Supplemental Prospectus (Form 424B5)

Subject To Completion, dated January 21, 2026 PRELIMINARY PRICING SUPPLEMENT dated January 21, 2026 (To Product Supplement No. 2 dated June 30, 2023 Prospectus Supplement dated May 12, 2023 and Prospectus dated May 12, 2023)
	Jefferies Financial Group Inc. Medium-Term Notes, Series A
	Market Linked Securities- Auto-Callable with Contingent Coupon and Contingent Downside Principal at Risk Securities Linked to the Lowest Performing of the VanEck® Semiconductor ETF, the State Street® Health Care Select Sector SPDR® ETF and the State Street Financial Select Sector SPDR® ETF due January 26, 2029
■ Linked to the lowest performing of the VanEck® Semiconductor ETF, the State Street® Health Care Select Sector SPDR® ETF and the State Street Financial Select Sector SPDR® ETF (each referred to as a "Market Measure") ■ Unlike ordinary debt securities, the securities do not provide for fixed payments of interest, do not repay a fixed amount of principal at stated maturity and are subject to potential automatic call prior to stated maturity upon the terms described below. Whether the securities pay a contingent coupon, whether the securities are automatically called prior to stated maturity and, if they are not automatically called, whether you receive the face amount of your securities at stated maturity will depend, in each case, on the fund closing price of the lowest performing Market Measure on the relevant calculation day. The lowest performing Market Measure on any calculation day is the Market Measure that has the lowest fund closing price on that calculation day as a percentage of its starting price ■ Contingent Coupon. The securities will pay a contingent coupon on a monthly basis until the earlier of stated maturity or automatic call if, and only if, the fund closing price of the lowest performing Market Measure on the calculation day for that month is greater than or equal to its threshold price. However, if the fund closing price of the lowest performing Market Measure on a calculation day is less than its threshold price, you will not receive any contingent coupon for the relevant month. If the fund closing price of the lowest performing Market Measure is less than its threshold price on every calculation day, you will not receive any contingent coupons throughout the entire term of the securities. The threshold price for each Market Measure is equal to 70% of its starting price. The contingent coupon rate will be determined on the pricing date and will be at least 13.00% per annum ■ Automatic Call. If the fund closing price of the lowest performing Market Measure on any of the calculation days occurring in January, April, July and October from July 2026 to October 2028, inclusive, is greater than or equal to its starting price, the securities will be automatically called for the face amount plus a final contingent coupon payment ■ Potential Loss of Principal. If the securities are not automatically called prior to stated maturity, you will receive the face amount at stated maturity if, and only if, the fund closing price of the lowest performing Market Measure on the final calculation day is greater than or equal to its threshold price. If the fund closing price of the lowest performing Market Measure on the final calculation day is less than its threshold price, you will lose more than 30%, and possibly all, of the face amount of your securities. ■ If the securities are not automatically called prior to stated maturity, you will have full downside exposure to the lowest performing Market Measure from its starting price if its fund closing price on the final calculation day is less than its threshold price, but you will not participate in any appreciation of any Market Measure and will not receive any dividends on any Market Measure or the securities included in any Market Measure ■ Your return on the securities will depend solely on the performance of the Market Measure that is the lowest performing Market Measure on each calculation day. You will not benefit in any way from the performance of the better performing Market Measures. Therefore, you will be adversely affected if any Market Measure performs poorly, even if the other Market Measures perform favorably ■ All payments on the securities are subject to our credit risk, and you will have no ability to pursue any Market Measure or any securities included in any Market Measure for payment; if we default on our obligations under the securities, you could lose some or all of your investment ■ No exchange listing; designed to be held to maturity

	Original Offering Price	Agent Discount(1)(2)	Proceeds to the Issuer
Per Security	$1,000.00	$23.25	$976.75
Total

(1)	Jefferies LLC and Wells Fargo Securities, LLC are the agents for the distribution of the securities and are acting as principal. See "Terms of the Securities-Agents" and "Estimated Value of the Securities" in this pricing supplement for further information.

