Glossary of Terms

TERM DESCRIPTION
12b-1 Fee Maximum annual charge deducted from fund assets to pay for distribution and marketing costs. Although usually set on a percentage basis, this amount will occasionally be a flat figure. This information is taken directly from the fund's prospectus, and includes distribution, service and other expenses incurred by the fund. Morningstar lists the maximum amount. Some 12b-1 fees are something of a hidden charge, because they are taken out of the NAV. Morningstar breaks the 12b-1 amount out of the expense ratio so investors know how much they're paying.
Account Type The account type can be a separate account or a commingled fund.
Administration Charge The percentage of the sub-account's daily net assets deducted by the insurance company to cover the costs involved in offering and administering the variable annuity, such as the cost of distribution and printing of correspondence.
Advisor The company that takes primary responsibility for managing the fund.
All Funds (Fi360 Fiduciary Score«: 0-100) All funds that have at least a 3 year track history and therefore receive an Fi360 Fiduciary Score.
Alpha 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 under-performed, given the expectations established by the fund's beta. All MPT statistics (alpha, beta, and R-squared) are based on a least-squared regression of the fund's return over Treasury bills (called excess return) and the excess returns of the fund's benchmark index. Alpha is calculated for the past 36 - month period.
Annual Contract Fee The annual fee charged to compensate the insurance company for the cost of maintaining and administering the variable account. Investors should note that because this charge is deducted by cashing annuity units, it is not reflected in the AUV or in the total return of the sub-account. The charge normally applies only during the contract's accumulation, not during its annuity phase. Unlike Variable Annuities, Variable Life contract charges are deducted from monthly premium payments prior to investment.
Basis Point One-hundredth of a percentage point. For example, 50 basis points equals .50%.
Brokerage Availability Denotes the specific brokerage companies that sell a particular mutual fund.
Cash For stocks, this figure is the total amount of cash, cash equivalents, and marketable equity securities held by the company as of the most recent quarter. Cash, as with other Balance Sheet items, is shown in millions of dollars ($M) and is current as of the last day of the specified reporting period. For mutual funds, see Composition- %Cash.
Closed Fund An open-end fund that has closed, either temporarily or permanently, to new investors. This usually occurs when management finds the fund's increasing asset size to be disadvantageous.
Closed-End Fund While closed-end funds share many traits with the more common open-end mutual funds, there are many distinctions between the two investment vehicles. Both are pools of assets that offer smaller investors the benefit of professional management and economies of scale. Both may be operated by the same managers and fund companies, and, for the most part, may invest in the same holdings. Closed-end funds differ primarily in their structure. Instead of issuing unlimited amounts of shares and redeeming them on demand, closed-end funds issue only a fixed number of shares at an initial public offering (IPO). These shares are then traded on the New York Stock Exchange (or occasionally on other exchanges or over the counter) and must be purchased through a broker.
Company Name The asset management firm representing the investment.
Composition A breakdown of the fund's portfolio holdings, as of the date listed, into general investment classes. 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 include everything from government notes to high-yield corporate bonds. Preferreds includes preferred stocks (equity securities that pay dividends at a specific rate). Convertibles includes convertible bonds and convertible preferreds, which are corporate securities that are exchangeable for a set amount of another form of security (usually common shares) at a prestated price. Other denotes all those not-so-neatly categorized securities, such as warrants and options.
Composition - % Cash The percent of portfolio assets in cash. 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.
Composition - % Non-US Bond The percent of portfolio assets in foreign bonds. Non-US bonds include everything from government notes to high-yield corporate bonds issued by foreign governments and/or corporations.
Composition - % Non-US Stock The percent of portfolio assets in non-US stocks.
Composition - % Other The percent of portfolio assets in other assets. Other may denote all those not-so-neatly-categorized securities, such as warrants and options.
Composition - % US Bond The percent of portfolio assets in domestic bonds. Bonds include everything from U.S. government notes to high-yield U.S. corporate bonds to U.S. municipal bonds.
Composition - % US Stock The percentage of portfolio assets invested in U.S. common stocks.
Composition Criterion This screen is one of the Fi360 Fiduciary Score« criterion.The screened product can have no more than 20% of the portfolio invested in 'unrelated asset class securities. For example, a Large-Cap Growth product should not hold more than 20% in cash, fixed income and/or international securities.This screen is not applied to all asset classes.
CUSIP (Committee on Uniform Security Identification Procedures) For individual securities, CUSIP is a standard security system to provide a consistent and concise description of a security. On the fund level, it is a permanent 9 digit ID number issued for each fund.
Deferred Load This is also known as a back-end sales charge, and it is imposed when investors redeem shares. The percentage charged generally declines the longer shares are held, and it is usually applied to the lower of the beginning price or ending price. This charge is often coupled with higher 12b-1 fees in B or C share classes as an alternative to a traditional front-end load fund.
ETF (Exchange-Traded Fund) ETFs are not mutual funds in the traditional sense; rather, they are hybrid instruments combining aspects of common stocks and mutual funds and offering many the benefits of both. ETFs are products that trade like stocks on the American Stock Exchange. They mimic stock indexes and are passively managed just like an index fund. Since ETFs trade throughout the day like a stock, investors have the ability to choose the timing, know the price of the transaction, and are subject to commission charges for each buy and sell trade executed.
Expense Ratio - Annuities The percentage of assets deducted each year for underlying fund operating expenses, management fees, and all other asset-based costs incurred by the fund, excluding brokerage fees. Like insurance expenses, fund expenses are reflected in the sub-account's AUV.
Expense Ratio - Audited Net 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. This expense ratio is pulled directly from the fund's annual report.Sales charges are not included in the expense ratio.For fund of funds, the underlying fund expense ratios are not included in the expense ratio.
Expense Ratio - Prospectus Gross Gross Expense Ratio represents the total gross expenses (net expenses with waivers added back in) divided by the fund's average net assets. If it is not equal to the net expense ratio, the gross expense ratio portrays the fund's expenses had the fund not waived a portion, or all, of its fees. Thus, to some degree, it is an indication of fee contracts. Some fee waivers have an expiration date; other waivers are in place indefinitely.
Expense Ratio - Prospectus Net The percentage of fund assets used to pay 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. The expense ratio for fund of funds is the aggregate expense ratio as defined as the sum of the wrap or sponsor fees plus the estimated weighted average of the underlying fund fees.
Fee Waiver The elimination of all or part of a fund's expenses and fees. Funds, particularly fixed-income funds, adopt this practice at various times to make their returns more competitive.
Fi360 Fiduciary Score« Average The Fi360 Fiduciary Score Average is a one-, three-, five- or ten-year rolling average of an investment's Fi360 Fiduciary Score. The Average Score is calculated on a monthly basis. Since the Average Score is a rolling average of the historical Fi360 Fiduciary Score, an investment needs to have the requisite amount of Fiduciary Score calculations for each Average Score.
