Filed Pursuant to Rule 485(a)
As filed with the Securities and Exchange Commission on June 2, 2000.
Registration No. 33-19229; 811-5430
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ( X )
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Pre-Effective Amendment No. _____ (_____)
Post-Effective Amendment No. 57 ( X )
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 ( X )
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Amendment No. 59 ( X )
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(Check appropriate box or boxes)
SSgA FUNDS
(Exact Name of Registrant as Specified in Charter)
909 A Street
Tacoma, Washington 98402
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (253) 627-7001
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Name and Address of Copies to:
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Agent for Service:
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Karl J. Ege Philip H. Newman, Esq.
Secretary and General Counsel Goodwin, Procter & Hoar
Frank Russell Investment Management Company Exchange Place
909 A Street Boston, Massachusetts 02109
Tacoma, Washington 98402
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Approximate Date of Proposed Public Offering: As soon as
practicable after the effective date of this Registration Statement.
It is proposed that this filing will become effective under Rule 485:
( ) immediately upon filing pursuant to paragraph (b)
( ) on (_____________) pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)
( ) on (date) pursuant to paragraph (a)(1)
( X ) 75 days after filing pursuant to paragraph (a)(2)
( ) on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following:
( ) This post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
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SSgA FUNDS
Form N-1A Cross Reference Sheet
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PART A ITEM NUMBER AND CAPTION PROSPECTUS CAPTION
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1. Front and Back Cover Pages Front and Back Cover Pages
2. Risk/Return Summary: Investments, Risks and Investment Objectives and Principal Investment
Performance Strategies; Additional Information about the
Fund's Objectives Investment Strategies
and Risks; Principal Risks; Risk and Return
3. Risk/Return Summary: Fee Table Risk and Return
4. Investment Objectives, Principal Strategies, Investment Objectives and Principal Investment Strategies;
and Related Risks Principal Risks;
(a) Investment Objective
(b) Investment Objectives and Principal Investment Strategies;
Portfolio Turnover; Additional Information about the Fund's Objectives,
Investment Strategies and Risks
(c) Principal Risks
5. Management's Discussion of Fund Performance Annual Reports to Shareholders
6. Management, Organization and Capital Structure Management of the Fund
(a)(1), (2) Investment Advisor
(a)(3) Not Applicable
(b) Not Applicable
7. Shareholder Information
(a) Pricing of Fund Shares
(b) Purchase of Fund Shares
(c) Redemption of Fund Shares
(d) Dividends and Distributions
(e) Taxes
(f) Not Applicable
8. Distribution Arrangements
(a) Fees and Expenses of the Fund
(b) Fees and Expenses of the Fund
(c) Not Applicable
9. Financial Highlights Information Financial Highlights
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PART B ITEM NUMBER AND CAPTION STATEMENT OF ADDITIONAL INFORMATION CAPTION
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10. Cover Page and Table of Contents Cover Page and Table of Contents
11. Fund History Fund History
12. Description of the Fund and Its Investments Description of the Fund and its Investment Risks
and Risks
(a) Description of the Fund and its Investment Risks
(b) Investment Strategies; Investment Risks
(c) Investment Restrictions
(d) Temporary Defensive Position
(e) Portfolio Turnover
13. Management of the Fund
(a), (b), (c) Board of Trustees and Officers
(d) Compensation
(d) Not Applicable
14. Control Persons and Principal Holders of Controlling and Principal Shareholders
Securities
(a), (b), (c) Controlling and Principal Shareholders
15. Investment Advisory and Other Services Investment Advisory and Other Services
(a) Advisor
(b) Distributor
(c), (d) Distribution and Shareholder Servicing Arrangements
(e) Not Applicable
(f) Not Applicable
(g) Distribution Plan and Shareholder Servicing
Arrangements--Distribution Plan
(h) Administrator; Transfer Agent and Custodian;
Independent Public Accountants
16. Brokerage Allocation and Other Policies Brokerage Practices and Commissions
(a), (b), (c) Brokerage Practices and Commissions
(d) Not Applicable
(e) Brokerage Practices and Commissions
17 Capital Stock and Other Securities Capitalization and Voting
(a) Capitalization and Voting
(b) Not Applicable
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18. Purchase, Redemption and Pricing of Shares
(a) Pricing of Fund Shares
(b) Not Applicable
(c) Pricing of Fund Shares
(d) Not Applicable
19 Taxation of the Fund Taxes
20. Underwriters
(a) Distributor
(b), (c) Not Applicable
21. Calculation of Performance Data Calculation of Performance Data
22. Financial Statements Financial Statements
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Part C
Information required to be included in Part C is set forth under the
appropriate item, so numbered in Part C of this Registration Statement.
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Filed pursuant to Rule 485(a)
File Nos. 33-19229; 811-5430
SSgA FUNDS
One International Place
Boston, Massachusetts 02110
www.ssgafunds.com
CustomerOwner[sm] Program Customer Service: 1-800-___-____
www.CustomerOwner.com
OWNx[sm] CustomerOwner[sm] Fund
As with all mutual funds, the Securities and Exchange Commission has neither
determined that the information in this prospectus is accurate and complete, nor
approved or disapproved of these securities. Any representation to the contrary
is a criminal offense.
The Fund's investment objective is capital appreciation. The Fund seeks its
objective by investing primarily in equity securities of companies that
participate in the OWNx.com[sm] CustomerOwner Program sponsored by OWNx.com.
PROSPECTUS DATED _______________, 2000
SUBJECT TO COMPLETION ___________, 2000
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective This prospectus shall not constitute an offer to sell or the
solicitation of any offer to buy nor shall there by any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
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TABLE OF CONTENTS
INVESTMENT STRATEGIES AND PRINCIPAL RISKS..................................... 3
INVESTMENT OBJECTIVE.......................................................... 3
PRINCIPAL INVESTMENT STRATEGIES............................................... 3
PRINCIPAL RISKS OF INVESTING IN THE FUND...................................... 3
RISK AND RETURN............................................................... 4
FEES AND EXPENSES OF THE FUND................................................. 5
MANAGEMENT OF THE FUND........................................................ 6
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENT
OBJECTIVE, INVESTMENT STRATEGIES AND RISKS.................................... 7
SHAREHOLDER INFORMATION....................................................... 9
PURCHASE OF FUND SHARES....................................................... 9
REDEMPTION OF FUND SHARES--CUSTOMEROWNER PROGRAM MEMBERS..................... 13
REDEMPTION OF FUND SHARES--NON-MEMBERS....................................... 14
DISTRIBUTION SERVICES AND SHAREHOLDER SERVICING ARRANGEMENTS................ 17
PRICING OF FUND SHARES........................................................17
DIVIDENDS AND DISTRIBUTIONS...................................................18
TAXES.........................................................................18
FINANCIAL HIGHLIGHTS..........................................................19
ADDITIONAL INFORMATION ABOUT THE FUND.........................................21
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INVESTMENT STRATEGIES AND PRINCIPAL RISKS
INVESTMENT OBJECTIVE
The Fund's investment objective is capital appreciation. The Fund seeks its
objective by investing primarily in equity securities of companies that
participate in the CustomerOwner Program sponsored by OWNx.com. Of course, there
is no assurance that the Fund will achieve its objective.
This objective may be changed by the Fund's trustees without shareholder
approval.
PRINCIPAL INVESTMENT STRATEGIES
The Fund seeks its objective by investing primarily in equity securities of
companies that participate in the CustomerOwner Program sponsored by OWNx.com
(referred to as participating companies). Under normal market conditions, the
Fund will invest at least 65% of its total assets in equity securities of
participating companies. As of the date of this prospectus, there are over 50
companies participating in the program. Participating companies may be added or
deleted at any time. A current listing is available on the CustomerOwner website
(www.CustomerOwner.com).
The participating companies will be combined into a customized index for use by
the portfolio manager. Each participating company will be weighted according to
the aggregate purchases of products and services from that company by members of
the CustomerOwner Program. The portfolio manager will purchase stock of each
participating company according to this weighting formula, subject to regulatory
requirements. This portion of the Fund may be rebalanced periodically in
accordance with the weighting formula. If a participating company stops
participating in the CustomerOwner Program, the Fund may retain that security or
may sell all or a portion of that company's securities, at the discretion of the
portfolio manager. The portfolio manager may sell the securities of a
participating company if in the portfolio manager's judgment the company has
experienced a significant event warranting a sale. At no time will more than 10%
of the Fund be invested in the securities or voting stock of any one
participating company.
Under normal market conditions, the remaining 35% of the Fund is actively
managed by investing in equity securities on the basis of a proprietary,
systematic investment process. The Fund management team employs an active equity
strategy using bottom-up, quantitative stock selection from among the securities
included in the Russell 3000(R) Value Index based on a multi-factor return
forecasting model, coupled with risk-controlled, benchmark oriented portfolio
construction. This structured and disciplined approach seeks over time to
provide long-term total returns in excess of the Russell 3000 Value Index. By
providing a substantial portfolio of actively managed shares, the concentration
of any one stock in the Fund is reduced, allowing the investment management team
the flexibility to build a portfolio which will be competitive as market cycles
evolve over time.
PRINCIPAL RISKS OF INVESTING IN THE FUND
Investment in the Fund, like any investment, has risks. The principal risks of
investing in the Fund are described below. Fund shares will rise and fall in
value and there is a risk you could lose money by investing in the Fund. There
can be no assurance that the Fund will achieve its
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objective. An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
Market Risk. The prices of securities held by the Fund will rise or fall due to
changing economic, political or market conditions, or due to a company's
individual situation. Some securities held by the Fund may be quite volatile,
meaning that their prices can change significantly in a short time. The value of
the Fund's shares could fluctuate significantly over time.
Investing in Participating Companies. The Fund invests in participating
companies based solely on their participation in the CustomerOwner Program, and
not on their investment merits. The size of the Fund's investment in each
participating company depends on purchases of products and services from that
company by members of the CustomerOwner Program. This means that the Fund may be
precluded from investing in companies with good investment prospects, and may
invest significantly in companies with poorer investment prospects. The Fund may
invest significant percentages of its assets in companies in the same or similar
lines of business. The Fund may underperform or outperform other stock funds
that are not subject to these limitations. Participating companies could stop
participating in the CustomerOwner Program at any time, and the portfolio
manager may choose to sell all or a portion of these companies' securities.
Large and Small Cap Issuers. The Fund may invest in larger and smaller
companies. Larger companies may not change as quickly as smaller companies in
response to competitive challenges. Larger companies also tend not to be able to
maintain the high growth rates of well-managed smaller companies, especially
during strong economic periods. Smaller companies may be particularly
susceptible to market downturns because of limited product lines, markets,
distribution channels or financial and management resources. Shares of smaller
companies may be less liquid than the shares of larger companies. As a result,
their prices may be more volatile, causing the Fund's share price to be
volatile.
OWNx.com. OWNx.com is the sponsor and administrator of the CustomerOwner
Program. Pursuant to an agreement with the Fund's advisor, OWNx.com provides the
portfolio manager with the information needed to create the customized index of
participating companies. OWNx.com develops this information pursuant to its
proprietary, patent-pending technology. OWNx.com was organized in 1999 for the
purpose of developing the CustomerOwner Program. If for any reason OWNx.com were
not able to provide the information to the portfolio manager, the Fund may not
invest in accordance with its principal strategy. The CustomerOwner Program is a
product of OWNx.com and is not an obligation of the Fund or State Street Bank
and Trust Company.
RISK AND RETURN
The OWNx.com Fund has not been in existence for a full calendar year. Therefore,
performance information is not available. The Fund commenced operations on
_______, 2000.
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FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
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Maximum Sales Charge (Load) Imposed on Purchases None
Maximum Deferred Sales Charge (Load) None
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends or Other Distributions None
Annual Account Maintenance Fee $15*
Initial Account Setup Fee $10**
Telephone Transaction Fee $ 5
Check Processing Fee $ 5***
Account Closing Fee $15**
On-line Transaction Fee None
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* This fee is deducted quarterly ($3.75/quarter) from all accounts,
including Individual Retirement Accounts (IRAs). The account
maintenance fee will be deducted from your account balance quarterly.
** The Initial Account Setup Fee is waived for all accounts that are
established on-line. The Account Setup and Closing Fees are paid
directly to the Program Transfer Agent by the investor and are
therefore not included in the annual fund operating expenses below.
*** This fee is waived for ACH transactions processed on-line or
established with automatic transactions. However, for investors
purchasing by check, the $5 fee must be sent in as a separate check
made payable to ______________.
The fees listed above are designed to encourage the efficient management of Fund
resources through on-line investing. The fees charged for human intervention and
manual transaction processing are used to offset the costs generated by those
transactions.
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Annual Fund Operating Expenses
(expenses that are deducted from fund assets)
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(as a percentage of average daily net assets)
Management Fee .40%
Distribution and Service (12b-1) Fees(1) .25
Other Expenses(2, 3) .55
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Total Annual Fund Operating Expenses 1.20
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Example
These examples are intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds.
These examples assume that you invest $10,000 and $1,000 in the Fund for the
time periods indicated, regardless of whether you redeem all of your shares at
the end of those periods. The examples also assume that your investment has a 5%
return each year and that the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:
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$10,000 Investment
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1 year 3 years
$122 $381
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$1,000 Investment
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1 year 3 years
$12 $38
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Long term shareholders of the Fund may pay more in Rule 12b-1 fees than the
economic equivalent of the maximum front end sales charge permitted by the NASD.
MANAGEMENT OF THE FUND
Investment Advisor. State Street, 225 Franklin Street, Boston, Massachusetts
02110, serves as the investment advisor for the Fund and directs the investment
of the Fund in accordance with the Fund's investment objective, policies and
restrictions.
------------------------
(1) The ratio includes .05% for 12b-1 Distribution and .20% for 12b-1
Shareholder Servicing Fees.
(2) Other expenses include a .35% fee to OWNx.com for technology and support
services.
(3) OWNx, as a technology and support services provider, has contractually
agreed to reimburse the CustomerOwner Fund for expenses in excess of 1.20%
up to a maximum of .35% of average daily net assets on an annual basis until
December 31, 2002.
6
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State Street is one of the largest providers of securities processing and record
keeping services for US mutual funds and pension funds. State Street Global
Advisors ("SSgA") is the investment management business of State Street, a
200-year old pioneer and leader in the world of financial services. State Street
is a wholly-owned subsidiary of State Street Corporation, a publicly held bank
holding company. State Street, with over $720 billion under management as of May
4, 2000, provides complete global investment management services from offices in
North America, South America, Europe, Asia, Australia and the Middle East.
For these services, the Fund pays State Street an annual management fee,
calculated daily and paid monthly, of .40% of the average daily net assets of
the Fund.
Portfolio Management. Mr. Michael J. Feehily, CFA, Principal of SSgA, is the
portfolio manager primarily responsible for investment decisions regarding the
Fund. Mr. Feehily joined State Street Corporation in August 1992 in the Global
Operations area before moving to the Performance & Analytics group in 1994. He
helped to develop and work with a proprietary application which is used to
analyze venture capital, real estate, and other private investments. Mr. Feehily
holds a BS in Finance, Investments and Economics from Babson College and an MBA
in Finance from Bentley College. There are three other portfolio managers who
assist in managing the Fund.
Under certain circumstances, as provided in the Investment Company Act of 1940
(the 1940 Act), the Fund may be terminated and assets distributed to
shareholders.
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENT
OBJECTIVE, INVESTMENT STRATEGIES AND RISKS
The investment objective of the Fund as stated above may be changed by the
Fund's trustees without shareholder approval. The investment policies described
below reflect the Fund's current practices. In addition to the principal risks
explained above, other risks are explained in some of the descriptions of the
investment policies below. There can be no assurance that these investment
policies will ensure achievement of the fund's investment objective.
Futures Contracts and Options on Futures. To equitize cash, the Fund may enter
into futures contracts that relate to securities in which they may directly
invest and indices comprised of such securities and may purchase and write call
and put options on such contracts. The Fund may also purchase futures and
options if cheaper than the underlying stocks.
A financial futures contract is a contract to buy or sell a specified quantity
of financial instruments such as US Treasury bills, notes and bonds, commercial
paper and bank certificates of deposit or the cash value of a financial
instrument index at a specified future date at a price agreed upon when the
contract is made.
Stock Index Futures. Stock Index Futures may be used by the Fund to equitize all
cash and cash equivalents so that the Fund may remain fully invested in the
equity market. This will enable the Fund to facilitate demand for same day
redemptions. A stock index futures contract is a contract to buy or sell
specified units of a stock index at a specified future date at a price agreed
upon when the contract is made. The value of a unit is based on the current
value of the contract index. Under such contracts no delivery of the actual
stocks making up the index takes place. Rather, upon expiration of the contract,
settlement is made by exchanging cash in an amount equal to the
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difference between the contract price and the closing price of the index at
expiration, net of variation margin previously paid.
Substantially all futures contracts are closed out before settlement date or
called for cash settlement. A futures contract is closed out by buying or
selling an identical offsetting futures contract. Upon entering into a futures
contract, the Fund is required to deposit an initial margin with the Custodian
for the benefit of the futures broker. The initial margin serves as a good faith
deposit that the Fund will honor its futures commitments. Subsequent payments
(called "variation margin") to and from the broker are made on a daily basis as
the price of the underlying investment fluctuates.
