The highest and lowest NAV a security reached during the last 52 weeks.

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 Morningstars 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.

Average effective duration provides a measure of a funds interest-rate sensitivity.

The longer a funds duration, the more sensitive the fund is to shifts in interest rates.

The relationship among funds with different durations is straightforward: A fund with duration of 10 years is expected to be twice as volatile as a fund with a five-year duration.

Duration also gives an indication of how a funds net asset value (NAV) will change as interest rates change. A fund with a five-year duration would be expected to lose 5% of its NAV if interest rates rose by 1 percentage point, or gain 5% if interest rates fell by 1 percentage point. Morningstar surveys fund companies for this information.

Average effective maturity is a weighted average of all the maturities of the bonds in a portfolio, computed by weighting each bonds effective maturity by the market value of the security.

Average effective maturity takes into consideration all mortgage prepayments, puts, and adjustable coupons. (Because Morningstar uses fund company calculations for this figure and because different companies use varying interest-rate assumptions in determining call likelihood and timing, we ask that companies not adjust for call provisions.)

Longer-maturity funds are generally considered more interest-rate sensitive than their shorter counterparts.

Average credit quality gives a snapshot of the portfolios overall credit quality. It is an average of each bonds 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 & Poors or Moodys. Because its rare to find individual bonds in a portfolio with a rating below B, the average credit quality of bond funds in Morningstars 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.

The process of dividing investments among different kinds of asset categories, such as stocks, bonds, real estate and cash, to optimize the risk/reward tradeoff based on an individuals or institutions specific situation and goals. A key concept in financial planning and money management.

The daily percentage change in the NAV of the fund.

The daily value change in the NAV of the fund.

The date on which an investor who purchases a share is not entitled to an upcoming, declared dividend. The investor selling the share receives this dividend.

The amount of the distribution attributed by the fund to net investment income, such as interest and dividends.

The amount of the distribution attributed by the fund to realized short-term capital gains.

The amount of the distribution attributed by the fund to realized long-term capital gains.

The is the total value of distirbutions calculated by summing Income, Total Capital Gain and Return Capital Gain distributions.

The expense ratio is the annual fee that all funds or ETFs charge their shareholders. It 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 funds average net assets, is accrued on a daily basis.

If the funds 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.

Often referred to as the Audited Expense Ratio. Morningstar pulls the net annual expense ratio from the funds audited annual report. Annual-report expense ratios reflect the actual fees charged during a particular fiscal year. The annual report expense ratio for a fund of funds is the wrap or sponsor fee only.

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 funds average net assets, is accrued on a daily basis. If the funds 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.

The net prospectus expense ratio is pulled from the funds prospectus and shows expenses the fund company anticipates will actually be borne by the funds shareholders in the upcoming fiscal year less any expense waivers, offsets or reimbursements. In summary, the net prospectus expense ratio is forward looking and the net annual report expense ratio is backward looking.

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 funds average net assets, is accrued on a daily basis. If the funds 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.

Morningstar evaluates a mutual fund share classs expense ratio relative to other funds that invest in a similar asset class and have similar distribution characteristics. Within each Comparison Group, a fund share class expense ratio is ranked against peers using five quintiles.

The Fee Level rating is objective, based entirely on a mathematical evaluation of a share classs expense ratio relative to similar funds. It is a useful tool for putting a funds fees into context, but alone is not a sufficient basis for investment decisions.

A chart showing the growth of a $10,000 investment in terms of market prices. The red line represents the growth of a $10,000 investment based on the funds market price. The orange line represents the funds Morningstar Category (see definition below). The green line represents the S&P 500. The starting date for each line is set to the earliest month from which Morningstar has continuous monthly return data, or to the leftmost point on the chart.

All three 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 $100,000 and $200,000 because both represent a 100% increase in investment value. This provides a more accurate representation of a funds performance than would a simple arithmetic graph. All the graphs are scaled so that the full length of vertical axis represents a tenfold increase in investment value. For funds whose returns have exhibited greater than a tenfold increase over the period shown in the graph, the vertical axis has been compressed accordingly.

This is a proprietary Morningstar data point. The Morningstar Style Box is a nine-square grid that provides a graphical representation of the investment style of stocks and mutual funds. For stocks and stock funds, it classifies securities according to market capitalization (the vertical axis) and growth and value factors (the horizontal axis). Fixed income funds are classified according to credit quality (the vertical axis) and sensitivity to changes in interest rates (the horizontal axis).

By providing an easy-to-understand visual representation of stock and fund characteristics, the Morningstar Style Box allows for informed comparisons and portfolio construction based on actual holdings, as opposed to assumptions based on a funds name or how it is marketed. The Style Box also forms the basis for Morningstars style-based fund categories and market indexes.

