Paper Tigers
A decade ago, Morningstar popularized the existence of the "investor gap": the difference between how funds perform on paper and how they perform for their owners.

If a $10 million fund gains 15% per annum for four years, is rewarded at the start of its fifth year with $50 million in sales, and then declines 15% over the next 12 months, its official five-year total returns will be 8.2% annualized. That number will be printed in the prospectus and on morningstar.com. In aggregate, though, that fund will have lost more dollars for its shareholders than it made. The return on the average dollar in the fund, aka Morningstar Investor Return, will be negative.

That, of course, is a dramatic example, simplified for illustration purposes. In real life, few funds with healthy, positive total returns outright lose money for their shareholders. More likely, a fund with an 8.2% annualized gain has an investor return that falls modestly short of that mark--for example, landing at 7.2%. Morningstar calls the difference between the former and the latter--the space between the official total return and the investor return--the investor gap. In this example, the gap is negative 1%.