INVESTMENT ADVISORY AGREEMENT

                                     BETWEEN

                           SSGA FUNDS MANAGEMENT, INC.

                                       AND

                         THE SELECT SECTOR SPDR(R) TRUST



            This Agreement is made as of this first day of May, 2001, between

The Select Sector SPDR Trust, a Massachusetts business trust (the "Trust"), and

SSgA Funds Management, Inc., a Massachusetts corporation (the "Adviser").



            WHEREAS, the Trust is an open-end management investment company

registered under the Investment Company Act of 1940, as amended (the "1940

Act"), currently consisting of the nine separate portfolio series set forth on

Exhibit A to this Agreement (each a "Fund" and collectively, the "Initial

Funds"), each having its own investment policies; and



            WHEREAS, the Adviser is in the business of providing investment

advisory services; and



            WHEREAS, the Trust desires to retain the Adviser to render

investment advisory services to the Trust with respect to the Initial Funds and

such other series subsequently established by the Trust and made subject to this

Agreement in accordance with paragraph 1(b) (the "Additional Funds") (the

Initial Funds together with the Additional Funds being referred to herein as the

"Funds"), and the Adviser is willing to render such services;



            NOW, THEREFORE, in consideration of the mutual agreements contained

herein, the Trust and Adviser agree as follows:



1. APPOINTMENT OF ADVISER.



            (a) Initial Funds: The Trust hereby appoints the Adviser to act as

      investment adviser to the Initial Funds for the period and on the terms

      set forth in this Agreement. The Adviser accepts such appointment and

      agrees to render the services herein set forth, for the compensation

      herein provided. The Trust warrants that the Adviser has been duly

      appointed to act hereunder.





            (b) Additional Funds: In the event that the Trust establishes one or

      more series other than the Initial Funds with respect to which it desires

      to retain the Adviser to render investment advisory services hereunder, it

      shall so notify the Adviser in writing, indicating the advisory fee to be

      payable with respect to each Additional Fund. If the Adviser is willing to

      render such services, it shall so notify the Trust in writing, whereupon

      each such Additional Fund shall become a Fund hereunder. In such event, a

      writing signed by both the Trust and the Adviser shall be annexed hereto

      as a part hereof indicating that each such Additional Fund has

{PAGE}

      become a Fund hereunder and reflecting the agreed-upon fee schedule for

      each such Additional Fund.



2. ADVISORY DUTIES. Subject to the supervision of the Board of Trustees of the

Trust (the "Board"), the Adviser shall manage the investment operations and

determine the composition of the portfolio of each Fund, including the purchase,

retention and disposition of the securities and other instruments held by the

Fund, in accordance with such Fund's investment objective and policies as stated

in the then current prospectus and Statement of Additional Information for such

Fund contained in the Trust's Registration Statement on Form N-1A (the

"Registration Statement"), as such prospectus and Statement of Additional

Information are amended or supplemented from time to time. The Adviser's duties

hereunder are subject to the following understandings:



            (a) The Adviser shall provide supervision of investments, furnish a

      continuous investment program for the Funds, determine from time to time

      what investments or securities will be purchased, retained or sold by the

      Funds, and what portion of the assets will be invested or held uninvested

      as cash;



            (b) The Adviser, in the performance of its duties and obligations

      under this Agreement, shall act in conformity with the Trust's Declaration

      of Trust, By-Laws, Registration Statement and the terms and conditions of

      the order of exemption under the 1940 Act of the Securities and Exchange

      Commission (IC Release No. 23534) (November 13, 1998) granted pursuant to

      the Third Amended and Restated Application No. 812-10662, and with the

      instructions and directions of the Board, provided, however, the Adviser

      shall not be responsible for acting contrary to any of the foregoing that

      are changed without notice of such change to the Adviser; and the Adviser

      shall conform to and comply with the applicable requirements of the 1940

      Act and all other applicable federal or state laws and regulations;

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