About Morningstar

Morningstar, Inc. (Morningstar) provides independent investment insights in the United States, Canada, Asia, Australia, Europe, the United Kingdom, and international. The company’s core competencies are data, research, and design, and it employs each of these to create products that clearly convey complex investment information. The company started with affordable publications for individuals, then moved to creating technology solutions for professionals to help them research and select investments for clients. The company offers a variety of products and solutions that serve market participants of all kinds, including individual and institutional investors in public and private capital markets, financial advisors, asset managers, retirement plan providers and sponsors, and issuers of securities. The company also applies its investing philosophy to managing assets for clients who prefer to employ the expertise of professional portfolio management teams. The company helps investors in two primary ways. First, the company supports asset managers, financial advisors, individuals, and institutions who make their own investment decisions. The company’s customers have access to a wide selection of investment data, fundamental equity research, manager research, private capital markets research, credit ratings, environmental, social, and governance (ESG) ratings, fund ratings, and indexes directly on its proprietary desktop or web-based software platforms, or through subscriptions, data feeds, and third-party distributors. Second, the company provides investment management services, investment analysis platforms, and portfolio management and accounting software tools to advisors and financial institutions. The company’s managed portfolio offerings help financial institutions deliver investor-friendly products based on its valuation-driven, fundamentals-based approach to investing. Applying the company’s expertise in asset allocation, investment selection, and portfolio construction, its global investment team creates long-term investment strategies built on Morningstar’s data and ratings. The company helps retirement plan sponsors build high-quality savings programs for employees. The company’s financial technology solutions allow advisors to continually demonstrate their value to clients, from aggregating client accounts to provide visibility into holdings, spending habits and cash flows and creating an initial investment proposal, to reporting portfolio performance and providing automated rebalancing tools. Investors also uses its indexes as benchmarks, to create investable products based off its proprietary research, or to construct portfolios using customized indexes. Through DBRS Morningstar, the company also provides independent credit ratings services for financial institutions, corporate and sovereign entities, and structured finance products and instruments. Through Morningstar Sustainalytics, issuers of green bonds can also obtain Second-Party Opinions, which facilitate alignment with industry standards for sustainable finance. Data, Research, and Ratings Morningstar’s trusted data, research, and ratings underpin the company’s products. The company’s data covers a wide range of investment offerings, including managed investment products, publicly listed companies, private companies, fixed-income securities, private credit, and bank loans. The company focuses its data, research, and ratings efforts on several areas: Manager research (including mutual funds, exchange-traded funds, separately-managed accounts, and other vehicles) The company provides independent analyst research on managed investment strategies. The company uses this analysis to provide research reports and qualitative, forward-looking Morningstar Analyst Ratings for more than 4,500 mutual funds, exchanged-traded funds (ETFs), separately managed accounts (SMAs), collective investment trusts (CITs), and model portfolios globally spanning more than 21,000 share classes. The company also offers the Morningstar Quantitative Rating, which is a forward-looking rating that uses algorithmic techniques to evaluate managed investments that significantly expands the breadth of its forward-looking ratings to an additional 56,000 funds, SMAs, and model portfolios and more than 380,000 share classes worldwide. The Morningstar Quantitative Rating employs machine learning to infer patterns from the way Morningstar’s manager research analysts assign ratings to funds and then applies those learnings to rate funds that the analysts don’t cover. This analysis augments other quantitative ratings and analytics, such as the Morningstar Rating for funds (the star rating), which ranks managed investment strategies such as mutual funds based on their past risk-adjusted performance versus peers. The company also publishes qualitative research and ratings on state-sponsored college-savings plans, target-date funds, and health-savings accounts. In addition, the Morningstar Style Box visually depicts a strategy’s underlying investment style, making it easier to compare investments and build portfolios. The star rating and style box have become important tools that millions of investors and advisors use in making investment decisions. The company also offers the Morningstar Sustainability Rating, Low Carbon Risk Designation, Morningstar ESG Commitment Level, and Sustainability Summary to help investors evaluate funds based on ESG factors. As of December 31, 2022, the company had more than 145 manager research analysts and other researchers globally, including teams in North America, Europe, Australia, and Asia. Public and Private Company Research As part of its research efforts on individual stocks, the company