There are certain investment risks in using derivatives such as futures
contracts and options on futures as a hedging technique. Loss can result from a
lack of correlation between changes in the value of derivative instruments and
the portfolio assets (if any) being hedged, the potential illiquidity of the
markets for derivative instruments, or risks arising from margin requirements
and related leverage factors associated with such transactions. The use of these
management techniques also involves the risk of loss if the Advisor is incorrect
in its expectation of fluctuations in securities prices, interest rates or
currency prices.
American Depository Receipts (ADRs). The common stocks the Fund may invest in
include American Depository Receipts (ADRs). ADRs represent the right to receive
securities of foreign issuers deposited in a domestic bank or a correspondent
bank. ADRs do not eliminate the risk inherent in investing in securities of
foreign issuers, such as: less publicly available information; lack of uniform
accounting, auditing, and financial reporting standards, practices and
requirements; lower trading volume, less liquidity and more volatility for
securities; less government regulation of securities exchanges, brokers and
listed companies; political or social instability; and the possibility of
expropriation or confiscatory taxation, each of which could adversely affect
investment in such securities. For purposes of the Fund's investment policies,
the Fund's investments in ADRs and similar instruments will be deemed to be
investments in the equity securities representing securities of foreign issuers
into which they may be converted.
Defensive Strategies. The Fund may, from time to time, take temporary defensive
positions that are inconsistent with the Fund's principal investment strategies
in attempting to respond to adverse market, political or other conditions. When
investing for defensive purposes, the Fund may invest in high quality money
market and other short-term instruments and may not be pursuing its investment
objective.
Investments in Other Funds. To the extent permitted under the 1940 Act and
exemptive rules and orders thereunder, the Fund may seek to achieve its
investment objective by investing solely in the shares of other investment
companies that have substantially similar investment objectives and policies.
These other investment companies may charge management fees which shall be borne
by the Fund. Investments in other funds may include investing in exchange traded
funds (ETFs).
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SHAREHOLDER INFORMATION
PURCHASE OF FUND SHARES
Distribution and Eligible Investors. Shares of the Fund are offered without a
sales commission by ________________ [to be determined] ("Program Distributor")
through the CustomerOwner Program or directly to the investor. To become a
member of the CustomerOwner Program, you must first complete the on-line
application that can be found by visiting the www.CustomerOwner.com website or
calling CustomerOwner Program Customer Service at 1-800-___-____ for an
application and prospectus. As a part of the application process, you will be
asked to consent to certain matters, including your consent to electronic
delivery of all reports, statements and other information that the Fund or
OWNx.com may deliver to you and to the delivery of one set of such information
per address of record (referred to as "householding"). Further, you will be
asked to authorize OWNx.com to deliver to the Fund, for your account, all
Ownership Credits credited to your account in connection with your purchases
through the CustomerOwner Program for conversion into shares of the Fund. This
authorization will continue until revoked by you.
Shares of the Fund are offered without a sales commission to investors who are
not participants in the CustomerOwner Program by Russell Fund Distributors, Inc.
("Direct Distributor"). Please call 1-800-___-____ to obtain a prospectus and
application.
Purchases by CustomerOwner Program Members. If you elect to become a member in
the CustomerOwner Program you may accumulate Ownership Credits as described in
the CustomerOwner membership agreement. Ownership Credits ("OC's") are credits
earned based upon your purchases from participating companies. OC's have no cash
value and are not transferable. The OC's are collected in your CustomerOwner
earnings portfolio. Your OC's vest over a three-month period from the day they
are posted to your earnings portfolio. When vested, they are eligible for
conversion to shares of the CustomerOwner Fund. You will be notified of your
eligibility to open a CustomerOwner Fund account once you have at least 2,500
vested OC's available. Please consult the CustomerOwner membership agreement for
a complete discussion of the Ownership Credits. Ownership Credits are not an
obligation of the Fund, State Street Bank and Trust Company or Russell Fund
Distributors, Inc.
Once you have authorized the opening of your CustomerOwner Fund account with the
initial 2,500 vested OC's, every time 1,000 or more of your OC's vest, they
automatically convert into shares of the CustomerOwner Fund the following month.
You may revoke the authorization to convert OC's to Fund shares at any time.
Fund shares will be priced at the net asset value per share next determined
after vesting and conversion. Once this conversion is complete, you own shares
of the Fund. An electronic statement will be updated on the next business day
after a transaction is made, and statements will be available quarterly. You can
access your statements on-line at www.CustomerOwner.com.
How to Accumulate Ownership Credits. Once you have become a member in the
CustomerOwner Program you may accumulate OC's by purchasing products or services
sold by participating companies. A listing of and information on participating
companies is available on the CustomerOwner.com website. OWNx.com will track
your purchases and CustomerOwner Program Account balance, along with your
investment in the Fund.
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Minimum Initial and Subsequent Investments and Account Balance. For
CustomerOwner program members, the Fund requires a minimum investment of $25.
For CustomerOwner program members, to reach this $25 the minimum initial
accumulation is 2,500 OC's. Investors who are not members of the CustomerOwner
program may make initial cash purchases with a minimum of $1,000. For members
and non-members, subsequent cash investments must be at least $100, or a
CustomerOwner program member's accumulated OC's vest and convert into Fund
shares as described above. An investment in Fund shares may be subject to a
liquidation at the Fund's discretion if the account balance is less than $25 for
CustomerOwner Program members, or $1,000 for non-members, as a result of
shareholder redemptions.
______________________[TBD], the CustomerOwner Program's transfer agent
("Program Transfer Agent/Recordkeeper"), or State Street Bank ("Direct Transfer
Agent" or "State Street") will give shareholders 60 days' notice that the
account will be closed unless an investment is made to increase the account
balance to the applicable required minimum. Failure to bring the account balance
to the required minimum may result in the closing of the account at the net
asset value next determined on the day the account is closed and mailing the net
proceeds to the shareholder's address shown on the applicable Transfer Agent's
records. The Fund reserves the right to reject any purchase order.
For CustomerOwner Program members, the Fund reserves the right to close the
account due to a failure to bring the balance up to the required minimum. You
will be notified prior to the closing of the account and given an opportunity to
bring the balance up to the required minimum. Otherwise, the account close-out
fee of $15.00 and a check processing fee of $5.00 will be deducted by the
Program Transfer Agent/Recordkeeper before the proceeds are mailed to the
address of record. Any purchases by check, whether initial or subsequent, will
be charged a $5.00 processing fee by the Program Transfer Agent/Recordkeeper. A
separate check for the $5.00 fee must accompany the purchase. Failure to send in
a separate check for the fee will result in the application and checks being
returned. Please make all checks payable to the SSgA Funds or Program Transfer
Agent/Recordkeeper.
Order and Payment Procedures for Direct Investors. There are several ways to
invest in the Fund if you are not a member of the CustomerOwner Program. The
Fund requires a purchase order in good form, which consists of a completed and
signed application for each new account. For additional information including
the IRA package, additional applications or other forms, please call:
If you are NOT a member of the
CustomerOwner Program--
SSgA Funds Customer Service Department
1-800-___-____
or write:
SSgA Funds
P.O. Box 8317
Boston, MA 02266-8317
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Order and Payment Procedures for Program Members with Existing Accounts. Program
members may purchase additional shares for their account by completing the
appropriate section of the application. If you are a program member and wish to
purchase additional shares, please contact:
If you are a CustomerOwner Program Member
purchasing additional shares--
CustomerOwner Program Customer Service
1-800-___-____
Members may also access this information on-line at
www.CustomerOwner.com.
Members of the CustomerOwner Program may also make subsequent investments
of $100 or more monthly, quarterly or annually by direct deposit through
ACH by debiting your bank checking account. Please complete the appropriate
section of the application or talk to the Program Transfer Agent.
Purchase Dates and Times for Direct Purchases. For non-CustomerOwner
Program members, Fund shares may be purchased on any business day. A
business day is one on which the New York Stock Exchange is open for
regular trading. All purchases must be made in US dollars. Purchase
orders in good form (described below) and payments for Fund shares must
be received by the Direct Transfer Agent prior to the close of the
regular trading session of the New York Stock Exchange, which is
ordinarily 4 p.m. Eastern time (the "Pricing Time"), to be effective on
the date received. If an order or payment is received after the Pricing
Time, the order will be effective on the next business day.
Mail. If you are not a member of the CustomerOwner Program, please mail
the completed application and check. Additional investments should also
be made by check. You must include the Fund name and account number on
your check, or use the remittance form attached to the confirmation
statement (in the return envelope provided). All checks should be made
payable to the SSgA Funds or State Street Bank, the Direct Transfer
Agent. If you are using a servicing agent or broker-dealer, please
verify with them the proper address or instructions before writing and
mailing your check. All purchase requests should be mailed to one of
the following addresses:
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Regular Mail: Registered, Express or Certified Mail:
SSgA Funds SSgA Funds
P.O. Box 8317 2 Heritage Drive
Boston, MA 02266-8317 North Quincy, MA 02171
</TABLE>
All purchases made by check should be in US dollars from a US
bank. Third party checks (e.g., checks not made payable to SSgA
Funds or State Street Bank, the Direct Transfer Agent), starter
checks and checks drawn on credit card accounts will not be
accepted. The Direct Transfer Agent will charge a $10.00 initial
account setup fee on mail purchases if it is a new account being
established as well as a $5.00 processing fee for all purchases
made by check. Please include a separate check for the $10.00
initial setup fee and another check for the $5.00 check processing
fee (please do not include both fees in one check) payable to SSgA
Funds or State Street Bank. Failure to include a separate check
for each fee will result in the checks and application being
returned to you.
Federal Funds Wire for Direct Investors. Investors who are not
members of the CustomerOwner Program may make initial investments
of $1,000 or more or subsequent investments of $100 or more by
wiring federal funds to State Street, as Direct Transfer Agent,
once the application has been received and the account
established. CustomerOwner Program members may make subsequent
investments of at least $100 by wiring federal funds to State
Street, as Direct Transfer Agent. In either case, follow the
directions below by instructing the wiring bank to wire federal
funds to:
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
ABA #0110-0002-8
DDA #9904-631-0
SSgA OWNx CustomerOwner Fund
Account Number and Registration
Dollar Amount Per Account (if one wire is to cover more than
one purchase)
All wires must be received by State Street Bank prior to 4 p.m.
Eastern time in order to receive that day's closing price. Any
wires received by State Street Bank after 4 p.m. will be purchased
the following business day.
If all wires, checks and transfers are not identified properly as
instructed above, the Direct Transfer Agent may delay, reject
and/or incorrectly apply the settlement of your purchase. Any
wires received at State Street Bank will be purchased as indicated
on the wire at the next determined net asset value and will earn
the dividend declared on the next business day. If a wire cannot
be applied due to incomplete information (e.g., there is no fund
name or registration number identified on the wire, or if the
account number is invalid), it will be returned to the sending
bank. The shares will be purchased at the next determined net
asset value only when a valid wire has been received.
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Automatic Investment Plan (AIP). For investors who are not members
of the CustomerOwner Program, once the initial investment has been
made, you may make subsequent investments of $100 or more monthly,
quarterly or annually by direct deposit through the Automatic
Clearing House (ACH) by debiting your bank checking account.
Please complete the appropriate section of the application and
attach a voided personal check to correctly code your account with
the bank instructions. Once this option has been established, you
may call the SSgA Funds Customer Service Department at
1-800-___-____ prior to 3 p.m. Eastern time to make additional
automatic purchases, to change the amount of the existing
automatic purchase, or to stop it. Shares will be purchased at the
offering price next determined following receipt of the order by
the Direct Transfer Agent. A telephone transaction fee of $5.00
will be charged for all automatic purchases called into the
Customer Service Department. This fee is waived if the transaction
is initiated on-line or established automatically.
Initial Account Set-Up and Annual Account Maintenance Fees. The Fund
charges a one-time Initial Account Set-Up Fee of $10.00 for all accounts.
This fee is waived for all accounts established on-line. The Fund also
charges each account (including IRA accounts) an Annual Maintenance Fee of
$15.00 ($3.75 per quarter), regardless of the method by which your account
was established. The account maintenance fee will be deducted from your
account balance quarterly.
REDEMPTION OF FUND SHARES--CUSTOMEROWNER PROGRAM MEMBERS
Members of the CustomerOwner Program may redeem Fund shares on any Fund business
day by making an on-line redemption request on the CustomerOwner.com website or
telephoning the Program Transfer Agent at 1-800-___-____. If your redemption
request is received by or before 4 p.m. Eastern time, on a particular Fund
business day, your redemption will be effective as of the close of business on
that day. If your redemption request is received by the Program Transfer Agent
after 4 p.m. Eastern time, on a particular Fund business day, your redemption
will be effective as of the close of business on the next Fund business day. The
terms of the CustomerOwner Program govern any restriction on on-line or
telephone redemption requests. If you are having trouble with connectivity which
may prevent you from submitting a purchase or redemption request before the
deadline, please try telephoning your trade request to the Program Transfer
Agent at 1-800-___-____; neither OWNx.com nor the SSgA funds may be held
responsible for lost purchase or redemption opportunities under those
circumstances. Please note that a $5.00 telephone transaction fee will be
charged by the Program Transfer Agent for processing the trade.
If you request a redemption of Fund shares, you will ordinarily receive a check
in the amount of the redemption proceeds minus the amount of any redemption and
transaction fees. The Fund will normally make payments within one business day
but in no event later than seven calendar days after receipt by the Recordkeeper
of your request. The Program Transfer Agent will charge a $5.00 processing fee
for all redemption proceeds paid by check.
Systematic Withdrawal Plan by Check for Program Members. If your account balance
is over $10,000, you may request periodic cash withdrawals automatically be paid
to you or any person you designate. If the checks are returned to the Fund as
undeliverable or remain uncashed for six months or more, the systematic
withdrawal plan will be cancelled and the amount will be
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reinvested in the Fund at the per share net asset value determined as of the
date of the cancellation of the checks. No interest will accrue on the amounts
represented by the uncashed redemption checks. The Program Transfer Agent
charges a $5.00 processing fee for each check issued.
The Fund may pay any portion of the redemption amount by a distribution in kind
of readily marketable securities from the portfolio of the Fund in lieu of cash.
You will incur brokerage charges and may incur other fees on the sale of these
securities. In addition, you will be subject to the market risks associated with
such securities until such time as you choose to dispose of them. The Fund
reserves the right to suspend the right of redemption or postpone the date of
payment if emergency conditions, as specified in the 1940 Act of as determined
by the Securities and Exchange Commission, should exist.
Automatic Redemption. The Fund reserves the right to redeem your shares if you
revoke your consent to receive information about the Fund through electronic
delivery. The Fund also reserves the right to redeem your shares if you are a
member of the OWNx.com Ownership Program and you cancel your authorization to
deliver OC's for conversion into Fund shares or if your account balance falls
below $25 because of redemptions.
REDEMPTION OF FUND SHARES--NON-MEMBERS
Telephone Redemption. Investors who are not members of the CustomerOwner Program
may normally redeem Fund shares by telephoning the SSgA Funds Customer Service
Department at 1-800-___-____ between 8 a.m. and 4 p.m. Eastern time. You must
complete the appropriate section of the application and attach a voided check to
code your account correctly with the bank information before utilizing this
feature. The Fund and the Direct Transfer Agent will employ reasonable
procedures to confirm that instructions communicated by telephone are properly
authorized. Neither the Fund, the Direct Distributor nor the Direct Transfer
Agent will be responsible for any loss or expense for executing instructions
that are deemed to be authorized and genuine after following reasonable
procedures. These procedures include recording telephonic instructions, mailing
to the shareholder a written confirmation of the transaction, performing a
personal identity test with private information not likely to be known by other
individuals, and restricting mailing of redemptions to your address of record,
if the address has not been changed within 60 days of the redemption request. To
the extent the Direct Transfer Agent fails to use reasonable procedures as a
basis for its belief, it and/or its service contractors may be liable for
telephone instructions that prove to be fraudulent or unauthorized. The Fund,
the Direct Distributor or the Direct Transfer Agent will be responsible for the
authenticity of terminal access instructions only if it acts with willful
misfeasance, bad faith or gross negligence. The Direct Transfer Agent charges a
$5.00 fee for each telephone redemption.
Redemptions By Check. If you are not a member of the CustomerOwner Program, you
may have proceeds of less than $50,000 mailed only to the address shown on the
Direct Transfer Agent's registration record, provided that the address has not
been changed within 60 days of the redemption request. You may call the Customer
Service Department at 1-800-___-____. Shares will be redeemed using that day's
closing price. All proceeds by check will normally be sent the following
business day. The Direct Transfer Agent will charge a telephone transaction fee
of $5.00 and a check processing fee of $5.00 for each redemption by telephone
and check issued. A check is not available for telephone redemption requests in
excess of $50,000; the request must be in writing. If your redemption request is
over $50,000, please follow instructions for redemption by wire or by mail.
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<PAGE>
During periods of drastic economic or market changes, shareholders giving
instructions by phone may encounter delays.
Redemptions by Wire. For investors who are not members of the CustomerOwner
Program, redemption proceeds exceeding $1,000 may be sent via wire transfer to
your bank as previously indicated on your application or letter of instruction
in good order. The shares will be redeemed from the account on the day the
redemption instructions are received and the proceeds wire will be sent the
following business day. Although the Fund does not charge a wire fee for this
feature, your bank may charge a fee for receiving the wire. The Direct Transfer
Agent will charge a $5.00 processing for each telephone redemption. Please check
with your bank before requesting this feature. If bank instructions are not
indicated on the account, a signature guaranteed letter of instruction is
required to add the bank information to send proceeds via wire.
