Abstract. A faceted taxonomy is a set of taxonomies, each describing a given domain from a different aspect, or facet. The indexing of domain objects is done through conjunctive combinations of terms from the facets, called compound terms. A faceted taxonomy has several advantages over a single hierarchy of terms, including conceptual clarity, compactness and scalability. A drawback, however, is the cost of avoiding invalid combinations, i.e. compound terms that do not apply to any object in the domain. This need arises in both indexing and retrieval, and typically involves human effort for specifying the valid compound terms one by one. We here propose a compound term composition algebra which can be used to generate valid compound terms in a given faceted taxonomy in an efficient and flexible manner. It works on the basis of the original simple terms of the facets and a small set of positive and/or negative statements. In each algebraic operation, we adopt a closed-world assumptio...