-by-case
basis, giving consideration to factors such as overall level of independence on the board
and general corporate governance standards in the company. However, we may take voting
action against the chair or members of the nominating committee at the STOXX Europe
600 companies that have combined the roles of chair and CEO and have not appointed an
independent deputy chair or a lead independent director.
 
 
Director Time Commitments
When voting on the election or re-election of a director, we also consider the number of
outside board directorships a non-executive and an executive may undertake. Thus, State
Street Global Advisors may take voting action against a director who exceeds the number
of board mandates listed below:
 
Named Executive Officers (NEOs) of a public company who sit on more than two
public company boards
 
Non-executive board chairs or lead independent directors who sit on more than three
public company boards
 
Director nominees who sit on more than four public company boards
 
For non-executive board chairs/lead independent directors and director nominees who hold
excessive commitments, as defined above, we may consider waiving our policy and vote in
support of a director if a company discloses its director commitment policy in a publicly
available manner (e.g., corporate governance guidelines, proxy statement, company
website). This policy or associated disclosure must include:
 
A numerical limit on public company board seats a director can serve on
 
This limit cannot exceed our policy by more than one seat
 
Consideration of public company board leadership positions (e.g., Committee Chair)
 
Affirmation that all directors are currently compliant with the company policy
 
Description of an annual policy review process undertaken by the Nominating
Committee to evaluate outside director time commitments
 
If a director is imminently leaving a board and this departure is disclosed in a written,
time-bound and publicly-available manner, we may consider waiving our withhold vote
when evaluating the director for excessive time commitments.
 
Service on a mutual fund board, the board of a UK investment trust or a Special Purpose
Acquisition Company (SPAC) board is not considered when evaluating directors for
excessive commitments. However, we do expect these roles to be considered by
nominating committees when evaluating director time commitments.
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Director Attendance at
Board Meetings
We also consider attendance at board meetings and may withhold votes from directors
who attend less than 75 percent of board meetings without appropriate explanation or
providing reason for their failure to meet the attendance threshold. In addition, we monitor
other factors that may influence the independence of a non-executive director, such as
performance-related pay, cross-directorships and significant shareholdings. Moreover, we
may vote against the election of a director whose biographical disclosures are insufficient
to assess his or her role on the board and/or independence.
 
 
Board Gender Diversity
We expect boards of all listed companies to have at least one female board member. If a
company fails to meet this expectation, State Street Global Advisors may vote against the
Chair of the board's nominating committee or the board leader in the absence of a
nominating committee, if necessary. Additionally, if a company fails to meet this
expectation for three consecutive years, State Street Global Advisors may vote against all
incumbent members of the nominating committee.
 
 
Length of Board Terms
Although we generally are in favour of the annual election of directors, we recognise that
director terms vary considerably in different European markets. We may vote against
article/bylaw changes that seek to extend director terms. In addition, we may vote against
directors in certain markets if their terms extend beyond four years.
 
 
Board Committees
We believe companies should have relevant board level committees for audit,
remuneration and nomination oversight. The audit committee is responsible for monitoring
the integrity of the financial statements of the company, appointing external auditors,
monitoring their qualifications and independence, and assessing effectiveness and
resource levels. Similarly, executive pay is an important aspect of corporate governance,
and it should be determined by the board of directors. We expect companies to have
remuneration committees to provide independent oversight of executive pay. We may vote
against nominees who are executive members of audit or remuneration committees.
 
In certain European markets, it is not uncommon for the election of directors to be
presented in a single slate. In these cases, where executives serve on the audit or the
remuneration committees, we may vote against the entire slate.
 
 
Board Responsiveness to
High Dissent Against Pay
Proposals
Poorly-structured executive remuneration plans pose increasing reputational risk to
companies. Ongoing high levels of dissent against a company's remuneration proposals
may indicate that the company is not receptive to investor concerns. If the level of dissent
against a company's remuneration report and/or remuneration policy is consistently high,
and we have determined that a vote against a remuneration-related proposal is warranted
in the third consecutive year, we will vote against the Chair of the remuneration committee.
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Incorporating R-FactorTM
into Director Votes
R-FactorTM is a scoring system created by State Street Global Advisors that measures the
performance of a company's business operations and governance as it relates to
financially material ESG factors facing the company's industry. R-FactorTM encourages
companies to manage and disclose material, industry-specific ESG risks and
opportunities, thereby reducing investment risk across our own portfolio and the broader
market. State Street Global Advisors may take voting action against the independent board
leader at companies on the STOXX 600 that are R-FactorTM laggards1 and momentum
underperformers2 and cannot articulate how they plan to improve their score.
 
 
 
 
Climate-related Disclosure
We believe climate change poses a systemic risk to all companies in our portfolio.
 
State Street Global Advisors has publicly supported the global regulatory efforts to
establish a mandatory baseline of climate risk disclosures for all companies. Until these
consistent disclosure standards are established, we find that the recommendations of the
Task Force on Climate-related Financial Disclosures (TCFD) provide the most effective
framework (with?) which companies can develop strategies to plan for climate-related risks
and make their businesses more resilient to the impacts of climate change.
 
As such, we may vote against the independent board leader at companies in the STOXX
600 that fail to provide sufficient disclosure in accordance with the TCFD framework,
including:
 
Board oversight of climate-related risks and opportunities
 
Total Scope 1 and Scope 2 greenhouse gas emissions
 
Targets for reducing greenhouse gas emissions
 
 
Indemnification and
Limitations on Liability
Generally, we support proposals to limit directors' liability and/or expand indemnification
and liability protection up to the limit provided by law if a director has not acted in bad faith,
with gross negligence, or with reckless disregard of the duties involved in the conduct of
his or her office.
 
 
Audit-Related Issues
Companies should have robust internal audit and internal control systems designed for
effective management of any potential and emerging risks to company operations and
strategy. The responsibility of setting up an internal audit function lies with the audit
committee, which should have as members independent non-executive directors.

1
Bottom 10 percent of scores relative to industry peers.
2
Have consistently underperformed their peers over the last two years; bottom 30 percent of scores relative to industry peers.
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Appointment of External
Auditors
We believe that a company's auditor is an essential feature of an effective and transparent
system of external supervision. Shareholders should be given the opportunity to vote on
their appointment or re-appoint them at the annual meeting. When appointing external
auditors and approving audit fees, we consider the level of detail in company disclosures;
we will generally not support such resolutions if adequate breakdown is not provided and if
non-audit fees are more than 50 percent of audit fees. In addition, we may vote against
members of the audit committee if we have concerns with audit-related issues or if the
level of non-audit fees to audit fees is significant. We may consider auditor tenure when
evaluating the audit process in certain circumstances.
 
 
Limit Legal Liability of
External Auditors
We generally oppose limiting the legal liability of audit firms as we believe this could create
a negative impact on the quality of the audit function.
 
Approval of Financial Statements
 
The disclosure and availability of reliable financial statements in a timely manner is
imperative for the investment process. We expect external auditors to provide assurance of
a company's financial condition. Hence, we will vote against the approval of financial
statements if i) they have not been disclosed or audited; ii) the auditor opinion is qualified/
adverse, or the auditor has issued a disclaimer of opinion; or iii) the auditor opinion is not
disclosed.
 
 
Shareholder Rights and
Capital-Related Issues
In some European markets, differential voting rights continue to exist. State Street Global
Advisors supports the one-share, one-vote policy and favors a share structure where all
shares have equal voting rights. We believe pre-emption rights should be introduced for
shareholders in order to provide adequate protection from excessive dilution from the
issuance of new shares or convertible securities to third parties or a small number of
select shareholders.
 
 
Unequal Voting Rights
We generally oppose proposals authorizing the creation of new classes of common stock
with superior voting rights. We will generally oppose the creation of new classes of
preferred stock with unspecified voting, conversion, dividend distribution and other rights.
In addition, we will not support capitalization changes that add classes of stock with
undefined voting rights or classes that may dilute the voting interests of existing
shareholders. We support proposals to abolish voting caps and capitalization changes that
eliminate other classes of stock and/or unequal voting rights.
 
 
Increase in Authorized
Capital
The ability to raise capital is critical for companies to carry out strategy, to grow, and to
achieve returns above their cost of capital. The approval of capital raising activities is
fundamental to shareholders' ability to monitor returns and to ensure capital is deployed
efficiently. We support capital increases that have sound business reasons and are not
excessive relative to a company's existing capital base.
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Pre-emption rights are a fundamental right for shareholders to protect their investment in a
company. Where companies seek to issue new shares whilst disapplying pre-emption
rights, we may vote against if such authorities are greater than 20 percent of the issued
share capital. We may also vote against resolutions that seek authority to issue capital with
pre-emption rights if the aggregate amount allowed seems excessive and is not justified by
the board. Generally, we oppose capital issuance proposals greater than 100 percent of
the issued share capital when the proceeds are not intended for a specific purpose.
 
 
Share Repurchase
Programs
We typically support proposals to repurchase shares; however, there are exceptions in
some cases. We do not support repurchases if the issuer does not clearly state the
business purpose for the program, a definitive number of shares to be repurchased, the
range of premium/discount to market price at which the company can repurchase shares,
and the timeframe for the repurchase. We may vote against share repurchase requests
that allow share repurchases during a takeover period.
 
 
Dividends
We generally support dividend payouts that constitute 30 percent or more of net income.
We may vote against the dividend payouts if the dividend payout ratio has been
consistently below 30 percent without adequate explanation or the payout is excessive
given the company's financial position. Particular attention will be paid to cases in which
the payment may damage the company's long-term financial health.
 
 
Related-Party Transactions
Some companies in European markets have a controlled ownership structure and complex
cross-shareholdings between subsidiaries and parent companies (related companies).
Such structures may result in the prevalence of related-party transactions between the
company and its various stakeholders, such as directors and management, subsidiaries
and shareholders. In markets where shareholders are required to approve such
transactions, we expect companies to provide details of the transaction, such as the
nature, the value and the purpose of such a transaction. We also encourage independent
directors to ratify such transactions. Further, we encourage companies to describe the level
of independent board oversight and the approval process, including details of any
independent valuations provided by financial advisors on related-party transactions.
 
 
Mergers and Acquisitions
Mergers or restructurings often involve proposals relating to reincorporation, restructurings,
mergers, liquidation and other major changes to the corporation. Proposals will be
supported if they are in the best interest of the shareholders, which is demonstrated by
enhancing share value or improving the effectiveness of the company's operations. In
general, provisions that are not viewed as financially sound or are thought to be destructive
to shareholders' rights are not supported.
 
We will generally support transactions that maximize shareholder value. Some of the
considerations include:
 
Offer premium
 
Strategic rationale
 
Board oversight of the process for the recommended transaction, including director
and/ or management conflicts of interest
 
Offers made at a premium and where there are no other higher bidders
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Offers in which the secondary market price is substantially lower than the net asset
value
 
We may vote against a transaction considering the following:
 
Offers with potentially damaging consequences for minority shareholders because of
illiquid stock
 
Offers where we believe there is a reasonable prospect for an enhanced bid or other
bidders
 
The current market price of the security exceeds the bid price at the time of voting
 
 
Anti–Takeover Measures
European markets have diverse regulations concerning the use of share issuances as
takeover defenses, with legal restrictions lacking in some markets. We support the
one-share, one-vote policy. For example, dual-class capital structures entrench certain
shareholders and management, insulating them from possible takeovers. We oppose
unlimited share issuance authorizations because they can be used as anti-takeover
devices. They have the potential for substantial voting and earnings dilution. We also
monitor the duration of time for authorities to issue shares, as well as whether there are
restrictions and caps on multiple issuance authorities during the specified time periods. We
oppose antitakeover defenses, such as authorities for the board when subject to a hostile
takeover to issue warrants convertible into shares to existing shareholders.
 
 
Remuneration
 
 
 
Executive Pay
Despite the differences among the various types of plans and awards, there is a simple
underlying philosophy that guides our analysis of executive pay: there should be a direct
relationship between remuneration and company performance over the long term.
 
Shareholders should have the opportunity to assess whether pay structures and levels are
aligned with business performance. When assessing remuneration reports, we consider
factors such as adequate disclosure of remuneration elements, absolute and relative pay
levels, peer selection and benchmarking, the mix of long-term and short-term incentives,
alignment of pay structures with shareholder interests, corporate strategy and
performance. We may oppose remuneration reports where pay seems misaligned with
shareholders' interests. We may also vote against the re-election of members of the
remuneration committee if we have serious concerns about remuneration practices and if
the company has not been responsive to shareholder pressure to review its approach.
 
 
Equity Incentives Plans
We may not support proposals regarding equity-based incentive plans where insufficient
information is provided on matters, including grant limits, performance metrics,
performance and vesting periods, and overall dilution. Generally, we do not support options
under such plans being issued at a discount to market price or plans that allow for
retesting of performance metrics.
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Non–Executive Director Pay
In European markets, proposals seeking shareholder approval for non-executive directors'
fees are generally not controversial. We typically support resolutions regarding directors'
fees unless disclosure is poor and we are unable to determine whether the fees are
excessive relative to fees paid by comparable companies. We will evaluate any non-cash
or performance-related pay to non-executive directors on a company-by-company basis.
 
 
Risk Management
We believe that risk management is a key function of the board, which is responsible for
setting the overall risk appetite of a company and for providing oversight on the risk
management process established by senior executives at a company. We allow boards to
have discretion regarding the ways in which they provide oversight in this area. However,
we expect companies to disclose how the board provides oversight on its risk management
system and risk identification. Boards should also review existing and emerging risks, as
they can change with a changing political and economic landscape or as companies
diversify or expand their operations into new areas.
 
 
Environmental and Social
Issues
As a fiduciary, State Street Global Advisors takes a comprehensive approach to engaging
with our portfolio companies about material environmental and social (sustainability)
issues. We use our voice and our vote through engagement, proxy voting and thought
leadership in order to communicate with issuers and educate market participants about
our perspective on important sustainability topics. Our Asset Stewardship program
prioritization process allows us to proactively identify companies for engagement and
voting in order to mitigate sustainability risks in our portfolio. Through engagement, we
address a broad range of topics that align with our stewardship priorities and build
long-term relationships with issuers. When voting, we fundamentally consider whether the
adoption of a shareholder proposal addressing a material sustainability issue would
promote long-term shareholder value in the context of the company's existing practices
and disclosures as well as existing market practice.
 
