SPDR Series Trust, SPDR Index Shares, SSGA FUNDS MANAGEMENT INC

Application for an Order pursuant to Section 6(c) of the Investment Company Act of 1940 (the “Act”) for an exemption from Sections 2(a)(32), 5(a)(1), 18(f)(1), 18(i), 22(d) and 22(e) of the Act and Rule 22c-1 under the Act, and pursuant to Sections 6(c) and 17(b) of the Act for an exemption from Sections 17(a)(1) and 17(a)(2) of the Act

SPDR Series Trust and SPDR Index Shares Funds (each, a “Trust,” and together, the “Trusts”), and SSGA Funds Management, Inc. (the “Adviser,” and collectively with the Trusts, the “Applicants”) hereby apply for and request an order (the “Order”) under Section 6(c) of the Investment Company Act of 1940 (the “Act”), for an exemption from Sections 2(a)(32), 5(a)(1), 18(f)(1), 18(i), 22(d) and 22(e) 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 17(a)(2) of the Act. Applicants request that the Order apply not only to Applicants, but also to any existing or future series of the Trusts and any other existing or future open-end management investment companies registered under the Act and the series thereof (each such series, a “Fund” and, collectively, the “Funds”) that are advised by the Adviser and track the performance of an index.¹ The Funds will comply with the terms and conditions of the Application.

Applicants request an Order that would permit each Fund to offer one or more classes of mutual fund shares (each such class, a “Mutual Fund Class,” and such shares, “Mutual Fund Shares”) in addition to the Fund’s existing class of exchange-traded shares (each such class, an “ETF Class,” and such shares, “ETF Shares”). Each Mutual Fund Class would be specifically designed for, and only available to, investors purchasing through a retirement plan, such as pension plans, retirement plans (e.g., 457, 401(a), 403(b) and/or 401(k) plans (collectively, “Retirement Plans”). The Order would provide each of the Funds with two broad categories of relief: (1) the relief necessary to continue standard exchange-traded fund (“ETF”) operations consistent with Rule 6c-11 under the Act (“ETF Operational Relief”) and (2) the relief necessary to offer a Mutual Fund Class (“Share Class Relief”).

Applicants estimate that there are approximately $4 Trillion of defined contribution retirement assets invested in Index Strategies, split almost equally between collective investment trusts (“CITs”) and mutual funds. The trend seems to be accelerating based on the Adviser’s review of a variety of data sources, including Cerulli and Brightscope, the adoption of low-cost index strategies has steadily increased in the US defined contribution market. The percentage of US defined contribution plans offering index funds climbed from 79% in 2006 to 95% in 2020 while the percentage of US defined contribution plan assets invested in index funds has climbed from 17% in 2006 to 41% in 2020. The fragmented framework used to deliver low-cost index strategies is increasing confusion, costs, and complexity. In addition, whether through lack of eligibility or access, CITs are generally not available to smaller Retirement Plans and 403(b) plans. As a result, there is a need for more and better low-cost index strategy options.

Pursuant to the ETF Operational Relief, the Order would permit: (i) ETF Shares of the Funds to continue to be listed on a national securities exchange (“Exchange”), as defined in Rule 6c-11, and traded at market-determined prices, rather than at the ETF Shares’ next-determined net asset value (“NAV”) per share; (ii) ETF Shares to continue to be issued and redeemed only in creation units, as defined in Rule 6c-11 (“Creation Units”), except with respect to the Exchange Privilege (as defined and discussed in the “Legal Analysis and Discussion” section below); (iii) certain affiliated persons of a Fund to purchase Creation Units with (or redeem Creation Units for) baskets, as defined in Rule 6c-11 (“Baskets”); and (iv) certain Funds that include foreign investments in their Baskets to pay redemption proceeds more than seven calendar days after ETF Shares are tendered for redemption. As described below, the ETF Operational Relief would provide the Funds with the same relief as contained in Rule 6c-11, subject to the same conditions contained in Rule 6c-11.

Pursuant to the Share Class Relief, the Order would permit a Fund to offer both an ETF Class and a Mutual Fund Class. This multi-class structure would comply with Rule 18f-3 under the Act, except for certain ways in which an ETF Class and Mutual Fund Class would have different rights and obligations, as described below.

The Trusts are registered under the Act as open-end management investment companies and organized as business trusts under the laws of the Commonwealth of Massachusetts. Each Trust is organized as a series fund with multiple separate Funds, certain of which are currently offered and sold pursuant to a registration statement on Form N-1A (“Registration Statement”).

The Funds that initially would rely on the relief are separate investment portfolios of the Trusts and each Fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of a specified index. Each Fund will choose to offer an ETF Class and Mutual Fund Classes only when the board of trustees (the “Board”), including the trustees who are not interested persons of the Trust under Section 2(a)(19) of the Act (the “Independent Trustees”), determines that such multi-class structure is in the best interest of the ETF Class and any Mutual Fund Class individually, and the Fund as a whole.

The Adviser currently serves as investment adviser to each of the Funds pursuant to a separate investment advisory agreement with the relevant Trust (each, an “Investment Advisory Agreement” and together, the “Investment Advisory Agreements”). The Adviser is a Massachusetts corporation, with its principal office located in Boston, Massachusetts. The Adviser is an indirect wholly owned subsidiary of State Street Corporation. The Adviser is, and any other Adviser will be, registered as an “investment adviser” under Section 203 of the Investment Advisers Act of 1940 (the “Advisers Act”).

