For example, the vertical distance between $10,000 and $20,000 is the same as the distance between $20,000 and $40,000 because both represent a 100% increase in investment value. This provides a more accurate representation of performance than would a simple arithmetic graph. The graphs are scaled so that the full length of the vertical axis represents a tenfold increase in investment value. For securities with returns that have exhibited greater than a tenfold increase over the period shown in the graph, the vertical axis has been compressed accordingly.

Annual Returns
Total returns calculated on a calendar-year basis. Total return includes both income (in the form of dividends or interest payments) and capital gains or losses(the increase or decrease in the value of a security). Morningstar calculates total return by taking the change in a fund's NAV, assuming the reinvestment of all income and capital gains distributions (on the actual reinvestment date used by the fund) during the period, and then dividing by the initial NAV. Unless marked as load-adjusted total returns, Morningstar does not adjust total return for sales charges or for redemption fees. Total returns do account for management, administrative, and 12b-1 fees and other costs automatically deducted from fund assets.

+/- S&P 500 or +/- LB Aggregate
A benchmark index gives the investor a point of reference for evaluating a fund's performance. In all cases where such comparisons are made, Morningstar uses the S&P 500 as the primary benchmark for stock-oriented funds, and the Lehman Brothers Aggregate Bond index (an overall bond benchmark) as the benchmark index for bond funds. The +/- (Calendar Year) figure indicates the amount by which a fund over- or underperformed its primary index during a given calendar year.

Note: The total returns for the S&P 500 assume reinvestment of dividends on the last day of the month. This may account for differences between the index returns published on Morningstar.com and the index returns published elsewhere.

+/- Category
The Morningstar category gives the investor a point of reference for evaluating a fund's performance (see the Morningstar category definition below). The +/- (Calendar Year) figure indicates the amount by which a fund over- or underperformed its category during a given calendar year.

Day Change
The change in the price of the fund during the prior business day.

Total Assets
This figure is recorded in millions of dollars and represents the fund's total asset base.

Expense Ratio %
This is the percentage of fund assets paid for operating expenses and management fees. The expense ratio typically includes the following types of fees: accounting, administrator, advisor, auditor, board of directors, custodial, distribution (12b-1), legal, organizational, professional, registration, shareholder reporting, sub-advisor, and transfer agency. The expense ratio does not reflect the fund's brokerage costs or any investor sales charges.

Benefits
The expense ratio is useful because it shows the actual amount that a fund takes out of its assets each year to cover its expenses. Investors should note not only the current expense-ratio figure, but also the trend in these expenses; it could prove useful to know whether a fund is becoming cheaper or more costly. When considering high expenses vs. low expenses, potential investors must also consider the fund's objective and its size. Certain objectives, such as foreign-equity funds, have higher costs and, therefore, higher expense ratios. As for size, smaller funds are normally costlier than larger funds, because they do not have the benefits of economies of scale.

Front-end Load
The initial, or front-end, sales charge is a one-time deduction from an investment made into the fund. The amount is generally relative to the amount of the investment, so that larger investments incur smaller rates of charge. The sales charge serves as a commission for the broker who sold the fund.

Deferred Load
These are also known as back-end sales charges and are imposed when investors redeem shares. The percentage charged generally declines the longer shares are held. This charge, often coupled with 12b-1 fees as an alternative to a traditional front-end load, diminishes over time.

Manager Name
The name of the individual or individuals who are employed by the advisor or subadvisor who are directly responsible for managing the fund's portfolio, as taken directly from the fund's prospectus. Other terms that may appear in this column include the following:

Analyst Report Summary
A brief description of the fund written by Morningstar's analysts. For a more complete analysis, the Morningstar Analyst Report provides unbiased Morningstar commentary on the fund (click Read full analyst report link).

Analyst Pick or Pan
Analyst Picks or Pans indicate whether a fund is designated as a most or least favorite choice by Morningstar's in-house staff of analysts. Only a handful of funds in each investment category are designated picks and this is an excellent way to quickly look for quality funds. Looking at analyst pans is a good way to avoid funds that may be poor or inappropriate investment options.