Redemptions by Mail. In certain circumstances, investors who are not members of
the CustomerOwner Program may request to sell shares in writing (please use the
addresses for purchases by mail listed under "Purchase of Fund Shares"). The
shareholder may need to include additional items with the request, as shown in
the table below. Shareholders may need to include a signature guarantee, which
protects them against fraudulent orders. An account closing fee of $15.00
applies, and the Direct Transfer Agent will charge a $5.00 check processing fee
if the proceeds are to be paid by check. A signature guarantee will be required
if:
1. Your address of record has changed within the past 60 days;
2. You are redeeming more than $50,000 worth of shares; or
3. You are requesting payment other than by a check mailed to the address of
record and payable to the registered owner(s).
Signature guarantees can usually be obtained from the following sources:
1. A broker or securities dealer, registered with a domestic stock exchange;
2. A federal savings, cooperative or other type of bank;
3. A savings and loan or other thrift institution;
4. A credit union; or
5. A securities exchange or clearing agency.
Please check with the institution prior to signing to ensure that they are an
acceptable signature guarantor. A notary public cannot provide a signature
guarantee.
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<TABLE>
<CAPTION>
Seller Requirements for Written Requests
<S> <C>
Owner of individual, joint, o Letter of instruction, signed by all
sole proprietorship, persons authorized to sign for the account
UGMA/UTMA (custodial stating general titles/capacity, exactly as the
accounts for minors) or account is registered; and
general partner accounts o Signature guarantee, if applicable (see above).
Owners of corporate or o Letter of instruction signed by authorized person(s),
association accounts stating capacity as indicated by the corporate
resolution;
o Corporate resolution, certified within the past 90
days; and
o Signature guarantee, if applicable (see above).
Owners or trustees of trust o Letter of instruction, signed by all trustees;
accounts o If the trustees are not named in the registration,
please provide a copy of the trust document certified
within the past 60 days; and
o Signature guarantee, if applicable (see above).
Joint tenancy shareholders o Letter of instruction signed by surviving
whose co-tenants are tenant(s);
deceased o Certified copy of the death certificate; and
o Signature guarantee, if applicable (see above).
</TABLE>
Necessary legal documentation for written requests may include, in certain
circumstances, documents verifying the authority or legal capacity of the
person(s) seeking to redeem. All non-members should call the SSgA Funds Customer
Service Department at 1-800-___-____ for questions or further instructions.
If you request a redemption of Fund shares, you will ordinarily receive a check
in the amount of the redemption proceeds minus the amount of any redemption and
transaction fees. The Fund will normally make payments within one business day
but in no event later than seven calendar days after receipt by the Direct
Transfer Agent of your request. The Direct Transfer Agent will charge a $5.00
processing fee for all redemption proceeds paid by check.
Systematic Withdrawal Plan by Check. If your account balance is over $10,000,
you may request periodic cash withdrawals automatically be paid to you or any
person you designate. If the checks are returned to the Fund as undeliverable or
remain uncashed for six months or more, the systematic withdrawal plan will be
cancelled and the amount will be reinvested in the Fund at the per share net
asset value determined as of the date of the cancellation of the checks. No
interest will accrue on the amounts represented by the uncashed redemption
checks. The Direct Transfer Agent charges a $5.00 processing fee for each check
issued.
Systematic Withdrawal Plan by ACH. You may make automatic withdrawals of $100 or
more by completing the appropriate sections of the application and attaching a
voided check to code your account correctly with the bank information. You may
also choose to establish this option with pre-designated withdrawal dates and
amounts, if the account balance is over $10,000 and if
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<PAGE>
you do not participate in the CustomerOwner Program by calling the SSgA Funds
Customer Service Department at 1-800-___-____, prior to 3 p.m. Eastern time,
requesting the withdrawal. Withdrawals by telephone do not require a minimum
account balance provided the Fund's minimum investment is maintained. The Direct
Transfer Agent will charge a $5.00 processing fee for each telephone redemption.
Please note that proceeds from ACH withdrawals will be transmitted to the
investor's bank two days after the withdrawal, and there is no charge to the
shareholder for these transactions.
Automatic Redemption. For investors who are not members of the CustomerOwner
Program, redemption proceeds greater than $1,000 may be wire transferred to your
account at a domestic commercial bank that is a member of the Federal Reserve
System. For non-members, if the account balance falls below $1,000 the Fund
reserves the right to redeem your shares. If you purchased Fund shares by check
or an automatic investment program (AIP) and you elect to redeem shares within
15 days of the purchase, you may experience delays in receiving redemption
proceeds. In this case, the Fund will generally postpone sending redemption
proceeds until it can verify that the check or AIP investment has been
collected. There will be no such delay for redemptions following investments
paid by federal funds wire or by bank cashier's check, certified check or
treasurer's check. The Fund also reserves the right to redeem your shares if
your account balance falls below $1,000 because of redemptions.
DISTRIBUTION SERVICES AND SHAREHOLDER SERVICING ARRANGEMENTS
The Fund has adopted a distribution plan pursuant to Rule 12b-1 (the Plan) under
the Investment Company Act of 1940. The Plan allows the Fund to pay distribution
and other fees for the sale and distribution of Fund shares and for services
provided to shareholders. Because these fees are paid out of Fund assets on an
ongoing basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges. Payments to the
Distributor, as well as payments from the Fund to service organizations
providing shareholder services to the Fund, are not permitted by the Plan to
exceed .25% of the Fund's average net asset value per year. Any payments that
are required to be made to the Distributor or service organization that cannot
be made because of the .25% limitation may be carried forward and paid the
following two fiscal years so long as the Plan is in effect.
Service organizations, like OWNx.com or the Program Transfer Agent/Recordkeeper,
providing technology and support services to the Fund will be responsible for
prompt transmission of purchase and redemption orders and may charge you a fee
for their services.
PRICING OF FUND SHARES
The Fund determines the price per share once each business day at 4 p.m. Eastern
time, or the close of the New York Stock Exchange, if earlier. Pricing does not
occur on Exchange holidays. The price is computed by dividing the current value
of the Fund's assets, less its liabilities, by the number of shares of the Fund
outstanding and rounding to the nearest cent.
The Fund values portfolio securities at market value. The Fund values securities
for which market quotations are not readily available at fair value, as
determined in good faith pursuant to procedures established by the Board of
Trustees.
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<PAGE>
Debt obligation securities maturing within 60 days of the valuation date are
valued at amortized cost unless the Board determines that the amortized cost
method does not represent market value.
DIVIDENDS AND DISTRIBUTIONS
The Board of Trustees intends to declare and pay dividends on shares of the Fund
annually from net investment income. Distributions will be made at least
annually from net short- and long-term capital gains, if any, generally in
mid-October. It is intended that an additional distribution may be declared and
paid in December if required for the Fund to avoid the imposition of a 4%
federal excise tax on undistributed capital gains.
Dividends declared in October, November or December and payable to shareholders
of record in such months will be deemed for Federal income tax purposes to have
been paid by the Fund and received by shareholders on December 31 of that year
if the dividend is paid prior to February 1 of the following year.
Income dividends and capital gains distributions will be paid in additional
shares (commonly referred to as "reinvested") at their net asset value on the
record date to the Fund account. Dividends and distributions will not be paid in
cash.
Any dividend or capital gain distribution paid by the Fund shortly after a
purchase of shares will reduce the per share net asset value of the Fund by the
amount of the dividend or distribution. In effect, the payment will represent a
return of capital to the shareholder. However, you will be subject to taxes with
respect to such dividend or distribution.
TAXES
Dividends from net investment income and distributions of net short-term capital
gains are taxable to you as ordinary income under federal income tax laws.
Distributions from net long-term gains are taxable as long-term gains regardless
of the length of time you have held the shares.
The Fund's distributions may be subject to federal income taxes. Dividends and
distributions may also be subject to state or local taxes. Depending on the tax
rules in the state in which you live, a portion of the dividends paid by the
Fund attributable to direct obligations of the US Treasury and certain agencies
may be exempt from state and local taxes.
Selling or exchanging your Fund shares is a taxable event and may result in
capital gain or loss. Any loss incurred on the sale of Fund shares held for six
months or less will be treated as a long-term loss to the extent of long-term
capital gain dividends received with respect to such shares.
You will be notified after each calendar year of the amount of income dividends
and net capital gains distributed. The Fund is required to withhold a legally
determined portion of all taxable dividends, distributions and redemption
proceeds payable to any noncorporate shareholder that does not provide the Fund
with the shareholder's correct taxpayer identification number or certification
that the shareholder is not subject to backup withholding.
The tax discussion in this prospectus is only a summary of certain federal
income tax issues generally affecting the Fund and its shareholders.
Circumstances among investors may vary, so
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<PAGE>
you are encouraged to discuss investment in the Fund with your tax advisor.
Nothing in this prospectus should be considered tax advice concerning the
CustomerOwner program or the tax impact to a particular shareholder.
FINANCIAL HIGHLIGHTS
Financial highlights information is not available for the CustomerOwner Fund
because it has been in operation for less than one year.
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SSgA FUNDS
SSgA Money Market Fund
SSgA US Government Money Market Fund
SSgA Tax Free Money Market Fund
SSgA Yield Plus Fund
SSgA Intermediate Fund
SSgA Bond Market Fund
SSgA High Yield Bond Fund
SSgA Intermediate Municipal Bond Fund
SSgA Growth and Income Fund
SSgA S&P 500 Index Fund
SSgA Matrix Equity Fund
SSgA Small Cap Fund
(Closed to new investors as of August 31, 1998)
SSgA Special Equity Fund
SSgA Tuckerman Active REIT Fund
SSgA Aggressive Equity Fund
SSgA IAM SHARES Fund
SSgA Emerging Markets Fund
SSgA Active International Fund
SSgA International Growth Opportunities Fund
SSgA OWNx CustomerOwner Fund
SSgA Life Solutions Growth Fund
SSgA Life Solutions Balanced Fund
SSgA Life Solutions Income and Growth Fund
20
<PAGE>
ADDITIONAL INFORMATION ABOUT THE FUND
A Statement of Additional Information (SAI) includes additional information
about the Fund. The SAI is incorporated into this Prospectus by reference and is
available, without charge, upon request. To request an SAI, other information
about the Fund or to make any shareholder inquiry, please contact the Fund at:
CustomerOwner Program Member Customer Service
----------------------
----------------------
1-800-___-____
www.CustomerOwner.com
Customer Service for investors who are not members of CustomerOwner Program:
1-800-___-____
To request information about other SSgA Funds, please contact:
Russell Fund Distributors, Inc.
One International Place
Boston, Massachusetts 02110
1-800-___-____
You also can review and copy information about the fund, including the SAI, at
the Securities and Exchange Commission's Public Reference Room in Washington,
D.C. You can receive information on the operation of the Public Reference Room
by calling 1-202-942-8090. Reports and other information bout the fund are
available on the EDGAR database on the Commission's internet site at
http://www.sec.gov, and copies also may be obtained, upon payment of a
duplicating fee, by electronic request at the following e-mail address:
[email protected], or by writing the Commission's Public Reference Section,
Washington, D.C. 20549-0102. You may also access the SSgA Funds' website at
www.ssgafunds.com.
SSgA Funds' Investment Company Act File No. 811-5430
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<PAGE>
Filed pursuant to Rule 485(a)
File Nos. 33-19229; 811-5430
SSgA FUNDS
One International Place
Boston, Massachusetts 02110
www.ssgafunds.com
CustomerOwner Program Customer Service: 1-800-___-____
www.customerowner.com
STATEMENT OF ADDITIONAL INFORMATION
OWNx[SM] CUSTOMEROWNER[SM] Fund
___________________, 2000
This Statement of Additional Information is not a prospectus. Instead, it
supplements or describes in greater detail the SSgA Funds and the series named
above as contained in the prospectus dated ____________________, 2000. You may
obtain a copy of the prospectus by calling 1-800-___-____.
<PAGE>
TABLE OF CONTENTS
FUND HISTORY...................................................................2
DESCRIPTION OF THE FUND AND ITS INVESTMENT RISKS...............................2
Investment Strategies......................................................2
Hedging Strategies and Related Investment Techniques.......................5
Investment Risks...........................................................6
Investment Restrictions....................................................6
Temporary Defensive Position...............................................6
Portfolio Turnover.........................................................7
MANAGEMENT OF THE FUND.........................................................7
Board of Trustees and Officers.............................................7
Compensation...............................................................9
Controlling and Principal Shareholders....................................10
INVESTMENT ADVISORY AND OTHER SERVICES........................................11
Advisor...................................................................11
Administrator.............................................................11
Custodian and Transfer Agent..............................................12
Distributor...............................................................12
Distribution Plan and Shareholder Servicing Arrangements..................12
Technology and Support Services...........................................13
Independent Accountants...................................................14
Legal Counsel.............................................................14
BROKERAGE PRACTICES AND COMMISSIONS...........................................14
PRICING OF FUND SHARES........................................................15
TAXES.........................................................................15
CALCULATION OF PERFORMANCE DATA...............................................16
ADDITIONAL INFORMATION........................................................16
Shareholder Meetings......................................................16
Capitalization and Voting.................................................17
Federal Law Affecting State Street........................................17
FINANCIAL STATEMENTS..........................................................17
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FUND HISTORY
SSgA Funds (the Investment Company) was organized as a Massachusetts business
trust on October 3, 1987, and operates under a First Amended and Restated Master
Trust Agreement, dated October 13, 1993, as amended. The SSgA Funds was formerly
known as The Seven Seas Series Fund. The name change took effect on December 27,
1996.
DESCRIPTION OF THE FUND AND ITS INVESTMENT RISKS
The SSgA Funds is an open-end, management investment company which offers shares
of beneficial interest in separate portfolios, each of which is referred to as a
fund. Each SSgA Fund is diversified1, in that at least 75% of its total assets
are represented by a variety of instruments including cash, government
securities, securities of other investment companies, and other securities
within the limitations described in the investment restrictions.
Investment Strategies
To the extent consistent with its investment objective and restrictions, the
fund may invest in the following instruments and use the following investment
techniques:
US Government Obligations. The types of US Government obligations in which the
fund may at times invest include: (1) A variety of US Treasury obligations,
which differ only in their interest rates, maturities and times of issuance; and
(2) obligations issued or guaranteed by US Government agencies and
instrumentalities which are supported by any of the following: (a) the full
faith and credit of the US Treasury, (b) the right of the issuer to borrow an
amount limited to a specific line of credit from the US Treasury, (c)
discretionary authority of the US Government agency or instrumentality or (d)
the credit of the instrumentality (examples of agencies and instrumentalities
are: Federal Land Banks, Federal Housing Administration, Federal Farm Credit
Bank, Farmers Home Administration, Export--Import Bank of the United States,
Central Bank for Cooperatives, Federal Intermediate Credit Banks, Federal Home
Loan Banks, General Services Administration, Maritime Administration, Tennessee
Development Bank, Student Loan Marketing Association, International Bank for
Reconstruction and Development and Federal National Mortgage Association). No
assurance can be given that in the future the US Government will provide
financial support to such US Government agencies or instrumentalities described
in (2)(b), (2)(c) and (2)(d), other than as set forth above, since it is not
obligated to do so by law. The fund may purchase US Government obligations on a
forward commitment basis.
Initial Public Offerings. The fund may purchase initial public offerings (IPOs).
Performance of the fund may be impacted by its holdings of IPOs. Because an IPO
is an equity security that is new to the public market, the value of IPOs can
fluctuate dramatically. Therefore, IPOs have greater risks than other equity
investments.
Repurchase Agreements. The fund may enter into repurchase agreements with
financial institutions. Under repurchase agreements, these parties sell
securities to a fund and agree to repurchase the securities at the fund's cost
plus interest within a specified time (normally one day). The securities
purchased by each fund have a total value in excess of the purchase price paid
by the fund and are held by the Custodian until repurchased. Repurchase
agreements assist the fund in being invested fully while retaining "overnight"
flexibility in pursuit of investments of a longer-term nature. The fund will
limit repurchase transactions to those member banks of the Federal Reserve
System and broker-dealers whose creditworthiness is continually monitored and
found satisfactory by the Advisor.
Reverse Repurchase Agreements. The fund may enter into reverse repurchase
agreements under the circumstances described in "Investment Restrictions." Under
reverse repurchase agreements, a fund transfers possession of portfolio
securities to financial institutions in return for cash in an amount equal to a
percentage of the portfolio securities' market value and agrees to repurchase
the securities at a future date by repaying the cash with interest. The fund
retains the right to receive interest and principal payments from the securities
while they are in the possession of the financial institutions. Cash or liquid
high quality debt obligations from a fund's portfolio equal in value to the
repurchase price including any accrued interest will be segregated by the
Custodian on the fund's records while a reverse repurchase agreement is in
effect. Reverse repurchase agreements involve the risk that the market value of
securities sold by the fund may decline below the price at which it is obligated
to repurchase the securities. Reverse repurchase agreement may be used as a
means of borrowing temporarily for extraordinary or emergency purposes or to
facilitate redemptions and are not used to leverage the fund.
If the other party or "seller" defaults, a fund might suffer a loss to the
extent that the proceeds from the sale of the underlying securities and other
collateral held by the fund are less than the repurchase price and the fund's
cost associated with delay and
----------------------------------------
(1) With the exception of the SSgA Tuckerman Active REIT Fund, which is
non-diversified.
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<PAGE>
enforcement of the repurchase agreement. In addition, in the event of bankruptcy
of the seller, a fund could suffer additional losses if a court determines that
the fund's interest in the collateral is not enforceable.
