Morningstar 2011/2012 - (Page 38)

38 Fund, Stock, and Credit Research Morningstar Fund Research Independent analysis of mutual funds worldwide. ® ABC Value A Shares | ABCDX allowingLarge-Cap Blend to provideMSCI World Free NR USD perspectives Global our analysts on funds that have underperformed or have 2001 2002 2003 limited track records. Style Map While the Analyst Rating distills our view of a fund, the background for that rating is available in our Global Fund Research Reports for institutions and advisors. Each in-depth report, translated into local languages and currencies, includes underlying data and written Deep Value Blend Growth High Value Growth analysis in its comprehensive evaluation. Large Mid Small Micro Giant 3 Forward-looking insights with the new Morningstar Analyst Rating TM how a fund might behave in a variety of market environments. Available through Morningstar.com® and other products, the Analyst Rating brings clarity to the investment selection process. We assign ratings globally on a five-tier scale with three positive ratings of Gold, Silver, and Bronze; a Neutral rating; and a Negative rating. Each describes our analysts’ convictions in a fund’s long-term performance based on our proprietary methodology, which considers the fund‘s investment team, process, parent company, performance, and price. Our methodology puts only partial weight on past performance, Morningstar Category Category Index Total A 2065 2004 3 In-depth Global Fund Research Reports available in local languages 20 For more than 25 years, Morningstar has been a pioneer in fund research, serving investors with the independent insights and resources they need to make sound financial decisions. Now, we’re introducing the Morningstar Analyst Rating for mutual funds. This forward-looking assessment by analysts working in markets worldwide acts as a single, global evaluation of TM Regional Exposure & & ( & & 9.98 10.50 67 31.13 –3.35 –1.98 21 18.98 3.71 4.25 3 7 View Analyst Ratings for funds in late 2011 0.86 –9.40 morningstar.com 18.39 17.71 15 3 5 Americas 39.6% Page 3 of 7 Europe & Africa 53.2% Asia & Australia 7.2% 1 1 4 4 4 40 35 25 43 22 35 TM ABC Value A Shares | ABCDX Process: Portfolio Cash is down, health-care is up. Morningstar Analyst Rating TM People Jane Smith John Doe Michael Jones 12/09 12/09 12/10 46 22 32 1.42 40 29 31 1.40 Morningstar Category Category Index Global Large-Cap Blend Equity MSCI World Free NR USD Total Assets Circle size represents number of holdings. Page 2 of 7 tion sensitivity and global markets’ general upent expiry—when valuations are cheap enough. Morningstar Analyst Rating swing, the fund’s purchases have primarily come Meanwhile, much remains the same. Although from out-of-favor areas. Notably, its health-care some tobacco stocks have been trimmed as their stake has continued to rise, though gradually, valuations move closer to management’s intrinsicProcess Pillar Positive Morningstar Category Index and at nearly 13% of stocks, it’s as high as it’s value estimates, they remain important parts of Category Global Large-Cap Blend MSCI World Free NR USD 12 Sept 2011 | The portfolio has had some nobeen since the mid-1990s and also represents an the portfolio thanks to their cash-rich operations Equity table changes since its management team took overweight compared with both its MSCI World and dividend and share-buyback programs. The the reins nearly 18 months ago. The continuing Index benchmark and its world-stock withoutAs peers. reference to the geographic or sectoral The approach is based on stockpicking decrease in the fund’s cash level from 40% highly sensitive to valuations, and is of ideas becoming too diluted. Conversely, managers structure of the MSCI World. Managers can also ’s changed. assets in July 2009 to less than 10% at the endbeing aligned with the without buy distressed debt (that is, companies