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Glossary of Terms



7 Day Yield
The 7-Day Yield is the interest earned on a money market mutual fund without the compounding interest. It more closely reflects the current earnings of this money market investment option than the total return displayed.
12b-1 Fee
This is an annual fee on a mutual fund. It's used for marketing or distribution costs.
30-Day SEC Yield - Subsidized (Net)
This yield citation reflects the income the investment option produced. It includes all expense waivers, caps, and breakpoints in place during the 30-day period. Without these waivers, the investment option's yield would be lower.
Average Effective Duration
A measure of a fixed-income investment option's interest-rate sensitivity and represents an approximate percent change in bond's price for a one percent change in interest rates-the longer a fund's duration, the more sensitive the portfolio is to shifts in interest rates. The duration of a fixed-income investment option is determined by a formula that includes projected cash flows, such as coupons and principal payout at maturities for bonds.
Average Effective Maturity
This is a weighted average of all the effective maturities of the bonds in a portfolio.
Average Market Capitalization
This measures the average size of a fund's stock holdings. It's the geometric mean of the market capitalization for all of the stocks it owns and is calculated by raising the market capitalization of each stock to a power equal to that stock's stake in the portfolio. The resulting numbers are multiplied together to produce the geometric mean of the market caps of the stocks in the portfolio, which is reported as average market capitalization.
Average Weighted Coupon
This figure is calculated by weighting each bond's coupon by its relative size in the portfolio. This figure indicates whether the portfolio has more high or low coupon bonds.
Average Weighted Price
This statistic is calculated by weighting the price of each bond by its relative size in the portfolio. This number reveals if the investment option favors bonds selling at prices above or below face value (discount or premium securities, respectively). A higher number indicates a bias toward premiums. This statistic is expressed as a percentage of par (face) value.
Benchmark
A measure used to compare a fund's returns to judge its performance. A benchmark can be the average performance of similar funds or a broad index of similar investments.
Category Average Return
Morningstar takes the average return of the funds that exist in a category for the time period and divide by the number of funds that exist for that time period. For calendar year category average returns Morningstar includes funds that have merged, liquidated, or changed categories when calculating category averages.
Contingent Deferred Sales Charge (CDSC)
This is a fee (also called a sales charge or load) that investors pay when selling an investment. It generally decreases with the amount of time that fund shares are held before sale, ultimately declining to 0% - that's why it's referred to as a contingent sales charge. Performance displayed reflects the application of these charges.
Contractual Cap
A contractual agreement between the investment advisor and the fund to limit the expenses borne by the fund. Expressed as a percentage of net assets.
Coupon
The fixed percentage paid out on a fixed-income security on an annual basis.
Credit Analysis
Depicts the quality of bonds in the portfolio by showing the percentage of fixed-income securities that fall within each credit-quality rating (as assigned by Standard & Poor's or Moody's). Higher ratings indicate a lower credit risk, and lower ratings indicate a higher credit risk.
Daily Volume
The average number of shared traded daily.
Distribution
Money paid to investors based on the performance of the investment. An income dividend distribution is paid to fund shareholders from dividends and interest earned from a mutual fund's holdings. Income that a fund earns must be paid to shareholders at least once per year. A capital gain is a profit that a mutual fund realizes by selling securities for a price higher than that at which they were purchased. Capital gains must also be paid to shareholders at least once per year. When distributed to shareholders, any realized capital gains are offset by any realized losses resulting in a distribution of the net capital gain. Unrealized gains on investments that have increased in value but have not been sold by the fund are not required to be distributed. The daily NAV includes unrealized gains.
Distribution Yield
A measurement of cash flow paid by an exchange-traded fund (ETF), real estate investment trust (REIT), or another income-paying vehicle. It is calculated by annualizing the most recent distribution and dividing it by the net asset value (NAV) of the security at the time of the payment.
Dividend Yield
Expresses a stock's cash dividend relative to its current price.
Excess Return
The difference between an investment option's return and the return of an external benchmark, such as a passive index.
Tracking Error
Also known as "excess risk", is defined as the standard deviation or volatility of excess returns.
