Morningstar Report: Mutual Fund Data Definitions

Snapshot
 

 Performance

Growth of $10,000 Graph
The Growth of $10,000 graph shows a fund's performance based on how $10,000 invested in the fund would have grown over time. The returns used in the graph are not load-adjusted. The growth of $10,000 begins at the date of the fund's inception, or the first year listed on the graph, whichever is appropriate. Located alongside the fund's graph line is a line that represents the growth of $10,000 in either the S&P 500 index (for stock funds and hybrid funds) or the LB Aggregate index (for bond funds). The third line represents the fund's Morningstar category (see definition below). These lines allow investors to compare the performance of the fund with the performance of a benchmark index and the fund's Morningstar category. Both lines are plotted on a logarithmic scale, so that identical percentage changes in the value of an investment have the same vertical distance on the graph.

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.


 Key Stats

Morningstar Category
While the investment objective stated in a fund's prospectus may or may not reflect how the fund actually invests, the Morningstar category is assigned based on the underlying securities in each portfolio. Morningstar categories help investors and investment professionals make meaningful comparisons between funds. The categories make it easier to build well-diversified portfolios, assess potential risk, and identify top-performing funds. We place funds in a given category based on their portfolio statistics and compositions over the past three years. If the fund is new and has no portfolio history, we estimate where it will fall before giving it a more permanent category assignment. When necessary, we may change a category assignment based on recent changes to the portfolio.

Stock Funds
Domestic-Stock Funds
Funds with at least 70% of assets in domestic stocks are categorized based on the style and size of the stocks they typically own. The style and size divisions reflect those used in the Morningstar investment style box: value, blend, or growth style and small, medium, or large median market capitalization. (See Equity Style Box for more details on style methodology.)

Based on their investment style over the past three years, domestic-stock funds are placed in one of the nine categories: large growth, large blend, large value, medium growth, medium blend, medium value, small growth, small blend, small value. Domestic-equity funds that specialize in a particular sector of the market are placed in a specialty category: communications, consumer discretionary, consumer staples, equity energy (funds that hold stocks of energy companies), financials, health care, industrials, natural resources, real estate, technology, utilities, and miscellaneous.

Also see "Conservative Allocation" and "Moderate Allocation" in the "Balanced Funds" section below.

International-Stock Funds
Stock funds that have invested 40% or more of their equity holdings in foreign stocks (on average over the past three years) are placed in an international-stock category.

Foreign Large Value: These funds seek capital appreciation by investing in large international stocks that are value-oriented. Large-cap foreign stocks have market capitalizations greater than $5 billion. Value is defined based on low price/book and price/cash-flow ratios, relative to the MSCI EAFE Index. These funds typically will have less than 20% of assets invested in U.S. stocks.

Foreign Large Blend: These funds seek capital appreciation by investing in a variety of large international stocks. Large-cap foreign stocks have market capitalizations greater than $5 billion. The blend style is assigned to funds where neither growth nor value characteristics predominate. These funds typically will have less than 20% of assets invested in U.S. stocks.

Foreign Large Growth: These funds seek capital appreciation by investing in large international stocks that are growth-oriented. Large-cap foreign stocks have market capitalizations greater than 5 billion. Growth is defined based on high price/book and price/cash-flow ratios, relative to the MSCI EAFE Index. These funds typically will have less than 20% of assets invested in U.S. stocks.

Foreign Small/Mid Value: These funds seek capital appreciation by investing in small- and mid-sized international stocks that are value-oriented. Small-and mid-cap stocks have market capitalizations less than $5 billion. Value is defined based on low price/book and price/cash-flow ratios, relative to the MSCI EAFE Index. These funds typically will have less than 20% of assets invested in U.S. stocks.

Foreign Small/Mid Growth: These funds seek capital appreciation by investing in small- and mid-sized international stocks that are growth-oriented. Small-and mid-cap stocks have market capitalizations less than $5 billion. Growth is defined based on high price/book and price/cash-flow ratios, relative to the MSCI EAFE Index. These funds typically will have less than 20% of assets invested in U.S. stocks.

