SEC Company Response from STATE STREET VARIABLE INSURANCE SERIES FUNDS INC (CIK 0000746687) — Apr 22, 2020
STATE STREET VARIABLE INSURANCE SERIES FUNDS INC (CIK 0000746687)
Date: April 22, 2020 · CIK: 0000746687 · Accession: 0001683863-20-004693
AI Filing Summary & Sentiment
File numbers found in text: 811-04041
Letter
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ROPES & GRAY LLP
PRUDENTIAL TOWER
800 BOYLSTON STREET BOSTON, MA 02199"3600
WWW.ROPESGRAY.COM
Adam M. Schlichtmann 617-951-7114
617-235-7346 fax
adam.schlichtmann@ropesgray.com
April 22, 2020
VIA EDGAR CORRESPONDENCE
Securities and Exchange Commission
Division of Investment Management
100 F Street, N.E. Washington, D.C. 20549
Re: State Street Variable Insurance Series Funds, Inc. (the "Company" or the "Registrant") (Registration Nos. 002-91369, 811-04041) Amendment Number 73 to the Company's Registration Statement (the "Registration Statement") on Form N-1A Filed on February 14, 2020, Pursuant to Rule 485(a) under the Securities Act of 1933, as amended (the "1933 Act")
Ladies and Gentlemen:
This letter provides the Company's responses to comments on the above-referenced amendment to the Registration Statement of the Company that Ms. Jennifer Hardy of the staff (the "Staff") of the Securities and Exchange Commission (the "SEC") provided by telephone to Adam Schlichtmann on April 1, 2020. For convenience of reference, each of the comments is summarized before the Company's responses. Capitalized terms not otherwise defined herein have the meanings ascribed to them in the Registration Statement.
The Company currently intends to make a filing under Rule 485(b) of the 1933 Act on or about April 28, 2020 containing its Prospectus and SAI that will be become automatically effective on or about May 1, 2020.
1.Please note that where a comment is made in one section of the registration statement such comment is applicable to all similar disclosures appearing elsewhere in the registration statement.
Response: The Company acknowledges the comment.
2.Significant market events have occurred since this post effective amendment was filed as a result of the COVID-19 pandemic. Please consider whether the portfolios' disclosure, including risk disclosure, should be revised based on how these events are affecting both equity and debt markets. If the registrant determines that no additional disclosure is warranted, please explain supplementally why not. Applies to all funds.
Response: In response to this comment, the Company intends to add disclosure as follows:
The Company intends to add disclosure under "Market Risk" in each "Principal Risks" section of the Prospectus as follows:
The Fund's investments are subject to changes in general economic conditions, and general market fluctuations and the risks inherent in investment in securities markets. Investment markets can be volatile and prices of investments can change substantially due to various factors including, but not limited to, economic growth or recession, changes in interest rates, changes in the actual or perceived creditworthiness of issuers, and general market liquidity. The Fund is subject to the risk that geopolitical events will disrupt securities markets and adversely affect global economies and markets. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, or other events could have a significant impact on the Fund and its investments.
The Company intends to add disclosure under "Market Risk" in the "Additional Information about Investment Objectives, Principal Strategies, and Risks – Additional Information About Risks" section of the Prospectus as follows:
Market prices of investments held by a Fund will go up or down, sometimes rapidly or unpredictably. A Fund's investments are subject to changes in general economic conditions, general market fluctuations and the risks inherent in investment in securities markets. Investment markets can be volatile, and prices of investments can change substantially due to various factors including, but not limited to, economic growth or recession, changes in interest rates, changes in actual or perceived creditworthiness of issuers and general market liquidity. Even if general economic conditions do not change, the value of an investment in a Fund could decline if the particular industries, sectors or companies in which the Fund invests do not perform well or are adversely affected by events. Further, legal, political, regulatory and tax changes also may cause fluctuations in markets and securities prices. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, or other events could have a significant impact on a Fund and its investments.
