2010 10-K: Part I The Morningstar Style Box The Morningstar Rating  ★  ★★ ★★★ ★★★★ ★★★★★ We provide Morningstar Ratings on mutual funds, stocks, separate accounts,  hedge funds, exchange-traded funds, and closed-end funds, as well as variable  annuity/life portfolios and subaccounts. For managed investment products, the  Morningstar Rating brings performance and risk together into one evaluation,  with the top 10% of rated offerings receiving 5 stars and the bottom 10% receiving 1 star. The Morningstar Rating for stocks is based on the difference  between a stock’s current market price and our  analyst-generated fair  value estimate. It also incorporates our analysts’  assessment of the company’s level of business risk and economic moat, or competitive advantage. Value Blend Growth We also provide a  Morningstar Qualitative Rating for funds based in  Europe and Asia, which we assign  on a  s cale r angin g  fro m  Elite  to Im p aired.  In De c embe r  2009, we launched a  Morningstar corporate credit rating, which measures the ability of a firm to satisfy its debt and debt-like  obligations. For the corporate  credit rating, we issue an overall rating ranging from AAA to D as well as  scores for the factors underlying the rating. Through our Realpoint subsidiary,  we also offer new issue and surveillance ratings on commercial mortgage- backed securities. We provide three levels of detail for the Morningstar Style Box: a basic grid il- lustrating the overall style of a stock or fund, a basic Ownership Zone illustrat- ing the area of the Style Box in which most of the fund’s holdings tend to fall,  and a detailed Ownership Zone that plots precisely where the fund’s holdings  fall within the Style Box. For the hypothetical mutual fund shown here, the first  illustration shows that the fund’s overall style emphasizes large-capitalization  stocks with a blend of value and growth characteristics. The second illustration shows that most of the fund’s investments fall into the  large-capitalization range and that the fund puts slightly more emphasis on  growth stocks than value-oriented stocks. The third illustration shows the complete distribution of the fund’s holdings.  Because some individual holdings have extremely large market capitalizations,  they land outside the traditional Style Box range. These products all include integrated research and portfolio tools,  allowing investors to use our proprietary information and analysis  across multiple security types. With each platform, we believe we  can continue expanding our reach with our current audience, as  well as extending to reach new market segments. In keeping with our mission, we are pursuing five key growth strat- egies, which we describe below. We review our growth strategies  on a regular basis and refine them to reflect changes in our business. With Morningstar.com, we’re continuing to expand the range of  content and market updates on the site, including third-party content.  We’ve also been focusing on mobile development and social net- working, as well as expanding data and functionality to increase  the site’s value to both registered users and Premium members.  With Advisor Workstation, we plan to build on our large installed  base by expanding our mid- and back-office capabilities, improving  the product’s interface and design, and integrating real-time data  and other functionality. With Morningstar Direct, we’re pursuing  an aggressive development program to provide data and analysis  on securities and investments around the world. We’re adding third- party data and content and enhancing our technology to allow the product to function as a purely web-based solution. We also plan  to expand into new global markets, enhance our capabilities in  We believe that individual investors, financial advisors, and insti- tutional clients increasingly want integrated solutions as opposed  to using different research tools for different parts of their portfolios.  To help meet this need, our strategy is to focus our product offerings  on our three major platforms: 1. Enhance our position in each of our key market segments by  focusing on our three major Internet-based platforms. U  Morningstar.com for individual investors; U  Morningstar Advisor Workstation for financial advisors; and U  Morningstar Direct for institutional professionals. Morningstar’s Growth Strategies Growth Strategies Value Blend Growth Small Mid Large Expand internationally Become a global leader in funds  of funds Continue building thought leadership Create premier  global database Focus on three platforms 28