SPDR TRUST SERIES 1 (Form: 485APOS, Received: 01/28/2004 06:11:34)

Net asset value of the Trust

Fee as a percentage of
net asset value of the Trust

$0 – $499,999,999

10/100 of 1% per annum plus or minus the Adjustment Amount

$500,000,000 – $2,499,999,999

8/100 of 1% per annum plus or minus the Adjustment Amount

$2,500,000,000 – and above

6/100 of 1% per annum plus or minus the Adjustment Amount






   As filed with the Securities and Exchange Commission on January 27, 2004
                                                               File No. 33-46080
                                                                        811-7330
================================================================================



                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549



                         POST EFFECTIVE AMENDMENT NO. 14



                                       TO

                                    FORM S-6

              FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
                 SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED
                                 ON FORM N-8B-2

     A.   Exact name of Trust:

          SPDR TRUST SERIES 1

     B.   Name of Depositor:

          PDR  SERVICES LLC

     C.   Complete address of Depositor's principal executive office:

          PDR SERVICES LLC
          c/o AMERICAN STOCK EXCHANGE LLC
          86 Trinity Place
          New York, New York 10006

     D.   Name and complete address of agent for service:

          Michael J. Ryan, Jr.
          PDR SERVICES LLC
          c/o AMERICAN STOCK EXCHANGE LLC
          86 Trinity Place
          New York, New York 10006

          Copy to:


          Kathleen H. Moriarty, Esq.
          CARTER LEDYARD & MILBURN LLP
          2 Wall Street
          New York, New York 10005











            It is proposed that this filing will become effective:

    [x] 60 days after filing pursuant to paragraph (a)(1) of Rule 485

         E. Title and amount of securities being registered:

         An indefinite number of units of Beneficial Interest pursuant to Rule
24f-2 under the Investment Company Act of 1940.

         F. Proposed maximum aggregate offering price to the public of the
securities being registered:

            Indefinite pursuant to Rule 24f-2

         G. Amount of filing fee:



            In accordance with Rule 24f-2, a fee in the amount of $0.00 was paid
on December 19, 2003 in connection with the filing of the Rule 24f-2 Notice
for the Trust's most recent fiscal year.


         H. Approximate date of proposed sale to public:

            AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION
STATEMENT.

            [ ] Check box if it is proposed that this filing will become
effective on [date], at [time] pursuant to paragraph (b) of Rule 485.

================================================================================











                               SPDR TRUST SERIES 1

                              Cross Reference Sheet

                            Pursuant to Regulation C
                  Under the Securities Act of 1933, as amended

                  (Form N-8B-2 Items required by Instruction 1
                          as to Prospectus in Form S-6)

Form N-8B-2                                           Form S-6
Item Number                                           Heading in Prospectus
-----------                                           ---------------------




                     I. Organization and General Information
                        ------------------------------------

 1.   (a)    Name of Trust...............             Prospectus Front Cover
      (b)    Title of securities issued..             Prospectus Front Cover

 2.   Name, address and Internal
      Revenue Service Employer
      Identification Number of
      depositor.......................                Sponsor

 3.   Name, address and Internal
      Revenue Service Employer
      Identification Number of
      trustee.........................                Trustee

 4.   Name, address and Internal
      Revenue Service Employer
      Identification Number
      of principal underwriter........                *

 5.   State of organization of Trust..                Summary - Highlights

 6.   (a) Dates of execution and
          termination of Trust
          Agreement...................                Essential Information

      (b) Dates of execution and
          termination of Trust
          Agreement...................                Same as set forth in 6(a)

 7.   Changes of name.................                   *

 8.   Fiscal Year.....................                   *

 9.   Material Litigation.............                   *


----------

*Not applicable, answer negative or not required.



                                        i








                      II. General Description of the Trust
                           and Securities of the Trust
                          --------------------------------

10.  (a) Registered or bearer


         securities..................              Securities Depository,
                                                      Book-Entry-Only System

     (b)    Cumulative or distributive..              Summary - Essential
                                                      Information as of

     (c)    Rights of holders as to
            withdrawal or redemption....              Redemption of SPDRs

     (d)    Rights of holders as to
            conversion, transfer, etc...              Rights of Beneficial
                                                      Owners

     (e)    Lapses or defaults in
            principal payments with
            respect to periodic payment
            plan certificates...........              *

     (f)    Voting rights...............              Rights of Beneficial
                                                      Owners

     (g)    Notice to holders as to
            change in:

            (1) Composition of Trust
                assets..................              *

            (2) Terms and conditions
                of Trust's securities...              Administration of the
                                                      Trust - Amendments to
                                                      the Trust Agreement

            (3) Provisions of Trust
                Agreement...............              Same as set forth in
                                                      10(g)(2)

            (4) Identity of depositor
                and trustee.............              Sponsor; Trustee

----------

*Not applicable, answer negative or not required.



                                       ii










      (h) Consent of holders
          required to change:

          (1) Composition of Trust
              assets...................              *

          (2) Terms and conditions
              of Trust's securities....              Administration of the Trust
                                                     - Amendments to the
                                                     Trust Agreement
          (3) Provisions of Trust
              Agreement................               Same as set forth in
                                                      10(h)(2)

          (4) Identity of depositor
              and trustee..............               Sponsor; Trustee

        (i)    Other principal
               features of the securities...          The Trust

11. Type of securities
    comprising units.................                 The Portfolio

12. Certain information regarding
    securities comprising periodic
    payment certificates.............                 *

13. (a)   Certain information regarding
          loads, fees, expenses
          and charges..................              Expenses of the Trust;
                                                     Redemption of SPDRs

    (b)   Certain information regarding
          periodic payment plan
          certificates.................              *

    (c)   Certain percentages..........              Same as set forth in 13(a)

    (d)   Reasons for certain
          differences in prices........              *

    (e)   Certain other loads, fees, or
          charges payable by holders...              *


----------

*Not applicable, answer negative or not required.



                                       iii










    (f)  Certain profits receivable
         by depositor, principal
         underwriters, custodian,
         trustee or affiliated
         persons......................               Adjustments to the
                                                     Portfolio Deposit

    (g)  Ratio of annual charges and
         deductions to income.........               *

14. Issuance of Trust's securities...                The Trust - Creation of
                                                     Creation Units

15. Receipt and handling of
    payments from purchasers.........                The Trust

16. Acquisition and disposition of
    underlying securities............                The Trust - Creation of
                                                     Creation Units; The
                                                     Portfolio; Administration
                                                     of the Trust

17. (a)  Withdrawal or redemption by
         holders......................               Administration of the Trust
                                                     - Rights of Beneficial
                                                     Owners; Redemption of SPDRs
    (b)  Persons entitled or required
         to redeem or repurchase
         securities...................               Same as set forth in 17(a)

    (c)  Cancellation or resale of
         repurchased or redeemed
         securities...................               Same as set forth in 17(a)

18. (a)  Receipt, custody and
         disposition of income........               Administration of the Trust
                                                     - Distributions to
                                                     Beneficial Owners

    (b)  Reinvestment of distribu-
         tions........................               *

    (c)  Reserves or special funds....               Same as set forth in 18(a)

    (d)  Schedule of distributions....               *

----------

*Not applicable, answer negative or not required.



                                       iv










19. Records, accounts and reports..                  The S&P Index; Distribution
                                                     of SPDRs; Expenses of the
                                                     Trust; Administration of
                                                     the Trust

20. Certain miscellaneous provi-
    sions of Trust Agreement

    (a)    Amendments.................               Administration of the Trust
                                                     - Amendments to the Trust
                                                     Agreement

    (b)    Extension or termination...               Administration of the Trust
                                                     - Amendments to the Trust
                                                     Agreement; - Termination
                                                     of the Trust Agreement

    (c)    Removal or resignation of
           trustee....................               Trustee

    (d)    Successor trustee..........               Same as set forth in 20(c)

    (e)    Removal or resignation of
           depositor..................               Sponsor

    (f)    Successor depositor........               Same as set forth in 20(e)

21. Loans to security holders......                  *

22. Limitations on liabilities.....                  Trustee; - Sponsor

23. Bonding arrangements...........                  *

24.     Other material provisions of
        Trust Agreement................              *



                        III. Organization, Personnel and


                             Affiliated Persons of Depositor
                             -------------------------------

25. Organization of depositor......                   Sponsor

26. Fees received by depositor.....                   *

----------

*Not applicable, answer negative or not required.



                                        v










27. Business of depositor..........                   Sponsor

28. Certain information as to
    officials and affiliated
    persons of depositor...........                   Sponsor

29. Ownership of voting securities
    of depositor...................                   Sponsor

30. Persons controlling depositor..                   *

31. Payments by depositor for
    certain services rendered
    to Trust.......................                   *

32. Payments by depositor for
    certain other services
    rendered to Trust..............                   *

33. Remuneration of employees of
    depositor for certain
    services rendered to Trust.....                   *

34. Compensation of other persons
    for certain services rendered
    to Trust.......................                   *





                  IV. Distribution and Redemption of Securities
                      -----------------------------------------

35. Distribution of Trust's
    securities in states...........                   *

36. Suspension of sales of Trust's
    securities.....................                   *

37. Denial or revocation of
    authority to distribute........                   *

38. (a)    Method of distribution.....                The Trust - Creation of
                                                      Creation Units

    (b)    Underwriting agreements....                Summary - Highlights

    (c)    Selling agreements.........                Same as set forth in
                                                      38(b)


----------

*Not applicable, answer negative or not required.



                                       vi










39. (a)    Organization of principal
           underwriter................                Summary - Highlights

    (b)    NASD membership of
           principal underwriter......                Summary - Highlights

40. Certain fees received by
    principal underwriters.........                   *

41. (a)    Business of principal
           underwriters...............                Summary - Highlights

    (b)    Branch offices of
           principal underwriters.....                *

    (c)    Salesmen of principal
           underwriters...............                *

42. Ownership of Trust's securities
    by certain persons.............                   *

43. Certain brokerage commissions
    received by principal
    underwriters...................                   *

44. (a)    Method of valuation for
           determining offering price.                The Portfolio; Valuation

    (b)    Schedule as to components of
           offering price.............                *

    (c)    Variation in offering
           price to certain persons...                *

45. Suspension of redemption
    rights.........................                   *

46. (a)    Certain information
           regarding redemption or
           withdrawal valuation.......                Valuation; Redemption of
                                                      SPDRs

    (b)    Schedule as to components
           of redemption price........                *

----------

*Not applicable, answer negative or not required.



                                       vii










47. Maintenance of position in
    underlying securities..........                   The Trust; The Portfolio;
                                                      Distribution of SPDRs;
                                                      Valuation; Administration
                                                      of the Trust





               V. Information Concerning the Trustee or Custodian
                  -----------------------------------------------

48. Organization and regulation of
    trustee........................                   Trustee

49. Fees and expenses of trustee...                   Expenses of the Trust;
                                                      Redemptions of SPDRs

50. Trustee's lien.................                   Expenses of the Trust;
                                                      Redemption of SPDRs






          VI. Information Concerning Insurance of Holders of Securities
              ---------------------------------------------------------



51. (a)    Name and address of
           insurance company...........               *

    (b)    Types of policies...........               *

    (c)    Types of risks insured and
           excluded....................               *

    (d     Coverage....................               *

    (e)    Beneficiaries...............               *

    (f)    Terms and manner of
           cancellation................               *

    (g)    Method of determining
           premiums....................               *

    (h)    Aggregate premiums paid.....               *

    (i)    Recipients of premiums......               *

    (j)    Other material provisions
           of Trust Agreement relating
           to insurance................               *

----------

*Not applicable, answer negative or not required.



                                      viii










                            VII. Policy of Registrant
                                 --------------------

52. (a)    Method of selecting and
           eliminating securities from
           the Trust...................               The Trust - Creation of
                                                      Creation Units; The
                                                      Portfolio; Administration
                                                      of the Trust

    (b)    Elimination of securities
           from the Trust..............               *

    (c)    Policy of Trust regarding
           substitution and elimina-
           tion of securities..........               Same as set forth in
                                                      52(a)

    (d)    Description of any other
           fundamental policy of the
           Trust.......................               *

    (e)    Code of Ethics pursuant to                 Code of Ethics
           Rule 17j-1 of the 1940 Act..

53. (a)    Taxable status of the Trust.               Tax Status of the Trust

    (b)    Qualification of the Trust
           as a regulated investment
           company.....................               Same as set forth in
                                                      53(b)





                   VIII. Financial and Statistical Information
                         -------------------------------------

54. Information regarding the
    Trust's last ten fiscal years...                 *

55. Certain information regarding
    periodic payment plan certifi-
    cates...........................                 *

56. Certain information regarding
    periodic payment plan certifi-
    cates...........................                 *

57. Certain information regarding
    periodic payment plan certifi-
    cates...........................                 *

----------

*Not applicable, answer negative or not required.



                                       ix










58. Certain information regarding
    periodic payment plan certifi-
    cates...........................                  *

59. Financial statements
    (Instruction 1(c) to Form S-6)..                  *






                                        x





                           Undertaking to File Reports
                           ---------------------------

          Subject to the terms and conditions of Section 15(d) of the Securities
          Exchange Act of 1934, the undersigned registrant hereby undertakes to
          file with the Securities and Exchange Commission such supplementary
          and periodic information, documents, and reports as may be prescribed
          by any rule or regulations of the Commission heretofore or hereafter
          duly adopted pursuant to authority conferred in that section.

Prospectus

STANDARD & POOR'S DEPOSITARY RECEIPTS ®

("SPDRs")

SPDR Trust, Series 1
(A Unit Investment Trust)

•

SPDR Trust is an exchange traded fund designed to generally correspond to the price and yield performance of the S&P 500® Index.

•

SPDR Trust holds all of the S&P 500 Index stocks.

•

Each SPDR represents an undivided ownership interest in the SPDR Trust.

•

The SPDR Trust issues and redeems SPDRs only in multiples of 50,000 SPDRs in exchange for S&P 500 Index stocks and cash.

•

Individual SPDRs trade on the American Stock Exchange like any other equity security.

•

Minimum trading unit: 1 SPDR.

SPONSOR: PDR SERVICES LLC
(Solely Owned by American Stock Exchange LLC)

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES NOR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Prospectus Dated January 27, 2004

STANDARD & POOR'S DEPOSITARY RECEIPTS ("SPDRs®")
SPDR TRUST, SERIES 1


TABLE OF CONTENTS
Summary				1
Essential Information as of September 30, 2003				1
Highlights				3
Risk Factors				11
Report of Independent Accountants				15
Statement of Assets and Liabilities				16
Statements of Operations				17
Statements of Changes in Net Assets				18
Financial Highlights				19
Notes to Financial Statements				20
Schedule of Investments				25
The Trust				30
Creation of Creation Units				30
Procedures for Creation of Creation Units				31
Placement of Creation Orders Using SPDR Clearing Process				33
Placement of Creation Orders Outside SPDR Clearing Process				33
Securities Depository; Book-Entry-Only System				34
Redemption of SPDRs				36
Procedures for Redemption of Creation Units				36
Placement of Redemption Orders Using SPDR Clearing Process				39
Placement of Redemption Orders Outside SPDR Clearing Process				39
The Portfolio				39
Portfolio Securities Conform to the S&P 500 Index				40

TABLE OF CONTENTS cont'd


Adjustments to the Portfolio Deposit				43
The S&P 500 Index				45
License Agreement				47
Exchange Listing				48
Tax Status of the Trust				49
Income Tax Consequences to Beneficial Owners				49
ERISA Considerations				52
Continuous Offering of SPDRs				52
Dividend Reinvestment Service				53
Expenses of the Trust				54
Trustee Fee Scale				56
Valuation				57
Administration of the Trust				58
Distributions to Beneficial Owners				58
Statements to Beneficial Owners; Annual Reports				60
Rights of Beneficial Owners				60
Amendments to the Trust Agreement				60
Termination of the Trust Agreement				61
Sponsor				62
Trustee				63
Depository				65
Legal Opinion				65
Independent Auditors				65
Code of Ethics				65
Information and Comparisons Relating to Trust, Secondary Market Trading, Net Asset Size, Performance and Tax Treatment				66
Glossary				71

"S&P®", "S&P 500®", "Standard & Poor's 500®", "Standard & Poor's Depositary Receipts®" and "SPDRs®" are trademarks of The McGraw-Hill Companies, Inc. PDR Services LLC and American Stock Exchange LLC are permitted to use these trademarks pursuant to a "License Agreement" with Standard & Poor's, a division of The McGraw-Hill Companies, Inc. SPDR Trust, Series 1, is not, however, sponsored by or affiliated with Standard & Poor's or The McGraw-Hill Companies, Inc.

SUMMARY

Essential Information as of September 30, 2003*


Glossary:				All defined terms used in this Prospectus and page numbers on which their definitions appear are listed in the Glossary on page 72.
Total Trust Assets:				$36,218,776,655
Net Trust Assets:				$36,054,567,557
Number of SPDRs:				361,002,167
Fractional Undivided Interest in the Trust Represented by each SPDR:				1/361,002,167th
Dividend Record Dates:				Quarterly, on the second (2nd) Business Day after the third Friday in each of March, June, September and December.
Dividend Payment Dates:				Quarterly, on the last Business Day of April, July, October and January.
Trustee's Annual Fee:				From 6/100 of one percent to 10/100 of one percent, based on the NAV of the Trust, as the same may be adjusted by certain amounts.
Estimated Ordinary Operating Expenses of the Trust:				12/100 of one percent (0.12%) (after a waiver of a portion of Trustee's annual fee).**
NAV per SPDR (based on the value of the Portfolio Securities, other net assets of the Trust and number of SPDRs outstanding):				$99.87
Evaluation Time:				Closing time of the regular trading session on the New York Stock Exchange, Inc. (ordinarily 4:00 p.m. New York time).
Licensor:				Standard & Poor's, a division of The McGraw-Hill Companies, Inc.


Mandatory Termination Date:				The Trust is scheduled to terminate no later than January 22, 2118, but may terminate earlier under certain circumstances.
Discretionary Termination:				The Trust may be terminated if at any time the value of the securities held by the Trust is less than $350,000,000, as adjusted for inflation. The Trust may also be terminated under other circumstances.
Fiscal Year End:				September 30
Market Symbol:				SPDRs trade on the American Stock Exchange under the symbol "SPY".
CUSIP:				78462F103

*	The Trust Agreement became effective, the initial deposit was made and the Trust commenced operation on January 22, 1993.

Ordinary operating expenses of the Trust currently are being accrued at an annual rate of 0.1200%. Last year's operating expenses were 0.1306%, but the excess over 0.1200% was waived by the Trustee and, after earnings credits of 0.0013% were applied, the net expenses of the Trust were 0.1187%. Future accruals will depend primarily on the level of the Trust's net assets and the level of Trust expenses. The Trustee has agreed to waive a portion of its fee until February 1, 2005, but may thereafter discontinue this voluntary waiver policy. The Sponsor has undertaken that the ordinary operating expenses of the Trust will not exceed an amount that is 0.1845% of the daily NAV of the Trust, but this amount may be changed. Therefore, there is no guarantee that the Trust's ordinary operating expenses will not exceed the current 0.1200% or 0.1845% of the Trust's daily NAV.

Highlights

• SPDRs are Ownership Interests in the SPDR Trust

SPDR Trust, Series 1 ("Trust") is a unit investment trust that issues securities called "Standard & Poor's Depositary Receipts" or "SPDRs." The Trust is organized under New York law and is governed by a trust agreement between State Street Bank and Trust Company ("Trustee") and PDR Services LLC ("Sponsor"), dated and executed as of January 22, 1993, as amended, ("Trust Agreement"). SPDRs represent an undivided ownership interest in a portfolio of all of the common stocks of the Standard & Poor's 500 Composite Stock Price Index® ("S&P 500 Index").

•	SPDRs Should Closely Track the Value of the Stocks Included in the S&P 500 Index

SPDRs intend to provide investment results that, before expenses, generally correspond to the price and yield performance of the S&P 500 Index. Current information regarding the value of the S&P 500 Index is available from market information services. Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P") obtains information for inclusion in, or for use in the calculation of, the S&P 500 Index from sources S&P considers reliable. None of S&P, the Sponsor, the Trust or the Exchange accepts responsibility for or guarantees the accuracy and/or completeness of the S&P 500 Index or any data included in the S&P 500 Index.

The Trust holds the Portfolio and cash and is not actively "managed" by traditional methods, which typically involve effecting changes in the Portfolio on the basis of judgments made relating to economic, financial and market considerations. To maintain the correspondence between the composition and weightings of stocks held by the Trust ("Portfolio Securities" or, collectively, "Portfolio") and component stocks of the S&P 500 Index ("Index Securities"), the Trustee adjusts the Portfolio from time to time to conform to periodic changes in the identity and/or relative weightings of Index Securities. The Trustee aggregates certain of these adjustments and makes changes to the Portfolio at least monthly or more frequently in the case of significant changes to the S&P 500 Index. Any change in the identity or weighting of an Index Security will result in a corresponding adjustment to the prescribed Portfolio Deposit effective on any day that the New York Stock Exchange is open for business ("Business Day") following the day on which the change to the S&P 500 Index takes effect after the close of the market.

The value of SPDRs fluctuates in relation to changes in the value of the Portfolio. The market price of each individual SPDR may not be identical to the net asset value ("NAV") of such SPDR but, historically, these two valuations have been very close.

• SPDRs Trade on the American Stock Exchange

SPDRs are listed for trading on the American Stock Exchange ("Exchange"), and are bought and sold in the secondary market like ordinary shares of stock at any time during the trading day. SPDRs are traded on the Exchange in 100 SPDR round lots, but can be traded in odd lots of as little as one SPDR. The Exchange may halt trading of SPDRs under certain circumstances.

• Brokerage Commissions on SPDRs

Secondary market purchases and sales of SPDRs are subject to ordinary brokerage commissions and charges.

• The Trust Issues and Redeems SPDRs in "Creation Units"

The Trust issues and redeems SPDRs only in specified large lots of 50,000 SPDRs or multiples thereof referred to as "Creation Units." Creation Units are issued by the Trust to anyone who, after placing a creation order with ALPS Distributors, Inc. ("Distributor"), deposits with the Trustee a specified portfolio of Index Securities and a cash payment generally equal to dividends (net of expenses) accumulated up to the time of deposit.

Fractional Creation Units may be created or redeemed only in limited circumstances.* Creation Units are redeemable in kind only and are not redeemable for cash. Upon receipt of one or more Creation Units, the Trust delivers to the redeeming holder a portfolio of Index Securities (based on NAV of the Trust), together with a cash payment. Each redemption has to be accompanied by a Cash Redemption Payment that on any given Business Day is an amount identical to the Cash Component of a Portfolio Deposit.

If the Trustee determines that one or more Index Securities are likely to be unavailable, or available in insufficient quantity, for delivery upon creation of Creation Units, the Trustee may permit the cash equivalent value of one or more of these Index Securities to be included in the Portfolio Deposit as a part of the Cash Component in lieu thereof. If a creator is restricted by regulation or otherwise from investing or engaging in a transaction in one or more Index Securities, the Trustee may permit the cash equivalent value of such Index Securities to be included in the Portfolio Deposit based on the market value of such Index Securities as of the Evaluation Time on the date such creation order is deemed received by the Distributor as part of the Cash Component in lieu of the inclusion of such Index Securities in the stock portion of the Portfolio Deposit. If the Trustee determines that one or more Index Securities are likely

*	See the discussion of termination of the Trust in this Summary and "Dividend Reinvestment Service," however, for a description of the circumstances in which SPDRs may be redeemed or created by the Trustee in less than a Creation Unit size aggregration of 50,000 SPDRs.

to be unavailable or available in insufficient quantity for delivery by the Trust upon the redemption of Creation Units, the Trustee may deliver the cash equivalent value of one or more of these Index Securities, based on their market value as of the Evaluation Time on the date the redemption order is deemed received by the Trustee, as part of the Cash Redemption Payment in lieu thereof.

• Creation Orders Must be Placed with the Distributor

All orders to create Creation Units must be placed with the Distributor. To be eligible to place these orders, an entity or person must be (a) a "Participating Party," or (b) a DTC Participant, and in each case must have executed an agreement with the Distributor and the Trustee ("Participant Agreement"). The term "Participating Party" means a broker-dealer or other participant in the SPDR Clearing Process, through the Continuous Net Settlement ("CNS") System of the National Securities Clearing Corporation ("NSCC"), a clearing agency registered with the Securities and Exchange Commission ("SEC"). Payment for orders is made by deposits with the Trustee of a portfolio of securities, substantially similar in composition and weighting to Index Securities, and a cash payment in an amount equal to the Dividend Equivalent Payment, plus or minus the Balancing Amount. "Dividend Equivalent Payment" is an amount equal, on a per Creation Unit basis, to the dividends on the Portfolio (with ex-dividend dates within the accumulation period), net of expenses and accrued liabilities for such period (including, without limitation, (i) taxes or other governmental charges against the Trust not previously deducted, if any, and (ii) accrued fees of the Trustee and other expenses of the Trust (including legal and auditing expenses) and other expenses not previously deducted), calculated as if all of the Portfolio Securities had been held for the entire accumulation period for such distribution. The Dividend Equivalent Payment and the Balancing Amount collectively are referred to as "Cash Component" and the deposit of a portfolio of securities and the Cash Component collectively are referred to as a "Portfolio Deposit." Persons placing creation orders with the Distributor must deposit Portfolio Deposits either (i) through the CNS clearing process of NSCC, as such processes have been enhanced to effect creations and redemptions of Creation Units, such processes referred to herein as the "SPDR Clearing Process," or (ii) with the Trustee outside the SPDR Clearing Process ( i.e. through the facilities of DTC).

The Distributor acts as underwriter of SPDRs on an agency basis. The Distributor maintains records of the orders placed with it and the confirmations of acceptance and furnishes to those placing such orders confirmations of acceptance of the orders. The Distributor also is responsible for delivering a prospectus to persons creating SPDRs. The Distributor also maintains a record of the delivery instructions in response to orders and may provide certain other administrative services, such as those related to state securities law compliance.

The Distributor is a corporation organized under the laws of the State of Colorado and is located at 1625 Broadway, Suite 2200, Denver, CO 80202, toll free number: 1-800-843-2639. The Distributor is a registered broker-dealer and a member of the National Association of Securities Dealers, Inc. PDR Services LLC, as Sponsor of the Trust, pays the Distributor for its services a flat annual fee. The Sponsor will not seek reimbursement for such payment from the Trust without obtaining prior exemptive relief from the SEC.

• Expenses of the Trust

The expenses of the Trust are accrued daily and reflected in the NAV of the Trust. After reflecting waivers but before reflecting credits, the Trust currently is accruing ordinary operating expenses at an annual rate of 0.1200%.


Shareholder Fees:*				None*
(fees paid directly from your investment)

Estimated Trust Annual Ordinary Operating Expenses:


Current Trust Annual Ordinary Operating Expenses	As a % of Trust Net Assets
Trustee's Fee		0.0616	%
S&P License Fee		0.0350	%
Registration Fees		0.0026	%
Marketing		0.0300	%
Other Operating Expenses		0.0014	%
Total:		0.1306	%
Trustee Waiver**		(0.0106	)%
Net Expense After Waiver		0.1200	%
Trustee Reduction for Balance Credits**		(0.0013	)%
Net Expenses after Waivers and Reductions		0.1187	%

Future expense accruals will depend primarily on the level of the Trust's net assets and the level of expenses.

Investors do not pay shareholder fees directly from their investment, but purchases and redemptions of Creation Units are subject to Transaction Fees (described below in "A Transaction Fee is Payable For Each Creation and For Each Redemption of Creation Units"), and purchases and sales of SPDRs in the secondary market are subject to ordinary brokerage commissions and charges (described above in "Brokerage Commissions on SPDRs").

Until February 1, 2005, the Trustee has agreed to waive a portion of its fee to the extent operating expenses exceed 0.1200%. Thereafter, the Trustee may discontinue this voluntary waiver policy. Therefore, there is no guarantee that the Trust's ordinary operating expenses will not exceed 0.1200% of the Trust's daily NAV. Trust expenses were further reduced by a Trustee's earnings credit of 0.0013% of the Portfolio's daily NAV as a result of uninvested cash balances in the Trust.

• Bar Chart and Table

The bar chart below and the table on the next page entitled "Average Annual Total Returns (for periods ending December 31, 2003)" ("Table") provide some indication of the risks of investing in the Trust by showing the variability of the Trust's returns based on net assets and comparing the Trust's performance to the performance of the S&P 500 Index. Past performance (both before and after tax) is not necessarily an indication of how the Trust will perform in the future.

The after-tax returns presented in the Table are calculated using the highest historical individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns will depend on your specific tax situation and may differ from those shown below. After-tax returns are not relevant to investors who hold SPDRs through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. The total returns in the bar chart below, as well as the total and after-tax returns presented in the Table, do not reflect Transaction Fees payable by those persons purchasing and redeeming Creation Units, nor do they reflect brokerage commissions incurred by those persons purchasing and selling SPDRs in the secondary market (see footnotes (3) and (4) to the Table).

This bar chart shows the performance of the Trust for each full calendar year since its inception on January 22, 1993. During the period shown above (January 1, 1994 through December 31, 2003), the highest quarterly return for the Trust was 21.21% for the quarter ended 12/31/1998, and the lowest was –17.26% for the quarter ended 9/30/2002.

(1)

Total return figures are calculated assuming the reinvested price for the 12/19/03 income distribution is the 12/31/03 NAV. The actual reinvestment price is the 1/30/04 NAV, which was not available at the time of the above calculations. Actual performance calculations may or may not differ based on this assumption.

Average Annual Total Returns (for periods ending December 31, 2003)


	Past One Year			Past Five Years			Past Ten Years			Since Inception ⁽⁵⁾
SPDR Trust, Series 1
Return Before Taxes ^(1)(2)(3)(4)		28.37	%		–0.66	%		10.88	%		10.83	%
Return After Taxes on Distributions ^(1)(2)(3)(4)		28.04	%		–1.10	%		10.22	%		10.13	%
Return After Taxes on Distributions and Redemption of Creation Units ^(1)(2)(3)(4)		18.77	%		–0.80	%		9.28	%		9.24	%
S&P 500 Index ⁽⁶⁾		28.68	%		-0.57	%		11.07	%		11.02	%

(1)

(2)	Includes all applicable ordinary operating expenses set forth above in the section of "Highlights" entitled "Expenses of the Trust".

(3)

Does not include the Transaction Fee which is payable to the Trustee only by persons purchasing and redeeming Creation Units as discussed below in the section of "Highlights" entitled "A Transaction Fee is Payable For Each Creation and For Each Redemption of Creation Units". If these amounts were reflected, returns would be less than those shown.

(4)

Does not include brokerage commissions and charges incurred only by persons who make purchases and sales of SPDRs in the secondary market as discussed above in the section of "Highlights" entitled "Brokerage Commissions on SPDRs". If these amounts were reflected, returns would be less than those shown.

(5)	Investment operation commenced on January 22, 1993.

(6)	Does not reflect deductions for taxes, operating expenses, Transaction Fees, brokerage commissions, or fees of any kind.

SPDR TRUST, SERIES 1

GROWTH OF $10,000 INVESTMENT
SINCE INCEPTION ⁽¹⁾

1	Past performance is not necessarily an indication of how the Trust will perform in the future.

2	Effective as of September 30, 1997 the Trust's fiscal year end changed from December 31 to September 30.

•	A Transaction Fee is Payable for Each Creation and for Each Redemption of Creation Units

A transaction fee payable to the Trustee in connection with each creation and redemption of Creation Units made through the SPDR Clearing Process ("Transaction Fee") is non-refundable, regardless of the NAV of the Trust. This Transaction Fee is $3,000 per Participating Party per day, regardless of the number of Creation Units created or redeemed on such day. The $3,000 charge is subject to a limit not to exceed 10/100 of one percent (10 basis points) of the value of one Creation Unit at the time of creation ("10 Basis Point Limit").

For creations and redemptions outside the SPDR Clearing Process, an additional amount not to exceed three (3) times the Transaction Fee applicable for one Creation Unit is charged per Creation Unit per day. Under the current schedule, therefore, the total fee charged in connection with creation or redemption outside the SPDR Clearing Process would be $3,000 (the Transaction Fee for the creation or redemption of one Creation Unit) plus an additional amount up to $9,000 (3 times $3,000), for a total not to exceed $12,000. Creators and redeemers restricted from engaging in transactions in one or more Index Securities may pay the Trustee the Transaction Fee and may pay an additional amount per Creation Unit not to exceed three (3) times the Transaction Fee applicable for one Creation Unit.

• SPDRs are Held in Book Entry Form Only

The Depository Trust Company ("DTC") or its nominee is the record or registered owner of all outstanding SPDRs. Beneficial ownership of SPDRs is shown on the records of DTC or its participants. Individual certificates are not issued for SPDRs. See "The Trust—Depository; Book-Entry-Only System."

• SPDRs Make Periodic Dividend Payments

SPDR holders receive on the last Business Day of April, July, October and January an amount corresponding to the amount of any cash dividends declared on the Portfolio Securities during the applicable period, net of fees and expenses associated with operation of the Trust, and taxes, if applicable. Because of such fees and expenses, the dividend yield for SPDRs is ordinarily less than that of the S&P 500 Index. Investors should consult their tax advisors regarding tax consequences associated with Trust dividends, as well as those associated with SPDR sales or redemptions.

Quarterly distributions based on the amount of dividends payable with respect to Portfolio Securities and other income received by the Trust, net of fees and expenses, and taxes, if applicable, are made via DTC and its participants to Beneficial Owners on each Dividend Payment Date. Any capital gain income recognized by the Trust in any taxable year that is not previously treated as distributed during the year ordinarily is to be distributed at least annually in January of the following taxable year. The Trust may make additional distributions shortly after the end of the year in order to satisfy certain distribution requirements imposed by the Internal Revenue Code of 1986, as amended ("Code"). Although all distributions are currently made quarterly, the Trustee may vary the periodicity with which distributions are made. Those Beneficial Owners interested in reinvesting their quarterly distributions may participate through DTC Participants in the DTC Dividend Reinvestment Service ("Service") available through certain brokers. See "The Trust—Depository; Book-Entry-Only System."

• The Trust Intends to Qualify as a Regulated Investment Company

For the fiscal year ended September 30, 2003, the Trust believes that it qualified for tax treatment as a "regulated investment company" under Subchapter M of the Code. The Trust intends to continue to so qualify and to distribute annually its entire investment company taxable income and net capital gain. Distributions that are taxable as ordinary income to Beneficial Owners generally are expected to constitute qualified dividend income eligible (i) for the new maximum 15% tax rate for non-corporate taxpayers through 2008 and (ii) for federal income tax purposes for the dividends-received deduction available to many corporations to the extent of qualified dividend income received by the Trust. The Trust's regular quarterly distributions are based on the dividend performance of the Portfolio during such quarterly

distribution period rather than the actual taxable income of the Trust. As a result, a portion of the distributions of the Trust may be treated as a return of capital or a capital gain dividend for federal income tax purposes or the Trust may be required to make additional distributions to maintain its status as a regulated investment company or to avoid imposition of income or excise taxes on undistributed income.

• Termination of the Trust

The Trust has a specified lifetime term. The Trust is scheduled to terminate on the first to occur of (a) January 22, 2118 or (b) the date 20 years after the death of the last survivor of eleven persons named in the Trust Agreement, the oldest of whom was born in 1990 and the youngest of whom was born in 1993. Upon termination, the Trust may be liquidated and pro rata shares of the assets of the Trust, net of certain fees and expenses, distributed to holders of SPDRs.

• Purchases of SPDRs by Registered Investment Companies

Purchases of SPDRs by registered investment companies are subject to restrictions set forth in Section 12(d)(1) of the Investment Company Act of 1940. The Trust has applied for an SEC order that would permit registered investment companies to invest in SPDRs beyond these limits, subject to certain conditions and terms. One such condition stated in the application is that registered investment companies relying on the order must enter into a written agreement with the Trust. The Sponsor will notify investors if, and when, the requested order is granted.

The Trust itself is also subject to the restrictions of Section 12(d)(1). This means that (a) the Trust cannot invest in any registered investment company, to the extent that the Trust would own more than 3% of that regulated investment company's outstanding share position, (b) the Trust cannot invest more than 5% of its total assets in the securities of any one registered investment company, and (c) the Trust cannot invest more than 10% of its total assets in the securities of registered investment companies in the aggregate.

Risk Factors

Investors can lose money by investing in SPDRs. Investors should carefully consider the risk factors described below together with all of the other information included in this Prospectus before deciding to invest in SPDRs.

Investment in the Trust involves the risks inherent in an investment in any equity security. An investment in the Trust is subject to the risks of any investment in a broadly based portfolio of common stocks, including the risk that the general level of stock prices may decline, thereby adversely affecting

the value of such investment. The value of Portfolio Securities may fluctuate in accordance with changes in the financial condition of the issuers of Portfolio Securities (particularly those that are heavily weighted in the S&P 500 Index), the value of common stocks generally and other factors. The identity and weighting of Index Securities and the Portfolio Securities also change from time to time.

The financial condition of the issuers may become impaired or the general condition of the stock market may deteriorate (either of which may cause a decrease in the value of the Portfolio and thus in the value of SPDRs). Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in and perceptions of their issuers change. These investor perceptions are based on various and unpredictable factors including expectations regarding government, economic, monetary and fiscal policies, inflation and interest rates, economic expansion or contraction, and global or regional political, economic and banking crises.

Holders of common stocks of any given issuer incur more risk than holders of preferred stocks and debt obligations of the issuer because the rights of common stockholders, as owners of the issuer, generally are inferior to the rights of creditors of, or holders of debt obligations or preferred stocks issued by, such issuer. Further, unlike debt securities that typically have a stated principal amount payable at maturity, or preferred stocks that typically have a liquidation preference and may have stated optional or mandatory redemption provisions, common stocks have neither a fixed principal amount nor a maturity. Common stock values are subject to market fluctuations as long as the common stock remains outstanding. The value of the Portfolio may be expected to fluctuate over the entire life of the Trust.

There can be no assurance that the issuers of Portfolio Securities will pay dividends. Distributions generally depend upon the declaration of dividends by the issuers of Portfolio Securities and the declaration of such dividends generally depends upon various factors, including the financial condition of the issuers and general economic conditions.

The Trust is not actively managed. The Trust is not actively "managed" by traditional methods, and therefore the adverse financial condition of an issuer will not result in the elimination of its stocks from the Portfolio unless the stocks of such issuer are removed from the S&P 500 Index.

A liquid trading market for certain Portfolio Securities may not exist. Although most of the Portfolio Securities are listed on a national securities exchange, the principal trading market for some may be in the over-the-counter market. The existence of a liquid trading market for certain Portfolio Securities may depend on whether dealers will make a market in such stocks. There can be no assurance that a market will be made for any Portfolio Securities, that any market will be maintained or that any such market will be

or remain liquid. The price at which Portfolio Securities may be sold and the value of the Portfolio will be adversely affected if trading markets for Portfolio Securities are limited or absent.

The Trust may not always be able exactly to replicate the performance of the S&P 500 Index. The Trust is not able to replicate exactly the performance of the S&P 500 Index because the total return generated by the Portfolio is reduced by Trust expenses and transaction costs incurred in adjusting the actual balance of the Portfolio. It is also possible that, for a short period, the Trust may not fully replicate the performance of the S&P 500 Index due to the temporary unavailability of certain Index Securities in the secondary market or due to other extraordinary circumstances.

Investment in the Trust may have adverse tax consequences. Investors in the Trust should also be aware that there are tax consequences associated with the ownership of SPDRs resulting from the distribution of Trust dividends and sales of SPDRs as well as under certain circumstances the sales of stocks held by the Trust in connection with redemptions.

NAV may not always correspond to market price. The NAV of SPDRs in Creation Unit size aggregations and, proportionately, the NAV per SPDR, changes as fluctuations occur in the market value of Portfolio Securities. Investors should be aware that the aggregate public trading market price of 50,000 SPDRs may be different from the NAV of a Creation Unit ( i.e. , 50,000 SPDRs may trade at a premium over, or at a discount to, the NAV of a Creation Unit) and similarly the public trading market price per SPDR may be different from the NAV of a Creation Unit on a per SPDR basis. This price difference may be due, in large part, to the fact that supply and demand forces at work in the secondary trading market for SPDRs is closely related to, but not identical to, the same forces influencing the prices of Index Securities trading individually or in the aggregate at any point in time. Investors also should note that the size of the Trust in terms of total assets held may change substantially over time and from time to time as Creation Units are created and redeemed.

The Exchange may halt trading in SPDRs. SPDRs are listed for trading on the Exchange under the market symbol SPY. Trading in SPDRs may be halted due to market conditions or, in light of Exchange rules and procedures, for reasons that, in the view of the Exchange, make trading in SPDRs inadvisable. In addition, trading is subject to trading halts caused by extraordinary market volatility pursuant to Exchange "circuit breaker" rules that require trading to be halted for a specified period based on a specified market decline. There can be no assurance that the requirements of the Exchange necessary to maintain the listing of SPDRs will continue to be met or will remain unchanged. The Trust will be terminated if SPDRs are delisted from the Exchange.

SPDRs are subject to market risks. SPDRs are subject to the risks other than those inherent in an investment in equity securities, discussed above, in that

the selection of the stocks included in the Portfolio, the expenses associated with the Trust, or other factors distinguishing an ownership interest in a trust from the direct ownership of a portfolio of stocks may affect trading in SPDRs.

The regular settlement period for Creation Units may be reduced. Except as otherwise specifically noted, the time frames for delivery of stocks, cash, or SPDRs in connection with creation and redemption activity within the SPDR Clearing Process are based on NSCC's current "regular way" settlement period of three (3) days during which NSCC is open for business (each such day an "NSCC Business Day"). NSCC may, in the future, reduce such "regular way" settlement period, in which case there may be a corresponding reduction in settlement periods applicable to SPDR creations and redemptions.

Clearing and settlement of Creation Units may be delayed or fail. The Trustee delivers a portfolio of stocks for each Creation Unit delivered for redemption substantially identical in weighting and composition to the stock portion of a Portfolio Deposit as in effect on the date the request for redemption is deemed received by the Trustee. If redemption is processed through the SPDR Clearing Process, the stocks that are not delivered are covered by NSCC's guarantee of the completion of such delivery. Any stocks not received on settlement date are marked-to-market until delivery is completed. The Trust, to the extent it has not already done so, remains obligated to deliver the stocks to NSCC, and the market risk of any increase in the value of the stocks until delivery is made by the Trust to NSCC could adversely affect the NAV of the Trust. Investors should note that the stocks to be delivered to a redeemer submitting a redemption request outside of the SPDR Clearing Process that are not delivered to such redeemer are not covered by NSCC's guarantee of completion of delivery.

