SSGA FUNDS
SSGA FUNDS
(the Trust)
One Iron Street
Boston, Massachusetts 02210
STATEMENT OF ADDITIONAL INFORMATION
December 29, 2022
 
Class N
(formerly,
Institutional
Class)
Class A
Class I
Class K
SSGA Domestic Equity Funds
STATE STREET S&P 500 INDEX FUND
SVSPX
  N/A
  N/A
  N/A
SSGA International Equity Funds
STATE STREET INTERNATIONAL STOCK SELECTION FUND
SSAIX
SSILX
SSIPX
SSIQX
This Statement of Additional Information (SAI) relates to the Prospectus dated December 29, 2022, for the Funds listed above.
This SAI is not a prospectus and should be read in conjunction with the Funds' Prospectus. This SAI describes the Trust generally and provides additional information about the Funds. A copy of the Prospectus or the most recent Annual Reports to Shareholders (Annual Reports), which contain the Funds' financial statements incorporated herein by reference, can be obtained free of charge, upon request, by calling (800) 647-7327. You may also obtain the Prospectus or Annual Reports through the Trust's website at www.ssga.com. Capitalized terms used in this SAI and not otherwise defined have the meanings assigned to them in the Prospectus.
SSGACOMBSAI
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TABLE OF CONTENTS
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GENERAL
The Trust is a single legal entity organized on October 3, 1987 as a Massachusetts business trust, and operates under a Second Amended and Restated Master Trust Agreement, dated May 15, 2012, as amended (the Master Trust Agreement).
The Trust is registered with the Securities and Exchange Commission (the SEC) as an open-end, management investment company under the Investment Company Act of 1940, as amended (the 1940 Act). The Trust offers shares of beneficial interest in the Funds as described in the Prospectus. Each of the Funds is diversified as provided by the 1940 Act. Under the 1940 Act, a diversified company is defined as a management company which meets the following requirements: at least 75% of the value of its total assets is represented by cash and cash items (including receivables), Government securities, securities of other investment companies, and other securities limited in respect of any single issuer to 5% or less of each of the Fund's total assets, and to not more than 10% of the outstanding voting securities of such issuer.
SSGA Funds Management, Inc. (the Adviser or SSGA FM) serves as the investment manager of each Fund.
Effective October 12, 2018, the SSGA International Stock Selection Fund was renamed the State Street International Stock Selection Fund; and the SSGA S&P 500 Index Fund was renamed the State Street S&P 500 Index Fund.
Effective June 17, 2019, the State Street S&P 500 Index Fund no longer operates in a master-feeder arrangement, and will make direct investments consistent with its investment strategy instead of investing substantially all of its assets in a master portfolio advised by SSGA FM that was a separate series of State Street Master Funds (the Master Portfolio).
DESCRIPTION OF INVESTMENTS AND RISKS
The Funds' Prospectus contains information about the investment objective and policies of each Fund. This SAI should only be read in conjunction with the Prospectus of the Fund or Funds in which you intend to invest.
In addition to the principal investment strategies and the principal risks of the Funds described in the Fund's Prospectus, a Fund may employ other investment practices and may be subject to additional risks, which are described below.
ADDITIONAL INVESTMENTS AND RISKS
To the extent consistent with its investment objective and restrictions, each Fund may invest in the following instruments and use the following techniques (unless otherwise noted).
American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs) and European Depositary Receipts (EDRs). State Street International Stock Selection Fund may invest in ADRs, GDRs and EDRs under certain circumstances as an alternative to directly investing in foreign securities. ADRs are issued by a U.S. depository institution, but they represent a specified quantity of shares of a non-U.S. stock company. ADRs trade on U.S. securities exchanges, but are treated as foreign securities for purposes of the limitations on the Fund's investments in foreign securities because they are subject to many of the same risks as foreign securities as described below.
In addition to ADRs, State Street International Stock Selection Fund may invest in sponsored or unsponsored GDRs and EDRs to the extent they become available. GDRs and EDRs are typically issued by foreign depositaries and evidence ownership interests in a security or pool of securities issued by either a foreign or a U.S. corporation. Holders of unsponsored GDRs and EDRs generally bear all the costs associated with establishing them. The depositary of an unsponsored GDR or EDR is under no obligation to distribute shareholder communications received from the underlying issuer or to pass through to the GDR or EDR holders any voting rights with respect to the securities or pools of securities represented by the GDR or EDR. As a result, available information concerning the issuer may not be as current as for sponsored GDRs or EDRs, and the prices of unsponsored GDRs or EDRs may be more volatile than if such instruments were sponsored by the issuer. GDRs and EDRs also may not be denominated in the same currency as the underlying securities. Registered GDRs and EDRs are generally designed for use in U.S. securities markets, while bearer form GDRs and EDRs are generally designed for non-U.S. securities markets. The Fund will treat the underlying securities of a GDR or EDR as the investment for purposes of its investment policies and restrictions.
A depositary or issuer may unwind its depositary receipt program, or the relevant exchange may require ADRs, GDRs, or EDRs to be delisted, which could require the Fund to sell its ADRs, GDRs, or EDRs (potentially at disadvantageous prices) or to convert them into shares of the underlying non-U.S. security (which could adversely affect their value or liquidity). ADRs do not eliminate the risk inherent in investing in the securities of foreign issuers. However, by investing in
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ADRs and GDRs rather than directly in a foreign issuer's stock, the Fund can minimize currency risks during the settlement period for either purchases or sales. In general, there is a large liquid market in the U.S. for many ADRs and GDRs although ADRs, GDRs, or EDRs also may be subject to illiquidity risk, and trading in ADRs, GDRs, or EDRs may be suspended by the relevant exchange. The information available for ADRs and GDRs is subject to the accounting, auditing and financial reporting standards of the domestic market or exchange on which they are traded, which standards may be more uniform and more exacting than those to which many foreign issuers are subject.
Cleared Derivatives Transactions. Transactions in some types of swaps are required to be centrally cleared by applicable rules and regulations and a Fund may also elect to choose to centrally clear other transactions that are available for clearing. In a cleared derivatives transaction, a Fund's counterparty to the transaction is a central derivatives clearing organization, or clearing house, rather than a bank or broker. Because the Funds are not members of a clearing house, and only members of a clearing house can participate directly in the clearing house, the Funds hold cleared derivatives through accounts at clearing members. In cleared derivatives transactions, a 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 Fund than bilateral (non-cleared) arrangements. For example, a 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 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. Each Fund is subject to risk if it enters into a derivatives transaction that is required to be cleared (or which the Adviser expects to be cleared), and no clearing member is willing or able to clear the transaction on the Fund's behalf. In that case, the transaction might have to be terminated, and the 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 the Funds and clearing members is drafted by the clearing members and generally is less favorable to the Funds than typical bilateral derivatives documentation. For example, documentation relating to cleared derivatives generally includes a one-way indemnity by the Fund in favor of the clearing member for losses the clearing member incurs as the Fund's clearing member. Also, such documentation typically does not provide the Fund any remedies if the clearing member defaults or becomes insolvent.
Counterparty risk with respect to derivatives has been and will continue to be affected by new rules and regulations relating to the derivatives market. With respect to a centrally cleared transaction, a party is subject to the credit risk of the clearing house and the clearing member through which it holds its cleared position. Credit risk of market participants with respect to centrally cleared derivatives is concentrated in a few clearing houses, and it is not clear how an insolvency proceeding of a clearing house would be conducted and what impact an insolvency of a clearing house would have on the financial system. A clearing member is obligated by contract and regulation to segregate all funds received from customers with respect to cleared derivatives positions from the clearing member's proprietary assets. However, all funds and other property received by a clearing member from its customers with respect to cleared derivatives are generally held by the clearing member on a commingled basis in an omnibus account (which can be invested in instruments permitted under the regulations). Therefore, a Fund might not be fully protected in the event of the bankruptcy of the Fund's clearing member because the Fund would be limited to recovering only a pro rata share of the funds held by the clearing member on behalf of customers, with a claim against the clearing member for any deficiency. Also, the clearing member is required to transfer to the clearing house the amount of margin required by the clearing house for cleared derivatives, which amount is generally held in an omnibus account at the clearing house for all customers of the clearing member. Regulations promulgated by the Commodity Futures Trading Commission (the CFTC) require that the clearing member notify the clearing house of the initial margin provided by the clearing member to the clearing house that is attributable to each customer. However, if the clearing member does not accurately report the Fund's initial margin, the Fund is subject to the risk that a clearing house will use the assets attributable to it in the clearing house's omnibus account to satisfy payment obligations a defaulting customer of the clearing member has to the clearing house. In addition, clearing members generally provide the clearing house the net amount of variation margin required for cleared swaps for all of its customers, rather than individually for each customer. A Fund is therefore subject to the risk that a clearing house will not make variation margin payments owed to the Fund if another customer of the clearing member has suffered a loss and is in default, and the risk that the Fund will be required to provide additional variation margin to the clearing house before the clearing house will move the Fund's cleared derivatives positions to another clearing member. In addition, if a clearing
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member does not comply with the applicable regulations or its agreement with the Fund, or in the event of fraud or misappropriation of customer assets by a clearing member, the Fund could have only an unsecured creditor claim in an insolvency of the clearing member with respect to the margin held by the clearing member.
Convertible Securities. State Street International Stock Selection Fund may hold convertible securities of foreign or domestic issuers. A convertible security is a fixed-income security which may be converted into the issuer's common or preferred stock at a stated price within a specified period of time. Convertible securities are senior to common stocks in a corporation's capital structure but are usually subordinated to similar nonconvertible securities. Convertible securities provide, through their conversion feature, an opportunity to participate in capital appreciation resulting from a market price advance in a convertible security's underlying common stock. The price of a convertible security is influenced by the market value of the underlying common stock and tends to increase as the market value of the underlying stock rises, whereas it tends to decrease as the market value of the underlying stock declines.
Custodial Risk. There are risks involved in dealing with the custodians or brokers who hold a Fund's investments or settle a Fund's trades. It is possible that, in the event of the insolvency or bankruptcy of a custodian or broker, a Fund would be delayed or prevented from recovering its assets from the custodian or broker, or its estate, and may have only a general unsecured claim against the custodian or broker for those assets. In recent insolvencies of brokers or other financial institutions, the ability of certain customers to recover their assets from the insolvent's estate has been delayed, limited, or prevented, often unpredictably, and there is no assurance that any assets held by a Fund with a custodian or broker will be readily recoverable by the Fund. In addition, there may be limited recourse against non-U.S. sub-custodians in those situations in which a Fund invests in markets where custodial and/or settlement systems and regulations are not fully developed, including emerging markets, and the assets of the Fund have been entrusted to such sub-custodians. SSGA FM or an affiliate may serve as the custodian of the Funds.
Risks Associated with Derivatives Regulation. The U.S. government has enacted and is continuing to implement legislation that provides for new regulation of the derivatives market, including clearing, margin, reporting, and registration requirements. The European Union (the EU), the United Kingdom (the UK) and some other countries have also adopted and are continuing to implement similar requirements, which will affect a Fund when it enters into a derivatives transaction with a counterparty organized in that country or otherwise subject to that country's derivatives regulations. Such rules and other new rules and regulations could, among other things, restrict a Fund's ability to engage in, or increase the cost to the Fund of, derivatives transactions, for example, by making some types of derivatives no longer available to the Fund, increasing margin or capital requirements, or otherwise limiting liquidity or increasing transaction costs. While the rules and regulations and central clearing of some derivatives transactions are designed to reduce systemic risk (i.e., the risk that the interdependence of large derivatives dealers could cause them to suffer liquidity, solvency or other challenges simultaneously), there is no assurance that they will achieve that result, and in the meantime, as noted above, central clearing and related requirements expose the Funds to new kinds of costs and risks.
For example, in the event of a counterparty's (or its affiliate's) insolvency, a Fund's ability to exercise remedies, such as the termination of transactions, netting of obligations and realization on collateral, could be stayed or eliminated under new special resolution regimes adopted in the United States, the EU, the UK and various other jurisdictions. Such regimes provide government authorities with broad authority to intervene when a financial institution is experiencing financial difficulty. In particular, with respect to counterparties who are subject to such proceedings in the EU and the UK, the liabilities of such counterparties to the Funds could be reduced, eliminated, or converted to equity in such counterparties (sometimes referred to as a bail in).
The SEC has adopted new Rule 18f-4 under the 1940 Act providing for the regulation of registered investment companies' use of derivatives and certain related instruments. The new rule, among other things, limits derivatives exposure through one of two value-at-risk tests and eliminates the asset segregation framework for covering derivatives and certain financial instruments arising from the SEC's Release 10666 and ensuing staff guidance. The rule also requires funds to adopt and implement a derivatives risk management program (including the appointment of a derivatives risk manager and the implementation of certain testing requirements) and subjects funds to certain reporting requirements in respect of derivatives. Limited derivatives users (as determined by Rule 18f-4) are not, however, subject to the full requirements under the rule.
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Additionally, U.S. regulators, the EU, the UK and certain other jurisdictions have adopted minimum margin and capital requirements for uncleared derivatives transactions. It is expected that these regulations will have a material impact on a Fund's use of uncleared derivatives. These rules impose minimum margin requirements on derivatives transactions between a Fund and its counterparties and may increase the amount of margin a Fund is required to provide. They impose regulatory requirements on the timing of transferring margin and the types of collateral that parties are permitted to exchange.
These and other regulations are relatively new and evolving, so their full impact on the Funds and the financial system are not yet known.
Other Derivatives Risks. The use of derivatives involves the risk that their value may not change as expected relative to changes in the value of the assets, rates or indices they are designed to track. In addition, all derivative instruments involve risks that are in addition to, and potentially greater than, the risks of investing directly in securities and other more traditional assets. Derivatives are subject to counterparty risk, which is the risk that a loss may be sustained by a Fund as a result of the failure of the other party to a derivative (usually referred to as a counterparty) to comply with the terms of the derivative contract. An over-the-counter derivative contract typically can be closed or a position transferred only with the consent of the other party to the contract. If the counterparty defaults, the Fund will still have contractual remedies but may not be able to enforce them. Even when derivatives are required by contract to be collateralized, the Fund typically will not receive the collateral for one or more days after the collateral is required to be posted.
Debt Securities. State Street International Stock Selection Fund may invest in debt securities. The Fund may also invest in debt securities with broad credit ratings that may or may not be investment grade. Debt will typically represent less than 5% of the Fund's assets. Debt securities are subject to market and credit risk. Lower rated debt securities may include obligations that are in default or that face the risk of default with respect to principal or interest. Such securities are sometimes referred to as junk bonds. Please see Description of Securities Ratings in Appendix A.
Equity Swaps and Equity Linked Notes. The Funds may invest in equity swaps. Equity swap agreements are contracts between parties in which one party agrees to make payments to the other party based on an interest rate or the change in market value of a specified index or asset. In return, the other party agrees to make payments to the first party based on the return of a different specified index or asset. Although swap agreements entail the risk that a party will default on its payment obligations, the portfolios will seek to manage this risk by entering into agreements only with counterparties that the Adviser deems creditworthy. The Adviser will allow the Funds to enter into swap agreements only with counterparties that would be eligible for consideration as repurchase agreement counterparties under the Trust's repurchase agreement guidelines. Swap agreements bear the risk that a Fund will not be able to meet its obligation to the counterparty. A Fund may seek to mitigate this risk by investing in assets generating cash flows consistent with the Fund's payment obligations under the swap agreement.
Eurodollar Certificates of Deposit (ECDs), Eurodollar Time Deposits (ETDs) and Yankee Certificates of Deposit (YCDs). State Street International Stock Selection Fund may purchase ECDs, ETDs, and YCDs. ECDs are U.S. dollar denominated certificates of deposit and time deposits, respectively, issued by foreign branches of domestic banks. ETDs are U.S. dollar denominated deposits in foreign banks or foreign branches of U.S. banks. YCDs are U.S. dollar denominated certificates of deposit issued by U.S. branches of foreign banks.
Different risks than those associated with the obligations of domestic banks may exist for ECDs, ETDs and YCDs because the banks issuing these instruments, or their domestic or foreign branches, are not necessarily subject to the same regulatory requirements that apply to domestic banks, such as loan limitations, examinations and reserve, accounting, auditing, recordkeeping and public reporting requirements.
Foreign Currency and Foreign Currency Derivatives. State Street S&P 500 Index Fund will not speculate in foreign security or currency options or futures or related options. State Street International Stock Selection Fund may invest in foreign currency. State Street International Stock Selection Fund has authority to deal in forward foreign currency exchange contracts (including those involving the U.S. dollar) as a hedge against possible variations in the exchange rate between various currencies. State Street International Stock Selection Fund may also deal in forward foreign currency exchange contracts (including those involving the U.S. dollar) in order to seek to generate returns consistent with the Fund's investment objective and strategies. This is accomplished through individually negotiated contractual agreements to purchase or to sell a specified currency at a specified future date and price set at the time of the contract. The Fund's dealings in forward foreign currency exchange contracts may be with respect to a specific purchase or sale of a security, or with respect to its portfolio positions generally. The Fund is not obligated to hedge its portfolio positions and will enter
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into such transactions only to the extent, if any, deemed appropriate by the Adviser. If properly executed, the Fund's use of forward foreign currency exchange contracts for hedging purposes may help to reduce losses resulting from depreciation of a foreign currency in which securities in the Fund's portfolio are denominated.
In addition to the forward foreign currency exchange contracts, State Street International Stock Selection Fund may also purchase or sell listed or over-the-counter (OTC) foreign currency options and foreign currency futures and related options as a short or long hedge against possible variations in foreign currency exchange rates. The cost to the Fund of engaging in foreign currency transactions varies with such factors as the currencies involved, the length of the contract period and the market conditions then prevailing. Put and call options on currency may also be used to hedge against fluctuation in currency rates when forward contracts and/or futures are deemed to be not cost effective. Options will not be used to provide leverage in any way.
Certain differences exist among these instruments. For example, foreign currency options provide the holder thereof the rights to buy or sell a currency at a fixed price on a future date. A futures contract on a foreign currency is an agreement between two parties to buy and sell a specified amount of a currency for a set price on a future date. Futures contracts and options on futures contracts are traded on boards of trade or futures exchanges.
Like other types of derivatives, forward foreign currency exchange contracts, foreign currency options and foreign currency futures are subject to counterparty risk (i.e., the risk that the counterparty to a transaction will not perform under the contract). There can be no guarantee that a currency hedging strategy will produce the desired result. The Adviser may be incorrect in its expectations as to currency fluctuations, and the Fund may incur losses in connection with its currency transactions that it would not otherwise incur. Additionally, an imperfect correlation between movements in the price of the derivative and the price of the security, currency or other investment being hedged creates risk. In the event of an imperfect correlation between a derivative position and the portfolio position intended to be hedged, the Fund may realize a loss on the derivative at the same time the Fund is realizing a loss on the portfolio position being hedged.
The Fund may hedge a position with respect to the currency of a particular country to an extent greater than the aggregate market value (at the time of making such transactions) of the securities held in its portfolio denominated or quoted in that particular foreign currency. No Fund will enter into a position hedging commitment if, as a result thereof, it would have more than 20% of the value of its assets committed to such contracts or will enter into a forward contract with a term of more than 36 months.
If the Fund invests in foreign securities or securities denominated in foreign currencies (or related foreign currency derivatives), it may be adversely affected by changes in currency exchange rates, exchange control regulations, foreign country indebtedness and indigenous economic and political developments. The Fund attempts to buy and sell foreign currencies on favorable terms, but will incur the cost of any price spread on currency exchanges when the Fund changes investments from one country to another or when proceeds from the sale of shares in U.S. dollars are used for the purchase of securities in foreign countries. Also, some countries may adopt policies which would prevent the Fund from repatriating invested capital and dividends, withhold portions of interest and dividends at the source, or impose other taxes, with respect to the Fund's investments in securities of issuers of that country. A change in the value of a foreign currency against the U.S. dollar will result in a corresponding change in the U.S. dollar value of the Fund's securities. In addition, some emerging market countries may have fixed or managed currencies which are not free-floating against the U.S. dollar. Further, certain emerging market currencies may not be internationally traded. Certain of these currencies have experienced a steady devaluation relative to the U.S. dollar. Many emerging markets countries have experienced substantial and in some periods extremely high rates of inflation for many years. Inflation and rapid fluctuations in inflation rates have had, and may continue to have negative effects on the economies and securities markets of certain emerging market countries.
Foreign Securities State Street International Stock Selection Fund is permitted to invest in foreign securities. Foreign securities include securities of foreign companies and foreign governments (or agencies or subdivisions thereof). If the Fund's securities are held abroad, the countries in which such securities may be held and the sub-custodian holding them must be approved by the Board of Trustees (the Board or Board of Trustees) or its delegate under applicable rules adopted by the SEC. In buying foreign securities, the Fund may convert U.S. dollars into foreign currency, but only to effect securities transactions on foreign securities exchanges and not to hold such currency as an investment.
The globalization and integration of the world economic system and related financial markets have made it increasingly difficult to define issuers geographically. Accordingly, the Fund intends to construe geographic terms such as foreign, non-U.S., European, Latin American, and Asian, in the manner that affords the Fund the greatest flexibility in seeking to achieve its investment objective(s). Specifically, in circumstances where the investment objective and/or
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strategy is to invest at least some percentage of the Fund's assets in foreign securities, the Fund will take the view that a security meets this description so long as the issuer of a security is tied economically to the particular country or geographic region indicated by words of the relevant investment objective and/or strategy (the Relevant Language). For these purposes the issuer of a security is deemed to have that tie if:
(i)
The issuer is organized under the laws of the country or a country within the geographic region suggested by the Relevant Language or maintains its principal place of business in that country or region; or
(ii)
The securities are traded principally in the country or region suggested by the Relevant Language; or
(iii)
The issuer, during its most recent fiscal year, derived at least 50% of its revenues or profits from goods produced or sold, investments made, or services performed in the country or region suggested by the Relevant Language or has at least 50% of its assets in that country or region.
In addition, the Fund intends to treat derivative securities (e.g., call options) by reference to the underlying security. Conversely, if the investment objective and/or strategy of the Fund limits the percentage of assets that may be invested in foreign securities, or prohibits such investments altogether, the Fund intends to categorize securities as foreign, only if the security possesses all of the attributes described above in clauses (i), (ii) and (iii).
Foreign securities also include securities of foreign issuers represented by ADRs, GDRs and EDRs. Please see American Depositary Receipts, Global Depositary Receipts and European Depositary Receipts above.
Investments in foreign securities involve special risks and considerations. Foreign companies are not generally subject to uniform accounting, auditing and financial reporting standards, practices and requirements comparable to those applicable to domestic companies, and such practices and standards may vary significantly from country to country. There may be less publicly available information about a foreign company than about a domestic company. The Public Company Accounting Oversight Board, which regulates auditors of U.S. public companies, is unable to inspect audit work papers in certain foreign countries. Investors in foreign countries often have limited rights and few practical remedies to pursue shareholder claims, including class actions or fraud claims, and the ability of the SEC, the U.S. Department of Justice and other authorities to bring and enforce actions against foreign issuers or foreign persons is limited. Foreign markets have different clearance and settlement procedures. Delays in settlement could result in temporary periods when assets of the Fund are uninvested. The inability of the Fund to make intended security purchases due to settlement problems could cause it to miss certain investment opportunities. They may also entail certain other risks, such as the possibility of one or more of the following: imposition of dividend or interest withholding or other taxes (in each case, which taxes could potentially be confiscatory) higher brokerage costs, thinner trading markets, currency blockages or transfer restrictions, expropriation, nationalization, military coups or other adverse political or economic developments; less government supervision and regulation of securities exchanges, brokers and listed companies; and the difficulty of enforcing obligations in other countries. Purchases of foreign securities are usually made in foreign currencies and, as a result, the Fund may incur currency conversion costs and may be affected favorably or unfavorably by changes in the value of foreign currencies against the U.S. dollar. Further, it may be more difficult for the Fund's agents to keep currently informed about corporate actions which may affect the prices of portfolio securities. Communications between the United States and foreign countries may be less reliable than within the United States, thus increasing the risk of delayed settlements of portfolio transactions or loss of certificates for portfolio securities. Certain markets may require payment for securities before delivery. The Fund's ability and decisions to purchase and sell portfolio securities may be affected by laws or regulations relating to the convertibility of currencies and repatriation of assets.
A number of current significant political, demographic and economic developments may affect investments in foreign securities and in securities of companies with operations overseas. Such developments include dramatic political changes in government and economic policies in several Eastern European countries and the republics composing the former Soviet Union, as well as the unification of the European Economic Community. The course of any one or more of these events and the effect on trade barriers, competition and markets for consumer goods and services are uncertain. Similar considerations are of concern with respect to developing countries. For example, the possibility of revolution and the dependence on foreign economic assistance may be greater in these countries than in developed countries. Management seeks to mitigate the risks associated with these considerations through diversification and active professional management.
Forward Commitments. Each Fund may invest in forward commitments. Each Fund may contract to purchase securities for a fixed price at a future date beyond customary settlement time consistent with the Fund's ability to manage its investment portfolio and meet redemption requests. A Fund may dispose of a commitment prior to settlement if it is appropriate to do so and the Fund may realize short-term profits or losses upon such sale. When effecting such
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transactions, cash or other liquid assets (such as liquid high quality debt obligations) held by a Fund of a dollar amount sufficient to make payment for the portfolio securities to be purchased will be segregated on the Fund's records at the trade date and maintained until the transaction is settled. Such segregated assets will be marked to market on a daily basis, and if the market value of such assets declines or the market value of the securities to be purchased increases, additional cash or assets will be segregated so that the market value of the segregated assets will equal the amount of such Fund's obligations. Forward commitments involve a risk of loss if the value of the security to be purchased declines prior to the settlement date, or if the other party fails to complete the transaction.
Illiquid Securities. Each Fund may invest in illiquid securities. A Fund may not invest more than 15% of its net assets in illiquid investments that are assets. These securities include repurchase agreements that have a maturity of longer than seven days and securities that are illiquid by virtue of the absence of a readily available market or legal or contractual restrictions on resale. These securities may also include time deposits with maturities in excess of seven days, variable rate demand notes with demand periods in excess of seven days, unless the Adviser determines that such notes are readily marketable and could be sold promptly at the prices at which they are valued and guaranteed investment contracts; participation interests, floating and variable rate demand obligations and tender option bonds as to which the Fund cannot exercise a demand feature in seven or fewer days or for which there is no secondary market. Repurchase agreements subject to demand are deemed to have a maturity equal to the notice period. Securities that have legal or contractual restrictions on resale but have a readily available market are not considered illiquid for purposes of this limitation. The Adviser will monitor the liquidity of such restricted securities under the supervision of the Board. The absence of a regular trading market for illiquid securities imposes additional risk on investments in these securities. Illiquid securities may be difficult to value and may often be disposed of only after considerable expense and delay.
The SEC has adopted a liquidity risk management rule (the Liquidity Rule) that requires the Funds to establish a liquidity risk management program (the LRMP). The Trustees, including a majority of the Independent Trustees (as defined below), have designated the Adviser to administer the Funds' LRMP. Under the LRMP, the Adviser assesses, manages, and periodically reviews the Funds' liquidity risk. The Liquidity Rule defines liquidity risk as the risk that the Funds could not meet requests to redeem shares issued by the Funds without significant dilution of remaining investors' interests in the Funds. The liquidity of the Funds' portfolio investments is determined based on relevant market, trading and investment-specific considerations under the LRMP. To the extent that an investment is deemed to be an illiquid investment or a less liquid investment, the Funds can expect to be exposed to greater liquidity risk. The Liquidity Rule's impact on a Fund, and on the open-end fund industry in general, is not yet fully known, but the rule could affect a Fund's performance and its ability to achieve its investment objectives. While the LRMP attempts to assess and manage liquidity risk, there is no guarantee it will be effective in its operations and may not reduce the liquidity risk inherent in a Fund's investments.
Interfund Lending. Each Fund may participate in interfund lending. In accordance with an exemptive order received by the Trust from the SEC, the Funds may participate in a joint lending and borrowing facility (the Credit Facility). All such borrowing and lending will be subject to a participating Fund's fundamental investment limitations. To the extent that the Funds borrow through the program, the costs of any such borrowings must be equal to or lower than the cost of bank loans. Interfund loans and borrowings normally extend overnight, but can have a maximum duration of seven days. Loans may be called on one business day's notice. A participating Fund may have to borrow from a bank at a higher interest rate if an interfund loan is called or not renewed.
Initial Public Offerings (IPOs). Each Fund may at times have the opportunity to invest in securities offered in IPOs. IPOs may not be available to the Funds at all times, and the Funds may not always invest in IPOs offered to them. Investments in IPOs may have a substantial beneficial effect on the Funds' investment performance. The Funds' investment return earned during a period of substantial investment in IPOs may not be sustained during other periods when the Funds make more-limited, or no, investments in IPOs. The Funds may lose money on an investment in securities offered in an IPO. There can be no assurance that the Funds will have the opportunity to invest in IPOs that are made available to other clients of State Street Global Advisors (SSGA).
IPO Holding Risk. Each Fund may participate in IPO holding. IPO holding is the practice of participating in an IPO with the intent of holding the security for investment purposes. Because an IPO is an equity security that is new to the public market, the value of IPOs may fluctuate dramatically. Therefore, IPOs have greater risks than other equity investments. Because of the cyclical nature of the IPO market, from time to time there may not be any IPOs in which a Fund can participate. Even when a Fund requests to participate in an IPO, there is no guarantee that the Fund will receive an allotment of shares in an IPO sufficient to satisfy the Fund's desired participation. Due to the volatility of IPOs, these investments can have a significant impact on performance, which may be positive or negative.
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IPO Trading Risk. Each Fund may participate in IPO trading. IPO trading is the practice of participating in an IPO with the intent of immediately selling the security in the secondary market. Engaging in this strategy could result in active and frequent trading. Use of this strategy could increase a Fund's portfolio turnover and the possibility of realized capital gain. This is not a tax-efficient strategy. From time to time, it may not be possible to pursue an IPO trading strategy effectively because of a limited supply of hot IPOs. In addition, this practice may result in losses if a Fund purchases a security in an IPO and there is insufficient demand for the security in the after-market of the IPO. Due to the volatility of IPOs, these investments can have a significant impact on performance, which may be positive or negative.
Market Disruption and Geopolitical Risk
The Funds are subject to the risk that geopolitical events will disrupt securities markets and adversely affect global economies and markets. War, terrorism, and related geopolitical events have led, and in the future may lead, to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets generally. Likewise, natural and environmental disasters, epidemics or pandemics and systemic market dislocations may be highly disruptive to economies and markets. Those events as well as other changes in non-U.S. and domestic economic and political conditions also could adversely affect individual issuers or related groups of issuers, securities markets, interest rates, credit ratings, inflation, investor sentiment, and other factors affecting the value of a Fund's investments. Given the increasing interdependence between global economies and markets, conditions in one country, market, or region might adversely impact markets, issuers and/or foreign exchange rates in other countries, including the U.S. Continuing uncertainty as to the status of the Euro and the Economic and Monetary Union of the European Union (the EMU) has created significant volatility in currency and financial markets generally. Any partial or complete dissolution of the EMU, or any continued uncertainty as to its status, could have significant adverse effects on currency and financial markets, and on the values of a Fund's investments. On January 31, 2020, the United Kingdom (UK) formally withdrew from the European Union (EU) (commonly known as Brexit). An agreement between the UK and the EU governing their future trade relationship became effective January 1, 2021, but critical aspects of the relationship remain unresolved and subject to further negotiation and agreement. There is still considerable uncertainty relating to the potential consequences associated with the exit, including whether the U.K.'s exit will increase the likelihood of other countries also departing the EU. Brexit may have a significant impact on the U.K., Europe, and global economies, which may result in increased volatility and illiquidity, and potentially lower economic growth in markets in the U.K., Europe and globally, which may adversely affect the value of the Funds' investments.
Securities markets may be susceptible to market manipulation (e.g., the potential manipulation of the London Interbank Offered Rate (LIBOR)) or other fraudulent trade practices, which could disrupt the orderly functioning of these markets or adversely affect the value of investments traded in these markets, including investments of a Fund.
Many financial instruments use or may use a floating rate based on LIBOR, which is the offered rate for short-term Eurodollar deposits between major international banks. In 2017, the UK Financial Conduct Authority announced its intention to cease compelling banks to provide the quotations needed to sustain LIBOR after 2021. ICE Benchmark Administration, the administrator of LIBOR, ceased publication of most LIBOR settings on a representative basis at the end of 2021 and is expected to cease publication of a majority of U.S. dollar LIBOR settings on a representative basis after June 30, 2023. In addition, global regulators have announced that, with limited exceptions, no new LIBOR-based contracts should be entered into after 2021.
The transition away from and elimination of LIBOR may adversely affect the interest rates on, and value of, certain investments for which the value is tied to LIBOR. Such investments may include bank loans, derivatives, floating rate securities, and other assets or liabilities tied to LIBOR. Actions by regulators have resulted in the establishment of alternative reference rates to LIBOR in most major currencies (e.g., the Secured Overnight Financing Rate for U.S. dollar LIBOR and the Sterling Overnight Interbank Average Rate for GBP LIBOR). Various financial industry groups have been planning for the transition away from LIBOR. Markets are slowly developing in response to these new rates. Questions around liquidity impacted by these rates, and how to appropriately adjust these rates at the time of transition, remain a concern for the Funds.
The effect of any changes to, or discontinuation of, LIBOR on the Funds will vary depending, among other things, on (1) existing fallback or termination provisions in individual contracts and (2) whether, how, and when industry participants develop and adopt new reference rates and fallbacks for both legacy and new products and instruments. Accordingly, it is difficult to predict the full impact of the transition away from LIBOR on the Funds until new reference rates and fallbacks for both legacy and new products, instruments and contracts are commercially accepted.
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Recent political activity in the U.S. has increased the risk that the U.S. could default on some or any of its obligations. While it is impossible to predict the consequences of such an unprecedented event, it is likely that a default by the U.S. would be highly disruptive to the U.S. and global securities markets and could significantly impair the value of the Funds' investments. Similarly, political events within the U.S. at times have resulted, and may in the future result, in a shutdown of government services, which could negatively affect the U.S. economy, decrease the value of many Fund investments, and increase uncertainty in or impair the operation of the U.S. or other securities markets. To the extent a Fund has focused its investments in the stock market index of a particular region, adverse geopolitical and other events could have a disproportionate impact on the Fund.
Market Turbulence Resulting From COVID-19
An outbreak of a respiratory disease caused by a novel coronavirus first detected in China in December 2019 has spread globally. In an organized attempt to contain and mitigate the effects of the spread of the coronavirus known as COVID-19, governments and businesses world-wide have taken aggressive measures, including closing borders, restricting international and domestic travel, and the imposition of prolonged quarantines of large populations. COVID-19 has resulted 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 continuing effects of COVID-19 may affect certain sectors and industries more dramatically than others, which may adversely affect the value of a 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.
Participation Certificates. State Street International Stock Selection Fund may purchase participation certificates, also known as participation notes. Participation certificates are issued by banks or broker-dealers and are designed to replicate the performance of foreign companies or foreign securities markets and can be used by a Fund as an alternative means to access the securities market of a country. Participation certificates offer a return linked to a particular underlying equity, debt, index or currency; however, the performance results of participation certificates will not replicate exactly the performance of the foreign companies or foreign securities markets that they seek to replicate due to transaction costs and other expenses. Investments in participation certificates involve the same risks associated with a direct investment in the underlying foreign companies or foreign securities markets that they seek to replicate. Participation certificates are subject to counterparty risk, which is the risk that the broker- dealer or bank that issues them will not fulfill its contractual obligation to complete the transaction with the Fund. Participation certificates constitute general unsecured contractual obligations of the banks or broker-dealers that issue them, the counterparty, and a Fund is relying on the creditworthiness of such counterparty and has no rights under a participation certificate against the issuer of the underlying security. The holder of a participation certificate generally will be entitled to receive from the issuing bank or broker-dealer any dividends paid in connection with the underlying security; however, the holder of the participation certificate does not have voting rights, as the holder would if it owned the underlying security directly.
Participation certificates may be traded OTC or may be listed on an exchange. Participation certificates that are not listed on an exchange may be illiquid and therefore subject to a Fund's percentage limitation for investments in illiquid securities. Due to liquidity and transfer restrictions, the secondary markets on which unlisted participation certificates are traded may be less liquid than the markets for other securities, which may lead to the absence of readily available market quotations for securities in a Fund's portfolio. Consequently, it may nevertheless be more difficult for a Fund to accurately assign a daily value to such securities.
Preferred Stocks. A Fund, may invest in preferred stocks. Preferred stock, unlike common stock, generally confers a stated dividend rate payable from the corporation's earnings. Such preferred stock dividends may be cumulative or noncumulative, fixed, participating, auction rate or other. If interest rates rise, a fixed dividend on preferred stocks may be less attractive, causing the price of preferred stocks to decline either absolutely or relative to alternative investments. Preferred stock may have mandatory sinking fund provisions, as well as provisions that allow the issuer to redeem or call the stock. The right to payment of preferred stock is generally subordinate to rights associated with a corporation's debt securities.
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Purchase of Other Investment Company Funds. Each Fund may seek to achieve its investment objective by investing in the shares of certain other investment companies, or exchange traded funds registered as investment companies, that have substantially similar investment objectives and policies, including those advised by the Adviser. With respect to the State Street S&P 500 Index Fund, these investments may be made temporarily, for example, to invest uncommitted cash balances or, in limited circumstances, to assist in meeting shareholder redemptions. The 1940 Act and the rules thereunder limits the ability of one registered investment company to invest in another. With respect to investments in other mutual funds, to the extent permitted under the 1940 Act, the amount of securities of underlying mutual funds that a Fund may hold may exceed the limitations in the 1940 Act, provided that certain conditions are met. The conditions are intended to address certain abuses perceived to be associated with a fund-of-funds, including unnecessary costs (such as sales loads, advisory fees that may be borne by a Fund and administrative costs), and undue influence by a fund-of-funds over the underlying fund. The conditions apply only when a Fund and its affiliates in the aggregate own more than 3% of the outstanding shares of any one underlying fund. If shares of a Fund are purchased by another fund beyond the limits of Section 12 of the 1940 Act, and the Fund purchases shares of another investment company, the Fund will not be able to make new investments in other funds, including private funds exempt from the definition of investment company under the 1940 Act by Sections 3(c)(1) or 3(c)(7) thereof, if, as a result of such investment, more than 10% of the Fund's assets would be invested in other funds.
Registration under the Commodity Exchange Act. The Adviser has claimed an exclusion from the definition of the term commodity pool operator with respect to the Funds under the Commodity Exchange Act (the CEA), and therefore, is not subject to registration or regulation as a commodity pool operator under the CEA. As a result, the Funds are limited in their ability to trade instruments subject to the CFTC's jurisdiction, including commodity futures (which include futures on broad-based securities indexes, interest rate futures and currency futures), options on commodity futures, certain swaps or other investments (whether directly or indirectly through investments in other investment vehicles).
Under this exclusion, a Fund must satisfy one of the following two trading limitations whenever it enters into a new commodity trading position: (1) the aggregate initial margin and premiums required to establish the Fund's positions in CFTC-regulated instruments may not exceed 5% of the liquidation value of the Fund's portfolio (after accounting for unrealized profits and unrealized losses on any such investments); or (2) the aggregate net notional value of such instruments, determined at the time the most recent position was established, may not exceed 100% of the liquidation value of the Fund's portfolio (after accounting for unrealized profits and unrealized losses on any such positions). A Fund would not be required to consider its exposure to such instruments if they were held for bona fide hedging purposes, as such term is defined in the rules of the CFTC. In addition to meeting one of the foregoing trading limitations, the Fund may not market itself as a commodity pool or otherwise as a vehicle for trading in the markets for CFTC-regulated instruments.
Repurchase Agreements. Each Fund may enter into repurchase agreements with banks, other financial institutions, such as broker-dealers, and other institutional counterparties. Under a repurchase agreement, the Funds purchase securities from a financial institution that agrees to repurchase the securities at the Fund's original purchase price plus interest within a specified time. A Fund will limit repurchase transactions to those member banks of the Federal Reserve System, broker-dealers and other financial institutions whose creditworthiness the Adviser considers satisfactory. Should the counterparty to a transaction fail financially, a Fund may encounter delay and incur costs before being able to sell the securities, or may be prevented from realizing on the securities. Further, the amount realized upon the sale of the securities may be less than that necessary to fully compensate the Fund.
Private Placements and Restricted Securities. The Funds may invest in securities that are purchased in private placements and, accordingly, are subject to restrictions on resale as a matter of contract or under federal securities laws. While such private placements may offer attractive opportunities for investment not otherwise available on the open market, the securities so purchased are often restricted securities, i.e., securities which cannot be sold to the public without registration under the Securities Act of 1933 (the Securities Act) or the availability of an exemption from registration (such as Rules 144 or 144A), or which are not readily marketable because they are subject to other legal or contractual delays in or restrictions on resale. Generally speaking, restricted securities may be sold only to qualified institutional buyers, or in a privately negotiated transaction to a limited number of purchasers, or in limited quantities after they have been held for a specified period of time and other conditions are met pursuant to an exemption from registration, or in a public offering for which a registration statement is in effect under the Securities Act.
Because there may be relatively few potential purchasers for such investments, especially under adverse market or economic conditions or in the event of adverse changes in the financial condition of the issuer, the Fund could find it more difficult to sell such securities when the Adviser believes it advisable to do so or may be able to sell such securities only at prices lower than if such securities were more widely held. Market quotations for such securities are generally less readily
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available than for publicly traded securities. The absence of a trading market can make it difficult to ascertain a market value for such securities for purposes of computing the Fund's net asset value, and the judgment of the Adviser may at times play a greater role in valuing these securities than in the case of publicly traded securities. Disposing of such securities, which may be illiquid investments, can involve time-consuming negotiation and legal expenses, and it may be difficult or impossible for the Fund to sell them promptly at an acceptable price. The Fund may have to bear the extra expense of registering such securities for resale and the risk of substantial delay in effecting such registration.
A Fund may be deemed to be an underwriter for purposes of the Securities Act when selling restricted securities to the public, and in such event the Fund may be liable to purchasers of such securities if the registration statement prepared by the issuer, or the prospectus forming a part of it, is materially inaccurate or misleading.
Reverse Repurchase Agreements. Each Fund may enter into reverse repurchase agreements, which are a form of borrowing, under the circumstances described in Investment Restrictions. Under reverse repurchase agreements, a Fund transfers possession of portfolio securities to a counterparty in return for cash in an amount equal to a percentage of the portfolio securities' market value and agrees to repurchase the securities at a future date by repaying the cash with interest. Each Fund retains the right to receive interest and principal payments from the securities while they are in the possession of the securities. Cash or liquid high quality debt obligations from a Fund's portfolio equal in value to the repurchase price including any accrued interest may be segregated by the custodian on the Fund's records while a reverse repurchase agreement is in effect. Reverse repurchase agreements involve the risk that the market value of securities sold by a Fund may decline below the price at which it is obligated to repurchase the securities. Reverse repurchase agreements involve the risk that the buyer of the securities sold might be unable to deliver them when a Fund seeks to repurchase the securities. If the buyer files for bankruptcy or becomes insolvent, a Fund may be delayed or prevented from recovering the security that it sold.
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.