(2)

In respect of certain securities sold in this offering, Jefferies LLC, the broker-dealer subsidiary of Jefferies Financial Group Inc., may pay a fee of up to $3.00 per security to selected securities dealers in consideration for marketing and other services in connection with the distribution of the securities to other securities dealers.

Terms of the Securities

	Issuer:		Jefferies Financial Group Inc.
	Market Measures:		The VanEck® Semiconductor ETF, the State Street® Health Care Select Sector SPDR® ETF and the State Street Financial Select Sector SPDR® ETF (each referred to as a "Market Measure," and collectively as the "Market Measures").
	Fund Underlying Index:		With respect to the VanEck® Semiconductor ETF, the MVIS® US Listed Semiconductor 25 Index. With respect to the State Street® Health Care Select Sector SPDR® ETF, the Health Care Select Sector Index. With respect to the State Street Financial Select Sector SPDR® ETF, the Financial Select Sector Index.
	Pricing Date*:		January 23, 2026
	Issue Date*:		January 28, 2026
	Original Offering Price:		$1,000 per security.
	Face Amount:		$1,000 per security. References in this pricing supplement to a "security" are to a security with a face amount of $1,000.
	Contingent Coupon Payment:		On each contingent coupon payment date, you will receive a contingent coupon payment at a per annum rate equal to the contingent coupon rate if, and only if, the fund closing price of the lowest performing Market Measure on the related calculation day is greater than or equal to its threshold price. Each "contingent coupon payment," if any, will be calculated per security as follows: ($1,000 × contingent coupon rate)/12. Any contingent coupon payment will be rounded to the nearest cent, with one-half cent rounded upward. If the fund closing price of the lowest performing Market Measure on any calculation day is less than its threshold price, you will not receive any contingent coupon payment on the related contingent coupon payment date. If the fund closing price of the lowest performing Market Measure is less than its threshold price on all calculation days, you will not receive any contingent coupon payments over the term of the securities.
	Contingent Coupon Payment Dates:		Monthly, on the third business day following each calculation day (as each such calculation day may be postponed pursuant to "-Market Disruption Events and Postponement Provisions" below, if applicable); provided that the contingent coupon payment date with respect to the final calculation day will be the stated maturity date.
	Contingent Coupon Rate:		The "contingent coupon rate" will be determined on the pricing date and will be at least 13.00% per annum.
	Automatic Call:		If the fund closing price of the lowest performing Market Measure on any of the calculation days occurring in January, April, July and October from July 2026 to October 2028, inclusive, is greater than or equal to its starting price, the securities will be automatically called, and on the related call settlement date you will be entitled to receive a cash payment per security in U.S. dollars equal to the face amount plus a final contingent coupon payment. The securities will not be subject to automatic call until the sixth calculation day, which is approximately six months after the issue date. If the securities are automatically called, they will cease to be outstanding on the related call settlement date and you will have no further rights under the securities after such call settlement date. You will not receive any notice from us if the securities are automatically called.
	Calculation Days*:		Monthly, on the 23rd day of each month, commencing February 2026 and ending December 2028, and the final calculation day, each subject to postponement as described below under "-Market Disruption Events and Postponement Provisions." We refer to January 23, 2029 as the "final calculation day."
	Call Settlement Date:		Three business days after the applicable calculation day (as each such calculation day may be postponed as described below in "-Market Disruption Events and Postponement Provisions", if applicable).
	Stated Maturity Date*:		January 26, 2029, subject to postponement. The securities are not subject to repayment at the option of any holder of the securities prior to the stated maturity date.

