XLY Consumer Discretionary Select SPDR Fund

Select Sector SPDRs, a family of exchange-traded funds (ETFs) that divide the S&P 500 into nine individual sector funds, saw collective assets under management grow 40% in 2005 to nearly $13.2 billion. The expansion of $3.77 billion in assets under management is the largest on record for the Select Sector SPDRs funds group, surpassing the previous record of $3.2 billion growth in 2004. With S&P 500 performance posting a subdued 3% gain for 2005, the vast majority of the Sector SPDR expansion is due to inflows of new money. The rapid pace of inflows compares favorably to the 13% expansion of the broad-market domestic ETF category in 2005, and underscores the continuing surge in popularity of sector investing. Although sector-based ETFs account for only 14% of domestic ETF assets, they provided nearly one-third of the $30.5 billion in growth seen in 2005. "With broad-market performance in 2005 essentially flat, and predictions for continued sideways movement, investors are increasingly realizing the benefits of more active sector allocations as a way to achieve market-beating returns," said Dan Dolan, Director - Wealth Management Strategies, Select Sector SPDR Trust, and the architect of Select Sector SPDRs. "It appears that our industry-leading liquidity, low 25 basis point expense ratios, and easily identifiable funds that divide the S&P 500, are clear selling points to financial advisors, and individual and institutional investors." In terms of individual funds, the Energy Select Sector SPDR (XLE) led all others in asset growth, expanding by $1.71 billion to end the year at $3.28 billion. The Healthcare SPDR (XLV) followed with a $734 million expansion to end the year with $1.79 billion in assets. Coming in a close third, the Financial SPDR added $731 million to close with $1.87 billion. Other significant contributions came from the Technology SPDR (XLK), which added $304 million, and the Materials SPDR (XLB), which added $245 million. Only one fund, the Consumer Discretionary SPDR (XLY) showed significant contractions, shedding $74 million to end the year with $397 million in assets. The table below gives asset growth figures for all nine Select Sector SPDR funds (ranked by percent growth): -0- *T Fund Ticker Assets 12/31/04 Assets 12/31/05 % Change ----------------- --------- ----------------- --------------- -------- Energy XLE $1.57 billion $3.28 billion 109% ----------------- --------- ----------------- --------------- -------- Healthcare XLV $1.05 billion $1.79 billion 70% ----------------- --------- ----------------- --------------- -------- Financials XLF $1.14 billion $1.87 billion 64% ----------------- --------- ----------------- --------------- -------- Materials XLB 707.7 million $952.6 million 35% ----------------- --------- ----------------- --------------- -------- Technology XLK $1.24 billion $1.54 billion 24% ----------------- --------- ----------------- --------------- -------- Industrials XLI $780.1 million $886.2 million 14% ----------------- --------- ----------------- --------------- -------- Consumer Staples XLP $760.8 million $784.9 million 3% ----------------- --------- ----------------- --------------- -------- Utilities XLU $1.69 billion $1.68 billion -.6% ----------------- --------- ----------------- --------------- -------- Consumer XLY $471.1 million $396.7 million Discretionary -16% ----------------- --------- ----------------- --------------- -------- Total $ 9.41 billion $ 13.18 billion 40% ----------------- --------- ----------------- --------------- -------- *T About Select Sector SPDRs Select Sector SPDRs are unique ETFs that divide the S&P 500 into nine sector index funds: Consumer Discretionary, Consumer Staples, Energy, Financials, Healthcare, Industrials, Materials, Technology and Utilities. Select Sector SPDRs allow investors to customize their portfolios by picking and weighting the sectors to meet specific investment goals. Select Sector SPDR shares are actively traded on the American Stock Exchange throughout the trading day. SSgA Funds Management, Inc. serves as the Adviser to the Trust and, subject to the supervision of the Board of Trustees, is responsible for the investment management of the Select Sector SPDR Funds. Ordinary brokerage commissions apply when buying or selling Sector SPDR shares. An investor should consider investment objectives, risks, charges, and expenses carefully before investing. To obtain a prospectus which contains this and other information, visit www.spdrindex.com/common/prospectus.pdf. Please read the prospectus carefully before investing. The Select Sector SPDR is a trademark of the McGraw-Hill Companies, Inc. and has been licensed for use. The stocks included in each Select Sector Index were selected by the compilation agent. The composition and weighting of each Index can be expected to differ to that of any similar index that is published by Standard & Poor's. Select Sector SPDRs bear a higher level of risk than more broadly diversified funds. ALPS Distributors Inc., a registered broker-dealer, is the distributor for the Sector SPDR Trust.