Pursuant to the terms of each Investment Advisory Agreement, The Adviser, subject to oversight of the Board, manages the investment operations and determines the composition of the portfolio of each Fund, including the purchase, retention and disposition of the securities and other instruments held by the Fund. In addition, pursuant to each Investment Advisory Agreement, the Adviser is authorized, subject to approval of the Board, including a majority of the Independent Trustees, and the shareholders of the applicable Fund (if required by applicable law) to engage one or more Sub-Advisers for the performance of any of the services contemplated to be rendered by the Adviser to any Fund under the applicable Investment Advisory Agreement.

In return for the services that it provides to each Fund, the Adviser receives a fee from each Fund, computed as a percentage of the Fund’s average daily net assets (“Advisory Fee”). The terms of the Investment Advisory Agreements comply with Section 15(a) of the Act. Each Investment Advisory Agreement was approved by the Board, including a majority of the Independent Trustees, and was approved by the initial shareholder of each Fund in the manner required by Sections 15(a) and (c) of the Act. With respect to new Funds offered in the future, the Investment Advisory Agreement that would be applicable to that Fund will be approved by the initial shareholder of the Fund in the manner required by Sections 15(a) and (c) of the Act and Rule 18f-2 thereunder. In the case of each Fund, the Advisory Fee can be described as a unitary fee, in that the Investment Advisory Agreement provides for all the services generally necessary to operate the Fund, including investment advisory, administration, custody, and transfer agency services.² It is expected that with the addition of a Mutual Fund Class, the Advisory Fee would remain unchanged, but the Adviser would implement certain contractual or voluntary waivers to the ETF Class, the Mutual Fund Class, or both classes to reflect the different underlying costs of services provided to each class or to allow the Fund to better compete in each class’s distribution channel.

In 2000, the U.S. Securities and Exchange Commission (“Commission”) granted an exemptive order to The Vanguard Group, Inc. (“Vanguard”) permitting Vanguard to offer certain index-based open-end management investment companies with mutual fund classes and exchange-traded classes.³ In 2003, the Commission amended the original exemptive order to expand the relief to cover additional domestic equity index funds.⁴ Also in 2003, the Commission granted an exemptive order to permit Vanguard to offer international equity index funds with mutual fund

classes and exchange-traded classes.⁵ Finally, in 2007, the Commission granted an exemptive order to permit Vanguard’s bond index funds to offer mutual fund classes and exchange-traded classes.⁶ Relying on these four exemptive orders (collectively, the “Vanguard Orders”), Vanguard has become a major sponsor of index-based ETFs.⁷

In 2019, the Commission adopted Rule 6c-11 under the Act to provide the exemptive relief necessary under the Act to permit ETF operations.⁸ However, the Commission determined not to provide the necessary exemptive relief to allow for ETF Classes as part of Rule 6c-11. The Adopting Release explains that ETF Class Relief raises policy considerations that are different from those that the Commission intended to address in Rule 6c-11. The Adopting Release specifically notes that an ETF class that transacts with authorized participants, as defined in Rule 6c-11 (“Authorized Participants”), on an in-kind basis and a mutual fund class that transacts with shareholders on a cash basis may give rise to differing costs to the portfolio. As a result, certain costs may result from transactions through one class, but all shareholders would generally bear the costs.⁹

The Commission concluded that a fund seeking to offer an ETF class and mutual fund classes should request relief through the exemptive application process so that the Commission may assess all relevant policy considerations in the context of the facts and circumstances of particular applicants.¹⁰

Applicants are filing the Application because they believe that the ability of a Fund to offer both ETF Shares and Mutual Fund Shares could be beneficial to the Fund and to shareholders of each type of class, as discussed below. Applicants continue to see demand for ETFs to help investors meet their distinct financial goals. However, Retirement Plans do not offer ETFs to their plan participants because retirement plan administrators are often unable to accommodate trading nuances related to ETF investments. As a result, such retirement plan investors typically invest in mutual funds and/or CITs. CITs can be a cost-effective vehicle when compared to traditional mutual fund expense ratios, however, access is often limited to large employers due to high investment minimums and a more complex onboarding process. This current market structure creates inequity as small businesses are often limited to mutual funds, which carry higher operational costs for investors.

If the relief sought by this Application were granted, Mutual Fund Shares offered by an ETF could be made available to Retirement Plan participants, which could be beneficial to both ETF Class shareholders and Mutual Fund Class shareholders of a Fund. By having a Mutual Fund Class, the Fund may benefit from having access to Retirement Plan distribution channels and ultimately ETF Class shareholders may benefit from greater economies of scale. Similarly, by being part of a Fund that has an ETF Class, Mutual Fund Class shareholders of a Fund may benefit from a broader distribution channel and ultimately from greater economies of scale. Such asset growth could make it possible for a Fund’s shareholders to realize the benefits of breakpoints in the Fund’s fee schedule and for a Fund to spread fixed costs over a larger asset base, driving economies of scale to the benefit of all shareholders.

Applicants believe that the multi-class structure will allow Retirement Plan investors to have access to many of the benefits of investing in index-based ETFs by investing in the Mutual Fund Class, while providing the benefits of greater scale to the advantage of all Fund shareholders. To ensure that, before a Fund offers a Mutual Fund Class, the Board, including the Independent Trustees, will find that the multi-class structure is in the best interests of each ETF Class and Mutual Fund Class individually and of the Fund as a whole. As required by Rule 18f-3, before any Board vote on a multi-class plan that includes an ETF Class and one or more Mutual Fund Classes, the trustees will request and evaluate, and any agreement relating to the class arrangements will require the Adviser to furnish such information as may be reasonably necessary to evaluate the plan.