Securities Lending. Each Fund may lend portfolio securities to certain creditworthy borrowers in U.S. and non-U.S. markets in an amount not to exceed 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 Fund may terminate a loan at any time and obtain the securities loaned. A Fund receives the value of any interest or cash or non-cash distributions paid on the loaned securities. A Fund cannot vote proxies for securities on loan, but may recall loans to vote proxies if a material issue affecting the Fund's economic interest in the investment is to be voted upon. Efforts to recall such securities promptly may be unsuccessful, especially for foreign securities or thinly traded securities, and may involve expenses to a Fund. 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 typically will be entitled to receive a fee based on the amount of cash collateral. A 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 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 high quality short-term instruments either directly on behalf of the lending Fund or through one or
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more joint accounts or funds, which may include those managed by the Adviser. A Fund could lose money due to a decline in the value of collateral provided for loaned securities or any investments made with cash collateral. Certain non-cash collateral or investments made with cash collateral may have a greater risk of loss than other non-cash collateral or investments.
A 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 Funds in accordance with guidelines approved by the Board. In such capacity, the lending agent provides 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 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 servicing; and (xi) arranging for return of loaned securities to the Fund in accordance with the terms of the Securities Lending Authorization Agreement. State Street Bank and Trust Company (State Street), an affiliate of the Trust, has been approved by the Board to serve as securities lending agent for each 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), 17(d) and 12(d)(1) under the 1940 Act to serve as the lending agent for affiliated investment companies such as the Trust, to invest the cash collateral received from loan transactions in an affiliated cash collateral fund and to receive a fee based on a share of the revenue generated from such transactions.
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 especially so in certain international markets such as Taiwan), gap risk (i.e., the risk of a mismatch between the return on cash collateral reinvestments and the fees a Fund has agreed to pay a borrower), risk of loss of collateral, credit, legal, counterparty and market risk. If a securities lending counterparty were to default, a Fund would be subject to the risk of a possible delay in receiving collateral (or the proceeds of its liquidation) or in recovering the loaned securities. In the event a borrower does not return a Fund's securities as agreed, the Fund may experience losses if the proceeds received from liquidating the collateral do not at least equal the value of the loaned security at the time the collateral is liquidated, plus the transaction costs incurred in purchasing replacement securities. Although State Street has agreed to provide a Fund with indemnification in the event of a borrower default, a Fund is still exposed to the risk of losses in the event a borrower does not return a Fund's securities as agreed. For example, delays in recovery of lent securities may cause a Fund to lose the opportunity to sell the securities at a desirable price with guaranteed delivery provisions.
Special Situations. State Street International Stock Selection Fund may invest in joint ventures, cooperatives, partnerships, private placements, unlisted securities, and other similar vehicles (collectively, special situations). Investments in special situations could enhance the Fund's capital appreciation potential. These investments are generally illiquid and subject to the same risks and limitations associated with illiquid securities, as described above. Due to foreign ownership restrictions, the Fund may invest periodically in illiquid securities which are or become illiquid due to restrictions on foreign ownership imposed by foreign governments. Said securities may be more difficult to price and trade.
Special Risk Considerations of Investing in China. State Street International Stock Selection Fund may invest in securities of Chinese issuers. Investing in securities of Chinese issuers, including by investing in A Shares, involves certain risks and considerations not typically associated with investing in securities of U.S. issuers, including, among others, (i) more frequent (and potentially widespread) trading suspensions and U.S. or foreign government interventions or restrictions with respect to Chinese issuers, which could preclude the Fund from making certain investments or result in the Fund selling investments at disadvantageous times and which may also cause reduced liquidity and increased price volatility in such investments, (ii) currency revaluations and other currency exchange rate fluctuations or blockage, (iii) the nature and extent of intervention by the Chinese government in the Chinese securities markets, whether such intervention will continue and the impact of such intervention or its discontinuation, (iv) the risk of nationalization or expropriation of assets, (v) the risk that the Chinese government may decide not to continue to support economic reform programs, (vi) limitations on the use of brokers, (vii) potentially higher rates of inflation, (viii) the unavailability of consistently-reliable economic data, (ix) the relatively small size and absence of operating history of many Chinese companies, (x) accounting,
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auditing and financial reporting standards in China are different from U.S. standards and, therefore, disclosure of certain material information may not be available, (xi) greater political, economic, social, legal and tax-related uncertainty, (xii) higher market volatility caused by any potential regional territorial conflicts or natural disasters, (xiii) higher dependence on exports and international trade, (xiv) the risk of increased trade tariffs, sanctions, embargoes and other trade limitations, (xv) restrictions on foreign ownership, and (xvi) custody risks associated with investing through programs to access Chinese securities. Significant portions of the Chinese securities markets may become rapidly illiquid, as Chinese issuers have the ability to suspend the trading of their equity securities, and have shown a willingness to exercise that option in response to market volatility and other events. The liquidity of Chinese securities may shrink or disappear suddenly and without warning as a result of adverse economic, market or political events, or adverse investor perceptions, whether or not accurate.
In addition, unexpected political, regulatory and diplomatic events, such as the U.S.-China trade war that intensified in 2018, may affect investor and consumer confidence and may adversely impact financial markets and the broader economy, perhaps suddenly and to a significant degree. The current political climate and the further escalation of a trade war between China and the United States may have an adverse effect on both the U.S. and Chinese economies, as each country has recently imposed tariffs on the other country's products. Some U.S. politicians have recently sought to limit certain U.S. investors from investing in Chinese companies. In January 2020, the U.S. and China signed a Phase 1 trade agreement that reduced some U.S. tariffs on Chinese goods while boosting Chinese purchases of American goods. However, this agreement left in place a number of existing tariffs, and it is unclear whether further trade agreements may be reached in the future. Events such as these and their impact on the Fund are difficult to predict and it is unclear whether further tariffs may be imposed or other escalating actions may be taken in the future.
Total Rate of Return Swaps. State Street International Stock Selection Fund may invest in total rate of return swaps. The Fund may contract with a counterparty to pay a stream of cash flows and receive the total return of an index or a security for purposes of attempting to obtain a particular desired return at a lower cost to the Fund than if they had invested directly in an instrument that yielded that desired return. The Adviser will cause the Fund to enter into swap agreements only with counterparties that would be eligible for consideration as repurchase agreement counterparties under the Trust's repurchase agreement guidelines.
Temporary Defensive Positions. From time to time, the Street International Stock Selection Fund may take temporary defensive positions in attempting to respond to adverse market, economic or other conditions. Temporary defensive positions may be taken, for example, to preserve capital or if the Fund is unable to pursue its investment strategies or acquire the types of securities in which it normally invests. Temporary defensive positions will be in high-quality fixed income securities, cash or cash equivalents. These positions include, but are not limited to: (1) obligations issued or guaranteed as to principal and interest by the U.S. Government, its agencies or instrumentalities; (2) commercial paper, bank certificates of deposit, bankers' acceptances and time deposits; (3) repurchase agreements; or (4) uninvested cash, some or all of which may be held in a non-interest bearing demand deposit account at the Fund's affiliated custodian. The Adviser has discretion in determining: (i) whether taking a temporary defensive position is appropriate for the Fund at a particular time, and (ii) the types of instruments that the Fund will hold in taking a temporary defensive position. While investing defensively, the Fund may maintain a substantial portion of its assets in cash, on which the Fund may earn little if any income.
When taking a temporary defensive position, the Fund may not achieve its investment objective.
U.S. Government Obligations. Each Fund may invest in U.S. Government obligations. The types of U.S. Government obligations in which each Fund may at times invest include (1) U.S. Treasury obligations, which differ only in their interest rates, maturities and times of issuance and (2) obligations issued or guaranteed by U.S. Government agencies and instrumentalities which are supported by any of the following: (a) the full faith and credit of the U.S. Treasury, (b) the right of the issuer to borrow an amount limited to a specific line of credit from the U.S. Treasury, (c) discretionary authority of the U.S. Government agency or instrumentality or (d) the credit of the instrumentality (examples of agencies and instrumentalities are: Federal Land Banks, Federal Housing Administration, Federal Farm Credit Bank, Farmers Home Administration, Export-Import Bank of the United States, Central Bank for Cooperatives, Federal Intermediate Credit Banks, Federal Home Loan Banks, General Services Administration, Maritime Administration, Tennessee Development Bank, Student Loan Marketing Association, International Bank for Reconstruction and Development and Federal National Mortgage Association (Fannie Mae). No assurance can be given that in the future the U.S. Government will provide financial support to such U.S. Government agencies or instrumentalities described in (2)(b), (2)(c) and (2)(d), other than as set forth above, since it is not obligated to do so by law. Each such Fund may purchase U.S. Government obligations on a forward commitment basis.
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Since September 2008, Fannie Mae and the Federal Home Loan Mortgage Corporation (together, the GSEs) have been placed under the conservatorship of the Federal Housing Finance Agency (FHFA). The U.S. Treasury, FHFA and the Federal Reserve have taken the steps to support the conservatorship. No assurance can be given that those initiatives with respect to the debt
Warrants. Each Fund may invest in warrants. Warrants entitle the holder to buy equity securities at a specific price for a specific period of time. Warrants may be considered more speculative than certain other types of investments in that they do not entitle a holder to dividends or voting rights with respect to the securities which may be purchased nor do they represent any rights in the assets of the issuing company. Also, the value of the warrant does not necessarily change with the value of the underlying securities and a warrant ceases to have value if it is not exercised prior to the expiration date. No Fund will invest more than 5% of the value of its net assets in warrants, or more than 2% in warrants which are not listed on the New York or American Stock Exchanges.
When-Issued, Delayed Delivery and Forward Commitment Transactions. To secure an advantageous price or yield, certain Funds may purchase securities on a when-issued, delayed delivery, to-be-announced (TBA) or forward commitment basis and may sell securities on a forward commitment or delayed delivery basis. A Fund will enter into when-issued, delayed delivery, TBA or forward commitment transactions for the purpose of acquiring securities and not for the purpose of leverage.
When purchasing a security on a when-issued, delayed delivery, TBA or forward commitment basis, a Fund assumes the rights and risks of ownership of the security, including the risk of price and yield fluctuations, and takes such fluctuations into account when determining its net asset value (NAV). When such transactions are negotiated, certain terms may be fixed at the time the commitment is made, but delivery and payment for the securities takes place at a later date. In general, a Fund does not pay for the securities until received and does not start earning interest or other income until the contractual settlement date. A Fund may take delivery of the securities or it may sell the securities before the settlement date.
At the time of delivery of the securities, the value may be more or less than the purchase or sale price. If a Fund remains substantially fully invested at a time when when-issued, delayed delivery, TBA or forward commitment purchases are outstanding, the purchases may result in a form of leverage and give rise to increased volatility of the Fund's NAV. Default by, or bankruptcy of, a counterparty to a when-issued, delayed delivery, TBA or forward commitment transaction would expose the Fund to possible losses because of an adverse market action, expenses or delays in connection with the purchase or sale of the pools specified in such transaction. Purchases of when-issued, delayed delivery, TBA or forward commitment securities also involve a risk of loss if the seller fails to deliver after the value of the securities has risen.
A TBA transaction involves a commitment to purchase securities sold for a fixed price where the underlying securities are announced at a future date. The seller does not specify the particular securities to be delivered. Instead, a Fund agrees to accept any security that meets specified terms. For example, in a TBA mortgage-backed security transaction, a Fund and the seller would agree upon the issuer, interest rate and terms of the underlying mortgages. The seller would not identify the specific underlying mortgages until it issues the security. For this reason, in a TBA transaction, a Fund commits to purchase securities for which all specific information is not yet known at the time of the trade, particularly the exact face amount in forward commitment mortgage-backed securities transactions. The purchaser in a TBA transaction generally is subject to increased market risk and interest rate risk because the delivered securities may be less favorable than anticipated by the purchaser.
Certain Funds may also enter into a forward commitment to sell securities it owns. The use of forward commitments enables a Fund to hedge against anticipated changes in interest rates and prices. In a forward sale, a Fund does not participate in gains or losses on the security occurring after the commitment date. Forward commitments to sell securities also involve a risk of loss if the seller fails to take delivery after the value of the securities has declined. Forward commitment transactions involve additional risks similar to those associated with investments in options and futures contracts.
Rule amendments proposed by the Financial Industry Regulatory Authority, Inc. (FINRA) may impose mandatory margin requirements for Covered Agency Transactions, which include TBA Transactions, certain transactions in pass-through mortgage-backed securities or small-business administration-backed asset-backed securities and transactions in collateralized mortgage obligations (CMOs), in each case where such transactions have delayed contractual settlement
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dates of a specified period. There are limited exceptions to these margin requirements. Covered Agency Transactions historically have not been required to be collateralized. The collateralization of Covered Agency Transactions is intended to mitigate counterparty credit risk between trade and settlement, but could increase the cost of such transactions and impose added operational complexity.
FUND SPECIFIC INVESTMENT STRATEGIES: A Fund may invest in the following instruments and utilize the following investment techniques:
Applicable to State Street International Stock Selection Fund:
Investors should consider carefully the substantial risks involved in securities of companies and governments of foreign nations, which are in addition to the usual risks inherent in domestic investments. There may be less publicly available information about foreign companies comparable to the reports and ratings published regarding U.S. companies. Foreign companies are not generally subject to uniform accounting, auditing and financial reporting standards, and auditing practices and requirements may not be comparable to those applicable to U.S. companies. Many foreign markets have substantially less volume than either the established domestic securities exchanges or the OTC markets. Securities of some foreign companies are less liquid and more volatile than securities of comparable U.S. companies. Commission rates in foreign countries, which may be fixed rather than subject to negotiation as in the U.S., are likely to be higher. In many foreign countries there is less government supervision and regulation of securities exchanges, brokers and listed companies than in the U.S., and capital requirements for brokerage firms are generally lower. Settlement of transactions in foreign securities may, in some instances, be subject to delays and related administrative uncertainties.
Investments in companies domiciled in emerging market countries may be subject to additional risks than investment in the U.S. and in other developed countries. These risks include: (1) Volatile social, political and economic conditions in emerging or developing markets can cause exposure to economic structures that are generally less diverse and mature. Emerging market countries can have political systems which can be expected to have less stability than those of more developed countries. The possibility may exist that recent favorable economic developments in certain emerging market countries may be suddenly slowed or reversed by unanticipated political or social events in such countries. Moreover, the economies of individual emerging market countries may differ favorably or unfavorably from the U.S. economy in such respects as the rate of growth in gross domestic product, the rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments position. (2) The small current size of the markets for such securities and the currently low or nonexistent volume of trading can result in a lack of liquidity and in greater price volatility. Until recently, there has been an absence of a capital market structure or market-oriented economy in certain emerging market countries. To the extent the Fund invests in securities denominated in foreign currencies, the value of such securities to the Fund will be affected by changes in currency exchange rates and in exchange control regulations. A change in the value of a foreign currency against the U.S. dollar will result in a corresponding change in the U.S. dollar value of the Fund's securities. In addition, some emerging market countries may have fixed or managed currencies which are not free-floating against the U.S. dollar. Further, certain emerging market currencies may not be internationally traded. Certain of these currencies have experienced a steady devaluation relative to the U.S. dollar. Many emerging markets countries have experienced substantial, and in some periods extremely high, rates of inflation for many years. Inflation and rapid fluctuations in inflation rates have had, and may continue to have, negative effects on the economies and securities markets of certain emerging market countries. (3) The existence of national policies may restrict the Fund's investment opportunities and may include restrictions on investment in issuers or industries deemed sensitive to national interests. (4) Some emerging markets countries may not have developed structures governing private or foreign investment and may not allow for judicial redress for injury to private property.
The Fund endeavors to buy and sell foreign currencies on favorable terms. Price spreads on currency exchange (to cover service charges) may be incurred, particularly when the Fund changes investments from one country to another or when proceeds from the sale of shares in U.S. dollars are used for the purchase of securities in foreign countries. Also, some countries may adopt policies which would prevent the Fund from repatriating invested capital and dividends, withhold portions of interest and dividends at the source, or impose other taxes, with respect to the Fund's investments in securities of issuers of that country. There also is the possibility of expropriation, nationalization, withholding or other taxation (in each case, which taxes could potentially be confiscatory), foreign exchange controls (which may include suspension of the ability to transfer currency from a given country), default in foreign government securities, domestic and foreign political or social instability, or diplomatic developments that could adversely affect investments in securities of issuers in those nations.
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The Fund may be affected either favorably or unfavorably by fluctuations in the relative rates of exchange between the currencies of different nations, exchange control regulations and indigenous economic and political developments.
Exchange Traded Funds. An exchange-traded fund (ETF) is an investment company that trades like a stock throughout the day. An ETF is similar to an index fund in that it will primarily invest in the securities of companies that are included in a selected market index. An ETF will invest in either all of the securities or a representative sample of the securities included in the index.
Although ETFs are legally classified as open-end companies or unit investment trusts (UITs), they differ from traditional open-end companies and UITs in the following respects:
ETFs do not sell individual shares directly to investors and only issue their shares in large blocks (blocks of 50,000 shares, for example) that are known as Creation Units;
Investors generally do not purchase Creation Units with cash. Instead, they buy Creation Units with a basket of securities that generally mirrors the ETF's portfolio. Those who purchase Creation Units are frequently institutions; and
After purchasing a Creation Unit, an investor often splits it up and sells the individual shares on a secondary market. This permits other investors to purchase individual shares (instead of Creation Units).
Investors who want to sell their ETF shares have two options: (1) they can sell individual shares to other investors on the secondary market, or (2) they can sell the Creation Units back to the ETF. In addition, ETFs generally redeem Creation Units by giving investors the securities that comprise the portfolio instead of cash. Because of the limited redeemability of ETF shares, ETFs are not considered to be—and may not call themselves—mutual funds. ETFs are subject to the risk that the value of the securities in which the ETF invests may go up or down in response to the prospects of the underlying securities and/or general economic conditions. Price changes may be temporary or may last for extended periods.
DERIVATIVES, HEDGING STRATEGIES AND RELATED INVESTMENT TECHNIQUES
The State Street International Stock Selection Fund may use derivative instruments, among other things, to hedge against movements in the equity markets, interest rates and currency exchange rates through the use of swaps, options, futures transactions, and options on futures. The Fund may also use derivative instruments to seek to generate investment returns. The Fund has authority to write (sell) covered call and put options on portfolio securities, purchase put and call options on securities and engage in transactions in stock index options, stock index futures and financial futures and related options on such futures and may enter into such options and futures transactions either on exchanges or in the OTC markets. The Fund may engage in options and futures transactions for hedging purposes, in which case, the Adviser believes that such strategies will not subject the Fund to the risks frequently associated with the speculative use of options and futures transactions. The Fund may also choose to use derivatives to generate exposure to securities or markets more efficiently than through direct investment in a security or group of securities. Although the use of hedging strategies by the Fund is intended to reduce the volatility of the NAV of the Fund's shares, the NAV will nevertheless fluctuate. There can be no assurance that the use of derivatives or hedging transactions will be effective.
Writing Covered Call Options. The Fund is authorized to write (sell) covered call options on the securities in which it may invest and to enter into closing purchase transactions with respect to such options. Writing a call option obligates the Fund to sell or deliver the option's underlying security, in return for the strike price, upon exercise of the option. By writing a call option, the Fund receives an option premium from the purchaser of the call option. Writing covered call options is generally a profitable strategy if prices remain the same or fall. Through receipt of the option premium, the Fund would seek to mitigate the effects of a price decline. By writing covered call options, however, the Fund gives up the opportunity, while the option is in effect, to profit from any price increase in the underlying security above the option exercise price. In addition, the Fund's ability to sell the underlying security will be limited while the option is in effect unless the Fund effects a closing purchase transaction.
Writing Covered Put Options. The Fund is authorized to write (sell) covered put options on its portfolio securities and to enter into closing transactions with respect to such options.
When the Fund writes a put option in return for receipt of a premium, the Fund assumes the obligation to pay the strike price for the option's underlying instrument if the other party to the option chooses to exercise it. The Fund may seek to terminate its position in a put option it writes before exercise by closing out the option in the secondary market at its current price. If the secondary market is not liquid for an option the Fund has written, however, the Fund must continue to be prepared to pay the strike price while the option is outstanding, regardless of price changes, and must continue to cover its position.
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The Fund may write put options as an alternative to purchasing actual securities. If security prices rise, the Fund would expect to profit from a written put option, although its gain would be limited to the amount of the premium it received. If security prices remain the same over time, it is likely that the Fund will also profit, because it should be able to close out the option at a lower price. If security prices fall, the Fund would expect to suffer a loss. This loss should be less than the loss the Fund would have experienced from purchasing the underlying instrument directly, however, because the premium received for writing the option should mitigate the effects of the decline.
Purchasing Put Options. The Fund is authorized to purchase put options to hedge against a decline in the market value of its portfolio securities. By buying a put option the Fund has the right (but not the obligation) to sell the underlying security at the exercise price, thus limiting the Fund's risk of loss through a decline in the market value of the security until the put option expires. The amount of any appreciation in the value of the underlying security will be partially offset by the amount of the premium paid by the Fund for the put option and any related transaction costs. Prior to its expiration, a put option may be sold in a closing sale transaction and profit or loss from the sale will depend on whether the amount received is more or less than the premium paid for the put option plus the related transaction costs. A closing sale transaction cancels out the Fund's position as the purchaser of an option by means of an offsetting sale of an identical option prior to the expiration of the option it has purchased. The Fund will not purchase put options on securities (including stock index options) if as a result of such purchase, the aggregate cost of all outstanding options on securities held by the Fund would exceed 5% of the market value of its total assets.
Purchasing Call Options. The Fund is also authorized to purchase call options. The features of call options are essentially the same as those of put options, except that the purchaser of a call option obtains the right to purchase, rather than sell, the underlying instrument at the option's strike price (call options on futures contracts are settled by purchasing the underlying futures contract). The Fund will purchase call options only in connection with closing purchase transactions. The Fund will not purchase call options on securities (including stock index options) if as a result of such purchase the aggregate cost of all outstanding options on securities held by the Fund would exceed 5% of the market value of its total assets.
Interest Rate and Financial Futures and Options. The Fund may invest in interest rate futures contracts, foreign currency futures contracts, and options thereon that are traded on a U.S. or foreign exchange or board of trade. An interest rate, foreign currency or index futures contract provides for the future sale by one party and purchase by another party of a specified quantity of financial instruments (such as GNMA certificates or Treasury bonds) or foreign currency or the cash value of an index or interest rate at a specified price at a future date. A futures contract on an index is an agreement between two parties (buyer and seller) 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 was originally written. In the case of futures contracts traded on U.S. exchanges, the exchange itself or an affiliated clearing corporation assumes the opposite side of each transaction (i.e., as buyer or seller). A futures contract may be satisfied or closed out by delivery or purchase, as the case may be, of the financial instrument or by payment of the change in the cash value of the index. Using futures to effect a particular strategy instead of using the underlying or related security or index may result in lower transaction costs being incurred. Although the value of an index may be a function of the value of certain specified securities, no physical delivery of these securities is made. A public market exists in futures contracts covering interest rates, several indexes and a number of financial instruments and foreign currencies.
The Fund may also purchase and write call and put options on futures contracts. Options on futures contracts possess many of the same characteristics as options on securities and indexes (discussed above). A futures option gives the holder the right, in return for the premium paid, to assume a long position (in the case of a call) or short position (in the case of a put) in a futures contract at a specified exercise price 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. An option on a futures contract may be closed out (before exercise or expiration) by an offsetting purchase or sale of an option on a futures contract of the same series.
The Fund will only enter into futures contracts and options on futures contracts which are standardized and traded on a U.S. or foreign exchange, board of trade, or similar entity, or quoted on an automated quotation system. The Fund will enter into a futures contract only if the contract is covered. The Fund will write a call or put option on a futures contract only if the option is covered.
Restrictions on the Use of Futures Transactions. The purchase or sale of a futures contract differs from the purchase or sale of a security in that no purchase price is paid or received at the outset of the transaction. Instead, an amount of cash or securities acceptable to the broker and the relevant contract market, which varies, but is generally about 5% of the contract amount, must be deposited with the broker. This amount is known as initial margin and represents a good faith
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deposit assuring the performance of both the purchaser and seller under the futures contract. Subsequent payments to and from the broker, called variation margin, are required to be made on a daily basis as the price of the futures contract fluctuates making the long and short positions in the futures contracts more or less valuable, a process known as marking to market. At any time prior to the settlement date of the futures contract, the Fund may seek to close out a position by taking an opposite position which will operate to terminate the position in the futures contract; however, there is no guarantee that the Fund will be able to do so. Upon termination of a futures contract, a final determination of variation margin is then made, additional cash is required to be paid to or released by the broker and the purchaser realizes a loss or gain. In addition, a nominal commission is paid on each completed sale transaction.
Restrictions on OTC Options. The Fund may engage in OTC options (including OTC foreign security and currency options and options on foreign security and currency futures if permitted by its investment mandate), only with member banks of the Federal Reserve System and primary dealers in U.S. Government securities or with affiliates of such banks or dealers which have capital of at least $50 million or whose obligations are guaranteed by an entity having capital of at least $50 million. The Fund will acquire only those OTC options for which the Adviser believes the Fund can receive on each business day at least two independent bids or offers (one of which will be from an entity other than a party to the option).
The staff of the SEC has taken the position that purchased OTC options and the assets used as cover for written OTC options are illiquid securities. Therefore, the Fund has adopted an operating policy pursuant to which it will not purchase or sell OTC options if, as a result of such transaction, the sum of: (1) the market value of outstanding OTC options held by the Fund; (2) the market value of the underlying securities covered by outstanding OTC call options sold by the Fund; and (3) the market value of all other assets of the Fund that are illiquid or are not otherwise readily marketable, would exceed 15% of its net assets, taken at market value. However, if an OTC option is sold by the Fund to a primary U.S. Government securities dealer recognized by the Federal Reserve Bank of New York and the Fund has the unconditional contractual right to repurchase such OTC option from the dealer at a predetermined price, then the Fund will treat as illiquid such amount of the underlying securities as is equal to the repurchase price less the amount by which the option is in-the-money (current market value of the underlying security minus the option's strike price). The repurchase price with primary dealers is typically a formula price which is generally based on a multiple of the premium received for the option plus the amount by which the option is in-the-money.
Risk Factors in Options, Futures and Forward Transactions. The use of options and futures involves the risk of imperfect correlation in movements in the price of options and futures for hedging purposes and movements in the price of the reference asset. If the price of the options or futures moves more or less than the price of reference asset, the Fund will experience a gain or loss which will not be completely offset by movements in the price of the reference asset. The successful use of options and futures also depends on the Adviser's ability to correctly predict price movements in the market involved in a particular options or futures transaction. To compensate for imperfect correlations, the Fund may purchase or sell stock index options or futures contracts in a greater dollar amount than the reference asset if the volatility of the reference asset is historically greater than the volatility of the stock index options or futures contracts. Conversely, the Fund may purchase or sell fewer stock index options or futures contracts, if the historical price volatility of the reference asset is less than that of the stock index options or futures contracts. The risk of imperfect correlation generally tends to diminish as the maturity date of the stock index option or futures contract approaches. Options are also subject to the risks of an illiquid secondary market, particularly in strategies involving writing options, which the Fund cannot terminate by exercise. In general, options whose strike prices are close to their underlying instruments' current value will have the highest trading volume, while options whose strike prices are further away may be less liquid.
The Fund may contract to purchase securities for a fixed price at a future date beyond customary settlement time. When effecting such transactions, cash or marketable securities held by the Fund of a dollar amount sufficient to make payment for the portfolio securities to be purchased will be segregated by the custodian on the Funds' records at the trade date and maintained until the transaction is settled. The failure of the other party to the transaction to complete the transaction may cause the Fund to miss an advantageous price or yield. Forward commitments involve a risk of loss if the value of the security to be purchased declines prior to the settlement date, or if the other party fails to complete the transaction.
The Fund intends to enter into options and futures transactions, on an exchange or in the OTC market, only if there appears to be a liquid secondary market for such options or futures or, in the case of OTC transactions, the Adviser believes the Fund can receive on each business day at least two independent bids or offers. However, there can be no assurance that a liquid secondary market will exist at any specific time. Thus, it may not be possible to close an options or futures position. The inability to close options and futures positions also could have an adverse impact on the Fund's ability to effectively hedge its portfolio. There is also the risk of loss by the Fund of margin deposits or collateral in the
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event of bankruptcy of a broker with whom the Fund has an open position in a derivative position. To the extent that the Fund uses futures, options or forward instruments to gain direct exposure to a security or market, the use of such instruments could expose the Fund to the effects of leverage, which could increase the Fund's exposure to the market and magnify potential losses.
The exchanges on which options on securities and currency options are traded have generally established limitations governing the maximum number of call or put options on the same underlying security or currency (whether or not covered) which may be written by a single investor, whether acting alone or in concert with others (regardless of whether such options are written on the same or different exchanges or are held or written in one or more accounts or through one or more brokers). Trading limits are imposed on the maximum number of contracts which any person may trade on a particular trading day.
In addition, if a futures broker of the Fund becomes bankrupt or insolvent, or otherwise defaults on its obligations to the Fund, the Fund may not receive all amounts owing to it in respect of its trading, despite the futures clearing house fully discharging all of its obligations. In the event of the bankruptcy of a futures broker, the Fund could be limited to recovering only a pro rata share of all available funds segregated on behalf of the futures broker's combined customer accounts. Also, in contrast to the treatment of margin provided for cleared derivatives, the futures broker does not typically notify the futures clearing house of the amount of margin provided by the futures broker to the futures clearing house that is attributable to each customer. Therefore, the Fund is subject to the risk that its margin will be used by the futures clearing house to satisfy the obligations of another customer of its futures broker. In addition, in the event of the bankruptcy or insolvency of a clearing house, the Fund might experience a loss of funds deposited through its futures broker as margin with the clearing house, a loss of unrealized profits on its open positions, and the loss of funds owed to it as realized profits on closed positions. Such a bankruptcy or insolvency might also cause a substantial delay before the Fund could obtain the return of funds owed to it by a futures broker who was a member of such clearing house. Furthermore, if a futures broker does not comply with the applicable regulations or its agreement with a Fund, or in the event of fraud or misappropriation of customer assets by a futures broker, the Fund could have only an unsecured creditor claim in an insolvency of the futures broker with respect to margin held by the futures broker.
Applicable to State Street S&P 500 Index Fund:
Cash Reserves. The Fund may hold portions of its assets in cash or short-term debt instruments with remaining maturities of 397 days or less pending investment or to meet anticipated redemptions and day-to-day operating expenses. Short-term debt instruments consist of: (i) short-term obligations of the U.S. Government, its agencies, instrumentalities, authorities or political subdivisions; (ii) other short-term debt securities rated at the time of purchase Aa or higher by Moody's or AA or higher by S&P Global Ratings (S&P) or, if unrated, of comparable quality in the opinion of the Adviser; (iii) commercial paper; (iv) bank obligations, including negotiable certificates of deposit, time deposits and bankers' acceptances; and (v) repurchase agreements. At the time the Fund invests in commercial paper, bank obligations or repurchase agreements, the issuer or the issuer's parent must have outstanding debt rated Aa or higher by Moody's or AA or higher by S&P or outstanding commercial paper or bank obligations rated Prime-1 by Moody's or A-1 by S&P; or, if no such ratings are available, the instrument must be of comparable quality in the opinion of the Adviser. To the extent that the Fund holds the foregoing instruments its ability to track its corresponding Index may be adversely affected. See Appendix A for more information on the ratings of debt instruments.
Futures Contracts and Options on Futures. The Fund may enter into futures contracts on securities in which it may invest or on indices comprised of such securities and may purchase and write call and put options on such contracts.
Futures contracts. A financial futures contract is a contract to buy or sell a specified quantity of financial instruments such as U.S. Treasury bills, notes and bonds at a specified future date at a price agreed upon when the contract is made. An index futures contract is a contract to buy or sell specified units of an index at a specified future date at a price agreed upon when the contract is made. The value of a unit is based on the current value of the index. Under such contracts no delivery of the actual securities making up the index takes place. Rather, upon expiration of the contract, settlement is made by exchanging cash in an amount equal to the difference between the contract price and the closing price of the index at expiration, net of variation margin previously paid. Futures contracts are traded in the United States only on commodity exchanges or boards of trade — known as contract markets — approved for such trading by the CFTC, and must be executed through a futures commission merchant or brokerage firm which is a member of the relevant contract market.
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Although futures contracts (other than index futures) by their terms call for actual delivery or acceptance of commodities or securities, in most cases the contracts are closed out before the settlement date without the making or taking of delivery, but rather by entering into an offsetting contract (a closing transaction). Upon entering into a futures contract, the Fund is required to deposit an initial margin with the futures broker. The initial margin serves as a good faith deposit that the 500 Fund will honor its futures commitments. Subsequent payments (called variation margin or maintenance margin) to and from the broker are made on a daily basis as the price of the underlying security or commodity fluctuates, making the long and short positions in the futures contract more or less valuable, a process known as marking to the market. Futures contracts also involve brokerage costs. If the Fund is unable to enter into a closing transaction, the amount of the Fund's potential loss may be unlimited.
The Fund will not commit more than 5% of the market value of its total assets to initial margin deposits on futures and premiums paid for options on futures.
Options on Securities and Securities Indices. The Fund may purchase or sell options on securities in which it may invest and on indices that are comprised of securities in which it may invest, subject to the limitations set forth above and provided such options are traded on a regulated exchange or in the OTC market. A call option on a securities index grants the purchaser of the call, for a premium paid to the seller, the right to receive in cash an amount equal to the difference between the closing value of the index and the exercise price of the option times a multiplier established by the exchange upon which the option is traded. Typically, a call option will be profitable to the holder of the option if the value of the security or the index increases during the term of the option; a put option will be valuable if the value of the security or the index decreases during the term of the option. The Fund may also invest in warrants, which entitle the holder to buy equity securities at a specific price for a specific period of time.
Description of Benchmark Indices
The following are descriptions of indices against which certain Funds measure their performance, or from which a Fund chooses securities for investment.
State Street S&P 500 Index Fund. The S&P 500® Index (the Index) is composed of the common stocks of 500 companies which are chosen by Standard & Poor's Financial Services LLC (Standard & Poor's) to best capture the performance of the large-cap segment of the market and it is considered to be a proxy of the U.S. equity market. The Index is structured to approximate the general distribution of industries in the U.S. economy. The inclusion of a stock in the Index in no way implies that Standard & Poor's believes the stock to be an attractive investment, nor is Standard & Poor's a sponsor or in any way affiliated with the Fund. The index captures approximately 80% coverage of available market capitalization of all U.S. common stocks. The Index is weighted by float-adjusted market capitalization. Constituent selection is at the discretion of the Index Committee and it is based on the eligibility criteria. The Index has a fixed constituent company count of 500. Sector balance, as measured by a comparison of each GICS sector's weight in an index with its weight in the S&P Total Market Index, in the relevant market capitalization range, is also considered in the selection of companies for the Index.
State Street International Stock Selection Fund measures its performance against the MSCI® EAFE® Index. The MSCI® EAFE® Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of developed markets countries excluding USA and Canada. As of October 31, 2022, the MSCI® EAFE® Index included the following countries: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.
INVESTMENT RESTRICTIONS
The Trust has adopted the following fundamental investment restrictions with respect to the Funds, which may not be changed without the affirmative vote of a majority of the outstanding voting securities of a Fund, which is defined in the 1940 Act to mean the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the Fund and (2) 67% or more of the shares present at a meeting if more than 50% of the outstanding shares are present at the meeting in person or by proxy.
1.
A Fund may borrow money and issue senior securities to the extent consistent with applicable law from time to time.
2.
A Fund may make loans, including to affiliated investment companies, to the extent consistent with applicable law from time to time.
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3.
A Fund may purchase or sell commodities to the extent consistent with applicable law from time to time.
4.
A Fund may purchase, sell or hold real estate to the extent consistent with applicable law from time to time.
5.
A Fund may underwrite securities to the extent consistent with applicable law from time to time.
For State Street International Stock Selection Fund:
6.
The Fund may not purchase any security if, as a result, 25% or more of the Fund's total assets (taken at current value) would be invested in a particular industry (for purposes of this restriction, investment companies are not considered to constitute a particular industry or group of industries), except as is consistent with applicable law from time to time and as follows: the Fund is permitted to invest without limit in government securities (as defined in the 1940 Act) and tax-exempt securities issued by a U.S. territory or possession, a state or local government, or a political subdivision of any of the foregoing.
For State Street S&P 500 Index Fund:
6.
The Fund may not purchase any security if, as a result, 25% or more of the Fund's total assets (taken at current value) would be invested in a particular industry (for purposes of this restriction, investment companies are not considered to constitute a particular industry or group of industries), except as is consistent with applicable law from time to time and as follows: the Fund is permitted to invest without limit in government securities (as defined in the 1940 Act) and tax exempt securities issued by a U.S. territory or possession, a state or local government, or a political subdivision of any of the foregoing. The Fund may concentrate its investments in securities of issuers in the same industry as may be necessary to approximate the composition of the Fund's underlying Index.
For each Fund, all percentage limitations (except the limitation to borrowings) on investments will apply at the time of the making of an investment and shall not be considered violated unless an excess or deficiency occurs or exists immediately after and as a result of such investment. Except for the investment restrictions expressly identified as fundamental, or to the extent designated as such in the Prospectus with respect to a Fund, the other investment policies described in this SAI or in the Prospectus are not fundamental and may be changed by approval of the Trustees without shareholder approval.
Additional Information
Fundamental Investment Restrictions (1) through (5), as numbered above, limit a Fund's ability to engage in certain investment practices and purchase securities or other instruments to the extent consistent with applicable law as that law changes from time to time. Applicable law includes the 1940 Act, the rules or regulations thereunder and applicable orders of the SEC as are currently in place. In addition, interpretations and guidance provided by the SEC staff may be taken into account, where deemed appropriate by a Fund, to determine if an investment practice or the purchase of securities or other instruments is permitted by applicable law. As such, the effects of these limitations will change as the statute, rules, regulations or orders (or, if applicable, interpretations) change, and no shareholder vote will be required or sought when such changes permit or require a resulting change in practice.
Names Rule Policy
To the extent a Fund is subject to Rule 35d-1 under the 1940 Act, the Fund has an investment policy, described in the Fund's Prospectus, to, under normal circumstances, invest at least 80% of its assets in the particular types of investments suggested by the Fund's name (a Name Policy). Assets for the purposes of a Name Policy are net assets plus the amount of any borrowings for investment purposes. The percentage limitation applies at the time of purchase of an investment. A Fund's Name Policy may be changed by the Board of Trustees without shareholder approval. However, to the extent required by SEC regulations, shareholders will be provided with at least sixty (60) days' notice prior to any change in a Fund's Name Policy.
DISCLOSURE OF PORTFOLIO HOLDINGS
Introduction
The policies set forth below to be followed by State Street and SSGA FM (collectively with State Street, the Service Providers) for the disclosure of information about the portfolio holdings of the Trust. These disclosure policies are intended to ensure compliance by the Service Providers and the Trust with applicable regulations of the federal securities laws, including the 1940 Act and the Investment Advisers Act of 1940, as amended. The Board of Trustees must approve all material amendments to the policy.
General Policy
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It is the policy of the Service Providers to protect the confidentiality of client holdings and prevent the selective disclosure of non-public information concerning the Trust.
No information concerning the portfolio holdings of the Trust may be disclosed to any party (including shareholders) except as provided below. The Service Providers are not permitted to receive compensation or other consideration in connection with disclosing information about a Fund's portfolio to third parties. In order to address potential conflicts between the interest of Fund shareholders, on the one hand, and those of the Service Providers or any affiliated person of those entities or of the Fund, on the other hand, the Fund's policies require that non-public disclosures of information regarding the Fund's portfolio may be made only if there is a legitimate business purpose consistent with fiduciary duties to all shareholders of the Fund.
The Board of Trustees exercises continuing oversight over the disclosure of each Fund's holdings by (i) overseeing the implementation and enforcement of the portfolio holding disclosure policy, Codes of Ethics and other relevant policies of each Fund and its Service Providers by the Trust's Chief Compliance Officer (CCO) and (ii) considering reports and recommendations by the Trust's CCO concerning any material compliance matters (as defined in Rule 38a-1 under the 1940 Act). The Board reserves the right to amend the policy at any time without prior notice in its sole discretion.
Publicly Available Information. Any party may disclose portfolio holdings information after the holdings are publicly available.
Disclosure of the complete holdings of each Fund is required to be made quarterly within 60 days of the end of the Fund's fiscal quarter in the Annual Report and Semi-Annual Report to Fund shareholders and in the monthly holdings report on Form N-PORT, with every third month made available to the public by the SEC 60 days after the end of the Funds' fiscal quarter. You can find SEC filings on the SEC's website, www.sec.gov. Each Fund will also make complete portfolio holdings available generally no later than 60 calendar days after the end of such Fund's fiscal quarter or subsequent to periodic portfolio holdings disclosure in the Fund's filings with the SEC or on their website.
Press Interviews Brokers and Other Discussions
Portfolio managers and other senior officers or spokespersons of the Service Providers or the Trust may disclose or confirm the ownership of any individual portfolio holding position to reporters, brokers, shareholders, consultants or other interested persons only if such information has been previously publicly disclosed in accordance with these disclosure policies. For example, a portfolio manager discussing the Trust may indicate that he owns XYZ Company for the Trust only if the Trust's ownership of such company has previously been publicly disclosed.
Trading Desk Reports
The Adviser's trading desk may periodically distribute lists of investments held by its clients (including the Trust) for the general analytical research purposes. In no case may such lists identify individual clients or individual client position sizes. Furthermore, in the case of equity securities, such lists shall not show aggregate client position sizes.
Miscellaneous
Confidentiality Agreement. No non-public disclosure of the Funds' portfolio holdings will be made to any party unless such party has signed a written Confidentiality Agreement. For purposes of the disclosure policies, any Confidentiality Agreement must be in a form and substance acceptable to, and approved by, the Trust's officers.
Evaluation Service Providers. There are numerous mutual fund evaluation services (such as Morningstar, Inc. and Broadridge Financial Solutions, Inc., formerly Lipper, Inc.) and due diligence departments of broker-dealers and wirehouses that regularly analyze the portfolio holdings of mutual funds in order to monitor and report on various attributes. These services and departments then distribute the results of their analysis to the public, paid subscribers and/or in-house brokers. In order to facilitate the review of the Trust by these services and departments, the Trust may distribute (or authorize the Service Providers and the Trust's custodian or fund accountants to distribute) month-end portfolio holdings to such services and departments only if such entity has executed a confidentiality agreement.
Additional Restrictions. Notwithstanding anything herein to the contrary, the Board of Trustees, State Street and SSGA FM may, on a case-by-case basis, impose additional restrictions on the dissemination of portfolio information beyond those found in these disclosure policies.
Waivers of Restrictions. These disclosure policies may not be waived, or exceptions made, without the consent of the Trust's officers. All waivers and exceptions involving the Trust will be disclosed to the Board of Trustees no later than its next regularly scheduled quarterly meeting.
24