The vertical axis of the Style Box defines three size categories, or capitalization bands-small, mid-size, and large. The horizontal axis defines three style categories. Two of these categories, value and growth, are common to both stocks and funds. However, for stocks, the central column of the style box represents the core style (those stocks for which neither value or growth characteristics dominate); for funds, it represents the blend style (a mixture of growth and value stocks or mostly core stocks).

Style Box assignments begin at the individual stock level. Morningstar determines the investment style of each individual stock in its database. Stocks are evaluated against other stocks in the same geographic area (United States, Latin America, Canada, Europe, Japan, Asia ex-Japan, Australia/New Zealand). The style attributes of individual stocks are then used to determine the style classification of stock mutual funds.

The scores for a stocks value and growth characteristics determine its horizontal placement:

Price/book 12.5% Price/sales 12.5% Price/cash flow 12.5% Dividend yield 12.5%

Historical earnings growth 12.5% Sales growth 12.5% Cash flow growth 12.5% Book value growth 12.5%

Growth and value characteristics for each individual stock are compared to those of other stocks within the same capitalization band and are scored from zero to 100 for both value and growth. To determine the overall style score, the value score is subtracted from the growth score.

The resulting number can range from 100 (for low-yield, extremely growth-oriented stocks) to -100 (high-yield, low-growth stocks). A stock is classified as growth if the net score equals or exceeds the growth threshold (normally about 25 for large-cap stocks). It is deemed value if its score equals or falls below the value threshold (normally about -15 for large-cap stocks). And if the score lies between the two thresholds, 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 the market. However, on average, the three stock styles each account for approximately one third of the total free float in each size category.

Rather than a fixed number of large capor small cap stocks, Morningstar uses a flexible system that isnt adversely affected by overall movements in the market. Large-cap stocks are defined as the group that accounts for the top 70% of the capitalization of each geographic area; mid-cap stocks represent the next 20%; and small-cap stocks represent the balance.

A stock fund is an aggregation of individual stocks and its style is determined by the style assignments of the stocks it owns. By plotting all of a funds stocks on the stock style grid, the range of stock styles included in the fund immediately becomes apparent. An asset-weighted average of the underlying stocks style and size scores determines a funds placement in the Style Box.

Style box assignments for stocks are updated each month. Assignments for funds are recalculated whenever Morningstar receives updated portfolio holdings for the fund.

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

Understanding how different types of stocks behave is crucial for building a diversified, style-controlled portfolio of stocks or mutual funds. The Morningstar Style Box helps investors construct portfolios based on the characteristics-the style factors-of all the stocks and funds that portfolio includes.

The model for the fixed income style box is based on the two pillars of fixed-income performance: interest-rate sensitivity and credit quality. As depicted in the image below, the three interest sensitivity groups are limited, moderate and extensive and the three credit quality groups are high, medium and low. These groupings display a portfolios effective duration and third party credit ratings to provide an overall representation of the funds risk orientation given the sensitivity to interest rate and credit rating of bonds in the portfolio.

The horizontal axis focuses on interest-rate sensitivity as measured by the bonds portfolio effective duration.

Prior to October 2009, US taxable-bond funds with durations of 3.5 years or less were considered short-term (having limited sensitivity to interest rate change); more than 3.5 years but less than 6 years were considered intermediate term (having moderate sensitivity to interest rate change); and more than 6 years were considered longer term (having extensive sensitivity to interest rate change). In October 2009, Morningstar moved from the aforementioned static breakpoints to dynamic breakpoints.

On a monthly basis Morningstar calculates duration breakpoints based around the 3 year effective duration of the Morningstar Core Bond Index (MCBI).

Limited: To be placed in the limited section of the fixed income style box the funds three year average effective duration needs to fall under 75% of the three year average effective duration of the MCBI (Morningstar Core Bond Index). For example, if the three year average of the MCBI = 5.935, limited funds would have a three year average effective duration

<4.45. these funds have limited sensitivity to interest rate change.

Moderate: To be placed in the moderate section of the fixed income style box the funds three year average effective duration needs to fall between 75% and 125% of the three year average effective duration of the MCBI (Morningstar Core Bond Index). For example, if the three year average of the MCBI = 5.935, moderate funds would have a three year average effective duration>

= 4.45 and

<7.42. these funds have moderate sensitivity to interest rate change.

Extensive: To be placed in the extensive section of the fixed income style box the funds three year average effective duration needs to fall above 125% of the three year average effective duration of the MCBI (Morningstar Core Bond Index). For example, if the three year average of the MCBI = 5.935, extensive funds would have a three year average effective duration>

= 7.42. These funds have extensive sensitivity to interest rate change.

