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Sate street global advisors

  1. 1. Not “Why” ETFs but “How”Investment Ideas with Exchange Traded FundsCitywire Montreux, May 9-11th, 2012
  2. 2. ContentOverview of the ETF IndustryHow Investors are Using ETFsDeep Dive: ETFs as an Access Tool – Local Currency BondsSPDR ETFsAppendix 2
  3. 3. The Global ETP Market 4,881 ETPs and $1.7 Trillion in Assets The Americas EMEA Asia Pacific ETP ETP # of ETP Assets # of Assets # of Assets ETPs (US$ B) ETPs (US$ B) ETPs (US$ B) Canada 308 $47.5 Europe 2,325 $335.4 Asia ex- Japan 338 $49.3 USA 1,443 $1,209.7 Middle East 329 $31.7 and Africa Japan 111 $37.2 Latin America 27 $13.1 Total 1,778 $1,270.3 Total 2,654 $367.1 Total 449 $86.5 Source: Markit, SSgA ETF Strategy & Consulting, as of March 31, 2012. 3CMIBG-0226
  4. 4. Asset Diversification in Europe and the US Fixed Income $184.78bn Equity $843.09bn EUROPE US Source: SSgA ETF Strategy & Consulting, Morningstar, as of March 2012. 4
  5. 5. European ETF Growth $500 2500 2300 $450 2100 $400 1900Assets in Billions Number of ETFs $350 1700 $300 1500 1300 $250 1100 $200 900 $150 700 500 $100 300 $50 100 $0 -100 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Assets Funds Source: Bloomberg, SSgA Global ETF Strategy & Research, as of 31 December 2011. 5
  6. 6. Motivations for Investing in ETFs Source: Citywire and SPDR ETFs Exchange Traded Funds Research 2011. 186 Global Fund Selector responses, November 2011. N.B Score is a weighted calculation. Items ranked first are valued higher than the following ranks, the score is the sum of all weighted rank counts. 6GLSTND-0325
  7. 7. Satisfaction with ETFs or ETF-like products over time Source: The EDHEC European ETF Survey 2011. This exhibit indicates the percentages of respondents that are satisfied with ETFs or ETF-like products for different asset classes over time. The percentages are based on the results of the EDHEC ETF survey 2006, 2008 to 2011. 7GLSTND-0325
  8. 8. 1st Quarter 2012 European ETF Flows (USD millions) Asset Class Emerging vs. Developed Source: Markit, as of 31 March 2012. 8
  9. 9. ContentOverview of the ETF IndustryHow Investors are Using ETFsDeep Dive: ETFs as an Access Tool – Local Currency BondsSPDR ETFsAppendix 9
  10. 10. Role of ETFs How often do you use ETFs for the following purposes? Source: The EDHEC European ETF Survey 2011. This exhibit indicates the frequency of respondents using ETFs for each of the mentioned purposes. Respondents were asked to rate the frequency from 1 to 6. The “frequent” category would include ratings from 4 to 6 and “Rarely” would take into account ratings from 1 to 3 and non-responses. 10GLSTND-0325
  11. 11. Role of ETFs in Asset Allocation Do you use ETFs as? Source: Citywire and SPDR ETFs Exchange Traded Funds Research 2011. 255 Global Fund Selector responses, November 2011. 11GLSTND-0325
  12. 12. How can ETFs be used?There are a number of ways an institutional investor can benefit from using ETFs Application Objective ETF Solution Make a long term asset allocation based on ETFs allow you to easily implement these views acrossStrategic Asset Allocation prevailing economic forecasts and outlook. asset classes as well as from a sector and style perspective. The intraday liquidity and precise exposures of ETFs offer Over or underweight certain market segments basedTactical Asset Allocation on short term outlook. investors an efficient vehicle by which to implement a short term outlook. Increase the speed and efficiency of rebalancing ETFs can make rebalancing more efficient than movingRebalancing across the asset allocation. assets from illiquid managers. Increase liquidity in overall asset allocation without Use ETFs for a given percentage of each asset class toLiquidity Management changing allocation. provide a liquidity buffer across the asset allocation. ETFs are an attractive alternative solution to futures due toCash Equitisation Remain fully invested while maintaining liquidity. the product variety, transparency, easier documentation, reduced operational errors, and elimination of roll risk. Maintain market exposure while searching for a new Invest proceeds of a manager liquidation in an ETF until newTransitions manager. manager has been selected. Using ETF to gain exposure to an asset class that isPortfolio Completion Fill any asset allocation holes quickly and easily. underrepresented in the asset allocation. 12