on the willingness to look past current headwinds— —Bridget Hughes CFA of March 2011 is notable. While some may think ments in one go. They allow cash to accumulate in verge of insolvency) and put in place merger-andProcess Pillar potential health-care reform and Category Positive Morningstar near-term pat- arbitrage strategies. Derivatives areTotal Assets that curious considering management’s valuaCategory Index Inception Date Domicile Currency the absence of opportunities. The majority of the acquisition Global Large-Cap used MSCI for hedging USD USD | 12 Sept 2011 The fund follows the characteristic Blend opportunisticallyWorld Free NR or income pur-2065 Mil USD is24/8/2005 in the Ireland portfolio hedged manager’s reference Similarity to Index 06/30/11 style of ABC, with value-oriented stock-picking. currency—the US dollar. poses. The investment horizon is long, hence the 2001 2002 2004 Fund 2005 Index % 2006 2007 2008 2009 2010 7/2011 Index Overlap Largest Common Holdings Style Map Fund With the help of analysts, managers look for % low Index % (on average 25% per year), which re- % —Thomas Lancereau CFA turnover Largest Distinct Holdings 2003 Number of Equity Holdings XYZ Holding Name X.XX II I U I shares tradingBritish AmericanintrinsicPLC below their Tobacco value. They 1.89 duces 0.37 transaction costs. With the prudent attitude X.XX Fund 117 Imperial Tobacco Group PLC 1.38 of managers, positions are built up gradually, usu- X.XX 0.14 XYZ Holding Name X.XX Index Fund 25 Index 1,635 Vodafone Group PLC 1.34 0.59 XYZ 2.0%, climbing to a maximum X.XX X.XX 20 whole picture, as well as taking a close look at the ally from 0.5% to Holding Name Royal Dutch Shell PLC 1.26 0.52 Fund Overlap with Index X.XX 15 management team. The portfolio is constructed of 4.0% after XYZ Holding Name gives adequate X.XX appreciation. This ABC Value A Shares | ABCDX Process: Approach TM Total Named Managers Morningstar Page 1 of 7 3 Analyst Rating 1.35 1.38 1 ABC Value A Shares | ABCDX Morningstar Analyst Rating TM Morningstar Rating TM QQQQQ ABC Value is changing, but much is the same. Performance as of 07/31/11 Growth of $10,000 Annualized Fund Category Index 10-Yr USD 13,990 12,765 12,450 Ret % 6.00 4.33 3.87 R USD 2003 2004 2065 Mil USD Portfolio Holdings 06/30/11 Equity Holdings Bond Holdings Holdings Overlap 95 Pernod Ricard NV Asset Overlap 15.2% Equity Style Box 06/30/11 Giant Large Inception Date Mid 1.50 0.08 XYZ Holding Name Fund Current Allocation 3-Year Average Category Deep Value Blend Growth High Average Value Growth Index Turnover Ratio (Reported) Name Turnover Assets in Top 10 Holdings 107 3 14.89% Index 24/8/2005 Centroid:Regional Exposure Weighted average of equity First Avg Days Morningstar Economic holdings Bought Trading Vol Rating for Stocks Moat Zone: 75% of fund’s — — Not Wide equity holdings Rated Asset Allocation 06/30/11 Domicile X.XX X.XX 10K U Full Manager Change I Partial Manager Change Bear Market QQQQQ QQQQ QQQ QQ Q Currency Average Holding Period 39.79% — & & ( — & & & * & 0.8 89.6 —( ) ( Bonds 0.6 Ireland Assets % Fund 3-Yr Avg Category Index Morningstar Rating U.S. Equities Non-U.S. Equities 87.5 — 70.0 — 2.5 — — — Quartile Rank in Category USD 7/2011 3 7 67 Stock 21 18 1-Yr Total 45 Percentile Rank in Category Cash 48 0.0 2 25.591 0.1 64 — 73 0.86 –9.40 31.13 Style 18.98 P/E Other23.02 15.29 Ret % 10.95 –26.73 20.78 7.9 11.08 — 7.16 % Total Return (USD) 11.9 3.5 /– Category 18.39 9.98 3.35 –0.32 15.17 –14.38 –2.61 –1.46 British American Tobacco PLC GBR 1.89 1.97 0.02 s Consumer Defensive–3.35 7 3.71 14.6 3.68 33.76 /– Index 17.71 2.95 1.93 13.93 –9.10 –0.68 –2.10 ThyssenKrupp AG DEU Deep 1.64 Blend Growth0.24 — 1.63 — QQQQQ None p Industrials 10.50 –1.98 4 4.25 13.9 5.81 36.94 Value High Region Exposure 06/30/11 Sector Delta 06/30/11 Growth Accor FRA Value 1.51 1.63 0.04 — — QQQ Europe & Narrow 23.4 26.29 t