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Standard & Poor's Launches New Index Of S&P 500 Nasdaq Stocks - State Street Global Advisors Expected To Become First Licensee For ETF

Date 29/03/2004

Standard & Poor's, a leading provider of independent investment research, indices, and ratings, announced today the launch of the S&P 500 O-Strip Index, a new index comprised of all Nasdaq-listed components "stripped" out of the S&P 500. Currently made up of 74 Nasdaq-traded constituents, the S&P 500 O-Strip is maintained in accordance with the same index methodology as the S&P 500 and represents 15% of its market cap. It is expected that State Street Global Advisors will shortly be licensed to create an ETF that will trade on the Amex along with options on the ETF, and Standard & Poor's anticipates futures and options on the S&P 500 O-Strip Index will also soon be available.

"We created this index to provide an effective way to measure the performance of this subset of the S&P 500 and establish a basis for our licensees to meet investor demand for a more efficient way to acquire the underlying components of the S&P 500," said Robert Shakotko, managing director, Standard & Poor's. "Investors can also use this new index as an alternative to the Nasdaq 100."

"The S&P 500 O-Strip Index is a subset of the S&P 500 and is therefore consistent with the S&P 500 methodology including the index inclusion criteria such as screens for liquidity and market cap and a track record of at least four consecutive quarters of positive earnings," said David Blitzer, managing director and chairman of the Index Committees, Standard & Poor's. "The index also offers broader sector distribution than the Nasdaq 100, which excludes Financials for example, and may offer better representation of the overall universe of Nasdaq-traded stocks."

"Investors will soon be able to efficiently capture the S&P 500 with fewer trades by buying the S&P 500 stocks listed on the New York Stock Exchange in a basket, and picking up the Nasdaq-traded constituents through index-linked product based on the S&P 500 O-Strip, " said Daniel McCabe, CEO and managing director, Bear Hunter Structured Products. "Investors can also use the index for easily under-weighting or over-weighting the Nasdaq portion of the S&P 500, a common enhanced indexing strategy."

Both the S&P 500 and the S&P 500 O-Strip Index are capitalization weighted indices. Dividends, constituent changes and share count adjustments are treated in the same manner and implemented at the same time in the S&P 500 and the S&P 500 O-Strip Index.

The total market cap of the S&P 500 O-Strip Index will be the same as the total market cap of the Nasdaq-traded stocks within the S&P 500. The proportional weight of any stock in the S&P 500 O-Strip Index will be larger than that stock's proportional weight in the S&P 500 because the S&P 500 O-Strip Index is a subset of the S&P 500.

More information including index values can be found on www.indices.standardandpoors.com. The ticker symbol for the index is SPOS.

Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:MHP), is the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research, data and valuations. With 5000 employees located in 20 countries, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit www.standardandpoors.com.