Lipper Leaders Rating System

The Lipper Leaders Rating System is a mutual fund rating system that uses investor-centered criteria, such as capital preservation, expense and consistent return.

Funds are rated on a numeric scale of 5 to 1, with 5 being the highest rating and 1 representing the lowest rated funds.

The Lipper Ratings are derived from sophisticated formulas that analyze funds against clearly defined criteria. Funds are compared to similar funds within a peer group.

Each fund is ranked against its peers based on the metric used (such as Total Return or Expense), and the highest 20% of funds in each peer group are named Lipper Leaders (score is 5), the next 20% receive a rating of 4, the middle 20% are rated 3, the next 20% are rated 2, and the lowest 20% are rated 1.

The ratings are subject to change every month and are calculated for the following periods: three-year, five-year, ten-year, and overall. The overall calculation is based on an equal-weighted average of percentile ranks for each metric over three-, five-, and ten-year periods (if applicable).

The Lipper Ratings metrics, often referred to by their acronyms are: TR: Total Return CR: Consistent Return P: Preservation TE: Tax Efficiency (applies to the United Status Only) E: Expense

For example, during April 2011 the SPDR S&P 500 ETF (SPY) traded on NYSE Arca had the following ratings: TR: 4 CR: 5 P: 5 TE: 2 E: 5