popularized the concepts of economic moat, a measure of competitive advantage originally developed by Warren Buffett, and margin of safety, which reflects the size of the discount in a stock's price relative to its estimated value. The Morningstar Rating for stocks is based on the stock's current price relative to its analyst-generated fair value estimates, as well as the company's level of business risk and economic moat. The company’s analysts cover approximately 1,500 companies using a consistent, proprietary methodology that focuses on fundamental analysis, competitive advantage assessment, and intrinsic value estimation. Morningstar’s data and research on publicly traded companies is used extensively in the company’s products and solutions, such as institutional equity research, Morningstar Indexes, such as the Morningstar Wide Moat Focus Index, the company’s Global Market Barometer, and as a basis for equity portfolio strategies used in Morningstar Managed Portfolios. Morningstar adheres to a globally consistent framework that integrates ESG risk into the company’s equity research. Analysts identify valuation-relevant risks for each company using Sustainalytics' ESG Risk Ratings, which measure a company's exposure to material ESG risks, and then evaluate the probability that those risks materialize and the associated valuation impact. Results from this research inform Morningstar's assessment of a stock's intrinsic value and the margin of safety required before assigning a Morningstar Rating for stocks. PitchBook’s Institutional Research Group is a provider of investment strategy, fund performance and industry research. The group leverages PitchBook’s proprietary data, such as valuations, deal multiples, and fund returns, to deliver analysis that allows clients to quickly gauge trends, price transactions, assess risks and identify notable company sets in the private capital markets. As of December 31, 2022, the team provided coverage of the private equity, venture capital, real assets, leveraged loan, high-yield bond, and private credit asset classes. PitchBook also provides full-time analyst coverage of emerging technology industries, delivering comprehensive assessments of disruptive sectors to help clients better segment and size markets, understand company and investor landscapes, evaluate opportunities, and develop conviction around the growth trajectories of emerging industries. As of December 31, 2022, the company had 130 public equity researchers and more than 35 private markets researchers globally, making it one of the largest providers of independent equity research. In addition to its analyst-driven coverage, the company provides quantitative ratings and reports for approximately 58,000 publicly traded companies across Morningstar's solutions and cover 3.5 million privately-held companies through the PitchBook Platform. Credit Ratings DBRS Morningstar provides global credit ratings as the world’s fourth largest credit rating agency. The company rates more than 4,000 issuers and 60,000 securities worldwide, providing independent credit ratings for financial institutions, corporate and sovereign entities, and structured finance products and instruments. The company’s approach and size provide the agility to respond to customers’ needs with the necessary expertise and resources. As of December 31, 2022, the company had more than 565 credit rating analysts and analytical support staff based in the United States (U.S.), Canada, the United Kingdom, Europe, and India. ESG Ratings Morningstar Sustainalytics’ ESG Risk Ratings empower investors by providing them with the tools to assess financially material ESG risks that could affect the long-term performance of their investments at the security, fund, and portfolio levels. The ratings introduce a single measurement unit to assess ESG risks across 20 different material ESG issues (MEIs). Unlike other ESG ratings that are based on a relative, best-in-class approach, Sustainalytics’ ESG Risk Ratings provide a powerful signal of a company’s absolute ESG risk that is comparable across peers and sub-industries while allowing for aggregation at the portfolio level. As of December 31, 2022, the company rated more than 20,000 companies worldwide, and offered more than 13,000 ESG Risk Ratings free to the public so that any investor can benefit from its research. Strategy The company’s strategy is to deliver insights and experiences that make it essential to investor workflow. Proprietary data sets, meaningful analytics, independent research, and effective investment strategies are at the core of the powerful digital solutions that investors across its client segments rely on. The company has a keen focus on innovation across data, research, product, and delivery so that it can effectively cater to the evolving needs and expectations of investors globally. The company executes its strategy through four connected elements: values, work, clients, and brand. The key elements of the company’s strategy are to deliver differentiated insights across asset classes to public and private market investors; establish a leading ESG position across each business area; and build an inclusive culture that drives exceptional talent engagement and development. Major Customer Groups The company focuses on six primary customer groups, such as advisors (including independent financial advisors and those affiliated with Registered Investment Advisors (RIAs), broker/dealers or other intermediaries); asset management (including fund companies, insurance companies, and other companies that build and manage portfolios of securities for their clients); fixed-income security issuers and arrangers; private market/venture capital