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Coupon Range

Taxable-bond funds feature a table listing the breakdown of each portfolio’s bond coupons, or rates of interest payments.

The coupon range is designed to help an investor complete the picture suggested by the average weighted coupon statistic. These ranges differ according to Morningstar Category and, due to changing interest rates, are subject to alteration over time. Whatever the breakdown may be, the first number is always exclusive and the second number is always inclusive. A range of 8% to 10%, for example, would exclude bonds that have a weighted coupon rate of exactly 8% but would include bonds with a weighted coupon rate of 10%.

High-yield bond funds include “PIKs” in their coupon breakdown, which are payment-in-kind issues that make interest payments in the form of additional securities rather than cash. The overall percentage of bond assets that fall within each coupon range is noted in the % of Bonds column. The Rel Cat column compares a fund with others in its Morningstar Category. The category average is set at 1.0.

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