Possibly a stupid question but could someone enlighten me as to...

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    Possibly a stupid question but could someone enlighten me as to how index funds make money for example, the top 100 on ASX i understand the dividends received,but not all pay dividends,they have to buy as soon as a new share enters the top 100 so the share "dropping out" will probably have lost value and has to be sold regardless,what am i missing? Thanks.
 
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