For more information on our approach to environmental and social issues, please see our
Global Proxy Voting and Engagement Guidelines for Environmental and Social Issues and
our Frameworks for Voting Environmental and Social Shareholder Proposals, both
available at ssga.com/about-us/asset-stewardship.html.
 
 
More Information
Any client who wishes to receive information on how its proxies were voted should contact
its State Street Global Advisors relationship manager.
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About State Street Global
Advisors
For four decades, State Street Global Advisors has served the world's governments,
institutions and financial advisors. With a rigorous, risk-aware approach built on research,
analysis and market-tested experience, we build from a breadth of active and index
strategies to create cost-effective solutions. As stewards, we help portfolio companies see
that what is fair for people and sustainable for the planet can deliver long-term
performance. And, as pioneers in index, ETF, and ESG investing, we are always inventing
new ways to invest. As a result, we have become the world's fourth-largest asset manager*
with US $4.14 trillion† under our care.

*
Pensions & Investments Research Center, as of December 31, 2020.
This figure is presented as of December 31, 2021 and includes approximately $61.43 billion of assets with respect to SPDR products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated.


ssga.com
State Street Global Advisors Worldwide Entities
Abu Dhabi: State Street Global Advisors Limited, ADGM Branch, Al Khatem Tower, Suite 42801, Level 28, ADGM Square, Al Maryah Island, P.O Box 76404, Abu Dhabi, United Arab Emirates. Regulated by the ADGM Financial Services Regulatory Authority. T: +971 2 245 9000. Australia: State Street Global Advisors, Australia, Limited (ABN 42 003 914 225) is the holder of an Australian Financial Services License (AFSL Number 238276). Registered office: Level 14, 420 George Street, Sydney, NSW 2000, Australia. T: +612 9240-7600. F: +612 9240-7611. Belgium: State Street Global Advisors Belgium, Chaussée de La Hulpe 185, 1170 Brussels, Belgium. T: +32 2 663 2036. State Street Global Advisors Belgium is a branch office of State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorized and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. Canada: State Street Global Advisors, Ltd., 1981
McGill College Avenue, Suite 500, Montreal, Qc, H3A 3A8, T: +514 282 2400 and 30 Adelaide Street East Suite 800, Toronto, Ontario M5C 3G6. T: +647 775 5900. France: State Street Global Advisors Europe Limited, France Branch (State Street Global Advisors France) is a branch of State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorized and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. State Street Global Advisors France is registered in France with company number RCS Nanterre 899 183 289, and its office is located at Coeur Défense — Tour A — La Défense 4, 33e étage, 100, Esplanade du Général de Gaulle, 92 932 Paris La Défense Cedex, France. T: +33 1 44 45 40 00. F: +33 1 44 45 41 92. Germany: State Street Global Advisors Europe Limited, Branch in Germany, Brienner Strasse 59, D-80333 Munich, Germany (State Street Global Advisors Germany). T: +49 (0)89 55878 400. State Street Global Advisors Germany is a branch of State Street Global Advisors Europe Limited, registered in Ireland with
company number 49934, authorized and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. Hong Kong: State Street Global Advisors Asia Limited, 68/F, Two International Finance Centre, 8 Finance Street, Central, Hong Kong. T: +852 2103-0288. F: +852 2103-0200. Ireland: State Street Global Advisors Europe Limited is regulated by the Central Bank of Ireland. Registered office address 78 Sir John Rogerson's Quay, Dublin 2. Registered Number: 49934. T: +353 (0)1 776 3000. F: +353 (0)1 776 3300. Italy: State Street Global Advisors Europe Limited, Italy Branch (State Street Global Advisors Italy) is a branch of State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorized and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. State Street Global Advisors Italy is registered in Italy with company number 11871450968 — REA: 2628603 and VAT number 11871450968, and its office is located at Via Ferrante Aporti, 10 -20125 Milan, Italy. T: +39 02 32066 100. F: +39
02 32066 155. Japan: State Street Global Advisors (Japan) Co., Ltd., Toranomon Hills Mori Tower 25F 1-23-1 Toranomon, Minato-ku, Tokyo 105-6325 Japan. T: +81-3-4530-7380. Financial Instruments Business Operator, Kanto Local Financial Bureau (Kinsho #345), Membership: Japan Investment Advisers Association, The Investment Trust Association, Japan, Japan Securities Dealers' Association. Netherlands: State Street Global Advisors Netherlands, Apollo Building 7th floor, Herikerbergweg 29, 1101 CN Amsterdam, Netherlands. T: +31 20 7181 000. State Street Global Advisors Netherlands is a branch office of State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorized and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. Singapore: State Street Global Advisors Singapore Limited, 168, Robinson Road, #33-01 Capital Tower, Singapore 068912 (Company Reg. No: 200002719D, regulated by the Monetary Authority of Singapore). T: +65 6826-7555. F: +65 6826-7501. Switzerland: State Street
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Global Advisors AG, Beethovenstr. 19, CH-8027 Zurich. Registered with the Register of Commerce Zurich CHE-105.078.458. T: +41 (0)44 245 70 00. F: +41 (0)44 245 70 16. United Kingdom: State Street Global Advisors Limited. Authorized and regulated by the Financial Conduct Authority. Registered in England. Registered No. 2509928. VAT No. 5776591
81. Registered office: 20 Churchill Place, Canary Wharf, London, E14 5HJ. T: 020 3395 6000. F: 020 3395 6350. United States: State Street Global Advisors, 1 Iron Street, Boston, MA 02210-1641. T: +1 617 786 3000.
The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents
disclosed to third parties without State Street Global Advisors' express written consent.
© 2022 State Street Corporation.
All Rights Reserved.
ID949708-3479909.2.1.GBL.RTL 0322
Exp. Date: 03/31/2023
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March 2022
 
Japan
 
Proxy Voting and
Engagement Guidelines
 
State Street Global Advisors' Japan Proxy Voting and
Engagement Guidelinesi outline our expectations of
companies listed on stock exchanges in Japan. These
Guidelines complement and should be read in
conjunction with State Street Global Advisors'
overarching Global Proxy Voting and Engagement
Guidelines, which provide a detailed explanation of our
approach to voting and engaging with companies, and
State Street Global Advisors' Conflict Mitigation
Guidelines.
 
 

i
These Proxy Voting and Engagement Guidelines are also applicable to SSGA Funds Management, Inc. SSGA Funds Management, Inc. is an SEC-registered investment adviser. SSGA Funds Management, Inc., State Street Global Advisors Trust Company, and other advisory affiliates of State Street make up State Street Global Advisors, the investment management arm of State Street Corporation.
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State Street Global Advisors' Proxy Voting and Engagement Guidelines in Japan address
areas including: board structure, audit related issues, capital structure, remuneration,
environmental, social, and other governance-related issues.
 
When voting and engaging with companies in Japan, State Street Global Advisors takes
into consideration the unique aspects of Japanese corporate governance structures. We
recognize that under Japanese corporate law, companies may choose between two
structures of corporate governance: the statutory auditor system or the committee
structure. Most Japanese boards predominantly consist of executives and
non-independent outsiders affiliated through commercial relationships or
cross-shareholdings. Nonetheless, when evaluating companies, State Street Global
Advisors expects Japanese companies to address conflicts of interest and risk
management and to demonstrate an effective process for monitoring management. In our
analysis and research regarding corporate governance issues in Japan, we expect all
companies at a minimum to comply with Japan's Corporate Governance Principles and
proactively monitor companies' adherence to the principles. Consistent with the ‘comply or
explain' expectations established by the Principles, we encourage companies to proactively
disclose their level of compliance with the Principles. In instances of non-compliance when
companies cannot explain the nuances of their governance structure effectively, either
publicly or through engagement, we may vote against the board leader.
 
 
State Street Global
Advisors' Proxy Voting
and Engagement
Philosophy
In our view, corporate governance and sustainability issues are an integral part of the
investment process. The Asset Stewardship Team consists of investment professionals
with expertise in corporate governance and company law, remuneration, accounting, and
environmental and social issues. We have established robust corporate governance
principles and practices that are backed with extensive analytical expertise to understand
the complexities of the corporate governance landscape. We engage with companies to
provide insight on the principles and practices that drive our voting decisions. We also
conduct proactive engagement to address significant shareholder concerns and
environmental, social, and governance (ESG) issues in a manner consistent with
maximizing shareholder value.
 
The team works alongside members of State Street Global Advisors' Active Fundamental
and Asia-Pacific (APAC) Investment Teams; the teams collaborate on issuer engagement
and provide input on company specific fundamentals. We are also a member of various
investor associations that seek to address broader corporate governance related policy
issues in Japan.
 
State Street Global Advisors is a signatory to the United Nations Principles of Responsible
Investment (UNPRI) and is compliant with Japan's Stewardship Code and Corporate
Governance Code. We are committed to sustainable investing and are working to further
integrate ESG principles into investment and corporate governance practices where
applicable and consistent with our fiduciary duty.
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Directors and Boards
Principally, we believe the primary responsibility of the board of directors is to preserve
and enhance shareholder value and protect shareholder interests. In order to carry out
their primary responsibilities, directors have to undertake activities that range from setting
strategy and overseeing executive management to monitoring the risks that arise from a
company's business, including risks related to sustainability issues. Further, good
corporate governance necessitates the existence of effective internal controls and risk
management systems, which should be governed by the board.
 
State Street Global Advisors believes that a well constituted board of directors with a
balance of skills, expertise, and independence, provides the foundation for a well governed
company. We view board quality as a measure of director independence, director
succession planning, board diversity, evaluations and refreshment, and company
governance practices. We vote for the (re-)election of directors on a case-by-case basis
after considering various factors, including board quality, general market practice, and
availability of information on director skills and expertise. In principle, we believe
independent directors are crucial to robust corporate governance and help management
establish sound corporate governance policies and practices. A sufficiently independent
board will most effectively monitor management and perform oversight functions that are
necessary to protect shareholder interests.
 
Japanese companies have the option of having a traditional board of directors with
statutory auditors, a board with a committee structure, or a hybrid board with a board level
audit committee. We will generally support companies that seek shareholder approval to
adopt a committee or hybrid board structure.
 
Most Japanese issuers prefer the traditional statutory auditor structure. Statutory auditors
act in a quasi-compliance role, as they are not involved in strategic decision-making nor
are they part of the formal management decision process. Statutory auditors attend board
meetings but do not have voting rights at the board; however, they have the right to seek an
injunction and conduct broad investigations of unlawful behavior in the company's
operations.
 
State Street Global Advisors will support the election of statutory auditors, unless the
outside statutory auditor nominee is regarded as non-independent based on our criteria,
the outside statutory auditor has attended less than 75 percent of meetings of the board of
directors or board of statutory auditors during the year under review, or the statutory
auditor has been remiss in the performance of their oversight responsibilities (fraud,
criminal wrong doing, and breach of fiduciary responsibilities).
 
For companies with a statutory auditor structure there is no legal requirement that boards
have outside directors; however, we believe there should be a transparent process of
independent and external monitoring of management on behalf of shareholders.
 
We believe that boards of TOPIX 500 companies should have at least three
independent directors or be at least one-third independent, whichever requires fewer
independent directors. Otherwise, we may oppose the board leader who is responsible
for the director nomination process.
 
For controlled, non-TOPIX 500 companies with a statutory auditor structure or hybrid
structure, we may oppose the board leader if the board does not have at least two
independent directors.
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For non-controlled, non-TOPIX 500 companies with a statutory auditor structure or
hybrid structure, State Street Global Advisors may oppose the board leader if the
board does not have at least two independent directors.
 
For companies with a committee structure or a hybrid board structure, we also take into
consideration the overall independence level of the committees. In determining director
independence, we consider the following factors:
 
Participation in related-party transactions and other business relations with the
company
 
Past employment with the company
 
Professional services provided to the company
 
Family ties with the company
 
Regardless of board structure, we may oppose the election of a director for the following
reasons:
 
Failure to attend board meetings
 
In instances of egregious actions related to a director's service on the board
 
Board Gender Diversity
 
We expect boards of all listed companies to have at least one female board member. If a
company fails to meet this expectation, State Street Global Advisors may vote against the
Chair of the board's nominating committee or the board leader in the absence of a
nominating committee, if necessary. Additionally, if a company fails to meet this
expectation for three consecutive years, State Street Global Advisors may vote against all
incumbent members of the nominating committee or those persons deemed responsible
for the nomination process.
 
Incorporating R-Factor™ into Director Votes
 
R-Factor™ is a scoring system created by State Street Global Advisors that measures the
performance of a company's business operations and governance as it relates to
financially material ESG factors facing the company's industry. R-Factor™ encourages
companies to manage and disclose material, industry-specific ESG risks and
opportunities, thereby reducing investment risk across our own portfolio and the broader
market. State Street Global Advisors may take voting action against board members at
companies on the TOPIX 100 that are R-Factor™ laggards1 and momentum underper-
formers2 and cannot articulate how they plan to improve their score.
 
Indemnification and Limitations on Liability
 
Generally, State Street Global Advisors supports proposals to limit directors' and statutory
auditors' liability and/or expand indemnification and liability protection up to the limit
provided by law, if he or she has not acted in bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his or her office. We believe limitations
and indemnification are necessary to attract and retain qualified directors.

1
Bottom 10 percent of scores relative to industry peers.
2
Have consistently underperformed their peers over the last two years; bottom 30 percent of scores relative to industry peers.
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Audit-Related Items
State Street Global Advisors believes that a company's auditor is an essential feature of
an effective and transparent system of external supervision. Shareholders should have the
opportunity to vote on the appointment of the auditor at the annual meeting.
 
Ratifying External Auditors
 
We generally support the appointment of external auditors unless the external auditor is
perceived as being non-independent and there are concerns about the accounts presented
and the audit procedures followed.
 
Approval of Financial Statements
 
The disclosure and availability of reliable financial statements in a timely manner is
imperative for the investment process. We expect external auditors to provide assurance of
a company's financial condition. Hence, we will vote against the approval of financial
statements if i) they have not been disclosed or audited; ii) the auditor opinion is qualified/
adverse, or the auditor has issued a disclaimer of opinion; or iii) the auditor opinion is not
disclosed.
 
Limiting Legal Liability of External Auditors
 
We generally oppose limiting the legal liability of audit firms as we believe this could create
a negative impact on the quality of the audit function.
 