World Stock: an international fund having more than 20% of stocks invested in the United States.

Diversified Emerging Markets: at least 50% of stocks invested in emerging markets.

Diversified Pacific Asia: at least 65% of stocks invested in Pacific countries, with at least an additional 10% of stocks invested in Japan.

Asia/Pacific ex-Japan: at least 75% of stocks invested in Pacific countries, with less than 10% of stocks invested in Japan.

China Region: China region stock portfolios invest almost exclusively in stocks from China, Taiwan and Hong Kong. These portfolios invest at least 70% of total assets in equities and invest at least 75% of stock assets in one specific region or a combination of China, Taiwan and/or Hong Kong.

Broad Asset Class Index: MSCI EAFE NR USD

Category Index: Russell China TR USD

Europe: at least 75% of stocks invested in Europe.

Japan: at least 75% of stocks invested in Japan.

Latin America: at least 75% of stocks invested in Latin America.

Global Real Estate: Global real estate portfolios invest primarily in non-U.S. real estate securities but may also invest in U.S. real estate securities. Securities that these portfolios purchase include: debt and equity securities, convertible securities, and securities issued by real estate investment trusts (REITs) and REIT-like entities. Portfolios in this category also invest in real-estate operating companies.

Also see "World Allocation" in the "Balanced Funds" section below.

Bond Funds
Funds with 80% or more of their assets invested in bonds are classified as bond funds. Bond funds are divided into two main groups: taxable bond and municipal bond. (Note: For all bond funds, maturity figures are used only when duration figures are unavailable.)

Taxable-Bond Funds
Long-Term Government: A fund with at least 90% of its bond portfolio invested in government issues with a duration of greater than or equal to six years or an average effective maturity of greater than 10 years.

Intermediate-Term Government: A fund with at least 90% of its bond portfolio invested in government issues with a duration of greater than or equal to 3.5 years and less than six years or an average effective maturity of greater than or equal to four years and less than 10 years.

Short-Term Government: A fund with at least 90% of its bond portfolio invested in government issues with a duration of greater than or equal to one year and less than 3.5 years, or average effective maturity of greater than or equal to one year and less than four years.

Long-Term Bond: A fund that focuses on corporate and other investment-grade issues with an average duration of more than six years, or an average effective maturity of more than 10 years.

Intermediate-Term Bond: A fund that focuses on corporate, government, foreign or other issues with an average duration of greater than or equal to 3.5 years but less than or equal to six years, or an average effective maturity of more than four years but less than 10 years.

Short-Term Bond: A fund that focuses on corporate and other investment-grade issues with an average duration of more than one year but less than 3.5 years, or an average effective maturity of more than one year but less than four years.

Ultrashort Bond: Used for funds with an average duration or an average effective maturity of less than one year. This category includes general- and government-bond funds, and excludes any international, convertible, multisector, and high-yield bond funds.

High-Yield Bond: A fund with at least 65% of assets in bonds rated below BBB.

World Bond: A fund that invests at least 40% of bonds in foreign markets.

Emerging-Markets Bond: at least 65% assets in emerging-markets bonds.

Multisector Bond: Used for funds that seek income by diversifying their assets among several fixed-income sectors, usually U.S. government obligations, foreign bonds, and high-yield domestic debt securities.

Inflation-Protected Bond: Inflation-protected bond portfolios invest primarily in debt securities that adjust their principal values in line with the rate of inflation. These bonds can be issued by any organization, but the U.S. Treasury is currently the largest issuer for these types of securities.

Bank Loan: funds that invest primarily in floating-rate bank loans instead of bonds. In exchange for their credit risk, they offer high interest payments that typically float above a common short-term benchmark.

Corporate Bond:Corporate Bond portfolios concentrate on bonds issued by corporations. These tend to have more credit risk than government or agency-backed bonds. These portfolios hold more than 65% of their assets in corporate bonds, hold less than 40% of their assets in foreign bonds, less than 35% in high yield bonds, and have an effective duration of more than 75% of the Morningstar Core Bond Index.