Expense Waiver
The investment manager can waive a portion of the management fees, resulting in a lower net investment expense ratio.
Extended Performance Inception Date
Inception date of the oldest share class of the fund.
Forward Price/Earnings Ratio
An investment option's current price divided by the mean EPS estimate for the current fiscal year.
Geometric Average Capitalization
This measures the average size of a fund's stock holdings. It's the geometric mean of the market capitalization for all of the stocks it owns and is calculated by raising the market capitalization of each stock to a power equal to that stock's stake in the portfolio. The resulting numbers are multiplied together to produce the geometric mean of the market caps of the stocks in the portfolio, which is reported as average market capitalization.
Holdings
The contents of an investment portfolio held by an individual or entity, such as a mutual fund.
Inception Date
Date on which the investment option began its operations.
Inception Date
Date on which the investment option began its operations.
Investment Manager or Sub-Advisor
Handles the investment option's day-to-day management. The Investment Manager or Sub-Advisor may include:
  • A Registered Investment Adviser as defined in the Advisers Act of 1940.
  • An Investment Adviser as defined in the Investment Company Act of 1940.
  • A company employed by the investment option's Investment Manager to The portfolio manager may work for either the Investment Adviser or the Sub-Advisor.

  • If "Multiple Sub-Advisors" is displayed, see the definition appearing elsewhere.
    Investment Strategy
    An investment option's goals and investment criteria.
    Long Position
    A security that's bought outright and sold later with the hope that the price rises over time.
    Manager Start Date
    The hire date of the current manager of the investment option.
    Morningstar Category
    The Morningstar Category identifies investment options based on their actual investment styles, as measured by their underlying portfolio holdings (portfolio statistics and compositions over the past three years).
    Morningstar Sectors
    Morningstar sectors are designed to help investors and investment professionals more easily compare and understand the sector exposures of investment options and portfolios. Morningstar divides the economy into three "Super Sectors"-- the Information Economy, the Service Economy, and the Manufacturing Economy. Each Super Sector contains four sub-sectors.
    Morningstar Star Rating
    For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating™ based on the Morningstar risk-adjusted return. The risk-adjusted return accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, and redemption fees). This approach places more emphasis on downward variations and rewards consistent performance.
    Based on this measure:
  • The top 10% of funds in each category receive five stars.
  • The next 22.5% receive four stars.
  • The next 35% receive three stars.
  • The next 22.5% receive two stars.
  • The bottom 10% receive 1 star.

  • Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages. The overall Morningstar Rating for a fund is calculated using a weighted average of the performance figures associated with its three-, five-, and ten-year (if applicable) Morningstar Rating metrics. *Morningstar Ratings do not reflect the inclusion of sales charges. If sales charges were reflected, rankings could be lower.
    Morningstar Style Box
    The Morningstar Style Box is a nine-square grid that shows the investment style of an investment option.
    For equity investment options, the vertical axis shows the market capitalization of the stocks owned. The horizontal axis shows investment style (value, blend, or growth).
    For fixed-income investment options, the vertical axis shows the credit quality of the bonds owned. The horizontal axis shows interest rate sensitivity as measured by a bond's effective duration.
    Morningstar seeks credit rating information from fund companies on a periodic basis (e.g., quarterly). In compiling credit rating information, Morningstar instructs fund companies to only use ratings that have been assigned by a Nationally Recognized Statistical Rating Organization (NRSRO). If two NRSROs have rated a security, fund companies are to report the lowest rating; if three or more NRSROs have rated the same security differently, fund companies are to report the rating that is in the middle. For example, if NRSRO X rates a security AA-, NRSRO Y rates the same security an A and NRSRO Z rates it a BBB+, the fund company should use the credit rating of 'A' in its reporting to Morningstar. PLEASE NOTE: Morningstar, Inc. is not itself an NRSRO nor does it issue a credit rating on the investment option. An NRSRO rating on a fixed-income security can change from time-to-time.