Each Fund’s operations will be subject to ongoing monitoring, including monitoring by the Fund’s Adviser of brokerage and other costs associated with portfolio transactions, cash drag, and the tax efficiency of the Fund, as well as data concerning inflows and outflows on a per class basis. In the event that a Fund’s Adviser identifies material issues in the functioning of the Fund’s multi-class structure, the Adviser will notify the Board or a designated committee thereof (“Committee”) and present recommendations for appropriate remedial measures to the Board or Committee for its consideration. The Board or Committee will then decide whether to take any corrective action. Potential actions may include, but are not limited to, refining the process to leverage the scale, efficiency, and flexibility of the multi-class structure and manage flows, cash balances, and portfolio rebalances with in-kind transactions and efficient rebalancing, modifying the Fund’s investment strategy, liquidating or combining one or more classes or the Fund, and restructuring a Fund’s ETF Class or Mutual Fund Class as shares of a separate Fund that offers only an ETF Class or one or more Mutual Fund Classes but is otherwise identical to the Fund (i.e., has the same Adviser, Board, investment objective(s) and fundamental investment policies). The range of corrective measures may vary depending on the particular facts and circumstances relating to a Fund’s operations. The Board or Committee may consider additional corrective measures if deemed necessary.

Each Fund’s registration statement also will clearly describe the multi-class structure, including the key characteristics of, and any risks associated with, the multi-class structure, such as the potential that transactions through one class could generate portfolio transaction costs and tax consequences for shareholders in other classes. Investors therefore will be able to assess whether they wish to invest in the Fund, and through which type of class.

Applicants separately note that on April 15, 2024, Cboe BZX Exchange, Inc. (“Cboe”) has filed an application pursuant to Rule 19b-4 under the Securities Exchange Act of 1934, as amended, with the Commission proposing amendments to Cboe Rule 14.11(l).¹¹ If approved by the Commission, the proposed amendments to Cboe Rule 14.11(l) would establish a path and set of conditions for Cboe to approve the “generic” listing and/or trading of ETF Classes issued by open-end investment companies that also offer Mutual Fund Class Shares in reliance on ETF Share Class Relief.

Applicants believe that Mutual Fund Classes would offer the following significant benefits to shareholders in a Fund’s ETF Class.

First, investor cash flows through a Mutual Fund Class can be used for efficient portfolio rebalancing. To the extent that cash flows come into a Fund through a Mutual Fund Class, a portfolio manager may be able to deploy that cash strategically to rebalance the portfolio. Under these circumstances, cash flows through a Mutual Fund Class could help facilitate portfolio management to the benefit of all shareholders, including ETF Class shareholders, particularly if there are no creations through the ETF Class on a given day.

Second, cash flows through a Mutual Fund Class may allow for greater Basket flexibility for creations and redemptions through the ETF Class, which could promote arbitrage efficiency and narrower spreads on the trading of ETF Shares in the secondary market. If cash flows from a Mutual Fund Class can be utilized strategically by the portfolio manager to obtain exposure to some portfolio positions (e.g., small portfolio positions), the portfolio manager could specify a smaller number of different securities for the Baskets used for creations and redemptions of ETF Class Shares by Authorized Participants. As recognized in the Adopting Release, if Baskets contain a smaller number of securities, Authorized Participants may be able to assemble or liquidate such Baskets with lower transaction costs. Reducing the costs of Authorized Participants

to create and redeem ETF Shares could potentially result in greater arbitrage efficiency and narrower spreads in connection with the trading of ETF Shares in the secondary market by the Authorized Participants and could make the Fund more attractive and less expensive to trade, thus increasing overall Fund assets.¹² Additionally, these cash flows could be used to optimize portfolio holdings to better track the index in the absence of creations and/or redemptions through the ETF Class.

Because each Fund is currently operating as an ETF, a Mutual Fund Class would permit investors that cannot invest in ETFs through their Retirement Plans to gain access to index investing through established Funds. Applicants also believe that the establishment of a Mutual Fund Class as part of an existing Fund could lead to cost efficiencies. In terms of Fund expenses, a Mutual Fund Class could have initial and ongoing advantages for its shareholders. Similarly, Applicants expect that shareholders of an ETF Class of a Fund, even if it already has substantial assets, could benefit from additional economies of scale. These are the same types of benefits that the Commission originally recognized in adopting Rule 18f-3.¹³

Tax-free exchanges of shares from a Mutual Fund Class for shares of the ETF Class also may increase the ETF shareholder base. Subsequent secondary market transactions by the ETF Class shareholders could generate greater trading volume, resulting in lower trading spreads and/or premiums or discounts in the market prices of the ETF Shares to the benefit of ETF shareholders.

Applicants believe that being part of a multi-class structure that includes an ETF Class would offer the following significant benefits to shareholders in a Fund’s Mutual Fund Classes.

First, in-kind transactions through the ETF Class may contribute to lower portfolio transaction costs and greater tax efficiency. In general, in-kind transactions through the ETF Class in connection with creations and redemptions could allow a Fund to reduce some portfolio transaction costs. This could be particularly true through the use of the custom basket flexibility permitted under Rule 6c-11. For example, on days when there may be limited cash inflows through the Mutual Fund Classes, in-kind transactions through the ETF Class could allow the Fund to rebalance its portfolio efficiently while keeping cash balances low and without needing to sell and purchase portfolio securities in the market. In-kind redemptions also could serve to limit the realization of capital gains and reduce unrealized capital gains within the portfolio and improve the tax profile of the Fund, which could help shareholders defer capital gains to the extent that portfolio adjustments and cash redemptions by a Mutual Fund Class require the sale of portfolio securities. An improved tax profile for the Fund also may assist the competitive positioning of the Fund for attracting prospective shareholders.

