Dear Morningstar Clients,
This e-mail contains Morningstar Data Release Notes for September 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
*New Minimums for Portfolio Statistics
*Price Ratio Methodology Change
*Fiduciary Grades for Funds
*Morningstar Acquires ePiper Separate Accounts Data
RECAP OF PREVIOUS ANNOUNCEMENTS
*Quarterly Fund Category Review
*Additional Contact Point for Data Questions
*International Equity Style Now Plotted in DataLab
NEWS FROM MORNINGSTAR
*Morningstar at IMCA Fall Conference, NAVA Annual Meeting, The Art of Indexing Conference
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Morningstar Data Release Notes - September 2004
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*New Minimums for Equity Portfolio Statistics
Effective Dec. 31, Morningstar will implement a new data quality rule that will prohibit an equity Style Box and market cap information from being generated unless we are able to score at least 50% of a portfolio's equity holdings. This change affects all portfolios with at least 15% equity holdings, the minimum required to generate an equity Style Box. The portfolio statistics that will not be calculated are: Equity Style Box, x & y data points for size and style, Style Box breakdown, market cap (GAC), and market cap breakdown. Our analysis has determined that this change will affect fewer than 20 portfolios, and we will notify those fund families individually in the coming weeks. Please contact your account team if you have any questions.
*Price Ratio Methodology Change
Effective Dec. 31, 2004, Morningstar will make some slight revisions to the methodology for portfolio-level price ratios (P/E, P/B, P/S, P/C and dividend yield). We will adopt a top-down approach that measures the ratio of portfolio market value to total earnings (or book value, etc), rather than calculating an asset-weighted average of the stock price ratios. We will also remove any upper and lower caps on the stock-level data (for example, stock P/Es were limited to the range of 0-60 for trailing-12-month measures and negative P/Es were excluded for forward P/E measures). Morningstar will include negative values as stock inputs for the portfolio calculation, but will not display stock or portfolio price ratios if the final result is negative. These changes should provide a more accurate and complete picture of each portfolio�s holdings.
Our research department continually reviews our methodologies and procedures and makes changes where appropriate. You will receive additional details about this change next month. Please note that this is a methodology change only and will not affect the format or structure of client files.
*New Fiduciary Grade for Funds
On Aug. 24, Morningstar introduced a new measure to help investors assess the intangible traits of a fund -- including regulatory issues, the quality of a fund board, management incentives, fees, and the firm's corporate culture. This new measure, called the Fiduciary Grade for funds, is currently available on Morningstar.com for Premium Members, and will be included in the Morningstar Mutual Funds binder in October. Fiduciary grades are also available for license via Reprints. We are developing our plans regarding roll-out of this data into other Morningstar products and will keep you informed.
*Morningstar Acquires ePiper Separate Accounts Data
Morningstar has acquired Pensions & Investments� ePiper separate account database, creating one of the most comprehensive separate accounts databases in the industry. Our database now covers nearly 5,000 separate accounts and more than 1,000 managers, with quantitative information such as performance, complete portfolio holdings, asset allocation, sector weightings, the Morningstar Style Box(TM), and the Morningstar Ownership Zone(SM). In October, the enhanced separate accounts data will be integrated into DataLab(R) and Licensed Data(SM) feeds, and will also be available in Advisor Workstation(SM) and Principia.
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Recap of Previous Announcements
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*Fund Category Review
Thank you to all who participated in the recent Morningstar Category review. This review included new funds with one year of history or less. Established funds with more than one year of history are reviewed semi-annually and will be assessed in November 2004. New categories and the resulting Morningstar Rating(TM) were displayed on our Websites on Sept. 3.
*Additional Contact Point for Data Questions
As previously communicated, Morningstar is dedicated to providing the highest quality investment data in the industry. As part of our ongoing commitment to quality, we�ve established several ways in which you can ask questions or report any issues with the data your firm provides to Morningstar. By using these centralized points of contact, we�ll be able to address your questions as promptly as possible. If you currently work with a specific data analyst or relationship manager at Morningstar, he or she will continue to help you. Here is an additional way you can reach us with data questions:
Phone: 312-696-6600
Fax: 312-696-6019
E-mail: dataquestions@morningstar.com
Mailing address: Data Questions
Morningstar, Inc.
225 West Wacker Drive
Chicago, Illinois 60606
*International Equity Style Now Plotted in DataLab
As part of the implementation of the international Style Box methodology launched earlier this year, the style tools in DataLab now plot international equities. (Plotting of ADRs will be implemented soon.) If you would like more information on the international Style Box methodology, please check the Research tab on the DataLab home page.
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News from Morningstar
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*Morningstar at Industry Shows
We hope to see you at booth 30 at the Investment Management Consultants Association Fall Conference in Chicago at the Downtown Marriott Hotel, Sept. 27-29, 2004. Also, look for us at booth 1207 at the National Association for Variable Annuities Annual Meeting in New York at the Hilton New York, Oct. 3-5, 2004.
In addition, we will have a tabletop exhibit at The Art of Indexing Conference to be held Sept. 30-Oct. 1 at the J.W. Marriott Hotel, Pennsylvania Avenue, Washington D.C. Sanjay Arya, director of Morningstar Indexes, will participate in a panel discussion along with representatives from MSCI, Russell and S&P.
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