Fi360 Fiduciary Score The Fi360 Fiduciary Score is a peer percent ranking of an investment against a set of quantitative due diligence criteria selected to reflect prudent fiduciary management. The Fi360 Fiduciary Score is calculated on a monthly basis for investments with at least a three year history. Note: Group Retirement Plan Annuities (GRPAs) are ranked in a peer group that includes GRPAs, Mutual Funds and ETFs. Prior to 9/30/2013 only Mutual Funds and ETFs were used to construct the peer group.
Fi360 Fiduciary Score«: 26-50 The investment has noteworthy shortfalls. It may not be an appropriate choice if being considered in a search. However, if already in use, the investment may not need to be replaced.
Fi360 Fiduciary Score«: 51-75 The investment has considerable shortfalls. It may not be an appropriate choice if being considered in a search. However, if already in use, the investment may not need to be replaced.
Fi360 Fiduciary Score«: 76-100 The investment has significant shortfalls and may not be appropriate for use in a fiduciary account. Strongly consider replacing the investment if already in use.
Firm Assets A firm's assets under management for the stated time period.
Front-End Load The initial, or front-end, sales charge is a one-time deduction from an investment made into the fund. The amount is generally relative to the amount of the investment, so that larger investments incur smaller rates of charge. The sales charge serves as a commission for the broker who sold the fund. A fund's potential fees and sales charges are an important factor to consider before making an investment. The load fee compensates the broker or financial planner for the service of providing professional investment advice.
Front-End Load- Annuities The front-end load, or front-end sales charge, is assessed by the insurance company on the investor's initial contribution. For variable annuities, front-end loads are unusual. Most insurance companies prefer to assess a surrender charge instead. The variable annuity with a front-end load is at a disadvantage because less of the investor's initial contribution will be put to work. For variable life, the front-end load is deducted from premium payments, usually as a portion of the guideline or target premiums. Unlike VAs, however, variable-life policies often employ both front-end loads and surrender charges. Typically, the front-end load consists of a sales charge intended to defray the insurance company's contract-creation expenses, such as underwriting, brokering, and marketing the policy. Occasionally, the front-end load can include an administration or issue charge--usually expressed as a flat dollar amount.
Full Surrender Charge Charges exacted only if a variable-life account is redeemed prematurely (including cases in which the maximum partial surrender charge has been exceeded), or if the insured fails to make the premium payments necessary to keep the policy in effect. These charges come in as many varieties as do VL sub-accounts. A simple version of this fee is a percentage fee of all paid premiums that declines over time. This fee pattern closely mimics that seen in variable-annuity surrender charges. Another version is for the charge to consist of a large fee, diminishing over time, levied against the policy's face value.
Fund Family A company which offers mutual funds. Generally speaking, the company name is included in the official fund name.
Manager Name(s) The name of the individual or individuals who are employed by the advisor or sub-advisor and who are directly responsible for selecting securities and managing the portfolio.
Manager Tenure The number of years that the current manager has been managing the investment.In the case of a team, the longest manager tenure is used.
Fund Name The fund's official name, or an abbreviation thereof, as stated in the fund's prospectus. Morningstar attempts to limit the extent to which fund name abbreviation is made by keeping the family name or first word intact whenever possible. As a general rule, the words Fund, Shares, Class, Series, Trust (not including class designation), and articles at the beginning of a fund's name are omitted. They appear, however, in cases where their omission could confuse two funds or groups. The fund name is taken directly from the prospectus. The names normally do not change, unless the fund itself changes its name.
Fund of Funds A fund that specializes in buying shares in other mutual funds rather than individual securities. Quite often this type of fund is not discernible from its name alone, but rather through prospectus wording (i.e. the fund's charter).
HOLDRs HOLDRs (Holding Company Depository Receipts) are trust-issued receipts that represent an investor's ownership in the common stock or American Depository Receipts of specific companies in a particular industry or an industry sector. Shareholders are treated as owners of the underlying securities and are entitled to the benefits such as proxy votes and dividends. HOLDRs trade on the exchange and are priced throughout the trading day like stocks.
Hybrid Sub-accounts Sub-accounts that do not fit cleanly into either the equity or the fixed-income categorization. Balanced sub-accounts, which invest in both stocks and bonds, and high-yield bond sub-accounts, which are technically fixed-income funds but are much more speculative in investment practice, are both classified as hybrids. In ratings and comparisons, hybrids are usually either compared only against other hybrids, or against a combined universe of equity and fixed-income sub-accounts.
Inception Date The date on which the fund began its operations. Funds with long track records offer more history by which investors can assess overall fund performance. However, another important factor to consider is the fund manager and his or her tenure with the fund. Often times a change in fund performance can indicate a change in management.
Index A collection of securities chosen to represent a specific investment area. Common indexes include the Dow Jones Industrial Average, the S&P 500, and the NASDAQ Composite.
Index Fund A fund that tracks a particular index and attempts to match returns. While an index typically has a much larger portfolio than a mutual fund, the fund's management may study the index's movements to develop a representative sampling, and match sectors proportionately.
Insurance Company The name of the company sponsoring a variable policy.
Insurance Expense The percentage of sub-account assets deducted each year to cover M & E risk charges, and other miscellaneous administration fees.
Insurance Fee The amount the fund spent on insurance fees during the last fiscal year, as reported in the most recent annual report. This fee is usually only seen for funds that own insured bonds. If the fund has multiple share classes, the amount shown is prorated for that share class.
Load-Adjusted Return Returns adjusted for front-end, deferred and back-end (redemption) loads. For funds with front-end loads, the full amount of the load is deducted. For deferred loads, the percentage charged often declines the longer the shares are held. This charge, often coupled with a 12b-1 fee, usually disappears entirely after several years. Morningstar defines mutual fund load-adjusted return as the holding period return where a shareholder invests money at the beginning of the period, pays all applicable loads and redemption fees, and completely liquidates the investment at the end of the period.
M & E Risk Charges The mortality and expense (M&E) risk charge, which is the percentage of the subaccount's assets that the insurance company deducts to cover costs associated with mortality and expense risk. Specifically, it can serve as a source of profit for the insurance company in addition to compensating the company for offering features such as the variable-annuity death benefit and for compensation. The typical M&E charge for variable annuities runs at about 1.25%. Mortality and expense risk charges tend to be much lower for variable-life because they also deduct the cost of insurance from premiums. The typical variable-life M&E risk charge is 0.90%.
MPT Statistics (Modern Portfolio Theory) Alpha, beta, and R-squared are modern-portfolio-theory measures of a fund's relative risk, based on a least-squares regression of a fund's excess returns on the excess returns of a market index. Standard deviation is not considered an MPT statistic because it is not generated through the same formula or mathematical analysis as the other three statistics.
Municipal Bond A bond issued backed by a state, city, county, or other municipal agency.All interest income is tax-free under federal income tax law, though some municipalities will tax this income.