Role in Portfolio
A guide to assist with portfolio allocation, funds can be designated core, supporting player or specialty. Core funds should be the bulk of an investor's portfolio, while supporting players contribute to a portfolio, but are secondary to the core. Specialty offerings tend to be speculative, and should typically only be a small portion of investors' portfolios.

· The manner in which funds are run;
· The degree to which the management company's and fund board's interests are aligned with fund shareholders;
· The degree to which shareholders can expect their interests to be protected from potentially conflicting interests of the management company.

· Regulatory Issues
· Board Quality
· Manager Incentives
· Fees
· Corporate Culture

The Morningstar Style Box™ was introduced in 1992 to help investors and advisors determine the investment style of a fund. The equity Style Box is a nine-square grid that classifies securities by size along the vertical axis and by value and growth characteristics along the horizontal axis. Different investment styles often have different levels of risk and lead to differences in returns. Therefore, it is crucial that investors understand style and have a tool to measure their style exposure. For the Fixed-Income Morningstar Style Box, see Fixed-Income Style Box.

Benefits
Morningstar's equity style methodology uses a "building block," holdings-based approach that is consistent with Morningstar's fundamental approach to investing. Style is first determined at the stock level and then those attributes are "rolled up" to determine the overall investment style of a fund or portfolio. This unified framework can link what are often treated as separate processes-stock research, fund research, portfolio assembly, and market monitoring-in the belief that a shared analytical framework will lead to better portfolio construction and fund usage.

Morningstar uses 10 different stock characteristics to measure value and growth, and this produces more accurate and stable stock and portfolio style assignments. Morningstar uses both forward-looking and historical-based components to ensure that information available to active portfolio managers is incorporated in the model. This robust approach to style analysis is a powerful lens for understanding stocks, funds, and portfolios.

The Morningstar Style Box is applicable in all equity markets. A geographic framework ensures that style assignments are relevant to local investors everywhere. As of March 31, 2004, all U.S. and non-U.S. stocks and portfolios are evaluated under the same style methodology. This methodology was originally introduced in May 2002 for U.S. stocks and portfolios only.

Using the Style Box
In general, a growth-oriented portfolio will hold the stocks of companies that the portfolio manager believes will increase factors such as sales and earnings faster than the rest of the market. A value-oriented portfolio contains mostly stocks the manager thinks are currently undervalued in price and will eventually see their worth recognized by the market. A blend portfolio might be a mix of growth stocks and value stocks, or it may contain stocks that exhibit both characteristics.

The Morningstar Style Box helps investors construct diversified, style-controlled portfolios based on the style characteristics of all the stocks and funds included in that portfolio.

Origin
Morningstar generates Style Boxes for stocks and portfolios in-house, using data culled from our internal databases. Style Box assignments for stocks are updated each month. Style Box assignments for portfolios are recalculated whenever Morningstar receives updated holdings for the portfolio.

The Style Box also forms the basis for the style-based Morningstar Categories and market indexes.

For the Pros
The Morningstar Style Box captures three of the major considerations in equity investing: size, security valuation and security growth. Value and growth are measured separately because they are distinct concepts. A stock's value orientation reflects the price that investors are willing to pay for some combination of the stock's anticipated per-share earnings, book value, revenues, cash flow, and dividends. A high price relative to these measures indicates that a stock's value orientation is weak, but it does not necessarily mean that the stock is growth-oriented. Instead, a stock's growth orientation is independent of its price and reflects the growth rates of fundamental variables such as earnings, book value, revenues, and cash flow. When neither value nor growth is dominant, stocks are classified as "core" and portfolios are classified as "blend."

