Each Select Sector SPDR typically earns income from stock dividends and interest income from debt securities. These amounts, net of expenses, are distributes to shareholders as "income dividend distributions" on a quarterly basis. Each Select Sector SPDR also realizes capital gains or losses whenever it sells securities. Net long-term capital gains are distributed to shareholders as "capital gain distributions" annually. In general, distributions are subject to federal income tax when they are paid, whether you take them in cash or reinvest them in a Select Sector SPDR. Distributions paid out of a Select Sector SPDR's income and short-term gains are taxable as ordinary income. Distributions of net long-term capital gains, in excess of short-term capital losses, are taxable as long-term capital gains, regardless of how long you have held the shares.
The tax information is provided as general information. You should consult your own tax professional about the tax consequences of an investment in a Select Sector SPDR.