NDTR NDTR_D indexes provide an estimate of the total return that would be achieved by reinvesting one twelfth of the annual yield reported at every month end. It also takes into account actual dividends before withholding taxes, but excludes special tax credits declared by companies. In addition, NDTR_D indexes subtract withholding taxes retained at the source for foreigners who do not benefit from a double taxation treaty. The suffix _D indicates dollar-denominated returns. _L indicates local-currency
Net Assets - Funds/ETFs The month-end net assets of the mutual fund, recorded in millions of dollars. Net-asset figures are useful in gauging a fund's size, agility, and popularity. They help determine whether a small company fund, for example, can remain in its investment-objective category if its asset base reaches an ungainly size.The assets are totaled across all share classes of the fund.
Net Assets - Subaccount Subaccount net assets are the assets within a policy for a particular subaccount.
Net Assets - Underlying Fund Underlying fund net assets are the total net assets of all the subaccounts across all policies that use a specific underlying fund.Fund net assets can be greater than or equal to the subaccount net assets. (They will be equal if the fund only appears in one policy)
No-Load Fund Any fund with no front load, no deferred load, and 12b-1 fees less than or equal to 0.25%. Management fees, however, may be higher, since marketing charges come directly out-of-pocket. True no-load funds are normally, but not always, cheaper to own than load funds with distribution fees. While true no-load funds may be attractive from an expense standpoint, this does not suggest that funds with loads should be shunned. Many funds with consistently above-average track-records have fees and expenses attached. In many cases these may be marketing fees (often 12b-1 fees) or charges to cover administrative costs, rather than broker commissions. Clearly, investors fare best by reading a fund's prospectus carefully, and weighing the factor of fees and expenses into any fund-investing decision.
NTF Plans (No Transaction Fee) Indicates which NTF programs offer the fund. Wrap programs are not included.
Number of investments in Peer Group A count of the number of investments within a specific peer group for a particular data point such as 1yr return or Alpha. This number represents the total number of investments used to calculate the bar charts and rankings for each data point.(Note: Group Retirement Plan Annuities (GRPAs) are ranked in a peer group that includes GRPAs, Mutual Funds and ETFs. Prior to 9/30/2013 only Mutual Funds and ETFs were used to construct the peer group.
Number of Subaccounts This is the number of subaccounts offered by a particular policy.
Partial Surrender Charge Although a few variable life policies do permit free partial withdrawals, most assess a charge for a partial surrender of assets. Typically, this charge is the lesser of $25 or 2% of the amount withdrawn (in such cases, $25 is listed). The partial-surrender charge may, however, consist of some percentage of the full surrender charge. Partial surrenders are contingent upon the maximum partial surrender limit's not being exceeded; if the investor withdraws too much from the subaccount, the full surrender charge may be applied.
Peer Group (Morningstar Category) In an effort to distinguish funds by what they own, as well as by their prospectus objectives and styles, Morningstar developed the Morningstar Categories. While the prospectus objective identifies a fund's investment goals based on the wording in the fund prospectus, the Morningstar Category identifies funds based on their actual investment styles as measured by their underlying portfolio holdings (portfolio and other statistics over the past three years). See specific category name for further details (i.e. "Peer Group - Large Value").
Policy Name Typically abbreviated, this is the title commonly used to identify the policy. This name often includes the name of the offering insurance company.
Product Type Identifies the subaccount as a variable annuity, variable life, or variable universal life product.
Prospectus A fund's formal written statement, generally issued on an annual basis. In this statement the fund sets forth its proposed purposes, goals, fees and other facts (e.g. history and investment objective) that an investor should know in order to make an informed decision.
Purchase Constraint Information stating if a fund has any of the following qualities: Qualified Access (A), Institutional (T), Closed to New Investments (C), or Closed to All Investments (L). Because these qualities can all act as restrictions and/or requirements for investment, they are grouped together.
Purchase Constraints - Closed to All Investments Denoted with a (L), this group includes those funds that are accepting no investments whatsoever, even from current shareholders.
Purchase Constraints - Closed to New Investments Denoted with a (C), these funds are not accepting new shareholder investments. This does not, however, restrict current shareholders from increasing their investment amount.
Redemption Fee The redemption fee is an amount charged when money is withdrawn from the fund. This fee does not go back into the pockets of the fund company, but rather into the fund itself and thus does not represent a net cost to shareholders. Also, unlike contingent deferred sales charges, redemption fees typically operate only in short, specific time clauses, commonly 30, 180, or 365 days. However, some redemption fees exist for up to five years. Charges are not imposed after the stated time has passed. These fees are typically imposed to discourage market timers, whose quick movements into and out of funds can be disruptive. The charge is normally imposed on the ending share value, appreciated or depreciated from the original value.
Redemption Fee Breakpoint The amount of a redemption fee is generally relative to the amount of time that the investment was held, so that longer-held investments incur smaller rates of charge. The breakpoints are the charges for a particular time period, which is expressed in months. For example, 2% after 3 months, 1% after 6 months, 0% after 9 months.
REIT An acronym for "Real Estate Investment Trust." A trust or corporation that is established in and/or managing real estate and mortgages. REITs can sell shares like other corporations and tend to distribute a large portion of their income in dividends.
R-Squared Reflects the percentage of a fund's movements that can be explained by movements in its benchmark index. An R-squared of 100 indicates that all movements of a fund can be explained by movements in the index. Thus, index funds that invest only in S&P 500 stocks will have an R-squared very close to 100. Conversely, a low R-squared indicates that very few of the fund's movements can be explained by movements in its benchmark index. An R-squared measure of 35, for example, means that only 35% of the fund's movements can be explained by movements in the benchmark index.R-squared can be used to ascertain the significance of a particular beta. Generally, a higher R-squared will indicate a more reliable beta figure. If the R-squared is lower, then the beta is less relevant to the fund's performance.
Secondary Indexes In addition to being compared with a primary benchmark index (the S&P 500 index for stock funds, the Barclays Aggregate Bond index for bond funds), each fund in our database is compared with a secondary index, based on its Morningstar Category.
Separate Account Name The separate account product's official name as provided to Morningstar by the asset management firm, or an abbreviation of the separate account's official name that is programmatically generated by Morningstar.
Share Class Type - A Funds that have lower investment minimums and carry a front-load to pay the advisors' sales commission. Front-load discounts are usually available if the investor meets a higher minimum initial purchase.Also known as 1, I or One.Typically, the maximum front load is between 4% and 5.75%, the maximum deferred load is zero, the maximum 12b-1 fee is between 0 and 50 bps and the investment minimum is $2,500 or less.
Share Class Type - "No Load" Funds without front- or back-end sales charges. Purchased directly by investors or through advisors. Typically, the maximum front load is 0%, the maximum deferred load is 0%, the maximum 12b-1 fee is between 0 and 100 bps, and the investment minimum is $2,500 or less.
