Investments, tenth edition

 Figure 4.5 

Morningstar report   

Source: Morningstar Mutual Funds, © 2012 Morningstar, Inc. All rights reserved. Used with permission. 

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112 

P A R T   I

 Introduction

 More data on the performance of the fund are provided in the graph near the top of the 

figure. The line graph compares the growth of $10,000 invested in the fund versus its two 

comparison indexes over the last 10 years. Below the graph are boxes for each year that 

depict the relative performance of the fund for that year. The shaded area on the box shows 

the quartile in which the fund’s performance falls relative to other funds with the same 

objective. If the shaded band is at the top of the box, the firm was a top quartile performer 

in that period, and so on. The table below the bar charts presents historical data on the year-

by-year performance of the fund. 

 Below the table, the “Portfolio Analysis” table shows the asset allocation of the fund, and 

then Morningstar’s well-known style box. In this box, Morningstar evaluates style along 

two dimensions: One dimension is the size of the firms held in the portfolio as measured 

by the market value of outstanding equity; the other dimension is a value/growth measure. 

Morningstar defines  value stocks  as those with low ratios of market price per share to vari-

ous measures of value. It puts stocks on a growth-value continuum based on the ratios of 

stock price to the firm’s earnings, book value, sales, cash flow, and dividends. Value stocks 

are those with a low price relative to these measures of value. In contrast,  growth stocks  

have high ratios, suggesting that investors in these firms must believe that the firm will 

experience rapid growth to justify the prices at which the stocks sell. The shaded box shows 

that the fund tends to hold larger firms (top row) and growth stocks (right column).  

 Finally, the tables in the right column provide information on the current composition 

of the portfolio. You can find the fund’s 15 “Top Holdings” there as well as the weighting 

of the portfolio across various sectors of the economy.