Dividend under STI ETF

Hi Tan Kin Lian,
It is clear to me that any index ETF tracks the underlying index. However, index itself will have dividend yield (let's say 3%), which I believe is significant.

If so, in the ideal circumstances ETF performance shall have to beindex + dividend yield.
Does ETF price reflect the dividend yield of the index? Where does the dividend of index go?

REPLY
If you invest in the STI ETF by StateStreet, the dividend is paid out in half yearly distributions.