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AM High Technology MSH

The Morgan Stanley High-Technology 35 index measures highly capitalized U.S. companies, active in nine subsectors of the industry. The component companies are involved in computer services, design software, server software, PC software and new media, networking and telecommunications equipment, server hardware, PC hardware and peripherals, specialized systems and semiconductors.

Like others, the MSH is an equal-dollar-weighted index. That ensures that components are represented in approximate equal dollar value. The weighting was established by designating the necessary number of shares, from each of the component stocks, to total a value of $300,000 as of the closing bell on December 16, 1994. The total value of the stocks was reduced by a divisor to establish the 200-benchmark value. Adjustments are made annually, after closing on the third Friday of December, to ensure that each component remains representative of its equal market value.

An industry sector index affords investors the opportunity to participate in market trends without having to research and select specific stocks or groups of stock. A market sector index is a simpler, more efficient measure of movement within a given industry. A contract within a market sector index affords investors to focus efforts on overall market movement rather than the risks behind a specific stock.

Sector indices will reflect movement within their given markets to the extent their member companies represent the given industry. A sector index is "benchmarked" against the value at which it was originally set and will typically be altered at least once per year to maintain an accurate representation.

Options are traded on a given index and are settled in cash, unlike equity options which are settled in stock. The assigned writer (seller) is obligated to pay the exercising holder (buyer) the difference between the closing value of the underlying index and the exercise (strike) price of the option, multiplied by the specified index multiplier (usually $100). Basically, a multiplier of 100 in a sector index means that for every point a sector option is "in the money," there is an incremental $100 of intrinsic value.

Name     Symbol                            
America Online, Inc. (AOL)
First Data Corporation (FDC)
PeopleSoft, Inc. (PSFT)
Applied Materials, Inc. (AMAT)
Hewlett-Packard Company (HWP)
Seagate Technology Inc. (SEG)
Ascend Communications, Inc. (ASND)
Intel Corporation (INTC)
SGS-Thomson Micro. N.V. (STM)
Automatic Data Processing, Inc. (AUD)
International Business Machines Corp. (IBM)
Solectron Corporation (SLR)
Cisco Systems, Inc. (CSCO)
Intuit, Inc. (INTU)
Sun Micosystems, Inc. (SUNW)
Compaq Computer Corporation (CPQ)
Lucent Technologies, Inc. (LU)
Tellabs, Inc. (TLAB)
Computer Associates Intíl, Inc. (CA)
Micron Technology (MU)
Texas Instruments, Inc. (TXN)
Computer Sciences Corporation (CSC)
Microsoft Corporation (MSFT)
3Com Corporation (COMS)
Dell Computer Corporation (DELL)
Motorola, Inc. (MOT)
Xilinx, Inc. (XLNX)
Electronic Arts, Inc. (ERTS)
Northern Telecom (NT)
Yahoo! Inc. (YHOO)
Electronic Data Systems Corp. (EDS)
Oracle Corporation (ORCL)
First Data Corporation (FDC)


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