	Maturity Payment Amount:		If the securities are not automatically called prior to the stated maturity date, then on the stated maturity date, you will be entitled to receive a cash payment per security in U.S. dollars equal to the maturity payment amount (in addition to the final contingent coupon payment, if any). The "maturity payment amount" per security will equal: • if the ending price of the lowest performing Market Measure on the final calculation day is greater than or equal to its threshold price: $1,000; or • if the ending price of the lowest performing Market Measure on the final calculation day is less than its threshold price: $1,000 × performance factor of the lowest performing Market Measure on the final calculation day
			If the securities are not automatically called prior to stated maturity and the ending price of the lowest performing Market Measure on the final calculation day is less than its threshold price, you will lose more than 30%, and possibly all, of the face amount of your securities at stated maturity. Any return on the securities will be limited to the sum of your contingent coupon payments, if any. You will not participate in any appreciation of any Market Measure, but you will have full downside exposure to the lowest performing Market Measure on the final calculation day if the ending price of that Market Measure is less than its threshold price.
	Lowest Performing Market Measure:		For any calculation day, the "lowest performing Market Measure" will be the Market Measure with the lowest performance factor on that calculation day.
	Performance Factor:		With respect to a Market Measure on any calculation day, its fund closing price on such calculation day divided by its starting price (expressed as a percentage).
	Fund Closing Price:		With respect to each Market Measure, fund closing price, closing price and adjustment factor have the meanings set forth under "General Terms of the Securities-Certain Terms for Securities Linked to a Fund-Certain Definitions" in the accompanying product supplement.
	Starting Price:		With respect to the VanEck® Semiconductor ETF: , its fund closing price on the pricing date. With respect to the State Street® Health Care Select Sector SPDR® ETF: , its fund closing price on the pricing date. With respect to the State Street Financial Select Sector SPDR® ETF: , its fund closing price on the pricing date.
	Ending Price:		The "ending price" of a Market Measure will be its fund closing price on the final calculation day.
	Threshold Price:		With respect to the VanEck® Semiconductor ETF: , which is equal to 70% of its starting price. With respect to the State Street® Health Care Select Sector SPDR® ETF: , which is equal to 70% of its starting price. With respect to the State Street Financial Select Sector SPDR® ETF: , which is equal to 70% of its starting price.
	Market Disruption Events and Postponement Provisions:		Each calculation day (including the final calculation day) is subject to postponement due to non-trading days and the occurrence of a market disruption event. In addition, the stated maturity date will be postponed if the final calculation day is postponed, and will be adjusted for non-business days. For more information regarding adjustments to the calculation days and the stated maturity date, see "General Terms of the Securities-Consequences of a Market Disruption Event; Postponement of a Calculation Day-Securities Linked to Multiple Market Measures" and "-Payment Dates" in the accompanying product supplement. For purposes of the accompanying product supplement, each call settlement date and the stated maturity date is a "payment date." In addition, for information regarding the circumstances that may result in a market disruption event, see "General Terms of the Securities-Certain Terms for Securities Linked to an Index-Market Disruption Events" and "General Terms of the Securities-Certain Terms for Securities Linked to a Fund-Market Disruption Events" in the accompanying product supplement.
	Calculation Agent:		Jefferies Financial Services Inc. ("JFSI"), a wholly owned subsidiary of Jefferies Financial Group Inc.

	Material Tax Consequences:		For a discussion of the material U.S. federal income and certain estate tax consequences of the ownership and disposition of the securities, see "Supplemental Discussion of U.S. Federal Income Tax Consequences."
	Agents:		Jefferies LLC and Wells Fargo Securities, LLC ("WFS") are the agents for the distribution of the securities. The agents will receive an agent discount of up to $23.25 per security. The agents may resell the securities to other securities dealers at the original offering price of the securities less a concession not in excess of $17.50 per security. Such securities dealers may include Wells Fargo Advisors ("WFA") (the trade name of the retail brokerage business of WFS's affiliates, Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC). In addition to the concession allowed to WFA, WFS may pay $0.75 per security of the underwriting discount to WFA as a distribution expense fee for each security sold by WFA. In addition, in respect of certain securities sold in this offering, Jefferies LLC may pay a fee of up to $3.00 per security to selected securities dealers in consideration for marketing and other services in connection with the distribution of the securities to other securities dealers. The agents and/or one or more of their respective affiliates expects to realize hedging profits projected by their proprietary pricing models to the extent they assume the risks inherent in hedging our obligations under the securities. If the agents or any other dealer participating in the distribution of the securities or any of their affiliates conduct hedging activities for us in connection with the securities, that dealer or its affiliates will expect to realize a profit projected by its proprietary pricing models from those hedging activities. Any such projected profit will be in addition to any discount, concession or fee received in connection with the sale of the securities to you.
	Denominations:		$1,000 and any integral multiple of $1,000.
	CUSIP:		47233YTK1

