This e-mail contains Morningstar Data Release Notes for August 2006. As always, we invite your comments and questions on our communications, products and services. Please contact any member of your account team. Thank you.

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August 2006

August 2006 Release Notes   Recap of Previous Announcements   Morningstar News                                                                                 > U.S. Quarterly Fund Category Review > Investor Returns in Licensed Data > Shorts and Derivatives in Portfolios > Changes to Exchange ID and Language ID   > Morningstar Security ID (SECID) Changes for S&P Indexes > Investor Returns Data > Changes to Morningstar Category and Rating Scheme in Europe > Prospectus Expenses, Waivers and Caps > SEC Fund of Fund Changes > Q2 2006 Morningstar U.S. Market Commentary   > Launch of Morningstar Direct 3.0 > Morningstar at Industry Shows > Data Questions                                   Release Notes         U.S. Quarterly Fund Category Review         The next quarterly fund category review will begin on Aug. 15, with the appeal period running from Aug. 15 to Aug. 25. This review will include all funds, and fund families with a proposed category change will receive further information via e-mail on August 15. Category changes will be effective with August month-end processing, and results will be available on our Web sites on Sept.6.                   Investor Returns in Licensed Data         Licensed Data feeds will include investor returns in the U.S. open-end performance and U.S. open-end and exchange traded fund fact sheet data packages. These returns will be added as a separate return type in the same format as total return, load adjusted returns, etc. We will have them available in our feeds for September data delivered in October. Given that this is a data point addition, no schema change is required for XML deliveries.                   Shorts and Derivatives in Portfolios         Morningstar is working on a multi-phase initiative to standardize how funds report their short and derivative holdings and to capture the economic exposure of these positions in our portfolio statistics. We recently completed the portfolio reporting standards for shorts, futures, and forwards and will be sharing that with our contact list of investment managers and custodians who send us portfolio files. In early 2007, Morningstar will produce portfolio statistics that reflect the underlying asset for each futures and forward contract, and Morningstar will offer enhanced long and short (and in some cases net) portfolio statistics. After that, Morningstar will formulate reporting standards for swaps and options. We will be sending more information about the new statistics in the next few months.                   Changes to Exchange ID and Language ID         The Morningstar database has changed the codes for Exchange ID and Language ID from three character codes to 10 character codes. Products are not impacted by the change. Licensed data packages are already set up to allow for 10 characters, therefore are not impacted either. However if you perform any mapping between Exchange ID or Language ID, you will have to review your process to account for the new codes. The revised codes are listed below:                     New Id   Exchange Name   EX$$$$XASE   AMERICAN STOCK EXCHANGE   EX$$$$XNAS   NASDAQ   EX$$$$XCHI   CHICAGO STOCK EXCHANGE, INC.   EX$$$$XNYS   NEW YORK STOCK EXCHANGE, INC.   SEX$$$$XOTC   OTC BULLETIN BOARD   EX$$$$XCBO   CHICAGO BOARD OPTIONS EXCHANGE   EX$$$$XAMS   EURONEXT AMSTERDAM   EX$$$$XBDA   BERMUDA STOCK EXCHANGE LTD   EX$$$$XCAY   CAYMAN ISLANDS STOCK EXCHANGE   EX$$$$XFRA   DEUTSCHE BOERSE AG   EX$$$$XDUB   IRISH STOCK EXCHANGE   EX$$$$XLON   LONDON STOCK EXCHANGE   EX$$$$XLUX   LUXEMBOURG STOCK EXCHANGE   EX$$$$XSWX   SWISS EXCHANGE   EX$$$$XWBO   WIENER BOERSE AG   EX$$$$XWBO   NASDAQ/NMS (NATIONAL MARKET SYSTEM)
Language ID		Language
0L00000082		Chinese
0L00000122		English
0L00000138		French
0L00000152		German
0L00000203		Italian
0L00000204		Japanese
0L00000235		Korean
0L00000265		Luxembourgish; Letzeburgesch
0L00000408		Spanish; Castilian
0L00000415		Swedish

		Recap of Previous Announcements
		Morningstar Security ID (SECID) Changes for S&P Indexes
		As previously announced, Morningstar began tracking the price return counterparts of the S&P 100, S&P 400, S&P 500, S&P 600 and S&P REIT. To accommodate this enhancement, Morningstar needed to change SECIDs to accurately differentiate between performance strings. The following specifies the Morningstar SECIDs for all S&P indexes.
Total Return		New SECID
Standard & Poor's 100 TR		XIUSA04GQK
Standard & Poor's Midcap 400 TR		XIUSA04GQL
Standard & Poor's 500 TR		XIUSA04G92
Standard & Poor's Smallcap 600 TR		XIUSA04GQM
Standard & Poor's 1500 TR		XIUSA04GQN
Standard & Poor's REIT TR		XIUSA04GS5
"TR" (Total Return)-"TR" return variants were assigned new SECIDs: Includes daily reinvestment of dividends. Clients wishing to reflect "Total Return-TR" performance will need to map to the new SECIDs.

Price Return		SECID
Standard & Poor's 100 PR		XIUSA000O8
Standard & Poor's Midcap 400 PR		XIUSA000O9
Standard & Poor's 500 PR		XIUSA000OA
Standard & Poor's Smallcap 600 PR		XIUSA000OB
Standard & Poor's 1500 PR		XIUSA000LL
Standard & Poor's REIT PR		XIUSA000LK
"PR" (Price Return)-"PR" return variants utilized old SECIDs: Does not include reinvested dividends. The price return variant requires no additional programming.