Forward Commitments. The fund may contract to purchase securities for a fixed
price at a future date beyond customary settlement time consistent with the
fund's ability to manage its investment portfolio, maintain a stable net asset
value and meet redemption requests. A fund may dispose of a commitment prior to
settlement if it is appropriate to do so and realize short-term profits or
losses upon such sale. When effecting such transactions, cash or liquid high
quality debt obligations held by the fund of a dollar amount sufficient to make
payment for the portfolio securities to be purchased will be segregated on the
fund's records at the trade date and maintained until the transaction is
settled. Forward commitments involve a risk of loss if the value of the security
to be purchased declines prior to the settlement date, or if the other party
fails to complete the transaction.
When-Issued Transactions. New issues of securities are often offered on a
when-issued basis. This means that delivery and payment for the securities
normally will take place several days after the date the buyer commits to
purchase them. The payment obligation and the interest rate that will be
received on securities purchased on a when-issued basis are each fixed at the
time the buyer enters into the commitment.
The fund will make commitments to purchase when-issued securities only with the
intention of actually acquiring the securities, but a fund may sell these
securities or dispose of the commitment before the settlement date if it is
deemed advisable as a matter of investment strategy. Cash or marketable high
quality debt securities equal to the amount of the above commitments will be
segregated on the fund's records. For the purpose of determining the adequacy of
these securities the segregated securities will be valued at market. If the
market value of such securities declines, additional cash or securities will be
segregated on the fund's records on a daily basis so that the market value of
the account will equal the amount of such commitments by the fund. The fund will
not invest more than 25% of its net assets in when-issued securities.
Securities purchased on a when-issued basis and held by the fund are subject to
changes in market value based upon the public's perception of changes in the
level of interest rates. Generally, the value of such securities will fluctuate
inversely to changes in interest rates -- i.e., they will appreciate in value
when interest rates decline and decrease in value when interest rates rise.
Therefore, if in order to achieve higher interest income a fund remains
substantially fully invested at the same time that it has purchased securities
on a "when-issued" basis, there will be a greater possibility of fluctuation in
the fund's net asset value.
When payment for when-issued securities is due, the fund will meet its
obligations from then-available cash flow, the sale of segregated securities,
the sale of other securities or, and although it would not normally expect to do
so, from the sale of the when-issued securities themselves (which may have a
market value greater or less than the fund's payment obligation). The sale of
securities to meet such obligations carries with it a greater potential for the
realization of capital gains, which are subject to federal income taxes.
Securities Lending. A fund may lend portfolio securities with a value of up to
33-1/3% of its total assets. For these purposes, total assets shall include the
value of all assets received as collateral for the loan. Such loans may be
terminated at any time, and a fund will receive cash or other obligations as
collateral. In a loan transaction, as compensation for lending its securities, a
fund will receive a portion of the dividends or interest accrued on the
securities held as collateral or, in the case of cash collateral, a portion of
the income from the investment of such cash. In addition, a 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. A
fund will call loans to vote proxies if a material issue affecting the
investment is to be voted upon. Should the borrower of the securities fail
financially, a 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 Advisor to be of good financial standing. In a loan transaction, a
fund will also bear the risk of any decline in value of securities acquired with
cash collateral. A fund will minimize this risk by limiting the investment of
cash collateral to high quality instruments of short maturity. This strategy is
not used to leverage any fund.
Interfund Lending. The SSgA Funds have sought and been granted permission from
the SEC to participate in a joint lending and borrowing facility (the "Credit
Facility"). Portfolios of the SSgA Funds may borrow money from the SSgA Money
Market Fund for temporary purposes. All such borrowing and lending will be
subject to a participating fund's fundamental investment limitations. The SSgA
Money Market Fund will lend through the program only when the returns are higher
than those available from an investment in repurchase agreements or short term
reserves. The SSgA Funds will borrow through the program only when the costs are
equal to or lower than the cost of bank loans. Interfund loans and borrowings
normally extend overnight, but can have a maximum duration of seven days. Loans
may be called on one business day's notice. A participating fund may have to
borrow from a bank at a higher interest rate if an interfund loan is called or
not renewed. Any delay in repayment to the SSgA Money Market Fund could result
in a lost investment opportunity or additional borrowing costs.
Section 4(2) Commercial Paper. The fund may invest in commercial paper issued in
reliance on the so-called "private placement" exemption from registration
afforded by Section 4(2) of the Securities Act of 1933 ("Section 4(2) paper").
Section 4(2) paper is restricted as to disposition under the federal securities
laws, and generally is sold to investors who agree that they are purchasing the
paper for an investment and not with a view to public distribution. Any resale
by the purchaser must be in an exempt transaction. Section 4(2) paper is
normally resold to other investors through or with the assistance of the issuer
or investment dealers who make a market in Section 4(2) paper, thus providing
liquidity. Pursuant to guidelines established by the board of trustees, the
Advisor may determine that Section 4(2) paper is liquid for the purposes of
complying with the fund's investment restriction relating to investments in
illiquid securities.
-3-
<PAGE>
Warrants. The fund may invest in warrants which entitle the holder to buy equity
securities at a specific price for a specific period of time. Warrants may be
considered more speculative than certain other types of investments in that they
do not entitle a holder to dividends or voting rights with respect to the
securities which may be purchased nor do they represent any rights in the assets
of the issuing company. Also, the value of the warrant does not necessarily
change with the value of the underlying securities and a warrant ceases to have
value if it is not exercised prior to the expiration date. The fund will not
invest more than 5% of the value of its net assets in warrants, or more than 2%
in warrants which are not listed on the New York or American Stock Exchanges.
American Depository Receipts (ADRs). The fund may invest in ADRs under certain
circumstances as an alternative to directly investing in foreign securities.
Generally, ADRs, in registered form, are designed for use in the US securities
markets. ADRs are receipts typically issued by a US bank or trust company
evidencing ownership of the underlying securities. ADRs represent the right to
receive securities of foreign issuers deposited in a domestic bank or a
correspondent bank. ADRs do not eliminate the risk inherent in investing in the
securities of foreign issuers. However, by investing in ADRs rather than
directly in a foreign issuer's stock, the fund can avoid currency risks during
the settlement period for either purchases or sales. In general, there is a
large liquid market in the US for many ADRs. The information available for ADRs
is subject to the accounting, auditing and financial reporting standards of the
domestic market or exchange on which they are traded, which standards are more
uniform and more exacting than those to which many foreign issuers are subject.
Illiquid Securities. The fund will not invest more than 15% of its net assets in
illiquid securities or securities that are not readily marketable. These
securities include repurchase agreements and time deposits of more than seven
days' duration and participation interests (including municipal leases),
floating and variable rate demand obligations and tender option bonds as to
which the fund cannot exercise a demand feature in seven or fewer days or for
which there is no secondary market. The absence of a regular trading market for
illiquid securities imposes additional risk on investments in these securities.
Illiquid securities may be difficult to value and may often be disposed of only
after considerable expense and delay.
Variable Amount Master Demand Notes. Variable amount master demand notes are
unsecured obligations that are redeemable upon demand and are typically unrated.
These instruments are issued pursuant to written agreements between their
issuers and holders. The agreements permit the holders to increase (subject to
an agreed maximum) and the holders and issuers to decrease the principal amount
of the notes, and specify that the rate of interest payable on the principal
fluctuates according to an agreed formula. Generally, changes in interest rates
will have a smaller effect on the market value of these securities than on the
market value of comparable fixed income obligations. Thus, investing in these
securities generally allows less opportunity for capital appreciation and
depreciation than investing in comparable fixed income securities. There may be
no active secondary market with respect to a particular variable rate
instrument.
Convertible Securities. The fund may invest in convertible securities of foreign
or domestic issues. A convertible security is a fixed-income security (a bond or
preferred stock) which may be converted at a stated price within a specified
period of time into a certain quantity of the common stock of the same or a
different issuer. Convertible securities are senior to common stocks in a
corporation's capital structure but are usually subordinated to similar
nonconvertible securities. Convertible securities provide, through their
conversion feature, an opportunity to participate in capital appreciation
resulting from a market price advance in a convertible security's underlying
common stock. The price of a convertible security is influenced by the market
value of the underlying common stock and tends to increase as the market value
of the underlying stock rises, whereas it tends to decrease as the market value
of the underlying stock declines.
Cash Reserves. For defensive purposes, the fund may temporarily invest, without
limitation, in short-term fixed income securities. High quality,
investment-grade securities include obligations issued or guaranteed as to
principal and interest by the US Government, its agencies or instrumentalities
and repurchase agreements collateralized by these obligations, commercial paper,
bank certificates of deposit, bankers' acceptances and time deposits. When using
this strategy, the weighted average maturity of securities held by a fund will
decline, and thereby possibly cause its yield to decline as well.
Equity Swaps. Equity swap agreements are contracts between parties in which one
party agrees to make payments to the other party based on the change in market
value of a specified index or asset. In return, the other party agrees to make
payments to the first party based on the return of a different specified index
or asset. Although swap agreements entail the risk that a party will default on
its payment obligations, the portfolios will minimize this risk by entering into
agreements only with counterparties that the Advisor deems creditworthy. The
Advisor will allow the fund to enter into swap agreements only with
counterparties that would be eligible for consideration as repurchase agreement
counterparties under the SSgA Funds' repurchase agreement guidelines. Swap
agreements bear the risk that the portfolios will not be able to meet their
obligation to the counterparty. This risk will be mitigated by investing the
portfolios in the specific asset for which it is obligated to pay a return.
Total Rate of Return Swaps. The fund may contract with a counterparty to pay a
stream of cash flows and receive the total return of an index or a security for
purposes of attempting to obtain a particular desired return at a lower cost to
the fund than if the fund had invested directly in an instrument that yielded
that desired return. The Advisor will cause the fund to enter into swap
agreements only with counterparties that would be eligible for consideration as
repurchase agreement counterparties under the Funds' repurchase agreement
guidelines.
-4-
<PAGE>
Hedging Strategies and Related Investment Techniques
The fund may seek to hedge against movements in the equity markets, interest
rates and currency exchange rates through the use of options, futures
transactions, options on futures and forward foreign currency exchange
transactions. The fund has authority to write (sell) covered call and put
options on their portfolio securities, purchase put and call options on
securities and engage in transactions in stock index options, stock index
futures and financial futures and related options on such futures. The fund may
enter into such options and futures transactions either on exchanges or in the
over-the-counter ("OTC") markets. Although certain risks are involved in options
and futures transactions (as discussed in the prospectus and below), the Advisor
believes that, because the fund will only engage in these transactions for
hedging purposes, the options and futures portfolio strategies of the fund will
not subject the fund to the risks frequently associated with the speculative use
of options and futures transactions. Although the use of hedging strategies by
the fund is intended to reduce the volatility of the net asset value of the
fund's shares, the fund's net asset value will nevertheless fluctuate. There can
be no assurance that the fund's hedging transactions will be effective.
Interest Rate and Financial Futures Options. The fund may invest in interest
rate futures contracts, foreign currency futures contracts, and options thereon
that are traded on a US or foreign exchange or board of trade, as specified in
the Prospectuses. An interest rate, foreign currency or index futures contract
provides for the future sale by one party and purchase by another party of a
specified quantity of a financial instruments (such as GNMA certificates or
Treasury bonds) or foreign currency or the cash value of an index at a specified
price at a future date. A futures contract on an index is an agreement between
two parties (buyer and seller) to take or make delivery of an amount of cash
equal to the difference between the value of the index at the close of the last
trading day of the contract and the price at which the index contract was
originally written. In the case of futures contracts traded on US exchanges, the
exchange itself or an affiliated clearing corporation assumes the opposite side
of each transaction (i.e., as buyer or seller). A futures contract may be
satisfied or closed out by delivery or purchase, as the case may be, of the
financial instrument or by payment of the change in the cash value of the index.
Frequently, using futures to effect a particular strategy instead of using the
underlying or related security or index will result in lower transaction costs
being incurred. Although the value of an index may be a function of the value of
certain specified securities, no physical delivery of these securities is made.
A public market exists in futures contracts covering interest rates, several
indexes and a number of financial instruments and foreign currencies. For
example: US Treasury bonds; US Treasury notes; three-month US Treasury bills;
Eurodollar certificates of deposit. It is expected that other futures contracts
will be developed and traded in the future.
The fund may also purchase and write call and put options on futures contracts.
Options on futures contracts possess many of the same characteristics as options
on securities and indexes (discussed above). A futures option gives the holder
the right, in return for the premium paid, to assume a long position (in the
case of a call) or short position (in the case of a put) in a futures contract
at a specified exercise price at any time during the period of the option. Upon
exercise of a call option, the holder acquires a long position in the futures
contract and the writer is assigned the opposite short position. In the case of
a put option, the opposite is true. An option on a futures contract may be
closed out (before exercise or expiration) by an offsetting purchase or sale of
an option on a futures contract of the same series.
As long as required by regulatory authorities, the fund will limit its use of
futures contracts and options on futures contracts to hedging transactions. For
example, the fund might use futures contracts to hedge against anticipated
changes in interest rates that might adversely affect either the value of the
fund's securities or the price of the securities which the fund intends to
purchase. Additionally, a fund may use futures contracts to create equity
exposure for its cash reserves for liquidity purposes.
The fund will only enter into futures contracts and options on futures contracts
which are standardized and traded on a US or foreign exchange, board of trade,
or similar entity, or quoted on an automated quotation system. A fund will enter
into a futures contract only if the contract is "covered" or if the fund at all
times maintains with the Custodian liquid assets equal to or greater than the
fluctuating value of the contract (less any margin or deposit). A fund will
write a call or put option on a futures contract only if the option is
"covered."
Restrictions on the Use of Futures Transactions. The purchase or sale of a
futures contract differs from the purchase or sale of a security in that no
price or premium is paid or received. Instead, an amount of cash or securities
acceptable to the broker and the relevant contract market, which varies, but is
generally about 5% of the contract amount, must be deposited with the broker.
This amount is known as "initial margin" and represents a "good faith" deposit
assuring the performance of both the purchaser and seller under the futures
contract. Subsequent payments to and from the broker, called "variation margin,"
are required to be made on a daily basis as the price of the futures contract
fluctuates making the long and short positions in the futures contracts more or
less valuable, a process known as "marking to market." At any time prior to the
settlement date of the futures contract, the position may be closed out by
taking an opposite position which will operate to terminate the position in the
futures contract. A final determination of variation margin is then made,
additional cash is required to be paid to or released by the broker and the
purchaser realizes a loss or gain. In addition, a nominal commission is paid on
each completed sale transaction.
Regulations of the CFTC applicable to the fund require that all of the fund's
futures and options on futures transactions constitute bona fide hedging
transactions and that the fund not enter into such transactions if, immediately
thereafter, the sum of the amount of initial margin deposits on the fund's
existing futures positions and premiums paid for related options would exceed 5%
of the market value of the fund's total assets.
-5-
<PAGE>
Investment Risks
Foreign Investments. Investment in securities of non-US issuers and securities
denominated in foreign currencies involve investment risks that are different
from those of US issuers, including: uncertain future political, diplomatic and
economic developments; possible imposition of exchange controls or other
governmental restrictions; less publicly available information; lack of uniform
accounting, auditing and financial reporting standards, practices and
requirements; lower trading volume, less liquidity and more volatility for
securities; less government regulation of securities exchanges, brokers and
listed companies; political or social instability; and the possibility of
expropriation or confiscatory taxation, each of which could adversely affect
investments in such securities. ADRs are subject to all of the above risks,
except the imposition of exchange controls, and currency fluctuations during the
settlement period.
Investment Restrictions
The following investment restrictions have been adopted by the Investment
Company with respect to the fund. Except as otherwise stated, these investment
restrictions are "fundamental" policies. A fundamental policy is defined in the
1940 Act to mean that the restriction cannot be changed without the vote of a
"majority of the outstanding voting securities" of the fund. A majority of the
outstanding voting securities is defined in the 1940 Act as the lesser of (a)
67% or more of the voting securities present at a meeting if the holders of more
than 50% of the outstanding voting securities are present or represented by
proxy, or (b) more than 50% of the outstanding voting securities. The fund may
not:
1. Borrow money, except as permitted under the 1940 Act, as amended and
as interpreted or modified by regulation from time to time.
2. Issue "senior securities," except as permitted under the 1940 Act,
as amended and as interpreted or modified by regulation from time to
time.
3. Engage in the business of underwriting securities issued by other
persons, except to the extent that, in connection with the
disposition of portfolio securities, the
fund may be deemed to be an underwriter under applicable law.
4. Purchase or sell real estate, except that the fund may (i) acquire
or lease office space for its own use, (ii) invest in securities of
issuers that invest in real estate or interests therein, (iii)
invest in mortgage-related securities and other securities that are
secured by real estate or interests therein, and (iv) hold and sell
real estate acquired by the fund as a result of the ownership of
securities.
5. Purchase or sell commodities, except the fund may purchase and sell
derivatives (including but not limited to options, futures contracts
and options on futures contracts) whose value is tied to the value
of a financial index or a financial instrument or other asset
(including, but not limited to, securities indexes, interest rates,
securities, currencies and physical commodities).
6. Make loans, except that the fund may (i) lend portfolio securities,
(ii) enter into repurchase agreements, (iii) purchase all or a
portion of an issue of debt securities, bank loan participation
interests, bank certificates of deposit, bankers' acceptances,
debentures or other securities, whether or not the purchase is made
upon the original issuance of the securities and (iv) participate in
an interfund lending program with other registered investment
companies.
