| Actual Fees
(Funds) |
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12b-1 Fee
Taken from the fund's prospectus, this number qualifies the
12b-1 fee listed under Sales Fees. The 12b-1 fee represents
the annual charge deducted from fund assets to pay for distribution
and marketing costs. If fee levels have changed since the
end of the most recent fiscal year, the actual fees will most
commonly be presented as a recalculation based on the prior
year's average monthly net assets using the new, current expenses.
Although contract-type distribution costs are listed in a
fund's prospectus, these are maximum amounts and funds may
waive a portion, or possibly all, of this fee. Actual fees
thus represent a closer approximation of the true costs to
shareholders.
Management Fee
Taken from the fund's prospectus, this area qualifies the
management and administrative fees listed under Management
Fees. The actual fees listing most commonly represents the
costs shareholders paid for management and administrative
services over the fund's prior fiscal year. If fee levels
have changed since the end of the most recent fiscal year,
the actual fees will most commonly be presented as a recalculation
based on the prior year's average monthly net assets using
the new, current expenses. Although contract-type management
costs are listed in a fund's prospectus, these are maximum
amounts and funds may waive a portion, or possibly all, of
those fees. Actual fees thus represent a closer approximation
of the true costs to shareholders.
Expense Ratio
The expense ratio expresses the percentage of assets deducted each fiscal year for fund expenses, including 12b-1 fees, management fees, administrative fees, operating costs, and all other asset-based costs incurred by the fund. Portfolio transaction fees, or brokerage costs, as well as initial or deferred sales charges are not included in the expense ratio. The expense ratio, which is deducted from the fund's average net assets, is accrued on a daily basis. If the fund's assets are small, its expense ratio can be quite high because the fund must meet its expenses from a restricted asset base. Conversely, as the net assets of the fund grow, the expense percentage should ideally diminish as expenses are spread across the wider base. Funds may also opt to waive all or a portion of the expenses that make up their overall expense ratio.
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| Alpha
(Funds) |
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| A measure of the difference between a fund's actual returns and its expected performance, given its level of risk as measured by beta. A positive alpha figure indicates the fund has performed better than its beta would predict. In contrast, a negative alpha indicates the fund's underperformance, given the expectations established by the fund's beta. All MPT statistics (alpha, beta, and R-squared) are based on a least-squares regression of the fund's return over Treasury bills (called excess return) and the excess returns of the fund's benchmark index. Alpha can be used to directly measure the value added or subtracted by a fund's manager. Alpha depends on two factors: 1) the assumption that market risk, as measured by beta, is the only risk measure necessary and 2) the strength of the linear relationship between the fund and the index, as it has been measured by R-squared. In addition, a negative alpha can sometimes result from the expenses that are present in a fund's returns, but not in the returns of the comparison index. Example: A fund has an alpha of 0.86, a beta of 0.96 and an R-squared of 97. The high R-squared lends further credibility to the accuracy of the fund's alpha and beta. The alpha of 0.86 indicates that the fund produced a return 0.86% higher than its beta would predict. See also Beta |
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| American Depository
Receipts (ADRs) |
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| If you see the letters ADR after a company name, this means it is an American Depository Receipt. ADRs represent shares of foreign companies traded in U.S. dollars on U.S. exchanges. They can be treated just like shares of domestic stock-you can buy or sell them through a broker, for example. However, ADRs aren't actually shares of stock, they are tradable receipts for actual shares on deposit at a bank. The purpose of the ADR is to make investing abroad both simpler and less costly for the average individual, who has neither the expertise of a foreign-stock mutual fund manager nor the buying power to trade in the volumes necessary to reduce the cost of foreign-stock transactions. |
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| Analyst Pick/Pan
(Funds) |
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| This proprietary Morningstar data point indicates whether a fund is designated as a favorite (Fund Analyst Pick) or a least-favorite (Fund Analyst Pan) chosen by Morningstar's in-house staff of analysts. Only a handful of funds in each investment category are designated Analyst Picks, and this is an excellent way to quickly look for quality funds. Conversely, looking at Analyst Pans is a good way to avoid funds that may be poor or inappropriate investment options. |
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| Analyst Report
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Morningstar's Take
For the 500 largest and most important companies in our 1,000-company
universe, we give you our unbiased opinion on the stock's
prospects. The Take is updated whenever conditions warrant,
providing valuable commentary on a company's success or failure,
as well as long-term insights into the company's strategic
goals. Our analysts cull information from every available
source—SEC filings, company press releases, news services,
and our own proprietary financial database—to provide
insights on stocks that can't be found anywhere else. Our
fund analysts closely monitor 2,000 mutual funds, updating
Morningstar's Take whenever conditions warrant. They do all
of their own research: calling mutual-fund companies, talking
to fund managers, and digging through annual reports. Because
we are not involved in money management or underwriting, we
have no conflicts of interests when it comes to providing
you with analysis. When do fund analyses get updated? Whenever
the Morningstar analyst thinks there's been important news
or events that you should know about.
