Prospectus
SSGA
Active Trust
State
Street® US Equity
Premium Income ETF (SPIN)
Principal
U.S. Listing Exchange: Cboe BZX Exchange, Inc.
The U.S.
Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the accuracy or adequacy of this Prospectus. Any
representation to the contrary is a criminal offense. Shares in the Fund are not
guaranteed or insured by the Federal Deposit Insurance Corporation or any other
agency of the U.S. Government, nor are shares deposits or obligations of any
bank. It is possible to lose money by investing in the
Fund.
|
|
|
|
|
Management
fees |
|
|
Distribution
and service (12b-1) fees |
|
|
Other
expenses |
|
|
Total
annual Fund operating expenses |
|
|
Year
1 |
Year
3 |
Year
5 |
Year
10 |
|
$ |
$ |
$ |
$ |
1
Principal
Risks of Investing in the Fund
2
3
4
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year |
Since
Inception |
|
| ||
|
Return
Before Taxes |
|
|
|
Return
After Taxes on Distributions |
|
|
|
Return
After Taxes on Distributions and Sale of Fund Shares
|
|
|
|
S&P
500 Index (reflects no deduction for fees, expenses or
taxes) |
|
|
Portfolio
Management
Investment
Adviser
SSGA FM serves as
the investment adviser to the Fund.
Portfolio
Managers
The professionals
primarily responsible for the day-to-day management of the Fund are Emiliano
Rabinovich, Juan Acevedo and Chris Sierakowski.
Emiliano Rabinovich,
CFA, is a Managing Director of the Adviser and Co-Head of the Systematic Equity
Team in the Americas. He joined the Adviser in 2006.
Juan Acevedo is a
Vice President of the Adviser and a Senior Portfolio Manager in the Systematic
Equity Team. He joined the Adviser in 2000.
Chris Sierakowski,
CFA, is a Managing Director of the Adviser and a Portfolio Manager in the
Fundamental Growth and Core U.S. Equity Group. He joined the Adviser in 2016
through the acquisition of GE Asset Management Incorporated (“GEAM”) by the
ultimate parent company of State Street Investment
Management.
Purchase
and Sale Information
The Fund will issue
(or redeem) Fund Shares to certain institutional investors (typically market
makers or other broker-dealers) only in large blocks of Fund Shares known as
“Creation Units.” Creation Unit transactions are conducted in exchange for the
deposit or delivery of a designated portfolio of in-kind securities and/or cash.
Creation Unit transactions may be conducted in exchange for cash only, which may
cause the Fund to recognize capital gains and to pay out higher annual capital
gain distributions to shareholders than if such transactions had been conducted
in-kind.
6
Individual Fund
Shares may only be purchased and sold on the Cboe BZX Exchange, Inc. (the
“Exchange”), other national securities exchanges, electronic crossing networks
and other alternative trading systems through your broker-dealer at market
prices. Because Fund Shares trade at market prices rather than at NAV, Fund
Shares may trade at a price greater than NAV (premium) or less than NAV
(discount). When buying or selling Fund Shares in the secondary market, you may
incur costs attributable to the difference between the highest price a buyer is
willing to pay to purchase Fund Shares (bid) and the lowest price a seller is
willing to accept for Fund Shares (ask) (the “bid-ask spread”). Recent
information regarding the Fund's NAV, market price, premiums and discounts, and
bid-ask spreads is available at www.statestreet.com/im.
Tax
Information
The Fund intends to
make distributions that may be taxed as ordinary income, qualified dividend
income and/or capital gains, unless you are investing through a tax-advantaged
arrangement, such as a 401(k) plan or individual retirement account. Any
withdrawals made from a tax-advantaged arrangement may be taxable to you. Some
distributions may be treated as a return of capital for tax
purposes.
Payments
to Broker-Dealers and Other Financial Intermediaries
If you purchase Fund
Shares through a broker-dealer or other financial intermediary (such as a bank),
the Adviser or its affiliates may pay the financial intermediary for
certain activities related to the Fund, including educational training programs,
conferences, the development of technology platforms and reporting systems, or
other services related to the sale or promotion of the Fund. These payments may
create a conflict of interest by influencing the broker-dealer or other
intermediary and your salesperson to recommend the Fund over another investment.
Ask your salesperson or visit your financial intermediary's website for more
information.
7
Additional
Strategies Information
Principal
Strategies
Please see “The
Fund's Principal Investment Strategy” section under “Fund Summary” above for a
discussion of the Fund's principal investment strategy. The Fund may invest in
various types of securities and engage in various investment techniques which
are not the principal focus of the Fund and therefore are not described in this
Prospectus. These securities, techniques and practices, together with their
risks, are described in the Statement of Additional Information (the “SAI”)
which you may obtain free of charge by contacting shareholder services (see the
back cover of this Prospectus for the address and phone number).
The Fund has adopted
a non-fundamental investment policy to invest at least 80% of its net assets,
plus the amount of borrowings for investment purposes, in a combination of
equity securities of U.S. companies and income-generating derivatives. The Fund
will provide shareholders with at least 60 days' notice prior to any change in
this non-fundamental 80% investment policy. The Board of Trustees (the
“Board”) of SSGA Active Trust (the “Trust”) may change the Fund's investment
objective, investment strategy and other policies without shareholder approval,
except as otherwise noted in this Prospectus or in the SAI.
Non-Principal
Strategies
Temporary
Defensive Positions. In response to
actual or perceived adverse market, economic, political, or other conditions,
the Fund may (but will not necessarily), without notice, depart from its
principal investment strategies by temporarily investing for defensive purposes.
Temporary defensive positions may include, but are not limited to, cash, cash
equivalents, U.S. government securities, repurchase agreements collateralized by
such securities, money market funds, and high-quality debt investments. If the
Fund invests for defensive purposes, it may not achieve its investment
objective. In addition, the defensive strategy may not work as
intended.
Borrowing
Money.
The Fund may borrow money from a bank as permitted by the Investment Company Act
of 1940, as amended (“1940 Act”), or other governing statutes, by the rules
thereunder, or by the U.S. Securities and Exchange Commission (“SEC”) or other
regulatory agency with authority over the Fund, but only for temporary or
emergency purposes. The 1940 Act presently allows the Fund to borrow from any
bank (including pledging, mortgaging or hypothecating assets) in an amount up to
33 1/3% of its total assets (not including temporary borrowings not in excess of
5% of its total assets). The Fund may also invest in reverse repurchase
agreements or similar financing transactions. Consistent with a rule under the
1940 Act, the Fund may treat such investments as either borrowings or
derivatives transactions. To the extent the Fund treats reverse repurchase
agreements or similar financing transactions as borrowings, such investments
will also be included in the 33 1/3% limit.
Lending
of Securities. The Fund may lend
its portfolio securities in an amount not to exceed 40% of the value of its net
assets via a securities lending program through its securities lending agent,
State Street Bank and Trust Company (“State Street” or the “Lending Agent”), to
brokers, dealers and other financial institutions desiring to borrow securities
to complete transactions and for other purposes. A securities lending program
allows the Fund to receive a portion of the income generated by lending its
securities and investing the respective collateral. The Fund will receive
collateral for each loaned security which is at least equal to the market value
of that security, marked to market each trading day. To the extent the Fund
receives cash collateral, as of the date of this Prospectus, the Adviser expects
to invest such cash collateral in a fund managed by the Adviser that invests in:
a broad range of money market instruments; certificates of deposit and time
deposits of U.S. and foreign banks; commercial paper and other high quality
obligations of U.S. or foreign companies; asset-backed securities;
mortgage-related securities; repurchase agreements; and shares of money market
funds. With respect to loans that are collateralized by cash, the borrower may
be entitled to receive a fee based on the amount of cash collateral. The Fund is
compensated by the difference between the amount earned on the reinvestment of
cash collateral and the fee paid to the borrower. In the case of collateral
other than cash, the Fund is compensated by a fee paid by the borrower equal to
a percentage of the market value of the loaned securities. In the securities
lending program, the borrower generally has the right to vote the loaned
securities; however, the Fund may call loans to vote proxies if a material issue
affecting the Fund's economic interest in the investment is to be voted upon.
Security loans may be terminated at any time by the
Fund.
8
Additional
Risk Information
The following
section provides information regarding the principal risks identified under
“Principal Risks of Investing in the Fund” in the Fund Summary along with
additional risk information.
Principal
Risks
Counterparty
Risk.
The Fund will be subject to credit risk with respect to the counterparties with
which the Fund enters into derivatives contracts and other transactions such as
repurchase agreements or reverse repurchase agreements. The Fund's ability to
profit from these types of investments and transactions will depend on the
willingness and ability of its counterparty to perform its obligations. If a
counterparty fails to meet its contractual obligations, the Fund may be unable
to terminate or realize any gain on the investment or transaction, resulting in
a loss to the Fund. The Fund may experience significant delays in obtaining any
recovery in an insolvency, bankruptcy, or other reorganization proceeding
involving its counterparty (including recovery of any collateral posted by it)
and may obtain only a limited recovery or may obtain no recovery in such
circumstances. If the Fund holds collateral posted by its counterparty, it may
be delayed or prevented from realizing on the collateral in the event of a
bankruptcy or insolvency proceeding relating to the counterparty. Under
applicable law or contractual provisions, including if the Fund enters into an
investment or transaction with a financial institution and such financial
institution (or an affiliate of the financial institution) experiences financial
difficulties, then the Fund may in certain situations be prevented or delayed
from exercising its rights to terminate the investment or transaction, or to
realize on any collateral and may result in the suspension of payment and
delivery obligations of the parties under such investment or transactions or in
another institution being substituted for that financial institution without the
consent of the Fund. Further, the Fund may be subject to “bail-in” risk under
applicable law whereby, if required by the financial institution's authority,
the financial institution's liabilities could be written down, eliminated or
converted into equity or an alternative instrument of ownership. A bail-in of a
financial institution may result in a reduction in value of some or all of its
securities and, if the Fund holds such securities or has entered into a
transaction with such a financial security when a bail-in occurs, the Fund may
also be similarly impacted.