		Clients wishing to track the index that more closely depicts what Morningstar previously stored for these six S&P indexes should use our TR (Total Return) Variant. The TR variant provides a more meaningful comparison for funds that reinvest their dividends. If you have any questions, please contact your Relationship Manager.
		Investor Returns Data
		Beginning with Sept. 30, 2006 data, Morningstar will calculate investor returns for U.S. open-end and exchange-traded funds. Investor returns (also known as dollar-weighted returns) measure how the typical investor in that fund fared over time, incorporating the impact of cash inflows and outflows from purchases and sales. Investor returns will be available in numerous Morningstar products. Please click here for a fact sheet.
		Changes to Morningstar Category and Rating Scheme in Europe
		As of October 31st , Morningstar Europe will add approximately 30 new fund categories to its existing Morningstar Category scheme. Amongst others we will introduce absolute return categories, target date categories, more granularity in fixed income categories and single country categories within the Euro zone. The enhanced classification scheme will be used by our European and Hong Kong operations. At the same time, Morningstar Europe will also expand the time periods used for the European Rating system, bringing the system in line with Morningstar in the U.S. Five and 10 year ratings will be available, and the Morningstar Overall Rating will be a weighted average of the three-, five- and ten-year ratings. Morningstar will also incorporate back-end loads in the rating calculations for funds domiciled in Europe and offshore, as per our U.S. methodology.
		SEC Expenses, Waivers and Caps
		In order to expand Morningstar's coverage of fund fees and expenses, we now collect several new expense-related data points from U.S. prospectuses and/or 497s (prospectus amendments):
		Expense Waivers
		Also referred to as expense offsets, expense reimbursements etc., represent the amount the U.S. fund company waives or assumes in order to keep the fund's actual (net) expenses low. A company may reduce different components of overall expenses: management fee, 12b-1 fee, other fees, etc. If the prospectus discloses which component is being waived, Morningstar will capture this information as "waiver type". Expense Waivers may be voluntary or contractual, and can be set to expire at a particular date or timeframe. Morningstar assumes a waiver is voluntary if no disclosure is made in the prospectus to the contrary. Morningstar collects waiver expiration dates if these are disclosed in the prospectus.
		Expense Ratio Cap
		states the highest level of expenses the U.S. fund company is willing to charge its shareholders. The fund's actual total annual operating expenses may be higher or lower than this cap. If the Gross Expense Ratio is higher than the expense cap, the fund company will typically waive the amount exceeding the cap in order to bring the Net Expense Ratio to the cap level. In rare cases, a fund company may cap its expenses and fail to honor this cap. Expense caps may also be voluntary or contractual, and can be set to expire at a particular date or timeframe.
		Fund companies may also disclose additional information with regards to fees and expenses that doesn't fit neatly into any of the categories above. If this information is relevant, Morningstar will collect it as Notes. We anticipate waiver and cap information to be ready in the fourth quarter of this year.
		SEC Fund of Fund Changes
		Recent changes to SEC regulation will require fund of funds to disclose the aggregate expense amount charged by the fund and any fund that the fund of funds invests in (see here for link to SEC site). Morningstar is aware of this change and will capture the enhanced expense data as it becomes available.
		Q2 2006 Morningstar U.S. Market Commentary
		Fears of inflation and uncertainty regarding the sustainability of corporate profits led to a market sell-off late in the second quarter. Volatility rudely imposed itself on investors accustomed to calm after the end of the bear market in 2002. All Morningstar equity indexes except the Morningstar Large Value Index posted losses for the quarter, and the Morningstar US Market Index shed 1.8% over the same period, but still managed to post a gain of about 3.3% for the year to date. Smaller-cap and more value-oriented indexes are outperforming for the year, but fell harder in the second quarter. Please click here to read the full report.

		Morningstar News
		Launch of Morningstar Direct 3.0
		We are happy to announce the release of Morningstar Direct 3.0. This release includes significant functionality and navigational enhancements, along with the addition of two new data universes: the stocks database and the ownership database. We are confident that these upgrades will deliver improved efficiencies and better help you address your business challenges. Morningstar Direct clients received full details via e-mail earlier this month. If you have questions about Morningstar Direct, please send an e-mail to MorningstarDirect@morningstar.com.
		Morningstar at Industry Shows
		Morningstar will exhibit at the Profit Sharing Council of America (PSCA) National Conference, Sept. 21-23, on Amelia Island, FL., at the 15th ALFI & NICSA Investment Funds Forum, Sept. 26-27, in Hemicycle Luxembourg-Kirchberg, at the Pensions and Investments (P&I) West Coast Conference, Oct. 9-11, in San Francisco, and at the National Association of Variable Annuities (NAVA) Annual Conference, Oct. 13-15, in New York City.
		Data Questions
		Contact your account team or our data quality department: U.S. 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 Europe E-mail: dataquestions.uk@morningstar.com Phone: +44 20 3107 0070 Fax: +44 20 3107 0001 Mailing address: Data Question Morningstar Europe 1 Oliver's Yard, 55-71 City Road, London EC1Y 1HQ USA

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