Dear Morningstar Clients,
This e-mail contains Morningstar Data Release Notes for August 2003. As always, we invite your comments and questions on our communications, products and services. Please contact any member of your account team. Thank you.
Your Morningstar Team
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Morningstar(R) Data Release Notes - August 2003
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*Tax Rate Changes
The Jobs and Growth Tax Relief Reconciliation Act of 2003 calls for different tax treatments for qualified dividends and new tax rates for income, dividends, and capital gains. Morningstar will begin using the new tax rates in our November 30 after-tax calculations.
*Change to Best-Fit Index
Effective August 1, we began using the Citigroup Emerging Market Sovereign Bond Index - Capped Brady index (Citigroup ESBI-Capped Brady) in place of the Citigroup Emerging Market Mutual Fund index, which was discontinued.
*New Foreign Style-Based Categories
As previously communicated, effective September 30, Morningstar will introduce five new style-based foreign categories to help investors differentiate between the many foreign stock funds now available. These five new categories will replace the current Foreign Stock category, across all data universes. The categories and letter codes are as follows: Foreign Large Value-FV; Foreign Large Blend-FB; Foreign Large Growth-FG; Foreign Small/Mid Value-FA; Foreign Small/Mid Growth-FR.
Potential fund assignments within these new categories were reviewed with the fund families earlier this month during our regular quarterly category review. A preliminary look at the Morningstar Rating(TM) within these new categories will be provided during the second week in September, based on August month-end data. This preliminary look will be provided for only those funds assigned to the new foreign categories, and funds� new foreign category assignment and resulting Rating will be rolled out September 30.
*Morningstar Rating(TM) Methodology
As a reminder, the enhanced Morningstar Rating(TM) methodology introduced for open-end funds last summer will be applied to closed-end and exchange-traded funds effective with August month-end processing. The enhanced methodology was applied to our variable annuity/life data earlier this year. As such, all data universes will share a consistent methodology. If you would like more details on the Morningstar Rating methodology, please contact your account team.
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Recap of Previous Announcements
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*Fund Category Review
As you know, for the past year Morningstar has reviewed all funds� category assignments each quarter. After careful assessment of this procedure, we have determined that a semi-annual review of category assignments for established funds is preferable. This will help us ensure that funds have experienced a sustained strategy shift before we change their category. However, to properly categorize the many new funds that come to market, we will continue our quarterly review of funds with one year�s history or less. New funds and the new foreign categories were reviewed this quarter. The next quarterly review will be conducted in November and will include all funds.
*Investment Profile Pages - Change to Treatment of Manager Tenure
For our Profile clients, last month we began to display the full tenure of the manager. Previously, the manager tenure date matched the inception date of the share class or subaccount covered on the page.
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News from Morningstar
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*529 Back to School Sale!
Take advantage of our introductory-rate discounts on 529 data products, including Licensed Data, Investment Profiles (both PDF and web-based formats) and Internet Content and Tools. Provide investors with the information they need to make good decisions. Support your communications initiatives with plan, portfolio and underlying investment data, along with Morningstar proprietary statistics. Ask your Morningstar representative for more information.
*Upcoming Client Conference in San Francisco
Our West Coast client conference will be held on September 23 at the Park Hyatt Hotel on Battery Street. If you are interested in attending or would like more details, please contact your account team or call Lisa Bowling at 312 384 3877. The agenda includes a presentation on portfolio construction by our managing director Don Phillips.
*New York area DataLab Users Forum
Our first New York Users Forum will be held on October 30 at the Warwick Hotel. We are pleased that several of our clients have agreed to share their knowledge and experience with other DataLab users. The agenda will also include a presentation on holdings- versus returns-based style analysis by our research director, Paul Kaplan. Watch this space for more details.
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