Derivatives
Risk. A
derivative is a financial contract the value of which depends on, or is derived
from, the value of an underlying asset, interest rate, or index. Derivative
transactions typically involve leverage and may have significant volatility. It
is possible that a derivative transaction will result in a loss greater than the
principal amount invested, and the Fund may not be able to close out a
derivative transaction at a favorable time or price. Risks associated with
derivative instruments include potential changes in value in response to
interest rate changes or other market developments or as a result of the
counterparty's credit quality; the potential for the derivative transaction not
to have the effect the Adviser anticipated or a different or less favorable
effect than the Adviser anticipated; the failure of the counterparty to the
derivative transaction to perform its obligations under the transaction or to
settle a trade; possible mispricing or improper valuation of the derivative
instrument; imperfect correlation in the value of a derivative with the asset,
rate, or index underlying the derivative; the risk that the Fund may be required
to post collateral or margin with its counterparty, and will not be able to
recover the collateral or margin in the event of the counterparty's insolvency
or bankruptcy; the risk that the Fund will experience losses on its derivatives
investments and on its other portfolio investments, even when the derivatives
investments may be intended in part or entirely to hedge those portfolio
investments; the risks specific to the asset underlying the derivative
instrument; lack of liquidity for the derivative instrument, including, without
limitation, absence of a secondary trading market; the potential for reduced
returns to the Fund due to losses on the transaction and an increase in
volatility; the potential for the derivative transaction to have the effect of
accelerating the recognition of gain; and legal risks arising from the
documentation relating to the derivative transaction.
Call
Writing Options Strategy Risk. The Fund's use of
call options involves speculation and can lead to losses because of adverse
movements in the price or value of the underlying stock, index, or other asset,
which may be magnified by certain features of the options. The Fund's successful
use of call options depends on the ability of the Adviser to forecast market
movements correctly. For example, if the Fund were to write (sell) a call option
on an index or security based on the Adviser's expectation that the price of the
index or security would fall, but the price were to rise instead, the Fund could
be required to sell the underlying asset upon exercise at a price below the
current market price. When selling a call option, the Fund will receive a
premium; however, this premium may not be enough to offset a loss incurred by
the Fund if the price of the underlying asset is above the strike price by an
amount equal to or greater than the premium. The value of an option may be
adversely affected if the market for the option becomes less liquid or smaller,
and will be affected by changes in the value or yield of the option's
9
underlying asset, an
increase in interest rates, a change in the actual or perceived volatility of
the stock market or the underlying asset and the remaining time to expiration.
Additionally, the value of an option does not increase or decrease at the same
rate as the underlying asset(s). In addition, if the price of the underlying
asset of an option is above the strike price of a written call, the value of the
option, and consequently of the Fund, may decline significantly more than if the
Fund invested directly in the underlying asset instead of using options. The
Fund could experience a loss if its options do not perform as anticipated, or
are not correlated with the performance of their underlying asset or if the Fund
is unable to purchase or liquidate a position because of an illiquid secondary
market. As an option on an underlying asset held by the Fund nears expiration,
they are generally closed out and replaced by another option with a later
expiration (referred to as “rolling the option”). There is no assurance that the
Fund will be able to roll the option or effect a different closing transaction
at any particular time or at an acceptable price. The sale of call options may
create investment leverage. Frequent selling of call options may result in
higher Fund expenses and may result in increased distributions to investors,
including potentially increased distributions that are taxable to individuals as
ordinary income.
The continued use of
the Fund's call writing strategies will impact the extent that the Fund
participates in the positive price returns of the underlying assets and, in
turn, the Fund's returns, both during the term of the sold call options and over
longer time periods. If, for example, each month the Fund were to sell 3%
out-of-the-money call options (i.e., the strike price is 3% higher than the
price of the underlying asset at the time the call option is written) having a
one-month term, the Fund's participation in the positive price returns of the
underlying assets will be capped at 3% in any given month. However, over a
longer period (e.g., 5 months), the Fund should not be expected to participate
fully in the first 21% (i.e., 5 months x 3%) of the positive price returns of
the underlying assets, or the Fund may even lose money, even if the underlying
assets share prices have appreciated by at least that much over such period, if
during any month over that period the underlying assets had a return less than
3%. This example illustrates that both the Fund's participation in the positive
price returns of the underlying assets and its returns will depend not only on
the share prices of the underlying assets but also on the path that the
underlying assets' share prices take over time.
FLEX
Options. The Fund may
utilize FLEX Options guaranteed for settlement by the OCC. The FLEX Options
traded by the Fund are listed on the Chicago Board Options Exchange. Options
positions are marked to market daily. Although guaranteed for settlement by the
OCC, FLEX Options are still subject to counterparty risk with the OCC and may be
less liquid than more traditional exchange-traded option contracts. The Fund
bears the risk that the OCC will be unable or unwilling to perform its
obligations under the FLEX Options contracts. In the unlikely event that the OCC
becomes insolvent or is otherwise unable to meet its settlement obligations, the
Fund could suffer significant losses. FLEX Options are subject to the risk that
they may be less liquid than certain other securities, such as standardized
options. In less liquid markets, termination of FLEX Options may require the
payment of a premium or acceptance of a discounted price and may take longer to
complete and/or the liquidation of a large number of options may significantly
impact the price of the options and may adversely impact the value of your
investment. Additionally, in connection with the creation and redemption of Fund
Shares, to the extent market participants are not willing or able to enter into
FLEX Option transactions with the Fund at prices that reflect the market price
of Fund Shares, the Fund's NAV and, in turn the share price of the Fund, could
be negatively impacted.
Futures
Contract Risk. The risk of loss
relating to the use of futures contracts is potentially unlimited. The ability
to establish and close out positions in futures contracts will be subject to the
development and maintenance of a liquid market. There is no assurance that a
liquid market on an exchange will exist for any particular futures contract or
at any particular time. In the event no such market exists, it might not be
possible to effect closing transactions, and the Fund will be unable to
terminate the futures contract. In using futures contracts, the Fund will be
reliant on the ability of the Adviser to predict market and price movements
correctly; the skills needed to use such futures contracts successfully are
different from those needed for traditional portfolio management. If the Fund
uses futures contracts for hedging purposes, there is a risk of imperfect
correlation between movements in the prices of the futures contracts and
movements in the securities or index underlying the futures contracts or
movements in the prices of the Fund's investments that are the subject of such
hedge. The prices of futures contracts, for a number of reasons, may not
correlate perfectly with movements in the securities or index underlying them.
For example, participants in the futures markets are subject to margin deposit
requirements. Such requirements may cause investors to take actions with respect
to their futures positions that they would not
10
otherwise take. The
margin requirements in the futures markets may be less onerous than margin
requirements in the securities markets in general, and as a result those markets
may attract more speculators than the securities markets do. Increased
participation by speculators in those markets may cause temporary price
distortions. Due to the possibility of price distortion, even a correct forecast
of general market trends by the Adviser still may not result in a successful
futures activity over a very short time period. The risk of a position in a
futures contract may be very large compared to the relatively low level of
margin the Fund is required to deposit. The Fund will typically be required to
post margin with its futures commission merchant in connection with its
transactions in futures contracts. In many cases, a relatively small price
movement in a futures contract may result in immediate and substantial loss or
gain to the investor relative to the size of a required margin deposit. The Fund
will incur brokerage fees in connection with its futures transactions. In the
event of an insolvency of the futures commission merchant or a clearing house,
the Fund may not be able to recover all (or any) of the margin it has posted
with the futures commission merchant, or to realize the value of any increase in
the price of its positions, or it may experience a significant delay in doing
so. The Commodity Futures Trading Commission (the “CFTC”), certain foreign
regulators, and many futures exchanges have established limits referred to as
“position limits” on the maximum net long or net short positions that any person
and certain affiliated entities may hold or control in a particular futures and
options contract. In addition, federal position limits apply to swaps that are
economically equivalent to futures contracts on certain agricultural, metals and
energy commodities. All positions owned or controlled by the same person or
entity, even if in different accounts, must be aggregated for purposes of
complying with position limits. It is possible that the positions of different
clients managed by the Adviser may be aggregated for this purpose. Therefore,
the trading decisions of the Adviser may have to be modified and positions held
by the Fund liquidated in order to avoid exceeding such limits. The modification
of investment decisions or the elimination of open positions, if it occurs, may
adversely affect the performance of the Fund. A violation of position limits
could also lead to regulatory action materially adverse to the Fund's investment
strategy. In addition, exchanges may establish accountability levels applicable
to a futures contract instead of position limits, provided that the futures
contract is not subject to federal position limits. An exchange may order a
person who holds or controls a position in excess of a position accountability
level not to further increase its position, to comply with any prospective limit
that exceeds the size of the position owned or controlled, or to reduce any open
position that exceeds the position accountability level if the exchange
determines that such action is necessary to maintain an orderly market. Position
accountability levels could adversely affect the Fund's ability to establish and
maintain positions in commodity futures contracts to which such levels apply, if
the Fund were to trade in such contracts, and the Fund's ability to achieve its
investment objective.