Category Group Index: Barclays US Agg Bond TR USD

Category Index: Barclays US Corp IG TR USD

Preferred Stock: Preferred stock portfolios concentrate on preferred stocks and perpetual bonds. These portfolios tend to have more credit risk than government or agency backed bonds, and effective duration longer than other bond portfolios. These portfolios hold more than 65% of assets in preferred stocks and perpetual bonds.

Category Group Index: Barclays US Agg Bond TR USD

Category Index: BofAML Preferred Stock Fixed Rate TR

Municipal Bond Funds
Municipal National Long-Term: A national fund with an average duration of more than seven years, or average maturity of more than 12 years.

Municipal National Intermediate-Term: A national fund with an average duration of more than 4.5 years but less than seven years, or average maturity of more than five years but less than 12 years.

Municipal Short: A fund that focuses on municipal debt/bonds with an average duration of less than 4.5 years, or an average maturity of less than five years.

State-specific munis: A municipal bond fund that primarily invest in one specific state. These funds must have at least 80 percent of assets invested in municipal bonds from that state. Each state-specific muni category includes long, intermediate, and short duration bond funds. State-specific funds that do not fall into one of the below categories will occupy either the Muni Single State Long-Term or Muni Single State Intermediate category. Muni California Intermediate
Muni California Long-Term
Muni Massachusetts
Muni Minnesota
Muni New Jersey
Muni New York Intermediate
Muni New York Long-Term
Muni Ohio
Muni Pennsylvania

High Yield Muni: A fund that invest at least 50 percent of assets in high-income municipal securities that are not rated or that are rated by a major rating agency at the level of BBB (considered speculative in the municipal industry) or below.

Balanced Funds
Funds in these categories offer investors a mix of stocks and bonds to provide capital appreciation, income, diversification, or specific allocations based on planned retirement dates. This group also includes funds that invest in convertibles, which act a bit like stocks and a bit like bonds.

Convertibles: Convertible bond portfolios are designed to offer some of the capital-appreciation potential of stock portfolios while also supplying some of the safety and yield of bond portfolios. To do so, they focus on convertible bonds and convertible preferred stocks. Convertible bonds allow investors to convert the bonds into shares of stock, usually at a preset price. These securities thus act a bit like stocks and a bit like bonds.

Conservative Allocation: Conservative-allocation portfolios seek to provide both capital appreciation and income by investing in three major areas: stocks, bonds, and cash. These portfolios tend to hold smaller positions in stocks than moderate-allocation portfolios. These portfolios typically have 20% to 50% of assets in equities and 50% to 80% of assets in fixed income and cash.

Moderate Allocation: Moderate-allocation portfolios seek to provide both capital appreciation and income by investing in three major areas: stocks, bonds, and cash. These portfolios tend to hold larger positions in stocks than conservative-allocation portfolios. These portfolios typically have 50% to 70% of assets in equities and the remainder in fixed income and cash.

Aggressive Allocation: Aggressive-allocation portfolios seek to provide both capital appreciation and income by investing in three major areas: stocks, bonds, and cash. These portfolios tend to hold larger positions in stocks than moderate-allocation portfolios. These portfolios typically have 70% to 90% of assets in equities and the remainder in fixed income and cash.

Broad Asset Class Index: Morningstar Moderate Target Risk

Category Index: Morningstar Aggressive Target Risk

World Allocation: World-allocation portfolios seek to provide both capital appreciation and income by investing in three major areas: stocks, bonds, and cash. While these portfolios do explore the whole world, most of them focus on the U.S., Canada, Japan, and the larger markets in Europe. It is rare for such portfolios to invest more than 10% of their assets in emerging markets. These portfolios typically have at least 10% of assets in bonds, less than 70% of assets in stocks, and at least 40% of assets in non-U.S. stocks or bonds.