As described in greater detail below, Applicants also believe that an exchange feature could allow Mutual Fund shareholders to exchange Mutual Fund Shares for ETF Shares without adverse consequences to the Fund. To the extent that some Mutual Fund shareholders might ultimately prefer to hold ETF Shares, the existence of an ETF Class could allow for those shareholders to exchange their shares into the ETF Class of the same Fund rather than redeeming their Mutual Fund Shares and buying shares of another ETF. In so doing, the exchanging shareholder could save on transaction costs and potential tax consequences that may otherwise be incurred in redeeming their Mutual Fund Shares and buying separate ETF Shares, and the Fund (and thus other shareholders) may also save on transaction costs and potential tax consequences that could otherwise arise if the Fund needed to sell portfolio securities (a potential tax realization event) to raise cash to satisfy the redemption of Mutual Fund Shares. This exchange feature would be a particular advantage if Retirement Plan administrators become able to better accommodate ETFs in the future.

Many of the Funds are large and have a well-established track record. Having higher assets under management and a performance history or track record can be an important factor in whether a Fund may qualify as an investment option in many Retirement Plans. A Mutual Fund Class of an existing Fund that is an ETF could benefit from pre-existing assets and performance, which could improve the availability of the Fund to investors. In addition, the ability to grow in two different distribution channels, ETF Class and Mutual Fund Class, could lead to additional asset growth and economies of scale to the benefit of all shareholders. Further, the addition of a new share class to an existing Fund can benefit existing assets by allowing, among other things, the Fund’s fixed expenses to be spread over a larger asset base. The Commission previously recognized these benefits when considering the adoption of Rule 18f-3.¹⁴

Finally, the establishment of a Mutual Fund Class as part of an existing Fund also would provide Mutual Fund Class shareholders the benefit of an established securities lending program. It usually takes a new Fund some time to establish the asset base and maturity of a securities lending program to reach optimal utilization. Shareholders of a new Mutual Fund Class of an existing Fund could receive the benefit of a fully developed securities lending program.

The Adopting Release indicates that Funds operating with both an ETF Class and a Mutual Fund Class raise certain additional policy considerations. Specifically, the Commission notes that the cash flows associated with different classes could impact a fund’s portfolio, generating costs that shareholders of all classes would share.

With respect to the potential consequences of cash flows, the Commission identifies three categories of costs: (i) brokerage and other costs associated with buying and selling portfolio securities in response to mutual fund share class inflows and outflows; (ii) cash drag associated with holding the cash necessary to satisfy mutual fund share class redemptions; and (iii) distributable capital gains associated with portfolio transactions. Applicants believe that each of these issues could be considered by a particular Fund’s Adviser and the respective Board in determining whether the Fund should offer both Mutual Fund Classes and an ETF Class.

In terms of brokerage and other costs in connection with portfolio transactions, Funds will be chosen where the applicable Adviser believes shareholders of all classes will benefit from the scale, efficiency, and flexibility of the multi-class structure, and shareholder flows, cash balances, and portfolio rebalances can be managed holistically with in-kind transactions and efficient rebalancing to the mutual benefit of shareholders of all classes, significantly reducing the potential risk to the ETF Class, which will be clearly disclosed.

As described above, cash inflows also may allow a portfolio manager to make specific portfolio adjustments that could be more difficult to achieve strictly using Basket transactions through a stand-alone ETF. At times, an index ETF may not be able to rebalance to achieve desired portfolio positions purely through in-kind creation and redemption activity, and therefore could incur portfolio transaction costs if it becomes necessary to sell portfolio securities in order to generate cash to invest in certain positions. Similarly, each Fund has ongoing expenses, whether the Advisory Fee, taxes, or fund governance related expenses, those fees are paid in cash and could require an ETF to sell portfolio securities to generate cash. Accordingly, the possibility of cash inflows through a Mutual Fund Class and in-kind transactions through an ETF class is a combination that could allow for benefits to all Fund shareholders: in-kind creations and redemptions through the ETF Class could save some portfolio transaction costs, while cash inflows through the Mutual Fund Class could save transaction costs that the Fund might have incurred if otherwise forced to liquidate holdings to rebalance its portfolio or pay Fund expenses. Having both cash inflows and in-kind creation unit activity permits a Fund’s portfolio management team to manage the Fund’s investment program from a tax perspective as well.

With respect to the issue of cash drag, Funds will be chosen where the Adviser believes cash balances (if needed) can be efficiently raised and put to work and/or are often part of the portfolio management strategy, and Mutual Fund Class cash flows can be efficiently used to effect rebalances. In addition, Applicants expect that most investors in a Mutual Fund Class would be doing so through a Retirement Plan and would likely be long-term investors. To the extent that there is periodic rebalancing within the investments available to a Retirement Plan, Applicants believe that such purchases and redemptions generally offset each other. As a result, Applicants do not expect ETFs that would offer Mutual Fund Classes to maintain cash balances at a level that would cause any significant adverse impact on Fund performance. Nonetheless, the risk of potential cash drag would be disclosed to investors.

Finally, the tax management of a Fund portfolio can have many elements. As a general matter, in-kind redemptions through the ETF Class could limit a Fund’s realization of capital gains and reduce the unrealized capital gains for the Fund’s portfolio generally, in which case cash redemption activity through the Mutual Fund Class might not generate capital gains on an ongoing basis for any of the classes.

Further, Applicants believe that if there ever were a case where there was to be a significant redemption request, they would be able to expect advance notice of any such redemption request from the Retirement Plan, which would allow the Adviser to raise necessary cash in anticipation of such a redemption rather than hold excessive amounts of cash on a daily basis. The Mutual Fund Class may also provide cash inflows that could reduce the need to liquidate holdings to reposition the portfolio (as described in connection with transaction costs above) or to pay dividends and thereby reduce capital gain realization that may otherwise occur on liquidation of holdings.