Consumer Cyclical Asia & 4 Process Australia Fund % Fund 3-Yr Avg QQQQQ Pernod Ricard NV FRA 1.50 1.62 0.04 — —Americas Africa Market Type Equitys Consumer Defensive Category Index14.9 Narrow 17.42 4 Equity Style Box 39.6% Index 53.2% 7.2% Box 1.46 0.01 Developed 99.1 98.7 95.7 —13.6 Altria Group USA Style1.47 Factors 06/30/11— — QQQQ Wide 45.68 s Consumer Defensive 7 Asset Allocation Larger sector concentrations Emerging 0.9 1.3 4.3 —10.8 Stock Bond Cash Other Pﬁzer GBR Market Cap 1.45 0.21 Fund 3-Yr Avg Category Rated 1.44 — — Not Index Narrow 24.11 t Consumer Cyclical 5 versus the index move the People investment to the corner of Supersector Imperial Tobacco Group PLC GBR Giant 1.38 1.45 0.32 45.5 XX.X — Not Rated — Wide 22.23 s Consumer Defensive Category Index11.2 53.2 52.4 7 Top 5 Countries Equity % Fund 3-Yr Avg Jane Smith 12/09 thetriangle22 corresponding to 40 46 40 40 13.57 38 37 20 25 24 % q Cyclical Vinci FRA Large1.38 1.43 0.00 43.5 XX.X — Not Rated — None Industrials 43 21.8 34.6 1 —11.6 that equity Super Sector. United 12/09 p States 29.9 43.1 John Doe 3536.3Defensive 22 22 29 14.1 24 19.95 27 26 29 42 34 35 % w Sensitive Cyclical CVS Caremark Corp USA Mid 1.34 1.43 0.03 10.2 XX.X — QQQ — Narrow Consumer 18.6 Michael 12.9 Jones United 12/10 s Kingdom 15.4 32 4 31 — 2516.0 35Services 10.8 36 20.03 35 37 51 36 40 41 % e Defensive Vodafone Group PLC GBR Small1.34 1.41 0.03 0.8 XX.X —5.6 Rated — Not 0.0 Narrow i Communication 15.3 4 —11.1 France 12.1 4.7 Total Named Managers 3 Equity 1.33 06/30/111.31 Micro 0.0 XX.X 0.8 0.0 1.3510.6 1.38 8.8 1.424.6 1.40 1.38 Sector Breakdown1.30 1.31 1.32 —% Price Expense Ratio Change since last portfolio: TIncrease YDecrease RNew Germany — Sectors Fund 3-Yr Avg Category Index Avg Market Cap Bil USD 28.3 22.2 41.8 37.2 Switzerland 7.7 6.6 5.0 — Elminated Holdings Largest Sales % Assets Sector Largest Position Changes Prior % New Holdings Largest Purchases % Assets Sector Sept. 29, Current %q Cyclicalhas continued to move 2011 | This fund dictates. Altria Group, for example, has 35.4 25.4 valuation— 34.2 0.03 1.25 Y Schindler Holding AG into some unloved areas. Although some health0.83 y Telefonica, S.A. 1.10Value Measures Metlife Inc i r Basic Materials 1.5 1.8 been one of the fund’s big winners in 2011—it’s 7.5 — Economic Moat 06/30/11 Inc 0.83 0.22 T Metlife Viacom, 11.8 t Foster's Group Limited 0.42Price/Prospect. Earnings Inc. B s 11.5 12.0 12.3 0.65 t Consumer their performance so 14.1 5.3 up 17% so far in 2011—and the managers have 8.3 — care stocks have improved Cyclical Inc. 3-Yr 0.10 T Viacom,Fund B Avg Category Index 0.65 Telecom Italia SpA Risp. i Bayer AG 1.27Price/Book t 1.2 1.3 1.6 1.6 0.85 Moat Rating 16.9 — far in 2011,0.34y Financial Services have18.7 15.4 sold about 10% of the fund’s shares. Nonetheless, the managers here added to 0.83 Porsche Automobil Holding SE Resolution Ltd. 1.17Price/Sales Moat Y Total SA — — — — y 0.8 0.8 1.1 1.1 1.15 Widet 1.1 2.9 tobacco companies still consume about 8% of as1.4 — 0.85u Real Estate 0.37 T Telecom Italia SpA Risp. their large-cap pharmaceutical stake. After buying y Teva Pharmaceutical 0.69Price/Cash Flow PartnerRe Ltd. — — — — f 6.1 5.7 5.7 5.2 0.99 Narrow Moat w Sensitive 29.7 29.9 sets as of the end of June 2011. 41.0 — PFE in 2010’s Abbott Laboratories ABT No Moat — — — — Dividend Yield 3.1 3.8 2.6 2.7 i Communication Serv. 5.1 4.0 4.9 Since Smith and Doe took the fund’s reins — Analyst View o Energy 5.4 8.0 10.8 — Growth Measures (with assistant portfolio manager Michael Jones) after an abrupt management change in late 2009, Key Ratios Bridget B. Hughes CFA 06/30/11 p Industrials 13.5 11.3 14.0 — Long-Term Earnings % 8.7 9.9 9.5 9.1 also added Merck MRK performance has been unexceptional. Its 0.19% Fund 3-Yr Avg Category Index a Technology 5.7 6.6 11.3 — Historical Earnings % –10.1 –3.8 –14.1 –11.8 Bayer AG BAYRY and Teva Pharmaceutical