investors; workplace/retirement (including retirement plan providers, advisors, and sponsors); and individual investors. Advisors This customer group includes independent advisors at RIA firms, advisors affiliated with independent broker/dealers, dually registered advisors, and captive advisors who are employees of a broker/dealer. These broker/dealers include wirehouses, regional broker/dealers, and banks. The advisor landscape is broad in both the U.S. and in other parts of the world where the company focuses. The company’s largest market is the U.S., where Cerulli Associates estimated in 2021 that there would be more than 294,000 financial advisors by the end of 2022. The company’s advisor solutions also draw on Morningstar’s proprietary investment research methodologies and research insights. The company sells its advisor-related solutions both directly to independent financial advisors and through enterprise licenses, which allow financial advisors associated with the licensing firm to use its products. In the U.S. and the U.K. the company is building comprehensive wealth platforms for financial advisors that expand the range of services it offers to help them with to all aspects of their daily workflow needs, including investment decision-making, portfolio construction, client monitoring and reporting, practice management, portfolio rebalancing that connects with custodial and trading interfaces, and financial planning. The company’s main products for financial advisors are Morningstar Advisor Workstation, Morningstar Office, and Morningstar Managed Portfolios. Asset Management This customer group includes individuals involved in sales, marketing, product development, business intelligence, and distribution, as well as investment management (often referred to as the buy side), which includes portfolio management and research. The company’s asset management offerings help companies connect with their clients because of Morningstar’s strong brand presence with both financial advisors and individual investors. The company offers a global reach and have earned investors’ trust in its unbiased approach, investor-centric mission, and thought leadership. The key products the company offers for asset management firms include Morningstar Direct, Morningstar Data, and Morningstar Indexes. For the buy side, key products areas include Morningstar Research, DBRS Morningstar, Morningstar Data, Morningstar Direct, and Morningstar Sustainalytics. Fixed Income Security Issuers, Arrangers, and Investors DBRS Morningstar typically issues credit ratings in response to requests from issuers, intermediaries, or investors. DBRS Morningstar credit ratings are requested for corporate short and long-term fixed income obligations, sovereign debt, single project financings and structured finance programs, including securitization of receivables, such as auto loans, credit cards, residential real estate loans and commercial real estate loans. In addition, claims-paying-ability credit ratings are issued for life, covering property/casualty, financial guaranty, title, and mortgage insurance companies. As of December 31, 2022, the company provided ratings for more than 4,000 issuers of debt. Private Market/Venture Capital Investors PitchBook covers the full lifecycle of venture capital, private equity, and merger and acquisition (M&A) activities, including the limited partners, investment funds, and service providers involved. The company’s main product for this customer group is the PitchBook Platform, an all-in-one research and analysis workstation that gives clients the ability to access data, discover new connections, and conduct research on potential investment opportunities. An Excel plug-in and mobile capabilities are included with the platform license, and Morningstar public equity research can also be delivered through the platform. As of December 31, 2022, the company served over 10,100 clients, including investment and research firms, venture capital and private equity firms, investment banks, limited partners, lenders, law firms, and accounting firms. The company also served corporate development teams at firms across industry sectors. Workplace/Retirement The company’s solutions are designed to help improve the DC retirement system by offering highly personalized savings and investment advice at the employee level, scalable investment and risk mitigation services at the plan and advisor level, and industry research at the policy and institutional level. The company’s focus is the U.S. market, because it continues to demonstrate healthy growth. The company’s core retirement products (managed retirement accounts, fiduciary services, and custom models) primarily reach individual investors through employers (plan sponsors) that offer DC plans for their employees. As of December 31, 2022, the company served 89 retirement service providers, broker dealers, asset managers, plan sponsors and RIAs, representing about 323,300 retirement plans. Individual Investors The company offers tools and content for individual investors who invest to build wealth and save for other goals, such as retirement or college tuition. A Gallup survey released in 2022 found that approximately 58% of individuals in the U.S. invest in the stock market either directly, through mutual funds, or self-directed retirement plans. The company designs products for individual investors who are actively involved in the investing process and want to take charge of their own investment decisions. The company also reaches individuals who want to learn more about investing or want to validate the advice they receive from brokers or financial advisors. The company offers three products for individual investors. The company’s largest