Share Class Type - Adv Funds typically purchased through advisors, but generally requiring a higher minimum investment.Also know as Adv or Advisor. Typically, the maximum front load is 0%, the maximum deferred load is 0%, the maximum 12b-1 fee is between 0 and 50 bps, and the investment minimum is $2,500 or less.
Share Class Type - B Funds that have lower investment minimums and carry a deferred-load sales charge, also called a surrender charge. The sales charge is imposed if shares are redeemed before specified time periods, typically within five years. The sales charge decreases with the time invested such that the surrender charge is higher in year one than it is in year five.Also know as 2, II, or Two.Typically, the maximum front load is 0%, the maximum deferred load is between 4% and 5%, the maximum 12b-1fee is between 75 and 100 bps, and the investment minimum is $2,500 or less.
Share Class Type - C Funds that have lower investment minimums and carry a level-load structure. This sales charge is typically a recurring fee of 1% that is used on an annual basis to compensate advisors. Investment minimums for C- shares tend to be lower than for D-shares.Also know as 3, III, or Three.Typically, the maximum front load is 0% and occasionally 1%, the maximum deferred load is 1% and occasionally 0%, the maximum 12b-1 fees is between 75 and 100 bps, and the investment minimum is $2,500 or less.
Share Class Type - D Funds that have lower investment minimums and carry a level-load structure. This sales charge is typically a recurring fee of 1% that is used on an annual basis to compensate advisors. Investment minimums for C- shares tend to be lower than for D-shares.Typically, the maximum front load is 0%, the maximum deferred load is 0% and occasionally 1%, the maximum 12b-1 fee is 0% and occasionally between 1 and 50 bps, and the investment minimum is $2,000 or more.
Share Class Type - Inst Funds typically purchased by large institutional buyers, such as pension plans.Also know as Y, I, Z, X, Inst, Instl. Typically, the maximum front load is 0%, the maximum deferred load is 0%, the maximum 12b-1 fee is 0%, and the investment minimum is $25,000 or more.
Share Class Type - M Typically, M shares carry lower front-end loads than A shares and are available to investors with larger initial investments. Typically, the maximum front load is sometimes 0% and sometimes between 1% and 3.5%, the maximum deferred load is 0%, the maximum 12b-1fee is sometimes 0% and sometimes between 25 bps and 100 bps, and the investment minimum is $50,000 or more.
Share Class Type - N Typically, N shares are available to investors with larger initial investments.Many also charge a 12b-1 fee. Typically, the maximum front load is 0%, the maximum deferred load is 0%, the maximum 12b-1 fee is between 25 and 50 bps, and the investment minimum is $50,000 or more.
Share Class Type - Other Funds not elsewhere classified. This category contains fewer than 5% of all funds.Also know as most other share class letters. The maximum front load varies, the maximum deferred load varies, the maximum 12b-1 fee varies, and the investment minimum varies.
Share Class Type - Retirement Funds available through retirement plans. Purchased by retirement plan participants, usually without any sales loads.Also know as Ret, R, K, and J. Typically, the maximum front load is 0%, the maximum deferred load is 0%, the maximum 12-b1 fee is between 25 and 50 bps, and the investment minimum varies.
Share Class Type - S S share classes are similar to no-load funds in that there is usually no front or deferred load charged.However, investment minimums may be slightly higher.Typically, the maximum front load is 0%, the maximum deferred load is 0%, the maximum 12b-1 fee is 0%, and the investment minimum is $2,000 or more.
Share Class Type - T Typically, T shares carry lower front-end loads than A shares and are available to investors with larger initial investments. Typically, the maximum front load is 0% and sometimes between 3% and 4.75%, the maximum deferred load is 0%, the maximum 12b-1 fee is sometimes 0% and sometimes between 25 bps and 50 bps, and the investment minimum is $2,000 or more.
Share Class Type - Inv Investor share classes can be purchased by individual investors, so there is usually no front or deferred load charged. However, investment minimums may be slightly higher.Also know as Investor or Investment. Typically, the maximum front load is 0%, the maximum deferred load is 0%, the maximum 12b-1 fee is sometimes 0% and sometimes between 1bp and 25 bps, and the investment minimum is $10,000 or less.
Share Classes Shares of the same fund that offer different shareholder rights and obligations, such as different fee and load charges. Common share classes are A (front-end load), B (deferred fees), C (no sales charge and a relatively high annual 12b-1 fee, such as 1.00%). Multi-class funds hold the same investment portfolio for all classes, and differ only in their surrounding fee structure.
Sharpe Ratio A risk-adjusted measure developed by Nobel Laureate William Sharpe. It is calculated by using standard deviation and excess return to determine reward per unit of risk. The higher the Sharpe Ratio, the better the fund's historical risk-adjusted performance. The Sharpe ratio is calculated for the past 36-month period by dividing a fund's annualized excess returns by the standard deviation of a fund's annualized excess returns. Since this ratio uses standard deviation as its risk measure, it is most appropriately applied when analyzing a fund that is an investor's sole holding. The Sharpe Ratio can be used to compare two funds directly on how much risk a fund had to bear to earn excess return over the risk-free rate.
Short Position Being "short" a security means to have sold it without owning it. A fund or individual may sell a security that the fund/individual does not presently own.Before settlement of the transaction, the fund/individual will purchase an equivalent amount of that security in order to satisfy the sale.
Special Criteria - Fund of Funds Denoted with a (F), these funds invest in other funds rather than other types of individual securities.
Special Criteria - Index Fund Denoted with an (I), these funds track a particular index and attempt to match returns.
Special Criteria - Index Sub-account Denoted with a (I ), these sub-accounts invest in an underlying fund that tracks a particular index and attempts to match returns.
Special Criteria - Life Cycle Denoted with a (V), these funds are geared toward investors of a certain age or with a specific time horizon for investing. Typically they are grouped together in sets (i.e. conservative, moderate, and aggressive portfolios).
Special Criteria - Socially Conscious Any fund that selectively invests based on certain non-economic principles. Such funds may make investments based on such issues as environmental responsibility, human rights, or religious views. A socially conscious fund may take a pro-active stance by selectively investing in, for example, environmentally-friendly companies, or firms with good employee relations. This group also includes funds that avoid investing in companies involved in promoting alcohol, tobacco, or gambling, or in the defense industry.
Special Criteria - Socially Conscious Sub-account Denoted with an (S), these are sub-accounts with an underlying fund that invests according to non-economic guidelines. Socially conscious funds can direct their investments based on such issues as environmental responsibility, human rights, or religious views. A socially conscious fund may take a proactive stance by selectively investing in, for example, environmentally friendly waste-management companies, or firms with good employee relations. This category also includes funds that avoid investing in companies involved in promoting alcohol, tobacco, or gambling, or in the defense industry.