 
Capital Structure,
Reorganization, and
Mergers
State Street Global Advisors supports the one share one vote policy and favors a share
structure where all shares have equal voting rights. We support proposals to abolish voting
caps or multiple voting rights and will oppose measures to introduce these types of
restrictions on shareholder rights.
 
We believe pre-emption rights should be introduced for shareholders. This can provide
adequate protection from excessive dilution due to the issuance of new shares or
convertible securities to third parties or a small number of select shareholders.
 
Unequal Voting Rights
 
We generally oppose proposals authorizing the creation of new classes of common stock
with superior voting rights. We will generally oppose new classes of preferred stock with
unspecified voting, conversion, dividend distribution, and other rights. In addition, we will
not support capitalization changes that add classes of stock with undefined voting rights or
classes that may dilute the voting interests of existing shareholders.
 
However, we will support capitalization changes that eliminate other classes of stock and/
or unequal voting rights.
 
Increase in Authorized Capital
 
We generally support increases in authorized capital where the company provides an
adequate explanation for the use of shares. In the absence of an adequate explanation,
we may oppose the request if the increase in authorized capital exceeds 100 percent of
the currently authorized capital. Where share issuance requests exceed our standard
threshold, we will consider the nature of the specific need, such as mergers, acquisitions
and stock splits.
B-49

 
Dividends
 
We generally support dividend payouts that constitute 30 percent or more of net income.
We may vote against the dividend payouts if the dividend payout ratio has been
consistently below 30 percent without adequate explanation; or, the payout is excessive
given the company's financial position. Particular attention will be paid where the payment
may damage the company's long-term financial health.
 
Share Repurchase Programs
 
Companies are allowed under Japan Corporate Law to amend their articles to authorize
the repurchase of shares at the board's discretion. We will oppose an amendment to
articles allowing the repurchase of shares at the board's discretion. We believe the
company should seek shareholder approval for a share repurchase program at each year's
AGM, providing shareholders the right to evaluate the purpose of the repurchase.
 
We generally support proposals to repurchase shares, unless the issuer does not clearly
state the business purpose for the program, a definitive number of shares to be
repurchased, and the timeframe for the repurchase. We may vote against share
repurchase requests that allow share repurchases during a takeover period.
 
Mergers and Acquisitions
 
Mergers or reorganizing the structure of a company often involve proposals relating to
reincorporation, restructurings, mergers, liquidations, and other major changes to the
corporation. We will support proposals that are in the best interests of the shareholders,
demonstrated by enhancing share value or improving the effectiveness of the company's
operations. In general, provisions that are deemed to be destructive to shareholders' rights
or financially detrimental are not supported.
 
We evaluate mergers and structural reorganizations on a case-by-case basis. We will
generally support transactions that maximize shareholder value. Some of the
considerations include, but are not limited to the following:
 
Offer premium
 
Strategic rationale
 
Board oversight of the process for the recommended transaction, including director
and/or management conflicts of interest
 
Offers made at a premium and where there are no other higher bidders
 
Offers in which the secondary market price is substantially lower than the net asset
value
 
We may vote against a transaction considering the following:
 
Offers with potentially damaging consequences for minority shareholders because of
illiquid stock
 
Offers where we believe there is a reasonable prospect for an enhanced bid or other
bidders
 
Offers in which the current market price of the security exceeds the bid price at the
time of voting
B-50

 
Anti-Takeover Measures
 
In general, State Street Global Advisors believes that adoption of poison pills that have
been structured to protect management and to prevent takeover bids from succeeding is
not in shareholders' interest. A shareholder rights plan may lead to management
entrenchment. It may also discourage legitimate tender offers and acquisitions. Even if the
premium paid to companies with a shareholder rights plan is higher than that offered to
unprotected firms, a company's chances of receiving a takeover offer in the first place may
be reduced by the presence of a shareholder rights plan.
 
Proposals that reduce shareholders' rights or have the effect of entrenching incumbent
management will not be supported.
 
Proposals that enhance the right of shareholders to make their own choices as to the
desirability of a merger or other proposal are supported.
 
Shareholder Rights Plans
 
In evaluating the adoption or renewal of a Japanese issuer's shareholder rights plans
(poison pill), we consider the following conditions: (i) release of proxy circular with details
of the proposal with adequate notice in advance of meeting, (ii) minimum trigger of over 20
percent, (iii) maximum term of three years, (iv) sufficient number of independent directors,
(v) presence of an independent committee, (vi) annual election of directors, and (vii) lack
of protective or entrenchment features. Additionally, we consider the length of time that a
shareholder rights plan has been in effect.
 
In evaluating an amendment to a shareholder rights plan (poison pill), in addition to the
conditions above, we will also evaluate and consider supporting proposals where the terms
of the new plans are more favorable to shareholders' ability to accept unsolicited offers.
 
 
Compensation
In Japan, excessive compensation is rarely an issue. Rather, the problem is the lack of
connection between pay and performance. Fixed salaries and cash retirement bonuses
tend to comprise a significant portion of the compensation structure while
performance-based pay is generally a small portion of the total pay. State Street Global
Advisors, where possible, seeks to encourage the use of performance-based
compensation in Japan as an incentive for executives and as a way to align interests with
shareholders.
 
Adjustments to Aggregate Compensation Ceiling for Directors
 
Remuneration for directors is generally reasonable. Typically, each company sets the
director compensation parameters as an aggregate thereby limiting the total pay to all
directors. When requesting a change, a company must disclose the last time the ceiling
was adjusted, and management provides the rationale for the ceiling increase. We will
generally support proposed increases to the ceiling if the company discloses the rationale
for the increase. We may oppose proposals to increase the ceiling if there has been
corporate malfeasance or sustained poor performance.
 
Annual Bonuses for Directors/Statutory Auditors
 
In Japan, since there are no legal requirements that mandate companies to seek
shareholder approval before awarding a bonus, we believe that existing shareholder
approval of the bonus should be considered best practice. As a result, we support
management proposals on executive compensation where there is a strong relationship
between executive pay and performance over a five-year period.
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Retirement Bonuses for Directors/Statutory Auditors
 
Retirement bonuses make up a sizeable portion of directors' and auditors' lifetime
compensation and are based upon board tenure. While many companies in Japan have
abolished this practice, there remain many proposals seeking shareholder approval for the
total amounts paid to directors and statutory auditors as a whole. In general, we support
these payments unless the recipient is an outsider or in instances where the amount is not
disclosed.
 
Stock Plans
 
Most option plans in Japan are conservative, particularly at large companies. Japanese
corporate law requires companies to disclose the monetary value of the stock options for
directors and/or statutory auditors. Some companies do not disclose the maximum number
of options that can be issued per year and shareholders are unable to evaluate the dilution
impact. In this case, we cannot calculate the dilution level and, therefore, we may oppose
such plans for poor disclosure. We also oppose plans that allow for the repricing of the
exercise price.
 
Deep Discount Options
 
As Japanese companies move away from the retirement bonus system, deep discount
options plans have become more popular. Typically, the exercise price is set at JPY 1 per
share. We evaluate deep discount options using the same criteria used to evaluate stock
options as well as considering the vesting period.
 
 
Environmental and Social
Issues
As a fiduciary, State Street Global Advisors takes a comprehensive approach to engaging
with our portfolio companies about material environmental and social (sustainability)
issues. We use our voice and our vote through engagement, proxy voting, and thought
leadership in order to communicate with issuers and educate market participants about
our perspective on important sustainability topics. Our Asset Stewardship program
prioritization process allows us to proactively identify companies for engagement and
voting in order to mitigate sustainability risks in our portfolio. Through engagement, we
address a broad range of topics that align with our stewardship priorities and build
long-term relationships with issuers. When voting, we fundamentally consider whether the
adoption of a shareholder proposal addressing a material sustainability issue would
promote long-term shareholder value in the context of the company's existing practices
and disclosures as well as existing market practice.
 
For more information on our approach to environmental and social issues, please see our
Global Proxy Voting and Engagement Guidelines for Environmental and Social Issues and
our Frameworks for Voting Environmental and Social Shareholder Proposals, both
available at ssga.com/about-us/asset-stewardship.html.
 
 
Miscellaneous/ Routine
Items
Expansion of Business Activities
 
Japanese companies' articles of incorporation strictly define the types of businesses in
which a company is permitted to engage. In general, State Street Global Advisors views
proposals that expand and diversify the company's business activities as routine and
non-contentious. We will monitor instances in which there has been an inappropriate
acquisition and diversification away from the company's main area of competence that
resulted in a decrease of shareholder value.
B-52

 
 
More Information
Any client who wishes to receive information on how its proxies were voted should contact
its State Street Global Advisors relationship manager.
 
 
About State Street Global
Advisors
For four decades, State Street Global Advisors has served the world's governments,
institutions and financial advisors. With a rigorous, risk-aware approach built on research,
analysis and market-tested experience, we build from a breadth of active and index
strategies to create cost-effective solutions. As stewards, we help portfolio companies see
that what is fair for people and sustainable for the planet can deliver long-term
performance. And, as pioneers in index, ETF, and ESG investing, we are always inventing
new ways to invest. As a result, we have become the world's fourth-largest asset manager*
with US $4.14 trillion† under our care.

*
Pensions & Investments Research Center, as of December 31, 2020.
This figure is presented as of December 31, 2021 and includes approximately $61.43 billion of assets with respect to SPDR products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated.


ssga.com
State Street Global Advisors Worldwide Entities
Abu Dhabi: State Street Global Advisors Limited, ADGM Branch, Al Khatem Tower, Suite 42801, Level 28, ADGM Square, Al Maryah Island, P.O Box 76404, Abu Dhabi, United Arab Emirates. Regulated by the ADGM Financial Services Regulatory Authority. T: +971 2 245 9000. Australia: State Street Global Advisors, Australia, Limited (ABN 42 003 914 225) is the holder of an Australian Financial Services License (AFSL Number 238276). Registered office: Level 14, 420 George Street, Sydney, NSW 2000, Australia. T: +612 9240-7600. F: +612 9240-7611. Belgium: State Street Global Advisors Belgium, Chaussée de La Hulpe 185, 1170 Brussels, Belgium. T: +32 2 663 2036. State Street Global Advisors Belgium is a branch office of State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorized and regulated by the Central Bank of
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number 49934, authorized and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. State Street Global Advisors Italy is registered in Italy with company number 11871450968 — REA: 2628603 and VAT number 11871450968, and its office is located at Via Ferrante Aporti, 10 -20125 Milan, Italy. T: +39 02 32066 100. F: +39 02 32066 155. Japan: State Street Global Advisors (Japan) Co., Ltd., Toranomon Hills Mori Tower 25F 1-23-1 Toranomon, Minato-ku, Tokyo 105-6325 Japan. T: +81-3-4530- 7380. Financial Instruments Business Operator, Kanto Local Financial Bureau (Kinsho #345), Membership: Japan Investment Advisers Association, The Investment Trust Association, Japan, Japan Securities Dealers' Association. Netherlands: State Street Global Advisors Netherlands, Apollo Building 7th floor, Herikerbergweg 29, 1101 CN Amsterdam, Netherlands. T: +31 20 7181 000. State Street Global Advisors Netherlands is a branch office of
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State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorized and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. Singapore: State Street Global Advisors Singapore Limited, 168, Robinson Road, #33-01 Capital Tower, Singapore 068912 (Company Reg. No: 200002719D, regulated by the Monetary Authority of Singapore).
T: +65 6826-7555. F: +65 6826-7501. Switzerland: State Street Global Advisors AG, Beethovenstr. 19, CH-8027 Zurich. Registered with the Register of Commerce Zurich CHE-105.078.458. T: +41 (0)44 245 70 00. F: +41 (0)44 245 70 16. United Kingdom: State Street Global Advisors Limited. Authorized and regulated by the Financial Conduct Authority. Registered in England. Registered No. 2509928. VAT No. 5776591 81. Registered office: 20 Churchill
Place, Canary Wharf, London, E14 5HJ. T: 020 3395 6000. F: 020 3395 6350. United States: State Street Global Advisors, 1 Iron Street, Boston, MA 02210-1641. T: +1 617 786 3000.
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ID949710-3479913.2.1.GBL.RTL 0322
Exp. Date: 03/31/2023
B-54

 
 
 
March 2022
 
North America (United States & Canada)
 
Proxy Voting and
Engagement Guidelines
 
State Street Global Advisors' North America Proxy
Voting and Engagement Guidelinesi outline our
expectations of companies listed on stock exchanges in
the US and Canada. These Guidelines complement and
should be read in conjunction with State Street Global
Advisors' Global Proxy Voting and Engagement
Principles, which provide a detailed explanation of our
approach to voting and engaging with companies, and
State Street Global Advisors' Conflict Mitigation
Guidance.
 
 

i
These Proxy Voting and Engagement Guidelines are also applicable to SSGA Funds Management, Inc. SSGA Funds Management, Inc. is an SEC-registered investment adviser. SSGA Funds Management, Inc., State Street Global Advisors Trust Company, and other advisory affiliates of State Street make up State Street Global Advisors, the investment management arm of State Street Corporation.
B-55

 
 
 
 
 
State Street Global Advisors' North America Proxy Voting and Engagement Guidelines
address areas, including board structure, director tenure, audit related issues, capital
structure, executive compensation, as well as environmental, social, and other
governance-related issues of companies listed on stock exchanges in the US and Canada
(North America).
 
When voting and engaging with companies in global markets, we consider market specific
nuances in the manner that we believe will most likely protect and promote the long-term
economic value of client investments. We expect companies to observe the relevant laws
and regulations of their respective markets, as well as country specific best practice
guidelines and corporate governance codes. When we feel that a country's regulatory
requirements do not address some of the key philosophical principles that we believe are
fundamental to its global voting guidelines, we may hold companies in such markets to our
global standards.
 
In its analysis and research about corporate governance issues in North America, we
expect all companies to act in a transparent manner and to provide detailed disclosure on
board profiles, related-party transactions, executive compensation, and other governance
issues that impact shareholders' long-term interests. Further, as a founding member of the
Investor Stewardship Group (ISG), we proactively monitor companies' adherence to the
Corporate Governance Principles for US listed companies. Consistent with the comply-or-
explain expectations established by the principles, we encourage companies to proactively
disclose their level of compliance with the principles. In instances of non-compliance when
companies cannot explain the nuances of their governance structure effectively, either
publicly or through engagement, we may vote against the independent board leader.
 