The Fund may also be
affected by other regimes, including those of the European Union and United
Kingdom, and trading venues that impose position limits on commodity derivative
contracts. Futures contracts traded on markets outside the U.S. are not
generally subject to the same level of regulation by the CFTC or other U.S.
regulatory entities as contracts traded in the U.S., including without
limitation as to the execution, delivery, and clearing of transactions. U.S.
regulators neither regulate the activities of a foreign exchange, nor have the
power to compel enforcement of the rules of the foreign exchange or the laws of
the foreign country in question. Margin and other payments made by the Fund may
not be afforded the same protections as are afforded those payments in the U.S.,
including in connection with the insolvency of an executing or clearing broker
or a clearinghouse or exchange. Certain foreign futures contracts may be less
liquid and more volatile than U.S. contracts.
Equity
Investing Risk. The market prices
of equity securities owned by the Fund may go up or down, sometimes rapidly or
unpredictably. The value of a security may decline for a number of reasons that
may directly relate to the issuer, such as management performance, financial
leverage, non-compliance with regulatory requirements, and reduced demand for
the issuer's goods or services. The values of equity securities also may decline
due to general industry or market conditions that are not specifically related
to a particular company, such as real or perceived adverse economic conditions,
changes in the general outlook for corporate earnings, changes in interest or
currency rates, or adverse investor sentiment generally. In addition, equity
markets tend to move in cycles, which may cause stock prices to fall over short
or extended periods of time.
Large-Capitalization
Securities Risk. Securities issued
by large-capitalization companies may present risks not present in smaller
companies. For example, larger companies may be unable to respond as quickly as
smaller and mid-sized companies to competitive challenges or to changes in
business, product, financial, or other market conditions. Larger companies may
not be able to maintain growth at the high rates that may be achieved by
well-
11
managed smaller and
mid-sized companies, especially during strong economic periods. Returns on
investments in securities of large companies could trail the returns on
investments in securities of smaller and mid-sized companies.
Mid-Capitalization
Securities Risk. The securities of
mid-capitalization companies may be more volatile and may involve more risk than
the securities of larger companies. These companies may have limited product
lines, markets or financial resources, may lack the competitive strength of
larger companies, and may depend on a few key employees. In addition, these
companies may have been recently organized and may have little or no track
record of success. The securities of mid-sized companies may trade less
frequently and in smaller volumes than more widely held securities. The prices
of these securities may fluctuate more sharply than those of other securities,
and the Fund may experience some difficulty in establishing or closing out
positions in these securities at prevailing market prices. There may be less
publicly available information about the issuers of these securities or less
market interest in these securities than in the case of larger companies, both
of which can cause significant price volatility. Some securities of mid-sized
issuers may be illiquid or may be restricted as to resale. Returns on
investments in securities of mid-capitalization companies could trail the
returns on investments in securities of larger or smaller
companies.
Fluctuation
of Net Asset Value, Share Premiums and Discounts Risk. The net asset
value (“NAV”) of Fund Shares will generally fluctuate with changes in the market
value of the Fund's securities holdings. The market prices of Fund Shares will
generally fluctuate in accordance with changes in the Fund's NAV and supply and
demand of Fund Shares on the Exchange. It cannot be predicted whether Fund
Shares will trade below, at or above their NAV. Price differences may be due, in
large part, to the fact that supply and demand forces at work in the secondary
trading market for Fund Shares will be closely related to, but not identical to,
the same forces influencing the prices of the securities trading individually or
in the aggregate at any point in time. The market prices of Fund Shares may
deviate significantly from the NAV of Fund Shares during periods of market
volatility. However, given that Fund Shares can be created and redeemed in
Creation Units (unlike shares of many closed-end funds, which frequently trade
at appreciable discounts from, and sometimes at premiums to, their NAV), the
Adviser believes that large discounts or premiums to the NAV of Fund Shares
should not be sustained over long periods. While the creation/redemption feature
is designed to make it likely that Fund Shares normally will trade close to the
Fund's NAV, disruptions to creations and redemptions or market volatility may
result in trading prices that differ significantly from the Fund's NAV. If an
investor purchases Fund Shares at a time when the market price is at a premium
to the NAV of Fund Shares or sells at a time when the market price is at a
discount to the NAV of Fund Shares, then the investor may sustain
losses.
Leveraging
Risk.
Borrowing transactions, reverse repurchase agreements, certain derivatives
transactions, securities lending transactions and other investment transactions
such as when-issued, delayed-delivery, or forward commitment transactions may
create investment leverage. If the Fund engages in transactions that have a
leveraging effect on the Fund's investment portfolio, the value of the Fund will
be potentially more volatile and all other risks will tend to be compounded.
This is because leverage generally creates investment risk with respect to a
larger base of assets than the Fund would otherwise have and so magnifies the
effect of any increase or decrease in the value of the Fund's underlying assets.
The use of leverage is considered to be a speculative investment practice and
may result in losses to the Fund. Certain derivatives have the potential for
unlimited loss, regardless of the size of the initial investment. The use of
leverage may cause the Fund to liquidate positions when it may not be
advantageous to do so to satisfy repayment, interest payment, or margin
obligations or to meet asset coverage requirements.
Limited
Track Record Risk. The Fund has a
limited track record and there is no assurance that the Fund will grow quickly.
When the Fund's size is small, the Fund may experience low trading volume, which
could lead to wider bid/ask spreads. In addition, the Fund may face the risk of
being delisted if the Fund does not meet certain conditions of the listing
exchange. Any resulting liquidation of the Fund could cause elevated transaction
costs for the Fund and negative tax consequences for its
shareholders.
Liquidity
Risk.
Liquidity risk is the risk that the Fund may not be able to dispose of
investments readily at a favorable time or prices (or at all) or at prices
approximating those at which the Fund currently values them. For example,
certain investments may be subject to restrictions on resale, may trade in the
over-the-counter market or in limited volume, or may not have an active trading
market. Illiquid investments may trade at a discount from comparable, more
liquid investments and may be subject to wide fluctuations in market value. It
may be difficult for the Fund to value illiquid investments accurately. The
market for certain investments may become illiquid under adverse market or
economic
12
conditions
independent of any specific adverse changes in the conditions of a particular
issuer. If the liquidity of the Fund's holdings deteriorates, it may lead to
differences between the market price of Fund Shares and the NAV of Fund Shares,
and could result in the Fund Shares being less liquid. Disposal of illiquid
investments may entail registration expenses and other transaction costs that
are higher than those for liquid investments. The Fund may seek to borrow money
to meet its obligations (including among other things redemption obligations) if
it is unable to dispose of illiquid investments, resulting in borrowing expenses
and possible leveraging of the Fund.
Management
Risk.
The Fund is actively managed. The Adviser's judgments about the attractiveness,
relative value, or potential appreciation of a particular sector, security,
commodity or investment strategy may prove to be incorrect, and may cause the
Fund to incur losses. There can be no assurance that the Adviser's investment
techniques and decisions will produce the desired results.
Market
Risk.
Market prices of investments held by the Fund will go up or down, sometimes
rapidly or unpredictably. The Fund's investments are subject to changes in
general economic conditions, general market fluctuations and the risks inherent
in investment in securities markets. Investment markets can be volatile, and
prices of investments can change substantially due to various factors,
including, but not limited to, economic growth or recession, changes in interest
rates, inflation, changes in actual or perceived creditworthiness of issuers and
general market liquidity. Even if general economic conditions do not change, the
value of an investment in the Fund could decline if the particular industries,
sectors or companies in which the Fund invests do not perform well or are
adversely affected by events. Further, legal, political, regulatory and tax
changes also may cause fluctuations in markets and securities prices. Local,
regional or global events such as war, military conflicts, acts of terrorism,
trade policy changes or disputes, the threat or actual imposition of tariffs,
natural disasters, public health issues, or other events could have a
significant impact on the Fund and its investments. Due to the
interconnectedness of economies and financial markets throughout the world, if a
Fund invests in securities of issuers located in or with significant exposure to
countries experiencing economic and financial difficulties, the value and
liquidity of the Fund's investments may be negatively affected. A widespread
outbreak of an infectious illness, such as COVID-19, and efforts to contain its
spread, may result in market volatility, inflation, reduced liquidity of certain
instruments, disruption in the trading of certain instruments, and systemic
economic weakness. The foregoing could impact the Fund and its investments and
result in disruptions to the services provided to the Fund by its service
providers.
Models
and Data Risk. The Adviser
utilizes proprietary quantitative analysis and model(s) when determining strike
prices for the call options written by the Fund. There is a possibility that one
or all of the model(s) may not function as intended, which may lead to
substantial losses for the Fund. Among other risks of relying on a model and
inputting data, errors in data input, assumptions and/or the design of a model
may occur from time to time and may not be identified and/or corrected by the
Adviser for a significant period or at all, which may magnify the adverse effect
on the Fund of any investment decisions made in reliance on the erroneous model
results. Data used in the construction of model(s) may prove to be inaccurate or
stale, which may result in losses for the Fund.