Target-Date Portfolios: Target-date portfolios provide a diversified exposure to stocks, bonds, and cash for those investors who have a specific date in for retirement or another goal. These portfolios aim to provide investors with an optimal level of return and risk, based solely on the target date. Over time, management adjusts the allocation among asset classes to more conservative mixes as the target date approaches. Morningstar divides target-date funds into the following categories:

Target-Date 2000-2010
Target-Date 2011-2015
Target-Date 2016-2020
Target-Date 2021-2025
Target-Date 2026-2030
Target-Date 2031-2035
Target-Date 2036-2040
Target-Date 2041-2045
Target-Date 2050+
Retirement Income

Tactical Allocation: Tactical Allocation portfolios seek to provide capital appreciation and income by actively shifting allocations between asset classes. These portfolios have material shifts across equity regions, and bond sectors on a frequent basis. To qualify for the Tactical Allocation category, the fund must first meet the requirements to be considered in an allocation category. Next, the fund must historically demonstrate material shifts within the primary asset classes either through a gradual shift over three years or through a series of material shifts on a quarterly basis. The cumulative asset class exposure changes must exceed 10% over the measurement period.

Category Group Index: Morningstar Moderate Target Risk

Category Index: Morningstar Moderately Aggr Target Risk

Alternative
Alternative funds may take short positions or invest in currencies, derivatives, or other instruments. Funds in this group may attempt to move in the opposite direction of the market or may have performance that is not correlated with the broader markets.

Bear Market : Bear-market portfolios invest in short positions and derivatives in order to profit from stocks that drop in price. Because these portfolios often have extensive holdings in shorts or puts, their returns generally move in the opposite direction of the benchmark index.

Currency: Currency portfolios invest in U.S. and foreign currencies through the use of short-term money market instruments; derivative instruments including (and not limited to) forward currency contracts, index swaps, and options; and cash deposits.

Long-Short: Long-short portfolios hold sizable stakes in both long and short positions. Some funds that fall into this category are market neutral--dividing their exposure equally between long and short positions in an attempt to earn a modest return that is not tied to the market's fortunes. Other portfolios that are not market neutral will shift their exposure to long and short positions depending upon their macro outlook or the opportunities they uncover through bottom-up research.

Market Neutral: Market neutral portfolios seek income while maintaining low correlation to fluctuations in market conditions. Market neutral portfolios typically have net equity exposure between -20% and 20% and a beta between -0.3 and 0.3.

Broad Asset Class Index: ML USD LIBOR 3 Mon CM

Category Index: IA SBBI US 30 Day TBill TR USD

Specialty-Precious Metals: Specialty-precious metals portfolios focus on mining stocks, though some do own small amounts of gold bullion. Most portfolios concentrate on gold-mining stocks, but some have significant exposure to silver-, platinum-, and base-metal-mining stocks as well. Precious-metals companies are typically based in North America, Australia, or South Africa.

Managed Futures, FF: These funds primarily trade liquid global futures, options, swaps, and foreign exchange contracts, both listed and over-the-counter. A majority of these funds follow trend-following, price-momentum strategies. Other strategies included in this category are systematic mean-reversion, discretionary global macro strategies, commodity index tracking, and other futures strategies. More than 60% of the fund's exposure is invested through derivative securities. These funds obtain exposure primarily through derivatives; the holdings are largely cash instruments.

Broad Asset Class Index: S&P 500 TR

Category Index: S&P Diversified Trends Indicator TR

Multialternative, AM These funds offer investors exposure to several different alternative investment tactics. Funds in this category have a majority of their assets exposed to alternative strategies. An investor’s exposure to different tactics may change slightly over time in response to market movements. Funds in this category include both funds with static allocations to alternative strategies and funds tactically allocating among alternative strategies and asset classes. Average Gross short exposures is greater than 20%.

Broad Asset Class Index: S&P 500

Category Index: BarCap US AggBond TR

Trading-Inverse Commodities, IC These funds seek to generate returns equal to an inverse multiple of short-term returns of a commodity index. The compounding of short-term returns results in performance that does not correspond to those of investing in the index with external leverage. For example, a fund attempting to achieve negative 2 times the returns of a given index on a daily basis is unlikely to deliver anything like negative 2 times the index’s returns over periods longer than one day. Many of these funds seek to generate a multiple typically negative 1 to negative 3 times of the daily or weekly return of the reference index. Trading funds are not considered suitable for a long-term investor and are designed to be used by active traders.