7. Purchase a security if, after giving effect to the purchase, more
than 25% of its total assets would be invested in the securities of
one or more issuers conducting their principal business activities
in the same industry (excluding the US Government or its agencies or
instrumentalities).
If any percentage restriction described above for the fund is adhered to at the
time of investment, a subsequent increase or decrease in the percentage
resulting from a change in the value of the fund's assets will not constitute a
violation of the restriction.
Temporary Defensive Position
For defensive purposes, the fund may invest temporarily in short term fixed
income securities. These include obligations issued or guaranteed as to
principal and interest by the US Government, its agencies or instrumentalities
and repurchase agreements collateralized by these obligations; commercial paper;
bank certificates of deposit; bankers' acceptances and time deposits. These
short term, fixed income securities may be used without limitation to invest
uncommitted cash balances or to maintain liquidity to meet shareholder
redemptions. When using this strategy, the weighted average maturity of
securities held by the fund will decline, which will possibly cause its yield to
decline as well. This strategy may be inconsistent with the fund's principal
investment strategy in an attempt to respond to adverse market, economic,
political or other conditions. Taking such a temporary defensive position may
result in the fund not achieving its investment objective.
-6-
<PAGE>
Portfolio Turnover
Generally, securities are purchased for the fund for investment income and/or
capital appreciation and not for short-term trading profits. The Advisor's sell
discipline for the fund's investment in securities of foreign issuers is based
on the premise of a long-term investment horizon, however, sudden changes in
valuation levels arising from, for example, new macroeconomic policies,
political developments, and industry conditions could change the assumed time
horizon. Liquidity, volatility, and overall risk of a position are other factors
considered by the Advisor in determining the appropriate investment horizon.
Therefore, the fund may dispose of securities without regard to the time they
have been held when such action, for defensive or other purposes, appears
advisable.
The portfolio turnover rate for the fund is calculated by dividing the lesser of
purchases or sales of portfolio securities for the particular year, by the
monthly average value of the portfolio securities owned by the fund during the
year. For purposes of determining the rate, all short-term securities, including
options, futures, forward contracts and repurchase agreements, are excluded. A
high turnover rate (over 100%) will: (1): increase transactions expenses which
will adversely affect a fund's performance; and (2) result in increased
brokerage commissions and other transaction costs, and the possibility of
realized capital gains.
MANAGEMENT OF THE FUND
Board of Trustees and Officers
The board of trustees is responsible for overseeing generally the management,
activities and affairs of each fund and has approved contracts with various
financial organizations to provide, among other services, day-to-day management
required by the SSgA funds (see the section called "Investment Advisory and
Other Services."). Trustees hold office until they resign or are removed by, in
substance, a vote of two-thirds of Investment Company shares outstanding. The
officers, all of whom are employed by the Administrator or its affiliates, are
responsible for the day-to-day management and administration of the SSgA Funds'
operations.
The following lists the SSgA Funds' trustees and officers, their mailing
addresses and ages, their positions with the SSgA funds and their present and
principal occupations during the past five years.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
Name, Address and Age Position(s) with SSgA funds Principal Occupation(s) During Past 5 Years
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Lynn L. Anderson Trustee (Interested Person o Vice Chairman, Frank Russell Company;
909 A Street of the SSgA funds as defined o Chairman of the Board and Chief Executive
Tacoma, WA 98402 in the 1940 Act), Chairman Officer, Frank Russell Investment
Age 60 of the Board, President and Management Company and Russell Fund
Treasurer Distributors, Inc.;
o Chairman of the Board, Frank Russell Trust
Company;
o Trustee, President and Chief Executive
Officer, Frank Russell Investment Company
and Russell Insurance Funds; and
o Director, Russell Insurance Agency, Inc.,
Frank Russell Investments (Ireland)
Limited, Frank Russell Investment Company
plc; Frank Russell Institutional Funds plc,
Frank Russell Qualifying Investor Fund, and
Frank Russell Investments (Cayman) Ltd.
---------------------------------------------------------------------------------------------------------------------------
William L. Marshall Trustee o Chief Executive Officer and President,
33 West Court Street Wm. L. Marshall Associates, Inc. (a
Doylestown, PA 18901 registered investment advisor and provider
Age 57 of financial and related consulting
services);
o Certified Financial Planner and Member,
Institute of Certified Financial Planners;
o Member, Registry of Financial Planning
Practitioners and Advisory Committee,
International Association for Financial
Planning Broker-Dealer Program;
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
o Registered Representative for Securities
with FSC Securities Corp., Marietta,
Georgia.
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Steven J. Mastrovich Trustee o Managing Director, HSBC Securities (USA)
99 High Street, 27th Floor Inc.
Boston, MA 02110 o From 1998 to 2000, President, Key Global
Age 43 Capital, Inc.;
o From 1997 to 1998, Partner, Squire,
Sanders & Dempsey (law firm);
o From 1994 to 1997, Partner, Brown, Rudnick,
Freed & Gesmer (law firm); and
o From 1990 to 1994, Partner, Warner &
Stackpole (law firm).
---------------------------------------------------------------------------------------------------------------------------
Patrick J. Riley Trustee o Partner, Riley, Burke & Donahue, L.L.P.
One Corporate Place (law firm).
55 Ferncroft Road
Danvers, MA 01923
Age 51
---------------------------------------------------------------------------------------------------------------------------
Richard D. Shirk Trustee o President and Chief Executive Officer,
3350 Peachtree Road, N.E. Blue Cross/Blue Shield of Georgia.
Atlanta, GA 30326
Age 54
---------------------------------------------------------------------------------------------------------------------------
Bruce D. Taber Trustee o Consultant, Computer Simulation, General
26 Round Top Road Electric Industrial Control Systems.
Boxford, MA 01921
Age 56
---------------------------------------------------------------------------------------------------------------------------
Henry W. Todd Trustee o President and Director, Zink & Triest Co.,
111 Commerce Drive Inc.(dealer in vanilla flavor materials);
Montgomeryville, PA 18936 and
Age 52 o Director, Executive Vice President, A.M.
Todd Group, Inc. and Flavorite
Laboratories.
---------------------------------------------------------------------------------------------------------------------------
J. David Griswold Vice President and Secretary o Assistant Secretary and Associate General
909 A Street Counsel, Frank Russell Investment
Tacoma, WA 98402 Management Company, Russell Fund
Age 42 Distributors, Inc., Frank Russell Capital
Inc., Frank Russell Company and Frank
Russell Investments (Delaware), Inc.;
o Director, Secretary and Associate General
Counsel, Frank Russell Securities, Inc.;
o Secretary, Frank Russell Canada
Limited/Limitee.
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
Name, Address and Age Position(s) with SSgA funds Principal Occupation(s) During Past 5 Years
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mark E. Swanson Assistant Secretary, o Director - Funds Administration, Frank
909 A Street Assistant Treasurer and Russell Investment Management Company and
Tacoma, WA 98402 Principal Accounting Officer Frank Russell Trust Company; and
Age 36 o Treasurer and Chief Accounting Officer,
Frank Russell Investment Company and
Russell Insurance Funds.
---------------------------------------------------------------------------------------------------------------------------
Rick J. Chase Assistant Secretary o Manager, Fund Administration, Frank Russell
909 A Street Investment Management Company; and
Tacoma, WA 98402 o Assistant Treasurer, Frank Russell
Age 34 Investment Company and Russell Insurance
Funds.
---------------------------------------------------------------------------------------------------------------------------
Deedra S. Walkey Assistant Secretary o Associate General Counsel and Assistant
909 A Street Secretary, Frank Russell Company, Frank
Tacoma, WA 98402 Russell Investment Management Company,
Age 35 Frank Russell Trust Company, Frank Russell
Investment Company, Russell Insurance
Funds, and Russell Insurance Agency.
---------------------------------------------------------------------------------------------------------------------------
Carla L. Anderson Assistant Secretary o Senior Paralegal and Assistant Secretary,
909 A Street Frank Russell Company, Frank Russell
Tacoma, WA 98402 Investment Management Company, Frank
Age 35 Russell Securities, Inc., Russell Fund
Distributors, Inc., Frank Russell Capital
Inc., Frank Russell International Services
Company Inc., Russell Real Estate Advisors
Inc. and A Street Investment Associates,
Inc.
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Compensation
Trustees who are not officers or employees of Frank Russell Investment
Management Company, State Street Bank and Trust Company or their affiliates are
paid $63,000 each fiscal year and are reimbursed for travel and other expenses
they incur in attending Board meetings. As of the date of this SAI, the trustees
were not paid pension or retirement benefits as part of Investment Company
expenses. However, the trustees have approved a deferred compensation plan by
which they would be allowed to invest a portion of their annual trustee fee in
shares of the SSgA Funds. The Investment Company has obtained an exemptive order
from the SEC to enable it to offer this benefit. Participation by the trustees
is optional. To date, none of the trustees have used the deferred compensation
plan. The Investment Company's officers and employees are compensated by the
Administrator or its affiliates.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Trustee Total Annual Compensation
from Investment Company per
Fiscal Year
-------------------------------------------------------------------------------
<S> <C>
Lynn L. Anderson $0
-------------------------------------------------------------------------------
William L. Marshall $63,000
-------------------------------------------------------------------------------
Steven J. Mastrovich $63,000
-------------------------------------------------------------------------------
Patrick J. Riley $63,000
-------------------------------------------------------------------------------
Richard D. Shirk $63,000
-------------------------------------------------------------------------------
Bruce D. Taber $63,000
-------------------------------------------------------------------------------
Henry W. Todd $63,000
-------------------------------------------------------------------------------
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Name of SSgA Fund Amount of Total Annual Trustee Compensation
(Including Out of Pocket Expenses) Attributable to
Each Fund For the Fiscal Year Ended August 31, 1999
--------------------------------------------------------------------------------------------------------------
<S> <C>
Money Market $148,616
--------------------------------------------------------------------------------------------------------------
US Government Money Market 26,152
--------------------------------------------------------------------------------------------------------------
Matrix Equity 11,327
--------------------------------------------------------------------------------------------------------------
S&P 500 Index 47,343
--------------------------------------------------------------------------------------------------------------
Small Cap 8,227
--------------------------------------------------------------------------------------------------------------
Yield Plus 14,754
--------------------------------------------------------------------------------------------------------------
Bond Market 4,966
--------------------------------------------------------------------------------------------------------------
Emerging Markets 6,022
--------------------------------------------------------------------------------------------------------------
US Treasury Money Market 20,386
--------------------------------------------------------------------------------------------------------------
Growth & Income 5,267
--------------------------------------------------------------------------------------------------------------
Intermediate 2,187
--------------------------------------------------------------------------------------------------------------
Prime Money Market 50,634
--------------------------------------------------------------------------------------------------------------
Tax Free Money Market 6,081
--------------------------------------------------------------------------------------------------------------
Active International 2,582
--------------------------------------------------------------------------------------------------------------
International Growth Opportunities 1,494
--------------------------------------------------------------------------------------------------------------
Tuckerman Active REIT 1,473
--------------------------------------------------------------------------------------------------------------
High Yield Bond 1,191
--------------------------------------------------------------------------------------------------------------
Special Equity 1,531
--------------------------------------------------------------------------------------------------------------
Aggressive Equity(1) 839
--------------------------------------------------------------------------------------------------------------
IAM SHARES(1) 430
--------------------------------------------------------------------------------------------------------------
All Life Solutions Funds 0
--------------------------------------------------------------------------------------------------------------
</TABLE>
Controlling and Principal Shareholders
State Street may from time to time have discretionary authority over accounts
which invest in Investment Company shares. These accounts include accounts
maintained for securities lending clients and accounts which permit the use of
Investment Company portfolios as short-term cash sweep investments. Shares
purchased for all discretionary accounts are held of record by State Street, who
retains voting control of such shares. As of _______________, 2000, State Street
held of record less than 25% of the issued and outstanding shares of Investment
Company in connection with its discretionary accounts. Consequently, State
Street is not deemed to be a controlling person of Investment Company for
purposes of the 1940 Act.
The trustees and officers of Investment Company, as a group, own less than 1% of
Investment Company's voting securities.
Frank Russell Investment Management Company ("Administrator"), Investment
Company's administrator, will be the sole shareholder of the fund until such
time as the fund has public shareholders and therefore may be deemed a
controlling person.
--------------------------
(1) The fund did not operate a full year during fiscal 1999.
-10-
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
Advisor
State Street Bank and Trust Company serves as the SSgA Funds' Investment Advisor
pursuant to an Advisory Agreement dated April 12, 1988. State Street is a wholly
owned subsidiary of State Street Corporation, a publicly held bank holding
company. State Street's address is 225 Franklin Street, Boston, MA 02110. State
Street also serves as the Investment Company's Custodian and Transfer Agent (see
below).
The Advisory Agreement will continue from year to year provided that a majority
of the Trustees who are not interested persons of the fund and either a majority
of all Trustees or a majority of the shareholders of the fund approve its
continuance. The Agreement may be terminated by the Advisor or a fund without
penalty upon sixty days' notice and will terminate automatically upon its
assignment.
Under the Advisory Agreement, the Advisor directs each fund's investments in
accordance with its investment objective, policies and limitations. For these
services, the fund pays an annual management fee to the Advisor as stated in the
fund's prospectus. The management fee rate is a percentage of the average daily
net asset value of the fund, calculated daily and paid monthly.
State Street's Code of Ethics. Under State Street Global Advisors' Code of
Ethics, all employees who are deemed to be access persons (employees who have
interaction with funds or accounts managed by SSgA as part of their job
function) must pre-clear personal securities transactions. The Code of Ethics is
designed to ensure that employees conduct their personal securities transactions
in a manner that does not create an actual or potential conflict of interest to
SSgA's business or fiduciary responsibilities. Subject to the pre-clearance
procedures contained in the Code, State Street employees may purchase securities
held by the fund. In addition, the Code of Ethics establishes standards
prohibiting the trading in or recommending of securities based on material,
nonpublic information or the divulgence of such information to others.
Administrator
Frank Russell Investment Management Company serves as the Investment Company's
Administrator, pursuant to an Administration Agreement dated April 12, 1988.
The Administrator is a wholly owned subsidiary of Frank Russell Company. Frank
Russell Company was founded in 1936 and has provided comprehensive asset
management consulting services since 1969 for institutional pools of investment
assets, principally those of large corporate employee benefit plans. Frank
Russell Company and its affiliates have offices in Tacoma, Winston-Salem, New
York City, Toronto, London, Tokyo, Sydney, Paris, Singapore and Auckland, and
have approximately 1,400 officers and employees. The Administrator's and Frank
Russell Company's mailing address is 909 A Street, Tacoma, WA 98402. Frank
Russell Company is an independently operated subsidiary of The Northwestern
Mutual Life Insurance Company.
Pursuant to the Administration Agreement with Investment Company, the
Administrator will: (1) supervise all aspects of the fund's operations; (2)
provide the fund with administrative and clerical services, including the
maintenance of certain of the fund's books and records; (3) arrange the periodic
updating of the fund's prospectuses and any supplements thereto; (4) provide
proxy materials and reports to fund shareholders and the Securities and Exchange
Commission; and (5) provide the fund with adequate office space and all
necessary office equipment and services, including telephone service, heat,
utilities, stationery supplies and similar items. For these services, the
following fees are paid:
Money Market Portfolios
3.15 basis points up to and including $15 billion; 2.9 basis points thereafter
US Equity Portfolios
3.15 basis points up to and including $2 billion; 2.9 basis points thereafter
US Fixed Income Portfolios
3.15 basis points up to and including $1 billion; 2.9 basis points thereafter
International Portfolios
7.0 basis points up to and including $1 billion; 5.0 basis points thereafter
Feeder Portfolios
3.15 basis points up to and including $1 billion; 1.0 basis points thereafter
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For purposes of determining the breakpoints in calculating the fees above, the
assets will be aggregated. The percentage of the fee paid by a particular fund
is equal to the percentage of average aggregate daily net assets that are
attributable to that fund. The Administrator will also receive reimbursement of
expenses it incurs in connection with establishing new investment portfolios.
The Administration Agreement will continue from year to year provided that a
majority of the Trustees and a majority of the Trustees who are not interested
persons of each fund and who have no direct or indirect financial interest in
the operation of the Distribution Plan described below or the Administration
Agreement approve its continuance. The Agreement may be terminated by the
Administrator or any fund without penalty upon sixty days' notice and will
terminate automatically upon its assignment.
The percentage of the fee paid by a particular fund is equal to the percentage
of average aggregate daily net assets that are attributable to that fund. The
Administrator will also receive reimbursement of expenses it incurs in
connection with establishing new investment portfolios. The Administration
Agreement will continue from year to year provided that a majority of the
trustees and a majority of the trustees who are not interested persons of each
fund and who have no direct or indirect financial interest in the operation of
the Distribution Plan described below or the Administration Agreement approve
its continuance. The Agreement may be terminated by the Administrator or any
fund without penalty upon sixty days' notice and will terminate automatically
upon its assignment.
The Administrator's and Direct Distributor's Code of Ethics. Officers and
employees of the Administratorand Direct Distributor are permitted to engage in
personal securities transactions subject to restrictions and procedures set
forth in the Confidentiality Manual and Code of Ethics adopted by the Investment
Company, Administrator and Direct Distributor. Such restrictions and procedures
include substantially all of the recommendations of the Advisory Group of the
Investment Company Institute and comply with Securities and Exchange Commission
rules and regulations.