In addition to the specific issues that the Commission raised in the Adopting Release relating to cash flows through a Mutual Fund Class, the Commission also noted in the Adopting Release that unlike the ETFs covered by Rule 6c-11, existing ETF classes do not provide daily portfolio transparency.¹⁵ Applicants note that a lack of daily portfolio transparency is not a necessary characteristic of investment companies that offer both a Mutual Fund Class and an ETF class. Currently, the Funds operate as ETFs and make portfolio holdings information available to shareholders on a daily basis, consistent with the requirements of Rule 6c-11. Applicants will continue to publish the portfolio of each Fund that offers both a Mutual Fund Class and an ETF Class on a daily basis. The Advisers believe that full portfolio transparency could be provided for index Funds without significant adverse consequences to shareholders. Each Adviser would only utilize a multi-class structure in reliance on the requested Order for Funds that track an index, where the Adviser believes that displaying the portfolio holdings of the Fund on a daily basis would not negatively impact shareholders.

Taking into account the Commission’s concerns in the Adopting Release, Applicants have proposed conditions to the relief that will ensure that a Fund’s Adviser and the respective Board focus on these issues with the initial approval and on an ongoing basis. Applicants also will include appropriate disclosure in a Fund’s registration statement regarding the key characteristics of, and any significant risks associated with, the multi-class structure, including the potential that transactions through one class could generate portfolio transaction costs and tax consequences for shareholders in other classes. Accordingly, investors will be able to make an informed investment decision when investing in a Fund with Mutual Fund Classes and an ETF Class.

Section 6(c) of the Act provides that the Commission may exempt any person, security, or transaction or any class or classes of persons, securities, or transactions from any provisions of the Act, or any rule or regulation thereunder, if such relief is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act.

Section 17(b) of the Act provides that the Commission will grant an exemption from the provisions of Section 17(a) of the Act if evidence establishes that the terms of the proposed transaction are reasonable and fair, including the consideration to be paid or received, and do not involve overreaching on the part of any person concerned, that the proposed transaction is consistent with the policy of each registered investment company concerned, and that the proposed transaction is consistent with the general purposes of the Act.

Applicants believe that the requested relief described in this Application meets these standards.

With respect to the ETF Operational Relief, Applicants seek the same exemptive relief as provided by Rule 6c-11, subject to the same conditions contained in Rule 6c-11. Applicants believe that they are technically unable to rely on Rule 6c-11 because “exchange-traded fund” is defined, in part, to mean a registered open-end management investment company “whose shares are listed on an Exchange and traded at market-determined prices.” To the extent that this definition suggests that all of the investment company’s shares must be listed on an Exchange, a Fund with both Mutual Fund Shares and ETF Shares would not meet this definition.

In addition, the Funds may offer an “Exchange Privilege” that would permit shareholders in a Mutual Fund Class to exchange Mutual Fund Shares for ETF Shares, but not vice versa (i.e., shareholders in the ETF Class would not be permitted to exchange ETF Shares for Mutual Fund Shares). The Exchange Privilege will conform with Section 11(a) of the Act. In particular, any exchange would occur at the relative NAVs of the respective securities. To the extent a Fund imposes any administrative fee on the exchange, the fee will be applied in compliance with Rule 11a-3 under the Act. ETF Shares issued to a shareholder as part of the Exchange Privilege will be newly issued ETF Shares, and not ETF Shares purchased in the secondary market. The issuance of ETF Shares in connection with the Exchange Privilege will comply with the Securities Act. Because the definition of “exchange-traded fund” in Rule 6c-11 requires that the ETF “issues (and redeems) creation units to (and from) authorized participants in exchange for a basket and a cash balancing amount if any,” a Fund that permits a holder of Mutual Fund Shares to acquire individual ETF Shares directly from the Fund through the Exchange Privilege may not satisfy this definition.

Although Applicants otherwise would comply with Rule 6c-11 as required by condition 1 below, because the Funds cannot rely on Rule 6c-11, Applicants request the ETF Operational Relief described below.

Section 5(a)(1) of the Act defines an “open-end company” as a management investment company that is offering for sale or has outstanding any redeemable security of which it is the issuer. Section 2(a)(32) of the Act defines a redeemable security as any security, other than short-term paper, under the terms of which the holder, upon its presentation to the issuer, is entitled to receive approximately such holder’s proportionate share of the issuer’s current net assets, or the cash equivalent.

Because ETF shares are not individually redeemable, a possible question arises as to whether the definitional requirements of a “redeemable security” or an “open-end company” under the Act are met. Rule 6c-11(b)(1) resolves this issue for exchange-traded funds relying on Rule 6c-11 by specifically providing that an exchange-traded fund share is considered a redeemable security within the meaning of Section 2(a)(32). Because the operations of an ETF Class would adhere to all of the requirements of Rule 6c-11, except that a Fund will list only one class of its shares on an Exchange and may offer an Exchange Privilege, Applicants request an Order under Section 6(c) granting an exemption from Sections 2(a)(32) and 5(a)(1) to permit a Fund to register as an open-end management investment company and, except as otherwise permitted by Rule 6c-11, redeem ETF Shares in Creation Units only.

Section 22(d) of the Act, among other things, prohibits investment companies, their principal underwriters, and dealers from selling a redeemable security to the public except at a current public offering price described in the prospectus. Rule 22c-1 under the Act generally requires that a dealer selling, redeeming, or repurchasing a redeemable security do so only at a price based on its NAV.

Because investors may purchase and sell individual ETF shares from and to dealers on the secondary market at market-determined prices (i.e., at prices other than those described in the prospectus or based on NAV), Rule 6c-11 provides exemptions from these provisions. As noted, the operations of an ETF Class, including the ways in which the ETF Shares trade at market-determined prices, would be the same as for ETFs relying on Rule 6c-11. Accordingly, Applicants seek the same relief pursuant to Section 6(c) as provided by Rule 6c-11.

