UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
SPDR SERIES TRUST
SPDR INDEX SHARES FUNDS
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
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AN IMPORTANT MESSAGE FROM SPDR SERIES TRUST ("SST") AND SPDR INDEX SHARES FUNDS
("SIS") (EACH A "TRUST" AND TOGETHER THE "SPDR FUNDS") PRESIDENT JAMES ROSS
All SPDR Funds Shareholders,
SPDR Funds will hold a Special Meeting of Shareholders on March 19, 2010 at SSgA
Funds Management, Inc.'s ("SSgA FM" or the "Adviser") offices in Boston, MA.
This booklet contains a proxy statement explaining several proposals that the
SPDR Funds' Trustees are asking shareholders to approve at the meeting. The
proposals described in the proxy statement relate to the following matters:
1. To elect Trustees for all SPDR Funds. Five of the six nominees in whom
we are asking you to place your trust are independent of SPDR Funds
management, and two nominees are currently members of the Board of
Trustees.
2. To approve an investment sub-advisory agreement between the Adviser
and Nuveen Asset Management ("Nuveen" or "Sub-Adviser"), pursuant to
which Nuveen will serve as sub-adviser to the following SPDR Funds:
SPDR Barclays Capital Municipal Bond ETF, SPDR Barclays Capital
California Municipal Bond ETF, SPDR Barclays Capital New York
Municipal Bond ETF, SPDR Barclays Capital Short Term Municipal Bond
ETF, and SPDR S&P VRDO Municipal Bond ETF.
3. To approve a "manager of managers" structure for all SPDR Funds, which
would permit the SPDR Funds to hire and replace sub-advisers without
incurring the expense of a shareholder meeting.
4. To approve eliminating or reclassifying certain fundamental policies
and restrictions for all SPDR Funds, and to update and standardize
your SPDR Funds' investment policies to allow SPDR Funds to serve your
needs most effectively and efficiently in today's market environment.
5. Shareholders also may be asked to vote on such other business as may
properly come before the Meeting.
Your vote is important. Please do not hesitate to call Broadridge Financial
Solutions, Inc. at 877-257-9951 if you have any questions about the proposals
under consideration. If you have any additional questions about the SPDR Funds,
please contract your financial advisor or the SPDR representatives at
866-787-2257 or visit www.spdrs.com. Thank you for taking the time to consider
these important proposals and for your investment in the SPDR Funds.
I encourage you to exercise your rights concerning the governance of the SPDR
Funds by reviewing our proxy statement and then voting either through the
Internet, by telephone, or by mail as soon as possible. No matter how many
shares you own, your vote is important.
Sincerely,
/s/ James Ross
President
[January 15, 2010]
IMPORTANT INFORMATION ABOUT VOTING
I HAVE ONLY A FEW SHARES--WHY SHOULD I BOTHER TO VOTE?
Because your vote makes a difference. If many shareholders choose not to vote,
the SPDR Funds might not receive enough votes to reach a quorum and conduct the
shareholder meeting in March. If that appears likely to happen, the SPDR Funds
will have to send additional mailings to shareholders to try to get more
votes--a process that would be very costly for the SPDR Funds and thus for you
as a SPDR Fund shareholder.
WHAT'S THE DEADLINE FOR SUBMITTING MY VOTE?
We encourage you to vote as soon as possible to make sure that your SPDR Fund
receives enough votes to act on the proposals. The final opportunity to cast
your vote is at the shareholder meeting on March 19, 2010.
WHO GETS TO VOTE?
Any person who owned shares of any SPDR Fund on the "record date," which was
January 6, 2010, even if that person later sold those shares.
HOW DO I VOTE?
You may vote in any of four ways:
1. Through the Internet at www.proxyvote.com.
2. By telephone, with a toll-free call to the phone number indicated on
the enclosed proxy card or voting instruction card.
3. By mail, with the enclosed proxy card or voting instruction card.
4. In person at the shareholder meeting in Boston, MA, on March 19, 2010.
Vote on the internet
Log on to:
www.proxyvote.com
Follow the on-screen instructions
Vote by phone
Call the phone number indicated on your proxy card or voting instruction card.
Follow the recorded instructions available 24 hours each day
Vote by mail
Vote, sign, and date the proxy card and return in the postage-paid envelope
Vote in person
Attend the Shareholder Meeting at SSgA Funds Management, Inc., State Street
Financial Center, One Lincoln Street Boston, MA 02111 on March 19, 2010.
We encourage you to vote via the Internet or telephone using the [xx]-digit
control number and [x]-digit security code on the enclosed proxy card or voting
instruction card, because these methods save the SPDR Funds the most money
(since they require no return postage). If you would like to change your
previous vote, you may vote again using any of the methods described above.
HOW DO I SIGN THE PROXY CARD?
You should sign your name exactly as it appears on the enclosed proxy card or
voting instruction card. Unless you have instructed us otherwise, either owner
of a joint account may sign the card, but again, the owner must sign the name
exactly as it appears on the card.
IMPORTANT NOTICE
Although we recommend that you read the complete proxy statement, for your
convenience we have provided a brief overview of the proposals. The information
provided under the "Questions and Answers" section below is qualified in its
entirety by reference to the proxy statement.
QUESTIONS AND ANSWERS
WHY AM I RECEIVING THIS PROXY STATEMENT?
All SPDR Funds will host a Special Meeting of Shareholders on Friday, March 19,
2010, at [time], Eastern time, at the offices of SSgA Funds Management, Inc.,
the investment adviser to the SPDR Funds ("SSgA FM" or the "Adviser"), at State
Street Financial Center, One Lincoln Street, Boston, MA 02111. This meeting of
the SPDR Funds is being held so that shareholders can vote on the following
proposals:
1. To elect Trustees for all SPDR Funds. Five out of the six nominees in
whom we are asking you to place your trust are independent of SSgA FM,
and two nominees are currently members of the Board of Trustees.
2. To approve an investment sub-advisory agreement between the Adviser
and Nuveen Asset Management ("Nuveen" or "Sub-Adviser"), pursuant to
which Nuveen will serve as sub-adviser to the following SPDR Funds:
SPDR Barclays Capital Municipal Bond ETF, SPDR Barclays Capital
California Municipal Bond ETF, SPDR Barclays Capital New York
Municipal Bond ETF, SPDR Barclays Capital Short Term Municipal Bond
ETF, and SPDR S&P VRDO Municipal Bond ETF.
3. To approve a "manager of managers" structure for all SPDR Funds, which
would permit the SPDR Funds to hire and replace sub-advisers without
incurring the expense of a shareholder meeting.
4. To approve eliminating or reclassifying certain fundamental policies
and restrictions for all SPDR Funds, and to update and standardize
your SPDR Funds' investment policies to allow SPDR Funds to serve your
needs most effectively in today's market environment.
5. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
WHY AM I BEING ASKED TO ELECT TRUSTEES?
The SPDR Funds are governed by the Investment Company Act of 1940, as amended
(the "1940 Act"). As a general matter, the 1940 Act permits the boards of
trustees or directors of registered investment companies, such as the SPDR
Funds, to fill vacancies without shareholder vote only so long as at least two
thirds of the trustees would have been elected by shareholders after the
appointments. Prior to December 31, 2009, the Board consisted of four Trustees,
three of whom were elected by shareholders. One of the Trustees who is not an
"interested person", as defined in the 1940 Act ("Independent Trustees"), Ms.
Peters, resigned from the Board as of December 31, 2009. As a result of certain
banking
regulations effectively prohibiting representatives of the Adviser from
holding more than 25% of the seats on an investment company board, the
interested Trustee, Mr. Ross also resigned effective December 31, 2009. The
Board may not fill these vacancies without obtaining shareholder approval, since
immediately after filling these vacancies, less than two thirds of the Trustees
would have been elected by shareholders. In addition, the Board of Trustees has
determined to increase the size of the Board to six Trustees by adding two
additional Independent Trustees.
WHY AM I BEING ASKED TO VOTE ON A NEW INVESTMENT SUB-ADVISORY AGREEMENT WITH
NUVEEN ASSET MANAGEMENT?
The Board of Trustees is also seeking shareholder approval of Nuveen Asset
Management to act as sub-adviser for certain SPDR Funds. It is proposed that
Nuveen will serve as sub-adviser to the following SPDR Funds: SPDR Barclays
Capital Municipal Bond ETF, SPDR Barclays Capital California Municipal Bond ETF,
SPDR Barclays Capital New York Municipal Bond ETF, SPDR Barclays Capital Short
Term Municipal Bond ETF, and SPDR S&P VRDO Municipal Bond ETF (the "Municipal
SPDR Funds").
The Board of Trustees and the Adviser believe that Nuveen will bring significant
municipal securities experience to bear in managing the Municipal SPDR Funds.
Nuveen has extensive experience in managing municipal securities, and, as of [
], Nuveen managed more than [$xx] billion in portfolios of municipal securities
for a wide array of mutual funds, closed-end funds, retail managed accounts and
institutional managed accounts. In addition, Tim Ryan, one of the Municipal SPDR
Funds' primary portfolio managers, will be joining Nuveen upon the shareholder
approval of Nuveen's sub-advisory role, bringing his extensive experience in
managing passive municipal bond strategies. Mr. Ryan's experience in managing
the Municipal SPDR Funds, coupled with Nuveen's experience in the municipal
markets, is expected to create a strong management team for the Municipal SPDR
Funds.
The 1940 Act requires shareholder approval of new investment advisory agreements
and, because the Trust has not yet implemented the manager of managers structure
discussed below, shareholder approval is required for sub-advisory agreements.
WHAT IS A "MANAGER OF MANAGERS" STRUCTURE?
A "manager of managers" structure would permit the Board of Trustees of the SPDR
Funds to appoint or replace sub-advisers without obtaining shareholder approval
which would otherwise be required by the 1940 Act. Particularly now, at a time
when the Board is recommending the approval of a new sub-adviser for several
SPDR Funds, the Board of Trustees believes the manager of managers structure to
be efficient and effective in managing the SPDR Funds that make use of a
sub-adviser. Using a "manager of managers" structure will enable the SPDR Funds
to avoid the considerable expense of holding shareholder meetings to approve new
or additional sub-advisers.
If shareholders approve the "manager of managers" structure, which would cover
all SPDR Funds in addition to the SPDR Funds indicated above, the SPDR Funds
intend to seek the necessary exemptive relief from the U.S. Securities and
Exchange Commission ("SEC") pursuant to Section 15(a) of the 1940 Act which
provides, in relevant part, that it is unlawful for any person to act as an
investment adviser to a registered investment company except pursuant to a
written contract that has been approved by the vote of a majority of the
company's outstanding voting securities. The exemptive relief would exempt the
SPDR Funds from the requirement to have sub-advisory contracts approved by
shareholder vote. However, before a SPDR Fund can rely on this exemption and
implement the "manager of managers" structure, the SPDR Fund's shareholders must
approve the "manager of managers" structure.
HOW WILL THE IMPLEMENTATION OF THE "MANAGER OF MANAGERS" STRUCTURE AFFECT ME?
The implementation of the "manager of managers" structure will not directly
impact you. You will remain a shareholder of your SPDR Fund just as before and
each SPDR Fund will contract for advisory services as before. However, with the
proposed "manager of managers" structure, the SPDR Funds will receive the
benefit of SSgA FM's investment adviser selection, monitoring and allocation
services and the Board's flexibility in approving additional or replacement
sub-advisers without shareholder approval.
WILL THE IMPLEMENTATION OF A "MANAGER OF MANAGERS" STRUCTURE AFFECT THE SPDR
FUNDS' EXPENSES?
For each SPDR Fund, SSgA FM will be responsible for paying any advisory fees to
the sub-advisers. As a result, the proposed changes will not result in increased
investment advisory fees. Accordingly, implementation of a "manager of managers"
structure will not result in increased SPDR Fund fees and expenses to
shareholders.
WHY AM I BEING ASKED TO VOTE FOR CHANGES TO MY FUND'S INVESTMENT POLICIES AND
RESTRICTIONS?
The Board of Trustees believes that it would benefit shareholders of the SPDR
Funds to update the SPDR Funds' fundamental investment policies. Some of the
SPDR Funds' policies are more restrictive than current government regulations
require. The proposed changes in investment policies will benefit shareholders
by allowing the SPDR Funds to adapt more quickly to future changes in investment
opportunities. It is currently expected that the proposed changes to the
investment policies will not have a material impact on the manner in which the
SPDR Funds are managed.
WILL MY VOTE MAKE A DIFFERENCE?
Yes. Your vote is needed to ensure that the proposals can be acted upon.
Additionally, your immediate response on the enclosed proxy card(s) will help
save the costs of any further solicitations for shareholder votes. We encourage
all shareholders to participate in the governance of their SPDR Fund.
HOW DO THE TRUSTEES SUGGEST THAT I VOTE?
After careful consideration, the Trustees of the SPDR Funds, including the
Independent Trustees who comprise a majority of each SPDR Fund's Board of
Trustees, unanimously recommend that you vote "FOR" the proposals.
WHOM DO I CALL IF I HAVE QUESTIONS?
We will be happy to answer your questions about this proxy solicitation. Please
call our proxy solicitation agent, Broadridge Financial Solutions, Inc.
("Broadridge") at 877-257-9951.
HOW CAN I VOTE MY SHARES?
Please refer to your proxy card(s) for instructions on how to vote.
SPDR SERIES TRUST
SPDR INDEX SHARES FUNDS
State Street Financial Center
One Lincoln Street
Boston, MA 02111
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 19, 2009
NOTICE IS HEREBY GIVEN that a special meeting of shareholders (the "Meeting") of
the
SPDR SERIES TRUST, which includes the following SPDR Funds: SPDR Dow Jones Total
Market ETF, SPDR Dow Jones Large Cap ETF, SPDR Dow Jones Large Cap Growth ETF,
SPDR Dow Jones Large Cap Value ETF, SPDR Dow Jones Mid Cap ETF, SPDR Dow Jones
Mid Cap Growth ETF, SPDR Dow Jones Mid Cap Value ETF, SPDR Dow Jones Small Cap
ETF, SPDR Dow Jones Small Cap Growth ETF, SPDR Dow Jones Small Cap Value ETF,
SPDR DJ Global Titans ETF, SPDR Dow Jones Reit ETF, SPDR KBW Bank ETF, SPDR KBW
Capital Markets ETF, SPDR KBW Insurance ETF, SPDR Morgan Stanley Technology ETF,
SPDR S&P Dividend ETF, SPDR S&P Biotech ETF, SPDR S&P Homebuilders ETF, SPDR S&P
Metals & Mining ETF, SPDR S&P Oil & Gas Equipment & Services ETF, SPDR S&P Oil &
Gas Exploration & Production ETF, SPDR S&P Pharmaceuticals ETF, SPDR S&P Retail
ETF, SPDR S&P Semiconductor ETF, SPDR KBW Regional Banking ETF, SPDR KBW
Mortgage Finance ETF, SPDR Wells Fargo Preferred Stock ETF, SPDR Barclays
Capital 1-3 Month T-Bill ETF, SPDR Barclays Capital TIPS ETF, SPDR Barclays
Capital Short Term Corporate Bond ETF, SPDR Barclays Capital Intermediate Term
Treasury ETF, SPDR Barclays Capital Long Term Treasury ETF, SPDR Barclays
Capital Intermediate Term Credit Bond ETF, SPDR Barclays Capital Long Term
Credit Bond ETF, SPDR Barclays Capital Convertible Bond ETF, SPDR Barclays
Capital Mortgage Backed Bond ETF, SPDR Barclays Capital Aggregate Bond ETF, SPDR
Barclays Capital Municipal Bond ETF, SPDR Barclays Capital California Municipal
Bond ETF, SPDR Barclays Capital New York Municipal Bond ETF, SPDR Barclays
Capital Short Term Municipal Bond ETF, SPDR S&P VRDO Municipal Bond ETF, SPDR DB
International Government Inflation-Protected Bond ETF, SPDR Barclays Capital
Short Term International Treasury Bond ETF, SPDR Barclays Capital International
Treasury Bond ETF and SPDR Barclays Capital High Yield Bond ETF; and
SPDR INDEX SHARES FUNDS, which includes the following SPDR Funds: SPDR DJ STOXX
50 ETF, SPDR DJ Euro STOXX 50 ETF, SPDR S&P Emerging Asia Pacific ETF, SPDR S&P
China ETF, SPDR S&P Emerging Markets ETF, SPDR S&P BRIC 40 ETF, SPDR S&P
Emerging Europe ETF, SPDR S&P Emerging Latin America ETF, SPDR S&P Emerging
Middle East & Africa ETF, SPDR S&P World Ex-US ETF, SPDR S&P International Small
Cap ETF, SPDR Dow Jones International Real Estate ETF, SPDR FTSE/Macquarie
Global Infrastructure 100 ETF, SPDR MSCI ACWI Ex-US ETF, SPDR Russell/Nomura
Prime Japan ETF, SPDR Russell/Nomura Small Cap Japan ETF, SPDR S&P International
Dividend ETF, SPDR S&P International Mid Cap ETF, SPDR S&P Emerging Markets
Small Cap ETF, SPDR Dow Jones Global Real Estate ETF, SPDR S&P International
Consumer Discretionary Sector ETF, SPDR S&P International Consumer Staples
Sector ETF, SPDR S&P International Energy Sector ETF, SPDR S&P International
Financial Sector ETF, SPDR S&P International Health Care Sector ETF, SPDR S&P
International Industrial Sector ETF, SPDR S&P International Materials Sector
ETF, SPDR S&P International Technology Sector ETF, SPDR S&P International
Telecommunications Sector ETF, SPDR S&P International Utilities Sector ETF.
