Company Press Release

Morningstar Launches Inaugural Awards for Best U.S. ETFs and ETF Providers

CHICAGO, Oct. 4, 2012 — Morningstar, Inc. (MORN), a leading provider of independent investment research, today announced the winners of its inaugural Morningstar Awards for U.S. exchange-traded funds (ETFs and ETNs) and ETF providers at its third annual ETF Invest Conference in Chicago. The Morningstar Awards recognize the best ETF firms as well as Morningstar ETF Category Winners for retail and institutional investing objectives based on performance and cost.

The following providers were named the 2012 Morningstar Best ETF Providers in five U.S. broad asset classes:

Commodities: iPath ETNs

International Stock: iShares

Sector Stock: Vanguard

Taxable Bond: iShares

U.S. Stock: Vanguard "We're introducing ETF awards to help individual investors, advisors, and institutional investors identify ETFs with strong one- and three-year performance track records and reasonable costs," said Paul Justice, Morningstar's director of research for passive funds, North America. "While the awards take into account past results, performance is only part of the story. Costs are important to ETF investors, and the total cost of holding an ETF goes beyond simple expense ratios, which is why the awards also consider estimated holding costs and liquidity costs. Because performance can be fleeting, we emphasize cost analysis because fees have less variance year to year."

The new Morningstar Awards for ETFs and ETF providers consider the total cost of ETF ownership, based on an ETF's estimated holding cost, tracking volatility, and market impact cost; the ability of the ETF to track its index; and risk-adjusted returns. More information about Morningstar's data points for total cost analysis is available athttp://advisor.morningstar.com/products/conference/brochure/ETF%20Total%20Cost%20Analysis.pdf.

The quantitative methodology for the award also recognizes risk-adjusted outperformance within the context of a relevant peer group over the past one- and three-year periods.

Morningstar identified winners across 37 ETF categories; the category winner is the highest ranked in the category versus its peers, in terms of total cost of ownership and risk-adjusted returns. Morningstar will not include a category unless there are at least five eligible funds in the category, and the category falls in one of five U.S. broad asset classes. A full list of the retail and institutional Morningstar Category Winners is available at http://advisor.morningstar.com/products/conference/etfinvest_awards.asp. Morningstar recognizes the differing needs of retail and institutional ETF investors: while a retail investor is likely to invest a smaller dollar amount over a longer period of time, an institutional investor may invest a larger dollar amount but have a greater need for liquidity. More information about Morningstar's assessment of the suitability of ETFs for different investors is available on http://www.morningstar.com/goto/etfawards. 

To be eligible, ETFs must have three years of performance data as of June 30, 2012; a stated primary benchmark that the ETF has tracked for at least 13 months, and for which Morningstar has performance data; and have traded on at least 240 of the last 250 trading days. The ETF providers with the most Morningstar Category Winners within each U.S. broad asset class receive the Morningstar Best ETF Provider award. iPath ETNs had four Category Winners, while iShares received 24 Category Winners, and Vanguard obtained 26. To view the awards methodology, please visit
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