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The Dow Jones Internet Composite Index tracks 40 of the largest and most actively traded Internet companies in the United States. The index was launched in February 1999 – at the height of the dot-com bubble – to establish clearly defined benchmarking principles for the evolving industry. The Dow Jones Internet Composite Index is a benchmark designed to measure companies whose primary business generates at least 50% of its revenues from the Internet.
“The Dow Jones Internet Composite Index is one example of the many niche markets we aim to represent with our index families. We designed this index to accurately measure the performance of Internet stocks over the long run – not merely during the tech boom.” said Michael A. Petronella, President of Dow Jones Indexes/Ventures. “First Trust’s decision to license this particular benchmark recognizes investor demand for specialized index-based products.”
“First Trust is excited to continue its longstanding licensing relationship with Dow Jones Indexes by sponsoring the First Trust Dow Jones Internet Indexsm Fund,” said Dan Waldron, Vice President for First Trust Advisors.
To be eligible for inclusion in the index, a company must generate at least half of its annual revenues from either Internet services or Internet commerce and must have a three-month average market capitalization of at least $100 million. Newly public companies must have a minimum of three months’ trading history; spin-offs are required to have this history only if the parent company has been trading for less than three months. Stocks also must have sufficient trading activity to pass liquidity screens.
Eligible stocks are ranked first by their average three-month float-adjusted market capitalization followed by their three-month average share volume. A final rank is applied based on an equal-weighted average of the market capitalization and trading volume. Companies are then sorted by sector classification as either Internet services or Internet commerce, and the top 25 Internet services and top 15 Internet commerce companies are added to the index.
The index is weighted by float-adjusted market capitalization. The top three Internet commerce companies in the index are Google Inc., Yahoo! Inc. and eBay Inc. The top three Internet services companies are VeriSign Inc., Akamai Technologies Inc, and BEA Systems Inc.
Also available are two sub-indexes – the Dow Jones Internet Commerce Index and Dow Jones Internet Services Index – that distinguish between companies that conduct business over the Internet and companies that make the Internet itself and the business conducted through it possible, respectively.
The Dow Jones Internet Indexes are reviewed quarterly in March, June, September and December. Daily historical data is available back to June 30, 1997. More information on the Dow Jones Internet Indexes can be found at www.djindexes.com.