Stock Size Score: Vertical Axis
Rather than using a fixed number of "large cap" or "small cap" stocks, Morningstar uses a flexible system that isn't adversely affected by overall movements in the market. World equity markets are first divided into seven style zones:

United States
Latin America
Canada
Europe
Japan
Asia ex-Japan
Australia/New Zealand

Stock Style Score: Horizontal Axis
The scores for a stock's value and growth characteristics determine its horizontal placement. There are five value factors and five growth factors, which are listed below.

Value Score Components and Weights
Forward Looking

Price/Projected Earnings 50.0%

Price/Book 12.5%
Price/Sales 12.5%
Price/Cash Flow 12.5%
Dividend Yield 12.5%

Growth Score Components and Weights
Forward Looking

Long-term Projected Earnings Growth 50.0%

Book Value Growth 12.5%
Sales Growth 12.5%
Cash Flow Growth 12.5%
Historical Earnings Growth 12.5%

The five value and five growth characteristics for each individual stock are compared to those of other stocks within the same scoring group (groups based on style zone and size, e.g. Europe large-caps). Stocks are then assigned Overall Value and Overall Growth scores based on the ten factors. If either growth or value is dominant, the stock is classified accordingly. If the scores for value and growth are similar in strength, the stock is classified as "core."

The thresholds between value, core, and growth stocks vary to some degree over time, as the distribution of stock styles changes in each style zone. However, on average, the three stock styles each account for approximately one-third of the total capitalization in each scoring group.

Moving from Individual Stocks to Portfolios
A stock fund or portfolio is an aggregation of individual stocks and its style is determined by the style assignments of the stocks it owns. Style Box assignments for portfolios are based on the asset-weighted average of the style and size scores of the underlying stocks. Few or no portfolios contain only stocks with extreme value-growth orientations, and both value and growth managers often hold core stocks for diversification or other reasons. Therefore, for portfolios, the central column of the Style Box represents the "blend" style (a mixture of growth and value stocks or mostly core stocks).

Fixed-Income Style Box
Domestic and international fixed-income funds focus on the two pillars of fixed-income performance: interest-rate sensitivity and credit quality. Morningstar splits fixed-income funds into three groups of interest rate sensitivity (high, medium, and low) and three credit-quality groups (high, medium, and low). These groupings graphically display a portfolio's average effective duration and credit quality. As with equity funds, nine possible combinations exist, ranging from short maturity/high quality for the safest funds to long maturity/low quality for the more volatile.

Along the horizontal axis of the style box lies the average term length of a fund's bond portfolio based on average effective duration. This figure, which is calculated by the fund companies, weights each bond's duration by its relative size within the portfolio. Duration provides a more accurate description of a bond's true interest-rate sensitivity than does maturity because it takes into consideration all mortgage prepayments, puts, and adjustable coupons. Funds with an average effective maturity of less than 3.5 years qualify as short term. Funds with bonds that have an average effective duration greater than or equal to 3.5 years but less than or equal to six years are categorized as intermediate, and those with maturity that exceeds six years are long term. (The duration ranges vary slightly for municipal-bond funds: Less than 4.5 years is short term; 4.5 to seven years is intermediate; and greater than seven years is long term.)

If duration data are not available, Morningstar will use average effective maturity figures to calculate the fund's style box. Although duration is the more accurate measurement, maturity can also be used to gauge the amount of interest-rate risk in a fund's portfolio. Funds with bonds that have an average effective maturity of less than four years qualify as short term. Funds with an average effective maturity greater than or equal to four years but less than or equal to 10 years are categorized as intermediate, and those with maturity that exceeds 10 years are long term.

Along the vertical axis of a fixed-income style box lies the average quality rating of a bond portfolio. Funds that have an average credit rating of AAA or AA are categorized as high quality. Bond portfolios with average ratings of A or BBB are medium quality, and those rated below BB are categorized as low quality. For the purposes of Morningstar's calculations, U.S. government securities are considered AAA bonds, nonrated municipal bonds generally are classified as BB, and all other nonrated bonds are considered B.

For hybrid funds, both equity and fixed-income style boxes appear.

