Financial Times Stock Exchange 100 Index
FT-SE 100

The FT-SE 100 index is the leading representative of a wide family of stock market indexes which has been jointly established by the Financial Times, the London Stock Exchange, and the Institute and Faculty of Actuaries. The series of indexes comprises the following indexes

Real time calculation indexes:

  • FT-SE 100
  • FT-SE Mid 250
  • FT-SE Mid without Investment Trusts
  • FT-SE Actuaries 350
  • 4 FT-SE Actuaries 350 Industry Baskets
  • FT-SE Eurotrack 100
  • FT-SE Eurotrack 200

End of day calculation indexes:

  • FT-SE SmallCap
  • FT-SE SmallCap without Investment Trusts
  • FT-SE Actuaries Fledgling
  • FT-SE Actuaries Fledgling without Investment Trusts
  • FT-SE Actuaries All-Share
  • FT-SE Actuaries 350 Higher Yield
  • FT-SE Actuaries 350 Lower Yield
  • 44 sector and branch indexes

For a stock to be included in an FT-SE index (except for the FT-SE Eurotrack indexes) the issuing company must be incorporated and resident for tax purposes in the United Kingdom. A company which is a subsidiary of another constituent is excluded from entering the index sample, however, in order to prevent double counting. Companies whose business is that of holding equity and other investments, e.g. investment trusts, are eligible for inclusion, whereas funds whose prices are a direct derivation of underlying holdings, e.g. Unit Trusts, are excluded. Further on, for a stock to be eligible for inclusion in the FT-SE Share Indices it must pass four index qualification criteria.

  • Investibility

At least 25% of the stock in issue must be publicly available for investment and must not be in the hands of a single party or parties acting in concert. Two or more identifiable holders of more than 75% of a single stock may be deemed to be acting in concert unless evidence is available to the contrary.

  • Price

An accurate and reliable price for the purpose of determining the market value of a company must exist. A company that is excluded from the FT-SE Actuaries 350 because a SEAQ or SEAT quote is not available is not included in the FT-SE Actuaries All-Share Index.

  • Size

The FT-SE Actuaries All-Share Index aims to represent 98-99% of the market capitalization of all UK eligible listed and USM companies.

  • Liquidity

Stocks which are not traded on at least 100 business days (50 business days in the case of the FT-SE Actuaries Fledglings Index) during the twelve months prior to the annual review of the constituents are not eligible for inclusion in the indexes and, if constituents, will be removed at the end of the year after close of business on the last trading day of the year. New issues since the previous annual review must trade with the same minimum frequence in proportion to the period since first traded.

The decisions taken at the annual review meeting become effective after close of business on December 31 each year.

Based on these criteria the FT-SE 100 consists of the largest 100 UK companies ranked by market value, the FT-SE Mid 250 consists of the next 250 UK companies. The union of both index samples constitutes the FT-SE Actuaries 350 index sample which thus represents the largest 350 eligible companies. All constituents of the FT-SE Actuaries 350 are classified within industry sectors each of which constitutes a separate FT-SE Actuaries 350 Industry Basket. The FT-SE SmallCap consists of the UK companies within the FT-SE Actuaries All Share Index which are not large enough to be constituents of the FT-SE Actuaries 350. The FT-SE Actuaries Fledgling Index comprises all UK companies which are eligible for inclusion but are too small to be included in the FT-SE Actuaries All Share. The indexes are adjusted for the usual set of transactions.

Footnote

1. Lower (higher) yield stocks are those whose annual dividend is below (above) the weighted average annual dividend of the stocks contained in the index sample. At the December annual review the aim is that the total market capitalization of each yield index should be the same, each representing 50%, or as close of 50% as possible, of the total market capitalization of the FT-SE Actuaries 350. At the time of the other quarterly reviews all stocks whose annual dividend has fallen below (has risen above) the 85% (115%) threshold of the weighted average annual dividend yield become constituents of the Lower (Higher) Yield Index.

Financial Times Stock Exchange 100 Index: FT-SE International Limited. Text: Institute for Advanced Studies, Vienna, 1998. All rights reserved.


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