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Kathy Panagopouloskathy.panagopoulos@morningstar.com
Morningstar Enhances Popular Quicktake Report, Introduces New Fund Diagnostics Tool

CHICAGO, Nov 22, 2002 – Morningstar.com, consistently ranked among the best investment Web sites, today launched a new tool, Fund Diagnostics, which provides valuable context to key mutual-fund data within Morningstar's popular Quicktake® Report. Unlike any tool currently available on the Web, Fund Diagnostics helps investors understand and compare specific data points for a particular fund, such as sector exposure, expenses, management tenure, and the Morningstar Rating. The new tool offers the most complete, straightforward description of data and statistics for some 13,000 funds that Morningstar tracks. It will be free for a limited time and then it will only be available to Morningstar.com Premium Members.

"Many investors need help navigating their way through the huge volume of mutual-fund data. They might not understand what some data points mean and they might not know how to interpret others. Morningstar Fund Diagnostics explains the data," said Russ Kinnel, director of fund analysis for Morningstar. "We have highlighted several key data points and provided context for each one. This puts answers to important questions right where investors can use them. Our new Fund Diagnostics tool was designed to complement Morningstar's in-depth Analyst Reports, which are written by Morningstar experts and explain a fund's strategy in great detail."

Morningstar Fund Diagnostics provides meaningful context to statistics, complex methodology, and long-term performance information and helps investors understand the following fund data:

  • Performance: Comparing a specific fund's performance to other funds in its category, Fund Diagnostics illustrates how statistics do not always fully explain a fund's strategy. For example, American Funds Washington Mutual's five-year return is only 3.8 percent, though it remains one of the best-performing funds in its category. Fund Diagnostics reports, "It may not look like it, but this fund sports an outstanding performance record. While its five-year returns may not look too impressive, most of the offerings in its category have turned in poor results over that period. Compared to them, its five-year returns are among the best."  
  • Morningstar Rating and Risk: The Morningstar Rating for funds, better known as the "star rating," is a proprietary Morningstar methodology that evaluates a fund's returns relative to its volatility. Fidelity Magellan is currently a three-star fund, but Fund Diagnostics discloses, "Compared with other funds in its category, it has historically generated average returns given the amount of risk it has taken on. In this case, the fund has churned out above-average returns, but those returns have been accompanied by greater volatility than most of the fund's peers."   
  • Expense Ratio: Always an important factor, Fund Diagnostics helps put a fund's expense ratio into context. Pimco Total Return's expense ratio is 0.43 percent, considered to be very low. "This fund has a very low expense ratio, even for a no-load offering. Expenses are a big factor in the long-term, relative performance, and funds with lower expenses generally outperform those with higher expenses," reports Fund Diagnostics.  
  • Management: Fund Diagnostics shows how a fund's manager tenure stacks up against its peers and explains how that relates to returns.   
  • Morningstar Style Box: Revealing the proprietary Morningstar Style Box details, Fund Diagnostics clarifies how a fund's holdings can affect performance and makeup. Van Wagoner Emerging Growth is a small-growth fund, but Fund Diagnostics tells an investor, "The most notable thing about this fund is that it focuses in micro-cap stocks. Micro caps are very small companies. These stocks can behave differently than other parts of the market, so they are a good way to get extra diversification. They also carry special risks, though – they are fairly illiquid, for example, and thus hard to sell in a hurry – so these funds are generally used to help round out a portfolio rather than as core holdings." 
  • Sector Breakdown: Comparing it with the S&P 500 Index and to other funds within its category, Fund Diagnostics provides insight into the fund's sector exposure and tells investors if it has large stakes in any one sector of the market.  
  • Asset Allocation: Funds are compared with others within its category, and investors can tell if the fund holds concentrations in cash, foreign stocks, and bonds.  
  • Percent of Assets in the Top 10: This statistic examines how much of a fund's top 10 stock positions make up the fund portfolio's entire composition.

To access Morningstar Fund Diagnostics, Morningstar.com Members can enter a ticker or fund name in the Morningstar Quicktake® Report box in the upper left corner of every Morningstar.com cover page. The Fund Diagnostics link, labeled "Diagnostics," can be found across the top of the fund Quicktake® Report between the "Snapshot" and the "Analyst Report" tabs. 

About Morningstar.com Premium Membership
Morningstar.com Premium Membership is available for $109 a year or $11.95 a month. The service includes access to Morningstar Analyst Reports on 1,000 stocks and 2,000 mutual funds, Fund and Stock Analyst Picks, Premium Stock and Fund Selectors, and Portfolio X-Rays®, which help investors evaluate their entire portfolio at the individual security level. It also includes Morningstar® ClearFutureSM, a leading online retirement planning service.

About Morningstar, Inc.
Chicago-based Morningstar, Inc. is a global investment research firm, offering an extensive line of print, software, and Internet-based products and services for individuals, financial advisors, institutions, and the media. The company is a trusted source for investment information, data, and analysis of stocks, mutual funds, exchange-traded funds, closed-end funds, and variable annuity/life subaccounts.

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