The iShares DJ Transportation Index (Ticker: IYT) seeks investment results that correspond generally to the performance, before fees and expenses, of the Dow Jones Transportation Average, which includes airlines, industrial transportation companies and general industrial service companies. The Dow Jones Transportation Average is maintained by editors of The Wall Street Journal. While the stock selection process is somewhat subjective, a stock typically is added only if the company has an excellent reputation, demonstrates sustained growth, is of interest to a large number of investors and accurately represents the market sectors covered by the average. When the averages were initially created, their values were calculated by simply adding up the component stock prices and dividing by the number of components. Today, the divisor of each average is adjusted to smooth out the effects of stock splits and other composition changes. The Dow Jones averages are unique in that they are price weighted rather than market capitalization weighted. The index is reviewed on an as-needed basis. For the sake of continuity, composition changes are rare, and generally occur following corporate acquisitions or other dramatic shifts in a component company's core business. When such an event necessitates that one component be replaced, the entire index is reviewed. As a result, several component changes are often implemented simultaneously.
