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December 2005
Release Notes |
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Recap of Previous
Announcements |
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Morningstar
News |
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Release Notes |
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We are pleased to inform you that we have activated HOLding Company Depositary ReceiptS (HOLDRs) in the database, with a limited set of data points. They will be part of the exchange-traded funds (ETFs) universe. HOLDRS are trustissued receipts that represent an investor's ownership in the common stock or American Depositary Receipts of specific companies in a particular industry or an industry sector. Shareholders are treated as owners of the underlying securities and are entitled to benefits such as proxy votes and dividends. HOLDRS trade on the exchange and are priced throughout the trading day like stocks. |
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Morningstar plans to introduce a Morningstar Rating(TM) for exchange-traded funds (ETFs) domiciled in the United States using performance data through February 2006 month end. The Morningstar Rating uses a scale of one to five stars to rank funds on risk-adjusted return against their category peers. ETFs will be rated based on the rating breakpoints for open-end categories, but they will not be included in the open-end population while those breakpoints are drawn. We will be reviewing our rating methodology for ETFs domiciled outside of the United States in early 2006. We will provide more information about the new ETF rating in January Release Notes. |
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Morningstar's mission is to create the highest quality products and services to help investors make better decisions. Our data is the bedrock of those products, and data accuracy is its most critical aspect. To reduce the possibility of errors, we have introduced three new policies regarding investment criteria for all Morningstar products, including Investment Profile pages. First, the fund name will no longer be included in investment criteria. This change was introduced to avoid inconsistencies when funds merge or change names. Second, to further ensure consistency, the description of the portfolio will be based solely on wording from the prospectus. Third, in response to client feedback and to more accurately reflect diversification inherent in Lifecycle and other Funds of Funds, we are including additional detail regarding diversification of underlying holdings. If you would like more specific details on these changes please contact your account team. |
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Effective Feb 28, 2006, Morningstar will discontinue collection of the "30-year Treasury bond" series, because it is difficult to obtain comparable data from month to month (even with the U.S. Treasury's plans to reintroduce this security). Clients who use this investment as a benchmark are advised to substitute the 20-Year Constant Maturity Treasury in its place. This decision and the recommended substitute are consistent with the reporting standards of the U.S. Treasury. We welcome any additional client feedback about this issue. |
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We have been pleased with the results of our performance audit so far, and can report that 90% of funds audited have been reconciled to within one basis point. Fund families who have completed the audit to date have told us it was a valuable exercise, and we thank you for your support. As part of Morningstars commitment to quality and accuracy, we are auditing our trailing performance calculations for all the US-domiciled funds in our database. The audit will continue over the next few months, and fund families will receive individual communication outlining the process. Thank you for your anticipated cooperation, and we look forward to working with you to continue to provide investors with the most accurate data possible on your funds. |
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Recap of Previous Announcements |
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The U.S. category review began Nov. 14, with the appeals period running through Nov. 21. This review included all funds, and fund families with proposed category changes received information via e-mail. Category changes were effective with November month-end processing, and results were be available on our Websites on Dec. 5. The next review will be held in mid-February 2006 and will include only funds with one year of history or less. |
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Morningstar now offers ratings for a load-waived version of each A share class for U.S.-domiciled funds. Load-waived ratings better reflect the investor experience for those who purchase shares through retirement plans or who otherwise qualify to have the front load waived. Morningstar will display the load-waived A share as an additional share class and will also calculate other performance measures (load-adjusted return, tax-adjusted return) on a load-waived basis. Most statistics will be exactly the same between the original A share and the load-waived A share. Morningstar Direct, Morningstar.com, Principia, and the Essentials data feed rolled out these ratings for performance data ending Nov.30, 2005, and other products will introduce this in the upcoming months. |
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Effective February 28, 2006, Morningstar will add five new categories and one broad asset class to its current classification system for portfolios domiciled in the US. This change will affect all data universes (open-end, closed-end, ETF, VA, etc.). The new categories are: Long-Short, Inflation-Protected Bond, Target-Date 2000-2014, Target-Date 2015-2029, and Target-Date 2030+. The new broad asset class is Balanced, which will be added to the current set of four broad asset classes: U.S. Stock, International Stock, Taxable Bond, and Municipal Bond. Broad asset classes are used to help individuals narrow a search for funds; they do not impact the Morningstar Rating. The Balanced broad asset class will contain the following categories: Conservative Allocation, Moderate Allocation, World Allocation, Convertibles, and the three new target-date categories. |
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Effective in the first quarter of 2006, Morningstar will provide only the actual 12b-1 fee as disclosed in a funds annual prospectus, and will phase out display of the maximum 12b-1 report and 12b-1 service fees. The 12b-1 report and service fees capture the maximum fee a fund could charge, while the actual 12b-1 fee reflects the true investor experience. Please contact your account team if you have any questions |
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Morningstar News |
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We are pleased to tell you that Morningstar and Ibbotson today announced that we are combining forces. We expect Ibbotson to become part of Morningstar early next year. Please click here for a letter from our chairman, Joe Mansueto, detailing how we plan to build on the strengths of both companies to continue to deliver the best investment services to our clients. For more information about the acquisition, please see our press release, fact sheet, and general questions and answers at http://global.morningstar.com/ibbotson. And, as always, please contact any member of your Morningstar account team if you have any questions. |
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Contact your account team or our data quality department:
E-mail: dataquestions@morningstar.com
Phone: +1 312-696-6600
Fax: +1 312-696-6019
Mailing address:
Data Questions
Morningstar, Inc.
225 West Wacker Drive
Chicago, Illinois 60606
USA |
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�2005 Morningstar. All rights reserved. |
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This e-mail contains privileged and confidential information and is intended only for the use of the recipient. Any dissemination, distribution, or duplication of this communication without prior written consent from Morningstar is strictly prohibited. If you received this message in error please contact the sender immediately and delete the materials from any computer. You are receiving this e-mail because you are a Morningstar Data client, or because you asked that your name be added to the distribution list. If you wish to remove yourself from our institutional client communication list, please hit reply with unsubscribe in the subject line. If you would like to opt-in to this e-mail list please hit reply and include your full name, title, company name and address. We will be happy to add you to the list. The newsletter is free, and we never release these e-mail addresses to third parties. If you change your mind and no longer wish to receive this e-mail, we will quickly remove your name from the distribution list. |
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