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January 2006
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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U.S. Quarterly Fund Category Review |
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The next review will be held in mid-February 2006 and will include only funds with one year of history or less, and funds being considered for assignment to one of the five new categories detailed below. Fund families with proposed category changes will receive further information via e-mail on Feb. 14. Category changes will be effective with February month-end processing, and results will be available on our Websites on March 3. |
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New Categories and Broad Asset Class for U.S. Portfolios |
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As previously announced, effective Feb. 28, 2006, Morningstar will add five new categories and one broad asset class to its current classification system for portfolios domiciled in the U.S. This change will affect all data universes (open-end, closed-end, ETF, VA, etc.). 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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U.K. Life and Pensions Database |
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To provide investors with data to make better investment decisions, Morningstar U.K. is integrating life and pension fund data into current Morningstar products. We are working directly with fund companies to collect the data that will allow life and pension funds to receive a Morningstar Rating and a Morningstar Style Box. The new data will also allow financial advisors and institutional investors to conduct more thorough portfolio construction, research, and analysis. |
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Index Name Changes |
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Please click here for a list of recent index name changes. |
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European Funds Expense Data |
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To provide investors in European funds with the same fee transparency found in markets like the U.S., Australia, and Canada, Morningstar Europe has begun collecting and analyzing total expense ratios for funds registered for sale within Europe. Total expense ratios will be monitored along with annual management charges and other expenses, giving investors more ways to evaluate their investment choices. Fund families who wish to contribute their fund's expense data to our transparency efforts should contact their local Data Relationship Manager |
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New U.S. Closed-end Data Points |
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Effective March 31, 2006, Morningstar will introduce several new U.S. closed-end data points: IPO NAV and Share Price, Preferred Issue Shares Outstanding, Undistributed Net Investment Income (UNII), Earnings Per Share (EPS), Modified Duration, and Bond Call Schedule. Additionally, we will add a flag to highlight all closed-end funds that utilize a covered call investment strategy. |
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2005 Morningstar U.S.
Market Commentary |
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Stocks ended 2005 in the black, continuing an equities rally for the third straight year after the bursting of the technology bubble sent stocks reeling from 2000 through 2002. All nine Morningstar Style Indexes finished the year in positive territory, with mid-caps leading the way, and growth stocks showed signs of life. Please click here to read the full report. |
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Ten Largest Offshore Funds |
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Morningstar provides coverage of more than 11,000 offshore investment funds. Offshore funds are mutual funds that are domiciled in areas like Luxembourg, Dublin, and the Channel Islands, and they can have certain tax advantages for investors. Below you will find a list of the ten largest offshore funds in Morningstar's database, listed by market value. For more information regarding Morningstar's offshore database capabilities, please contact your account team in your local Morningstar office. |
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Fund Name |
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Most Recently Reported Portfolio Net Assets (USD) |
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Domicile |
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| 1 |
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Goldman Sachs Global High Yield Portfolio�
Euro Hedged |
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2,143,034,261 |
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Luxembourg |
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| 2 |
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Pioneer Funds�European Research Fund |
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2,137,951,207 |
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Luxembourg |
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| 3 |
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Aberdeen Global Japanese Equity Fund |
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2,130,978,285 |
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Luxembourg |
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| 4 |
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Fidelity Funds�America Fund |
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2,089,355,826 |
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Luxembourg |
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| 5 |
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UBAM Neuberger Berman US Equity Value Fund |
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2,056,319,885 |
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Luxembourg |
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| 6 |
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UniEuroKapital Corporates Fund |
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2,054,529,551 |
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Luxembourg |
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| 7 |
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UniOptimus -net- |
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2,047,847,795 |
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Luxembourg |
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| 8 |
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Pioneer Funds�Total Return Defensive Fund |
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1,996,242,020 |
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Luxembourg |
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| 9 |
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Fortis L Fund Bond Convertible Europe Fund |
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1,987,616,303 |
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Luxembourg |
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| 10 |
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CMI Japan Equity Index Tracking Fund |
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1,980,070,760 |
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Luxembourg |
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Recap of Previous Announcements
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Methodology Change for Applying Deferred Loads to U.S. Open-end Funds |
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As a reminder, 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 uses 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 for U.S. Closed-end and Exchanged-traded Funds |
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Also 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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The Morningstar Rating� for U.S. Exchange-Traded Funds |
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Morningstar plans to introduce a Morningstar Rating for exchange-traded funds (ETFs) domiciled in the U.S. using performance data through February 2006. The Morningstar Rating uses a scale of one to five stars to rank funds on risk-adjusted return against their category peers. ETFs will be rated based on the rating breakpoints for open-end categories, but they will not be included in the open-end population while those breakpoints are drawn. We will be reviewing our rating methodology for ETFs domiciled outside of the United States in early 2006. |
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U.S HOLDRs Activated in Morningstar Database |
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We are pleased to inform you that we have activated HOLding Company Depositary ReceiptS (HOLDRs) in the database, with a limited set of data points. They will be part of the exchange-traded funds (ETFs) universe. HOLDRS are trust�issued receipts that represent an investor's ownership in the common stock or American Depositary Receipts of specific companies in a particular industry or an industry sector. Shareholders are treated as owners of the underlying securities and are entitled to benefits such as proxy votes and dividends. HOLDRS trade on the exchange and are priced throughout the trading day like stocks. |
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Investment Criteria Change for U.S. Registered Investments |
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Morningstar's mission is to create the highest quality products and services to help investors make better decisions. Our data is the bedrock of those products, and data accuracy is its most critical aspect. To reduce the possibility of errors, we have introduced three new policies regarding investment criteria for all Morningstar products, including Investment Profile pages. First, the fund name will no longer be included in investment criteria. This change was introduced to avoid inconsistencies when funds merge or change names. Second, to further ensure consistency, the description of the portfolio will be based solely on wording from the prospectus. Third, in response to client feedback and to more accurately reflect diversification inherent in Lifecycle and other Funds of Funds, we are including additional detail regarding diversification of underlying holdings. If you would like more specific details on these changes please contact your account team. |
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U.S. 30-Year T-Bond Discontinued |
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Effective Feb. 28, 2006, Morningstar will discontinue collection of the "30-year Treasury bond" series, because it is difficult to obtain comparable data from month to month (even with the U.S. Treasury's plans to reintroduce this security). Clients who use this investment as a benchmark are advised to substitute the 20-Year Constant Maturity Treasury in its place. This decision and the recommended substitute are consistent with the reporting standards of the U.S. Treasury. We welcome any additional client feedback about this issue. |
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Morningstar News
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Morningstar Europe Unpacks the Moving Boxes |
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Morningstar has moved its London offices to One Oliver's Yard on City Road. Serving as both the local office for Morningstar UK, and the global headquarters for Morningstar in Europe, the new office boasts added capacity to house the expansion of Morningstar's global data capabilities. The move is an integral part of the comprehensive strategic expansion plan for Morningstar in Europe. The new address is 55-71 City Road London, EC1Y 1HQ, and the new phone number is +44 (0)20 3107 0000. |
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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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�2006 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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