SPDR SERIES TRUST and SPDR INDEX SHARES FUNDS are each a "Trust" and together
herein referred to as the "SPDR Funds", unless as otherwise specified. The
Meeting will be held at the offices of SSgA Funds Management, Inc. ("SSgA FM" or
the "Adviser"), the investment adviser to the SPDR Funds, State Street Financial
Center, One Lincoln Street, Boston, MA 02111 at [time], Eastern Time, on March
19, 2010, for the following purposes:
1. To elect Trustees for all SPDR Funds. Five out of the six nominees in
whom we are asking you to place your trust are independent of SSgA FM,
and two nominees are currently members of the Board of Trustees.
2. To approve a "manager of managers" structure for all SPDR Funds, which
would permit the SPDR Funds to hire and replace sub-advisers without
incurring the expense of a shareholder meeting.
3. To approve an investment sub-advisory agreement between the Adviser
and Nuveen Asset Management ("Nuveen" or "Sub-Adviser"), pursuant to
which Nuveen will serve as sub-adviser to the following SPDR Funds:
SPDR Barclays Capital Municipal Bond ETF, SPDR Barclays Capital
California Municipal Bond ETF, SPDR Barclays Capital New York
Municipal Bond ETF, SPDR Barclays Capital Short Term Municipal Bond
ETF, and SPDR S&P VRDO Municipal Bond ETF.
4. To approve eliminating or reclassifying certain fundamental policies
and restrictions for all SPDR Funds, and to update and standardize
your SPDR Funds' investment policies to allow SPDR Funds to serve your
needs most effectively in today's market environment.
5. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
The proposals are discussed in the attached proxy statement. The Board of
Trustees of each Trust recommends that you vote FOR each applicable proposal.
Shareholders of record at the close of business on January 6, 2010 are entitled
to notice of, and to vote at, the Meeting or any adjournments thereof. You are
invited to attend the Meeting, but if you cannot do so, please vote by
telephone, or by logging on to the Internet to vote electronically. Please refer
to the proxy card attached to the enclosed proxy statement for details. If you
are unable to vote by telephone, or on the Internet, you may also complete and
sign the enclosed proxy card and return it in the accompanying envelope as
promptly as possible. Your vote is important no matter how many shares you own.
You can vote easily and quickly by telephone, Internet, mail or in person at the
Meeting.
By Order of the Board of Trustees
/s/ Ryan M. Louvar
Secretary
VOTING IS IMPORTANT TO ENSURE A QUORUM AT THE MEETING. PLEASE CALL OUR PROXY
SOLICITATION AGENT BROADRIDGE FINANCIAL SOLUTIONS, INC. AT 877-257-9951 FOR MORE
INFORMATION OR IF YOU HAVE ANY QUESTIONS ABOUT ATTENDING THE MEETING IN PERSON.
PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY SUBMITTING TO
THE SECRETARY OF THE TRUST AT THE ADDRESS ABOVE A WRITTEN NOTICE OF REVOCATION,
BY A SUBSEQUENTLY EXECUTED PROXY CARD OR BY ATTENDING THE MEETING AND VOTING IN
PERSON. ATTENDANCE AT THE MEETING WILL NOT BY ITSELF SERVE TO REVOKE A PROXY.
SPDR SERIES TRUST
SPDR INDEX SHARES FUNDS
State Street Financial Center
One Lincoln Street
Boston, MA 02111
SPECIAL MEETING OF SHAREHOLDERS
MARCH 19, 2010
PROXY STATEMENT
INTRODUCTION
This combined proxy statement is being provided to you on behalf of the Boards
of Trustees of the SPDR SERIES TRUST ("SST") and SPDR INDEX SHARES FUNDS ("SIS")
(each a "Trust" and together the "SPDR Funds"). We have divided the proxy
statement into five main parts:
Part I An Overview of the Proposals begins on page xx.
Part II Proposal Details begins on page [ ].
Part III Information on the SPDR Funds' Independent Accountants begins on
page xx.
Part IV More on Proxy Voting and Shareholder Meetings begins on page xx.
Part V Fund and Investment Adviser Information begins on page xx.
Please read the proxy statement before voting on the proposals. If you have
questions about the proxy statement, or if you would like additional
information, please call our proxy solicitation agent, Broadridge Financial
Solutions, Inc. toll-free at 877-257-9951. If you have any additional questions
about the SPDR Funds, please contract your financial advisor or the SPDR
representatives at 866-787-2257 or visit www.spdrs.com. This proxy statement was
mailed to shareholders beginning the week of [January __, 2010].
Annual and Semiannual Reports.
Copies of the SPDR Series Trust Annual Report to Shareholders dated June 30,
2009 and the SPDR Index Shares Funds Annual Report to Shareholders dated
September 30, 2009 may be obtained without charge by writing to State Street
Global Markets, LLC, State Street Financial Center, One Lincoln Street, Boston,
Massachusetts 02111, by visiting the Trust's website at www.spdrs.com or by
calling 1-866-787-2257.
PART I: AN OVERVIEW OF THE PROPOSALS
Shareholders of the SPDR Funds are being asked to vote on a number of proposals.
Not all proposals apply to each SPDR Fund. The table below shows each proposal
and the specific SPDR Funds to which it applies. Only shareholders of record on
January 6, 2010, are entitled to vote on a SPDR Fund's proposals.
-1-
SPDR PROPOSALS FUNDS
- ------------------------------------------ -----------------------------------
1. Elect Trustees for each Trust. Applies to all SPDR Funds.
2. Approve an investment sub-advisory Applies to SPDR Barclays Capital
agreement between SSgA Funds Municipal Bond ETF, SPDR Barclays
Management, Inc. ("SSgA FM" or the Capital California Municipal Bond
"Adviser") and Nuveen Asset ETF, SPDR Barclays Capital New York
Management ("Nuveen" or Municipal Bond ETF, SPDR Barclays
"Sub-Adviser"). Capital Short Term Municipal Bond
ETF and SPDR S&P VRDO Municipal
Bond ETF.
3. To approve a "manager of managers" Applies to all SPDR Funds.
structure for all SPDR Funds.
4. Update and standardize the SPDR Funds Applies to all SPDR Funds
fundamental policies regarding: fundamental policies.
a. Purchasing and selling real
estate.
b. Issuing senior securities and
borrowing money.
c. Making loans.
d. Purchasing and selling
commodities.
e. Concentrating investments in a
particular industry or group of
industries.
f. Underwriting activities.
g. Eliminating outdated fundamental
investment policies not required
by law.
PART II: PROPOSAL DETAILS
PROPOSAL 1 -- ELECT TRUSTEES FOR EACH FUND
THIS PROPOSAL APPLIES TO ALL SPDR FUNDS.
We are asking shareholders of each SPDR Fund to elect a Board of Trustees.
WHO ARE THE NOMINEES TO THE BOARD?
The six people listed below have been nominated for election as SPDR Fund
Trustees. Mr. Nesvet and Mr. Kelly currently serve as Trustees for all SPDR
Funds. Ms. Boatman, Mr. Churchill and Mr. Verboncoeur are not yet Trustees, but
are nominees for Trustee for all of the SPDR Funds. Mr. Ross served as a Trustee
through December 31, 2009, but resigned effective December 31, 2009 to comply
with a banking regulatory restriction prohibiting the representatives from the
Adviser from holding more than 25% of the seats on the Board. Each nominee has
consented to continue serving (or, in the case of Mr. Ross, Ms. Boatman, Mr.
Churchill and Mr. Verboncoeur, begin serving) as a Trustee for the SPDR
-2-
Funds if elected by shareholders. If elected, each nominee would oversee a total
of at least 100 SPDR Funds.
The mailing address of the SPDR Fund Trustees and officers is State Street
Financial Center, One Lincoln Street Boston, MA 02111-2900.
TRUSTEES
TERM OF PRINCIPAL OTHER
OFFICE AND OCCUPATION(S) DIRECTORSHIPS
NAME, ADDRESS POSITION(S) LENGTH OF DURING PAST HELD BY
AND YEAR OF BIRTH WITH FUNDS TIME SERVED 5 YEARS TRUSTEE
- ----------------------------- -------------------- -------------- ---------------------- ----------------
INDEPENDENT NOMINEES
Frank Nesvet Independent Trustee, Unlimited Chief Executive
c/o SPDR Series Trust/SPDR Chairman Elected: Officer, Libra Group,
Index Shares Funds September 2000 Inc. (1998-present) (a
State Street Financial Center financial services
One Lincoln Street consulting company).
Boston, MA 02111-2900
Born 1943
David M. Kelly Independent Unlimited Retired. Penson Worldwide
c/o SPDR Series Trust/SPDR Trustee Elected: Inc. (Director)
Index Shares Funds September 2000
State Street Financial Center
One Lincoln Street
Boston, MA 02111-2900
Born 1938
Bonny Eugenia Boatman Independent Unlimited Retired (2005 -
c/o SPDR Series Trust/SPDR Nominee present);
Index Shares Funds Managing Director,
State Street Financial Center Columbia
One Lincoln Street Management Group,
Boston, MA 02111-2900 Bank of America
Born 1950 (1984-2005).
Dwight D. Churchill Independent Unlimited Retired (July 2009 -
c/o SPDR Series Trust/SPDR Nominee present); Head of
Index Shares Funds Fixed Income and
State Street Financial Center other Senior
One Lincoln Street Management roles,
Boston, MA 02111-2900 Fidelity Investments
Born 1953 (1993-2009).
Carl G. Verboncoeur Independent Unlimited Retired (July 2009-
c/o SPDR Series Trust/SPDR Nominee present); Chief
Index Shares Funds Executive Officer,
State Street Financial Center Rydex Investments
One Lincoln Street (2003-2009).
Boston, MA 02111-2900
Born 1952
INTERESTED NOMINEE
-3-
TERM OF PRINCIPAL OTHER
OFFICE AND OCCUPATION(S) DIRECTORSHIPS
NAME, ADDRESS POSITION(S) LENGTH OF DURING PAST HELD BY
AND YEAR OF BIRTH WITH FUNDS TIME SERVED 5 YEARS TRUSTEE
----------------- -------------------- -------------- ---------------------- ----------------
James E. Ross* Interested Nominee, Unlimited, President, SSgA Select Sector
SSgA Funds Management, Inc. President Elected Funds Management, SPDR Trust
State Street Financial Center President: Inc. (2005-present); (Trustee); State
One Lincoln Street May 2005, Principal, SSgA Funds Street Master
Boston, MA 02111-2900 Appointed Management, Inc. Funds (Trustee);
Born 1965 Trustee: (2001-present); and State Street
November 2005- Senior Managing Institutional
December 2009 Director, State Street Investment Trust
Global Advisors (Trustee).
(2006-present);
Principal, State
Street Global
Advisors (2000-2006).
WHY ARE FUND SHAREHOLDERS BEING ASKED TO ELECT TRUSTEES?
Federal law requires that shareholders elect a fund's board of trustees under
certain circumstances. As a general matter, a fund's board of trustees may fill
vacancies as long as, after the board fills the vacancy, at least two-thirds of
the trustees were elected by shareholders. The ability to appoint new Trustees
is important because without it the SPDR Funds would have to hold expensive
shareholder meetings for each new Trustee. Mr. Ross, Ms. Boatman, Mr. Churchill
and Mr. Verboncoeur are currently nominees for Trustee of the SPDR Funds.
HOW MANY OF THE NOMINEES WILL BE "INDEPENDENT" TRUSTEES IF ELECTED?
Five of the six nominees - all but Mr. Ross - will be Independent Trustees if
elected by shareholders. Independent Trustees have no affiliation with SSgA FM
or the SPDR Funds they oversee, apart from any personal investments they choose
to make in the SPDR Funds as private individuals. Independent Trustees play a
critical role in overseeing SPDR Fund operations and representing the interests
of each SPDR Fund's shareholders.
HOW ARE THE BOARDS OF THE SPDR FUNDS STRUCTURED?
The SPDR Funds are grouped into two separate Trusts. Each Trust is made up of
multiple SPDR Funds (which are sometimes called "series" of the Trust). Funds
that are part of the same Trust elect their Trustees on a joint basis.
Part V of this booklet includes a list of SPDR Funds that specifies the Trust to
which each SPDR Fund belongs and provides a variety of other details about the
SPDR Funds.
Currently, the same individuals serve as Trustees of both Trusts. There are
important benefits in having the same members serve on the Board of Trustees of
both Trusts. Service on both Boards gives the Trustees greater familiarity with
operations that are common to all SPDR Funds. Such service also permits the
Trustees to address common issues on a knowledgeable and consistent basis. It
also avoids
-4-
the substantial additional costs, administrative complexities, and
redundancies that would result from having a different Board of Trustees for
each Trust.
While there are many areas of common interest among the SPDR Funds, the Trustees
recognize that they are responsible for exercising their responsibilities at all
times on a fund-by-fund basis.
HOW LONG WILL EACH TRUSTEE SERVE?
If elected, each Trustee will serve until he or she resigns, retires, or is
removed from the board as provided in the applicable Trust's governing
documents. A Trustee may be removed from the Board by a shareholder vote
representing two-thirds of the total outstanding SPDR Fund shares of a Trust. If
a nominee is unable to accept election, or subsequently leaves the Board before
the next election, the Board of Trustees may, in its discretion, select another
person to fill the vacant position, so long as two-thirds of the remaining
Trustees were elected by shareholders.
WHAT ARE THE BOARD'S RESPONSIBILITIES?
The primary responsibility of the Board of Trustees of each SPDR Fund is to
oversee the management of the SPDR Fund for the benefit of shareholders. Each
Board has a majority of independent Trustees who are not "interested persons" of
the SPDR Funds. As an officer and employee of the Adviser and/or its parent
company for over 10 years, Mr. Ross is currently the only interested nominee for
the SPDR Funds' boards. Mr. Ross has relevant background, experience and skills,
particularly in those domains critical to the SPDR Funds and their shareholders.
In exercising their oversight responsibilities, the SPDR Funds' Trustees focus
on matters they determine to be vitally important to SPDR Fund shareholders.
This includes not only the management and performance of the SPDR Funds but also
the operating plans and budgets, strategic plans, and composition and
performance evaluations of the Adviser.
The business acumen, experience, and objective thinking of the SPDR Funds'
independent Trustees are considered invaluable assets for SSgA FM management
and, ultimately, the SPDR Funds' shareholders. Having management accountable to
a group of independent, highly experienced, and qualified individuals who act
solely on behalf of shareholders makes management more effective in the long
run.
WHAT ARE THE BOARD'S COMMITTEES?
The Board of Trustees of each SPDR Fund has two standing committees.
- AUDIT COMMITTEE. The Board has an Audit Committee consisting of all
Independent Trustees (i.e., Trustees who are not "interested persons"
(as defined in the 1940 Act) of the Trust). Helen Peters, who is
resigning from the Boards, currently serves as Chair. The Audit
Committee meets with the Trust's independent auditors to review and
approve the scope and results of their professional services; to
review the procedures for evaluating the adequacy of the Trust's
accounting controls; to consider the range of audit fees; and to make
recommendations to the Board regarding the engagement of the Trust's
independent auditors. The Audit Committee met three (3) times during
the fiscal years ended June 30, 2009 and September 30, 2009 for SPDR
Series Trust and SPDR Index Shares Funds, respectively.
- TRUSTEE COMMITTEE. The Board has established a Trustee Committee
consisting of all Independent Trustees. Mr. Nesvet serves as Chair.
The responsibilities of the Trustee Committee are to: (1) nominate
Independent Trustees; (2) review on a periodic basis the governance
-5-
structures and procedures of the SPDR Funds; (3) review proposed
resolutions and conflicts of interest that may arise in the business
of the SPDR Funds and may have an impact on the investors of the SPDR
Funds; (4) review matters that are referred to the Committee by the
Chief Legal Officer or other counsel to the Trust; and (5) provide
general oversight of the SPDR Funds on behalf of the investors of the
SPDR Funds. The Trustee Committee met six (6) times during the fiscal
year ended June 30, 2009 for SPDR Series Trust and seven (7) times
during the fiscal year ended September 30, 2009 for SPDR Index Shares
Funds.
