State Street Global Advisors is the fourth-largest asset manager in the world,^* with total assets under management (AUM) of $3.5 trillion as of December 31, 2022.

We are a pioneer in indexing and quantitative investing, and the creator of many of the world's first exchange-traded funds (ETFs). Our fundamental goal is to be the leading partner and provider of investment exposures and solutions to our clients. We see their challenges as our own, and we work to turn them into opportunities for innovation and returns.

With investment solutions that span the entire risk-return spectrum and cover all major asset classes across geographies, investment styles, and vehicles, we serve some of the world's largest and most sophisticated pension plan sponsors, endowments and foundations, sovereign wealth funds, central banks, and financial intermediaries. They turn to us for the diversified exposure they seek across market cycles, as well as for our deep expertise and insights that help them optimize portfolio returns and manage risk.

We are committed to delivering tailored solutions for our clients while maintaining our global leadership position in index investing, ETFs, cash, and multi-asset solutions. Always thinking innovatively, we remain focused on adding capabilities to meet clients' evolving needs so we can help position them to succeed in any investment environment.

Against 2022's challenging macroeconomic backdrop, Global Advisors demonstrated resilience and continued business momentum. Not immune to the broader market forces, our year-end AUM decreased by 16 percent compared to the prior year, reflecting lower market levels, institutional net outflows, and the negative impact of currency translation, which was partially offset by ETF net inflows. We demonstrated good expense discipline, which enabled us to maintain our margins close to our target of 30 percent.

As markets evolved in 2022, we saw investor interest shift and we supported clients with the breadth of investment exposures, insights, and guidance that helped them remain resilient. Most notably, as short-term rates rose, cash increasingly became an attractive place for investors to generate much-needed yield and downside protection, as well as a reserve to be deployed should markets pivot. Our Cash business gained market share in 2022 by achieving solid investment performance and broad distribution reach in money market funds. Global Advisors was one of only five firms among the top 10 global institutional money market fund providers that saw positive inflows in 2022.

Despite downturns across equities and fixed income, ETFs had their second-best year industry-wide following 2021's record levels of inflows in the U.S., and Global Advisors saw continued momentum in the SPDR® Portfolio Low-Cost Suite and Fixed Income ETFs. Our Defined Contribution business in the U.S. experienced $48 billion in inflows in 2022. Global Advisors' Target Date Fund franchise has grown from $31 billion in 2014 to $146 billion in 2022, with inflows of $21 billion added in 2022.

As individual investors enter the decumulation phase of retirement, we are helping them establish a steady source of income in their later years through innovative funds like IncomeWise. Structured as a target date fund, IncomeWise follows an asset allocation glidepath while giving participants the option to purchase a deferred income annuity, which provides a guaranteed source of retirement income and protects investors against the risk of outliving their assets. Global Advisors was among the first to bring a deferred lifetime income product to market.

Throughout the year, we continued to modernize our operating platform to improve resilience, efficiency, client experience, and risk excellence, and this includes progressing the implementation of the company's proprietary State Street Alpha℠ platform to streamline Global Advisors' integrated front-to-back investment process. In December, we began to migrate our fixed income indexing business onto Alpha, marking an important milestone as we enhance the way we do business by leveraging the broader State Street infrastructure transformation.

During the year, Global Advisors continued to raise the bar on asset stewardship. Through engagements with our portfolio companies, our asset stewardship program remains focused on the creation of long-term value.

Whether on the topic of human capital, environmental issues, or new regulatory and reporting requirements, it is our role to make sure companies embrace best practice disclosures and have plans to address associated risks and take advantage of opportunities to create long-term value. At the end of 2022, we announced the extension of our proxy voting choice to a much larger group of institutional investors. With this change, investors in more than 40 percent of the index equity assets we manage will have the ability to decide how shares held in the funds and separately managed accounts they own are voted, effective with the 2023 proxy season.

Building on the momentum of our Fearless Girl initiative, we continue to have a positive influence on female board composition and industry leadership. Since 2017, of the 2,146^ companies we had identified as having all-male boards, 1,027^^ have appointed at least one female director as part of their leadership team. Indeed, in 2022, every company in the S&P 500 had at least one woman on its board. We have also set the stage for diversity engagement that moves beyond gender via our broader stewardship efforts.

Global Advisors is well known as an innovator in the industry. Last year, for example, we launched several new products and key partnerships, including a collaboration with Barclays Quantitative Portfolio Strategy (Barclays QPS) that is helping meet the needs of investors seeking systematically active outcomes in fixed income. Over the past decade, fixed income securities have traded more efficiently and with greater liquidity.

Through this innovative partnership, we will develop and manage a suite of active fixed income strategies, leveraging data sourced from systematic strategy indices created by the Barclays QPS team.

Systematic fixed income strategies — in which alpha is driven by rigorous data analysis used to uncover mispricings — offer a compelling alternative for investors looking for active outcomes in fixed income.

As a long-term ESG solutions manager, in 2022 Global Advisors continued to provide investors with innovative choices to help them develop climate-aware investment strategies. Extending our ESG-related ETF offerings, we introduced the SPDR MSCI Climate Aligned ETFs (NZUS and NZAC), aligned with the Paris Climate Agreement, and the active SPDR Nuveen Municipal Bond ESG Fund (MBNE). We also realized flows of $2.5 billion into our new money market fund share class, the Opportunity Class, which was launched at the end of 2021 and benefits philanthropic organizations whose values align with State Street's commitment to racial equity and social justice.

Global Advisors is well-positioned for success against the broader market trends we are anticipating in 2023 and beyond. Under the leadership of new President and Chief Executive Officer, Yie-Hsin Hung, we will continue to innovate and invest in our partnerships and in helping to solve our clients' most complex investment challenges.

Our vision is to be the world's leading partner and provider of investment exposures and tailored investment management solutions, with principal strengths in indexing, ETFs, cash, and multi-asset capabilities. As investment markets continue to evolve, we intend to lead the way as we partner with clients to provide the investment strategies and solutions they need.

*By assets under management ^Since 2017 and the expansion of the policy in 2023 ^^Major indices in Australia, Canada, Europe, Hong Kong, Japan, Singapore, United Kingdom, United States ^^^As of February 2023