Custodian and Transfer Agent
State Street serves as the Custodian for the OWNx CustomerOwner Fund. State
Street also provides the basic portfolio recordkeeping required by the
Investment Company for regulatory and financial reporting purposes. For its
services as Custodian, State Street is paid an annual fee in accordance with the
following: custody services--a fee payable monthly on a pro rata basis, based on
the following percentages of average daily net assets of each fund: $0 up to
$1.5 billion--0.02%, over $1.5 billion--0.015% (for purposes of calculating the
break point, the assets of all domestic funds are aggregated); securities
transaction charges from $6.00 to $25.00 per transaction; Eurodollar transaction
fees ranging from $110.00 to $125.00 per transaction; monthly pricing fees of
$375.00 per investment portfolio and from $4.00 to $16.00 per security,
depending on the type of instrument and the pricing service used; and yield
calculation fees of $350.00 per non-money market portfolio per year.
__________________ serves as the Transfer Agent for the OWNx CustomerOwner Fund
Program Members ("Program Transfer Agent") For its services as Program Transfer
Agent, __________________ receives the following fees: ___________________. The
Program Transfer Agent can be reached at __________________. State Street serves
as the Transfer Agent for non-program members (the "Direct Transfer Agent"). For
its services State Street receives the following fees:______________________.
The Direct Transfer Agent can be reached at ___________________________.
Distributor
___________________________________ serves as the distributor for the OWNx
CustomerOwner program members (the "Program Distributor") pursuant to a Program
Distribution Agreement dated __________________. [Describe corporate structure.]
The Program Distributor is a ________________________. The Program Distributor's
mailing address is _______________________________________.
Russell Fund Distributors, Inc. serves as the Distributor of Fund shares for
non-program members (the "Direct Distributor") pursuant to a Distribution
Agreement dated April 12, 1988 ("Distribution Agreement"). The Direct
Distributor is a wholly owned subsidiary of the Administrator. The Distributor's
mailing address is One International Place, Boston, MA 02110.
Distribution Plan and Shareholder Servicing Arrangements
Distribution Plan. Under the 1940 Act, the Securities and Exchange Commission
has adopted Rule 12b-1, which regulates the circumstances under which a fund
may, directly or indirectly, bear distribution and shareholder servicing
expenses. Rule 12b-1 provides that a fund may pay for such expenses only
pursuant to a plan adopted in accordance with the Rule. Accordingly, the fund
has adopted an active distribution Plan providing for reimbursement for
distribution expenses up to the plan limit.
In connection with the trustees' consideration of whether to adopt the
Distribution Plan, the Direct Distributor, as the SSgA Funds' principal
underwriter, represented to the trustees that the Direct Distributor believes
that the Distribution Plan should result in increased sales and asset
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retention for the fund by enabling the fund to reach and retain more investors
and servicing agents (such as brokers, banks, financial planners, investment
advisors and other financial institutions), although it is impossible to know
for certain in the absence of a Distribution Plan or under an alternative
distribution arrangement, the level of sales and asset retention that the fund
would have.
The Plan provides that the fund may spend annually, directly or indirectly, up
to 0.25% of the value of its average net assets for distribution and shareholder
servicing services. The Plan does not provide for a fund to be charged for
interest, carrying or any other financing charges on any distribution expenses
carried forward to subsequent years. A quarterly report of the amounts expended
under the Plan, and the purposes for which such expenditures were incurred, must
be made to the trustees for their review. The Plan may not be amended without
shareholder approval to increase materially the distribution or shareholder
servicing costs that the fund may pay. The Plan and material amendments to it
must be approved annually by all of the trustees and by the trustees who are
neither "interested persons" (as defined in the 1940 Act) of the fund nor have
any direct or indirect financial interest in the operation of the Plan or any
related agreements.
Distribution and Shareholder Servicing. Payments under the Plan will be made to
the Direct Distributor to finance activity which is intended to result in the
sale and retention of fund shares including: (1) payments made to certain
broker-dealers, investment advisors and other third-party intermediaries; (2)
the costs of prospectuses, reports to shareholders and sales literature; (3)
advertising; and (4) expenses incurred in connection with the promotion and sale
of fund shares, including the Direct Distributor's overhead expenses for rent,
office supplies, equipment, travel, communication, compensation and benefits of
sales personnel.
Under the Plan, the fund and/or the Direct Distributor may also enter into
Service Agreements with financial institutions, which may include the Advisor
("Service Organizations"), to provide shareholder servicing with respect to
shares of the fund held by or for the customers of the Service Organizations.
Under the Service Agreements, the Service Organizations and Program Distributor
may provide various services for such customers, including: answering inquiries
regarding the fund; assisting customers in changing dividend options, account
designations and addresses; performing subaccounting for such customers;
establishing and maintaining customer accounts and records; processing purchase
and redemption transactions; providing periodic statements showing customers'
account balances and integrating such statements with those of other
transactions and balances in the customers' other accounts serviced by the
Service Organizations and the Program Distributor; arranging for bank wires
transferring customers' funds; and such other services as the customers may
request in connection with the fund, to the extent permitted by applicable
statute, rule or regulation. Service Organizations and the Program Distributor
may receive from the fund and or the Direct Distributor, for shareholder
servicing, monthly fees at a rate that shall not exceed .20% per annum of the
average daily net asset value of the fund's shares owned by or for shareholders
with whom the Service Organization has a servicing relationship. Banks and other
financial service firms may be subject to various state laws, and may be
required to register as dealers pursuant to state law.
The Investment Company has entered into Service Agreements with the Advisor and
the following entities related to the Advisor: State Street Brokerage Services,
Inc., Metropolitan Division of Commercial Banking, Retirement Investment
Services and State Street Solutions. The purpose of the Service Agreements is to
obtain shareholder services for fund shares owned by clients of each of these
entities. In return for these services, the Investment Company pays each of the
entities a fee. These agreements are reviewed annually by the board of trustees.
Payments to the Director Distributor, as well as payments to Service
Organizations and the Program Distributor, are not permitted by the Plan to
exceed .25% per year of the average net asset value of the fund's shares. Any
payments that are required to be made by the Distribution Agreement and any
Service Agreement but could not be made because of the .25% limitation may be
carried forward and paid in subsequent years so long as the Plan is in effect.
The fund's liability for any such expenses carried forward shall terminate at
the end of two years following the year in which the expenditure was incurred.
Service Organizations will be responsible for prompt transmission of purchase
and redemption orders and may charge fees for their services.
Technology and Support Services
Technology and support services are provided by OWNx.com Ownx.com will provide
the fund with an interface to the OWNx.com CustomerOwner Program technology
infrastructure. This interface will:
o Provide the fund's portfolio manager with the aggregate consumer spending
patterns across participating companies in a format that can be used to
maintain the underlying stock positions of the fund; and
o Enable members to convert Ownership Credits (OCs) into shares of the fund
once they reach the minimum initial investment.
This interface will also link the technology of the OWNx.com CustomerOwner
Program to the fund's transfer agent so that shareholder accounts can be
established and maintained on an ongoing basis with minimal manual processing.
OWNx.com will also service OWNx.com CustomerOwner Program member accounts in a
separate phone service center in order to isolate the cost of this support from
the fund. In addition, OWNx.com will provide the technology infrastructure
necessary to determine the cash transfers required from each participating
company to fund its obligations to OWNx.com CustomerOwner Program members. The
mailing address of OWNx.com is 1105 Washington Street, Newton, MA 02465.
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Independent Accountants
PricewaterhouseCoopers LLP serves as the Investment Company's independent
accountants. PricewaterhouseCoopers LLP is responsible for performing annual
audits of the financial statements and financial highlights in accordance with
auditing standards generally accepted in the United States, a review of federal
tax returns, and, pursuant to Rule 17f-2 of the 1940 Act, three security counts.
The mailing address of PricewaterhouseCoopers LLP is 160 Federal Street, Boston,
MA 02110.
Legal Counsel
Goodwin, Procter & Hoar LLP, Exchange Place, Boston, MA 02109, provides legal
services to the SSgA Funds.
BROKERAGE PRACTICES AND COMMISSIONS
All portfolio transactions are placed on behalf of the fund by Advisor. Advisor
ordinarily pays commissions when it executes transactions on a securities
exchange. In contrast, there is generally no stated commission on the purchase
or sale of securities traded in the over-the-counter markets, including most
debt securities and money market instruments. Rather, the price of such
securities includes an undisclosed "commission" in the form of a mark-up or
mark-down. The cost of securities purchased from underwriters includes an
underwriting commission or concession.
The fund contemplates purchasing most equity securities directly in the
securities markets located in emerging or developing countries or in the
over-the-counter markets. ADRs and EDRs may be listed on stock exchanges, or
traded in the over-the-counter markets in the US or Europe, as the case may be.
ADRs, like other securities traded in the US, will be subject to negotiated
commission rates.
Subject to the arrangements and provisions described below, the selection of a
broker or dealer to execute portfolio transactions is usually made by Advisor.
The Advisory Agreement provides, in substance and subject to specific directions
from officers of Investment Company, that in executing portfolio transactions
and selecting brokers or dealers, the principal objective is to seek the best
overall terms available to the fund. Ordinarily, securities will be purchased
from primary markets, and Advisor shall consider all factors it deems relevant
in assessing the best overall terms available for any transaction, including the
breadth of the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, for the specific transaction and other
transactions on a continuing basis.
The Advisory Agreement authorizes Advisor to select brokers or dealers to
execute a particular transaction, including principal transactions, and in
evaluating the best overall terms available, to consider the "brokerage and
research services" (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) provided to the fund and/or Advisor (or its
affiliates). Advisor is authorized to cause the fund to pay a commission to a
broker or dealer who provides such brokerage and research services for executing
a portfolio transaction which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction. The fund or
Advisor, as appropriate, must determine in good faith that such commission was
reasonable in relation to the value of the brokerage and research services
provided--viewed in terms of that particular transaction or in terms of all the
accounts over which Advisor exercises investment discretion. Any commission, fee
or other remuneration paid to an affiliated broker-dealer is paid in compliance
with the fund's procedures adopted in accordance with Rule 17e-1 of the 1940
Act.
The Advisor arranges for the purchase and sale of fund securities and selects
brokers and dealers (including affiliates), which in its best judgment provide
prompt and reliable execution at favorable prices and reasonable commission
rates. The Advisor may select brokers and dealers which provide it with research
services and may cause a fund to pay such brokers and dealers commissions which
exceed those other brokers and dealers may have charged, if it views the
commissions as reasonable in relation to the value of the brokerage and/or
research services. In selecting a broker, including affiliates, for a
transaction, the primary consideration is prompt and effective execution of
orders at the most favorable prices. Subject to that primary consideration,
dealers may be selected for research, statistical or other services to enable
the fund to supplement its own research and analysis. Research services
generally include services which assist investment professionals in their
investment decision-making process, including information concerning securities
or indexes, performance, technical market action, pricing, risk measurement,
corporate responsibility and proxy issues, in addition to political and economic
developments.
With respect to brokerage commissions, if commissions are generated by the fund,
the Board reviews, at least annually, the commissions paid by the fund to
evaluate whether the commissions paid over representative periods of time were
reasonable in relation to commissions being charged by other brokers and the
benefits to the fund. The trustees periodically review Advisor's performance of
its responsibilities in connection with the placement of portfolio transactions
on behalf of the fund and review the prices paid by the fund over representative
periods of time to determine if such prices are reasonable in relation to the
benefits provided to the fund. Certain services received by Advisor
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attributable to a particular fund transaction may benefit one or more other
accounts for which Advisor exercises investment discretion or an Investment
Portfolio other than such fund. Advisor's fees are not reduced by Advisor's
receipt of such brokerage and research services.
PRICING OF FUND SHARES
Shares of the SSgA Funds are offered without a sales commission by Russell Fund
Distributors, Inc. (the Distributor), to institutional and retail investors
which invest for their own account or in a fiduciary or agency capacity. The
fund determines the price per share once each business day at 4:00 p.m. Eastern
time. A business day is one on which the New York Stock Exchange is open for
regular trading. Currently, the New York Stock Exchange is open for trading
every weekday except New Year's Day, Martin Luther King, Jr., Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day.
Trading may occur in debt securities and in foreign securities at times when the
New York Stock Exchange is closed (including weekends and holidays or after 4:00
p.m. Eastern time on a regular business day). The trading of portfolio
securities at such times may significantly increase or decrease the net asset
value of fund shares when the shareholder is not able to purchase or redeem fund
shares. Further, because foreign securities markets may close prior to the time
the fund determines net asset value, events affecting the value of the portfolio
securities occurring between the time prices are determined and the time the
fund calculates net asset value may not be reflected in the calculation of net
asset value unless the board of trustees determine that a particular event would
materially affect the net asset value. If such an event occurs, these securities
will be valued at their fair value following procedures approved by the
trustees.
With the exceptions noted below, the fund values portfolio securities at market
value. This generally means that equity securities and fixed income securities
listed and traded principally on any national securities exchange are valued on
the basis of the last sale price or, lacking any sales, at the closing bid
price, on the primary exchange on which the security is traded. United States
equity and fixed-income securities traded principally over-the-counter and
options are valued on the basis of the last reported bid price. Futures
contracts are valued on the basis of the last reported sales price.
Because many fixed income securities do not trade each day, last sale or bid
prices are frequently not available. Therefore, fixed income securities may be
valued using prices provided by a pricing service when such prices are believed
to reflect the market value of such securities.
The fund values securities maturing within 60 days of the valuation date at
amortized cost unless the Board determines that the amortized cost method does
not represent fair value. This method involves valuing an instrument at its cost
and thereafter assuming a constant amortization to maturity of any discount or
premium, even though the portfolio security may increase or decrease in market
value generally in response to changes in interest rates. While this method
provides certainty in valuation, it may result in periods during which value, as
determined by amortized cost, is higher or lower than the price a fund would
receive if it sold the instrument.
For example, in periods of declining interest rates, the daily yield on fund
shares computed by dividing the annualized daily income on the fund's portfolio
by the net asset value based upon the amortized cost valuation technique may
tend to be higher than a similar computation made by using a method of valuation
based upon market prices and estimates. In periods of rising interest rates, the
daily yield on fund shares computed the same way may tend to be lower than a
similar computation made by using a method of calculation based upon market
prices and estimates.
The Investment Company filed an exemption from Section 18(f) of the 1940 Act on
Form N-18-F on December 29, 1987, which may enable it to redeem securities in
kind. Therefore, a fund may pay any portion of the redemption amount (in excess
of $25 million) by a distribution in kind of readily marketable securities from
its portfolio instead of cash.
TAXES
Each portfolio of the SSgA Funds intends to qualify for treatment as a regulated
investment company ("RIC") under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). As a RIC, each fund will not be liable for
federal income taxes on taxable net investment income and net capital gain
(long-term capital gains in excess of short-term capital losses) that it
distributes to its shareholders, provided that the fund distributes annually to
its shareholders at least 90% of its net investment income and net short-term
capital gain for the taxable year ("Distribution Requirement"). For a fund to
qualify as a RIC it must abide by all of the following requirements: (1) at
least 90% of the fund's gross income each taxable year must be derived from
dividends, interest, payments with respect to securities loans, gains from the
sale or other disposition of stock or securities or foreign currencies, or other
income (including gains from options, futures or forward contracts) derived with
respect to its business of investing in such stock, securities or currencies
("Income Requirement"); (2) at the close of each quarter of the fund's taxable
year, at least 50% of the value of its total assets must be represented by cash
and cash items, US Government securities, securities of other RICs, and other
securities, with such other securities limited, in respect of any one issuer, to
an amount that does not exceed 5% of the total assets of the fund or that does
not represent more than 10% of the outstanding voting securities of any one
issuer; and (3) at the
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close of each quarter of the fund's taxable year, not more than 25% of the value
of its assets may be invested in securities (other than US Government securities
or the securities of other RICs) of any one issuer.
The fund will be subject to a nondeductible 4% excise tax to the extent it fails
to distribute by the end of any calendar year an amount at least equal to the
sum of: (1) 98% of its ordinary income for that year; (2) 98% of its capital
gain net income for the one-year period ending on October 31 of that year; and
(3) certain undistributed amounts from the preceding calendar year. For this and
other purposes, dividends declared in October, November or December of any
calendar year and made payable to shareholders of record in such month will be
deemed to have been received on December 31 of such year if the dividends are
paid by the fund subsequent to December 31 but prior to February 1 of the
following year.
If a shareholder receives a distribution taxable as a long-term gain with
respect to shares of the fund and redeems or exchanges the shares, and has held
the shares for six months or less, then any loss on the redemption or exchange
will be treated as a long-term loss to the extent of the respective capital gain
distribution.
Issues Related to Hedging and Option Investments. The fund's ability to make
certain investments may be limited by provisions of the Code that require
inclusion of certain unrealized gains or losses in the fund's income for
purposes of the Income Requirement and the Distribution Requirement, and by
provisions of the Code that characterize certain income or loss as ordinary
income or loss rather than capital gain or loss. Such recognition,
characterization and timing rules will affect investments in certain futures
contracts, options, foreign currency contracts and debt securities denominated
in foreign currencies.
State and Local Taxes. Depending upon the extent of each fund's activities in
states and localities in which its offices are maintained, its agents or
independent contractors are located or it is otherwise deemed to be conducting
business, the fund may be subject to the tax laws of such states or localities.
The foregoing discussion is only a summary of certain federal income tax issues
generally affecting the fund and its shareholders. Circumstances among investors
may vary and each investor is encouraged to discuss investment in the fund with
the investor's tax advisor.