HOW ARE THE TRUSTEES COMPENSATED?
Each SPDR Fund pays its proportionate share of the independent Trustees'
compensation. The SPDR Funds' sole non-independent Trustee nominee, Mr. Ross,
received no compensation from the SPDR Funds for his past service. No officer,
director or employee of the Adviser, its parent or subsidiaries receives any
compensation from the Trust for serving as an officer or Trustee of the Trust,
other than the Chief Compliance Officer, who serves at the pleasure of the
Independent Trustees. The SPDR Funds compensate their independent Trustees by
paying, in the aggregate, each Independent Trustee an annual fee of $90,000 plus
$5,000 per in-person meeting attended. An Independent Trustee will receive
$1,250 for each telephonic or video conference meeting attended. The Chair of
the Board receives an additional annual fee of $25,000 and the Chair of the
Audit Committee receives an additional annual fee of $10,000. The Trust also
reimburses each Independent Trustee for travel and other out-of-pocket expenses
incurred by him/her in connection with attending such meetings. Trustee fees are
allocated between each Trust and each of their respective series in such a
manner as deemed equitable, taking into consideration the relative net assets of
the series.
The table below shows the compensation that Independent Trustees received during
the SPDR Series Trust's fiscal year ended June 30, 2009.
PENSION OR TOTAL
RETIREMENT COMPENSATION
BENEFITS ESTIMATED FROM THE
AGGREGATE ACCRUED ANNUAL TRUST AND
NAME OF COMPENSATION AS PART BENEFITS FUND COMPLEX
INDEPENDENT FROM THE OF TRUST UPON PAID TO
TRUSTEE TRUST EXPENSES RETIREMENT TRUSTEES(1)
----------- ------------ ---------- ---------- ------------
Frank Nesvet $92,431 N/A N/A $120,500
David M. Kelly $73,400 N/A N/A $ 95,500
Helen F. Peters(2) $80,456 N/A N/A $104,750
(1) The Fund Complex includes the SPDR Series Trust and the SPDR Index Shares
Funds Trust.
(2) Ms. Peters resigned from the Board effective December 31, 2009.
No Trustee or officer is entitled to any pension or retirement benefits from the
Trust.
The table below shows the compensation that Independent Trustees received during
the SPDR Index Shares Funds' fiscal year ended September 30, 2009.
-6-
PENSION OR TOTAL
RETIREMENT COMPENSATION
BENEFITS ESTIMATED FROM THE
AGGREGATE ACCRUED ANNUAL TRUST AND
NAME OF COMPENSATION AS PART BENEFITS FUND COMPLEX
INDEPENDENT FROM THE OF TRUST UPON PAID TO
TRUSTEE TRUST EXPENSES RETIREMENT TRUSTEES(1)
- ------------------ ------------ ---------- ---------- ------------
Frank Nesvet $25,514 N/A N/A $137,000
David M. Kelly $21,755 N/A N/A $116,500
Helen F. Peters(2) $20,702 N/A N/A $112,000
(1) The Fund Complex includes the SPDR Series Trust and the SPDR Index Shares
Funds.
(2) Ms. Peters resigned from the Board effective December 31, 2009.
DO TRUSTEES OWN FUND SHARES?
Please see Part V of the proxy statement for information on the dollar range of
SPDR Fund shares owned by each Trustee nominee.
WHO ARE THE FUNDS' OFFICERS?
All SPDR Funds employ their officers on a shared basis. Officers are considered
"interested persons" of the SPDR Funds. The executive officers of the Trust,
along with their principal occupations over the past five years and their
affiliations with the Adviser are listed below. In addition to Mr. Ross,
president, they are as follows:
OFFICERS
TERM OF PRINCIPAL
OFFICE AND OCCUPATION(S)
NAME, ADDRESS POSITION(S) LENGTH OF DURING PAST
AND YEAR OF BIRTH WITH FUNDS TIME SERVED 5 YEARS
- ----------------------------- ----------- ------------- ------------------
Ellen M. Needham Vice Unlimited Principal, SSgA
SSgA Funds Management, Inc. President Elected: Funds Management,
State Street Financial Center March 2008 Inc. (1992-present)*;
One Lincoln Street Managing Director,
Boston, MA 02111 State Street Global
1967 Advisors (1992-
present).*
Michael P. Riley Vice Unlimited Principal, State
SSgA Funds Management, Inc. President Elected: Street Global
State Street Financial Center February 2005 Advisors
One Lincoln Street (2005-present);
Boston, MA 02111 Assistant Vice
1969 President, State
Street Bank and
Trust Company
(2000-2004).
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Gary L. French Treasurer Unlimited Senior Vice
State Street Bank and Trust Elected: President,
Company May 2005 State Street Bank
Two Avenue de Lafayette and Trust Company
Boston, MA 02111 (2002-present).
1951
Ryan M. Louvar Secretary Unlimited Vice President and
State Street Bank and Trust Elected: Senior Counsel, State
Company August 2008 Street Bank and Trust
Four Copley Place, CPH0326 Company (2005-
Boston, MA 02116 present)*; Counsel,
1972 BISYS Group, Inc.
(2000-2005) (a financial
services company).
Mark E. Tuttle Assistant Unlimited Vice President and
State Street Bank and Trust Secretary Elected: Counsel, State Street
Company August 2007 Bank and Trust Company
Four Copley Place, CPH0326 (2007-present)*;
Boston, MA 02116 Assistant Counsel,
1970 BISYS Group, Inc.
(2005-2007)*;
(a financial services
company); Sole
Practitioner, Mark E.
Tuttle Attorney at Law
(2004-2005).
* Served in various
capacities during noted
time period.
Matthew Flaherty Assistant Unlimited Assistant Vice
State Street Bank and Trust Treasurer Elected: President, State
Company May 2005 Street Bank and
Two Avenue de Lafayette Trust
Boston, MA 02111 (1994-present).*
1971
Chad C. Hallett Assistant Unlimited Vice President,
State Street Bank and Trust Treasurer Elected: State Street Bank and
Company May 2006 Trust Company
Two Avenue de Lafayette (2001-present).*
Boston, MA 02111
1969
Laura F. Healy Assistant Unlimited Vice President,
State Street Bank and Trust Treasurer Elected: State Street
Company November 2007 Bank and Trust Company
Two Avenue de Lafayette (2002-present).*
Boston, MA 02111
1964
-8-
Julie B. Piatelli Chief Unlimited Principal and Senior
SSgA Funds Management, Inc. Compliance Elected: Compliance Officer,
State Street Financial Center Officer August 2007 SSgA Funds
One Lincoln Street Management, Inc.
Boston, MA 02111 (2004-present);
1967 Vice President, State
Street Global Advisors
(2004-present); Senior
Manager,
PricewaterhouseCoopers,
LLP (1999-2004).
* Served in various capacities during noted time period.
VOTING REQUIREMENTS FOR PROPOSAL 1.
Approval of Proposal 1 with respect to election of a nominee as a Trustee of a
Trust requires the favorable vote of a majority of shares of that Trust
represented in person or by proxy and entitled to vote at the Meeting.
EACH SPDR FUND'S BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH
OF THE NOMINEES LISTED UNDER PROPOSAL 1.
PROPOSAL 2 - TO APPROVE AN INVESTMENT SUB-ADVISORY AGREEMENT BETWEEN THE
ADVISER, SSGA FUNDS MANAGEMENT, INC. ("SSGA FM" OR THE "ADVISER") AND NUVEEN
ASSET MANAGEMENT ("NUVEEN" OR "SUB-ADVISER"), PURSUANT TO WHICH NUVEEN WILL
SERVE AS SUB-ADVISER.
THIS PROPOSAL APPLIES TO SPDR BARCLAYS CAPITAL MUNICIPAL BOND ETF, SPDR BARCLAYS
CAPITAL CALIFORNIA MUNICIPAL BOND ETF, SPDR BARCLAYS CAPITAL NEW YORK MUNICIPAL
BOND ETF, SPDR BARCLAYS CAPITAL SHORT TERM MUNICIPAL BOND ETF, AND SPDR S&P VRDO
MUNICIPAL BOND ETF.
We are asking shareholders to approve an investment sub-advisory agreement
between the Adviser and Nuveen, pursuant to which Nuveen will serve as
sub-adviser to SPDR Barclays Capital Municipal Bond ETF, SPDR Barclays Capital
California Municipal Bond ETF, SPDR Barclays Capital New York Municipal Bond
ETF, SPDR Barclays Capital Short Term Municipal Bond ETF, and SPDR S&P VRDO
Municipal Bond ETF (the "Municipal SPDR Funds").
At its meeting on November 17, 2009 the Board, including all the Independent
Trustees, approved the Sub-Advisory Agreement between the Adviser and Nuveen,
pursuant to which Nuveen will be responsible for managing the assets of the
Municipal SPDR Funds on a day-to-day basis, subject to the oversight of the
Adviser and the Board. Shareholders of the Municipal SPDR Funds are being asked
to approve the Sub-Advisory Agreement.
Currently, SSgA FM serves as the investment adviser to the Municipal SPDR Funds
under an Investment Advisory Agreement by and between the Municipal SPDR Funds
and SSgA FM ("Current Agreement") and continuously reviews, supervises and
administers the Municipal SPDR Funds' investment program, subject to the
oversight of the Board. The Adviser has recommended to the Board that Nuveen be
engaged as a sub-adviser. In this regard, the Board was advised that Nuveen has
extensive experience managing municipal bond portfolios.
-9-
The Board of Trustees and the Adviser believe that Nuveen will bring significant
municipal securities experience to bear in managing the Municipal SPDR Funds.
Nuveen has extensive experience in managing municipal securities, and, as of
September 30, 2009, Nuveen managed more than $68.5 billion in portfolios of
municipal securities for a wide array of mutual funds, closed-end funds, retail
managed accounts and institutional managed accounts.. In addition, Tim Ryan, one
of the Municipal SPDR Funds primary portfolio managers will be joining Nuveen
upon the shareholder approval of Nuveen's sub-advisory role, bringing his
extensive experience in managing passive municipal bond strategies. Mr. Ryan's
experience in managing the Municipal SPDR Funds, coupled with Nuveen's
experience in the municipal markets will create a strong management team for the
Municipal SPDR Funds.
If the Proposal is approved by shareholders, SSgA FM will continue to serve as
the Municipal SPDR Funds' investment adviser. But, rather than managing the
Municipal SPDR Funds' assets directly, as it has in the past, SSgA FM will be
responsible for supervising the activities of Nuveen in managing the assets of
the Municipal SPDR Funds, subject to the oversight of the Board.
DESCRIPTION OF THE SUB-ADVISORY AGREEMENT
A copy of the form of Sub-Advisory Agreement is included as Exhibit A to this
proxy statement. The description of the Sub-Advisory Agreement in this proxy
statement is qualified in its entirety by reference to Exhibit A.
DUTIES UNDER THE SUB-ADVISORY AGREEMENT. Under the Sub-Advisory Agreement,
Nuveen will:
(i) provide supervision of each Municipal SPDR Fund's investments, furnish a
continuous investment program for the Municipal SPDR Funds, determine from time
to time what investments or securities will be purchased, retained or sold by
the Municipal SPDR Funds, and what portion of the assets will be invested or
held uninvested as cash;
(ii) maintain books and records with respect to the Municipal SPDR Funds
securities transactions and keep the Board and the Adviser fully informed in
writing on an ongoing basis as agreed by the Adviser and the Sub-Adviser of all
material facts concerning the investment and reinvestment of the assets in the
Municipal SPDR Funds, the Sub-Adviser and its key investment personnel and
operations providing services with respect to the Municipal SPDR Funds make
regular and periodic special written reports of such additional information
concerning the same as may reasonably be requested from time to time by the
Adviser or the board, and the Sub-Adviser will attend meetings with the Adviser
and/or the Trustees, as reasonably requested, to discuss the foregoing;
(iii) in accordance with procedures and methods established by the Board, which
may be amended from time to time, provide assistance in determining the fair
value of all securities and other investments/assets in the Municipal SPDR
Funds, as necessary, and use reasonable efforts to arrange for the provision of
valuation information or a price(s) from a party(ies) independent of the
Sub-Adviser for each security or other investment/asset in the SPDR Fund for
which market prices are not readily available, it being understood that the
Sub-Adviser shall not be responsible for determining the value of any such
security;
(iv) provide any and all material composite performance information, records and
supporting documentation about accounts the Sub-Adviser manages, if appropriate,
which are relevant to the Municipal SPDR Funds and that have investment
objectives, policies, and strategies substantially similar to those employed by
the Sub-Adviser in managing the Municipal SPDR Funds that may be reasonably
necessary, under applicable laws, to allow the Municipal SPDR Funds or its agent
to present information concerning the Sub-Adviser's prior performance in the
Trust's Prospectus and SAI (as defined in the Sub-Advisory Agreement) and any
permissible reports and materials prepared by the SPDR Fund or its agent;
-10-
(v) cooperate with and provide reasonable assistance to the Adviser,
administrator, custodian and foreign custodians, the transfer agent and pricing
agents and all other agents and representatives of the Trust and the Adviser,
keep all such persons fully informed as to such matters as they may reasonably
deem necessary to the performance of their obligations to the Trust and the
Adviser, provide prompt responses to reasonable requests made by such persons
and maintain any appropriate interfaces with each so as to promote the efficient
exchange of information; and
(vi) The Sub-Adviser shall initially determine and make such modifications to
the identity and number of shares of the Deposit Securities and the Fund
Securities required for a Fund Deposit or Redemption (as defined in the
Sub-Advisory Agreement) for each Municipal SPDR Fund as may be necessary as a
result of rebalancing adjustments and corporate action events (and may give
directions to the Trust's Custodian with respect to such designation).
DURATION AND TERMINATION. Unless terminated earlier, the Sub-Advisory Agreement
will continue in effect for an initial term of up to two years from the date of
the Sub-Advisory Agreement, and thereafter, for periods of one year for so long
as such continuance is specifically approved at least annually (i) by the vote
of the holders of a majority of the outstanding shares of the Municipal SPDR
Funds or by the Trustees of the Trust, and (ii) by the vote of a majority of the
Independent Trustees, cast in person at a meeting called for the purpose of
voting on such approval. The Sub-Advisory Agreement will terminate automatically
in the event of its assignment. The Sub-Advisory Agreement is terminable at any
time without penalty by the Trustees of the Trust or by a vote of a majority of
the outstanding voting securities of the Municipal SPDR Funds, or by the
Adviser, in each case, upon sixty (60) days' written notice to Nuveen. In
addition, the Adviser may terminate the Sub-Advisory Agreement upon breach by
Nuveen of any representation or warranty provided for in the Sub-Advisory
Agreement, which shall not have been cured within thirty (30) days of Nuveen's
receipt of written notice of such breach, or by the Adviser immediately upon
written notice to Nuveen if Nuveen becomes unable to discharge its duties and
obligations under the Sub-Advisory Agreement. Nuveen may terminate the
Sub-Advisory Agreement upon 120 days written notice to the Adviser and the
Municipal SPDR Funds.
LIABILITY AND INDEMNIFICATION. Except as may otherwise be provided by the 1940
Act or any other federal securities law, neither the Sub-Adviser nor any of its
officers, members or employees (its "Affiliates") shall be liable for any
losses, claims, damages, liabilities or litigation (including legal and other
expenses) incurred or suffered by the Adviser or the Municipal SPDR Funds as a
result of any error of judgment or mistake of law by the Sub-Adviser or its
Affiliates with respect to each Municipal SPDR Fund, except that nothing in the
Sub-Advisory Agreement shall limit the liability of the Sub-Adviser or its
Affiliates for, and the Sub-Adviser shall indemnify and hold harmless the
Municipal SPDR Funds, against any and all losses, claims, damages, liabilities
or litigation (including reasonable legal and other expenses) to which any of
the Municipal SPDR Funds may become subject under relevant law or otherwise
arising out of or based on (i) any willful misconduct, bad faith, reckless
disregard or gross negligence of the Sub-Adviser in the performance of any of
its duties or obligations under the Sub-Advisory Agreement or (ii) any untrue
statement of a material fact contained in the Prospectus and SAI, proxy
materials, reports, advertisements, sales literature, or other materials
pertaining to the SPDR Fund or the omission to state therein a material fact
known to the Sub-Adviser which was required to be stated therein or necessary to
make the statements therein not misleading, if such statement or omission was
made in reliance upon information furnished to the Adviser or the Trust by the
Sub-Adviser for use therein.
COMPENSATION. Under the Sub-Advisory Agreement, the Adviser will pay Nuveen a
fee, calculated and paid monthly, based on a percentage of 45% of the advisory
fee paid to the Adviser by the Municipal
-11-
SPDR Funds, after deducting payments to fund service providers paid by the
Adviser under the unitary fee structure. The Municipal SPDR Funds will have no
responsibility for any fee payable to Nuveen.
