Document ID: SEC-2007-0638-0001
Agency: sec
Document Type: Notice
Title: SSgA Funds Management, Inc., et al.; Notice of Application
Posted Date: 2007-05-07T04:00Z

[Federal Register: May 7, 2007 (Volume 72, Number 87)]
[Notices]               
[Page 25808-25809]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07my07-92]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-27809; 812-13356]

 
SSgA Funds Management, Inc., et al.; Notice of Application

April 30, 2007.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application to amend a prior order under section 6(c) 
of the Investment Company Act of 1940 (``Act'') for an exemption from 
sections 2(a)(32), 5(a)(1), 22(d), 22(e) and 24(d) of the Act and rule 
22c-1 under the Act, and under sections 6(c) and 17(b) of the Act for 
an exemption from sections 17(a)(1) and (a)(2) of the Act.

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Summary of Application: Applicants request an order to amend a prior 
order that permits: (a) Open-end management investment companies, whose 
series are based on certain equity securities indices, to issue shares 
of limited redeemability; (b) secondary market transactions in the 
shares of the series to occur at negotiated prices; (c) dealers to sell 
shares to purchasers in the secondary market unaccompanied by a 
prospectus when prospectus delivery is not required by the Securities 
Act of 1933 (``Securities Act''); (d) certain affiliated persons of the 
series to deposit securities into, and receive securities from, the 
series in connection with the purchase and redemption of aggregations 
of the series' shares; and (e) under certain circumstances, the series 
that track certain foreign equity securities indices to pay redemption 
proceeds more than seven days after the tender of shares (the ``Prior 
Order'').\1\ Applicants seek to amend the Prior Order in order to offer 
additional series based on certain fixed income securities indices (the 
``New Funds''). In addition, the order would delete a condition related 
to future relief in the Prior Order.
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    \1\ State Street Bank and Trust Company, et al., Investment 
Company Act Release No. 24666 (Sept. 24, 2000), superseding The 
Select Sector SPDR Trust, Investment Company Act Release No. 23534 
(Nov. 13, 1998), as amended by SSgA Funds Management, Inc., et al., 
Investment Company Act Release No. 27543 (Nov. 1, 2006).

Applicants: SSgA Funds Management, Inc. (``Adviser''), State Street 
Global Markets LLC (``Distributor''), streetTRACKS[supreg] Series 
Trust, and streetTRACKS[supreg] Index Shares Funds (each, a ``Trust'' 
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and together, the ``Trusts'').

Filing Dates: The application was filed on January 5, 2007 and amended 
on April 23, 2007.

Hearing or Notification of Hearing: An order granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on May 24, 2007, and should be accompanied by proof of 
service on applicants, in the form of an affidavit or, for lawyers, a 
certificate of service. Hearing requests should state the nature of the 
writer's interest, the reason for the request, and the issues 
contested. Persons who wish to be notified of a hearing may request 
notification by writing to the Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street, NE, Washington, DC 20549-1090. Applicants: Scott M. Zoltowski, 
Esq., State Street Global Advisors, One Lincoln Street, Boston 
Massachusetts 02111; Vincent Manzi, State Street Global Markets LLC, 
One Lincoln Street, Boston, Massachusetts 02111; and W. John McGuire, 
Esq., Morgan, Lewis & Bockius LLP, 1111 Pennsylvania Avenue, NW, 
Washington, DC 20004.

FOR FURTHER INFORMATION CONTACT: Emerson S. Davis, Sr., Senior Counsel, 
at (202) 551-6868, or Mary Kay Frech, Branch Chief, at (202) 551-6821 
(Division of Investment Management, Office of Investment Company 
Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
Commission's Public Reference Branch, 100 F Street, NE, Washington, DC 
20549-0102 (tel. 202-551-5850).

Applicants' Representations

    1. Each Trust is an open-end management investment company 
registered under the Act and organized as a Massachusetts business 
trust. The Trusts are organized as series funds with multiple series. 
The Adviser, an investment adviser registered under the Investment 
Advisers Act of 1940, will serve as investment adviser to the New 
Funds. The Adviser may retain sub-advisers (``Sub-Advisers'') to manage 
the assets of a New Fund. Any Sub-Adviser will be registered under the 
Advisers Act. The Distributor, a broker-dealer registered under the 
Securities Exchange Act of 1934 (``Exchange Act''), will serve as the 
principal underwriter of the New Funds'' shares.
    2. Each Trust is currently permitted to offer series based on 
equity securities indices in reliance on the Prior Order. Applicants 
seek to amend the Prior Order to permit the Trusts to offer the New 
Funds that, except as described in the application, would operate in a 
manner identical to the existing series of the Trusts that are subject 
to the Prior Order.
    3. The New Funds will invest in portfolios of securities generally 
consisting of the component securities of the Lehman Brothers 1-3 Year 
U.S. Treasury Index, Lehman Brothers Intermediate U.S. Treasury Index, 
Lehman Brothers Long U.S. Treasury Index, Lehman Brothers U.S. 
Aggregate Index, Lehman Brothers 1-3 Year U.S. Corporate Investment 
Grade Index, Lehman Brothers U.S. Intermediate Corporate Grade Index, 
and Lehman Brothers U.S. Long Corporate Investment Grade Index (the 
``Underlying Indexes''). No entity that creates, compiles, sponsors, or 
maintains an Underlying Index is or will be an affiliated person, as 
defined in section 2(a)(3) of the Act, or an affiliated person of an 
affiliated person, of the Trusts, the Adviser, any Sub-Adviser, the 
Distributor, or a promoter of a New Fund.
    4. The investment objective of each New Fund will be to provide 
investment results that correspond generally to the price and yield 
performance of the relevant Underlying Index. The Adviser may fully 
replicate a New Fund's relevant Underlying Index or use a 
representative sampling strategy where the New Fund will seek to hold a 
representative sample of the component securities of the Underlying 
Index. Each New Fund generally will invest at least 80% or 90% of its 
total assets, as disclosed in the relevant prospectus, in the 
securities that comprise the relevant Underlying Index, but at times 
may invest up to 20% of its total assets in certain futures, options, 
and swap contracts, cash and cash equivalents, as well as securities 
not included in its Underlying Index which the Adviser believes will 
help the New Fund track the Underlying Index. At all times, a New Fund 
will hold, in the aggregate, at