An outbreak of a respiratory disease caused by a novel coronavirus (known as COVID-
19)first detected in China in December 2019 has resulted in a global pandemic and major disruptions to economies and markets around the world, including the United States. Financial markets have experienced extreme volatility and severe losses, and trading in many instruments has been disrupted. Liquidity for many instruments has been greatly reduced for periods of time. Some interest rates are very low and in some cases yields are negative. Governments and central banks, including the Federal Reserve in the United States, have taken extraordinary and unprecedented actions to support local and global economies and the financial markets. The impact of these measures, and whether they will be effective to mitigate the economic and market disruption, will not be known for some time. In addition, the outbreak of COVID-19, and measures taken to mitigate its effects, could result in disruptions to the services provided to a Fund by its service providers.
The Company intends to add disclosure under the "Additional Investments and Risks" in the SAI as follows:
Market Turbulence Resulting from COVID-19. An outbreak of a respiratory disease caused by a novel coronavirus first detected in China in December 2019 has spread
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globally in a short period of time. In an organized attempt to contain and mitigate the effects of the spread of the coronavirus known as COVID-19, governments and businesses world-wide have taken aggressive measures, including closing borders, restricting international and domestic travel, and the imposition of prolonged quarantines of large populations. COVID-19 has resulted in the disruption of and delays in the delivery of healthcare services and processes, the cancellation of organized events and educational institutions, the disruption of production and supply chains, a decline in consumer demand for certain goods and services, and general concern and uncertainty, all of which have contributed to increased volatility in global markets. The effects of COVID-19 will likely affect certain sectors and industries more dramatically than others, which may adversely affect the value of a Fund's investments in those sectors or industries. COVID-19, and other epidemics and pandemics that may arise in the future, could adversely affect the economies of many nations, the global economy, individual companies and capital markets in ways that cannot be foreseen at the present time. In addition, the impact of infectious diseases in developing or emerging market countries may be greater due to limited health care resources. Political, economic and social stresses caused by COVID-19 also may exacerbate other pre-existing political, social and economic risks in certain countries. The duration of COVID-19 and its effects cannot be determined at this time, but the effects could be present for an extended period of time.
3.Please provide all missing and bracketed information along with your response to the staff's comments on EDGAR no later than 5 business days prior to the effective date of the filing to give the staff adequate time to review the funds' responses. Please make sure the response shows the disclosure changes intended to be made in response to staff comments. This can be done either by including in your correspondence filing the pages of the registration statement with the revised disclosure or by clearly indicating the revisions to the disclosure in the letter.
Response: The Company acknowledges the comment.
4.Please make sure that you provide hyperlinks to all documents that are incorporated by reference pursuant to the FAST Act.
Response: The requested change will be made.
5.State Street U.S. Equity V.I.S. Fund:
a."The Fund is designed to produce a broadly diversified portfolio, and typically has characteristics similar to the S&P 500® Index, including average market capitalization and dividend yield potential." To avoid investor confusion that the fund is not an index fund, please delete or revise this sentence.
Response: The Fund will consider making this change in connection with a future annual update. The Fund is actively managed and notes that it includes the following disclosure under "Principal Risks – Management Risk:" "The Fund is actively managed. The Adviser's judgments about the attractiveness, relative value, or potential appreciation of a particular sector, security, commodity or investment strategy may prove to be incorrect, and may cause the Fund to incur losses. There can be no assurance that the Adviser's investment techniques and decisions will produce the desired results."
b."Through fundamental company research involving analyzing financial statements and other information about a company, SSGA Funds Management, Inc. ("SSGA FM" or the
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"Adviser"), the investment adviser to the Fund, primary seeks to identify securities of large and medium sized companies (meaning companies with market capitalizations of $2 billion or more) with characteristics such as ...appropriate capital structures... ." Please provide detailed disclosure regarding the characteristics that the adviser looks for in determining which securities to buy and sell.
Response: The Fund has reviewed its disclosure and determined not to make any changes at this time.
c."The Fund also may invest up to 15% of its net assets (plus any borrowings for investment purposes) in foreign securities and up to 20% of its net assets (plus any borrowings for investment purposes) in debt securities." Please specify the type debt securities in which the fund may invest and add risk disclosure based on the debt securities identified. This comment applies to all funds with similar disclosure.