 
State Street Global
Advisors' Proxy Voting
and Engagement
Philosophy
Corporate governance and sustainability issues are an integral part of the investment
process. The Asset Stewardship Team consists of investment professionals with expertise
in corporate governance and company law, remuneration, accounting, and environmental
and social issues. We have established robust corporate governance principles and
practices that are backed with extensive analytical expertise to understand the
complexities of the corporate governance landscape. We engage with companies to
provide insight on the principles and practices that drive our voting decisions. We also
conduct proactive engagements to address significant shareholder concerns and
environmental, social, and governance (ESG) issues in a manner consistent with
maximizing shareholder value.
 
The team works alongside members of State Street Global Advisors' Active Fundamental
and various other investment teams, collaborating on issuer engagements and providing
input on company specific fundamentals. We are also a member of various investor
associations that seek to address broader corporate governance related policy issues in
North America.
 
State Street Global Advisors is a signatory to the United Nations Principles of Responsible
Investment (UNPRI) and is compliant with the US Investor Stewardship Group Principles.
We are committed to sustainable investing and are working to further integrate ESG
principles into investment and corporate governance practices, where applicable and
consistent with our fiduciary duty.
B-56

 
 
Directors and Boards
Principally, we believe the primary responsibility of the board of directors is to preserve
and enhance shareholder value and protect shareholder interests. In order to carry out
their primary responsibilities, directors have to undertake activities that range from setting
strategy and overseeing executive management to monitoring the risks that arise from a
company's business, including risks related to sustainability issues. Further, good
corporate governance necessitates the existence of effective internal controls and risk
management systems, which should be governed by the board.
 
State Street Global Advisors believes that a well constituted board of directors, with a
balance of skills, expertise, and independence, provides the foundations for a well
governed company. We view board quality as a measure of director independence, director
succession planning, board diversity, evaluations and refreshment, and company
governance practices. We vote for the election/re-election of directors on a case-by-case
basis after considering various factors, including board quality, general market practice,
and availability of information on director skills and expertise. In principle, we believe
independent directors are crucial to robust corporate governance and help management
establish sound corporate governance policies and practices. A sufficiently independent
board will most effectively monitor management and perform oversight functions
necessary to protect shareholder interests.
 
Director-related proposals include issues submitted to shareholders that deal with the
composition of the board or with members of a corporation's board of directors. In
deciding the director nominee to support, we consider numerous factors.
 
Director Elections
 
Our director election guideline focuses on companies' governance profile to identify if a
company demonstrates appropriate governance practices or if it exhibits negative
governance practices. Factors we consider when evaluating governance practices include,
but are not limited to the following:
 
Shareholder rights
 
Board independence
 
Board structure
 
If a company demonstrates appropriate governance practices, we believe a director should
be classified as independent based upon the relevant listing standards or local market
practice standards. In such cases, the composition of the key oversight committees of a
board should meet the minimum standards of independence. Accordingly, we will vote
against a nominee at a company with appropriate governance practices if the director is
classified as non-independent under relevant listing standards or local market practice and
serves on a key committee of the board (compensation, audit, nominating, or committees
required to be fully independent by local market standards).
 
Conversely, if a company demonstrates negative governance practices, State Street
Global Advisors believes the classification standards for director independence should be
elevated. In such circumstances, we will evaluate all director nominees based upon the
following classification standards:
 
Is the nominee an employee of or related to an employee of the issuer or its auditor?
 
Does the nominee provide professional services to the issuer
B-57

 
Has the nominee attended an appropriate number of board meetings?
 
Has the nominee received non-board related compensation from the issuer?
 
In the US market where companies demonstrate negative governance practices, these
stricter standards will apply not only to directors who are a member of a key committee but
to all directors on the board as market practice permits. Accordingly, we will vote against a
nominee (with the exception of the CEO) where the board has inappropriate governance
practices and is considered not independent based on the above independence criteria.
 
Additionally, we may withhold votes from directors based on the following:
 
Overall average board tenure is excessive. In assessing excessive tenure, we consider
factors such as the preponderance of long tenured directors, board refreshment
practices, and classified board structures
 
Directors attend less than 75 percent of board meetings without appropriate
explanation or providing reason for their failure to meet the attendance threshold
 
Directors of companies that have not been responsive to a shareholder proposal that
received a majority shareholder support at the last annual or special meeting
 
Consideration can be warranted if management submits the proposal(s) on the ballot
as a binding management proposal, recommending shareholders vote for the
particular proposal(s)
 
Directors of companies have unilaterally adopted/ amended company bylaws that
negatively impact our shareholder rights (such as fee-shifting, forum selection, and
exclusion service bylaws) without putting such amendments to a shareholder vote
 
Compensation committee members where there is a weak relationship between
executive pay and performance over a five-year period
 
Audit committee members if non-audit fees exceed 50 percent of total fees paid to the
auditors
 
Directors who appear to have been remiss in their duties
 
Board Gender Diversity
 
We expect boards of all listed companies to have at least one female board member. If a
company fails to meet this expectation, State Street Global Advisors may vote against the
Chair of the board's nominating committee or the board leader in the absence of a
nominating committee, if necessary. Additionally, if a company fails to meet this
expectation for three consecutive years, State Street Global Advisors may vote against all
incumbent members of the nominating committee.
 
Board Racial/Ethnic Diversity
 
We believe that companies have a responsibility to effectively manage and disclose risks
and opportunities related to racial and ethnic diversity. If a company in the S&P 500 does
not disclose, at minimum, the gender, racial and ethnic composition of its board, we may
vote against the Chair of the nominating committee. We may withhold support from the
Chair of the nominating committee also when a company in the S&P 500 does not have at
least one director from an underrepresented community on its board.
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Workforce Diversity
 
We may vote against the Chair of the compensation committee at companies in the S&P
500 that do not disclose their EEO-1 reports. Acceptable disclosures include:
 
The original EEO-1 report response
 
The exact content of the report translated into custom graphics
 
Director Time Commitments
 
When voting on the election or re-election of a director, we also consider the number of
outside board directorships a non-executive and an executive may undertake. Thus, State
Street Global Advisors may take voting action against a director who exceeds the number
of board mandates listed below:
 
Named Executive Officers (NEOs) of a public company who sit on more than two
public company boards
 
Non-executive board chairs or lead independent directors who sit on more than three
public company boards
 
Director nominees who sit on more than four public company boards
 
For non-executive board chairs/lead independent directors and director nominees who hold
excessive commitments, as defined above, we may consider waiving our policy and vote in
support of a director if a company discloses its director commitment policy in a publicly
available manner (e.g., corporate governance guidelines, proxy statement, company
website). This policy or associated disclosure must include:
 
A numerical limit on public company board seats a director can serve on
 
This limit cannot exceed our policy by more than one seat
 
Consideration of public company board leadership positions (e.g., Committee Chair)
 
Affirmation that all directors are currently compliant with the company policy
 
Description of an annual policy review process undertaken by the Nominating
Committee to evaluate outside director time commitments
 
If a director is imminently leaving a board and this departure is disclosed in a written,
time-bound and publicly-available manner, we may consider waiving our withhold vote
when evaluating the director for excessive time commitments.
 
Service on a mutual fund board, the board of a UK investment trust or a Special Purpose
Acquisition Company (SPAC) board is not considered when evaluating directors for
excessive commitments. However, we do expect these roles to be considered by
nominating committees when evaluating director time commitments.
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Incorporating R-Factor™ into Director Votes
 
R-Factor™ is a scoring system created by State Street Global Advisors that measures the
performance of a company's business operations and governance as it relates to
financially material ESG factors facing the company's industry. R-Factor™ encourages
companies to manage and disclose material, industry-specific ESG risks and
opportunities, thereby reducing investment risk across our own portfolio and the broader
market. State Street Global Advisors may take voting action against the senior
independent board leader at companies on the S&P 500 that are R-Factor™ laggards1 and
momentum underperformers2 and cannot articulate how they plan to improve their score.
 
Climate-related Disclosure
 
We believe climate change poses a systemic risk to all companies in our portfolio.
 
State Street Global Advisors has publicly supported the global regulatory efforts to
establish a mandatory baseline of climate risk disclosures for all companies. Until these
consistent disclosure standards are established, we find that the recommendations of the
Taskforce on Climate-related Financial Disclosures (TCFD) provide the most effective
framework by which companies can develop strategies to plan for climate-related risks and
make their businesses more resilient to the impacts of climate change.
 
As such, we may vote against the independent board leader at companies in the S&P 500
and S&P/TSX Composite that fail to provide sufficient disclosure in accordance with the
TCFD framework, including:
 
Board oversight of climate-related risks and opportunities
 
Total Scope 1 and Scope 2 greenhouse gas emissions
 
Targets for reducing greenhouse gas emissions
 
Director-Related Proposals
 
We generally vote for the following director-related proposals:
 
Discharge of board members' duties, in the absence of pending litigation, regulatory
investigation, charges of fraud, or other indications of significant concern
 
Proposals to restore shareholders' ability in order to remove directors with or without
cause
 
Proposals that permit shareholders to elect directors to fill board vacancies
 
Shareholder proposals seeking disclosure regarding the company, board, or
compensation committee's use of compensation consultants, such as company name,
business relationship(s), and fees paid
 
We generally vote against the following director-related proposals:
 
Requirements that candidates for directorships own large amounts of stock before
being eligible to be elected
 
Proposals that relate to the transaction of other business as properly comes before
the meeting, which extend blank check powers to those acting as proxy

1
Bottom 10 percent of scores relative to industry peers.
2
Have consistently underperformed their peers over the last two years; bottom 30 percent of scores relative to industry peers.
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Proposals requiring two candidates per board seat
 
Majority Voting
 
We will generally support a majority vote standard based on votes cast for the election of
directors.
 
We will generally vote to support amendments to bylaws that would require simple majority
of voting shares (i.e. shares cast) to pass or to repeal certain provisions.
 
Annual Elections
 
We generally support the establishment of annual elections of the board of directors.
Consideration is given to the overall level of board independence and the independence of
the key committees, as well as the existence of a shareholder rights plan.
 
Cumulative Voting
 
We do not support cumulative voting structures for the election of directors.
 
Separation Chair/CEO
 
We analyze proposals for the separation of Chair/CEO on a case-by-case basis taking into
consideration numerous factors, including the appointment of and role played by a lead
director, a company's performance, and the overall governance structure of the company.
 
However, we may take voting action against the chair or members of the nominating
committee at S&P 500 companies that have combined the roles of chair and CEO and
have not appointed a lead independent director.
 
Proxy Access
 
In general, we believe that proxy access is a fundamental right and an accountability
mechanism for all long-term shareholders. We will consider proposals relating to proxy
access on a case-by-case basis. We will support shareholder proposals that set
parameters to empower long-term shareholders while providing management the flexibility
to design a process that is appropriate for the company's circumstances.
 
We will review the terms of all other proposals and will support those proposals that have
been introduced in the spirit of enhancing shareholder rights.
 
Considerations include the following:
 
The ownership thresholds and holding duration proposed in the resolution
 
The binding nature of the proposal
 
The number of directors that shareholders may be able to nominate each year
 
Company governance structure
 
Shareholder rights
 
Board performance
 
Age/Term Limits
 
Generally, we will vote against age and term limits unless the company is found to have
poor board refreshment and director succession practices, and has a preponderance of
non-executive directors with excessively long tenures serving on the board.
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Approve Remuneration of Directors
 
Generally, we will support directors' compensation, provided the amounts are not
excessive relative to other issuers in the market or industry. In making our determination,
we review whether the compensation is overly dilutive to existing shareholders.
 
Indemnification
 
Generally, we support proposals to limit directors' liability and/or expand indemnification
and liability protection if he or she has not acted in bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his or her office.
 
Classified Boards
 
We generally support annual elections for the board of directors.
 
Confidential Voting
 
We will support confidential voting.
 
Board Size
 
We will support proposals seeking to fix the board size or designate a range for the board
size and will vote against proposals that give management the ability to alter the size of the
board outside of a specified range without shareholder approval.
 
Board Responsiveness
 
We may vote against the re-election of members of the compensation committee if we
have serious concerns about remuneration practices and if the company has not been
responsive to shareholder pressure to review its approach. In addition, if the level of
dissent against a management proposal on executive pay is consistently high, and we
have determined that a vote against a pay-related proposal is warranted in the third
consecutive year, we may vote against the Chair of the compensation committee.
 
 
Audit-Related Issues
Ratifying Auditors and Approving Auditor Compensation
 
We support the approval of auditors and auditor compensation provided that the issuer
has properly disclosed audit and non-audit fees relative to market practice and the audit
fees are not deemed excessive. We deem audit fees to be excessive if the non-audit fees
for the prior year constituted 50 percent or more of the total fees paid to the auditor. We will
also support the disclosure of auditor and consulting relationships when the same or
related entities are conducting both activities and will support the establishment of a
selection committee responsible for the final approval of significant management
consultant contract awards where existing firms are already acting in an auditing function.
 
In circumstances where other fees include fees related to initial public offerings,
bankruptcy emergence, and spin-offs, and the company makes public disclosure of the
amount and nature of those fees which are determined to be an exception to the standard
non-audit fee category, then such fees may be excluded from the non-audit fees
considered in determining the ratio of non-audit to audit/audit-related fees/tax compliance
and preparation for purposes of determining whether non-audit fees are excessive.
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We will support the discharge of auditors and requirements that auditors attend the annual
meeting of shareholders.3
 
Approval of Financial Statements
 
The disclosure and availability of reliable financial statements in a timely manner is
imperative for the investment process. We expect external auditors to provide assurance of
a company's financial condition. Hence, we will vote against the approval of financial
statements if i) they have not been disclosed or audited; ii) the auditor opinion is qualified/
adverse, or the auditor has issued a disclaimer of opinion; or iii) the auditor opinion is not
disclosed.
 
 
Capital-Related Issues
Capital structure proposals include requests by management for approval of amendments
to the certificate of incorporation that will alter the capital structure of the company.
 
The most common request is for an increase in the number of authorized shares of
common stock, usually in conjunction with a stock split or dividend. Typically, we support
requests that are not unreasonably dilutive or enhance the rights of common shareholders.
In considering authorized share proposals, the typical threshold for approval is 100 percent
over current authorized shares. However, the threshold may be increased if the company
offers a specific need or purpose (merger, stock splits, growth purposes, etc.). All
proposals are evaluated on a case-by-case basis taking into account the company's
specific financial situation.
 
Increase in Authorized Common Shares
 
In general, we support share increases for general corporate purposes up to 100 percent
of current authorized stock.
 