SPDR TRUST SERIES 1
REPORT OF INDEPENDENT AUDITORS

To the Trustee and Unitholders of SPDR Trust Series 1

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of SPDR Trust Series 1 (the "Trust") at September 30, 2003, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Trustee; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by the Trustee, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at September 30, 2003 by correspondence with the custodian, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Boston, Massachusetts
November 20, 2003

SPDR Trust Series 1
Statement of Assets and Liabilities
September 30, 2003


Assets
Investments in securities, at value	$	36,032,012,153
Cash		145,176,363
Dividends receivable		41,588,139
Total Assets		36,218,776,655
Liabilities
Income distribution payable		146,042,770
Accrued Trustee fees		1,478,819
Accrued expenses and other liabilities		16,687,509
Total Liabilities		164,209,098
Net Assets	$	36,054,567,557
Net Assets Represented by:
Paid in surplus	$	50,701,635,044
Distribution in excess of net investment income		(29,877,598	)
Accumulated net realized loss on investments		(2,986,061,096	)
Net unrealized depreciation on investments		(11,631,128,793	)
Net Assets	$	36,054,567,557
Net asset value per SPDR	$	99.87
Units of fractional undivided interest ("SPDRs") outstanding, unlimited units authorized, $0.00 par value		361,002,167
Cost of investments	$	47,663,140,946

See accompanying notes to financial statements.

SPDR Trust Series 1
Statements of Operations


	For the Year Ended September 30, 2003			For the Year Ended September 30, 2002			For the Year Ended September 30, 2001
Investment Income
Dividend income(a)	$	693,488,016		$	430,308,111		$	332,146,057
Expenses
Trustee fees		23,869,863			17,755,841			16,572,948
Marketing expense		11,609,929			7,944,415			7,933,224
S&P license fee		13,544,917			9,967,905			7,444,842
SEC registration fee		1,000,100			—			2,109,103
Legal and audit services		126,250			134,206			23,774
Other expenses		380,870			380,957			334,322
Total expenses		50,531,929			36,183,324			34,418,213
Rebate from Trustee		(4,092,213	)		(2,007,651	)		(2,674,063	)
Net expenses		46,439,716			34,175,673			31,744,150
Trustee earnings credit		(521,780	)		(1,523,393	)		(2,408,752	)
Net expenses after Trustee earnings credits		45,917,936			32,652,280			29,335,398
Net Investment Income		647,570,080			397,655,831			302,810,659
Realized and Unrealized Gain/(Loss) on Investments
Net realized gain/(loss) on investment transactions		2,065,341,241			(1,023,252,620	)		1,123,821,976
Net change in unrealized depreciation		5,437,715,771			(6,497,205,220	)		(9,508,928,101	)
Net Realized and Unrealized Gain/(Loss) on Investments		7,503,057,012			(7,520,457,840	)		(8,385,106,125	)
Net increase (decrease) in net assets resulting from operations	$	8,150,627,092		$	(7,122,802,009	)	$	(8,082,295,466	)

(a)	Net of withholding tax expense of $0, $1,255,246, and $1,632,512 for 2003, 2002, and 2001, respectively.

See accompanying notes to financial statements.

SPDR Trust Series 1
Statements of Changes in Net Assets


	For the Year Ended September 30, 2003			For the Year Ended September 30, 2002			For the Year Ended September 30, 2001
Increase (decrease) in net assets
resulting from operations:
Net investment income	$	647,570,080		$	397,655,831		$	302,810,659
Net realized gain/(loss) on investment transactions		2,065,341,241			(1,023,252,620	)		1,123,821,976
Net change in unrealized depreciation		5,437,715,771			(6,497,205,220	)		(9,508,928,101	)
Net increase (decrease) in net assets resulting from operations		8,150,627,092			(7,122,802,009	)		(8,082,295,466	)
Undistributed net investment income included in price of units issued and redeemed, net		(6,804,410	)		34,187,594			258,362
Distributions to unitholders from net investment income		(640,459,798	)		(425,983,780	)		(302,709,902	)
Net increase (decrease) in net assets from issuance and redemption of SPDRs		(2,147,671,890	)		13,337,612,220			8,971,980,218
Net increase in net assets during year		5,355,690,994			5,823,014,025			587,233,212
Net assets at beginning of year		30,698,876,563			24,875,862,538			24,288,629,326
Net assets end of year	$	36,054,567,557		$	30,698,876,563		$	24,875,862,538
* Includes distributions in excess of net investment income	$	(29,877,598	)	$	(36,266,188	)	$	(7,938,239	)

See accompanying notes to financial statements.

SPDR Trust Series 1
Financial Highlights
Selected data for a SPDR outstanding during the year


	For the YearEnded 9/30/03			For the Year Ended 9/30/02			For the Year Ended 9/30/01			For the Year Ended 9/30/00			For the Year Ended 9/30/99
Net asset value, beginning of year	$	81.78		$	104.33		$	143.83		$	128.39		$	101.80
Investment Operations:
Net investment income		1.55			1.46			1.45			1.45			1.49
Net realized and unrealized gain (loss) on investments		18.09			(22.55	)		(39.51	)		15.43			26.59
Total from investment operations		19.64			(21.09	)		(38.06	)		16.88			28.08
Less distributions from:
Net investment income		(1.55	)		(1.46	)		(1.44	)		(1.44	)		(1.49	)
Net asset value, end of year	$	99.87		$	81.78		$	104.33		$	143.83		$	128.39
Total investment return		24.13	%		–20.46	%		–26.60	%		13.16	%		27.54	%
Ratios and supplemental data
Ratio to average net assets:
Net investment income		1.67	%		1.40	%		1.14	%		1.01	%		1.18	%
Total expenses (2)		0.12	%		0.11	%		0.11	%		0.13	%		0.17	%
Portfolio turnover rate (1)		1.76	%		4.43	%		4.61	%		8.20	%		6.23	%
Total expenses excluding Trustee earnings credit		0.12	%		0.12	%		0.12	%		0.14	%		0.18	%
Total expenses excluding Trustee earnings credit and fee waivers		0.13	%		0.13	%		0.13	%		0.17	%		0.20	%
Net assets, end of year (000's)	$	36,054,568		$	30,698,877		$	24,875,863		$	24,288,629		$	13,181,992

(1)	Portfolio turnover ratio excludes securities received or delivered from processing creations or redemptions of SPDRs.

(2)	Net of expenses reimbursed by the Trustee.

See accompanying notes to financial statements.

SPDR Trust Series 1
Notes to Financial Statements
September 30, 2003

NOTE 1—ORGANIZATION

SPDR Trust Series 1 (the "Trust") is a unit investment trust created under the laws of the State of New York and registered under the Investment Company Act of 1940. The Trust was created to provide investors with the opportunity to purchase a security representing a proportionate undivided interest in a portfolio of securities consisting of substantially all of the common stocks, in substantially the same weighting, comprising the Standard & Poor's 500 Composite Price Index (the "S&P Index"). Each unit of fractional undivided interest in the Trust is referred to as a Standard & Poor's Depositary Receipt ("SPDR"). The Trust commenced operations on January 22, 1993 upon the initial issuance of 150,000 SPDRs (equivalent to three "Creation Units"—see Note 4) in exchange for a portfolio of securities assembled to reflect the intended portfolio composition of the Trust.

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates. The following is a summary of significant accounting policies followed by the Trust.

Security Valuation

Portfolio securities are valued based on the closing sale price on the exchange which is deemed to be the principal market for the security, except for securities listed on the NASDAQ which are valued at the NASDAQ official closing price. If no closing sale price or official closing price is available, then the security is valued at the previous closing sale price on the exchange which is deemed to be the principal market for the security, or at the previous official closing price if the security is listed on the NASDAQ. If there is no closing sale price or official closing price available, valuation will be determined by the Trustee in good faith based on available information.

Investment Transactions

Investment transactions are recorded on the trade date. Realized gains and losses from the sale or disposition of securities are recorded on the identified cost basis. Dividend income is recorded on the ex-dividend date.

SPDR Trust Series 1
Notes to Financial Statements
September 30, 2003

Distributions to Unitholders

The Trust declares and distributes dividends from net investment income to its unitholders quarterly. The Trust will distribute net realized capital gains, if any, at least annually.

Federal Income Tax

The Trust has qualified and intends to qualify as a "regulated investment company" under Subchapter M of the Internal Revenue Code of 1986, as amended. By so qualifying and electing, the Trust will not be subject to federal income taxes to the extent it distributes its taxable income, including any net realized capital gains, for each fiscal year. In addition, by distributing during each calendar year substantially all of its net investment income and capital gains, if any, the Trust will not be subject to federal excise tax. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences are primarily due to differing treatments for income equalization, in-kind transactions and losses deferred due to wash sales. Net investment income per share calculations in the financial highlights for all years presented exclude these differences.

During 2003, the Trust reclassified $2,520,066,084 of non-taxable security gains realized in the in-kind redemption of Creation Units (Note 4) as an increase to paid in surplus in the Statement of Assets and Liabilities. At September 30, 2003, the Trust had capital loss carryforwards of $33,523, $27,700,040, $56,816,996, $403,831,303 and $472,492,447, and $1,530,834,020 which will expire on September 30, 2005, September 30, 2007, September 30, 2008, September 30, 2009, September 30, 2010 and September 30, 2011 respectively. The Trust incurred losses of $440,688,753 during the period November 1, 2002 through September 30, 2003 that were deferred for tax purposes until fiscal 2004.

The Tax character of distributions paid during the year ended September 30, 2003 was $640,459,798 of ordinary income.

As of September 30, 2003, the components of distributable earnings (excluding unrealized appreciation (depreciation)) on the tax basis were undistributed ordinary income of $115,897,349 and undistributed long term capital gain of $0.

NOTE 3—TRANSACTIONS WITH THE TRUSTEE AND SPONSOR

In accordance with the Trust Agreement, State Street Bank and Trust Company (the "Trustee") maintains the Trust's accounting records, acts as

SPDR Trust Series 1
Notes to Financial Statements
September 30, 2003

custodian and transfer agent to the Trust, and provides administrative services, including filing of all required regulatory reports. The Trustee is also responsible for determining the composition of the portfolio of securities which must be delivered and/or received in exchange for the issuance and/or redemption of Creation Units of the Trust, and for adjusting the composition of the Trust's portfolio from time to time to conform to changes in the composition and/or weighting structure of the S&P 500 Index. For these services, the Trustee received a fee at the following annual rates for the year ended September 30, 2003:

The Adjustment Amount is the sum of (a) the excess or deficiency of transaction fees received by the Trustee, less the expenses incurred in processing orders for creation and redemption of SPDRs and (b) the amounts earned by the Trustee with respect to the cash held by the Trustee for the benefit of the Trust. During the year ended September 30, 2003, the Adjustment Amount reduced the Trustee's fee by $471,775. The Adjustment Amount included a deficiency of net transaction fees from processing orders of $50,005 and a Trustee earnings credit of $521,780.

For the year ended September 30, 2003, the Trustee agreed to reimburse the Trust for, or assume, the ordinary operating expenses of the Trust, before the Trustee earnings credit, which exceeded 12.00/100 of 1% per annum of the daily net asset value of the Trust. The amount of such reimbursement by the Trustee for the year ended September 30, 2003 was $4,092,213.

The Trust has entered into a Memorandum of Agreement with Standard and Poor's ("S&P"), the American Stock Exchange LLC (the "AMEX"), and PDR Services (the "Sponsor") pursuant to which the Trust has obtained a sub-license to use certain S&P marks. The Memorandum of Agreement requires the Trust to pay annually a sub-license fee to the S&P equal to the greater of: (i) 0.03% of the Trust's daily average net assets of the Trust plus a volume-based fee ranging from $0.03 to $0.04 per round lot trade of the average daily trading volume, or (ii) $125,000, the minimum annual fee.

SPDR Trust Series 1
Notes to Financial Statements
September 30, 2003

Note 4—Trust Transactions in SPDRs

Transactions in SPDRs were as follows:


	Year Ended September 30, 2003						Year Ended September 30, 2002						Year Ended September 30, 2001
	SPDRs			Amount			SPDRs			Amount			SPDRs			Amount
SPDRs sold		337,100,000		$	30,662,851,816			239,200,000		$	23,977,046,407			194,600,000		$	24,198,795,267
Dividend reinvestment SPDRs issued		14,556			1,332,378			8,716			891,781			5,489			720,016
SPDRs redeemed		(351,500,000	)		(32,818,660,494	)		(102,250,000	)		(10,606,138,374	)		(125,050,000	)		(15,227,276,703	)
Net income equalization		—			6,804,410			—			(34,187,594	)		—			(258,362	)
Net increase (decrease)		(14,385,444	)	$	(2,147,671,890	)		136,958,716		$	13,337,612,220			69,555,489		$	8,971,980,218

Except for under the Trust's dividend reinvestment plan, SPDRs are issued and redeemed by the Trust only in Creation Unit size aggregations of 50,000 SPDRs. Such transactions are only permitted on an in-kind basis, with a separate cash payment which is equivalent to the undistributed net investment income per SPDR (income equalization) and a balancing cash component to equate the transaction to the net asset value per unit of the Trust on the transaction date. A transaction fee of $3,000 is charged in connection with each creation or redemption of Creation Units through the SPDR Clearing Process per Participating party per day, regardless of the number of Creation Units created or redeemed. Transaction fees are received by the Trustee and used to offset the expense of processing orders.

NOTE 5—INVESTMENT TRANSACTIONS

For the year ended September 30, 2003, the Trust had in-kind contributions, in-kind redemptions, purchases and sales of investment securities of $28,590,199,660, $30,709,789,780, $670,956,298, and $690,080,142, respectively. At September 30, 2003, the cost of investments for federal income tax purposes was $47,716,537,138, accordingly, gross unrealized appreciation was $599,973,930 and gross unrealized depreciation was $12,284,498,915, resulting in net unrealized depreciation of $11,684,524,985.

NOTE 6—TAX INFORMATION (UNAUDITED)

For Federal income tax purposes, the percentage of Trust distributions which qualify for the corporate dividends paid deduction for the fiscal year ended September 30, 2003 is 100%.

SPDR Trust Series 1
Notes to Financial Statements
September 30, 2003

For the fiscal year ended September 30, 2003, certain dividends paid by the Trust may be designated as qualified dividend income and subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Complete information will be reported in conjunction with your 2003 Form 1099-DIV.

SPDR Trust, Series 1
Schedule of Investments
September 30, 2003


Common Stocks	Shares		Value
3M Co		3,066,220	$	211,783,815
Abbott Laboratories		6,119,235		260,373,449
ACE Ltd		1,026,702		33,963,302
ADC Telecommunications, Inc.*		3,143,263		7,323,803
Adobe Systems, Inc		906,082		35,572,779
Advanced Micro Devices, Inc.*		1,295,250		14,390,228
AES Corp.*		2,402,634		17,827,544
Aetna, Inc		575,056		35,095,668
Aflac, Inc		2,040,676		65,913,835
Agilent Technologies, Inc. *		1,805,873		39,927,852
Air Products & Chemicals, Inc		894,175		40,327,292
Alberto-Culver Co. (Class B)		224,357		13,196,679
Albertson's, Inc		1,520,995		31,286,867
Alcoa, Inc		3,304,543		86,446,845
Allegheny Energy, Inc.*		494,372		4,518,560
Allegheny Technologies, Inc		334,419		2,190,444
Allergan, Inc.*		504,795		39,742,510
Allied Waste Industries, Inc.*		780,041		8,424,443
Allstate Corp		2,766,109		101,045,962
ALLTEL Corp		1,228,907		56,947,550
Altera Corp.*		1,541,333		29,131,194
Altria Group, Inc		7,951,303		348,267,071
Ambac Financial Group, Inc		423,061		27,075,904
Amerada Hess Corp		342,608		17,164,661
Ameren Corp		602,987		25,874,172
American Electric Power Co., Inc		1,548,997		46,469,910
American Express Co		5,038,683		227,043,056
American Greetings Corp. (Class A)*		256,679		4,987,273
American International Group, Inc		10,239,893		590,841,826
American Power Conversion Corp.*		788,862		13,521,095
American Standard Companies Inc.*		283,478		23,883,021
AmerisourceBergen Corp		412,975		22,321,299
Amgen Inc.*		5,057,733		326,577,820
AmSouth Bancorp		1,440,741		30,572,524
Anadarko Petroleum Corp		979,547		40,905,883
Analog Devices, Inc.*		1,427,345		54,267,657
Andrew Corp.*		466,482		5,733,064
Anheuser-Busch Companies Inc		3,236,529		159,690,341
Anthem, Inc.*		542,465		38,694,028
AOL Time Warner, Inc.*		17,650,677		266,701,729
Aon Corp		1,231,802		25,683,072
Apache Corp		626,017		43,408,019
Apartment Investment & Management Co. (Class A)		370,188		14,570,600
Apollo Group, Inc. (Class A)*		672,472		44,403,326
Apple Computer, Inc.*		1,350,948		27,870,057
Applera Corp. – Applied Biosystems Group		849,811		18,959,283
Applied Materials, Inc.*		6,406,819		116,219,697
Applied Micro Circuits Corp.*		1,193,013	$	5,809,973
Archer-Daniels-Midland Co		2,591,869		33,979,403
Ashland, Inc		285,020		9,362,907
AT&T Corp		3,017,654		65,030,444
AT&T Wireless Services, Inc.*		10,672,514		87,301,165
Autodesk, Inc		420,214		7,152,042
Automatic Data Processing, Inc		2,364,102		84,753,057
AutoNation, Inc.*		1,145,330		20,089,088
Autozone, Inc.*		351,229		31,445,532
Avaya, Inc.*		1,503,148		16,384,313
Avery Dennison Corp		431,163		21,782,355
Avon Products, Inc		930,175		60,052,098
Baker Hughes, Inc		1,319,942		39,057,084
Ball Corp		217,902		11,766,708
Bank of America Corp		5,851,289		456,634,594
Bank of New York Co., Inc. (The)		2,971,641		86,504,470
Bank One Corp		4,425,004		171,026,405
Bausch & Lomb, Inc		211,411		9,333,796
Baxter International Inc		2,338,697		67,962,535
BB&T Corp		2,114,113		75,917,798
Bear Stearns Inc		390,877		29,237,600
Becton, Dickinson and Company		1,016,416		36,712,946
Bed Bath & Beyond, Inc.*		1,154,974		44,096,907
BellSouth Corp		7,293,973		172,721,281
Bemis Co., Inc		216,235		9,579,211
Best Buy Co., Inc.*		1,249,714		59,386,409
Big Lots, Inc.*		448,887		7,096,903
Biogen, Inc.*		588,642		22,503,784
Biomet, Inc		1,021,290		34,325,557
BJ Services Co.*		608,152		20,780,554
Black & Decker Corp		319,514		12,956,293
Block (H&R), Inc		721,470		31,131,430
BMC Software, Inc.*		967,772		13,481,064
Boeing Co		3,283,984		112,739,171
Boise Cascade Corp		235,743		6,506,507
Boston Scientific Corp.*		1,609,619		102,693,692
Bristol-Myers Squibb Co		7,587,006		194,682,574
Broadcom Corp. (Class A)*		1,102,088		29,337,583
Brown-Forman Corp. (Class B)		247,353		19,570,569
Brunswick Corp		357,169		9,172,100
Burlington Northern Santa Fe Corp		1,473,197		42,531,197
Burlington Resources, Inc		793,721		38,257,352
C.R. Bard, Inc		207,405		14,725,755
Calpine Corp.*		1,446,549		7,073,625
Campbell Soup Co		1,607,221		42,591,356
Capital One Financial Corp		888,500		50,680,040
Cardinal Health, Inc		1,755,321		102,493,193
Carnival Corp		2,443,380		80,362,768
Caterpillar, Inc		1,355,093		93,284,602
Cendant Corp.*		4,049,675		75,688,426
CenterPoint Energy, Inc		1,196,132		10,968,530
Centex Corp		235,242		18,320,647

(*) Non-income producing security

The accompanying notes are an integral part of these financial statements.

SPDR Trust, Series 1
Schedule of Investments (Continued)
September 30, 2003


Common Stocks	Shares		Value
CenturyTel, Inc		560,482	$	18,994,735
Charles Schwab Corp. (The)		5,323,056		63,397,597
Charter One Financial, Inc		919,186		28,127,092
ChevronTexaco Corp		4,185,254		299,036,398
Chiron Corp.*		740,762		38,289,988
Chubb Corp		724,505		47,005,884
CIENA Corp.*		1,726,235		10,202,049
CIGNA Corp		554,144		24,742,530
Cincinnati Financial Corp		634,140		25,340,234
CINergy Corp		689,941		25,320,835
Cintas Corp		671,621		24,742,518
Circuit City Stores, Inc		835,652		7,963,764
Cisco Systems, Inc.*		27,558,511		538,493,305
Citigroup, Inc		20,163,967		917,662,138
Citizens Communications Co.*		1,077,134		12,074,672
Citrix Systems, Inc.*		676,069		14,927,604
Clear Channel Communications, Inc		2,409,088		92,268,070
Clorox Co		867,346		39,785,161
CMS Energy Corp.*		509,635		3,756,010
Coca-Cola Co. (The)		9,621,473		413,338,480
Coca-Cola Enterprises, Inc		1,719,510		32,773,861
Colgate-Palmolive Co		2,111,144		117,991,838
Comcast Corp. (Class A) *		8,833,268		272,771,316
Comerica, Inc		690,721		32,187,599
Computer Associates International, Inc		2,257,099		58,932,855
Computer Sciences Corp.*		735,208		27,621,765
Compuware Corp.*		1,478,902		7,926,915
Comverse Technology, Inc.*		690,072		10,323,477
ConAgra Foods, Inc		2,101,780		44,641,807
Concord EFS, Inc.*		1,989,526		27,196,820
Conoco Phillips, Inc		2,649,703		145,071,239
Consolidated Edison, Inc		876,264		35,716,521
Constellation Energy Group, Inc		627,054		22,435,992
Convergys Corp.*		662,830		12,156,302
Cooper Industries Ltd (Class A)		377,197		18,116,772
Cooper Tire & Rubber Co		291,694		4,629,184
Coors (Adolph) Co. (Class B)		149,353		8,029,217
Corning Inc.*		5,218,569		49,158,920
Costco Wholesale Corp.*		1,765,323		54,866,239
Countrywide Financial Corp		512,485		40,117,326
Crane Co		246,104		5,761,295
CSX Corp		832,310		24,345,067
Cummins, Inc		168,883		7,503,472
CVS Corp		1,516,599		47,105,565
Dana Corp		599,136		9,244,668
Danaher Corp		598,424		44,199,597
Darden Restaurants, Inc		689,958		13,109,202
Deere & Co		925,163		49,320,440
Dell Inc.*		10,078,794		336,530,932
Delphi Corp		2,228,061		20,163,952
Delta Air Lines, Inc		497,400		6,615,420
Deluxe Corp		226,865		9,106,361
Devon Energy Corp		906,553	$	43,686,789
Dillard's, Inc. (Class A)		296,299		4,142,260
Disney(Walt) Co. (The)		7,999,419		161,348,281
Dollar General Corp		1,270,791		25,415,820
Dominion Resources, Inc		1,267,250		78,442,775
Dover Corp		782,852		27,689,475
Dow Chemical Co		3,555,275		115,688,648
Dow Jones & Co., Inc		342,584		16,221,352
DTE Energy Co		657,540		24,256,651
Du Pont (E.I.) de Nemours		3,893,539		155,780,495
Duke Energy Corp		3,472,023		61,836,730
Dynegy, Inc. (Class A)*		1,392,429		5,012,744
Eastman Chemical Co		311,134		10,422,989
Eastman Kodak Co		1,147,853		24,036,042
Eaton Corp		291,579		25,839,731
ebay Inc.*		2,491,385		133,314,011
Ecolab, Inc		1,025,119		25,884,255
Edison International*		1,284,692		24,537,617
El Paso Corp		2,266,691		16,546,844
Electronic Arts Inc.*		571,664		52,724,571
Electronic Data Systems Corp		1,881,670		38,009,734
EMC Corp.*		8,579,205		108,355,359
Emerson Electric Co		1,649,289		86,835,066
Engelhard Corp		518,774		14,354,477
Entergy Corp		872,152		47,227,031
EOG Resources, Inc		456,393		19,049,844
Equifax, Inc		578,967		12,893,595
Equity Office Properties Trust		1,625,756		44,757,063
Equity Residential Properties Trust		1,057,651		30,968,021
Exelon Corp		1,265,025		80,329,087
Express Scripts, Inc. (Class A)*		311,400		19,042,110
Exxon Mobil Corp		25,991,606		951,292,780
Family Dollar Stores, Inc		682,962		27,243,354
Fannie Mae		3,812,251		267,620,020
Federated Department Stores, Inc		748,095		31,345,180
Federated Investors, Inc. (Class B)		423,888		11,741,698
FedEx Corp		1,176,423		75,796,934
Fifth Third Bancorp		2,252,598		124,951,611
First Data Corp		2,934,285		117,254,029
First Tennessee National Corp		502,102		21,319,251
FirstEnergy Corp		1,275,365		40,684,143
Fiserv, Inc.*		723,904		26,227,042
FleetBoston Financial Corp		4,114,107		124,040,326
Fluor Corp		304,412		11,363,700
Ford Motor Co		7,100,218		76,469,348
Forest Laboratories, Inc.*		1,403,909		72,231,118
Fortune Brands, Inc		594,631		33,745,309
FPL Group, Inc		694,236		43,875,715
Franklin Resources, Inc		994,006		43,945,005
Freddie Mac		2,697,052		141,190,672

(*) Non-income producing security

The accompanying notes are an integral part of these financial statements.

SPDR Trust, Series 1
Schedule of Investments (Continued)
September 30, 2003


Common Stocks	Shares		Value
Freeport-McMoran Copper & Gold, Inc. (Class B)		657,600	$	21,766,560
Gannett Co., Inc		1,046,869		81,195,160
Gap, Inc. (The)		3,495,069		59,835,581
Gateway, Inc.*		1,306,389		7,394,162
General Dynamics Corp		773,677		60,393,227
General Electric Co		39,228,279		1,169,394,997
General Mills, Inc		1,433,643		67,481,576
General Motors Corp		2,198,360		89,978,875
Genuine Parts Co		688,770		22,026,865
Genzyme Corp.*		833,420		38,545,675
Georgia-Pacific Corp		982,540		23,816,770
Gillette Co		4,009,827		128,234,267
Golden West Financial Corp		599,916		53,698,481
Goldman Sachs Group, Inc		1,855,593		155,684,253
Goodrich (B.F.) Co. (The)		395,144		9,578,291
Goodyear Tire & Rubber Co. (The)		630,226		4,140,585
Great Lakes Chemical Corp		206,011		4,142,881
Guidant Corp		1,200,771		56,256,121
Halliburton Co		1,718,266		41,667,950
Harley-Davidson, Inc		1,185,776		57,154,403
Harrah's Entertainment, Inc		446,758		18,812,979
Hartford Financial Services Group, Inc. (The)		1,096,027		57,683,901
Hasbro, Inc		698,160		13,041,629
HCA, Inc		1,955,564		72,082,089
Health Management Associates, Inc		968,630		21,125,820
Heinz (H.J.) Co		1,377,913		47,234,858
Hercules, Inc.*		435,314		4,932,108
Hershey Foods Corp		517,902		37,641,117
Hewlett-Packard Co		11,958,580		231,518,109
Hilton Hotels Corp		1,466,625		23,788,657
Home Depot, Inc		9,020,773		287,311,620
Honeywell International, Inc		3,347,710		88,212,158
Humana, Inc. *		671,855		12,126,983
Huntington Bancshares, Inc		897,026		17,752,145
Illinois Tool Works, Inc		1,203,895		79,770,083
IMS Health, Inc		953,411		20,116,972
Ingersoll-Rand Co. (Class A)		653,098		34,901,557
Intel Corp		25,496,006		701,395,125
International Business Machines Corp		6,780,634		598,933,401
International Flavors & Fragrances, Inc		373,217		12,346,018
International Game Technology		1,332,021		37,496,391
International Paper Co		1,896,554		74,003,537
Interpublic Group of Companies Inc		1,495,040		21,109,965
Intuit, Inc.*		805,145		38,840,195
ITT Industries, Inc		357,779		21,409,495
J.C. Penney Co., Inc. (Holding Co.)		1,034,960		22,117,095
J.P. Morgan Chase & Co		7,970,783		273,636,980
Jabil Circuit, Inc.*		770,645	$	20,075,302
Janus Capital Group, Inc		841,111		11,750,321
JDS Uniphase Corp.*		5,236,111		18,850,000
Jefferson-Pilot Corp		564,692		25,061,031
John Hancock Financial Services, Inc		1,155,863		39,068,169
Johnson & Johnson Company		11,647,836		576,800,839
Johnson Controls, Inc		345,054		32,642,108
Jones Apparel Group, Inc		487,807		14,600,064
KB HOME		189,157		11,285,107
Kellogg Co		1,601,729		53,417,662
Kerr-McGee Corp		390,499		17,431,875
Keycorp		1,675,501		42,842,561
KeySpan Corp		613,905		21,535,787
Kimberly-Clark Corp		2,002,118		102,748,696
Kinder Morgan, Inc		450,893		24,352,731
King Pharmaceuticals, Inc.*		953,811		14,450,237
Kla-Tencor Corp.*		742,036		38,140,650
Knight Ridder, Inc		332,647		22,187,555
Kohl's Corp.*		1,317,425		70,482,237
Kroger Co.*		3,004,992		53,699,207
Leggett & Platt, Inc		777,079		16,808,219
Lehman Brothers Holdings, Inc		934,753		64,572,737
Lexmark International, Inc. (Class A)*		498,700		31,423,087
Lilly (Eli) & Co		4,403,742		261,582,275
Limited, Inc. (The)		2,043,113		30,810,144
Lincoln National Corp		721,241		25,517,507
Linear Technology Corp		1,226,519		43,921,645
Liz Claiborne, Inc		427,273		14,548,646
Lockheed Martin Corp		1,771,037		81,733,358
Loews Corp		742,043		29,956,276
Louisiana-Pacific Corp.*		430,193		5,928,060
Lowe's Companies Inc		3,043,991		157,983,133
LSI Logic Corp.*		1,442,294		12,966,223
Lucent Technologies, Inc.*		15,557,857		33,604,971
Manor Care, Inc		352,648		10,579,440
Marathon Oil Corp		1,223,212		34,861,542
Marriott International, Inc		919,940		39,585,018
Marsh & McLennan Companies Inc		2,101,875		100,070,269
Marshall & Ilsley Corp		889,321		28,031,398
Masco Corp		1,839,906		45,040,899
Mattel, Inc		1,695,573		32,148,064
Maxim Integrated Products, Inc		1,274,970		50,361,315
May Department Stores Co		1,126,525		27,746,311
Maytag Corp		306,266		7,647,462
MBIA, Inc		589,009		32,377,825
MBNA Corp		4,982,893		113,609,960
McCormick & Company, Inc		550,392		15,091,749
McDonald's Corp		4,983,970		117,322,654
McGraw-Hill Cos., Inc. (The)		768,903		47,771,943
McKesson Corp		1,117,032		37,185,995
MeadWestvaco Corp		779,911		19,887,730
Medco Health Solutions, Inc.*		1,062,859		27,559,934

(*) Non-income producing security

The accompanying notes are an integral part of these financial statements.

SPDR Trust, Series 1
Schedule of Investments (Continued)
September 30, 2003


Common Stocks	Shares		Value
MedImmune, Inc.*		979,046	$	32,318,308
Medtronic, Inc		4,791,667		224,825,016
Mellon Financial Corp		1,707,409		51,461,307
Merck & Co., Inc		8,764,820		443,675,188
Mercury Interactive Corp.*		327,303		14,862,829
Meredith Corp		202,621		9,355,012
Merrill Lynch & Co., Inc		3,651,500		195,464,795
MetLife, Inc		2,977,594		83,521,512
MGIC Investment Corp		404,941		21,085,278
Micron Technology, Inc.*		2,357,765		31,641,206
Microsoft Corp		42,360,519		1,177,198,823
Millipore Corp.*		189,351		8,721,507
Molex, Inc		765,597		21,888,418
Monsanto Co		1,005,214		24,064,823
Monster Worldwide Inc.*		416,893		10,497,366
Moody's Corp		581,424		31,960,877
Morgan Stanley Dean Witter & Co		4,246,471		214,276,927
Motorola, Inc		9,088,558		108,790,039
Nabors Industries Ltd.*		558,141		20,796,334
National City Corp		2,385,187		70,267,609
National Semiconductor Corp.*		676,813		21,854,292
Navistar International Corp.*		233,623		8,709,465
NCR Corp.*		385,878		12,228,474
Network Appliance, Inc. *		1,276,617		26,208,947
New York Times Co. (The) (Class A)		577,249		25,087,242
Newell Rubbermaid, Inc		1,023,371		22,176,450
Newmont Mining Corp. (Holding Co.)		1,598,713		62,493,691
Nextel Communications, Inc. (Class A)*		4,035,655		79,462,047
Nicor, Inc		178,661		6,278,148
Nike, Inc. (Class B)		1,054,636		64,142,962
NiSource, Inc		957,479		19,130,430
Noble Corp.*		522,446		17,757,940
Nordstrom, Inc		527,481		13,086,804
Norfolk Southern Corp		1,524,486		28,202,991
North Fork Bancorporation, Inc		614,527		21,354,813
Northern Trust Corp		877,658		37,247,806
Northrop Grumman Corp		705,179		60,800,533
Novell, Inc.*		1,374,915		7,328,297
Novellus Systems, Inc.*		551,062		18,598,342
Nucor Corp		289,819		13,296,896
NVIDIA Corp.*		625,077		9,945,600
Occidental Petroleum Corp		1,446,142		50,947,583
Office Depot, Inc.*		1,154,530		16,221,146
Omnicom Group, Inc		729,212		52,393,882
Oracle Corp.*		20,548,575		230,555,011
PACCAR, Inc		458,809		34,268,444
Pactiv Corp.*		638,756		12,953,972
Pall Corp		498,005		11,175,232
Parametric Technology Corp.*		1,070,625		3,340,350
Parker-Hannifin Corp		463,845		20,733,871
Paychex, Inc		1,471,544		49,929,488
Peoples Energy Corp		137,895	$	5,706,095
PeopleSoft, Inc.*		1,350,575		24,566,959
PepsiCo, Inc		6,740,417		308,913,311
PerkinElmer, Inc		488,552		7,479,731
Pfizer, Inc		30,488,824		926,250,473
PG&E Corp.*		1,524,748		36,441,477
Phelps Dodge Corp.*		327,162		15,311,182
Pinnacle West Capital Corp		333,124		11,825,902
Pitney Bowes, Inc		933,581		35,774,824
Plum Creek Timber Co., Inc		729,118		18,548,762
PMC-Sierra, Inc.*		650,711		8,583,529
PNC Financial Services Group		1,112,397		52,927,849
Power-One, Inc.*		302,104		3,108,650
PPG Industries, Inc		662,683		34,605,306
PPL Corp		692,629		28,363,158
Praxair, Inc		632,127		39,160,268
Principal Financial Group		1,252,912		38,827,743
Procter & Gamble Co		5,072,499		470,829,357
Progress Energy, Inc		909,900		40,454,154
Progressive Corp. (The)		861,614		59,546,144
ProLogis		702,263		21,243,456
Providian Financial Corp.*		1,131,803		13,343,957
Prudential Financial, Inc		2,158,143		80,628,222
Public Service Enterprise Group, Inc		881,235		37,011,870
Pulte Homes, Inc		240,115		16,330,221
QLogic Corp.*		358,892		16,871,513
QUALCOMM, Inc		3,088,477		128,604,182
Quest Diagnostics Inc.*		413,506		25,075,004
Qwest Communications International, Inc.*		6,564,645		22,319,793
R.J. Reynolds Tobacco Holdings, Inc		363,742		14,382,359
R.R. Donnelley & Sons Co		444,441		11,053,248
RadioShack Corp		662,596		18,824,352
Raytheon Co		1,561,379		43,718,612
Reebok International Ltd		222,075		7,423,967
Regions Financial Corp		865,306		29,636,730
Robert Half International, Inc.*		699,914		13,648,323
Rockwell Automation, Inc		732,519		19,228,624
Rockwell Collins, Inc		733,873		18,530,293
Rohm & Haas Co		869,532		29,085,845
Rowan Companies Inc.*		383,472		9,425,742
Ryder System, Inc		246,519		7,227,937
Sabre Holdings Corp		541,795		11,643,175
SAFECO Corp		543,151		19,151,504
Safeway, Inc.*		1,731,050		39,710,287
Sanmina-SCI Corp.*		2,082,059		20,195,972
Sara Lee Corp		3,082,962		56,603,182
SBC Communications Inc		13,042,186		290,188,638
Schering-Plough Corp		5,730,946		87,339,617
Schlumberger Ltd		2,258,350		109,304,140
Scientific-Atlanta, Inc		584,478		18,206,490
Sealed Air Corp.*		341,818		16,144,064
Sears, Roebuck & Co		1,108,223		48,462,592

(*) Non-income producing security

The accompanying notes are an integral part of these financial statements.

SPDR Trust, Series 1
Schedule of Investments (Continued)
September 30, 2003


Common Stocks	Shares		Value
Sempra Energy		800,576	$	23,504,911
Sherwin-Williams Co. (The)		581,294		17,095,857
Siebel Systems, Inc.*		1,815,066		17,642,442
Sigma-Aldrich Corp		288,289		14,973,731
Simon Property Group, Inc		724,052		31,554,186
SLM Corp		1,780,114		69,353,241
Snap-on, Inc		230,010		6,359,777
Solectron Corp.*		3,197,903		18,707,733
Southern Co. (The)		2,832,852		83,059,221
SouthTrust Corp		1,346,092		39,561,644
Southwest Airlines Co		3,020,200		53,457,540
Sprint Corp		3,512,754		53,042,585
Sprint Corp. (PCS Group)*		3,879,270		22,228,217
St. Jude Medical , Inc.*		669,262		35,986,218
St. Paul Companies Inc. (The)		885,119		32,775,957
Stanley Works (The)		340,498		10,051,501
Staples, Inc.*		1,910,303		45,369,696
Starbucks Corp.*		1,505,818		43,367,558
Starwood Hotels & Resorts Worldwide, Inc		778,032		27,075,514
State Street Corp		1,275,682		57,405,690
Stryker Corp		777,601		58,561,131
Sun Microsystems, Inc.*		12,444,913		41,192,662
SunGard Data Systems, Inc.*		1,112,513		29,270,217
Sunoco, Inc		305,292		12,278,844
SunTrust Banks, Inc		1,119,320		67,573,348
Supervalu, Inc		534,191		12,745,797
Symantec Corp.*		571,152		35,993,999
Symbol Technologies, Inc		886,997		10,599,614
Synovus Financial Corp		1,155,037		28,864,375
Sysco Corp		2,568,405		84,012,528
T. Rowe Price Group, Inc		496,633		20,491,078
Target Corp		3,535,130		133,026,942
TECO Energy, Inc		713,747		9,863,984
Tektronix, Inc.*		388,927		9,625,943
Tellabs, Inc.*		1,641,104		11,143,096
Temple-Inland, Inc		199,748		9,697,765
Tenet Healthcare Corp. *		1,864,082		26,991,907
Teradyne, Inc.*		709,863		13,203,452
Texas Instruments, Inc		6,793,095		154,882,566
Textron, Inc		556,728		21,962,920
The Pepsi Bottling Group, Inc		1,119,165		23,032,416
Thermo Electron Corp.*		679,434		14,743,718
Thomas & Betts Corp.*		239,651		3,798,468
Tiffany & Co		571,982		21,352,088
TJX Cos., Inc. (The)		2,071,061		40,220,005
Torchmark Corp		485,246		19,720,397
Toys "R" Us, Inc.*		770,004		9,263,148
Transocean Sedco Forex, Inc		1,252,793		25,055,860
Travelers Property Casualty Corp. (Class B)		3,920,283		62,254,094
Tribune Co		1,212,411		55,649,665
Tupperware Corp		224,141		2,999,007
TXU Corp		1,284,402		30,260,511
Tyco International Ltd		7,830,643		159,980,036
U.S. Bancorp		7,490,893	$	179,706,523
Union Pacific Corp		982,061		57,126,488
Union Planters Corp		810,435		25,642,163
Unisys Corp.*		1,254,823		16,977,755
United Parcel Service Inc. (Class B)		4,414,310		281,632,978
United States Steel Corp		369,735		6,795,729
United Technologies Corp		1,834,635		141,780,593
UnitedHealth Group, Inc		2,327,518		117,120,706
Univision Communications, Inc. (Class A)*		1,261,350		40,274,905
Unocal Corp		1,024,752		32,300,183
UnumProvident Corp		1,130,328		16,694,945
UST, Inc		656,105		23,081,774
V.F. Corp		442,164		17,204,601
VERITAS Software Corp.*		1,668,117		52,378,874
Verizon Communications Inc		10,794,220		350,164,497
Viacom, Inc.*		6,908,297		264,587,775
Visteon Corp		530,050		3,498,330
Vulcan Materials Co		408,624		16,308,184
W.W. Grainger, Inc		373,893		17,778,612
Wachovia Corp		5,215,483		214,825,745
Wal-Mart Stores, Inc		17,112,237		955,718,436
Walgreen Co		4,014,059		122,990,768
Washington Mutual, Inc		3,653,747		143,848,019
Waste Management, Inc		2,338,256		61,192,160
Waters Corp.*		520,769		14,284,694
Watson Pharmaceuticals, Inc.*		418,813		17,460,314
Wellpoint Health Networks, Inc.*		572,724		44,145,566
Wells Fargo & Co		6,576,176		338,673,064
Wendy's International, Inc		422,389		13,643,165
Weyerhaeuser Co		862,373		50,405,702
Whirlpool Corp		253,178		17,157,873
Williams Companies Inc. (The)		2,031,227		19,134,158
Winn-Dixie Stores, Inc		559,065		5,394,977
Worthington Industries, Inc		346,100		4,347,016
Wrigley (Wm.) Jr. Co		890,858		49,264,447
Wyeth		5,204,850		239,943,585
Xcel Energy, Inc		1,486,718		22,999,527
Xerox Corp.*		3,036,356		31,153,013
Xilinx, Inc.*		1,319,346		37,614,554
XL Capital Ltd		527,386		40,840,772
Yahoo!, Inc.*		2,366,317		83,720,295
Yum Brands, Inc.*		1,159,527		34,345,190
Zimmer Holdings, Inc.*		882,675		48,635,392
Zions Bancorp		363,017		20,274,499
Total Common Stocks (Cost $47,663,140,946)			$	36,032,012,153

(*) Non-income producing security

The accompanying notes are an integral part of these financial statements.

THE TRUST

The Trust, an exchange traded fund or "ETF", is a registered investment company which both (a) continuously issues and redeems "in-kind" its shares, known as SPDRs, only in large lot sizes called Creation Units at their once-daily NAV and (b) lists SPDRs individually for trading on the American Stock Exchange at prices established throughout the trading day, like any other listed equity security trading in the secondary market on the Exchange.

Creation of Creation Units

Portfolio Deposits may be made through the SPDR Clearing Process or outside the SPDR Clearing Process only by a person who executed a Participant Agreement with the Distributor and the Trustee. The Distributor shall reject any order that is not submitted in proper form. A creation order is deemed received by the Distributor on the date on which it is placed ("Transmittal Date") if (a) such order is received by the Distributor not later than the Closing Time on such Transmittal Date and (b) all other procedures set forth in the Participant Agreement are properly followed. The Transaction Fee is charged at the time of creation of a Creation Unit, and an additional amount not to exceed three (3) times the Transaction Fee applicable for one Creation Unit is charged for creations outside the SPDR Clearing Process, in part due to the increased expense associated with settlement.

