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Sector Weightings

Sectors help investors and investment professionals more easily compare and understand the sector exposures of mutual funds and portfolios.

At Morningstar, the stock market is divided into twelve specific industry sectors. Sectors are based on what companies actually do. That is, unlike some other sector classification systems, sectors aren't based on expected behavior of the stocks of these companies.

The sectors are as follows:

Information

% Software

Companies engaged in the design and marketing of computer operating systems and applications. Examples include Microsoft, Oracle, and Siebel Systems.

% Hardware

Manufacturers of computer equipment, communication equipment, semiconductors, and components. Examples include IBM, Cisco Systems, and Intel.

% Media

Companies that own and operate broadcast networks and those that create content or provide it to other media companies. Examples include AOL Time Warner, Walt Disney, and The Washington Post.

% Telecommunication

Companies that provide communication services using fixed-line networks or those that provide wireless access and services. Examples include SBC Communications, and Alltel.

Service

% Health Care Services

Includes biotechnology, pharmaceuticals, research services, HMOs, home health, hospitals, medical equipment and supplies, and assisted living companies. Examples include Abbott Laboratories, Merck, and Cardinal Health.

% Consumer Services

Includes retail stores, personal services, home builders, home supply, travel and entertainment companies, and educational providers. Examples include Wal-Mart, Home Depot, and Pulte Homes.

% Business Services

Includes advertising, printing, publishing, business support, consultants, employment, engineering and construction, security services, waste management, distributors, and transportation companies. Examples include Manpower, R. H. Donnelley, and Southwest Airlines.

% Financial Services

Includes banks, finance companies, money management firms, savings and loans, securities brokers, and insurance companies. Examples include Citigroup, Washington Mutual, and Fannie Mae.

Manufacturing

% Consumer Goods

Companies that manufacture or provide food, beverages, household and personal products, apparel, shoes, textiles, autos and auto parts, consumer electronics, luxury goods, packaging, and tobacco. Examples include PepsiCo, Ford Motor, and Kraft Foods.

% Industrial Materials

Includes aerospace and defense firms, and companies that provide or manufacture chemicals, machinery, building materials, and commodities. Examples include Boeing, DuPont, and Alcoa.

% Energy

Companies that produce or refine oil and gas, oil field service and equipment companies, and pipeline operators. Examples include ExxonMobil, Schlumberger, and BP Amoco.

% Utilities

Electric, gas, and water utilities. Examples include Duke Energy, Exelon, and El Paso.

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