PARTICIPANT AGREEMENT



         This Participant Agreement (the "Agreement") is entered into by and

between ALPS Mutual Funds Services, Inc. (the "Distributor"), State Street Bank

and Trust Company, as transfer agent (the "Transfer Agent") and ___________(the

"Participant") and is subject to acceptance by The Select Sector SPDR(R) Trust

(the "Trust"). 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 shares of series of the Trust (each a "Fund"

and together, the "Funds"). The Transfer Agent has been retained to provide

certain services with respect to the creation and redemption of shares of the

Funds. As specified in the Trust's prospectus and Statement of Additional

Information (together, the "Prospectus"), shares of each Fund may be created or

redeemed only in aggregations of 50,000 shares, referred to therein and herein

as a "Creation Unit". The Prospectus provides that Creation Units be shall

issued in exchange for a Fund Deposit delivered by the Participant on behalf of

the investor (which may be the Participant) to the Trust. The Prospectus also

provides that Creation Units shall be redeemed in exchange for Fund Securities

and an amount of cash. Capitalized terms not otherwise defined herein are used

herein as defined in the Prospectus.



         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 "Clearing Process", or

(ii) outside 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, Transfer Agent and the Trust 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 Trust reserves the right

         to issue additional or other procedures relating to the manner of

         creating or redeeming Creation Units and the Participant, the Transfer

         Agent 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 Clearing Process, the Participant as a

         Participating Party hereby authorizes the Transfer Agent 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 telephone representative of the Distributor for





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         purchases and the telephone representative of the Transfer Agent for

         redemption. The Participant agrees to be bound by the terms of such

         instructions issued by the Transfer Agent (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, Transfer Agent or the

         Trust.



5.       Fees. In connection with the creation or redemption of Creation Units,

         the Trust shall charge and the Participant agrees to pay on behalf of

         the investor to the Trust the Transaction Fee prescribed in the

         Prospectus applicable to creation or redemption through the Clearing

         Process, or the Transaction Fee and such additional fee as may be

         prescribed pursuant to the Prospectus applicable to creation or

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