    For credit quality, Morningstar combines the credit rating information provided by the fund companies with an average default rate calculation to come up with a weighted-average credit quality. The weighted-average credit quality is currently a letter that roughly corresponds to the scale used by a leading NRSRO. Bond investment options are assigned a style box placement of "low", "medium", or "high" based on their average credit quality. Investment options with a low credit quality are those whose weighted-average credit quality is determined to be less than "BBB-"; medium are those less than "AA-", but greater or equal to "BBB-"; and high are those with a weighted-average credit quality of "AA-" or higher. When classifying a bond portfolio, Morningstar first maps the NRSRO credit ratings of the underlying holdings to their respective default rates (as determined by Morningstar's analysis of actual historical default rates). Morningstar then averages these default rates to determine the average default rate for the entire bond investment option. Finally, Morningstar maps this average default rate to its corresponding credit rating along a convex curve.
    For interest-rate sensitivity, Morningstar obtains from fund companies the average effective duration. Generally, Morningstar classifies a fixed-income investment option's interest-rate sensitivity based on the effective duration of the Morningstar Core Bond Index (MCBI), which is currently three years. The classification of Limited will be assigned to those investment options whose average effective duration is between 25% to 75% of MCBI's average effective duration; investment options whose average effective duration is between 75% to 125% of the MCBI will be classified as Moderate; and those that are at 125% or greater of the average effective duration of the MCBI will be classified as Extensive.
    For municipal bond funds, Morningstar also obtains from fund companies the average effective duration. In these cases static breakpoints are utilized. These breakpoints are as follows: (i) Limited: 4.5 years or less; (ii) Moderate: more than 4.5 years but less than 7 years; and (iii) Extensive: more than 7 years. In addition, for non-US taxable and non-US domiciled fixed income funds static duration breakpoints are used: (i) Limited: less than or equal to 3.5 years; (ii) Moderate: greater than 3.5 and less than or equal to 6 years; (iii) Extensive: greater than 6 years.
    Net Assets
    Total assets of an investment option, less fees and expenses. Recorded on a month-end basis in millions of dollars.
    Net Position
    The long position net of the short position. Long positions involve buying a security and selling it later, with the hope that the security price rises over time. In contrast, short positions are taken to benefit from anticipated price declines.
    Number of Holdings
    Total number of different holdings of a fund. Used as a measure of portfolio risk.
    Percentile Rankings
    Each investment's total returns are compared to other investments in the same Morningstar category for various time periods. Total returns are ranked on a scale from 1 to 100, where 1 represents the highest-returning 1% of investments, and 100 represents the lowest-returning investments.
    Portfolio Advisor Managers
    Individuals who are employed by the Portfolio Advisor and directly responsible for managing day- to-day advisory activities.
    Portfolio Composition
    A breakdown of the investment option's portfolio holdings, as of the date listed, into general investment classes.
    Long positions involve buying a security and selling it later, with the hope that the security price rises over time. In contrast, short positions are taken to benefit from anticipated price declines. In this type of transaction, the investor borrows the security from another investor, sells it and receives cash, and then is obligated to buy it back at some point in the future. If the price falls after the short sale, the investor will have sold high and can now buy low to close the short position and lock in a profit. However, if the price of the security increases after the short sale, the investor will experience losses by buying it at a higher price than the sale price.
    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.
    Stocks
    include only the portfolio's common stocks."
    Bonds
    A bond is a debt investment. When investors buy bonds, they're loaning money to an entity like a corporation or a government.
    Preferred Stocks
    Equity securities that pay dividends at a specific rate.
    Convertibles
    An investment that can be changed into another form (usually common shares) at a prestated price.
    Other
    Denotes all those not-so-neatly categorized securities, such as warrants and options. When listed, "U.S stocks" reflects the portion of the portfolio invested in domestic companies. "Non-U.S. Stocks" reflects the portion of the portfolio invested in non-U.S. companies. The composition is obtained from quarterly surveys and investment option portfolios."
    Portfolio Managers
    Individuals who are employed by the advisor or subadvisor and directly responsible for managing the portfolio.
    Price/Book Ratio
    Also referred to as p/b ratio, is the ratio of a company's most recent month-end share price to the company's estimated book value per share (BPS) for the current fiscal year. (Book value is the total assets of a company, less total liabilities.) The price/book ratio of a fund is the weighted average of the price/book ratios of all the stocks in a fund's portfolio.