Broad Asset Class Index: S&P 500 TR

Category Index: DJ UBS Commodity TR

Trading-Inverse Equity, IE These funds seek to generate returns equal to an inverse fixed multiple of short-term returns of an equity index. The compounding of short-term returns results in performance that does not correspond to those of investing in the index with external leverage. For example, a fund attempting to achieve negative 2 times the returns of a given index on a daily basis is unlikely to deliver anything like negative 2 times the index’s returns over periods longer than one day. Many of these funds seek to generate a multiple typically negative 1 to negative 3 times the daily or weekly return of the reference index. Trading funds are not considered suitable for a long-term investor and are designed to be used by active traders.

Broad Asset Class Index: S&P 500 TR

Category Index: BofAML USD Libor 3 Mon CM

Trading-Miscellaneous, TS These funds seek to generate returns equal to a fixed multiple (positive or negative) of short-term returns of an index. The reference index for this category is not equity, fixed-income, or commodity linked. The compounding of short-term returns results in performance that does not correspond to those of investing in the index with external leverage. For example, a fund attempting to achieve 2 times the returns of a given index on a daily basis is unlikely to deliver anything like 2 times the index’s returns over periods longer than one day. Many of these funds seek to generate a multiple of the daily or weekly return of the reference index. Trading funds are not considered suitable for a long-term investor and are designed to be used by active traders.

Broad Asset Class Index: S&P 500 TR

Category Index: BofAML USD Libor 3 Mon CM

Trading-Leveraged Commodities, LC These funds seek to generate returns equal to a fixed multiple of short-term returns of a commodity index. The compounding of short-term returns results in performance that does not correspond to those of investing in the index with external leverage. For example, a fund attempting to achieve 2 times the returns of a given index on a daily basis is unlikely to deliver anything like 2 times the index’s returns over periods longer than one day. Many of these funds seek to generate a multiple of the daily or weekly return of the reference index. Trading funds are not considered suitable for a long-term investor and are designed to be used by traders.

Broad Asset Class Index: S&P 500 TR

Category Index: DJ UBS Commodity TR

Trading-Leveraged Equity, LE These funds seek to generate returns equal to a fixed multiple of the short-term returns of an equity index. The compounding of short-term returns results in performance that does not correspond to those of investing in the index with external leverage. For example, a fund attempting to achieve 2 times the returns of a given index on a daily basis is unlikely to deliver anything like 2 times the index’s returns over periods longer than one day. Many of these funds seek to generate a multiple of the daily or weekly return of the reference index. Trading funds are not considered suitable for a long-term investor and are designed to be used by active traders.

Broad Asset Class Index: S&P 500 TR

Category Index: BofAML USD Libor 3 Mon CM

Trading-Inverse Debt, IT These funds seek to generate returns equal to an inverse fixed multiple of short-term returns of a fixed-income index. The compounding of short-term returns results in performance that does not correspond to those of investing in the index with external leverage. For example, a fund attempting to achieve negative 2 times the returns of a given index on a daily basis is unlikely to deliver anything like negative 2 times the index’s returns over periods longer than one day. Many of these funds seek to generate a multiple typically negative 1 to negative 3 times of the daily or weekly return of the reference index. Trading funds are not considered suitable for a long-term investor and are designed to be used by active traders.

Broad Asset Class Index: BarCap US AggBond TR

Category Index: BofAML USD Libor 3 Mon CM

Trading-Leveraged Debt, GD These funds seek to generate returns equal to a fixed multiple of the short-term returns of a fixed-income index. The compounding of short-term returns results in performance that does not correspond to those of investing in the index with external leverage. For example, a fund attempting to achieve 2 times the returns of a given index on a daily basis is unlikely to deliver anything like 2 times the index’s returns over periods longer than one day. Many of these funds seek to generate a multiple of the daily or weekly return of the reference index. Trading funds are not considered suitable for a long-term investor and are designed to be used by active traders.

