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The Standard and Poor's depositary receipt. This is a tracking stock which trades like an index mutual fund which follows the S&P 500. It trades continuously.


Also called a Standard & Poor's Depositary Receipt or a SPDR. An exchange-traded fund that tracks the Standard and Poor's 500. The organization issuing the SPDR owns each of the stocks traded on the S&P 500 in approximate ratio to their market capitalization. SPDR shares can be bought, sold, short-sold, traded on margin; they generally function as if they were stocks. Dividends are paid quarterly and are based on the accumulated dividends of all the stocks represented in the SPDR, less any expenses. Investors use SPDRs (and indeed all exchange-traded funds) as a way to easily diversify their portfolios at relatively low cost. Investors also see the demand for SPDRs as an indicator of which direction the market believes the S&P 500 is going. See also: Mid-Cap SPDR.


Standard & Poor's Depositary Receipt (SPDR).

When you buy SPDRs -- pronounced spiders -- you're buying shares in a unit investment trust (UIT) that owns a portfolio of stocks included in Standard & Poor's 500 Index (S&P 500). A share is priced at about 1/10 the value of the S&P 500.

Like an index mutual fund that tracks the S&P 500, SPDRs provide a way to diversify your investment portfolio without having to own shares in all the S&P 500 companies yourself.

However, while the net asset value (NAV) of an index fund is set only once a day, at the end of trading, the price of SPDRs, which are listed on the American Stock Exchange (AMEX), changes throughout the day, reflecting the constant changes in the index.

SPDRs, which are part of a category of investments known as exchange traded funds (ETFs), can be sold short or bought on margin as stocks can.

Each quarter you receive a distribution based on the dividends paid on the stocks in the underlying portfolio, after trust expenses are deducted. If you choose, you can reinvest those distributions to buy additional shares.

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For a list of SPDR ETF NAIC designations, see attachment.