How to Read the Funds List
This list takes a close look at about 4,000 of the larger U.S. mutual funds from the database of Morningstar Inc. Tax-free funds designed for residents of other states and funds that are only available in employer retirement plans have been excluded.
Morningstar Star Rating System
This is a “risk-adjusted” rating. It’s a measure of a fund’s performance (returns) and risk assessed together.
The overall star rating is a weighted average of three-, five- and 10-year periods, when available.
Morningstar’s rating system is designed to illustrate the relative attractiveness of a fund’s risk-reward profile. Funds in the top 10% of a given class for a given period are awarded five stars (highest); those falling in the next 22.5% receive four stars (above average); the middle 35% earn three stars (neutral); the next 22.5% receive two stars (below average); the bottom 10% get one star (lowest).
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Three-Year Total Return Percentile, Morningstar Category (1-100)
This is the fund’s total-return percentile rank relative to all funds in the same Morningstar category. The top-performing fund in a category will always receive a rank of 1, but in a large group there could be more than one fund with that ranking.
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Manager Tenure
The number of years the current manager has been directing the fund’s portfolio. For funds with more than one manager, the average tenure is shown.
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Bear Market Rank (1-10)
How a fund has performed during bear markets compared with other stock or bond funds. Morningstar adds a fund’s performance during each bear market month to reach a total bear market return. It is then assigned a decile ranking. A fund with a bear market ranking of 1 has withstood poor markets well, while one with a ranking of 10 hasn’t.
(Bear market definition: For stock funds, all months since Jan. 1, 1990, that the S&P; 500-stock index lost more than 3% of its value; for bond funds, all months since Jan. 1, 1990, that the Lehman Bros. Aggregate Index lost more than 1%.)
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Categories See D10
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NAV
NAV, or net asset value, is the funds’ share price. Funds compute this value by dividing their total net assets by the total number of shares.
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Returns (13-week, year-to-date and three-year figures are as of Friday.)
Morningstar’s calculation of total return is computed by taking the change in monthly net asset value, reinvesting all income and capital gains distributions and dividing by the starting NAV. Returns here are not adjusted for sales charges (such as front-end and deferred fees and redemption fees). The total returns do account for management, administrative and 12b-1 fees and other costs automatically taken out of fund assets. For ease of use, total returns for periods longer than one year are annualized, expressed in terms of compounded average annual returns (also known as geometric total returns).
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Loads
Sales charge or commissions, with footnote: Front-end (f)--initial charge, generally a one-time deduction. It may vary by size of investment. Deferred (d)--also known as back-end, imposed when investors remove money from the fund; the percentage charged generally declines the longer shares are held. Redemption fee (r)--charges always taken when funds arewithdrawn that may go back into fund assets rather than to fund company. 12b-1 fee (b)--separate marketing fee. (These fees can also be part of expenses.) Multiple (m)--multiple fees and charges, usually a marketing fee and either a sales or redemption fee.
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Expense Ratio
The percentage of fund assets paid for operating expenses and management fees, including 12b-1 fees, administrative fees and all other asset-based costs incurred by the fund, except brokerage costs. Fund expenses are reflected in the fund’s NAV. Sales charges are not included in the expense ratio.
Data and analysis provided by Morningstar Inc.