The Trustee, at the direction of the Sponsor, may increase *, reduce or waive the Transaction Fee (and/or the additional amounts charged in connection with creations and/or redemptions outside the SPDR Clearing Process) for certain lot-size creations and/or redemptions of Creation Units. The Sponsor has the right to vary the lot-size of Creation Units subject to such an increase, a reduction or waiver. The existence of any such variation shall be disclosed in the then current SPDR Prospectus.

The Trustee makes available to NSCC** before the commencement of trading on each Business Day a list of the names and required number of shares of each Index Security in the current Portfolio Deposit as well as the

*	Such increase is subject to the 10 Basis Point Limit.

As of December 31, 2003, the Depository Trust and Clearing Corporation ("DTCC") owned 100% of the issued and outstanding shares of common stock of NSCC. Also, as of such date, the National Association of Securities Dealers, Inc., the parent Company of the Exchange, owned 3.6929% of the issued and outstanding shares of common stock of DTCC ("DTCC Shares"), the Exchange owned 0.0016% of DTCC Shares, the American Stock Exchange Clearing Corporation LLC, a wholly-owned subsidiary of the Exchange, owned 3.6929% of DTCC Shares and the Trustee owned 4.63% of DTCC Shares.

amount of the Dividend Equivalent Payment for the previous Business Day. The identity and weightings of the Index Securities to be delivered as part of a Portfolio Deposit are determined daily, reflect the relative weighting of the current S&P 500 Index and, together with the Cash Component, have a value equal to the NAV of the Trust on a per Creation Unit basis at the close of business on the day of the creation request. The identity of each Index Security required for a Portfolio Deposit, as in effect on September 30, 2003, is set forth in the above Schedule of Investments. The Sponsor makes available (a) on each Business Day, the Dividend Equivalent Payment effective through and including the previous Business Day, per outstanding SPDR, and (b) every 15 seconds throughout the day at the Exchange a number representing, on a per SPDR basis, the sum of the Dividend Equivalent Payment effective through and including the previous Business Day, plus the current value of the stock portion of a Portfolio Deposit as in effect on such day (which value occasionally includes a cash in lieu amount to compensate for the omission of a particular Index Security from such Portfolio Deposit). This information is calculated based upon the best information available to the Sponsor and may be calculated by other persons designated to do so by the Sponsor. The inability of the Sponsor to provide such information will not in itself result in a halt to the trading of SPDRs on the Exchange.

Upon receipt of one or more Portfolio Deposits, following placement with the Distributor of an order to create SPDRs, the Trustee (a) delivers one or more Creation Units to DTC, (b) removes the SPDR position from its account at DTC and allocates it to the account of the DTC Participant acting on behalf of the investor creating Creation Unit(s), (c) increases the aggregate value of the Portfolio, and (d) decreases the fractional undivided interest in the Trust represented by each SPDR.

Under certain circumstances, (a) a portion of the stock portion of a Portfolio Deposit may consist of contracts to purchase certain Index Securities or (b) a portion of the Cash Component may consist of cash in an amount required to enable the Trustee to purchase such Index Securities. If there is a failure to deliver Index Securities that are the subject of such contracts to purchase, the Trustee will acquire such Index Securities in a timely manner. To the extent the price of any such Index Security increases or decreases between the time of creation and the time of its purchase and delivery, SPDRs will represent fewer or more shares of such Index Security. Therefore, price fluctuations during the period from the time the cash is received by the Trustee to the time the requisite Index Securities are purchased and delivered will affect the value of all SPDRs.

Procedures For Creation of Creation Units

All creation orders must be placed in Creation Units and must be received by the Distributor by no later than the closing time of the regular trading session on the New York Stock Exchange, Inc. ("Closing Time") (ordinarily

4:00 p.m. New York time) in each case on the date such order is placed in order for creation to be effected based on the NAV of the Trust as determined on such date. Orders must be transmitted by telephone or other transmission method acceptable to the Distributor and the Trustee, pursuant to procedures set forth in the Participant Agreement and described in this prospectus. Severe economic or market disruptions or changes, or telephone or other communication failure, may impede the ability to reach the Distributor, the Trustee, a Participating Party or a DTC Participant.

SPDRs may be created in advance of receipt by the Trustee of all or a portion of the Portfolio Deposit. In these circumstances, the initial deposit has a value greater than the NAV of the SPDRs on the date the order is placed provided in proper form, because in addition to available Index Securities, cash collateral must be deposited with the Trustee in an amount equal to the sum of (a) the Cash Component, plus (b) 115% of the market value of the undelivered Index Securities ("Additional Cash Deposit"). The Trustee holds such Additional Cash Deposit as collateral in an account separate and apart from the Trust. The order is deemed received on the Business Day on which the order is placed if the order is placed in proper form before the Closing Time, on such date and federal funds in the appropriate amount are deposited with the Trustee by 11:00 a.m., New York time, the next Business Day. If the order is not placed in proper form by the Closing Time or federal funds in the appropriate amount are not received by 11:00 a.m. the next Business Day, the order may be deemed to be rejected and the investor shall be liable to the Trust for any losses, resulting therefrom. An additional amount of cash must be deposited with the Trustee, pending delivery of the missing Index Securities to the extent necessary to maintain the Additional Cash Deposit with the Trustee in an amount at least equal to 115% of the daily mark-to-market value of the missing Index Securities. If missing Index Securities are not received by 1:00 p.m., New York time, on the third Business Day following the day on which the purchase order is deemed received and if a mark-to-market payment is not made within one Business Day following notification by the Distributor that such a payment is required, the Trustee may use the Additional Cash Deposit to purchase the missing Index Securities. The Trustee will return any unused portion of the Additional Cash Deposit once all of the missing Index Securities have been properly received or purchased by the Trustee and deposited into the Trust. In addition, a transaction fee of $4,000 is charged in all cases. The delivery of Creation Units so created will occur no later than the third Business Day following the day on which the purchase order is deemed received. The Participant Agreement for any Participating Party intending to follow these procedures will contain terms and conditions permitting the Trustee to buy the missing portion(s) of the Portfolio Deposit at any time and will subject the Participating Party to liability for any shortfall between the cost to the Trust of purchasing such stocks and the value of such collateral. The Participating Party

is liable to the Trust for the costs incurred by the Trust in connection with any such purchases. The Trust will have no liability for any such shortfall.

All questions as to the number of shares of each Index Security, the amount of the Cash Component and the validity, form, eligibility (including time of receipt) and acceptance for deposit of any Index Securities to be delivered are determined by the Trustee. The Trustee may reject a creation order if (a) the depositor or group of depositors, upon obtaining the SPDRs ordered, would own 80% or more of the current outstanding SPDRs, (b) the Portfolio Deposit is not in proper form; (c) acceptance of the Portfolio Deposit would have certain adverse tax consequences; (d) the acceptance of the Portfolio Deposit would, in the opinion of counsel, be unlawful; (e) the acceptance of the Portfolio Deposit would otherwise have an adverse effect on the Trust or the rights of Beneficial Owners; or (f) circumstances outside the control of the Trustee make it for all practical purposes impossible to process creations of SPDRs. The Trustee and the Sponsor are under no duty to give notification of any defects or irregularities in the delivery of Portfolio Deposits or any component thereof and neither of them shall incur any liability for the failure to give any such notification.

Placement of Creation Orders Using SPDR Clearing Process

Creation Units created through the SPDR Clearing Process must be delivered through a Participating Party that has executed a Participant Agreement. The Participant Agreement authorizes the Trustee to transmit to the Participating Party such trade instructions as are necessary to effect the creation order. Pursuant to the trade instructions from the Trustee to NSCC, the Participating Party agrees to transfer the requisite Index Securities (or contracts to purchase such Index Securities that are expected to be delivered through the SPDR Clearing Process in a "regular way" manner by the third NSCC Business Day) and the Cash Component to the Trustee, together with such additional information as may be required by the Trustee.

Placement of Creation Orders Outside SPDR Clearing Process

Creation Units created outside the SPDR Clearing Process must be delivered through a DTC Participant that has executed a Participant Agreement and has stated in its order that it is not using the SPDR Clearing Process and that creation will instead be effected through a transfer of stocks and cash. The requisite number of Index Securities must be delivered through DTC to the account of the Trustee by no later than 11:00 a.m. of the next Business Day immediately following the Transmittal Date. The Trustee, through the Federal Reserve Bank wire transfer system, must receive the Cash Component no later than 2:00 p.m. on the next Business Day immediately following the Transmittal Date. If the Trustee does not receive both the requisite Index Securities and the Cash Component in a timely fashion, the order will be cancelled. Upon

written notice to the Distributor, the cancelled order may be resubmitted the following Business Day using a Portfolio Deposit as newly constituted to reflect the current NAV of the Trust. The delivery of SPDRs so created will occur no later than the third (3rd) Business Day following the day on which the creation order is deemed received by the Distributor.

Securities Depository; Book-Entry-Only System

DTC acts as securities depository for SPDRs. SPDRs are represented by a single global security, registered in the name of Cede & Co., as nominee for DTC and deposited with, or on behalf of, DTC.

DTC is a limited-purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities of its participants ("DTC Participants") and to facilitate the clearance and settlement of securities transactions among the DTC Participants through electronic book-entry changes in their accounts, thereby eliminating the need for physical movement of securities certificates. DTC Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations, some of whom (and/or their representatives) own DTC. * Access to DTC system also is available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly ("Indirect Participants").

Upon the settlement date of any creation, transfer or redemption of SPDRs, DTC credits or debits, on its book-entry registration and transfer system, the amount of SPDRs so created, transferred or redeemed to the accounts of the appropriate DTC Participants. The accounts to be credited and charged are designated by the Trustee to NSCC, in the case of a creation or redemption through the SPDR Clearing Process, or by the Trustee and the DTC Participant, in the case of a creation or redemption outside of the SPDR Clearing Process. Beneficial ownership of SPDRs is limited to DTC Participants, Indirect Participants and persons holding interests through DTC Participants and Indirect Participants. Ownership of beneficial interests in SPDRs (owners of such beneficial interests are referred to herein as "Beneficial Owners") is shown on, and the transfer of ownership is effected only through, records maintained by DTC (with respect to DTC Participants) and on the records of DTC Participants (with respect to Indirect Participants and Beneficial Owners that are not DTC Participants). Beneficial Owners are expected to receive from or through the DTC Participant a written confirmation relating to their purchase of SPDRs. The laws of some jurisdictions may

*	As of December 31, 2003, DTCC owned 100% of the issued and outstanding shares of the common stock of DTC.

require that certain purchasers of securities take physical delivery of such securities in definitive form. Such laws may impair the ability of certain investors to acquire beneficial interests in SPDRs.

As long as Cede & Co., as nominee of DTC, is the registered owner of SPDRs, references to the registered or record owner of SPDRs shall mean Cede & Co. and shall not mean the Beneficial Owners of SPDRs. Beneficial Owners of SPDRs are not entitled to have SPDRs registered in their names, will not receive or be entitled to receive physical delivery of certificates in definitive form and will not be considered the record or registered holders thereof under the Trust Agreement. Accordingly, each Beneficial Owner must rely on the procedures of DTC, the DTC Participant and any Indirect Participant through which such Beneficial Owner holds its interests, to exercise any rights under the Trust Agreement.

The Trustee recognizes DTC or its nominee as the owner of all SPDRs for all purposes except as expressly set forth in the Trust Agreement. Pursuant to the agreement between the Trustee and DTC ("Depository Agreement"), DTC is required to make available to the Trustee upon request and for a fee to be charged to the Trust a listing of the SPDR holdings of each DTC Participant. The Trustee inquires of each such DTC Participant as to the number of Beneficial Owners holding SPDRs, directly or indirectly, through the DTC Participant. The Trustee provides each such DTC Participant with copies of such notice, statement or other communication, in the form, number and at the place as the DTC Participant may reasonably request, in order that the notice, statement or communication may be transmitted by the DTC Participant, directly or indirectly, to the Beneficial Owners. In addition, the Trust pays to each such DTC Participant a fair and reasonable amount as reimbursement for the expense attendant to such transmittal, all subject to applicable statutory and regulatory requirements.

Distributions are made to DTC or its nominee, Cede & Co. DTC or Cede & Co., upon receipt of any payment of distributions in respect of SPDRs, is required immediately to credit DTC Participants' accounts with payments in amounts proportionate to their respective beneficial interests in SPDRs, as shown on the records of DTC or its nominee. Payments by DTC Participants to Indirect Participants and Beneficial Owners of SPDRs held through such DTC Participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in a "street name," and will be the responsibility of such DTC Participants. Neither the Trustee nor the Sponsor has or will have any responsibility or liability for any aspects of the records relating to or notices to Beneficial Owners, or payments made on account of beneficial ownership interests in SPDRs, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests or for any other aspect of the relationship between DTC and the DTC Participants or the relationship

between such DTC Participants and the Indirect Participants and Beneficial Owners owning through such DTC Participants.

DTC may discontinue providing its service with respect to SPDRs at any time by giving notice to the Trustee and the Sponsor and discharging its responsibilities with respect thereto under applicable law. Under such circumstances, the Trustee and the Sponsor shall take action either to find a replacement for DTC to perform its functions at a comparable cost or, if such a replacement is unavailable, to terminate the Trust.

REDEMPTION OF SPDRS

SPDRs are redeemable only in Creation Units. Creation Units are redeemable in kind only and are not redeemable for cash except as described under "Summary—Highlights—Termination of the Trust."

Procedures For Redemption Of Creation Units

Redemption orders must be placed with a Participating Party (for redemptions through the SPDR Clearing Process) or DTC Participant (for redemptions outside the SPDR Clearing Process), as applicable, in the form required by such Participating Party or DTC Participant. A particular broker may not have executed a Participant Agreement, and redemption orders may have to be placed by the broker through a Participating Party or a DTC Participant who has executed a Participant Agreement. At any given time, there may be only a limited number of broker-dealers that have executed a Participant Agreement. Redeemers should afford sufficient time to permit (a) proper submission of the order by a Participating Party or DTC Participant to the Trustee and (b) the receipt of the SPDRs to be redeemed and any Excess Cash Amounts by the Trustee in a timely manner. Orders for redemption effected outside the SPDR Clearing Process are likely to require transmittal by the DTC Participant earlier on the Transmittal Date than orders effected using the SPDR Clearing Process. These deadlines vary by institution. Persons redeeming outside the SPDR Clearing Process are required to transfer SPDRs through DTC and the Excess Cash amounts, if any, through the Federal Reserve Bank wire transfer system in a timely manner.

Requests for redemption may be made on any Business Day to the Trustee and not to the Distributor. In the case of redemptions made through the SPDR Clearing Process, the Transaction Fee is deducted from the amount delivered to the redeemer. In the case of redemptions outside the SPDR Clearing Process, the Transaction Fee plus an additional amount not to exceed three (3) times the Transaction Fee applicable for one Creation Unit per Creation Unit redeemed, and such amount is deducted from the amount delivered to the redeemer.

The Trustee transfers to the redeeming Beneficial Owner via DTC and the relevant DTC Participant(s) a portfolio of stocks for each Creation Unit

delivered, generally identical in weighting and composition to the stock portion of a Portfolio Deposit as in effect (a) on the date a request for redemption is deemed received by the Trustee or (b) in the case of the termination of the Trust, on the date that notice of the termination of the Trust is given. The Trustee also transfers via the relevant DTC Participant(s) to the redeeming Beneficial Owner a "Cash Redemption Payment," which on any given Business Day is an amount identical to the amount of the Cash Component and is equal to a proportional amount of the following: dividends on the Portfolio Securities for the period through the date of redemption, net of expenses and liabilities for such period including, without limitation, (i) taxes or other governmental charges against the Trust not previously deducted if any, and (ii) accrued fees of the Trustee and other expenses of the Trust, as if the Portfolio Securities had been held for the entire accumulation period for such distribution, plus or minus the Balancing Amount. The redeeming Beneficial Owner must deliver to the Trustee any amount by which the amount payable to the Trust by such Beneficial Owner exceeds the amount of the Cash Redemption Payment ("Excess Cash Amounts"). For redemptions through the SPDR Clearing Process, the Trustee effects a transfer of the Cash Redemption Payment and stocks to the redeeming Beneficial Owner by the third (3rd) NSCC Business Day following the date on which request for redemption is deemed received. For redemptions outside the SPDR Clearing Process, the Trustee transfers the Cash Redemption Payment and the stocks to the redeeming Beneficial Owner by the third (3rd) Business Day following the date on which the request for redemption is deemed received. The Trustee will cancel all SPDRs delivered upon redemption.

If the Trustee determines that an Index Security is likely to be unavailable or available in insufficient quantity for delivery by the Trust upon redemption, the Trustee may elect to deliver the cash equivalent value of any such Index Securities, based on its market value as of the Evaluation Time on the date such redemption is deemed received by the Trustee as a part of the Cash Redemption Payment in lieu thereof.

If a redeemer is restricted by regulation or otherwise from investing or engaging in a transaction in one or more Index Securities, the Trustee may elect to deliver the cash equivalent value based on the market value of any such Index Securities as of the Evaluation Time on the date of the redemption as a part of the Cash Redemption Payment in lieu thereof. In such case, the investor will pay the Trustee the standard Transaction Fee, and may pay an additional amount equal to the actual amounts incurred in connection with such transaction(s) but in any case not to exceed three (3) times the Transaction Fee applicable for one Creation Unit.

The Trustee upon the request of a redeeming investor, may elect to redeem Creation Units in whole or in part by providing such redeemer, with a portfolio of stocks differing in exact composition from Index Securities but not differing in NAV from the then-current Portfolio Deposit. Such a redemption

is likely to be made only if it were determined that it would be appropriate in order to maintain the Trust's correspondence to the composition and weighting of the S&P 500 Index.

The Trustee may sell Portfolio Securities to obtain sufficient cash proceeds to deliver to the redeeming Beneficial Owner. To the extent cash proceeds are received by the Trustee in excess of the required amount, such cash proceeds shall be held by the Trustee and applied in accordance with the guidelines applicable to Misweighting.

All redemption orders must be transmitted to the Trustee by telephone or other transmission method acceptable to the Trustee so as to be received by the Trustee not later than the Closing Time on the Transmittal Date, pursuant to procedures set forth in the Participant Agreement. Severe economic or market disruption or changes, or telephone or other communication failure, may impede the ability to reach the Trustee, a Participating Party, or a DTC Participant.

The calculation of the value of the stocks and the Cash Redemption Payment to be delivered to the redeeming Beneficial Owner is made by the Trustee according to the procedures set forth under "Valuation" and is computed as of the Evaluation Time on the Business Day on which a redemption order is deemed received by the Trustee. Therefore, if a redemption order in proper form is submitted to the Trustee by a DTC Participant not later than the Closing Time on the Transmittal Date, and the requisite SPDRs are delivered to the Trustee prior to DTC Cut-Off Time on such Transmittal Date, then the value of the stocks and the Cash Redemption Payment to be delivered to the Beneficial Owner is determined by the Trustee as of the Evaluation Time on such Transmittal Date. If, however, a redemption order is submitted not later than the Closing Time on a Transmittal Date but either (a) the requisite SPDRs are not delivered by DTC Cut-Off Time on the next Business Day immediately following such Transmittal Date or (b) the redemption order is not submitted in proper form, then the redemption order is not deemed received as of such Transmittal Date. In such case, the value of the stocks and the Cash Redemption Payment to be delivered to the Beneficial Owner is computed as of the Evaluation Time on the Business Day that such order is deemed received by the Trustee, i.e. , the Business Day on which the SPDRs are delivered through DTC to the Trustee by DTC Cut-Off Time on such Business Day pursuant to a properly submitted redemption order.

The Trustee may suspend the right of redemption, or postpone the date of payment of the NAV for more than five (5) Business Days following the date on which the request for redemption is deemed received by the Trustee (a) for any period during which the New York Stock Exchange is closed, (b) for any period during which an emergency exists as a result of which disposal or evaluation of the Securities is not reasonably practicable, (c) or for such other period as the SEC may by order permit for the protection of Beneficial

Owners. Neither the Sponsor nor the Trustee is liable to any person or in any way for any loss or damages that may result from any such suspension or postponement.

Placement of Redemption Orders Using SPDR Clearing Process

A redemption order made through the SPDR Clearing Process is deemed received on the Transmittal Date if (a) such order is received by the Trustee not later than the Closing Time on such Transmittal Date and (b) all other procedures set forth in the Participant Agreement are properly followed. The order is effected based on the NAV of the Trust as determined as of the Evaluation Time on the Transmittal Date. A redemption order made through the SPDR Clearing Process and received by the Trustee after the Closing Time will be deemed received on the next Business Day immediately following the Transmittal Date. The Participant Agreement authorizes the Trustee to transmit to NSCC on behalf of the Participating Party such trade instructions as are necessary to effect the Participating Party's redemption order. Pursuant to such trade instructions from the Trustee to NSCC, the Trustee transfers the requisite stocks (or contracts to purchase such stocks which are expected to be delivered in a "regular way" manner) by the third (3rd) NSCC Business Day following the date on which the request for redemption is deemed received, and the Cash Redemption Payment.

Placement of Redemption Orders Outside SPDR Clearing Process

A DTC Participant who wishes to place an order for redemption of SPDRs to be effected outside the SPDR Clearing Process need not be a Participating Party, but its order must state that the DTC Participant is not using the SPDR Clearing Process and that redemption will instead be effected through transfer of SPDRs directly through DTC. An order is deemed received by the Trustee on the Transmittal Date if (a) such order is received by the Trustee not later than the Closing Time on such Transmittal Date, (b) such order is preceded or accompanied by the requisite number of SPDRs specified in such order, which delivery must be made through DTC to the Trustee no later than 11:00 a.m. on the next Business Day immediately following such Transmittal Date ("DTC Cut-Off Time") and (c) all other procedures set forth in the Participant Agreement are properly followed. Any Excess Cash Amounts owed by the Beneficial Owner must be delivered no later than 2:00 p.m. on the next Business Day immediately following the Transmittal Date.

The Trustee initiates procedures to transfer the requisite stocks (or contracts to purchase such stocks) that are expected to be delivered within three Business Days and the Cash Redemption Payment to the redeeming Beneficial Owner by the third Business Day following the Transmittal Date.

THE PORTFOLIO

Because the objective of the Trust is to provide investment results that, before expenses, generally correspond to the price and yield performance of

the S&P 500 Index, the Portfolio at any time will consist of as many of Index Securities as is practicable. It is anticipated that cash or cash items (other than dividends held for distribution) normally would not be a substantial part of the Trust's net assets. Although the Trust may at any time fail to own certain of Index Securities, the Trust will be substantially invested in Index Securities and the Sponsor believes that such investment should result in a close correspondence between the investment performance of the S&P 500 Index and that derived from ownership of SPDRs.

Portfolio Securities Conform to the S&P 500 Index

The S&P 500 Index is a capitalization-weighted index of 500 securities calculated under the auspices of the S&P Committee of S&P. At any moment in time, the value of the S&P 500 Index equals the aggregate market value of the total shares outstanding in each of the component 500 Index Securities, evaluated at their respective last sale prices on the NYSE, AMEX or NASDAQ, divided by a scaling factor ("divisor") which yields a resulting index value in the reported magnitude.

Periodically (typically, several times per quarter), S&P may determine that total shares outstanding have changed in one or more component Index Securities due to secondary offerings, repurchases, conversions or other corporate actions. Additionally, the S&P Committee may periodically (ordinarily, several times per quarter) replace one or more component securities in the S&P Index due to mergers, acquisitions, bankruptcies, or other market conditions, or if the issuers of such component securities fail to meet the criteria for inclusion in the S&P 500 Index. In 2003, there were 9 company changes to the S&P 500 Index. Ordinarily, whenever there is a change in shares outstanding or a change in a component security of the S&P 500 Index, S&P adjusts the divisor to ensure that there is no discontinuity in the value of the S&P 500 Index.

The Trust is not managed and therefore the adverse financial condition of an issuer does not require the sale of stocks from the Portfolio. The Trustee on a non-discretionary basis adjusts the composition of the Portfolio to conform to changes in the composition and/or weighting structure of Index Securities. To the extent that the method of determining the S&P 500 Index is changed by S&P in a manner that would affect the adjustments provided for herein, the Trustee and the Sponsor have the right to amend the Trust Agreement, without the consent of DTC or Beneficial Owners, to conform the adjustments to such changes and to maintain the objective of tracking the S&P 500 Index.

The Trustee aggregates certain of these adjustments and makes conforming changes to the Portfolio at least monthly. The Trustee directs its stock transactions only to brokers or dealers, which may include affiliates of the Trustee, from whom it expects to obtain the most favorable prices or execution of orders. Adjustments are made more frequently in the case of significant

changes to the S&P 500 Index. Specifically, the Trustee is required to adjust the composition of the Portfolio whenever there is a change in the identity of any Index Security ( i.e. , a substitution of one security for another) within three (3) Business Days before or after the day on which the change is scheduled to take effect. If the transaction costs incurred by the Trust in adjusting the Portfolio would exceed the expected variation between the composition of the Portfolio and the S&P 500 Index ("Misweighting"), it may not be efficient identically to replicate the share composition of the S&P 500 Index. Minor Misweighting generally is permitted within the guidelines set forth below. The Trustee is required to adjust the composition of the Portfolio at any time that the weighting of any stock in the Portfolio varies in excess of one hundred and fifty percent (150%) of a specified percentage, which percentage varies from 8/100 of 1% to 2/100 of 1%, depending on the NAV of the Trust (in each case, "Misweighting Amount"), from the weighting of the Index Security in the S&P 500 Index.

The Trustee examines each stock in the Portfolio on each Business Day, comparing its weighting to the weighting of the corresponding Index Security, based on prices at the close of the market on the preceding Business Day (a "Weighting Analysis"). If there is a Misweighting in any stock in the Portfolio in excess of one hundred and fifty percent (150%) of the applicable Misweighting Amount, the Trustee calculates an adjustment to the Portfolio in order to bring the Misweighting within the Misweighting Amount, based on prices at the close of the market on the day on which such Misweighting occurs. Also, on a monthly basis, the Trustee performs a Weighting Analysis for each stock in the Portfolio, and in any case where there exists a Misweighting exceeding one hundred percent (100%) of the applicable Misweighting Amount, the Trustee calculates an adjustment to the Portfolio in order to bring the Misweighting within the applicable Misweighting Amount, based on prices at the close of the market on the day on which such Misweighting occurs. In the case of any adjustment to the Portfolio because of a Misweighting, the purchase or sale of stock necessitated by the adjustment is made within three (3) Business Days of the day on which such Misweighting is determined. In addition to the foregoing adjustments, the Trustee may make additional periodic adjustments to Portfolio Securities that may be misweighted by an amount within the applicable Misweighting Amount.

The foregoing guidelines with respect to Misweighting also apply to any Index Security that (a) is likely to be unavailable for delivery or available in insufficient quantity for delivery or (b) cannot be delivered to the Trustee due to restrictions prohibiting a creator from engaging in a transaction involving such Index Security. Upon receipt of an order for a Creation Unit that involves such an Index Security, the Trustee determines whether the substitution of cash for the stock would cause a Misweighting in the Portfolio. If a Misweighting results, the Trustee will purchase the required number of shares of the Index Security on the opening of the market on the following Business Day. If a

Misweighting does not result and the Trustee does not hold cash in excess of the permitted amounts, the Trustee may hold the cash or, if such excess would result, make the required adjustments to the Portfolio.

As a result of the purchase and sale of stock in accordance with these requirements, or the creation of Creation Units, the Trust may hold some amount of residual cash (other than cash held temporarily due to timing differences between the sale and purchase of stock or cash delivered in lieu of Index Securities or undistributed income or undistributed capital gains). This amount may not exceed for more than two (2) consecutive Business Days 5/10th of 1 percent of the value of the Portfolio. If the Trustee has made all required adjustments and is left with cash in excess of 5/10th of 1 percent of the value of the Portfolio, the Trustee will use such cash to purchase additional Index Securities that are under-weighted in the Portfolio as compared to their relative weightings in the S&P 500 Index, although the Misweighting of such Index Securities may not be in excess of the applicable Misweighting Amount.

All portfolio adjustments are made as described herein unless such adjustments would cause the Trust to lose its status as a "regulated investment company" under Subchapter M of the Code. Additionally, the Trustee is required to adjust the composition of the Portfolio at any time to insure the continued qualification of the Trust as a regulated investment company.

The Trustee relies on industry sources for information as to the composition and weightings of Index Securities. If the Trustee becomes incapable of obtaining or processing such information or NSCC is unable to receive such information from the Trustee on any Business Day, the Trustee shall use the composition and weightings of Index Securities for the most recently effective Portfolio Deposit for the purposes of all adjustments and determinations (including, without limitation, determination of the stock portion of the Portfolio Deposit) until the earlier of (a) such time as current information with respect to Index Securities is available or (b) three (3) consecutive Business Days have elapsed. If such current information is not available and three (3) consecutive Business Days have elapsed, the composition and weightings of Portfolio Securities (as opposed to Index Securities) shall be used for the purposes of all adjustments and determinations (including, without limitation, determination of the stock portion of the Portfolio Deposit) until current information with respect to Index Securities is available.

If the Trust is terminated, the Trustee shall use the composition and weightings of Portfolio Securities as of such notice date for the purpose and determination of all redemptions or other required uses of the basket.

From time to time S&P may adjust the composition of the S&P 500 Index because of a merger or acquisition involving one or more Index Securities. In such cases, the Trust, as shareholder of an issuer that is the object of such merger or acquisition activity, may receive various offers from would-be acquirors of the issuer. The Trustee is not permitted to accept any such offers

until such time as it has been determined that the stocks of the issuer will be removed from the S&P 500 Index. As stocks of an issuer are often removed from the S&P 500 Index only after the consummation of a merger or acquisition of such issuer, in selling the securities of such issuer the Trust may receive, to the extent that market prices do not provide a more attractive alternative, whatever consideration is being offered to the shareholders of such issuer that have not tendered their shares prior to such time. Any cash received in such transactions is reinvested in Index Securities in accordance with the criteria set forth above. Any stocks received as a part of the consideration that are not Index Securities are sold as soon as practicable and the cash proceeds of such sale are reinvested in accordance with the criteria set forth above.

Adjustments to the Portfolio Deposit

On each Business Day (each such day an "Adjustment Day"), the number of shares and identity of each Index Security in a Portfolio Deposit are adjusted in accordance with the following procedure. At the close of the market the Trustee calculates the NAV of the Trust. The NAV is divided by the number of outstanding SPDRs multiplied by 50,000 SPDRs in one Creation Unit, resulting in an NAV per Creation Unit ("NAV Amount"). The Trustee then calculates the number of shares (without rounding) of each of the component stocks of the S&P 500 Index in a Portfolio Deposit for the following Business Day ("Request Day"), so that (a) the market value at the close of the market on the Adjustment Day of the stocks to be included in the Portfolio Deposit on Request Day, together with the Dividend Equivalent Payment effective for requests to create or redeem on the Adjustment Day, equals the NAV Amount and (b) the identity and weighting of each of the stocks in a Portfolio Deposit mirrors proportionately the identity and weightings of the stocks in the S&P 500 Index, each as in effect on Request Day. For each stock, the number resulting from such calculation is rounded to the nearest whole share, with a fraction of 0.50 being rounded up. The identities and weightings of the stocks so calculated constitute the stock portion of the Portfolio Deposit effective on Request Day and thereafter until the next subsequent Adjustment Day, as well as Portfolio Securities to be delivered by the Trustee in the event of request for redemption on the Request Day and thereafter until the following Adjustment Day.

In addition to the foregoing adjustments, if a corporate action such as a stock split, stock dividend or reverse split occurs with respect to any Index Security that does not result in an adjustment to the S&P 500 Index divisor, the Portfolio Deposit shall be adjusted to take into account the corporate action in each case rounded to the nearest whole share.

On the Request Day and on each day that a request for the creation or redemption is deemed received, the Trustee calculates the market value of the stock portion of the Portfolio Deposit as in effect on the Request Day as of the close of the market and adds to that amount the Dividend Equivalent Payment

effective for requests to create or redeem on Request Day (such market value and Dividend Equivalent Payment are collectively referred to herein as "Portfolio Deposit Amount"). The Trustee then calculates the NAV Amount, based on the close of the market on the Request Day. The difference between the NAV Amount so calculated and the Portfolio Deposit Amount is the "Balancing Amount". The Balancing Amount serves the function of compensating for any differences between the value of the Portfolio Deposit Amount and the NAV Amount at the close of trading on Request Day due to, for example, (a) differences in the market value of the securities in the Portfolio Deposit and the market value of the Securities on Request Day and (b) any variances from the proper composition of the Portfolio Deposit.

On any Adjustment Day on which (a) no change in the identity and/or share weighting of any Index Security is scheduled to take effect that would cause the S&P 500 Index divisor to be adjusted after the close of the market on that Business Day, * and (b) no stock split, stock dividend or reverse stock split with respect to any Index Security has been declared to take effect on the corresponding Request Day, the Trustee may forego making any adjustment to the stock portion of the Portfolio Deposit and to use the composition and weightings of Index Securities for the most recently effective Portfolio Deposit for the Request Day following such Adjustment Day. In addition, the Trustee may calculate the adjustment to the number of shares and identity of Index Securities in a Portfolio Deposit as described above except that such calculation would be employed two (2) Business Days rather than one (1) Business Day before the Request Day.

The Dividend Equivalent Payment and the Balancing Amount in effect at the close of business on the Request Date are collectively referred to as the Cash Component or the Cash Redemption Payment. If the Balancing Amount is a positive number ( i.e. , if the NAV Amount exceeds the Portfolio Deposit Amount) then, with respect to creation, the Balancing Amount increases the Cash Component of the then effective Portfolio Deposit transferred to the Trustee by the creator. With respect to redemptions, the Balancing Amount is added to the cash transferred to the redeemer by the Trustee. If the Balancing Amount is a negative number ( i.e. , if the NAV Amount is less than the Portfolio Deposit Amount) then, with respect to creation, this amount decreases the Cash Component of the then effective Portfolio Deposit to be transferred to the Trustee by the creator or, if such cash portion is less than the Balancing Amount, the difference must be paid by the Trustee to the creator. With respect to redemptions, the Balancing Amount is deducted from the cash transferred to the redeemer or, if such cash is less than the Balancing Amount, the difference must be paid by the redeemer to the Trustee.

*	S&P publicly announces changes in the identity and/or weighting of Index Securities up to five Business Days in advance of the actual change. The announcements are made after the close of trading on such day.

If the Trustee has included the cash equivalent value of one or more Index Securities in the Portfolio Deposit because the Trustee has determined that such Index Securities are likely to be unavailable or available in insufficient quantity for delivery, of if a creator or redeemer is restricted from investing or engaging in transactions in one or more of such Index Securities, the Portfolio Deposit so constituted shall determine the Index Securities to be delivered in connection with the creation of SPDRs in Creation Unit size aggregations and upon the redemption of SPDRs until the time the stock portion of the Portfolio Deposit is subsequently adjusted.

THE S&P 500 INDEX

The S&P 500 Index is composed of 500 selected stocks, all of which are listed on the AMEX, the NYSE or NASDAQ, and spans over 105 separate industry groups. As of December 31, 2003, the five largest industry segments comprising the S&P 500 Index were: pharmaceuticals 8.33%, diversified banks 4.33%, integrated oil & gas 4.27%, industrial conglomerates 4.26% and systems software 4.15%. Since 1968, the S&P 500 Index has been a component of the U.S. Commerce Department's list of Leading Indicators that track key sectors of the U.S. economy. Current information regarding the market value of the S&P 500 Index is available from market information services. The S&P 500 Index is determined, comprised and calculated without regard to the Trust.

S&P is not responsible for and does not participate in the creation or sale of SPDRs or in the determination of the timing, pricing, or quantities and proportions of purchases or sales of Index Securities or Portfolio Securities. The information in this Prospectus concerning S&P and the S&P 500 Index has been obtained from sources that the Sponsor believes to be reliable, but the Sponsor takes no responsibility for the accuracy of such information.

The following table shows the actual performance of the S&P 500 Index for the years 1960 through 2003. Stock prices fluctuated widely during this period and were higher at the end than at the beginning. The results shown should not be considered representative of the income yield or capital gain or loss that may be generated by the S&P 500 Index in the future. The results should not be considered representative of the performance of the Trust.


Year	Calendar Year-End Index Value*		Calendar Year-End Index Value 1960=100		Change in Index for Calendar Year			Calendar Year-End Yield**
1960		58.11		100.00		—	%		3.47	%
1961		71.55		123.13		23.13			2.98
1962		63.10		108.59		–11.81			3.37
1963		75.02		129.10		18.89			3.17
1964		84.75		145.84		12.97			3.01
1965		92.43		159.06		9.06			3.00
1966		80.33		138.24		–13.09			3.40
1967		96.47		166.01		20.09			3.20
1968		103.86		178.73		7.66			3.07
1969		92.06		158.42		–11.36			3.24
1970		92.15		158.58		0.10			3.83
1971		102.09		175.68		10.79			3.14
1972		118.05		203.15		15.63			2.84
1973		97.55		167.87		–17.37			3.06
1974		68.56		117.98		–29.72			4.47
1975		90.19		155.21		31.55			4.31
1976		107.46		184.93		19.15			3.77
1977		95.10		163.66		–11.50			4.62
1978		96.11		165.39		1.06			5.28
1979		107.94		185.75		12.31			5.47
1980		135.76		233.63		25.77			5.26
1981		122.55		210.89		–9.73			5.20
1982		140.64		242.02		14.76			5.81
1983		164.93		283.82		17.27			4.40
1984		167.24		287.80		1.40			4.64
1985		211.28		363.59		26.33			4.25
1986		242.17		416.75		14.62			3.49
1987		247.08		425.19		2.03			3.08
1988		277.72		477.92		12.40			3.64
1989		353.40		608.15		27.25			3.45
1990		330.22		568.26		–6.56			3.61
1991		417.09		717.76		26.31			3.24
1992		435.71		749.80		4.46			2.99
1993		464.45		802.70		7.06			2.78
1994		459.27		790.34		–1.54			2.82
1995		615.93		1,059.92		34.11			2.56
1996		740.74		1,274.70		20.26			2.19
1997		970.43		1,669.99		31.01			1.77
1998		1,229.23		2,115.35		26.67			1.49
1999		1,469.25		2,528.39		19.53			1.14
2000		1,320.28		2,272.04		–10.14			1.19
2001		1,148.08		1,975.70		–13.04			1.36
2002		879.82		1,514.06		–23.37			1.81
2003		1,111.92		1,913.47		26.38			1.63

*	Source: S&P. Year-end index values shown do not reflect reinvestment of dividends nor costs, such as brokerage charges and transaction costs.

**	Source: S&P. Yields are obtained by dividing the aggregate cash dividends by the aggregate market value of the stocks in the S&P 500 Index.

LICENSE AGREEMENT

The License Agreement grants the Sponsor a license to use the S&P 500 Index as a basis for determining the composition of the Portfolio and to use certain trade names and trademarks of S&P in connection with the Portfolio. The License Agreement may be amended without the consent of any of the Beneficial Owners of SPDRs. Currently, the License Agreement is scheduled to terminate on January 22, 2018 but its term may be extended beyond such date without the consent of any of the Beneficial Owners of SPDRs.

None of the Trust, the Trustee, the Distributor, DTC or any Beneficial Owner of SPDRs is entitled to any rights whatsoever under the foregoing licensing arrangements or to use the trademarks "S&P", "Standard & Poor's", "Standard & Poor's 500" or "S&P 500" or to use the S&P 500 Index except as specifically described herein or as may be specified in the Trust Agreement.

The Trust is not sponsored, endorsed, sold or promoted by S&P and S&P makes no representation or warranty, express or implied, to the Trust, the Trustee, the Distributor, DTC or Beneficial Owners of SPDRs regarding the advisability of investing in Index Securities or unit investment trusts generally or in the Trust particularly or the ability of the S&P 500 Index to track general stock market performance. S&P's only relationship to the Trust is the licensing of certain trademarks and trade names of S&P and of the S&P 500 Index which is determined, comprised and calculated by S&P without regard to the Trust or the Beneficial Owners of SPDRs. S&P has no obligation to take the needs of the Trust or the Beneficial Owners of SPDRs into consideration in determining, comprising or calculating the S&P 500 Index. S&P is not responsible for and has not participated in any determination or calculation made with respect to issuance or redemption of SPDRs. S&P has no obligation or liability in connection with the administration, marketing or trading of SPDRs.

STANDARD & POOR'S DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. STANDARD & POOR'S MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE SPONSOR, THE TRUST, BENEFICIAL OWNERS OF SPDRS OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN IN CONNECTION WITH THE USE LICENSED UNDER THE LICENSE AGREEMENT, OR FOR ANY OTHER USE. STANDARD & POOR'S MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL SUCH WARRANTIES, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL STANDARD & POOR'S HAVE ANY

LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

EXCHANGE LISTING

SPDRs are listed on the Exchange. The Trust is not required to pay a listing fee to the Exchange. Transactions involving SPDRs in the public trading market are subject to customary brokerage charges and commissions.

The Sponsor's aim in designing SPDRs was to provide investors with a security whose initial market value would approximate one-tenth (1/10th) the value of the S&P 500 Index. Of course, the market value of a SPDR is affected by a variety of factors, including capital gains distributions made, and expenses incurred, by the Trust, and therefore, over time, a SPDR may no longer approximate 1/10th the value of the S&P 500 Index. The market price of a SPDR should reflect its share of the dividends accumulated on Portfolio Securities and may be affected by supply and demand, market volatility, sentiment and other factors. There can be no assurance that SPDRs will always be listed on the Exchange. The Trust will be terminated if SPDRs are delisted. The Exchange will consider the suspension of trading in or removal from listing of SPDRs if: (a) the Trust has more than 60 days remaining until termination and there are fewer than 50 record and/or beneficial holders of SPDRs for 30 or more consecutive trading days; (b) the S&P 500 Index is no longer calculated or available; or (c) such other event occurs or condition exists which, in the opinion of the Exchange, makes further dealings on the Exchange inadvisable.

SPDRs also are listed and traded on the Singapore Exchange Ltd. ("SGX") in connection with a joint venture created by the Exchange and the SGX. In the future, SPDRs may be listed and traded on other non-U.S. exchanges pursuant to similar arrangements.

TAX STATUS OF THE TRUST

For the fiscal year ended September 30, 2003, the Trust believes that it qualified for tax treatment as a "regulated investment company" under Subchapter M of the Code. The Trust intends to continue to so qualify. To qualify as a regulated investment company, the Trust must, among other things, (a) derive in each taxable year at least 90% of its gross income from dividends, interest, gains from the sale or other disposition of stock, securities or foreign currencies, or certain other sources, (b) meet certain diversification tests, and (c) distribute in each year at least 90% of its investment company taxable income. If the Trust qualifies as a regulated investment company, subject to certain conditions and requirements, the Trust will not be subject to federal income tax to the extent its income is distributed in a timely manner. Any undistributed income may be subject to tax, including a four percent (4%) excise tax imposed by section 4982 of the Code on certain undistributed income of a regulated investment company that does not distribute to shareholders in a timely manner at least ninety-eight percent (98%) of its taxable income (including capital gains).

