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ABC Company Retirement Plan
Glossary of Terms
Alpha
The excess return of the fund relative to the return of the benchmark index. Alpha is a measure of performance on a risk(beta)-adjusted basis.
Annualized Returns
Returns for periods longer than one year are expressed as "annualized returns." This is equivalent to the compound rate of return which, over a certain period of time, would
produce a fund's total return over that same period.
Assets Under Management (AUM)
The net assets of all share classes of the fund.
Batting Average
A measure of a manager's consistency to outperform. It is calculated by dividing the number of months in which the manager exceeded or matched the fund's primary
benchmark index by the total number of months in the period. For example, a manager who exceeds the benchmark half of the time would have a batting average of 50.
Beta
A measure of systematic risk, or the sensitivity of a manager to movements in the benchmark. A beta of 1 implies that you can expect the movement of a manager's return series
to match that of the benchmark used to measure beta.
Rank in Category
This is the fund's total return percentile rank relative to all funds that have the same Morningstar Category. The highest (or most favorable) percentile rank is I and the lowest (or
least favorable) percentile rank is 100. The top-performing fund in a category will always receive a rank of 1.
Downcapture
The average return of the investment during negative quarters divided by average return of benchmark during negative quarters. A downcapture of less than 100% means the
fund performs better in down markets versus its category average. Please note, unlike other monitoring criteria, the most favorable rank in category is 100% least favorable is
1%.
Expense Ratio
The percentage of fund assets paid for operating expenses and management fees, including 12b-I fees, administrative fees, and all other asset-based costs incurred by the fund,
except brokerage cost. Fund expenses are reflected in the fund's N V. Sales charges are not included in the expense ratio.
Geometric Average Market Cap
The geometric mean of the market capitalization for all of the stocks owned by a fund.
Information Ratio
The Information Ratio is a risk-adjusted performance measure. It is similar in structure to the Sharpe Ratio as a ratio of excess return per unit of risk. The Information Ratio
measures excess return and risk relative to a specific benchmark index. The Information Ratio is especially helpful for evaluating active managers. Index funds will typically have
an Information Ratio close to zero, because these funds achieve very little excess return over the benchmark. In contrast, active managers deviate from the benchmark in an
attempt to add value. The Information Ratio measures how much the fund outperformed the benchmark per unit of additional risk taken.
Mutual Fund
A type of investment company that offers for sale or has outstanding securities which it has issued and which are redeemable on demand by the fund at current net asset value.
All owners in the fund share in the gains or losses of the fund.