  13. 13. How Institutions Buy and Sell ETFs The majority of ETF trades take place in the secondary market on exchanges, other markets, or through OTC transactions with liquidity providers. Secondary Market Liquidity Providers Creation/Redemption • Buyers and sellers are matched • Liquidity providers are able to • Authorized Participants can also through an exchange provide greater liquidity than the create or redeem shares secondary market • The secondary market may be a • APs deliver the corresponding limited portion of an ETF’s overall • Liquidity providers can transact underlying securities in kind or liquidity in the underlying securities as cash in exchange for ETF well as other offsetting hedges shares • Common trades: such as futures, options, highly • Client receives NAV plus any – Market Orders correlated ETFs, etc associated costs including – Limit Orders • Common trades: spread of underlying securities, fixed creation cost with ETF – Stop Loss Orders – Risk Trades sponsor, etc – MOC – Spread to NAV Orders – VWAP, TWAP – Underlying VWAP Orders – Overnight underlying VWAP orders Source: SSgA ETF Global Capital Markets Group. 13GLSTND-0325
  14. 14. Institutional Tools for Beta Exposure ETFs, Futures or Swaps: Key Advantages and Considerations Type of Product Advantages Considerations Works Best • Leverage • Roll risk • Short term trades • Liquidity (certain • Limited exposure • Popular benchmarks Futures benchmarks) • Higher notional values • Low commission • Variety of offerings • Expense / fees • More specific exposure • Liquidity • Tracking error • Flexible time frames and ETFs • Ease of use • Replication method trading values • Lendability • Derivative constrained clients • Customisation • OTC • Low turnover • Confidentiality • Counterparty risk • Longer-term and Swaps • Leverage • Set up / documentation customised trades • Lower funding costs Source: SPDR ETFs Strategy & Consulting. 14GLSTND-0325
  15. 15. ContentOverview of the ETF IndustryHow Investors are Using ETFsDeep Dive: ETFs as an Access Tool – Local Currency BondsSPDR ETFsAppendix 15
  16. 16. Why Emerging Market Local Currency Debt? Growth in EM Debt Market Over the last decade there has been significant growth in issuance of Local Currency Emerging Market debt. Emerging Market countries have lowered their reliance on hard currency debt and are increasingly financing in local currency to reduce vulnerability to external shocks. Growth of EM Debt 1800 1600Market Value ($ Bil) 1400 1200 Since 2000, EM 1000 governments have 800 gravitated to issuing a 600 much larger share of 400 debt in local currency 200 0 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Date Local Currency EM Debt USD EM Debt Source: Barclays Capital, as of 31 December 2011. 16
  17. 17. Why Emerging Market Local Currency Debt? Hard Currency vs. Local Currency Hard currency debt is typically USD denominated issuance compared to debt issued in the sovereign country’s local currency. If EM economies continue to grow quickly and their currencies are allowed to appreciate, hard currency debt does not provide investors with the potential upside that local currency debt may provide. Local currency issues have proved to be popular, allowing investors to access potential additional source of returns. Values of outstanding issues in local currency now exceed those in USD. Strong growth of emerging economies has generated internal demand for local currency issues through expanded local wealth and growing pension scheme provision. International investors who recognise relative attractiveness of growing economies, lower debt/GDP ratios and stronger balance sheets consider currencies to be cheap. 17EMPRES-0563
  18. 18. Return Decomposition – Barclays Capital Emerging Markets Local CurrencyLiquid Government Index Monthly Return (EUR, % Total Return)1210 8 6 4 2 0 -2 -4 -6 -8-10-12 0 1 0 0 11 11 10 10 11 11 -10 1 0 1 0 1 10 0 0 0 11 1 1 1 t-1 t-1 -1 -1 v-1 c-1 v-1 c-1 r-1 y-1 l -1 y-1 l -1 r-1 r-1 n- n- g- p- g- p- b- b- n n r Oc Oc Ju Ju Ap Ap Ma Ma No De No DeJa Ju Ja Ju Ma Ma Fe Au Se Fe Au Se Price Return Coupon Return Currency Return It is not possible to invest directly in an index. Index performance does not reflect charges and expenses associated with the fund or brokerage commissions associated with buying and selling a fund. Index performance is not meant to represent that of any particular fund. Source: Barclays Capital, as of 31 December 2011. Past performance is not a guarantee of future results. Performance returns for periods of less than one year are not annualised. 18