Disclosures Required by Law. Nothing contained herein is intended to prevent the disclosure of portfolio holdings information as may be required by applicable law. For example, SSGA FM, State Street, the Trust or any of its affiliates or service providers may file any report required by applicable law (such as Schedules 13D, 13G and 13F or Form N-MFP), respond to requests from regulators and comply with valid subpoenas.
PORTFOLIO TURNOVER
Generally, securities are purchased for the Funds for investment income and/or capital appreciation and not for short-term trading profits. Except as otherwise stated in a Fund's Prospectus or this SAI, the Adviser's sell discipline for each Fund's investment in securities is based on the premise of a long-term investment horizon; however, sudden changes in valuation levels arising from, for example, new macroeconomic policies, political developments, and industry conditions could change the assumed time horizon. Additionally, certain of the Funds may invest in foreign securities. As a result, such investments by a Fund may be subject to restrictions on repatriation of capital and/or dividends that may cause the Adviser to change the assumed time horizon with respect to the investments. Liquidity, volatility, and overall risk of a position are other factors considered by the Adviser in determining the appropriate investment horizon. Therefore, the Funds may dispose of securities without regard to the time they have been held when such action, for defensive or other purposes, appears advisable.
Portfolio turnover is calculated by dividing the lesser of purchases or sales of portfolio securities for the particular year, by the monthly average value of the portfolio securities owned by a Fund during the year. For purposes of determining the rate, all short-term securities, including options, futures, forward contracts and repurchase agreements, are excluded. A high turnover rate (over 100%) will: (1) increase transaction expenses which will adversely affect a Fund's performance; and (2) result in increased brokerage commissions and other transaction costs, and the possibility of realized capital gains. To the extent any realized gains are short-term capital gains, they will generally be taxed at ordinary income rates when distributed to shareholders. The payment of any taxes will impact a shareholder's net return from holding an interest in a Fund.
The portfolio turnover rate of a Fund may also be affected by participation in IPOs. To the extent a Fund is authorized to participate in IPOs, the practice of immediately selling the security in the aftermarket could result in active and frequent trading of portions of the Fund's portfolio and an increase in the Fund's portfolio turnover rate.
Portfolio Turnover Rate. The following table shows the Fund's portfolio turnover rate during the two most recent fiscal years ended August 31.
Fund
2022
2021
State Street S&P 500 Index Fund
2%
4%
State Street International Stock Selection Fund
120%
111%
MANAGEMENT OF THE FUNDS
BOARD OF TRUSTEES AND OFFICERS
The Board of Trustees is responsible for overseeing generally the management, activities and affairs of the Funds and has approved contracts with various organizations to provide, among other services, day-to-day management required by the Trust (see the section called Investment Advisory and Other Services). The Board has engaged the Adviser to manage the Funds on a day-to day basis. The Board is responsible for overseeing the Adviser and other service providers in the operation of the Trust in accordance with the provisions of the 1940 Act, applicable Massachusetts law and regulation, other applicable laws and regulations, and the Second Amended and Restated Master Trust Agreement.
The Trustees may hold office for the life of the Trust subject to any retirement policy adopted by the Trustees who are not interested persons (as defined in the 1940 Act) of the Trust (the Independent Trustees). The officers, all of whom are elected annually by the Board of Trustees and employed by either the Sub-Administrator or the Adviser or their affiliates, are responsible for the day-to-day management and administration of the Trust's operations. For the fiscal year ended August 31, 2022, the Board of Trustees held 7 meetings.
The Trustees listed below are also Directors of the State Street Variable Insurance Series Funds, Inc. and Trustees of the State Street Institutional Investment Trust, the State Street Master Funds, State Street Institutional Funds and the State Street Navigator Securities Lending Trust (the Navigator Trust) and their respective series and Elfun Diversified Fund,
25