Income Tax Consequences to Beneficial Owners

Dividends paid by the Trust from its investment company taxable income (which includes dividends, interest and the excess of net short-term capital gains over net long-term capital losses) are generally taxable to Beneficial Owners as ordinary income. However, to the extent that such dividends are designated by the Trust as attributable to the receipt by the Trust of qualified dividend income, such dividends will be eligible for the 15% maximum tax rate applicable to non-corporate taxpayers through 2008. A dividend paid in January is considered for federal income tax purposes to have been paid by the Trust and received by Beneficial Owners on the preceding December 31 if the dividend was declared in the preceding October, November or December to Beneficial Owners of record as shown on the records of DTC and the DTC Participants on a date in one of those months.

Distributions paid by the Trust from the excess of net long-term capital gains over net short-term capital losses are considered "capital gains dividends" regardless of the length of time an investor has owned SPDRs. Any loss on the sale or exchange of a share held for six months or less may be treated as a long-term capital loss to the extent of any capital gain dividends received by the Beneficial Owner. For corporate investors, dividends from net investment income (but not return of capital distributions or capital gain dividends) generally qualify for the corporate dividends-received deduction to the extent of qualifying dividend income received by the Trust, subject to the limitations contained in the Code. Investors should note that the regular quarterly dividends paid by the Trust are not based on the Trust's investment company taxable income and net capital gain, but rather are based on the dividends paid with respect to Portfolio Securities. As a result, a portion of the distributions

of the Trust may be treated as a return of capital or a capital gain dividend for federal income tax purposes or the Trust may make additional distributions in excess of the yield performance of Portfolio Securities in order to distribute all of its investment company taxable income and net capital gain.

Distributions in excess of the Trust's current or accumulated earnings and profits (as specially computed) generally are treated as a return of capital for federal income tax purposes and reduce a Beneficial Owner's tax basis in SPDRs. Return of capital distributions may result, for example, if a portion of the dividends declared represents cash amounts deposited in connection with Portfolio Deposits rather than dividends actually received by the Trust. Under certain circumstances, a significant portion of the Trust's regular quarterly dividends could be treated as return of capital distributions. Such circumstances may be more likely to occur in periods during which the number of outstanding SPDRs fluctuates significantly. Beneficial Owners receive annually notification from the Trustee through the DTC Participants as to the tax status of the Trust's distributions. A distribution paid shortly after a purchase or creation of SPDRs may be taxable even though in effect it may represent a return of capital.

Distributions reinvested in additional SPDRs through the means of the Service are nevertheless taxable dividends to Beneficial Owners acquiring such additional SPDRs to the same extent as if such dividends were received in cash.

The sale of SPDRs by a Beneficial Owner is a taxable event, and may result in a gain or loss, which generally should be a capital gain or loss for Beneficial Owners that are not dealers in securities.

Dividend distributions, capital gains distributions, and capital gains from sales or redemptions may also be subject to state, local and foreign taxes.

Under the Code, an in-kind redemption of SPDRs does not result in the recognition of taxable gain or loss by the Trust but generally constitutes a taxable event for the redeeming shareholder. Upon redemption, a Beneficial Owner generally recognizes gain or loss measured by the difference on the date of redemption between the aggregate value of the cash and stocks received and its tax basis in the SPDRs redeemed. Stocks received upon redemption (which will be comprised of the stock portion of the Portfolio Deposit in effect on the date of redemption) generally have an initial tax basis equal to their respective market values on the date of redemption. The Internal Revenue Service ("IRS") may assert that any resulting loss may not be deducted by a Beneficial Owner on the basis that there has been no material change in such Beneficial Owner's economic position or that the transaction has no significant economic or business utility apart from the anticipated tax consequences. Beneficial Owners of SPDRs in Creation Unit size aggregations should consult their own tax advisors as to the consequences to them of the redemption of SPDRs.

Deposits of a Portfolio Deposit with the Trustee in exchange for Creation Units do not result in the recognition of taxable gain or loss by the Trust but generally constitute a taxable event to the investor under the Code, and an investor generally recognizes gain or loss with respect to each stock deposited equal to the difference between the amount realized in respect of the stock and the investor's tax basis therein. The amount realized with respect to a stock deposited should be determined by allocating the value on the date of deposit of the SPDRs received (less any cash paid to the Trust, or plus any cash received from the Trust, in connection with the deposit) among the stocks deposited on the basis of their respective fair market values at that time. The IRS may assert that any resulting losses may not be deducted by an investor on the basis that there has been no material change in the investor's economic position or that the transaction has no significant economic or business utility or purpose apart from the anticipated tax consequences. Investors should consult their own tax advisors as to the tax consequences to them of a deposit to the Trust.

The Trustee has the right to reject the order to create Creation Units transmitted to it by the Distributor if the investor or group of investors, upon obtaining the SPDRs ordered, would own eighty percent (80%) or more of the outstanding SPDRs, and if pursuant to section 351 of the Code such a circumstance would result in the Trust having a basis in the stocks deposited different from the market value of such stocks on the date of deposit. The Trustee has the right to require information regarding SPDR ownership pursuant to the Participant Agreement and from DTC and to rely thereon to the extent necessary to make the foregoing determination as a condition to the acceptance of a Portfolio Deposit.

Ordinary income dividends received via DTC by Beneficial Owners who are non-resident aliens are subject to a thirty percent (30%) United States withholding tax unless a reduced rate of withholding or a withholding exemption is provided under applicable tax treaties. Non-resident holders of SPDRs are urged to consult their own tax advisors concerning the applicability of United States withholding tax.

Backup withholding at a rate equal to the fourth lowest income tax rate applicable to individuals (which, under current law, is 28%) applies to dividends, capital gain distributions, redemptions and sales of SPDRs unless (a) the Beneficial Owner is a corporation or comes within certain other exempt categories and, when required, demonstrates this fact, or (b) provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding, and otherwise complies with applicable requirements of the backup withholding rules. The amount of any backup withholding from a payment to a Beneficial Owner is allowed as a credit against the holder's U.S. federal income tax liability and may entitle such holder to a refund from the IRS, if the required information is furnished to the IRS.

The tax discussion set forth above is included for general information only. Prospective investors should consult their own tax advisors concerning the federal, state, local and foreign tax consequences to them of an investment in the Trust, including the effect of possible legislative changes.

ERISA Considerations

In considering the advisability of an investment in SPDRs, fiduciaries of pension, profit sharing or other tax-qualified retirement plans (including Keogh Plans) and welfare plans (collectively, "Plans") subject to the fiduciary responsibility requirements of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), should consider whether an investment in SPDRs is permitted by the documents and instruments governing the Plan and whether the investment satisfies the exclusive benefit, prudence and diversification requirements of ERISA. Individual retirement account ("IRA") investors should consider that an IRA may make only such investments as are authorized by its governing instruments.

The fiduciary standards and prohibited transaction rules of ERISA and the Code will not apply to transactions involving the Trust's assets while SPDRs are held by a Plan or IRA. Unlike many other investment vehicles offered to Plans and IRAs, the Trust's assets will not be treated as "plan assets" of the Plans or IRAs which acquire or purchase SPDRs. Although ERISA imposes certain duties on Plan fiduciaries and ERISA and/or Section 4975 of the Code prohibit certain transactions involving "plan assets" between Plans or IRAs and their fiduciaries or certain related persons, those rules will not apply to transactions involving the Trust's assets because SPDRs represent an interest in the Trust, and the Trust is registered as an investment company under the Investment Company Act of 1940. ERISA, the Code and U.S. Department of Labor regulations contain unconditional language exempting the assets of registered investment companies from treatment as "plan assets" in applying the fiduciary and prohibited transaction provisions of ERISA and the Code.

Employee benefit plans that are governmental plans (as defined in Section 3(32) of ERISA), certain church plans (as defined in Section 3(33) of ERISA) and foreign plans (as described in Section 4(b)(4) of ERISA) are not subject to the requirements of ERISA or Section 4975 of the Code. The fiduciaries of governmental plans should, however, consider the impact of their respective state pension codes on investments in SPDRs and the considerations discussed above, to the extent applicable.

CONTINUOUS OFFERING OF SPDRs

Creation Units are offered continuously to the public by the Trust through the Distributor. Persons making Portfolio Deposits and creating Creation Units receive no fees, commissions or other form of compensation or

inducement of any kind from the Sponsor or the Distributor, and no such person has any obligation or responsibility to the Sponsor or Distributor to effect any sale or resale of SPDRs.

Because new SPDRs can be created and issued on an ongoing basis, at any point during the life of the Trust, a "distribution", as such term is used in the Securities Act of 1933 ("1933 Act"), may be occurring. Broker-dealers and other persons are cautioned that some of their activities may result in their being deemed participants in a distribution in a manner which could render them statutory underwriters and subject them to the prospectus-delivery and liability provisions of the 1933 Act. For example, a broker-dealer firm or its client may be deemed a statutory underwriter if it takes Creation Units after placing a creation order with the Distributor, breaks them down into the constituent SPDRs and sells the SPDRs directly to its customers; or if it chooses to couple the creation of a supply of new SPDRs with an active selling effort involving solicitation of secondary market demand for SPDRs. A determination of whether one is an underwriter must take into account all the facts and circumstances pertaining to the activities of the broker-dealer or its client in the particular case, and the examples mentioned above should not be considered a complete description of all the activities that could lead to categorization as an underwriter.

Dealers who are not "underwriters" but are participating in a distribution (as contrasted to ordinary secondary trading transactions), and thus dealing with SPDRs that are part of an "unsold allotment" within the meaning of Section 4(3)(C) of the 1933 Act, would be unable to take advantage of the prospectus-delivery exemption provided by Section 4(3) of the 1933 Act.

The Sponsor intends to qualify SPDRs in states selected by the Sponsor and through broker-dealers who are members of the National Association of Securities Dealers, Inc. Investors intending to create or redeem Creation Units in transactions not involving a broker-dealer registered in such investor's state of domicile or residence should consult their legal advisor regarding applicable broker-dealer or securities regulatory requirements under the state securities laws prior to such creation or redemption.

DIVIDEND REINVESTMENT SERVICE

The Trust has made the Service available for use by Beneficial Owners through DTC Participants for reinvestment of their cash proceeds. Some DTC Participants may not elect to utilize the Service; therefore, an interested SPDR investor may wish to contact such investor's broker to ascertain the availability of the Service through such broker. Each broker may require investors to adhere to specific procedures and timetables in order to participate in the Service and such investors should ascertain from their broker such necessary details.

Distributions reinvested in additional SPDRs through the Service are nevertheless taxable dividends to Beneficial Owners to the same extent as if received in cash.

The Trustee generally uses the cash proceeds of dividends received from all Beneficial Owners participating in reinvestment through the Service to obtain Index Securities necessary to create the requisite number of SPDRs at the close of business on each SPDR distribution date. Any cash balance remaining after the requisite number of SPDRs has been created is distributed, on a pro rata basis, to all Beneficial Owners who participated in the Service. Brokerage commissions, if any, incurred in obtaining Index Securities necessary to create additional SPDRs with the cash from the distributions is an expense of the Trust. *

EXPENSES OF THE TRUST

Ordinary operating expenses of the Trust currently are being accrued at an annual rate of 0.1200%. Future accruals will depend primarily on the level of the Trust's net assets and the level of Trust expenses. The Trustee has agreed to waive a portion of its fee until February 1, 2005. Thereafter, the Trustee may discontinue this voluntary waiver policy. Therefore, there is no guarantee that the Trust's ordinary operating expenses will not exceed 0.1200% of the Trust's daily NAV.

Until further notice, the Sponsor has undertaken that it will not permit the ordinary operating expenses of the Trust, as calculated by the Trustee, to exceed an amount that is 18.45/100 of 1% (0.1845%) per annum of the daily NAV of the Trust. To the extent the ordinary operating expenses of the Trust do exceed such 0.1845% amount, the Sponsor will reimburse the Trust for, or assume, the excess. The Sponsor retains the ability to be repaid by the Trust for expenses so reimbursed or assumed to the extent that subsequently during the fiscal year expenses fall below the 0.1845% per annum level on any given day. For purposes of this undertaking, ordinary operating expenses of the Trust do not include taxes, brokerage commissions and any extraordinary non-recurring expenses, including the cost of any litigation to which the Trust or the Trustee may be a party. The Sponsor may discontinue this undertaking or renew it for a specified period of time, or may choose to reimburse or assume certain Trust expenses in later periods to keep Trust expenses at a level it believes to be attractive to investors. In any event, on any day and during any period over the life of the Trust, total fees and expenses of the Trust may exceed 0.1845% per annum.

It is difficult to estimate the annual dollar amount of brokerage commissions that might be incurred in connection with the Dividend Reinvestment Service during any fiscal year. The Trustee estimates that during fiscal year 2003, the approximate amount of annual brokerage commissions incurred in implementing the Service was less than $0.001 per SPDR.

Subject to any applicable cap, the Sponsor may charge the Trust a special fee for certain services the Sponsor may provide to the Trust which would otherwise be provided by the Trustee in an amount not to exceed the actual cost of providing such services. The Sponsor or the Trustee from time to time may voluntarily assume some expenses or reimburse the Trust so that total expenses of the Trust are reduced. Neither the Sponsor nor the Trustee is obligated to do so and either one or both parties may discontinue such voluntary assumption of expenses or reimbursement at any time without notice.

The following charges are or may be accrued and paid by the Trust: (a) the Trustee's fee; (b) fees payable to transfer agents for the provision of transfer agency services; (c) fees of the Trustee for extraordinary services performed under the Trust Agreement; (d) various governmental charges; (e) any taxes, fees and charges payable by the Trustee with respect to SPDRs (whether in Creation Units or otherwise); (f) expenses and costs of any action taken by the Trustee or the Sponsor to protect the Trust and the rights and interests of Beneficial Owners of SPDRs (whether in Creation Units or otherwise); (g) indemnification of the Trustee or the Sponsor for any losses, liabilities or expenses incurred by it in the administration of the Trust; (h) expenses incurred in contacting Beneficial Owners of SPDRs during the life of the Trust and upon termination of the Trust; and (i) other out-of-pocket expenses of the Trust incurred pursuant to actions permitted or required under the Trust Agreement.

In addition, the following expenses are or may be charged to the Trust: (a) reimbursement to the Sponsor of amounts paid by it to S&P in respect of annual licensing fees pursuant to the License Agreement; (b) federal and state annual registration fees for the issuance of SPDRs; and (c) expenses of the Sponsor relating to the printing and distribution of marketing materials describing SPDRs and the Trust (including, but not limited to, associated legal, consulting, advertising, and marketing costs and other out-of-pocket expenses such as printing). Pursuant to the provisions of an exemptive order, the expenses set forth in this paragraph may be charged to the Trust by the Trustee in an amount equal to the actual costs incurred, but in no case shall such charges exceed 20/100 of 1% (0.20%) per annum of the daily NAV of the Trust.

If the income received by the Trust in the form of dividends and other distributions on Portfolio Securities is insufficient to cover Trust expenses, the Trustee may make advances to the Trust to cover such expenses. Otherwise, the Trustee may sell Portfolio Securities in an amount sufficient to pay such expenses. The Trustee may reimburse itself in the amount of any such advance, together with interest thereon at a percentage rate equal to the then current overnight federal funds rate, by deducting such amounts from (a) dividend payments or other income of the Trust when such payments or other income is received, (b) the amounts earned or benefits derived by the Trustee on cash held by the Trustee for the benefit of the Trust, and (c) the sale of Portfolio

Securities. Notwithstanding the foregoing, if any advance remains outstanding for more than forty-five (45) Business Days, the Trustee may sell Portfolio Securities to reimburse itself for such advance and any accrued interest thereon. These advances will be secured by a lien on the assets of the Trust in favor of the Trustee. The expenses of the Trust are reflected in the NAV of the Trust.

For services performed under the Trust Agreement, the Trustee is paid a fee at an annual rate of 6/100 of 1% to 10/100 of 1% of the NAV of the Trust, as shown below, such percentage amount to vary depending on the NAV of the Trust, plus or minus the Adjustment Amount. The compensation is computed on each Business Day based on the NAV of the Trust on such day, and the amount thereof is accrued daily and paid monthly. To the extent that the amount of the Trustee's compensation, before any adjustment in respect of the Adjustment Amount, is less than specified amounts, the Sponsor has agreed to pay the amount of any such shortfall. The Trustee also may waive all or a portion of such fee.

Trustee Fee Scale

*	The fee indicated applies to that portion of the NAV of the Trust that falls in the size category indicated.

As of September 30, 2003, and as of December 31, 2003, the NAV of the Trust was $36,054,567,557 and $43,815,353,508, respectively. No representation is made as to the actual NAV of the Trust on any future date, as it is subject to change at any time due to fluctuations in the market value of the Portfolio, or to creations or redemptions made in the future.

The Adjustment Amount is calculated at the end of each quarter and applied against the Trustee's fee for the following quarter. "Adjustment Amount" is an amount which is intended, depending upon the circumstances, either to (a) reduce the Trustee's fee by the amount that the Transaction Fees paid on creation and redemption exceed the costs of those activities, and by the amount of excess earnings on cash held for the benefit of the Trust ** or (b) increase the Trustee's fee by the amount that the Transaction Fee (plus additional amounts paid in connection with creations or redemptions outside the SPDR Clearing Process), paid on creations or redemptions, falls short of the actual costs of these activities. If in any quarter the Adjustment Amount

**	The excess earnings on cash amount is currently calculated, and applied, on a monthly basis.

exceeds the fee payable to the Trustee as set forth above, the Trustee uses such excess amount to reduce other Trust expenses, subject to certain federal tax limitations. To the extent that the amount of such excess exceeds the Trust's expenses for such quarter, any remaining excess is retained by the Trustee as part of its compensation. If in any quarter the costs of processing creations and redemptions exceed the amounts charged as a Transaction Fee (plus the additional amounts paid in connection with creations or redemptions outside the SPDR Clearing Process) net of the excess earnings, if any, on cash held for the benefit of the Trust, the Trustee will augment the Trustee's fee by the resulting Adjustment Amount. The net Adjustment Amount is usually a credit to the Trust. To make the expense ratio of the Trust comparable to the expense ratio of most other investment companies, it is shown as a "below the line" adjustment to Trust's expenses. If the adjustment is negative, it is shown "above the line."

VALUATION

The NAV of the Trust is computed as of the Evaluation Time shown under "Summary—Essential Information" on each Business Day. The NAV of the Trust on a per SPDR basis is determined by subtracting all liabilities (including accrued expenses and dividends payable) from the total value of the Portfolio and other assets and dividing the result by the total number of outstanding SPDRs.

The value of the Portfolio is determined by the Trustee in good faith in the following manner. If Portfolio Securities are listed on one or more national securities exchanges or on the National Market System maintained by the NASDAQ Stock Market, such evaluation is generally based on the closing sale price on that day or, in the case of the NASDAQ, at the official closing price on that day (unless the Trustee deems such price inappropriate as a basis for evaluation) on the exchange or system which is deemed to be the principal market thereof (the New York or American Stock Exchange if the stocks are listed thereon) or, if there is no such appropriate closing price or NASDAQ official closing price on such exchange or system at the last sale price (unless the Trustee deems such price inappropriate as a basis for evaluation). If the stocks are not so listed or, if so listed and the principal market therefor is other than on such exchange or system or there is no such closing price available, such evaluation shall generally be made by the Trustee in good faith based on the closing price on the over-the-counter market (unless the Trustee deems such price inappropriate as a basis for evaluation) or if there is no such appropriate closing price, (a) on current bid prices, (b) if bid prices are not available, on the basis of current bid prices for comparable stocks, (c) by the Trustee's appraising the value of the stocks in good faith on the bid side of the market, or (d) by any combination thereof.

ADMINISTRATION OF THE TRUST

Distributions to Beneficial Owners

The regular quarterly ex-dividend date for SPDRs is the third Friday in each of March, June, September and December, unless such day is not a Business Day, in which case the ex-dividend date is the immediately preceding Business Day ("Ex-Dividend Date"). Beneficial Owners reflected on the records of DTC and the DTC Participants on the second Business Day following the Ex-Dividend Date ("Record Date") are entitled to receive an amount representing dividends accumulated on Portfolio Securities through the quarterly dividend period which ends on the Business Day preceding such Ex-Dividend Date (including stocks with ex-dividend dates falling within such quarterly dividend period), net of fees and expenses, accrued daily for such period. For the purposes of all dividend distributions, dividends per SPDR are calculated at least to the nearest 1/1000th of $0.01. The payment of dividends is made on the last Business Day in the calendar month following each Ex-Dividend Date ("Dividend Payment Date"). Dividend payments are made through DTC and the DTC Participants to Beneficial Owners then of record with funds received from the Trustee.

Dividends payable to the Trust in respect of Portfolio Securities are credited by the Trustee to a non-interest bearing account as of the date on which the Trust receives such dividends. Other moneys received by the Trustee in respect of the Portfolio, including but not limited to the Cash Component, the Cash Redemption Payment, all moneys realized by the Trustee from the sale of options, warrants or other similar rights received or distributed in respect of Portfolio Securities as dividends or distributions and capital gains resulting from the sale of Portfolio Securities are credited by the Trustee to a non-interest bearing account. All funds collected or received are held by the Trustee without interest until distributed in accordance with the provisions of the Trust Agreement. To the extent the amounts credited to the account generate interest income or an equivalent benefit to the Trustee, such interest income or benefit is used to reduce the Trustee's annual fee.

Any additional distributions the Trust may need to make so as to continue to qualify as a "regulated investment company" would consist of (a) an increase in the distribution scheduled for January to include any amount by which estimated Trust investment company taxable income and net capital gains for a year exceeds the amount of Trust taxable income previously distributed with respect to such year or, if greater, the minimum amount required to avoid imposition of such excise tax, and (b) a distribution soon after actual annual investment company taxable income and net capital gains of the Trust have been computed, of the amount, if any, by which such actual income exceeds the distributions already made. The NAV of the Trust is reduced in direct proportion to the amount of such additional distributions. The magnitude of the additional distributions, if any, depends upon a number

of factors, including the level of redemption activity experienced by the Trust. Because substantially all proceeds from the sale of stocks in connection with adjustments to the Portfolio are used to purchase shares of Index Securities, the Trust may have no cash or insufficient cash with which to pay such additional distributions. In that case, the Trustee has to sell shares of Portfolio Securities sufficient to produce the cash required to make such additional distributions. In selecting the stocks to be sold to produce cash for such distributions, the Trustee chooses among the stocks that are over-weighted in the Portfolio relative to their weightings in the S&P 500 Index first and then from among all other stocks in such a manner to maintain the weightings of Portfolio Securities within the applicable Misweighting Amount.

The Trustee may declare special dividends if such action is necessary or advisable to preserve the status of the Trust as a regulated investment company or to avoid imposition of income or excise taxes on undistributed income, and to vary the frequency with which periodic distributions are made ( e.g. , from quarterly to monthly) if it is determined by the Sponsor and the Trustee that such a variance would be advisable to facilitate compliance with the rules and regulations applicable to regulated investment companies or would otherwise be advantageous to the Trust. In addition, the Trustee may change the regular ex-dividend date for SPDRs to another date within the month or quarter if it is determined by the Sponsor and the Trustee that such a change would be advantageous to the Trust. Notice of any such variance or change shall be provided to Beneficial Owners via DTC and the DTC Participants.

As soon as practicable after notice of termination of the Trust, the Trustee will distribute via DTC and the DTC Participants to each Beneficial Owner redeeming Creation Units before the termination date specified in such notice a portion of Portfolio Securities and cash as described above. Otherwise, the Trustee will distribute to each Beneficial Owner (whether in Creation Unit size aggregations or otherwise), as soon as practicable after termination of the Trust, such Beneficial Owner's pro rata share of the NAV of the Trust.

All distributions are made by the Trustee through DTC and the DTC Participants to Beneficial Owners as recorded on the book entry system of DTC and the DTC Participants.

The settlement date for the creation of SPDRs or the purchase of SPDRs in the secondary market must occur on or before the Record Date in order for such creator or purchaser to receive a distribution on the next Dividend Payment Date. If the settlement date for such creation or a secondary market purchase occurs after the Record Date, the distribution will be made to the prior securityholder or Beneficial Owner as of such Record Date.

Any Beneficial Owner interested in acquiring additional SPDRs with proceeds received from distributions described above may elect dividend reinvestment through DTC Participants by means of the Service, if such service is available through the Beneficial Owner's broker.

Statements to Beneficial Owners; Annual Reports

With each distribution, the Trustee furnishes for distribution to Beneficial Owners a statement setting forth the amount being distributed, expressed as a dollar amount per SPDR.

Promptly after the end of each fiscal year, the Trustee furnishes to the DTC Participants for distribution to each person who was a Beneficial Owner of SPDRs at the end of such fiscal year, an annual report of the Trust containing financial statements audited by independent accountants of nationally recognized standing and such other information as may be required by applicable laws, rules and regulations.

Rights of Beneficial Owners

Beneficial Owners may sell SPDRs in the secondary market, but must accumulate enough SPDRs to constitute a full Creation Unit in order to redeem through the Trust. The death or incapacity of any Beneficial Owner does not operate to terminate the Trust nor entitle such Beneficial Owner's legal representatives or heirs to claim an accounting or to take any action or proceeding in any court for a partition or winding up of the Trust.

Beneficial Owners shall not (a) have the right to vote concerning the Trust, except with respect to termination and as otherwise expressly set forth in the Trust Agreement, (b) in any manner control the operation and management of the Trust, or (c) be liable to any other person by reason of any action taken by the Sponsor or the Trustee. The Trustee has the right to vote all of the voting stocks in the Trust. The Trustee votes the voting stocks of each issuer in the same proportionate relationship as all other shares of each such issuer are voted to the extent permissible and, if not permitted, abstains from voting.

Amendments to the Trust Agreement

The Trust Agreement may be amended from time to time by the Trustee and the Sponsor without the consent of any Beneficial Owners (a) to cure any ambiguity or to correct or supplement any provision that may be defective or inconsistent or to make such other provisions as will not adversely affect the interests of Beneficial Owners; (b) to change any provision as may be required by the SEC; (c) to add or change any provision as may be necessary or advisable for the continuing qualification of the Trust as a "regulated investment company" under the Code; (d) to add or change any provision as may be necessary or advisable if NSCC or DTC is unable or unwilling to continue to perform its functions; and (e) to add or change any provision to conform the adjustments to the Portfolio and the Portfolio Deposit to changes, if any, made by S&P in its method of determining the S&P 500 Index. The Trust Agreement may also be amended by the Sponsor and the Trustee with the consent of the

Beneficial Owners of 51% of the outstanding SPDRs to add provisions to, or change or eliminate any of the provisions of, the Trust Agreement or to modify the rights of Beneficial Owners; although, the Trust Agreement may not be amended without the consent of the Beneficial Owners of all outstanding SPDRs if such amendment would (a) permit the acquisition of any securities other than those acquired in accordance with the terms and conditions of the Trust Agreement; (b) reduce the interest of any Beneficial Owner in the Trust; or (c) reduce the percentage of Beneficial Owners required to consent to any such amendment.

Promptly after the execution of an amendment, the Trustee receives from DTC, pursuant to the terms of the Depository Agreement, a list of all DTC Participants holding SPDRs. The Trustee inquires of each such DTC Participant as to the number of Beneficial Owners for whom such DTC Participant holds SPDRs, and provides each such DTC Participant with sufficient copies of a written notice of the substance of such amendment for transmittal by each such DTC Participant to Beneficial Owners.

Termination of the Trust Agreement

The Trust Agreement provides that the Sponsor has the discretionary right to direct the Trustee to terminate the Trust if at any time the NAV of the Trust is less than $350,000,000, as such dollar amount shall be adjusted for inflation in accordance with the CPI-U. This adjustment is to take effect at the end of the fourth year following the Initial Date of Deposit and at the end of each year thereafter and to be made so as to reflect the percentage increase in consumer prices as set forth in the CPI-U for the twelve month period ending in the last month of the preceding fiscal year.

The Trust may be terminated (a) by the agreement of the Beneficial Owners of 66 2/3% of outstanding SPDRs; (b) if DTC is unable or unwilling to continue to perform its functions as set forth under the Trust Agreement and a comparable replacement is unavailable; (c) if NSCC no longer provides clearance services with respect to SPDRs, or if the Trustee is no longer a participant in NSCC; (d) if S&P ceases publishing the S&P 500 Index; (e) if the License Agreement is terminated; or (f) if SPDRs are delisted from the Exchange. The Trust will also terminate by its terms on the Termination Date.

The Trust will terminate if either the Sponsor or the Trustee resigns or is removed and a successor is not appointed. The dissolution of the Sponsor or its ceasing to exist as a legal entity for any cause whatsoever, however, will not cause the termination of the Trust Agreement or the Trust unless the Trustee deems termination to be in the best interests of Beneficial Owners.

Prior written notice of the termination of the Trust must be given at least twenty (20) days before termination of the Trust to all Beneficial Owners. The notice must set forth the date on which the Trust will be terminated, the period during which the assets of the Trust will be liquidated, the date on which

Beneficial Owners of SPDRs (whether in Creation Unit size aggregations or otherwise) will receive in cash the NAV of the SPDRs held, and the date upon which the books of the Trust shall be closed. The notice shall further state that, as of the date thereof and thereafter, neither requests to create additional Creation Units nor Portfolio Deposits will be accepted, that no additional SPDRs will be created for the purpose of reinvesting dividend distributions, and that, as of the date thereof and thereafter, the portfolio of stocks delivered upon redemption shall be identical in composition and weighting to Portfolio Securities as of such date rather than the stock portion of the Portfolio Deposit as in effect on the date request for redemption is deemed received. Beneficial Owners of Creation Units may, in advance of the Termination Date, redeem in kind directly from the Trust.

Within a reasonable period after the Termination Date, the Trustee shall, subject to any applicable provisions of law, use its best efforts to sell all of the Portfolio Securities not already distributed to redeeming Beneficial Owners of Creation Units. The Trustee shall not be liable for or responsible in any way for depreciation or loss incurred because of any such sale. The Trustee may suspend such sales upon the occurrence of unusual or unforeseen circumstances, including but not limited to a suspension in trading of a stock, the closing or restriction of trading on a stock exchange, the outbreak of hostilities, or the collapse of the economy. The Trustee shall deduct from the proceeds of sale its fees and all other expenses and transmit the remaining amount to DTC for distribution, together with a final statement setting forth the computation of the gross amount distributed. SPDRs not redeemed before termination of the Trust will be redeemed in cash at NAV based on the proceeds of the sale of Portfolio Securities, with no minimum aggregation of SPDRs required.

SPONSOR

The Sponsor is a Delaware limited liability company incorporated on April 6, 1998 with offices c/o the Exchange, 86 Trinity Place, New York, New York 10006. The Sponsor's Internal Revenue Service Employer Identification Number is 52-2127241. The Exchange is the sole member of the Sponsor and the Exchange is a "control person" of the Sponsor as such term is defined in the Securities Act of 1933.

The Sponsor, at its own expense, may from time to time provide additional promotional incentives to brokers who sell SPDRs to the public. In certain instances, these incentives may be provided only to those brokers who meet certain threshold requirements for participation in a given incentive program, such as selling a significant number of SPDRs within a specified period.

If at any time the Sponsor fails to undertake or perform or becomes incapable of undertaking or performing any of the duties required under the Trust Agreement, or resigns, or becomes bankrupt or its affairs are taken over by public authorities, the Trustee may appoint a successor Sponsor, agree to act

as Sponsor itself, or may terminate the Trust Agreement and liquidate the Trust. Notice of the resignation or removal of the Sponsor and the appointment of a successor shall be mailed by the Trustee to DTC and the DTC Participants for distribution to Beneficial Owners. Upon a successor Sponsor's execution of a written acceptance of appointment as Sponsor of the Trust, the successor Sponsor becomes vested with all of the rights, powers, duties and obligations of the original Sponsor. Any successor Sponsor may be compensated at rates deemed by the Trustee to be reasonable.

The Sponsor may resign by executing and delivering to the Trustee an instrument of resignation. Such resignation shall become effective upon the appointment of a successor Sponsor and the acceptance of appointment by the successor Sponsor, unless the Trustee either agrees to act as Sponsor or terminates the Trust Agreement and liquidates the Trust. The dissolution of the Sponsor or its ceasing to exist as a legal entity for any cause whatsoever will not cause the termination of the Trust Agreement or the Trust unless the Trustee deems termination to be in the best interests of the Beneficial Owners of SPDRs.

The Trust Agreement provides that the Sponsor is not liable to the Trustee, the Trust or to the Beneficial Owners of SPDRs for taking any action, or for refraining from taking any action, made in good faith or for errors in judgment, but is liable only for its own gross negligence, bad faith, willful misconduct or willful malfeasance in the performance of its duties or its reckless disregard of its obligations and duties under the Trust Agreement. The Sponsor is not liable or responsible in any way for depreciation or loss incurred by the Trust because of the sale of any Portfolio Securities. The Trust Agreement further provides that the Sponsor and its directors, subsidiaries, shareholders, officers, employees, and affiliates under common control with the Sponsor shall be indemnified from the assets of the Trust and held harmless against any loss, liability or expense incurred without gross negligence, bad faith, willful misconduct or willful malfeasance on the part of any such party in the performance of its duties or reckless disregard of its obligations and duties under the Trust Agreement, including the payment of the costs and expenses of defending against any claim or liability.

TRUSTEE

The Trustee is a bank and trust company organized under the laws of the Commonwealth of Massachusetts with its principal place of business at 225 Franklin Street, Boston, Massachusetts 02110. The Trustee's Internal Revenue Service Employer Identification Number is 04-1867445. The Trustee is subject to supervision and examination by the Massachusetts Division of Banks and the Federal Reserve Bank of Boston.

Information regarding Cash Redemption Payment amounts, number of outstanding SPDRs and Transaction Fees may be obtained from the Trustee at

the toll-free number: 1-800-545-4189. Complete copies of the Trust Agreement and a list of the parties that have executed a Participant Agreement may be obtained from the Trustee's principal office.

The Trustee may resign and be discharged of the Trust created by the Trust Agreement by executing a notice of resignation in writing and filing such notice with the Sponsor and mailing a copy of the notice of resignation to all DTC Participants reflected on the records of DTC as owning SPDRs for distribution to Beneficial Owners as provided above not less than sixty (60) days before the date such resignation is to take effect. Such resignation becomes effective upon the appointment of and the acceptance of the Trust by a successor Trustee. The Sponsor, upon receiving notice of such resignation, is obligated to use its best efforts to appoint a successor Trustee promptly. If no successor is appointed within sixty (60) days after the date such notice of resignation is given, the Trust shall terminate.

If the Trustee becomes incapable of acting as such or is adjudged bankrupt or is taken over by any public authority, the Sponsor may discharge the Trustee and appoint a successor Trustee as provided in the Trust Agreement. The Sponsor shall mail notice of such discharge and appointment via the DTC Participants to Beneficial Owners. Upon a successor Trustee's execution of a written acceptance of an appointment as Trustee for the Trust, the successor Trustee becomes vested with all the rights, powers, duties and obligations of the original Trustee. A successor Trustee must be (a) a trust company, corporation or national banking association organized, doing business under the laws of the United States or any state thereof; (b) authorized under such laws to exercise corporate trust powers; and (c) at all times have an aggregate capital, surplus and undivided profit of not less than $50,000,000.

Beneficial Owners of 51% of the then outstanding SPDRs may at any time remove the Trustee by written instrument(s) delivered to the Trustee and the Sponsor. The Sponsor shall thereupon use its best efforts to appoint a successor Trustee as described above.

The Trust Agreement limits Trustee's liabilities. It provides, among other things, that the Trustee is not liable for (a) any action taken in reasonable reliance on properly executed documents or for the disposition of monies or stocks or for the evaluations required to be made thereunder, except by reason of its own gross negligence, bad faith, willful malfeasance, willful misconduct, or reckless disregard of its duties and obligations; (b) depreciation or loss incurred by reason of the sale by the Trustee of any Portfolio Securities; (c) any action the Trustee takes where the Sponsor fails to act; and (d) any taxes or other governmental charges imposed upon or in respect of Portfolio Securities or upon the interest thereon or upon it as Trustee or upon or in respect of the Trust which the Trustee may be required to pay under any present or future law of the United States of America or of any other taxing authority having jurisdiction.

The Trustee and its directors, subsidiaries, shareholders, officers, employees, and affiliates under common control with the Trustee will be indemnified from the assets of the Trust and held harmless against any loss, liability or expense incurred without gross negligence, bad faith, willful misconduct, willful malfeasance on the part of such party or reckless disregard of its duties and obligations, arising out of, or in connection with its acceptance or administration of the Trust, including the costs and expenses (including counsel fees) of defending against any claim or liability.

DEPOSITORY

DTC is a limited purpose trust company and member of the Federal Reserve System.

LEGAL OPINION

The legality of the SPDRs offered hereby has been passed upon by Carter Ledyard & Milburn LLP, New York, New York, as counsel for the Sponsor.

INDEPENDENT AUDITORS

The financial statements as of September 30, 2003 included in this Prospectus have been so included in reliance upon the report of PricewaterhouseCoopers LLP, independent auditors, 125 High Street, Boston, Massachusetts, given on the authority of said firm as experts in auditing and accounting.

CODE OF ETHICS

The Trust and the Sponsor have adopted a code of ethics regarding personal securities transactions by employees. Subject to certain conditions and standards, the code permits employees to invest in SPDRs for their own accounts. The code is designed to prevent fraud, deception and misconduct against the Trust and to provide reasonable standards of conduct. The code is on file with the SEC and you may obtain a copy by visiting the SEC at the address listed on the back cover of this prospectus. The code is also available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov. A copy may be obtained, after paying a duplicating fee, by electronic request at publicinfo@sec.gov, or by writing the SEC at the address listed on the back cover of this prospectus.

INFORMATION AND COMPARISONS RELATING TO TRUST,
SECONDARY MARKET TRADING, NET ASSET SIZE, PERFORMANCE AND TAX TREATMENT

Information regarding various aspects of the Trust, including the net asset size thereof, as well as the secondary market trading, the performance and the tax treatment of SPDRs, may be included from time to time in advertisements, sales literature and other communications and in reports to current or prospective Beneficial Owners. Any such performance-related information will reflect only past performance of SPDRs, and no guarantees can be made of future results.

Specifically, information may be provided to investors regarding the ability to engage in short sales of SPDRs, including reference to the exemption from the "tick test" provision of the SEC short sale rule (Rule 10a-1 under the Securities Exchange Act of 1934), to permit short sales on "minus" or "zero-minus" ticks. Selling short refers to the sale of securities which the seller does not own, but which the seller arranges to borrow before effecting the sale. Institutional investors may be advised that lending their SPDRs to short sellers may generate stock loan credits that may supplement the return they can earn from an investment in SPDRs. These stock loan credits may provide a useful source of additional income for certain institutional investors who can arrange to lend SPDRs. Potential short sellers may be advised that a short rebate (functionally equivalent to partial use of proceeds of the short sale) may reduce their cost of selling short.

In addition, information may be provided to prospective or current investors comparing and contrasting the tax efficiencies of conventional mutual funds with SPDRs. Both conventional mutual funds and the Trust may be required to recognize capital gains incurred as a result of adjustments to the composition of the S&P 500 Index and therefore to their respective portfolios. From a tax perspective, however, a significant difference between a conventional mutual fund and the Trust is the process by which their shares are redeemed. In cases where a conventional mutual fund experiences redemptions in excess of subscriptions ("net redemptions") and has insufficient cash available to fund such net redemptions, such fund may have to sell stocks held in its portfolio to raise and pay cash to redeeming shareholders. A mutual fund will generally experience a taxable gain or loss when it sells such portfolio stocks in order to pay cash to redeeming fund shareholders. In contrast, the redemption mechanism for SPDRs does not involve selling the portfolio stocks. Instead, the Trust delivers the actual portfolio of stocks in an in-kind exchange to any person redeeming SPDRs shares in Creation Unit size aggregations. While this in-kind exchange is a taxable transaction to the redeeming entity (usually a broker/dealer) making the exchange, it generally does not constitute a taxable transaction at the Trust level and, consequently, there is no realization of taxable gain or loss by the Trust with respect to such in-kind exchanges. In a period of market appreciation of the S&P 500 Index

and, consequently, appreciation of the portfolio stocks held in the Trust, this in-kind redemption mechanism has the effect of eliminating the recognition and distribution of those net unrealized gains at the Trust level. Although the same result would obtain for conventional mutual funds utilizing an in-kind redemption mechanism, the opportunities to redeem fund shares by delivering portfolio stocks in-kind are limited in most mutual funds.

Investors may be informed that, while no unequivocal statement can be made as to the net tax impact on a conventional mutual fund resulting from the purchases and sales of its portfolio stocks over a period of time, conventional funds that have accumulated substantial unrealized capital gains, if they experience net redemptions and do not have sufficient available cash, may be required to make taxable capital gains distributions that are generated by changes in such fund's portfolio. In contrast, the in-kind redemption mechanism of SPDRs may make them more tax efficient investments under most circumstances than comparable conventional mutual fund shares. As discussed above, this in-kind redemption feature tends to lower the amount of annual net capital gains distributions to SPDRs holders as compared to their conventional mutual fund counterparts. Since shareholders are generally required to pay income tax on capital gains distributions, the smaller the amount of such distributions, the less taxes that are payable currently. To the extent that the Trust is not required to recognize capital gains, the SPDRs holder is able, in effect, to defer tax on such gains until he sells or otherwise disposes of his shares, or the Trust terminates. If such holder retains his shares until his death, under current law the tax basis of such shares would be adjusted to their then fair market value.

One important difference between SPDRs and conventional mutual fund shares is that SPDRs are available for purchase or sale on an intraday basis on the American Stock Exchange. An investor who buys shares in a conventional mutual fund will buy or sell shares at a price at or related to the closing NAV per share, as determined by the fund. In contrast, SPDRs are not offered for purchase or redeemed for cash at a fixed relationship to closing NAV. The tables below illustrate the distribution relationship of SPDRs closing prices to NAV for the period 1/29/93 (the first trading date of the SPDR Trust) through 12/31/03, the distribution relationships of high, low and closing prices over the same period, and distribution of bid/asked spreads for 2003. This table should help investors evaluate some of the advantages and disadvantages of SPDRs relative to funds sold and redeemed at prices related to closing NAV. Specifically, the table illustrates in an approximate way the risks of buying or selling SPDRs at prices less favorable than closing NAV and, correspondingly, the opportunities to buy or sell at prices more favorable than closing NAV.

The investor may wish to evaluate the opportunity to buy or sell on an intraday basis versus the assurance of a transaction at or related to closing NAV. To assist investors in making this comparison, the table illustrates the distribution of percentage ranges between the high and the low price each day

and between each extreme daily value and the closing NAV for all trading days from 1/29/93 through 12/31/03. The investor may wish to compare these ranges with the average bid/asked spread on SPDRs and add any commissions charged by a broker. The trading ranges for this period will not necessarily be typical of trading ranges in future years and the bid/asked spread on SPDRs may vary materially over time and may be significantly greater at times in the future. There is some evidence, for example, that the bid/asked spread will widen in markets that are more volatile and narrow when markets are less volatile. Consequently, the investor should expect wider bid/asked spreads to be associated with wider daily spread ranges.