Bird's Eye View
For all 1,000 stocks covered by Morningstar, we provide a
Bird's Eye View of the company: the basics of the company's
operations, strategy, and long-term investment prospects.
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| Annual Returns
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| Annual total returns are calculated on a calendar-year
and year-to-date basis. Total return includes both capital appreciation
and dividends. The year-to-date return is updated daily. For
mutual funds, 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.
See also Trailing Return |
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| Asset Turnover
(Stocks) |
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| This figure represents how many dollars in revenue a company has generated per dollar of assets. It is calculated by dividing total revenues for the period by total assets for the same period. In comparison, the industry average and S&P 500 are shown for the most recent fiscal year. Asset turnover can give an indication of how efficient a company is. A high asset turnover, which expresses how many times a company sells-or turns over-its assets in a year is a sign of high efficiency. |
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| % Assets in
Top 10 Holdings (Funds) |
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| 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. 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. At Morningstar, this figure is calculated in-house, using the most recent portfolio we have available for the fund. It currently counts cash as a holding. |
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| Automatic Investment
Plan (Funds) |
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| This indicates the smallest amount with which
one may enter a fund's automatic-investment plan—an arrangement
where the fund takes money on a monthly, quarterly, semiannual,
or annual basis from the shareholder's checking account. Often,
the normal minimum initial purchase requirements are waived
in lieu of this systematic investment plan. The systematic investment
amount is the minimum amount required for subsequent regular
investments in an automatic investment plan. Studies indicate
that regular automatic investment, also known as dollar-cost
averaging, is perhaps the most successful investment plan for
long-term investors. |
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| Average Credit
Quality (Funds) |
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| Average credit quality gives a snapshot of the
portfolio's overall credit quality. It is an average of each
bond's credit rating, adjusted for its relative weighting in
the portfolio. For corporate-bond and municipal-bond funds,
Morningstar also shows the percentage of fixed-income securities
that fall within each credit-quality rating, as assigned by
Standard & Poor's or Moody's. Because it's rare to find individual
bonds in a portfolio with a rating below B, the average credit
quality of bond funds in Morningstar's database ranges from
AAA (highest) to B (lowest). U.S. government bonds carry the
highest credit rating, while bonds issued by speculative or
bankrupt companies usually carry the lowest credit ratings.
Anything at or below BB is considered a high-yield or "junk"
bond. |
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| Average Duration
(Funds) |
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| Duration is a time measure of a bond's interest-rate
sensitivity, based on the weighted average of the time periods
over which a bond's cash flows accrue to the bondholder. Time
periods are weighted by multiplying by the present value of
its cash flow divided by the bond's price. (A bond's cash flows
consist of coupon payments and repayment of capital.) A bond's
duration will almost always be shorter than its maturity, with
the exception of zero-coupon bonds, for which maturity and duration
are equal. |
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| Average Market
Cap (Funds) |
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| 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. |
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| Average Maturity
(Funds) |
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| This figure is computed by weighting the maturity
of each security in the portfolio by the market value of the
security, then averaging these weighted figures. We list Average
Effective Maturity for taxable-bond and hybrid funds. We list
Average Nominal Maturity for municipal-bond funds. |
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| Average Volume
(Stocks) |
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| The average number of shares traded daily. |
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| Average Weighted
Coupon (Funds) |
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| Morningstar generates this figure from the fund's
portfolio by weighting the coupon of each bond by its relative
size in the portfolio. Coupons are fixed percentages paid out
on a fixed-income security on an annual basis. |
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| Bear Market
% Rank (Funds) |
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| The bear-market percentile rank details how a fund has performed during bear markets. For stock funds, a bear market is defined as all months in the past five years that the S&P 500 lost more than 3%; for bond funds, it's all months in the past five years that the Lehman Brothers Aggregate Bond Index lost more than 1%. Morningstar adds a fund's performance during each bear-market month to reach a total bear-market return. Based on these returns, each fund is then assigned a percentile ranking. Stock funds are ranked separately from bond funds. Use this figure to analyze how well a fund performs during market downturns, relative to its peers. Morningstar generates this figure in-house, based on the monthly total returns for the funds during those periods defined as bear-market months. The highest (or most favorable) percentile rank is 1 and the lowest (or least favorable) percentile rank is 100. The top-performing fund in a category will always receive a rank of 1. Example: A fund with a bear-market rank of 5 has withstood poor markets relatively well, while one with a rank of 95 has not. |
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| Benchmark Index
(Funds) |
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| 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
