In seeking to track the performance of the index, the fund employs a replication strategy, which means that the fund typically invests in substantially all of the securities represented in the index in approximately the same proportions as the index. It generally invests substantially all, but at least 95%, of its total assets in the securities comprising the index. The fund is non-diversified.
This index, whose components include Apple, Microsoft, Nvidia, Broadcom, and Cisco, includes stocks primarily focused on internet software and service companies, IT consulting services, semiconductor equipment, computers, and peripherals (1).
DISCLOSURE ABOUT DISRIBUTIONS
Dividends from stocks and interest from debt instruments are the two main sources of income for each Select Sector SPDR. On a quarterly basis, "income dividend distributions" are made to shareholders from these sums, after expenses. Every time a Select Sector SPDR sells shares, capital gains or losses are also realized. Annual "capital gain distributions" are made to shareholders in the form of net long-term capital gains. In general, whether you take distributions in cash or reinvest them in a Select Sector SPDR, they are taxed as federal income when they are paid. Distributions made from a Select Sector SPDR's earnings and profits are subject to ordinary income tax.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 owned the shares.Tax information is provided in broad strokes. You should discuss the tax implications of investing in a Select Sector SPDR with your personal tax counsel (1).