We support increases for specific corporate purposes up to 100 percent of the specific
need plus 50 percent of current authorized common stock for US and Canadian firms.
 
When applying the thresholds, we will also consider the nature of the specific need, such
as mergers and acquisitions and stock splits.
 
Increase in Authorized Preferred Shares
 
We vote on a case-by-case basis on proposals to increase the number of preferred
shares.
 
Generally, we will vote for the authorization of preferred stock in cases where the company
specifies the voting, dividend, conversion, and other rights of such stock and the terms of
the preferred stock appear reasonable.
 
We will support proposals to create declawed blank check preferred stock (stock that
cannot be used as a takeover defense). However, we will vote against proposals to
increase the number of blank check preferred stock authorized for issuance when no
shares have been issued or reserved for a specific purpose.

3
Common for non-US issuers; request from the issuer to discharge from liability the directors or auditors with respect to actions taken by them during the previous year.
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Unequal Voting Rights
 
We will not support proposals authorizing the creation of new classes of common stock
with superior voting rights and will vote against new classes of preferred stock with
unspecified voting, conversion, dividend distribution, and other rights. In addition, we will
not support capitalization changes that add blank check classes of stock (i.e. classes of
stock with undefined voting rights) or classes that dilute the voting interests of existing
shareholders.
 
However, we will support capitalization changes that eliminate other classes of stock and/
or unequal voting rights.
 
 
Mergers and Acquisitions
Mergers or the reorganization of the structure of a company often involve proposals
relating to reincorporation, restructurings, liquidations, and other major changes to the
corporation.
 
Proposals that are in the best interests of the shareholders, demonstrated by enhancing
share value or improving the effectiveness of the company's operations, will be supported.
 
In general, provisions that are not viewed as economically sound or are thought to be
destructive to shareholders' rights are not supported.
 
We will generally support transactions that maximize shareholder value. Some of the
considerations include the following:
 
Offer premium
 
Strategic rationale
 
Board oversight of the process for the recommended transaction, including, director
and/or management conflicts of interest
 
Offers made at a premium and where there are no other higher bidders
 
Offers in which the secondary market price is substantially lower than the net asset
value
 
We may vote against a transaction considering the following:
 
Offers with potentially damaging consequences for minority shareholders because of
illiquid stock, especially in some non-US markets
 
Offers where we believe there is a reasonable prospect for an enhanced bid or other
bidders
 
The current market price of the security exceeds the bid price at the time of voting
 
 
Anti–Takeover Issues
Typically, these are proposals relating to requests by management to amend the certificate
of incorporation or bylaws to add or to delete a provision that is deemed to have an
anti-takeover effect. The majority of these proposals deal with management's attempt to
add some provision that makes a hostile takeover more difficult or will protect incumbent
management in the event of a change in control of the company.
 
Proposals that reduce shareholders' rights or have the effect of entrenching incumbent
management will not be supported.
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Proposals that enhance the right of shareholders to make their own choices as to the
desirability of a merger or other proposal are supported.
 
Shareholder Rights Plans
 
US We will support mandates requiring shareholder approval of a shareholder rights plans
(poison pill) and repeals of various anti-takeover related provisions.
 
In general, we will vote against the adoption or renewal of a US issuer's shareholder rights
plan (poison pill).
 
We will vote for an amendment to a shareholder rights plan (poison pill) where the terms
of the new plans are more favorable to shareholders' ability to accept unsolicited offers
(i.e. if one of the following conditions are met: (i) minimum trigger, flip-in or flip-over of 20
percent, (ii) maximum term of three years, (iii) no dead hand, slow hand, no hand
nor similar feature that limits the ability of a future board to redeem the pill, and (iv)
inclusion of a shareholder redemption feature (qualifying offer clause), permitting ten
percent of the shares to call a special meeting or seek a written consent to vote on
rescinding the pill if the board refuses to redeem the pill 90 days after a qualifying offer is
announced).
 
Canada We analyze proposals for shareholder approval of a shareholder rights plan
(poison pill) on a case-by-case basis taking into consideration numerous factors,
including but not limited to, whether it conforms to ‘new generation' rights plans and the
scope of the plan.
 
Special Meetings
 
We will vote for shareholder proposals related to special meetings at companies that do
not provide shareholders the right to call for a special meeting in their bylaws if:
 
The company also does not allow shareholders to act by written consent
 
The company allows shareholders to act by written consent but the ownership
threshold for acting by written consent is set above 25 percent of outstanding shares
 
We will vote for shareholder proposals related to special meetings at companies that give
shareholders (with a minimum 10 percent ownership threshold) the right to call for a
special meeting in their bylaws if:
 
The current ownership threshold to call for a special meeting is above 25 percent of
outstanding shares
 
We will vote for management proposals related to special meetings.
 
Written Consent
 
We will vote for shareholder proposals on written consent at companies if:
 
The company does not have provisions in their bylaws giving shareholders the right to
call for a special meeting
 
The company allows shareholders the right to call for a special meeting, but the
current ownership threshold to call for a special meeting is above 25 percent of
outstanding shares
 
The company has a poor governance profile
 
We will vote management proposals on written consent on a case-by-case basis.
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Super–Majority
 
We will generally vote against amendments to bylaws requiring super-majority shareholder
votes to pass or repeal certain provisions. We will vote for the reduction or elimination of
super-majority vote requirements, unless management of the issuer was concurrently
seeking to or had previously made such a reduction or elimination.
 
 
Remuneration Issues
Despite the differences among the types of plans and the awards possible there is a
simple underlying philosophy that guides the analysis of all compensation plans; namely,
the terms of the plan should be designed to provide an incentive for executives and/or
employees to align their interests with those of the shareholders and thus work toward
enhancing shareholder value. Plans that benefit participants only when the shareholders
also benefit are those most likely to be supported.
 
Advisory Vote on Executive Compensation and Frequency
 
State Street Global Advisors believes executive compensation plays a critical role in
aligning executives' interest with shareholders', attracting, retaining and incentivizing key
talent, and ensuring positive correlation between the performance achieved by
management and the benefits derived by shareholders. We support management
proposals on executive compensation where there is a strong relationship between
executive pay and performance over a five-year period. We seek adequate disclosure of
various compensation elements, absolute and relative pay levels, peer selection and
benchmarking, the mix of long-term and short-term incentives, alignment of pay structures
with shareholder interests as well as with corporate strategy, and performance. Further
shareholders should have the opportunity to assess whether pay structures and levels are
aligned with business performance on an annual basis.
 
In Canada, where advisory votes on executive compensation are not commonplace, we will
rely primarily upon engagement to evaluate compensation plans.
 
Employee Equity Award Plans
 
We consider numerous criteria when examining equity award proposals. Generally we do
not vote against plans for lack of performance or vesting criteria. Rather the main criteria
that will result in a vote against an equity award plan are:
 
Excessive voting power dilution To assess the dilutive effect, we divide the number of
shares required to fully fund the proposed plan, the number of authorized but unissued
shares and the issued but unexercised shares by the fully diluted share count. We review
that number in light of certain factors, such as the industry of the issuer.
 
Historical option grants Excessive historical option grants over the past three years.
Plans that provide for historical grant patterns of greater than five to eight percent are
generally not supported.
 
Repricing We will vote against any plan where repricing is expressly permitted. If a
company has a history of repricing underwater options, the plan will not be supported.
 
Other criteria include the following:
 
Number of participants or eligible employees
 
The variety of awards possible
 
The period of time covered by the plan
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There are numerous factors that we view as negative. If combined they may result in a
vote against a proposal. Factors include:
 
Grants to individuals or very small groups of participants
 
Gun-jumping grants which anticipate shareholder approval of a plan or amendment
 
The power of the board to exchange underwater options without shareholder
approval. This pertains to the ability of a company to reprice options, not the actual act
of repricing described above
 
Below market rate loans to officers to exercise their options
 
The ability to grant options at less than fair market value;
 
Acceleration of vesting automatically upon a change in control
 
Excessive compensation (i.e. compensation plans which we deem to be overly
dilutive)
 
Share Repurchases If a company makes a clear connection between a share repurchase
program and its intent to offset dilution created from option plans and the company fully
discloses the amount of shares being repurchased, the voting dilution calculation may be
adjusted to account for the impact of the buy back.
 
Companies will not have any such repurchase plan factored into the dilution calculation if
they do not (i) clearly state the intentions of any proposed share buy-back plan, (ii)
disclose a definitive number of the shares to be bought back, (iii) specify the range of
premium/discount to market price at which a company can repurchase shares, and (iv)
disclose the time frame during which the shares will be bought back.
 
162(m) Plan Amendments If a plan would not normally meet our criteria described above,
but was primarily amended to add specific performance criteria to be used with awards
that were designed to qualify for performance-based exception from the tax deductibility
limitations of Section 162(m) of the Internal Revenue Code, then we will support the
proposal to amend the plan.
 
Employee Stock Option Plans
 
We generally vote for stock purchase plans with an exercise price of not less than 85
percent of fair market value. However, we take market practice into consideration.
 
Compensation-Related Items
 
We generally support the following proposals:
 
Expansions to reporting of financial or compensation-related information within reason
 
Proposals requiring the disclosure of executive retirement benefits if the issuer does
not have an independent compensation committee
 
We generally vote against the following proposal:
 
Retirement bonuses for non-executive directors and auditors
 
 
Miscellaneous/Routine
Items
We generally support the following miscellaneous/routine governance items:
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Reimbursement of all appropriate proxy solicitation expenses associated with the
election when voting in conjunction with support of a dissident slate
 
Opting-out of business combination provision
 
Proposals that remove restrictions on the right of shareholders to act independently of
management
 
Liquidation of the company if the company will file for bankruptcy if the proposal is not
approved
 
Shareholder proposals to put option repricings to a shareholder vote
 
General updating of, or corrective amendments to, charter and bylaws not otherwise
specifically addressed herein, unless such amendments would reasonably be
expected to diminish shareholder rights (e.g. extension of directors' term limits,
amending shareholder vote requirement to amend the charter documents, insufficient
information provided as to the reason behind the amendment)
 
Change in corporation name
 
Mandates that amendments to bylaws or charters have shareholder approval
 
Management proposals to change the date, time, and/or location of the annual
meeting unless the proposed change is unreasonable
 
Repeals, prohibitions or adoption of anti-greenmail provisions
 
Management proposals to implement a reverse stock split when the number of
authorized shares will be proportionately reduced and proposals to implement a
reverse stock split to avoid delisting
 
Exclusive forum provisions
 
State Street Global Advisors generally does not support the following miscellaneous/
routine governance items:
 
Proposals requesting companies to adopt full tenure holding periods for their
executives
 
Reincorporation to a location that we believe has more negative attributes than its
current location of incorporation
 
Shareholder proposals to change the date, time, and/or location of the annual meeting
unless the current scheduling or location is unreasonable
 
Proposals to approve other business when it appears as a voting item
 
Proposals giving the board exclusive authority to amend the bylaws
 
Proposals to reduce quorum requirements for shareholder meetings below a majority
of the shares outstanding unless there are compelling reasons to support the proposal
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Environmental and Social
Issues
As a fiduciary, State Street Global Advisors takes a comprehensive approach to engaging
with our portfolio companies about material environmental and social (sustainability)
issues. We use our voice and our vote through engagement, proxy voting, and thought
leadership in order to communicate with issuers and educate market participants about
our perspective on important sustainability topics. Our Asset Stewardship program
prioritization process allows us to proactively identify companies for engagement and
voting in order to mitigate sustainability risks in our portfolio. Through engagement, we
address a broad range of topics that align with our stewardship priorities and build
long-term relationships with issuers. When voting, we fundamentally consider whether the
adoption of a shareholder proposal addressing a material sustainability issue would
promote long-term shareholder value in the context of the company's existing practices
and disclosures as well as existing market practice.
 
For more information on our approach to environmental and social issues, please see our
Global Proxy Voting and Engagement Guidelines for Environmental and Social Issues and
our Frameworks for Voting Environmental and Social Shareholder Proposals, both
available at ssga.com/about-us/asset-stewardship.html.
 
 
More Information
Any client who wishes to receive information on how its proxies were voted should contact
its State Street Global Advisors relationship manager.
 
 
About State Street Global
Advisors
For four decades, State Street Global Advisors has served the world's governments,
institutions and financial advisors. With a rigorous, risk-aware approach built on research,
analysis and market-tested experience, we build from a breadth of active and index
strategies to create cost-effective solutions. As stewards, we help portfolio companies see
that what is fair for people and sustainable for the planet can deliver long-term
performance. And, as pioneers in index, ETF, and ESG investing, we are always inventing
new ways to invest. As a result, we have become the world's fourth-largest asset manager*
with US $4.14 trillion† under our care.