DESCRIPTION OF NUVEEN
Nuveen is located at 333 West Wacker Drive, Chicago, IL 60606. Nuveen, a
wholly-owned subsidiary of Nuveen Investments, Inc., is organized under the laws
of the State of Delaware and an investment adviser registered with the SEC. On
November 13, 2007, Nuveen Investments was acquired by investors led by Madison
Dearborn Partners, LLC, which is a private equity investment firm based in
Chicago, Illinois (the "MDP Acquisition"). The investor group led by Madison
Dearborn Partners, LLC includes affiliates of Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch"). Merrill Lynch has since been acquired by
Bank of America Corporation. Nuveen has adopted policies and procedures that
address arrangements involving Nuveen and Bank of America Corporation (including
Merrill Lynch) that may give rise to certain conflicts of interest. Nuveen
Investments significantly increased its level of debt in connection with the MDP
Acquisition. Nuveen Investments believes that monies generated from operations
and cash on hand will be adequate to fund debt service requirements, capital
expenditures and working capital requirements for the foreseeable future.
However, Nuveen Investments' ability to continue to fund these items, to service
its debt and to maintain compliance with covenants in its debt agreements may be
affected by general economic, financial, competitive, legislative, legal and
regulatory factors and by its ability to refinance or repay outstanding
indebtedness with scheduled maturities beginning in 2013. In the event that
Nuveen Investments breaches certain of the covenants included in its debt
agreements, the breach of such covenants may result in the accelerated payment
of its outstanding debt, increase the cost of such debt or generally have an
adverse effect on the financial condition of Nuveen Investments.
As of September 30, 2009, Nuveen manages more than $68.5 billion in portfolios
of municipal securities for a wide array of mutual funds, closed-end funds,
retail managed accounts and institutional managed accounts.
Nuveen does not currently provide investment advisory services to any funds
which have investment objectives and strategies comparable to those of the
Municipal SPDR Funds.
OFFICERS AND DIRECTORS OF NUVEEN. Listed below are the names and principal
occupations of each of the directors and the principal executive officers of
Nuveen. Neither the directors or officers are Trustees or officers of the
Municipal SPDR Funds. The address for each person listed below is c/o Nuveen
Investments, 333 West Wacker Drive, Chicago, IL 60606.
PRINCIPAL EXECUTIVE OFFICERS AND DIRECTORS OF NUVEEN. Listed below are the names
and principal occupations of each of the principal executive officers and
directors of Nuveen. Neither the directors or officers are Trustees or officers
of the Municipal SPDR Funds. The address for each person listed below is c/o
Nuveen Investments, 333 West Wacker Drive, Chicago, IL 60606.
POSITIONS/OFFICES
NAME HELD WITH NUVEEN PRINCIPAL OCCUPATION/POSITION
- ---- ----------------------------------------------- -------------------------------------------------------------
John P. Amboian Chief Executive Officer and Director Chief Executive Officer (since July 2007) and Director (since
1999) of Nuveen Investments, Inc.; Chief Executive Officer
(since 2007) of Nuveen Investments Advisors, Inc.; formerly,
President (1999-2004) of Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp.
-12-
Glenn R. Richter Executive Vice President and Director Executive Vice President and Chief Administrative Officer of
Nuveen Investments, Inc.; Executive Vice President of Nuveen
Investments, LLC, Nuveen Investments Advisers, Inc., Nuveen
Investments Holdings, Inc., and NWQ Holdings, LLC.
John L. MacCarthy Executive Vice President, Secretary, General Executive Vice President (since 2008), formerly, Senior Vice
Counsel and Director President (2006-2008), Secretary and General Counsel (since
2006) of Nuveen Investments, Inc., Nuveen Investments, LLC
and Nuveen Investments Holdings, Inc.; Executive Vice
President (since 2008), formerly, Senior Vice President
(2006-2008) and Secretary (since 2006) of Nuveen Investments
Advisers Inc., NWQ Holdings, LLC, Nuveen Investments
Institutional Services Group LLC, NWQ Investment Management
Company, LLC, Tradewinds Global Investors, LLC, Symphony
Asset Management, LLC, Santa Barbara Asset Management, LLC,
Nuveen HydePark Group, LLC and Nuveen Investment Solutions,
Inc.
William T. Huffman Chief Operating Officer, Municipal Fixed Income Chairman, President and Chief Executive Officer (2002-2007)
of Northern Trust Global Advisors, Inc. and Chief Executive
Officer (2007) of Northern Trust Global Investments Limited;
Certified Public Accountant.
TRUSTEES' CONSIDERATIONS
The 1940 Act requires that a fund's sub-advisory agreement must be specifically
approved by the vote of a majority of the independent trustees of the trust,
cast in person at a meeting called for the purpose of voting on such approval.
In connection with such approvals, the fund's trustees must request and
evaluate, and the sub-adviser is required to furnish, such information as may be
reasonably necessary to evaluate the terms of the sub-advisory agreement. In
determining whether to approve a sub-advisory agreement, the board is required
to act solely in the best interests of the fund and the fund's shareholders in
evaluating the terms of the sub-advisory agreement. The board is required to
judge the terms of the arrangement in light of those that would be reached as a
result of arm's length bargaining.
The Board of the Municipal SPDR Funds considered approval of the Sub-Advisory
Agreement after review of materials provided to them at their request by Nuveen
and the Adviser. In deciding whether to approve the Sub-Advisory Agreement, the
Board considered various factors, including (i) the nature,
-13-
extent and quality of services expected to be provided by the Sub-Adviser with
respect to the Municipal SPDR Funds under the Sub-Advisory Agreement; and (ii)
investment performance of municipal bond funds managed by Nuveen. The Board also
considered that the fees paid under the Sub-Advisory Agreement would be paid
directly by the Adviser and would not result in increased fees payable by the
Municipal SPDR Funds
The Board considered the background and experience of Nuveen's senior management
and in particular Nuveen's experience in investing in municipal securities. The
Board noted that Nuveen would bring significant municipal securities experience
to bear in managing the Municipal SPDR Funds. The Board noted that Nuveen has
extensive experience in managing municipal securities, and, as of September 30,
2009, Nuveen managed more than $68.5 billion in portfolios of municipal
securities for a wide array of mutual funds, closed-end funds, retail managed
accounts and institutional managed accounts. In addition, the Board considered
that Tim Ryan, one of the Municipal SPDR Funds primary portfolio managers, will
be joining Nuveen upon the shareholder approval of Nuveen's sub-advisory role,
bringing his extensive experience in managing passive municipal bond strategies.
The Board concluded that Mr. Ryan's experience in managing the Municipal SPDR
Funds, coupled with Nuveen's experience in the municipal markets, would create a
strong management team for the Municipal SPDR Funds. In addition, the Board
received a report from the Municipal SPDR Funds' chief compliance officer
regarding diligence undertaken with respect to Nuveen's compliance program and
related matters.
The Board, including the Independent Trustees voting separately, approved the
Sub-Advisory Agreement after weighing the foregoing factors, none of which was
dispositive in itself. The Board's conclusions with respect to the Sub-Advisory
Agreement were as follows: (a) the nature and extent of the services expected to
be provided by the Nuveen to each Municipal SPDR Fund were adequate and
appropriate; and (b) Nuveens' experience in managing municipal bond funds is
extensive.
VOTING REQUIREMENTS FOR PROPOSAL 2.
Approval of Proposal 2 with respect to a Municipal Bond SPDR requires the
favorable vote of a majority of outstanding voting shares of the applicable
Municipal Bond SPDR as defined by the 1940 Act. If the Proposal is not approved
by shareholders, SSgA FM will continue to manage the assets of the Municipal
SPDR Funds directly pursuant to the Current Agreement and the Board, in
consultation with SSgA FM, will determine the appropriate course of action to
take, which may include submitting an alternative proposal to shareholders at a
future shareholders' meeting.
EACH MUNICIPAL SPDR FUND'S BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR"
PROPOSAL 2.
PROPOSAL 3 - TO APPROVE A "MANAGER OF MANAGERS" STRUCTURE FOR ALL SPDR FUNDS.
THIS PROPOSAL APPLIES TO ALL SPDR FUNDS.
We are asking shareholders of the SPDR Funds to approve a "manager of managers"
structure for all SPDR Funds.
SEC EXEMPTIVE ORDER AND SHAREHOLDER APPROVAL.
Proposal 3 seeks shareholder approval to implement a "manager of managers"
structure for each SPDR Fund. A "manager of managers" structure would permit the
Board of Trustees of the SPDR Funds to appoint or replace sub-advisers WITHOUT
obtaining shareholder approval. Normally, shareholders of a
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fund must approve investment advisory agreements (including investment
sub-advisory agreements) for the fund.
If shareholders approve the "manager of managers" structure, which would cover
all SPDR Funds in addition to the SPDR Funds indicated above, the SPDR Funds
intend to seek the necessary exemptive relief from the U.S. Securities and
Exchange Commission ("SEC") pursuant to Section 15(a) of the 1940 Act which
provides, in relevant part, that it is unlawful for any person to act as an
investment adviser to a registered investment company except pursuant to a
written contract that has been approved by the vote of a majority of the
company's outstanding voting securities. The exemptive relief would exempt the
SPDR Funds from the requirement to have sub-advisory contracts approved by
shareholder vote. However, before a SPDR Fund can rely on this exemption and
implement the "manager of managers" structure, the SPDR Fund's shareholders must
approve the "manager of managers" structure.
DESCRIPTION OF THE PROPOSED "MANAGER OF MANAGERS" STRUCTURE.
Under the proposed "manager of managers" structure, each SPDR Fund will be
operated in a manner that is different from many other funds. Most funds operate
under a structure in which a single entity, the fund's adviser, provides
investment advisory services to the fund. Typically, the fund pays an advisory
fee to the fund's adviser and the adviser, in turn, compensates the adviser's
portfolio managers who make specific securities selections for the fund. In
contrast, under the "manager of managers" structure, a SPDR Fund will pay SSgA
FM an advisory fee and SSgA FM, in turn, will hire sub-advisers to provide
day-to-day investment advisory services to the SPDR Fund. Under this structure,
shareholders will have the benefit of SSgA FM's expertise in selecting and
monitoring investment sub-advisers.
SSgA FM will continuously monitor the performance of the sub-advisers and may
from time to time recommend that the Board of Trustees replace one or more
sub-advisers or appoint additional sub-advisers, depending on SSgA FM's
assessment of what combination of sub-advisers it believes would optimize a SPDR
Fund's chances of achieving its investment objective. The Board would be able to
approve the addition or termination of sub-advisers without shareholder
approval.
Any proposal to add or replace sub-advisers would be reviewed as follows. First,
SSgA FM would assess a SPDR Fund's needs and, if it believed additional or
replacement sub-advisers could benefit the SPDR Fund, would systematically
search the relevant universe of available investment sub-advisers. Second, any
recommendations made by SSgA FM would have to be approved by a majority of the
Trustees, including a majority of the Trustees who are not parties to the
investment sub-advisory agreement or "interested persons," as defined under the
1940 Act, of any party to the investment sub-advisory agreement. Finally, any
selections of additional or replacement sub-advisers would have to comply with
conditions contained in any exemptive order issued by the SEC.
The proposed "manager of managers" structure is intended to afford the SPDR
Funds increased management flexibility. With the "manager of managers"
structure, the Trustees will not be required to call a shareholder meeting each
time a new sub-adviser is approved and a SPDR Fund will not incur the
considerable expense of holding shareholder meetings to approve new
sub-advisers.
TRUSTEES' CONSIDERATIONS.
In unanimously approving the "manager of managers" structure for the SPDR Funds
and in recommending that shareholders also approve this structure, the Trustees
considered the flexibility the SPDR Funds will have under a "manager of
managers" structure to implement sub-adviser changes when the Board determines
that such changes are advisable without incurring the considerable costs and
delays of obtaining shareholder approval. Particularly now, at a time when the
Board is recommending the
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approval of a new sub-adviser for several SPDR Funds, the Board of Trustees
believes the manager of managers structure to be efficient and effective in
managing the SPDR Funds that make use of a sub-adviser.
VOTING REQUIREMENTS FOR PROPOSAL 3.
Approval of Proposal 3 with respect to a SPDR Fund requires the favorable vote
of a majority of outstanding voting shares of that Fund as defined by the 1940
Act.
EACH SPDR FUND'S BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
PROPOSAL 3.
PROPOSAL 4 - TO APPROVE ELIMINATING OR RECLASSIFYING CERTAIN FUNDAMENTAL
POLICIES AND RESTRICTIONS FOR ALL FUNDS AND TO UPDATE AND STANDARDIZE THE SPDR
FUNDS' INVESTMENT POLICIES
THIS PROPOSAL APPLIES TO ALL SPDR FUNDS.
We are asking shareholders of the SPDR Funds to approve eliminating or
reclassifying certain fundamental policies and restrictions for all SPDR Funds,
and to update and standardize the SPDR Funds investment policies. Fundamental
policies are policies that can be changed only by obtaining shareholder
approval, which typically requires a lengthy and costly proxy solicitation.
Every SPDR Fund currently has a set of fundamental policies, but some of the
policies differ from fund to fund, in part because the SPDR Funds have been
launched at different times and the policies have been refined over time,
frequently in response to changes in federal or state regulatory oversight or
changes in investment markets. We propose to adopt a uniform set of updated
fundamental policies for all SPDR Funds that conform to the standards Congress
and the SEC have established for funds as well as emerging best practices in the
mutual fund industry.
The revised fundamental policies are intended to be comprehensive but simple.
This simplicity provides many advantages, as discussed more fully below.
Standardizing the policies across all SPDR Funds will make oversight and
compliance more efficient. Updating and simplifying the policies will make the
SPDR Funds more responsive to changing regulatory and market environments.
WHY CHANGE THE CURRENT POLICIES?
Adopting uniform fundamental policies for all SPDR Funds will simplify the task
of monitoring the SPDR Funds' compliance with the policies. If approved, the
proposal will bring all of the SPDR Funds' fundamental policies into consistent
alignment with the primary federal law that governs funds, the 1940 Act. As part
of this process, the SPDR Funds propose to eliminate a number of existing
fundamental policies that reflect regulatory or business conditions, practices,
or requirements that are no longer applicable. The revised policies will be
consistent with the bounds of prudence and safety established by law and are
intended enhance SSgA FM's and any sub-adviser's ability to manage the SPDR
Funds' assets efficiently and effectively in changing regulatory and market
environments. This flexibility is intended to enable the SPDR Funds to respond
quickly to changing business conditions and to react to regulatory changes such
as amendments to the 1940 Act or new rules, interpretations, and exemptions
implemented by the SEC and other agencies.
HOW WILL THE UNIFORM POLICIES DIFFER FROM THE EXISTING POLICIES?
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The changes fall into two broad categories. First, uniform fundamental policies
required by law will be adopted, standardizing the policies across all of the
SPDR Funds. Second, existing fundamental policies that are outdated and not
required by law will be eliminated.
WHAT ARE THE STANDARDIZED FUNDAMENTAL POLICIES THE SPDR FUNDS PROPOSE TO ADOPT?
The 1940 Act requires that every fund adopt policies with respect to certain
activities, and effectively provides that such policies may not be changed
except by a majority vote of shareholders. The activities are:
- Purchasing and selling real estate.
- Issuing senior securities and borrowing money.
- Making loans.
- Purchasing and selling commodities.
- Concentrating investments in a particular industry or group of
industries.
- Underwriting activities.
Every SPDR Fund currently has a fundamental policy addressing each of the
activities for which it is required to have such a policy. However, different
SPDR Funds frequently have different policies for the same activity. In
addition, many of the SPDR Funds have adopted fundamental policies covering
activities for which a fundamental policy is not required, unnecessarily
restricting the SPDR Funds' ability to respond to changing circumstances. This
proposal, if adopted by shareholders, affords the SPDR Funds an opportunity to
adopt an updated and standardized set of policies for all SPDR Funds.
SUBPROPOSAL 4A: TO AMEND THE FUNDAMENTAL POLICY ON PURCHASING AND SELLING REAL
ESTATE.
We are proposing to adopt a revised policy on investing in real estate that
would read as follows:
REAL ESTATE. THE FUND MAY NOT INVEST DIRECTLY IN REAL ESTATE UNLESS THE REAL
ESTATE IS ACQUIRED AS A RESULT OF OWNERSHIP OF SECURITIES OR OTHER INSTRUMENTS.
THIS RESTRICTION SHALL NOT PRECLUDE THE FUND FROM INVESTING IN COMPANIES THAT
DEAL IN REAL ESTATE OR IN INSTRUMENTS THAT ARE BACKED OR SECURED BY REAL ESTATE.
With one minor exception, the proposed fundamental policy on real estate is
essentially the same as the existing policy for all of the SPDR Funds. The
exception is that, rather than unconditionally prohibiting the SPDR Funds from
investing directly in real estate, the proposed policy permits them to own real
estate "acquired as a result of ownership of securities or other instruments."