Non-Diversification
Risk.
As a “non-diversified” fund, the Fund may hold a smaller number of portfolio
securities than many other funds. To the extent the Fund invests in a relatively
small number of issuers, a decline in the market value of a particular security
held by the Fund may affect its value more than if it invested in a larger
number of issuers. The value of Fund Shares may be more volatile than the values
of shares of more diversified funds.
Unconstrained
Sector Risk. The Fund may
invest a substantial portion of its assets within one or more economic sectors
or industries, which may change from time to time. When the Fund focuses its
investments in a particular industry or sector, financial, economic, business,
and other developments affecting issuers in that industry, market, or economic
sector will have a greater effect on the Fund than if it had not focused its
assets in that industry, market, or economic sector, which may increase the
volatility of the Fund.
Tax
Risk.
The call option portion of the Fund's strategy may be subject to U.S. federal
income tax rules that could adversely affect the amount, character and timing of
the Fund's gains and losses, and of distributions to Fund shareholders. The call
options could result in the Fund recognizing significant amounts of short-term
capital gain, which is taxable as ordinary income when distributed to
shareholders. The call options may result in the Fund's investments being
subject to the U.S. federal income tax rules applicable to “straddles.” If
positions held by the Fund are treated as “straddles” for tax purposes, or the
Fund's risk of loss with respect to a position is otherwise diminished as set
forth in applicable regulations, dividends on stocks that are part of such
positions may not be eligible to be treated as qualified dividend income for
non-corporate shareholders or for the dividends received deduction for
13
corporate
shareholders. Under the straddle rules, if applicable: (1) any loss realized on
disposition of one position of a straddle may not be recognized to the extent
that the Fund has unrealized gains with respect to the other position in the
straddle; (2) the Fund's holding period in straddle positions may be suspended
while the straddle exists, which could result in a gain being treated as
short-term capital gain rather than long-term capital gain; (3) the losses
recognized with respect to certain positions that are part of a “mixed straddle”
may be treated as 60% long-term and 40% short-term capital loss; (4) losses
recognized with respect to certain straddle positions that would otherwise be
short-term capital losses may be treated as long-term capital losses; and (5)
the deduction of interest and carrying charges attributable to certain straddle
positions may be deferred.
Technology
Sector Risk. Market or economic
factors impacting technology companies and companies that rely heavily on
technological advances could have a major effect on the value of the Fund's
investments. The value of stocks of technology companies and companies that rely
heavily on technology is particularly vulnerable to rapid changes in technology
product cycles, rapid product obsolescence, government regulation and
competition, both domestically and internationally, including competition from
foreign competitors with lower production costs. Technology companies may have
limited product lines, markets, financial resources or personnel. Stocks of
technology companies and companies that rely heavily on technology, especially
those of smaller, less-seasoned companies, tend to be more volatile than the
overall market. Technology companies are heavily dependent on patent and
intellectual property rights, the loss or impairment of which may adversely
affect profitability. Additionally, companies in the technology sector may face
dramatic and often unpredictable changes in growth rates and competition for the
services of qualified personnel.
Non-Principal
Risks
Authorized
Participants, Market Makers and Liquidity Providers Concentration
Risk.
The Fund has a limited number of financial institutions that may act as
Authorized Participants (“APs”), which are responsible for the creation and
redemption activity for the Fund. In addition, there may be a limited number of
market makers and/or liquidity providers in the marketplace. To the extent
either of the following events occur, Fund Shares may trade at a material
discount to NAV and possibly face delisting: (i) APs exit the business or
otherwise become unable to process creation and/or redemption orders and no
other APs step forward to perform these services, or (ii) market makers and/or
liquidity providers exit the business or significantly reduce their business
activities and no other entities step forward to perform their
functions.
Cash
Transaction Risk. To the extent the
Fund sells portfolio securities to meet some or all of a redemption request with
cash, the Fund may incur taxable gains or losses that it might not have incurred
had it made redemptions entirely in-kind. As a result, the Fund may pay out
higher annual capital gain distributions than if the in-kind redemption process
was used.
Conflicts
of Interest Risk. An investment in
the Fund may be subject to a number of actual or potential conflicts of
interest. For example, the Adviser or its affiliates may provide services to the
Fund, such as securities lending agency services, custodial, administrative,
bookkeeping, and accounting services, transfer agency and shareholder servicing,
securities brokerage services, and other services for which the Fund would
compensate the Adviser and/or such affiliates. The Fund may invest in other
pooled investment vehicles sponsored, managed, or otherwise affiliated with the
Adviser. There is no assurance that the rates at which the Fund pays fees or
expenses to the Adviser or its affiliates, or the terms on which it enters into
transactions with the Adviser or its affiliates will be the most favorable
available in the market generally or as favorable as the rates the Adviser makes
available to other clients. Because of its financial interest, the Adviser may
have an incentive to enter into transactions or arrangements on behalf of the
Fund with itself or its affiliates in circumstances where it might not have done
so in the absence of that interest.
The Adviser and its
affiliates serve as investment advisers to other clients and may make investment
decisions that may be different from those that will be made by the Adviser on
behalf of the Fund. For example, the Adviser may provide asset allocation advice
to some clients that may include a recommendation to invest in or redeem from
particular issuers while not providing that same recommendation to all clients
invested in the same or similar issuers. The Adviser may (subject to applicable
law) be simultaneously seeking to purchase (or sell) investments for the Fund
and to sell (or purchase) the same investment for accounts, funds, or structured
products for which it serves as asset manager, or for other clients or
affiliates. The Adviser and its affiliates may invest for clients in various
securities that are senior, pari passu or junior to, or have interests different
from or adverse to, the securities that are owned by the
14
Fund. The Adviser or
its affiliates, in connection with its other business activities, may acquire
material non-public confidential information that may restrict the Adviser from
purchasing securities or selling securities for itself or its clients (including
the Fund) or otherwise using such information for the benefit of its clients or
itself.
The foregoing does
not purport to be a comprehensive list or complete explanation of all potential
conflicts of interests which may affect the Fund. The Fund may encounter
circumstances, or enter into transactions, in which conflicts of interest that
are not listed or discussed above may arise.
Costs
of Buying and Selling Shares. Investors buying
or selling Fund Shares in the secondary market will pay brokerage commissions or
other charges imposed by brokers, as determined by that broker. Brokerage
commissions are often a fixed amount and may be a significant proportional cost
for investors seeking to buy or sell relatively small amounts of Fund Shares. In
addition, secondary market investors will also incur the cost of the difference
between the price that an investor is willing to pay for Fund Shares (the “bid”
price) and the price at which an investor is willing to sell Fund Shares (the
“ask” price). This difference in bid and ask prices is often referred to as the
“spread” or “bid/ask spread.” The bid/ask spread varies over time for Fund
Shares based on trading volume and market liquidity, and is generally lower if
Fund Shares have more trading volume and market liquidity and higher if Fund
Shares have little trading volume and market liquidity. Further, increased
market volatility may cause increased bid/ask spreads. Due to the costs of
buying or selling Fund Shares, including bid/ask spreads, frequent trading of
Fund Shares may significantly reduce investment results and an investment in
Fund Shares may not be advisable for investors who anticipate regularly making
small investments.
Cybersecurity
Risk.
With the increased use of technologies such as the Internet and the dependence
on computer systems to perform business and operational functions, funds (such
as the Fund) and their service providers (including the Adviser) may be prone to
operational and information security risks resulting from cyber-attacks and/or
technological malfunctions. Furthermore, geopolitical tensions may have
increased the scale and sophistication of deliberate cybersecurity attacks,
particularly those from nation-states or from entities with nation-state
backing. In general, cyber-attacks are deliberate, but unintentional events may
have similar effects. Cyber-attacks include, among others, stealing or
corrupting data maintained online or digitally, preventing legitimate users from
accessing information or services on a website, releasing confidential
information without authorization, and causing operational disruption.
Successful cyber-attacks against, or security breakdowns of, the Fund, the
Adviser, a custodian, the transfer agent, or other affiliated or third-party
service provider may adversely affect the Fund or its shareholders. For
instance, cyber-attacks or technical malfunctions may interfere with the
processing of shareholder or other transactions, affect the Fund's ability to
calculate its NAV, cause the release of private shareholder information or
confidential Fund information, impede trading, cause reputational damage, and
subject the Fund to regulatory fines, penalties or financial losses,
reimbursement or other compensation costs, and additional compliance costs.
Cyber-attacks or technical malfunctions may render records of Fund assets and
transactions, shareholder ownership of Fund Shares, and other data integral to
the functioning of the Fund inaccessible or inaccurate or incomplete. The Fund
may also incur substantial costs for cybersecurity risk management in order to
prevent cyber incidents in the future. The Fund and its shareholders could be
negatively impacted as a result. While the Adviser has established business
continuity plans and systems designed to minimize the risk of cyber-attacks
through the use of technology, processes and controls, there are inherent
limitations in such plans and systems, including the possibility that certain
risks have not been identified, given the evolving nature of this threat. The
use of artificial intelligence and machine learning could exacerbate these risks
or result in cyber security incidents that implicate personal data. The Fund
relies on third-party service providers for many of its day-to-day operations,
and will be subject to the risk that the protections and protocols implemented
by those service providers will be ineffective to protect the Fund from
cyber-attack. The Adviser does not control the cybersecurity plans and systems
put in place by third-party service providers, and such third-party service
providers may have limited indemnification obligations to the Adviser or the
Fund. Similar types of cybersecurity risks or technical malfunctions also are
present for issuers of securities in which the Fund invests, which could result
in material adverse consequences for such issuers, and may cause the Fund's
investment in such securities to lose value.