  19. 19. SSgA Emerging Markets Passive Fixed Income Experience Managing EM Debt since 2005 Emerging Markets Assets: $3,219 million (USD) Manage 3 EM Debt ETFs Segregated Emerging – SPDR Barclays Capital Emerging Markets Local Market Debt Accounts $469M Bond ETF (US and Europe domiciled) SPDR Emerging Market – ABF Pan Asia Bond Index Fund Local Bond ETFs $107M Manage Global Inflation ETF with some EM – $1.172 billion in the SPDR DB International Govt Inflation Bond ETF (WIP) – US ETF launched in March 2008 that includes Brazil, Chile, Israel, Mexico, Poland, South Africa, ABF Pan South Korea, and Turkey. Asia Bond Index Fund SSgA Resources $2,643M – 20 fixed income index portfolio managers – Global trading platform – Well established investment process to effectively capture asset class beta *Source SPDR ETFs Strategy & Consulting, as of 31 December 2011. 19CMINST-3276
  20. 20. Emerging Market Index Characteristics and Country Exposure Barclays Capital EM Local Currency Barclays Capital EM Local Currency Government Index Liquid Government IndexNumber of Issues 401 242Market Value (in USD Bn) 1,537 1,393Modified Duration (%) 4.5 4.5Yield to Maturity (%) 6.0 6.1Coupon (%) 5.7 6.3 Country Weights Data is as of the date indicated, is subject to change and should not be relied upon as current thereafter. Source: Barclays Capital, SPDR ETFs Strategy & Consulting, as of 30 March 2012. 20
  21. 21. Stratified Sampling ApproachSSgA’s systematic investment process seeks to provide benchmark exposure byselecting the most efficient indexing strategy, while minimizing tracking error – Risk is defined as any variance between portfolio and benchmark Identify Sources of Risk – Risk can arise from a change to the portfolio and/or the benchmark – Select most efficient indexing strategy Portfolio Construction – Manage risk by strict adherence to index characteristics – Rebalancing and exit strategies follow the index rules – Seek to own only index-eligible securities – Quasi to full replication Implementation – Stratified sampling – Dedicated trading desk – Monitor holdings for sources of index deviations and impact of flows Monitoring and Maintenance – Risk management and oversight – Any special consideration and/or tests 21
  22. 22. Stratified Sampling Approach Currency Duration Yield Curve Sector/Issuer exposure • Key risk for local currency • Key risk for fixed income • Match key rate duration: • Rating emerging market debt portfolio the duration per bucket exposure of maturity • Sector • Match within tight tolerance • Match within tight • Issuer idiosyncratic risk tolerance • Risk measure • Market weight • Contribution to duration • Contribution to duration • Rating & country market weights deviations • Contribution to duration • Contribution to spread duration per country • Risk mitigation • Physical bond exposure in • Diversified physical bond • Diversified physical bond • Diversified physical bond tool local currency portfolio matching the portfolio matching the portfolio matching the index overall duration index overall yield curve index overall quality and • Fx forwards and non- exposure country exposures deliverable forwards • Interest rate derivatives to adjust a portfolio’s overall • Interest rate derivatives • Index derivatives where duration where available to adjust a portfolio’s available or credit default overall duration in swaps to adjust a specific maturities where portfolio’s credit spread available exposure SSgA seeks to match the key risk characteristics of the index primarily by investing in securities that form part of the index universe 22EMPRES-0563