Section 22(e) generally prohibits a registered open-end management investment company from postponing the date of satisfaction of redemption requests for more than seven days after the tender of a security for redemption.

Rule 6c-11 provides an exemption from Section 22(e) to permit an ETF to delay satisfaction of a redemption request for more than seven days if a local market holiday, or series of consecutive holidays, or the extended delivery cycles for transferring foreign investments to redeeming Authorized Participants, or the combination thereof, prevents timely delivery of the foreign investment included in the ETF’s Basket. Pursuant to Section 6(c), Applicants seek the same relief for an ETF Class, subject to the requirements of Rule 6c-11.

Section 17(a) of the Act generally prohibits an affiliated person of a registered investment company, or an affiliated person of such person, from knowingly selling any security or other property to or purchasing any security or other property from the company.

Rule 6c-11 provides an exemption from these provisions to permit purchases and redemptions of Creation Units through Basket transactions between exchange-traded funds and certain types of affiliated persons as described in Rule 6c-11. Applicants seek an exemption from Sections 17(a)(1) and 17(a)(2) of the Act pursuant to Sections 6(c) and 17(b) of the Act to permit the Funds to engage in the same types of Basket transactions through the ETF Class, subject to the requirements of Rule 6c-11.

In addition to the ETF Operational Relief that parallels the exemptive relief provided by Rule 6c-11, Applicants request an Order under Section 6(c) for relief from Sections 18(f)(1) and 18(i) of the Act in order for a an ETF to offer one or more Mutual Fund Classes.

Section 18(f)(1) of the Act provides that “it shall be unlawful for any registered open-end investment company to issue any class of senior security or to sell any senior security of which it is the issuer” with exceptions not here relevant. The term “senior security” is defined in Section 18(g) to mean “any stock of a class having priority over any other class as to distribution of assets or payment of dividends.” Section 18(i) provides that every share of stock issued by an open-end investment company “shall be a voting stock and have equal voting rights with every other outstanding voting stock.”

Section 18(f)(1) was enacted to protect investors from abuses associated with complex investment company capital structures, including excessive leverage, conflicts of interest among classes, and investor confusion, while Section 18(i) was intended to prevent inequitable and discriminatory shareholder voting provisions.¹⁶ The Commission generally takes the position that an open-end investment company that issues multiple classes could raise issues under Sections 18(f)(1) and 18(i) because differences in the rights accorded to, or expenses paid by, different shareholders of the same investment company may raise senior security issues under Section 18.

In 1995, the Commission adopted Rule 18f-3, which provides an exemption from Sections 18(f)(1) and 18(i) for any open-end investment company (or series thereof) with a multi-class structure, provided that the company complies with the requirements of the rule.¹⁷ Although Applicants will comply substantially with the requirements of Rule 18f-3, the Funds would not be able to comply with the requirement in Rule 18f-3(a)(4) that, aside from the differences permitted by the rule, the Mutual Fund Classes and the ETF Class will have the same rights and obligations.

Applicants have identified various ways in which Mutual Fund Shares and ETF Shares will have different rights. First, Mutual Fund Shares will be individually redeemable while ETF Shares will be redeemable only in Creation Units. Second, ETF Shares will be tradable on an Exchange while Mutual Fund Shares will not, thus the benefits of an ETF (trading any time during market hours with advanced trading features, such as limit and stop loss orders) will only be available to

the ETF Shares. Third, the Exchange Privilege will be limited to the Mutual Fund Class (i.e., the Exchange Privilege will not be offered to holders of ETF Shares of the Fund). Fourth, dividends of Mutual Fund Shares may be automatically reinvested in additional Mutual Fund Shares issued by a Fund at its NAV, while holders of ETF Shares may only participate in a dividend reinvestment plan to the extent their broker-dealers make available the DTC book-entry and/or broker-dealer sponsored dividend reinvestment service. Fifth, although all share classes of a Fund will declare dividends on the same schedule (e.g., monthly, quarterly, annually), it is currently expected that the dividend declaration date for Mutual Fund Shares will be the ex-dividend date, whereas due to current Exchange requirements, the declaration date for ETF Shares would generally be one business day before the ex-dividend date (although it is possible that changes to Exchange requirements could alter this approach for ETF Shares and possibly result in no difference between ETF Shares and Mutual Fund Shares in this regard). Sixth, while all share classes of a Fund will pay dividends on the same schedule (e.g., monthly, quarterly, annually), dividends on the Mutual Fund Shares are expected to be paid by the business day after ex-dividend date, whereas the payment date for ETF Shares is expected to be several days after the ex-dividend date.

Applicants do not believe that the differences in class rights noted above implicate the concerns at which Section 18 is directed – i.e., excessive leverage, conflicts of interest, and investor confusion.

The issuance of classes of shares with different rights and obligations, and different dividend declaration and payable dates, does not create any opportunity for leverage.

While having more than one class of shares creates the potential for conflicts of interest between the classes, Applicants do not believe that the potential conflicts that could arise with respect to a Mutual Fund Class of an ETF are any different from those that could arise in any multi-class arrangement. Rule 18f-3 contains provisions designed to minimize or eliminate potential conflicts between classes, such as requiring separate approval on any matter submitted to shareholders in which the interests of one class differ from the interests of any other class, and requiring the use of certain formulas for allocating income, gains and losses, and appreciation and depreciation. Under this framework, multi-class funds have successfully addressed conflicts of interest between classes and have become one of the prevalent types of registered investment companies in the asset management industry. The Funds will comply with these voting and allocation provisions. Applicants do not believe that potential conflicts of interest beyond those raised generally by a multi-class structure are raised specifically when classes have different redemption and trading rights, different timing of dividend declaration and payment dates, differences in the availability of a dividend reinvestment plan, and, in some cases, different exchange rights.