Standard Deviation A statistical measurement of dispersion about an average, which, for a mutual fund, depicts how widely the returns varied over a certain period of time. Investors use the standard deviation of historical performance to try to predict the range of returns that are most likely for a given fund. When a fund has a high standard deviation, the predicted range of performance is wide, implying greater volatility.Standard deviation is most appropriate for measuring risk if it is for a fund that is an investor's only holding. The figure can not be combined for more than one fund because the standard deviation for a portfolio of multiple funds is a function of not only the individual standard deviations, but also of the degree of correlation among the funds' returns. If a fund's returns follow a normal distribution, then approximately 68 percent of the time they will fall within one standard deviation of the mean return for the fund, and 95 percent of the time within two standard deviations. Morningstar computes standard deviation using the trailing monthly total returns for the appropriate time period. All of the monthly standard deviations are then annualized.
Standardized Returns Standardized Returns assume reinvestment of dividends and capital gains. It depicts performance without adjusting for the effects of taxation, but are adjusted to reflect sales charges and ongoing fund expenses. If adjusted for taxation, the performance quoted would be significantly reduced. Standardized returns never include pre-inception data.
Style Box - Equity The Morningstar Style Box™ reveals a fund's investment strategy. Morningstar classifies funds as being large-cap, mid-cap, or small-cap based on the market capitalization of long stocks owned; and as value, blend, or growth based on the value-growth orientation of the stock holdings. The nine possible combinations of these characteristics correspond to the nine squares of the Morningstar Style Box-size is displayed along the vertical axis and style is displayed along the horizontal axis.
Style Box - Fixed Income The Morningstar Style Box reveals a fund's investment strategy. Morningstar classifies bond funds in its style box based on their interest rate sensitivity as limited, moderate and extensive measured by the average effective duration of the fund's holdings; and their credit quality as high, medium, or low based on letter (or alphanumeric) credit ratings of the long bonds owned by third party credit rating agencies. The nine possible combinations of these characteristics correspond to the nine squares of the Morningstar Style Box -- quality is displayed along the vertical axis and sensitivity to interest rate along the horizontal axis.  Morningstar seeks credit rating information from fund companies on a periodic basis (e.g., quarterly). In compiling credit rating information Morningstar accepts credit ratings reported by fund companies that have been issued by all Nationally Recognized Statistical Rating Organizations (NRSROs). For a list of all NRSROs, please visit http://www.sec.gov/divisions/marketreg/ratingagency.htm. Additionally, Morningstar accepts foreign credit ratings from widely recognized or registered rating agencies. If two rating organizations/agencies have rated a security, fund companies are to report the lower rating; if three or more organizations/agencies have rated a security, fund companies are to report the median rating, and in cases where there are more than two organization/agency ratings and a median rating does not exist, fund companies are to use the lower of the two middle ratings. PLEASE NOTE: Morningstar, Inc. is not itself an NRSRO nor does it issue a credit rating on the fund. An NRSRO or rating agency ratings 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 funds are assigned a style box placement of "low", "medium", or "high" based on their average credit quality. Funds 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 fund. 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 fund'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 funds whose average effective duration is between 25% to 75% of MCBI's average effective duration; funds 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 equal to 6 years; (iii) Extensive: greater than 6 years.
Style Drift Criterion This screen is one of the Fi360 Fiduciary Score« criterion.A comparison is made of the fund's category (3-year style average) and the current style (for the quarter). The fiduciary due diligence screen is a match between the category and style.
Sub-account Inception Date The date the policy started offering the investment, as determined by Morningstar.
Sub-account Name The most common and complete title used for the variable-product sub-account.To facilitate identification, the name typically includes the name of the insurance policy and references to the underlying fund company or sub-account.
Sub-advisor In some cases, the advisor employs another company, called the sub-advisor, to handle the fund's day-to-day management. In these instances, the portfolio manager generally works for the fund's sub-advisor, and not the advisor.
Sub-advisor fee In some cases, a fund's advisor employs another company, called the sub-advisor, to handle the fund's day-to-day management. Therefore, the sub-advisor fee is the fee the sub-advisor receives for doing these duties. The sub-advisor fees are either paid by the advisor or by the fund.
Surrender Charge Surrender charges are levied by the insurance company when an investor withdraws money in excess of the free withdrawal and before the end of the surrender period. In variable annuities, surrender charges are often used in place of front-end sales loads and, in effect, compensate the insurance company for the expenses of starting up a contract. They are sometimes called the Contingent Deferred Sales Charge or CDSC. Surrender charges decline over time, typically reaching 0% after 7 or 8 years.For example, a variable annuity might have a 7% surrender charge that declines one percentage point annually. Thus, an investor who surrenders the account in year three will pay a 5% penalty, while one who cashes out in year eight can withdraw the investment free of surrender charges. The manner in which the surrender charge declines is detailed in parentheses next to the percentage figure.
Surrender Charge (number of years) Maximum number of years surrender charge will apply
Ticker The NASDAQ assigned symbol commonly used to locate the fund on electronic price-quoting systems. Ticker information is provided by NASDAQ. Morningstar receives daily internet transmissions detailing ticker as well as fund-name changes, plus a listing of any funds that have been recently added or deleted from NASDAQ listings. The ticker symbol itself is designated by the fund company. Thus, tickers do not always follow a uniform pattern.
Total Return - Annuity Expressed as a percentage, this figure is calculated by taking the change in accumulation unit value (AUV) during the period and dividing by the starting AUV. Morningstar calculates total returns using AUVs rather than net asset values (NAVs) because the AUV reflects the actual returns passed on to an investor. AUV takes into account a sub-account's fund expense ratio and all insurance expenses.
Total Return - Calendar Years Expressed as a percentage, these total returns are calculated on a calendar-year basis. The annual return for a fund will be the same as its trailing 12-month total return only at year-end.
Total Return - Funds Expressed in percentage terms, Morningstar's calculation of total return is determined each month by taking the change in monthly net asset value, reinvesting all income and capital-gains distributions during that month, and dividing by the starting NAV. Reinvestments are made using the actual reinvestment NAV, and daily payoffs are reinvested monthly. Unless otherwise noted, Morningstar does not adjust total returns for sales charges (such as front-end loads, deferred loads and redemption fees), preferring to give a clearer picture of a fund's performance. The total returns do account for management, administrative, 12b-1 fees and other costs taken out of fund assets. Total returns for periods longer than one year are expressed in terms of compounded average annual returns (also known as geometric total returns), affording a more meaningful picture of fund performance than non-annualized figures.
Total Return - Load-Adjusted Expressed as a percentage, this return is adjusted for front-end loads, deferred loads and redemption fees, but not taxes. For investments with front-end loads, the full amount of the load is deducted. For deferred loads and redemption fees, the percentage charged often declines the longer the shares are held. Morningstar adjusts the deferred load for each time period accordingly when making this calculation.