based on engagement is its investing media site Morningstar.com, which offers data, editorial and research content available for free to registered customers and visitors. The company’s second product is Morningstar Investor (Morningstar Premium outside of the U.S. and Australia), which provides access to Morningstar’s research, advanced screening tools and portfolio management tools. The third product is a set of investment newsletters based on different investment types and investing strategies. Revenue Types The company leverages its proprietary data and research to sell products and services across its portfolio that generate revenue in three primary ways: License-Based: The majority of the company’s research, data, and proprietary platforms are accessed via subscription services that grant access on either a per user or enterprise-basis for a specified period of time. License-based revenue includes PitchBook, Morningstar Data, Morningstar Direct, Morningstar Advisor Workstation, Morningstar Sustainalytics, and other similar products. Asset-Based: The company charges basis points and other fees for assets under management or advisement. The company’s Investment Management, Workplace Solutions, and Morningstar Indexes products are categorized as asset-based revenue. Transaction-Based: Credit ratings and ad sales on Morningstar.com comprise the majority of the products that are transactional, or one-time, in nature, versus the recurring revenue streams represented by the company’s licensed and asset-based products. Major Products and Services PitchBook PitchBook's main product is the PitchBook Platform, an all-in-one web-hosted solution for investment and research professionals, including venture capital and private equity firms, corporate development teams, investment banks, limited partners, lenders, law firms, and accounting firms. Clients rely on the company for a central, easy-to-use platform that provides access to the broadest and most powerful collection of data and research covering the private capital markets, including venture capital, private equity, and M&A activities. To accommodate its clients' diverse needs, the platform offers company profiles for both private and public companies, advanced search functionality, and other features that help to optimize workflow by surfacing relevant information and insights. The company’s clients source deals, raise funds, build buyer lists, create benchmarks, and network with the PitchBook Platform. PitchBook also offers a mobile application, CRM integrations, an Excel plug-in, data feeds, and flexible, à la carte data solutions that allow clients to access a variety of data points on demand. In 2022, PitchBook continued to make significant investments in data sets and product capabilities, all focused on offering a comprehensive, fast, and intuitive platform experience for the company’s clients. PitchBook’s most significant investment in 2022 came with Morningstar’s acquisition of Leveraged Commentary & Data (LCD). LCD is the industry standard for leveraged loan and high-yield bond data, news, analysis, and indexes, providing coverage across the full lifecycle of loans. PitchBook continues to integrate LCD data into its platform, providing critical datasets for participants across the debt markets. At the same time, the company continued to expand its core datasets across global venture capital, private equity, and merger and acquisition (M&A). During the year, the company focused its efforts on increasing the number of companies and funds under coverage in the Europe, Middle East, and Africa (EMEA) and Asia-Pacific regions, as well expanding alternative asset class data sets, including real assets and hedge funds. PitchBook also integrated data sets that enable biotech and pharmaceutical investors and business professionals to track the progress of clinical trials. Finally, PitchBook Institutional Research Group (PIRG) continued to expand the scope of its coverage during 2022. PIRG added full-time analyst coverage of several new industries, including Carbon and Emissions Technology, e-Commerce, and Healthcare Services, among others. The group also added ESG research capabilities and expanded analyst coverage of the leveraged loans, high-yield bond, and private credit markets with the acquisition of LCD. Pricing for the PitchBook Platform is based on the number of seats, with standard base license fees per user and customized prices for large enterprises, boutiques, and startup firms. In 2022, PitchBook’s largest markets were North America and EMEA. PitchBook's main competitors are CB Insights, Preqin, and S&P Capital IQ. PitchBook had 94,628 licensed users worldwide as of December 31, 2022. Morningstar Data The company’s licensed data gives asset managers, redistributors, and wealth managers independent, comprehensive, and timely data and research they can use to empower investor success. The company’s offering spans managed investments (including mutual funds, ETFs, separate accounts, collective investment trusts, and model portfolios), equities, and fixed income securities and is available globally. The company is well-known for enriching managed investment raw data with research-driven intellectual property, resulting in proprietary statistics, such as the Morningstar Category, Morningstar Style Box, and Morningstar Rating, which it distributes through licensed data feeds. The company also offers a wide range of other data sets, including information on investment performance, risk analytics, full historical portfolio holdings, operations data (such as managed investments’ fees and expenses), cash flows, financial statement data, consolidated industry statistics, and investment ownership. Clients license