    Price/Cash Flow Ratio
    Price/cash flow for a stock is the ratio of the company's most recent month-end share price to the company's estimated cash flow per share (CPS) for the current fiscal year. Cash flow measures the ability of a business to generate cash; it acts as a gauge of liquidity and solvency. For portfolios, this data point is calculated by taking an asset-weighted average of the cash flow yields (C/P) of all the stocks in the portfolio and then taking the reciprocal of the result.
    Price/Projected Earnings Ratio
    Price/projected earnings ratio (also known as p/e ratio) for a stock is the stock's current price divided by the company's trailing 12-month earnings per share from continuous operations. For portfolios, this data point is calculated by taking an asset-weighted average of the earnings yields (E/P) of all the stocks in the portfolio and then taking the reciprocal of the result.
    Price/Sales Ratio
    Price/sales for a stock is the stock's current price divided by the company's trailing 12-month sales per share. For portfolios, this data point is calculated by taking an asset-weighted average of the sales yields (S/P) of all the stocks in the portfolio and then taking the reciprocal of the result.
    Redemption Fee
    An amount charged when assets are withdrawn from some investment options.
    Regional Exposure
    Broad breakdown of a non-U.S. investment option's geographical exposure. Each region's exposure is presented as a percentage of non-cash equity assets held by the investment option.
    Sector
    A company's general area of business.
    Shares Outstanding
    Average number of shares a company had on the market during a certain time period. Used to calculate earnings per share and other per-share ratios.
    Short Position
    A security that is borrowed and sold to receive cash. The security is obligated to be bought back at some point in the future.
    Stock Sector Breakdown
    Morningstar sectors are designed to help investors and investment professionals more easily compare and understand the sector exposures of investment options and portfolios. Morningstar divides the economy into three "Super Sectors"-- the Information Economy, the Service Economy, and the Manufacturing Economy -- each of which contains four sub-sectors. For investment options that have more significant fixed income exposure (for example, Balanced/Asset Allocation investment options), keep in mind that the percentages displayed are only reflective of the equity or stock portion of the investment option.
    Stock Type
    Morningstar places stocks into eight type designations: Distressed, Hard Asset, Cylical, Speculative Growth, Aggressive Growth, Classic Growth, Slow Growth and High Yield. Each designation defines a broad category of investment characteristics.
    Subsidized Yield
    Reflects the income earned over a 30-day period after the deduction of the fund's net expenses.
    Ticker
    A ticker symbol represents a fund's or company's stock on an exchange.
    Top 10 Holdings
    The 10 holdings in a portfolio that have the greatest allocation of the portfolio's assets.
    Top 5 Countries
    The top five countries in which an investment option invests as of the most recent portfolio date. Also listed is the percentage of net assets those investments take up in the portfolio.
    Total Investment Expense Gross
    The maximum expense ratio that can be applied to an investment option. This includes expenses and management fees, including 12b-1 fees, administrative fees, and all other asset-based costs incurred by the investment option, except brokerage costs.
    Total Investment Expense Net
    Gross expense ratio less any fee waivers, reimbursements or caps. It includes the expenses, as a percentage of net assets, actually borne by the fund. Investment performance results are always net of expense ratios.
    Total Investment Expense Gross Per $1,000 invested
    This is the total investment expense gross expressed as a dollar amount for a $1,000 investment over a one-year period.
    Tracking Error
    The difference between a portfolio's return and its benchmark, it's also known as "excess risk."
    Transfer Restriction
    Restriction implemented by fund families that could limit the number of transactions for a particular investment. Some restrictions could include redemption fees.
    Turnover Ratio
    A measure of the investment option's trading activity, which is determined 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. The resulting percentage loosely represents the percentage of the portfolio's holdings that have changed over the past year.
    Unsubsidized Yield
    Reflects the income earned over a 30-day period after the deduction of the fund's gross expenses.
    Waiver Expiration Date
    Date on which the amount waived by the fund company expires.