Total Return - Percentile Rank This is the investment's total-return percentile rank relative to all funds that have the same Morningstar Category. The highest (or most favorable) percentile rank is 1 and the lowest (or least favorable) percentile rank is 100. The top-performing investment in a category will always receive a rank of 1. Rankings may vary among share classes and are based on historical total returns, which are not indicative of future results.
Turnover Ratio This is a measure of the fund's trading activity which is computed 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. A turnover ratio of 100% or more does not necessarily suggest that all securities in the portfolio have been traded. In practical terms, the resulting percentage loosely represents the percentage of the portfolio's holdings that have changed over the past year.
Underlying Fund Family Name The name of the company that offers the underlying fund in which the variable annuity invests. Generally speaking, the company name is included in the official underlying fund name.
Underlying Fund Manager Name The name of the underlying fund manager.
Underlying Fund Manager Tenure The amount of time in years that the manager has managed the underlying fund.
Underlying Fund Name The official name, or an abbreviation, of the fund in which the sub-account invests. Despite this association, professionals running the fund company often have no relationship with the insurance company. The names normally do not change, unless the fund itself changes its name.
Variable Annuity A tax-deferred product that combines the concepts applied in mutual-fund investing with annuities.
Average Effective Duration A measure of a fund's interest-rate sensitivity--the longer a fund's duration, the more sensitive the fund is to shifts in interest rates. Duration is determined by a formula that includes coupon rates and bond maturities. Small coupons tend to increase duration, while shorter maturities and higher coupons shorten duration. The relationship between funds with different durations is straightforward: A fund with a duration of 10 years is twice as volatile as a fund with a five-year duration.
Average Effective Maturity Average effective maturity is a weighted average of all the maturities of the bonds in a portfolio, computed by weighting each bond's effective maturity by the market value of the security. Average effective maturity takes into consideration all mortgage prepayments, puts, and adjustable coupons. Longer-maturity funds are generally considered more interest-rate sensitive than their shorter counterparts. We list Average Effective Maturity for Taxable Fixed-Income and Hybrid funds and Average Nominal Maturity for Municipal Bond Funds.
Average Maturity 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.
Average-Weighted Coupon This figure is calculated by weighting each bond's coupon by its relative size in the portfolio. It indicates whether the underlying fund owns more high- or low-coupon bonds. There can be advantages to holding higher coupon bonds, but many funds buy them simply to tempt investors with a high payout. This can be damaging to investors for two reasons. The first is that higher-coupon bonds often carry greater risk than lower-coupon issues. The second is that when these bonds don't carry extra risk, they are old issues that the fund has paid up for and if the offering doesn't amortize the extra yield, investors are likely to find that their principal erodes over time.
Credit Rating The independent judgment of a bond issuer's ability to repay the principal and interest payments under the terms of the bond.Each bond has a separate rating because bonds issued by the same entity may have different provisions for ensuring their repayment.For example, some bonds have first claim to a company's assets in the event of non-payment.Another issue by that same company may give the bondholder second claim on the same assets.
Load Load denotes either a fund's 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, the amount charged is based on the lesser of the initial or final value of the shares sold.
Morningstar Risk-Adjusted Ratings Often simply called the Star Rating, the Morningstar Rating brings load-adjustments, performance (returns) and risk together into one evaluation. To determine a fund's star rating for a given time period (three, five, or 10 years), the fund's risk-adjusted return is plotted on a bell curve: If the fund scores in the top 10% of its category, it receives 5 stars (Highest); if it falls in the next 22.5% it receives 4 stars (Above Average); a place in the middle 35% earns 3 stars (Average); those lower still, in the next 22.5%, receive 2 stars (Below Average); and the bottom 10% get only 1 star (Lowest). The Overall Morningstar Rating is a weighted average of the available three-, five-, and 10-year ratings. Morningstar rankings may vary among share classes and are based on historical total returns, which are not indicative of future results.
Other Fee The amount the fund spent on miscellaneous fees during the last fiscal year, as reported in the most recent annual report. The placement of fees into this category is solely at the discretion of the fund. If the fund has multiple share classes, the amount shown is prorated for that share class.
Phone Number The number to call to receive more information about a fund, or fund literature.
Portfolio Date The date the portfolio was reported. (Although Morningstar tries to ensure that the portfolio is timely, we do not always receive current portfolio information from fund companies. Portfolios older than six months should not be disregarded; although it may not represent data from the exact current holdings of the fund, it may still provide a good picture of the overall nature of the fund's management style.)
Sector Weightings Calculated for all stock and bond funds based on the securities in the fund's most recent portfolio. For stock funds, this statistic shows the percentage of the fund's stock assets invested in each of the 12 major equity sectors. For taxable bond funds, this statistic shows the percent of the fund's cash and bond assets invested in each of the 14 fixed-income sectors. For municipal bond funds, this statistic shows the percentage of the fund's municipal assets invested in each of the 11 muni sectors.
Fi360 Fiduciary Score«: 0 No fiduciary due diligence shortfalls exist.
Fi360 Fiduciary Score«: 1 - 25 The investment may be an appropriate choice for use in a fiduciary account.
Fi360 Fiduciary Score« Methodology The fi360 Fiduciary Score is a peer percent ranking of an investment against a set of quantitative due diligence criteria selected to reflect prudent fiduciary management. For each investment with at least a three-year history, Fi360 calculates the Fi360 Fiduciary Score based on the following due diligence criteria: regulatory oversight, minimum track record, stability of the organization, assets in the investment, composition consistency with asset class, style consistency, expense ratio/fees relative to peers, risk-adjusted performance relative to peers, and performance relative to peers. Investments are evaluated at the conclusion of each month. If an investment does not meet an individual due diligence criterion, points are awarded.  Investments that satisfy all of the due diligence criteria receive a Fi360 Fiduciary Score of 0. Every other investment is given a Score of 1-100 based on their point total, and representing their percentile ranking within their peer group. The Fi360 Fiduciary Score Average is a one-, three-, five- or ten-year rolling average of an investments Fi360 Fiduciary Score.  The Average Score is also calculated on a monthly basis. The Fi360 Fiduciary Score represents a suggested course of action and is not intended, nor should it be used, as the sole source of information for reaching an investment decision.Visit fi360.com/fi360-Fiduciary-Score for the complete methodology document.
Load Waived Shares Load waived shares are mutual fund shares that do not require investors to pay the front end sales load common to the share class.This waiver is common for retirement-plan participants.
Investment Policy Statement (IPS) The Investment Policy Statement can be considered the business plan for the portfolio.It outlines the general rules that the investment advisor will follow to achieve the client's desired outcome for the portfolio.Minimum components of an IPS should include: The duties and responsibilities of all parties, Diversification and rebalancing guidelines, Due diligence criteria to be used in selecting investments, Monitoring criteria for investment options and service vendors, and procedures for controlling and accounting for investment expenses.
