Track Your MNDCP Fund Performance Against an Index
The MNDCP Performance Report provides comparative indexes. A comparative or "benchmark" index is essentially an imaginary portfolio of securities representing a particular market or a portion of it, providing investors with a point of reference for evaluating their fund's performance. While you can invest in mutual funds that try to mimic the performance of indexes, you can't invest directly in an index.
The oldest barometer of the stock market is the Dow Jones Industrial Average (DJIA). The 30 stocks in the DJIA only account for about 25% of the total value of all stocks listed on the New York Stock Exchange. Many investors watch broader market indexes to gain a better feel for the overall direction of the stock market or for other market segments, such as small or mid-capitalization stocks.
The S&P 500® is composed almost entirely of large-cap domestic stocks, and is a good performance measure for domestic-equity funds and the overall market, but other comparisons are less useful. Comparing a foreign stock fund with the S&P 500®, for example, does not tell the investor how the fund has done relative to foreign stock markets.
Besides the S&P 500® index, there are several other indexes designed to track key segments of the market. Following are brief descriptions of the other indexes MNDCP uses.
Russell 2000 Index
Offers investors access to the small-capitalization segment of the U.S. equity market universe measuring the performance of the 2,000 smallest companies in the Russell 3,000 Index, representing approximately 10% of the total market capitalization of that Index.
MSCI* EAFE (Europe, Australasia, and Far East) Index
Designed to measure developed market equity performance of 21 countries in Europe, Australasia, and the Far East. With 909 constituents, the Index covers approximately 85% of the free float-adjusted market capitalization in each country.
*MSCI stands for Morgan Stanley Capital International.
Spliced Mid Cap Index
Represents the universe of medium capitalization companies in the U.S. equity market. This index targets for inclusion 450 companies representing approximately 15% of the capitalization of the U.S. equity market.
The Index is "spliced" because it uses the S&P Mid Cap 400® Index through May 16, 2003, the MSCI* US Mid Cap 450 Index through January 30, 2013, and the CRSP US Mid Cap Index thereafter.
S&P Mid Cap 400® Index is a registered trademark of Stardard & Poor's Fiunancial Services, LLC.
Vanguard Balanced Composite Index
60% of this index represents the Dow Jones US Total Stock Market Index. A universe of companies in the U.S. equity market including large, mid, small and micro cap companies. This index targets for inclusion 99.5% of the capitalization of the U.S. equity market.
40% of the index represents the Lehman Brothers U.S. Aggregate Bond Index through May 31, 2005; 60% MSCI US Broad Market Index and 40% Barclays U.S. Aggregate Bond Index through December 31, 2009; 60% MSCI US Broad Market Index and 40% Barclays U.S. Aggregate Float Adjusted Index through January 14, 2013; and 60% CRSP US Total Market Index and 40% Barclays U.S. Aggregate Float Adjusted Index thereafter. This is a measure of returns of the US dollar-denominated investment grade bond universe excluding those securities held by the Federal Reserve.
Barclays Capital Aggregate Bond Index
The most commonly used benchmark index to measure the relative performance of U.S. dollar-denominated investment grade fixed-rate taxable bond market. Due to tax treatment issues, municipal bonds and Treasury Inflation-Protected Securities are excluded. The index includes Treasury securities, Government agency bonds, Mortgage-backed bonds, Corporate bonds, and a small amount of foreign bonds traded in U.S. The Barclays Capital Aggregate Bond Index is an intermediate-term Index.