Elfun Government Money Market Fund, Elfun Tax-Exempt Income Fund, Elfun Income Fund, Elfun International Equity Fund and Elfun Trusts (collectively, the Elfun Funds). The following table provides information with respect to each Trustee, including the Independent Trustees and each officer of the Trusts.
Name, Address,
and Year of Birth
Position(s)
Held With
Trust
Term of
Office and
Length of
Time Served
Principal
Occupation
During Past
Five Years
and Relevant
Experience
Number
of Funds
in Fund
Complex
Overseen
by Trustee†
Other
Directorships
Held by
Trustee
During Past
Five Years
INDEPENDENT TRUSTEES
MICHAEL F. HOLLAND(1)
c/o SSGA Funds
Management, Inc.
One Iron Street
Boston, MA 02210
YOB: 1944
Trustee and
Co-Chairperson
of the Board
Term:
Indefinite
Elected: 1/14
Chairman, Holland &
Company L.L.C.
(investment adviser)
(1995 – present).
56
Director, the Holland
Series Fund, Inc.;
Director, The China
Fund, Inc. (1992 –
2017); Director, The
Taiwan Fund, Inc. (2007
– 2017); Director,
Reaves Utility Income
Fund, Inc.; and Director,
Blackstone/GSO Loans
(and Real Estate)
Funds.
PATRICK J. RILEY
c/o SSGA Funds
Management, Inc.
One Iron Street
Boston, MA 02210
YOB: 1948
Trustee and
Co-Chairperson
of the Board
Term:
Indefinite
Elected:
1988
Associate Justice of the
Superior Court,
Commonwealth of
Massachusetts (2002 –
May 2010); Partner,
Riley, Burke & Donahue,
L.L.P. (law firm) (1985 –
2002); Independent
Director, State Street
Global Advisors Europe
Limited (investment
company) (1998 –
present); Independent
Director, SSGA Liquidity
plc (formerly, SSGA
Cash Management Fund
plc) (1998 – present);
Independent Director,
SSGA Fixed Income plc
(January 2009 –
present); Independent
Director, SSGA Qualified
Funds PLC (January
2009 – 2019.
56
Board Director and
Chairman, SPDR
Europe 1PLC Board
(2011 – present); Board
Director and Chairman,
SPDR Europe II, PLC
(2013 – present).
JOHN R. COSTANTINO
c/o SSGA Funds
Management, Inc.
One Iron Street
Boston, MA 02210
YOB: 1946
Trustee and
Chairperson of
the Qualified
Legal
Compliance
Committee
Term:
Indefinite
Elected:
12/18
Senior Advisor to NGN
Capital LLC (January
2020 – present);
Managing General
Partner, NGN Capital
LLC (2006 – December
2019).
56
Director of Kleinfeld
Bridal Corp. (January
2016 – present); Trustee
of Neuroscience
Research Institute (1986
– 2017); Trustee of
Fordham University
(1989 – 1995 and 2001
– 2007) and Trustee
Emeritus (2007 –
present); Trustee and
Independent
Chairperson of GE
Funds (1993 – February
2011); Director,
Muscular Dystrophy
Association (2019 –
present); Trustee of
Gregorian University
Foundation (1992 –
2007); Chairman of the
Board of Directors,
Vivaldi Biosciences Inc.
26

Name, Address,
and Year of Birth
Position(s)
Held With
Trust
Term of
Office and
Length of
Time Served
Principal
Occupation
During Past
Five Years
and Relevant
Experience
Number
of Funds
in Fund
Complex
Overseen
by Trustee†
Other
Directorships
Held by
Trustee
During Past
Five Years
 
 
 
 
 
(May 2017 - present);
Chairman of the
Supervisory Board,
Vivaldi Biosciences AG.
(May 2017 - present);
Trustee, Gallim Dance
(December 2021 -
present).
MICHAEL A. JESSEE
c/o SSGA Funds
Management, Inc.
One Iron Street
Boston, MA 02210
YOB: 1946
Trustee and
Chairperson of
the Valuation
Committee
Term:
Indefinite
Appointed:
7/16
Elected:
12/18
Retired; formerly,
President and Chief
Executive Officer of the
Federal Home Loan
Bank of Boston (1989 –
2009); Trustee,
Randolph-Macon
College (2004 – 2016).
56
None.
MARGARET MCLAUGHLIN
c/o SSGA Funds
Management, Inc.
One Iron Street
Boston, MA 02210
YOB: 1967
Trustee
Term:
Indefinite
Appointed:
9/22
Consultant, Bates Group
(consultants) (since
2020); Consultant,
Madison Dearborn
Partners (private equity)
(2019 – 2020); General
Counsel/CCO, Kramer
Van Kirk Credit
Strategies L.P./Mariana
Systems LLC
(Investment
Adviser/SaaS
Technology) (2011 –
2019).
56
Director, Manning &
Napier Fund Inc (2021 –
2022).
GEORGE M. PEREIRA
c/o SSGA Funds
Management, Inc.
One Iron Street
Boston, MA 02210
YOB: 1964
Trustee
Term:
Indefinite
Appointed:
9/22
Chief Operating Officer
(January 2011 –
September 2020) and
Chief Financial Officer
(November 2004 –
September 2020),
Charles Schwab
Investment
Management.
56
Director, Pacific Premier
Bancorp, Pacific Premier
Bank (2021 – present);
Director, Charles
Schwab Asset
Management (Ireland)
Ltd., & Charles Schwab
Worldwide Funds plc.
(2005 – 2020); Director,
Rotaplast International,
Inc. (non-profit providing
free medical services to
children worldwide)
(2012 – 2018).
DONNA M. RAPACCIOLI
c/o SSGA Funds
Management, Inc.
One Iron Street
Boston, MA 02210
YOB: 1962
Trustee and
Chairperson of
the Audit
Committee
Term:
Indefinite
Elected:
12/18
Dean of the Gabelli
School of Business
(2007 – June 2022) and
Accounting Professor
(1987 – present) at
Fordham University.
56
Director- Graduate
Management
Admissions Council
(2015 – present);
Trustee of Emmanuel
College (2010 – 2019).
RICHARD D. SHIRK
c/o SSGA Funds
Management, Inc.
One Iron Street
Boston, MA 02210
YOB: 1945
Trustee and
Chairperson of
the Nominating
Committee and
Chairperson of
the Governance
Committee
Term:
Indefinite
Elected:
1988
Chairman (March 2001 -
April 2002), President
and Chief Executive
Officer (1996 - March
2001), Cerulean
Companies, Inc. (holding
company) (Retired);
President and Chief
Executive Officer, Blue
Cross Blue Shield of
Georgia (health insurer,
managed healthcare)
(1992 - March 2001).
56
Chairman and Board
Member (1998 -
December 2008) and
Investment Committee
Member (December
2008 - present),
Healthcare Georgia
Foundation (private
foundation); Lead
Director and Board
Member, Amerigroup
Corp. (managed health
care) (September 2002
27

Name, Address,
and Year of Birth
Position(s)
Held With
Trust
Term of
Office and
Length of
Time Served
Principal
Occupation
During Past
Five Years
and Relevant
Experience
Number
of Funds
in Fund
Complex
Overseen
by Trustee†
Other
Directorships
Held by
Trustee
During Past
Five Years
 
 
 
 
 
– 2012); Board Member
(1999 - 2013) and
Investment Committee
Member (2001 - 2017),
Woodruff Arts Center;
Trustee, Gettysburg
College (2003 - 2009);
Board member,
Aerocare Holdings
(2003 - January 2021),
Regenesis Biomedical
Inc. (April 2012 -
present).
INTERESTED TRUSTEE(2)
ELLEN M. NEEDHAM(3)
SSGA Funds
Management, Inc.
One Iron Street
Boston, MA 02210
YOB: 1967
Trustee and
President
Term:
Indefinite
Elected:
12/18
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).
56
Board Director, SSGA
SPDR ETFs Europe I
plc (May 2020 –
present); Board Director,
SSGA SPDR ETFs
Europe II plc (May 2020
– present).
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.
(1)
Mr. Holland is expected to retire as a Trustee of the Trust effective December 31, 2022.
(2)
The individual listed below is a Trustee who is an interested person, as defined in the 1940 Act, of the Trust (Interested Trustee).
(3)
Ms. Needham is an Interested Trustee because of her employment by SSGA FM, an affiliate of the Trust.
*
Served in various capacities and/or with various affiliated entities during noted time period.
The following lists the principal officers for the Trust, as well as their mailing addresses and ages, positions with the Trust and length of time served, and present and principal occupations:
Name, Address,
and Year of Birth
Position(s)
Held With
Trust
Term of
Office and
Length of
Time Served
Principal Occupation
During Past Five Years
OFFICERS:
ELLEN M. NEEDHAM
SSGA Funds Management, Inc.
One Iron Street
Boston, MA 02210
YOB: 1967
President, Trustee
Term: Indefinite
Elected: 10/12
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).
BRUCE S. ROSENBERG
SSGA Funds Management, Inc.
One Iron Street
Boston, MA 02210
YOB: 1961
Treasurer
Term: Indefinite
Elected: 2/16
Managing Director, State Street Global Advisors and
SSGA Funds Management, Inc. (July 2015 – present);
Director, Credit Suisse (April 2008 – July 2015).
ANN M. CARPENTER
SSGA Funds Management, Inc.
One Iron Street
Boston, MA 02210
YOB: 1966
Vice President and
Deputy Treasurer
Term: Indefinite
Elected: 10/12
Term: Indefinite
Elected: 2/16
Chief Operating Officer, SSGA Funds Management, Inc.
(April 2005 – present)*; Managing Director, State Street
Global Advisors (April 2005 – present).*
28

Name, Address,
and Year of Birth
Position(s)
Held With
Trust
Term of
Office and
Length of
Time Served
Principal Occupation
During Past Five Years
CHAD C. HALLETT
SSGA Funds Management, Inc.
One Iron Street
Boston, MA 02210
YOB: 1969
Deputy Treasurer
Term: Indefinite
Elected: 2/16
Vice President, State Street Global Advisors and SSGA
Funds Management, Inc. (November 2014 – present).
DARLENE ANDERSON-VASQUEZ
SSGA Funds Management, Inc.
One Iron Street
Boston, MA 02210
YOB: 1968
Deputy Treasurer
Term: Indefinite
Elected: 11/16
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
YOB: 1966
Deputy Treasurer
Term: Indefinite
Elected: 9/17
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
YOB: 1971
Assistant Treasurer
Term: Indefinite
Elected: 11/20
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
YOB: 1982
Assistant Treasurer
Term: Indefinite
Elected: 5/22
Vice President, State Street Global Advisors and SSGA
Funds Management, Inc. (May 2017 – present);
Assistant Vice President, State Street Bank and Trust
Company (May 2014 – May 2017).
JOHN BETTENCOURT
SSGA Funds Management, Inc.
One Iron Street,
Boston, MA 02210
YOB:1976
Assistant Treasurer
Term: Indefinite
Elected: 5/22
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).
BRIAN HARRIS
SSGA Funds Management, Inc.
One Iron Street
Boston, MA 02210
YOB: 1973
Chief Compliance
Officer, Anti-
Money Laundering
Officer and Code
of Ethics
Compliance Officer
Term: Indefinite
Elected: 11/13
Term: Indefinite
Elected: 9/16
Managing Director, State Street Global Advisors and
SSGA Funds Management, Inc. (June 2013 – present).*
SEAN O'MALLEY
SSGA Funds Management, Inc.
One Iron Street
Boston, MA 02210
YOB: 1969
Chief Legal Officer
Term: Indefinite
Elected: 8/19
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
YOB:1974
Secretary
Term: Indefinite
Elected: 9/20
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
YOB: 1985
Assistant Secretary
Term: Indefinite
Elected: 8/19
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).
*
Served in various capacities and/or with various affiliated entities during noted time period.
Summary of Trustees' Qualifications
Following is a summary of the experience, attributes and skills which qualify each Trustee to serve on the Trust's Board.
Michael F. Holland: Mr. Holland is an experienced business executive with over 51 years of experience in the financial services industry including 25 years as a portfolio manager of another registered mutual fund; his experience includes service as a trustee, director or officer of various investment companies. He has served on the Board of Trustees and
29

related committees of State Street Institutional Investment Trust and State Street Master Funds for 22 years (since the trusts' inception) and possesses significant experience regarding the operations and history of those trusts. Mr. Holland serves as a Trustee of the Navigator Trust, Elfun Funds, and State Street Institutional Funds and a Director of State Street Variable Insurance Series Funds, Inc.
Patrick J. Riley: Mr. Riley is an experienced business executive with over 45 years of experience in the legal and financial services industries; his experience includes service as a trustee or director of various investment companies and Associate Justice of the Superior Court of the Commonwealth of Massachusetts. He has served on the Board of Trustees and related committees of the Trust for 33 years and possesses significant experience regarding the operations and history of the Trust. Mr. Riley serves as a Trustee of the Navigator Trust, State Street Institutional Trust, State Street Master Funds, Elfun Funds, and State Street Institutional Funds and a Director of State Street Variable Insurance Series Funds, Inc.
John R. Costantino: In addition to his tenure as a board member of various other funds advised by SSGA FM, Mr. Costantino has over 33 years of private equity investing experience. He has also served as an officer or a board member of charitable organizations and public and private companies for over 32 years. Mr. Costantino is an attorney and a certified public accountant. Mr. Costantino serves as a Trustee of the Navigator Trust, State Street Institutional Investment Trust, State Street Master Funds, Elfun Funds, and State Street Institutional Funds (independent chairperson through 2016) and a Director of State Street Variable Insurance Series Funds, Inc. (independent chairperson through 2016).
Michael A. Jessee: Mr. Jessee is an experienced business executive with approximately 45 years of experience in the banking industry. He previously served as President and Chief Executive Officer of the Federal Home Loan Bank of Boston as well as various senior executive positions of major banks. Mr. Jessee has served on the Navigator Trust's Board of Trustees and related committees for 26 years and possesses significant experience regarding the trust's operations and history. Mr. Jessee also serves as a Trustee of the Navigator Trust, State Street Institutional Investment Trust, State Street Master Funds, Elfun Funds, and State Street Institutional Funds and a Director of State Street Variable Insurance Series Funds, Inc.
Margaret McLaughlin: Ms. McLaughlin has over twenty-five years of experience she has gained in a variety of roles encompassing regulatory, operating, legal, and compliance functions, serving both firms and their boards. Ms. McLaughlin formerly served as a founding member of the executive management team for Kramer Van Kirk Credit Strategies L.P. and its technology affiliate, Mariana Systems LLC, where she was integrally involved in corporate strategy, operational oversight, risk management and board governance. Prior to Kramer Van Kirk, Ms. McLaughlin was Assistant General Counsel to Harris Associates L.P., where she was responsible for legal, regulatory and compliance activities related to the Oakmark Mutual Funds. Ms. McLaughlin has an extensive understanding and perspective on governance, oversight, regulation, policies and procedures from these positions as well as her prior experience with both the Securities and Exchange Commission and the Department of Justice. Most recently, Ms. McLaughlin has held consulting positions at major private equity and management consulting firms. Ms. McLaughlin serves as a Trustee of State Street Institutional Investment Trust, State Street Master Funds, State Street Navigator Securities Lending Trust, SSGA Funds, Elfun Funds, and State Street Institutional Funds and a Director of State Street Variable Insurance Series Funds, Inc.
George M. Pereira: Mr. Pereira has over thirty years of experience in executive management with financial institutions, including extensive experience relating to financial reporting, operations, cybersecurity oversight, and enterprise risk management. Mr. Pereira recently retired from Charles Schwab Investment Management Inc., having served as Chief Operating Officer and Chief Financial Officer during his tenure. Previously, Mr. Pereira also served as Head of Financial Reporting for Charles Schwab & Co., Inc. Earlier in his career, Mr. Pereira gained valuable regulatory experience and perspective while serving as managing director at the New York Stock Exchange. With this professional experience, Mr. Pereira has developed wide-ranging expertise in building and managing financial, operational, technology and risk control platforms for growth and scale within the financial services industry. Additionally, Mr. Pereira is a member of the Latino Corporate Directors Association. Mr. Pereira serves as a Trustee of State Street Institutional Investment Trust, State Street Master Funds, State Street Navigator Securities Lending Trust, SSGA Funds, Elfun Funds, and State Street Institutional Funds and a Director of State Street Variable Insurance Series Funds, Inc.
Donna M. Rapaccioli: Ms. Rapaccioli has over 32 years of service as a full-time member of the business faculty at Fordham University, where she developed and taught undergraduate and graduate courses, including International Accounting and Financial Statement Analysis and has taught at the executive MBA level. She has served on Association
30

to Advance Collegiate Schools of Business accreditation team visits, lectured on accounting and finance topics and consulted for numerous investment banks. Ms. Rapaccioli also serves as a Trustee of the Navigator Trust, State Street Institutional Investment Trust, State Street Master Funds, Elfun Funds, and State Street Institutional Funds and a Director of State Street Variable Insurance Series Funds, Inc.
Richard D. Shirk: Mr. Shirk is an experienced business executive with over 53 years of experience in the health care and insurance industries and with investment matters; his experience includes service as a trustee, director or officer of various health care companies and nonprofit organizations. He has served on the Board of Trustees and related committees of the Trust for 33 years and possesses significant experience regarding the operations and history of the Trust. Mr. Shirk also serves as a Trustee of the Navigator Trust, State Street Institutional Investment Trust, State Street Master Funds, Elfun Funds, and State Street Institutional Funds and a Director of State Street Variable Insurance Series Funds, Inc.
Ellen M. Needham: Ms. Needham is a Senior Managing Director of State Street Global Advisors; Head of Global Funds Management, President of SSGA Funds Management, Inc. Ms. Needham serves as a director of SSGA Funds Management, Inc. and a manager of State Street Global Advisors Funds Distributors, LLC. In her role, she is responsible for managing firm-wide processes that focus on governance, fund structure, sub-adviser oversight, tax, product viability, distribution, ongoing monitoring and regulatory coordination across all products globally. Ms. Needham has been involved in the investment industry for over thirty years, beginning her career at State Street in 1989. Ms. Needham also serves as a Trustee of the Navigator Trust, State Street Institutional Investment Trust, State Street Master Funds, Elfun Funds, and State Street Institutional Funds and a Director of State Street Variable Insurance Series Funds, Inc. and is a Board Director—SPDR Europe I plc and SPDR Europe II plc Boards.
References to the experience, attributes and skills of Trustees above are pursuant to requirements of the SEC, do not constitute holding out of the Board or any Trustee as having any special expertise or experience, and shall not impose any greater responsibility or liability on any such person or on the Board by reason thereof.
Standing Committees
The Board of Trustees has established various committees to facilitate the timely and efficient consideration of various matters of importance to Independent Trustees, the Trust, and the Trust's shareholders and to facilitate compliance with legal and regulatory requirements. Currently, the Board has created an Audit Committee, Governance Committee, Nominating Committee, Valuation Committee and Qualified Legal Compliance Committee (the QLCC).
The Audit Committee is composed of all of the Independent Trustees. The Audit Committee meets twice a year, or more often as required, in conjunction with meetings of the Board of Trustees. The Audit Committee oversees and monitors the Trust's internal accounting and control structure, its auditing function and its financial reporting process. The Audit Committee is responsible for selecting and retaining the independent accountants for the Trust. The Audit Committee is responsible for approving the audit plans, fees and other material arrangements in respect of the engagement of the independent accountants, including non-audit services performed. The Audit Committee reviews the qualifications of the independent accountant's key personnel involved in the foregoing activities and monitors the independent accountant's independence. During the fiscal year ended August 31, 2022, the Audit Committee held 4 meetings.
Each of the Governance Committee and the Nominating Committee is composed of all the Independent Trustees. The primary functions of the Governance Committee and the Nominating Committee are to review and evaluate the composition and performance of the Board; make nominations for membership on the Board and committees; review the responsibilities of each committee; and review governance procedures, compensation of Independent Trustees, and independence of outside counsel to the Trustees. The Nominating Committee will consider nominees to the Board recommended by shareholders. Recommendations should be submitted in accordance with the procedures set forth in the Nominating Committee Charter and should be submitted in writing to the Trust, to the attention of the Trust's Secretary, at the address of the principal executive offices of the Trust. Shareholder recommendations must be delivered to, or mailed and received at, the principal executive offices of the Trust not less than sixty (60) calendar days nor more than ninety (90) calendar days prior to the date of the Board or shareholder meeting at which the nominee candidate would be considered for election. The Governance Committee performs an annual self-evaluation of Board members. During the fiscal year ended August 31, 2022, the Governance Committee held 6 meetings and the Nominating Committee held 6 meetings.
The Valuation Committee is composed of all the Independent Trustees. The Valuation Committee's primary purpose is to review the actions and recommendations of the Adviser's Oversight Committee no less often than quarterly. The Trust has established procedures and guidelines for valuing portfolio securities and makes fair value determinations from time to
31

time through the Valuation Committee, with the assistance of the Oversight Committee, State Street and SSGA FM. The Valuation Committee reviews the actions and recommendations of the Oversight Committee in connection with quarterly Board meetings. During the fiscal year ended August 31, 2022, the Valuation Committee held 5 meetings.
The QLCC is composed of all the Independent Trustees. The primary functions of the QLCC are to receive quarterly reports from the Trust's CCO; to oversee generally the Trust's responses to regulatory inquiries; and to investigate matters referred to it by the Chief Legal Officer and make recommendations to the Board regarding the implementation of an appropriate response to evidence of a material violation of the securities laws or breach of fiduciary duty or similar violation by the Trust, its officers or the Trustees. During the fiscal year ended August 31, 2022, the QLCC held 4 meetings.
Leadership Structure and Risk Management Oversight
The Board has chosen to select different individuals as Co-Chairpersons of the Board of the Trust and as President of the Trust. Currently, Mr. Holland and Mr. Riley, both Independent Trustees, serve as Co-Chairpersons of the Board, Ms. Rapaccioli serves as Chairperson of the Audit Committee, Mr. Costantino serves as Chairperson of the QLCC, Mr. Jessee serves as Chairperson of the Valuation Committee and Mr. Shirk serves as Chairperson of each of the Governance Committee and Nominating Committee.
Ms. Needham who is an employee of the Adviser, serves as a Trustee and the President of the Trust. The Board believes that this leadership structure is appropriate, since Ms. Needham provides the Board with insight regarding the Trust's day-to-day management, while Mr. Holland and Mr. Riley provide an independent perspective on the Trust's overall operation and Ms. Rapaccioli provides a specialized perspective on audit matters.
The Board has delegated management of the Trust to service providers who are responsible for the day-to-day management of risks applicable to the Trust. The Board oversees risk management for the Trust in several ways. The Board receives regular reports from both the CCO and administrator for the Trust, detailing the results of the Trust's compliance with its Board-adopted policies and procedures, the investment policies and limitations of the Funds, and applicable provisions of the federal securities laws and Internal Revenue Code of 1986, as amended (the Code). As needed, the Adviser discusses management issues regarding the Trust with the Board, and solicits the Board's input on many aspects of management, including potential risks to the Funds. The Board's Audit Committee also receives reports on various aspects of risk that might affect the Trust and offers advice to management, as appropriate. The Trustees also meet in executive session with the independent counsel to the disinterested Trustees, the independent registered public accounting firm, counsel to the Trust, the CCO and representatives of management, as needed. Through these regular reports and interactions, the Board oversees the risk management parameters for the Trust, which are effected on a day-to-day basis by service providers to the Trust.
Trustee Ownership of Securities of the Trust, Adviser and Distributor
As of December 31, 2021, none of the Independent Trustees or their immediate family members had any ownership of securities of the Adviser, State Street Global Advisors Funds Distributors, LLC (SSGA FD), the Trust's distributor, or any person directly or indirectly controlling, controlled by or under common control with the Adviser or SSGA FD.
TRUSTEE COMPENSATION
Independent Trustees are compensated on a calendar year basis. An Interested Trustee does not receive compensation from the Funds for his or her service as a Trustee. As of January 1, 2023, each Independent Trustee will receive for his or her services to the State Street Master Funds, the State Street Institutional Investment Trust, the Trust, the Elfun Funds and the Navigator Trust, State Street Institutional Funds and State Street Variable Insurance Series Funds, Inc. (together, the Fund Entities) an annual retainer of $360,000. The Chairperson receives an additional $90,000 annual retainer. The Independent Trustees receive a fee of $25,000 for each additional special in-person Board meeting and $5,000 for each additional special telephonic Board meeting. As of January 1, 2020, the total annual compensation paid to the Independent Trustees (other than telephonic and special meeting fees) will be allocated to each Fund Entity as follows: a fixed amount of $21,000 will be allocated to each Fund Entity or, if applicable, each series thereof; and the remainder will be allocated among the Fund Entities or, if applicable, each series thereof that is not a feeder fund in a master-feeder structure, based on relative net assets. The Independent Trustees are reimbursed for travel and other out-of-pocket expenses in connection with meeting attendance. As of the date of this SAI, the Trustees were not paid pension or retirement benefits as part of the Trust's expenses. However, the Trust has, pursuant to an exemptive order from the SEC, implemented an optional deferred compensation plan by which the Independent Trustees may defer receipt of
32

compensation and receive a return on the deferred amount determined with reference to the performance of shares of specified SSGA Funds. As of the fiscal year ended August 31, 2022, none of the Independent Trustees participated in the optional deferred compensation program. The Trust's officers are compensated by the Adviser and its affiliates.
Trustee Compensation Table
For The Fiscal Year Ended August 31, 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:
Michael F. Holland
$13,273
$0
$0
$405,000
Patrick J. Riley
$13,273
$0
$0
$405,000
John R. Costantino
$10,703
$0
$0
$345,000
Michael A. Jessee
$10,703
$0
$0
$345,000
Donna M. Rapaccioli
$10,703
$0
$0
$345,000
Richard D. Shirk
$10,703
$0
$0
$345,000
Margaret McLaughlin(1)
$0
$0
$0
$0
George M. Pereira(1)
$0
$0
$0
$0
Bruce D. Taber(2)
$2,648
$0
$0
$94,350
Interested Trustee:
Ellen M. Needham
$0
$0
$0
$0
(1)
Ms. McLaughlin and Mr. Pereira were appointed Trustees effective September 15, 2022.
(2)
Mr. Taber retired from the Board of Trustees of the Trust effective as of December 31, 2021.
EQUITY SECURITIES BENEFICIALLY OWNED BY TRUSTEES
For any Fund that is not listed below for a Trustee, such Trustee beneficially owned no equity securities of the Fund for the calendar year ended December 31, 2021.
Name of Trustee
Fund
Dollar Range Of
Equity Securities In
Each Fund
Aggregate Dollar Range
Of Equity Securities In
All Registered Investment
Companies Overseen By
Trustees In Family of
Investment Companies
Independent Trustees:
 