*	To the extent that we make any change to the expected pricing date or expected issue date, the calculation days and stated maturity date may also be changed in our discretion to ensure that the term of the securities remains the same.

Additional Information about the Issuer and the Securities

•	Product Supplement No. 2 dated June 30, 2023: https://www.sec.gov/Archives/edgar/data/96223/000114036123032428/brhc20055267_424b2.htm

•	Prospectus Supplement dated May 12, 2023 and Prospectus dated May 12, 2023: https://www.sec.gov/Archives/edgar/data/96223/000114036123024421/ny20009069x3_424b2.htm

Estimated Value of the Securities

Investor Considerations

■

seek an investment with contingent coupon payments at a rate of at least 13.00% per annum (to be determined on the pricing date) until the earlier of stated maturity or automatic call, if, and only if, the fund closing price of the lowest performing Market Measure on the applicable calculation day is greater than or equal to 70% of its starting price;

■

understand that if the ending price of the lowest performing Market Measure on the final calculation day has declined by more than 30% from its starting price, they will be fully exposed to the decline in the lowest performing Market Measure from its starting price and will lose more than 30%, and possibly all, of the face amount at stated maturity;

■	are willing to accept the risk that they may receive few or no contingent coupon payments over the term of the securities;

■	understand that the securities may be automatically called prior to stated maturity and that the term of the securities may be as short as approximately six months;

■	understand that the return on the securities will depend solely on the performance of the Market Measure that is the lowest performing Market Measure on each calculation day and that they will not benefit in any way from the performance of the better performing Market Measures;

■	understand that the securities are riskier than alternative investments linked to only one of the Market Measures or linked to a basket composed of each Market Measure;

■	understand and are willing to accept the full downside risks of each Market Measure;

■	are willing to forgo participation in any appreciation of any Market Measure and dividends on the Market Measures and the securities included in the Market Measures; and

■	are willing to hold the securities until maturity.

■	seek a liquid investment or are unable or unwilling to hold the securities to maturity or any earlier automatic call;

■	require full payment of the face amount of the securities at stated maturity;

■	seek a security with a fixed term;

■	are unwilling to purchase securities with an estimated value as of the pricing date that is lower than the original offering price and that may be as low as the lower estimated value set forth on the cover page;

■	are unwilling to accept the risk that the fund closing price of the lowest performing Market Measure on the final calculation day may decline by more than 30% from its starting price;

■	seek the certainty of current income over the term of the securities;

■	seek exposure to the upside performance of any or each Market Measure;

■	seek exposure to a basket composed of each Market Measure or a similar investment in which the overall return is based on a blend of the performances of the Market Measures, rather than solely on the lowest performing Market Measure;

■	are unwilling to accept the risk of exposure to the Market Measures;

■	are unwilling to accept our credit risk; or

■	prefer the lower risk of fixed income investments with comparable maturities issued by companies with comparable credit ratings.

Determining Payment On A Contingent Coupon Payment Date and at Maturity

Hypothetical Payout Profile

Selected Risk Considerations

•

Investing In The Securities Is Not The Same As Investing In The Market Measures. Investing in the securities is not equivalent to investing in the Market Measures. As an investor in the securities, your return will not reflect the return you would realize if you actually owned and held the Market Measures or the securities included in the Market Measures for a period similar to the term of the securities because you will not receive any dividend payments, distributions or any other payments paid on those securities. As a holder of the securities, you will not have any voting rights or any other rights that holders of the Market Measures or the securities included in the Market Measures would have.

