<p>Straight Composite:</p><p>A straight composite uses its base index data points to calculate a combined number based on the percentage you assign to each index when the composite is created. The number is calculated using the following formula: x1 * y1 + x2 * y2 + x3 * .... where x = base index y = percentage assigned</p><p>Example:</p><p>Index A Index B Formula Composite Value Aug-10 1.2 10.23 1.2*0.6 + 10.23 * 0.4 4.812 Sep-10 1.4 9.8 1.4*0.6 + 9.8 * 0.4 4.76 Oct-10 1.195 11.49 1.195 * 0.6 + 11.49 * 0.4 5.313 % 60 40</p><p>Normalized Composite:</p><p>A normalized composite uses its base index data points to calculate the percent change over time of each base index. The percent change is calculated using the beginning month chosen by you when the composite is created. Once the original data has been converted it is now referred to as “normalized”. The normalized indexes are then multiplied by the percentage assigned to each index and added together. The complete algorithm is:</p><p>For two indexes with the following data:</p><p>Index A Index B Aug-10 1.2 10.23 Sep-10 1.4 9.8 Oct-10 1.195 11.49</p><p>The data is then normalized by dividing each month’s value by the base month’s value. Using Aug-10 as the base month:</p><p>Index A Formula Normalized Values Aug-10 1.2 1.2/1.2 1 Sep-10 1.4 1.4/1.2 1.166667 Oct-10 1.195 1.195/1.2 0.995833</p><p>Index B Formula Normalized Values Aug-10 10.23 10.23/10.23 1 Sep-10 9.8 9.8/10.23 0.957966764 Oct-10 11.49 11.49/10.23 1.123167155</p><p>The final value of the composite is then calculated by multiplying each normalized index by its assigned percentage and adding the results together as follows: n1 * y1 + n2 * y2 + n3 * .... where n = normalized index y = percentage assigned</p><p>With results of:</p><p>Composite A Normalized B Normalized Formula Value Aug-10 1 1 1 * 0.6 + 1 * 0.4 1 Sep-10 1.166667 0.957966764 1.167 * 0.6 + 0.958 * 0.4 1.083186906 Oct-10 0.995833 1.123167155 0.996 * 0.6 + 1.123 * 0.4 1.046766662 % 60 40</p>