Broad Asset Class Index: BarCap US AggBond TR

Category Index: BofAML USD Libor 3 Mon CM

Volatility, VY Volatility strategies trade volatility as an asset class. Directional volatility strategies aim to profit from the trend in the implied volatility embedded in derivatives referencing other asset classes. Volatility arbitrage seeks to profit from the implied volatility discrepancies between related securities.

Broad Asset Class Index: S&P 500 TR

Category Index: S&P VIX Mid Term Futures TR

Morningstar Rating for Funds
Morningstar rates mutual funds from one to five stars based on how well they've performed (after adjusting for risk and accounting for all sales charges) in comparison to similar funds. Within each Morningstar Category, the top 10% of funds receive five stars, the next 22.5% four stars, the middle 35% three stars, the next 22.5% two stars, and the bottom 10% receive one star. Funds are rated for up to three time periods--three-, five-, and 10 years--and these ratings are combined to produce an overall rating. Funds with less than three years of history are not rated. Ratings are objective, based entirely on a mathematical evaluation of past performance. They're a useful tool for identifying funds worthy of further research, but shouldn't be considered buy or sell recommendations.

NAV
A fund's net asset value (NAV) represents its per-share price. A fund's NAV is derived by dividing the total net assets of the fund, less fees and expenses, by the number of shares outstanding.

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.

Fund expenses (net of waivers and reimbursements) are subtracted from the fund's assets on a daily basis. This causes the expense ratio to be accrued evenly, with little daily effect to the fund's NAV. Most companies associated with the fund, such as the investment advisor, are actually paid on a monthly basis.

For most funds, the Expense Ratio that appears in the Snapshot view is pulled from the fund's audited annual report. Annual-report expense ratios reflect the actual fees charged during a particular fiscal year.

For funds of funds only, the Snapshot Expense Ratio is the prospectus expense ratio from the fund's most recent prospectus. The prospectus expense ratio reflects material changes to the expense structure for the current period and is the aggregate expense ratio as defined as the sum of the wrap or sponsor fees plus the estimated weighted average of the underlying fund fees.


Funds of Funds- The prospectus expense ratio for a fund of funds is the aggregate expense ratio as defined as the sum of the wrap or sponsor fees plus the estimated weighted average of the underlying fund fees.

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.

Yield
Yield, expressed as a percentage, represents a fund's income return on capital investment for the past 12 months. This figure refers only to interest distributions from fixed-income securities, dividends from stocks, and realized gains from currency transactions. Monies generated from the sale of securities or from options and futures transactions are considered capital gains, not income. Return of capital is also not considered income NMF--or No Meaningful Figure--appears in this space for those funds that do not properly label their distributions. We list N/A if a fund is less than one year old, in which case we cannot calculate yield.

Morningstar computes yield by dividing the sum of the fund's income distributions for the past 12 months by the previous month's NAV (adjusted upward for any capital gains distributed over the same time period).

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:

Multiple Managers
This term appears when more than two people are involved in the fund management, and they manage independently. Where this term is used, quite often the fund has divided net assets in set amounts among the individual managers. In most cases, multiple managers are employed at different subadvisors or investment firms.

Management Team
This is used when there are more than two people involved in fund management, and they manage together, or when the fund strongly promotes its team-managed aspect.

Et al
When this term appears just after a manager name, it indicates that while other people are involved in fund management, the person listed acts as the leader or is recognized by the fund as being the principal management player.

   Premium Features
 

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.

   Stewardship Grade
  Morningstar's Stewardship Grade for funds goes beyond the usual analysis of strategy, risk, and return. The Stewardship Grade allows investors and advisors to assess funds based on factors that we believe influence the following:
· 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.
We assign each fund a letter grade from A (best) to F (worst). Funds are graded on an absolute basis. There is no "curve."