 
 
Michael F. Holland
None
None
None
Patrick J. Riley
State Street S&P 500 Index Fund
Over $100,000
Over $100,000
John R. Costantino
None
None
None
Michael A. Jessee
None
None
None
Donna M. Rapaccioli
None
None
None
Margaret McLaughlin(1)
None
None
None
George M. Pereira(1)
None
None
None
Richard D. Shirk
None
None
Over $100,000
Interested Trustee:
 
 
 
Ellen M. Needham
None
None
None
(1)
Ms. McLaughlin and Mr. Pereira were appointed Trustees effective September 15, 2022.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
State Street may from time to time have discretionary authority over accounts which invest in shares of the Funds. These accounts include accounts maintained for securities lending clients and accounts that permit the use of the Funds as short-term cash sweep investments. Shares purchased for all discretionary accounts are held of record by State Street,
33

who retains voting control of such shares. As of November 30, 2022, State Street held of record less than 25% of the issued and outstanding shares of the Funds (in the aggregate) in connection with its discretionary accounts; however, State Street may hold more than 25% of such shares in any one series of the Trust. Consequently, State Street is not deemed to be a controlling person for purposes of the 1940 Act.
The Trustees and officers of the Trust, as a group, own less than 1% of the Funds' voting securities as of November 30, 2022.
Persons or organizations owning 25% or more of the outstanding shares of a Fund may be presumed to control (as that term is defined in the 1940 Act) a Fund. As a result, these persons or organizations could have the ability to approve or reject those matters submitted to the shareholders of such Fund for their approval. As of November 30, 2022, 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 a Fund:
State Street S&P 500 Index Fund – Class N shares
TD Ameritrade Inc. for the exclusive benefit of our clients, P.O. Box 2226, Omaha, NE 68103-2226—36.68%
State Street International Stock Selection Fund – Class A shares
Matrix Trust Company Cotrustee FBO Pipe Trades DC 36 DCP-Total Return, P.O. Box 52129, Phoenix, AZ 85072-2129—57.49%
State Street International Stock Selection Fund – Class K shares
National Financial Services LLC for the exclusive benefit of our customers, Attn: Mutual Funds Department 4th floor, 499 Washington Boulevard, Jersey City, NJ 07310-1995—90.19%
State Street International Stock Selection Fund – Class N shares
Charles Schwab & Co Inc., Special Cust A/C for the benefit of our customers, Mutual Funds, 101 Montgomery Street, San Francisco, CA 94104-4151—51.76%
As of November 30, 2022, to the knowledge of the Trust, the following shareholders owned of record or beneficially through one or more accounts 5% or more of the issued and outstanding shares of any class of a Fund. Such shares may be held pursuant to a shareholder servicing arrangement in omnibus accounts for underlying shareholders:
State Street S&P 500 Index Fund – Class N shares
National Financial Services LLC for the exclusive benefit of our customers, 200 Liberty St, 1 World Financial Center, New York, NY 10281—14.93%
Morgan Stanley Smith Barney LLC for the exclusive benefit of its customers, 1 New York Plaza, Floor SC1 Floor 39, New York, NY7.28%
State Street International Stock Selection Fund – Class A shares
Matrix Trust Company Cotrustee FBO Pipe Trades DC 36 DCP-Current Inc, P.O. Box 52129, Phoenix, AZ 85072-2129—13.34%
Matrix Trust Company Trustee FBO Pipe Trades District Council No. 36, P.O. Box 52129, Phoenix, AZ 85072-2129—10.21%
Matrix Trust Company Cotrustee FBO Pipe Trades DC 36 DCP-Maximum App, P.O. Box 52129, Phoenix, AZ 85072-2129—9.72%
Matrix Trust Company Cotrustee FBO Pipe Trades DC 36 DCP-Total Return, P.O. Box 52129, Phoenix, AZ 85072-2129—5.02%
State Street International Stock Selection Fund – Class I shares
National Financial Services LLC for the exclusive benefit of our customers, Attn: Mutual Funds Department 4th floor, 499 Washington Boulevard, Jersey City, NJ 07310-1995—15.50%
State Street International Stock Selection Fund – Class N shares
SEI Private Trust Company C/O Evercore Bank ID 573 Attn. Mutual Fund Administrator One Freedom Valley Drive, Oaks, PA 19456-9989—19.90%
34

National Financial Services LLC for the exclusive benefit of our customers, 200 Liberty St, 1 World Financial Center, New York, NY 10281—7.26%
Morgan Stanley Smith Barney LLC for the exclusive benefit of its customers, 1 New York Plaza, Floor SC1 Floor 39, New York, NY5.87%
INVESTMENT ADVISORY AND OTHER SERVICES
ADVISER
SSGA FM serves as the Trust's investment adviser pursuant to an Amended and Restated Advisory Agreement dated April 11, 2012 (the Advisory Agreement). The Adviser 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. The Adviser and other advisory affiliates of State Street Corporation make up SSGA, the investment management arm of State Street Corporation. State Street, the Trust's custodian and State Street Global Advisors Funds Distributors, LLC (SSGA FD or the Distributor), are affiliated persons of the Adviser. The address of the Adviser is One Iron Street, Boston, Massachusetts 02210.
The Advisory Agreement provides for an initial term of two years and thereafter will continue from year to year provided that such continuance is specifically approved at least annually by (a) the Trustees or by the vote of a majority of the outstanding voting securities of a Fund, and (b) vote of a majority of the Independent Trustees, cast in person at a meeting called for the purpose of voting on such approval. The Advisory Agreement may be terminated by the Adviser or a Fund without penalty upon sixty days' notice and will terminate automatically upon its assignment.
Under the Advisory Agreement, the Adviser directs the Funds' investments in accordance with each Fund's investment objective, policies and limitations. For these services, each Fund pays an annual management fee to the Adviser. The management fee rate is a percentage of the average daily NAV of a Fund, calculated daily and paid monthly.
Advisory Expenses. The following table shows the expenses each Fund accrued to the Adviser during the fiscal years ended August 31:
Fund
2022
2021
2020
State Street S&P 500 Index Fund
$466,243
$465,341
$459,670
State Street International Stock Selection Fund
$1,340,152
$1,417,507
$1,366,304
The Adviser has contractually agreed to waive the advisory fee and/or reimburse certain expenses in excess of a certain percentage of average daily net assets on an annual basis (an expense limitation) for the Funds. As described in the Prospectus, certain fees and expenses are excluded from the waiver for each Fund. The expense limitations, shown in the chart below, are in effect through December 31, 2023. In addition, the Adviser has contractually agreed to waive 0.01% of its administration fee. The applicable amount of waivers and reimbursements are also shown in the table below for the fiscal years ended August 31:
Fund
Expense Limitation
State Street S&P 500 Index Fund
0.157%
State Street International Stock Selection Fund
0.75%
Fund
2022
2021
2020
State Street S&P 500 Index Fund
$271,063
$402,895
$503,835
State Street International Stock Selection Fund
$430,560
$492,916
$517,114
The Funds are permitted to invest their cash reserves (i.e., monies awaiting investment in portfolio securities suitable for the Funds' objectives) in money market funds, including money market funds advised by the Adviser (a Central Fund). Shares of a Central Fund sold to and redeemed from any participating Fund will not be subject to a redemption fee, distribution fee or service fee.
Other Accounts Managed. The Adviser manages each Fund using a team of investment professionals. 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 each Fund and assets under management in those accounts. The total number of accounts and assets has been allocated to each respective manager. Therefore, some accounts and assets have been counted twice.
35

Other Accounts Managed as of August 31, 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)
Adel Daghmouri
1
$0.37
34*
$5.99*
22**
$8.14**
$14.50
Emiliano Rabinovich
134
$834.42
379
$691.90
518
$463.00
$1,989.32
Karl Schneider
134
$834.42
379
$691.90
518
$463.00
$1,989.32
Amy Scofield
134
$834.42
379
$691.90
518
$463.00
$1,989.32
*
Includes 6 accounts (totaling $2.73 billion in assets under management) with performance-based fees.
**
Includes 2 accounts (totaling $1.82 billion in assets under management) with performance-based fees.
Ownership of Securities. As of August 31, 2022, none of the portfolio managers listed above beneficially owned shares of any of the Funds.
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.
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.
36

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.
ADMINISTRATOR
SSGA FM serves as the administrator for the Trust (the Administrator), pursuant to an administration agreement dated June 1, 2015 (the SSGA FM Administration Agreement). Pursuant to the SSGA FM Administration Agreement, SSGA FM is obligated to continuously provide business management services to the Trust and the Funds and will generally, subject to the general oversight of the Trustees and except as otherwise provided in the SSGA FM Administration Agreement, manage all of the business and affairs of the Trust. The nature and amount of services provided by SSGA FM under the SSGA FM Administration Agreement may vary as between classes of shares of a Fund, and a Fund may pay fees to SSGA FM under that Agreement at different rates in respect of its different share classes.
As consideration for SSGA FM's services as Administrator with respect to the Trust, SSGA FM receives a fee at the annual rate of 0.05% of the average daily net assets attributable to each class of shares of the Fund. The fees are accrued daily at the rate of 1/365th and payable monthly on the first business day of each month. Additionally, the Funds reimburse the Administrator for certain out-of-pocket travel expenses of the CCO and compliance team incurred on the Funds' behalf. The Adviser has contractually agreed to waive 0.01% of its fee for its services as Administrator. This waiver may not be terminated or modified except with approval of the Funds' Board of Trustees and shall continue until at least December 31, 2023.
Administration Expenses. The following table shows the expenses each Fund accrued to SSGA FM as the Administrator during the fiscal years ended August 31:
Fund
2022
2021
2020
State Street S&P 500 Index Fund
$777,072
$775,568
$766,117
State Street International Stock Selection Fund
$89,344
$94,501
$91,087
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SUB-ADMINISTRATOR, CUSTODY AND FUND ACCOUNTING
State Street serves as the sub-administrator for the Trust, pursuant to a sub-administration agreement dated June 1, 2015 (the Sub-Administration Agreement). State Street serves as the custodian for the Trust, pursuant to a custody agreement dated April 11, 2012 (the Custody Agreement). Under the Sub-Administration Agreement, State Street is obligated to provide certain sub-administrative services to the Trust. Under the Custody Agreement, State Street is obligated to provide certain custody services to the Trust, as well as basic portfolio recordkeeping required by the Trust for regulatory and financial reporting purposes. State Street is a wholly owned subsidiary of State Street Corporation, a publicly held financial holding company, and is affiliated with the Adviser. State Street's mailing address is State Street Financial Center, One Lincoln Street, Boston, Massachusetts 02111-2900.
As consideration for sub-administration, custody and fund accounting services provided to the Funds, the Adviser and the Funds each pay State Street a portion of the annual fee (payable monthly). Each Fund also pays State Street transaction and service fees for these services and reimburses State Street for out-of-pocket expenses.
Sub-Administration Fees. The following table shows the sub-administration and custodian fees paid by the Funds to State Street as for the last three fiscal years ended August 31:
Fund
2022
2021
2020
State Street S&P 500 Index Fund
$79,309
$118,882
$118,490
State Street International Stock Selection Fund
$102,455
$120,593
$135,755
TRANSFER AND DIVIDEND PAYING AGENT
SS&C GIDS, Inc. serves as the Transfer and Dividend Paying Agent. SS&C GIDS, Inc. is paid for the following annual account services and activities including but not limited to: establishment and maintenance of each shareholder's account; closing an account; acceptance and processing of trade orders; preparation; and transmission of payments for dividends and distributions declared by each Fund; customer service support including receipt of correspondence and responding to shareholder and financial intermediary inquiries; investigation services; tax related support; financial intermediary and fee payment processing; and charges related to compliance and regulatory services.
Portfolio fees are allocated to each Fund based on the average NAV of each Fund and are billable on a monthly basis at the rate of 1/12 of the annual fee. SS&C GIDS, Inc. is reimbursed by each Fund for supplying certain out-of-pocket expenses including but not limited to: Anti-Money Laundering (AML) Delegations, omnibus transparency (market timing) services; confirmation statements and periodic investor statements, fulfillment, banking fees, postage, forms, audio response, telephone, records retention, customized programming/enhancements, reports, transcripts, and expenses incurred at the specific direction of the Fund. SS&C GIDS, Inc.'s principal business address is 2000 Crown Colony Drive, Quincy, Massachusetts 02169-0953.
SECURITIES LENDING
The 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.
38

For the fiscal year ended August 31, 2022, the income earned by each Fund as well as the fees and/or compensation paid by each Fund (in dollars) pursuant to the Master Amended and Restated Securities Lending Authorization Agreement among the Trust, State Street Institutional Investment Trust, and State Street Master Funds, each on behalf of its respective 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
State Street
International
Stock Selection
Fund
$105,251
$12,009
$693
$0
$0
$7,089
$0
$19,791
$85,460
State Street S&P
500 Index
Fund
$15,551
$396
$487
$0
$0
$11,560
$0
$12,443
$3,108
For the fiscal year ended August 31, 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) monitoring the value of loaned securities, the value of collateral received, and other lending parameters; (iii) seeking additional collateral, as necessary, from borrowers; (iv) 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; (v) returning collateral to borrowers; (vi) facilitating substitute dividend, interest, and other distribution payments to the Funds from borrowers; (vii) 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; (viii) selecting securities, including amounts (percentages), to be loaned; (ix) recordkeeping and accounting servicing; and (x) arranging for return of loaned securities to the Funds in accordance with the terms of the Securities Lending Authorization Agreement.
CODES OF ETHICS
The Adviser, Distributor and the Trust have each adopted a code of ethics (the Trust's code being referred to herein as the Code of Ethics) under Rule 17j-1 of the 1940 Act. The Code of Ethics, by relying on the codes of the underlying service providers, permits personnel of the Funds' Adviser, Distributor and officers, subject to the provisions of the relevant code of ethics, to invest in securities, including securities that may be purchased or held by the Adviser or the Trust. Under the relevant code of ethics, all employees or officers who are deemed to be access persons (persons who have interaction with funds or accounts managed by the Adviser or the Distributor as part of their job function) must pre-clear personal securities transactions. Each code of ethics is designed to ensure that employees conduct their personal securities transactions in a manner that does not create an actual or potential conflict of interest to the business or fiduciary responsibilities of the Trust's service providers or officers. In addition, the Code of Ethics establishes standards prohibiting the trading in or recommending of securities based on material, nonpublic information or the divulgence of such information to others.
DISTRIBUTION ARRANGEMENTS
SSGA FD serves as the distributor of the Funds for the continuous offering of shares pursuant to a distribution agreement (the Distribution Agreement), as amended. The Distribution Agreement shall continue in effect for each Fund for two years following its effective date with respect to the Fund; and thereafter only so long as its continuance is specifically
39

approved at least annually by a majority of the Trustees who are not parties to the Distribution Agreement or interested persons of any such party cast in person at a meeting called for the purpose of voting on such approval, or by vote of a majority of the outstanding voting securities of the Fund. SSGA FD offers the shares of each Fund on an agency or best efforts basis under which the SSGA Funds shall only issue such shares as are actually sold. SSGA FD is an indirect wholly-owned subsidiary of State Street Corporation. SSGA FD's mailing address is One Iron Street, Boston, Massachusetts 02210.
Distribution Plans and Shareholder Servicing Arrangements
Distribution Plans. To compensate SSGA FD for the services it provides and for the expenses it bears in connection with the distribution of shares of the Funds, SSGA FD will be entitled to receive any front-end sales load applicable to the sale of shares of the Fund. Each Fund may also make payments from the assets attributable to certain classes of its shares to SSGA FD under a distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act (the Plan or Distribution Plan). The Distribution Plan is a compensation plan that provides for payments at annual rates (based on average daily net assets) described below.
The Board, including all of the Trustees who are not interested persons (as defined in the 1940 Act) of the Trust (the Independent Trustees) and who have no direct or indirect financial interest in the Distribution Plan or any related agreements, approved the Plan (the Qualified Distribution Plan Trustees). The Distribution Plan will continue in effect with respect to a class of shares of a Fund only if such continuance is specifically approved at least annually by a vote of both a majority of the Board and a majority of the Qualified Distribution Plan Trustees. The Plan may not be amended to increase materially the amount of a Fund's permitted expenses thereunder without the approval of a majority of the outstanding shares of the affected share class and may not be materially amended in any case without a vote of the majority of both the Trustees and the Qualified Distribution Plan Trustees. The Distribution Plan calls for payments at an annual rate (based on average net assets) as follows:
 
Annual 12b-1 Fee
Class N
0.25%
Class A
0.25%
Class I
0.00%
Class K
0.00%
Additionally, the Board of Trustees has determined that payments made by the State Street S&P 500 Index Fund will not exceed 0.062% of average daily net assets.
The Distribution Plan may benefit the Funds by increasing sales of shares and reducing redemptions of shares, resulting potentially, for example, in economies of scale and more predictable flows of cash into and out of the Funds. Because Rule 12b-1 fees are paid out of a Fund's assets, all shareholders share in that expense; however, because shareholders hold their shares through varying arrangements (for example, directly or through financial intermediaries), they may not share equally in the benefits of the Plan.
As of December 31, 2021, none of the Independent Trustees had a direct or indirect financial interest in the operation of the 12b-1 Plans.
Distribution Expenses. For the fiscal years ended August 31, Class N and Class A shares of the Funds paid to SSGA FD the following amounts related to distribution and/or service fees pursuant to the 12b-1 Plans:
Fund – Class N
2022
2021
2020
State Street S&P 500 Index Fund
$948,028
$946,192
$934,663
State Street International Stock Selection Fund
$258,505
$277,660
$294,635
Fund – Class A
2022
2021
2020
State Street International Stock Selection Fund
$10,583
$11,268
$10,257
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For the fiscal year ended August 31, 2022, the Funds have been informed by SSGA FD that the following expenditures were made using the amounts each Fund's Class N and Class A shares paid under the 12b-1 Plans:
Fund - Class N
Advertising
Printing
Compensation to
Dealers
Compensation to
Sales Personnel
Other*
State Street S&P 500 Index Fund
$10
$401
$799,554
$196,447
$159,558
State Street International Stock Selection
Fund
$1
$27
$224,142
$13,174
$10,707
*
Includes such items as compensation for travel, conferences and seminars for staff, professional fees, technology, services, and overhead (including space/facilities and management).
Fund - Class A
Advertising
Printing
Compensation to
Dealers
Compensation to
Sales Personnel
Other*
State Street International Stock Selection
Fund
$0
$1
$10,578
$535
$435
*
Includes such items as compensation for travel, conferences and seminars for staff, professional fees, technology, services, and overhead (including space/facilities and management).
Since the Funds pay distribution, service and other fees for the sale of their shares and for services provided to shareholders out of the Funds' assets on an ongoing basis, over time those fees will increase the cost of an investment in a Fund. In addition, a Fund may pay distribution, service, and other expenditures described above at a time when shares of the Fund are not being actively promoted to new investors generally, or when shares of that Fund are unavailable for purchase.
Payments to Financial Intermediaries
Financial intermediaries are firms that, for compensation, sell shares of mutual funds, including the Funds, and/or provide certain administrative and account maintenance services to mutual fund shareholders. Financial intermediaries may include, among others, brokers, financial planners or advisors, banks, and insurance companies. In some cases, a financial intermediary may hold its clients' Fund shares in nominee or street name. Shareholder services provided by a financial intermediary may (though they will not necessarily) include, among other things: processing and mailing trade confirmations, periodic statements, prospectuses, annual reports, semi-annual reports, shareholder notices, and other SEC-required communications; capturing and processing tax data; issuing and mailing dividend checks to shareholders who have selected cash distributions; preparing record date shareholder lists for proxy solicitations; collecting and posting distributions to shareholder accounts; and establishing and maintaining systematic withdrawals and automated investment plans and shareholder account registrations.
Some portion of SSGA FD's payments to financial intermediaries will be made out of amounts received by SSGA FD under the Funds' Distribution Plans. In addition, the Funds may reimburse SSGA FD for payments SSGA FD makes to financial intermediaries that provide recordkeeping, shareholder servicing, sub-transfer agency, administrative and/or account maintenance services (collectively, servicing). The amount of the reimbursement and the manner in which it is calculated are reviewed by the Trustees periodically.
The compensation paid by SSGA FD to a financial intermediary may be paid continually over time, during the period when the intermediary's clients hold investments in the Funds. The compensation to financial intermediaries may include networking fees and account-based fees. The amount of continuing compensation paid by SSGA FD to different financial intermediaries varies. In the case of most financial intermediaries, compensation for servicing in excess of any amount covered by payments under a Distribution Plan is generally paid at an annual rate of 0.10% – 0.20% of the aggregate average daily NAV of Fund shares held by that financial intermediary's customers, although in some cases the compensation may be paid at higher annual rates (which may, but will not necessarily, reflect enhanced or additional services provided by the financial intermediary).
SSGA FD and its affiliates (including SSGA FM), at their own expense and out of their own assets, may also provide compensation to financial intermediaries in connection with sales of the Funds' shares or the servicing of shareholders or shareholder accounts by financial intermediaries. Such compensation may include, but is not limited to, ongoing payments, financial assistance to financial intermediaries in connection with conferences, sales, or training programs for their employees, seminars for the public, advertising or sales campaigns, or other financial intermediary-sponsored special events. In some instances, this compensation may be made available only to certain financial intermediaries whose representatives have sold or are expected to sell significant amounts of shares. Financial intermediaries may not use
41

sales of the Funds' shares to qualify for this compensation to the extent prohibited by the laws or rules of any state or any self-regulatory agency, such as FINRA. The level of payments made to a financial intermediary in any given year will vary and, in the case of most financial intermediaries, will not exceed 0.20% of the value of assets attributable to the financial intermediary invested in shares of funds in the SSGA FM fund complex. In certain cases, the payments described in the preceding sentence are subject to minimum payment levels.
If payments to financial intermediaries by the distributor or adviser for a particular mutual fund complex exceed payments by other mutual fund complexes, your financial advisor and the financial intermediary employing him or her may have an incentive to recommend that fund complex over others. Please speak with your financial advisor to learn more about the total amounts paid to your financial advisor and his or her firm by SSGA FD and its affiliates, and by sponsors of other mutual funds he or she may recommend to you. You should also consult disclosures made by your financial intermediary at the time of purchase.
Set forth below is a list of those financial intermediaries to which SSGA FD (and its affiliates) expects, as of December 1, 2022, to pay compensation in the manner described in this Payments to Financial Intermediaries section. This list may change over time. Please contact your financial intermediary to determine whether it or its affiliate currently may be receiving such compensation and to obtain further information regarding any such compensation.
ADP Broker-Dealer Inc.
Alight Financial Solutions, LLC
American Portfolio Financial
Ascensus Inc.
AXA Advisors, LLC
Brown Brothers Harriman
Charles Schwab & Co., Inc.
Charles Schwab Trust Bank
Commerce Bank
Community Bank NA
E*Trade Securities Inc.
Edward Jones
GWFS Equities Inc.
Hancock Securities
Hand Securities
Hartford Life Insurance Company
Interactive Brokers LLC
Janney Montgomery Scott
John Hancock
JP Morgan Chase Bank, N.A.
Kestra Financial, Inc.
LaSalle St. Securities, LLC.
Lincoln Financial Advisors Corp.
LPL Financial LLC
Matrix Capital Bank
Merrill Lynch, Pierce, Fenner & Smith Inc.
Mid Atlantic Capital Corp.
Morgan Stanley Smith Barney LLC
MSCS Financial Services Division of Broadridge Business Process Outsourcing, LLC
National Financial Services, LLC
42

Nationwide Financial Services, Inc.
Northern Trust Co
Pershing LLC
PNC Bank, N.A.
Principal Life Insurance
Prudential Investments
Putnam Investor Services, Inc.
Raymond James & Associates
RBC Capital Markets Corp
Reliance Trust Company
Royal Alliance
SEI Private Trust Company
Slavic Investment Corporation
Southwest Securities Inc
Stifel Nicolaus & Co
TD Ameritrade, Inc.
The ON Equity Sales Company
T Rowe Price
TIAA-CREF Individual & Institutional Services, LLC
Trust Company of America
UBS Financial Services, Inc.
US Bank N.A.
USI Securities Inc.
Valic Retirement Services
Vangard Marketing Corp
Voya Financial Partners, LLC
Voya Institutional Plan Services, LLC
Voya Retirement Insurance and Annuity Company
Wells Fargo Bank, N.A.
Wells Fargo Clearing Services
COUNSEL AND INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ropes & Gray LLP, 800 Boylston Street, Boston Massachusetts 02199, provides legal services to the Trust. Sullivan & Worcester LLP, located at One Post Office Square, Boston, Massachusetts, 02109, provides legal services to the Independent Trustees.
Ernst & Young LLP serves as the independent registered public accounting firm for the Trust and provides (i) audit services and (ii) tax services. In connection with the audit of the 2021 financial statements, the Trust entered into an engagement agreement with Ernst & Young LLP that sets forth the terms of Ernst & Young LLP's audit engagement. The principal business address of Ernst & Young LLP is 200 Clarendon Street, Boston, Massachusetts, 02116.
BROKERAGE PRACTICES AND COMMISSIONS
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
43