Response: The Fund will consider making this change in connection with a future annual update.
d.Please disclose that derivatives counted toward the fund's 80% policy will be valued on a mark to market basis. This disclosure can be in located in the Item 9 section of the prospects. This comment applies to all funds that count derivatives toward their 35d-1 investment policies.
Response: For purposes of determining compliance with a policy adopted in accordance with Rule 35d-1 under the 1940 Act (a "35d-1 Policy"), a Fund may account for a derivative position by reference to its market value or notional value. A Fund may use a derivative contract's notional value when it determines that notional value is an appropriate measure of the Fund's exposure to investments that are consistent with its 35d-1 Policy. See, e.g., "Final Rule: Investment Company Names," Rel. No. IC-24828 (Jan. 17, 2001) at n. 13.
e.The fund includes Technology Sector Risk in the summary risk disclosure. Please add corresponding principal investment strategy disclosure in Items 4 and 9 as done for other funds in the prospectus, or else delete the risk factor for this fund.
Response: The Fund will consider making this change in connection with a future annual update.
f.The fund includes Debt Securities Risk in the summary risk disclosure. In light of current market conditions, please update interest rate disclosure in this risk. This comment applies to all funds with Debt Securities Risk.
Response: The Fund has reviewed its disclosure and determined not to make any changes at this time.
g.The fund discloses Mid-Capitalization Securities Risk. Please add large capitalization securities risk (or something similar).
Response: The Fund will consider making this change in connection with a future annual update.
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h.Under the heading Investment Adviser on page 5, please note that the portfolio managers are jointly responsible for the day-to-day management of the fund. This comment applies to the other funds in the prospectus.
Response: The Fund has reviewed its disclosure and determined not to make any changes at this time.
6.State Street S&P 500 Index V.I.S. Fund
a."The Fund invests at least 80% of its net assets in equity securities of companies contained in the Index. Please add "plus borrowings for investment purposes." This comment applies to all funds with 80% policies where not clarified.
Response: The Fund notes that the disclosure in the SAI under "Names Rule Policy" states that, "In addition to non-fundamental investment restriction 7 above, to the extent a Fund is subject to Rule 35d-1 under the 1940 Act, the Fund has an investment policy, described in the Fund's prospectus, to, under normal circumstances, invest at least 80% of its assets in the particular types of investments suggested by the Fund's name (a 'Name Policy'). 'Assets' for the purposes of a Name Policy are net assets plus the amount of any borrowings for investment purposes." Therefore, the Fund declines to make the requested change.
b.If fees and expenses of the fund's investment in underlying money market funds and other mutual funds exceed 1 bp, please reflect such fees and expenses in a separate line to the fee table. Otherwise, supplementally confirm that they are included in other expenses. This comment applies to all funds that invest in underlying funds.
Response: The Fund supplementally confirms that acquired fund fees and expenses did not exceed 1 basis point for the relevant time period.
c.Risk of Investment in Other Pools states "The Fund bears its proportionate share of the fees and expenses of any pool in which it invests." Please revise this disclosure to clarify that investors may pay higher expenses than those of other funds that don't invest in underlying funds or pools because expenses for investment in the fund also include the fees and expenses of the underlying funds or pools in which the fund invests.
Response: The Fund has reviewed its disclosure and determined not to make any changes at this time.
7.State Street Premier Growth Equity V.I.S. Fund
a."The Fund also may invest up to 25% of its total assets in foreign securities and up to 20% of its net assets (plus any borrowings for investment purposes) in debt securities." Please specify the type debt securities in which the fund may invest and add risk disclosure based on the debt securities identified.
Response: The Fund will consider making this change in connection with a future annual update.
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b.To avoid investor confusion, rename Diversification Risk as "Limited Number of Issuers Risk" and instead of saying "of more diversified funds" say "of funds investing in a larger number of issuers."
Response: The Fund will consider making this change in connection with a future annual update.
c.Please add large capitalization securities risk (or something similar).