Daily Percentage Price Ranges: Average and Frequency Distribution for
SPDR Trust and S&P Composite Stock Price Index:
Highs and Lows vs. Close*
(from 1/29/93 through 12/31/2003)

S&P 500 COMPOSITE STOCK PRICE INDEX


	Daily % Price Range					Intraday High Value Above Closing Value					Intrady Low Value Below Closing Value
Range	Frequency		% of Total			Frequency		% of Total			Frequency		% of Total
0—0.25%		1		0.04	%		1088		39.52	%		730		26.52	%
0.25—0.5%		246		8.94	%		505		18.34	%		637		23.14	%
0.5—1%		875		31.78	%		577		20.96	%		698		25.35	%
1—1.5%		712		25.86	%		268		9.73	%		337		12.24	%
1.5—2%		442		16.06	%		157		5.70	%		183		6.65	%
2—2.5%		233		8.46	%		84		3.05	%		88		3.20	%
2.5—3%		121		4.40	%		36		1.31	%		34		1.24	%
3—3.5%		57		2.07	%		20		0.73	%		20		0.73	%
>3.5%		66		2.40	%		18		0.65	%		26		0.94	%
Total		2,753		100	%		2,753		100	%		2,753		100	%

Average Daily Range: 1.3566%

SPDR TRUST


	Daily % Price Range					Intraday High Value Above Closing Value					Intrady Low Value Below Closing Value
Range	Frequency		% of Total			Frequency		% of Total			Frequency		% of Total
0—0.25%		21		0.76	%		941		34.18	%		685		24.88	%
0.25—0.5%		253		9.19	%		585		21.25	%		659		23.94	%
0.5—1%		723		26.26	%		607		22.05	%		711		25.83	%
1—1.5%		768		27.90	%		307		11.15	%		369		13.40	%
1.5—2%		481		17.47	%		129		4.69	%		167		6.07	%
2—2.5%		248		9.01	%		104		3.78	%		80		2.91	%
2.5—3%		128		4.65	%		43		1.56	%		43		1.56	%
3—3.5%		63		2.29	%		19		0.69	%		20		0.73	%
>3.5%		68		2.47	%		18		0.65	%		19		0.69	%
Total		2,753		100	%		2,753		100	%		2,753		100	%

Average Daily Range: 1.4015%

*	Source: Bloomberg

Frequency Distribution of Discounts and Premiums for SPDR Trust:
Closing AMEX Price vs. Net Asset Value (NAV) as of 12/31/03



Range			Calendar Quarter Ending 3/31/2003			Calendar Quarter Ending 6/30/2003			Calendar Quarter Ending 9/30/2003			Calendar Quarter Ending 12/31/2003			Calendar Year 2003			From 1/29/1993 through 12/31/2003
> 200	Days			—			—			—			—			—			—
Basis Points		%		—			—			—			—			—			—
150—200	Days			—			—			—			—			—			—
Basis Points		%		—			—			—			—			—			—
100—150	Days			—			—			—			—			—			1
Basis Points		%		—			—			—			—			—			0.0	%
50—100	Days			—			—			—			—			—			19
Basis Points		%		—			—			—			—			—			0.7	%
25—50	Days			10			1			1			5			17			176
Basis Points		%		16.4	%		1.6	%		1.6	%		7.8	%		6.7	%		6.4	%
0—25	Days			30			25			33			29			117			1141
Basis Points		%		49.2	%		39.7	%		51.6	%		45.3	%		46.4	%		41.4	%
Total Days	Days			40			26			34			34			134			1337
at Premium		%		65.6	%		41.3	%		53.1	%		53.1	%		53.2	%		48.6	%
Closing Price	Days			—			2			2			—			4			20
Equal to NAV		%		—			3.2	%		3.1	%		—			1.6	%		0.7	%
Total Days	Days			21			35			28			30			114			1396
at Discount		%		34.4	%		55.6	%		43.8	%		46.9	%		45.2	%		50.7	%
0— -25	Days			16			33			26			28			103			1109
Basis Points		%		26.2	%		52.4	%		40.6	%		43.8	%		40.9	%		40.3	%
-25— -50	Days			5			2			1			2			10			235
Basis Points		%		8.2	%		3.2	%		1.6	%		3.1	%		4.0	%		8.5	%
-50— -100	Days			—			—			1			—			1			49
Basis Points		%		—			—			1.6	%		—			0.4	%		1.8	%
-100— -150	Days			—			—			—			—			—			1
Basis Points		%		—			—			—			—			—			0.0	%
-150— -200	Days			—			—			—			—			—			1
Basis Points		%		—			—			—			—			—			0.0	%
<-200	Days			—			—			—			—			—			1
Basis Points		%		—			—			—			—			—			0.0	%

Close was within 0.25% of NAV better than 82% of the time from 1/29/93
(the first day of trading on the AMEX) through 12/31/03.

Source: American Stock Exchange LLC.

SPDR BID/ASKED SPREAD DISTRIBUTION (2003 Only)*


Range ($)	% of Total
0.01—0.05		54.23	%
0.06—0.10		38.84	%
0.10—0.15		6.49	%
0.15—0.20		0.37	%
0.20—0.25		0.05	%
0.25—0.50		0.02	%
> 0.50		0.00	%
Total		100.00	%

The price range of shares for 2003 was from $79.40 to $111.51; consequently, $0.10 was from 0.13% to 0.09% of the share price.

*	Source: American Stock Exchange LLC

GLOSSARY


	Page
"10 Basis Point Limit"		8
"Additional Cash Deposit"		30
"Adjustment Amount"		53
"Adjustment Day"		40
"Balancing Amount"		41
"Beneficial Owners"		32
"Business Day"		3
"Cash Component"		5
"Cash Redemption Payment"		34
"Closing Time"		29
"Code"		9
"Creation Units"		4
"Depository Agreement"		32
"Distributor"		4
"Dividend Equivalent Payment"		5
"Dividend Payment Date"		54
"DTC"		9
"DTCC"		28
"DTC Cut-Off Time"		36
"DTC Participants"		32
"Evaluation Time"		1
"Ex-Dividend Date"		54
"Excess Cash Amounts"		34
"Exchange"		3
"Index Securities"		3
"Indirect Participants"		32
"License Agreement"		i
"Misweighting"		38
"Misweighting Amount"		38
"NAV"		3
"NAV Amount"		40
"NSCC Business Day"		12
"NSCC"		5
"Participant Agreement"		5
"Participating Party"		5
"Portfolio"		3
"Portfolio Deposit"		5
"Portfolio Deposit Amount"		41
"Portfolio Securities"		3
"Record Date"		54
"Request Day"		40
"S&P"		3
"S&P 500 Index"		3
"SEC"		5
"Service"		9
"SPDRs"		3
"SPDR Clearing Process"		5
"Sponsor"		3
"Transaction Fee"		8
"Transmittal Date"		28
"Trust"		3
"Trust Agreement"		3
"Trustee"		3
"Weighting Analysis"		38

STANDARD & POOR'S DEPOSITARY
RECEIPTS (SPDRs)
SPDR TRUST, SERIES 1

SPONSOR:
PDR SERVICES LLC

This Prospectus does not include all of the information with respect to the SPDR Trust set forth in its Registration Statement filed with the SEC in Washington, D.C. under the:

•

Securities Act of 1933 (File No. 33-46080) and

•

Investment Company Act of 1940 (File No. 811-7330).

To obtain copies from the SEC at prescribed rates—
Write:     Public Reference Section of the SEC
450 Fifth Street, N.W., Washington, D.C. 20549-6009
CALL:     1-800-SEC-0330
VISIT:     http://www.sec.gov

No person is authorized to give any information or make any representation about the SPDR Trust not contained in this Prospectus, and you should not rely on any other information. Read and keep both parts of this Prospectus for future reference.

PDR Services LLC has filed a registration statement on Form S-6 and Form N-8B-2 with the SEC covering SPDRs. While this Prospectus is a part of the registration statement on Form S-6, it does not contain all the exhibits filed as part of the registration statement on Form S-6. You should consider reviewing the full text of those exhibits.

Prospectus dated January 27, 2004










                       CONTENTS OF REGISTRATION STATEMENT

     This amendment to the Registration Statement on Form S-6 comprises the
     following papers and documents:

               The facing sheet.

               The cross-reference sheet.

               The prospectus.

               The undertaking to file reports.

               The signatures.

               Written consents of the following persons:

               PricewaterhouseCoopers LLP

               (included in Exhibit 99.C2)

               Carter Ledyard & Milburn LLP

               (included in Exhibit 99.C1)

The following exhibits:



          Ex-99.A1 Amended and Restated Standard Terms and Conditions of Trust
          dated as of January 1, 2004, between PDR Services LLC, as Depositor
          and State Street Bank and Trust Company, as Trustee.


          Ex-99.C1 Opinion of Counsel as to legality of securities being
          registered and consent of Counsel.


          Ex-99.C2 Consent of Independent Auditors.


          Ex-99.C3 Code of Ethics incorporated herein by reference to Exhibit
          Ex.-99.C3 to Post Effective Amendment Number 9 to the Registration
          Statement on Form S-6 for SPDR Trust, Series 1 (#33-46080), filed with
          the Securities & Exchange Commission on January 24, 2001.






                          FINANCIAL STATEMENTS

         1. Statement of Financial Condition of the Trust as shown in the
current Prospectus for this series herewith.

         2. Financial Statements of the Depositor:



         PDR Services LLC - Financial Statements, as part of American Stock
         Exchange LLC current consolidated financial statements incorporated by
         reference to the Amendment to Form 1-A dated June, 2003.














                                   SIGNATURES



         Pursuant to the requirements of the Securities Act of 1933, the
registrant, SPDR Trust Series 1, has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, in the City of New York, and State of New York, on the 27th day
of January, 2004.





                                           SPDR TRUST SERIES 1 (Registrant)

                                       By: PDR Services LLC
                                       By: American Stock Exchange LLC,
                                               sole member


                                           /s/ Clifford J. Weber
                                           -------------------------------
                                           Senior Vice President

          Pursuant to the requirements of the Securities Act of 1933, this
amendment to the Registration Statement has been signed below on behalf of PDR
Services LLC, the Depositor, by the following persons in the capacities and on
the date indicated.




PDR SERVICES LLC

Name                                       Title/Office
----                                       ------------




/s/ Clifford J. Weber            Senior Vice President of PDR Services LLC*
-------------------------
Clifford J. Weber



/s/ Robert S. Tull               Vice President of PDR Services LLC
-------------------------
Robert S. Tull




----------
*    The Senior Vice President of PDR Services LLC also undertakes all the
     duties and responsibilities of, and performs all functions of, the
     principal financial officer of PDR Services LLC.











                                  EXHIBIT INDEX





1. EX-99.A1    -- Amended and Restated Standard Terms and Conditions of Trust
               dated as of January 1, 2004, between PDR Services LLC, as
               Depositor and State Street Bank and Trust Company, as Trustee.

2. EX-99.C1    -- Opinion of Counsel as to legality of securities being
               registered and Consent of Counsel.


3. EX-99.C2    -- Consent of Independent Accountants.

4. EX-99.C3    -- Code of Ethics incorporated herein by reference to
               Exhibit 99.C3 to Post Effective Amendment Number 9 to the
               Registration Statement on Form S-6 for SPDR Trust, Series 1
               (#33-46080), filed with the Securities and Exchange Commission on
               January 24, 2001.





===============================================================================


                                STANDARD & POOR'S
                       DEPOSITARY RECEIPTS ("SPDR") TRUST
                                    SERIES 1

                                       and

                           ANY SUBSEQUENT AND SIMILAR
                                  SERIES OF THE

                                   SPDR TRUST

                       AMENDED AND RESTATED STANDARD TERMS

                                       AND
                               CONDITIONS OF TRUST

                           DATED AS OF JANUARY 1, 2004

                                     between

                                PDR SERVICES LLC

                                   as Sponsor

                                       and

                       STATE STREET BANK AND TRUST COMPANY
                                   as Trustee

                           Effective January 27, 2004






===============================================================================






                                TABLE OF CONTENTS

                                                                                                      Page
                                                                                                      ----

Amended and Restated Standard Terms and Conditions of Trust..............................................4

Original Agreement.......................................................................................4

Amendment Agreements.....................................................................................4

Original SPDR Trust Indenture............................................................................5

Amended SPDR Trust Indenture"............................................................................5

Trust Documents..........................................................................................6

ARTICLE I Definitions....................................................................................7

ARTICLE II Declaration of Trust;  Deposit of Securities; The Portfolio; Creation and Issuance of SPDRs
in Creation Unit Size Aggregations .....................................................................16

   Section 2.01. Declaration of Trust...................................................................16
   Section 2.02. Deposit of Securities..................................................................16
   Section 2.03. Creation and Issuance of Creation Units................................................18
   Section 2.04. Portfolio and Portfolio Deposit Adjustments............................................23
   Section 2.05. Bank Accounts..........................................................................32

ARTICLE III Administration of Trust.....................................................................32

   Section 3.01. Collection of Income...................................................................32
   Section 3.02. Collection of Other Moneys.............................................................33
   Section 3.03. Establishment of Reserves..............................................................34
   Section 3.04. Certain Deductions and Distributions...................................................34
   Section 3.05. Statements and Reports.................................................................41
   Section 3.06. Purchase and Sale of Securities........................................................41
   Section 3.07. Substitute Securities..................................................................42
   Section 3.08. Counsel................................................................................42
   Section 3.09. Sale by Trustee........................................................................43

ARTICLE IV Evaluation of Securities.....................................................................48

   Section 4.01. Evaluation of Securities...............................................................48
   Section 4.02. Responsibility of the Trustee..........................................................49
   Section 4.03. Continued Qualification as Regulated Investment Company................................49

ARTICLE V Trust Fund Evaluation and Redemption of Creation Units........................................50

   Section 5.01. Trust Fund Evaluation..................................................................50
   Section 5.02. Redemption of SPDRs in Creation Unit Size Aggregations.................................50

ARTICLE VI Transfer of SPDRs in Creation Unit Size Aggregations.........................................54

   Section 6.01. Transfer of SPDRs in Creation Unit Size Aggregations...................................54

ARTICLE VII Sponsor.....................................................................................54

   Section 7.01. Responsibility and Duties..............................................................54
   Section 7.02. Certain Matters Regarding Successor Sponsor............................................55
   Section 7.03. Resignation of Sponsor; Successors.....................................................55
   Section 7.04. Liability of Sponsor and Indemnification...............................................56


                                       i





ARTICLE VIII Trustee.....................................................................................58

   Section 8.01.  General Definition of Trustee's Rights. Duties and Responsibilities....................58
   Section 8.02.  Books, Records and Reports.............................................................62
   Section 8.03.  Indenture and List of Securities on File...............................................63
   Section 8.04.  Compensation of Trustee................................................................63
   Section 8.05.  Indemnification of Trustee.............................................................64
   Section 8.06.  Resignation. Discharge or Removal of Trustee: Successors...............................65
   Section 8.07.  Qualification of Trustee...............................................................68
   Section 8.08.  Trustee's Duties Expressly Provided for Herein.........................................68

ARTICLE IX Termination...................................................................................68

   Section 9.01.  Procedure Upon Termination.............................................................68
   Section 9.02.  Moneys to Be Held Without Interest to Beneficial Owners................................72
   Section 9.03.  Dissolution of Sponsor Not to Terminate Trust..........................................72

ARTICLE X Miscellaneous Provisions.......................................................................72

   Section 10.01. Amendment and Waiver...................................................................72
   Section 10.02. Registration (Initial and Continuing) of SPDRs.........................................74
   Section 10.03. License Agreement with Standard & Poor's Corporation...................................74
   Section 10.04. Certain Matters Relating to Beneficial Owners..........................................74
   Section 10.05. New York Law to Govern.................................................................76
   Section 10.06. Notices................................................................................76
   Section 10.07. Severability...........................................................................76
   Section 10.08. Separate and Distinct Series...........................................................77
   Section 10.09. Ratification and Confirmation of Trust Documents.......................................77
   Section 10.10. Counterparts...........................................................................77





                                       ii





                                STANDARD & POOR'S
                       DEPOSITARY RECEIPTS ("SPDR") TRUST
                                    SERIES 1
                                       AND
                      ANY SUBSEQUENT AND SIMILAR SERIES OF
                                 THE SPDR TRUST

                       AMENDED AND RESTATED STANDARD TERMS
                             AND CONDITIONS OF TRUST
                           DATED AS OF JANUARY 1, 2004
                                       and
                           Effective January 27, 2004


                       for all or similar Series formed on
                        or subsequent to January 22, 1993


         These Restated Standard Terms and Conditions of Trust dated as of
January 1, 2004 ("Amended and Restated Standard Terms and Conditions of Trust")
are executed between PDR Services LLC, as Sponsor, and State Street Bank and
Trust Company, as Trustee and wholly incorporate the provisions of the Standard
Terms and Conditions of Trust dated as of January 1, 1993 ("Original Agreement")
as subsequently amended by each of the five amendments thereto respectively
dated as of May 19, 1994, January 19, 1996, September 1, 1997, January 1, 1999
and January 1, 2004 (collectively "Amendment Agreements") each of which was
executed by and between PDR Services LLC (or its predecessor entity) as Sponsor,
and State Street Bank and Trust, as Trustee.

                                WITNESSETH THAT:

         WHEREAS, the Sponsor desires to establish one or more unit investment
trusts pursuant to the provisions of the Investment Company Act of 1940 and the
laws of the State of New York and each such trust may issue a Series (as
hereinafter defined) of redeemable securities, each series representing
undivided interests in a Trust or Trust Fund (as hereinafter defined) that will
be composed primarily of Securities (as hereinafter defined) included from time
to time in the S&P Index (as hereinafter defined);




         WHEREAS, the Sponsor desires to provide for the adjustment by the
Trustee of the Securities of each Trust to reflect the S&P Index, the collection
by the Trustee of the dividends and other income of and capital gains on such
Securities held in the Trust for each Series, and the distribution by the
Trustee of such dividends and other income of and capital gains on such
Securities to the Depository (as hereinafter defined) for distribution to
Beneficial Owners as provided herein, and to provide for other terms and
conditions upon which such Trusts shall be established and administered as
hereinafter provided; and

         WHEREAS, in order to facilitate the creation of various series of unit
investment trusts as aforesaid, the terms and conditions of establishment and
administration of which will be in many respects substantially similar, it is
desirable to set forth standard terms and conditions of trust upon which such
Trusts will be established and administered, subject to the terms and provisions
of this Agreement (as hereinafter defined) and the terms and conditions of an
Indenture (as hereinafter defined) into which this Agreement will be, as to each
Series, incorporated;

         WHEREAS, the agreement entitled "Trust Indenture and Agreement dated
January 22, 1993 incorporating by reference Standard Terms and Conditions of
Trust for Standard & Poor's Depositary Receipts (`SPDR') Trust dated as of
January 1, 1993 ("Original SPDR Trust Indenture") was executed by and between
the Sponsor and the Trustee;

         WHEREAS, the Original SPDR Trust Indenture was amended pursuant to the
amendment agreement dated as of January 19, 1996 cited above ("Amended SPDR
Trust Indenture");



         WHEREAS, the Sponsor and the Trustee have each ratified and confirmed
each of: the Original Agreement, the Amendment Agreements, the Original SPDR
Trust Indenture and the Amended SPDR Trust Indenture ("Trust Documents"); and

         WHEREAS, the Sponsor and the Trustee, for each of reference, each
desire that this single document entitled "Amended and Restated Standard Terms
and Conditions of Trust dated as of January 1, 2004" shall incorporate, combine
and restate each and every current provision of the Original Agreement as
amended by the Amendment Agreements;

         NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the Sponsor and the Trustee hereby agree as
follows:


                                  INTRODUCTION

         These Standard Terms and Conditions of Trust (defined below) shall be
applicable to SPDR Trust Series 1 (a unit investment trust) and to all Series of
SPDR Trust formed on or subsequent to January 22, 1993 for which their
applicability and their incorporation by reference is specified in the
applicable Indenture relating to such Series. For each Series of SPDR Trust to
which these Standard Terms and Conditions of Trust are to be applicable, the
Sponsor and the Trustee shall execute an Indenture (or supplement or amendment
to such Indenture) incorporating by reference these Standard Terms and
Conditions of Trust and designating any exclusion from or exception to such
incorporation by reference for the purposes of that Series or variation of the
terms hereof for the purposes of that Series and specifying for that Series (i)
the Initial Portfolio Deposit to be deposited in trust pursuant to Section 2.02
and the number of Creation Unit size aggregations of SPDRs to be delivered by
the Trustee in exchange for the Initial Portfolio Deposit so deposited, (ii) the
initial undivided interest represented by each Creation Unit size aggregations
of SPDRs, (iii) the




number of SPDRs which, when aggregated, constitute one Creation Unit, (iv) the
Mandatory Termination Date, and the date on which the Trustee will begin to
distribute or sell Securities pursuant to Section 9.01, (v) the Initial Date of
Deposit and the Series name of the Trust, and (vi) any other terms specific to
any Series of the SPDR Trust.

                                   ARTICLE I

                                   DEFINITIONS

         Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:

         Adjustment Amount

         Shall have the meaning assigned to such term in Section 3.04.

         Adjustment Day

         The day(s) specified in Section 2.04.

         Agreement

         The Standard Terms and Conditions of Trust and all amendments and
supplements hereto.

         Authorized Officer

         Shall mean the President, any Vice President, any Secretary and any
other person or category of persons named in the resolution(s) authorizing the
Sponsor to establish the Trust or authorizing the Trustee to act as such.

         Balancing Amount

         Shall have the meaning assigned to such term in Section 2.04.


         Beneficial Owner

         Shall have the meaning assigned to such term in Section 3.11.

         Business Day

         Any day that the New York Stock Exchange is open for business.

         Cash Component

         Shall have the meaning assigned to such term in Section 2.03.

         Cash Redemption Payment

         Shall have the meaning assigned to such term in Section 5.02.

         CNS System

         The continuous net settlement system of NSCC.

         CPI-U

         The National Consumer Price Index for All Urban Consumers, as published
by the United States Department for Labor, or any successor index.

         Creation Unit

         The minimum number of SPDRs that may be created at any one time as
described below in Section 2.03 is 50,000, unless otherwise provided in the
Registration Statement.

         Depositor

         Each person or organization having a Participant Agreement with the
Trustee and that may from time to time deposit Portfolio Deposits with the
Trustee, including, without limitation, the Depositor making the Initial
Portfolio Deposit(s) on the Initial Date of Deposit.



         Depository

         The Depository Trust Company, New York, New York, or such other
depository as may be selected by the Trustee as specified herein.

         Depository Agreement

         The agreement or Letter of Representation among the Trustee, the
Sponsor and the Depository, dated as of January 14, 1993, as the same may be
from time to time amended in accordance with its terms.

         Distributor

         ALPS Distributors, Inc., any successor corporation thereto and any
other corporation appointed by the Sponsor and the Trustee to act as the
Distributor hereunder, provided that such corporation is identified as the
Distributor in the current version of each Prospectus.

         Discretionary Termination Amount

         The amount specified in Section 9.01.

         Dividend Equivalent Payment

         The cash payment required to accompany a deposit Securities into the
Trust as specified in Section 2.03.

         Dividend Payment Date

         The date(s) specified in Section 3.04.

         DTC Participant

         Shall have the meaning assigned to such term in Section 3.11.


         Evaluation Time

         Closing time at the New York Stock Exchange, Inc. of the regular
trading session (currently 4:00 p.m. New York time) unless another meaning is
assigned to such term in the Indenture, or is otherwise provided for in the
Registration Statement.

         Ex-Dividend Date

         The date(s) specified in Section 3.04(a).

         Exchange

         The American Stock Exchange, LLC.

         Global Security

         The global certificate issued to the Depository as provided in the
Depository Agreement, substantially in the form attached hereto as Exhibit B.

         Income

         Any income or cash or other dividend distribution by an issuer of a
Security, whether or not such payment or distribution is taxable to the
recipient thereof.

         Indenture

         The indenture into which this Agreement will be, as to each Series,
incorporated and all amendments and supplemental indentures thereto.

         Index Securities

         The securities that constitute the S&P Index.

         Indirect Participant

         Shall have the meaning assigned to such term in Section 3.11.




         Initial Date of Deposit

         The date so designated in the Indenture.

         Initial Portfolio Deposit

         The Portfolio Deposit(s) as in effect on the Initial Date of Deposit.

         Internal Revenue Code

         The Internal Revenue Code of 1986, as amended, or any successor
provisions.

         License Agreement

         The agreement dated October 30, 1992, among Standard & Poor's
Corporation, the Exchange and the Sponsor under which the Sponsor has been
granted the license to use certain trade names and trademarks of Standard &
Poor's Corporation and all amendments and supplements thereto.

         Mandatory Termination Date

         The date specified in the Indenture.

         Misweighting

         Shall have the meaning assigned to such term in Section 2.04.

         Misweighting Amount

         The amount(s) specified in Section 2.04.

         NASDAQ

         The National Association of Securities Dealers Automated Quotations
Systems.

         NAV Amount

         The amount specified in Section 2.04.


         NSCC

         The National Securities Clearing Corporation.

         Participant Agreement

         An Agreement among the Distributor, the Trustee and either (1) a
Participating Party or (2) a DTC Participant, substantially in the form set
forth in Exhibit A hereto, as the same may be from time to time amended in
accordance with its terms.

         Participating Party

         A participant in the SPDR Clearing Process.

         Portfolio

         The Securities held by the Trust consisting of a portfolio of common
stocks or, in the case of securities not yet delivered on the Initial Date of
Deposit (or, subsequently, securities not yet delivered in connection with
purchases made by the Trust or subsequent Portfolio Deposits), confirmations of
contracts to purchase such securities.

         Portfolio Deposit

         Shall have the meaning assigned to such term in Section 2.03.

         Portfolio Deposit Amount

         Shall have the meaning assigned to such term in Section 2.04.

         Prospectus

         The prospectus relating to a particular Trust filed with the Securities
and Exchange Commission pursuant to Rule 424 of the Securities Act of 1933, as
amended.



         Record Date

         The date(s) specified in Section 3.04.

         Redemption Date

         Shall have the meaning assigned to such term in Section 5.02.

         Regulated Investment Company

         A trust which qualifies as a "regulated investment company" under the
current provisions of the Internal Revenue Code of 1986, as amended or successor
provisions.

         Request Day

         Shall have the meaning assigned to such term in Section 2.04.

         S&P Index

         The Standard & Poor's 500 Composite Stock Price Index.

         Securities

         Publicly traded common stocks and other securities convertible into or
representing common stock of issuers, including contracts to purchase
securities, (a) that are listed or referred to as securities in Schedule A to
the Indenture, (b) that have been received by the Trust in subsequent Portfolio
Deposits pursuant to Section 2.02, (c) that have been acquired by the Trust as a
result of the reinvestment of proceeds from any sale of securities or as a
result of purchases and sales of securities to conform the Portfolio to the S&P
Index all pursuant to Section 2.04, (d) that have been received by the Trust as
a distribution or dividend in respect of any of the securities held by the
Trust, or (e) that have been received by the Trust in exchange or substitution
pursuant to Section 3.07, each as may from time to time continue to be held as a
part of the Trust, unless another meaning is assigned to such term in the
Indenture.




         Series

         Any series of or series similar to the Trusts.

         SPDRs

         Standard & Poor's Depositary Receipts, which constitute, in 50,000 SPDR
aggregations, a Creation Unit, unless (1) a different aggregate number of SPDRs
necessary to constitute a Creation Unit is set forth in the Indenture for a
particular Series or (2) a different aggregate number for an existing series is
effectuated by means of an amendment to the Indenture and current Prospectus for
such series.

         SPDR Clearing Process

         The CNS system of NSCC, as such processes have been enhanced to effect
creations and redemptions of Creation Unit size aggregations of SPDRs.

         Sponsor

         PDR Services LLC, or any corporation into which it may be merged or
with which it may be consolidated, or any corporation resulting from any merger
or consolidation to which it shall be a party, or any corporation succeeding to
all or substantially all of its business as sponsor of unit investment trusts,
or any successor Sponsor designated as such by operation of law or any successor
Sponsor appointed as herein provided.

         Sponsor Indemnified Party

         Shall have the meaning assigned to such term in Section 7.04.

         Standard Terms and Conditions of Trust

         The Standard Terms and Conditions of Trust embodied in this instrument
entitled "Amended and Restated Standard Terms and Conditions of Trust dated as
of January 1, 2004".



         Transaction Fee

         Shall have the meaning assigned to such term in Section 2.03.

         Trust or Trust Fund

         Shall mean the individual trust fund created by a particular Indenture
which shall consist of the Portfolio and all undistributed income or other
amounts received or receivable thereon and any undistributed cash held or
realized from the sale or liquidation of the Securities, or from the deposit of
Portfolio Deposits.

         Trust Fund Evaluation

         Shall have the meaning assigned to such term in Section 5.01.

         Trustee

         (a) State Street Bank and Trust Company or its successor or (b) any
successor Trustee designated by operation of law or appointed as herein provided
or (c) any other bank, trust company, corporation or national banking
association designated as Trustee in the Indenture for the applicable Trust
Series which bank, trust company, corporation or national banking association
shall be a party to such Indenture and whose execution thereof shall subject
such bank, trust company, corporation or national banking association to all
rights, duties and liabilities hereunder and thereunder, in each case acting as
Trustee and not individually, unless otherwise indicated.

         Trustee Indemnified Party

         Shall have the meaning assigned to such term in Section 8.05.

         Weighting Analysis

         Shall have the meaning assigned to such term in Section 2.04.








                                   ARTICLE II

                              DECLARATION OF TRUST;

                             DEPOSIT OF SECURITIES;

                                 THE PORTFOLIO;

                              CREATION AND ISSUANCE

                                   OF SPDRS IN

                                  CREATION UNIT

                                SIZE AGGREGATIONS

         Section 2.01. Declaration of Trust. The Trustee declares it holds and
will hold the Trust Fund as Trustee for the use and benefit of all present and
future Beneficial Owners and subject to the terms and conditions of the
Indenture and this Agreement. The Trustee hereby declares on behalf of the Trust
that it elects the treatment for tax purposes as a Regulated Investment Company
and covenants to comply with the provisions of Section 4.03 hereof to continue
the qualification of the Trust as a Regulated Investment Company.

         Section 2.02. Deposit of Securities. Concurrently with the execution
and delivery of the Indenture, a Depositor will deposit the Initial Portfolio
Deposit with the Trustee, and from time to time thereafter, Depositors may make,
as provided below in this Section 2.02, additional deposits of Portfolio
Deposits with the Trustee, and in each case the Trustee will be granted and
conveyed all right, title and interest in and to, and there will be conveyed and
deposited with the Trustee in an irrevocable trust, all cash and securities so
deposited in connection with each such Portfolio Deposit. With respect to the
Initial Portfolio Deposit made by a Depositor concurrently with the execution
and delivery of the Indenture, the securities portion of the Initial Portfolio
Deposit is comprised of the securities listed in Schedule A to the Indenture,



and each of such securities is duly endorsed in blank or accompanied by all
necessary instruments of assignment and transfer in proper form, to be held and
applied by the Trustee as herein provided. There will be no Cash Component
included in the Initial Portfolio Deposit. The first accrual period for
dividends payable on the first Dividend Payment Date will commence on the
Business Day following the Initial Date of Deposit. Upon the delivery of the
Initial Portfolio Deposit, the Depositor will also deliver to the Trustee one of
the following: a certified check or checks, cash or cash equivalent or an
irrevocable letter or letters of credit or an irrevocable loan commitment issued
by a commercial bank or banks rated A or better (or other equivalent rating) by
a nationally recognized rating agency in an amount necessary to satisfy
applicable regulatory requirements.

         From time to time following the Initial Date of Deposit, the Trustee is
authorized to accept on behalf of the Trust additional deposits of Portfolio
Deposits, and all Index Securities deposited in connection therewith shall be
duly endorsed in blank or accompanied by all necessary instruments of assignment
and transfer in proper form, to be held and applied by the Trustee as herein
provided. The Trustee shall ensure that the securities portion of each Portfolio
Deposit shall be comprised of such Index Securities and in such weightings as
specified in Section 2.04. The Trustee shall also ensure that, in the event
certain Securities held by the Trust Fund are removed from the S&P Index or the
composition or the weighting structure of the Index Securities changes by a
percentage as specified in Section 2.04, the Trustee shall recalculate the
composition of the Portfolio Deposit and adjust the composition of the
Portfolio, in each case as required by the provisions of Section 2.04.

         The Trustee is hereby irrevocably authorized to effect registration or
transfer of the Securities in fully registered form to the name of the Trustee
or to the name of its nominee or the nominee of its agent.




         Section 2.03. Creation and Issuance of Creation Units. The Trustee
acknowledges that the Initial Portfolio Deposit(s) specified in the Indenture
(which include the Securities listed in Schedule A to the Indenture) have been
deposited with it by the Depositor on the Initial Date of Deposit. The Trustee
shall accept such Initial Portfolio Deposit(s) and issue an appropriate
corresponding number of SPDRs in Creation Unit size aggregations in exchange
therefor.

         The additional deposits of Portfolio Deposits accepted by the Trustee
from time to time thereafter shall include a portfolio of securities (initially
the securities listed in Exhibit A to the Indenture and thereafter, such
securities as the composition and weighting thereof may be adjusted as required
by Section 2.04) together, in each case other than that of the Initial Portfolio
Deposit(s), with a cash payment, to the extent applicable, equal to the Dividend
Equivalent Payment (as hereinafter defined), plus or minus, as the case may be,
the Balancing Amount (as hereinafter defined - see Section 2.04). The "Dividend
Equivalent Payment" enables the Trustee to make a distribution of dividends on
the next Dividend Payment Date (as hereinafter defined), and is an amount equal,
on a per Creation Unit basis, to the dividends on all the Securities for the
accumulation period, net of expenses and liabilities for such period (including,
without limitation, (x) taxes or other governmental charges against, the Trust
not previously deducted, if any and (y) accrued fees of the Trustee and other
expenses of the Trust (including legal and auditing expenses) and other expenses
not previously deducted), as if all of the Securities had been held for the
entire accumulation period for such distribution.

         The Dividend Equivalent Payment and the Balancing Amount are
collectively referred to herein as the "Cash Component" and the deposit of such
a portfolio of securities and the Cash Component are collectively referred to
herein as a "Portfolio Deposit. In the event that the Trustee determines, in its
discretion, that an Index Security is likely to be



unavailable or available in insufficient quantity for delivery to the Trust upon
the creation of SPDRs in Creation Unit size aggregations, or upon the redemption
of SPDRs in Creation Unit size aggregations, the. cash equivalent value of such
Index Security may be included in the Portfolio Deposit as a part of the Cash
Component in lieu of the inclusion of such Index Security in the securities
portion of the Portfolio Deposit.

         Requests to create SPDRs in Creation Unit size aggregations through the
Distributor must be made by or through a Participating Party or a DTC
Participant as specified below. A Participating Party, pursuant to the
Participant Agreement described below, agrees to transfer the requisite Index
Securities (or contracts to purchase such Index Securities which are expected to
be delivered in a "regular way" manner in five (5) Business Days) and the Cash
Component to the Trustee by means of the SPDR Clearing Process, together with
such additional information as may be required by the Trustee. The Participant
Agreement shall set forth the procedures for requesting the creation of Creation
Units and delivering Portfolio Deposits, confirming requests for creations, and
for delivering SPDRs in Creation Unit size aggregations for redemption. A list
of the entities that are party to the Participant Agreement is available at the
office of the Trustee at 1776 Heritage Drive, North Quincy, Massachusetts 02171
and the office of the Distributor at 6 St. James Place, Boston, Massachusetts
02116 during normal business hours or at such other address as may be specified
to the other parties hereto in writing.

         Under certain circumstances, SPDRs in Creation Unit size aggregations
may be created by or through a DTC Participant through the Distributor outside
the SPDR Clearing Process. In such cases, the DTC Participant shall effectuate
the transfer of the requisite Index Securities and the Cash Component to the
Trustee directly through DTC on the day on which



the order is accepted by the Distributor for SPDR delivery not later than on the
fifth Business Day following the day on which the order is accepted by the
Distributor.

         Upon receipt of a Portfolio Deposit or Deposits following acceptance by
the Distributor of an order to create SPDRs, the Trustee will deliver SPDRs
thereby created in Creation Unit size aggregations to the Depository in the name
of Cede & Co. for the account of such depositor, if such depositor is a DTC
Participant, or for the account of the DTC Participant acting on behalf of such
depositor. The Trustee shall acknowledge the deposit of such Portfolio
Deposit(s) by recording on its books the name of the Depositor and the aggregate
number of Creation Unit(s) created in respect of the Portfolio Deposit(s) so
deposited. The Trustee shall also credit (a) the Dividend Equivalent Payment, if
any, accompanying such Portfolio Deposit(s) to the Trust, to be added to
dividends to be received on the deposited Index Securities for distribution
pursuant to Section 3.04, and (b) the Balancing Amount, if any, to the Trust to
be applied or distributed as provided in this Agreement.

         The identity and number of shares of the Index Securities required for
a Portfolio Deposit, which will change as the composition and weighting
structure of the Index Securities change, shall be determined in the manner
specified in Section 2.04. The Trustee shall, as set forth in this Agreement,
determine the number of shares of each of the Index Securities and the Cash
Component in each Portfolio Deposit. Such determination by the Trustee shall be
final and binding in connection with all Portfolio Deposits.

         The Trustee may reject an order to create SPDRs in Creation Unit size
aggregations transmitted to it by the Distributor if the depositor or group of
depositors, upon obtaining the SPDRs ordered, would own or appear to own eighty
percent (80%) or more of the



outstanding SPDRs and if pursuant to Section 351 of the Internal Revenue Code,
such circumstance would result in the Trust having a basis in the Index
Securities deposited different from the market value of such Index Securities on
the date of such deposit. The Trustee shall have the right to require
information regarding SPDR ownership pursuant to the Participant Agreement and
from the Depository and to rely thereon to the extent necessary to make the
foregoing determination as a condition to the acceptance of an order to create
SPDRs. The Trustee further reserves the absolute right to reject any Portfolio
Deposit or any component thereof (a) determined by it not to be in proper form;
(b) that would have adverse tax consequences to the Trust or to Beneficial
Owners; (c) the acceptance for deposit of which would, in the opinion of
counsel, be unlawful; (d) that would otherwise, in the discretion of the
Trustee, have an adverse effect on the Trust or the rights of Beneficial Owners;
or (e) in the event of the inability of the creator to deliver or cause to be
delivered the Portfolio Deposit through the Depository or otherwise in the event
that circumstances outside the control of the Trustee make it for all practical
purposes impossible to process creations of SPDRs.

         The Trustee will not issue certificates for SPDRs in Creation Unit size
aggregations or otherwise, other than the Global Security issued to the
Depository. The Trustee and the Sponsor are under no duty to give notification
of any defects or irregularities in the delivery of Portfolio Deposits or any
component thereof nor shall either of them incur any liability for the failure
to give any such notification. A transaction fee will be payable to the Trustee
for its own account in connection with each creation and each redemption of each
Creation Unit size aggregation of SPDRs (the "Transaction Fee"). During the
ninety (90) day period following the Initial Date of Deposit for Series 1, the
Transaction Fee charged in connection with the creation of Creation Units
through the SPDR Clearing Process shall be $1,500 for a



creation order for one Creation Unit per Participating Party per day and $3,000
for creation order(s) for two or more Creation Units per Participating Party per
day. Following such ninety (90) day period, the Transaction Fee charged in
connection with the creation of Creation Units shall be as set forth in the
table below:



                    Creations Per Partipating Party Per Day*
                    ----------------------------------------
       1-10  Creation Units              -         $1,500 per Creation Unit
       11-25 Creation Units              -         $  500 per Creation Unit
       26 and more                       -         $  250 per Creation Unit


The Transaction Fee charged in connection with redemptions, whether or not
within the ninety (90) day period following the Initial Date of Deposit, shall
be as set forth in the following table (except under the circumstances regarding
transactions effectuated outside of the SPDR Clearing Process described below):





                  Redemptions Per Participating Party Per Day*
                  --------------------------------------------
       1-10  Creation Units              -         $1,500 per Creation Unit
       11-25 Creation Units              -         $  500 per Creation Unit
       26 and more                       -         $  250 per Creation Unit


          *    The Transaction Fee applies to the number of Creation Units that
               falls into the size category indicated.

The Transaction Fee may subsequently be changed by the Trustee in its sole
discretion, but will not in any event exceed 1/10th of one percent of the value
of a Creation Unit at the time of creation or redemption, as the case may be.
Prior to implementing such change, the Trustee shall cause the current
registration statement for the Trust to be amended to reflect any such changes
in the Transaction Fee. The amount of the Transaction Fee in effect at any given
time shall be made available upon request by the Trustee. If one or more
Creation Units are created or redeemed outside the SPDR Clearing Process, an
additional amount



equal to three (3) times the Transaction Fee applicable for one Creation Unit
will be charged to the creator or redeemer per Creation Unit in part due to the
increased expense associated with settlement outside the SPDR Clearing Process.
Notwithstanding anything else herein to the contrary, the Transaction Fee
charged in connection with a creation or redemption of one Creation Unit will
never be in an amount less than $1,000.

         So long as the Depository Agreement is in effect, SPDRs in Creation
Unit size aggregations will be transferable solely through the book-entry system
of the Depository. The Depository may determine to discontinue providing its
service with respect to SPDRs by giving notice to the Trustee and the Sponsor
pursuant to and in conformity with the provisions of the Depository Agreement
and discharging its responsibilities with respect thereto under applicable law.
Under such circumstances, the Trustee and the Sponsor shall take action either
to find a replacement for the Depository to perform its functions at a
comparable cost or, if such a replacement is unavailable, to terminate the
Trust.

         Section 2.04. Portfolio and Portfolio Deposit Adjustments. (a) The
Trustee will adjust the composition of the Portfolio from time to time to
conform to changes in the composition and/or weighting structure of the Index
Securities. The Trustee will aggregate certain of these adjustments and make
conforming changes to the Trust's portfolio at least monthly; however,
adjustments will be made more frequently in the case of changes to the S&P Index
that are significant. Specifically, the Trustee will be required to adjust the
composition of the Portfolio at any time that there is a change in the identity
of any Index Security (i.e., a substitution of one security in replacement of
another), which adjustment shall be made within three (3) Business Days before
or after the day on which the change in the identity of such index Security is
scheduled to take effect at the close of the market.



         From time to time Standard & Poor's may make adjustments to the
composition of the S&P Index as a result of a merger or acquisition involving
one or more of the Index Securities. In such cases, the Trust, as shareholder of
securities of an issuer that is the object of such merger or acquisition
activity, may receive various offers from would-be acquirers of the issuer. The
Trustee will not be permitted to accept any such offers until such time as it
has been determined that the securities of the issuer will be removed from the
S&P Index. Since securities of an issuer are often removed from the S&P Index
only after the consummation of a merger or acquisition of such issuer, in
selling the securities of such issuer the Trust may receive, to the extent that
market prices do not provide a more attractive alternative, whatever
consideration is being offered to the shareholders of such issuer that have not
tendered their shares prior to such time. Any cash received in such transactions
will be reinvested in Index Securities in accordance with the criteria set forth
above. Any securities received as a part of the consideration that are not Index
Securities will be sold as soon as practicable and the cash proceeds of such
sale will be reinvested in accordance with the criteria set forth above.

         To further the investment objective of the Trust, minor misweightings
will generally be permitted within the guidelines set forth below.