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. 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;
44

(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.
Brokerage Commission Expenses. The following table shows the brokerage commission expenses that the Funds paid during the fiscal years ended August 31:
Fund
2022
2021
2020
State Street International Stock Selection Fund
$119,512
$111,467
$115,595
State Street S&P 500 Index Fund
$10,219
$35,671
$26,848
Securities of Regular Broker-Dealer. The Trust is required to identify any securities of its regular brokers and dealers (as such term is defined in the 1940 Act) which it may hold at the close of its 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 August 31, 2022 are as follows:
J.P. Morgan Securities LLC
$13,689,908.00
BofA Securities, Inc.
$9,796,172.00
Wells Fargo Securities, LLC
$6,759,577.00
Morgan Stanley & Co. LLC
$4,930,914.00
Goldman Sachs & Co. LLC
$4,719,922.00
Citigroup Global Markets Inc.
$3,845,886.00
UBS Securities LLC
$2,000,410.00
SG Americas Securities, LLC
$699,391.00
BNP Paribas Securities Corp.
$36,711.00
PRICING OF SHARES
Multiple-class funds do not have a single share price. Rather, each class has a share price, called its NAV. The price per share for each class of each Fund is determined each business day (unless otherwise noted) at the scheduled close of the New York Stock Exchange (NYSE) (ordinarily 4:00 p.m. Eastern time). A business day is one in which the NYSE is open for regular trading. A Fund does not calculate its price on days in which the NYSE is closed for trading. Currently, the NYSE is open for regular trading every weekday except New Year's Day, Martin Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Juneteenth National Independence Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. The NYSE may close early on certain days, such as Christmas Eve and New Year's Eve and before certain other holidays. Please contact your SSGA Funds account representative if you have questions on early NYSE closing times. In unusual circumstances, such as an emergency or an unscheduled close or halt of trading on the NYSE, the time at which share prices are determined may be changed.
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Trading may occur in debt securities and in foreign securities at times when the NYSE or Federal Reserve is closed (including weekends and holidays or after 4:00 p.m. Eastern time on a regular business day). The trading of portfolio securities at such times may significantly increase or decrease the NAV of Fund shares when the shareholder is not able to purchase or redeem Fund shares. Further, because foreign securities markets may close prior to the time the Funds determine NAV, events affecting the value of the portfolio securities occurring between the time prices are determined and the time the Funds calculate NAV may not be reflected in the calculation of NAV unless it is determined that a particular event would materially affect the NAV. If such an event occurs, these securities will be valued at their fair value following procedures approved by the Trustees.
The NAV per share of a Fund's share class is determined by dividing the total assets, minus liabilities, allocated to each share class by the number of Fund shares outstanding for that class. Determination of a Fund's NAV per share is made in accordance with generally accepted accounting principles and applicable rules of the SEC.
Portfolio instruments for which market quotations are available are valued at market value (generally determined at the closing time of the market on which the instruments are traded). If market quotations are not readily available or if the Adviser believes that the available quotations are unreliable, the portfolio instruments are valued at fair value by the Adviser as the valuation designee, subject to oversight by the Board of Trustees. This generally means that equity securities and fixed income securities listed and traded principally on any national securities exchange are valued on the basis of the last sale price or, lacking any sales, at the closing bid price, on the primary exchange on which the security is traded. United States equity and fixed-income securities traded principally OTC and options are valued on the basis of the last sale price. Futures contracts are valued on the basis of the last reported sales price.
Because many fixed income securities do not trade each day, last sale or bid prices are frequently not available. Therefore, fixed income securities may be valued using prices provided by a pricing service when such prices are believed to reflect the market value of such securities.
International securities traded on a national securities exchange are valued on the basis of last sale price. International securities traded OTC are valued on the basis of last sale price. In the absence of a last sale price, such securities may be valued on the basis of prices provided by a pricing service if those prices are believed to reflect the fair value of such securities. Some international securities trade on days that the Funds are not open for business. As a result, the NAV of Fund shares may fluctuate on days when Fund shareholders may not buy or sell Funds shares.
The Funds value securities maturing within 60 days of the valuation date at amortized cost unless the Board determines that the amortized cost method does not represent fair value. This method involves valuing an instrument at its cost and thereafter assuming a constant amortization to maturity of any discount or premium, even though the portfolio security may increase or decrease in market value generally in response to changes in interest rates. While this method provides certainty in valuation, it may result in periods during which value, as determined by amortized cost, is higher or lower than the price a Fund would receive if it sold the instrument.
The SSGA Funds reserve the right to make payment with respect to any request for redemption (in excess of $15 million) in whole or in part by delivering readily marketable securities chosen by the Fund and valued as they are for purposes of computing the Fund's NAV (known as redemption-in-kind); provided, however, that under the applicable SEC rule, a Fund is obligated to redeem shares to any one shareholder during any 90 day period solely in cash up to the lesser of $250,000 or 1.00% of the NAV of the Fund at the beginning of the period. A redemption is generally a taxable event for shareholders, regardless of whether the redemption is satisfied in cash or in kind. An investor that receives an in-kind distribution of property from a Fund may be required to recognize taxable gain or loss upon a subsequent taxable disposition of that property.
TAXATION OF THE FUNDS
Cost Basis Reporting. Department of the Treasury regulations mandate cost basis reporting to shareholders and The Internal Revenue Service (IRS) for redemptions of Fund shares acquired on or after January 1, 2012 (Post Effective Date Shares). If you acquire and hold shares directly through the Funds and not through a Financial Intermediary, SS&C GIDS, Inc. will use a default average cost basis methodology for tracking and reporting your cost basis on Post Effective Date Shares, unless you request, in writing, another cost basis reporting methodology.
46

The available methods for reporting your cost-basis include: average cost basis, first in-first out and specific share identification. You may elect which method you want to use by notifying SS&C GIDS, Inc. in writing. This election may be revoked or changed by you at any time up to the date of your first redemption of Post-Effective Date Shares. If you do not affirmatively elect a cost basis method then the Fund's default cost basis calculation method, which is currently the average cost method will be applied to your account(s). The default method will also be applied to all new accounts established unless otherwise requested by you.
Additionally, for redemptions of Fund shares, SS&C GIDS, Inc. will first redeem all shares acquired prior to January 1, 2012 (Pre-Effective Date Shares), before redeeming any Post-Effective Date Shares. You continue to be responsible for tracking cost basis and appropriately reporting sales of Pre-Effective Date Shares to the IRS. If SS&C GIDS, Inc. has historically provided cost basis reporting on these Pre-Effective Date Shares, SS&C GIDS, Inc. will continue to provide those reports. However, no cost basis reporting will be provided to the IRS on the sale of Pre-Effective Date Shares.
If you acquire and hold shares through a Financial Intermediary, please contact your Financial Intermediary for information related to cost basis defaults, cost basis selection, and cost basis reporting.
It is important for you to consult with your own tax advisor(s) when selecting which cost basis methodology is in your best interest.
U.S. Federal Income Tax Considerations Applicable to the Funds
The following discussion of U.S. federal income tax consequences of an investment in the Funds is based on the Code, U.S. Treasury regulations, and other applicable authority, as of the date of this SAI. These authorities are subject to change by legislative or administrative action, possibly with retroactive effect. The following discussion is only a summary of some of the important U.S. federal income tax considerations generally applicable to investments in the Funds. There may be other tax considerations applicable to particular shareholders. Shareholders should consult their own tax advisors regarding their particular situation and the possible application of foreign, state and local tax laws.
Special tax rules apply to investments through defined contribution plans and other tax-qualified plans or tax-advantaged arrangements. Shareholders should consult their tax advisors to determine the suitability of shares of a Fund as an investment through such plans and arrangements and the precise effect of an investment on their particular tax situations.
Qualification as a Regulated Investment Company
Each Fund has elected to be treated as a regulated investment company (RIC) under Subchapter M of the Code and intends each year to qualify and be eligible to be treated as such. In order to qualify for the special tax treatment accorded RICs and their shareholders, each Fund must, among other things, (a) derive at least 90% of its gross income for each taxable year from (i) dividends, interest, payments with respect to certain securities loans, gains from the sale of securities or foreign currencies, or other income (including but not limited to gains from options, futures or forward contracts) derived with respect to its business of investing in such stock, securities or currencies and (ii) net income derived from interests in qualified publicly traded partnerships (as defined below); (b) diversify its holdings so that, at the end of each quarter of the Fund's taxable year, (i) at least 50% of the value of the Fund's total assets consists of cash and cash items, U.S. Government securities, securities of other RICs, and other securities limited in respect of any one issuer to a value not greater than 5% of the value of the Fund's total assets and no more than 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of its assets are invested, including through corporations in which the Fund owns a 20% or more voting stock interest, (x) in the securities (other than those of the U.S. Government or other RICs) of any one issuer or of two or more issuers which the Fund controls and which are engaged in the same, similar or related trades and businesses, or (y) in the securities of one or more qualified publicly traded partnerships (as defined below); and (c) distribute with respect to each taxable year at least 90% of the sum of its investment company taxable income (as that term is defined in the Code without regard to the deduction for dividends paid — generally taxable ordinary income and the excess, if any, of net short-term capital gains over net long-term capital losses) and net tax-exempt income, for such year.
In general, for purposes of the 90% gross income requirement described in (a) above, income derived from a partnership will be treated as qualifying income only to the extent such income is attributable to items of income of the partnership which would be qualifying income if realized directly by the RIC. However, 100% of the net income derived from an interest in a qualified publicly traded partnership (a partnership (x) the interests in which are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent thereof, and (y) that derives less than 90% of its income from the qualifying income described in section (a)(i) of the preceding paragraph), will be treated as
47

