Interpretive Letter to Stuart M. Strauss, Esq., Mayer, Brown & Platt

January 16, 2001

Stuart M. Strauss, Esq.
Mayer, Brown & Platt
1675 Broadway
New York, NY 10019-5820

Re: Secondary market trading in State Street Bank and Trust Company streetTracks Series Trust

Dear Mr. Strauss:

I am responding to your letter of September 8, 2000, as supplemented by information provided on November 29, 2000, in which you request that we interpret NASD Rules 2830(c) and (g) to permit secondary market trading in shares issued by the streetTracks Series Trust (the "Trust"), an open-end management investment company registered under the Investment Company Act of 1940 (the "Act"), which consists of ten separate investment portfolios (each a "Fund" and collectively, the "Funds"). In your letter, you indicate that you are requesting this relief on behalf of the Trust, State Street Bank and Trust Company ("State Street") (the investment adviser, transfer agent, and custodian of the Trust), the distributor and underwriter of the Trust, and NASD members engaging in transactions in shares of the Funds.

Background

You have represented that your request is substantially similar to the relief requested by State Street and ALPS Distributors, Inc. in connection with the Select Sector SPDR Trust ("Select Sector") and on behalf of the American Stock Exchange, Inc. and PDR Services Corporation in connection with Standard & Poor's Depositary Receipts ("SPDRs"), Standard & Poor's MidCap 400 Depositary Receipts ("MidCap SPDRs") and DIAMONDS ("DIAMONDS"). The NASD staff granted the relief requested in connection with Select Sector, SPDRs, MidCap SPDRs, and DIAMONDS in letters dated December 7, 1998, April 28, 1992, June 7, 1995, and February 19, 1998, respectively.

You have further represented that the Trust filed with the Securities and Exchange Commission (the "SEC") an application under Sections 6(c) and 17(b) of the Act requesting exemptions from, among other things, the provisions of Section 22(d) of the Act and Rule 22c-1 thereunder to allow secondary market trading of the Funds at negotiated prices. The SEC granted the requested relief by order dated September 25, 2000.¹

Response

Based on the representations in your letter and the SEC's September 25, 2000 order granting exemptions from, among other things, Section 22(d) of the Act and Rule 22c-1 thereunder to permit secondary market trading in the Funds, the NASD Regulation staff will not consider secondary market trading in the Funds to violate NASD Rules 2830(c) and (g). This position is limited to the factual descriptions and legal representations in your letter and the SEC's order, and is effective only during such period as the SEC's exemptions from Sections 22(d) of the Act and from Rule 22c-1 thereunder remain in effect. Your firm or parties to the transaction should notify NASD Regulation of any material change to the facts described herein, including the method of distribution. In this regard, you should be aware that any change in the methodology used to distribute the Funds will require further consideration by NASD Regulation and may cause us to reach a different conclusion.

I hope that this letter responds to your inquiry. Please note that the opinions expressed herein are staff opinions only and have not been reviewed or endorsed by the Board of Directors of NASD Regulation. This letter responds only to the issues that you have raised based on the facts as described, and does not address any other rule or interpretation of the Association, or all the possible regulatory and legal issues involved.

Sincerely,

Afshin Atabaki

1 See Investment Company Act of 1940 Release No. 24666 (September 25, 2000).