NASDAQ-100

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The NASDAQ-100 is a stock market index of 100 of the largest domestic and international non-financial companies listed on the NASDAQ stock exchange. It is a modified market value-weighted index; the companies weights in the index are based on their market capitalization, with certain rules capping the influence of the largest components. It does not contain financial companies, and includes companies incorporated in Canada (e.g. Research In Motion), Israel (e.g. Check Point), India (e.g. Infosys), Singapore (e.g. Flextronics), Sweden (e.g Ericsson), Switzerland (e.g. Logitech) and Ireland (e.g.Ryanair); both of these factors differentiate this index from the S&P 500. The index established a weekly close above the 1800 point level for the first time in 5 1/2 years on November 17, 2006, and briefly touched 1850 during February 2007.

Contents 1 History 2 Options and ETF 3 Standards 4 Yearly Rebalancing 5 Differences from NASDAQ Composite Index 6 Components 7 External links

[edit] History

The NASDAQ-100 began on January 31, 1985 as a way for the Nasdaq Stock Market to support enhanced media coverage for itself. The index was introduced the same day as the NASDAQ Financial-100 Index and as a result, financial companies were, and still are, excluded from the NASDAQ-100. The base price of the index was initially set at 250, but when it closed near 800 on December 31, 1993, the base was reset at 125 the following trading day, below the price of the more commonly known NASDAQ Composite.

The first annual adjustments were made in 1993 in advance of options on the index that would trade at the Chicago Board Options Exchange in 1994. Foreign companies were first admitted to the index in January 1998, but foreign companies had higher standards to meet before they could be added. Those standards were relaxed in 2002, while standards for domestic firms were raised, ensuring that all companies met the same standards.

The all-time highs for the index, set at the height of the dot-com bubble in 2000, stand above 4700 points, while its recent bear market lows in 2002 occurred below the 900 point level.

[edit] Options and ETF

NASDAQ-100 is often abbreviated as NDX. Its corresponding futures contracts are traded on the Chicago Mercantile Exchange. The regular futures are called ND, as in NDM6 for the June 2006 expiration. The e-mini versions are called NQ. ND and NQ are among the most heavily traded futures at the Chicago Mercantile Exchange.

The NASDAQ-100 Trust Series 1 Exchange-traded fund trades under the ticker NASDAQ: QQQQ. On December 1, 2004, it was moved from the American Stock Exchange where it had the symbol QQQ to the NASDAQ and given the new four letter code QQQQ. It is sometimes referred to as the "Quad Qs," "Cubes," or simply as "the Qs." Since 2000, it is the most actively traded security in the United States. On November 15, 2006, the ETF closed above $44 for the first time since early 2001.

[edit] Standards

The NASDAQ has over the years put in place a series of stringent standards for which companies must meet before being included in the index. Those standards include:

• Being listed exculsively on NASDAQ in either the Global Select or Global Market tiers
• Being listed for two years(or if it meets certain market capitalization standards, one year)
• Having average daily volume of 200,000 shares
• Being current in regards to quarterly and annual reports, and;
• Not being in Bankruptcy proceedings.

Additionally, companies with multiple classes of stock are only allowed to have one class included in the index(usually the largest class in terms of market capitalization).

[edit] Yearly Rebalancing

While the components of the NASDAQ-100 will change in the case of delisting (such as due to merger, transfer to another exchange, or bankruptcy), the index is only rebalanced once a year, in December, when NASDAQ reviews it's components and those changes are publically announced.

The are two tools the NASDAQ uses to determine the market values of companies for what it calls the annual review:

• Share Prices as of the last trading day of October(usually the 31st unless the 31st falls on a weekend);
• Publicly announced share totals as of the last trading day of November.

Those components that are in the top 100 of all eligible companies at the annual review are retained in the index. Those ranked 101 to 125 are retained only if they were in the top 100 of the previous year's annual review. If they fail to move into the top 100 for the following year's review, they are dropped. Those not ranked in the top 125 are dropped regardless of the previous year's rank. (A company will also be dropped if, at the end of two consecutive months, the component fails to have an index weighting of at least one-tenth of a percent.)

The companies that are dropped are replaced by those who have the largest market value and are not in the index already. Anticipation of these changes can lead to changes in the stock prices of the affected companies.

[edit] Differences from NASDAQ Composite Index

The NASDAQ-100 is frequently confused with the Nasdaq Composite Index; the latter index (often referred to simply as "the NASDAQ") includes the stock of every company that is listed on NASDAQ (more than 3,000 all together) and is quoted more frequently than the NASDAQ-100 in popular media.

The NASDAQ-100 is a modified capitalization-weighted average, in which certain companies will have more influence on the performance of the index, even if they are smaller than others.

The methodology was created in 1998 in advance of the creation the NASDAQ-100 Index Trust, which held portions of all NASDAQ-100 firms. The only time it is to be rebalanced again is if

• One company is worth 24% of the index, or
• Those companies with a weighting of at least 4.5% constitute 48% of the index.

