About Select Sector SPDRs
Diverse, Customizable, Focused and Tradeable
Select Sector SPDRs are unique ETFs that divide the S&P 500 into nine sector index funds. So now you can customize your investments by picking and weighting these sectors to meet your specific investment goals. Select Sector SPDRs have the diversity of a mutual fund, the focus of a sector fund, and the tradability of a stock. You can buy or sell Select Sector SPDR shares on NYSE Arca throughout the trading day.
Together, the nine Select Sector SPDRs represent the S&P 500 as a whole. However, each Select Sector SPDR can also be bought individually, providing you with undiluted exposure to a particular sector or industry group.
Select Sector SPDRs let you achieve the security of investing in the well-known, large cap stocks of the S&P 500, with the ability to over-weight or under-weight particular sectors based on your own investment goals and strategies.
The nine Select Sector funds are:
The Consumer Discretionary Select Sector SPDR Fund - XLY
The Consumer Staples Select Sector SPDR Fund - XLP
The Energy Select Sector SPDR Fund - XLE
The Financial Select Sector SPDR Fund - XLF
The Health Care Select Sector SPDR Fund - XLV
The Industrial Select Sector SPDR Fund - XLI
The Materials Select Sector SPDR Fund - XLB
The Technology Select Sector SPDR Fund - XLK
The Utilities Select Sector SPDR Fund - XLU
Calculating Select Sector Indexes
Each Select Sector Index is calculated using a modified "market capitalization" methodology. This formula ensures that each of the component stocks within a Select Sector Index is represented in a proportion consistent with its percentage of the total market cap of that particular index. However, all nine Select Sector SPDRs are diversified mutual funds with respect to the Internal Revenue Code. As a result, each Sector Index will be modified so that an individual security does not comprise more than 25% of the index.
Select Sector SPDR Trust Administration and Management
State Street Bank and Trust Company serves as administrator and custodian of the Trust and SSgA Funds Management Inc. serves as the Trust's advisor. The value of Select Sector Indexes is calculated by NYSE Arca. The distributor for The Select Sector SPDR Trust is ALPS Distributors, Inc., a registered broker-dealer.
The Select Sector SPDRs of The Select Sector SPDR Trust are not "actively managed" by traditional methods.
Each Select Sector SPDR is designed to, before expenses, closely track the price performance and dividend yield of a particular Select Sector Index. Each Funds portfolio is comprised principally of shares of constituent companies included in the S&P 500. Each stock in the S&P 500 is allocated to only one Select Sector Index. The combined companies of the nine Select Sector Indexes represent all of the companies in the S&P 500. Of course, each Select Sector SPDR can be expected to move up or down in value with its underlying Select Sector Index.
Shares of Select Sector SPDR Funds provide you with a way to invest in a portfolio of equity securities in a sector or group of industries in a single trade.
Select Sector SPDRs allow you to custom tailor asset allocations to fit your particular investment needs or goals. One Fund may complement another; individual Select Sector SPDRs can be used to increase your exposure to certain industries that may be outperforming the market or to hedge other holdings in your portfolio. Although an individual Select Sector SPDR may bear a higher level of risk than a broad-market fund because of less diversity, sector investments may also offer opportunities for returns greater than an investment in the entire S&P 500 Index.
You can buy or sell shares of Select Sector SPDRs much as you do shares of a single stock. They trade like stock. They can provide dividends like stock. And, like stock, they can be held for either the short or long term. Find out in the following pages how Select Sector SPDRs can help you custom tailor your personal equity portfolio.