Morningstar analysts' evaluation of five factors determine the grade for each fund:
· Regulatory Issues
· Board Quality
· Manager Incentives
· Fees
· Corporate Culture
Morningstar's Stewardship Grade for funds is entirely different from the Morningstar Rating for funds, commonly known as the star rating. There is no relationship between the two.

 Portfolio Analysis

MORNINGSTAR STYLE BOX

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
The stocks in each style zone are further subdivided into size groups. Giant-cap stocks are defined as those that account for the top 40% of the capitalization of each style zone; large-cap stocks represent the next 30%; mid-cap stocks represent the next 20%; small-cap stocks represent the next 7% and micro-cap stocks represent the smallest 3%. For value-growth scoring, giant-cap stocks are included with the large-cap group for that style zone, and micro-caps are scored against the small-cap group for that style zone.

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%
Historical-Based Measures
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%
Historical-Based Measures
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.

Older portfolios should not be disregarded, however. Although the data may not represent the exact current holdings of the fund, it may still provide a good picture of the overall nature of the fund's management style.  

Average Market Capitalization
The average market capitalization of a fund's equity portfolio gives you a measure of the size of the companies in which the fund invests. Market capitalization is calculated by multiplying the number of a company's shares outstanding by its price per share. At Morningstar we calculate this figure by taking the geometric mean of the market capitalizations of the stocks a fund owns.

Asset Allocation

% Cash
This data point identifies the percentage of the fund's net assets held in cash. Cash encompasses both actual cash and cash equivalents (fixed-income securities with a maturity of one year or less) held by the portfolio plus receivables minus payables. Negative percentages of cash indicate that the portfolio is leveraged, meaning it has borrowed against its own assets to buy more securities or that it has used other techniques to gain more than 100% exposure to the market.

% Stocks
The percentage listed under the heading Stocks incorporates only the portfolio's straight common stock holdings.

% Bonds
This data point identifies the percentage of the fund's net assets held in bonds. Bonds include everything from government notes to high-yield corporate bonds.

% Other
Other includes preferred stocks (equity securities that pay dividends at a specific rate) as well as convertible bonds and convertible preferreds, which are corporate securities that are exchangeable for a set amount of another form of security (usually common shares) at a prestated price. Other also may denote holdings in not-so-neatly-categorized securities, such as warrants and options.  

Turnover Ratio
This is a measure of the fund's trading activity which is computed by taking the lesser of purchases or sales (excluding all securities with maturities of less than one year) and dividing by average monthly net assets. A turnover ratio of 100% or more does not necessarily suggest that all securities in the portfolio have been traded. In practical terms, the resulting percentage loosely represents the percentage of the portfolio's holdings that have changed over the past year. Benefits: A low turnover figure (20% to 30%) would indicate a buy-and-hold strategy. High turnover (more than 100%) would indicate an investment strategy involving considerable buying and selling of securities. Origin: Morningstar does not calculate turnover ratios. The figure is culled directly from the financial highlights of the fund's annual report.

% Assets in Top 10
The aggregate assets, expressed as a percentage, of the fund's top 10 portfolio holdings. This figure is meant to be a measure of portfolio risk. Specifically, the higher the percentage, the more concentrated the fund is in a few companies or issues, and the more the fund is susceptible to the market fluctuations in these few holdings. The figure is calculated from the most recent available fund holdings. Benefits: The Percent Assets in Top 10 Holdings figure provides insight into the degree to which a portfolio is diversified. Used in combination with the total number of holdings, it can indicate how concentrated a fund is. Origin: This figure is calculated in-house, using the most recent portfolio we have available for the fund. It currently counts cash as a holding.

Equity Sector Breakdown %
Basic Materials - Companies that manufacture chemicals, building materials and paper products. This sector also includes companies engaged in commodities exploration and processing. Companies in this sector include ArcelorMittal, BHP Billiton and Rio Tinto.
 
Communication Services - Companies that provide communication services using fixed-line networks or those that provide wireless access and services. This sector also includes companies that provide internet services such as access, navigation and internet related software and services. Companies in this sector include AT&T, France Telecom and Verizon Communications.
 