Portfolio Date (explanation of reporting frequency)
Morningstar makes every effort to gather the most up-to-date portfolio information from a fund. By law, however, funds need only report this information two times during a calendar year, and they have two months after the report date to actually release the shareholder report and portfolio. Therefore, it's possible that a fund's portfolio could be up to eight months old at the time of publication. We print the date the portfolio was reported.

Morningstar's fixed-income sector scheme consists of three levels: Super Sector, Primary Sector, and Secondary Sector. There are six Super Sectors, which divide into 17 Primary Sectors, which in turn are formed by 72 Secondary Sectors.

The Super Sectors and Primary Sectors are as shown below.

Government

• Government
• Government Related

• Municipal Taxable
• Municipal Tax-Exempt

• Bank Loan
• Convertible
• Corporate Bond
• Preferred Stock

• Agency Mortgage-Backed
• Non-Agency Residential Mortgage-Backed
• Commercial Mortgage-Backed
• Covered Bond
• Asset-Backed

• Cash & Equivalents

• Swap
• Future/Forward
• Option/Warrant

This Primary Sector includes all conventional debt issued by governments, including bonds issued by a Central Bank or Treasury and bonds issued by local governments, cantons, regions and provinces. Securities in this sector include U.S. Treasury: inflation-protected instruments and sovereign bonds such as German Bundesobligationen, UK index-linked Gilts, and Japanese government securities.

This Primary Sector includes debt obligations issued by government agencies as well as interest-rate swaps and Treasury futures that are generally considered to have a risk profile commensurate with government bonds but may not have explicit government backing. Bonds issued by government-sponsored enterprises such as Federal National Mortgage Association and Federal Home Loan Mortgage Corporation can be found in this Primary Sector, while securities backed by mortgages that carry guarantees from government agencies can be found in the agency mortgage backed Primary Sector. Securities in this sector include U.S. bonds issued by the Export Import Bank of the United States, The Tennessee Valley Authority, the Commodity Credit Corporation, and the Small Business Administration as well as Treasury futures. This Primary Sector also includes bonds issued by agencies of central governments and bonds issued by supranational agencies. Securities in this Primary Sector include: Bundesschatzanweisungen (German federal notes) and Australian bonds issued by electrical suppliers and backed by the commonwealth of Australia; securities issued by the International Bank for Reconstruction and Development (World Bank), the European Investment Bank, the Inter-American Development Bank, and more.

United States regulations require that bonds benefiting from a federal tax exemption be issued only for certain purposes. The interest on municipal bonds may be taxable (that is, not excluded from gross income for federal income tax purposes) if they are deemed to be issued in support of certain private activities. A municipal security is considered a private-activity bond if it meets either of two sets of conditions set out in Section 141 of the Internal Revenue Code, which includes limits on the use of bond proceeds for private business use. The interest from so-called qualified private-activity bonds may be excluded from gross income for federal income tax purposes, but it remains subject to the Alternative Minimum Tax. These "AMT bonds" are included in the Municipal Tax-Exempt Primary Sector. This sector also includes Build America Bonds, which were issued under the 2009 American Recovery and Reinvestment Act, and non-U.S. municipal bonds.

Local governments, state governments, provinces, and regional authorities are often referred to more generally as "municipalities" and typically issue bonds in order to raise money for operations and development. This financing is sometimes used to build or upgrade hospitals, sewer systems, schools, housing, stadiums, or industrial complexes. Some municipal bonds are backed by the issuing entity, while others are linked to a revenue stream, such as from a toll way or a utility. Municipal bonds in the United States are typically exempt from federal taxes and often the taxes of the states in which they are issued. Those taxation advantages may allow municipal governments to sell bonds at lower interest rates than those offered by comparable taxable bonds. This Primary Sector includes issues that are subject to the Alternative Minimum Tax but not other federal taxes.