Although Mutual Fund Shares and ETF Shares may both pay dividends, the dividend declaration date for Mutual Fund Shares is expected to be the ex-dividend date while the declaration date for ETF Shares is expected to be one business day before the ex-dividend date. Applicants expect that the difference in the dates on which dividends of Funds are declared for Mutual Fund Shares and ETF Shares will be due solely to Exchange rules applicable to ETFs, not to the intent of management to adopt specific measures that could be favorable to one class and prejudicial to another. Applicants note that they do not expect that there will be an economic impact on a particular share class as a result of this difference in dividend declaration dates.

Although Mutual Fund Shares and ETF Shares may both pay dividends, dividends on Mutual Fund Shares are expected to be paid by the business day after the ex-dividend date and can be automatically and immediately reinvested in additional Mutual Fund Shares at the NAV on the ex-dividend date, while the payment date for ETF Shares is expected to be several days after the ex-dividend date and ETF Class shareholders will not be able to reinvest their dividends until several days after the ex-dividend date. The delay between the ex-dividend date and the payment/reinvestment date occurs for all ETFs, whether they are stand-alone ETFs or part of a multi-class structure, and regardless of whether an ETF shareholder elects to reinvest dividends.

As a result of the difference in when dividends are paid, Mutual Fund Class shareholders who reinvest dividends will be continuously invested, while ETF Class shareholders who reinvest will be “out of the market” for several days with respect to the amount of the dividend. This difference will affect the relative performance of the classes because, during the period when the dividend is out of the market, ETF Class shareholders will not receive income or experience appreciation or depreciation on the amount of the dividend. Applicants do not believe that this economic difference will be significant.

Applicants do not believe that this difference between Mutual Fund Classes and ETF Classes resulting from the different dividend payment schedules results in a conflict between the share classes nor is inconsistent with the purposes underlying Section 18 of the Act for the following reasons:

As noted, Section 18(i) provides that “every share of stock . . . issued by a registered management investment company . . . shall be a voting stock and have equal voting rights with every other outstanding voting stock.” Because shareholders of each Fund have voting rights based on the number of shares owned, and because the shareholders in the Mutual Fund Class may be able to reinvest dividends sooner than shareholders in the ETF Class, each Mutual Fund Class shareholder could obtain more voting power than an ETF Class Shareholder in the days immediately following an ex-dividend date.

Applicants believe that their proposed treatment of voting rights meets the standards of Section 18(i) because every share issued by the Funds will have equal voting rights in that each share will be entitled to one vote per each share or dollar of NAV (number of shares owned multiplied by the NAV per share) and a fractional vote per each fractional share or dollar amount. While the voting power of a Mutual Fund Class shareholder arguably could be different due to the ability to reinvest dividends more quickly, voting power and voting rights are not necessarily the same thing. Even if one takes the position that the classes have different voting rights as a result of their different dividend policies, Applicants’ proposal merits an exemption from Section 18(i) because, given the immaterial difference in voting power between the classes, it is extremely unlikely that the outcome of a proxy vote would be affected.

As discussed above in section IV.C. of this Application, the Commission has expressed concern in the context of the Adopting Release that the cash flows associated with Mutual Fund Classes could impact a Fund’s portfolio, generating costs that shareholders of all classes, including the ETF Class, would share. This potential for “cross-subsidization” between the classes might be viewed as a potential conflict between the classes. However, Applicants note as an initial matter that an inherent part of the mutual fund structure is the fact that some investors in the mutual fund will transact with the mutual fund more frequently than others, which may generate transaction costs and tax realizations that are experienced by all shareholders, including non-transacting shareholders.

Applicants also note that the sharing of portfolio transaction costs and tax realizations at the portfolio level is a characteristic of all multi-class funds that operate under Rule 18f-3. For example, even though different classes may be offered to different types of investors that may have different levels of transaction activity or different transaction sizes (e.g., institutional investors, retail investors), Rule 18f-3 does not seek to isolate the portfolio transaction costs or any tax realizations caused by cash inflows and outflows to the specific class “responsible” for that transaction activity. Instead of seeking to allocate such costs, Rule 18f-3 requires that the Board, including a majority of the Independent Trustees, determine that the multi-class plan for the Fund is in the best interests of each class individually and of the Fund as a whole.

Applicants generally propose to take the same approach with respect to a Fund that would offer a Mutual Fund Class (or Mutual Fund Classes) and an ETF Class. In light of the Commission’s concerns, however, Applicants propose several conditions to the requested relief that will help ensure that a Fund’s Adviser and the respective Board, including the Independent Trustees, are keenly focused on these issues as an initial and ongoing matter.¹⁸ As noted above, based on the characteristics of certain Funds and the Advisers’ historical investment approach, Applicants believe that shareholders of both a Mutual Fund Class and an ETF Class of certain Funds would benefit from the multi-class structure. As addressed in the next section, Applicants also will take steps to inform and educate investors regarding the characteristics of the multi-class structure, including the potential that transactions through one class could generate portfolio transaction costs and tax consequences for shareholders in other classes. Finally, the Adviser will reimburse the Fund for any brokerage or other transaction costs that result from purchases and sales of the Mutual Fund Class.