qualifying income. In general, such entities will be treated as partnerships for federal income tax purposes, because they meet the passive income requirement under Code Section 7704(c)(2). Further, although in general the passive loss rules of the Code do not apply to RICs, such rules do apply to a RIC with respect to items attributable to an interest in a qualified publicly traded partnership.
For purposes of the diversification test in (b) above, the term outstanding voting securities of such issuer will include the equity securities of a qualified publicly traded partnership. Also, for purposes of the diversification test in (b) above, the identification of the issuer (or, in some cases, issuers) of a particular Fund investment can depend on the terms and conditions of that investment. In some cases, identification of the issuer (or issuers) is uncertain under current law, and an adverse determination or future guidance by the IRS with respect to issuer identification for a particular type of investment may adversely affect a Fund's ability to meet the diversification test in (b) above.
If a Fund qualifies as a RIC that is accorded special tax treatment, the Fund will not be subject to federal income tax on income or gains distributed in a timely manner to its shareholders in the form of dividends (including Capital Gain Dividends, as defined below). If a Fund were to fail to meet the income, diversification or distribution test described above, the Fund could in some cases cure such failure, including by paying a Fund-level tax, paying interest or disposing of certain assets. If such Fund were ineligible to or otherwise did not cure such failure for any year, or if such Fund were otherwise to fail to qualify as a RIC accorded special tax treatment in any taxable year, the Fund would be subject to tax at the Fund level on its taxable income at corporate rates, and all distributions from earnings and profits, including any distributions of net tax-exempt income (if any) and net capital gains (as defined below), would be taxable to shareholders as ordinary income. Some portions of such distributions may be eligible for the dividends-received deduction in the case of corporate shareholders and may be eligible to be treated as qualified dividend income in the case of shareholders taxed as individuals, provided, in both cases, the shareholder meets certain holding period and other requirements in respect of a Fund's shares (each as described below). In addition, a Fund could be required to recognize unrealized gains, pay substantial taxes and interest and make substantial distributions before re-qualifying as a RIC that is accorded special tax treatment.
Each Fund intends to distribute at least annually to its shareholders all or substantially all of its investment company taxable income (computed without regard to the dividends-paid deduction) and its net tax-exempt income (if any), and may distribute its net capital gain (that is, the excess of net long-term capital gain over net short-term capital loss, in each case determined with reference to any loss carryforwards). Any taxable income retained by a Fund will be subject to tax at the Fund level at regular corporate rates. If a Fund retains any net capital gain, it will be subject to tax at regular corporate rates on the amount retained, but it is permitted to designate the retained amount as undistributed capital gain in a timely notice to its shareholders who (a) will be required to include in income for federal income tax purposes, as long-term capital gain, their shares of such undistributed amount, and (b) will be entitled to credit their proportionate shares of the tax paid by the Fund on such undistributed amount against their federal income tax liabilities, if any, and to claim refunds on a properly-filed U.S. tax return to the extent the credit exceeds such liabilities. If a Fund makes this designation, for U.S. federal income tax purposes, the tax basis of shares owned by a shareholder of the Fund will be increased by an amount equal to the difference between the amount of undistributed capital gains included in the shareholder's gross income under clause (a) of the preceding sentence and the tax deemed paid by the shareholder under clause (b) of the preceding sentence. The Funds are not required to, and there can be no assurance a Fund will, make this designation if it retains all or a portion of its net capital gain in a taxable year.
In determining its net capital gain, including in connection with determining the amount available to support a Capital Gain Dividend (as defined below), its taxable income, and its earnings and profits, a RIC generally may elect to treat part or all of any post-October capital loss (defined as any net capital loss attributable to the portion, if any, of the taxable year after October 31, or, if there is no such loss, the net long-term capital loss or net short-term capital loss attributable to any such portion of the taxable year) or late-year ordinary loss (generally, the sum of its (i) net ordinary loss, if any, from the sale, exchange or other taxable disposition of property, attributable to the portion, if any, of the taxable year after October 31, and (ii) other net ordinary loss, if any, attributable to the portion, if any, of the taxable year after December 31) as if incurred in the succeeding taxable year.
If a Fund were to fail to distribute in a calendar year at least an amount equal, in general, to the sum of 98% of its ordinary income for such year and 98.2% of its capital gain net income for the one-year period ending October 31 of such year (or for the one-year period ending November 30 or December 31, if the Fund is eligible to elect and so elects), plus any such amounts retained from the prior year, the Fund would be subject to a nondeductible 4% excise tax on the undistributed amounts. For purposes of the required excise tax distribution, a RIC's ordinary gains and losses from the sale, exchange or other taxable disposition of property that would otherwise be taken into account after October 31 of a calendar year (or
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November 30 of that year, if the Fund makes the election described above) generally are treated as arising on January 1 of the following calendar year; in the case of a Fund with a December 31 year end that makes the election described above, no such gains or losses will be so treated. Also, for these purposes, a Fund will be treated as having distributed any amount on which it is subject to corporate income tax for the taxable year ending within the calendar year. Each Fund intends generally to make distributions sufficient to avoid imposition of the excise tax, although there can be no assurance that it will be able to do so. Distributions declared by a Fund during October, November and December to shareholders of record on a date in any such month and paid by the Fund during the following January will be treated for federal tax purposes as paid by the Fund and received by shareholders on December 31 of the year in which declared.
Capital losses in excess of capital gains (net capital losses) are not permitted to be deducted against a Fund's net investment income. Instead, potentially subject to certain limitations, a Fund may carry net capital losses from any taxable year forward to subsequent taxable years to offset capital gains, if any, realized during such subsequent taxable years. Distributions from capital gains are generally made after applying any available capital loss carryforwards. Capital loss carryforwards are reduced to the extent they offset current-year net realized capital gains, whether the Fund retains or distributes such gains. A Fund may carry net capital losses forward to one or more subsequent taxable years without expiration; any such carryforward losses will retain their character as short-term or long-term. The Fund must apply such carryforwards first against gains of the same character. See a Fund's most recent annual shareholder report for the Fund's available capital loss carryovers as of the end of its most recently ended fiscal year.
Taxation of Distributions Received by Shareholders
For U.S. federal income tax purposes, distributions of investment income are generally taxable to shareholders as ordinary income. Taxes on distributions of capital gains are determined by how long a Fund has owned (or is deemed to have owned) the investments that generated them, rather than how long a shareholder has owned his or her Fund shares. In general, a Fund will recognize long-term capital gain or loss on the disposition of assets the Fund has owned (or is deemed to have owned) for more than one year , and short-term capital gain or loss on the disposition of investments the Fund has owned (or is deemed to have owned) for one year or less. Distributions of net capital gain (that is, the excess of net long-term capital gain over net short-term capital loss) that are properly reported by a Fund as capital gain dividends (Capital Gain Dividends) generally will be taxable to a shareholder receiving such distributions as long-term capital gains includible in net capital gain, and taxed to individuals at reduced rates relative to ordinary income. Distributions from capital gains are generally made after applying any available capital loss carryovers. The IRS and the Department of the Treasury have issued regulations that impose special rules in respect of Capital Gain Dividends received through partnership interests constituting applicable partnership interests under Section 1061 of the Code. Distributions of net short-term capital gain (as reduced by any net long-term capital loss for the taxable year) will be taxable to shareholders as ordinary income. Distributions of investment income properly reported by a Fund as derived from qualified dividend income will be taxed in the hands of individuals at the rates applicable to net capital gain, provided holding period and other requirements are met at both the shareholder and Fund level.
The Code generally imposes a 3.8% Medicare contribution tax on the net investment income of certain individuals, trusts and estates to the extent their income exceeds certain threshold amounts. For these purposes, net investment income generally includes, among other things, (i) distributions paid by a Fund of net investment income and capital gains, and (ii) any net gain from the sale, redemption, exchange or other taxable disposition of Fund shares. Shareholders are advised to consult their tax advisors regarding the possible implications of this additional tax on their investment in the Fund.
Shareholders of a Fund will be subject to federal income taxes as described herein on distributions made by a Fund whether received in cash or reinvested in additional shares of the Fund.
If a Fund makes a distribution to a shareholder in excess of the Fund's current and accumulated earnings and profits in any taxable year, the excess distribution will be treated as a return of capital to the extent of such shareholder's tax basis in its shares, and thereafter as capital gain. A return of capital is not taxable, but it reduces a shareholder's tax basis in its shares, thus reducing any loss or increasing any gain on a subsequent taxable disposition by the shareholder of its shares.
Distributions with respect to a Fund's shares are generally subject to U.S. federal income tax as described herein to the extent they do not exceed the Fund's realized income and gains, even though such distributions may economically represent a return of a particular shareholder's investment. Such distributions are likely to occur in respect of shares purchased at a time when a Fund's NAV reflects either unrealized gains, or realized but undistributed income or gains, that
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were therefore included in the price the shareholder paid. Such distributions may reduce the fair market value of the Fund's shares below the shareholder's cost basis in those shares. As described above, a Fund is required to distribute realized income and gains regardless of whether the Fund's NAV also reflects unrealized losses.
In order for some portion of the dividends received by a Fund shareholder to be qualified dividend income, the Fund must meet holding period and other requirements with respect to the dividend-paying stocks held by the Fund and the shareholder must meet holding period and other requirements with respect to the Fund's shares. In general, a dividend will not be treated as qualified dividend income (at either the Fund or shareholder level) (a) if the dividend is received with respect to any share of stock held for fewer than 61 days during the 121 day period beginning on the date which is 60 days before the date on which such share becomes ex-dividend with respect to such dividend (or, in the case of certain preferred stock, 91 days during the 181 day period beginning 90 days before such date), (b) to the extent that the recipient is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property, (c) if the recipient elects to have the dividend income treated as investment income for purposes of the limitation on deductibility of investment interest, or (d) if the dividend is received from a foreign corporation that is (i) not eligible for the benefits of a comprehensive income tax treaty with the United States (with the exception of dividends paid on stock of such a foreign corporation readily tradable on an established securities market in the United States) or (ii) treated as a passive foreign investment company (PFIC).
In general, distributions of investment income properly reported by a Fund as derived from qualified dividend income will be treated as qualified dividend income in the hands of a shareholder taxed as an individual, provided the shareholder meets the holding period and other requirements described above with respect to the Fund's shares. If the aggregate qualified dividends received by a Fund during any taxable year are 95% or more of the Fund's gross income (excluding net long-term capital gain over net short-term capital loss), then 100% of the Fund's dividends (other than dividends properly reported as Capital Gain Dividends) will be eligible to be treated as qualified dividend income.
In general, dividends of net investment income received by corporate shareholders of a Fund will qualify for the dividends-received deduction generally available to corporations only to the extent of the amount of eligible dividends received by a Fund from domestic corporations for the taxable year. A dividend received by a Fund will not be treated as a dividend eligible for the dividends-received deduction (a) if it has been received with respect to any share of stock that the Fund has held for less than 46 days (91 days in the case of certain preferred stock) during the 91-day period beginning on the date which is 45 days before the date on which such share becomes ex-dividend with respect to such dividend (during the 181 day period beginning 90 days before such date in the case of certain preferred stock) or (b) to the extent that the Fund is under an obligation (pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property. Moreover, the dividends-received deduction may otherwise be disallowed or reduced (x) if the corporate shareholder fails to satisfy the foregoing requirements with respect to its shares of the Fund or (y) by application of various provisions of the Code (for instance, the dividends-received deduction is reduced in the case of a dividend received on debt-financed portfolio stock (generally, stock acquired with borrowed funds)).
Any distribution of income that is attributable to (a) income received by a Fund in lieu of dividends with respect to securities on loan pursuant to a securities lending transaction or (b) dividend income received by a Fund on securities it temporarily purchased from a counterparty pursuant to a repurchase agreement that is treated for U.S. federal income tax purposes as a loan by the Fund, will not constitute qualified dividend income to individual shareholders and will not be eligible for the dividends-received deduction for corporate shareholders. Distributions by a Fund to its shareholders that the Fund properly reports as section 199A dividends, as defined and subject to certain conditions described below, are treated as qualified REIT dividends in the hands of non-corporate shareholders. Non-corporate shareholders are permitted a federal income tax deduction equal to 20% of qualified REIT dividends received by them, subject to certain limitations. Very generally, a section 199A dividend is any dividend or portion thereof that is attributable to certain dividends received by a RIC from REITs (as defined below), to the extent such dividends are properly reported as such by the RIC in a written notice to its shareholders. A section 199A dividend is treated as a qualified REIT dividend only if the shareholder receiving such dividend holds the dividend-paying RIC shares for at least 46 days of the 91-day period beginning 45 days before the shares become ex-dividend, and is not under an obligation to make related payments with respect to a position in substantially similar or related property. A Fund is permitted to report such part of its dividends as section 199A dividends as are eligible, but is not required to do so.
If a Fund holds, directly or indirectly, one or more tax credit bonds issued on or before December 31, 2017, on one or more applicable dates during a taxable year, the Fund may elect to permit its shareholders to claim a tax credit on their income tax returns equal to each shareholder's proportionate share of tax credits from the bond otherwise allowed to the Fund. In such a case, a shareholder will be deemed to receive a distribution of money with respect to its Fund shares
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equal to the shareholder's proportionate share of the amount of such credits and be allowed a credit against the its U.S. federal income tax liability equal to the amount of such deemed distribution. A shareholder's ability to claim a tax credit associated with one or more tax credit bonds may be subject to certain limitations imposed by the Code, and the amount of the tax credits may not exceed the amount reported by the Fund in a written notice to shareholders. Even if a Fund is eligible to pass through tax credits to shareholders, the Fund may choose not to do so.
As required by federal law, detailed federal tax information with respect to each calendar year will be furnished to each shareholder early in the succeeding year.
Tax Implications of Certain Fund Investments
Special Rules for Debt Obligations. Some debt obligations with a fixed maturity date of more than one year from the date of issuance (and zero-coupon debt obligations with a fixed maturity date of more than one year from the date of issuance) will be treated as debt obligations that are issued originally at a discount. Generally, the original issue discount (OID) is treated as interest income and is included in the Fund's income and required to be distributed by the Fund over the term of the debt obligation, even though payment of that amount is not received until a later time, upon partial or full repayment or disposition of the debt obligation. In addition, payment-in-kind obligations will give rise to income which is required to be distributed and is taxable even though the Fund holding the obligation receives no interest payment in cash on the obligation during the year.
Some debt obligations with a fixed maturity date of more than one year from the date of issuance that are acquired by a Fund in the secondary market may be treated as having market discount. Very generally, market discount is the excess of the stated redemption price of a debt obligation (or in the case of an obligation issued with OID, its revised issue price) over the purchase price of such obligation. Subject to the discussion below regarding Section 451 of the Code, (i) generally, any gain recognized on the disposition of, and any partial payment of principal on, a debt obligation having market discount is treated as ordinary income to the extent the gain, or principal payment, does not exceed the accrued market discount on such debt obligation, (ii) alternatively, a Fund may elect to accrue market discount currently, in which case the Fund will be required to include the accrued market discount in the Fund's income (as ordinary income) and thus distribute it over the term of the debt obligation, even though payment of that amount is not received until a later time, upon partial or full repayment or disposition of the debt obligation, and (iii) the rate at which the market discount accrues, and thus is included in a Fund's income, will depend upon which of the permitted accrual methods the Fund elects.
Notwithstanding the foregoing, effective for taxable years beginning after 2017, Section 451 of the Code generally requires any accrual method taxpayer to take into account items of gross income no later than the time at which such items are taken into account as revenue in the taxpayer's financial statements. The IRS and the Department of Treasury issued regulations providing that this rule does not apply to accrued market discount. If this rule were to apply to the accrual of market discount, each Fund would be required to include in income any market discount as it takes the same into account on its financial statements, even if the Fund does not otherwise elect to accrue market discount currently for federal income tax purposes.
If a Fund holds the foregoing kinds of obligations, or other obligations subject to special rules under the Code, it may be required to pay out as an income distribution each year an amount which is greater than the total amount of cash interest the Fund actually received. Such distributions may be made from the cash assets of the Fund or, if necessary, by disposition of portfolio securities including at a time when it may not be advantageous to do so. These dispositions may cause the Fund to realize higher amounts of short-term capital gains (generally taxed to shareholders at ordinary income tax rates) and, in the event the Fund realizes net capital gains from such transactions, its shareholders may receive a larger Capital Gain Dividend than they would have if the Fund had not held such obligations.
A portion of the OID accrued on certain high yield discount obligations may not be deductible to the issuer and will instead be treated as a dividend paid by the issuer for purposes of the dividends-received deduction. In such cases, if the issuer of the high yield discount obligations is a domestic corporation, dividend payments by a Fund may be eligible for the dividends-received deduction to the extent attributable to the deemed dividend portion of such OID.
Securities Purchased at a Premium. Very generally, where a Fund purchases a bond at a price that exceeds the redemption price at maturity – that is, at a premium — the premium is amortizable over the remaining term of the bond. In the case of a taxable bond, if a Fund makes an election applicable to all such bonds it purchases, which election is irrevocable without consent of the IRS, the Fund reduces the current taxable income from the bond by the amortized premium and reduces its tax basis in the bond by the amount of such offset; upon the disposition or maturity of such bonds acquired on or after January 4, 2013, the Fund is permitted to deduct any remaining premium allocable to a prior period.
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At-risk or Defaulted Securities. Investments in debt obligations that are at risk of or in default present special tax issues for a Fund. Tax rules are not entirely clear about issues such as when a Fund may cease to accrue interest, OID or market discount; whether, when or to what extent a Fund should recognize market discount on such a debt obligation; when and to what extent a Fund may take deductions for bad debts or worthless securities; and how a Fund should allocate payments received on obligations in default between principal and income. These and other related issues will be addressed by a Fund when, as and if it invests in such securities, in order to seek to ensure that it distributes sufficient income to preserve its status as a RIC and does not become subject to U.S. federal income or excise tax.
Certain Investments in REITs. Any investment by a Fund in equity securities of real estate investment trusts qualifying as such under Subchapter M of the Code (REITs) may result in the Fund's receipt of cash in excess of the REIT's earnings; if the Fund distributes these amounts, these distributions could constitute a return of capital to Fund shareholders for U.S. federal income tax purposes. Dividends received by a Fund from a REIT will not qualify for the corporate dividends-received deduction and generally will not constitute qualified dividend income.
Certain Investments in Mortgage Pooling Vehicles. A Fund may invest directly or indirectly in residual interests in real estate mortgage investment conduits (REMICs) (including by investing in residual interests in CMOs with respect to which an election to be treated as a REMIC is in effect) or equity interests in taxable mortgage pools (TMPs). Under a notice issued by the IRS in October 2006 and Treasury regulations that have yet to be issued but may apply retroactively, a portion of a Fund's income (including income allocated to the Fund from certain pass-through entities) that is attributable to a residual interest in a REMIC or an equity interest in a TMP (referred to in the Code as an excess inclusion) will be subject to U.S. federal income tax in all events. This notice also provides, and the regulations are expected to provide, that excess inclusion income of a RIC, such as a Fund, will be allocated to shareholders of the RIC in proportion to the dividends received by such shareholders, with the same consequences as if the shareholders held the related interest directly. As a result, a Fund investing in such interests may not be a suitable investment for charitable remainder trusts (CRTs), as noted below.
In general, excess inclusion income allocated to shareholders (i) cannot be offset by net operating losses (subject to a limited exception for certain thrift institutions), (ii) will constitute unrelated business taxable income (UBTI) to entities (including a qualified pension plan, an individual retirement account, a 401(k) plan, a Keogh plan or other tax-exempt entity) subject to tax on UBTI, thereby potentially requiring such an entity that is allocated excess inclusion income, and that otherwise might not be required to file a tax return, to file a tax return and pay tax on such income, and (iii) in the case of a foreign shareholder will not qualify for any reduction in U.S. federal withholding tax. A shareholder will be subject to U.S. federal income tax on such inclusions notwithstanding any exemption from such income tax otherwise available under the Code.
Foreign Currency Transactions. Any transaction by a Fund in foreign currencies, foreign currency-denominated debt obligations or certain foreign currency options, futures contracts or forward contracts (or similar instruments) may give rise to ordinary income or loss to the extent such income or loss results from fluctuations in the value of the foreign currency concerned. Any such net gains could require a larger dividend toward the end of the calendar year. Under Section 988 of the Code, gains or losses attributable to fluctuations in exchange rates between the time a fund accrues income or receivables or expenses or other liabilities denominated in a foreign currency and the time a fund actually collects such income or pays such liabilities are generally treated as ordinary income or ordinary loss. In general, gains and losses realized on debt instruments will likewise be treated as ordinary income or loss to the extent attributable to changes in exchange rates between the U.S. dollar and the currencies in which the instruments are denominated. Similarly, gains or losses on foreign currency, foreign currency forward contracts and certain foreign currency options or futures contracts (or similar instruments), to the extent attributable to fluctuations in exchange rates between the acquisition and disposition dates, are also treated as ordinary income or loss unless a fund elects otherwise. Such ordinary income treatment may accelerate fund distributions to shareholders, require a larger dividend toward the end of the calendar year, or increase distributions taxed to shareholders as ordinary income. Any such net losses will generally reduce and potentially require the recharacterization of prior ordinary income distributions. Any net ordinary losses so created cannot be carried forward by the Fund to offset income or gains earned in subsequent taxable years.
Passive Foreign Investment Companies. Equity investments by a Fund in certain PFICs could potentially subject the Fund to a U.S. federal income tax (including interest charges) on distributions received from the company or on proceeds received from the disposition of shares in the company. This tax cannot be eliminated by making distributions to Fund shareholders. However, a Fund may elect to avoid the imposition of that tax. For example, a Fund may elect to treat a PFIC as a qualified electing fund (i.e., make a QEF election), in which case the Fund will be required to include its share of the PFIC's income and net capital gains annually, regardless of whether it receives any distribution from the
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PFIC. A Fund also may make an election to mark the gains (and to a limited extent losses) in such holdings to the market as though it had sold (and, solely for purposes of this mark-to-market election, repurchased) its holdings in those PFICs on the last day of the Fund's taxable year. Such gains and losses are treated as ordinary income and loss. The QEF and mark-to-market elections may accelerate the recognition of income (without the receipt of cash) and increase the amount required to be distributed by the Fund to avoid taxation. Making either of these elections therefore may require a Fund to liquidate other investments (including when it is not advantageous to do so) to meet its distribution requirement, which also may accelerate the recognition of gain and affect the Fund's total return. Dividends paid by PFICs will not be eligible to be treated as qualified dividend income.
Because it is not always possible to identify a foreign corporation as a PFIC, a Fund may incur the tax and interest charges described above in some instances.
Options and Futures. In general, option premiums received by a Fund are not immediately included in the income of the Fund. Instead, the premiums are recognized when the option contract expires, the option is exercised by the holder, or the Fund transfers or otherwise terminates the option (e.g., through a closing transaction). If a call option written by a Fund is exercised and the Fund sells or delivers the underlying stock, the Fund generally will recognize capital gain or loss equal to (a) the sum of the strike price and the option premium received by the Fund minus (b) the Fund's basis in the stock. Such gain or loss generally will be short-term or long-term depending upon the holding period of the underlying stock. If securities are purchased by a Fund pursuant to the exercise of a put option written by it, the Fund generally will subtract the premium received for purposes of computing its cost basis in the securities purchased. Gain or loss arising in respect of a termination of a Fund's obligation under an option other than through the exercise of the option will be short-term gain or loss depending on whether the premium income received by the Fund is greater or less than the amount paid by the Fund (if any) in terminating the transaction. Thus, for example, if an option written by a Fund expires unexercised, the Fund generally will recognize short-term gain equal to the premium received.
A Fund's options activities may include transactions constituting straddles for U.S. federal income tax purposes, that is, that trigger the U.S. federal income tax straddle rules contained primarily in Section 1092 of the Code. Such straddles include, for example, positions in a particular security, or an index of securities, and one or more options that offset the former position, including options that are covered by a Fund's long position in the subject security. Very generally, where applicable, Section 1092 requires (i) that losses be deferred on positions deemed to be offsetting positions with respect to substantially similar or related property, to the extent of unrealized gain in the latter, and (ii) that the holding period of such a straddle position that has not already been held for the long-term holding period be terminated and begin anew once the position is no longer part of a straddle. Options on single stocks that are not deep in the money may constitute qualified covered calls, which generally are not subject to the straddle rules; the holding period on stock underlying qualified covered calls that are in the money although not deep in the money will be suspended during the period that such calls are outstanding. Thus, the straddle rules and the rules governing qualified covered calls could cause gains that would otherwise constitute long-term capital gains to be treated as short-term capital gains, and distributions that would otherwise constitute qualified dividend income or qualify for the dividends-received deduction to fail to satisfy the holding period requirements and therefore to be taxed as ordinary income or fail to qualify for the dividends-received deduction, as the case may be.
The tax treatment of certain positions entered into by a Fund, including regulated futures contracts, certain foreign currency positions and certain listed non-equity options, will be governed by section 1256 of the Code (section 1256 contracts). Gains or losses on section 1256 contracts generally are considered 60% long-term and 40% short-term capital gains or losses (60/40), although certain foreign currency gains and losses from such contracts may be treated as ordinary in character. Also, section 1256 contracts held by a Fund at the end of each taxable year (and, for purposes of the 4% excise tax, on certain other dates as prescribed under the Code) are marked to market with the result that unrealized gains or losses are treated as though they were realized and the resulting gain or loss is treated as ordinary or 60/40 gain or loss, as applicable.
Derivatives, Hedging, and Related Transactions. In addition to the special rules described above in respect of futures and options transactions, a Fund's transactions in other derivative instruments (e.g., forward contracts and swap agreements), as well as any of its hedging, short sale, securities loan or similar transactions, may be subject to one or more special tax rules (e.g., notional principal contract, straddle, constructive sale, wash sale and short sale rules). These rules may affect whether gains and losses recognized by a Fund are treated as ordinary or capital, accelerate the recognition of income or gains to the Fund, defer losses to the Fund, and cause adjustments in the holding periods of the Fund's securities, thereby affecting, among other things, whether capital gains and losses are treated as short-term or long-term. These rules could therefore affect the amount, timing and/or character of distributions to shareholders.
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Because these and other tax rules applicable to these types of transactions are in some cases uncertain under current law, an adverse determination or future guidance by the IRS with respect to these rules (which determination or guidance could be retroactive) may affect whether a Fund has made sufficient distributions, and otherwise satisfied the relevant requirements, to maintain its qualification as a RIC and avoid a Fund-level tax.
Commodities and Commodity-Linked Instruments. A Fund's investments in commodities and commodity-linked instruments can be limited by the Fund's intention to qualify as a RIC, and can bear on the Fund's ability to so qualify. Income and gains from commodities and certain commodity-linked instruments do not constitute qualifying income to a RIC for purposes of the 90% gross income test described above. In addition, the tax treatment of some other commodity-linked instruments in which a Fund might invest is not certain, in particular with respect to whether income or gains from such instruments constitute qualifying income to a RIC.
If a Fund were to treat income or gain from a particular instrument as qualifying income and the income or gain were later determined not to constitute qualifying income and, together with any other nonqualifying income, caused the Fund's nonqualifying income to exceed 10% of its gross income in any taxable year, the Fund would fail to qualify as a RIC unless it is eligible to and does pay a tax at the Fund level.
Book-Tax Differences. Certain of a Fund's investments in derivative instruments and foreign currency-denominated instruments, and any of the Fund's transactions in foreign currencies and hedging activities, are likely to produce a difference between its book income and the sum of its taxable income and net tax-exempt income (if any). If such a difference arises, and a Fund's book income is less than the sum of its taxable income and net tax-exempt income, the Fund could be required to make distributions exceeding book income to qualify as a RIC that is accorded special tax treatment and to avoid an entity-level tax. In the alternative, if a Fund's book income exceeds the sum of its taxable income (including realized capital gains) and net tax-exempt income, the distribution (if any) of such excess generally will be treated as (i) a dividend to the extent of the Fund's remaining earnings and profits (including earnings and profits arising from tax-exempt income), (ii) thereafter, as a return of capital to the extent of the recipient's basis in its shares, and (iii) thereafter as gain from the sale or exchange of a capital asset.
Investments in Other RICs. If a Fund receives dividends from an underlying RIC (each, an underlying RIC) and the underlying RIC reports such dividends as qualified dividend income, then the Fund is permitted, in turn, to report a portion of such dividends as qualified dividend income when it distributes such portion to its shareholders, provided holding period and other requirements are met.
If a Fund receives dividends from an underlying RIC, and the underlying RIC reports such dividends as eligible for the dividends-received deduction, then the Fund is permitted, in turn, to report a portion of such dividends as eligible for the dividends-received deduction as well when it distributes such portion to its shareholders, provided holding period and other requirements are met.
If an underlying RIC in which a Fund invests elects to pass through tax credit bond credits to its shareholders, then the Fund is permitted in turn to elect to pass through its proportionate share of those tax credits to its shareholders, provided that the Fund meets shareholder notice and other requirements.
The foregoing rules may cause the tax treatments of a Fund's gains, losses and distributions to differ at times from the tax treatment that would apply if the Fund invested directly in the types of securities held by the underlying RIC. As a result, investors may receive taxable distributions earlier and recognize higher amounts of capital gain or ordinary income than they otherwise would.
Foreign Taxation
Income, proceeds and gains received by a Fund from sources within foreign countries may be subject to non-U.S. withholding or other foreign taxes, which will reduce the yield on those investments. Tax conventions between certain countries and the United States may reduce or eliminate such taxes. If, at the close of a Fund's taxable year, more than 50% of the assets of the Fund consists of the securities of foreign corporations, the Fund may elect to permit shareholders to claim a credit or deduction on their income tax returns for their pro rata portions of qualified taxes paid by the Fund to foreign countries in respect of foreign securities that the Fund has held for at least the minimum period specified in the Code. In such a case, shareholders will include in gross income from foreign sources their pro rata shares of such taxes paid by the Fund.
A shareholder's ability to claim an offsetting foreign tax credit or deduction in respect of foreign taxes paid by a Fund is subject to certain limitations imposed by the Code, which may result in the shareholder's not receiving a full credit or deduction (if any) for the amount of such taxes. Shareholders who do not itemize on their U.S. federal income tax returns
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may claim a credit (but not a deduction) for such foreign taxes. Even if a Fund is eligible to make such an election for a given year, it may determine not to do so. If a Fund does not qualify for or does not make such election, shareholders will not be entitled to claim a credit or deduction with respect to foreign taxes paid by the Fund; in that case the foreign tax will nonetheless reduce the Fund's taxable income. Shareholders that are not subject to U.S. federal income tax, and those who invest in a Fund through tax-advantaged accounts (including those who invest through individual retirement accounts or other tax-advantaged retirement plans), generally will receive no benefit from any tax credit or deduction passed through by the Fund. Under certain circumstances, if a Fund receives a refund of foreign taxes paid in respect of a prior year, the value of Fund Shares could be affected or any foreign tax credits or deductions passed through to shareholders in respect of the Fund's foreign taxes for the current year could be reduced.
Backup Withholding
A Fund generally is required to withhold and remit to the U.S. Treasury a percentage of the taxable distributions and redemption proceeds paid to any individual shareholder who fails to properly furnish the Fund with a correct taxpayer identification number (TIN), who has under-reported dividend or interest income, or who fails to certify to the Fund that he or she is not subject to such withholding.
Backup withholding is not an additional tax. Any amounts withheld may be credited against the shareholder's U.S. federal income tax liability, provided the appropriate information is furnished to the IRS.
Tax-Exempt Shareholders Income of a RIC that would be UBTI if earned directly by a tax-exempt entity generally will not constitute UBTI when distributed to a tax-exempt shareholder of the RIC. Notwithstanding this blocking effect, a tax-exempt shareholder could realize UBTI by virtue of its investment in a Fund if shares in the Fund constitute debt-financed property in the hands of the tax-exempt shareholder within the meaning of Code Section 514(b).
A tax-exempt shareholder may also recognize UBTI if a Fund recognizes excess inclusion income derived from direct or indirect investments in residual interests in REMICs or equity interests in TMPs if the amount of such income recognized by the Fund exceeds the Fund's investment company taxable income (after taking into account deductions for dividends paid by the Fund).
In addition, special tax consequences apply to CRTs that invest in RICs that invest directly or indirectly in residual interests in REMICs or equity interests in TMPs. Under legislation enacted in December 2006, a CRT (as defined in Section 664 of the Code) that realizes any UBTI for a taxable year must pay an excise tax annually of an amount equal to such UBTI. Under IRS guidance issued in October 2006, a CRT will not recognize UBTI as a result of investing in a Fund that recognizes excess inclusion income. Rather, if at any time during any taxable year a CRT (or one of certain other tax-exempt shareholders, such as the United States, a state or political subdivision, or an agency or instrumentality thereof, and certain energy cooperatives) is a record holder of a share in a Fund that recognizes excess inclusion income, then the Fund will be subject to a tax on that portion of its excess inclusion income for the taxable year that is allocable to such shareholders at the highest federal corporate income tax rate. The extent to which this IRS guidance remains applicable in light of the December 2006 legislation is unclear. To the extent permitted under the 1940 Act, each Fund may elect to specially allocate any such tax to the applicable CRT, or other shareholder, and thus reduce such shareholder's distributions for the year by the amount of the tax that relates to such shareholder's interest in a Fund. CRTs are urged to consult their tax advisors concerning the consequences of investing in each Fund.
Redemptions and Exchanges
Redemptions and exchanges of each Fund's shares are taxable events and, accordingly, shareholders may realize gain or loss on these transactions. In general, any gain or loss realized upon a taxable disposition of shares will be treated as long-term capital gain or loss if the shares have been held for more than 12 months. Otherwise, the gain or loss on the taxable disposition of Fund shares will be treated as short-term capital gain or loss. However, any loss realized upon a taxable disposition of Fund shares held by a shareholder for six months or less will be treated as long-term, rather than short-term, to the extent of any Capital Gain Dividends received (or deemed received) by the shareholder with respect to the shares. Furthermore, all or a portion of any loss realized upon a taxable disposition of Fund shares will generally be disallowed under the Code's wash sale rule if other substantially identical shares are purchased, including by means of dividend reinvestment, within 30 days before or after the disposition. In such a case, the basis of the newly purchased shares will be adjusted to reflect the disallowed loss.
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Upon the redemption or exchange of shares of a Fund, the Fund or, in the case of shares purchased through a financial intermediary, the financial intermediary may be required to provide you and the IRS with cost basis and certain other related tax information about the Fund shares you redeemed or exchanged. See the Funds' prospectus for more information.
Tax Shelter Reporting
Under U.S. Treasury regulations, if a shareholder recognizes a loss of $2 million or more for an individual shareholder or $10 million or more for a corporate shareholder (or a greater loss over a combination of years), the shareholder must file with the IRS a disclosure statement on IRS Form 8886. Direct holders of portfolio securities are in many cases excepted from this reporting requirement, but under current guidance, shareholders of a RIC are not excepted. Future guidance may extend the current exception from this reporting requirement to shareholders of most or all RICs. 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 advisors to determine the applicability of these regulations in light of their individual circumstances.
Non-U.S. Shareholders
Non-U.S. shareholders in a Fund should consult their tax advisors concerning the tax consequences of ownership of shares in the Fund. Distributions by a Fund to shareholders that are not U.S. persons within the meaning of the Code (foreign shareholders) properly reported by the Fund as (1) Capital Gain Dividends, (2) short-term capital gain dividends, or (3) interest-related dividends, each as defined and subject to certain conditions described below, generally are not subject to withholding of U.S. federal income tax.
In general, the Code defines (1) short-term capital gain dividends as distributions of net short-term capital gains in excess of net long-term capital losses and (2) interest-related dividends as distributions from U.S.-source interest income of types similar to those not subject to U.S. federal income tax if earned directly by an individual foreign shareholder, in each case to the extent such distributions are properly reported as such by a Fund in a written notice to shareholders.
The exceptions to withholding for Capital Gain Dividends and short-term capital gain dividends do not apply to (A) distributions to an individual foreign shareholder who is present in the United States for a period or periods aggregating 183 days or more during the year of the distribution and (B) distributions attributable to gain that is treated as effectively connected with the conduct by the foreign shareholder of a trade or business within the United States under special rules regarding the disposition of U.S. real property interests (USRPIs) as described below. The exception to withholding for interest-related dividends does not apply to distributions to a foreign shareholder (i) that has not provided a satisfactory statement that the beneficial owner is not a U.S. person, (ii) to the extent that the dividend is attributable to certain interest on an obligation if the foreign shareholder is the issuer or is a 10% shareholder of the issuer, (iii) that is within certain foreign countries that have inadequate information exchange with the United States, or (iv) to the extent the dividend is attributable to interest paid by a person that is a related person of the foreign shareholder and the foreign shareholder is a controlled foreign corporation). If a Fund invests in a RIC that pays such distributions to the Fund, such distributions retain their character as not subject to withholding if properly reported when paid by the Fund to foreign shareholders. A RIC is permitted to report such parts of its dividends as are eligible to be treated as interest-related or short-term capital gain dividends, but is not required to do so. In the case of shares held through an intermediary, the intermediary may withhold even if a Fund reports all or a portion of a payment as an interest-related or short-term capital gain dividend to shareholders.
Foreign shareholders should contact their intermediaries regarding the application of withholding rules to their accounts.
Distributions by a Fund to foreign shareholders other than Capital Gain Dividends, short-term capital gain dividends and interest-related dividends (e.g., dividends attributable to dividend and foreign-source interest income or to short-term capital gains or U.S. source interest income to which the exception from withholding described above does not apply) are generally subject to withholding of U.S. federal income tax at a rate of 30% (or lower applicable treaty rate).
A foreign shareholder is not, in general, subject to U.S. federal income tax on gains (and is not allowed a deduction for losses) realized on the sale of shares of a Fund unless (a) such gain is effectively connected with the conduct of a trade or business carried on by such holder within the United States, (b) in the case of an individual holder, the holder is present in the United States for a period or periods aggregating 183 days or more during the year of the sale and certain other conditions are met, or (c) the special rules relating to gain attributable to the sale or exchange of U.S. real property interests (USRPIs) apply to the foreign shareholder's sale of shares of the Fund (as described below).
56

Foreign shareholders with respect to whom income from a Fund is effectively connected with a trade or business conducted by the foreign person within the United States will in general be subject to U.S. federal income tax on the income derived from the Fund at the graduated rates applicable to U.S. citizens, residents or domestic corporations, whether such income is received in cash or reinvested in shares of the Fund and, in the case of a foreign corporation, may also be subject to a branch profits tax. If a foreign shareholder is eligible for the benefits of a tax treaty, any effectively connected income or gain will generally be subject to U.S. federal income tax on a net basis only if it is also attributable to a permanent establishment maintained by the shareholder in the United States. More generally, foreign shareholders who are residents in a country with an income tax treaty with the United States may obtain different tax results than those described herein, and are urged to consult their tax advisors.
Special rules would apply if a Fund were a qualified investment entity (QIE) because it is either a U.S. real property holding corporation (USRPHC) or would be a USRPHC but for the operation of certain exceptions to the definition thereof. Very generally, a USRPHC is a domestic corporation that holds USRPIs the fair market value of which equals or exceeds 50% of the sum of the fair market values of the corporation's USRPIs, interests in real property located outside the United States, and other trade or business assets. USRPIs are generally defined as any interest in U.S. real property and any interest (other than solely as a creditor) in a USRPHC or, very generally, an entity that has been a USRPHC in the last five years. A Fund that holds, directly or indirectly, significant interests in REITs may be a USRPHC. Interests in domestically controlled QIEs, including REITs and RICs that are QIEs, not-greater-than-10% interests in publicly traded classes of stock in REITs and not-greater-than-5% interests in publicly traded classes of stock in RICs generally are not USRPIs, but these exceptions do not apply for purposes of determining whether a Fund is a QIE. If an interest in a Fund were a USRPI, the Fund would be required to withhold U.S. tax on the proceeds of a share redemption by a greater-than-5% foreign shareholder, in which case such foreign shareholder generally would also be required to file U.S. tax returns and pay any additional taxes due in connection with the redemption.
If a Fund were a QIE, under a special look-through rule, any distributions by the Fund to a foreign shareholder attributable directly or indirectly to (i) distributions received by the Fund from a lower-tier RIC or REIT that the Fund is required to treat as USRPI gain in its hands and (ii) gains realized on the disposition of USRPIs by the Fund, would retain their character as gains realized from USRPIs in the hands of the Fund's foreign shareholders, and would be subject to U.S. tax withholding. In addition, such distributions could result in the foreign shareholder being required to file a U.S. tax return and pay tax on the distributions at regular U.S. federal income tax rates. The consequences to a foreign shareholder, including the rate of such withholding and character of such distributions (e.g., as ordinary income or USRPI gain), would vary depending upon the extent of the foreign shareholder's current and past ownership of the Fund. Each Fund generally does not expect that it will be a QIE.
Foreign shareholders of a Fund also may be subject to wash sale rules to prevent the avoidance of the tax-filing and -payment obligations discussed above through the sale and repurchase of Fund shares.
Foreign shareholders should consult their tax advisors and, if holding shares through intermediaries, their intermediaries, concerning the application of these rules to their investment in a Fund.
In order for a foreign shareholder to qualify for any exemptions from withholding described above or for lower withholding tax rates under income tax treaties, or to establish an exemption from back-up withholding, the foreign shareholder must comply with special certification and filing requirements relating to its non-U.S. status (including, in general, furnishing an IRS Form W-8BEN, IRS Form W-8BEN-E or substitute form). Non-U.S. investors in a Fund should consult their tax advisors in this regard.
Special rules (including withholding and reporting requirements) apply to foreign partnerships and those holding Fund shares through foreign partnerships. Additional considerations may apply to foreign trusts and estates. Investors holding Fund shares through foreign entities should consult their tax advisors about their particular situation. A foreign shareholder may be subject to state and local tax and to the U.S. federal estate tax in addition to the U.S. federal income tax on income referred to above.
Shareholder Reporting Obligations With Respect To Foreign Bank and Financial Accounts
Shareholders that are U.S. persons and own, directly or indirectly, more than 50% of a Fund by vote or value could be required to report annually their financial interest in the Fund's foreign financial accounts, if any, on FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Shareholders should consult a tax advisor, and persons investing in a Fund through an intermediary should contact their intermediary, regarding the applicability to them of this reporting requirement.
57