*
Pensions & Investments Research Center, as of December 31, 2020.
This figure is presented as of December 31, 2021 and includes approximately $61.43 billion of assets with respect to SPDR products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated.


ssga.com
State Street Global Advisors Worldwide Entities
Australia: State Street Global Advisors, Australia, Limited (ABN 42 003 914 225) is the holder of an Australian Financial Services Licence (AFSL Number 238276). Registered Office: Level 17, 420 George Street, Sydney, NSW 2000, Australia. T: +612 9240 7600. F: +612 9240 7611.
Belgium: State Street Global Advisors Belgium, Chausse de La Hulpe 120, 1000 Brussels, Belgium. T: +32 2 663 2036, F: +32 2 672 2077. SSGA Belgium is a branch office of State Street Global Advisors Limited. State Street Global Advisors Limited is authorised and regulated by the Financial Conduct Authority in the United Kingdom. Canada: State Street Global Advisors, Ltd., 770 Sherbrooke Street West, Suite
1200 Montreal, Quebec, H3A 1G1, T: +514 282 2400 and 30 Adelaide Street East Suite 500, Toronto, Ontario M5C 3G6. T: +647 775 5900. Dubai: State Street Bank and Trust Company (Representative Office), Boulevard Plaza 1, 17th Floor, Office 1703 Near Dubai Mall & Burj Khalifa, P.O Box 26838, Dubai, United Arab Emirates. T: +971 (0)4 4372800. F: +971 (0)4 4372818. France: State Street Global
Advisors France. Authorised and regulated by the Autorité des Marchés Financiers. Registered with the Register of Commerce and Companies of Nanterre under the number: 412 052 680. Registered Office: Immeuble Défense Plaza, 23-25 rue Delarivière-Lefoullon, 92064 Paris La Défense Cedex, France. T: +33 1 44 45 40 00. F: +33 1 44 45 41 92. Germany: State Street Global Advisors GmbH, Brienner Strasse
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59, D-80333 Munich. T: +49 (0)89 55878 100. F: +49 (0)89 55878 440. Hong Kong: State Street Global Advisors Asia Limited, 68/F, Two International Finance Centre, 8 Finance Street, Central, Hong Kong. T: +852 2103 0288. F: +852 2103 0200. Ireland: State Street Global Advisors Ireland Limited is regulated by the Central Bank of Ireland. Incorporated and registered in Ireland at Two Park Place, Upper Hatch Street, Dublin 2. Registered Number: 145221. Member of the Irish Association of Investment Managers. T: +353 (0)1 776 3000. F: +353 (0)1 776 3300. Italy: State Street Global Advisors Limited, Milan Branch (Sede Secondaria di Milano) is a branch of State Street Global Advisors Limited, a company registered in the UK, authorised and regulated by the Financial Conduct Authority (FCA ), with a
capital of GBP 71'650'000.00, and whose registered office is at 20 Churchill Place, London E14 5HJ. State Street Global Advisors Limited, Milan Branch (Sede Secondaria di Milano), is registered in Italy with company number 06353340968 - R.E.A. 1887090 and VAT number 06353340968 and whose office is at Via dei Bossi, 4 -20121 Milano, Italy. T: 39 02 32066 100. F: 39 02 32066 155. Japan: State Street Global Advisors (Japan) Co., Ltd., 9-7-1 Akasaka, Minato-ku, Tokyo 107-6239. T: +813 4530 7380. Financial Instruments Business Operator, Kanto Local Financial Bureau (Kinsho #345). Japan Investment Advisers Association, Investment Trusts Association Japan, Japan Securities Dealers Association. Netherlands: State Street Global Advisors Netherlands, Adam Smith
Building, Thomas Malthusstraat 1-3, 1066 JR Amsterdam, Netherlands. T: +31 (0)20 7181701. State Street Global Advisors Netherlands is a branch office of State Street Global Advisors Limited. State Street Global Advisors Limited is authorised and regulated by the Financial Conduct Authority in the United Kingdom. Singapore: State Street Global Advisors Singapore Limited, 168, Robinson Road, #33-01 Capital Tower, Singapore 068912 (Company Registered Number: 200002719D). T: +65 6826 7500. F: +65 6826 7501. Switzerland: State Street Global Advisors AG, Beethovenstr. 19, CH-8027 Zurich. T: +41 (0)44 245 70 00. F: +41 (0)44 245 70 16. United Kingdom: State Street Global Advisors Limited. Authorised and regulated by the Financial Conduct Authority.
Registered in England. Registered Number: 2509928. VAT Number: 5776591 81. Registered Office: 20 Churchill Place, Canary Wharf, London, E14 5HJ. T: +020 3395 6000. F: +020 3395 6350. United States: State Street Global Advisors, One Lincoln Street, Boston, MA 02111-2900. T: +617 786 3000.
The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without State Street Global Advisors' express written consent.
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March 2022
 
United Kingdom and Ireland
 
Proxy Voting and
Engagement Guidelines
 
State Street Global Advisors' United Kingdom and
Ireland Proxy Voting and Engagement Guidelinesi
outline our expectations of companies listed on stock
exchanges in the United Kingdom and Ireland. These
Guidelines complement and should be read in
conjunction with State Street Global Advisors' Global
Proxy Voting and Engagement Principles, which provide
a detailed explanation of our approach to voting and
engaging with companies, and State Street Global
Advisors' Conflict Mitigation Guidelines.
 
 

i
These Proxy Voting and Engagement Guidelines are also applicable to SSGA Funds Management, Inc. SSGA Funds Management, Inc. is an SEC-registered investment adviser. SSGA Funds Management, Inc., State Street Global Advisors Trust Company, and other advisory affiliates of State Street make up State Street Global Advisors, the investment management arm of State Street Corporation.
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State Street Global Advisors' United Kingdom (UK) and Ireland Proxy Voting and
Engagement Guidelines address areas including board structure, audit-related issues,
capital structure, remuneration, environmental, social and other governance-related issues.
 
When voting and engaging with companies in global markets, we consider market specific
nuances in the manner that we believe will most likely protect and promote the long-term
economic value of client investments. We expect companies to observe the relevant laws
and regulations of their respective markets, as well as country-specific best practice
guidelines and corporate governance codes. When we identify that a country's regulatory
requirements do not address some of the key philosophical principles that we believe are
fundamental to our global voting guidelines, we may hold companies in such markets to
our global standards.
 
In our analysis and research into corporate governance issues in the UK and Ireland, we
expect all companies that obtain a primary listing on the London Stock Exchange or the
Irish Stock Exchange, regardless of domicile, to comply with the UK Corporate
Governance Code, and proactively monitor companies' adherence to the Code. Consistent
with the ‘comply or explain' expectations established by the Code, we encourage
companies to proactively disclose their level of compliance with the Code. In instances of
non-compliance in which companies cannot explain the nuances of their governance
structure effectively, either publicly or through engagement, we may vote against the
independent board leader.
 
 
State Street Global
Advisors' Proxy Voting
and Engagement
Philosophy
In our view, corporate governance and sustainability issues are an integral part of the
investment process. The Asset Stewardship Team consists of investment professionals
with expertise in corporate governance and company law, remuneration, accounting, and
environmental and social issues. We have established robust corporate governance
principles and practices that are backed with extensive analytical expertise to understand
the complexities of the corporate governance landscape. We engage with companies to
provide insight on the principles and practices that drive our voting decisions. We also
conduct proactive engagement to address significant shareholder concerns and
environmental, social and governance (ESG) issues in a manner consistent with
maximizing shareholder value.
 
The team works alongside members of State Street Global Advisors' Active Fundamental
and Europe, Middle East and Africa (EMEA) Investment teams. We collaborate on issuer
engagements and provide input on company specific fundamentals. We are also a member
of various investor associations that seek to address broader corporate governance
related policy issues in the UK and European markets.
 
State Street Global Advisors is a signatory to the United Nations Principles for
Responsible Investment (UNPRI) and is compliant with the UK Stewardship Code. We
are committed to sustainable investing, and are working to further integrate ESG principles
into investment and corporate governance practice where applicable and consistent with
our fiduciary duty.
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Directors and Boards
Principally, we believe the primary responsibility of a board of directors is to preserve and
enhance shareholder value and to protect shareholder interests. In order to carry out their
primary responsibilities, directors have to undertake activities that range from setting
strategy, overseeing executive management, and monitoring the risks that arise from a
company's business, including risks related to sustainability issues. Further, good
corporate governance necessitates the existence of effective internal controls and risk
management systems, which should be governed by the board.
 
We believe that a well constituted board of directors, with a balance of skills, expertise and
independence, provides the foundations for a well governed company. We view board
quality as a measure of director independence, director succession planning, board
diversity, evaluations and refreshment, and company governance practices. We vote for the
(re-)election of directors on a case-by-case basis after considering various factors,
including board quality, general market practice, and availability of information on director
skills and expertise. In principle, we believe independent directors are crucial to robust
corporate governance and help management establish sound corporate governance
policies and practices. A sufficiently independent board will most effectively monitor
management and perform oversight functions necessary to protect shareholder interests.
 
Our broad criteria for director independence for UK companies include factors such as:
 
Participation in related-party transactions and other business relations with the
company
 
Employment history with company
 
Excessive tenure and a preponderance of long-tenured directors
 
Relations with controlling shareholders
 
Family ties with any of the company's advisers, directors or senior employees
 
Company classification of a director as non-independent
 
When voting on the election or re-election of a director, we also consider the number of
outside board directorships a non-executive and an executive may undertake. Thus, we
may withhold votes from board chairs and lead independent directors who sit on more than
three public company boards, and from non-executive directors who hold more than four
public company board mandates. We may also take voting action against Named
Executive Officers who undertake more than two public board memberships. Service on a
mutual fund board or a UK investment trust is not considered when evaluating directors for
excessive commitments.
 
We also consider attendance at board meetings and may withhold votes from directors
who attend less than 75 percent of board meetings in a given year without appropriate
explanation or providing reason for their failure to meet the attendance threshold. In
addition, we monitor other factors that may influence the independence of a non-executive
director, such as performance-related pay, cross-directorships and significant
shareholdings.
 
We support the annual election of directors.
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While we are generally supportive of having the roles of chair and CEO separated in the
UK market, we assess the division of responsibilities between chair and CEO on a
case-by-case basis, giving consideration to factors such as the company's specific
circumstances, overall level of independence on the board and general corporate
governance standards in the company. Similarly, we monitor for circumstances in which a
combined chair/CEO is appointed or a former CEO becomes chair.
 
We may also consider factors such as board performance and directors who appear to be
remiss in the performance of their oversight responsibilities when considering their
suitability for reappointment (e.g. fraud, criminal wrongdoing and breach of fiduciary
responsibilities).
 
We believe companies should have committees for audit, remuneration and nomination
oversight. The audit committee is responsible for monitoring the integrity of the financial
statements of the company, the appointment of external auditors, auditor qualifications
and independence, and effectiveness and resource levels. Similarly, executive pay is an
important aspect of corporate governance, and it should be determined by the board of
directors. We expect companies to have remuneration committees to provide independent
oversight over executive pay. We will vote against nominees who are executive members of
audit or remuneration committees.
 
We consider whether board members have adequate skills to provide effective oversight of
corporate strategy, operations and risks, including environmental and social issues. Boards
should also have a regular evaluation process in place to assess the effectiveness of the
board and the skills of board members to address issues such as emerging risks, changes
to corporate strategy, and diversification of operations and geographic footprint. The
nomination committee is responsible for evaluating and reviewing the balance of skills,
knowledge, and experience of the board. It also ensures that adequate succession plans
are in place for directors and the CEO. We may vote against the re-election of members of
the nomination committee if, over time, the board has failed to address concerns over
board structure or succession.
 
Poorly structured executive compensation plans pose increasing reputational risk to
companies. Ongoing high level of dissent against a company's compensation proposals
may indicate that the company is not receptive to investor concerns. If the level of dissent
against a company's remuneration report and/or remuneration policy is consistently high,
and we have determined that a vote against a pay-related proposal is warranted in the
third consecutive year, we will vote against the Chair of the remuneration committee.
 
Board Gender Diversity
 
We expect boards of all listed companies to have at least one female board member. If a
company fails to meet this expectation, State Street Global Advisors may vote against the
chair of the board's nominating committee or the board leader in the absence of a
nominating committee, if necessary. Additionally, if a company fails to meet this
expectation for three consecutive years, State Street Global Advisors may vote against all
incumbent members of the nominating committee.
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Board Racial/Ethnic Diversity
 
We believe that companies have a responsibility to effectively manage and disclose risks
and opportunities related to racial and ethnic diversity. If a company in the FTSE 100 does
not disclose, at minimum, the gender, racial and ethnic composition of its board, we will
vote against the Chair of the nominating committee. We may withhold support from the
Chair of the nominating committee also when a company in the FTSE 100 does not have
at least one director from an underrepresented community on its board.
 
Director Time Commitments
 
When voting on the election or re-election of a director, we also consider the number of
outside board directorships a non-executive and an executive may undertake. Thus, State
Street Global Advisors may take voting action against a director who exceeds the number
of board mandates listed below:
 
Named Executive Officers (NEOs) of a public company who sit on more than two
public company boards
 
Non-executive board chairs or lead independent directors who sit on more than three
public company boards
 
Director nominees who sit on more than four public company boards
 
For non-executive board chairs/lead independent directors and director nominees who hold
excessive commitments, as defined above, we may consider waiving our policy and vote in
support of a director if a company discloses its director commitment policy in a publicly
available manner (e.g., corporate governance guidelines, proxy statement, company
website). This policy or associated disclosure must include:
 
A numerical limit on public company board seats a director can serve on
 
This limit cannot exceed our policy by more than one seat
 
Consideration of public company board leadership positions (e.g., Committee Chair)
 
Affirmation that all directors are currently compliant with the company policy
 
Description of an annual policy review process undertaken by the Nominating
Committee to evaluate outside director time commitments
 
If a director is imminently leaving a board and this departure is disclosed in a written,
time-bound and publicly-available manner, we may consider waiving our withhold vote
when evaluating the director for excessive time commitments.
 
Service on a mutual fund board, the board of a UK investment trust or a Special Purpose
Acquisition Company (SPAC) board is not considered when evaluating directors for
excessive commitments. However, we do expect these roles to be considered by
nominating committees when evaluating director time commitments.
 
Incorporating R-FactorTM into Director Votes
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R-FactorTM is a scoring system created by State Street Global Advisors that measures the
performance of a company's business operations and governance as it relates to
financially material ESG factors facing the company's industry. R-FactorTM encourages
companies to manage and disclose material, industry-specific ESG risks and
opportunities, thereby reducing investment risk across our own portfolio and the broader
market. State Street Global Advisors may take voting action against the independent board
leader at companies listed on the FTSE 350 that are R-FactorTM laggards1 and momentum
underperformers2 and cannot articulate how they plan to improve their score.
 
Climate-related Disclosure
 
We believe climate change poses a systemic risk to all companies in our portfolio.
 
State Street Global Advisors has publicly supported the global regulatory efforts to
establish a mandatory baseline of climate risk disclosures for all companies. Until these
consistent disclosure standards are established, we find that the recommendations of the
Taskforce on Climate-related Financial Disclosures (TCFD) provide the most effective
framework by which companies can develop strategies to plan for climate-related risks and
make their businesses more resilient to the impacts of climate change.
 
As such, we may vote against the independent board leader at companies in the FTSE
350 that fail to provide sufficient disclosure in accordance with the TCFD framework,
including:
 
Board oversight of climate-related risks and opportunities
 
Total Scope 1 and Scope 2 greenhouse gas emissions
 
Targets for reducing greenhouse gas emissions
 
Indemnification and Limitations on Liability
 
Generally, we support proposals to limit directors' liability and/or expand indemnification
and liability protection up to the limit provided by law. This holds if a director has not acted
in bad faith, gross negligence, nor reckless disregard of the duties involved in the conduct
of his or her office.
 
 
Audit-Related Issues
Companies should have robust internal audit and internal control systems designed for
effective management of any potential and emerging risks to company operations and
strategy. The responsibility of setting out an internal audit function lies with the audit
committee, which should have as members independent non-executive directors.