         The Trustee shall adjust the composition of the Portfolio at any time
that the weighting of any Security in the Portfolio varies in excess of one
hundred and fifty percent (150%) of the Misweighting Amount (set forth in the
table below) from the weighting of such Security in the S&P Index (a
"Misweighting"):



           Net Asset Value of the Trust                    Misweighting Amount
           ---------------------------------               -------------------
           Less than $25,000,000                                   .08%
           $25,000,000 - $99,999,999                               .05%
           $100,000,000 - $499,999,999                             .04%
           $500,000,000 - $999,999,999                             .03%
           $1,000,000,000 and over                                 .02%




         The Trustee shall examine each Security in the Portfolio on each
Business Day, comparing the weighting of each such Security in the Portfolio to
the weighting of the corresponding Index Security in the S&P Index, based on
prices at the close of the market on the preceding Business Day (a "Weighting
Analysis"). In the event that there is a Misweighting in any Security in excess
of one hundred and fifty percent (150%) of the applicable Misweighting Amount,
the Trustee shall calculate an adjustment to the Portfolio in order to bring the
Misweighting of such Security within the Misweighting Amount, based on prices at
the close of the market on the day on which such Misweighting occurs. Also, on a
monthly basis, the Trustee shall perform a Weighting Analysis for each Security
in the Portfolio, and in any case where there exists a Misweighting exceeding
one hundred percent (100%) of the applicable Misweighting Amount, the Trustee
shall calculate an adjustment to the Portfolio in order to bring the
Misweighting of such Security within the applicable Misweighting Amount, based
on prices at the close of the market on the day on which such Misweighting
occurs. In the case of any adjustment to the Portfolio due to a Misweighting as
described herein, the purchase or sale of securities necessitated by such
adjustment shall be made within three (3) Business Days of the day on which such
Misweighting occurs. In addition to the foregoing adjustments, the Trustee
reserves the right to make additional adjustments periodically to Securities
that may be misweighted by an amount within the applicable Misweighting Amount
in order to reduce the overall Misweighting of the Portfolio. Purchases and
sales of Securities resulting from the adjustments described herein will be made
in the share amounts dictated by the specifications set forth herein, whether
round lot or odd lot. All portfolio adjustments will be



made as described herein unless such adjustments would cause the Trust to lose
its status as a Regulated Investment Company under Subchapter M of the Internal
Revenue Code.

         Pursuant to these guidelines the Trustee will calculate the required
adjustments and will purchase and sell the appropriate securities. As a result
of the purchase and sale of securities in accordance with these requirements, or
the creation of Creation Units, the Trust may hold some amount of residual cash
(other than cash held temporarily due to timing differences between the sale and
purchase of securities or cash delivered in lieu of Index Securities or
undistributed income or undistributed capital gains) as a result of such
transactions, which amount shall not exceed for more than two (2) consecutive
Business Days 5/10ths of 1 percent of the aggregate value of the Securities. In
the event that the Trustee has made all required adjustments and is left with
cash in excess of 5/10ths of 1 percent of the aggregate value of the Securities,
the Trustee shall use such cash to purchase additional Index Securities that are
under-weighted in the Portfolio as compared to their relative weightings in the
S&P Index, although the Misweighting of such Index Securities may not be in
excess of the applicable Misweighting Amount.

         All adjustments to the Portfolio held by the Trustee will be made by
the Trustee pursuant to the foregoing specifications and as set forth in the
Trust Agreement and will be non-discretionary. In addition, the Trustee shall
have the power and shall be required to adjust the composition of the Portfolio
at any time if it is necessary to insure the continued qualification of the
Trust as a Regulated Investment Company. The adjustments provided herein are
intended to conform the composition and weightings of the Portfolio, to the
extent practicable, to the composition and weightings of the Index Securities.
Such adjustments are based upon the S&P Index as it is determined by Standard &
Poor's. To the extent that the method of determining the S&P Index is changed by
Standard & Poor's in a manner that



would affect the adjustments provided for herein, the Trustee and the Sponsor
shall have the right to amend the Trust Agreement, without the consent of the
Depository or Beneficial Owners, to conform the adjustments provided herein and
in the Trust Agreement to such changes so that the objective of tracking the S&P
Index is maintained.

         At such time as the Trustee gives written notice of the termination of
the Trust as provided in Section 9.01, from and after the date of such notice
the Trustee shall use the composition and weightings of the Securities as of
such date for the purpose and determination of all redemptions or other required
uses of the basket.

         The Trustee will direct its securities transactions only to brokers or
dealers, which may include affiliates of the Trustee, from whom it expects to
obtain the most favorable prices for execution of orders. The net proceeds of
any sales of Securities shall either be reinvested in accordance with Section
2.04 or distributed in accordance with Section 3.07.

         (b) After the Initial Date of Deposit, on each Business Day thereafter
(each such day an "Adjustment Day"), the number of shares and/or identity of
each of the Index Securities in a Portfolio Deposit will be adjusted in
accordance with the following procedure. At the close of the market on each
Adjustment Day, the Trustee will calculate the net asset value of the Trust as
provided in Section 5.01. The net asset value will be divided by the number of
outstanding SPDRs in Creation Unit size aggregations, resulting in a net asset
value per Creation Unit (the "NAV Amount"). The Trustee will then calculate the
number of shares (without rounding) of each of the component stocks of the S&P
Index in a Portfolio Deposit for the following Business Day ("Request Day"),
such that (1) the market value at the close of the market on Adjustment Day of
the securities to be included in the Portfolio Deposit on Request Day, together
with the Dividend Equivalent Payment effective for



requests to create or redeem on Adjustment Day, will equal the NAV Amount and
(2) the identity and weighting of each of the securities in a Portfolio Deposit
will mirror proportionately the identity and weightings of the securities in the
S&P Index, each as in effect on Request Day. For each security, the number
resulting from such calculation will be rounded to the nearest whole share, with
a fraction of 0.50 being rounded up. The identities and weightings of the
securities so calculated will constitute the securities portion of the Portfolio
Deposit effective on Request Day and thereafter until the next subsequent
Adjustment Day, as well as the Securities to be delivered by the Trustee in the
event of request for redemption of SPDRs in Creation Unit size aggregations on
Request Day and thereafter until the following Adjustment Day pursuant to
Section 5.02. In addition to the foregoing adjustments, in the event that there
shall occur a stock split or stock dividend with respect to any Index Security
that does not result in an adjustment to the S&P Index divisor, the Portfolio
Deposit shall be adjusted to take account of such stock split or stock dividend
by applying the stock split or stock dividend multiple (e.g., in the event of a
two-for-one stock split of an Index Security, by doubling the number of shares
of such Index Security in the prescribed Portfolio Deposit), in each case
rounded to the nearest whole share.

         On Request Day and on each day that a request for the creation or
redemption of SPDRs in Creation Unit size aggregations is made, the Trustee will
calculate the market value of the securities portion of the Portfolio Deposit as
in effect on Request Day as of the close of the market and add to that amount
the Dividend Equivalent Payment effective for requests to create or redeem on
Request Day (such market value and Dividend Equivalent Payment are collectively
referred to herein as the "Portfolio Deposit Amount"). The Trustee will then
calculate the NAV Amount, based on the close of the market on Request Day. The
difference between the NAV Amount so calculated and the Portfolio Deposit Amount
shall



be the "Balancing Amount". The Balancing Amount serves the function of
compensating for any differences between the value of the Portfolio Deposit
Amount and the NAV Amount at the close of trading on Request Day due to, for
example, (1) differences in the market value of the securities in the Portfolio
Deposit and the market value of the Securities on Request Day and (2) any
variances from the proper composition of the Portfolio Deposit.

         Notwithstanding the foregoing, on any Adjustment Day on which (a) no
change in the identity and/or share weighting of any Index Security is scheduled
to take effect that would cause the S&P Index divisor to be adjusted after the
close of the market on such Business Day,* and (b) no stock split or stock
dividend with respect to any Index Security has been declared to take effect on
the corresponding Request Day, the Trustee reserves the right to forego making
any adjustment to the Securities portion of the Portfolio Deposit and to use the
composition and weightings of the Index Securities for the most recently
effective Portfolio Deposit for the Request Day following such Adjustment Day.
Notwithstanding the foregoing, the amount of the Cash Component shall at all
times be determined in accordance with the procedures set forth above. In
addition, the Trustee further reserves the right to calculate the adjustment to
the number of shares and/or identity of the Index Securities in a Portfolio
Deposit as described above except that such calculation would be employed for
two (2) Business Days rather than one (1) Business Day prior to Request Day.

         As previously discussed, the Dividend Equivalent Payment and the
Balancing Amount in effect at the close of business on Request Date are
collectively referred to as the Cash Component or the Cash Redemption Payment.
If the Balancing Amount is a positive number (i.e., if the NAV Amount exceeds
the Portfolio Deposit Amount) then with respect to the

--------
* After the close of the market on the Business Day prior to any change in the
identity and/or weighting of any security included in the S&P Index, Standard &
Poor's publicly announces the new identity and/or weighting of the S&P Index
component securities effective on the following Business Day.




creation of SPDRs, the Balancing Amount shall increase the Cash Component of the
then effective Portfolio Deposit, and with respect to redemptions of SPDRs in
Creation Unit size aggregations, the Balancing Amount shall be added to the cash
transferred to a redeemer by the Trustee. If the Balancing Amount is a negative
number (i.e. if the NAV Amount is less than the Portfolio Deposit Amount), then
with respect to the creation of SPDRs such amount shall decrease the Cash
Component of the then effective Portfolio Deposit or, if such cash portion is
less than the Balancing Amount, the difference shall be paid by the Trustee to
the creator, and with respect to redemptions of SPDRs in Creation Unit size
aggregations, the Balancing Amount shall be deducted from the cash transferred
to the redeemer or, if such cash is less than the Balancing Amount, the
difference shall be paid by the redeemer to the Trustee.

         In making the adjustments described above, the Trustee will rely on
industry sources generally available for information as to the composition and
weightings of the Index Securities. If the Trustee becomes incapable of
obtaining or processing such information or NSCC is unable to receive such
information from the Trustee on any Business Day, then the Trustee shall use the
composition and weightings of the Index Securities for the most recently
effective Portfolio Deposit for the purposes of all adjustments and
determinations described herein (including, without limitation determination of
the securities portion of the Portfolio Deposit) until the earlier of (a) such
time as current information with respect to the Index Securities is available or
(b) three (3) consecutive Business Days have elapsed. If such current
information is not available and three (3) consecutive Business Days have
elapsed, the composition and weightings of the Securities shall be used for the
purposes of all adjustments and determinations herein (including, without
limitation, determination of the



securities portion of the Portfolio Deposit) until current information with
respect to the Index Securities is available.

         If the Trustee shall determine, in its discretion, that an Index
Security is likely to be unavailable or available in insufficient quantity for
delivery upon the creation of SPDRs in Creation Unit size aggregations or upon
the redemption of SPDRs in Creation Unit size aggregations for the following
Business Day or for any period thereafter, the Trustee shall have the right to
include the cash equivalent value of such Index Security determined in
accordance with the protocols listed in Section 4.01 hereof in the Portfolio
Deposit as a part of the Cash Component or the Cash Redemption Payment, as the
case may be, in lieu of the inclusion of such Index Security in the securities
portion of the Portfolio Deposit. In the event that such a determination is
made, the Portfolio Deposit so constituted shall dictate the Index Securities to
be delivered in connection with the creation of SPDRs in Creation Unit size
aggregations and upon the redemption of SPDRs in Creation Unit size aggregations
for all purposes hereunder until such time as the securities portion of the
Portfolio Deposit is subsequently adjusted.

         In connection with creation or redemption of SPDRs, if an investor is
restricted by regulation or otherwise from investing or engaging in a
transaction in one or more Index Securities, the Trustee, in its discretion,
shall have the right to include the cash equivalent value of such Index
Securities (determined in accordance with the protocols listed in Section 4.01
hereof) in the Portfolio Deposit as part of the Cash Component (or the Cash
Redemption Payment, as the case may be) in lieu of the inclusion of such Index
Securities in the securities portion of the Portfolio Deposit for the affected
investor. The amount of such cash equivalent payment shall be used by the
Trustee in accordance with the foregoing guidelines regarding allowable
Misweightings and permissible amounts of cash. In such cases, the Trustee, to



effectuate the policy described above, may purchase the appropriate number of
shares of the Index Security that the investor was unable to purchase. In any
such case an investor shall pay the Trustee the standard Transaction Fee plus an
additional amount not to exceed 3 times the standard Transaction Fee.

         Section 2.05. Bank Accounts. The Trustee shall open and maintain a
separate bank account or accounts in the banking department of the Trustee in
the name, and for the benefit, of the Trust, subject only to draft or order by
the Trustee acting pursuant to the terms of this Agreement, and shall hold in
such account or accounts all cash received by it from or for the account of the
Trust. Each Series of the Trust shall be separately identified and shall have an
account or accounts unique to it.

                                  ARTICLE III

                             ADMINISTRATION OF TRUST

         Section 3.01. Collection of Income. (a) The Trustee shall collect, or
claim on, any Income on the Securities as it becomes payable (including the
Dividend Equivalent Payment and that part of the proceeds of the sale or
liquidation of any of the Securities which represents accrued dividends or
distributions and capital gains thereon). Income so collected shall be held
uninvested until distributed pursuant to the provisions of this Agreement. The
Trustee shall accrue all Income to the Trust as of the date on which the Trust
is entitled to such Income as a holder of record of the Securities.

         (b) The Trustee may, in its discretion, sell securities pursuant to
Section 3.06 or advance out of its own funds such amounts as may be necessary to
permit distributions pursuant to Section 3.04 and payments in respect of the
redemption of SPDRs in Creation Unit size aggregations pursuant to Section 5.02.
The Trustee shall pay to itself the amounts which it is



entitled to receive as reimbursement for amounts advanced pursuant to the
preceding sentence, by deducting such amounts from the Income on the Securities
when funds are available. The Trustee will reimburse itself in the amount of
such advance, plus Federal Reserve Board requirements, together with interest
thereon at a percentage rate equal to then current overnight federal funds rate,
by deducting such amounts from (1) dividend payments or other income of the
Trust when such payments or other income is received, (2) the amounts earned or
benefits derived by the Trustee on cash held by the Trustee for the benefit of
the Trust, and (3) the sale of Securities. In the event any such advance remains
outstanding for more than forty-five (45) Business Days, the Trustee shall sell
Securities to reimburse itself for such advance and any accrued interest
thereon. The Trustee shall be deemed to be the beneficial owner of the Income
payments in question to the extent of all amounts advanced by it pursuant to
this Section 3.01(b), and such advances shall be secured by a lien on the Trust.

         Section 3.02. Collection of Other Moneys. All moneys other than amounts
received by the Trustee in respect of the Securities under this Agreement as
described in Section 3.02 or reinvested in the purchase of Index Securities as
provided in Section 2.04 (including, but not limited to, the Balancing Amount
and all moneys realized by the Trustee from the sale of options, warrants or
other similar rights received in respect of the Securities representing
dividends or distributions thereon), including any capital gains dividends,
shall be credited to the Trust in accordance with generally accepted accounting
principles; provided, however, that moneys which are required to cover the price
of securities purchased by the Trust but not yet delivered shall be held for
such purchase. Moneys so collected shall be held uninvested. Any moneys
collected other than amounts collected pursuant to Section 3.01 in respect of
the



Securities may be reinvested in additional Securities in lieu of distributions
of dividend payments and other income, if necessary, as provided in Section
3.04.

         Section 3.03. Establishment of Reserves. From time to time the Trustee
may, as required by generally accepted accounting principles, establish reserves
for any applicable taxes or other governmental charges that may be payable out
of the Trust Fund. The Trustee shall not be required to transmit to the
Depository for distribution to Beneficial Owners as described in Section 3.11
any of the amounts held in such reserves; provided, however, that if the
Trustee, in its sole discretion, determines that such amounts are no longer
necessary for payment of any applicable taxes or other governmental charges,
then such amounts shall no longer be considered to be held in such reserves. If
the Trust Fund has been terminated or is in the process of termination, the
Trustee shall transmit to the Depository for distribution to Beneficial Owners
as described in Section 3.11 such Beneficial Owners' interest in the amounts
previously reserved in accordance with Section 9.01.

         Section 3.04. Certain Deductions and Distributions. On each Business
Day, the Trustee shall deduct from moneys held as described above and pay to
itself individually the amounts that it is at the time entitled to receive
pursuant to Sections 8.01 and 8.04 on account of its services performed, in
accordance with the fee schedule set forth below (based on the net asset value
of the Trust on such Business Day). Expenses of the Trust will be annualized and
accrued on each Business Day.

         The following charges are or may be accrued and paid by the Trust:

         The (1) Trustee's fees as set forth below, (2) fees payable to transfer
agents for the provision of transfer agency services, if any,; (3) fees of the
Trustee for extraordinary services performed under this Agreement; (4) various
governmental charges; (5) any taxes,



fees and charges payable by the Trustee with respect to SPDRs (whether in
Creation Unit size aggregations or otherwise); (6) expenses and costs of any
action taken by the Trustee Indemnified Party or the Sponsor Indemnified Party
to protect the Trust and the rights and interests of Beneficial Owners of SPDRs
(whether in Creation Unit size aggregations or otherwise); (7) indemnification
of the Trustee or the Sponsor for any losses, liabilities or expenses incurred
by it in the administration of the Trust without gross negligence, bad faith,
wilful misconduct, wilful malfeasance on their part or reckless disregard of
their obligations and duties; (8) expenses incurred in contacting Beneficial
Owners of SPDRs upon termination of the Trust; and (9) other out-of-pocket
expenses of the Trust not otherwise stated above incurred pursuant to actions
permitted or required under this Agreement or the Indenture.

         In addition to those discussed above, the following expenses will be
charged to the Trust: (a) reimbursement to the Sponsor of amounts paid by it to
S&P in respect of annual licensing fees due under the License Agreement pursuant
to Section 10.03, (b) federal and state annual fees in keeping the registration
of SPDRs on a current basis pursuant to Section 10.02 for the issuance of SPDRs,
(c) expenses of the Sponsor relating to the printing and distribution of
marketing materials describing SPDRs and the Trust (including but not limited
to, associated legal, consulting, advertising and marketing costs and other
out-of-pocket expenses), and (d) initial fees and expenses totaling
approximately $350,000, in connection with the organization of the Trust, which
will be capitalized and amortized ratably over five years on a straight-line
basis.*


--------
* In accordance with the provisions of the exemptive order granted by the
Commission in Release IC -19055 dated October 26, 1992, the expenses listed in
clauses (a), (b), (c) and (d) above may only be charged by the Trustee to the
Trust in an amount equal to their actual costs, but in no case may exceed 20
basis points (20/100 of 1%) of the net asset value of the Trust per year.
Further, if in any one year such cost exceeds such 20 basis point limit, the
Sponsor shall absorb such excess costs and shall not authorize the Trustee to
carry such excess forward into the following calendar year.




         The Sponsor reserves the right to charge the Trust a special sponsor
fee from time to time in reimbursement for certain services it may provide to
the Trust which would otherwise be provided by the Trustee in an amount not to
exceed the actual cost of providing such services. The Sponsor or the Trustee
from time to time may voluntarily assume some expenses or reimburse the Trust so
that total expenses of the Trust are reduced, although neither the Sponsor nor
the Trustee is obligated to do so and either one or both parties may discontinue
such voluntary assumption of expenses or reimbursement at any time without
notice.

         The Sponsor intends to monitor the actual expenses of the Trust, and
may choose to reimburse the Trust for or assume some or all of the expenses and
charges mentioned above in order to assure that the Trust remains economically
attractive to current as well as prospective investors, but the Sponsor is not
obligated to do so for any period of time. In the event the Sponsor chooses to
so reimburse or assume certain expenses on behalf of the Trust, the Sponsor
shall have the right to be repaid the amount of any such reimbursement or
assumption to the extent that subsequently during the year expenses fall below
the 20/100 of 1% per annum level on any given day.

         If the income received by the Trust in the form of dividends and other
distributions on the Securities is insufficient to cover these above-mentioned
expenses, the Trustee may make advances to the Trust to cover the expenses
discussed above; otherwise the Trustee may sell Securities in an amount
sufficient to pay such expenses. The Trustee will reimburse itself in the amount
of any such advance, including those advances made pursuant to Section 3.01 (b),
together with interest thereon at a percentage rate equal to the then current
overnight federal



funds rate plus Federal Reserve Board requirements, by deducting such amounts
from (1) dividend payments or other income of the Trust when such payments or
other income is received, (2) the amounts earned or benefits derived by the
Trustee on cash held by the Trustee for the benefit of the Trust, and (3) the
sale of Securities. Notwithstanding the foregoing, in the event that any advance
remains outstanding for more than forty-five (45) Business Days, the Trustee
shall sell Securities to reimburse itself for the amount of such advance and any
accrued interest thereon. Such advances will be secured by a lien on the assets
of the Trust in favor of the Trustee. The expenses of the Trust will be
reflected in the net asset value of the Trust.

         For services performed under the Trust Agreement, the Trustee will be
paid by the Trust a fee at an annual rate of 11/100 of 1% to 15/100 of 1% of the
net asset value of the Trust, as shown below, such percentage amount to vary
depending on the net asset value of the Trust, plus or minus the Adjustment
Amount (as hereinafter defined). Such compensation will be computed on each
Business Day on the basis of the net asset value of the Trust on such day, and
the amount thereof shall be accrued daily and paid monthly. To the extent that
the amount of the Trustee's compensation, prior to any adjustment in respect of
the Adjustment Amount, during the first three years, is less than a total of
$468,000 in the aggregate, the amount of such shortfall shall be paid by the
Sponsor. Such shortfall, if any, during the first three years of the Trust's
operation shall accrue and shall be payable to the Trustee at the conclusion of
such three year period provided the Trust has not yet been terminated on or
prior to such date. The Trustee, in its sole discretion, may waive all or a
portion of such fee.






                               TRUSTEE FEE SCALE*
                               -----------------


                                            Fee as a Percentage of Net Asset
    Net Asset Value of the Trust                   Value of the Trust
    --------------------------------     -------------------------------------
    0 - $499,999,999                     15/100 of 1% per annum plus or minus
                                         the Adjustment Amount
    $500,000,000 - $999,999,999          13/100 of 1% per annum plus or minus
                                         the Adjustment Amount
    $1,000,000,000 and above             11/100 of 1% per annum plus or minus
                                         the Adjustment Amount


    *During the first two years of operation of the Trust, the Trustee's fee
     shall be reduced to 12/100 of 1% per annum less the Adjustment Amount for
     any day on which the net asset value of the Trust is below $350,000,000.
     The fee indicated applies to that portion of the net asset value of the
     Trust which falls in the size category indicated.


         Notwithstanding the fee schedule set forth in the table above, in the
fourth year of the Trust's operation and in subsequent years, the Trustee's
minimum fee shall be $400,000 per annum, as adjusted by the CPI-U to take effect
at the beginning of the fourth year and each year thereafter. The Adjustment
Amount shall be calculated at the end of each quarter and applied against the
Trustee's fee for the following quarter. The "Adjustment Amount" is an amount
which is intended, depending on the circumstances, either to (1) reduce the
Trustee's fee by the amount that the Transaction Fees paid on creation and
redemption exceeds the costs of those activities, and by the amount of excess
earnings on cash held for the benefit of the Trust or (2) increase the Trustee's
fee by the amount that the Transaction Fee (plus additional amounts paid in
connection with creations or redemptions outside the SPDR Clearing Process), if
any, paid on creations or redemptions, falls short of the actual costs of these
activities. If in any quarter the Adjustment Amount exceeds the fee payable to
the Trustee as set forth above, the Trustee shall use such excess amount to
reduce other Trust expenses, subject to certain federal tax limitations. To the
extent that the amount of such excess exceeds the Trust's expenses for such
quarter, any remaining excess shall be retained by the Trustee as part of its
compensation. If in any quarter the costs of processing creations and
redemptions exceed the amounts charged as a Transaction Fee (plus the additional
amounts paid in connection with creations and redemptions outside the



SPDR Clearing Process) net of excess earnings, if any, on cash held for the
benefit of the Trust, the Trustee will augment the Trustee's fee by the
resulting Adjustment Amount. The Transaction Fee and any additional amounts
prescribed in the Registration Statement shall be payable to the Trustee for
each Creation Unit size aggregation of SPDRs created pursuant to Sections 2.02,
2.03 and 2.04 and for each Creation Unit size aggregation of SPDRs tendered for
redemption pursuant to Section 5.02.

         The Trustee shall compute on a daily basis for each calendar quarter
the dividends accumulated and declared for the Securities within each quarterly
dividend period. The regular quarterly ex-dividend date for SPDRs will be the
third Friday in each of March, June, September and December, unless such day is
not a Business Day, in which case the ex-dividend date will be the immediately
preceding Business Day (the "Ex-Dividend Date"). Beneficial Owners as reflected
on the records of the Depository and the DTC Participants on the fourth Business
Day following the Ex-Dividend Date (the "Record Date") will be entitled to
receive an amount representing dividends accumulated on the Securities through
the quarterly dividend period preceding such Ex-Dividend Date (including
Securities with ex-dividend dates falling within such quarterly dividend
period), net of fees and expenses, accrued daily for such period. For the
purposes of all dividend distributions, dividends per SPDR will be calculated at
least to the nearest 1/100th of $0.01. On each Record Date, the Trustee shall
compute the aggregate amount of funds to be distributed through the Depository
to Beneficial Owners as described in Section 3.11 on the last Business Day in
the calendar month following each Ex-Dividend Date (the "Dividend Payment Date")
by deducting from available cash as of the close of business on the Dividend
Payment Date the amount of (i) cash required for the redemption of unredeemed
tendered SPDRs in Creation Unit size aggregations and (ii) the sum of the
amounts to be deducted on or before such




Dividend Payment Date and pursuant to the foregoing provisions of this Section
3.04. On each Dividend Payment Date, the Trustee shall distribute to the
Depository the aggregate amount of funds to be distributed to each Beneficial
Owner pursuant to this Section 3.04 as described in Section 3.11.

         Distribution of funds made to the Depository for distribution to
Beneficial Owners as described in Section 3.11 with respect to moneys received
by the Trust other than Income shall be made annually as described below.

         The proceeds of any sale of Securities sold pursuant to Section 3.06
shall be used, subject to the provisions of Section 3.06, to purchase shares of
Index Securities pursuant to Section 2.04 in lieu of a distribution of capital
as provided in this Section 3.04.

         The Trustee further reserves the right to declare special dividends if,
in its reasonable discretion, such action is necessary or advisable to preserve
the status of the Trust as a regulated investment company or to avoid imposition
of income or excise taxes on undistributed income.

         The Trustee further reserves the right to vary the frequency with which
periodic distributions are made (e.g., from quarterly to monthly) if it is
determined by the Sponsor and the Trustee, in their discretion, that such a
variance would be advisable to facilitate compliance with the rules and
regulations applicable to regulated investment companies or would otherwise be
advantageous to the Trust. Notice of any such variance (which notice shall
include changes to the Record Date, the Ex-Dividend Date and the accumulation
period resulting from such variance) shall be provided to Beneficial Owners via
the Depository and the DTC Participants.




         During the term of the Trust, the Trustee and the Sponsor shall
undertake to ensure that the Trustee is adequately and reasonably compensated
for its services hereunder. In the event that the Trustee and the Sponsor agree
that additional compensation to the Trustee is warranted and appropriate to the
Trustee, subject to the agreement of the Sponsor, the Trustee may be paid an
additional compensation over and above the fees described above either (i)
directly from the Sponsor or (ii) from the Trust subject to approval by a
majority of the Beneficial Owners.

         Section 3.05. Statements and Reports. Promptly after the end of each
taxable year of the Trust, the Trustee will furnish to the DTC Participants for
distribution to each person who was a Beneficial Owner of SPDRs at the end of
such taxable year, an annual report of the Trust containing financial statements
audited by independent accountants of nationally recognized standing and such
other information as may be required by applicable laws, rules and regulations.

         Section 3.06. Purchase and Sale of Securities. The Trustee shall be
required to purchase or sell Index Securities to conform the Portfolio to
changes in the S&P Index as described in Section 2.04. The Trustee shall
calculate the adjustments to the Portfolio and place the appropriate buy or sell
orders at such times and in the manner so prescribed in Section 2.04.

         The Trustee intends to make additional distributions with respect to
moneys received by the Trust other than Income to the minimum extent necessary
(i) to distribute the entire annual investment company taxable income of the
Trust, plus any net capital gains (from sales of securities in connection with
adjustments to the Portfolio or to generate cash for such distributions), and
(ii) to avoid imposition of the excise tax imposed by section 4982 of the
Internal Revenue Code.



         The Trustee is empowered, in its discretion, to sell the requisite
amount of Securities held in the Trust Fund to permit the payment of
distributions pursuant to Section 3.04 in the event that the Trustee has
insufficient amounts available in the Trust Fund to make such distributions. The
Trustee shall not be responsible in any way for depreciation or loss incurred by
reason of such sale.

         Section 3.07. Substitute Securities. In the event that an offer by the
issuer of any of the Securities shall be made to issue new Securities in
exchange or substitution for any issue of Securities, the Trustee shall not
accept such offer or take any other action with respect thereto until such time
as it has been determined that the securities of the issuer will be removed from
the S&P Index. In the event that a security of an issuer is removed from the S&P
Index as a result of the consummation of merger or acquisition activity of such
issuer and the Trust receives cash in exchange for the Security of such issuer,
the Trustee shall reinvest such cash in Index Securities as provided in Section
2.04. If the Trust receives any securities in exchange for the Security of the
issuer removed from the S&P Index and such securities received are not included
in the S&P Index, the Trustee shall sell such securities as soon as practicable
and reinvest the proceeds of the sale in the new Index Securities as provided in
Section 2.04. The purchases and sales of Securities for the Trust Portfolio
pursuant to this Section 3.07 shall be subject to the terms and conditions of
this Agreement to the same extent as Portfolio Deposits. The Trustee shall not
be liable or responsible in any way for any loss incurred by reason of a
purchase or sale pursuant to this Section 3.07.

         Section 3.08. Counsel. The Trustee may employ from time to time counsel
to act on behalf of the Trust and perform any legal services in connection with
the Securities and the Trust, including any legal matters relating to the
possible disposition or acquisition of any



Securities pursuant to any provision hereof. The fees and expenses of such
counsel shall be paid by the Trustee from the assets of the Trust as provided in
and permitted by Section 3.04.

         Section 3.09. Sale by Trustee. Notwithstanding any provision contained
in this Agreement, the Trustee shall not sell any Securities in the Portfolio
unless such sale is required as a Portfolio Adjustment pursuant to and in
accordance with Section 2.04 or is otherwise permitted in accordance with the
provisions of Sections 3.01(b), 3.04, 3.06, 3.07 or 8.04.

         If at any time the issuer of any Security fails to pay or declare an
anticipated dividend or interest and provision for such payment has not been
duly made, or there has been a material event affecting an issuer's Security,
the Trustee may not sell such Securities unless and until such Securities are
removed from the S&P Index or as otherwise permitted in accordance with Sections
3.06 and 3.07. The Trustee shall not be liable or responsible in any way for
depreciation or loss incurred by reason of such sale or the failure to make such
a sale.

         Section 3.10 Action by Trustee Regarding Voting. The Trustee shall have
the exclusive right to vote all of the voting Securities of the Trust, and shall
vote each of the Securities in the same proportion as all shares of each such
Security are voted by all the shareholders of each such Security to the extent
permissible, and if not permitted, shall abstain from voting. The Trustee shall
not be liable to any person for any action or failure to take action with
respect to this Section 3.10.

         Section 3.11 Book-Entry-Only System; Global Security. The Depository
will act as securities depository for SPDRs. SPDRs will be represented by a
single Global Security, which will be registered in the name of Cede & Co., as
nominee for the Depository and deposited with, or on behalf of, the Depository.
Certificates will not be issued for SPDRs. The Global Security



shall either be (1) in the form attached hereto as Exhibit B or (2) in a form
substantially similar to the form in Exhibit C that shall represent such SPDRs
as shall be specified therein and may provide that it shall represent the
aggregate amount of outstanding SPDRs from time to time endorsed thereon and
that the aggregate amount of outstanding SPDRs represented thereby may from time
to time be reduced or increased to reflect exchanges. Any endorsement of a
Global Security to reflect the amount, or any increase or decrease in the
amount, of outstanding SPDRs represented thereby shall be made in such manner
and upon instructions given by the Trustee as specified in the Depository
Agreement.

         The Trustee shall authenticate and deliver one or more Global
Securities that (i) shall represent and shall be denominated in an aggregate
amount equal to the aggregate principal amount of the outstanding SPDRs to be
represented by one or more Global Securities, (ii) shall be registered in the
name of the Depository for such Global Security or Global Securities or the
nominee of such Depository, (iii) shall be delivered by the Trustee to such
Depository or pursuant to such Depository's instruction, and (iv) shall bear a
legend substantially to the following effect: "Unless this certificate is
presented by an authorized representative of The Depository Trust Company, a New
York corporation ("DTC"), to Issuer or its agent for registration of transfer,
exchange, or payment, and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
required by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as
the registered owner hereof, Cede & Co., has an interest herein."

         The Depository has advised the Sponsor and the Trustee as follows: The
Depository is a limited-purpose trust company organized under the laws of the
State of New York, a



member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended. The Depository was created to hold securities of its
participants (the "DTC Participants") and to facilitate the clearance and
settlement of securities transactions among the DTC Participants in such
securities through electronic book-entry changes in accounts of the DTC
Participants, thereby eliminating the need for physical movement of securities
certificates. DTC Participants include securities brokers and dealers, banks,
trust companies, clearing corporations, and certain other organizations, some of
whom (and/or their representatives) own the Depository.* Access to the
Depository system is also available to others such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a DTC Participant, either directly or indirectly (the "indirect Participants").
The Depository agrees with and represents to its participants that it will
administer its book-entry system in accordance with its rules and by-laws and
requirements of law.

         Upon the settlement date of any creation, transfer or redemption of
SPDRs, the Depository will credit or debit, on its book-entry registration and
transfer system, the amount of SPDRs so created, transferred or redeemed to the
accounts of the appropriate DTC Participants. The accounts to be credited and
charged shall be designated by the Trustee to NSCC, in the case of a creation or
redemption through the SPDR Clearing Process, or by the Trustee and the DTC
Participant, in the case of a creation or redemption transacted outside of the
SPDR Clearing Process. Beneficial ownership of SPDRs will be limited to DTC
Participants, indirect Participants and persons holding interests through DTC
Participants and

----------
* As of December 31, 1992, the Exchange owns 4.56% of the issued and outstanding
shares of common stock of the Depository and an affiliate of the Exchange, AMEX
Clearing Corp., owns .00181% of the issued and outstanding shares of common
stock of the Depository. The Trustee owns 2.9078% of the issued and outstanding
shares of common stock of the Depository.



indirect Participants. Ownership of beneficial interests in SPDRs (owners of
such beneficial interests are referred to herein as "Beneficial Owners") will be
shown on, and the transfer of ownership will be effected only through, records
maintained by the Depository (with respect to DTC Participants) and on the
records of DTC Participants (with respect to indirect Participants and
Beneficial Owners that are not DTC Participants or indirect Participants).
Beneficial Owners are expected to receive from or through the DTC Participant a
written confirmation relating to their purchase of SPDRs.

         So long as Cede & Co., as nominee of the Depository, is the registered
owner of SPDRs, references herein to the registered or record owners of SPDRs
shall mean Cede & Co. and shall not mean the Beneficial Owners of SPDRs.
Beneficial Owners of SPDRs will not be entitled to have SPDRs registered in
their names, will not receive or be entitled to receive physical delivery of
certificates in definitive form and will not be considered the record or
registered holder thereof under the Trust Agreement. Accordingly, each
Beneficial Owner must rely on the procedures of the DTC Participant or
Depository and, if such Beneficial Owner is not a DTC Participant, on the
procedures of the indirect Participant through which such Beneficial Owner holds
its interests, to exercise any rights of a holder of SPDRs under the Trust
Agreement.

         The Trustee and the Sponsor understand that under existing industry
practice, in the event the Trustee requests any action of SPDR holders, or a
Beneficial Owner desires to take any action that the Depository, as the record
owner of all outstanding SPDRs, is entitled to take, the Depository would
authorize the DTC Participants to take such action and that the DTC Participants
would authorize the indirect Participants and Beneficial Owners acting through
such DTC Participants to take such action or would otherwise act upon the
instructions of Beneficial Owners owning through them.



         As described above, the Trustee will recognize the Depository or its
nominee as the owner of all SPDRs for all purposes except as expressly set forth
in this Agreement. Conveyance of all notices, statements and other
communications to Beneficial Owners will be effected as follows. Pursuant to the
Depository Agreement, the Depository is required to make available to the
Trustee upon request and for a fee to be charged to the Trust a listing of the
SPDR holdings of each DTC Participant. The Trustee shall inquire of each such
DTC Participant as to the number of Beneficial Owners holding SPDRs, directly or
indirectly, through such DTC Participant. The Trustee shall provide each such
DTC Participant with copies of such notice, statement or other communication, in
such form, number and at such place as such DTC Participant may reasonably
request, in order that such notice, statement or communication may be
transmitted by such DTC Participant, directly or indirectly, to such Beneficial
Owners. In addition, the Trust shall pay to each such DTC Participant an amount
as reimbursement for the expenses attendant to such transmittal, all subject to
applicable statutory and regulatory requirements.

         SPDR distributions shall be made to the Depository or its nominee, Cede
& Co., as the registered owner of all SPDRs. The Trustee and the Sponsor expect
that the Depository or its nominee, upon receipt of any payment of distributions
in respect of SPDRs, shall credit immediately DTC Participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
SPDRs as shown on the records of the Depository or its nominee. The Trustee and
the Sponsor also expect that payments by DTC Participants to indirect
Participants and Beneficial Owners of SPDRs held through such DTC Participants
will be governed by standing instructions and customary practices, as is now the
case with securities held for the accounts of customers in bearer form or
registered in a "street name," and will be the responsibility of such DTC
Participants. Neither the Trustee nor the Sponsor



will have any responsibility or liability for any aspects of the records
relating to or notices to Beneficial Owners, or payments made on account of
beneficial ownership interests in SPDRs, or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests or for any
other aspect of the relationship between the Depository and the DTC Participants
or the relationship between such DTC Participants and the indirect Participants
and Beneficial Owners owning through such DTC Participants.

         The Depository may determine to discontinue providing its services with
respect to SPDRs at any time by giving notice to the Trustee and the Sponsor and
discharging its responsibilities with respect thereto under applicable law.
Under such circumstances, the Sponsor shall take action either to find a
replacement for the Depository to perform its functions at a comparable cost or,
if such a replacement is unavailable, to terminate the Trust as provided in
Article IX.

                                   ARTICLE IV

                            EVALUATION OF SECURITIES

         Section 4.01. Evaluation of Securities. The Trustee shall make
available to NSCC prior to the commencement of trading on each Business Day a
list of the names and required number of shares of each of the Index Securities
in the current Portfolio Deposit as well as the amount of the Dividend
Equivalent Payment for the previous Business Day. Under certain extraordinary
circumstances which may make it impossible for the Trustee to provide such
information to NSCC on a given Business Day, NSCC shall use the information
regarding the identity and weightings of the Index Securities of the Portfolio
Deposit on the previous Business Day. Any such determination shall be effective
for all deposits and redemptions made on the following Business Day. The
evaluation with respect to the aggregate value of the Securities as used in
calculating the net asset value of the Trust shall be made as follows: If the
Securities are listed on




one or more national securities exchanges, such evaluation shall generally be
based on the closing sale price on that day (unless the Trustee deems such price
inappropriate as a basis for evaluation) on the exchange which is deemed to be
the principal market therefor (the New York or American Stock Exchange, if the
securities are listed thereon) or, if there is no such appropriate closing sale
price on such exchange, at the closing bid price (unless the Trustee deems such
price inappropriate as a basis for evaluation). If the Securities are not so
listed or, if so listed and the principal market therefor is other than on such
exchange or there is no such closing bid price available such evaluation shall
generally be made by the Trustee in good faith based on the closing price on the
over-the-counter market (unless the Trustee deems such price inappropriate as a
basis for evaluation) or if there is no such appropriate closing price, (a) on
current bid prices, (b) if bid prices are not available, on the basis of current
bid prices for comparable securities, (c) by the Trustee's appraising the value
of the securities in good faith on the bid side of the market, or (d) by any
combination thereof.

         Section 4.02. Responsibility of the Trustee. The Sponsor and the
Beneficial Owner may rely on any evaluation furnished by the Trustee and the
Sponsor shall have no responsibility for the accuracy therefore. The
determinations made by the Trustee hereunder shall be made in good faith upon
the basis of, and the Trustee shall not be liable for any errors contained in,
information reasonably available to it. The Trustee shall be under no liability
to the Sponsor, or to Beneficial Owners, for errors in judgment, provided,
however, that this provision shall not protect the Trustee against any liability
to which it would otherwise be subject by reason of wilful misfeasance, wilful
misconduct, bad faith or gross negligence in the performance of its duties or by
reason of its reckless disregard of its obligations and duties hereunder.

         Section 4.03. Continued Qualification as Regulated Investment Company.
The Trustee shall perform such reviews, file such reports or take any and all
such action as it is advised by



counsel or accountants employed by the Trustee as required in order to continue
the qualification of the Trust as a regulated investment company.

                                   ARTICLE V

             TRUST FUND EVALUATION AND REDEMPTION OF CREATION UNITS

         Section 5.01. Trust Fund Evaluation. As of the Evaluation Time (1) on
each December 31 (or the last Business Day prior thereto) and (2) upon
termination of the Trust, the Trustee shall, in determining the net asset value
of the Trust: (a) subtract all Liabilities (including accrued expenses and
dividends payable) from the total value of the Trust's investments and other
assets and (b) divide the resulting figure by the total number of outstanding
SPDRs. The resulting figure is herein called a "Trust Fund Evaluation." The
amount of cash held by the Trust (including dividends receivable on stocks
trading ex-dividend) is computed as of such Evaluation Time (a) on each day on
which SPDRs in Creation Unit size aggregations are tendered for redemption and
(b) on any other day desired by the Trustee.

         Section 5.02. Redemption of SPDRs in Creation Unit Size Aggregations.
SPDRs in Creation Unit size aggregations will be redeemable in kind when such
Creation Unit size aggregation is in the account of a single DTC Participant by
submitting a request for redemption to the Trustee in the manner specified
below.

         Requests for redemptions of Creation Units may be made on any Business
Day to the Trustee through the SPDR Clearing Process. Requests for redemptions
of Creation Units may also be made directly to the Trustee outside the SPDR
Clearing Process. Requests for redemption shall not be made to the Distributor.
In the case of redemptions made through the SPDR Clearing Process, the
Transaction Fee will be deducted from the amount delivered to the redeemer and
in case of redemptions tendered directly to the Trustee outside the SPDR




Clearing Process, an additional amount not to exceed three (3) times the
Transaction Fee applicable for one Creation Unit, per Creation Unit redeemed,
will be deducted from the amount delivered to the redeemer due in part to the
increased expense associated with delivery outside the SPDR Clearing Processes.
In all cases, both the tender of SPDRs for redemption and distributions to the
redeemer in respect of SPDRs redeemed will be effected through the Depository
and the relevant DTC Participant(s) to the Beneficial Owner thereof as recorded
on the book entry system of the Depository or the relevant DTC Participant, as
the case may be.