Other Reporting and Withholding Requirements
Sections 1471-1474 of the Code and the U.S. Treasury and IRS guidance issued thereunder (collectively, FATCA) generally require a Fund to obtain information sufficient to identify the status of each of its shareholders under FATCA or under an applicable intergovernmental agreement (an IGA) between the United States and a foreign government. If a shareholder fails to provide the requested information or otherwise fails to comply with FATCA or an IGA, the Fund may be required to withhold under FATCA at a rate of 30% with respect to that shareholder on ordinary dividends it pays. The IRS and the Department of Treasury have issued proposed regulations providing that these withholding rules will not apply to the gross proceeds of share redemptions or Capital Gain Dividends a Fund pays. If a payment by a Fund is subject to FATCA withholding, the Fund is required to withhold even if such payment would otherwise be exempt from withholding under the rules applicable to foreign shareholders described above (e.g., short-term capital gain dividends and interest-related dividends).
Each prospective investor is urged to consult its tax advisor regarding the applicability of FATCA and any other reporting requirements with respect to the prospective investor's own situation, including investments through an intermediary.
General Considerations
The U.S. federal income tax discussion set forth above is for general information only. Prospective investors should consult their tax advisors regarding the specific U.S. federal income tax consequences of purchasing, holding, and disposing of shares of a Fund, as well as the effects of state, local, foreign, and other tax laws and any proposed tax law changes.
ADDITIONAL INFORMATION
SHAREHOLDER MEETINGS
The Trust will not hold an annual meeting of shareholders. Special meetings may be convened: (1) by the Board of Trustees; (2) upon written request to the Board by the holders of at least 10% of the outstanding shares; or (3) upon the Board's failure to honor the shareholders' request described above, by holders of at least 10% of the outstanding shares giving notice of the special meeting to the shareholders.
DECLARATION OF TRUST
The Master Trust Agreement provides that the Trust may redeem shares of a Fund at the redemption price that would apply if the share redemption were initiated by a shareholder. It is the policy of the Trust that, except upon such conditions as may from time to time be set forth in the then current prospectus of the Trust or to facilitate the Trust's or a Fund's compliance with applicable law or regulation, the Trust would not initiate a redemption of shares unless it were to determine that failing to do so may have a substantial adverse consequence for a Fund or the Trust.
The Trust's organizational documents provide that a Trustee who is not an interested person (as defined in the 1940 Act) of the Trust will be deemed independent and disinterested with respect to any demand made in connection with a derivative action or proceeding. It is the policy of the Trust that it will not assert that provision to preclude a shareholder from claiming that a trustee is not independent or disinterested with respect to any demand made in connection with a derivative action or proceeding.
The Trust will not deviate from the foregoing policies in a manner that adversely affects the rights of shareholders of a Fund without the approval of a vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of such Fund.
CAPITALIZATION AND VOTING
Each Fund share has one vote. There are no cumulative voting rights. There is no annual meeting of shareholders, but special meetings may be held. On any matter that affects only a particular investment Fund, only shareholders of that Fund may vote unless otherwise required by the 1940 Act or the Master Trust Agreement.
A Fund share represents an equal proportionate interest in the Fund, has a par value of $.001 per share and is entitled to such relative rights and preferences and dividends and distributions earned on the assets belonging to the Fund as may be declared by the Board of Trustees. Fund shares are fully paid and nonassessable by the Trust and have no preemptive rights.
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The SSGA Funds do not issue share certificates. Instead, the Transfer Agent sends monthly statements to shareholders of the Fund concurrent with any transaction activity, confirming all investments in or redemptions from their accounts. Each statement also sets forth the balance of shares held in the account.
The Trust is authorized to divide shares of any Fund into two or more classes of shares. The shares of each Fund may have such rights and preferences as the Trustees may establish from time to time, including the right of redemption (including the price, manner and terms of redemption), special and relative rights as to dividends and distributions, liquidation rights, sinking or purchase Fund provisions and conditions under which any Fund may have separate voting rights or no voting rights. Each class of shares is entitled to the same rights and privileges as all other classes of the Fund, except that each class bears the expenses associated with the distribution and shareholder servicing arrangements of that class, as well as other expenses attributable to the class and unrelated to the management of the Fund's portfolio securities. The Funds have Class N (formerly, Institutional Class) (the original class of shares); and Class A, Class I and Class K (State Street International Stock Selection Fund only).
FEDERAL LAW AFFECTING STATE STREET
Federal laws may prohibit state chartered banks such as State Street from engaging in the business of certain kinds of underwriting and other activities and may impact the services provided by State Street. SSGA Funds shares are not endorsed or guaranteed by State Street or its affiliates, are not deposits or obligations of State Street or its affiliates, and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.
Changes in federal or state statutes and regulations relating to the permissible activities of banks and their affiliates, as well as judicial or administrative decisions or interpretations of such or future statutes and regulations, could prevent the Adviser from continuing to perform all or a part of the above services for its customers and/or the Funds. If the Adviser were prohibited from serving the Fund in any of its present capacities, the Board of Trustees would seek an alternative provider(s) of such services. In such event, changes in the operation of the Funds may occur. It is not expected by the Adviser that existing shareholders would suffer any adverse financial consequences (if another Adviser with equivalent abilities is found) as a result of any of these occurrences.
PROXY VOTING POLICY AND GUIDELINES
The Trust has adopted proxy voting policies pursuant to which the Trust delegates the responsibility for voting proxies relating to portfolio securities held by the Funds to the Adviser as part of the Adviser's general management of the Funds, subject the Board's continuing oversight. A copy of the Trust's proxy voting procedures is located in Appendix B and a copy of the Adviser's proxy voting policy is located in Appendix C. You may obtain information regarding how the Funds voted proxies relating to their portfolio securities during the most recent 12-month period ended June 30: (1) without charge, upon request, by calling (800) 997-7327; (2) on the Funds' website at www.ssga.com; and (3) on the SEC's website at http://www.sec.gov.
MASSACHUSETTS BUSINESS TRUST
Each individual Fund of the Trust is a series of a Massachusetts business trust. A copy of the Trust's Master Trust Agreement is on file in the office of the Secretary of the Commonwealth of Massachusetts. The Master Trust Agreement and the By-Laws of the Trust are designed to make the Trust similar in most respects to a Massachusetts business corporation. The principal distinctions between the two forms relate to shareholder liability and are described below.
Under Massachusetts law, shareholders of such a trust may, under certain circumstances, be held personally liable as partners for the obligations of the trust. This is not the case for a Massachusetts business corporation. However, the Master Trust Agreement provides that the shareholders are not subject to any personal liability for the acts or obligations of the SSGA Funds and that every note, bond, contract, instrument, certificate or undertaking made on behalf of the SSGA Funds contains a provision to the effect that the shareholders are not personally liable.
No personal liability will attach to the shareholders under any undertaking containing such provision when adequate notice of such provision is given, except possibly in a few jurisdictions. With respect to all types of claims in the latter jurisdictions, (1) tort claims, (2) contract claims where the provision referred to is omitted from the undertaking, (3) claims for taxes, and (4) certain statutory liabilities in other jurisdictions, a shareholder may be held personally liable to the extent that claims are not satisfied by the SSGA Funds. However, upon payment of such liability, the shareholder will be entitled to reimbursement from the general assets of the SSGA Funds. The Trustees intend to conduct the operations of the SSGA Funds in a way as to avoid, as far as possible, ultimate liability of the shareholders.
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The Master Trust Agreement further provides that the name of the SSGA Funds refers to the Trustees collectively as Trustees, not as individuals or personally, and that no Trustee, officer, employee or agent is liable to any third persons in connection with the affairs of the SSGA Funds, except if the liability arises from his or its own bad faith, willful misfeasance, gross negligence or reckless disregard of his or its duties to such third persons. It also provides that all third persons shall look solely to the property of the SSGA Funds for any satisfaction of claims arising in connection with the affairs of the SSGA Funds. With the exceptions stated, the Trust's Master Trust Agreement provides that a Trustee, officer, employee or agent is entitled to be indemnified against all liability in connection with the affairs of the Trust.
The Trust shall continue without limitation of time subject to the provisions in the Master Trust Agreement concerning termination by action of the shareholders and the Trustees upon notice to the shareholders.
FINANCIAL STATEMENTS
The audited financial statements for the fiscal year ended August 31, 2022 for the Funds are included in the Annual Reports, which were filed with the SEC on November 3, 2022 as part of the Trust's filing on Form N-CSR (SEC Accession No. 0001193125-22-276685) and are incorporated into this SAI by reference. Economic or market sector categorizations appearing in the financial statements are for indicative purposes only and do not necessarily reflect any economic or market sector determination that the Funds have made in respect of any specific investment for other purposes. The Annual Reports are available, without charge, upon request, by calling (800) 647-7327 or through the Funds' website at www.ssga.com.
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APPENDIX A
RATINGS OF DEBT INSTRUMENTS
MOODY'S INVESTORS SERVICE, INC. (MOODY'S)
GLOBAL LONG-TERM RATING SCALE
Ratings assigned on Moody's global long-term rating scale are forward-looking opinions of the relative credit risks of financial obligations issued by non-financial corporates, financial institutions, structured finance vehicles, project finance vehicles, and public sector entities. Long-term ratings are assigned to issuers or obligations with an original maturity of one year or more and reflect both on the likelihood of a default on contractually promised payments and the expected financial loss suffered in the event of default.
Aaa: Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk.
Aa: Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.
A: Obligations rated A are judged to be upper-medium grade and are subject to low credit risk.
Baa: Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics.
Ba: Obligations rated Ba are judged to be speculative and are subject to substantial credit risk.
B: Obligations rated B are considered speculative and are subject to high credit risk.
Caa: Obligations rated Caa are judged to be speculative of poor standing and are subject to very high credit risk.
Ca: Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.
C: Obligations rated C are the lowest rated and are typically in default, with little prospect for recovery of principal or interest.
Note: Moody's appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category. Additionally, a (hyb) indicator is appended to all ratings of hybrid securities issued by banks, insurers, finance companies, and securities firms.*
*
By their terms, hybrid securities allow for the omission of scheduled dividends, interest, or principal payments, which can potentially result in impairment if such an omission occurs. Hybrid securities may also be subject to contractually allowable write-downs of principal that could result in impairment. Together with the hybrid indicator, the long-term obligation rating assigned to a hybrid security is an expression of the relative credit risk associated with that security.
GLOBAL SHORT-TERM RATING SCALE
Ratings assigned on Moody's global short-term rating scale are forward-looking opinions of the relative credit risks of financial obligations issued by non-financial corporates, financial institutions, structured finance vehicles, project finance vehicles, and public sector entities. Short-term ratings are assigned to obligations with an original maturity of thirteen months or less and reflect both on the likelihood of a default on contractually promised payments and the expected financial loss suffered in the event of default.
P-1: Ratings of Prime-1 reflect a superior ability to repay short-term obligations.
P-2: Ratings of Prime-2 reflect a strong ability to repay short-term obligations.
P-3: Ratings of Prime-3 reflect an acceptable ability to repay short-term obligations.
NP: Issuers (or supporting institutions) rated Not Prime do not fall within any of the Prime rating categories.
A-1

S&P GLOBAL RATINGS (S&P)
ISSUE CREDIT RATING DEFINITIONS
An S&P Global Ratings issue credit rating is a forward-looking opinion about the creditworthiness of an obligor with respect to a specific financial obligation, a specific class of financial obligations, or a specific financial program (including ratings on medium-term note programs and commercial paper programs). It takes into consideration the creditworthiness of guarantors, insurers, or other forms of credit enhancement on the obligation and takes into account the currency in which the obligation is denominated. The opinion reflects S&P Global Ratings' view of the obligor's capacity and willingness to meet its financial commitments as they come due, and this opinion may assess terms, such as collateral security and subordination, which could affect ultimate payment in the event of default.
Issue credit ratings can be either long-term or short-term. Short-term ratings are generally assigned to those obligations considered short-term in the relevant market. Short-term ratings are also used to indicate the creditworthiness of an obligor with respect to put features on long-term obligations. Medium-term notes are assigned long-term ratings.
LONG-TERM ISSUE CREDIT RATINGS*
AAA: An obligation rated ‘AAA' has the highest rating assigned by S&P Global Ratings. The obligor's capacity to meet its financial commitments on the obligation is extremely strong.
AA: An obligation rated ‘AA' differs from the highest-rated obligations only to a small degree. The obligor's capacity to meet its financial commitments on the obligation is very strong.
A: An obligation rated ‘A' is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor's capacity to meet its financial commitments on the obligation is still strong.
BBB: An obligation rated ‘BBB' exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to weaken the obligor's capacity to meet its financial commitments on the obligation.
BB; B; CCC; CC; and C: Obligations rated ‘BB', ‘B', ‘CCC', ‘CC', and ‘C' are regarded as having significant speculative characteristics. ‘BB' indicates the least degree of speculation and ‘C' the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposure to adverse conditions.
BB: An obligation rated ‘BB' is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions that could lead to the obligor's inadequate capacity to meet its financial commitments on the obligation.
B: An obligation rated ‘B' is more vulnerable to nonpayment than obligations rated ‘BB', but the obligor currently has the capacity to meet its financial commitments on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitments on the obligation.
CCC: An obligation rated ‘CCC' is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitments on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitments on the obligation.
CC: An obligation rated ‘CC' is currently highly vulnerable to nonpayment. The ‘CC' rating is used when a default has not yet occurred, but S&P Global Ratings expects default to be a virtual certainty, regardless of the anticipated time to default.
C: An obligation rated ‘C' is currently highly vulnerable to nonpayment, and the obligation is expected to have lower relative seniority or lower ultimate recovery compared with obligations that are rated higher.
D: An obligation rated ‘D' is in default or in breach of an imputed promise. For non-hybrid capital instruments, the ‘D' rating category is used when payments on an obligation are not made on the date due, unless S&P Global Ratings believes that such payments will be made within five business days in the absence of a stated grace period or within the earlier of the stated grace period or 30 calendar days. The ‘D' rating also will be used upon the filing of a bankruptcy petition or the taking of similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. A rating on an obligation is lowered to 'D' if it is subject to a distressed debt restructuring.
NR: This indicates that a rating has not been assigned or is no longer assigned.
A-2

*
Ratings from 'AA' to 'CCC' may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the rating categories.
SHORT-TERM ISSUE CREDIT RATINGS
A-1: A short-term obligation rated ‘A-1' is rated in the highest category by S&P Global Ratings. The obligor's capacity to meet its financial commitments on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor's capacity to meet its financial commitments on these obligations is extremely strong.
A-2: A short-term obligation rated ‘A-2' is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor's capacity to meet its financial commitments on the obligation is satisfactory.
A-3: A short-term obligation rated ‘A-3' exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to weaken an obligor's capacity to meet its financial commitments on the obligation.
B: A short-term obligation rated ‘B' is regarded as vulnerable and has significant speculative characteristics. The obligor currently has the capacity to meet its financial commitments; however, it faces major ongoing uncertainties that could lead to the obligor's inadequate capacity to meet its financial commitments.
C: A short-term obligation rated ‘C' is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitments on the obligation.
D: A short-term obligation rated ‘D' is in default or in breach of an imputed promise. For non-hybrid capital instruments, the ‘D' rating category is used when payments on an obligation are not made on the date due, unless S&P Global Ratings believes that such payments will be made within any stated grace period. However, any stated grace period longer than five business days will be treated as five business days. The ‘D' rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. An obligation's rating is lowered to ‘D' if it is subject to a distressed debt restructuring.
FITCH RATINGS. (FITCH)
ISSUER DEFAULT RATINGS
Rated entities in a number of sectors, including financial and non-financial corporations, sovereigns, insurance companies and certain sectors within public finance, are generally assigned Issuer Default Ratings (IDRs). IDRs are also assigned to certain entities in global infrastructure and project finance. IDRs opine on an entity's relative vulnerability to default on financial obligations. The threshold default risk addressed by the IDR is generally that of the financial obligations whose non-payment would best reflect the uncured failure of that entity. As such, IDRs also address relative vulnerability to bankruptcy, administrative receivership or similar concepts.
In aggregate, IDRs provide an ordinal ranking of issuers based on the agency's view of their relative vulnerability to default, rather than a prediction of a specific percentage likelihood of default.
AAA: Highest credit quality.
‘AAA' ratings denote the lowest expectation of default risk. They are assigned only in cases of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events.
AA: Very high credit quality.
‘AA' ratings denote expectations of very low default risk. They indicate very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.
A: High credit quality.
‘A' ratings denote expectations of low default risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse business or economic conditions than is the case for higher ratings.
A-3

BBB: Good credit quality.
‘BBB' ratings indicate that expectations of default risk are currently low. The capacity for payment of financial commitments is considered adequate, but adverse business or economic conditions are more likely to impair this capacity.
BB: Speculative.
‘BB' ratings indicate an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial flexibility exists that supports the servicing of financial commitments.
B: Highly speculative.
‘B' ratings indicate that material default risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is vulnerable to deterioration in the business and economic environment.
CCC: Substantial credit risk.
Very low margin for safety. Default is a real possibility.
CC: Very high levels of credit risk.
Default of some kind appears probable.
C: Near default
A default or default-like process has begun, or the issuer is in standstill, or for a closed funding vehicle, payment capacity is irrevocably impaired. Conditions that are indicative of a ‘C' category rating for an issuer include:
a.
the issuer has entered into a grace or cure period following non-payment of a material financial obligation;
b.
the issuer has entered into a temporary negotiated waiver or standstill agreement following a payment default on a material financial obligation;
c.
the formal announcement by the issuer or their agent of a distressed debt exchange;
d.
a closed financing vehicle where payment capacity is irrevocably impaired such that it is not expected to pay interest and/or principal in full during the life of the transaction, but where no payment default is imminent.
RD: Restricted default.
‘RD' ratings indicate an issuer that in Fitch's opinion has experienced:
a.
an uncured payment default or distressed debt exchange on a bond, loan or other material financial obligation, but
b.
has not entered into bankruptcy filings, administration, receivership, liquidation, or other formal winding-up procedure, and
c.
has not otherwise ceased operating.
This would include:
i.
the selective payment default on a specific class or currency of debt;
ii.
the uncured expiry of any applicable grace period, cure period or default forbearance period following a payment default on a bank loan, capital markets security or other material financial obligation;
iii.
the extension of multiple waivers or forbearance periods upon a payment default on one or more material financial obligations, either in series or in parallel; ordinary execution of a distressed debt exchange on one or more material financial obligations.
D: Default.
‘D' ratings indicate an issuer that in Fitch's opinion has entered into bankruptcy filings, administration, receivership, liquidation or other formal winding-up procedure or that has otherwise ceased business.
A-4

Default ratings are not assigned prospectively to entities or their obligations; within this context, non-payment on an instrument that contains a deferral feature or grace period will generally not be considered a default until after the expiration of the deferral or grace period, unless a default is otherwise driven by bankruptcy or other similar circumstance, or by a distressed debt exchange.
In all cases, the assignment of a default rating reflects the agency's opinion as to the most appropriate rating category consistent with the rest of its universe of ratings and may differ from the definition of default under the terms of an issuer's financial obligations or local commercial practice.
SHORT-TERM RATINGS ASSIGNED TO ISSUERS AND OBLIGATIONS
A short-term issuer or obligation rating is based in all cases on the short-term vulnerability to default of the rated entity and relates to the capacity to meet financial obligations in accordance with the documentation governing the relevant obligation. Short-term deposit ratings may be adjusted for loss severity. Short-Term Ratings are assigned to obligations whose initial maturity is viewed as short term based on market convention. Typically, this means up to 13 months for corporate, sovereign, and structured obligations and up to 36 months for obligations in U.S. public finance markets.
F1: Highest Short-Term Credit Quality. Indicates the strongest intrinsic capacity for timely payment of financial commitments; may have an added + to denote any exceptionally strong credit feature.
F2: Good Short-Term Credit Quality. Good intrinsic capacity for timely payment of financial commitments.
F3: Fair Short-Term Credit Quality. The intrinsic capacity for timely payment of financial commitments is adequate.
B: Speculative Short-Term Credit Quality. Minimal capacity for timely payment of financial commitments, plus heightened vulnerability to near term adverse changes in financial and economic conditions.
C: High Short-Term Default risk. Default is a real possibility.
RD: Restricted Default. Indicates an entity that has defaulted on one or more of its financial commitments, although it continues to meet other financial obligations. Typically applicable to entity ratings only.
D: Default. Indicates a broad-based default event for an entity, or the default of a short-term obligation.
Note: The modifiers + or - may be appended to a rating to denote relative status within major rating categories. For example, the rating category ‘AA' has three notch-specific rating levels (‘AA+'; ‘AA'; ‘AA-'; each a rating level). Such suffixes are not added to ‘AAA' ratings and ratings below the 'CCC' category. For the short-term rating category of ‘F1', a ‘+' may be appended. For Viability Ratings, the modifiers + or may be appended to a rating to denote relative status within categories from AA' to ‘CCC'. For derivative counterparty ratings the modifiers + or may be appended to the ratings withinAA(dcr)' to ‘CCC(dcr)' categories.
A-5

APPENDIX B - TRUST'S PROXY VOTING POLICY AND PROCEDURES
SSGA FUNDS
STATE STREET MASTER FUNDS
STATE STREET INSTITUTIONAL INVESTMENT TRUST
ELFUN GOVERNMENT MONEY MARKET FUND
ELFUN TAX-EXEMPT INCOME FUND
ELFUN INCOME FUND
ELFUN DIVERSIFIED FUND
ELFUN INTERNATIONAL EQUITY FUND
ELFUN TRUSTS
STATE STREET NAVIGATOR SECURITIES LENDING TRUST
STATE STREET INSTITUTIONAL FUNDS
STATE STREET VARIABLE INSURANCE SERIES FUNDS, INC. (THE COMPANY)1
PROXY VOTING POLICY AND PROCEDURES
As of September 20, 2017
The Board of Trustees/Directors of the Trust/Company (each series thereof, a Fund) have adopted the following policy and procedures with respect to voting proxies relating to portfolio securities held by the Trust/Company's investment portfolios.
1. Proxy Voting Policy
The policy of the Trust/Company is to delegate the responsibility for voting proxies relating to portfolio securities held by the Trust/Company to SSGA Funds Management, Inc., the Trust/Company's investment adviser (the Adviser), subject to the Trustees/Directors' continuing oversight.
2. Fiduciary Duty
The right to vote proxies with respect to a portfolio security held by the Trust/Company is an asset of the Trust/Company. The Adviser acts as a fiduciary of the Trust/Company and must vote proxies in a manner consistent with the best interest of the Trust/Company and its shareholders.
3. Proxy Voting Procedures
A. At least annually, the Adviser shall present to the Boards of Trustees/Directors its policies, procedures and other guidelines for voting proxies (Policy) and the policy of any Sub-adviser (as defined below) to which proxy voting authority has been delegated (see Section 9 below). In addition, the Adviser shall notify the Trustees/Directors of material changes to its Policy or the policy of any Sub-adviser promptly and not later than the next regular meeting of the Board of Trustees/Directors after such amendment is implemented.
B. At least annually, the Adviser shall present to the Boards of Trustees/Directors its policy for managing 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 a Fund to the Trustees/Directors at the next regular meeting of the Board of Trustees/Directors after such override(s) occur.
C. At least annually, the Adviser shall inform the Trustees/Director that a record is available with respect to each proxy voted with respect to portfolio securities of the Trust/Company during the year. Also see Section 5 below.
4. Revocation of Authority to Vote
The delegation by the Trustees/Directors of the authority to vote proxies relating to portfolio securities of the Trust/Company may be revoked by the Trustees/Directors, in whole or in part, at any time.
____________
1
Unless otherwise noted, the singular term Trust/Company used throughout this document means each of SSGA Funds, State Street Master Funds, State Street Institutional Investment Trust, State Street Navigator Securities Lending Trust, Elfun Government Money Market Fund, Elfun Tax-Exempt Income Fund, Elfun Income Fund, Elfun Diversified Fund, Elfun International Equity Fund, Elfun Trusts, State Street Institutional Funds, and State Street Variable Insurance Series Funds, Inc.
B-1

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/Company to the Trust/Company or its designated service provider in a timely manner and in a format acceptable to be filed in the Trust/Company'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 Boards of Trustees/Directors 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.
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 Boards of Trustees/Directors regarding the frequency and results of the sampling performed.
8. Disclosures
A.
The Trust/Company 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
1. A statement disclosing that information regarding how the Trust/Company 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/Company'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/Company 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/Company to determine how to vote proxies relating to portfolio securities of the Funds is available without charge, upon request, by calling the Trust/Company'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/Company 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/Company's toll-free telephone number; or through a specified Internet address; or both; and on the SEC's website.
9. Sub-Advisers
For certain Funds, the Adviser may retain investment management firms (Sub-advisers) to provide day-to-day investment management services to the Funds pursuant to sub-advisory agreements. It is the policy of the Trust/Company that the Adviser may delegate proxy voting authority with respect to a Fund to a Sub-adviser. Pursuant to such delegation, a Sub-adviser is authorized to vote proxies on behalf of the applicable Fund or Funds for which it serves as sub-adviser, in accordance with the Sub-adviser's proxy voting policies and procedures.
10. Review of Policy
The Trustees/Directors shall review this policy to determine its continued sufficiency as necessary from time to time.
B-2

APPENDIX C - ADVISER’S PROXY VOTING PROCEDURES AND GUIDELINES
 
 
 
March 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 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 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 our Global Proxy Voting and Engagement Principles (the Principles);
however, State Street Global Advisors also endeavors to show sensitivity to local market
practices when voting in these various markets. 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.
 
 
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 our 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. 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 our voting rights,
provides a meaningful shareholder tool that we believe protects and enhances the
long-term economic value of the holdings in our client accounts. We maximize our voting
power and engagement by maintaining a centralized proxy voting and active ownership
process covering all holdings, regardless of strategy. Despite the vast 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. In those limited circumstances in which
State Street Global Advisors acts as investment manager to a pooled investment vehicle
that, pursuant to its governing documents, utilizes guidelines developed by a third-party
advisor, 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. With respect to such funds
utilizing third-party guidelines, the terms of the applicable third-party guidelines shall apply
in place of the Principles described herein.
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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. Conversely, we conduct collaborative
engagement activities with multiple shareholders and communicate with company
representatives about common concerns where appropriate.
 
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, as well as issuer-specific concerns at a
company level.
 
The State Street Global Advisors Asset Stewardship Team may collaborate with members
of the Active Fundamental and various other 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 more broad industry-related trends. We also consider the size of
our total position of 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 the 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.
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We have established an engagement protocol that further describes our approach to
issuer engagement.
 
 
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, recurring, or
active, 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. Collaborative engagement, where multiple
shareholders communicate with company representatives, can serve as a potential forum
for issues that are not identified by us as requiring active engagement. An example of such
a forum is a shareholder conference call.
 
 
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 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 monitors the delivery of voting objectives. In addition, the ESG Committee provides
oversight of the State Street Global Advisors Stewardship Team, reviews departures from
State Street Global Advisors' proxy voting guidelines, and reviews conflicts of interest
involving proxy voting.
 
 
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.
C-4

 
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.
 
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 meetings
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 as a
shareholder. 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 the
long-term value of each portfolio's holdings.
C-5

 
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.
 
 
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.
C-6

 
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 adequacy of the consideration and
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.
 
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 (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 thematic 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.
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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.
 
Issuer Engagement:
 
We recognize that debt holders have limited leverage with companies on a day-to-day
basis. However, we believe that given the size of our holdings in corporate debt, we can
meaningfully influence ESG practices of companies through issuer engagement. 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.
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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 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
C-9

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.
ID949702-3479888.3.1.GBL.RTL 0322
Exp. Date: 03/31/2023
C-10

 
 
 
March 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 conflicts of interests identified.
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 guidancei is designed to act in conjunction with
related policies and practices employed by other groups
within the organization. Further, they complement those
policies and practices by providing specific guidance on
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.
C-11

 
 
 
 
Managing Conflicts of
Interest Related to Proxy
Voting
State Street Global Advisors has policies and procedures designed to prevent undue
influence on State Street Global Advisors' voting 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.
 
Protocols designed to help mitigate potential conflicts of interest include:
 
Assigning sole responsibility for the implementation of proxy voting guidelines to
members of State Street Global Advisors' Asset Stewardship Team. 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 a manner that is consistent with the best interests of all clients,
taking into account various perspectives on risks and opportunities with a view of
maximizing the value of client assets;
 
Generally exercising a singular vote decision for each ballot item regardless of our
investment strategy;1
 
Prohibiting members of State Street Global Advisors' Asset Stewardship team from
disclosing State Street Global Advisors' voting decision to any individual not affiliated
with the proxy voting process prior to the meeting or date of written consent, as the
case may be;
 
Mandatory disclosure by members of the State Street Global Advisors' Asset
Stewardship team, ESG Committee and Investment Committee (IC) of any personal
conflict of interest (e.g., familial relationship with company management, serves as a
director on the board of a listed company) to the Global Head of Asset Stewardship,
Voting & Engagement. Members are required to recuse themselves from any
engagement or proxy voting activities related to the conflict;
 
In certain instances, 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. In general,
State Street Global Advisors will outsource any voting decision relating to a
shareholder meeting of State Street Corporation or other State Street Global Advisors
affiliated entities to independent outside third parties. Delegated third parties exercise
vote decisions based upon State Street Global Advisors's Proxy Voting and
Engagement Guidelines (Guidelines); and
 
Reporting of overrides of Guidelines, if any, to the ESG Committee on a quarterly
basis.

1
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.
C-12

 
 
 
In general, we do not believe matters that fall within proxy voting guidelines utilized by
State Street Global Advisors and that are voted consistently with such guidelines present
any potential conflicts, since the vote on the matter has effectively been determined
without reference to the soliciting entity. However, where matters do not fall within the
applicable proxy voting guidelines or where we believe that voting in accordance with such
guidelines is unwarranted, we conduct an additional review to determine whether there is a
conflict of interest. In circumstances where a conflict has been identified and either: (i) the
matter does not fall clearly within the applicable guidelines; or (ii) State Street Global
Advisors determines that voting in accordance with such guidance is not in the best
interests of its clients, the Head of the Asset Stewardship team will determine whether a
material relationship exists. If so, the matter is referred to the ESG Committee. The ESG
Committee then reviews the matter and determines whether a conflict of interest exists,
and if so, how to best resolve such conflict. For example, the ESG Committee may (i)
determine that the proxy vote does not give rise to a conflict due to the issues presented or
(ii) retain an independent fiduciary to determine the appropriate vote.
 
 
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
C-13

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.
© 2022 State Street Corporation.
All Rights Reserved.
ID949718-3479898.2.1.GBL.RTL 0322
Exp. Date: 03/31/2023
C-14

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

C-15

 
 
 
 
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.
C-16

 
 
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
C-17

 
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
C-18

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
C-19

 
 
 
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.
C-20

 
 
 
 
 
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.
C-21

 
 
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
C-22

 
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.
C-23

 
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.
C-24

 
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.
C-25

 
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.
C-26

 
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.
C-27

 
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.
C-28

 
 
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
C-29

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
C-30

 
 
 
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.
C-31

 
 
 
 
 
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.
C-32

 
 
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
C-33

 
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.
C-34

 
 
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
C-38

 
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.
C-40

 
 
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
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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
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Exp. Date: 03/31/2023
C-42

 
 
 
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.
C-43

 
 
 
 
 
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.
C-44

 
 
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.
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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
C-48

 
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.
C-50

 
 
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
C-51

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 SSGA's express written consent.
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ID949710-3479913.2.1.GBL.RTL 0322
Exp. Date: 03/31/2023
C-52

 
 
 
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.
C-53

 
 
 
 
 
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.
C-54

 
 
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
C-55

 
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.
C-56

 
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.
C-57

 
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.
C-58

 
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.
C-59

 
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.
C-60

 
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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Exp. Date: 03/31/2023
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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.
C-74

 
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.
C-75

 
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
C-78

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.
ID949716-3479919.2.1.GBL.RTL 0322
Exp. Date: 03/31/2023
C-79

 
 
 
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.
C-80

 
 
 
 
 
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.
C-82

 
 
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.
C-83

 
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.
C-84

 
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.
C-85

 
 
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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Exp. Date: 03/31/2023
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