•

Historical Values Of A Market Measure Should Not Be Taken As An Indication Of The Future Performance Of Such Market Measure During The Term Of The Securities.

•

Changes That Affect A Market Measure Or Its Fund Underlying Index May Adversely Affect The Value Of The Securities And Any Payments On The Securities.

•

We Cannot Control Actions By Any Of The Unaffiliated Companies Whose Securities Are Included In A Market Measure Or Its Fund Underlying Index,.

•

We And Our Subsidiaries Have No Affiliation With Any Market Measure Sponsor Or the Sponsor of each Fund Underlying Index, And Have Not Independently Verified Their Public Disclosure Of Information.

•

An Investment Linked To The Shares Of The Market Measures Is Different From An Investment Linked To Their Underlying Indices.

•

There Are Risks Associated With A Fund.

•

Anti-dilution Adjustments Relating To The Shares Of A Fund Do Not Address Every Event That Could Affect Such Shares.

•

The calculation agent is our subsidiary and may be required to make discretionary judgments that affect the return you receive on the securities. JFSI, a wholly owned subsidiary of Jefferies Financial Group Inc., will be the calculation agent for the securities. As calculation agent, JFSI will determine any values of the Market Measures and make any other determinations necessary to calculate any payments on the securities. In making these determinations, JFSI may be required to make discretionary judgments that may adversely affect any payments on the securities. See the sections entitled "General Terms of the Securities- Certain Terms for Securities Linked to an Fund-Market Disruption Events,"-Adjustments to an Fund" and "-Discontinuance of an Fund" in the accompanying product supplement. In making these discretionary judgments, the fact that JFSI is our subsidiary may cause it to have economic interests that are adverse to your interests as an investor in the securities, and JFSI's determinations as calculation agent may adversely affect your return on the securities.

•

Research reports by our subsidiaries or any participating dealer or its affiliates may be inconsistent with an investment in the securities and may adversely affect the value of A Market Measure.

•

Business activities of our subsidiaries or any participating dealer or its affiliates with the companies whose securities are included in A Market Measure may adversely affect the value of such Market Measure.

•

Hedging activities by our subsidiaries or any participating dealer or its affiliates may adversely affect the value of A Market Measure.

•

Trading activities by our subsidiaries or any participating dealer or its affiliates may adversely affect the value of A Market Measure.

•

A participating dealer or its affiliates may realize hedging profits projected by its proprietary pricing models in addition to any selling concession and/or distribution expense fee, creating a further incentive for the participating dealer to sell the securities to you.

Hypothetical Returns

Hypothetical performance factor of lowest performing Market Measure on final calculation day	Hypothetical Maturity Payment Amount per Security
175.00%	$1,000.00
160.00%	$1,000.00
150.00%	$1,000.00
140.00%	$1,000.00
130.00%	$1,000.00
120.00%	$1,000.00
110.00%	$1,000.00
100.00%	$1,000.00
90.00%	$1,000.00
80.00%	$1,000.00
75.00%	$1,000.00
70.00%	$1,000.00
69.00%	$690.00
50.00%	$500.00
40.00%	$400.00
30.00%	$300.00
25.00%	$250.00
0.00%	$0.00

Hypothetical Contingent Coupon Payments

	VanEck® Semiconductor ETF	State Street® Health Care Select Sector SPDR® ETF	State Street Financial Select Sector SPDR® ETF
Hypothetical starting price:	100.00	100.00	100.00
Hypothetical fund closing price on relevant calculation day:	90.00	95.00	80.00
Hypothetical threshold price:	70.00	70.00	70.00
Performance factor (fund closing price on calculation day divided by starting price):	90.00%	95.00%	80.00%

