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Morningstar’s Ibbotson Unit Receives Patent on Its Portfolio Creation Technique Using the Concept of Human Capital

Friday, July 13, 2007

Chicago, IL -- Ibbotson Associates, a registered investment advisor and wholly owned subsidiary of Morningstar, Inc. (Nasdaq: MORN), today announced that it has received a patent from the U.S. Patent Office (patent number 7,216,099) on its portfolio creation technique for individual investors based on the concept of human capital. Ibbotson uses this method to construct portfolios for many of the largest mutual fund and insurance companies as well as individual investors in its defined contribution advice and managed account programs. This is the second patent received by Ibbotson for its asset allocation techniques.

The method provides a model for portfolio construction based on balancing an investor's financial capital and human capital. Financial capital is defined as an investor's current savings, such as money already saved in a retirement account. Human capital is an investor's future potential savings, and is often the single largest asset an investor has. Typically, human capital is a bond-like asset-similar to regular interest payments from a bond, workers earn a weekly salary from which they accumulate savings. Younger investors have far more of this bond-like human capital than older investors because they have a long time horizon to earn and save. So to balance out that large allocation to human capital, for example, younger investors should hold their financial capital in more aggressive investments. Older investors, on the other hand, have less human capital and should guard their financial capital with a larger concentration in conservative investments.

The invention is a method for automatically establishing an investor's portfolio mix by taking into account the investor's human capital, financial capital, age, savings rate, and risk profile. It was developed by Peng Chen, Ph.D., CFA, president and chief investment officer of Ibbotson Associates; Roger Ibbotson, Ph.D., founder of Ibbotson Associates and professor of finance at Yale School of Management; and Mike Henkel, former president of Ibbotson Associates.

"Andre Agassi and I are the same age and we may even have the same risk tolerance, but that doesn't necessarily mean we should have the same asset allocation," Chen said. "An investor's tolerance for risk and age should not be the only factors that determine asset allocation in a portfolio. One's current financial situation and future earning ability-financial capital and human capital, respectively-play a large role."

Ibbotson Associates, a leading authority on asset allocation, was founded by Professor Roger Ibbotson in 1977. The company has been entrusted to create asset allocation models for many of the largest companies in the finance and investment industries. Morningstar acquired Ibbotson in March 2006. Ibbotson is now part of Morningstar's Institutional business segment, and is a leading provider of retirement advice and investment consulting services to institutions. As of March 31, 2007, Ibbotson had over $26 billion in assets under advisement in its investment consulting practice and over $9 billion in assets under management in its managed retirement accounts business.

About Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in the United States and in major international markets. The company offers an extensive line of Internet, software, and print-based products and services for individuals, financial advisors, and institutional clients. Morningstar provides data on more than 230,000 investment offerings, including stocks, mutual funds, and similar vehicles. The company has operations in 16 countries and minority ownership positions in companies based in three other countries.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements. These statements relate to future events or to future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as "may," "could," "expect," "intend," "plan," "seek," "anticipate," "believe," "estimate," "predict," "potential," or "continue" or the negative of these terms or other comparable terminology. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors that are, in some cases, beyond our control and that could materially affect actual results, levels of activity, performance, or achievements.

Other factors that could materially affect actual results, levels of activity, performance, or achievements can be found in Morningstar's filings with the Securities and Exchange Commission, including Morningstar's Annual Report on Form 10-K for the year ended Dec. 31, 2006. If any of these risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary significantly from what we projected. Any forward-looking statement you read in this press release reflects our current views with respect to future events and is subject to these and other risks, uncertainties, and assumptions relating to our operations, results of operations, growth strategy, and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, whether as a result of new information, future events, or otherwise.

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