Dear Morningstar Clients,
This e-mail contains Morningstar Data Release Notes for April 2005. 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 of Funds Expense Ratio Change
*Quarterly Fund Category Review
*Hedge Fund Database Update
*Essentials Delivery Enhancements
RECAP OF PREVIOUS ANNOUNCEMENTS
*New Expense Data Points
*New Closed-End Data Points, Upcoming Methodology Change
*Fund Category Review
*Index Name Changes
*Morningstar Indexes Yearbook
*Morningstar Direct Launches, includes Hedge Fund Data
NEWS FROM MORNINGSTAR
*Industry Shows
*Data Questions
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Morningstar Data Release Notes � April 2005
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*Fund of Funds Expense Ratio Change
Effective with May month-end processing, Morningstar will deliver an aggregate expense ratio for fund of funds. This will replace the current data, which is limited to sponsor or wrap fees. The aggregate expense ratio is a more useful tool for investors comparing the costs of a fund of funds to other investments. We are able to make this change now because the presentation of expenses in SEC filings is more comprehensive.
*Quarterly Fund Category Review
The next quarterly Category Review will begin on May 16, with the appeal period running from May 16 until May 23. Complete details and instructions will be sent via email on May 16, 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 Web sites on June 3. This review will include all funds, using portfolio data through March 31.
*Hedge Fund Database Update
As announced last month, our new hedge fund database launched in Morningstar Direct on March 2. As of April 2005, we track $250 billion in aggregate hedge fund assets, and 25% of the funds we track manage more than $100 million (US). We developed a classification system to help investors understand the different types of investment strategies used by hedge funds around the world. If you have questions about our hedge fund data, please contact your account team.
*Essentials Data License Enhanced
Essentials clients have received an e-mail detailing some enhancements to the format and delivery of the Essentials Data License:
*Future deliveries will be via FTP
*Column headings to be clarified
Test files will be delivered beginning now and ending in July (June month-end data). If you have any questions, please contact your account team.
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Recap of Previous Announcements
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*New Expense Data Points
As previously communicated, in response to client requests, Morningstar will be adding two additional data points to our database: Annual Operating Expense Ratio and Prospectus Net Expense Ratio. These data points will reflect the current expenses of a fund and are not meant to replace what we consider to be a valuable data point, the annual audited expense ratio. However, many funds have been lowering their expense ratios, and these new data points capture the most current information from a prospectus or 497 filing in advance of an annual audit. This new data will be ready for May month-end data delivered in June, and is available in a Licensed Data feed or on a Profile page. Please contact your account team for more information.
*New Closed-End Data Points, Upcoming Methodology Change
As noted last month, we have added several new data points to our closed-end database: Shares Outstanding, Preferred Assets, Common Assets, Continuously Offered and Percent Leverage. Percent Leverage allows investors to determine the fund�s exposure to debt or preferred shares, resulting in more informed investment decisions. In addition, effective July 1, we will change our calculation method for closed-end dividend yield. Going forward, closed-end dividend yield will be based on market price instead of NAV (net asset value).
*Index Name Changes
Several Dow Jones indexes have changed names.
*Morningstar Indexes Yearbook
In early April, we mailed copies of the Morningstar Indexes Yearbook. This annual Yearbook summarizes Morningstar Index performance for 2004, identifies companies that created or eroded value for investors, and looks at whether actively managing small caps and indexing large caps paid off in 2004. Distinct and style-pure, Morningstar Indexes is a family of 16 indexes that tracks the U.S. market by capitalization and investment style.
*Morningstar Direct Launches, includes Hedge Fund Data
On March 2, Morningstar introduced Morningstar Direct, a Web-based global research platform that connects institutional investment professionals throughout the world to our investment data and research. Morningstar Direct will replace Morningstar DataLab. Current Morningstar DataLab clients will be contacted individually, approximately three to six months prior to renewal, to develop transition plans. If you have specific questions about Morningstar Direct, or would like a 15-day risk free trial, please contact your account team or call our product consultants at 1 866 229-0216.
*New Stewardship Grade for Stocks
On Feb. 7, Morningstar introduced a new grading system for stocks to help investors identify and compare companies that consistently align their interests with those of shareholders. The Morningstar Stewardship Grade for stocks is designed to help individual investors more easily evaluate a company�s financial transparency, shareholder friendliness, management incentives and ownership, as well as overall corporate stewardship of investors� capital. The new grades were launched as part of Premium Membership on Morningstar.com, our Web site for individual investors, and in Morningstar StockInvestor(TM) newsletter. This new measure follows our launch last year of a grading system for mutual funds.
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News from Morningstar
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*Morningstar at Industry Shows
Morningstar will exhibit at the AIMSE Annual Marketing and Sales Conference in Tucson, AZ, May 1-3, booth number 11, and at the ICI General Membership Meeting in Washington, DC, May 11-13, booths 121, 123. We will be at the SPARK Conference in Washington, DC, May 15-17 in booth 8. And, we hope to see you at the GAIM Europe Hedge Funds Conference in Lausanne, Switzerland, June 7-9, in booth 66.
*Morningstar Equity Research � 1500 stocks, 75 equity analysts � One Approach
Morningstar�s independent, third party perspective and recognized brand name provide strategic advantages in a competitive market for equity research. That�s why many institutions offer Morningstar Equity Research to their advisors and individual investors. Morningstar Equity Research can be integrated directly into your technology platform. For information on how to make this research available to your advisors and clients, please call Tricia Rothschild at 312-696-6329.
*The Power of One � Data Across Multiple Universes
A Morningstar Data License allows you to use Morningstar�s data and proprietary statistics like the Morningstar Rating(TM) and Style Box(TM) to inform and educate your investors. Multiply the power of your message by using consistent data and Morningstar statistics across ETFs, mutual funds, money market funds, stocks, 529 plans, variable annuities, separate accounts � and more.
Investment Profiles are one-page reports that utilize innovative methodologies and the industry's most comprehensive databases to present objective information in a clear format. Investment Profiles include the Morningstar Rating(TM) and Morningstar Style Box(TM), as well as key performance, portfolio and operations information. They are NASD-reviewed to facilitate immediate distribution and are available for all types of investments, including mutual funds, stocks, variable annuity/life subaccounts, separate accounts, custom funds, and 529 plans. Use them individually, or present them as an Investment Guide(TM)�a collection of Investment Profiles, summary information, and educational articles.
Please contact your account team for more information on how a Data License or Investment Profiles can help you provide innovative solutions to investors.
*Data Questions
Contact your account team or our data quality department:
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
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