[edit] Components

This list is current as of March 8, 2007. An up-to-date list is available in the External Links section.

• Activision, Inc. (ATVI)
• Adobe Systems Incorporated (ADBE)
• Akamai Technologies, Inc. (AKAM)
• Altera Corporation (ALTR)
• Amazon.com, Inc. (AMZN)
• Amgen Inc. (AMGN)
• Amylin Pharmaceuticals (AMLN)
• Apollo Group, Inc. (APOL)
• Apple Inc. (AAPL)
• Applied Materials, Inc. (AMAT)
• Autodesk, Inc. (ADSK)
• BEA Systems, Inc. (BEAS)
• Bed Bath & Beyond Inc. (BBBY)
• Biogen Idec Inc (BIIB)
• Biomet, Inc. (BMET)
• Broadcom Corporation (BRCM)
• C.H. Robinson Worldwide, Inc. (CHRW)
• Cadence Design Systems (CDNS)
• CDW Corporation (CDWC)
• Celgene Corporation (CELG)
• Check Point Software Technologies Ltd. (CHKP)
• CheckFree Corporation (CKFR)
• Cintas Corporation (CTAS)
• Cisco Systems, Inc. (CSCO)
• Citrix Systems, Inc. (CTXS)
• Cognizant Technology Solutions Corporation (CTSH)
• Comcast Corporation (CMCSA)
• Costco Wholesale Corporation (COST)
• Dell Inc. (DELL)
• DENTSPLY International Inc. (XRAY)
• Discovery Holding Co (DISCA)
• eBay Inc. (EBAY)
• EchoStar Communications Corporation (DISH)
• Electronic Arts Inc. (ERTS)
• Expedia Inc. (EXPE)
• Expeditors International of Washington, Inc. (EXPD)
• Express Scripts, Inc. (ESRX)
• Fastenal Company (FAST)
• Fiserv, Inc. (FISV)
• Flextronics International Ltd. (FLEX)
• Garmin Ltd. (GRMN)
• Genzyme Corporation (GENZ)
• Gilead Sciences, Inc. (GILD)
• Google, Inc. (GOOG)
• IAC/InterActiveCorp (IACI)
• Infosys Technologies(INFY)
• Intel Corporation (INTC)
• Intuit, Inc. (INTU)
• Intuitive Surgical Inc. (ISRG)
• Joy Global Inc. (JOYG)
• Juniper Networks, Inc. (JNPR)
• KLA-Tencor Corporation (KLAC)
• Lam Research Corporation (LRCX)
• Lamar Advertising Company (LAMR)
• Level 3 Communications (LVLT)
• Liberty Global, Inc. (LBTYA)
• Liberty Media Corporation, Interactive Series A (LINTA)
• Linear Technology Corporation (LLTC)
• LM Ericsson Telephone Company (ERIC)
• Logitech International, SA (LOGI)
• Marvell Technology Group, Ltd. (MRVL)
• Maxim Integrated Products, Inc. (MXIM)
• MedImmune, Inc. (MEDI)
• Microchip Technology Incorporated (MCHP)
• Microsoft Corporation (MSFT)
• Millicom International Cellular S.A. (MICC)
• Monster Worldwide, Inc. (MNST)
• Network Appliance, Inc. (NTAP)
• NII Holdings, Inc. (NIHD)
• NTL Incorporated (NTLI)
• NVIDIA Corporation (NVDA)
• Oracle Corporation (ORCL)
• PACCAR Inc. (PCAR)
• Patterson Companies Inc. (PDCO)
• Patterson-UTI Energy Inc. (PTEN)
• Paychex, Inc. (PAYX)
• PetSmart, Inc. (PETM)
• QUALCOMM Incorporated (QCOM)
• Research in Motion Limited (RIMM)
• Ross Stores, Inc. (ROST)
• Ryanair Holdings, PLC (RYAAY)
• SanDisk Corporation (SNDK)
• Sears Holdings Corporation (SHLD)
• Sepracor Inc. (SEPR)
• Sigma-Aldrich Corporation (SIAL)
• Sirius Satellite Radio, Inc. (SIRI)
• Staples, Inc. (SPLS)
• Starbucks Corporation (SBUX)
• Sun Microsystems, Inc. (SUNW)
• Symantec Corporation (SYMC)
• Tellabs, Inc. (TLAB)
• Teva Pharmaceutical Industries Limited (TEVA)
• UAL Corporation (UAUA)
• VeriSign, Inc. (VRSN)
• Vertex Pharmaceuticals (VRTX)
• Whole Foods Market, Inc. (WFMI)
• Wynn Resorts, Ltd. (WYNN)
• Xilinx, Inc. (XLNX)
• XM Satellite Radio Holdings, Inc. (XMSR)
• Yahoo! Inc. (YHOO)

[edit] External links

• NASDAQ 100 Index
• Market Indices
• Nasdaq 100 stock forums