Do Smallcase returns account for rebalances?

Suppose I pick a smallcase “A”, which gets rebalanced every 3 months. And suppose this smallcase was created in January 2015. When I look at the 2 returns today, am I looking at

  1. What the returns would have been if I had invested in A 2 years ago and rebalanced immediately when a rebalance was available
    OR
  2. What the returns would have been If I had bought the current basket of basket of stocks 2 years ago