	VanEck® Semiconductor ETF	State Street® Health Care Select Sector SPDR® ETF	State Street Financial Select Sector SPDR® ETF
Hypothetical starting price:	100.00	100.00	100.00
Hypothetical fund closing price on relevant calculation day:	60.00	105.00	102.00
Hypothetical threshold price:	70.00	70.00	70.00
Performance factor (fund closing price on calculation day divided by starting price):	60.00%	105.00%	102.00%

	VanEck® Semiconductor ETF	State Street® Health Care Select Sector SPDR® ETF	State Street Financial Select Sector SPDR® ETF
Hypothetical starting price:	100.00	100.00	100.00
Hypothetical fund closing price on relevant calculation day:	115.00	105.00	115.00
Hypothetical threshold price:	70.00	70.00	70.00
Performance factor (fund closing price on calculation day divided by starting price):	115.00%	105.00%	115.00%

Hypothetical Payment at Stated Maturity

	VanEck® Semiconductor ETF	State Street® Health Care Select Sector SPDR® ETF	State Street Financial Select Sector SPDR® ETF
Hypothetical starting price:	100.00	100.00	100.00
Hypothetical fund closing price on relevant calculation day:	115.00	115.00	110.00
Hypothetical threshold price:	70.00	70.00	70.00
Performance factor (fund closing price on calculation day divided by starting price):	115.00%	115.00%	110.00%

	VanEck® Semiconductor ETF	State Street® Health Care Select Sector SPDR® ETF	State Street Financial Select Sector SPDR® ETF
Hypothetical starting price:	100.00	100.00	100.00
Hypothetical fund closing price on relevant calculation day:	80.00	85.00	95.00
Hypothetical threshold price:	70.00	70.00	70.00
Performance factor (fund closing price on calculation day divided by starting price):	80.00%	85.00%	95.00%

	VanEck® Semiconductor ETF	State Street® Health Care Select Sector SPDR® ETF	State Street Financial Select Sector SPDR® ETF
Hypothetical starting price:	100.00	100.00	100.00
Hypothetical fund closing price on relevant calculation day:	105.00	45.00	110.00
Hypothetical threshold price:	70.00	70.00	70.00
Performance factor (fund closing price on calculation day divided by starting price):	105.00%	45.00%	110.00%

The Market Measures

The VanEck® Semiconductor ETF

Special cash dividend pi, adjusted = pi - (Dividend x (1 - Withholding Tax))	Divisor change: Yes
Split Shareholders receive "B" new shares for every "A" share held.	Divisor change: No
Rights offering Shareholders receive "B" new shares for every "A" share held. If the subscription-price is either not available or not smaller than the closing price, then no adjustment will be done.	Divisor change: No
Stock dividend Shareholders receive "B" new shares for every "A" share held.	Divisor change: No
Stock dividend from treasury Stock dividends from treasury are adjusted as ordinary cash dividends. Shareholders receive 'B' new shares for every 'A' share held.	Divisor change: Yes

Stock dividend of a different company security Shareholders receive "B" shares of a different company for every "A" share held.	Divisor change: Yes
Spin-offs Shareholders receive "B" shares of a different company for every "A" share held.	Divisor change: Yes
Addition/deletion of a company Net change in market value determines the divisor adjustment.	Divisor change: Yes
Changes in shares outstanding/free-float Any secondary issuance, share repurchase, buy back, tender offer, Dutch auction, exchange offer, bought deal equity offering or prospectus offering will be updated at the semi-annual review if the change is smaller than 10%. Changes larger than 10% will be pre-announced (3 trading days' notice) and implemented on a best efforts basis. If necessary and information is available, resulting float changes are taken into consideration. Share changes will not be implemented in the week between review announcement and implementation.	Divisor change: Yes
Changes due to a merger/takeover/spin-off Net change in free-float market value determines the divisor adjustment. In case of no change, the divisor change is 0.	Divisor change: Yes

The State Street® Health Care Select Sector SPDR® ETF

•

Each of the component stocks in a Select Sector Index (the "Component Stocks") is a constituent company of the SPX.