This exception is intended to cover a situation in which a SPDR Fund acquires
real estate unintentionally. Although extremely unlikely, this could happen if,
for example, a SPDR Fund owns shares of a company, such as a real estate
investment trust (REIT), that liquidates, and the SPDR Fund is forced to take
real estate as part of the liquidation.
The second sentence of the proposed policy permits investment in real
estate-related securities (as opposed to real estate itself). The current real
estate policy of every SPDR Fund already permits investment in one or both types
of real estate-related securities.
The SPDR Funds do not intend to change their approach to investing in real
estate in response to the modification of the real estate policy.
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EACH SPDR FUND'S BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR" SUBPROPOSAL
4A.
SUBPROPOSAL 4B: TO AMEND THE FUNDAMENTAL POLICY ON ISSUING SENIOR SECURITIES AND
BORROWING MONEY.
We are proposing to adopt a revised policy on issuing senior securities that
would read as follows:
SENIOR SECURITIES AND BORROWING MONEY. THE FUND MAY NOT ISSUE SENIOR SECURITIES
OR BORROW MONEY EXCEPT AS PERMITTED BY THE 1940 ACT OR OTHER GOVERNING STATUTE,
BY THE RULES THEREUNDER, OR BY THE SEC OR OTHER REGULATORY AGENCY WITH AUTHORITY
OVER THE FUND.
Somewhat simplified, a "senior security" is any security that gives its holder a
priority claim on a fund's assets or on dividends paid by a fund. A number of
different investment instruments and strategies - forward and futures contracts,
repurchase agreements, short selling, options writing, and certain derivatives -
may involve the issuance of a senior security. The 1940 Act generally prohibits
funds from issuing senior securities, but the SEC takes the position that
instruments and strategies that otherwise might be considered to involve senior
securities will not be considered to do so if the fund uses certain protective
techniques. These techniques include holding an offsetting position or
segregating liquid assets in an amount sufficient to meet the fund's obligations
under the instrument or strategy.
In addition, the 1940 Act imposes certain limitations on the borrowing
activities of funds. These limitations protect shareholders in two ways. First,
when a fund borrows money, its assets potentially become subject to the claims
of the lender. In some cases, those claims could have priority over the claims
of shareholders if all of the fund's assets are liquidated or redeemed. Limits
on borrowing reduce the potential for priority claims. Second, borrowed money
can be used to leverage the fund's portfolio, amplifying its gains and losses.
Limits on borrowing constrain leverage.
Under the 1940 Act, a fund can borrow up to one-third of the value of its net
assets (including the amount borrowed) from banks and may borrow an additional
amount up to 5% of its total assets for temporary purposes from an unaffiliated
lender. The SEC also permits a fund to engage in activities that the SEC staff
considers to be economically equivalent to borrowing, such as entering into a
reverse repurchase agreement or a futures contract, so long as the fund
segregates assets sufficient to cover its obligations under the instruments.
Current policies typically allow a SPDR Fund to borrow money only for temporary
or emergency purposes, and then in an amount not to exceed 10% of the SPDR
Fund's net assets. Additionally, SPDR Funds are prohibited from making
additional investments whenever outstanding borrowings exceed 5% of net assets.
The current limitations on borrowing are more restrictive than those imposed by
law. Funds typically borrow money so that they can cover short-term cash needs
without having to sell portfolio securities at a time when a sale would be
disadvantageous for investment reasons. Typically, such borrowings would be used
to cover large and unexpected redemption orders. The SPDR Funds do not intend to
change their borrowing activities in response to the modification of the policy.
The proposed fundamental policy on issuing senior securities is very similar to
the current version of the policy, with two very minor exceptions. First, the
current fundamental policy states that a SPDR Fund may issue senior securities
as permitted for emergency purposes in an amount up to 10% of the value of the
SPDR Fund's total assets, valued at market, less liabilities valued at the time
the borrowing is made. The proposed fundamental policy clarifies that the SPDR
Fund may issue senior securities or borrow money within the bounds of the law.
The current fundamental policies do not reference either the 1940
-18-
Act or any other legal authority. The proposed fundamental policy clarifies that
the SPDR Fund may not issue senior securities or borrow money except as
permitted by the 1940 Act or other governing statute. The policy as proposed
adds language clarifying this point.
As a practical matter, the proposed policy will not change how SPDR Funds invest
because the exception is unnecessary when the SPDR Funds use the protective
techniques described above. The SPDR Funds do not intend to change their
approach to issuing senior securities in response to the modification of the
policy.
EACH SPDR FUND'S BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR" SUBPROPOSAL
4B.
SUBPROPOSAL 4C: TO AMEND THE FUNDAMENTAL POLICY ON MAKING LOANS.
We are proposing to adopt a revised policy on making loans that would read as
follows:
LOANS. THE FUND MAY NOT MAKE LOANS TO ANOTHER PERSON EXCEPT AS PERMITTED BY THE
1940 ACT OR OTHER GOVERNING STATUTE, BY THE RULES THEREUNDER, OR BY THE SEC OR
OTHER REGULATORY AGENCY WITH AUTHORITY OVER THE FUND.
The 1940 Act prohibits a fund from lending money or other property to affiliated
persons, which would include any SPDR officer or employee. Under the current
version of the SPDR Funds' fundamental policy on loans, the SPDR Funds are not
permitted to lend any funds or other assets except through the purchase of all
or a portion of an issue of securities or obligations of the type in which it is
permitted to invest (including participation interests in such securities or
obligations) and except that the SPDR Fund may lend its portfolio securities in
an amount not to exceed 33 1/3% of the value of its total assets.
Generally, a SPDR Fund can lend money or other property primarily in four ways:
(1) by purchasing bonds and other fixed income instruments, (2) by entering into
a repurchase agreement (which is economically equivalent to a short-term loan),
(3) by lending portfolio securities, and (4) through an interfund lending
program permitted under the SEC order. All four practices are common for funds.
The revised fundamental policy is designed to permit the SPDR Funds to alter
their lending policies in connection with changes to the applicable regulations.
The SPDR Funds do not intend to change their lending activities in response to
the modification of the policy.
EACH SPDR FUND'S BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR" SUBPROPOSAL
4C.
SUBPROPOSAL 4D: TO AMEND THE FUNDAMENTAL POLICY ON PURCHASING AND SELLING
COMMODITIES.
We are proposing to adopt a revised policy on investing in commodities that
would read as follows:
COMMODITIES. THE FUND MAY NOT INVEST IN COMMODITIES EXCEPT AS PERMITTED BY THE
1940 ACT OR OTHER GOVERNING STATUTE, BY THE RULES THEREUNDER, OR BY THE SEC OR
OTHER REGULATORY AGENCY WITH AUTHORITY OVER THE FUNDS.
The term "commodity" typically describes physical products - agricultural crops
such as wheat, corn, and soybeans; base metals such as copper and aluminum;
precious metals such as gold and silver; and energy
-19-
sources such as oil and natural gas. In the investment world, however, a
commodity can also be an intangible financial product, the most common being a
futures contract. The only commodities in which the SPDR Funds typically might
invest are financial ones, such as stock and bond futures contracts, stock and
bond index futures contracts, foreign currencies, foreign currency forward
contracts, and options on any of these.
The SPDR Funds' existing commodities policies are more restrictive than required
by federal law and limit the SPDR Funds. The SPDR Funds currently are confined
to specifically identified categories of financial instruments, such as futures
contracts, indexes and options on such futures contracts. The identified
categories do not cover all the types of instruments that could be considered
commodities and do not cover instruments that may be available for investment in
the future and that could assist a SPDR Fund in meeting its objective. This
limitation originally derived from a Commodity Futures Trading Commission rule
that is no longer in effect. The SPDR Funds do not intend to change their
approach to investing in commodities in response to the modification of the
policy.
EACH SPDR FUND'S BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR" SUBPROPOSAL
4D.
SUBPROPOSAL 4E: TO AMEND THE POLICY ON CONCENTRATING INVESTMENTS IN A PARTICULAR
INDUSTRY OR GROUP OF INDUSTRIES.
We are proposing to adopt revised policies on industry concentration that would
read as set forth below.
CONCENTRATION: THE FUND MAY NOT CONCENTRATE ITS INVESTMENTS IN SECURITIES OF
ISSUERS IN THE SAME INDUSTRY, EXCEPT AS MAY BE NECESSARY TO APPROXIMATE THE
COMPOSITION OF THE FUND'S TARGET INDEX.
The 1940 Act requires every fund to have a fundamental investment policy
regarding industry concentration, but does not define what it means to
"concentrate" or what constitutes an "industry." The SEC staff has issued
helpful guidance in this area:
- The SEC staff takes the position that a fund concentrates its
investments if it invests more than 25% of its assets in any
particular industry. (For this purpose, investments do not include
certain items such as cash, U.S. government securities, securities of
other investment companies, and certain tax-exempt securities.)
- A fund may select its own industry classifications so long as they are
reasonable and the companies within a designated industry have similar
primary economic characteristics.
- A fund generally cannot adopt a policy that allows it to concentrate
or not concentrate based on what the Adviser believes is in the best
interests of shareholders. However, a fund can have a policy that
allows it to shift from unconcentrated to concentrated, or the
reverse, if (1) the policy clearly indicates the specific conditions
under which the fund will do so, or (2) the fund is a money market
fund and reserves the ability to concentrate investments in U.S.
government securities and certain instruments issued by domestic
banks.
The new policy is for index funds that don't generally concentrate, but contains
an exception that permits a SPDR Fund to concentrate as needed to track its
target index. The revision would ensure that all SPDR Funds are able to invest
in accordance with their stated investment objectives and strategies.
-20-
The SPDR Funds do not intend to change how they invest in response to the
modification of the concentration policy.
EACH SPDR FUND'S BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR" SUBPROPOSAL
4E.
SUBPROPOSAL 4F: TO ELIMINATE OUTDATED FUNDAMENTAL POLICIES NOT REQUIRED BY LAW.
WHAT FUNDAMENTAL POLICIES ARE THE FUNDS PROPOSING TO ELIMINATE?
The uniform policies we are proposing to adopt include only those policies that
the 1940 Act requires. This will result in the elimination of existing
fundamental policies not required by law. As a practical matter, the elimination
of these policies is not expected to change how the SPDR Funds operate or
invest, nor is it expected to change the risk profile of any of the SPDR Funds.
Many of the policies relate to instruments or strategies that the SPDR Funds do
not use today and do not expect to use in the future.
We propose to eliminate policies that deal with:
- Pledging, mortgaging, or hypothecating fund assets;
- Purchasing securities on margin;
- Selling securities short; and
- Changing of investment objective without shareholder approval. (only
applicable to Equity ETFs, as defined below)
Even after the unnecessary policies are eliminated, the SPDR Funds will still be
limited in regard to many of the activities covered by the policies. For
example, federal law limits the degree to which a fund may sell securities
short, purchase securities on margin, and pledge fund assets.
Certain of the SPDR Funds, including the SPDR Dow Jones Total Market ETF, SPDR
Dow Jones Large Cap ETF, SPDR Dow Jones Large Cap Growth ETF, SPDR Dow Jones
Large Cap Value ETF, SPDR Dow Jones Mid Cap ETF, SPDR Dow Jones Mid Cap Growth
ETF, SPDR Dow Jones Mid Cap Value ETF, SPDR Dow Jones Small Cap ETF, SPDR Dow
Jones Small Cap Growth ETF, SPDR Dow Jones Small Cap Value ETF, SPDR DJ Global
Titans ETF, SPDR Dow Jones REIT ETF, SPDR KBW Bank ETF, SPDR KBW Capital Markets
ETF, SPDR KBW Insurance ETF, SPDR Morgan Stanley Technology ETF, SPDR S&P
Dividend ETF, SPDR S&P Biotech ETF, SPDR S&P Homebuilders ETF, SPDR S&P Metals &
Mining ETF, SPDR S&P Oil & Gas Equipment & Services ETF, SPDR S&P Oil & Gas
Exploration & Production ETF, SPDR S&P Pharmaceuticals ETF, SPDR S&P Retail ETF,
SPDR S&P Semiconductor ETF, SPDR KBW Regional Banking ETF, SPDR KBW Mortgage
Finance ETF, SPDR DJ STOXX 50 ETF, SPDR DJ Euro STOXX 50 ETF, SPDR S&P Emerging
Asia Pacific ETF, SPDR S&P China ETF, SPDR S&P Emerging Markets ETF, SPDR S&P
BRIC 40 ETF, SPDR S&P Emerging Europe ETF, SPDR S&P Emerging Latin America ETF,
SPDR S&P Emerging Middle East & Africa ETF, SPDR S&P World Ex-US ETF, SPDR S&P
International Small Cap ETF, SPDR Dow Jones International Real Estate ETF, SPDR
MSCI ACWI Ex-US ETF, SPDR Russell/Nomura Prime Japan ETF, SPDR Russell/Nomura
Small Cap Japan ETF (the "Equity ETFs") currently have a fundamental restriction
which says that the "Fund may not change its investment objective." SSgA FM is
proposing to eliminate the fundamental restriction that says the SPDR Funds
cannot change their investment objective without shareholder approval.
Currently, many of the Equity ETFs have an investment objective to track a
specific index. Eliminating this fundamental restriction would allow such Equity
ETFs to change their investment objective to state that they will track an index
that follows a certain desired objective. The
-21-
elimination of this fundamental policy provides these Equity ETFs more
flexibility in changing their index if the portfolio managers and the Board of
Trustees believe it's in the shareholders best interest or in response to a
situation where the index is discontinued. Further, certain of the other SPDR
Funds do not have this restriction, so eliminating this restriction would
stream-line and make consistent the fundamental restrictions amongst all the
SPDR Funds.
Further, investors will always know how their SPDR Funds invest because each
SPDR Fund indicates its target index in its name and the SPDR Funds must
disclose this information in their prospectus and Statement of Additional
Information ("SAI"). In addition, the conditions of the exemptive relief on
which the SPDR Funds rely to operate as exchange traded funds require the SPDR
Funds to provide their portfolio holdings on a daily basis. These portfolio
holdings are available online at www.spdrs.com. The prospectus and SAI for every
SPDR Fund is available without cost online at www.spdrs.com or by calling
1-866-787-2257.
WHY ELIMINATE THESE POLICIES?
As noted above, the 1940 Act requires a fund to adopt fundamental policies with
respect to specific types of activities; however, some of the fundamental
policies are more restrictive than required under the 1940 Act. Some of these
policies were considered best practices at the time the SPDR Funds were
originally launched, but as the industry as evolved, the trend has been to
conform investment company fundamental policies to the actual requirements of
the applicable laws. By eliminating unnecessary fundamental policies, the SPDR
Funds will be able to avoid the costs and delays associated with a shareholder
meeting if, in the future, the Board decides that SPDR Fund shareholders would
benefit from a change in tactics or strategies now governed by those policies or
in order to take advantage of new financial products that would be permitted
under the 1940 Act, but restricted by these policies. Eliminating unnecessary
fundamental policies also will allow the SPDR Funds to respond more quickly to
regulatory and market changes. Finally, eliminating unnecessary fundamental
policies, which vary greatly from fund to fund, is an important step in creating
uniform fundamental policies for all SPDR Funds and realizing the administrative
efficiencies that are expected to result from that uniformity.
EACH SPDR FUND'S BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR" SUBPROPOSAL
4F.
VOTING REQUIREMENTS FOR EACH SUBPROPOSAL 4A-F.
Approval of Subproposals 4A-F, with respect to a SPDR Fund, requires the
favorable vote of a majority of outstanding voting shares of that Fund as
defined by the 1940 Act. If a Subproposal is not approved by shareholders of a
particular SPDR Fund, that Fund will remain subject to the current fundamental
policy or policies covered in the Subproposal.
PART III: INFORMATION ON THE SPDR FUNDS' INDEPENDENT ACCOUNTANTS
Selection of PricewaterhouseCoopers as Independent Accountants. The Independent
Trustees of SPDR Index Shares Funds have selected PricewaterhouseCoopers LLP
("PwC") as independent accountants to audit and certify the SPDR Funds'
financial statements. Representatives of PwC are not expected to be present at
the Meeting.
In addition to serving as independent accountants, PwC has provided limited
non-audit services (primarily tax services) to SPDR Index Shares Funds. The
Independent Trustees carefully considered these non-audit services when
evaluating PwC's independence for purposes of its selection as the SPDR
-22-
Index Shares Funds independent accountants. In a letter to the SPDR Index Shares
Funds audit committee dated July 30, 2009, PwC confirmed its status as
independent accountants with respect to SPDR Index Shares Funds within the
meaning of the federal securities laws.