CALCULATION OF PERFORMANCE DATA
The fund computes average annual total return by using a standardized method of
calculation required by the Securities and Exchange Commission. Average annual
total return is computed by finding the average annual compounded rates of
return on a hypothetical initial investment of $1,000 over the one-year,
five-year and ten-year periods (or life of the funds as appropriate), that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
n
P(1+T) = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a $1,000 payment
made at the beginning of the 1-year, 5-year
and 10-year periods at the end of the year
or period
The calculation assumes that all dividends and distributions of the fund are
reinvested at the price stated in the Prospectus on the dividend dates during
the period, and includes all recurring and nonrecurring fees that are charged to
all shareholder accounts.
Total returns and other performance figures are based on historical earnings and
are not indicative of future performance.
ADDITIONAL INFORMATION
Shareholder Meetings
Investment Company will not have an annual meeting of shareholders. Special
meetings may be convened: (1) by the board of trustees; (2) upon written request
to the board by the holders of at least 10% of the outstanding shares; or (3)
upon the board's failure to honor the shareholders' request described above, by
holders of at least 10% of the outstanding shares giving notice of the special
meeting to the shareholders.
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Capitalization and Voting
Each fund share has one vote. There are no cumulative voting rights. There is no
annual meeting of shareholders, but special meetings may be held. On any matter
that affects only a particular investment fund, only shareholders of that fund
may vote unless otherwise required by the 1940 Act or the Master Trust
Agreement. The trustees hold office for the life of the Trust. A Trustee may
resign or retire, and may be removed at any time by a vote of two-thirds of
Investment Company shares or by a vote of a majority of the trustees. The
trustees shall promptly call and give notice of a meeting of shareholders for
the purpose of voting upon removal of any trustee when requested to do so in
writing by holders of not less than 10% of the shares then outstanding. A
vacancy on the board of trustees may be filled by the vote of a majority of the
remaining trustees, provided that immediately thereafter at least two-thirds of
the trustees have been elected by shareholders.
The fund share represents an equal proportionate interest in the fund, has a par
value of $.001 per share and is entitled to such relative rights and preferences
and dividends and distributions earned on the assets belonging to the fund as
may be declared by the board of trustees. Fund shares are fully paid and
nonassessable by Investment Company and have no preemptive rights.
The Investment Company does not issue share certificates for the fund. Transfer
Agent sends monthly statements to shareholders of the fund concurrent with any
transaction activity, confirming all investments in or redemptions from their
accounts. Each statement also sets forth the balance of shares held in the
account.
Federal Law Affecting State Street
Federal laws may prohibit state chartered banks such as State Street from
engaging in the business of certain kinds of underwriting and other activities
and may impact the services provided by State Street. SSgA Funds shares are not
endorsed or guaranteed by State Street or its affiliates, are not deposits or
obligations of State Street or its affiliates, and are not insured by the
Federal Deposit Insurance Corporation or any other governmental agency.
Changes in federal or state statutes and regulations relating to the permissible
activities of banks and their affiliates, as well as judicial or administrative
decisions or interpretations of such or future statutes and regulations, could
prevent the Advisor from continuing to perform all or a part of the above
services for its customers and/or the fund. If the Advisor were prohibited from
serving the fund in any of its present capacities, the board of trustees would
seek an alternative provider(s) of such services. In such event, changes in the
operation of the fund may occur. It is not expected by the Advisor that existing
shareholders would suffer any adverse financial consequences (if another advisor
with equivalent abilities is found) as a result of any of these occurrences.
FINANCIAL STATEMENTS
Audited financial statements will be available within 60 days following the end
of the fund's then current fiscal year ending August 31. When available, copies
of the financial statements can be obtained without charge by calling (800)
647-7327.
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PART C: OTHER INFORMATION
Item 23. Exhibits
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<TABLE>
<CAPTION>
INCORPORATED BY REFERENCE
NAME OF EXHIBIT OR EXHIBIT NUMBER
<S> <C> <C>
1. First Amended and Restated
Master Trust Agreement Post-Effective Amendment #35 (12/29/95)
(a) Amendment No. 1 Post-Effective Amendment #35 (12/29/95)
(b) Amendment No. 2 Post-Effective Amendment #35 (12/29/95)
(c) Amendment No. 3 Post-Effective Amendment #35 (12/29/95)
(d) Amendment No. 4 Post-Effective Amendment #35 (12/29/95)
(e) Amendment No. 5 Post-Effective Amendment #35 (12/29/95)
(f) Amendment No. 6 Post-Effective Amendment #35 (12/29/95)
(g) Amendment No. 7 Post-Effective Amendment #35 (12/29/95)
(h) Amendment No. 8 Post-Effective Amendment #35 (12/29/95)
(i) Amendment No. 9 Post-Effective Amendment #40 (4/10/97)
(j) Amendment No. 10 Post-Effective Amendment #43 (2/4/98)
(k) Amendment No. 11 Post-Effective Amendment #47 (9/1/98)
(l) Amendment No. 12 Post-Effective Amendment #50 (3/15/99)
(m) Amendment No. 13 Post-Effective Amendment #56 (5/31/00)
(n) Amendment No. 14 To be filed by Amendment
2. Bylaws Post-Effective Amendment #42 (12/24/97)
3. Instruments Defining Rights of Security Holders None
4. Deferred Compensation Plan Post-Effective Amendment #50 (3/15/99)
5(a) Investment Advisory Agreement Post-Effective Amendment #35 (12/29/95)
(b) Letter agreement incorporating the Yield Plus and Bond Post-Effective Amendment #35 (12/29/95)
Market Funds within the Investment Advisory Agreement
(c) Letter agreement incorporating the US Treasury Money Post-Effective Amendment #35 (12/29/95)
Market and US Treasury Obligations Funds within the
Investment Advisory Agreement
(d) Letter agreement incorporating the Growth and Income and Post-Effective Amendment #35 (12/29/95)
Intermediate Funds within the Investment Advisory Agreement
(e) Letter agreement incorporating the Emerging markets Fund Post-Effective Amendment #35 (12/29/95)
and the Prime Money Market Fund within the Investment
Advisory Agreement
(f) Letter agreement incorporating the Tax Free Money Market Post-Effective Amendment #35 (12/29/95)
Fund within the Investment Advisory Agreement
(g) Letter agreement incorporating the Small Cap, Active Post-Effective Amendment #35 (12/29/95)
International and Real Estate Equity Funds within the
Investment Advisory Agreement
(h) Letter agreement incorporating the Life Solutions Post-Effective Amendment #41 (6/2/97)
Growth, Balanced and Income and Growth Funds within the
Investment Advisory Agreement
(i) Letter agreement incorporating the SSgA Special, Post-Effective Amendment #45 (4/28/98)
International Growth Opportunities and High Yield Bond
Funds within the Investment Advisory Agreement
(j) Letter agreement incorporating the SSgA Aggressive Post-Effective Amendment #47 (9/1/98)
Equity Fund within the Investment Advisory Agreement
(k) Letter agreement incorporating the SSgA IAM SHARES Fund Post-Effective Amendment #51 (5/28/99)
within the Investment Advisory Agreement
(l) Letter agreement incorporating the SSgA Intermediate Post-Effective Amendment #56 (5/31/00)
Municipal Bond Fund within the Investment Advisory Agreement
(m) Letter agreement incorporating the SSgA OWNx CustomerOwner To be filed by Amendment
Fund within the Investment Advisory Agreement
6. Distribution Agreements
(a) Distribution Agreement (Class A Shares) Post-Effective Amendment #35 (12/29/95)
(a)(i) Letter agreement incorporating the Yield Plus and Bond Post-Effective Amendment #35 (12/29/95)
Market Funds within the Distribution Agreement
(a)(ii) Letter agreement incorporating the US Treasury Money Post-Effective Amendment #35 (12/29/95)
Market and US Treasury Obligations Funds within the
Distribution Agreement
<PAGE>
(a)(iii) Letter agreement incorporating the Growth and Income and Post-Effective Amendment #35 (12/29/95)
Intermediate Funds within the Distribution Agreement
(a)(iv) Letter agreement incorporating the Emerging Markets and Post-Effective Amendment #35 (12/29/95)
Prime Money Market Funds within the Distribution
Agreement
(a)(v) Letter agreement incorporating the Class A shares of the Post-Effective Amendment #35 (12/29/95)
Tax Free Money Market Fund within the Distribution Agreement
(a)(vi) Letter agreement incorporating the Small Cap, Active Post-Effective Amendment #35 (12/29/95)
International and Real Estate Equity Funds within the
Distribution Agreement
(a)(vii) Letter agreement incorporating the Life Solutions Post-Effective Amendment #41 (6/2/97)
Growth, Balanced and Income and Growth Funds within the
Distribution Agreement
(a)(viii) Letter agreement incorporating the Special Small Cap, Post-Effective Amendment #45 (4/28/98)
International Growth Opportunities and High Yield Bond
Funds within the Distribution Agreement
(a)(ix) Letter agreement incorporating the SSgA Aggressive Post-Effective Amendment #47 (9/1/98)
Equity Fund within the Distribution Agreement
(a)(x) Letter agreement incorporating the SSgA IAM SHARES Fund Post-Effective Amendment #51 (5/28/99)
within the Distribution Agreement
(a)(xi) Letter agreement incorporating the SSgA Intermediate Post-Effective Amendment #56 (5/31/00)
Municipal Bond Fund within the Distribution Agreement
(a)(xii) Letter agreement incorporating the SSgA OWNx CustomerOwner To be filed by Amendment
Fund within the Distribution Agreement
(b) Distribution Agreement (regarding Class B Shares of the Post-Effective Amendment #42 (12/24/97)
Money Market and US Government Money Market Funds)
(b)(i) Letter agreement incorporating the Class B Shares of the To be filed by amendment
Tax Free Money Market Fund within the Distribution Agreement
(c) Distribution Agreement (regarding Class C Shares of the Post-Effective Amendment #42 (12/24/97)
Money Market and US Government Money Market Funds)
(c)(i) Letter Agreement incorporating the Class C Shares of the To be filed by amendment
Tax Free Money Market Fund within the Distribution Agreement
7. Bonus, profit sharing, or pension plans None
8.(a) Custodian Contract Post-Effective Amendment #35 (12/29/95)
(b) Letter agreement incorporating the Yield Plus and Bond Post-Effective Amendment #35 (12/29/95)
Market Fund into the Custodian Contract
(c) Letter agreement incorporating the US Treasury Money Post-Effective Amendment #35 (12/29/95)
Market and US Treasury Obligations Funds into the Custodian
Contract
(d) Letter agreement incorporating the Growth and Income and Post-Effective Amendment #35 (12/29/95)
Intermediate Funds into the Custodian Contract
(e) Letter agreement incorporating the Emerging Markets and Post-Effective Amendment #35 (12/29/95)
Prime Money Market Funds into the Custodian Contract
(f) Fee Schedule, dated February 17, 1994, to Custodian Post-Effective Amendment #35 (12/29/95)
Contract
(g) Letter agreement incorporating the Tax Free Money Market Post-Effective Amendment #35 (12/29/95)
Fund into the Custodian Contract
(h) Letter agreement incorporating the Small Cap, Active Post-Effective Amendment #35 (12/29/95)
International and Real Estate Equity Funds into the
Custodian Contract
(i) Letter agreement incorporating the Life Solutions Post-Effective Amendment #41 (6/2/97)
Growth, Balanced and Income and Growth Funds into the
Custodian Contract
(j) Letter agreement incorporating the Special, Post-Effective Amendment #45 (4/28/98)
International Growth Opportunities and High Yield Bond
Funds into the Custodian Contract
<PAGE>
(k) Letter agreement incorporating the Aggressive Equity Post-Effective Amendment #47 (9/1/98)
Fund into the Custodian Contract
(l) Letter agreement incorporating the IAM SHARES Fund into Post-Effective Amendment #51 (5/28/99)
the Custodian Contract
(m) Letter agreement incorporating the Intermediate Municipal Post-Effective Amendment #56 (5/31/00)
Bond Fund into the Custodian Contract
(n) Letter agreement incorporating the OWNx CustomerOwner Fund To be filed by Amendment
into the Custodian Contract
9(a)(i) Transfer Agency and Service Agreement Post-Effective Amendment #35 (12/29/95)
(a)(ii) Letter agreement incorporating the Yield Plus and Bond Post-Effective Amendment #35 (12/29/95)
Market Funds within the Transfer Agency and Service
Agreement
(a)(iii) Letter agreement incorporating the US Treasury Money Post-Effective Amendment #35 (12/29/95)
Market and US Treasury Obligations Funds within the
Transfer Agency and Service Agreement
(a)(iv) Letter agreement incorporating the Growth and Income and Post-Effective Amendment #35 (12/29/95)
Intermediate Funds within the Transfer Agency and Service
Agreement
(a)(v) Letter agreement incorporating the Emerging markets and Post-Effective Amendment #35 (12/29/95)
Prime Money Market Funds within the Transfer Agency and
Service Agreement
(a)(vi) Letter agreement incorporating the Tax Free Money Market Post-Effective Amendment #35 (12/29/95)
Fund within the Transfer Agency and Service Agreement
(a)(vii) Letter agreement incorporating the Small Cap, Active Post-Effective Amendment #35 (12/29/95)
International and Real Estate Equity Funds within the
Transfer Agency and Service Agreement
(a)(viii) Letter agreement incorporating the Life Solutions Post-Effective Amendment #41 (6/2/97)
Growth, Balanced and Income and Growth Funds within the
Transfer Agency and Service Agreement
(a)(ix) Letter agreement incorporating the Special, Post-Effective Amendment #45 (4/28/98)
International Growth Opportunities and High Yield Bond
Funds within the Transfer Agency and Service Agreement
(a)(x) Letter agreement incorporating the Aggressive Equity Post-Effective Amendment #47 (9/1/98)
Fund within the Transfer Agency and Service Agreement
(a)(xi) Letter agreement incorporating the IAM SHARES Fund Post-Effective Amendment #51 (5/28/99)
within the Transfer Agency and Service Agreement
(a)(xii) Letter agreement incorporating the Intermediate Municipal Post-Effective Amendment #56 (5/31/00)
Bond Fund within the Transfer Agency and Service Agreement
(a)(xiii) Letter agreement incorporating the OWNx Customer Owner Fund To be filed by Amendment
within the Transfer Agency and Service Agreement
(b)(i) Administration Agreement Post-Effective Amendment #35 (12/29/95)
(b)(ii) Letter agreement incorporating the Yield Plus and Bond Post-Effective Amendment #35 (12/29/95)
Market Funds within the Administration Agreement
(b)(iii) Letter agreement incorporating the US Treasury Money Post-Effective Amendment #35 (12/29/95)
Market and US Treasury Obligations Funds within the
Administration Agreement
(b)(iv) Letter agreement incorporating the Growth and Income and Post-Effective Amendment #35 (12/29/95)
Intermediate Funds within the Administration Agreement
(b)(v) Letter agreement incorporating the Emerging Markets and Post-Effective Amendment #35 (12/29/95)
Prime Money Market Funds within the Administration
Agreement
(b)(vi) Letter agreement incorporating the Tax Free Money Market Post-Effective Amendment #35 (12/29/95)
Fund within the Administration Agreement
(b)(vii) Letter agreement incorporating the Small Cap, Active Post-Effective Amendment #35 (12/29/95)
International and Real Estate Equity Funds within the
Administration Agreement
(b)(viii) Letter agreement incorporating the Life Solutions Post-Effective Amendment #35 (12/29/95)
Growth, Balanced and Income and Growth Funds within the
Administration Agreement
(b)(ix) Amendment No. 4 to the Administration Agreement between Post-Effective Amendment #41 (6/2/97)
Frank Russell Investment Management Company and SSgA
Funds
<PAGE>
(b)(x) Letter agreement incorporating the Special, Post-Effective Amendment #45 (4/28/98)
International Growth Opportunities and High Yield Bond
Funds within the Administration Agreement
(b)(xi) Letter agreement incorporating the Aggressive Equity Post-Effective Amendment #47 (9/1/98)
Fund within the Administration Agreement
(b)(xii) Letter agreement incorporating the IAM SHARES Fund Post-Effective Amendment #51 (5/28/99)
within the Administration Agreement
(b)(xiii) Letter agreement incorporating the Intermediate Municipal Post-Effective Amendment #56 (5/31/00)
Bond Fund within the Administration Agreement
(b)(xiv) Letter agreement incorporating the OWNx CustomerOwner Fund To be filed by Amendment
within the Administration Agreement
10. Opinion of Counsel
(a) Relating to The Seven Seas Series Money Market Fund Post-Effective Amendment #42 (12/24/97)
(b) Relating to The Seven Seas Series US Government Money Post-Effective Amendment #42 (12/24/97)
Market Fund
(c) Relating to The Seven Seas Series S&P 500 Index, S&P Post-Effective Amendment #42 (12/24/97)
Midcap Index, Matrix Equity, International European
Index, International Pacific Index and Short Term
Government Securities Funds
(d) Relating to The Seven Seas Series Yield Plus and Bond Post-Effective Amendment #42 (12/24/97)
Market Funds
(e) Relating to The Seven Seas Series US Treasury Money Post-Effective Amendment #42 (12/24/97)
Market and Treasury Obligations Funds
(f) Relating to The Seven Seas Series Growth and Income and Post-Effective Amendment #42 (12/24/97)
Intermediate Funds
(g) Relating to The Seven Seas Series Emerging Markets and Post-Effective Amendment #42 (12/24/97)
Prime Money Market Funds
(h) Relating to Class A, Class B and Class C Shares of The Post-Effective Amendment #42 (12/24/97)
Seven Seas Series Money Market and US Government Money
Market Funds
(i) Relating to Class A, Class B and Class C Shares of The Post-Effective Amendment #42 (12/24/97)