  23. 23. SPDR Barclays Capital Emerging Markets Local Bond ETFTop 10 Holdings Maturity Breakdown Weight (%)RUSSIAN FEDERATION 7.85 03/10/2018 5.17%TURKEY GOVERNMENT BOND 3.28 04/12/2013 3.28%POLAND GOVERNMENT BOND 0 01/25/2014 2.17%MALAYSIA GOVERNMENT BOND 3.43 08/15/2014 1.84%KOREA TREASURY BOND 3 12/10/2013 1.77%SOUTH AFRICA GOVERNMENT BOND 6.75 03/31/2021 1.60%KOREA TREASURY BOND 3.75 06/10/2013 1.57%BRAZIL LETRAS DO TESOURO NACIO 0 04/01/2014 1.54%INDONESIA TREASURY BOND 8.25 07/15/2021 1.45%MEXICAN BONOS 8.5 05/31/2029 1.41%Characteristics SPDR Barclays Capital BarCap EM Local Emerging Markets Currency Liquid Local Bond ETF Government Index Number of Holdings 190 242 Average Maturity (yrs) 6.3 6.5 Modified Duration (%) 4.5 4.5 Yield-to-Maturity (%) 5.9 6.1 Current Yield (%) 6.1 6.5 Par-weighted Coupon (%) 6.0 6.3 Top 10 Holdings, Characteristics and Maturity Breakdown are as of the 30 March 2012, are subject to change, and should not be relied upon as current thereafter. Source: Barclays Capital POINT, SPDR ETFs Strategy & Consulting, as of 30 March 2012. 23
  24. 24. SPDR Barclays Capital Emerging Markets Local Bond ETFCountry Breakdown Credit Quality Barclays uses the "middle rating" of Moody, S&P, and Fitch to determine a security index classification. If only two of the agencies rate a security, then the most conservative (lowest) rating will be used. If only one rating agency rates a security, that one rating will be used. Where there are no security level ratings, an issuer rating may be used to determine index classification. Country Breakdown and Credit Quality are as of the 30 March 2012, are subject to change, and should not be relied upon as current thereafter. Source: Barclays Capital POINT, SPDR ETFs Strategy & Consulting, as of 30 March 2012. Excludes cash position in the ETF. 24
  25. 25. SPDR Barclays Capital Emerging Markets Local Bond ETF Performance 1 mth (%) 3mth (%) YTD (%) 1 Year (%) Since ETF 3 Year 5 Year Inception Inception Tracking Tracking Date (%) Error Error SPDR Barclays Capital Emerging -1.64 7.22 7.22 - 0.32 - - 16 May Markets Local Bond ETF 2011 Barclays Capital Emerging Market Local -1.56 7.75 7.75 -1.13 1.41 Currency Liquid Government Index Difference -0.12 -0.53 -0.53 - -1.09 Calendar Year Performance (% TR in USD) Source: Barclays Capital, SPDR ETFs Strategy & Consulting, as of 30 March 2012. (SPDR Barclays Capital Emerging Markets Local Bond ETF – net returns in USD). Inception date for Barclays Capital Emerging Market Local Currency Liquid Government Index is January 2010. Past performance is not a guarantee of future results. Performance returns for periods of less than one year are not annualised. It is not possible to invest directly in an index. Index performance does not reflect charges and expenses associated with the fund or brokerage commissions associated with buying and selling a fund. Index performance is not meant to represent that of any particular fund. 25
  26. 26. SPDR Barclays Capital Emerging Markets Local Bond ETF Performance 1 mth (%) 3mth (%) 6 mth (%) 1 Year (%) 2 Years 3 Years 5 Years (%) (%) (%) No. of funds 89 86 84 72 55 43 28 25th percentile 0.96 2.21 3.87 -0.73 6.39 13.78 8.30 Median 0.65 1.69 3.02 -2.08 5.25 12.62 7.02 75th percentile -3.32 -2.69 -4.23 -8.53 -1.48 2.96 -3.32 Barclays Capital Emerging Market Local 0.64 1.68 3.18 -0.39 7.22 - - Currency Liquid Government Index • Emerging Markets have historically been viewed by many as a prime candidate for active management due to market inefficiencies, access difficulties etc. • However, identifying managers that can consistently added value in EM Debt is still difficult. • Passive options, until recently were few and far between. • The SPDR ETF alternative has become an attractive way for investors to access a diversified portfolio of Emerging Markets local currency government bonds.Source: Morningstar Direct, as of 30 April 2012. Universe is Morningstars Europe Open Ended Global Emerging Markets Bond – Local Currency category. Oldest share class only. AUM totalsin excess of $56 billion. Net of fees. Past performance is no guarantee of future performance. Performance returns for periods of less than one year are not annualised. It is not possible toinvest directly in an index. Index performance does not reflect charges and expenses associated with the fund or brokerage commissions associated with buying and selling a fund. Indexperformance is not meant to represent that of any particular fund. 26