While Applicants believe the potential for investor confusion is limited, Applicants intend to take the steps described below, which Applicants believe will minimize or eliminate any potential for investor confusion. Applicants note that ETFs have been in existence for more than thirty years, and some ETFs are consistently among the highest volume securities on the Exchange on which they trade. Applicants believe that investors are familiar with the concept of ETF shares and understand the fundamental differences between them and conventional mutual fund shares, regardless of whether the ETF shares are issued by ETFs or through ETF classes. As the Commission noted in the Adopting Release, “ETF investors have grown familiar with ETFs and the fundamental distinctions between ETFs and mutual funds,” and the Commission therefore determined that Rule 6c-11 did not need to include special disclosure requirements to highlight the ways in which mutual funds and ETFs differ.¹⁹ Further, even though Rule 6c-11 does not include exemptive relief to permit ETF classes, the Commission did consider the disclosure requirements that apply to ETF classes at the time of the rulemaking, and its amendments to Form N-1A

regarding ETF trading costs apply equally to ETFs and ETF classes.²⁰ Applicants also believe that it is extremely unlikely that any investor acquiring ETF Shares through the Exchange Privilege, if available, will do so without understanding the differences between the classes, since an investor would make an exchange only if the investor wanted to own shares with different characteristics. Applicants also note that a similar multi-class structure has been operated with great success for over 20 years with no apparent investor confusion.

Applicants will take numerous steps to ensure that investors have the information necessary to understand the differences between Mutual Fund Shares and ETF Shares.

Applicants believe that the efforts outlined above will ensure that interested investors have the information necessary to understand the differences between Mutual Fund Shares and ETF Shares.

As noted above, the Commission has granted similar requested relief on four previous occasions, as reflected in the Vanguard Orders.²² Although Applicants seek similar relief, Applicants have proposed different conditions to the relief that reflect the adoption of Rule 6c-11 and that address the concerns expressed by the Commission in the Adopting Release relating to ETF Class Relief. Applicants believe that the Adviser and the Board of each Trust will be well-positioned to determine whether it is appropriate for a given Fund to offer both an ETF Class and a Mutual Fund Class and to evaluate this structure on an on-going basis. In addition, a new condition will require Applicants to provide the information necessary for shareholders to fully inform themselves of the characteristics of a Fund’s multi-class structure.

Applicants agree that any order of the Commission granting the requested relief will be subject to the following conditions:

Applicants file this Application in accordance with Rule 0-2 under the Act. Pursuant to Rule 0-2(f) under the Act, Applicants state that their address is indicated on the cover page of this Application. Applicants further request that all communications concerning this Application should be directed and copied to the persons listed on the cover page of the Application.

In accordance with Rule 0-2(c) under the Act, Applicants state that all actions necessary to authorize the execution and filing of this Application have been taken, and the persons signing and filing this document are authorized to do so on behalf of Applicants. Ann Carpenter is authorized to sign and file this document on behalf of the Adviser pursuant to the general authority vested in her as Chief Operating Officer of SSGA Funds Management, Inc. Ann Carpenter is authorized to sign and file this document on behalf of the Trusts pursuant to the following resolution adopted by the Board of Trustees of the Trust on October 31, 2024:

RESOLVED, that the officers of the SPDR Series Trust and SPDR Index Shares (the “Trusts”) be, and each hereby is, authorized in the name of and on behalf of each Trust to make or cause to be made, and to execute and file with the U.S. Securities and Exchange Commission (the “SEC”) an application and any amendments thereto, as may be necessary, for an order or orders of exemption from the Investment Company Act of 1940, as amended, as may be necessary to allow the Trusts to offer series of the Trusts with classes of shares that are not exchange-traded (mutual fund classes), in addition to a class of exchange-traded shares, with such changes as an officer of the Trusts, with the advice of counsel, deems appropriate.

FURTHER RESOLVED, that the officers of the Trusts be, and each hereby is, authorized and directed to do such further acts and execute and deliver such additional documents or instruments, including any amendments or supplements thereto, as may be necessary or desirable to effect the intent and purpose of the foregoing resolution, such determination and their authority therefore to be conclusively evidenced by the doing of such acts or the preparation, execution, and filing of such documents.

Applicants also have attached the verifications required by Rule 0-2(d) under the Act to this Application. In accordance with Rule 0-5 under the Act, Applicants request that the Commission issue the Order without holding a hearing.

Based on the facts, analysis and conditions in the Application, Applicants respectfully request that the Commission issue an Order under Sections 6(c) and 17(b) of the Act granting the relief requested by Applicants. Applicants submit that the requested exemptions are necessary or appropriate in the public interest, consistent with the protection of investors and consistent with the purposes fairly intended by the policy and provisions of the Act. In addition, Applicants submit that the terms of the proposed transactions are reasonable and fair, including the consideration to be paid or received, and do not involve overreaching on the part of any person concerned, that the proposed transactions are consistent with the policy of each registered investment company concerned, and that the proposed transactions are consistent with the general purposes of the Act.

Applicants have caused this Application to be duly signed on their behalf on October 31, 2024.


SPDR SERIES TRUST

By:		/s/ ANN M. CARPENTER
Name:		ANN M. CARPENTER
Title:		President

Date: October 31, 2024

SPDR SERIES TRUST

By:		/s/ ANN M. CARPENTER
Name:		ANN M. CARPENTER
Title:		President

Date: October 31, 2024

SSGA FUNDS MANAGEMENT, INC.

By:		/s/ ANN M. CARPENTER
Name:		ANN M. CARPENTER
Title:		Chief Operating Officer

Date: October 31, 2024

The undersigned states that she has duly executed the attached Application dated for and on behalf of SPDR SERIES TRUST, SPDR INDEX SHARES, and SSGA FUNDS MANAGEMENT, INC.; that she is the President of SPDR Series Trust and SPDR Index Shares, and Chief Operating Officer of SSGA Funds Management, Inc.; and that all actions by directors and other persons necessary to authorize deponent to execute and file such instrument have been taken. The undersigned further says that she is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of her knowledge, information, and belief.


VERIFICATION

Commonwealth of Massachusetts		)
		)ss:
County of Suffolk		)

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