morningstar direct 3.1 enhancements to: navigation and usability functionality data released on...

Morningstar Direct 3.1

Enhancements to: •Navigation and Usability•Functionality•Data

Released on Friday, Feb. 2, 2007

Morningstar Direct Team

Navigation and Usability

Fund Analysis, Equity Analysis are the New Menu Choices

As Noted in Nov. 2006 Press Release, Given the New Focus on Collective Investment Trusts, the

Databases were Re-named

Previously called just “Separate Accounts”

Previously called “Composites”

Previously called “Commingled Funds”

Morningstar Enhancing Coverage of Collective Investment Trusts

CHICAGO, Nov. 29, 2006—Morningstar, Inc. (NASDAQ: MORN) today announced plans to enhance its coverage of collective investment trusts, investment vehicles similar to mutual funds available only in qualified retirement plans, such as 401(k) plans.

Beginning in early 2007, Morningstar will collect net returns, in addition to gross returns, for these pooled investment vehicles, and will provide monthly rankings and Morningstar Ratings™ against a peer group of mutual funds. Morningstar currently compares collective investment trusts to separately managed accounts, using gross returns to provide a quarterly rating. Under this new framework, investors and advisors will be able to more accurately compare collective investment trusts to mutual fund offerings in retirement plans and will have access to timelier, more transparent information.

“Because these investments are direct competitors with mutual funds in retirement plans, however, we think it’s more appropriate to give them more prominence and put them on a level playing field with mutual funds,” said John Rekenthaler, vice president of research for Morningstar.

“Going forward, investors will be able to directly compare the star ratings of a collective investment trust with those of a mutual fund. We hope not only to provide a more timely, meaningful point of comparison for investors, but also to set a higher reporting standard within the collective investment trust space.”With its recent acquisition of the database division of InvestorForce, Morningstar now has data on approximately 650 collective investment trusts. In addition to both gross- and net-of-fee performance data, Morningstar collects other data points such as risk and return statistics, fees and expenses, manager information, and portfolio holdings.

Regional Training Information Available in “Learning Center”

Users Can Now Set Their Preferences for Summary Statistics

With “Move To”, Users Can Now Easily Move their Rows of Investment Vehicles in Their

Investment ListsSelect rows to move, choose “Move To” under “Action”

Change Settings for Multiple Custom Calculations at Once

Simultaneously Change Date Range for Sharpe and Treynor Ratios, for Example, as Shown in

Previous Screen

New Functionality

Portfolio Aggregation Report – How to Generate

Portfolio Aggregation Report – The ResultMore than one page of analysis, including detailed common holdings

Not equal-weighted, weighted as per the Aggregate weighting

Peer Investor Holding Analysis, from “View Holdings”

An institutional investor, such as Madison Mosaic in this case, may want to see what its peers – maybe its competitors – own in terms of stocks, bonds, options, etc.

The comparison of what investments are similar or different against a peer or group of peers begins here.

Peer Investor Holding Analysis from “Ownership-Portfolio” database

You can insert up to 15 investment vehicles into the peer analysis

Peer Security Owner Analysis from “Ownership-Security” Universe

You want to find out who owns a stock and other similar types of stocks. The analysis begins here.

Peer Security Owner Analysis Output – see if, in this case, Prominent Japanese Stocks are

Owned by the same Mutual Fund

Now Able to Display “Multiple” Manager Teams

And same functionality for multiple “countries available for sale,” “custodian,” “distributor,” and other data points. The multiple data points are included in Excel downloads.

Active Share Calculation Added to Holdings Similarity Chart

The holdings similarity chart can be adjusted to overlap or similarity scores as well in “Chart Settings.”

To calculate Active Share, just calculate the Overlap with the index of choice and subtract from 1.Overlap = Sum{min(w1i,w2i)}Wherew1i = weight of stock i on portfolio 1w2i = weight of stock i on portfolio 2For example:Stock Port 1 Port 2 MinA 0.10 0.05 0.05B 0.03 0.20 0.03C 0.30 0.20 0.20D 0.25 0.10 0.10E 0.12 0.00 0.00F 0.20 0.35 0.20G 0.00 0.10 0.00Total 1.00 1.00 0.58Overlap = 58%Active Share = 100% - 58% = 42%

Active Share Calculation

Some Background on Active Share Calculation – Announced Last Year

•Competitive positioning

•Screening for manager value-add

•Fund of funds screening for good active managers

Find more information on “Active Shares” at:•http://mba.yale.edu/news_events/CMS/Articles/5727.shtml•http://www.som.yale.edu/Faculty/petajisto/active54.pdf

Hedge Fund Quicktake PDF Added

Hedge Fund Quicktake PDF – The Result

Hedge Fund Summary PDF – Contact Information Added

Insurance Product Funds - Quicktake and QT PDF Enabled

Data Added

A complete list of new data points in Morningstar Direct 3.1 is also available

Multiple New Data Points Added to Hedge Funds, in this case, How the Fund is Regulated

or Overseen (Altvest data brought into Direct from InvestorForce)

Hedge Funds – New Data Points Include Entire Pull-Down of “Hedging Techniques” – What they Hedge

and How (Altvest data brought into Direct from InvestorForce)

More Information on the Investor Type for a Collective Investment Trust

“Traditional” data brought into Direct from InvestorForce

New Data Points Added to U.S. OE MF

Detailed Holdings Data Added to “View Holdings” and Now Available for Many Closed

End Mutual Funds and ETFs as well

Net Returns (in addition to Gross Returns) for Separate Accounts and Collective Investment

Trusts

See when Analyst Reports have been Updated or Most Recently Written for U.S. Stocks, OE

and CE Mutual Funds, and ETFs

By clicking on the date, you get the Quicktake.

Look under “Analysis”

Fund-of-Funds Indicator

New Closed End Fund Data points

•UNII: Undistributed Net Investment Income

•EPS

•UNII/EPS Date

Data from central Morningstar database to populate these fields this month (February 2007)