The bank loans most commonly held within investment portfolios are typically referred to as leveraged loans, because the balance sheets of their borrowers carry heavy debt burdens. Loans of this kind are: normally issued with interest payments that float above a commonly used short-term benchmark such as the London Interbank Offered Rate, or LIBOR, by at least 300 basis points; typically senior to nearly all other debt and equity in a company's capital structure; and very often secured by specific assets or cash flows.

Convertible bonds and convertible preferreds give their owners an opportunity to convert each security to a certain number of shares of common stock at a certain price. As the stock approaches that price, the option to convert becomes more valuable and the price of the convertible also rises. These securities usually provide lower interest payments because the option to convert to stock could potentially be quite valuable at some point in the future.

This sector includes all conventional debt securities that are issued by corporations. Corporate bonds are issued with a wide range of coupon rates and maturity dates.

Preferred stock is legally structured as equity, above common equity in a company's capital structure, but does not offer voting rights. Preferred stock often pays a fixed dividend and has priority over common equity when an issuing company elects to pay dividends. Although preferred stocks are not debt instruments, investors often treat them as such because of their income payouts and higher capital-structure placement.

This sector contains securities that represent a claim on the cash flows associated with pools of mortgages guaranteed by a government agency. Rolling into this sector are items such as mortgage pass-throughs, mortgage CMOs, and mortgage ARMs. These securities are guaranteed by Ginnie Mae, an agency of the U.S. government, or by U.S.-government-sponsored enterprises such as Fannie Mae or Freddie Mac.

Non-agency residential mortgage-backed securities are those not issued and guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae. Conforming loan size limits set by the U.S. government determine if a mortgage loan can qualify for an agency guarantee, and those that do not qualify make up the bulk of non-agency RMBS collateral. Because they lack a third-party guarantee, protection in the case of non-agency RMBS is generally provided through the creation of subordinate securities. These are first in line to offer credit protection to the senior most AAA rated classes and are accordingly priced at lower prices relative to AAAs, reflecting their higher exposure to credit risk.

A type of mortgage-backed security backed by mortgages on commercial rather than residential real estate.

Covered bonds are securities issued by a bank and backed by either high-quality mortgage loans or public-sector loans, which represent the "cover pool." Issuers raise assets for cover pools by selling "covered bonds" to investors, which maintain a claim on the cover pool but also a claim on the general assets and credit of the issuer. Part of what differentiates a cover pool from the assets supporting a typical mortgage-backed security is that the cover pool remains on the balance sheet of its issuer, usually a bank or special financial institution set up for this purpose.

Asset-backed securities are based on the expected cash flows from debts such as auto loans, credit card receivables, and computer leases among others. The cash flows for asset-backed securities can be fixed or variable. These securities typically range in effective maturity from two to seven years.

Cash can be cash in the bank, certificates of deposit, currency, or money market holdings. Cash can also be any fixed-income securities that mature in less than 12 months. Cash also includes commercial paper and any repurchase agreements held by the fund.

Swaps are risk-shifting, over-the-counter agreements that allow one party to trade one type of exposure for another. Each party agrees in advance to trade one set of payments (e.g., fixed or floating interest rates on a predetermined notional amount) for a different set of payments for a set amount of time.

By entering into a futures contract, the buyer (long position) has an obligation to purchase a specific underlying asset at an agreed-upon price at a specific date in the future. The seller of the futures contract takes a short position in the asset and agrees to sell it according to those terms.

Forward contracts are very similar to futures contracts in that they also represent the obligation to buy or sell a specific asset on a specific future date.

Options are contracts that allow the holder to profit if the price of the underlying asset moves in a certain direction. Call options give the holder (the long position) the right, but not the obligation, to buy an asset at a predetermined strike price and profit when the asset price is higher than the strike price. Put options give the holder the right to sell an asset at a specific strike price and profit when the market price of the asset is below the strike price. The parties that write options take a short position and have the obligation to sell or buy the asset from the long position if the option is exercised.

Warrants are a type of call option that is issued by the company, usually as part of a bond offering.

These are the top 5 holdings in the fund's portfolio ranked by the % of net assets.