Presentation of Index Returns

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Some indices, such as the S&P 500 Index, have returns shown calculated with different methods.

These versions can differ based on how the index components are weighted and on how dividends are accounted.

For example, there are three versions of the S&P 500 Index: price return, which only considers the price of the components, total return, which accounts for dividend reinvestment, and net total return, which accounts for dividend reinvestment after the deduction of a withholding tax.

The Wilshire 4500 and Wilshire 5000 indices have five versions each: full capitalization total return, full capitalization price, float-adjusted total return, float-adjusted price, and equal weight.

The difference between the full capitalization, float-adjusted, and equal weight versions is in how index components are weighted.

Reprinted from eTorothe copyright all reserved by the original author.

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