  27. 27. Local Currency Bond Access Products SPDR Barclays Capital Emerging Markets SPDR Citi Asia Local Government Local Bond ETF Bond ETF Inception Date 16 May 2011 9 May 2012 (anticipated) ISIN IE00B4613386 IE00B7GBL799 Base Currency USD USD Ticker / Trading Currency – Deutsche Börse* – SYBM (EUR) Deutsche Börse* – SYBX GY (EUR) Exchange London Stock Exchange – EMDL (GBP) London Stock Exchange – ABND LN (GBP) London Stock Exchange – EMDD (USD) London Stock Exchange – ASIA LN (USD) Euronext – EMLD (EUR) Euronext – n/a SIX Swiss – EMDL (CHF) SIX Swiss – n/a Total Expense Ratio (TER) 0.55% 0.50% (anticipated) Index Name Barclays Capital Emerging Markets Local Citi Asian Government Bond Investable Index Currency Liquid Government Index No. of Index Constituents c. 240 c.185 Portfolio Construction Sampled Sampled Income Treatments Distributing Distributing Source: SPDR ETFs Strategy & Consulting, as of 31 December 2011. * Primary listing. 27
  28. 28. ContentOverview of the ETF IndustryHow Investors are Using ETFsDeep Dive: ETFs as an Access Tool – Local Currency BondsSPDR ETFsAppendix 28
  29. 29. SPDR Exchange Traded Funds — Global Family of SPDR ETFsA Leading ETF Provider – $304 billion* in global ETF AUM; over 160 ETFs worldwide spanning an array of asset classesIndustry Pioneer – Created the first and still largest ETF in 1993 (SPDR S&P® 500 ETF – SPY US)1Trusted Institution – Part of State Street Global Advisors (SSgA), one of the largest asset managers in the world with $1.99 trillion AUM globally $304 billion* in Global ETF Assets Under Management Global ETF Assets Under Management Assets Dividend Sector (US $M) $10,955 M International Size $127,778 $8,289 M Style $809 M Global $825 M Commodity 68,743 Broad $173 M Fixed Income Specialty $227 M Sector 60,460 $26,032 M Fixed Income 26,032 Dividend 10,955 International 8,289 Commodity Size $127,778 M Global 825 $68,743 M Style 809 Specialty 227 Broad 173 Sector $60,460 M Grand Total $304,293* Source: SSgA ETF Strategy & Consulting, as of March 31, 2012. * This AUM includes the assets of the SPDR Gold Trust (approx. $68.7 billion as of March 31, 2012), for which State Street Global Markets, LLC, an affiliate of State Street Global Advisors, serves as the marketing agent. This AUM excludes Asian sub-advised ETFs. 1 SPDR S&P 500® ETF (SPY US) is not registered for sale in Europe. 29
  30. 30. SSgA Global Fixed Income and CurrencyAs of February 7, 2012* Product Engineer 30
  31. 31. SSgA: Leading Manager of Global Fixed Income Indexed AssetsTotal Assets Under Management: $301 Billion (USD) in Fixed Income Assets Globally Source: SSgA, as of December 2011. All calculations are unaudited. 31
  32. 32. SPDR ETF launched SPDR ETF authorised on this indexThe European SPDR ETFs Fixed Income Family Barclays Capital Global Aggregate Index SPDR Barclays Capital SPDR Barclays Capital SPDR Barclays Capital US Aggregate Bond ETF Euro Aggregate Bond ETF Sterling Aggregate Bond ETF SPDR Barclays SPDR Barclays Capital SPDR Barclays Barclays Capital Barclays Capital UK Gilt Barclays Capital US Capital Euro US Treasury Capital Euro Sterling Corporate Index Corporate Bond Index Government Bond Bond ETF Corporate Bond ETF Bond Index ETF SPDR Barclays Barclays Barclays Barclays Euro UK Gilt 1- UK Gilt 1-3 Year Treasury 5 Year 15+ Year Euro Gov 10+ Index Index Index Bond ETF Emerging Market Debt High Yield SPDR Barclays Capital Emerging Markets Local Bond ETF SPDR Barclays Capital Euro High Yield Bond ETF SPDR Citi Asia Local Government Bond ETF BofA Merrill Lynch EM Corporate Bond Index 32
  33. 33. SSgA Global Passive Equity As of March 31, 2012 * Does not manage money Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame design) in the US, which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements. 33