•

The eleven Select Sector Indices together will include all of the companies represented in the SPX and each of the stocks in the SPX will be allocated to at least one of the Select Sector Indices.

•

The Index Compilation Agent assigns each constituent stock of the SPX to a Select Sector Index. The Index Compilation Agent assigns a company's stock to a particular Select Sector Index based on S&P Dow Jones Indices's sector classification methodology as set forth in its Global Industry Classification Standard.

•

Each Select Sector Index is calculated by S&P Dow Jones Indices using a modified "market capitalization" methodology. This design ensures that each of the component stocks within a Select Sector Index is represented in a proportion consistent with its percentage with respect to the total market capitalization of that Select Sector Index.

(i)

The indices are first evaluated to ensure none of the indices breach the maximum allowable limits defined in rules (ii) and (v) below. If any of the allowable limits are breached, the component stocks are reweighted based on their float-adjusted market capitalization weights.

(ii)

If any component stock has a weight greater than 24%, that component stock has its float-adjusted market capitalization weight capped at 23%. The 23% weight cap creates a 2% buffer to ensure that no component stock exceeds 25% as of the quarter-end diversification requirement date.

(iii)

All excess weight is equally redistributed to all uncapped component stocks within the relevant Select Sector Index.

(iv)

After this redistribution, if the float-adjusted market capitalization weight of any other component stock(s) then breaches 23%, the process is repeated iteratively until no component stock breaches the 23% weight cap.

(v)

The sum of the component stocks with weight greater than 4.8% cannot exceed 50% of the total index weight. These caps are set to allow for a buffer below the 5% limit.

(vi)

If the rule in step (v) is breached, all the component stocks are ranked in descending order of their float-adjusted market capitalization weights and the first component stock that causes the 50% limit to be breached has its weight reduced to 4.6%.

(vii)

This excess weight is equally redistributed to all component stocks with weights below 4.6%. This process is repeated iteratively until step (v) is satisfied.

(viii)

Index share amounts are assigned to each component stock to arrive at the weights calculated above. Since index shares are assigned based on prices one business day prior to rebalancing, the actual weight of each component stock at the rebalancing differs somewhat from these weights due to market movements.

(ix)

If necessary, the reweighting process may take place more than once prior to the close on the last business day of March, June, September or December to ensure conformity with all diversification requirements.

•

Each Select Sector Index is calculated using the same methodology utilized by S&P Dow Jones Indices in calculating the SPX, using a base-weighted aggregate methodology. The daily calculation of each Select Sector Index is computed by dividing the total market value of the companies in the Select Sector Index by a number called the index divisor.

•

The Index Compilation Agent at any time may determine that a Component Stock which has been assigned to one Select

•

Component Stocks removed from and added to the SPX will be deleted from and added to the appropriate Select Sector Index on the same schedule used by S&P Dow Jones Indices for additions and deletions from the SPX insofar as practicable.

The State Street Financial Select Sector SPDR® ETF

•

Each of the component stocks in a Select Sector Index (the "Component Stocks") is a constituent company of the SPX.

•

The eleven Select Sector Indices together will include all of the companies represented in the SPX and each of the stocks in the SPX will be allocated to at least one of the Select Sector Indices.

•

The Index Compilation Agent assigns each constituent stock of the SPX to a Select Sector Index. The Index Compilation Agent assigns a company's stock to a particular Select Sector Index based on S&P Dow Jones Indices's sector classification methodology as set forth in its Global Industry Classification Standard.

•

Each Select Sector Index is calculated by S&P Dow Jones Indices using a modified "market capitalization" methodology. This design ensures that each of the component stocks within a Select Sector Index is represented in a proportion consistent with its percentage with respect to the total market capitalization of that Select Sector Index.

(x)

The indices are first evaluated to ensure none of the indices breach the maximum allowable limits defined in rules (ii) and (v) below. If any of the allowable limits are breached, the component stocks are reweighted based on their float-adjusted market capitalization weights.