Money
Market Fund Investment Risk. An investment in a
money market fund is not a deposit of any bank and is not insured or guaranteed
by the FDIC or any other government agency. Certain money market funds seek to
preserve the value of their shares at $1.00 per share, although there can be no
assurance that they will do so, and it is possible to lose money by investing in
such a money market fund. A major or unexpected change in interest rates or a
decline in the credit quality of an issuer or entity providing credit support,
an inactive trading market for money market
15
instruments, or
adverse market, economic, industry, political, regulatory, geopolitical, and
other conditions could cause the share price of such a money market fund to fall
below $1.00. It is possible that such a money market fund will issue and redeem
shares at $1.00 per share at times when the fair value of the money market
fund's portfolio per share is more or less than $1.00. None of State Street
Corporation, State Street, SSGA FM or their affiliates (collectively, the “State
Street Entities”) guarantee the value of an investment in a money market fund at
$1.00 per share. Investors should have no expectation of capital support to a
money market fund from State Street Entities. Other money market funds price and
transact at a “floating” NAV that will fluctuate along with changes in the
market-based value of fund assets. Shares sold utilizing a floating NAV may be
worth more or less than their original purchase price. Recent changes in the
regulation of money market funds may affect the operations and structures of
money market funds. A money market fund may be permitted or required to impose
redemption fees during times of market stress.
Portfolio
Turnover Risk. The Fund may
engage in frequent trading of its portfolio securities. Fund turnover generally
involves a number of direct and indirect costs and expenses to the Fund,
including, for example, brokerage commissions, dealer mark-ups and bid/asked
spreads, and transaction costs on the sale of securities and reinvestment in
other securities. The costs related to increased portfolio turnover have the
effect of reducing the Fund's investment return, and the sale of securities by
the Fund may result in the realization of taxable capital gains, including
short-term capital gains.
Regulatory
Risk.
Governmental and regulatory actions may have unexpected or adverse consequences
on particular markets, strategies, or investments, which may adversely impact
the Fund and impair how it is managed. Policy and legislative changes in the
United States and in other countries may affect aspects of financial regulation,
and may in some instances contribute to decreased liquidity and increased
volatility in the financial markets. The impact of these changes on the markets,
and the practical implications for market participants, may not be fully known
for some time.
Securities
Lending Risk. The Fund may lend
portfolio securities in an amount not to exceed 40% of the value of its net
assets. For these purposes, net assets shall exclude the value of all assets
received as collateral for the loan. Such loans may be terminated at any time.
Any such loans must be continuously secured by collateral maintained on a
current basis in an amount at least equal to the market value of the securities
loaned by the Fund, marked to market each trading day. The Fund will receive the
amount of all dividends, interest and other distributions on the loaned
securities; however, the borrower has the right to vote the loaned securities.
The Fund will call loans to vote proxies if a material issue affecting the
investment is to be voted upon. Efforts to recall such securities promptly may
be unsuccessful, especially for foreign securities or thinly traded securities.
Securities lending involves the risk that the Fund may lose money because the
borrower of the loaned securities fails to return the securities in a timely
manner or at all. Should the borrower of the securities fail financially, the
Fund may experience delays in recovering the securities or exercising its rights
in the collateral. Loans are made only to borrowers that are deemed by the
securities lending agent to be of good financial standing. In a loan
transaction, the Fund will also bear the risk of any decline in value of
securities provided as collateral or acquired with cash collateral. The Fund
will attempt to minimize this risk by limiting the investment of cash collateral
to high quality instruments of short maturity either directly on behalf of the
lending Fund or through one or more joint accounts or funds, which may include
those managed by the Adviser. In addition, the Fund will be subject to the risk
that any income generated by lending its securities or reinvesting cash
collateral is lower than any fees the Fund has agreed to pay a borrower. The
Adviser will take into account the tax impact to shareholders of substitute
payments for dividends when overseeing the Fund's securities lending
activity.
Trading
Issues.
Although Fund Shares are listed for trading on the Exchange and may be listed or
traded on U.S. and non-U.S. stock exchanges other than the Exchange, there can
be no assurance that an active trading market for the Fund Shares will develop
or be maintained. Trading in Fund Shares on the Exchange may be halted due to
market conditions or for reasons that, in the view of the Exchange, make trading
in Fund Shares inadvisable. In addition, trading in Fund Shares on the Exchange
is subject to trading halts caused by extraordinary market volatility pursuant
to Exchange “circuit breaker” rules. Similar to the shares of operating
companies listed on a stock exchange, Fund Shares may be sold short and are
therefore subject to the risk of increased volatility in the trading price of
the Fund's shares. While the Fund expects that the ability of Authorized
Participants to create and redeem Fund Shares at NAV should be effective in
reducing any such volatility, there is no guarantee that it will eliminate the
volatility associated with such short sales. There can be no assurance that the
requirements of the Exchange necessary to maintain the listing of the Fund will
continue to be met or will remain unchanged or that Fund Shares will trade with
any volume, or at all, on any stock exchange.
16
Management
Investment
Adviser
SSGA FM serves as
the investment adviser to the Fund pursuant to an investment advisory agreement
(“Investment Advisory Agreement”) between the Trust and the Adviser, and,
subject to the oversight of Board, is responsible for the investment management
of the Fund. The Adviser provides an investment management program for the Fund
and manages the investment of the Fund's assets. In addition, the Adviser
provides administrative, compliance and general management services to the Fund.
The Adviser is a wholly-owned subsidiary of State Street Global Advisors, Inc.,
which itself is a wholly-owned subsidiary of State Street Corporation. The
Adviser is registered with the SEC under the Investment Advisers Act of 1940, as
amended. The Adviser and certain other affiliates of State Street Corporation
make up State Street Investment Management, the investment management arm of
State Street Corporation. As of December 31, 2025, the Adviser managed
approximately $1.34 trillion in assets and State Street Investment Management
managed approximately $5.66 trillion in assets. The Adviser's principal business
address is One Congress Street, Boston, Massachusetts 02114.
For the services
provided to the Fund under the Investment Advisory Agreement, the Fund pays the
Adviser annual fees based on a percentage of the Fund's average daily net assets
as set forth below:
|
State
Street US Equity Premium Income ETF |
0.25
% |
From time to time,
the Adviser may waive all or a portion of its management fee. The Adviser pays
all expenses of the Fund other than the management fee, acquired fund fees and
expenses associated with holdings of acquired funds for cash management
purposes, brokerage expenses, taxes, interest, fees and expenses of the
Independent Trustees (including any Trustee's counsel fees), litigation expenses
and other extraordinary expenses.
SSGA FM, as the
investment adviser for the Fund, may hire one or more sub-advisers to oversee
the day-to-day investment activities of the Fund. The sub-advisers are subject
to oversight by the Adviser. The Adviser and the Trust have received
an exemptive order from the SEC that permits the Adviser, with the approval of
the Board, including a majority of the Independent Trustees, of the Trust, to
retain and amend existing sub-advisory agreements with unaffiliated investment
sub-advisers for the Fund without submitting the sub-advisory agreement to a
vote of the Fund's shareholders. The Trust will notify shareholders in the event
of any change in the identity of such sub-adviser or sub-advisers. The Adviser
has ultimate responsibility for the investment performance of the Fund due to
its responsibility to oversee each sub-adviser and recommend their hiring,
termination and replacement. The Adviser is not required to disclose fees paid
to any unaffiliated sub-adviser retained pursuant to the order.
A summary of the
factors considered by the Board in connection with the initial approval of the
Investment Advisory Agreement for the Fund is available in the Fund's Form N-CSR
filing with the SEC for the period ended December 31, 2024.
Portfolio
Managers.
The Adviser manages the Fund using a team of investment professionals. The team approach is used to create an environment that encourages the flow of investment ideas. The portfolio managers within the team work together in a cohesive manner to develop and enhance techniques that drive the investment process for the investment strategy. This approach requires portfolio managers to share a variety of responsibilities, including investment strategy and analysis, while retaining responsibility for the implementation of the strategy within any particular portfolio. The approach also enables the team to draw upon the resources of other groups within State Street Investment Management. The portfolio management team is overseen by State Street Investment Management's internal governance.
The Adviser manages the Fund using a team of investment professionals. The team approach is used to create an environment that encourages the flow of investment ideas. The portfolio managers within the team work together in a cohesive manner to develop and enhance techniques that drive the investment process for the investment strategy. This approach requires portfolio managers to share a variety of responsibilities, including investment strategy and analysis, while retaining responsibility for the implementation of the strategy within any particular portfolio. The approach also enables the team to draw upon the resources of other groups within State Street Investment Management. The portfolio management team is overseen by State Street Investment Management's internal governance.
The professionals
primarily responsible for the day-to-day management of the Fund are
Emiliano Rabinovich, Juan Acevedo and Chris Sierakowski.