  34. 34. SSgA: Leading Manager of Global Equity Indexed AssetsTotal Assets Under Management: $932 Billion (USD) in Equity Indexed Assets Globally – An average of $72 billion in annual net new assets over past five years* – 85% of new assets derived from existing clients US Index Assets Under Management International and Global Equity AUM Emerging Markets Equity AUM $497,629 Million $377,940 Million $56,881 Million** US TEMC Customized Emerging $10,616 M FTSE Strategies S&P Developed Market Indices MSCI Other $30,187 M $25,841 M $1,399 M $6,583 M $6,881 M FTSE Emerging Markets $2,046M Dow Jones Dow Jones/ Developed DJ IndexesSM $11,715 M $22,409 M Global TEMC S&P and $2,803 M S&P®/ MSCI IFCI Russell Indexes Other Developed $4,035M $102,263 M (Nasdaq, FTSE …) $267,371 M $40,022 M S&P Indexes $348,875 M MSCI Emerging Markets $49,401 MSource: SSgA, as of 31 March 2012.*As of December 31, 2011, includes 5 year GEBS institutional average of $50 B and 5 year average SSgA ETF of $21 B, updated annually.**Exclusive of Emerging Markets Equities invested in other MSCI-benchmarked strategies such as MSCI ACWI and MSCI ACWI ex US."FTSE®”, "FT-SE®” and "Footsie®” are trade marks of the Exchange and FT and are used by FTSE under license. "All-World", "All-Share", "All-Small" and "FTSE4Good" are trademarks of FTSE. All Standard& Poors Indexes are registered trademarks of Standard & Poors Financial Services LLC. Dow Jones and Dow Jones Indices are service marks of Dow Jones & Company, Inc. and have been licensed for usefor certain purposes by State Street Global Advisors (SSgA). Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell Indicesare trademarks of Russell Investment Group. The MSCI Indexes are trademarks of MSCI Inc. 34
  35. 35. The European SPDR ETFs Equity Family Broad Blended Equity Benchmarks SPDR MSCI ACWI IMI ETF SPDR MSCI ACWI ETF Emerging Market Equity Benchmarks Developed Market Equity Benchmarks SPDR MSCI Europe ETF SPDR MSCI Emerging Markets ETF 10 MSCI Europe Sectors SPDR MSCI SPDR MSCI SPDR MSCI Europe Small Cap ETF SPDR MSCI EM LatAm EM Europe EM Asia ETF ETF ETF SPDR AEX ETF SPDR MSCI Emerging Markets Small Cap ETF SPDR FTSE UK All Share ETF SPDR S&P 500 ETF SPDR S&P 400 US Mid Cap ETF Dividend Benchmarks SPDR S&P US Dividend Aristocrats ETF SPDR S&P EM Dividend ETF SPDR S&P Euro Dividend Aristocrats ETF SPDR S&P UK Dividend Aristocrats ETF 35
  36. 36. ContentOverview of the ETF IndustryHow Investors are Using ETFsDeep Dive: ETFs as an Access Tool – Local Currency BondsSPDR ETFsAppendix 36
  37. 37. Important InformationThis document has been issued by State Street Global Advisors Limited (“SSgA”). Authorised and regulated by the Financial Services Authority/Registered No.2509928. VAT No. 5776591 81. Registered office: 20 Churchill Place, Canary Wharf, London, E14 5HJ. Telephone: 020 3395 6000. Facsimile: 020 3395 6350.Web: www.ssga.com.SPDR ETFs is the exchange traded funds (“ETF”) platform of State Street Global Advisors and is comprised of funds that have been authorised by Europeanregulatory authorities as open-ended UCITS investment companies (“Companies”).SSgA SPDR ETFs Europe I plc issue SPDR ETFs, and is an open-ended investment company with variable capital having segregated liability between its sub-funds. The Company is organised as an Undertaking for Collective Investments in Transferable Securities (UCITS) under the laws of Ireland and authorised asa UCITS by the Central Bank of Ireland.SPDR ETFs is a French open-ended investment company organised as an Undertaking for Collective Investments in Transferable Securities (UCITS) underthe laws of France and authorised by the Autorité des Marchés Financiers.This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering in the UnitedStates, Canada or any province or territory thereof, where the Companies are not authorised or registered for distribution and where the Companiesprospectuses have not been filed with any securities commission or regulatory authority. Neither this document nor any copy hereof should be taken,transmitted or distributed (directly or indirectly) into the United States. The Companies have not and will not be registered under the Investment Company Act of1940 or qualified under any applicable state securities statutes.SPDR ETFs may not be available or suitable for you. This advertisement does not constitute investment advice or an offer or solicitation topurchase shares. The information in this document is designed solely for use by sophisticated, professional and institutional investors andany other persons should not rely on this communication. You should obtain and read the Companies’ prospectuses prior to investing. Prospective investorsmay obtain the current Prospectuses, the articles of incorporation, the Simplified Prospectuses as well as the latest annual andsemi-annual reports free of charge from