Response: The Fund will consider making this change in connection with a future annual update.
8.State Street Small-Cap Equity V.I.S. Fund
a."The Fund also may invest up to 20% of its net assets (plus any borrowings for in
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ROPES & GRAY LLP
PRUDENTIAL TOWER
800 BOYLSTON STREET BOSTON, MA 02199"3600
WWW.ROPESGRAY.COM
Adam M. Schlichtmann 617-951-7114
617-235-7346 fax
adam.schlichtmann@ropesgray.com
April 22, 2020
VIA EDGAR CORRESPONDENCE
Securities and Exchange Commission
Division of Investment Management
100 F Street, N.E. Washington, D.C. 20549
Re: State Street Variable Insurance Series Funds, Inc. (the "Company" or the "Registrant") (Registration Nos. 002-91369, 811-04041) Amendment Number 73 to the Company's Registration Statement (the "Registration Statement") on Form N-1A Filed on February 14, 2020, Pursuant to Rule 485(a) under the Securities Act of 1933, as amended (the "1933 Act")
Ladies and Gentlemen:
This letter provides the Company's responses to comments on the above-referenced amendment to the Registration Statement of the Company that Ms. Jennifer Hardy of the staff (the "Staff") of the Securities and Exchange Commission (the "SEC") provided by telephone to Adam Schlichtmann on April 1, 2020. For convenience of reference, each of the comments is summarized before the Company's responses. Capitalized terms not otherwise defined herein have the meanings ascribed to them in the Registration Statement.
The Company currently intends to make a filing under Rule 485(b) of the 1933 Act on or about April 28, 2020 containing its Prospectus and SAI that will be become automatically effective on or about May 1, 2020.
1.Please note that where a comment is made in one section of the registration statement such comment is applicable to all similar disclosures appearing elsewhere in the registration statement.
Response: The Company acknowledges the comment.
2.Significant market events have occurred since this post effective amendment was filed as a result of the COVID-19 pandemic. Please consider whether the portfolios' disclosure, including risk disclosure, should be revised based on how these events are affecting both equity and debt markets. If the registrant determines that no additional disclosure is warranted, please explain supplementally why not. Applies to all funds.
Response: In response to this comment, the Company intends to add disclosure as follows:
The Company intends to add disclosure under "Market Risk" in each "Principal Risks" section of the Prospectus as follows:
The Fund's investments are subject to changes in general economic conditions, and general market fluctuations and the risks inherent in investment in securities markets. Investment markets can be volatile and prices of investments can change substantially due to various factors including, but not limited to, economic growth or recession, changes in interest rates, changes in the actual or perceived creditworthiness of issuers, and general market liquidity. The Fund is subject to the risk that geopolitical events will disrupt securities markets and adversely affect global economies and markets. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, or other events could have a significant impact on the Fund and its investments.
The Company intends to add disclosure under "Market Risk" in the "Additional Information about Investment Objectives, Principal Strategies, and Risks – Additional Information About Risks" section of the Prospectus as follows:
Market prices of investments held by a Fund will go up or down, sometimes rapidly or unpredictably. A Fund's investments are subject to changes in general economic conditions, general market fluctuations and the risks inherent in investment in securities markets. Investment markets can be volatile, and prices of investments can change substantially due to various factors including, but not limited to, economic growth or recession, changes in interest rates, changes in actual or perceived creditworthiness of issuers and general market liquidity. Even if general economic conditions do not change, the value of an investment in a Fund could decline if the particular industries, sectors or companies in which the Fund invests do not perform well or are adversely affected by events. Further, legal, political, regulatory and tax changes also may cause fluctuations in markets and securities prices. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, or other events could have a significant impact on a Fund and its investments.