PwC Audit Reports. PwC's audit report for each SPDR Index Shares Fund's last two
most recently ended fiscal years did not contain any adverse opinions or
disclaimers of opinion, nor did PwC qualify or modify such reports as to
uncertainty, audit scope, or accounting principles. Further, there were no
disagreements between any of the SPDR Index Shares Funds and PwC in three key
areas - (1) accounting principles and practices, (2) financial statement
disclosures, and (3) audit scope and procedures--that, if not resolved to PwC's
satisfaction, would have caused the accountants to reference the matter in their
audit reports.
FUND-RELATED AUDIT FEES PAID TO PWC. The SPDR Index Shares Funds paid PwC the
approximate amount shown in the table below as audit fees for the Trust's last
two most recently ended fiscal years.
AUDIT FEES
-------------------
TRUST 2009 2008
- ----- -------- --------
SPDR Index Shares Funds $506,100 $459,900
ALL OTHER FEES PAID TO PWC. For the fiscal years ended September 30, 2009, and
September 30, 2008, PwC was paid approximately $240,000 and $240,000,
respectively, for all non-audit services rendered to the SPDR Index Shares
Funds, primarily related to review of federal, state and local income, franchise
and other tax returns. For those same two years, PwC was paid approximately
$7,670,000 and $7,631,000, respectively, for non-audit services provided to SSgA
FM and certain of its affiliates that provide ongoing services to SPDR Index
Shares Funds. These amounts primarily related to service auditor's examinations
in accordance with the American Institute of Certified Public Accountants
Statement on Audit Standards No. 70 (SAS 70).
Selection of Ernst & Young LLP as Independent Accountants. The Independent
Trustees of SPDR Series Trust have selected Ernst & Young LLP ("E&Y") as
independent accountants to audit and certify the SPDR Funds' financial
statements. Representatives of E&Y are not expected to be present at the
Meeting.
In addition to serving as independent accountants, E&Y has provided limited
non-audit services (primarily tax services) to SPDR Series Trust. The
Independent rustees carefully considered these non-audit services when
evaluating E&Y's independence for purposes of its selection as the SPDR Funds
independent accountants. In a letter to the SPDR Series Trust audit committee
dated May 18, 2009, E&Y confirmed its status as independent accountants with
respect to SPDR Series Trust within the meaning of the federal securities laws.
E&Y Audit Reports. E&Y's audit report for each SPDR Series Trust last two most
recently ended fiscal years did not contain any adverse opinions or disclaimers
of opinion, nor did E&Y qualify or modify such reports as to uncertainty, audit
scope, or accounting principles. Further, there were no disagreements between
any of the SPDR Series Trust and E&Y in three key areas - (1) accounting
principles and practices, (2) financial statement disclosures, and (3) audit
scope and procedures--that, if not resolved to E&Y's satisfaction, would have
caused the accountants to reference the matter in their audit reports.
FUND-RELATED AUDIT FEES PAID TO E&Y. The SPDR Series Trust paid E&Y the
approximate amount shown in the table below as audit fees for the Trust's last
two most recently ended fiscal years.
-23-
AUDIT FEES
-------------------
TRUST 2009 2008
- ----- -------- --------
SPDR Series Trust $495,080 $437,000
ALL OTHER FEES PAID TO E&Y. For the fiscal years ended June 30, 2009 and June
30, 2008, E&Y was paid approximately $362,120 and $312,740, respectively, for
all non-audit services rendered to the SPDR Series Trust, primarily related to
the review of year-end distribution requirements, as well as the review and
signing as preparer of all federal, state and excise income tax returns for SPDR
Series Trust. For the calendar years ended 2009 and 2008, E&Y was paid
approximately $8.0 million and $5.4 million respectively, for non-audit services
provided to SSgA FM and certain of its affiliates that provide ongoing services
to SPDR Series Trust. These amounts primarily related to employee benefit plan
and non-statutory audits, audits of certain foreign-sponsored mutual funds, due
diligence procedures, reports on the processing of transactions by servicing
organizations, expatriate, compliance and corporate tax advisory services and
advisory services related to the BASEL II capital adequacy framework.
PART IV: MORE ON PROXY VOTING AND SHAREHOLDER MEETINGS
SHAREHOLDER APPROVAL
VOTES NEEDED TO ELECT TRUSTEES. Shareholders of SPDR Funds that are part of the
same Trust will elect their Trustees on a joint basis. (A list of SPDR Funds and
the Trust of which each SPDR Fund is a series is included in Part V of this
proxy statement.) For each Trust, the nominees receiving the favorable vote of a
majority of a majority of shares of that Trust represented in person or by proxy
and entitled to vote at the Meeting will be elected.
VOTES NEEDED TO APPROVE PROPOSALS 2 - 4. Shareholders of each SPDR Fund will
vote separately on each proposal applicable to that Fund. For a proposal to pass
for a SPDR Fund, there must be a majority of the outstanding voting securities
of a company, which means that the vote at a shareholder meeting must be, (A) of
67 per centum or more of the voting securities present at such meeting, if the
holders of more than 50 percent of the outstanding voting securities are present
or represented by proxy; or (B) of more than 50 percent of the outstanding
voting securities of such company, whichever is less. This is referred to as a
Majority Shareholder Vote.
PROXY SOLICITATION METHODS. The SPDR Funds will solicit shareholder proxies in a
variety of ways. All shareholders who are entitled to vote will receive these
proxy materials either by mail or electronically (assuming that applicable
requirements are met). In addition, SSgA FM employees and officers may solicit
shareholder proxies in person, by telephone, by mail, or over the Internet. The
SPDR Funds have also engaged the services of Broadridge Financial Solutions,
Inc. ("Broadridge") to assist in the solicitation of proxies for the shareholder
meeting.
PROXY SOLICITATION COSTS. Each SPDR Fund will pay all costs of soliciting
proxies from its shareholders with respect to all items other than the approval
of Nuveen Asset Management as a sub-adviser, including costs relating to the
printing, mailing, and tabulation of proxies. SSgA FM will pay the costs of
solicitation with respect to soliciting proxies for approval of Nuveen Asset
Management as sub-adviser. Broadridge's solicitation costs for the SPDR Funds
are currently estimated to be approximately $2.5 million and will be allocated
across the SPDR Funds proportionately, according to a fixed formula. By voting
immediately, you can help your SPDR Fund avoid the considerable expense of a
second proxy solicitation.
QUORUM. Each SPDR Fund must achieve a quorum in order for the shareholder
meeting to go forward. This means that a majority of a SPDR Fund's shares must
be represented at the meeting, either in person
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or by proxy. All returned proxies count toward a quorum, regardless of how they
are voted ("For," "Against," or "Abstain"). The SPDR Funds will count
abstentions and broker non-votes toward establishing a quorum and as votes
"Against" proposals 2-5. (A broker non-vote is a proxy received from a broker
who holds SPDR Fund shares on behalf of an investor, but who does not have
discretionary power to vote the shares on the investor's behalf, indicating that
the broker has not received instructions from the investor on the matter at
issue.) Signed, dated proxy cards and voting instruction cards returned to SSgA
FM without a choice indicated as to the applicable proposals shall be voted for
proposals 1-5.
ADJOURNMENT. If a quorum is not present or represented at the shareholder
meeting, the holders of a majority of the votes present in person or by proxy
and entitled to vote shall have the power to adjourn the meeting from time to
time, if the vote required to approve or reject any proposal described in the
original notice of such meeting is not obtained (with proxies being voted for or
against adjournment consistent with the votes for and against the proposal for
which the required vote has not been obtained). The affirmative vote of the
holders of a majority of the Shares then present in person or represented by
proxy shall be required to adjourn any meeting. Any adjourned meeting may be
reconvened without further notice or change in record date. At any reconvened
meeting at which a quorum shall be present, any business may be transacted that
might have been transacted at the meeting as originally called.
REVOKING YOUR PROXY. Your latest vote is the one that counts. Therefore, you can
revoke a prior proxy simply by voting again--over the Internet, with your proxy
card or voting instruction card, or by toll-free telephone call. You can also
revoke a prior proxy by writing to the SPDR Funds' secretary at the following
address: Ryan M. Louvar, State Street Bank and Trust Company, 4 Copley Place,
5th Floor Boston, MA 02116 or by voting in person at the meeting. You may revoke
your proxy at any time up until voting results are announced at the shareholder
meeting.
SHAREHOLDER PROPOSALS. Any shareholder proposals to be included in the proxy
statement for a SPDR Fund's next meeting of shareholders must be received by the
SPDR Fund within a reasonable period of time prior to that meeting. None of the
SPDR Funds currently plans to hold a meeting of shareholders in 2010.
VOTING RIGHTS. Shareholders are entitled to cast one vote for each dollar of
fund net assets owned on the record date and a fractional vote for each
fractional dollar of net assets owned on that date.
NOMINEE ACCOUNTS. Upon request, the SPDR Funds will reimburse nominees for their
reasonable expenses in forwarding proxy materials to beneficial owners of the
SPDR Funds' shares. Please submit invoices for our review to: SPDR Funds, One
Lincoln Street, LCC4N, Boston, MA 02111, Attn: SPDR ETF Fund Administration.
ANNUAL/SEMIANNUAL REPORTS. Copies of the SPDR Funds Annual Reports to
Shareholders may be obtained without charge by writing to State Street Global
Markets, LLC, the Trust's principal underwriter at State Street Financial
Center, One Lincoln Street, Boston, Massachusetts 02111, or by visiting the SPDR
Funds website at www.spdrs.com or by calling 1-866-787-2257.
OTHER MATTERS. At this point, we know of no other business to be brought before
the shareholder meeting. However, if any other matters do come up, we will use
our best judgment to vote on your behalf. If you object to our voting other
matters on your behalf, please tell us so in writing before the meeting.
PART V: FUND AND INVESTMENT ADVISER INFORMATION
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The SPDR Funds investment adviser is SSgA Funds Management, Inc. ("SSgA FM" or
the "Adviser"). The Adviser's principal address is State Street Financial
Center, One Lincoln Street, Boston, Massachusetts 02111.
SPDR FUND INFORMATION
This section provides certain required information for each of the SPDR Funds.
The SPDR Series Trust appear first followed by the SPDR Series Index Shares
Funds. The operational SPDR Funds for which proxies are being solicited are:
SPDR SERIES TRUST includes:
SPDR Dow Jones Total Market ETF
SPDR Dow Jones Large Cap ETF
SPDR Dow Jones Large Cap Growth ETF
SPDR Dow Jones Large Cap Value ETF
SPDR Dow Jones Mid Cap ETF
SPDR Dow Jones Mid Cap Growth ETF
SPDR Dow Jones Mid Cap Value ETF
SPDR Dow Jones Small Cap ETF
SPDR Dow Jones Small Cap Growth ETF
SPDR Dow Jones Small Cap Value ETF
SPDR DJ Global Titans ETF
SPDR Dow Jones REIT ETF
SPDR KBW Bank ETF
SPDR KBW Capital Markets ETF
SPDR KBW Insurance ETF
SPDR Morgan Stanley Technology ETF
SPDR S&P Dividend ETF
SPDR S&P Biotech ETF
SPDR S&P Homebuilders ETF
SPDR S&P Metals & Mining ETF
SPDR S&P Oil & Gas Equipment & Services ETF
SPDR S&P Oil & Gas Exploration & Production ETF
SPDR S&P Pharmaceuticals ETF
SPDR S&P Retail ETF
SPDR S&P Semiconductor ETF
SPDR KBW Regional Banking ETF
SPDR KBW Mortgage Finance ETF
SPDR Wells Fargo Preferred Stock ETF
SPDR Barclays Capital 1-3 Month T-Bill ETF
SPDR Barclays Capital TIPS ETF
SPDR Barclays Capital Short Term Corporate Bond ETF
SPDR Barclays Capital Intermediate Term Treasury ETF
SPDR Barclays Capital Long Term Treasury ETF
SPDR Barclays Capital Intermediate Term Credit Bond ETF
SPDR Barclays Capital Long Term Credit Bond ETF
SPDR Barclays Capital Convertible Bond ETF
SPDR Barclays Capital Mortgage Backed Bond ETF
SPDR Barclays Capital Aggregate Bond ETF
SPDR Barclays Capital Municipal Bond ETF
SPDR Barclays Capital California Municipal Bond ETF
SPDR Barclays Capital New York Municipal Bond ETF
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SPDR Barclays Capital Short Term Municipal Bond ETF
SPDR S&P VRDO Municipal Bond ETF
SPDR DB International Government Inflation-Protected Bond ETF
SPDR Barclays Capital Short Term International Treasury Bond ETF
SPDR Barclays Capital International Treasury Bond ETF
SPDR Barclays Capital High Yield Bond ETF
SPDR INDEX SHARES FUNDS include:
SPDR DJ STOXX 50 ETF
SPDR DJ Euro STOXX 50 ETF
SPDR S&P Emerging Asia Pacific ETF
SPDR S&P China ETF
SPDR S&P Emerging Markets ETF
SPDR S&P BRIC 40 ETF
SPDR S&P Emerging Europe ETF
SPDR S&P Emerging Latin America ETF
SPDR S&P Emerging Middle East & Africa ETF
SPDR S&P World Ex-US ETF
SPDR S&P International Small Cap ETF
SPDR Dow Jones International Real Estate ETF
SPDR FTSE/Macquarie Global Infrastructure 100 ETF
SPDR MSCI ACWI Ex-US ETF
SPDR Russell/Nomura Prime Japan ETF
SPDR Russell/Nomura Small Cap Japan ETF
SPDR S&P International Dividend ETF
SPDR S&P International Mid Cap ETF
SPDR S&P Emerging Markets Small Cap ETF
SPDR Dow Jones Global Real Estate ETF
SPDR S&P International Consumer Discretionary Sector ETF
SPDR S&P International Consumer Staples Sector ETF
SPDR S&P International Energy Sector ETF
SPDR S&P International Financial Sector ETF
SPDR S&P International Health Care Sector ETF
SPDR S&P International Industrial Sector ETF
SPDR S&P International Materials Sector ETF
SPDR S&P International Technology Sector ETF
SPDR S&P International Telecommunications Sector ETF
SPDR S&P International Utilities Sector ETF
As of September 30, 2009 and October 31, 2009, the current Independent Trustees
nominees and the new Independent Trustees nominees, respectively, or their
immediate family members, did not own beneficially or of record any securities
in the Adviser or any person controlling, controlled by, or under common control
with the Adviser.
The following table shows, as of December 31, 2009, the amount of equity
securities owned by the nominees in the SPDR Funds that they are nominated to
oversee.
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AGGREGATE DOLLAR RANGE OF
EQUITY SECURITIES
IN ALL FUNDS OVERSEEN
OR TO BE OVERSEEN BY
DOLLAR RANGE OF DIRECTOR OR NOMINEE IN
EQUITY SECURITIES FAMILY OF INVESTMENT
NAME OF NOMINEE FUND IN THE FUND COMPANIES
--------------- ---- ----------------- -------------------------
Independent Nominees:
Frank Nesvet None None None
David M. Kelly None None None
Bonny Eugenia Boatman None None None
Dwight D. Churchill None None None
Carl G. Verboncoeur None None None
Interested Nominee:
James Ross [ ] [ ] Over $100,000
[ ] [ ]
[ ] [ ]
The Depository Trust Company ("DTC") acts as securities depositary for the
Shares. Shares of each SPDR Fund are represented by securities registered in the
name of DTC or its nominee, Cede & Co., and deposited with, or on behalf of,
DTC. Except in the limited circumstances, certificates will not be issued for
Shares.
DTC, a limited-purpose trust company, was created to hold securities of its
participants (the "DTC Participants") and to facilitate the clearance and
settlement of securities transactions among the DTC Participants in such
securities through electronic book-entry changes in accounts of the DTC
Participants, thereby eliminating the need for physical movement of securities
certificates. DTC Participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations, some of
whom (and/or their representatives) own DTC. More specifically, DTC is owned by
a number of its DTC Participants and by the New York Stock Exchange (the "NYSE")
and the FINRA. Access to the DTC system is also available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a DTC Participant, either directly or indirectly
(the "Indirect Participants").
Beneficial ownership of Shares is limited to DTC Participants, Indirect
Participants and persons holding interests through DTC Participants and Indirect
Participants. Ownership of beneficial interests in Shares (owners of such
beneficial interests are referred to herein as "Beneficial Owners") is shown on,
and the transfer of ownership is effected only through, records maintained by
DTC (with respect to DTC Participants) and on the records of DTC Participants
(with respect to Indirect Participants and Beneficial Owners that are not DTC
Participants). Beneficial Owners will receive from or through the DTC
Participant a written confirmation relating to their purchase of Shares.