Emiliano Rabinovich,
CFA, is a Managing Director of State Street Investment Management and Co-Head of
the Systematic Equity Team in the Americas. Within the Systematic Equity Team,
he is the strategy leader for their Tax Aware, Smart Beta and ESG products. Mr.
Rabinovich manages a varied mix of portfolios that include both traditional
indexing as well as a variety of alternative beta mandates. He also manages
local and global strategies and fund structures, which include separately
managed accounts, commingled funds, mutual funds and ETFs. Mr. Rabinovich joined
State Street Investment Management in Montreal in 2006, where he served as the
Head of the Indexing team in
17
Canada. He has been
working in the investment management field since 2003. Mr. Rabinovich holds a
Bachelor of Arts in Economics from the University of Buenos Aires and a Master
of Arts in Economics from the University of CEMA. He has also earned the
Chartered Financial Analyst (CFA) designation and is a member of CFA Society
Boston, Inc.
Juan Acevedo is a
Vice President of State Street Investment Management and a Senior Portfolio
Manager in the Systematic Equity Team. He is responsible for managing equity
index, smart beta and tax-efficient quantitative strategies for institutional
clients and high net worth individuals. Prior to his current role, Mr. Acevedo
was a portfolio manager in State Street Investment Management's Implementation
Group, where he was responsible for the daily management of active and passive
strategies, with an additional focus on mass construction of separately managed
accounts. Mr. Acevedo received a Bachelor of Arts in International Business from
Providence College. Additionally, he received a Master of Science in Investment
Management and a Master of Business Administration with a Finance concentration
from the Questrom School of Business at Boston University.
Chris Sierakowski,
CFA, is a Managing Director of State Street Investment Management and a
Portfolio Manager in the Fundamental Growth and Core U.S. Equity Group. Mr.
Sierakowski joined State Street Investment Management through the acquisition of
GEAM by the ultimate parent company of State Street Investment Management in
July 2016. Prior to joining State Street Investment Management, Mr. Sierakowski
served in various investment roles at GEAM since 1999, including portfolio
management and as a research analyst providing coverage for the software,
computer hardware, semiconductors, business services, and payments industries.
Prior to GEAM, Mr. Sierakowski spent several years in consulting and as an
officer in the U.S. Army. Mr. Sierakowski has a Bachelor of Science in Economics
from the United States Military Academy and a Master of Business Administration
in Finance, Strategy, and Accounting from the University of Chicago Booth School
of Business. He earned the Chartered Financial Analyst (CFA) designation and has
been a member of the CFA Institute since 2002.
Additional
information about the portfolio managers' compensation, other accounts managed
by the portfolio managers, and the portfolio managers' ownership of the Fund is
available in the SAI.
Administrator,
Sub-Administrator, Custodian and Transfer Agent. The Adviser serves
as Administrator for the Fund. State Street, part of State Street Corporation,
serves as the Sub-Administrator for the Fund and the Custodian for the Fund's
assets, and serves as Transfer Agent to the Fund.
Lending
Agent.
State Street serves as the securities lending agent for the Trust. For its
services, the lending agent would typically receive a portion of the net
investment income, if any, earned on the collateral for the securities
loaned.
Distributor. State Street Global
Advisors Funds Distributors, LLC serves as the Fund's distributor (“SSGA FD” or
the “Distributor”) pursuant to the Distribution Agreement between SSGA FD and
the Trust. The Distributor will not distribute Fund Shares in less than Creation
Units, and it does not maintain a secondary market in Fund Shares. The
Distributor may enter into selected dealer agreements with other broker-dealers
or other qualified financial institutions for the sale of Creation Units of Fund
Shares.
Additional
Information. The Board oversees
generally the operations of the Fund and the Trust. The Trust enters into
contractual arrangements with various parties, including, among others, the
Fund's investment adviser, the Fund's investment sub-adviser, custodian,
transfer agent, and accountants, who provide services to the Fund. Shareholders
are not parties to any such contractual arrangements or intended beneficiaries
of those contractual arrangements, and those contractual arrangements are not
intended to create in any shareholder any right to enforce them directly against
the service providers or to seek any remedy under them directly against the
service providers.
This Prospectus
provides information concerning the Trust and the Fund that you should consider
in determining whether to purchase Fund Shares. Neither this Prospectus nor the
related SAI is intended, or should be read, to be or give rise to an agreement
or contract between the Trust or the Fund and any investor, or to give rise to
any rights in any shareholder or other person other than any rights under
federal or state law that may not be waived.
Additional
Purchase and Sale Information
Fund Shares are
listed for secondary trading on the Exchange and individual Fund Shares may only
be purchased and sold in the secondary market through a broker-dealer. The
secondary markets are closed on weekends and also are generally closed on the
following holidays: New Year's Day, Dr. Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day (observed), Juneteenth National Independence Day,
Independence Day, Labor Day,
18
Thanksgiving Day and
Christmas Day. The Exchange may close early on the business day before certain
holidays and on the day after Thanksgiving Day. Exchange holiday schedules are
subject to change without notice. If you buy or sell Fund Shares in the
secondary market, you will pay the secondary market price for Fund Shares. In
addition, you may incur customary brokerage commissions and charges and may pay
some or all of the spread between the bid and the offered price in the secondary
market on each leg of a round trip (purchase and sale) transaction.
The trading prices
of Fund Shares will fluctuate continuously throughout trading hours based on
market supply and demand rather than the Fund's NAV, which is calculated at the
end of each business day. Fund Shares will trade on the Exchange at prices that
may be above (i.e., at a premium) or
below (i.e., at a discount),
to varying degrees, the daily NAV of Fund Shares. The trading prices of Fund
Shares may deviate significantly from the Fund's NAV during periods of market
volatility. Given, however, that Fund Shares can be issued and redeemed daily in
Creation Units, the Adviser believes that large discounts and premiums to NAV
should not be sustained over long periods.
The Exchange will
disseminate, every fifteen seconds during the regular trading day, an indicative
optimized portfolio value (“IOPV”) relating to the Fund. The IOPV calculations
are estimates of the value of the Fund's NAV per Fund Share. Premiums and
discounts between the IOPV and the market price may occur. This should not be
viewed as a “real-time” update of the NAV per Fund Share. The IOPV is based on
the current market value of the published basket of portfolio securities and/or
cash required to be deposited in exchange for a Creation Unit and does not
necessarily reflect the precise composition of the Fund's actual portfolio
at a particular point in time. Moreover, the IOPV is generally determined by
using current market quotations and/or price quotations obtained from
broker-dealers and other market intermediaries and valuations based on current
market rates. The IOPV may not be calculated in the same manner as the NAV,
which (i) is computed only once a day, (ii) unlike the calculation of the IOPV,
takes into account Fund expenses, and (iii) may be subject, in accordance with
the requirements of the 1940 Act, to fair valuation at different prices than
those used in the calculations of the IOPV. The IOPV price is based on quotes
and closing prices from the securities' local market converted into U.S. dollars
at the current currency rates and may not reflect events that occur subsequent
to the local market's close. Therefore, the IOPV may not reflect the best
possible valuation of the Fund's current portfolio. Neither the Fund nor
the Adviser or any of their affiliates are involved in, or responsible for, the
calculation or dissemination of such IOPVs and make no warranty as to their
accuracy.
The Fund does not
impose any restrictions on the frequency of purchases and redemptions; however,
the Fund reserves the right to reject or limit purchases at any time as
described in the SAI. When considering that no restriction or policy was
necessary, the Board evaluated the risks posed by market timing activities, such
as whether frequent purchases and redemptions would interfere with the efficient
implementation of the Fund's investment strategy, or whether they would cause
the Fund to experience increased transaction costs. The Board considered that,
unlike traditional mutual funds, Fund Shares are issued and redeemed only in
large quantities of shares known as Creation Units, available only from the Fund
directly, and that most trading in the Fund occurs on the Exchange at prevailing
market prices and does not involve the Fund directly. Given this structure, the
Board determined that it is unlikely that (a) market timing would be attempted
by the Fund's shareholders or (b) any attempts to market time the Fund by
shareholders would result in negative impact to the Fund or its
shareholders.
Distributions
Dividends
and Capital Gains. As a Fund
shareholder, you are entitled to your share of the Fund's income and net
realized gains on its investments. The Fund pays out substantially all of its
net earnings to its shareholders as “distributions.”
The Fund may
earn dividends from stocks, interest from debt securities and, if participating,
securities lending income. Additionally, the Fund may also generate
incremental income from the selling of call option contracts. The Fund will
generally realize short-term capital gains or losses whenever it sells or
exchanges assets held for one year or less. Net short-term capital gains will
generally be treated as ordinary income when distributed to shareholders. The
Fund will generally realize long-term capital gains or losses whenever it sells
or exchanges assets held for more than one year. Net capital gains (the excess
of the Fund's net long-term capital gains over its net short-term capital
losses) are distributed to shareholders as “capital gain
distributions.”
Income dividend
distributions, if any, are generally distributed to shareholders monthly, but
may vary significantly from period to period.
19
Net capital gains
for the Fund are distributed at least annually. Dividends may be declared and
paid more frequently or at any other time to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the “Code”). Some
portion of each distribution may result in a return of capital. You will be
notified regarding the portion of the distribution that represents a return of
capital.
Distributions in
cash may be reinvested automatically in additional whole Fund Shares only if the
broker through whom you purchased Fund Shares makes such option available.