[[Page 25809]]

least 80% of its total assets in component securities and investments 
that have economic characteristics that are substantially identical to 
the economic characteristics of the component securities of its 
Underlying Index. Applicants expect that each New Fund will have a 
tracking error relative to the performance of its respective Underlying 
Index of less than 5 percent.
    5. Applicants state that a New Fund will comply with the federal 
securities laws in accepting a deposit of a portfolio of securities 
designated by the Adviser to correspond generally to the price and 
yield of the New Fund's Underlying Index (``Deposit Securities'') \2\ 
and satisfying redemptions with portfolio securities of the New Fund 
(``Fund Securities''), including that the Deposit Securities and Fund 
Securities are sold in transactions that would be exempt from 
registration under the Securities Act.\3\
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    \2\ Applicants state that a cash-in-lieu amount will replace any 
``to-be-announced'' (``TBA'') transaction that is listed as a 
Deposit Security of any New Fund. A TBA transaction is a method of 
trading mortgage-backed securities where the buyer and seller agree 
upon general trade parameters such as agency, settlement date, par 
amount and price. The actual pools delivered generally are 
determined two days prior to the settlement date. The amount of 
substituted cash in the case of TBA transactions will be equivalent 
to the value of the TBA transaction listed as a Deposit Security.
    \3\ In accepting Deposit Securities and satisfying redemptions 
with Fund Securities that are restricted securities eligible for 
resale pursuant to rule 144A under the Securities Act, New Funds 
will comply with the conditions of rule 144A, including in 
satisfying redemptions with such rule 144A eligible restricted Fund 
Securities. The prospectus for a New Fund will also state that an 
authorized participant that is not a ``Qualified Institutional 
Buyer,'' as defined in rule 144A under the Securities Act, will not 
be able to receive, as part of a redemption, restricted securities 
eligible for resale under rule 144A.
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    6. Applicants state that the New Funds will operate in a manner 
identical to the operation of the existing series of the Trusts in the 
Prior Order, except as specifically noted by applicants (and summarized 
in this notice), and will comply with all of the terms, provisions and 
conditions of the Prior Order, as amended by the present application. 
Applicants believe that the requested relief continues to meet the 
necessary exemptive standards.

Future Relief

    7. Applicants also seek to amend the Prior Order to modify the 
terms under which the Trusts may offer additional series in the future 
based on other securities indices (``Future Funds''). The Prior Order 
is currently subject to a condition that does not permit applicants to 
register the shares of any Future Fund by means of filing a post-
effective amendment to a Trust's registration statement or by any other 
means, unless applicants have requested and received with respect to 
such Future Fund, either exemptive relief from the Commission or a no-
action letter from the Division of Investment Management of the 
Commission, or if the Future Fund could be listed on a national 
securities exchange (``Exchange'') without the need for a filing 
pursuant to rule 19b-4 under the Exchange Act.
    8. The order would amend the Prior Order to delete this condition. 
Any Future Funds will (a) be advised by the Adviser or an entity 
controlled by or under common control with the Adviser; (b) track 
Underlying Indices that are created, compiled, sponsored or maintained 
by an entity that is not an affiliated person, as defined in section 
2(a)(3) of the Act, or an affiliated person of an affiliated person, of 
the Adviser, the Distributor, the Trusts or any Sub-Adviser or promoter 
of a Future Fund, and (c) comply with the respective terms and 
conditions of the Prior Order, as amended by the present application.
    9. Applicants believe that the modification of the future relief 
available under the Prior Order would be consistent with sections 6(c) 
and 17(b) of the Act and that granting the requested relief will 
facilitate the timely creation of Future Funds and the commencement of 
secondary market trading of such Future Funds by removing the need to 
seek additional exemptive relief. Applicants submit that the terms and 
conditions of the Prior Order have been appropriate for the existing 
series of the Trusts and would remain appropriate for Future Funds. 
Applicants also submit that tying exemptive relief under the Act to the 
ability of a Future Fund to be listed on an Exchange without the need 
for a rule 19b-4 filing under the Exchange Act is not necessary to meet 
the standards under sections 6(c) and 17(b) of the Act.

Applicants' Condition

    Applicants agree that any amended order granting the requested 
relief will be subject to the same conditions as those imposed by the 
Prior Order, except for condition 1 to the Prior Order, which will be 
deleted.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-8598 Filed 5-4-07; 8:45 am]

BILLING CODE 8010-01-P