TEVA cumulative loss between the beginning of 2010 Net Rating 13.7 © 2011 Morningstar, Inc. All rights reserved. The information, data, analyses, and opinions contained herein (1) include the conﬁdential and proprietaryAnalystMargin be copied redistrib- 14.5 e Defensive Morningstar 34.9 44.7 24.9 — Sales % –5.5 –6.3 –50.9 –45.0 information of Morningstar, Inc., (2) may not 13.1 or12.3 uted, (3) do not constitute investment advice offered by Morningstar, Inc., (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a security, and (5) are not warranted to be correct, in 2011’s second quarter. All told, health-care and Sept. 28. 2011, is roughly in line with the ROA 7.1 6.8 8.0 7.5 September information, % s Consumer Defensive 18.3 34.6 11.9 — –8.8 –0.8 –75.2 –74.7 complete or accurate. Morningstar, Inc. shall not be responsible forCash Flow % any trading decisions, damages, or other losses resulting from, or related to, this12, 2011 data, analyses or opinions or their use. Analyst Ratings are subjective in nature and should not be used as the sole basis for investment decisions. Analyst Ratings are based on Morningstar’s current expectations aboutDebt/Totaltherefore involves unknown risks and41.0 future events; Capital % uncertain- stocks consume more than 14% of the portfolio, 41.2 33.0 35.1 MSCI World Index’s 0.25% setback and the worldd Healthcare 11.0 5.4 10.3 — Book-Value % –9.8 represent –7.7 ties that may cause Morningstar’s expectations not to occur or to differ signiﬁcantly from what was expected.5.0 Morningstar does not–15.8 its Analyst Ratings to be guarantees nor should they be viewed as an assessment Morningstar Pillars % of a fund’s or the fund’s underlying securities creditworthiness. ROE 18.8 18.2 an overweight f Utilities with the fund’s MSCI 20.2 19.4 compared stock category’s 0.78% average loss. But given 5.6 4.7 2.7 — Process | pages 2–3 Positive World Index benchmark and greater than the ABC’s enduring process, the fund’s long-term Performance | page 4 Positive world-stock category average. This kind of move results are still meaningful, and those are impresPeople | page 5 Positive into unloved areas has characterized ABC over the sive; its 7.53% annualized 10-year return lands in Parent | page 6 Neutral years. (The managers have recently also added the world-stock category’s best quartile. © 2011 Morningstar, Inc. All rights reserved. The information, data, analyses, and 7 Price | page opinions contained herein (1) include the conﬁdential and proprietary information of Morningstar, Inc., (2) may not be copied or redistribNegative Top 10 Holdings Assets % Country 06/30/11 03/31/11 Small Micro Analyst View Sector Bridget B. Hughes CFA QQQQQ Morningstar Rating TM Sept. 29, 2011 | into some unlov care stocks hav far in 2011, the their large-cap p Abbott Laborato Giant Large Small Micro Mid 1 1 4 4 4 4 4 4 4 4 1 iti Sens ve 2005 2006 2007 2008 2009 2010 Morningstar Analyst Rating September 12, 2011 Performance as of 07/31/11 TM II ABC Value is changing, but much is the same. I U I TM 25 20 15 10K Growth of $10,000 Morningstar Pillars Process | pages 2–3 Annualized Performance | page 4 Fund People | page 5 Category Parent | page 6 Price | page 7 Index Morningstar Analyst Rating 10-Yr Positive 13,990 Positive 12,765 Neutral Negative 12,450 Positive USD uted, (3) do not constitute investment advice offered by Morningstar, Inc., (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a security, and (5) are not warranted to be correct, complete or accurate. Morningstar, Inc. shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses or opinions or their use. Analyst Ratings are subjective in nature and should not be used as the sole basis for Morningstar Analyst Rating investment decisions. Analyst Ratings are based on Morningstar’s current expectations about future events; therefore involves unknown risks and uncertainties