Nasdaq 100 Stock to Debut Right on QQQ

If timing is everything, then Nasdaq-Amex might have a hit on its hands when it begins trading its Nasdaq 100 index tracking stock today, under the symbol QQQ.

The tech-heavy index surged 85% in 1998--more than triple the gain of the blue-chip Standard & Poor’s 500 index--and is up about 10% this year, more than double the S&P;’s climb. Its returns have thumped the better-known S&P; and the Dow Jones industrial average over the last five years, fueled by leaders such as Microsoft Corp., Dell Computer Corp., Intel Corp. and Amazon.com. The index, which comprises the largest nonfinancial companies on the Nasdaq National Market, also includes non-tech shares such as Starbucks and Bed Bath & Beyond.

The tracking stock, which will trade on the American Stock Exchange, represents ownership in the Nasdaq 100 Trust, an investment trust designed to track the price and dividend yield performance of the index. The stock will be priced initially at 5% of the Nasdaq 100’s value. With the index now at 2,028.57, the shares are expected to trade for about $100.

The Amex, which pioneered index shares in 1993 with depositary receipts known as SPDRs (“spiders”) based on the S&P; 500, also plans to offer options on the Nasdaq 100 tracking stock starting today.

Nasdaq-Amex originally planned to trade the tracking stock under the ticker Q, but the New York Stock Exchange sued, claiming the exclusive right to one-letter ticker symbols. The NYSE, Amex and Nasdaq settled the case this week, agreeing to end the practice of letting one exchange permanently reserve a trading symbol.

Under the accord, Nasdaq-Amex agreed to use a different symbol for the Nasdaq 100 Trust stock, and “the parties agreed to discuss refining the system to make it more finite,” according to an NYSE attorney.

No matter its symbol, the stock figures to generate interest because of the index’s stellar returns.

But timing, of course, could eventually work to the disadvantage of the tracking stock’s early investors--if the Nasdaq 100 has already seen its best days. Only time will tell.

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One Hot 100

A new “tracking stock” is designed to mimic the performance of the Nasdaq 100 index, which comprises the Nasdaq Stock Market’s largest non-financial stocks. The index has outperformed both the Standard & Poor’s 500 index and the Dow Jones industrial average in recent years. Cumulative percentage gains from March 1994 through February:

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Nasdaq 100 index: + 407.4%

Standard & Poor’s 500 index: + 208.2%

Dow Jones industrial average: + 185.1%

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Source: Bloomberg News