Modeled Portfolio Outlook - Annualized Return The projected annualized return for this portfolio.This weighted return is calculated using the allocation specified on the report and the expected return for each of the broad asset classes stated in the Capital Market Inputs section.
Modeled Portfolio Outlook - Standard Deviation The projected standard deviation for this portfolio.Standard deviation is a common way to measure the risk of a portfolio.If the returns follow a normal distribution, then approximately 68 percent of the time they will fall within one standard deviation of the portfolio's annualized return and 95 percent of the time within two standard deviations.The portfolio standard deviation is a function of not only the individual standard deviations of each asset class, but also of the degree of correlation among the asset classes.
Modeled Portfolio Outlook - Likely Range of Returns There is a 68% chance that any one year's return will fall within this range. This figure is calculated by adding (and subtracting) 1 Standard Deviation to (from) the Annualized Return.
Modeled Portfolio Outlook - Large Loss Scenario While the technical definition of risk assesses both upward and downward variation in prices, from a layman's perspective, risk is viewed as the amount of money the investor is willing to lose in a given year. Recognizing this, we model a 'large loss' scenario that is based upon the calculated return found two standard deviations below the mean.This equates to the 95th percentile but we focus only on the left, or loss side, of the bell shaped curve.This theoretically represents a 1 in 40 event that could be as bad or worse then indicated once every forty years. Stated differently, there is a 2.5% probability that the 'large loss' will be as bad or even worse than the modeled value.
Modeled Portfolio Outlook - The Projected $ Value in 5 Years The projected 5 year growth of the Initial Amount using the annualized return and standard deviation of the portfolio.This figure is calculated by multiplying the Initial Amount times (1+(Annualized Return - 1/2 of the variance))^5.
Modeled Portfolio Outlook - Initial Amount The Initial Amount of the Portfolio to be invested.
Portfolio Backtest This table provides a historical look at the allocation shown to see how it might have performed in the past.The figures are calculated using the allocation specified and the median mutual fund/ETF manager for each of the respective asset classes.Please reference the Capital Market Inputs section to view the peer groups used to derive each asset classes median manager.The Portfolio Backtest represents past performance and should be considered indicative of future results.
Capital Market Inputs The inputs required for a risk-premium optimizer to run its calculations. The inputs are Expected Standard Deviation, Expected Return and the Correlation Coefficients for each asset class used in the optimization. The inputs used in the Fi360 reporting were developed by MacroRisk Analytics. Please view the Capital Market Inputs Methodology PDF for more details.
Capital Market Inputs - Return The expected return for each of the asset classes. The returns used in Fi360 reporting were developed by MacroRisk Analytics. The actual numerical forecasts of annualized returns are based on consensus predictions from government, professional forecasters, and institutional sources. MacroRisk regularly uses consensus information sources in its research and MacroRisk has several patents regarding the collection and use of data for creating optimal consensus forecasts. MacroRisk reviewed data and projections from standard institutional sources. The projections presented here are the medians of the forecasts they collected.
Capital Market Inputs - Standard Deviation The expected standard deviation for each of the asset classes. Standard deviation is a statistical measure of portfolio risk.  It reflects the average deviation of the observations from their sample mean. The standard deviations used in Fi360 reporting were developed by MacroRisk Analytics. The actual numerical forecasts of the standard deviations are based on consensus predictions from government, professional forecasters, and institutional sources. MacroRisk regularly use consensus information sources in its research and MacroRisk has several patents regarding the collection and use of data for creating optimal consensus forecasts. MacroRisk reviewed data and projections from standard institutional sources. The projections presented here are the medians of the forecasts they collected. 
Capital Market Inputs - Correlation Coefficient The expected correlation for each of the asset classes. Correlation measures the degree to which two variables are associated. Historically, equities and fixed-income asset returns have not moved in unison, therefore the asset returns are not strongly correlated. A balanced portfolio with equities and fixed-income asset represents a diversified portfolio that attempts to take advantage of the low correlation between the two asset classes. Please view Capital Market Inputs help article at fi360.zendesk.com for more details.
Broad Asset Class A term used to group funds with similar categories and investing styles.
Asset Allocation Asset Allocation is a decision to place a portfolio's assets in a certain % combination of asset classes with the expectation of meeting a certain risk/return profile. The suggested allocation below does not represent actual securities. It is a broad view of the market that should be refined with your advisor before implementing an investment strategy. In determining an asset allocation, your advisor may have considered your ability to handle market volatility (financially and/or emotionally) your financial needs and goals, the expected market behavior of the various asset classes, and other factors. Past performance should not be considered indicative of future results.
12b-1 Sales Fee The sales fee component of the 12b-1 fee is used to compensate the advisor or broker for the sale of the fund to the client. This is the most common component of the 12b-1 fee.This fee can be rebated back to the client to offset other plan expenses.
12b-1 Service Fee The service fee component of the 12b-1 fee is used to pay for services of the plan.These fees help to reduce other costs of the plan.This fee can be rebated back to the client to offset other plan expenses.
Sub-TA Fee Also know as Sub-Transfer Agency Fees, the name of this fee refers to the subcontracting of participant accounting to third parties, called Sub Transfer Agents. The transfer agent is the bank or trust company that executes, clears and settles buy or sell orders for mutual fund shares, and maintains shareholder records of ownership. When these functions are subcontracted to another recordkeeper, the fee paid to the sub-contractor is called the Sub-TA fee.Typically, Sub-TA fees are not disclosed in the prospectus and can vary depending on the client's circumstances.This fee can be rebated back to the client to offset other plan expenses.
Wrap Fee An inclusive fee generally based on the percentage of assets in an investment program, which typically provides asset allocation, execution of transactions and other administrative services.
Effective Management Fee The Effective Mgmt. Fees column represents the actual fees paid to the investment manager for managing and administering the fund. In addition the pure management fee, this would also include administration costs such as accounting, auditing, legal fees,etc. This value is calculated by subtracting the 12b-1 fees and Sub-ta Fees from the Prospectus Net Expense Ratio.
Third Party Administrator (TPA) The Third Party Administrator (TPA) can handle many of the 401k plan duties.Most TPA's outsource the actual money management to other firms such as a mutual fund.The TPA is especially useful for companies that need outside guidance/assistance in managing their 401k plan.
Advisor An investment advisor or Registered Investment Advisor has a fiduciary responsibility to act in the best interest of the client.
Broker A broker is charged with executing the purchase or sale of an investment at the best possible price.
Fund Manager The fund manager or portfolio manager is responsible for executing the portfolio mandate. The most common Fund Manager is an individual Mutual Fund or Exchange Traded Fund.
Participant Any employee or former employee of an employer who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer or members of such organization, or whose beneficiaries may be eligible to receive any such benefit.
Management Fee Fee charged for the management of pooled investments such as collective investment funds, insurance/annuity products, mutual funds and individually managed accounts.