1
Bottom 10 percent of scores relative to industry peers.
2
Have consistently underperformed their peers over the last two years; bottom 30 percent of scores relative to industry peers.
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Appointment of External Auditors
 
State Street Global Advisors believes that a company's auditor is an essential feature of
an effective and transparent system of external supervision. Shareholders should be given
the opportunity to vote on their appointment or re-appoint at the annual meeting. When
appointing external auditors and approving audit fees, we take into consideration the level
of detail in company disclosures and will generally not support such resolutions if an
adequate breakdown is not provided and if non-audit fees are more than 50% of audit
fees. In addition, we may vote against members of the audit committee if we have
concerns with audit-related issues or if the level of non-audit fees to audit fees is
significant. In certain circumstances, we may consider auditor tenure when evaluating the
audit process.
 
Limit Legal Liability of External Auditors
 
We generally oppose limiting the legal liability of audit firms because we believe this could
create a negative impact on the quality of the audit function.
 
Approval of Financial Statements
 
The disclosure and availability of reliable financial statements in a timely manner is
imperative for the investment process. We expect external auditors to provide assurance of
a company's financial condition. Hence, we will vote against the approval of financial
statements if i) they have not been disclosed or audited; ii) the auditor opinion is qualified/
adverse, or the auditor has issued a disclaimer of opinion; or iii) the auditor opinion is not
disclosed.
 
 
Shareholder Rights and
Capital-Related Issues
Share Issuances
 
The ability to raise capital is critical for companies to carry out strategy, to grow, and to
achieve returns above their cost of capital. The approval of capital raising activities is
essential to shareholders' ability to monitor returns and to ensure capital is deployed
efficiently. We support capital increases that have sound business reasons and are not
excessive relative to a company's existing capital base.
 
Pre-emption rights are a fundamental right for shareholders to protect their investment in a
company. Where companies seek to issue new shares without pre-emption rights, we may
vote against if such authorities are greater than 20% of the issued share capital. We may
also vote against resolutions that seek authority to issue capital with pre-emption rights if
the aggregate amount allowed seems excessive and is not justified by the board.
Generally, we are against capital issuance proposals greater than 100% of the issued
share capital when the proceeds are not intended for a specific purpose.
 
Share Repurchase Programs
 
We generally support a proposal to repurchase shares. However, this is not the case if the
issuer does not clearly state the business purpose for the program, a definitive number of
shares to be repurchased, the range of premium/discount to market price at which a
company can repurchase shares, and the timeframe for the repurchase. We may vote
against share repurchase requests that allow share repurchases during a takeover period.
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Dividends
 
We generally support dividend payouts that constitute 30% or more of net income. We may
vote against the dividend payouts if the dividend payout ratio has been consistently below
30% without adequate explanation or the payout is excessive given the company's
financial position. Particular attention will be paid where the payment may damage the
company's long term financial health.
 
Mergers and Acquisitions
 
Mergers or reorganizing the structure of a company often involve proposals relating to
reincorporation, restructurings, mergers, liquidations, and other major changes to the
corporation. Proposals that are in the best interests of the shareholders, demonstrated by
enhancing share value or improving the effectiveness of the company's operations, will be
supported. In general, provisions that are not viewed as financially sound or are thought to
be destructive to shareholders' rights and are not supported.
 
We will generally support transactions that maximize shareholder value. Some of the
considerations include the following:
 
Offer premium
 
Strategic rationale
 
Board oversight of the process for the recommended transaction, including, director
and/ or management conflicts of interest
 
Offers made at a premium and where there are no other higher bidders
 
Offers in which the secondary market price is substantially lower than the net asset
value
 
We may vote against a transaction considering the following:
 
Offers with potentially damaging consequences for minority shareholders because of
illiquid stock
 
Offers in which we believe there is a reasonable prospect for an enhanced bid or other
bidders
 
The current market price of the security exceeds the bid price at the time of voting
 
Anti-Takeover Measures
 
We oppose anti-takeover defenses such as authorities for the board when subject to a
hostile takeover to issue warrants convertible into shares to existing shareholders.
 
Notice Period to Convene a General Meeting
 
We expect companies to give as much notice as is practicable when calling a general
meeting. Generally, we are not supportive of authorizations seeking to reduce the notice
period to 14 days.
 
 
Remuneration
Executive Pay
 
Despite the differences among the types of plans and awards possible, there is a simple
underlying philosophy that guides our analysis of executive pay: there should be a direct
relationship between remuneration and company performance over the long term.
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Shareholders should have the opportunity to assess whether pay structures and levels are
aligned with business performance. When assessing remuneration policies and reports,
we consider adequate disclosure of various remuneration elements, absolute and relative
pay levels, peer selection and benchmarking, the mix of long-term and short- term
incentives, alignment of pay structures with shareholder interests as well as with corporate
strategy and performance. We may oppose remuneration reports where pay seems
misaligned with shareholders' interests. We may also vote against the re-election of
members of the remuneration committee if we have serious concerns about remuneration
practices or if the company has not been responsive to shareholder concerns.
 
Equity Incentive Plans
 
We may not support proposals on equity-based incentive plans where insufficient
information is provided on matters such as grant limits, performance metrics, performance,
vesting periods, and overall dilution. Generally we do not support options under such plans
being issued at a discount to market price or plans that allow for re-testing of performance
metrics.
 
Non-Executive Director Pay
 
Authorities that seek shareholder approval for non-executive directors' fees are generally
not controversial. We typically support resolutions regarding directors' fees unless
disclosure is poor and we are unable to determine whether they are excessive relative to
fees paid by comparable companies. We will evaluate any non-cash or performance
related pay to non-executive directors on a company- by-company basis.
 
 
Risk Management
State Street Global Advisors believes that risk management is a key function of the board,
which is responsible for setting the overall risk appetite of a company and for providing
oversight of the risk management process established by senior executives at a company.
We allow boards to have discretion over how they provide oversight in this area. We expect
companies to disclose how the board provides oversight on its risk management system
and risk identification. Boards should also review existing and emerging risks as they can
evolve with a changing political and economic landscape or as companies diversify their
operations into new areas.
 
 
Environmental and Social
Issues
As a fiduciary, State Street Global Advisors takes a comprehensive approach to engaging
with our portfolio companies about material environmental and social (sustainability)
issues. We use our voice and our vote through engagement, proxy voting, and thought
leadership in order to communicate with issuers and educate market participants about
our perspective on important sustainability topics. Our Asset Stewardship program
prioritization process allows us to proactively identify companies for engagement and
voting in order to mitigate sustainability risks in our portfolio. Through engagement, we
address a broad range of topics that align with our stewardship priorities and build
long-term relationships with issuers. When voting, we fundamentally consider whether the
adoption of a shareholder proposal addressing a material sustainability issue would
promote long-term shareholder value in the context of the company's existing practices
and disclosures as well as existing market practice.
 
For more information on our approach to environmental and social issues, please see our
Global Proxy Voting and Engagement Guidelines for Environmental and Social Issues and
Frameworks for Voting Environmental and Social Shareholder Proposals, both available at
ssga.com/about-us/asset-stewardship.html.
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More Information
Any client who wishes to receive information on how its proxies were voted should contact
its State Street Global Advisors relationship manager.
 
 
About State Street Global
Advisors
For four decades, State Street Global Advisors has served the world's governments,
institutions and financial advisors. With a rigorous, risk-aware approach built on research,
analysis and market-tested experience, we build from a breadth of active and index
strategies to create cost-effective solutions. As stewards, we help portfolio companies see
that what is fair for people and sustainable for the planet can deliver long-term
performance. And, as pioneers in index, ETF, and ESG investing, we are always inventing
new ways to invest. As a result, we have become the world's fourth-largest asset manager*
with US $4.14 trillion† under our care.

*
Pensions & Investments Research Center, as of December 31, 2020.
This figure is presented as of December 31, 2021 and includes approximately $61.43 billion of assets with respect to SPDR products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated.


ssga.com
State Street Global Advisors Worldwide Entities
Abu Dhabi: State Street Global Advisors Limited, ADGM Branch, Al Khatem Tower, Suite 42801, Level 28, ADGM Square, Al Maryah Island, P.O Box 76404, Abu Dhabi, United Arab Emirates. Regulated by the ADGM Financial Services Regulatory Authority. T: +971 2 245 9000. Australia: State Street Global Advisors, Australia, Limited (ABN 42 003 914 225) is the holder of an Australian Financial Services License (AFSL Number 238276). Registered office: Level 14, 420 George Street, Sydney, NSW 2000, Australia. T: +612 9240-7600. F: +612 9240-7611. Belgium: State Street Global Advisors Belgium, Chaussée de La Hulpe 185, 1170 Brussels, Belgium. T: +32 2 663 2036. State Street Global Advisors Belgium is a branch office of State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorized and regulated by the Central Bank of
Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. Canada: State Street Global Advisors, Ltd., 1981 McGill College Avenue, Suite 500, Montreal, Qc, H3A 3A8, T: +514 282 2400 and 30 Adelaide Street East Suite 800, Toronto, Ontario M5C 3G6. T: +647 775 5900. France: State Street Global Advisors Europe Limited, France Branch (State Street Global Advisors France) is a branch of State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorized and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. State Street Global Advisors France is registered in France with company number RCS Nanterre 899 183 289, and its office is located at Coeur Défense — Tour A — La Défense 4, 33e étage, 100, Esplanade du Général de Gaulle, 92 932 Paris La Défense Cedex, France. T: +33 1 44 45 40 00. F: +33 1 44 45 41 92. Germany: State Street Global Advisors Europe Limited, Branch
in Germany, Brienner Strasse 59, D-80333 Munich, Germany (State Street Global Advisors Germany). T: +49 (0)89 55878 400. State Street Global Advisors Germany is a branch of State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorized and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. Hong Kong: State Street Global Advisors Asia Limited, 68/F, Two International Finance Centre, 8 Finance Street, Central, Hong Kong. T: +852 2103-0288. F: +852 2103-0200. Ireland: State Street Global Advisors Europe Limited is regulated by the Central Bank of Ireland. Registered office address 78 Sir John Rogerson's Quay, Dublin 2. Registered Number: 49934. T: +353 (0)1 776 3000. F: +353 (0)1 776 3300. Italy: State Street Global Advisors Europe Limited, Italy Branch (State Street Global Advisors Italy) is a branch of State Street Global Advisors Europe Limited, registered in Ireland with company
number 49934, authorized and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. State Street Global Advisors Italy is registered in Italy with company number 11871450968 — REA: 2628603 and VAT number 11871450968, and its office is located at Via Ferrante Aporti, 10 -20125 Milan, Italy. T: +39 02 32066 100. F: +39 02 32066 155. Japan: State Street Global Advisors (Japan) Co., Ltd., Toranomon Hills Mori Tower 25F 1-23-1 Toranomon, Minato-ku, Tokyo 105-6325 Japan. T: +81-3-4530-7380. Financial Instruments Business Operator, Kanto Local Financial Bureau (Kinsho #345), Membership: Japan Investment Advisers Association, The Investment Trust Association, Japan, Japan Securities Dealers' Association. Netherlands: State Street Global Advisors Netherlands, Apollo Building 7th floor, Herikerbergweg 29, 1101 CN Amsterdam, Netherlands. T: +31 20 7181 000. State Street Global Advisors Netherlands is a branch office of
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State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorized and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. Singapore: State Street Global Advisors Singapore Limited, 168, Robinson Road, #33-01 Capital Tower, Singapore 068912 (Company Reg. No: 200002719D, regulated by the
Monetary Authority of Singapore). T: +65 6826-7555. F: +65 6826-7501. Switzerland: State Street Global Advisors AG, Beethovenstr. 19, CH-8027 Zurich. Registered with the Register of Commerce Zurich CHE-105.078.458. T: +41 (0)44 245 70 00. F: +41 (0)44 245 70 16. United Kingdom: State Street Global Advisors Limited. Authorized and regulated by the Financial Conduct Authority. Registered in England. Registered
No. 2509928. VAT No. 5776591 81. Registered office: 20 Churchill Place, Canary Wharf, London, E14 5HJ. T: 020 3395 6000. F: 020 3395 6350. United States: State Street Global Advisors, 1 Iron Street, Boston, MA 02210-1641. T: +1 617 786 3000.
The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents
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ID949716-3479919.2.1.GBL.RTL 0322
Exp. Date: 03/31/2023
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March 2022
 
Rest of the World
 
Proxy Voting and
Engagement Guidelines
 
State Street Global Advisors' Rest of the World Proxy
Voting and Engagement Guidelinesi cover different
corporate governance frameworks and practices in
international markets not covered under specific country/
regional guidelines. These Guidelines complement and
should be read in conjunction with State Street Global
Advisors' overarching Global Proxy Voting and
Engagement Principles, which provide a detailed
explanation of our approach to voting and engaging with
companies, and State Street Global Advisors' Conflict
Mitigation Guidelines.
 
 

i
These Proxy Voting and Engagement Guidelines are also applicable to SSGA Funds Management, Inc. SSGA Funds Management, Inc. is an SEC-registered investment adviser. SSGA Funds Management, Inc., State Street Global Advisors Trust Company, and other advisory affiliates of State Street make up State Street Global Advisors, the investment management arm of State Street Corporation.
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At State Street Global Advisors, we recognize that markets not covered under specific
country/regional guidelines, specifically emerging markets, are disparate in their corporate
governance frameworks and practices. While they tend to pose broad common
governance issues across all markets, such as concentrated ownership, poor disclosure of
financial and related-party transactions, and weak enforcement of rules and regulation, our
proxy voting Guidelines are designed to identify and to address specific governance
concerns in each market. We also evaluate the various factors that contribute to the
corporate governance framework of a country. These factors include, but are not limited to:
(i) the macroeconomic conditions and broader political system in a country; (ii) quality of
regulatory oversight, enforcement of property and shareholder rights; and (iii) the
independence of judiciary.
 