Seven Seas Series Tax Free Money Market Funds
(j) Relating to The Seven Seas Series Real Estate Equity Fund Post-Effective Amendment #42 (12/24/97)
(k) Relating to the SSgA Life Solutions Growth, Balanced and Post-Effective Amendment #41 (6/2/97)
Income and Growth Funds
(l) Relating to the Special, International Growth Post-Effective Amendment #45 (4/28/98)
Opportunities and High Yield Bond Funds
(m) Relating to the Aggressive Equity Fund Post-Effective Amendment #47 (9/1/98)
(n) Relating to the IAM SHARES Fund Post-Effective Amendment #51 (5/28/99)
(o) Relating to the Intermediate Municipal Bond Fund Post-Effective Amendment #56 (5/31/00)
(p) Relating to the OWNx CustomerOwner Fund To be filed by Amendment
11. Other Opinions: Consent of Independent Accountants Post-Effective Amendment #54 (12/17/99)
12. Financial Statements Omitted from Item 23 None
13. Letter of Investment Intent
(a) The Seven Seas Series Money Market Fund Post-Effective Amendment #42 (12/24/97)
(b) The Seven Seas Series US Government Money Market Fund Post-Effective Amendment #42 (12/24/97)
(c) The Seven Seas Series Government Securities, Index, Post-Effective Amendment #42 (12/24/97)
Midcap Index, Matrix, European Index and Pacific Index
Funds
(d) The Seven Seas Series Yield Plus and Bond Market Funds Post-Effective Amendment #42 (12/24/97)
(e) The Seven Seas Series US Treasury Money Market and Post-Effective Amendment #42 (12/24/97)
Treasury Obligations Funds
(f) The Seven Seas Series Growth and Income and Intermediate Post-Effective Amendment #42 (12/24/97)
Funds
(g) The Seven Seas Series Emerging Markets and Prime Money Post-Effective Amendment #42 (12/24/97)
Market Funds
(h) Class B and C Shares of The Seven Seas Series Money Post-Effective Amendment #42 (12/24/97)
Market and US Government Money Market Funds
(i) The Seven Seas Series Tax Free Money Market Fund (Class Post-Effective Amendment #42 (12/24/97)
A, B and C Shares)
<PAGE>
(j) The Seven Seas Series Active International Fund Post-Effective Amendment #42 (12/24/97)
(k) SSgA Life Solutions Growth, Balanced and Income and Post-Effective Amendment #41 (6/2/97)
Growth Funds
(l) SSgA Special, International Growth Opportunities and Post-Effective Amendment #45 (4/28/98)
High Yield Bond Funds
(m) SSgA Aggressive Equity Fund Post-Effective Amendment #47 (9/1/98)
(n) SSgA IAM SHARES Fund Post-Effective Amendment #51 (5/28/99)
(o) SSgA Intermediate Municipal Bond Fund Post-Effective Amendment #56 (5/31/00)
(p) SSgA OWNx CustomerOwner Fund To be filed by Amendment
14. Prototype Retirement Plan None
15. Distribution Plans pursuant to Rule 12b-1
(a) Plan of Distribution for the government Securities, Post-Effective Amendment #35 (12/29/95)
Index, Midcap Index, Matrix, European Index and Pacific
Index Funds as approved by the Board of Trustees
(a)(i) Addendum to the Plan of Distribution incorporating the Post-Effective Amendment #35 (12/29/95)
Yield Plus and Bond Market Funds into the Plan
(a)(ii) Addendum to the Plan of Distribution incorporating the Post-Effective Amendment #35 (12/29/95)
Money Market and US Government Money Market Funds into
the Plan (Class A Shares)
(a)(iii) Addendum to the Plan of Distribution incorporating the Post-Effective Amendment #35 (12/29/95)
US Treasury Money Market and US Treasury Obligations
Funds into the Plan
(a)(iv) Addendum to the Plan of Distribution incorporating the Post-Effective Amendment #35 (12/29/95)
Growth and Income and Intermediate Funds into the Plan
(a)(v) Addendum to the Plan of Distribution incorporating the Post-Effective Amendment #35 (12/29/95)
Emerging Markets and Prime Money Market Funds into the
Plan
(a)(vi) Addendum to the Plan of Distribution incorporating the Post-Effective Amendment #35 (12/29/95)
Class A Shares of the Tax Free Money Market Fund into
the Plan
(a)(vii) Addendum to the Plan of Distribution incorporating the Post-Effective Amendment #35 (12/29/95)
Small Cap, Active International and Real Estate Equity
Funds into the Plan
(a)(viii) Addendum to the Plan of Distribution incorporating the Post-Effective Amendment #41 (6/2/97)
Life Solutions Growth, Balanced and Income and Growth
Funds into the Plan
(a)(ix) Addendum to the Plan of Distribution incorporating the Post-Effective Amendment #45 (4/28/98)
Special, International Growth Opportunities and High
Yield Bond Funds into the Plan
(a)(x) Addendum to Plan of Distribution incorporating the Post-Effective Amendment #47 (9/1/98)
Aggressive Equity Fund in the Plan
(a)(xi) Addendum to Plan of Distribution incorporating the IAM Post-Effective Amendment #51 (5/28/99)
SHARES Fund into the Plan
(a)(xii) Addendum to Plan of Distribution incorporating the Post-Effective Amendment #56 (5/31/00)
Intermediate Municipal Bond Fund into the Plan
(a)(xiii) Addendum to Plan of Distribution incorporating the To be filed by Amendment
OWNx CustomerOwner Fund into the Plan
(b) Plan of Distribution for the Money Market and US Post-Effective Amendment #42 (12/24/97)
Government Money Market Funds (Class B Shares) as
approved by the Board of Trustees
(b)(i) Addendum to the Plan of Distribution incorporating the To be filed by amendment
Class B Shares of the Tax Free Money Market Fund
(c) Plan of Distribution for the Money Market and US Post-Effective Amendment #42 (12/24/97)
Government Money Market Funds (Class C Shares) as
approved by the Board of Trustees
(c)(i) Addendum to the Plan of Distribution incorporating the To be filed by amendment
Class C Shares of the Tax Free Money Market Fund
(d) Shareholder Servicing Agreement, by and between SSgA Post-Effective Amendment #42 (12/24/97)
Funds and State Street Bank and Trust Company
(d)(i) Shareholder Servicing Agreement, by and between SSgA Post-Effective Amendment #39 (12/27/96)
Funds and State Street Brokerage Services, Inc.
(d)(ii) Shareholder Servicing Agreement, by and between SSgA Post-Effective Amendment #39 (12/27/96)
Funds and State Street Bank and Trust Company,
Metropolitan Division of Commercial Banking Services
<PAGE>
(d)(iii) Shareholder Servicing Agreement, by and between SSgA Post-Effective Amendment #42 (12/24/97)
Funds and State Street Bank and Trust Company Retirement
Investment Services Division
(d)(iv) Shareholder Servicing Agreement, by and between SSgA Post-Effective Amendment #42 (12/24/97)
Funds and State Street Solutions
(d)(v) Shareholder Servicing Agreement, by and between SSgA Post-Effective Amendment #50 (3/15/99)
Funds and Global Cash Management Division of State
Street Bank and Trust Company
(e) Form of Agreement Pursuant to Rule 12b-1 Plan (relating To be filed by amendment
to Class B Shares) as approved by the Board of Trustees
(f) Form of Agreement Pursuant to Rule 12b-1 Plan (relating To be filed by amendment
to Class C Shares) as approved by the Board of Trustees
16. Code of Ethics
(a) Relating to the Registrant, Principal Underwriter Post-Effective Amendment #56 (5/31/00)
and Administrator
(b) Relating to the Investment Advisor To be filed by Amendment
17. Financial Data Schedule To be filed by Amendment
</TABLE>
Item 24. Persons Controlled by or Under Common Control with Registrant
-------------------------------------------------------------
None
Item 25. Indemnification
---------------
Indemnification is provided to officers and Trustees of the Registrant
pursuant to Section 6.4 of Article VI of Registrant's First Amended and Restated
Master Trust Agreement, which reads as follows:
"Section 6.4 Indemnification of Trustees, Officers, etc. The Trust shall
indemnify (from the assets of the Sub-Trust or Sub-Trusts in question) each of
its Trustees and officers (including persons who serve at the Trust's request as
directors, officers or trustees of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise [hereinafter referred to as
"Covered Person"]) against all liabilities, including but not limited to amounts
paid in satisfaction of judgments, in compromise or as fines and penalties, and
expenses, including reasonable accountants' and counsel fees, incurred by any
Covered Person in connection with the defense or disposition of any action, suit
or other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered Person may be or may
have been involved as a party or otherwise with which such person may be or may
have been threatened, while in office or thereafter, or by reason of being or
having been such a Trustee or officer, director or trustee, except with respect
to any matter as to which it has been determined that such Covered Person had
acted with willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's office
(such conduct referred to hereafter as "Disabling Conduct"). A determination
that the Covered Person is entitled to indemnification may be made by (i) a
final decision on the merits by a court or other body before whom the proceeding
was brought that the person to be indemnified was not liable by reason of
Disabling Conduct, (ii) dismissal of a court action or an administrative
proceeding against a Covered Person for insufficiency of evidence of Disabling
Conduct, or (iii) a reasonable determination, based upon a review of the facts,
that the indemnitee was not liable by reason of Disabling Conduct by (a) a vote
of a majority of a quorum of Trustees who are neither "interested persons" of
the Trust as defined in section 2(a)(19) of the 1940 Act nor parties to the
proceeding, or (b) an independent legal counsel in a written opinion. Expenses,
including accountants' and counsel fees so incurred by any such Covered Person
(but excluding amounts paid in satisfaction of judgments, in compromise or as
fines or penalties), may be paid from time to time by the Sub-Trust in question
in advance of the final disposition of any such action, suit or proceeding,
provided that the Covered Person shall have undertaken to repay the amounts so
paid to the Sub-Trust in question if it is ultimately determined that
indemnification of such expenses is not authorized under this Article VI and (i)
the Covered Person shall have provided security for such undertaking, (ii) the
Trust shall be insured against losses arising by reason of any lawful advances,
or (iii) a majority of a quorum of the disinterested Trustees who are not a
party to the proceeding, or an independent legal counsel in a written opinion,
shall have determined, based on a review of readily available facts (as opposed
to a full trial-type inquiry), that there is reason to believe that the Covered
Person ultimately will be found entitled to indemnification."
<PAGE>
The Investment Advisory Agreement provides that in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties under the Investment Advisory Agreement or on the part of
the Adviser, or for a loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services, the Adviser shall not be
subject to liability to the Registrant or to any shareholder of the Registrant
for any error of judgment, mistake of law or any other act or omission in the
course of, or connected with, rendering services under the Investment Advisory
Agreement or for any losses that may be sustained in the purchase, holding or
sale of any security.
The Distribution Agreements relating to Class A, Class B and Class C
Shares provide that in the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of obligations or duties under the
Distribution Agreement, the Distributor, its officers, directors and any
controlling person (within the meaning of Section 15 of the 1933 Act)
("Distributor") shall be indemnified by the Registrant from and against any and
all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which Distributor may incur under the
1933 Act or under common law or otherwise arising out of or based upon any
alleged untrue statement of a material fact contained in the Registration
Statement, Prospectus or Statement of Additional Information or arising out of
or based upon any alleged omission to state a material fact required to be
stated in said documents or necessary to make the statements not misleading.
Registrant provides the following undertaking:
"Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to Trustees, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a Trustee, officer, or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Trustee, officer or controlling person
in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by
the final adjudication of such issue."
Item 26. Business and Other Connections of Investment Adviser.
-----------------------------------------------------
The Investment Management Division of State Street Bank and Trust
Company ("State Street") serves as adviser to the Registrant. State Street, a
Massachusetts bank, currently manages large institutional accounts and
collective investment funds. The business, profession, vocation or employment of
a substantial nature which each director or officer of the investment adviser is
or has been, at any time during the past two fiscal years, engaged for his own
account or in the capacity of director, officer, employee, partner or trustee,
is as follows:
<TABLE>
<CAPTION>
NAME CAPACITY WITH ADVISOR BUSINESS NAME AND ADDRESS*
<S> <C> <C>
Tenley E. Albright, MD Director Chairman, Western Resources, Inc.
Two Commonwealth Avenue
Boston, MA 02116-3134
I. MacAlister Booth Director Retired Chairman, President and CEO,
Polaroid Corporation
P.O. Box 428 - 68 Barnes Hill Road
Concord, MA 01742
Marshall N. Carter Chairman and CEO State Street Bank and Trust Company
225 Franklin Street - P.O. Box 351
Boston, MA 02110
James I. Cash, Jr. Director The James E. Robison Professor of
Business Administration, Harvard
Business School (on sabbatical)
c/o Stanford Graduate School of
Business
518 Memorial Way
Stanford University
Stanford, CA 94305-5015
Truman S. Casner Director Partner, Ropes & Gray
One International Place - 37th Floor
Boston, MA 02110
<PAGE>
Nader F. Darehshori Director Chairman, President and CEO, Houghton
Mifflin Company
222 Berkeley - 5th Floor
Boston, MA 02116-3764
Arthur L. Goldstein Director Chairman and CEO, Ionics, Inc.
65 Grove Street
P.O. Box 9131
Watertown, MA 02272-9131
David P. Gruber Director President and CEO, Wyman-Gordon Company
244 Worchester Street
N. Grafton, MA 01536-8001
John M. Kucharski Director Chairman and CEO, EG&G, Inc.
45 William Street
Wellesley, MA 02181
Charles R. LaMantia Director President and CEO, Arthur D. Little,
Inc.
25 Acorn Park
Cambridge, MA 02140
David B. Perini Director Chairman and President, Perini
Corporation
73 Mt. Wayte Avenue
Framingham, MA 01701
Dennis J. Picard Director Chairman and CEO, Raytheon Company
141 Spring Street
Lexington, MA 02173
Alfred Poe Director CEO, MenuDirect Corp.
865 Centennial Avenue
Piscataway, NJ 08854
Bernard W. Reznicek Director President, Premier Group;
National Director, Utility Markets of
Central States Indemnity Company of Omaha
1212 N. 96th Street
Omaha, NE 68114-2274
David A. Spina President and Chief Operating State Street Corporation
Officer 225 Franklin Street - P.O. Box 351
Boston, MA 02110
Diana Chapman Walsh Director President, Wellesley College
106 Central Street
Wellesley, MA 02181
<PAGE>
Robert E. Weissman Director Chairman and CEO, Cognizant Corporation
200 Nyala Farms Road
Westport, CT 06880
</TABLE>
Item 27. Principal Underwriters
----------------------
(a) Russell Fund Distributors, Inc., also acts as principal underwriter
for Frank Russell Investment Company.
(b) The directors and officers of Russell Fund Distributors, Inc., their
principal business address, and positions and offices with the Registrant and
Russell Fund Distributors, Inc. are set forth below:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION AND OFFICES POSITION WITH
BUSINESS ADDRESS* WITH UNDERWRITER REGISTRANT
<S> <C> <C>
Lynn L. Anderson Director and CEO Trustee, Chairman of the Board,
and President
Carla L. Anderson Assistant Secretary Assistant Secretary
Leonard P. Brennan Director None
Karl J. Ege Secretary and General Counsel None
J. David Griswold President and Associate Vice President and Secretary
General Counsel
Linda L. Gutmann Treasurer and Controller None
John C. James Assistant Secretary None
Randall P. Lert Director None
Gregory J. Lyons Assistant Secretary None
B. James Rohrbacher Director, Compliance & Internal Chief Compliance Officer
Audit, Chief Compliance Officer
</TABLE>
*Address of all individuals: 909 A Street, Tacoma, Washington 98402
Item 28. Location of Accounts and Records
--------------------------------
The Registrant's Administrator, Frank Russell Investment Management
Company, 909 A Street, Tacoma, Washington 98402, will maintain the physical
possession of the books and records required by subsection (b)(4) of Rule 31a-1
under the Investment Company Act of 1940. All other accounts, books and
documents required by Rule 31a-1 are maintained in the physical possession of
Registrant's investment adviser, transfer agent, and custodian, State Street
Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts, 02110 and
1776 Heritage Drive, North Quincy, Massachusetts 02171.
<PAGE>
Item 29. Management Services
-------------------
Not applicable.
Item 30. Undertakings
------------
Not applicable.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, The Registrant, the SSgA Funds has duly caused this
Post-Effective Amendment No. 57 to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of Boston,
and Commonwealth of Massachusetts, on the 2nd day of June, 2000.
By: /s/ Lynn L. Anderson
-----------------------------------
Lynn L. Anderson, President,
Treasurer and Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities as
indicated on June 2, 2000.
Signature Title
--------- -----
/s/ Lynn L. Anderson Trustee, President, Treasurer and
----------------------------- Chairman of the Board
Lynn L. Anderson
/s/ Steven J. Mastrovich Trustee
-----------------------------
Steven J. Mastrovich
/s/ William L. Marshall Trustee
-----------------------------
William L. Marshall
/s/ Patrick J. Riley Trustee
-----------------------------
Patrick J. Riley
/s/ Richard D. Shirk Trustee
-----------------------------
Richard D. Shirk
/s/ Bruce D. Taber Trustee
-----------------------------
Bruce D. Taber
/s/ Henry W. Todd Trustee
-----------------------------
Henry W. Todd