Distributions which are reinvested will nevertheless be taxable to the same
extent as if such distributions had not been reinvested.
Portfolio
Holdings Disclosure
The Fund's portfolio
holdings disclosure policy is described in the SAI. In addition, the identities
and quantities of the securities held by the Fund are disclosed on the Fund's
website.
Additional
Tax Information
The following
discussion is a summary of some important U.S. federal income tax
considerations generally applicable to an investment in the Fund. Your
investment in the Fund may have other tax implications. Please consult your tax
advisor about federal, state, local, foreign or other tax laws applicable to
you. Investors, including non-U.S. investors, may wish to consult the SAI tax
section for additional disclosure.
The Fund has elected
or will elect to be a regulated investment company (“RIC”) and intends to
qualify each year to be treated as such. A RIC is generally not subject to tax
at the corporate level on income and gains that are distributed to shareholders.
However, the Fund's failure to qualify for treatment as a RIC may result in
corporate level taxation, and consequently, a reduction in income available for
distribution to shareholders.
Taxes
on Distributions. In general, your
distributions are subject to federal income tax when they are paid, whether you
take them in cash or reinvest them in the Fund. The income dividends and
short-term capital gains distributions you receive from the Fund will be taxed
as ordinary income or qualified dividend income. Subject to certain limitations,
dividends that are reported by the Fund as qualified dividend income are taxable
to noncorporate shareholders at reduced rates. Any distributions of the Fund's
net capital gains are taxable as long-term capital gain regardless of how long
you have owned Fund Shares. Long-term capital gains are generally taxed to
noncorporate shareholders at reduced rates. Distributions in excess of the
Fund's current and accumulated earnings and profits are treated as a tax-free
return of capital to the extent of your basis in Fund Shares, and, in general,
as capital gain thereafter.
In general,
dividends may be reported by the Fund as qualified dividend income if they are
attributable to qualified dividend income received by the Fund, which, in
general, includes dividend income from taxable U.S. corporations and certain
foreign corporations (i.e., certain foreign corporations incorporated in a
possession of the United States or in certain countries with a comprehensive tax
treaty with the United States, and certain other foreign corporations if the
stock with respect to which the dividend is paid is readily tradable on an
established securities market in the United States), provided that the Fund
satisfies certain holding period requirements in respect of the stock of such
corporations and has not hedged its position in the stock in certain ways. A
dividend generally will not be treated as qualified dividend income if the
dividend is received with respect to any share of stock held by the Fund for
fewer than 61 days during the 121-day period beginning at the date which is 60
days before the date on which such share becomes ex-dividend with respect to
such dividend or, in the case of certain preferred stock, for fewer than 91 days
during the 181-day period beginning 90 days before such date. These holding
period requirements will also apply to your ownership of Fund Shares. Holding
periods may be suspended for these purposes for stock that is hedged.
Additionally, income derived in connection with the Fund's securities lending
activities will not be treated as qualified dividend income.
U.S. individuals
with income exceeding specified thresholds are subject to a 3.8% Medicare
contribution tax on all or a portion of their “net investment income,” which
includes taxable interest, dividends and certain capital gains (generally
including capital gain distributions and capital gains realized upon the sale of
Fund Shares). This 3.8% tax also applies to all or a portion of the
undistributed net investment income of certain shareholders that are estates and
trusts.
20
Certain tax-exempt
educational institutions will be subject to an excise tax on net investment
income. For these purposes, certain dividends and capital gain distributions,
and certain gains from the disposition of Fund Shares (among other categories of
income), are generally taken into account in computing a shareholder's net
investment income.
If you lend your
Fund Shares pursuant to securities lending arrangements you may lose the ability
to treat Fund dividends (paid while the Fund Shares are held by the borrower) as
qualified dividend income. You should consult your financial intermediary
or tax advisor to discuss your particular circumstances.
Distributions paid
in January, but declared by the Fund in October, November or December of the
previous year, payable to shareholders of record in such a month, may be taxable
to you in the calendar year in which they were declared. The Fund will inform
you of the amount of your ordinary income dividends, qualified dividend income,
and capital gain distributions shortly after the close of each calendar
year.
A distribution will
reduce the Fund's NAV per Fund Share and may be taxable to you as ordinary
income or capital gain even though, from an investment standpoint, the
distribution may constitute a return of capital.
Derivatives
and Other Complex Securities. The Fund may invest
in complex securities. These investments may be subject to numerous special and
complex rules. These rules could affect whether gains and losses recognized by
the Fund are treated as ordinary income or capital gain, accelerate the
recognition of income to the Fund and/or defer the Fund's ability to recognize
losses. In turn, these rules may affect the amount, timing or character of the
income distributed to you by the Fund. You should consult your personal tax
advisor regarding the application of these rules.
Foreign
Currency Transactions. The Fund's
transactions in foreign currencies, foreign currency denominated debt
obligations and certain foreign currency options, futures contracts and forward
contracts (and similar instruments) may give rise to ordinary income or loss to
the extent such income or loss results from fluctuations in the value of the
foreign currency concerned.
Foreign
Income Taxes. Investment income
received by the Fund from sources within foreign countries may be subject to
foreign income taxes withheld at the source. The United States has entered into
tax treaties with many foreign countries which may entitle the Fund to a reduced
rate of such taxes or exemption from taxes on such income. It is impossible to
determine the effective rate of foreign tax for the Fund in advance since the
amount of the assets to be invested within various countries is not known. If
more than 50% of the total assets of the Fund at the close of its taxable year
consist of certain foreign stocks or securities, the Fund may elect to “pass
through” to you certain foreign income taxes (including withholding taxes) paid
by the Fund. If the Fund makes such an election, you will be considered to have
received as an additional dividend your share of such foreign taxes, but you may
be entitled to either a corresponding tax deduction in calculating your taxable
income, or, subject to certain limitations, a credit in calculating your federal
income tax. No deduction for such taxes will be permitted to individuals in
computing their alternative minimum tax liability. If the Fund does not so
elect, the Fund will be entitled to claim a deduction for certain foreign taxes
incurred by the Fund. Under certain circumstances, if the Fund receives a refund
of foreign taxes paid in respect of a prior year, the value of Fund Shares could
be affected or any foreign tax credits or deductions passed through to
shareholders in respect of the Fund's foreign taxes for the current year could
be reduced.
Taxes
on Exchange-Listed Share Sales. Any capital gain or
loss realized upon a sale of Fund Shares is generally treated as long-term
capital gain or loss if Fund Shares have been held for more than one year and as
short-term capital gain or loss if Fund Shares have been held for one year or
less, except that any capital loss on the sale of Fund Shares held for six
months or less is treated as long-term capital loss to the extent that capital
gain dividends were paid with respect to the Fund Shares.
Taxes
on Creations and Redemptions of Creation Units. A person who
exchanges securities for Creation Units generally will recognize a gain or loss.
The gain or loss will be equal to the difference between the market value of the
Creation Units at the time and the exchanger's aggregate basis in the securities
surrendered plus any cash paid for the Creation Units. A person who exchanges
Creation Units for securities will generally recognize a gain or loss equal to
the difference between the exchanger's basis in the Creation Units and the
aggregate market value of the securities and the amount of cash received. The
Internal Revenue Service (the “IRS”), however, may assert that a loss realized
21
upon an exchange of
securities for Creation Units cannot be deducted currently under the rules
governing “wash sales,” or on the basis that there has been no significant
change in economic position. Persons exchanging securities should consult their
own tax advisor with respect to whether wash sale rules apply and when a loss
might be deductible.
Under current
federal tax laws, any capital gain or loss realized upon a redemption (or
creation) of Creation Units is generally treated as long-term capital gain or
loss if the Fund Shares (or securities surrendered) have been held for more than
one year and as a short-term capital gain or loss if the Fund Shares (or
securities surrendered) have been held for one year or less.
If you create or
redeem Creation Units, you will be sent a confirmation statement showing how
many Fund Shares you purchased or sold and at what price.
The Trust on behalf
of the Fund has the right to reject an order for Creation Units if the
purchaser (or a group of purchasers) would, upon obtaining the Fund Shares so
ordered, own 80% or more of the outstanding shares of the Fund and if, pursuant
to Section 351 of the Code, the Fund would have a basis in the securities
different from the market value of the securities on the date of deposit.
The Trust also has the right to require information necessary to determine
beneficial share ownership for purposes of the 80% determination. If the
Trust does issue Creation Units to a purchaser (or a group of purchasers) that
would, upon obtaining the Fund Shares so ordered, own 80% or more of the
outstanding shares of the Fund, the purchaser (or group of purchasers) will not
recognize gain or loss upon the exchange of securities for Creation
Units.
If the Fund
redeems Creation Units in cash, it may bear additional costs and recognize more
capital gains than it would if it redeems Creation Units in
kind.
Certain
Tax-Exempt Investors. The Fund, if
investing in certain limited real estate investments and other publicly traded
partnerships, may be required to pass through certain “excess inclusion income”
and other income as “unrelated business taxable income” (“UBTI”). Prior to
investing in the Fund, tax-exempt investors sensitive to UBTI should consult
their tax advisors regarding this issue and IRS pronouncements addressing the
treatment of such income in the hands of such investors.
Non-U.S.