Consumer Cyclical - This sector includes retail stores, auto and auto parts manufacturers, companies engaged in residential construction, lodging facilities, restaurants and entertainment companies. Companies in this sector include Ford Motor Company, McDonald’s and News Corporation.
 
Consumer Defensive - Companies engaged in the manufacturing of food, beverages, household and personal products, packaging, or tobacco. Also includes companies that provide services such as education & training services. Companies in this sector include Philip Morris International, Procter & Gamble and Wal-Mart Stores.
 
Energy - Companies that produce or refine oil and gas, oil field services and equipment companies, and pipeline operators. This sector also includes companies engaged in the mining of coal. Companies in this sector include BP, ExxonMobil and Royal Dutch Shell.
 
Financial Services - Companies that provide financial services which includes banks, savings and loans, asset management companies, credit services, investment brokerage firms, and insurance companies. Companies in this sector include Allianz, J.P. Morgan Chase and Legg Mason.
 
Healthcare - This sector includes biotechnology, pharmaceuticals, research services, home healthcare, hospitals, long-term care facilities, and medical equipment and supplies. Companies in this sector include Astra Zeneca, Pfizer and Roche Holding.
 
Industrials - Companies that manufacture machinery, hand-held tools and industrial products. This sector also includes aerospace and defense firms as well as companied engaged in transportations and logistic services. Companies in this sector include 3M, Boeing and Siemens.
 
Real Estate - This sector includes mortgage companies, property management companies and REITs. Companies in this sector include Kimco Realty Corporation, Vornado Realty Trust and Westfield Group.
 
Technology - Companies engaged in the design, development, and support of computer operating systems and applications. This sector also includes companies that provide computer technology consulting services. Also includes companies engaged in the manufacturing of computer equipment, data storage products, networking products, semi¬conductors, and components. Companies in this sector include Apple, Google and Microsoft.
 
Utilities - Electric, gas, and water utilities. Companies in this sector include Electricité de France, Exelon and PG&E Corporation.

Fixed-Income Sectors

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
  • Municipal Taxable
  • Municipal Tax-Exempt
Corporate
  • Bank Loan
  • Convertible
  • Corporate Bond
  • Preferred Stock
Securitized
  • Agency Mortgage-Backed
  • Non-Agency Residential Mortgage-Backed
  • Commercial Mortgage-Backed
  • Covered Bond
  • Asset-Backed
Cash & Equivalents
  • Cash & Equivalents
Other
  • Swap
  • Future/Forward
  • Option/Warrant
Primary sector definitions are as follows:

Government

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.

Government Related

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.

Municipal Taxable

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.

Municipal Tax-Exempt

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.

Bank Loan

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

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.

Corporate Bond

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

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.

Agency Mortgage-Backed (Agency MBS)

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

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.

Commercial Mortgage-Backed(Commercial MBS)

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

Covered Bond

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

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 & Equivalents

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.

Swap

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.

Future/Forward

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.

Option/Warrant

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.

 Top 5 Holdings

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

YTD Return %
The holding's YTD return through the last close.

% of Net Assets
Morningstar calculates the percentage of net assets figure by dividing the market value of the security by the fund's total net assets. If a few securities take up a large percentage of the fund's net assets, the fund uses a concentrated portfolio strategy. If the percentage figures are low, then the manager is not willing to bet heavily on any particular security.

 Recent News

These are the five most recent news stories posted on this fund and taken from the following sources.

Dow Jones
The date in this column links to the latest Dow Jones Online News story filed with Morningstar that mentions a security in your portfolio. DJON is a premium service.  

Morningstar
The date in this column links to the latest story written by Morningstar's news team that mentions a security in your portfolio. This is a premium service.  

Press release
The date in this column links to the latest press release filed with Morningstar.com that mentions a security in your portfolio. Morningstar.com offers press releases from the two largest PR services, BusinessWire and PR Newswire. Investors should use some caution in reading press releases; press releases should not be assumed to have been written by objective sources.  



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