Index as the basic benchmark for stock-oriented funds, including
domestic-hybrid, international-hybrid, and convertible-bond
funds. The Lehman Brothers Aggregate Bond Index is used as the
benchmark index for all bond funds. LB Agg (Lehman Brothers
Aggregate Bond Index) This index is a combination of the Lehman
Brothers Government, Corporate, Mortgage-Backed, and Asset-Backed
Securities indexes. It contains no high-yield issues. S&P 500
(Standard & Poor's 500 Index) Often considered a surrogate for
the overall market, this index is composed of the stocks of
500 of the largest companies listed on U.S. exchanges. The S&P
500 Index is market-cap-weighted, which means that the importance
of individual stocks in the index depends upon the stock's market
value. Therefore, a percentage change in the market value of
a large company has a greater impact than an identical percentage
change in a smaller company |
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| Best Fit Alpha
(Funds) |
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This is the alpha of the fund relative to its Best Fit Index. Alpha is a measure of the difference between a fund's actual returns and its expected performance given its level of risk as measured by beta. A positive alpha figure indicates the fund has performed better than its beta would predict. In contrast, a negative alpha indicates the fund has underperformed given the expectations established by its beta. See also Alpha, Best Fit Index
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| Best Fit Beta
(Funds) |
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This is the beta of the fund relative to its Best Fit Index. Beta is a measure of a fund's sensitivity to market movements. The beta of the market is 1.00 by definition. Morningstar calculates beta by comparing a fund's excess return over Treasury bills to the Best Fit Index's excess return over Treasury bills. A beta of 1.10 shows that the fund has performed 10% better than its Best Fit Index in up markets and 10% worse in down markets, assuming all other factors remained constant. See also Best Fit Index, Beta
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| Best Fit Index
(Funds) |
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| The market index that shows the highest correlation with a fund over the most-recent 36 months, as measured by the highest R-squared. Both the standard and best-fit results can be useful to investors. The standard index R-squared statistics can help investors plan the diversification of their portfolio of funds. For example, an investor who wishes to diversify and already owns a fund with a very high correlation (and thus high R-squared) with the S&P 500 might choose not to buy another fund that correlates closely to that index. In addition, the best-fit index can be used to compare the betas and alphas of similar funds that show the same best-fit index. Morningstar recalculates the best-fit index in-house on a monthly basis. Example: A fund shows the Russell 2000 as its best-fit index. The best-fit R-squared in this case is 92, which means that 92% of movements in the fund are comparable to movements in the Russell 2000. |
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| Beta
(Funds) |
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A measure of a fund's sensitivity to market movements. The beta of the market is 1.00 by definition. Morningstar calculates beta by comparing a fund's excess return over Treasury bills to the market's excess return over Treasury bills, so a beta of 1.10 shows that the fund has performed 10% better than its benchmark index in up markets and 10% worse in down markets, assuming all other factors remain constant. Conversely, a beta of 0.85 indicates that the fund's excess return is expected to perform 15% worse than the market's excess return during up markets and 15% better during down markets.
Beta can be a useful tool when at least some of a fund's performance history can be explained by the market as a whole. Beta is particularly appropriate when used to measure the risk of a combined portfolio of mutual funds. It is important to note that a low beta for a fund does not necessarily imply that the fund has a low level of volatility. A low beta signifies only that the fund's market-related risk is low. (Standard deviation is a measure of a fund's absolute volatility.) A specialty fund that invests primarily in gold, for example, will usually have a low beta, as its performance is tied more closely to the price of gold and gold-mining stocks than to the overall stock market. Thus, the specialty fund might fluctuate wildly because of rapid changes in gold prices, but its beta will remain low. R-squared is a necessary statistic to factor into the equation, because it reflects the percentage of a fund's movements that are explained by movements in its benchmark index.
Example: A fund has an alpha of 0.86, a beta of 0.96, and an R-squared of 97. The high R-squared lends further credibility to the accuracy of the fund's alpha and beta. The beta of 0.96 indicates the fund's performance is very close to that of the market, which would be represented by 1.00.
See also Alpha, R-Squared
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| % Bond
(Funds) |
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| 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. |
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| Bond Style
Box (Funds) |
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| See Morningstar Style Box |
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| Bonds |
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| At their most basic, bonds are loans. When you buy a bond, you become a lender to an institution. Your loan lasts a certain period of time—until the date when the bond reaches maturity—and you get a certain dividend payment each month (commonly known as a coupon) as interest on the loan. As long as the institution does not go bankrupt, it will also pay back the principal on the bond, but no more than the principal. More on Bonds |
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| Brokerage Availability
(Funds) |
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| The brokerages through which a fund is available. The brokerage firms themselves provide us with this data. It is the brokerage firm's responsibility to disclose any fees associated with these plans. |
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