Investors. Ordinary income
dividends paid by the Fund to shareholders who are non-resident aliens or
foreign entities will generally be subject to a 30% U.S. withholding
tax (other than distributions reported by the Fund as interest-related
dividends and short-term capital gain dividends), unless a lower treaty rate
applies or unless such income is effectively connected with a U.S. trade or
business. In general, the Fund may report interest-related dividends to the
extent of its net income derived from U.S. source interest, and the Fund
may report short-term capital gain dividends to the extent its net short-term
capital gain for the taxable year exceeds its net long-term capital loss.
Gains on the sale of
Fund Shares and dividends that are, in each case, effectively connected with the
conduct of a trade or business within the U.S. will generally be subject to U.S.
federal net income taxation at regular income tax rates. Non-U.S. shareholders
that own, directly or indirectly, more than 5% of the Fund's shares are urged to
consult their own tax advisors concerning special tax rules that may apply to
their investment.
Unless certain
non-U.S. entities that hold Fund Shares comply with IRS requirements that will
generally require them to report information regarding U.S. persons investing
in, or holding accounts with, such entities, a 30% withholding tax may
apply to distributions payable to such entities. A non-U.S. shareholder may
be exempt from the withholding described in this paragraph under an applicable
intergovernmental agreement between the U.S. and a foreign government, provided
that the shareholder and the applicable foreign government comply with the terms
of such agreement.
Backup
Withholding. The Fund will be
required in certain cases to withhold (as “backup withholding”) on amounts
payable to any shareholder who (1) has provided the Fund either an incorrect tax
identification number or no number at all, (2) is subject to backup withholding
by the IRS for failure to properly report payments of interest or dividends, (3)
has failed to certify to the Fund that such shareholder is not subject to backup
withholding, or (4) has not certified that such shareholder is a U.S. person
(including a U.S. resident alien). The backup withholding rate is currently 24%.
Backup withholding will not be applied to payments that have been subject to the
30% withholding tax on shareholders who are neither citizens nor permanent
residents of the United States.
22
Certain
Potential Tax Reporting Requirements. Under U.S. Treasury
regulations, if a shareholder recognizes a loss of $2 million or more for an
individual shareholder or $10 million or more for a corporate shareholder (or
certain greater amounts over a combination of years), the shareholder must file
with the IRS a disclosure statement on Form 8886. Direct shareholders of
portfolio securities are in many cases excepted from this reporting requirement,
but under current guidance shareholders of a RIC are not excepted. Significant
penalties may be imposed for the failure to comply with the reporting
requirements. The fact that a loss is reportable under these regulations does
not affect the legal determination of whether the taxpayer's treatment of the
loss is proper. Shareholders should consult their tax advisors to determine the
applicability of these regulations in light of their individual
circumstances.
Other
Tax Issues. The Fund may be
subject to tax in certain states where the Fund does business (or is
treated as doing business as a result of its investments). Furthermore, in those
states which have income tax laws, the tax treatment of the Fund and of Fund
shareholders with respect to distributions by the Fund may differ from federal
tax treatment.
The foregoing
discussion summarizes some of the consequences under current federal income tax
law of an investment in the Fund. It is not a substitute for personal tax
advice. Consult your personal tax advisor about the potential tax consequences
of an investment in the Fund under all applicable tax laws.
General
Information
The Trust was
organized as a Massachusetts business trust on March 30, 2011. If
shareholders of the Fund are required to vote on any matters, shareholders are
entitled to one vote for each Fund Share they own. Annual meetings of
shareholders will not be held except as required by the 1940 Act and other
applicable law. See the SAI for more information concerning the Trust's form of
organization.
Management
and Organization
The Fund is a
separate series of the Trust, which is an open-end registered management
investment company.
From time to time,
the Fund may advertise yield and total return figures. Yield is a historical
measure of dividend income, and total return is a measure of past dividend
income (assuming that it has been reinvested) plus capital appreciation. Neither
yield nor total return should be used to predict the future performance of the
Fund.
Morgan, Lewis &
Bockius LLP serves as counsel to the Trust, including the Fund. Ernst &
Young LLP serves as the independent registered public accounting firm and will
audit the Fund's financial statements annually.
Financial
Highlights
These financial
highlight tables are intended to help you understand the Fund's financial
performance for the period from the Fund's commencement of operations through
June 30, 2025, and the six-month period ended December 31, 2025. Certain
information reflects the performance results for a single Fund Share. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Ernst & Young LLP, the
Trust's independent registered public accounting firm, whose report, along with
the Fund's financial highlights and financial statements, are included in the
Fund's Form N-CSR filing, which is available upon request. Any references to
Notes in these financial highlight tables refer to the “Notes to Financial
Statements” section of the Fund's financial statements, and the financial
information included in these tables should be read in conjunction with the
financial statements incorporated by reference in the SAI.
23
SSGA
ACTIVE TRUST
FINANCIAL
HIGHLIGHTS
Selected
data for a share outstanding throughout each period
|
|
State
Street US Equity Premium Income ETF | |
|
|
Six-month
Period Ended
12/31/25(a) |
For
the Period 9/5/24*-
6/30/25 |
|
Net
asset value, beginning of period |
$29.72 |
$30.00 |
|
Income
(loss) from investment operations:
|
|
|
|
Net
investment income (loss) (b) |
0.18 |
0.22 |
|
Net
realized and unrealized gain (loss) (c) |
3.39 |
1.98 |
|
Total
from investment operations |
3.57 |
2.20 |
|
Distributions
to shareholders from:
|
|
|
|
Net
investment income |
(0.91
) |
(0.86
) |
|
Return
of capital |
— |
(1.62
) |
|
Total
distributions |
(0.91
) |
(2.48
) |
|
Net
asset value, end of period |
$32.38 |
$29.72 |
|
Total
return (d) |
12.20
% |
7.72
% |
|
Ratios
and Supplemental Data:
|
|
|
|
Net
assets, end of period (in 000s) |
$55,693 |
$11,292 |
|
Ratios
to average net assets:
|
|
|
|
Total
expenses |
0.25
%(e) |
0.28
%(e) |
|
Net
investment income (loss) |
0.76
%(e) |
0.90
%(e) |
|
Portfolio
turnover rate (f) |
18
%(g) |
43
%(g) |
|
* |
Commencement
of operations. |
|
(a) |
Effective
August 14, 2025, the Board of Trustees approved a change in fiscal year
end for the Fund from June 30 to December 31. |
|
(b) |
Per
share numbers have been calculated using average shares outstanding, which
more appropriately presents the per share data for the
year. |
|
(c) |
Amounts
shown in this caption for a share outstanding may not accord with the
change in aggregate gains and losses in securities for the fiscal period
because
of the timing of sales and repurchases of Fund shares in relation to
fluctuating market values for the Fund. |
|
(d) |
Total
return is calculated assuming a purchase of shares at net asset value on
the first day and a sale at net asset value on the last day of each period
reported.
Distributions are assumed, for the purpose of this calculation, to be
reinvested at net asset value per share on the respective payment dates of
each
distribution. Total returns for periods of less than one year are not
annualized. Broker commission charges are not included in this
calculation.
|
|
(e) |
Annualized. |
|
(f) |
Portfolio
turnover rate excludes securities received or delivered from in-kind
processing of creations or redemptions. |
|
(g) |
Not
annualized. |
24
Where
to Learn More About the Fund
This Prospectus does
not contain all the information included in the Registration Statement filed
with the SEC with respect to Fund Shares. The SAI, Form N-CSR and the annual and
semi-annual reports to shareholders, each of which has been filed with the SEC,
provide more information about the Fund. The Prospectus and SAI may be
supplemented from time to time. In the annual report, you will find a
discussion of the market conditions and investment strategies that significantly
affected the Fund's performance during the Fund's last fiscal year, as
applicable. In the Form N-CSR, you will find the Fund's annual and semi-annual
financial statements. The SAI is
incorporated herein
by reference (i.e., it is legally part
of this Prospectus). These materials may be obtained without charge, upon
request, by writing to the Distributor, State Street Global Advisors Funds
Distributors, LLC, One Congress Street, Boston, Massachusetts 02114,
by visiting the Fund's website at www.statestreet.com/im or by calling the
following number:
Investor
Information: 1-866-787-2257
The Registration
Statement, including this Prospectus, the SAI, and the exhibits as well as any
shareholder reports may be reviewed on the EDGAR Database on the SEC's website
(http://www.sec.gov). You may also obtain copies of this and other information,
after paying a duplicating fee, by electronic request at the following E-mail
address: [email protected].
Shareholder
inquiries may be directed to the Fund in writing to State Street Global Advisors
Funds Distributors, LLC, One Congress Street, Boston, Massachusetts
02114, or by calling the Investor Information number listed
above.
No
person has been authorized to give any information or to make any
representations other than those contained in this Prospectus in connection with
the offer of Fund Shares, and, if given or made, the information or
representations must not be relied upon as having been authorized by the Trust
or the Fund. Neither the delivery of this Prospectus nor any sale of Fund Shares
shall under any circumstance imply that the information contained herein is
correct as of any date after the date of this Prospectus.
Dealers
effecting transactions in Fund Shares, whether or not participating in this
distribution, are generally required to deliver a Prospectus. This is in
addition to any obligation of dealers to deliver a Prospectus when acting as
underwriters.
SPDRSUSEQPREPROThe
Trust's Investment Company Act Number is 811-22542.