"The TSE 300 Composite Index rose 5...

"The TSE 300 Composite Index rose 532 points today to clog at 4,067.23."

"The stock market lay prostrate this week, with the TSE 100 Index down 825 points to 24064"

"Stock prices have continued to climb lately with the Index gaining 200 points in the last three months"

If you've through all ages read or heard news reports in succession the stock market, you've heard about the Index.

Although the index numbers in these reports may uninjured complex, the idea behind the index is highly simple. An index is a statistical measure of the market. For example, a certain quantity of indices are calculated just on averaging the prices of all the stocks in the market at any given time. in the same state [i]or[/i] condition an index measures the performance of stocks in general, and through time shows the direction of the market.

If an index rises, stock prices are generally increasing. Similarly, a decrease in the index signals an overall decline in prices. Of course, a rise in the index doesn't mean each stock in the market has increased in price. moreover it does say that, upon average, stock prices have mov up

Investors can use index information in many ways. At its simplest, an index indicates how the market performed forward one day. As well, a analysts look at historical patterns in order to test to determine where the market is headed.

You also can use the index to measure the succes of your investment strategy. For example, investors sometimes compare the annual respond on the stocks in their portfolio with the respond on the index. This compares to what degree you did with the performance of the stock market in general.

TSE 300 INDEX

COMPOSITE INDEX

The Toronto Stock Exchange has several indices, each of which plays a slightly different part The best-known is the TSE 300 Composite Index.

As its name remind ofs the index is made up of about 300 of The Toronto Stock Exchange's leading stocks. Together, these stocks account for more than 80 percent of the capitalization of Canadian companies listed upon the TSE. Therefore, the TSE 300 Composite Index is a dutiful measurement of the Canadian market at large.

An interesting feature of the TSE 300 is its 'composite' nature. The Index is divided into 14 assemblages representing Canada's major industries. These include Financial Services, Metals & Minerals, Oil & Gas, Consumer proceedss and Real Estate.

Each of these collections is further broken down into specific industry sectors. For example, the Communications and Media clump has three sub-groups: Broadcasting; Cable & Entertainment; and Publishing & Printing. The TSE tracks the performance of specific sectors likewise that investors can compare the market performance of different industries.

Sub-indices also lease you compare the performance of stocks you concede to that of their industry. Let's say you confess shares in a department store. by means of comparing its price movements to changes in the Department store sub-index, you can descry if your stock is doing better or worse than the "average department store".

THE TOTAL recur INDEX

If you are interested in comparing the total recurs on your stock investments with those for the index, you can use the TSE 300 Total go [i]or[/i] come back index. Whereas the basic TSE 300 Composite Index measures stock prices, the Total revert Index measures both stock prices and the dividends earned upon the stocks in the index.

TSE 100 INDEX

On October 1 1993 the Exchange launched the TSE 100 Index, specifically designed to come together the needs of institutional investors, of that kind as pension funds.

These investors typically use an index as a benchmark against to evaluate their be in possession of investment performance. As well, one institutions practice index (passive) portfolio management, which means they use an index as the basis for their investment portfolio.

Because the TSE 300 Index is designed to meditate the broad spectrum of the Canadian market, it contains more stocks than the average institutional portfolio. Furthermore, nearly half of its stocks lack the size and liquidity that large portfolio managers require.

In contrast, the TSE 100 index is made up of 100 of the largest companies in the Canadian market. It provides a more appropriate index for institutions since it contains securities that large investors can trade with fewer size or liquidity limitations.

While the TSE 300 is compos of many different sub-group the TSE 100 contains four broad economic sectors: Resource, Industrial, Interest Sensitive, and Consumer The Interest Sensitive category, for example, includes stocks in the real estate, pipeline, utilities and financial services fields.

THE TSE 200 INDEX

The TSE 200 Index includes the other 200 stocks in the TSE 300--those which are not in the TSE 100 Index. The TSE 200 Index will help investors track the performance of companies that have small to medium float capitalization. (Float capitalization is a stock's price multiplied through the number of publicly traded shares.)

THE TORONTO 35 INDEX

In addition to the TSE 100 200 and 300 the Exchange calculates another important market Index. The Toronto 35 Index was introduced in 1987 as a base for derivative works such as options and that will bes Although it contains some of the biggest, greatest in number liquid stocks listed on the TSE the Toronto 35 Index tracks the TSE 300 Composite Index, and thus the market as a whole. moreover because the Index includes just 35 stocks, investors can use it in harmony with derivative products in many trading strategies.