Where,
Tr = holding period total return (distributions reinvested)
Fl = front load
Dl = deferred load
Rf = redemption fee
BN = beginning NAV
EN = ending NAV
Min = minimum operator (choose the smaller of the two alternatives)
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. Currently, trailing month- and quarter-end load-adjusted returns are available.
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. There are several minor variations in how different fund families actually apply their loads and fees. We believe, however, that our method is the most common method used.
The deferred load is not assessed on shares purchased with reinvested distributions.
The deferred load is assessed on the lesser of the beginning value of the investment (after adjusting for any front load), or the ending value of the original shares purchased.
The redemption fee is assessed on the ending value of the investment before any deferred load adjustments are made.
The redemption fee is charged only if the holding period is less than the minimum redemption fee period. In other words, if the redemption period is 90 days and the holding period is 180 days, the redemption fee is NOT assessed, even if there is a reinvestment of distribution within the 90 days prior to liquidation.
Morningstar load-adjusted return differs from the SEC return in the following ways:
Morningstar load-adjusted return may not include all recurring fees, such as account maintenance fees, that are charged to shareholder accounts. The only recurring fees included in the Morningstar calculation are those reflected by a fund�s NAV.
Morningstar load-adjusted return assumes that no sales load is imposed on the reinvestment of distributions.
Morningstar makes a few general assumptions about how fund companies apply fees to the their funds (see the above assumptions). A few fund companies may employ different methods in calculating their fees.
Where,
Tr = holding period total return (distributions reinvested)
Fl = front load
Dl = deferred load
Rf = redemption fee
BN = beginning NAV
EN = ending NAV
Min = minimum operator (choose the smaller of the two alternatives)