By using the MCBI as the duration benchmark, Morningstar is letting the effective duration bands to fluctuate in lock-steps with the market which will minimize market-driven style box changes.

Municipal bond funds with duration of 4.5 years or less qualify as low; more than 4.5 years but less than 7 years, medium; and more than 7 years, high.

Non-US domiciled funds use static duration breakpoints. These thresholds are:

Historically, Morningstar followed the industry practice of reporting the average credit rating of a bond portfolio by taking a weighted average of ratings based on data provided by the fund company. However, because the default rates increase at an increasing rate between grades (a mathematical property called convexity), this method systematically understated the average default rate of a bond portfolio. For example, for U.S. corporate bonds as of the date of this document, the spread in default rates between CCC and BBB rated bonds was over 21 times that of the default rate spread between BBB and AAA bonds. Yet, the conventional method assumes that these spreads are equal. To see the impact of this, consider a portfolio of 90% AAA bonds and 10% CCC bonds. According to the conventional method, the average credit rating of this portfolio is AA. However, the average default rate for this portfolio is that of BB bonds.

To correct this bias, Morningstar takes the convexity of default rate curves into account when calculating the average credit rating of a portfolio. The first step is to map the grades of a portfolios constituents into relative default rates using a convex curve. Next, average the resulting default rates (rather than the grades) to come up with an average default rate for the portfolio. Finally, using the same convex curve Morningstar maps the resulting average default rate back into a grade. For example, a portfolio of 90% AAA bonds and 10% CCC bonds will have an average credit rating of BB under this new methodology.

Independent research confirms that the arithmetic average credit rating of a bond portfolio systematically understates the credit risk and that a more meaningful measure would be to average the default probabilities associated with each letter grade and then use the convex curve that relates the numerical representation of the letter grades to default probability to assign a letter or alphanumeric rating to the portfolio. This procedure is detailed in Appendix A.

Based on following breakpoints Morningstar maps the calculated average asset weighted letter credit rating (see Appendix A) for all portfolios on the vertical axis of the style box:

Low credit quality – where asset weighted average credit rating is less than BBB-

Medium credit quality – where asset weighted average credit rating is less than AA- but greater or equal to BBB-

High credit quality – where asset weighted average credit rating is AA- and higher

The data which drives the fixed income style box is surveyed from fund companies. Morningstar asks fund companies to send the following information on a monthly or quarterly basis for each of their fixed income or allocation funds.

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

Load denotes either a funds maximum initial or deferred sales charge.

For initial, or front-end loads, this figure is expressed as a percentage of the initial investment and is incurred upon purchase of fund shares.

For deferred sales charges (also known as back-end loads or contingent deferred sales charges), the amount charged is based on the lesser of the initial or final value of the shares sold. If the fund does not have a load and remains open to investors, None appears. We list 12b-1 only in this space if the fund has no sales fees, but does have a 12b-1 fee. If the fund no longer offers shares to new investors, Closed is listed here. A percentage followed by a W indicates that, at the time of publication, the fund is waiving its load for the general public.

Morningstar rates mutual funds from one to five stars based on how well theyve 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. Theyre a useful tool for identifying funds worthy of further research, but shouldnt be considered buy or sell recommendations.

Morningstar evaluates a mutual fund share classs expense ratio relative to other funds that invest in a similar asset class and have similar distribution characteristics. Within each Comparison Group, a fund share class expense ratio is ranked against peers using five quintiles.

The Fee Level rating is objective, based entirely on a mathematical evaluation of a share classs expense ratio relative to similar funds. It is a useful tool for putting a funds fees into context, but alone is not a sufficient basis for investment decisions.

The minimum purchase indicates the smallest investment amount a fund will accept to establish a new account.

This indicates the smallest permissible additional purchase a fund will accept in an existing account.

The smallest investment amount accepted for establishing an individual retirement account. If none appears, the fund does not have a plan. If the minimum is zero, then $0 will appear.

This indicates the smallest permissible additional purchase a fund will accept in an existing IRA account. If the minimum is zero, then $0 will appear.

This indicates the smallest amount with which one may enter a funds automatic-investment plan – an arrangement where the fund takes money on a monthly, quarterly, semiannual, or annual basis from the shareholders 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.

This indicates the smallest permissible additional investment a fund will accept in an existing automatic-investment plan account.

While the investment objective stated in a funds 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.

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 Morningstar 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, financials, health care, natural resources, real estate, technology, utilities, and miscellaneous.

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

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.

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.

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.)

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