         The Trustee will transfer to the redeemer via the Depository and the
relevant DTC Participant(s) a portfolio of securities for each Creation Unit
size aggregation of SPDRs delivered, identical in weighting and composition to
the securities portion of a Portfolio Deposit as in effect on the date a request
for redemption is made, other than at such time as notice of the termination of
the Trust is given, in which case the portfolio of securities so delivered shall
be identical in weighting and composition to the Securities in the Trust on the
date of such notice. The Trustee will also transfer via the relevant DTC
Participant(s) to the redeeming Beneficial Owner in cash the "Cash Redemption
Payment", which on any given Business Day is an amount identical to the amount
of the Cash Component and is equal to a proportional amount of the following:
dividends, on a per Creation Unit basis, on all the Securities for the period
through the date of redemption, net of expenses and liabilities for such period
(including, without limitation, (x) taxes or other governmental charges against
the Trust not previously deducted if any, and (y) accrued fees of the Trustee
and other expenses of the Trust (including legal and auditing expenses) and
other expenses not previously deducted, as if all the Securities had been held
for the entire accumulation period for such distribution, plus or minus the
Balancing Amount. To the extent that any amounts



payable to the Trust by the redeeming Beneficial Owner exceed the amount of the
Cash Redemption Payment, such Beneficial Owner shall be required to deliver
payment thereof to the Trustee. The Trustee will transfer the cash and
securities to the redeeming Beneficial Owner on the fifth Business Day following
the date on which request for redemption is made. The Trustee will cancel all
SPDRs delivered upon redemption.

         In the event that the Trustee determines, in its discretion, that an
Index Security is likely to be unavailable or available in insufficient quantity
for delivery by the Trust upon the redemption of SPDRs in Creation Unit size
aggregations, the cash equivalent based on the market value of such Index
Security at the close of the market on the date redemption is requested may be
included in the Portfolio Deposit as a part of the Cash Redemption Payment, in
lieu of the inclusion of such Index Security in the securities portion of the
Portfolio Deposit.

         If the income received by the Trust in the form of dividends and other
distributions on the Securities is insufficient to allow distribution of the
Cash Redemption Payment, the Trustee may advance out of its own funds any
amounts necessary in respect of redemptions of SPDRs pursuant to Section
3.01(b); otherwise, the Trustee may sell Securities in an amount sufficient to
effect such redemptions. The Trustee will reimburse itself in the amount of such
advance plus Federal Reserve Board reserve requirements together with interest
thereon at a percentage rate equal to then current overnight federal funds rate
by deducting such amounts from (1) dividend payments or other income of the
Trust when such payments or other income is received, (2) the amounts earned or
benefits derived by the Trustee on cash held by the Trustee for the benefit of
the Trust, and (3) the sale of Securities. Notwithstanding the foregoing, in the
event that any advance remains outstanding for more than forty-five (45)
Business Days, the Trustee shall sell Securities to reimburse itself for




such advance and any accrued interest thereon. Such advances will be secured by
a lien on the assets of the Trust in favor of the Trustee.

         The Trustee may, in its discretion, and will when so directed by the
Sponsor, suspend the right of redemption, or postpone the date of payment of the
net asset value for more than five (5) Business Days following the date on which
request for redemption is made, for any period during which the New York Stock
Exchange is closed; for any period during which an emergency exists as a result
of which disposal or evaluation of the Securities is not reasonably practicable;
or for such other period as the Commission may by order permit for the
protection of Beneficial Owners. Neither the Sponsor nor the Trustee is liable
to any person or in any way for any loss or damages which may result from any
such suspension or postponement.

         Upon the specific request of a redeemer, the Trustee may, in its sole
discretion, redeem SPDRs in Creation Unit size aggregations delivered to the
Trustee by such redeemer, either in whole or in part, by providing such redeemer
with a "Misweighted Portfolio" as is described in the next following sentence.
Such Misweighted Portfolio shall be (1) a portfolio of Securities then held by
the Trust, (2) which differs in exact composition and/or weighting from that of
the securities portion of a Portfolio Deposit in effect on the date that the
request for a redemption is made by the redeemer (the "Then-Current Portfolio
Deposit") (3) but does not differ in net asset value from that of the
Then-Current Portfolio Deposit. The Trustee may evaluate all factors in
considering a redeemer's request for a Misweighted Portfolio and may, but need
not, agree to such a redemption request if the Trustee determines that delivery
of the Misweighted Portfolio would be appropriate for the Trust.




                                   ARTICLE VI

              TRANSFER OF SPDRS IN CREATION UNIT SIZE AGGREGATIONS

         Section 6.01. Transfer of SPDRs in Creation Unit Size Aggregations.
SPDRs in Creation Unit size aggregations may be transferred only through the
book-entry system of the Depository as provided in Section 3.11. Beneficial
Owners have the rights accorded to holders of "book-entry" securities under
applicable law. Beneficial Owners may transfer SPDRs through the Depository by
instructing the DTC Participant holding the SPDRs for such Beneficial Owner in
accordance with standard securities industry practice.

                                  ARTICLE VII

                                     SPONSOR

         Section 7.01. RESPONSIBILITY AND DUTIES. The Sponsor shall be liable in
accordance herewith for the obligations imposed upon and undertaken by the
Sponsor hereunder. The Trustee will make available to NSCC prior to the
commencement of trading on each Business Day a list of the names and required
number of shares of each of the Index Securities in the current Portfolio
Deposit as well as the amount of the Dividend Equivalent Payment effective
through and including the previous Business Day. The Sponsor presently intends,
but is not obligated, to determine and cause to be announced (a) on a daily
basis, the Dividend Equivalent Payment effective through and including the
previous Business Day, per outstanding SPDR, and (b) on a minute-by-minute basis
throughout the day at the Exchange a number representing, on a per SPDR basis,
the sum of the Dividend Equivalent Payment effective through and including the
previous Business Day, plus the current value of the securities portion of a
Portfolio Deposit as in effect on such day (which value will occasionally
include a cash in lieu amount to compensate for the omission of a particular
Index Security from such Portfolio Deposit). Such




information will be calculated based upon the best information available to the
Sponsor and may be calculated by other persons designated to do so by the
Sponsor.

         Section 7.02. Certain Matters Regarding Successor Sponsor. The
covenants, provisions and agreements herein contained shall in every case be
binding upon any successor to the business of the Sponsor, except that no
successor Sponsor may be a partnership. In the event of an assignment by the
Sponsor to a successor corporation as permitted by the next following sentence,
the Sponsor shall be relieved of all further liability under this Agreement. The
Sponsor may transfer all or substantially all of its assets to a corporation
which carries on the business of the Sponsor, if at the time of such transfer
such successor duly assumes all the obligations of the Sponsor under this
Agreement.

         Section 7.03. Resignation of Sponsor; Successors. If at any time the
Sponsor desires to resign its position as Sponsor hereunder, it may resign by
delivering to the Trustee an instrument of resignation executed by the Sponsor.
Such resignation shall not become effective until the earlier of (i) the
appointment by the Trustee of a successor Sponsor to assume, with such
compensation from the Trust Fund as the Trustee may deem reasonable under the
circumstances, but not exceeding the amounts prescribed by the Securities and
Exchange Commission, the duties and obligations of the resigning Sponsor
hereunder by an instrument of appointment and assumption executed by the Trustee
and the successor Sponsor; or (ii) the Trustee shall have agreed to act as
Sponsor hereunder succeeding to all the rights and duties of the resigning
Sponsor without appointing a successor Sponsor and without terminating this
Agreement or the Indenture; or (iii) the Trustee shall have terminated this
Agreement and liquidated the Trust, which action the Trustee shall have taken
if, within sixty (60) days following the date on which a notice of resignation
shall have been delivered by the Sponsor, a successor Sponsor has not been
appointed or the Trustee has not agreed to act as Sponsor hereunder. If




the Sponsor shall fail to undertake or perform or become incapable of
undertaking or performing its duties hereunder or shall become bankrupt or its
affairs shall be taken over by public authorities, the Trustee shall act in
accordance with the provisions set forth in Section 8.01(g). Any such successor
Sponsor shall be satisfactory to the Trustee. Upon effective resignation
hereunder, the resigning Sponsor shall be discharged and shall no longer be
liable in any manner hereunder except as to acts or omissions occurring prior to
such resignation, and the new Sponsor shall thereupon undertake and perform all
duties and be entitled to all rights and compensation as Sponsor under this
Agreement. The successor Sponsor shall not be under any liability hereunder for
occurrences or omissions prior to the execution of such instrument.

         Section 7.04. Liability of Sponsor and Indemnification. (a) The Sponsor
shall not be under any liability to the Trust, the Trustee, or any Beneficial
Owner for any action taken or for refraining from the taking of any action in
good faith pursuant to this Agreement, or for errors in judgment or for
depreciation or loss incurred by reason of the purchase or sale of any
Securities; provided, however, that this provision shall not protect the Sponsor
against any liability to which it would otherwise be subject by reason of its
own gross negligence, bad faith, willful misconduct or willful malfeasance in
the performance of its duties hereunder or reckless disregard of its obligations
and duties hereunder. The Sponsor may rely in good faith on any paper, order,
notice, list, affidavit, receipt, evaluation, opinion, endorsement, assignment,
draft or any other document of any kind prima facie properly executed and
submitted to it by the Trustee, the Trustee's counsel or by any other person for
any matters arising hereunder. The Sponsor shall in no event be deemed to have
assumed or incurred any liability, duty, or obligation to any Beneficial-Owner
or to the Trustee other than as expressly provided for herein.




         (b) The Sponsor and its directors, shareholders, officers, employees,
affiliates (as such term is defined in Regulation S-X) and subsidiaries (each a
"Sponsor Indemnified Party") shall be indemnified from the Trust Fund and held
harmless against any loss, liability or expense incurred without (1) gross
negligence, bad faith, willful misconduct or willful malfeasance on the part of
such Sponsor Indemnified Party arising out of or in connection with the
performance of its obligations hereunder or any actions taken in accordance with
the provisions of this Agreement or the Indenture or (2) reckless disregard on
the part of such Sponsor Indemnified Party of its obligations and duties under
this Agreement or the Indenture. Such indemnity shall include payment from the
Trust Fund of the costs and expenses incurred by such Sponsor Indemnified Party
in defending itself against any claim or liability in its capacity as Sponsor
hereunder. Any amounts payable to a Sponsor Indemnified Party under this Section
7.04 may be payable in advance or shall be secured by a lien on the Trust Fund.
The Sponsor shall not be under any obligation to appear in, prosecute or defend
any legal action which in its opinion may involve it in any expense or
liability; provided, however, that if in the Sponsor's opinion action is
required with respect to an event or condition which would have a material
adverse effect on the Trust, the Sponsor shall notify the Trustee of such event
or condition. If the Trustee does not act within ten days after receipt of such
notice, the Sponsor may undertake any such action it may deem necessary or
desirable in respect of this Agreement and the rights and duties of the parties
hereto and the interests of the Beneficial Owners and, in such event, the legal
expenses and costs of any such action shall be expenses and costs of the Trust
Fund and the Sponsor shall be entitled to be reimbursed therefor by the Trust.

         (c) The Sponsor shall not be liable except by reason of its own gross
negligence, bad faith, wilful misconduct or wilful malfeasance for any action
taken or suffered to



be taken by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Agreement, or reckless
disregard of its obligations and duties hereunder or under the Indenture.

                                  ARTICLE VIII

                                     TRUSTEE

         Section 8.01. General Definition of Trustee's Rights. Duties and
Responsibilities. In addition to and notwithstanding the other duties, rights,
privileges and liabilities of the Trustee as otherwise set forth in this
Agreement, the duties, rights, privileges and liabilities of the Trustee are
further defined as follows:

         (a) All monies deposited with or received by the Trustee hereunder
shall be held, by it, without interest other than as provided in Section 3.04,
as a deposit for the account of the Trust in accordance with the provisions of
Section 2.05, until required to be disbursed in accordance with the provisions
of this Agreement. Such monies shall be deemed segregated by maintaining such
monies in an account for the exclusive benefit of the Trust in accordance with
the provisions of Section 2.05.

         (b) The Trustee shall not be under any liability for any action taken
in reasonable reliance on any appraisal, paper, certification, order, list,
demand, request, consent, affidavit notice, opinion, direction, valuation,
endorsement, assignment, resolution, draft or other documents prima facie
properly executed, provided, however that where a list of authorized officials
and their signatures are on file with the Trustee, the Trustee shall be required
to compare such manual signatures to the signature on any such documents. (Such
requirement shall not apply to "personal identification numbers" or "PINS" or
other forms of electronic security devices which function as a proxy for a
manual signature.)




         (c) The Trustee shall not be under any liability for the disposition of
monies, or of any of the Securities, or in respect of any evaluation which it is
required to make under this Agreement or otherwise, except by reason of its own
gross negligence, bad faith, willful misconduct or willful malfeasance, or
reckless disregard of its duties and obligations hereunder and the Trustee may
construe any of the provisions of this Agreement, insofar as the same may be
ambiguous or inconsistent with any other provisions hereof, and any reasonable
construction of any such provision hereof by the Trustee in good faith shall be
binding upon the parties hereto and all Beneficial Owners.

         (d) The Trustee shall not be responsible for the due execution hereof
by the Sponsor or for the form, character, genuineness, sufficiency, value or
validity of any of the Securities, or for the due execution thereof by any
Depositor, and the Trustee shall in no event assume or incur any liability, duty
or obligation to any Beneficial Owner or the Sponsor, other than as expressly
provided for herein.

         (e) The Trustee shall not be under any obligation to appear in,
prosecute or defend any action which in its opinion may involve it in expense or
liability, unless it shall be furnished with reasonable security and indemnity
against such expense or liability. Any pecuniary cost of the Trustee resulting
from the Trustee's appearance in, prosecution of or defense of any such actions
shall be deductible from and constitute a lien against the assets of the Trust.
Subject to the foregoing, the Trustee shall, in its discretion, undertake such
action as it may deem necessary at any and all times to protect the Trust Fund
and the rights and interest of all Beneficial Owners pursuant to the terms of
this Agreement; provided, however, that the expenses and costs of such actions,
undertakings or proceedings shall be deductible from the assets of the Trust or
otherwise reimbursable to the Trustee from, and shall constitute a lien against,
the assets of the Trust.




         (f) The Trustee may employ agents, attorneys, accountants, auditors and
other professionals and shall not be answerable for the default or misconduct of
any such agents, attorneys, accountants, auditors and other professionals if
such agents, attorneys, accountants, auditors or other professionals shall have
been selected with reasonable care. The Trustee shall not be liable in respect
of any action taken under this Agreement or the Indenture, or suffered, in good
faith by the Trustee, in accordance with the opinion of its counsel. The
accounts of the Trust Fund shall be audited, as required by law, by independent
certified public accountants designated from time to time by the Trustee, and
the report of such accountants shall be furnished by the Trustee to Beneficial
Owners as described in Section 3.11 upon request. The fees and expenses charged
by such agents, attorneys, accountants, auditors or other professionals shall
constitute an expense of the Trust.

         (g) If the Sponsor shall fail to undertake or perform or shall become
incapable of undertaking or performing any of the duties which by the terms of
this Agreement are required to be undertaken or performed by it, and such
failure shall not be cured within fifteen (15) Business Days following receipt
of notice from the Trustee of such failure, or if the Sponsor shall be adjudged
bankrupt or insolvent, or a receiver of the Sponsor or of its property shall be
appointed, or a trustee or liquidator or any public officer shall take charge or
control of the Sponsor or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then in any such case, the Trustee
may do any one or more of the following: (1) appoint a successor Sponsor to
assume, with such compensation from the Trust Fund as the Trustee may deem
reasonable under the circumstances, but not exceeding the reasonable amounts
prescribed by the Securities and Exchange Commission in accordance with Section
26(a)(2)(C) of the Investment Company Act of 1940, or any successor provision,
the duties and obligations of the resigning Sponsor hereunder by an instrument
of appointment and assumption executed




by the Trustee and the successor Sponsor; or (2) agree to act as Sponsor
hereunder without appointing a successor Sponsor and without terminating this
Agreement or the Indenture; or (3) terminate this Agreement and Indenture and
liquidate the Trust pursuant to Section 9.01.

         (h) If the evaluation of the Trust Fund as shown by any Trust Fund
Evaluation shall be less than the Discretionary Liquidation Value, the Trustee
shall, only when so directed in writing by the Sponsor, terminate this Agreement
and the applicable Indenture and the Trust Fund created hereby and thereby and
liquidate such Trust Fund, all in the manner provided in Section 9.01.

         (i) In no event shall the Trustee be personally liable for any taxes or
other governmental charges imposed upon or in respect of the Securities or upon
the Income thereon or upon it as Trustee hereunder or upon or in respect of the
Trust Fund which it may be required to pay under any present or future law of
the United States of America or of any other taxing authority having
jurisdiction in the premises. For all such taxes and charges and for any
expenses, including counsel's fees, which the Trustee may sustain or incur with
respect to such taxes or charges, the Trustee shall be reimbursed and
indemnified out of the assets of the Trust Fund and the payment of such amounts
shall be secured by a lien on the Trust Fund.

         (j) The Trustee shall not be liable except by reason of its own gross
negligence, bad faith, willful misconduct or willful malfeasance for any action
taken or suffered to be taken by it in good faith and believed by it to be
authorized or within the discretion, rights or powers conferred upon it by this
Agreement or reckless disregard of its obligations and duties hereunder or under
the Indenture.

         (k) So long as required by Section 26 (a)(2)(C) of the Investment
Company Act of 1940, or any successor provision, and the rules promulgated
thereunder, no payment to



the Sponsor or to any affiliated person (as so defined) or agent of the Sponsor
shall be allowed as an expense of the Trust except for payment not in excess of
such reasonable amounts as the Securities and Exchange Commission may prescribe
as compensation for performing bookkeeping and other administrative services of
a character normally performed by the Trustee itself and except as the
Securities and Exchange Commission may permit by order.

         (l) The Trustee in its individual or any other capacity may become an
owner or pledgee of, or be an underwriter or dealer in respect of, bonds or
other obligations issued by the same issuer (or an affiliate of such issuer) of
any Securities at any time held as part of the Trust Fund or SPDRs and may deal
in any manner with the same or with the issuer (or an affiliate of the issuer)
with the same rights and powers as if it were not the Trustee hereunder,
including, but not limited to making loans or maintaining other banking
relationships with any such issuer.

         (m) The Trustee shall discharge all of its obligations and perform all
of its duties under the Participant Agreement.

         Section 8.02. Books, Records and Reports. (a) The Trustee shall keep
proper books of record and account of all the transactions under this Agreement
at its office located in Quincy, Massachusetts or such office as it may
subsequently designate upon notice to the other parties hereto. The books and
records of the Trust Fund shall be open to inspection by any Beneficial Owner at
all reasonable times during the usual business hours of the Trustee. The Trustee
shall keep proper record of the creation and redemption of Creation Units at its
Quincy Office. Such records of the creation and redemption of Creation Units
shall be open to inspection at all reasonable times during the usual business
hours of the Trustee.




         (b) The Trustee shall make, or cause to be made, such annual or other
reports and file such documents as it is advised by counsel or accountants
employed by it as are required of the Trust by the Securities Act of 1933, the
Securities Exchange Act of 1934 and the Investment Company Act of 1940 and
including, but not limited to, Form N-SAR and filings pursuant to Rule 24f-2
under the Investment Company Act of 1940, make such elections and file such tax
returns as it is advised by counsel or accountants employed by it as are from
time to time required under any applicable state or federal statute or rule or
regulation thereunder, in particular, for the continuing qualification of the
Trust as a Regulated Investment Company. The Trust's taxable year shall be set
forth in the Indenture.

         Section 8.03. Indenture and List of Securities on File. The Trustee
shall keep a certified copy or duplicate original of this Agreement on file its
office available for inspection at all reasonable times during its usual
business hours by any Beneficial Owner, together with the Indenture for each
Series then in effect and the Trustee shall keep and so make available for
inspection a current list of the Securities in the Portfolio, including the
identity and number of shares of each of the Securities.

         Section 8.04. Compensation of Trustee. (a) The Trustee shall receive,
at the times set forth in this Agreement, as compensation for performing its
services under this Agreement, an amount equal to the amount specified as
compensation for the Trustee in Section 3.04. The computation of such
compensation shall be made as set forth in Section 3.04. Such compensation shall
be accrued daily by the Trustee in accordance with Section 3.04.

         (b) The Trustee shall charge the Trust for those expenses and
disbursements incurred hereunder as contemplated by this Agreement, including
legal, brokerage and auditing expenses; provided, however, that the amount of
any such charge which has not been finally




determined as of any Dividend Payment Date may be estimated and any necessary
adjustments shall be made in the succeeding month. The Trustee may direct that
all such expenses and disbursements shall be paid directly from the assets of
the Trust. If the cash balances of the Trust shall be insufficient to provide
for amounts payable pursuant to this Section 8.04, the Trustee may, in its
discretion, advance out of its own funds such amounts as are payable and
reimburse itself for such advances as funds become available or from the
proceeds of Securities sold to reimburse such advances. The Trustee will
reimburse itself in the amount of any such advance, plus Federal Reserve Board
reserve requirements, including those amounts made pursuant to Section 3.01(b)
together with interest thereon at a percentage rate equal to the then current
overnight federal funds rate, by deducting such amounts from (1) dividend
payments or other income of the Trust when such payments or other income is
received, (2) the amounts earned or benefits derived by the Trustee on cash held
by the Trustee for the benefit of the Trust, and (3) the sale of Securities.
Notwithstanding the foregoing, in the event that any advance remains outstanding
for more than forty-five (45) Business Days, the Trustee shall sell Securities
to reimburse itself for the amount of such advance and any accrued interest
thereon. Such advances will be secured by a lien on the assets of the Trust in
favor of the Trustee.

         Section 8.05. Indemnification of Trustee. The Trustee and its
directors, shareholders, officers, employees, affiliates (as such term is
defined in Regulation S-X) and subsidiaries (each a "Trustee Indemnified
Party") shall be indemnified from the Trust Fund and held harmless against any
loss, liability or expense incurred without (1) gross negligence, bad faith,
willful misconduct or willful malfeasance on the part of such Trustee
Indemnified Party arising out of or in connection with the acceptance or
administration of this Trust and any actions taken in accordance with the
provisions of this Agreement or arising out of the administration of any Section
of this Agreement or any Section of the Indenture or (2) reckless disregard on
the part of



such Trustee Indemnified Party of its obligations and duties under this
Agreement or the Indenture. Such indemnity shall include payment from the Trust
Fund of the costs and expenses incurred by such Trustee Indemnified Party in
defending itself against any claim or liability relating to this Agreement, the
Indenture or the Trust Fund, including any loss, liability or expense incurred
in acting pursuant to written directions or instructions to the Trustee given by
the Sponsor or counsel to the Trust from time to time in accordance with the
provisions of this Agreement or in undertaking actions from time to time which
the Trustee deems necessary in its discretion to protect the Trust Fund and the
rights and interest of all Beneficial Owners pursuant to the terms of this
Agreement. Any amounts payable to a Trustee Indemnified Party under this Section
8.05 may be payable in advance or shall be secured by a lien on the Trust Fund.

         Section 8.06. Resignation. Discharge or Removal of Trustee: Successors.
(a) The Trustee may resign and be discharged of the Trust created by this
Agreement and the Indenture by executing an instrument in writing resigning as
such Trustee, filing the same with the Sponsor, if any, and mailing a copy of a
notice of resignation to all DTC Participants for distribution to Beneficial
Owners as provided in Section 3.11 not less than 60 days before the date
specified in such instrument when, subject to Section 8.06(c), such resignation
is to take effect. The Trustee shall be advised by the Depository as to the
holdings of all DTC Participants pursuant to the Depository Agreement. In case
at any time the Trustee shall not meet the requirements set forth in Section
8.07 hereof, shall fail to undertake or perform or shall become incapable of
undertaking or performing any of the duties which by the terms of this Agreement
are required to be undertaken or performed by it, and such failure shall not be
cured within fifteen (15) Business Days following receipt of notice from the
Sponsor of such failure, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or a trustee or
liquidator or any public officer shall take charge or control of such




Trustee or of its property or affairs for the purposes of rehabilitation,
conservation or liquidation, then in any such case, the Sponsor may, subject to
the requirements of Section 8.06 (b) and (c), remove such Trustee and appoint a
successor Trustee by written instrument or instruments delivered to the Trustee
so removed and to the successor Trustee. Upon receiving notice of resignation or
removal of the Trustee, the Sponsor shall use its best efforts promptly to
appoint a successor Trustee in the manner and meeting the qualifications
hereinafter provided, by written instrument or instruments delivered to such
resigning Trustee and the successor Trustee. Notice of such appointment of a
successor Trustee shall be mailed promptly after acceptance of such appointment
by the successor Trustee to all DTC Participants for distribution to Beneficial
Owners as provided in Section 3.11. Beneficial Owners of 51 percent of the SPDRs
then outstanding may at any time remove the Trustee by written instrument or
instruments delivered to the Trustee and Sponsor. The Sponsor shall thereupon
use its best efforts to appoint a successor Trustee in the manner provided
herein. Upon effective resignation hereunder, the resigning Trustee shall be
discharged and shall no longer be liable in any manner hereunder except as to
acts or omissions occurring prior to such resignation, and the new Trustee shall
thereupon undertake and perform all duties and be entitled to all rights and
compensation as Trustee under this Agreement. The successor Trustee shall not be
under any liability hereunder for occurrences or omissions prior to the
execution of such instrument.

         (b) In case at any time the Trustee shall be removed or shall resign
and no successor Trustee shall have been appointed within sixty (60) days after
the date notice of removal has been received by the Trustee or the Trustee has
issued its notice of resignation, the Trustee shall terminate this Agreement and
indenture and liquidate the Trust pursuant to Section 9.01.




         (c) Any successor Trustee appointed hereunder shall execute and
acknowledge to the Sponsor and to the retiring Trustee an instrument accepting
such appointment hereunder, and such successor Trustee without any further act,
deed or conveyance shall become vested with all the rights, powers, duties and
obligations of its predecessor hereunder with like effect as if originally named
a Trustee herein and shall be bound by all the terms and conditions of this
Agreement and the Indenture. Upon the request of such successor Trustee the
retiring Trustee and the Sponsor shall, upon payment of all amounts due the
retiring Trustee, execute and deliver an instrument acknowledged by it
transferring to such successor Trustee all the rights and powers of the retiring
Trustee; and the retiring Trustee shall transfer, deliver and pay over to the
successor Trustee all Securities and monies at the time held by it hereunder, if
any, together with all necessary instruments of transfer and assignment or other
documents properly executed necessary to effect such transfer and such of the
records or copies thereof maintained by the retiring Trustee in the
administration hereof as may be requested by the successor Trustee and shall
thereupon be discharged from all duties and responsibilities under this
Agreement. Any resignation or removal of a Trustee and appointment of a
successor Trustee pursuant to this Section 8.06 shall become effective upon such
acceptance of appointment by the successor Trustee. The indemnification of such
Trustee and any other Trustee Indemnified Party provided for under Section 8.05
hereof shall survive any resignation, discharge or removal of the Trustee
hereunder.

         (d) Any bank, trust company, corporation or national banking
association into which a Trustee hereunder may be merged or with which it may be
consolidated, or any bank, trust company, corporation or national banking
association resulting from any merger or consolidation to which such Trustee
hereunder shall be a party, or any bank, trust company, corporation or national
banking association succeeding to all or substantially all of the business



of the Trustee, shall be the successor Trustee under this Agreement without the
execution or filing of any paper, instrument or further act to be done on the
part of the parties hereto, anything herein, or in any agreement relating to
such merger, consolidation or succession, by which any such Trustee may seek to
retain certain powers, rights and privileges theretofore obtaining for any
period of time following such merger or consolidation, to the contrary
notwithstanding.

         Section 8.07. Qualification of Trustee. The Trustee or successor
Trustee shall be a bank, trust company, corporation or national banking
association organized and doing business under the laws of the United States or
any state thereof, and shall be authorized under such laws to exercise corporate
trust powers. The Trustee and any successor Trustee shall have at all times an
aggregate capital, surplus, and undivided profits of not less than $50,000,000.

         Section 8.08. Trustee's Duties Expressly Provided for Herein. Except as
otherwise expressly provided for in this Agreement, the Trustee shall have no
duties or obligations hereunder.

                                   ARTICLE IX

                                   TERMINATION

         Section 9.01. Procedure Upon Termination. If within 90 days from the
date that the registration statement relating to the Trust becomes effective
under the Securities Act of 1933 the net worth of the Trust shall have fallen to
less than $100,000, the Trustee shall, upon the direction of the Sponsor,
terminate the Trust and distribute to each Beneficial Owner such Beneficial
Owner's pro rata share of the assets of the Trust. The Sponsor will have the
discretionary right to direct the Trustee to terminate the Trust if at any time
after six months following and prior to three years following the Initial Date
of Deposit the net asset value of the Trust falls below $150,000,000 and if at
any time after three years following the Initial Date of




Deposit such value is less than $350,000,000, as such dollar amount shall be
adjusted for inflation in accordance with the CPI-U, such adjustment to take
effect at the end of the fourth year following the Initial Date of Deposit and
at the end of each year thereafter and to be made so as to reflect the
percentage increase in consumer prices as set forth in the CPI-U for the twelve
month period ending in the last month of the preceding fiscal year (the
"Discretionary Termination Amount"). In such case, the Trustee shall, upon
receipt of instruction from the Sponsor, terminate this Agreement, the Indenture
and the Trust created hereby. Any termination pursuant to the two preceding
sentences shall be at the complete discretion of the Sponsor subject to the
terms hereof, and the Sponsor shall not be liable in any way for depreciation or
loss occurring as a result of any such termination. The Trustee shall have no
power to terminate the Agreement, the Indenture or the Trust because the value
of the Trust Fund is below the Discretionary Termination Amount. The Trustee
shall terminate the Agreement, the Indenture and the Trust Fund in the event
that SPDRs are de-listed from the Exchange.* The Agreement, the Indenture and
the Trust Fund may also be terminated upon the occurrence of any one or more of
the following events: (a) by the agreement of the Beneficial Owners of 66-2/3%
of outstanding SPDRs; (b) if the Depository is unable or unwilling to continue
to perform its functions as set forth herein and a comparable replacement is
unavailable; (c) if NSCC no longer provides clearance services with respect to
SPDRs, or if the Trustee is no longer a participant in NSCC; (d) if Standard &
Poor's ceases publishing the S&P Index; or (e) if the License Agreement is
terminated. If at any time the Sponsor


-------------
* It is intended that SPDRs will be listed for trading on the Exchange.
Transactions involving SPDRs in the public trading market will be subject to
customary brokerage charges and commissions. There can be no assurance, however,
that SPDRs will always be listed on the Exchange. Following the initial
twelve-month period following formation of the Trust and commencement of trading
on the Exchange, the Exchange will consider the suspension of trading in or
removal from listing SPDRs when, in its opinion, further dealings appear
unwarranted if (a) the Trust interest has more than sixty (60) days remaining
until termination and there are fewer than 50 record Beneficial Owners of SPDRs
for thirty (30) or more consecutive trading days; (b) Standard & Poor's ceases
publishing the S&P Index; or (c) such other event shall occur or condition shall
exist which, in the opinion of the Exchange, makes further dealings on the
Exchange inadvisable.



shall fail to undertake or perform or become incapable of undertaking or
performing any of the duties which by the terms of the Trust Agreement are
required to be undertaken or performed, or if the Sponsor resigns pursuant to
Section 7.03, the Trustee may, in its discretion, in lieu of appointing a
successor Sponsor pursuant to Section 8.01, terminate this Agreement, the
Indenture and the Trust and liquidate the Trust pursuant to the provisions
hereof. Notwithstanding the foregoing, the Agreement, the Indenture and the
Trust Fund in any event shall terminate by their terms on the Mandatory
Termination Date or the date 20 years after the death of the last survivor of
the eleven persons named in the Indenture, whichever occurs first, unless sooner
terminated as specified herein. As soon as practicable after notice of
termination of the Trust, the Trustee will distribute to redeemers tendering
SPDRs in Creation Unit size aggregations prior to the termination date the
Securities and cash as provided in Section 5.02 and upon termination of the
Trust the Trustee will sell the Securities held in the Trust as provided below.

         Written notice of termination, specifying the date of termination, the
period during which the assets of the Trust will be liquidated and SPDRs will be
redeemed in cash at net asset value, and the date determined by the Trustee upon
which the books of the Trustee, maintained pursuant to Section 6.01, shall be
closed, shall be given by the Trustee to each Beneficial Owner at least twenty
(20) days prior to termination of the Trust. Such notice shall further state
that, as of the date thereof and thereafter, neither requests to create
additional Creation Units nor additional Portfolio Deposits will be accepted and
that, as of the date thereof, the portfolio of securities delivered upon
redemption shall be identical in composition and weighting to the Securities
rather than the securities portion of the Portfolio Deposit as in effect on the
date request for redemption is made. Within a reasonable period of time after
such termination the Trustee shall, subject to any applicable provisions of law,




sell all of the Securities not already distributed to redeemers of SPDRs in
Creation Unit size aggregations, as provided herein, if any, in such a manner so
as to effectuate orderly sales and a minimal market impact. The Trustee shall
not be liable for or responsible in any way for depreciation or loss incurred by
reason of any sale or sales made in accordance with the provisions of this
Section 9.01. The Trustee may suspend its sales of the Securities upon the
occurrence of unusual or unforeseen circumstances, including, but not limited
to, a suspension in trading of a Security, the closing or restriction of trading
on a stock exchange, the outbreak of hostilities or the collapse of the economy.
Upon receipt of proceeds from the sale of the last Security, the Trustee shall:

         (a) pay to itself individually from the Trust Fund an amount equal to
the sum of (1) its accrued compensation for its ordinary services, (2) any
reimbursement due to it for its extraordinary services, (3) any advances made
but not yet repaid and (4) any other services and disbursements as provided
herein;

         (b) deduct any and all fees and expenses from the Trust Fund in
accordance with the provisions of Section 3.04 hereof; provided, however, that
no portion of such amount shall be deducted or paid unless the payment thereof
from the Trust is at that time lawful;

         (c) deduct from the Trust Fund any amounts which it, in its sole
discretion, shall deem requisite to be set aside as reserves for any applicable
taxes or other governmental charges that may be payable out of the Trust Fund;

         (d) transmit to the Depository for distribution each Beneficial Owner's
interest in the remaining assets of the Trust; and

         (e) disseminate to each Beneficial Owner as provided in Section 3.11 a
final statement as of the date of the computation of the amount distributable to
the Beneficial Owners,




setting forth the data and information in substantially the form and manner
provided for in Section 3.05 hereof.

         Dividends to be received by the Trust on Securities sold in liquidation
pursuant to this Section 9.01 subsequent to redemption shall be aggregated and
distributed ratably when all such dividends have been received.

         Section 9.02. Moneys to Be Held Without Interest to Beneficial Owners.
The Trustee shall be under no liability with respect to moneys held upon
termination, except to hold the same as a deposit without interest for the
benefit of the Beneficial Owners.

         Section 9.03. Dissolution of Sponsor Not to Terminate Trust. The
dissolution of the Sponsor, or its ceasing to exist as a legal entity from, or
for, any cause, shall not operate to terminate this Agreement and the Indenture
insofar as the duties and obligations of the Trustee are concerned unless the
Trustee terminates the Trust pursuant to Section 9.01.

                                   ARTICLE X

                            MISCELLANEOUS PROVISIONS

         Section 10.01. Amendment and Waiver. The Indenture and Agreement may be
amended from time to time by the Trustee and the Sponsor without the consent of
any Beneficial Owners (a) to cure any ambiguity or to correct or supplement any
provision thereof which may be defective or inconsistent or to make such other
provisions in regard to matters or questions arising thereunder as will not
adversely affect the interests of Beneficial Owners; (b) to change any provision
thereof as may be required by the Commission; (c) to add or change any provision
as may be necessary or advisable for the continuing qualification of the Trust
as a "regulated investment company" under the Code; (d) to add or change any
provision thereof as may be necessary or advisable in the event that NSCC or the
Depository is unable



or unwilling to continue to perform its functions as set forth therein; and (e)
to add or change any provision thereof to conform the adjustments to the
Portfolio and the Portfolio Deposit to changes, if any, made by Standard &
Poor's in its method of determining the S&P Index. The Indenture and Agreement
may also be amended from time to time by the Sponsor and the Trustee with the
consent of the Beneficial Owners of 51% of the outstanding SPDRs to add
provisions to or change or eliminate any of the provisions of the Trust
Agreement or to modify the rights of Beneficial Owners; provided, however, that
the Trust Agreement may not be amended without the consent of the Beneficial
Owners of all outstanding SPDRs if such amendment would (1) permit, except in
accordance with the terms and conditions of the Trust Agreement, the acquisition
of any securities other than those acquired in accordance with the terms and
conditions of the Trust Agreement; (2) reduce the interest of any Beneficial
Owner in the Trust; or (3) reduce the percentage of Beneficial Owners required
to consent to any such amendment.

         Promptly after the execution of any such amendment, the Trustee shall
receive from the Depository, pursuant to the terms of the Depository Agreement,
a list of all DTC Participants holding SPDRs. The Trustee shall inquire of each
such DTC Participant as to the number of Beneficial Owners for whom such DTC
Participant holds SPDRs, and provide each such DTC Participant with sufficient
copies of a written notice of the substance of such amendment for transmittal by
each such DTC Participant to such Beneficial Owners.

         It shall not be necessary for the consent of Beneficial Owners under
this Section 10.01 or under Section 9.01 to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by




Beneficial Owners shall be subject to such reasonable regulations as the Trustee
may prescribe.

         Section 10.02. Registration (Initial and Continuing) of SPDRs. The
Sponsor agrees and undertakes on its own part to register or appoint an agent,
which may include the Trustee, to register SPDRs with the Securities and
Exchange Commission and under the blue sky laws of such states as the Sponsor
may select and as may be required. If permitted by applicable law, the
registration of SPDRs with the Securities and Exchange Commission and under the
applicable securities laws of such states shall be payable out of the Trust.
Registration charges, blue sky fees, printing costs, mailing costs, attorney's
fees, and other miscellaneous out-of-pocket expenses incurred pursuant to this
Section and related to all SPDRs shall be borne by the Trust only to the extent
and in the manner provided for by Section 3.04.

         Section 10.03. License Agreement with Standard & Poor's Corporation.
The Sponsor shall, prior to the Initial Date of Deposit, obtain a license
agreement with Standard & Poor's Corporation under which the Trust may use the
trademarks "S&P", "S&P 500 Index", "S&P 500", "Standard & Poor's Depositary
Receipts" and "SPDRs" to the extent deemed necessary by the Sponsor under
federal and state securities laws and to indicate the source of the S&P 500 and
of the S&P 500 Index as a basis for determining the composition of the Trust
pursuant to Section 2.04.

         The Trust shall pay to Standard & Poor's, or shall reimburse the
Sponsor for its payment to Standard & Poor's, in accordance with Section 3.04, a
licensing fee as set forth in an exhibit to the License Agreement.

         Section 10.04. Certain Matters Relating to Beneficial Owners. (a) By
the purchase and acceptance or other lawful delivery and acceptance of SPDRs
(whether in Creation Unit size




aggregations or otherwise), each Beneficial Owner thereof shall be deemed to be
a beneficiary of the Trust created by this Agreement and the Indenture and
vested with all right, title and interest in the Trust Fund therein created to
the extent of the SPDRs in Creation Unit size aggregations or SPDRs set forth,
subject to the terms and conditions of this Agreement and the Indenture.

         (b) A redeemer may at any time tender SPDRs in Creation Unit size
aggregations to the Trustee for redemption, subject to and in accordance with
Section 5.02.

         (c) The death or incapacity of any Beneficial Owner shall not operate
to terminate the Indenture and Agreement or the Trust Fund, nor entitle such
Beneficial Owner's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them. Each Beneficial Owner expressly waives any right
such Beneficial Owner may have under any rule of law, or the provisions of any
statute, or otherwise, to require the Trustee at any time to account, in any
manner other than as expressly provided in the Indenture and Agreement, in
respect of the Securities or moneys from time to time received, held and applied
by the Trustee hereunder.

         (d) No Beneficial Owner shall have any right to vote except as provided
in Sections 9.01 and 10.01 or in any manner otherwise to control the operation
and management of the Trust Fund, or the obligations of the parties hereto.
Nothing set forth in this Indenture and Agreement shall be construed so as to
constitute the Beneficial Owners from time to time as partners or members of an
association; nor shall any Beneficial Owner ever be liable to any third person
by reason of any action taken by the parties to this Indenture, or for any other
cause whatsoever.




         Section 10.05. New York Law to Govern. The Indenture and Agreement are
executed and delivered in the State of New York, and all laws or rules of
construction of such State shall govern the rights of the parties hereto and the
Beneficial Owners and the interpretation of the provisions hereof. The Indenture
and Agreement shall be deemed effective when it is executed by the Sponsor and
the Trustee.

         Section 10.06. Notices. Any notice, demand, direction or instruction to
be given to the Sponsor hereunder shall be in writing and shall be duly given if
mailed, by certified or registered mail, return receipt requested, or delivered
to the Sponsor, at the following address: PDR Services LLC, c/o American Stock
Exchange, LLC, 86 Trinity Place, New York, New York 10006, Attention: Secretary,
or at such other address as shall be specified by the Sponsor to the other
parties hereto in writing. Any notice, demand, direction or instruction to be
given to the Trustee shall be in writing and shall be duly given if mailed, by
certified or registered mail, return receipt requested, delivered to or sent by
facsimile transmission and received by State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, Attention: Executive Vice
President, Mutual Funds - SPDRs, or such other address as shall be specified to
the other parties hereto by the Trustee in writing. Any notice to be given to a
Beneficial Owner shall be duly given if mailed or delivered to DTC Participants
for delivery to Beneficial Owners.

         Section 10.07. Severability. If any one or more of the covenants,
agreements, provisions or terms of this Indenture shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or the rights of the
Beneficial Owners.




         Section 10.08. Separate and Distinct Series. Each Series of the SPDR
Trust to which these Standard Terms and Conditions of Trust shall be applicable
shall, for all financial and administrative purposes, be considered separate and
distinct from every other Series, and the assets of one Series shall not be
commingled with the assets of another Series nor shall the expenses of any one
Series be charged against any other Series.

         Section 10.09. Ratification and Confirmation of Trust Documents. The
Trust Documents now in effect are in all respects ratified and confirmed hereby.

         Section 10.10. Incorporation by Reference. These Standard Terms and
Conditions of Trust incorporate, combine and restate each and every provision of
the Original Agreement as amended by the Amendment Agreements.

         Section 10.10. Counterparts. These Standard Terms and Conditions of
Trust may be simultaneously executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument







         IN WITNESS WHEREOF, the parties hereto have caused these Amended and
Restated Standard Terms and Conditions of Trust dated as of January 1, 2004, to
be duly executed.

                                PDR SERVICES LLC
                                   as Sponsor



                                By _______________________________
                                   Title:



                                STATE STREET BANK AND
                                   TRUST COMPANY,
                                   As Trustee



                                By _______________________________
                                   Title:

Dated:  ___________, 2004







STATE OF NEW YORK    )
                     :       ss.:
COUNTY OF NEW YORK   )




         On the __ day of ______ in the year 2004 before me personally came
________________ to me known, who, being by me duly sworn, did depose and say
that he is the President of PDR Services LLC, the corporation described in and
which executed the above instrument; and that he signed his name thereto by like
authority.





