For institutional and professional investors, navigating the complexities of the financial markets requires a clear understanding of potential risks. State Street, a prominent financial services provider, emphasizes the importance of informed investment decisions, particularly concerning their range of funds and Exchange Traded Funds (ETFs). This overview is designed to provide qualified investors with essential information regarding investment risks and important disclosures associated with State Street’s offerings.
Key Considerations for Investors
Investing inherently involves risk, and it is crucial to acknowledge the potential for financial loss. State Street underscores this principle, ensuring investors are aware that the value of their investments can fluctuate. This means that the initial capital invested is not guaranteed and may decrease due to market volatility or other unforeseen circumstances.
Fund-Specific Risk Disclosures
State Street highlights specific risks associated with certain funds, such as the State Street Institutional Liquid Reserves Fund. Investors should be aware of the following potential risks:
- Loss of Principal: Investing in such funds carries the risk of losing money. The share price is not fixed and can fluctuate, meaning that when shares are sold, they may be worth less than their original purchase price.
- Sale Fees: Under certain market conditions or due to other factors, funds may impose fees on the sale of shares. These fees can further reduce the returns on investment, particularly if daily net redemptions exceed a certain percentage of the fund’s net assets.
- No FDIC Insurance or Government Guarantee: Investments in these funds are not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other governmental agency. This lack of government backing increases the risk compared to FDIC-insured bank deposits.
- Limited Sponsor Obligation: It is important to note that the fund’s sponsor, in this case, State Street, has no legal obligation to provide financial support to the fund. Investors should not rely on the expectation of financial support from State Street at any time.
ETF Investment Risks
ETFs, like stocks, are traded on exchanges and are subject to market fluctuations and investment risk. Investing in ETFs through State Street also carries several important considerations:
- Market Value Fluctuation: The market value of ETFs can go up or down, and they may trade at prices above or below their net asset value (NAV). This price variability introduces risk for investors.
- Trading Costs: Brokerage commissions incurred when buying and selling ETFs, along with the ETF’s expense ratio, will reduce overall investment returns. These costs should be factored into investment decisions.
Index Licensing and Disclaimers
State Street utilizes indices like the S&P 500®, which is licensed from S&P Dow Jones Indices LLC. It’s important to understand the relationship between index providers and investment products:
- Index Provider Independence: Indices are products of independent entities, not State Street. These index providers do not sponsor, endorse, sell, or promote State Street’s funds.
- No Liability for Index Errors: Index providers bear no responsibility for the advisability of investing in State Street products, nor do they have liability for errors, omissions, or interruptions of their indices.
Important Information for Qualified Investors
State Street’s website and investment offerings are specifically designed for qualified investors. This focus entails several key restrictions and considerations:
- Qualified Investor Audience: The information and products on State Street’s platforms are intended exclusively for qualified investors.
- No Investment Solicitation: Content on State Street’s site should not be interpreted as a solicitation to buy or sell any security or investment product. It is informational and for qualified investors only.
- Product Availability: Not all State Street products and services are available to all investors. Product availability is tailored to different investor categories and may be restricted based on jurisdiction.
- Jurisdictional Restrictions: The information provided is not intended for distribution or use in any jurisdiction where such distribution or use would violate local laws or regulations.
Seeking Professional Financial Advice
State Street explicitly states that the information provided should not be considered investment advice. It is crucial for investors to:
- Consult a Financial Advisor: Investors should consult with their own tax and financial advisors to receive personalized advice tailored to their individual investment objectives, financial situation, and risk tolerance.
- Independent Decision Making: Investment decisions should be made based on thorough independent research and professional advice, not solely on the general information provided by State Street.
Information for Non-U.S. Investors
For investors outside of the United States, it is essential to understand geographical limitations:
- U.S. Focus: State Street’s products and services described on their website are primarily intended for persons within the United States.
- Local Law Compliance: Availability outside the U.S. is subject to qualification and permissibility under local laws. The website information is intended only for qualified persons in permissible jurisdictions.
- No Offer in Unlawful Jurisdictions: Nothing on State Street’s website constitutes an offer to sell or solicit to buy securities in any jurisdiction where such an offer would be unlawful under local securities laws.
Prospectus and Further Information
Before making any investment decisions regarding State Street funds or ETFs, investors are strongly advised to:
- Review the Prospectus: Obtain and carefully read the prospectus or summary prospectus for the specific fund or ETF of interest. These documents contain detailed information about investment objectives, risks, charges, and expenses.
- Contact State Street: Reach out to State Street directly via the provided phone numbers for ETFs, cash funds, ELFUN, or institutional services to request prospectuses or further information.
- Utilize Fund Finder: Explore State Street’s online “Fund Finder” resource to download prospectuses and summary prospectuses.
Important Disclaimers
State Street reiterates critical disclaimers to ensure investor understanding:
- Not FDIC Insured: Investments are not insured by the FDIC.
- No Bank Guarantee: Investments are not guaranteed by any bank.
- May Lose Value: Investments carry the risk of losing value.
By providing clear and comprehensive disclosures, State Street aims to empower institutional and professional investors to make well-informed decisions while understanding the inherent risks associated with investment activities. Understanding these disclosures is a critical step in responsible investing with State Street.
