Dear Morningstar Clients,
This e-mail contains Morningstar Data Release Notes for April 2004. 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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IN THIS ISSUE
*Fund Category Review
*Extended Performance Data
RECAP OF PREVIOUS ANNOUNCEMENTS
*Enhancements to International Style Box *SEC Rule 482 *Best Fit Index List
NEWS FROM MORNINGSTAR
*First Quarter Morningstar Market Commentary *Morningstar at Industry Shows
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Morningstar(R) Data Release Notes - April 2004
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*Fund Category Review
The next quarterly Category Review will begin on May 13, with the appeal period running from May 14 through May 20. This review will include all funds and will use three years of portfolio data through March 31, 2004. Funds that are now in the five, foreign style-based categories (Foreign Large Value, Foreign Large Blend, etc.) will be classified based on the new 10-factor Style Box methodology as announced last month. Complete details and instructions will be sent via e-mail on May 13, and the new categories will be effective with May month-end processing. New categories and the resulting Morningstar Rating(TM) can be seen on our websites on June 3.
*Extended Performance Data
As previously announced, effective with the April release of Principia, Morningstar will display Extended Performance statistics in italics, and the Morningstar Extended Performance Rating(TM) will be displayed as hollowed-out stars. Licensed Data Feeds and Advisor Workstation will display these data with May deliveries. Extended Performance statistics are calculated for eligible share classes based on the oldest surviving share class of the fund and the fee differential between the oldest and newer share classes. Extended Performance returns form the basis for the Morningstar Extended Performance Rating.
Please contact your account team if you have any questions.
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Recap of Previous Announcements
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*Enhancements to International Style Box As announced last month, Morningstar made several enhancements to our proprietary Style Box(TM) on March 31, 2004. The changes are applicable to international stocks and funds and are consistent with the 10-factor Style Box for U.S. stocks and funds that was introduced in May 2002. While the appearance of the Style Box remains the same, investors can look forward to more accurate and more stable fund classifications under the new model.
The new model uses a geographic framework and employs five factors for value and five factors for growth. Stocks are scored for size within one of seven style zones: United States, Latin America, Canada, Europe, Japan, Asia ex-Japan, and Australia/New Zealand. The stocks in each style zone are further subdivided into large-, mid-, or small-cap groups for value-growth scoring. Portfolios are classified based the weighted average of the underlying stock scores. Please click below for the methodology paper for more details. This paper is also available on the DataLab home page, on the Research tab. http://datalab.morningstar.com/ClientComm/Style_Box_Methodology_2004.pdf
The new methodology applies to all managed products: open-end, closed-end, variable annuities, separate accounts, etc.
*SEC Rule 482
The recent amendment to SEC Rule 482, which requires fund companies to make month end performance available by the seventh business day of the month, went into effect on April 1, 2004. Contact your account team to learn about how Morningstar is working with clients to help them comply with the new requirements.
*Best Fit Index List
Please click here for an updated copy of our best fit index list:
http://datalab.morningstar.com/ClientComm/Best_Fit_Index_List_Mar_04.pdf
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News from Morningstar
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*First Quarter Morningstar Market Commentary As the first quarter of 2004 drew to a close, the U.S. stock market looked uncertain. Optimism fought anxiety during the period. Through March 31, 2004, the Morningstar US Market Index gained 2.3% as investors searched through a fog of conflicting data and news. The economy looked strong, but doubts remained about its sustainability. Corporate balance sheets and earnings looked better, but many stocks looked pricey. There were mixed signals on the geopolitical front. Merger news, both good and bad, also influenced the broad market�s performance.
http://datalab.morningstar.com/ClientComm/Morningstar_Indexes_Q1_2004.pdf
*Morningstar at Industry Shows
Look for Morningstar in booth 15 at the Money Management Institute Annual Convention, April 20-21, at the Westin Copley Place in Boston, MA. We hope to see you in booth 213 at the Investment Management Consultants Association meeting, April 25-28, at the Boca Raton Resort and Club in Boca Raton, FL. And stop by booth 121-123 at the ICI Annual Meeting, May 18-20, at the Hilton Washington in Washington, D.C.
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