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November 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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Quarterly Fund Category Review�U.S. |
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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 will be effective with November month-end processing, and results will be available on our Websites on Dec. 5. |
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Introducing The Morningstar Rating for Load-Waived A Shares�U.S. Funds |
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Morningstar will introduce 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 and the Essentials data feed will roll out these ratings for performance data ending Nov. 30, 2005, and other products will introduce this in the upcoming months. For more information, please see the attached fact sheet. |
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New Categories and Broad Asset Class�U.S. |
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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 mutual funds domiciled in the US. 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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Change to 12b-1 Fee Data-U.S. Open-end Funds |
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Effective in the first quarter of 2006, Morningstar will provide only the actual 12b-1 fee as disclosed in a fund�s 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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U.S. Domiciled Fund Performance Audit |
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As part of Morningstar�s commitment to quality and accuracy, we are auditing our trailing performance calculations for all the US-domiciled funds in our database. The audit will be conducted 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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Methodology Change for Applying Deferred Loads-U.S. Open-end Funds |
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As announced, effective Jan. 31, 2006, we will change how we select the deferred-load breakpoint for each time-period return. This change will affect load-adjusted returns, tax-adjusted returns, and the Morningstar Rating for funds available for sale in the US, although we expect the impact to be minimal. Right now, Morningstar applies the "1-2 year" deferred load (i.e. the load that is charged to investors who redeem between one and two years after purchase) to the one-year time period and use similar logic for other time periods. After the change, we will use the "0-1 year" deferred load for the one-year time period and similar logic for other time periods. The new method is more conservative, and it is more consistent with how many fund companies already report performance. This change will also affect standardized returns for VA/L subaccounts. |
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Methodology Change For Market Price Return-U.S. |
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As previously communicated, effective Jan. 31, 2006, we will change our market price return methodology for closed-end and exchange-traded funds. Rather than reinvesting dividends at NAV, the new methodology will reinvest dividends at the market price as of the Ex (exclusion date). We believe this new methodology more closely captures the investor�s true experience. No changes will be made to the NAV Return. The new formula will read:
TR market price= {[Ending market price (1+ Distribution/Reinvestment price) - Beginning market price] / Beginning market price} x 100 Where, Reinvestment price = the market price per share on the Ex day. |
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Methodology Change for Returns for U.S. Closed-End Funds |
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As noted last month, effective Jan. 31, 2006, we will start using IPO market price and NAV to calculate since inception market price and NAV returns for all closed-end funds. We are currently using market price and NAV as of the first trade date. |
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Changes to European Morningstar Categories |
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Effective with October month-end, we updated our European Morningstar Categories to introduce style-based differentiation within large capitalization categories in Europe, North America, UK, and Global equity. Please click here for a complete list of new categories and their local language translations. |
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Third Quarter 2005 Morningstar U.S. Market Commentary |
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In the quarter, large-cap stocks mostly stalled as mid-caps and small caps posted gains, causing observers to wonder how much longer that now-familiar pattern can continue. Please click here to read the full report. |
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Morningstar News
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East Coast Morningstar Direct Users Forums |
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A few seats remain for our next Users Forum in Boston on Dec. 8, at the Omni Parker House Hotel. This event is open to all Morningstar Direct and DataLab users. The agenda will include a presentation by Don Phillips on current best practices in the industry, and will feature several breakout sessions designed to help you make the most of your investment in Morningstar Direct. If you would like to attend, please contact Lisa Bowling via e-mail at lisa.bowling@morningstar.com or call Lisa at 1 312 384-3877. |
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Morningstar at Industry Shows |
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Morningstar will exhibit at the 2005 Canadian Investment Awards, Nov. 30, and at the Super Bowl of Indexing in Scottsdale, AZ on Dec. 4-7. |
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Data 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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