SSgA, or from www.spdrseurope.com.For Investors in Switzerland: This document is directed at qualified investors only, as defined by Article 10(3) of the Swiss Act on Collective InvestmentSchemes (CISA) and Article 6 of the Swiss Ordinance on Collective Investment Schemes (CISO). Certain of the funds are not registered with the SwissFinancial Market Supervisory Authority (FINMA) which acts as supervisory authority in investment fund matters. Certain of the funds referenced herein have notbeen authorised by the FINMA as a foreign Collective Investment Scheme under Article 120 of the Collective Investment Schemes Act of June 23, 2006.Accordingly, the shares of these funds may not be offered to the public in or fromSwitzerland unless they are placed without public solicitation as such term is defined by FINMA from time to time. In relation to those funds that are registeredwith FINMA, prospective investors may obtain the current sales prospectuses, the articles of incorporation, the simplified prospectuses as well as the latestannual and semi-annual reports free of charge from the Swiss representative, State Street Fund Management Ltd., Beethovenstrasse 19, 8027 Zurich, from theSwiss paying agent, State Street Bank GmbH Munich, Zurich Branch, Beethovenstrasse 19, 8027 Zurich as well as from the main distributor in Switzerland,State Street Global Advisors AG , Beethovenstrasse 19, 8027 Zurich. Before investing please read the prospectuses, complete and simplified, copies of whichcan be obtained from the Swiss representativeor www.spdrseurope.com. 37
  38. 38. Important Information"CITI" is a registered trademark and service mark of Citigroup Inc. or its affiliates, and used under license for certain purposes by State Street Global Advisors("Licensee"). The SPDR Citi Asia Local Government Bond ETF (the “Fund”) is not sponsored, endorsed, sold or promoted by Citigroup Index LLC (“CitigroupIndex”) or any of its affiliates (collectively, “Citigroup”). Citigroup Index makes no representation or warranty, express or implied, to the owners or prospectiveowners of shares of the Fund or any member of the public regarding the advisability of investing in securities generally or in the Fund particularly, or the abilityof the Fund to track the performance of the Citi AGB Investable Index or the ability of the Citi AGB Investable Index to track general bond market performance.Citigroup Index’s only relationship to Licensee is the licensing of certain information, data, trademarks and trade names of Citigroup. The Citi AGB InvestableIndex is determined, composed and calculated by Citigroup Index without regard to Licensee or the Fund. Citigroup Index has no obligation to take the needs ofLicensee or the owners or prospective owners of the Fund into consideration in determining, composing or calculating the Citi AGB Investable Index. CitigroupIndex is not responsible for and has not participated in the determination of the prices and amount of the shares to be issued by the Fund or the timing of theissuance or sale of the shares to be issued by the Fund or in the determination or calculation of the equation by which the shares to be issued by the Fund areto be converted into cash. Citigroup Index has no obligation or liability in connection with the administration, marketing or trading of the Fund.CITIGROUP INDEX DOES NOT GUARANTEE THE ACCURACY OR COMPLETENESS OF THE CITI AGBI INVESTABLE INDEX OR ANY DATA INCLUDEDTHEREIN, OR FOR ANY COMMUNICATIONS, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATIONS (INCLUDING ELECTRONICCOMMUNICATIONS) WITH RESPECT THERETO, AND CITIGROUP INDEX SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS OR DELAYSTHEREIN. CITIGROUP INDEX MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS ORPROSPECTIVE OWNERS OF SHARES OF THE FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE CITI AGB INVESTABLE INDEXOR ANY DATA INCLUDED THEREIN. CITIGROUP INDEX MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALLWARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE CITI AGB INVESTABLE INDEXOR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL CITIGROUP HAVE ANY LIABILITY FORANY DIRECT, SPECIAL, PUNITIVE, INDIRECT, CONSEQUENTIAL OR ANY OTHER DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OFTHE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE.AEX