Conveyance of all notices, statements and other communications to Beneficial
Owners is effected as follows. Pursuant to the Depositary Agreement between the
Trust and DTC, DTC is required to make available to the Trust upon request and
for a fee to be charged to the Trust a listing of the Shares of each SPDR Fund
held by each DTC Participant. The Trust shall inquire of each such DTC
Participant as to the number of Beneficial Owners holding Shares, directly or
indirectly, through such DTC Participant. The Trust shall provide each such DTC
Participant with copies of such notice, statement or other communication, in
such form, number and at such place as such DTC Participant may reasonably
request, in order that such notice, statement or communication may be
transmitted by such DTC Participant, directly or indirectly, to such Beneficial
Owners. In addition, the Trust shall pay to each such DTC Participant a fair and
reasonable amount as reimbursement for the expenses attendant to such
transmittal, all subject to applicable statutory and regulatory requirements.
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Share distributions shall be made to DTC or its nominee, Cede & Co., as the
registered holder of all Shares. DTC or its nominee, upon receipt of any such
distributions, shall credit immediately DTC Participants' accounts with payments
in amounts proportionate to their respective beneficial interests in Shares of
each SPDR Fund as shown on the records of DTC or its nominee. Payments by DTC
Participants to Indirect Participants and Beneficial Owners of Shares held
through such DTC Participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in a "street name," and will be the
responsibility of such DTC Participants.
The Trust has no responsibility or liability for any aspects of the records
relating to or notices to Beneficial Owners, or payments made on account of
beneficial ownership interests in such Shares, or for maintaining, supervising
or reviewing any records relating to such beneficial ownership interests or for
any other aspect of the relationship between DTC and the DTC Participants or the
relationship between such DTC Participants and the Indirect Participants and
Beneficial Owners owning through such DTC Participants.
DTC may determine to discontinue providing its service with respect to Shares at
any time by giving reasonable notice to the Trust and discharging its
responsibilities with respect thereto under applicable law. Under such
circumstances, the Trust shall take action either to find a replacement for DTC
to perform its functions at a comparable cost or, if such a replacement is
unavailable, to issue and deliver printed certificates representing ownership of
Shares, unless the Trust makes other arrangements with respect thereto
satisfactory to the Exchange.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Although the SPDR Funds do not have information concerning their beneficial
ownership held in the names of DTC Participants, the names, addresses and
percentage ownership of each DTC Participant that owned of record 5% or more of
the outstanding Shares of the SPDR Funds were as follows (except as otherwise
noted below, information is as of October 1, 2009 for SPDR Series Trust and as
of January 1, 2010 for SPDR Index Shares Funds):
[INSERT BENEFICIAL OWNERSHIP HOLDERS HERE]
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EXHIBIT A:
FORM OF
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT, dated as of [ ], by and between SSgA Funds Management, Inc., a
Massachusetts corporation (the "ADVISER"), and Nuveen Asset Management, a
Delaware corporation (the "SUB-ADVISER").
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended ("ADVISERS ACT");
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated July 1, 2004 with the SPDR Series Trust ("TRUST") an investment company
registered under the Investment Company Act of 1940, as amended ("INVESTMENT
COMPANY ACT");
WHEREAS, the Sub-Adviser is registered as an investment adviser under the
Advisers Act;
WHEREAS, the Board of Trustees of the Trust (the "BOARD") and the Adviser
desire to retain the Sub-Adviser to render investment advisory and other
services to the portfolio(s) specified in Appendix A hereto, each a series of
the Trust (each a "FUND" and collectively, the "FUNDS"), in the manner and on
the terms hereinafter set forth;
WHEREAS, the Adviser has the authority under the Investment Advisory
Agreement with the Trust to select sub-advisers for each Fund of the Trust; and
WHEREAS, the Sub-Adviser is willing to furnish such services to the Adviser
and each Fund;
NOW, THEREFORE, the Adviser and the Sub-Adviser agree as follows:
1. APPOINTMENT OF THE SUB-ADVISER
(a) The Adviser hereby appoints the Sub-Adviser to act as an investment
adviser for each Fund, subject to the supervision and oversight of the Adviser
and the Board, and in accordance with the terms and conditions of this
Agreement. The Sub-Adviser accepts such appointment and agrees to render the
services herein set forth, for the compensation specified in Appendix A hereto.
(b) In the event that the Trust establishes one or more series in addition
to the Funds with respect to which the Adviser desires to retain the Sub-Adviser
to render investment advisory services hereunder, the Adviser shall so notify
the Sub-Adviser in writing, indicating the advisory fee to be payable to the
Sub-Adviser with respect to each additional Fund. If the Sub-Adviser is willing
to render such services, it shall so notify the Adviser in writing, whereupon
each such additional Fund shall become a Fund hereunder. In such event, a
writing signed by both the Adviser and the Sub-Adviser shall be annexed hereto
as a part hereof indicating that each such additional Fund has become a Fund
hereunder and reflecting the agreed-upon fee schedule for each such additional
Fund.
2. SERVICES TO BE RENDERED BY THE SUB-ADVISER
(a) Subject to the supervision of the Adviser and the Board and consistent
with its fiduciary duties to each Fund, the Sub-Adviser shall manage the
investment operations and determine the composition of the assets assigned to
the Sub-Adviser by the Adviser ("portfolio") of each Fund,
-A-1-
including the purchase, retention and disposition of the securities and other
instruments held by the Fund, in accordance with such Fund's investment
objective and policies as stated in the then-current prospectus ("PROSPECTUS")
and Statement of Additional Information ("SAI") for such Fund contained in the
Trust's Registration Statement on Form N-1A (the "REGISTRATION STATEMENT"), as
such Prospectus and SAI are amended or supplemented from time to time. As part
of the services it will provide hereunder, the Sub-Adviser shall:
(i) provide supervision of each Fund's investments, furnish a continuous
investment program for the Funds, determine from time to time what
investments or securities will be purchased, retained or sold by the
Funds, and what portion of the assets will be invested or held
uninvested as cash;
(ii) maintain books and records with respect to the Trust's securities
transactions and keep the Board and the Adviser fully informed on an
ongoing basis as agreed by the Adviser and the Sub-Adviser of all
material facts concerning the investment and reinvestment of the
assets in the Funds, the Sub-Adviser and its key investment personnel
and operations providing services with respect to the Fund; make
regular and periodic special written reports of such additional
information concerning the same as may reasonably be requested from
time to time by the Adviser or the Board, and the Sub-Adviser will
attend meetings with the Adviser and/or the Trustees, as reasonably
requested, to discuss the foregoing;
(iii) in accordance with procedures and methods established by the Board,
which may be amended from time to time, provide assistance in
determining the fair value of all securities and other
investments/assets in the Funds, as necessary, and use reasonable
efforts to arrange for the provision of valuation information or a
price(s) from a party(ies) independent of the Sub-Adviser for each
security or other investment/asset in the Fund for which market prices
are not readily available, it being understood that the Sub-Adviser
shall not be responsible for determining the value of any such
security;
(iv) provide any and all material composite performance information,
records and supporting documentation about accounts the Sub-Adviser
manages, if appropriate, which are relevant to the Fund and that have
investment objectives, policies, and strategies substantially similar
to those employed by the Sub-Adviser in managing the Fund that may be
reasonably necessary, under applicable laws, to allow the Fund or its
agent to present information concerning the Sub-Adviser's prior
performance in the Trust's Prospectus and SAI (as hereinafter defined)
and any permissible reports and materials prepared by the Fund or its
agent;
(v) cooperate with and provide reasonable assistance to the Adviser, the
Trust's administrator, the Trust's custodian and foreign custodians,
the Trust's transfer agent and pricing agents and all other agents and
representatives of the Trust that the Adviser and Sub-Adviser shall
agree, and the Adviser upon request from such person, shall keep all
such persons fully informed as to such matters as they may reasonably
deem necessary to the performance of their obligations to the Trust
and the Adviser, provide prompt responses to reasonable requests made
by such persons and maintain any appropriate interfaces with each so
as to promote the efficient exchange of information; and
(vi) the Sub-Adviser shall initially determine and make such modifications
to the identity and number of shares of the Deposit Securities and the
Fund Securities required for a Fund Deposit or Redemption for each
Fund as may be necessary as a result of rebalancing
-A-2-
adjustments and corporate action events (and may give directions to
the Trust's Custodian with respect to such designation) (capitalized
terms have the meaning set forth in the Funds' prospectus).
(b) In furnishing services hereunder, the Sub-Adviser shall be subject to,
and shall perform its responsibilities in accordance with the following: (i) the
Trust's Agreement and Declaration of Trust, as the same may be hereafter
modified and/or amended from time to time ("TRUST DECLARATION"); (ii) the
By-Laws of the Trust, as the same may be hereafter modified and/or amended from
time to time ("BY-LAWS"); (iii) the Prospectus and SAI of the Trust filed with
the Securities and Exchange Commission ("SEC") and delivered to the Sub-Adviser,
as the same may be hereafter modified, amended and/or supplemented; (iv) the
Investment Company Act, the Advisers Act, the applicable provisions of the
Internal Revenue Code of 1986, as amended, and the Commodities Exchange Act and
the rules under each, and all other federal and state laws or regulations
applicable to the Trust and the Fund(s); (v) the terms and conditions of
exemptive and no-action relief granted to the Trust as amended from time to
time; (vi) the Trust's policies and procedures adopted from time to time by the
Board; and (vii) the written instructions of the Adviser. Prior to the
commencement of the Sub-Adviser's services hereunder, the Adviser shall provide
the Sub-Adviser with current copies of the Trust Declaration, By-Laws,
Prospectus and SAI and other relevant policies and procedures adopted by the
Board and by applicable exemptive and no action relief. The Adviser undertakes
to provide the Sub-Adviser with copies or other written notice of any
amendments, modifications or supplements to any such above-mentioned document.
(c) In furnishing services hereunder, the Sub-Adviser will not consult with
any other investment adviser to (i) the Fund, (ii) any other Fund of the Trust
or (iii) any other investment company under common control with the Trust
concerning transactions of the Fund in securities or other assets. (This shall
not be deemed to prohibit the Sub-Adviser from consulting with any of its
affiliated persons concerning transactions in securities or other assets. This
also shall not be deemed to prohibit the Sub-Adviser from consulting with any of
the other covered advisers concerning compliance with paragraphs (a) and (b) of
Rule 12d3-1 under the Investment Company Act.)
(d) The Sub-Adviser, at its expense, will furnish: (i) all necessary
facilities and personnel, including salaries, expenses and fees of any personnel
required for the Sub-Adviser to faithfully perform its duties under this
Agreement; and (ii) administrative facilities, including bookkeeping, and all
equipment necessary for the efficient conduct of the Sub-Adviser's duties under
this Agreement.
(e) The Sub-Adviser will select brokers and dealers to effect all portfolio
transactions subject to the conditions set forth herein which may include
brokers and dealers affiliated with the Sub-Adviser if and as permitted by
applicable law. The Sub-Adviser will place all necessary orders with brokers,
dealers, or issuers, and will negotiate brokerage commissions, if applicable.
The Sub-Adviser is directed at all times to seek to execute transactions for
each Fund (i) in accordance with any written policies, practices or procedures
that may be established by the Board or the Adviser from time to time and which
have been provided to the Sub-Adviser or (ii) as described in the Trust's
Prospectus and SAI. In placing any orders for the purchase or sale of
investments for each Fund, in the name of the Fund or its nominees, the
Sub-Adviser shall seek to achieve for the Fund "best execution", considering all
of the circumstances, and shall maintain records adequate to demonstrate
compliance with this requirement. In no instance will portfolio securities be
purchased from or sold to the Sub-Adviser, or any affiliated person thereof,
except in accordance with the Investment Company Act, the Advisers Act and the
rules under each, and all other federal and state laws or regulations applicable
to the Trust and the Fund.
(f) Subject to the appropriate policies and procedures approved by the
Board, the Sub-Adviser may, to the extent consistent with the safe harbor set
forth in Section 28(e) of the Securities Exchange Act of 1934, as amended
("EXCHANGE ACT"), cause each Fund to pay a broker or dealer that
-A-3-
provides brokerage or research services to the Adviser, the Sub-Adviser or the
Fund an amount of commission for effecting a portfolio transaction in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Sub-Adviser determines, in good faith, that
such amount of commission is reasonable in relationship to the value of such
brokerage or research services provided viewed in terms of that particular
transaction or the Sub-Adviser's overall responsibilities to the Fund or its
other advisory clients. To the extent consistent with Section 28(e) and the
Board, the Sub-Adviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of
such action. Subject to seeking best execution, the Board or the Adviser may
authorize, but not require, the Sub-Adviser to effect transactions in portfolio
securities through broker-dealers in a manner that will help generate resources
to pay the cost of certain expenses that the Trust is required to pay or for
which the Trust is required to arrange payment.
(g) On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of the Fund(s) as well as other clients of
the Sub-Adviser and its affiliates, the Sub-Adviser to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation to,
aggregate the securities to be purchased or sold to attempt to obtain a more
favorable price or lower brokerage commissions and efficient execution.
Allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Sub-Adviser in the manner which
the Sub-Adviser considers to be the most equitable and consistent with its
fiduciary obligations to each Fund and to its other clients over time. The
Adviser agrees that the Sub-Adviser and its affiliates may give advice and take
action in the performance of their duties with respect to any of their other
clients that may differ from advice given, or the timing or nature of actions
taken, with respect to the Fund. The Adviser also acknowledges that the
Sub-Adviser and its affiliates are fiduciaries to other entities, some of which
have the same or similar investment objectives (and will hold the same or
similar investments) as the Fund, and that the Sub-Adviser will carry out its
duties hereunder together with its duties under such relationships. Nothing in
this Agreement shall be deemed to confer upon the Sub-Adviser any obligation to
purchase or to sell or to recommend for purchase or sale for the Fund any
investment that the Sub-Adviser, its affiliates, officers or employees may
purchase or sell for its or their own account or for the account of any client,
if in the sole and absolute discretion of the Sub-Adviser it is for any reason
impractical or undesirable to take such action or make such recommendation for
the Fund.
(h) The Sub-Adviser will maintain all accounts, books and records with
respect to each Fund as are required of an investment adviser of a registered
investment company pursuant to the Investment Company Act and Advisers Act and
the rules thereunder and shall file with the SEC all forms pursuant to Section
13 of the Exchange Act, with respect to its duties as are set forth herein.
(i) The Sub-Adviser will, unless and until otherwise directed by the
Adviser or the Board and consistent with seeking the best interests of each
Fund, exercise (or not exercise in its discretion) all rights of security
holders with respect to securities held by each Fund, including, but not limited
to: voting proxies, converting, tendering, exchanging or redeeming securities;
acting as a claimant in class action litigation (including litigation with
respect to securities previously held); and exercising rights in the context of
a bankruptcy or other reorganization. Unless the Adviser or the Board gives
written instructions to the contrary, the Sub-Adviser shall vote all proxies
solicited by or with respect to the issuers of securities in which assets of the
Fund may be invested in accordance with the Sub-Adviser's proxy voting
guidelines, a copy of which has been provided to the Adviser.
3. COMPENSATION OF THE ADVISER
The Adviser shall pay the Sub-Adviser an advisory fee with respect to each
Fund as specified in Appendix A to this Agreement.
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4. LIABILITY AND INDEMNIFICATION
(a) Except as may otherwise be provided by the Investment Company Act or
any other federal securities law, neither the Sub-Adviser nor any of its
officers, members or employees (its "AFFILIATES") shall be liable for any
losses, claims, damages, liabilities or litigation (including legal and other
expenses) incurred or suffered by the Adviser or the Trust as a result of any
error of judgment or mistake of law by the Sub-Adviser or its Affiliates with
respect to each Fund, except that nothing in this Agreement shall operate or
purport to operate in any way to exculpate, waive or limit the liability of the
Sub-Adviser for, and the Sub-Adviser shall indemnify and hold harmless the
Trust, the Adviser, all affiliated persons thereof (within the meaning of
Section 2(a)(3) of the Investment Company Act) and all controlling persons (as
described in Section 15 of the Securities Act of 1933, as amended ("1933 ACT"))
(collectively, "ADVISER INDEMNITEES") against any and all losses, claims,
damages, liabilities or litigation (including reasonable legal and other
expenses) to which any of the Adviser Indemnitees may become subject under the
1933 Act, the Investment Company Act, the Advisers Act, or under any other
statute, or common law or otherwise arising out of or based on (i) any willful
misconduct, bad faith, reckless disregard or gross negligence of the Sub-Adviser
in the performance of any of its duties or obligations hereunder or (ii) any
untrue statement of a material fact relating to the Sub-Adviser contained in the
Prospectus and SAI, proxy materials, reports, advertisements, sales literature,
or other materials pertaining to the Fund or the omission to state therein a
material fact known to the Sub-Adviser which was required to be stated therein
or necessary to make the statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to the Adviser or the
Trust by the Sub-Adviser Indemnitees (as defined below) expressly for use
therein and provided that the Adviser gave the Sub-Adviser a reasonable advance
opportunity to review and comment on all such Fund materials that relate to the
Sub-Adviser.
