THE MOTLEY FOOL Talking indexes

Q: What main stock indexes are there?

D.M., Scottsdale, Ariz.

A: The Dow Jones Industrial Average, launched in 1896, is one of the oldest and most widely referenced, but it contains only 30 companies — like Apple, McDonald’s, Microsoft, Nike, Walmart and Walt Disney.

The Standard & Poor’s 500 is much broader, featuring 500 of America’s biggest companies; examples include Amazon.com, Best Buy, Clorox, Dollar General, Hasbro, Hershey, Home Depot, Johnson & Johnson and Tesla.

Together, the 500 companies make up about 80% of the total market value of U.S. stocks, so the S&P 500 is often referenced as a proxy for the entire stock market.

Another key index, the Wilshire

5000, includes almost every publicly traded U.S. company.

The Russell 3000 index contains roughly 3,000 U.S. companies (including small, medium and large ones), which together represent close to 98% of the U.S. market.

The Russell 1000 is composed of the 1,000 largest companies in the Russell 3000, while the Russell 2000 comprises the 2,000 smaller companies in it.

There are many other major indexes, such as the FTSE Global All Cap, which aims to represent the entire world’s stock market; it encompasses more than 10,000 companies of varying sizes from dozens of countries, some with developing economies.

Various other indexes represent different countries, geographical regions, sectors or industries.

And some focus on assets other than stocks, such as bonds.

Q: What’s a “real” return?

A.B., Troy, Mich. A: It’s a gain that has been adjusted by subtracting the effect of inflation.

For example, if an investment has averaged annual gains of 10% over a period when inflation averaged 3%, the real average return would be about 7%.