An outbreak of a respiratory disease caused by a novel coronavirus (known as COVID-
19)first detected in China in December 2019 has resulted in a global pandemic and major disruptions to economies and markets around the world, including the United States. Financial markets have experienced extreme volatility and severe losses, and trading in many instruments has been disrupted. Liquidity for many instruments has been greatly reduced for periods of time. Some interest rates are very low and in some cases yields are negative. Governments and central banks, including the Federal Reserve in the United States, have taken extraordinary and unprecedented actions to support local and global economies and the financial markets. The impact of these measures, and whether they will be effective to mitigate the economic and market disruption, will not be known for some time. In addition, the outbreak of COVID-19, and measures taken to mitigate its effects, could result in disruptions to the services provided to a Fund by its service providers.
The Company intends to add disclosure under the "Additional Investments and Risks" in the SAI as follows:
Market Turbulence Resulting from COVID-19. An outbreak of a respiratory disease caused by a novel coronavirus first detected in China in December 2019 has spread
-2-
globally in a short period of time. In an organized attempt to contain and mitigate the effects of the spread of the coronavirus known as COVID-19, governments and businesses world-wide have taken aggressive measures, including closing borders, restricting international and domestic travel, and the imposition of prolonged quarantines of large populations. COVID-19 has resulted in the disruption of and delays in the delivery of healthcare services and processes, the cancellation of organized events and educational institutions, the disruption of production and supply chains, a decline in consumer demand for certain goods and services, and general concern and uncertainty, all of which have contributed to increased volatility in global markets. The effects of COVID-19 will likely affect certain sectors and industries more dramatically than others, which may adversely affect the value of a Fund's investments in those sectors or industries. COVID-19, and other epidemics and pandemics that may arise in the future, could adversely affect the economies of many nations, the global economy, individual companies and capital markets in ways that cannot be foreseen at the present time. In addition, the impact of infectious diseases in developing or emerging market countries may be greater due to limited health care resources. Political, economic and social stresses caused by COVID-19 also may exacerbate other pre-existing political, social and economic risks in certain countries. The duration of COVID-19 and its effects cannot be determined at this time, but the effects could be present for an extended period of time.
3.Please provide all missing and bracketed information along with your response to the staff's comments on EDGAR no later than 5 business days prior to the effective date of the filing to give the staff adequate time to review the funds' responses. Please make sure the response shows the disclosure changes intended to be made in response to staff comments. This can be done either by including in your correspondence filing the pages of the registration statement with the revised disclosure or by clearly indicating the revisions to the disclosure in the letter.
Response: The Company acknowledges the comment.
4.Please make sure that you provide hyperlinks to all documents that are incorporated by reference pursuant to the FAST Act.
Response: The requested change will be made.
5.State Street U.S. Equity V.I.S. Fund:
a."The Fund is designed to produce a broadly diversified portfolio, and typically has characteristics similar to the S&P 500® Index, including average market capitalization and dividend yield potential." To avoid investor confusion that the fund is not an index fund, please delete or revise this sentence.
Response: The Fund will consider making this change in connection with a future annual update. The Fund is actively managed and notes that it includes the following disclosure under "Principal Risks – Management Risk:" "The Fund is actively managed. The Adviser's judgments about the attractiveness, relative value, or potential appreciation of a particular sector, security, commodity or investment strategy may prove to be incorrect, and may cause the Fund to incur losses. There can be no assurance that the Adviser's investment techniques and decisions will produce the desired results."
b."Through fundamental company research involving analyzing financial statements and other information about a company, SSGA Funds Management, Inc. ("SSGA FM" or the
-3-
"Adviser"), the investment adviser to the Fund, primary seeks to identify securities of large and medium sized companies (meaning companies with market capitalizations of $2 billion or more) with characteristics such as ...appropriate capital structures... ." Please provide detailed disclosure regarding the characteristics that the adviser looks for in determining which securities to buy and sell.
Response: The Fund has reviewed its disclosure and determined not to make any changes at this time.
c."The Fund also may invest up to 15% of its net assets (plus any borrowings for investment purposes) in foreign securities and up to 20% of its net assets (plus any borrowings for investment purposes) in debt securities." Please specify the type debt securities in which the fund may invest and add risk disclosure based on the debt securities identified. This comment applies to all funds with similar disclosure.
