Barron's 400 Index To Serve As Basis Of Structured Note

Date: Thursday, September 27, 2007
Author: Hedgeco.net

Dow Jones Indexes, a leading global index provider, today announced the Barron’s 400 Index will serve as the basis of a structured note issued by Morgan Stanley. This is the first time the recently launched Barron’s 400 Index has been licensed to underlie an investment product.

Launched on Sept. 4, 2007, the Barron’s 400 Index tracks the performance of highly liquid U.S. stocks, highlighting America’s most promising companies as defined by fundamentals-related rules-based criteria>. The index is a joint collaboration of Dow Jones Indexes and Barron’s, which are business units of Dow Jones & Company.

“The Barron’s 400 Index is a unique barometer of some of the most liquid and dynamic U.S. companies. We have already received a good deal of attention from the investment community and expect further interest in this innovative index offering.” said Michael A. Petronella, president of Dow Jones Indexes.

Kevin Woodruff, Morgan Stanley’s Head of North America Equity Derivatives, said, “Providing access to underliers like the Barron’s 400 Index highlights Morgan Stanley’s commitment to delivering innovative ways for our clients to enhance their portfolio returns.”

To be eligible for inclusion, stocks are rated by fundamental criteria that measure companies’ profitability, cash flow and growth and value style characteristics. Fundamental analysis and rating of stocks is conducted by MarketGrader.com Corp., a research firm based in Coral Gables, Fla.

Stocks must then pass additional rules-based screens applied by Dow Jones Indexes: Securities must have a minimum float-adjusted market capitalization of $250 million USD, and at least 100 of the index’s 400 stocks must each have market capitalization of more than $3 billion USD. Companies must have reported quarterly or annual earnings results within six months prior to semi-annual reviews, and their stocks must have traded an average of at least $2 million daily for the preceding three months.

The top 400 stocks that meet these criteria are selected as components of the Barron’s 400 Index. Components are equal weighted and industries are capped at 20% of the index to ensure diversification. Real estate investment trusts (REITs) are ineligible for inclusion.

The index is reviewed semi-annually in March and September. Estimated daily back-tested history is available back to December 31, 1997. Back-tested performance information is purely hypothetical and does not represent actual performance. Past performance is not indicative of future results.

Index values are published daily on the Dow Jones Indexes Web site (http://djindexes.com) and on Barron’s Online (http://www.barrons.com).