S&P/Barra Indexes -- Description
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The S&P/Barra Growth and Value indexes were initially constructed at different points in time. In all cases a history of monthly index portfolios was generated back to the inception date of the full index.

Index Construction Date History Begins S&P 500/Barra Growth and Value May 1992 December 31, 1974 S&P MidCap 400/Barra Growth and Value October 1993 May 31, 1991 S&P SmallCap 600/Barra Growth and Value September 1996 December 31, 1993

All S&P/Barra Growth and Value indexes are rebalanced semi-annually on or about January 1 and July 1. The exact rebalance date is selected and announced by Standard & Poor's well in advance. The sole criteria for the S&P/Barra Growth/Value split is the book value divided by the market capitalization of a firm. The values used at the time of rebalancing are the equity's position at the close of trading one month prior (i.e., November 30 and May 31). This one month lag makes it possible to invest in the indexes as of the rebalancing dates because the new constituent lists are known well in advance. Between rebalancings adjustments are made to reflect index changes.

The indexes are designed so that approximately fifty percent of the combined index capitalization is in the value index and fifty percent is in the growth index. During intervening months, of course, the relative weights in the indexes will drift away from 50/50 as a result of capitalization changes in the index constituents. Every six months the indexes are re-adjusted so they are approximately equally split between growth and value.

The indexes are adjusted each month to reflect additions and deletions to the larger index. At each semiannual rebalance, a cutoff value is determined based on the book-to-price ratio of the "last" company in the value index (that is, the company in the value index with the lowest book-to-price ratio). This cutoff value is used to determine whether to place an index addition into the value or growth Index. A company is added to the growth index if its book-to-price ratio is lower than the most recent semi-annual cutoff value; otherwise, it is added to the value index. When companies are deleted from the larger index, they are also dropped from the value and growth indexes.