Glossary

Please see our detailed glossary of terms below regarding terminology on our funds.


Glossary of Terms

7-Day SEC 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.

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12b-1 Fee

This is an annual fee on a mutual fund. It's used for marketing or distribution costs.

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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.

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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.

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Average Effective Maturity

This is a weighted average of all the effective maturities of the bonds in a portfolio.

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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.

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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.

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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 (premium or discount, respectively). A higher number indicates a bias toward premiums. This statistic is expressed as a percentage of par (face) value.

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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.

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Bonds

A bond is a debt investment. When investors buy bonds, they're loaning money to an entity like a corporation or a government.

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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.

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Category Average Return

Morningstar takes the average return of the funds that exist in a category for the time period and divides that 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.

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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.

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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.

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Convertibles

An investment that can be changed into another form (usually common shares) at a prestated price.

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Coupon

The fixed percentage paid out on a fixed-income security on an annual basis.

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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.

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Daily Volume

The average number of shares traded daily.

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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.

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Distribution Yield

The ratio of all the distributions a fund paid in the past 12 months divided by the current share price of the fund.

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Excess Return

The difference between an investment option's return and the return of an external benchmark, such as a passive index.

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Expense Waiver

The investment manager can waive a portion of the management fees, resulting in a lower net investment expense ratio.

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Extended Performance Inception Date

Inception date of the oldest share class of the fund.

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Growth of $10,000

A graph that shows an investment option's performance based on how the value of $10,000 invested in the investment option would have changed over time.

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Holdings

The contents of an investment portfolio held by an individual or entity, such as a mutual fund.

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Inception Date

Date on which the investment option began its operations.

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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. 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.

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Investment Strategy

An investment option's goals and investment criteria.

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Long Position

A security that's bought outright and sold later with the hope that the price rises over time.

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Manager Start Date

The hire date of the current manager of the investment option.

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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).

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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" — Cyclical, Sensitive and Defensive sectors. Each Super Sector contains four sub-sectors.

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Morningstar Star Rating

This is a proprietary Morningstar data point.

Morningstar rates mutual funds and ETFs from 1 to 5 stars based on how well they've performed (after adjusting for risk and accounting for sales charges) in comparison to similar funds and ETFs.

Within each Morningstar Category, the top 10% of funds and ETFs receive 5 stars and the bottom 10% receive 1 star. Funds and ETFs are rated for up to three time periods-three-, five-, and 10-years and these ratings are combined to produce an overall rating. Funds and ETFs 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 and ETFs worthy of further research, but shouldn't be considered buy or sell signals.

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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.

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Net Assets

Total assets of an investment option, less fees and expenses. Recorded on a month-end basis in millions of dollars.

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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.

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Number of Holdings

Total number of different holdings of a fund. Used as a measure of portfolio risk.

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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.

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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.

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Portfolio Advisor Managers

Individuals who are employed by the Portfolio Advisor and are directly responsible for managing day- to-day advisory activities.

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Portfolio Composition

A breakdown of the investment option's portfolio holdings, as of the date listed, into general investment classes.

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Preferred Stocks

A preferred stock is a class of ownership in a corporation that has a higher claim on its assets and earnings than common stock. Preferred shares generally have a dividend that must be paid out before dividends to common shareholders, and the shares usually do not carry voting rights.

Preferred stock combines features of debt, in that it pays fixed dividends, and equity, in that it has the potential to appreciate in price. The details of each preferred stock depend on the issue.

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Portfolio Managers

Individuals who are employed by the advisor or subadvisor and directly responsible for managing the portfolio.

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Premium/Discount to NAV

A fund that trades at a price higher than its Net Asset Value (NAV) is said to trade at a premium to its NAV. A fund that trades at a price lower than its NAV is said to trade at a discount to its NAV. The term applies to Exchange-Traded Funds (ETFs) and closed-end mutual funds, since they trade at prices determined by supply and demand.

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Price/Book Ratio

The weighted average of the price/book ratios of all the stocks in a portfolio. The P/B ratio of a company is calculated by dividing the market price of its stock by the company’s per-share book value. Stocks with negative book values are excluded from this calculation. In theory, a high P/B ratio indicates that the price of the stock exceeds the actual worth of the company's assets, while a low P/B ratio indicates that the stock is a bargain.

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Price/Cash Flow Ratio

This represents the weighted average of the price/cash-flow ratios of the stocks in a portfolio. Price/cash-flow represents the amount an investor is willing to pay for a dollar generated from a particular company's operations. Price/cash-flow shows the ability of a business to generate cash and acts as a gauge of liquidity and solvency. Because accounting conventions differ among nations, reported earnings (and P/E ratios) may not be comparable across national boundaries. Price/cash-flow attempts to provide an internationally-standard measure of a firm's stock price relative to its financial performance.

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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 the average, each portfolio holding is weighted by the percentage of equity assets it represents, so that larger positions have proportionately greater influence on the fund's final P/E.

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Price/Sales Ratio

This represents the weighted average of the price/sales ratios of the stocks in a portfolio. Price/sales represents the amount an investor is willing to pay for a dollar generated from a particular company's operations.

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Redemption Fee

An amount charged when assets are withdrawn from some investment options.

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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.

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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.

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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.

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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"-- Cyclical, Sensitive and Defensive-- each of which contains three or 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.

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Stocks

A stock is an ownership share of a company. Investors who buy a stock become partial owners of that business. The value of that ownership rises and falls according to the success of the business.

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Subsidized Yield

Reflects the income earned over a 30-day period after the deduction of the fund's net expenses.

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Ticker

A ticker symbol represents a fund or a company's stock on an exchange.

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Top 10 Holdings

The 10 holdings in a portfolio that have the greatest allocation of the portfolio's assets.

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Top 5 Countries

The top 5 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.

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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.

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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.

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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.

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Tracking Error

The amount by which the performance of the fund differed from that of the benchmark. The tracking error quantifies the degree to which the strategy differed from the index or benchmark.

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Transfer Restriction

Restriction implemented by fund families that could limit the number of transactions for a particular investment. Some restrictions could include redemption fees.

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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.

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Unsubsidized Yield

Reflects the income earned over a 30-day period after the deduction of the fund's gross expenses.

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Waiver Expiration Date

Date on which the amount waived by the fund company expires.

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