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Definition of 'SPDR S&P 500 ETF (SPY)'

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SPDR is an acronym for Standard & Poor's Depository Receipts. From this acronym, this trust is often referred to as Spiders.

The SPDR trust owns stocks in the same proportion as that represented by the S&P500 stock index. Each share of a spider contains one-tenth of the S&P500 index, and so trades at roughly one-tenth of the level of the S&P500.

Spiders trade on the American Stock Exchange (AMEX) under the ticker symbol SPY.

SPDRs are ETF's and, therefore, they trade like ordinary shares on the stock market.

Because they trade like shares and have all the advantages of an ETF they compete directly against S&P500 index funds and provide a convenient and economical way for large institutions and small traders to expose themselves to the S&P500 index. They are popular with investors who want to passively match the performance of the S&P500 index.

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