 
State Street Global
Advisors' Proxy Voting
and Engagement
Philosophy in Emerging
Markets
State Street Global Advisors' approach to proxy voting and issuer engagement in emerging
markets is designed to increase the value of our investments through the mitigation of
governance risks. The overall quality of the corporate governance framework in an
emerging market country drives the level of governance risks investors assign to a country.
Thus, improving the macro governance framework in a country may help to reduce
governance risks and to increase the overall value of our holdings over time. In order to
improve the overall governance framework and practices in a country, members of our
Asset Stewardship Team endeavor to engage with representatives from regulatory
agencies and stock markets to highlight potential concerns with the macro governance
framework of a country. We are also a member of various investor associations that seek
to address broader corporate governance-related policy issues in emerging markets. To
help mitigate company-specific risk, the State Street Global Advisors Asset Stewardship
Team works alongside members of the Active Fundamental and emerging market
specialists to engage with emerging market companies on governance issues and address
any specific concerns, or to get more information regarding shareholder items that are to
be voted on at upcoming shareholder meetings. This integrated approach to engagement
drives our proxy voting and engagement philosophy in emerging markets.
 
Our proxy voting Guidelines in emerging markets address six broad areas:
 
Directors and Boards
 
Accounting and Audit-Related Issues
 
Shareholder Rights and Capital-Related Issues
 
Remuneration
 
Environmental and Social Issues
 
General/Routine Issues
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Directors and Boards
We believe that a well constituted board of directors, with a balance of skills, expertise and
independence, provides the foundation for a well governed company. However, several
factors, such as low overall independence level requirements by market regulators, poor
biographical disclosure of director profiles, prevalence of related-party transactions, and
the general resistance from controlling shareholders to increase board independence,
render the election of directors as one of the most important fiduciary duties we perform in
emerging market companies.
 
We vote for the election/re-election of directors on a case-by-case basis after considering
various factors, including general market practice and availability of information on director
skills and expertise. We expect companies to meet minimum overall board independence
standards, as defined in a local corporate governance code or market practice. Therefore,
in several countries, we will vote against certain non-independent directors if overall board
independence levels do not meet market standards.
 
Our broad criteria for director independence in emerging market companies include factors
such as:
 
Participation in related-party transactions
 
Employment history with company
 
Relations with controlling shareholders and employees
 
Company classification of a director as non-independent
 
In some countries, market practice calls for the establishment of a board level audit
committee. We believe an audit committee should be responsible for monitoring the
integrity of the financial statements of a company and appointing external auditors. It
should also monitor their qualifications, independence, effectiveness and resource levels.
Based upon our desire to enhance the quality of financial and accounting oversight
provided by independent directors, we expect that listed companies have an audit
committee constituted of a majority of independent directors.
 
Further, we expect boards of listed companies in all markets and indices to have at least
one female board member. If a company fails to meet this expectation, State Street Global
Advisors may vote against the Chair of the board's nominating committee or the board
leader in the absence of a nominating committee, if necessary. Additionally, if a company
fails to meet this expectation for three consecutive years, State Street Global Advisors may
vote against all incumbent members of the nominating committee or those persons
deemed responsible for the nomination process. We may waive the policy if a company
engages with State Street Global Advisors and provides a specific, timebound plan for
adding at least one woman to its board.
 
Poorly structured executive compensation plans pose increasing reputational risk to
companies. Ongoing high level of dissent against a company's compensation proposals
may indicate that the company is not receptive to investor concerns. If the level of dissent
against a company's remuneration report and/or remuneration policy is consistently high,
and we have determined that a vote against a pay-related proposal is warranted in the
third consecutive year, we will vote against the Chair of the remuneration committee.
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Audit-Related Issues
The disclosure and availability of reliable financial statements in a timely manner is
imperative for the investment process. As a result, board oversight of internal controls and
the independence of the audit process are essential if investors are to rely upon financial
statements. We believe that audit committees provide the necessary oversight for the
selection and appointment of auditors, the company's internal controls and the accounting
policies, and the overall audit process.
 
Appointment of External Auditors
 
We believe that a company's auditor is an essential feature of an effective and transparent
system of external supervision. Shareholders should be given the opportunity to vote on
their appointment or re-appointment at the annual meeting. We believe that it is imperative
for audit committees to select outside auditors who are independent from management.
 
 
Approval of Financial
Statements
The disclosure and availability of reliable financial statements in a timely manner is
imperative for the investment process. We expect external auditors to provide assurance of
a company's financial condition. Hence, we will vote against the approval of financial
statements if i) they have not been disclosed or audited; ii) the auditor opinion is qualified/
adverse, or the auditor has issued a disclaimer of opinion; or iii) the auditor opinion is not
disclosed.
 
 
Shareholder Rights and
Capital-Related Issues
State Street Global Advisors believes that changes to a company's capital structure, such
as changes in authorized share capital, share repurchase and debt issuances, are critical
decisions made by the board. We believe the company should have a business rationale
that is consistent with corporate strategy and should not overly dilute its shareholders.
 
Related-Party Transactions
 
Most companies in emerging markets have a controlled ownership structure that often
includes complex cross-shareholdings between subsidiaries and parent companies
(related companies). As a result, there is a high prevalence of related-party transactions
between the company and its various stakeholders, such as directors and management. In
addition, inter-group loan and loan guarantees provided to related companies are some of
the other related-party transactions that increase the risk profile of companies. In markets
where shareholders are required to approve such transactions, we expect companies to
provide details about the transaction, such as its nature, value and purpose. This also
encourages independent directors to ratify such transactions. Further, we encourage
companies to describe the level of independent board oversight and the approval process,
including details of any independent valuations provided by financial advisors on
related-party transactions.
 
Share Repurchase Programs
 
With regard to share repurchase programs, we expect companies to clearly state the
business purpose for the program and a definitive number of shares to be repurchased.
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Mergers and Acquisitions
 
Mergers or reorganization of the structure of a company often involve proposals relating to
reincorporation, restructurings, liquidations and other major changes to the corporation.
Proposals that are in the best interest of the shareholders, demonstrated by enhancing
share value or improving the effectiveness of the company's operations, will be supported.
In general, provisions that are not viewed as financially sound or are thought to be
destructive to shareholders' rights are not supported.
 
We evaluate mergers and structural reorganizations on a case-by-case basis. We
generally support transactions that maximize shareholder value. Some of the
considerations include, but are not limited to, the following:
 
Offer premium
 
Strategic rationale
 
Board oversight of the process for the recommended transaction, including director
and/ or management conflicts of interest
 
Offers made at a premium and where there are no other higher bidders
 
Offers in which the secondary market price is substantially lower than the net asset
value
 
We may vote against a transaction considering the following:
 
Offers with potentially damaging consequences for minority shareholders because of
illiquid stock
 
Offers where we believe there is a reasonable prospect for an enhanced bid or other
bidders
 
The current market price of the security exceeds the bid price at the time of voting
 
We will actively seek direct dialogue with the board and management of companies that
we have identified through our screening processes. Such engagements may lead to
further monitoring to ensure the company improves its governance or sustainability
practices. In these cases, the engagement process represents the most meaningful
opportunity for State Street Global Advisors to protect long-term shareholder value from
excessive risk due to poor governance and sustainability practices.
 
 
Remuneration
We consider it to be the board's responsibility to set appropriate levels of executive
remuneration. Despite the differences among the types of plans and the potential awards,
there is a simple underlying philosophy that guides our analysis of executive remuneration:
there should be a direct relationship between executive compensation and company
performance over the long term. In emerging markets, we encourage companies to
disclose information on senior executive remuneration.
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Shareholders should have the opportunity to assess whether pay structures and levels are
aligned with business performance. When assessing remuneration reports, we consider
factors such as adequate disclosure of remuneration elements, absolute and relative pay
levels, peer selection and benchmarking, the mix of long-term and short-term incentives,
alignment of pay structures with shareholder interests, corporate strategy and
performance. We may oppose remuneration reports where pay seems misaligned with
shareholders' interests. We may also vote against the re-election of members of the
remuneration committee if we have serious concerns about remuneration practices and if
the company has not been responsive to shareholder pressure to review its approach.
With regard to director remuneration, we support director pay provided the amounts are
not excessive relative to other issuers in the market or industry, and are not overly dilutive
to existing shareholders.
 
 
Environmental and Social
Issues
As a fiduciary, State Street Global Advisors takes a comprehensive approach to engaging
with our portfolio companies about material environmental and social (sustainability)
issues. We use our voice and our vote through engagement, proxy voting and thought
leadership in order to communicate with issuers and educate market participants about
our perspective on important sustainability topics. Our Asset Stewardship program
prioritization process allows us to proactively identify companies for engagement and
voting in order to mitigate sustainability risks in our portfolio. Through engagement, we
address a broad range of topics that align with our stewardship priorities and build
long-term relationships with issuers. When voting, we fundamentally consider whether the
adoption of a shareholder proposal addressing a material sustainability issue would
promote long-term shareholder value in the context of the company's existing practices
and disclosures as well as existing market practice.
 
For more information on our approach to environmental and social issues, please see our
Global Proxy Voting and Engagement Guidelines for Environmental and Social Issues and
our Frameworks for Voting Environmental and Social Shareholder Proposals, both
available at ssga.com/about-us/asset-stewardship.html.
 
 
General/Routine Issues
Some of the other issues that are routinely voted on in emerging markets include
approving the allocation of income and accepting financial statements and statutory
reports. For these voting items, our guidelines consider several factors, such as historical
dividend payouts, pending litigation, governmental investigations, charges of fraud, or
other indication of significant concerns.
 
 
More Information
Any client who wishes to receive information on how its proxies were voted should contact
its State Street Global Advisors relationship manager.
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About State Street Global
Advisors
For four decades, State Street Global Advisors has served the world's governments,
institutions and financial advisors. With a rigorous, risk-aware approach built on research,
analysis and market-tested experience, we build from a breadth of active and index
strategies to create cost-effective solutions. As stewards, we help portfolio companies see
that what is fair for people and sustainable for the planet can deliver long-term
performance. And, as pioneers in index, ETF, and ESG investing, we are always inventing
new ways to invest. As a result, we have become the world's fourth-largest asset manager*
with US $4.14 trillion† under our care.

*
Pensions & Investments Research Center, as of December 31, 2020.
This figure is presented as of December 31, 2021 and includes approximately $61.43 billion of assets with respect to SPDR products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated.


ssga.com
State Street Global Advisors Worldwide Entities
Abu Dhabi: State Street Global Advisors Limited, ADGM Branch, Al Khatem Tower, Suite 42801, Level 28, ADGM Square, Al Maryah Island, P.O Box 76404, Abu Dhabi, United Arab Emirates. Regulated by the ADGM Financial Services Regulatory Authority. T: +971 2 245 9000. Australia: State Street Global Advisors, Australia, Limited (ABN 42 003 914 225) is the holder of an Australian Financial Services License (AFSL Number 238276). Registered office: Level 14, 420 George Street, Sydney, NSW 2000, Australia. T: +612 9240-7600. F: +612 9240-7611. Belgium: State Street Global Advisors Belgium, Chaussée de La Hulpe 185, 1170 Brussels, Belgium. T: +32 2 663 2036. State Street Global Advisors Belgium is a branch office of State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorised and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. Canada: State Street Global Advisors, Ltd., 1981
McGill College Avenue, Suite 500, Montreal, Qc, H3A 3A8, T: +514 282 2400 and 30 Adelaide Street East Suite 800, Toronto, Ontario M5C 3G6. T: +647 775 5900. France: State Street Global Advisors Europe Limited, France Branch (State Street Global Advisors France) is a branch of State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorised and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. State Street Global Advisors France is registered in France with company number RCS Nanterre 899 183 289, and its office is located at Coeur Défense — Tour A — La Défense 4, 33e étage, 100, Esplanade du Général de Gaulle, 92 932 Paris La Défense Cedex, France. T: +33 1 44 45 40 00. F: +33 1 44 45 41 92. Germany: State Street Global Advisors Europe Limited, Branch in Germany, Brienner Strasse 59, D-80333 Munich, Germany (State Street Global Advisors Germany). T: +49 (0)89 55878 400. State Street Global Advisors Germany is a branch of State Street Global Advisors Europe Limited, registered in Ireland with
company number 49934, authorised and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. Hong Kong: State Street Global Advisors Asia Limited, 68/F, Two International Finance Centre, 8 Finance Street, Central, Hong Kong. T: +852 2103-0288. F: +852 2103-0200. Ireland: State Street Global Advisors Europe Limited is regulated by the Central Bank of Ireland. Registered office address 78 Sir John Rogerson's Quay, Dublin 2. Registered Number: 49934. T: +353 (0)1 776 3000. F: +353 (0)1 776 3300. Italy: State Street Global Advisors Europe Limited, Italy Branch (State Street Global Advisors Italy) is a branch of State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorised and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. State Street Global Advisors Italy is registered in Italy with company number 11871450968 — REA: 2628603 and VAT number 11871450968, and its office is located at Via Ferrante Aporti, 10 -20125 Milan, Italy. T: +39 02 32066 100. F: +39
02 32066 155. Japan: State Street Global Advisors (Japan) Co., Ltd., Toranomon Hills Mori Tower 25F 1-23-1 Toranomon, Minato-ku, Tokyo 105-6325 Japan. T: +81-3-4530-7380. Financial Instruments Business Operator, Kanto Local Financial Bureau (Kinsho #345), Membership: Japan Investment Advisers Association, The Investment Trust Association, Japan, Japan Securities Dealers' Association. Netherlands: State Street Global Advisors Netherlands, Apollo Building 7th floor, Herikerbergweg 29, 1101 CN Amsterdam, Netherlands. T: +31 20 7181 000. State Street Global Advisors Netherlands is a branch office of State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorised and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson's Quay, Dublin 2. Singapore: State Street Global Advisors Singapore Limited, 168, Robinson Road, #33-01 Capital Tower, Singapore 068912 (Company Reg. No: 200002719D, regulated by the Monetary Authority of Singapore). T: +65 6826-7555. F: +65 6826-7501. Switzerland: State Street
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Global Advisors AG, Beethovenstr. 19, CH-8027 Zurich. Registered with the Register of Commerce Zurich CHE-105.078.458. T: +41 (0)44 245 70 00. F: +41 (0)44 245 70 16. United Kingdom: State Street Global Advisors Limited. Authorised and regulated by the Financial Conduct Authority.
Registered in England. Registered No. 2509928. VAT No. 5776591 81. Registered office: 20 Churchill Place, Canary Wharf, London, E14 5HJ. T: 020 3395 6000. F: 020 3395 6350. United States:
State Street Global Advisors, 1 Iron Street, Boston, MA 02210-1641. T: +1 617 786 3000.
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ID949714-3479918.2.1.GBL.RTL 0322
Exp. Date: 03/31/2023
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