Advisory Fee Advisory fees can be assessed on a fee- only basis or as a percentage of client assets.These fees can encompass a variety of services, but typically cover the fee for advice on investment selection, plan or portfolio construction, and ongoing monitoring.
Communication Fee Communication fees are used to provide plan participants printed material, videos, slides, and face-to-face meetings to learn about 401(k) plan options.The communication fee can also include participant statements, and other required plan statements.
Custodial Fee The fees used to pay for the safeguarding of client assets.This fee is usually paid to a bank, insurance or trust company, or a mutual fund company.
Participant Education Fee All costs (including travel expenses) associated with providing print, video, software and/or live instruction to educate employees about how the plan works, the plan investment funds, and asset allocation strategies. There may be a one-time cost associated with implementing a new plan, as well as ongoing costs for an existing program.
Finder's Fee Finder's fees are typically paid to an intermediary or facilitator of a transaction.The fee can be paid by either the buyer or seller.
Recordkeeping Fee Fee for providing recordkeeping and other plan participant administrative type services. For start-up or takeover plans, these fees typically include charges for contacting and processing information from the prior service provider and matching up or mapping participant information. Use of this term is not meant to identify any ERISA Section 3(16)(A) obligations.
Startup/Termination Fees These are typically one-time fees that are incurred with the startup or termination of a plan.
Trustee Fee Fees charged by the individual, bank or trust company with fiduciary responsibility for holding plan assets.
Redemption Fee Fees charged by a mutual fund on shareholders who sell fund shares within a short period of time. The time limit and size of the fee vary among funds, but the redemption fee usually is a relatively small percentage(ex. 2% if redeemed within 30 days).
Exchange Fee A fee that some funds impose on shareholders if they exchange (transfer) to another fund within the same fund group or "family of funds."
Median Mutual Fund/ETF Manager The median manager for a given data point is calculated by ranking the managers (investments) within a given peer group on a particular data point from best to worst.The manager that represents the 50th percentile of the ranking becomes the median manager for the group.
GRPA Group Retirement Plan Annuities (GRPAs) are unregistered group annuities, primarily used in 401(k) qualified, but also 403(b) and 457 retirement plans. They are segregated, usually pooled, investment portfolios, separate from the general investment portfolios established by life insurance companies. State insurance boards, not the SEC, regulate these products.
Expense Ratio - GRPA The maximum percentage deducted from an investment's average net assets to pay an advisor or subadvisor. Often, as the investment's net assets grow, the percentage deducted for management fees decreases. Alternatively, the investment may compute the fee as a flat percentage of average net assets. A portion of the management fee may also be charged in the form of a group fee. To determine the group fee, the fund family creates a sliding scale for the family's total net assets and determines a percentage applied to each investment's asset base. The management fee might also be amended by or be primarily composed of a performance fee, which raises or lowers the management fee based on the investment's returns relative to an established index (we list the maximum by which the fee can increase or decrease). It might also be composed of a gross income fee, a percentage based on the total amount of income generated by the investment portfolio.
Portfolio Standard Deviation The standard deviation of a portfolio reflects the weighted standard deviation of the underlying investments multiplied by the correlation of the investments. Under Modern Portfolio Theory, negatively correlated investments will produce a return with less risk than if each investment were held separately.
Uniform Prudent Management of Institutional Funds Act (UPMIFA) UPMIFA provides guidance and authority to charitable organizations concerning the management and investment of funds held by those organizations, and UPMIFA imposes additional duties on those who manage and invest charitable funds. These duties provide additional protections for charities and also protect the interests of donors who want to see their contributions used wisely. Go to www.upmifa.org for more information.
Strategic Allocation The strategic allocation is the selected asset classes and weights that will produce an appropriate portfolio return for a client within the client's risk level.
Watch List The watch list is a list of investments that fail to meet the stated due diligence requirements used to periodically monitor the investment. The due diligence requrements are typically outlined in an Investment Policy Statement.
Fiduciary Someone who is managing the assets of another person and stands in a special relationship of trust, confidence, and/or legal responsibility.
Minimum Account Size The initial minimum investment needed to have an account.
Minimum/Maximum Fee The minimum or maximum fee charged by the asset manager based on the assets invested. Asset managers will typically have several breakpoints in addition to the minimum and maximum fee.
Contract charge Compensation the sub advisor received for handling the fund's day-to-day management. It is collected from the annual report and will reflect waivers or reductions in the contractual value.
Style Box - International Equity The International Equity style box highlights investments that primarily contain non-US holdings.
Total operational fee The total operational fee represents the true cost of an investment to the investor. It includes the effective management fee plus any applicable 12b-1, wrap and other fees for the investment.
Rebalancing Limit(Upper/Lower) The rebalancing limit represents the upper and lower thresholds of deviation, which if crossed, signal that investments in the portfolio need to be bought or sold to bring the portfolio back into alignment with the strategic allocation.
Upside/Downside Capture Ratio Upside(Downside) Capture Ratio measures a manager's performance in up(down) markets relative to the market (benchmark) itself. It is calculated by taking the security's upside(downside) capture return and dividing it by the benchmark's upside(downside) capture return. A number equal to 100 indicates that the security fully captured the return of the market (benchmark) for the period.
Yield to Maturity The expected rate of return on a bond, if it is held until its maturity date.
Regional Weightings This data set provides a broad breakdown of an investment's geographical exposure for a region. Each region's exposure is presented as a percentage of non-cash equity assets held by the fund. Regional exposure information summarizes a portfolio's exposure to geopolitical risk.
Investment Strategy A written summary of the Investment Objectives and Policy section found in every fund prospectus.It states the objective of the fund, and how the managers intend to invest to achieve this objective.It includes any limitations as to the fund's investment policies, as well as any share class structure difference, previous names, merger, liquidation, and opening or closing information.
Tactical Allocation A tactical allocation is the implementation of a strategic allocation, both in terms of investment vehicle selection and short term allocation changes. Tactical allocation changes may be made to over-weight or under-weight certain asset classes for small periods of time to take advantage of short term shifts in an investors view of the market and economy.
Strategic Allocation A strategic allocation is a long term, or market neutral allocation decision set to meet an expected risk/ return profile. An allocation profile may deviate from the strategic allocation from time to time, but the strategic allocation is not expected to change very frequently.
Total Return - Separate Account Returns are collected on a monthly and quarterly basis for separate accounts and commingled pools. This information is collected directly from the asset management firm running the product(s). Morningstar calculates total returns, using the raw data (gross monthly and quarterly returns), collected from these asset management firms. The performance data reported for CITs is adjusted for fees. If a firm will only supply gross-of-fees performance, Morningstar will calculate a net of fees return using the highest management fee breakpoint reported by the firm.
Investment Type The following abbreviations are used to identify an investment type. MF - Mutual Fund, ETF - Exchange Traded Fund, VA - Variable Annuity, SMA - Seprately Managed Account, GRPA - Group Retirement Plan Annuity
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