Index® is a registered trademark of Euronext N.V. or its subsidiaries designating the index that it calculates and publishes. Euronext N.V. and itssubsidiaries in no way sponsor, endorse or are otherwise involved in the issue and offering of the SPDR ® AEX Index ® ETF. Euronext N.V. and its subsidiariesdisclaim any liability to any party for any inaccuracy in the data on which the AEX Index ® is based, for any mistakes, errors, or omissions in the calculationand/or dissemination of the AEX Index®, or for the manner in which it is applied in connection with the issue and offering of SPDR ® AEX Index ® ETF.. 38
  39. 39. Important InformationExchange traded-funds (ETFs) trade like stocks, are subject to investment risk and will fluctuate in market value. The value of the investment can go down aswell as up and the return upon the investment will therefore be variable. Changes in exchange rates may have an adverse effect on the value, price or incomeof an investment. Further, there is no guarantee an ETF will achieve its investment objective.Risks associated with equity investing include stock values which may fluctuate in response to the activities of individual companies and general market andeconomic conditions. Investing in foreign domiciled securities may involve risk of capital loss from unfavourable fluctuation in currency values, withholdingtaxes, from differences in generally accepted accounting principles or from economic or political instability in other nations. Investments in emerging ordeveloping markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that aregenerally less diverse and mature and to political systems which have less stability than those of more developed countries. Investments in small-sizedcompanies may involve greater risks than in those of larger, better known companies.Bond funds contain interest rate risk (as interest rates rise bond prices usually fall); the risk of issuer default; issuer credit risk; liquidity risk; and inflation risk.The financial products referred to herein are not sponsored, endorsed, or promoted by MSCI and MSCI bears no liability with respect to any such financialproducts or any index on which such financial products are based. The Prospectus contains a more detailed description of the limited relationship MSCI haswith SSgA and any related financial products.Barclays Capital is a trademark of Barclays Capital, the investment banking division of Barclays Bank PLC (“Barclays Capital”) and has been licensed for use inconnection with the listing and trading of the SPDR Barclays Capital ETFs. The products are not sponsored by, endorsed, sold or promoted by Barclays Capitaland Barclays Capital makes no representation regarding the advisability of investing in them.“FTSE®”, “FT-SE®” and “Footsie®” are trade marks jointly owned by the London Stock Exchange Plc and The Financial Times Limited and are used by FTSEInternational Limited (“FTSE”) under license. “All-World”, “All-Share” and “All-Small” and “FTSE4Good” are trademarks of FTSE. The FTSE UK All Share Indexis calculated by FTSE. FTSE does not sponsor, endorse or promote this product and is not in any way connected to it and does not accept any liability. Allintellectual property rights in the index values and constituent list vests in FTSE. SSgA has obtained full license from FTSE to use such intellectual propertyrights in the creation of this product.“SPDR” is a registered trademark of Standard & Poor’s Financial Services LLC (“S&P”) and has been licensed for use by State Street Corporation. STANDARD& POOR’S, S&P, S&P 500 and S&P MIDCAP 400 are registered trademarks of Standard & Poor’s Financial Services LLC. No financial product offered byState Street Corporation or its affiliates is sponsored, endorsed, sold or promoted by S&P or its Affiliates, and S&P and its affiliates make no representation,warranty or condition regarding the advisability of buying, selling or holding units/shares in such products. Further limitations and important information thatcould affect investors’ rights are described in the prospectus for the applicable product.Expiration Date: 31.05.2013 IBGE-0485 © 2012 State Street Corporation – All rights reserved. 39

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