Response: The Fund will consider making this change in connection with a future annual update.
d.Please disclose that derivatives counted toward the fund's 80% policy will be valued on a mark to market basis. This disclosure can be in located in the Item 9 section of the prospects. This comment applies to all funds that count derivatives toward their 35d-1 investment policies.
Response: For purposes of determining compliance with a policy adopted in accordance with Rule 35d-1 under the 1940 Act (a "35d-1 Policy"), a Fund may account for a derivative position by reference to its market value or notional value. A Fund may use a derivative contract's notional value when it determines that notional value is an appropriate measure of the Fund's exposure to investments that are consistent with its 35d-1 Policy. See, e.g., "Final Rule: Investment Company Names," Rel. No. IC-24828 (Jan. 17, 2001) at n. 13.
e.The fund includes Technology Sector Risk in the summary risk disclosure. Please add corresponding principal investment strategy disclosure in Items 4 and 9 as done for other funds in the prospectus, or else delete the risk factor for this fund.
Response: The Fund will consider making this change in connection with a future annual update.
f.The fund includes Debt Securities Risk in the summary risk disclosure. In light of current market conditions, please update interest rate disclosure in this risk. This comment applies to all funds with Debt Securities Risk.
Response: The Fund has reviewed its disclosure and determined not to make any changes at this time.
g.The fund discloses Mid-Capitalization Securities Risk. Please add large capitalization securities risk (or something similar).
Response: The Fund will consider making this change in connection with a future annual update.
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h.Under the heading Investment Adviser on page 5, please note that the portfolio managers are jointly responsible for the day-to-day management of the fund. This comment applies to the other funds in the prospectus.
Response: The Fund has reviewed its disclosure and determined not to make any changes at this time.
6.State Street S&P 500 Index V.I.S. Fund
a."The Fund invests at least 80% of its net assets in equity securities of companies contained in the Index. Please add "plus borrowings for investment purposes." This comment applies to all funds with 80% policies where not clarified.
Response: The Fund notes that the disclosure in the SAI under "Names Rule Policy" states that, "In addition to non-fundamental investment restriction 7 above, to the extent a Fund is subject to Rule 35d-1 under the 1940 Act, the Fund has an investment policy, described in the Fund's prospectus, to, under normal circumstances, invest at least 80% of its assets in the particular types of investments suggested by the Fund's name (a 'Name Policy'). 'Assets' for the purposes of a Name Policy are net assets plus the amount of any borrowings for investment purposes." Therefore, the Fund declines to make the requested change.
b.If fees and expenses of the fund's investment in underlying money market funds and other mutual funds exceed 1 bp, please reflect such fees and expenses in a separate line to the fee table. Otherwise, supplementally confirm that they are included in other expenses. This comment applies to all funds that invest in underlying funds.
Response: The Fund supplementally confirms that acquired fund fees and expenses did not exceed 1 basis point for the relevant time period.
c.Risk of Investment in Other Pools states "The Fund bears its proportionate share of the fees and expenses of any pool in which it invests." Please revise this disclosure to clarify that investors may pay higher expenses than those of other funds that don't invest in underlying funds or pools because expenses for investment in the fund also include the fees and expenses of the underlying funds or pools in which the fund invests.
Response: The Fund has reviewed its disclosure and determined not to make any changes at this time.
7.State Street Premier Growth Equity V.I.S. Fund
a."The Fund also may invest up to 25% of its total assets in foreign securities and up to 20% of its net assets (plus any borrowings for investment purposes) in debt securities." Please specify the type debt securities in which the fund may invest and add risk disclosure based on the debt securities identified.
Response: The Fund will consider making this change in connection with a future annual update.
-5-
b.To avoid investor confusion, rename Diversification Risk as "Limited Number of Issuers Risk" and instead of saying "of more diversified funds" say "of funds investing in a larger number of issuers."
Response: The Fund will consider making this change in connection with a future annual update.
c.Please add large capitalization securities risk (or something similar).
Response: The Fund will consider making this change in connection with a future annual update.
8.State Street Small-Cap Equity V.I.S. Fund
a."The Fund also may invest up to 20% of its net assets (plus any borrowings for in