(xi)

If any component stock has a weight greater than 24%, that component stock has its float-adjusted market capitalization weight capped at 23%. The 23% weight cap creates a 2% buffer to ensure that no component stock exceeds 25% as of the quarter-end diversification requirement date.

(xii)

All excess weight is equally redistributed to all uncapped component stocks within the relevant Select Sector Index.

(xiii)

After this redistribution, if the float-adjusted market capitalization weight of any other component stock(s) then breaches 23%, the process is repeated iteratively until no component stock breaches the 23% weight cap.

(xiv)

The sum of the component stocks with weight greater than 4.8% cannot exceed 50% of the total index weight. These caps are set to allow for a buffer below the 5% limit.

(xv)

If the rule in step (v) is breached, all the component stocks are ranked in descending order of their float-adjusted market capitalization weights and the first component stock that causes the 50% limit to be breached has its weight reduced to 4.6%.

(xvi)

This excess weight is equally redistributed to all component stocks with weights below 4.6%. This process is repeated iteratively until step (v) is satisfied.

(xvii)

Index share amounts are assigned to each component stock to arrive at the weights calculated above. Since index shares are assigned based on prices one business day prior to rebalancing, the actual weight of each component stock at the rebalancing differs somewhat from these weights due to market movements.

(xviii)

If necessary, the reweighting process may take place more than once prior to the close on the last business day of March, June, September or December to ensure conformity with all diversification requirements.

•

Each Select Sector Index is calculated using the same methodology utilized by S&P Dow Jones Indices in calculating the

•

The Index Compilation Agent at any time may determine that a Component Stock which has been assigned to one Select Sector Index has undergone such a transformation in the composition of its business, and should be removed from that Select Sector Index and assigned to a different Select Sector Index. In the event that the Index Compilation Agent notifies S&P Dow Jones Indices that a Component Stock's Select Sector Index assignment should be changed, S&P Dow Jones Indices will disseminate notice of the change following its standard procedure for announcing index changes and will implement the change in the affected Select Sector Indices on a date no less than one week after the initial dissemination of information on the sector change to the maximum extent practicable. It is not anticipated that Component Stocks will change sectors frequently.

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Component Stocks removed from and added to the SPX will be deleted from and added to the appropriate Select Sector Index on the same schedule used by S&P Dow Jones Indices for additions and deletions from the SPX insofar as practicable.

SUPPLEMENTAL DISCUSSION OF U.S. FEDERAL INCOME TAX CONSEQUENCES

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a dealer in securities or currencies;

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a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings;

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a bank;

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a life insurance company;

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a tax exempt organization;

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a partnership;

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a regulated investment company;

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an accrual method taxpayer subject to special tax accounting rules as a result of its use of financial statements;

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a common trust fund;

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a person that owns a security as a hedge or that is hedged against interest rate risks;

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a person that owns a security as part of a straddle or conversion transaction for tax purposes; or

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a U.S. holder (as defined below) whose functional currency for tax purposes is not the U.S. dollar.

You should consult your tax advisor concerning the U.S. federal income tax and any other applicable tax consequences of your investments in the securities, including the application of state, local or other tax laws and the possible effects of changes in federal or other tax laws.

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a citizen or resident of the United States;

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a domestic corporation;

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an estate whose income is subject to U.S. federal income tax regardless of its source; or

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a trust if a United States court can exercise primary supervision over the trust's administration and one or more United States persons are authorized to control all substantial decisions of the trust.

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a nonresident alien individual;

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a foreign corporation; or

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an estate or trust that in either case is not subject to U.S. federal income tax on a net income basis on income or gain from the securities.

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a holder who is an individual present in the United States for 183 days or more in the taxable year of disposition and who is not otherwise a resident of the United States for U.S. federal income tax purposes;

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certain former citizens or residents of the United States; or

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a holder for whom income or gain in respect of the securities is effectively connected with the conduct of a trade or business in the United States.

LEGAL MATTERS

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