.jpg)
"In a time when it is important to provide investors with the optimum benchmarks to measure trends in the marketplace, we wanted to introduce a fine-tuned metric representing the aggregate performance of the world's best companies that meet NYSE standards and reflect the pricing stability of our auction market," said NYSE President, Co-Chief Operating Officer and Executive Vice Chairman, Catherine Kinney. "Introducing the new methodology also coincides with investors' increasing focus on tracking the differentiated performance of NYSE-listed stocks and showcases the NYSE Composite Index as the most diversified, best performing and least volatile of all broad-based indexes."
The NYSE, with the support of Dow Jones Indexes, reconstructed the index under a fully transparent and rules-based methodology that is aligned with those of other widely watched indexes. The revised index will measure the performance of all NYSE-listed common stocks, ADRs, tracking stocks and REITs and exclude closed-end funds, ETFs, and derivatives -- making it a more accurate gauge of the NYSE performance by eliminating the possibility of double-counting components.
Additionally, the NYSE Composite Index will move from a full market cap weighting to a float-adjusted market cap weighting to account for only those shares available for trading. Finally, the NYSE will recalculate the index to a base value of 5,000 as of Dec. 31, 2002. This change will not be reflected in the daily value of the index until Jan. 9. A comprehensive comparison of changes to the index is attached.
The improvements strengthen a key indicator of the NYSE market and the broader U.S. and global markets. Unlike other popular U.S. indexes, the NYSE Composite is global in nature, with 1,698 U.S. and 385 non-U.S. stocks among its nearly 2,100 common stocks. With a total market capitalization exceeding $12 trillion, the NYSE Composite represents approximately 82 percent of the total U.S. market cap and 57 percent of the world's total market cap. Additionally, the NYSE Composite has outperformed all other broad-based indexes for the past year and in the past three and five years.
"It is important that investors and other market participants have a tool that accurately measures the largest equities market in the world," said Michael A. Petronella, president, Dow Jones Indexes/Ventures. "Dow Jones Indexes is pleased to expand its relationship with the New York Stock Exchange as the calculator of this and other NYSE proprietary indexes."
The reintroduction of the NYSE Composite Index follows the launch of four new NYSE-branded indexes in June. The indexes, comprised entirely of NYSE-listed issuers, were introduced to serve as a platform for ETFs and to give investors a more defined snapshot of various segments of the NYSE marketplace. The indexes also serve to showcase the strengths of NYSE-listed companies. Other sector indexes to be rolled out in 2003 are being created with Dow Jones Indexes.
 | Old Methodology | New Methodology |
| Security class eligible for inclusion | | |
| Common stocks | Yes | Yes |
| ADRs | Yes | Yes |
| Tracking Stocks | Yes | Yes |
| REITs | Yes | Yes |
| Closed0end funds | Yes | No |
| ETFs | Yes | No |
| Preferred stocks | No | No |
| Derivatives | Yes | No |
| Shares of beneficial interest | Yes | No |
| Trust units | Yes | No |
| Limited partnerships | Yes | No |
| Weighting | Full market capitalization | Full market capitalization |
| Base Date | December 31, 2002 | December 31, 2002 |
| Base Value | 50 | 5,000 |
| Maintained/Calculated by | Securities Industry Automation Corporation | Dow Jones Indexes |
| Reconstitution/Rebalancing | Ongoing | |
| Share Updates (<10%) | Daily | |
| Return Calculations | Price return index | Price and total return indexes |
For more information on Indexes and ETFs please click here
