Morningstar Advisor - Winter 2008 - (Page 32) Gray Matters Inside the Morningstar Wide Moat Focus Index Structure: Launched: Reconstitution/Rebalancing: How to Invest in It: 20 low-price wide-moat stocks, equal weighted April 2007 (inception back dated to Sept. 20, 2002) Quarterly Elements Morningstar Wide Moat Focus ETN WMW, launched in October. Complete Holdings Boston Scientific BSX Time Warner TWX Moody’s MCO Fastenal FAST International Speedway ISCA St. Joe JOE Legg Mason LM Bank of America BAC Progressive PGR Starbucks SBUX Citigroup C Comcast CMCSK Home Depot HD Lowe’s Companies LOW Vulcan Materials VMC Walgreen WAG H&R Block HRB Capital One Financial COF Marsh & McLennan MMC Morgan Stanley MS Wide Moat Focus Index Sector Weightings h Information r Software t Hardware y Media u Telecommunications 10.00% 0.00% 0.00% 10.00% 0.00% j Service i Healthcare o Consumer Services p Business Services a Financial Services 80.00% 5.00% 25.00% 10.00% 40.00% k Manufacturing s Consumer Goods d Industrial Materials f Energy g Utilities 10.00% 5.00% 5.00% 0.00% 0.00% 26000 22000 18000 14000 0000 Style Diversification and Growth of $10K graph Large Size 30 5 5 Value 25 20 0 Core 10 5 0 Growth $26K Med Small 22 18 Morningstar Wide Moat Focus Index Valuation S&P 500 03 04 05 06 07 Data as of Dec 31, 2007 for at least 20 years. Only those stocks with one or more of the identifiable competitive advantages, as determined by Morningstar analysts and agreed to by Morningstar’s director of stock analysis and chief equities strategist, receive a wide moat rating. Thus, our wide moat stocks are a pretty selective group, amounting to less than one tenth of all the companies we cover. Combine that kind of strict quality screen with a valuation filter (Morningstar fair value estimate/current market price), and we get a group of wonderful companies trading for very attractive prices. The 20 wide-moat stocks with the best valuations compose the Morningstar Wide Moat Focus Index. The objective of the Wide Moat Focus Index is to offer investors the opportunity to easily invest in companies that have sustainable competitive advantages according to Morningstar analysts. These companies are the crème de la crème of the U.S. equity universe. K Pat Dorsey is Morningstar’s director of equity research Jan-04 analysis. Elements Morningstar Wide Moat Focus ETN (WMW) trades on the NYSE Arca and is issued by Deutsche Jan-03 Dec-03 Bank pursuant to a separate license from Morningstar. WMW is not sponsored, endorsed, sold or promoted by Morningstar, and Morningstar makes no representation as to the advisability of investing in WMW. Read the methodology paper for more about the construction of the Morningstar Wide Moat Focus Index: http://MorningststarAdvisor.com/uploaded/pdf/ Dec-07 Dec-04 Dec-06 Dec-05 WideMoat.pdf Jan-06 Jan-05 Feb-03Jul-03 Feb-04Jul-04 Feb-05Jul-05 Feb-06Jul-06 Jan-07Jun-07 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Apr-03 Oct-03 Apr-04 Oct-04 Apr-05 Oct-05 Apr-06 Oct-06 Apr-07 Oct-07 May-03 Nov-03 May-04 Nov-04 May-05 Nov-05 May-06 Nov-06 May-07 Nov-07 Jun-03 Aug-03 Jun-05 Aug-05 Jun-06 Aug-06 Feb-07Jul-07 Aug-07 Jun-04 Aug-04 32 Morningstar Advisor Winter 2008 http://MorningstarAdvisor.com/uploaded/pdf/WideMoat.pdf http://MorningstarAdvisor.com/uploaded/pdf/WideMoat.pdf
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