(b) Except as may otherwise be provided by the Investment Company Act or
any other federal securities law, the Adviser and the Trust shall not be liable
for any losses, claims, damages, liabilities or litigation (including legal and
other expenses) incurred or suffered by the Sub-Adviser as a result of any error
of judgment or mistake of law by the Adviser with respect to each Fund, except
that nothing in this Agreement shall operate or purport to operate in any way to
exculpate, waive or limit the liability of the Adviser for, and the Adviser
shall indemnify and hold harmless the Sub-Adviser, all affiliated persons
thereof (within the meaning of Section 2(a)(3) of the Investment Company Act)
and all controlling persons (as described in Section 15 of the 1933 Act)
(collectively, "SUB-ADVISER INDEMNITEES") against any and all losses, claims,
damages, liabilities or litigation (including reasonable legal and other
expenses) to which any of the Sub-Adviser Indemnitees may become subject under
the 1933 Act, the Investment Company Act, the Advisers Act, or under any other
statute, at common law or otherwise arising out of or based on (i) any willful
misconduct, bad faith, reckless disregard or gross negligence of the Adviser in
the performance of any of its duties or obligations hereunder or (ii) any untrue
statement of a material fact contained in the Prospectus and SAI, proxy
materials, reports, advertisements, sales literature, or other materials
pertaining to the Fund(s) or the omission to state therein a material fact known
to the Adviser that was required to be stated therein or necessary to make the
statements therein not misleading, unless such statement or omission was made in
reliance upon information furnished to the Adviser or the Trust by the
Sub-Adviser Indemnitees expressly for use therein and provided that the Adviser
gave the Sub-Adviser a reasonable advance opportunity to review and comment on
all such Fund materials that relate to the Sub-Adviser.
5. REPRESENTATIONS OF THE ADVISER
The Adviser represents, warrants and agrees that:
-A-5-
(a) The Adviser has been duly authorized by the Board to delegate to the
Sub-Adviser the provision of investment services to each Fund as contemplated
hereby.
(b) The Adviser (i) is registered as an investment adviser under the
Advisers Act and will continue to be so registered for so long as this Agreement
remains in effect; (ii) is not prohibited by the Investment Company Act, the
Advisers Act or other law, regulation or order from performing the services
contemplated by this Agreement; (iii) to the best of its knowledge, has met and
will seek to continue to meet for so long as this Agreement is in effect, any
other applicable federal or state requirements, or the applicable requirements
of any regulatory or industry self-regulatory agency necessary to be met in
order to perform the services contemplated by this Agreement; and (iv) will
promptly notify the Sub-Adviser of the occurrence of any event that would
disqualify the Adviser from serving as investment manager of an investment
company pursuant to Section 9(a) of the Investment Company Act or otherwise. The
Adviser will also promptly notify the Sub-Adviser if it is served or otherwise
receives notice of any action, suit, proceeding, inquiry or investigation, at
law or in equity, before or by any court, public board or body, regulatory
agency, involving the affairs of the Fund(s), provided, however, that routine
regulatory examinations shall not be required to be reported by this provision.
6. REPRESENTATIONS OF THE SUB-ADVISER
The Sub-Adviser represents, warrants and agrees as follows:
(a) The Sub-Adviser (i) is registered as an investment adviser under the
Advisers Act and will continue to be so registered (or shall qualify for an
exemption from registration) for so long as this Agreement remains in effect;
(ii) is not prohibited by the Investment Company Act, the Advisers Act or other
law, regulation or order from performing the services contemplated by this
Agreement; (iii) to the best of its knowledge, has met and will seek to continue
to meet, for so long as this Agreement remains in effect, any other applicable
federal or state requirements, or the applicable requirements of any regulatory
or industry self-regulatory agency necessary to be met in order to perform the
services contemplated by this Agreement; (iv) has the authority to enter into
and perform the services contemplated by this Agreement; and (v) will promptly
notify the Adviser of the occurrence of any event that would substantially
impair the Sub-Adviser's ability to fulfill its commitment under this Agreement
or disqualify the Sub-Adviser from serving as an investment adviser of an
investment company pursuant to Section 9(a) of the Investment Company Act or
otherwise. The Sub-Adviser will also promptly notify each Fund and the Adviser
if it is served or otherwise receives notice of any action, suit, proceeding,
inquiry or investigation, at law or in equity, before or by any court, public
board or body, involving the affairs of the Fund(s), provided, however, that
routine regulatory examinations shall not be required to be reported by this
provision.
(b) The Sub-Adviser has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the Investment Company Act and Rule 204A-1
under the Advisers Act and will provide the Adviser and the Board with a copy of
such code of ethics, together with evidence of its adoption. Within forty-five
days of the end of the last calendar quarter of each year that this Agreement is
in effect, and as otherwise requested, the president, Chief Operating Officer,
compliance officer or a vice-president of the Sub-Adviser shall certify to the
Adviser that the Sub-Adviser has complied with the requirements of Rule 17j-1
and Rule 204A-1 during the previous year and that there has been no material
violation of the Sub-Adviser's code of ethics or, if such a material violation
has occurred, that appropriate action was taken in response to such violation.
Upon the written request of the Adviser, the Sub-Adviser shall permit the
Adviser, its employees or its agents to examine the reports required to be made
to the Sub-Adviser by Rule 17j-1(c)(1) and Rule 204A-1(b) and all other records
relevant to the Sub-Adviser's code of ethics but only to the extent such reports
and/or records relate to the provision of services hereunder.
-A-6-
(c) The Sub-Adviser has adopted and implemented and will maintain (a) in
accordance with Rule 206(4)-7 under the Advisers Act, policies and procedures
reasonably designed to prevent violation by the Sub-Adviser and its supervised
persons (as such term is defined by the Advisers Act) of the Advisers Act and
the rules thereunder; and (b) to the extent that the Sub-Adviser's activities or
services could affect the Fund(s), policies and procedures reasonably designed
to prevent violation of the federal securities laws (as such term is defined in
Rule 38a-1 under the Investment Company Act) by the Fund(s) and the Sub-Adviser.
(d) The Sub-Adviser has provided the Trust and the Adviser with a copy of
its Form ADV, which as of the date of this Agreement is its Form ADV as most
recently filed with the SEC and promptly will furnish a copy of all material
amendments to the Trust and the Adviser at least annually. Such amendments shall
reflect those material changes in the Sub-Adviser's organizational structure,
professional staff or other significant developments affecting the Sub-Adviser's
services hereunder, which are required by the Advisers Act.
(e) The Sub-Adviser will notify the Trust and the Adviser of any assignment
of this Agreement or change of control of the Sub-Adviser, as applicable, and
any changes in the key personnel who are either the portfolio manager(s) of the
Fund(s) or senior management of the Sub-Adviser with management responsibilities
relating to the services hereunder, in each case prior to or promptly after,
such change. The Sub-Adviser agrees to bear all reasonable expenses of the
Trust, if any, arising out of an assignment or change in control of the
Sub-Adviser.
(f) The Sub-Adviser will notify the Adviser immediately upon detection of
(a) any material failure to manage the Fund(s) in accordance with the Fund(s)'
stated investment objectives and policies or any applicable law; or (b) any
material breach of any of the Fund(s)' or the Sub-Adviser's policies, guidelines
or procedures related to the Fund(s).
(g) The Sub-Adviser agrees to maintain an appropriate level of errors and
omissions or professional liability insurance coverage.
(h) The Sub-Adviser agrees that neither it, nor any of its affiliates, will
knowingly in any way refer directly or indirectly to its relationship with the
Trust, the Fund(s), the Adviser or any of their respective affiliates in
offering, marketing or other promotional materials without the express written
consent of the Adviser, except as required by rule, regulation or upon the
request of a governmental authority. However, the Sub-Adviser may use the
performance of the Fund in its composite performance. Notwithstanding the
foregoing, nothing in this Agreement shall be interpreted to prevent the
Sub-Adviser from referring to the names of the Fund(s) managed by the
Sub-Adviser, currently intended to be named as "SPDR(R) Nuveen [Index Name]
ETF."
7. NON-EXCLUSIVITY
The services of the Sub-Adviser to the Adviser, the Fund(s) and the Trust
are not to be deemed to be exclusive, and the Sub-Adviser shall be free to
render investment advisory or other services to others and to engage in other
activities, provided the Sub-Adviser furnishes in its Form ADV adequate
disclosure of possible conflicts of interest and implements procedures designed
to mitigate or eliminate such conflicts. It is understood and agreed that the
directors, officers, and employees of the Sub-Adviser are not prohibited from
engaging in any other business activity or from rendering services to any other
person, or from serving as partners, officers, directors, trustees, or employees
of any other firm or corporation.
-A-7-
8. SUPPLEMENTAL ARRANGEMENTS
The Sub-Adviser may from time to time employ or associate itself with any
person it believes to be particularly suited to assist it in providing the
services to be performed by such Sub-Adviser hereunder, provided that no such
person shall perform any services with respect to the Fund(s) that would
constitute an assignment or require a written advisory agreement pursuant to the
Investment Company Act. Any compensation payable to such persons shall be the
sole responsibility of the Sub-Adviser, and neither the Adviser nor the Trust
shall have any obligations with respect thereto or otherwise arising under the
Agreement.
9. REGULATION
Each party agrees to provide reasonable cooperation to the other party in
furtherance of this Agreement, including without limitation providing relevant
information, reports, or other materials pursuant to a request or requirement of
regulatory and administrative bodies having jurisdiction the party seeking such
cooperation.
10. RECORDS
The records relating to the services provided under this Agreement shall be
the property of the Trust and shall be under its control; however, the Trust
shall furnish to the Sub-Adviser such records and permit it to retain such
records (either in original or in duplicate form) as it shall reasonably require
in order to carry out its business. In the event of the termination of this
Agreement, such other records shall promptly be returned to the Trust by the
Sub-Adviser free from any claim or retention of rights therein, provided that
the Sub-Adviser may retain any such records that are required by law or
regulation or reasonably required in order to carryout its business. The
Sub-Adviser shall keep confidential any information obtained in connection with
its duties hereunder and is either identified as confidential or by its nature
or means of receipt would be considered confidential and disclose such
information only if the Trust has authorized such disclosure or if such
disclosure is expressly required or requested by applicable federal or state
regulatory authorities, or otherwise required by law.
11. DURATION OF AGREEMENT
This Agreement shall become effective upon the date first above written,
provided that this Agreement shall not take effect unless it has first been
approved: (i) by a vote of a majority of those trustees of the Trust who are not
"interested persons" (as defined in the Investment Company Act) of any party to
this Agreement ("INDEPENDENT Trustees"), cast in person at a meeting called for
the purpose of voting on such approval, and (ii) by vote of a majority of the
Fund's outstanding securities. This Agreement shall continue in effect for a
period more than two years from the date of its execution only so long as such
continuance is specifically approved at least annually by the Board provided
that in such event such continuance shall also be approved by the vote of a
majority of the Independent Trustees cast in person at a meeting called for the
purpose of voting on such approval.
12. ASSIGNMENT AND TERMINATION OF AGREEMENT
This Agreement may be terminated at any time, without the payment of any
penalty by the Adviser or the Sub-Adviser on sixty (60) days' written notice to
the other party. This Agreement will automatically terminate, without the
payment of any penalty, (i) in the event of its assignment (as defined in the
Investment Company Act), or (ii) in the event the Investment Management
Agreement between the Adviser and the Trust is assigned (as defined in the
Investment Company Act) or terminates for any other reason. This Agreement will
also terminate upon written notice to the other party that the other party is in
-A-8-
material breach of this Agreement, unless the other party in material breach of
this Agreement cures such breach to the reasonable satisfaction of the party
alleging the breach within thirty (30) days after written notice.
Notwithstanding the foregoing, no assignment shall be deemed to result from
any changes in the directors, officers or employees of such Sub-Adviser except
as may be provided to the contrary in the Investment Company Act or the rules or
regulations thereunder.
13. AMENDMENTS TO THE AGREEMENT
Except to the extent permitted by the Investment Company Act or the rules
or regulations thereunder or pursuant to no-action relief granted by the SEC
Staff or exemptive relief granted by the SEC, this Agreement may be amended by
the parties only if such amendment, if material, is specifically approved by the
vote of a majority of the outstanding voting securities of a Fund and by the
vote of a majority of the Independent Trustees cast in person at a meeting
called for the purpose of voting on such approval. The required shareholder
approval shall be effective with respect to the Fund if a majority of the
outstanding voting securities of the Fund vote to approve the amendment,
notwithstanding that the amendment may not have been approved by a majority of
the outstanding voting securities of any other Fund affected by the amendment or
all the Funds of the Trust.
Any change, waiver, discharge or termination of a provision of this Agreement,
whether or not such change is deemed to be material, may be made only by an
instrument in writing signed by both the Adviser and the Sub-Adviser.
14. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties with respect to each Fund.
This Agreement may be executed in two or more counterparts, each of which
when so executed shall be deemed to be an original, but such counterparts shall
together constitute one and the same document.
15. HEADINGS
The headings in the sections of this Agreement are inserted for convenience
of reference only and shall not constitute a part hereof.
16. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the address listed below of each applicable party in
person or by registered or certified mail or a private mail or delivery service
providing the sender with notice of receipt or such other address as specified
in a notice duly given to the other parties. Notice shall be deemed given on the
date delivered or mailed in accordance with this paragraph.
For: SPDR Series Trust
Ryan Louvar, Secretary
State Street Bank and Trust Company
Four Copley Place, CPH0326
Boston, MA 02116
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For: SSgA Funds Management, Inc.
Attn: Chief Compliance Officer
State Street Financial Center
1 Lincoln Street
Boston, MA 02111
For: Nuveen Asset Management
333 West Wacker Drive
Chicago IL 60606
Attn: Legal Department
17. SEVERABILITY
Should any portion of this Agreement for any reason be held to be void in law or
in equity, the Agreement shall be construed, insofar as is possible, as if such
portion had never been contained herein.
18. TRUST AND SHAREHOLDER LIABILITY
The Adviser and the Sub-Adviser are hereby expressly put on notice of the
limitation of shareholder liability as set forth in the Trust Declaration and
agree that obligations assumed by the Trust pursuant to this Agreement shall be
limited in all cases to the Trust and its assets, and if the liability relates
to one or more series, the obligations hereunder shall be limited to the
respective assets of the Fund. The Adviser and the Sub-Adviser further agree
that they shall not seek satisfaction of any such obligation from the
shareholders or any individual shareholder of the Fund(s), nor from the Trustees
or any individual Trustee of the Trust.
19. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the Commonwealth of Massachusetts. To the extent
that the laws of the Commonwealth of Massachusetts, or any of the provisions in
this Agreement, conflict with applicable provisions of the Investment Company
Act, the latter shall control.
20. INTERPRETATION
Any question of interpretation of any term or provision of this Agreement
having a counterpart in or otherwise derived from a term or provision of the
Investment Company Act shall be resolved by reference to such term or provision
of the Investment Company Act and to interpretations thereof, if any, by the
United States courts or, in the absence of any controlling decision of any such
court, by rules, regulations or orders of the SEC validly issued pursuant to the
Investment Company Act. Specifically, the terms "vote of a majority of the
outstanding voting securities," "interested persons," "assignment," and
"affiliated persons," as used herein shall have the meanings assigned to them by
Section 2(a) of the Investment Company Act. In addition, where the effect of a
requirement of the Investment Company Act reflected in any provision of this
Agreement is relaxed by a rule, regulation or order of the SEC, whether of
special or of general application, such provision shall be deemed to incorporate
the effect of such rule, regulation or order.
21. RIGHTS OF FUND
The Trust is hereby expressly made a third-party beneficiary of this
Agreement and shall have the full right to enforce any and all provisions of
this Agreement for its benefit and to proceed directly against
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the Sub-Adviser for any breach of any provision of this Agreement or for any
loss, damage, claim, liability arising due to any act or omission on the part of
the Sub-Adviser to the same extent as if the Fund itself were a party to this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first mentioned above.
NUVEEN ASSET MANAGEMENT
By:
Name: [________]
Title: [________]
SSgA FUNDS MANAGEMENT, INC.
By:
Name: [________]
Title: [________]
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APPENDIX A
SUB-ADVISER COMPENSATION
The Adviser shall pay the Sub-Adviser, upon receipt of an invoice, a monthly fee
for its services for the Funds listed below in the amount of 45% of the advisory
fee paid by the Fund to the Adviser set forth below after deducting payments to
fund service providers and fund expenses.
FUND ADVISORY FEE
- ---- ------------
SPDR Barclays Capital Municipal Bond ETF (TFI) 20bps
SPDR Barclays Capital California Municipal Bond ETF (CXA) 20bps
SPDR Barclays Capital New York Municipal Bond ETF (INY) 20bps
SPDR Barclays Capital Short Term Municipal Bond ETF (SHM) 20bps
SPDR S&P VRDO Municipal Bond ETF (VRD) 20bps
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