                                          -----------------------------------


                                          Notary Public





COMMONWEALTH OF MASSACHUSETTS    )
                                 : ss.:
COUNTY OF NORFOLK                )




         On this _____ day of ________, 2004, before me personally appeared
__________, to me known, who, being by me duly sworn, did depose and say that he
is __________of State Street Bank and Trust Company, the bank and trust company
described in and which executed the above instrument; and that he signed his
name thereto by authority of the board of directors of said bank and trust
company.



                                              -------------------------------
                                              Notary Public





                                                                       EXHIBIT A

                          Form of Participant Agreement



                                     FORM OF

                              PARTICIPANT AGREEMENT

         This Participant Agreement (the "Agreement") is entered into by and
between ALPS Distributors, Inc. (the "Distributor"), and         (the
"Participant") and is subject to acceptance by State Street Bank and Trust
Company as Trustee (The "Trustee"). The Trustee serves as the trustee of the
Standard & Poor's Depositary Receipts ("SPDRs") Trust (the "Trust") pursuant to
certain Standard Terms and Conditions of Trust dated as of January 1, 1993 and
effective as of January 22, 1993, and the Trust Indenture dated January 22,
1993, as amended (the "Trust Agreement") and is an Index Receipt Agent as that
term is defined in the Rules of the National Securities Clearing Corporation
("NSCC"). The Distributor has been retained to provide certain services with
respect to acting as principal underwriter of the Trust in connection with the
creation and distribution of SPDRs. As specified in the Trust's prospectus (the
"Prospectus") and the Trust Agreement, SPDRs may be created or redeemed only in
aggregations of 50,000 SPDRs; referred to therein and herein as a "Creation
Unit". The Trust Agreement provides that Creation Units shall be issued in
exchange for a Portfolio Deposit delivered by the Participant on behalf of the
investor (which may be the Participant) to the Trustee. The Trust Agreement also
provides that Creation Units shall be redeemed in exchange for Trust Securities
and an amount of cash. Capitalized terms not otherwise defined herein are used
herein as defined in the Prospectus and the Trust Agreement.

         This Agreement is intended to set forth certain premises and the
procedures by which the Participant may create and/or redeem Creation Units (i)
through the Continuous Net Settlement ("CNS") clearing process of NSCC as such
processes have been enhanced to effect creations and redemptions of Creation
Units, such processes being referred to herein as the "SPDR Clearing Process",
or (ii) outside SPDR the Clearing Process (i.e., through the facilities of The
Depository Trust Company ("DTC"). The parties hereto in consideration of the
premises and of the mutual agreements contained herein agree as follows:

1.   Status of Participant. The Participant hereby represents, covenants and
     warrants that (i) with respect to orders for the creation or redemption of
     Creation Units by means of the Clearing Process, it is a member of NSCC and
     a participant in the CNS System of NSCC (as defined in the Prospectus, a
     "Participating Party"); and (ii) with respect to orders for the creation or
     redemption of Creation Units outside the Clearing Process, it is a DTC
     Participant (as defined in the Prospectus, a "DTC Participant"). The
     Participant may place orders for the creation or redemption of Creation
     Units either through the Clearing Process or outside the Clearing Process,
     subject to the procedures for creation and redemption referred to in
     paragraph 2 of this Agreement ("Execution of Orders"). Any change in the
     foregoing status of Participant shall terminate this Agreement and




     Participant shall give notice to the Distributor and the Trustee of such
     change.

2.   Execution of Orders. All orders for the creation or redemption of Creation
     Units shall be handled by each party hereto in accordance with the terms of
     the Prospectus and the procedures described in Attachment A to this
     Agreement. Each party hereto agrees to comply with the provisions of such
     documents to the extent applicable to it. In the event the procedures
     include the use of recorded telephone lines, the Participant hereby
     consents to such use. The Trustee reserves the right to issue additional or
     other procedures relating to the manner of creating or redeeming Creation
     Units and the Participant and the Distributor each agrees to comply with
     such procedures as may be issued from time to time.

3.   NSCC. Solely with respect to orders for the creation or redemption of
     Creation Units through the SPDR Clearing Process, the Participant as a
     Participating Party hereby authorizes the Trustee to transmit to NSCC on
     behalf of the Participant such instructions, including share and cash
     amounts as are necessary with respect to the creation and redemption of
     Creation Units consistent with the instructions issued by the Participant
     to the SPDR telephone representative. The Participant agrees to be bound by
     the terms of such instructions issued by the Trustee (or the Distributor on
     behalf of the Trust) and reported to NSCC as though such instructions were
     issued by the Participant directly to NSCC.

4.   Role of Participant. The Participant shall have no authority in any
     transaction to act as agent of the Distributor, Trustee or the Trust.

5.   Fees. In connection with the creation or redemption of Creation Units, the
     Trustee shall charge, and the Participant agrees to pay on behalf of the
     investor to the Trustee the Transaction Fee prescribed in the Prospectus
     applicable to creation or redemption through the SPDR Clearing Process, or
     the Transaction Fee and such additional fee as may be prescribed pursuant
     to the Prospectus applicable to creation or redemption outside the SPDR
     Clearing Process. The Transaction Fee may be waived or otherwise adjusted
     from time to time subject to the provisions relating thereto and any
     limitation as prescribed in the Prospectus and the Trust Agreement.

6.   Authorized Persons. Concurrently with the execution of this Agreement and
     from time to time thereafter, the Participant shall deliver to the
     Distributor and the Trustee, duly certified as appropriate by its secretary
     or other duly authorized official, a certificate, in the form set forth in
     Attachment B, setting forth the names and signatures of all persons
     authorized to give instructions relating to activity contemplated hereby or
     any other




     notice, request or instruction on behalf of the Participant (each an
     "Authorized Person"). Such certificate may be accepted and relied upon by
     the Distributor and the Trustee as conclusive evidence of the facts set
     forth therein and shall be considered to be in full force and effect until
     delivery to the Distributor and the Trustee of a superseding certificate
     bearing a subsequent date. The Trustee shall issue to each Authorized
     Person a unique personal identification number ("PIN Number") by which such
     Authorized Person and the Participant shall be identified and instructions
     issued by the Participant hereunder shall be authenticated. Upon the
     termination or revocation of authority of such Authorized Person by the
     Participant, the Participant shall give immediate written notice of such
     fact to the Distributor and the Trustee and such notice shall be effective
     upon receipt by the Distributor and the Trustee.

7.   Redemption. The Participant represents and warrants that it will not obtain
     an Order Number (as described in Attachment A) for the purpose of redeeming
     a Creation Unit unless it or the party for which it is acting, as the case
     may be, first owns the requisite number of shares to be redeemed as a
     Creation Unit.

8.   Beneficial Ownership. The Participant represents and warrants to the
     Distributor, Trustee and the Trust that it does not hold for the account of
     any single Beneficial Owner of SPDRs 80 percent (80%) or more of
     outstanding SPDRs such as to cause the Trust to have a basis in the Index
     Securities deposited with the Trust different from the market value of such
     Index Securities on the date of such deposit, pursuant to Section 351 of
     the Internal Revenue Code. The Trustee shall have the right to require
     information from the Participant regarding SPDR ownership, and to rely
     thereon to the extent necessary to make a determination regarding ownership
     of 80 percent (80%) or more of outstanding SPDRs by a Beneficial Owner as a
     condition to the acceptance of a Portfolio Deposit.

9.   Indemnification. The Participant hereby agrees to indemnify and hold
     harmless the Distributor, the Trustee, PDR Services LLC (the "Trust
     Sponsor" and wholly-owned subsidiary of the American Stock Exchange, Inc.)
     their respective subsidiaries, affiliates, directors, officers, employees
     and agents (each an "Indemnified Party") from and against any loss,
     liability, cost and expense incurred by such Indemnified Party as a result
     of (i) any breach by the Participant of any provision of this Agreement; or
     (ii) any actions of such Indemnified Party in reliance upon any
     instructions issued in accordance with Attachment A (as may be amended from
     time to time) believed by the Distributor and/or the Trustee to be genuine
     and to have been given by the Participant. This paragraph shall survive the
     termination of this Agreement.

10.  Trustee Capacity. The parties acknowledge that the Trustee is acting in its
     capacity hereunder as trustee in accordance with and pursuant to the Trust
     Agreement and not in its general corporate capacity.



11.  Acknowledgment. The Participant acknowledges receipt of the Prospectus and
     represents it has reviewed such document and understands the terms thereof.

12.  Notices. Except as otherwise specifically provided in this Agreement, all
     notices required or permitted to be given pursuant to this Agreement shall
     be given in writing and delivered by personal delivery or by postage
     prepaid registered or certified United States first class mail, return
     receipt requested, or by telex, telegram or facsimile or similar means of
     same day delivery (with a confirming copy by mail as provided herein).
     Unless otherwise notified in writing, all notices to the Trustee shall be
     given or sent as follows: State Street Bank and Trust Company, Global
     Client Support, P.O. Box 1978, Boston, MA 02105, Attn.: SPDRs.

     All notices to the Participant and the Distributor shall be directed to the
     address or telephone, facsimile or telex numbers indicated below the
     signature line of such party.

13.  Termination and Amendment. This Agreement shall become effective in this
     form as of the date accepted by the Trustee and may be terminated at any
     time by any party upon thirty days prior notice to the other parties (i)
     unless earlier terminated by the Trustee in the event of a breach of this
     Agreement or the procedures described herein by the Participant or (ii) in
     the event that the Trust is terminated pursuant to the Trust Agreement.
     This Agreement supersedes any prior such agreement between the parties.

          This Agreement may be amended by the Trustee from time to time by the
     following procedure. The Trustee will mail a copy of the amendment to the
     Distributor and the Participant. For the purposes of this Agreement, mail
     will be deemed received by the recipient thereof on the third (3rd) day
     following the deposit of such mail into the U.S. postal system. If neither
     the Distributor nor the Participant objects in writing to the amendment
     within ten (10) days after its receipt, the amendment will become part of
     this Agreement in accordance with its terms.

14.  Counterparts. This Agreement may be simultaneously executed in several
     counterparts, each of which shall be an original and all shall constitute
     but one and the same instrument.



15.  Governing Law. This Agreement shall be governed by and interpreted in
     accordance with the laws of The State of New York.

16.  Anti-Money Laundering Program. The Participant represents and warrants to
     the Trust that it has, or its relevant service providers on its behalf
     have:

     a.   Established and implemented policies, procedures and internal controls
          reasonably designed to achieve compliance with the Bank Secrecy Act
          (the "BSA") and applicable regulations adopted to implement the
          provisions of the BSA, including policies and procedures that can be
          reasonably expected to detect and cause the reporting of transactions
          under Section 5318 of the BSA;

     b.   Designated an individual or individuals responsible for implementing
          and monitoring those policies, procedures and internal controls;

     c.   Provided ongoing training for the appropriate personnel with respect
          to those policies, procedures and internal controls; and

     d.   Provided for testing of those policies, procedures and internal
          controls by independent personnel or by a qualified outside party.







         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the _________ day of ______________________, 2001.



                                            ALPS DISTRIBUTORS, INC.

                                            BY:
                                                       -------------------------
                                            TITLE:
                                                       -------------------------
                                            ADDRESS:
                                                       -------------------------

                                            TELEPHONE:
                                                       -------------------------
                                            FACSIMILE:
                                                       -------------------------
                                            TELEX:
                                                       -------------------------


                                            [NAME OF PARTICIPANT]

                                            BY:
                                                       -------------------------
                                            TITLE:
                                                       -------------------------
                                            ADDRESS:
                                                       -------------------------

                                            TELEPHONE:
                                                       -------------------------
                                            FACSIMILE:
                                                       -------------------------
                                            TELEX:
                                                       -------------------------


                                            ACCEPTED BY: STATE STREET AND TRUST
                                            COMPANY ON BEHALF OF THE SPDR TRUST,
                                            AS TRUSTEE OF SUCH TRUST.


                                            BY:
                                                       -------------------------
                                            TITLE:
                                                       -------------------------
                                            ADDRESS:
                                                       -------------------------

                                            TELEPHONE:
                                                       -------------------------
                                            FACSIMILE:
                                                       -------------------------
                                            TELEX:
                                                       -------------------------






                                  ATTACHMENT A

         This document supplements the Prospectus and the Trust Agreement with
respect to the procedures to be used by (i) the Distributor in processing an
order for the creation of Creation Units of SPDRs and (ii) the Trustee in
processing an order for redemption of SPDRs. To accommodate Participants with
restricted securities in the standard basket, the Trustee has developed custom
creation and redemption baskets. For a Participant to transact in a custom
basket, the Participant must acknowledge the additional procedures described in
Appendix 1 relating to custom baskets.

         A Participant is required to have signed the Participant Agreement.
Upon acceptance of the Participant Agreement by the Trustee, the Trustee will
assign a personal identification number to each Authorized Person authorized to
act for the Participant. This will allow a Participant through its Authorized
Person(s) to place an order with respect to SPDRs.

TO PLACE AN ORDER FOR CREATION OR REDEMPTION OF CREATION UNITS

1.   Call to Receive an Order Number. An Authorized Person for the Participant
     will call the SPDR telephone representative at 800-545-4189 not later than
     the closing time of the regular trading session on the New York Stock
     Exchange (the "NYSE Closing Time") (ordinarily 4:00 p.m. New York time) to
     receive an Order Number.

     Upon verifying the authenticity of the caller (as determined by the use of
     the appropriate PIN Number) and the terms of the order, the SPDR telephone
     representative will issue a unique Order Number. All orders with respect to
     the creation or redemption of SPDRs are required to be in writing and
     accompanied by the designated Order Number. Incoming telephone calls are
     queued and will be handled in the sequence received. Calls placed before
     the NYSE Closing Time will be processed even if the call is taken after
     this cut-off time. ACCORDINGLY, DO NOT HANG UP AND REDIAL. INCOMING CALLS
     THAT ARE ATTEMPTED LATER THAN THE NYSE CLOSING TIME WILL NOT BE ACCEPTED.

     NOTE THAT THE TELEPHONE CALL IN WHICH THE ORDER NUMBER IS ISSUED INITIATES
     THE ORDER PROCESS BUT DOES NOT ALONE CONSTITUTE THE ORDER. AN ORDER IS ONLY
     COMPLETED AND PROCESSED UPON RECEIPT OF WRITTEN INSTRUCTIONS CONTAINING THE
     DESIGNATED ORDER NUMBER AND PIN NUMBER AND TRANSMITTED BY FACSIMILE OR
     TELEX (the "Order").

2.   Place the Order. An Order Number is only valid for a limited time. The
     Order for creation or redemption of Creation Units must be sent by
     facsimile or telex to the SPDR telephone representative within 20 minutes
     of the issuance of the Order Number. In the event that the Order is not
     received within such time period, the




     SPDR telephone representative will attempt to contact the Participant to
     request immediate transmission of the Order. Unless the Order is received
     by the SPDR telephone representative upon the earlier of (i) within 15
     minutes of contact with the Participant or (ii) 45 minutes after the NYSE
     Closing Time, the order will be deemed invalid.

3.   Await Receipt of Confirmation.

     A.   SPDR Clearing Process. The Distributor and/or the Trustee shall issue
          a confirmation of Order acceptance within 15 minutes of its receipt of
          an Order received in good form. In the event the Participant does not
          receive a timely confirmation from the Distributor or the Transfer
          Agent, it should contact the telephone representative at the business
          number indicated.

     B.   Outside the SPDR Clearing Process. In lieu of receiving a confirmation
          of Order acceptance, the DTC Participant will receive an
          acknowledgment of Order acceptance. The DTC Participant shall deliver
          on trade date the Index Securities and Cash Component (in the case of
          creations) or the Creation Unit size aggregation of SPDRs (in the case
          of redemptions) to the Trust through DTC. The Trust shall settle the
          transaction within three (3) Business Days.

4.   Ambiguous Instructions. In the event that an Order contains terms that
     differ from the information provided in the telephone call at the time of
     issuance of the Order Number, the SPDR telephone representative will
     attempt to contact the Participant to request confirmation of the terms of
     the order. If an Authorized Person confirms the terms as they appear in the
     Order then the order will be accepted and processed. If an Authorized
     Person contradicts its terms, the Order will be deemed invalid and a
     corrected Order must be received by the SPDR telephone representative not
     later than the earlier of (i) within 15 minutes of such contact with the
     Participant or (ii) 45 minutes after the NYSE Closing Time. If the SPDR
     telephone representative is not able to contact an Authorized Person, then
     the Order shall be accepted and processed in accordance with its terms
     notwithstanding any inconsistency from the terms of the telephone
     information. In the event that an Order contains terms that are illegible,
     as determined in the sole discretion of the Distributor and/or the Trustee,
     the Order will be deemed invalid and the SPDR telephone representative will
     attempt to contact the Participant to request retransmission of the Order.
     A corrected Order must be received by the SPDR telephone representative not
     later than the earlier of (i) within 15 minutes of such contact with the
     Participant or (ii) 45 minutes after the NYSE Closing Time.

5.   Processing an Order. The Distributor reserves the right to suspend an Order
     in the event that its acceptance would appear to result in the Participant
     or a Beneficial Owner owning 80 percent (80%) or more of all outstanding
     SPDRs. In such event, the SPDR telephone representative will attempt to
     contact an Authorized Person for purposes of confirmation of the fact that
     with respect to such


                                       2



     Participant no Beneficial Owner would own 80 percent (80%) or more of all
     outstanding SPDRs upon execution of the Order. In the event that (i) the
     telephone representative is unable to contact an Authorized Person or (ii)
     the Participant fails to transmit an identical Order containing a
     representation and warranty as to such fact, then the Order shall be deemed
     invalid.

6.   Creation of Creation Units Prior to Receipt of Deposit Securities. Creation
     Units of SPDRs may be created in advance of receipt by the Trustee of all
     or a portion of the applicable Deposit Securities, provided that the
     Participant deposits an initial deposit of cash with the Trustee having a
     value greater than the net asset value of the SPDRs on the date the order
     is placed in proper form. In addition to available Deposit Securities, cash
     must be deposited in an amount equal to the sum of (i) the Cash Component,
     plus (ii) 115% of the market value of the undelivered Deposit Securities
     (the "Additional Cash Deposit"). The Trustee will hold such Additional Cash
     Deposit as collateral in an account separate and apart from the Trust. The
     order shall be deemed to be received on the Business Day on which the order
     is placed provided that the order is placed in proper form prior to 4:00
     p.m. eastern time such date and federal funds in the appropriate amount are
     deposited with the Trust's Custodian by 11:00 a.m. eastern time the
     following Business Day. If the order is not placed in proper form by 4:00
     p.m. eastern time or federal funds in the appropriate amount are not
     received by 11:00 a.m. eastern time the next Business Day, then the order
     may be deemed to be rejected and the investor shall be liable to the Trust
     for losses, if any, resulting therefrom. An additional amount of cash shall
     be required to be deposited with the Trustee, pending delivery of the
     missing Deposit Securities to the extent necessary to maintain an amount of
     cash on deposit with the Trust at least equal to 115% of the daily marked
     to market value of the missing Deposit Securities. To the extent that
     missing Deposit Securities are not received by 1:00 p.m. eastern time on
     the third Business Day following the day on which the purchase order is
     deemed received by the Distributor or in the event a mark to market payment
     is not made within one Business Day following notification by the
     Distributor that such a payment is required, the Trust may use the
     Additional Cash Deposit to purchase the missing Deposit Securities. The
     Participant will be liable to the Trust for any shortfall between the cost
     to the Trust of purchasing the securities and the value of such collateral,
     including the costs incurred by the Trust in connection with any such
     purchases. These costs will be deemed to include the amount by which the
     actual purchase price of the Deposit Securities exceeds the market value of
     such Deposit Securities on the day the purchase order was deemed received
     by the Distributor plus the brokerage and related transaction costs
     associated with such purchases. The Trust will return any unused portion of
     the Additional Cash Deposit once all of the missing Deposit Securities have
     been properly received by the Custodian or purchased by the Trust and
     deposited into the Trust. In addition, a transaction fee of $4,000 will be
     charged in all cases. The delivery of Creation Units of SPDRs so created
     will occur no later than the third Business Day following the day on which
     the purchase order is deemed received by the Distributor.


                                       3




                APPENDIX 1--PROCEDURES SPECIFIC TO CUSTOM BASKETS

         To accommodate Participants with restricted securities in the standard
basket of Deposit Securities, State Street has developed custom creation and
redemption baskets (the "Custom Baskets"). Custom Baskets are intended to allow
Participants with restricted issues in the SPDR Trust, to transact in the SPDR
Trust using the Custom Basket process. The Custom Basket process substitutes
cash-in-lieu for the restricted securities and continues to settle through the
standard CNS process at NSCC. It is the responsibility of the Participant to
apply to the NSCC by contacting DTC Participant Services at 212-855-4155 to
allow them to receive Custom Baskets as well as the regular daily standard
baskets (the "Standard Baskets"). To ensure proper tracking of the Trust to the
S&P 500 Index the following guidelines must be followed when transacting Custom
Baskets:


1. On or before T-1, the Participant must request a Custom Basket from the
Trustee by calling 1-800-545-4189. The Trustee will fax a standard form on which
the Participant must identify the restricted securities to be omitted from the
creation or redemption basket. At this time, the Participant is limited to
substituting cash-in-lieu only for restricted issues. Participants may request
that the Custom Basket be available for creations and redemptions for a one-time
transaction, a specific period or indefinitely. The Trustee will review the
Custom Basket request and, if approved, will deliver a confirmation back to the
Participant. In the event subsequent additions and/or deletions to restricted
issues are required to change the custom basket already approved, the
Participant is responsible for completing a new standard form with the Trustee.


                                       4




2. On trade date, prior to the opening of the NYSE, the Trustee will notify NSCC
as to the components of the approved Custom Baskets available that day along
with the components of the Standard Basket. Each Custom Basket will be
identified by a separate NSCC assigned instruction CUSIP.

3. On trade date, the Participant will follow the directions regarding placing
orders outlined in Attachment A. A Participant wishing to create or redeem a
Custom Basket must identify the custom CUSIP on the order form in the space
provided. Orders received without a custom CUSIP indicated will be processed as
orders for Standard Baskets. Participants placing orders for Custom Baskets must
note that the cut-off-time to create and redeem a Custom Basket will be 3:00
p.m. New York time. ORDERS FOR CUSTOM BASKETS WILL NOT BE PROCESSED IF RECEIVED
BY THE TRUSTEE AFTER 3:00 P.M. NEW YORK TIME. The Participant must transact on
the Standard Basket after 3:00 p.m. New York time


                                       5





         IN WITNESS WHEREOF, the Participant acknowledges that he or she has
read the procedures relating to Custom Baskets and agrees to comply with all
such procedures. Failure to comply with the Custom Basket procedures will
require the transaction to be effected in Standard Basket


                                            PARTICIPANT:
                                                        ------------------------
                                            BY:
                                                        ------------------------
                                            TITLE:
                                                        ------------------------
                                            ADDRESS:
                                                        ------------------------

                                            TELEPHONE:
                                                        ------------------------
                                            FACSIMILE:
                                                        ------------------------
                                            TELEX:
                                                        ------------------------


Date:    _____________________________



                                       6




                                  ATTACHMENT B


         The following individuals are Authorized Persons pursuant to Section 6
of the Participant Agreement between ALPS Distributors, Inc., State Street Bank
and Trust Company, as Trustee for the SPDR Trust, and [NAME OF PARTICIPANT]:

















                                                     [                      ]

                                                     By:
                                                        ------------------------
                                                     Date:






                                       7




                                                                       EXHIBIT B

                         [FORM A OF GLOBAL CERTIFICATE.]


                       CERTIFICATE OF BENEFICIAL INTEREST
                                  -Evidencing-
                             All Undivided Interests
                                      -in-
                               SPDR TRUST SERIES 1

         This is to certify that CEDE & CO. is the owner and registered holder
of this Certificate evidencing the ownership of all of the fractional undivided
interests in the SPDR Trust Series 1 (herein called the "Trust") ("SPDRs"),
created under the laws of the State of New York by the Standard Terms and
Conditions of Trust and the Trust Indenture and Agreement (hereinafter called
the "Agreement and Indenture"), each between PDR Services Corporation
(hereinafter called the "Sponsor"), and State Street Bank and Trust Company, as
Trustee (hereinafter called the "Trustee"), copies of which are available at the
offices of the Trustee.

         At any given time this Certificate shall represent all undivided
interests in the Trust which shall be the total number of Creation Unit size
aggregations of SPDRs of undivided interest which are outstanding at such time.
The Agreement and Indenture provide for the deposit of additional Securities
from time to time with the Trustee, at which times the Trustee will create SPDRs
in the corresponding number of Creation Unit size aggregations representing the
additional Securities deposited with the Trust.

         The Sponsor and Spear Leeds & Kellogg as the initial depositor of the
Securities hereby grant and convey all of their rights, title and interest in
and to the Trust to the extent of the undivided interest represented hereby to
the registered holder of this Certificate subject to and in pursuance of the
Agreement and Indenture, all the terms, conditions and covenants of which are
incorporated herein as if fully set forth at length.

                                      B-1


         The registered holder of this Certificate is entitled at any time upon
tender of this Certificate to the Trustee, endorsed in blank or accompanied by
all necessary instruments of assignment and transfer in proper form, at its
Quincy office in the Commonwealth of Massachusetts and, upon payment of any tax
or other governmental charges, to receive on or before the seventh calendar day
following the day on which such tender is made or, if such calendar day is not a
Business Day (as defined in the Indenture), on the next succeeding Business Day
following such calendar day, such holder's ratable portion of the each of the
Securities for each Creation Unit size aggregation of SPDRs tendered and
evidenced by this Certificate and a check or, if elected, a wire transfer, in an
amount proportionate to money due such holder for each Creation Unit size
aggregations of SPDRs tendered.

         The holder hereof may be required to pay a charge specified in the
Agreement and Indenture issued in connection with the issuance, transfer or
interchange of this Certificate and any tax or other governmental charge that
may be imposed in connection with the transfer, interchange or other surrender
of this Certificate.

         The holder of this Certificate, by virtue of the purchase and
acceptance hereof, assents to and shall be bound by the terms of the Agreement
and Indenture, copies of which are on file and available for inspection at
reasonable times during business hours at the Quincy office of the Trustee, to
which reference is made for all the terms, conditions and covenants thereof.

         The Trustee may deem and treat the person in whose name this
Certificate is registered upon the books of the Trustee as the owner hereof for
all purposes and the Trustee shall not be affected by any notice to the
contrary.

         The Agreement and Indenture permits, with certain exceptions as therein
provided, the amendment thereof, the modification of the rights and the
obligations of the Sponsor, the Trustee

                                      B-2


and the holders of SPDRs in Creation Unit size aggregations thereunder and the
waiver of the performance of any of the provisions thereof at any time with the
consent of the holders of SPDRs in Creation Unit size aggregations or SPDRs,
evidencing 51% of Creation Unit size aggregations of SPDRs or, proportionately,
SPDRs at any time outstanding under the Indenture. Any such consent or waiver by
the holder of SPDRs shall be conclusive and binding upon such holder of SPDRs
and upon all future holders of SPDRs, and shall be binding upon any SPDRs,
whether evidenced by a Certificate or held in uncertificated form, issued upon
the registration or transfer hereof whether or not notation of such consent or
waiver is made upon this Certificate and whether or not the SPDRs in Creation
Unit size aggregations evidenced hereby are at such time in uncertificated form.
The Agreement and Indenture also permits the amendment thereof, in certain
limited circumstances, without the consent of any holders of SPDRs.

         This Certificate shall not become valid or binding for any purpose
until properly executed by the Trustee under the Agreement and Indenture.

         Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Trustee or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is required by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.

         IN WITNESS WHEREOF, State Street Bank and Trust Company, as Trustee,
has caused this Certificate to be manually executed in its corporate name by an
Authorized Officer and PDR

                                      B-3


Services Corporation, as Sponsor, has caused this Certificate to be executed in
its name by the manual or facsimile signature of one of its Authorized Officers.



STATE STREET BANK                                      PDR SERVICES CORPORATION,
  AND TRUST COMPANY,                                      As Sponsor
    As Trustee




By_________________________                      By____________________________
     Authorized Officer                                  Authorized Officer

Date: January 22, 1993



                                      B-4



                                                                       EXHIBIT C



                         [FORM B OF GLOBAL CERTIFICATE.]

                       CERTIFICATE OF BENEFICIAL INTEREST
                                                  _____ Creation Units
                                  -Evidencing-
                              An Undivided Interest
                                      -in-
                          STANDARD & POOR'S DEPOSITARY
                      RECEIPTS ("SPDR") TRUST, SERIES ____


         This is to certify that ___________ is the owner and registered holder
of this Certificate evidencing the ownership of SPDRs in the amount of _______
Creation Unit size aggregations of fractional undivided interest in the series
of SPDR Trust noted on the face hereof (herein called the "Trust"), created
under the laws of the State of New York by the Standard Terms and Conditions of
Trust and the Trust Indenture and Agreement (hereinafter called the "Agreement
and Indenture"), each between PDR Services Corporation (hereinafter called the
"Sponsor"), and State Street Bank and Trust Company, as Trustee (hereinafter
called the "Trustee"), copies of which are available at the offices of the
Trustee.

         At any given time this Certificate shall represent an undivided
interest in the Trust, the numerator of which fraction shall be the number of
Creation Unit size aggregations of SPDRs set forth on the face hereof and the
denominator of which shall be the total number of Creation Unit size
aggregations of SPDRs of undivided interest which are outstanding at such time.
The Agreement and Indenture provide for the deposit of additional Securities
from time to time with the Trustee, at which times the Trustee will deliver
SPDRs in Creation Unit size aggregations representing the additional Securities
deposited with the Trust.

         The Sponsor hereby grants and conveys all of its right, title and
interest in and to the Trust to the extent of the undivided interest represented
hereby to the registered holder of this Certificate

                                      C-1


subject to and in pursuance of the Agreement and Indenture, all the terms,
conditions and covenants of which are incorporated herein as if fully set forth
at length.

         The registered holder of this Certificate is entitled at any time upon
tender of this Certificate to the Trustee, endorsed in blank or accompanied by
all necessary instruments of assignment and transfer in proper form, at its
office in the City of New York and, upon payment of any tax or other
governmental charges, to receive on or before the seventh calendar day following
the day on which such tender is made or, if such calendar day is not a Business
Day (as defined in the Indenture), on the next succeeding Business Day following
such calendar day, such holder's ratable portion of the each of the Securities
for each Creation Unit size aggregation of SPDRs tendered and evidenced by this
Certificate and a check or, if elected, a wire transfer, in an amount
proportionate to money due such holder for each Creation Unit size aggregations
of SPDRs tendered.

         The holder hereof may be required to pay a charge specified in the
Agreement and Indenture issued in connection with the issuance, transfer or
interchange of this Certificate and any tax or other governmental charge that
may be imposed in connection with the transfer, interchange or other surrender
of this Certificate.

         The holder of this Certificate, by virtue of the purchase and
acceptance hereof, assents to and shall be bound by the terms of the Agreement
and Indenture, copies of which are on file and available for inspection at
reasonable times during business hours at the corporate trust office of the
Trustee, to which reference is made for all the terms, conditions and covenants
thereof.

         The Trustee may deem and treat the person in whose name this
Certificate is registered upon the books of the Trustee as the owner hereof for
all purposes and the Trustee shall not be affected by any notice to the
contrary.

                                      C-2


         The Agreement and Indenture permits, with certain exceptions as therein
provided, the amendment thereof, the modification of the rights and the
obligations of the Sponsor, the Trustee and the holders of SPDRs in Creation
Unit size aggregations thereunder and the waiver of the performance of any of
the provisions thereof at any time with the consent of the holders of SPDRs in
Creation Unit size aggregations or SPDRs, evidencing 51% of Creation Unit size
aggregations of SPDRs or, proportionately, SPDRs at any time outstanding under
the Indenture. Any such consent or waiver by the holder of SPDRs shall be
conclusive and binding upon such holder of SPDRs and upon all future holders of
SPDRs, and shall be binding upon any SPDRs, whether evidenced by a Certificate
or held in uncertificated form, issued upon the registration or transfer hereof
whether or not notation of such consent or waiver is made upon this Certificate
and whether or not the SPDRs in Creation Unit size aggregations evidenced hereby
are at such time in uncertificated form. The Agreement and Indenture also
permits the amendment thereof, in certain limited' circumstances, without the
consent of any holders of SPDRs.

         This Certificate shall not become valid or binding for any purpose
until properly executed by the Trustee under the Agreement and Indenture.

         Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is required by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.

                                      C-3


         IN WITNESS WHEREOF, State Street Bank and Trust Company, as Trustee,
has caused this Certificate to be manually executed in its corporate name by an
authorized officer and PDR Services corporation, as Sponsor, has caused this
Certificate to be executed in its names by the facsimile signature of one of its
Authorized Officers.



STATE STREET BANK                                      PDR SERVICES CORPORATION,
    AND TRUST COMPANY,                                      As Sponsor
        As Trustee




By_________________________                      By____________________________
      Authorized Officer                                 Authorized Officer

Date:  ______________, 1993





                                      C-4


                                  ABBREVIATIONS

         The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

         TEN COM - as tenants in common

         TEN ENT - as tenants by the entireties

         JT TEN - as joint tenants with right of

                  survivorship and not as tenants in common

                       UNIF GIFT MIN ACT __________Custodian________________
                                           (Cust)                 (Minor)

                          under Uniform Gifts to Minors

                          Act______________________________
                                        (State)

Additional abbreviations may also be used though not in the above list.

         FOR VALUE RECEIVED, hereby sell(s), assign(s) and transfer(s) unto

                                     ----------------------

                                     ----------------------

                                     Please insert Social Security or Other
                                     Identifying Number of Assignee
                                     ----------------------

                                     ----------------------

the within Certificate and does hereby irrevocably constitute and appoint
___________________ attorney, to transfer said Certificate on the books of the
Trustee with full power of substitution in the premises.



Dated:                               _______________________






                           Notice: The signatures to this assignment must
                           correspond with the name as written upon the face of
                           the Certificate or as recorded on the books of the
                           Trustee as the case may be, in every particular,
                           without alteration or enlargement or any change
                           whatever.



Signature guarantee should be made by the Sponsor or an eligible guarantor
institution having its principal office or correspondent in the City of New
York.

       Signature Guaranteed:


       ----------------------


       ----------------------




                                                                   Exhibit 99.C1

                                                                  (212) 238-8665

                                                         January 27, 2004

PDR Services LLC
c/o American Stock Exchange LLC
86 Trinity Place
New York, New York 10006

State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110

     Re: SPDR Trust Series 1
         -------------------

Ladies and Gentlemen:

We have served as counsel to the American Stock Exchange LLC (the "Exchange")
and PDR Services LLC as sponsor (the "Sponsor") of SPDR Trust Series 1
(hereinafter referred to as the "Trust"). It is proposed that Post-Effective
Amendment No. 14 to the Trust's registration statement ("Post-Effective
Amendment No. 14") will be filed with the Securities and Exchange Commission
(the "Commission") and dated as of the date hereof in connection with the
continued issuance by the Trust of an indefinite number of units of fractional
undivided interest in the Trust (hereinafter referred to as the "units")
pursuant to Rule 24f-2 promulgated under the provisions of the Investment
Company Act of 1940, as amended.

     In this regard, we have examined executed originals or copies of the
following:

     (a)  the Certificate of Incorporation, as amended, and the By-Laws, as
          amended, of the predecessor sponsor, certified by the Secretary of the
          predecessor sponsor, and the Certificate of Formation, as amended and
          restated and the Limited Liability Company Agreement of the Sponsor,
          certified by the Secretary of the sole member of the Sponsor;

     (b)  resolutions of the Board of Directors of the predecessor sponsor
          adopted on June 15, 1990, January 6, 1993, May 5, 1993 and March 1,
          1995 relating to the Trust and the issuance of the Units, certified by
          the Secretary of the predecessor sponsor; and the resolutions of the
          American Stock Exchange LLC as sole member of the Sponsor, certified
          by the Secretary of the sole member of the Sponsor;

     (c)  the Registration Statement on Form S-6 (File No. 33-46080) filed with
          the Commission in accordance with the Securities Act of 1933, as










          amended, and the rules and regulations of the Commission promulgated
          thereunder (collectively, the "1933 Act") and amendments thereto
          including Amendment No. 3 ("Amendment No. 3") filed on January 22,
          1993 (the "Registration Statement") and Post-Effective Amendment No.
          14 thereto proposed to be filed and dated as of the date hereof;

     (d)  the Notification of Registration of the Trust filed with the
          Commission under the Investment Company Act of 1940, as amended and
          the rules and regulations of the Commission promulgated thereunder
          (collectively, the "1940 Act") on Form N-8A, as amended, (the "1940
          Act Notification");

     (e)  the registration of the Trust filed with the Commission under the 1940
          Act on Form N-8B-2 (File No. 811-7330), as amended (the "1940 Act
          Registration");

     (f)  the prospectus included in Post-Effective Amendment No. 14 (the
          "Prospectus");

     (g)  the Application of SPDR Trust Series 1 and the Sponsor for exemptions
          under Sections 4(2), 14(a), 17(a), 22(d), 22(e), 24(d) and 26(a)(2)(C)
          of the 1940 Act and Rule 22c-1 and pursuant to Section 17d-1, as
          amended, the notice published and the order granted in connection
          therewith (File No. 812-7545, collectively, the "Order");

     (h)  the Amended and Restated Standard Terms and Conditions of the Trust
          dated as of January 1, 2004 between the Sponsor and State Street Bank
          and Trust Company (the "Trustee"), as amended (the "Standard Terms");

     (i)  the Trust Indenture dated January 22, 1993, as amended, between the
          Sponsor and the Trustee (the "Trust Indenture" and, collectively with
          the Standard Terms, the "Indenture and Agreement");

     (j)  the Distribution Agreement dated as of September 30, 1997 among the
          Sponsor, the Trust and ALPS Distributors, Inc. (formerly known as
          "ALPS Mutual Funds Services, Inc.") (the "Distribution Agreement"),

     (k)  the License Agreement between Standard & Poor's Corporation and the
          Sponsor dated October 30, 1992 as amended;

     (l)  the form of global certificate of ownership for units (the
          "Certificate") to be issued under the Indenture and Agreement; and









     (m)  such other pertinent records and documents as we have deemed
          necessary.

With your permission, in such examination, we have assumed the following: (a)
the authenticity of original documents and the genuineness of all signatures;
(b) the conformity to the originals of all documents submitted to us as copies;
(c) the truth, accuracy, and completeness of the information, representations,
and warranties contained in the records, documents, instruments and certificates
as we have reviewed; (d) except as specifically covered in the opinions set
forth below, with due authorization, execution, and delivery on behalf of the
respective parties thereto of documents referred to herein and the legal, valid
and binding effect thereof on such parties; and (e) the absence of any evidence
extrinsic to the provisions of the written agreement(s) between the parties that
the parties intended a meaning contrary to that expressed by those provisions.
However, we have not examined the securities deposited pursuant to the Indenture
and the Agreement (the "Securities") nor the contracts for the Securities.

We express no opinion as to matters of law in jurisdictions other than the State
of New York (except "Blue Sky" laws) and the federal laws of the United States,
except to the extent necessary to render the opinion as to the Sponsor and the
Indenture and Agreement in paragraphs (i) and (iii) below with respect to
Delaware law. As you know, we are not licensed to practice law in the State of
Delaware, and our opinion in paragraph (i) as to Delaware law is based solely on
review of the official statutes of the State of Delaware.

     Based on such examination, and having regard for legal considerations which
we deem relevant, we are of the opinion that:

          (i) the Sponsor is a limited liability company duly organized, validly
     existing, and in good standing under the laws of the State of Delaware with
     full corporate power to conduct its business as described in the
     Prospectus;

          (ii) the Sponsor is duly qualified as a foreign limited liability
     company and is in good standing as such within the State of New York;

          (iii) the Indenture and Agreement has been duly authorized, executed
     and delivered by the Sponsor and, assuming the due authorization, execution
     and delivery by the other parties thereto, is a valid and binding agreement
     of the Sponsor, enforceable against the Sponsor in accordance with its
     terms;

          (iv) the Trust has been duly formed and is validly existing as an
     investment trust under the laws of the










     State of New York and has been duly registered under the 1940 Act;

          (v) the terms and provisions of the Units conform to all material
     respects to the description thereof contained in the Prospectus;

          (vi) the consummation of the transactions contemplated under the
     Indenture and the fulfillment of the terms thereof will not be in violation
     of the Sponsor's Certificate of Formation, as amended and restated, or
     Limited Liability Company Agreement and will not conflict with any
     applicable laws or regulations applicable to the Sponsor in effect on the
     date hereof;

          (vii) the Units to be issued by the Trust, when duly issued by the
     Trustee in accordance with the Indenture and Agreement, upon delivery
     against payment therefor as described in the Registration Statement and
     Prospectus will constitute fractional undivided interests in the Trust
     enforceable against the Trust in accordance with its terms, will be
     entitled to the benefits of the Indenture and Agreement and will be fully
     paid and non-assessable; and

          (viii) while the Registration Statement has not yet become effective,
     we have no reason to believe that such Registration Statement, after being
     appropriately amended, will not become effective within 60 days after the
     date hereof.

In addition, we have participated in conferences with representatives of the
Sponsor, the Exchange, the Trustee, the Trust's accountants and others
concerning the Registration Statement and the Prospectus and have considered the
matters required to be stated therein and the statements contained therein,
although we have not independently verfied the accuracy, completeness or
fairness of such statements. Based upon and subject to the foregoing, nothing
has come to our attention to cause us to believe that the Registration
Statement, as of the date hereof, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or that the Prospectus, as of the date
hereof, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading (it being understood that we have not been requested to and do
not make any comment in this paragraph with respect to the financial statements,
schedules and other financial and statistical information contained in the
Registration Stratement or the Prospectus).

     Our opinion that any document is valid, binding, or enforceable in
accordance with its terms is qualified as to:









     (a) limitations imposed by bankruptcy, insolvency, reorganization,
arrangement, fraudulent conveyance, moratorium, or other laws relating to or
affecting the enforcement of creditors' rights generally;

     (b) rights to indemnification and contribution which may be limited by
applicable law or equitable principles; and

     (c) general principles of equity, regardless of whether such enforceability
is considered in a proceeding in equity or at law.

We hereby consent to the filing of this opinion as an exhibit to Post-Effective
Amendment No. 14 and to the use of our name where it appears in Post-Effective
Amendment No. 14 and the Prospectus.

                                            Very truly yours,

                                            /s/ Carter Ledyard and Milburn LLP

                                            Carter Ledyard and Milburn LLP





                                                                   EXHIBIT 99.C2

                       CONSENT OF INDEPENDENT ACCOUNTANTS

     We hereby consent to the use in the Prospectus constituting part of this
Post Effective Amendment No. 14 to the Registration Statement on Form S-6 of our
report dated November 20, 2003, relating to the financial statements and
financial highlights of SPDR Trust, Series 1, which appears in such Prospectus.
We also consent to the reference to us under the heading "Independent
Auditors" in such Prospectus.

PricewaterhouseCoopers LLP
Boston, Massachusetts

January 27, 2004