that may cause Morningstar’s expectations not to occur or to differ signiﬁcantly from what was expected. Morningstar does not represent its Analyst Ratings to be guarantees nor should they be viewed as an assessment of a fund’s or the fund’s underlying securities creditworthiness. analysts believe lead to funds that are more likely to outperform over the long term on a risk-adjusted basis. Analyst Rating Spectrum American International Group AIG.) It helps explain the portfolio’s value tilt; valuation work is critical here. Meanwhile, much has remained the same. Tobacco stocks are still a big part of the portfolio, though some have been trimmed as Investors remain in capable hands here. analysts believe lead to funds that are more likely to outperform over the long term on a risk-adjusted basis. Analyst Rating Spectrum U Full Manager Change I Partial Manager Change Bear Market © 2011 Morningstar, Inc. All rights reserved. The information, data, analyses, and opinions contained herein (1) include the conﬁdential and proprietary information of Morningstar, Inc., (2) may not be copied or redistributed, (3) do not constitute investment advice offered by Morningstar, Inc., (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a security, and (5) are not warranted to be correct, complete or accurate. Morningstar, Inc. shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses or opinions or their use. Analyst Ratings are subjective in nature and should not be used as the sole basis for investment decisions. Analyst Ratings are based on Morningstar’s current expectations about future events; therefore involves unknown risks and uncertainties that may cause Morningstar’s expectations not to occur or to differ signiﬁcantly from what was expected. Morningstar does not represent its Analyst Ratings to be guarantees nor should they be viewed as an assessment of a fund’s or the fund’s underlying securities creditworthiness. Morningstar Rating (with assistant also added Mer Bayer AG BAYR in 2011’s secon stocks consume Ret overweight an % World Index b world-stock cat 6.00 into 4.33 unloved are years. (The man 3.87 American Intern plain the portfo critical here. Meanwh same. Tobacco portfolio, thoug Def ensi ve ( & & & * & ) ( ( 67 31.13 21 18.98 18 15.29 48 23.02 45 10.95 2 –26.73 91 20.78 64 11.08 The Five Pillars. The new Morningstar Analyst Rating measures a fund’s long-term performance outlook based on our analysts’ evaluation of five key factors: Process, Performance, People, Parent, and Price. QQQQQ © 2011 Morningstar, Inc. All rights reserved. The information, data, analyses, and opinions contained herein (1) inclu QQQQ uted, (3) do not constitute investment advice offered by Morningstar, Inc., (4) are provided solely for informational pu QQQ complete or accurate. Morningstar, Inc. shall not be responsible for any trading decisions, damages, or other losses re QQ subjective in nature and should not be used as the sole basis for investment decisions. Analyst Ratings are based on M Q ties that may cause Morningstar’s expectations not to occur or to differ signiﬁcantly from what was expected. Mornings of a fund’s or the fund’s underlying securities creditworthiness. Quartile Rank in Category 73 7.16 % Percentile Rank in Category Total Return (USD) http://www.Morningstar.com http://www.morningstar.com

Table of Contents for the Digital Edition of Morningstar 2011/2012

Morningstar 2011/2012
Table of Contents
Commonwealth Financial Network
The Hartford
ING
Transamerica
Institutional Software
Custom Software and Services
Investment Data, Market Data, and Indexes
Fund, Stock, and Credit Research
Advisory, Retirement, and Portfolio Management Services
Independent Advisor Software and Services
Financial Communications
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Morningstar 2011/2012

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