Morningstar Data to build transparent products and services that all investors, from those just starting out to sophisticated and high net worth individuals, can easily understand and use to reach their investing goals. Morningstar Data is used to serve retail investors and their intermediaries, supporting a variety of investor communications, including websites, print publications, and marketing fact sheets, as well as for internal research and product development. Demand for Morningstar Data has increased as clients build digital solutions, prepare for regulatory requirements, and incorporate automation, artificial intelligence, machine learning, and other forms of data analytics into their workflows. The company is committed to covering its clients’ whole portfolios, and offering the data they need to make informed investment decisions. The company’s data feeds enable its clients to discover the data that they need, and to schedule delivery in S3, FTP, CSV, XML, JSON, Text, and TSV output formats. The company provides access to Morningstar Data utilizing an application programming interface (API) format to download and process large data files. The Morningstar Data team applies emerging methods in artificial intelligence to regression, classification, deep learning, natural language processing, and optical character recognition to extract data from structured and unstructured content. The Morningstar Data team uses a human in the loop approach where machine inferences are presented to a data analyst for validation. Validated data is published in Morningstar products and used to retrain and continuously improve the Morningstar Data team's machine learning models. This approach enables Morningstar to produce data faster without compromising the quality of data that the company’s clients use in making sound investment decisions. In 2022, the company builds on its commitment to cover the whole investor portfolio. The company expanded its coverage of public equities and fixed-income securities, while adding fixed-income analytics to deliver global reference data and evaluated prices for corporate and sovereign bonds. Within managed investment data, the company added to existing coverage of 529 plan portfolios, collective investment trusts (CITs), and model portfolios. During the year, the company also launched a U.K. Managed Portfolio database, which standardized portfolio data allowing for better like-for-like competitive analysis, distribution to advisors, and reporting to clients. Finally, the company introduced new regulatory data solutions in response to global investor protection, capital adequacy and sustainability regulations, as well as new data management solutions to support its asset management and wealth management clients by driving connectivity across their business functions. In 2022, Morningstar Data’s largest markets were North America and EMEA. The company’s main global competitors for mutual fund data include Refinitiv and FE fundinfo. For market and equity data, the company primarily competes with FactSet, S&P Global, ICE Data Services, Bloomberg, and Refinitiv. DBRS Morningstar DBRS Morningstar is the fourth largest credit rating agency in the world, offering a wide range of credit rating services and products that contribute to the transparency of international and domestic credit markets. DBRS Morningstar generates its revenue from providing independent credit ratings on financial institutions, corporates, and sovereigns, as well as on securitizations and other structured finance instruments, such as asset-backed securities (ABS), residential mortgage-backed securities (RMBS), commercial mortgage-backed securities (CMBS) and collateralized loan obligations (CLO). The credit analysis and the assignment of credit ratings can take place on issuance of new bonds or on a continuous basis for existing credit exposures. The fees to the issuer are based on the type of issuance, the size of the transaction, and the complexity of the analysis. Credit ratings are forward-looking opinions on credit risk that reflect the creditworthiness of a company or fixed-income security. They are determined within the framework of a ratings committee that represents a collective assessment of DBRS Morningstar’s opinion rather than the opinion of an individual analyst. These credit ratings are based on information that incorporates both global and local considerations and the use of approved methodologies and are determined in compliance with policies and procedures designed to avoid or manage conflicts of interest. DBRS Morningstar’s credit rating methodologies are publicly available and support the objectivity and integrity of the credit rating process. DBRS Morningstar also offers a micro-website dedicated to ESG factors deemed relevant to credit ratings analysis. In addition to ratings and research opinions, DBRS Morningstar also offers data products derived from its ratings activities and analytical tools. These include ratings data feeds that can be integrated into companies’ internal databases, web-based research, and analytical tools. In 2021, Morningstar expanded the way it interacts with issuers and investors by launching a new credit solution provider, Morningstar Credit Information and Analytics (MCIA), that is separate from DBRS Morningstar and offers credit products and services beyond credit ratings. DealView, a commercial mortgage-bond monitoring service, is the main product sold by MCIA. In 2022, MCIA continued to work on developing modular credit information products that leverage the company’s credit expertise and embed in the workflows of internal and external customers, along with an initiative to develop a unified commercial real estate product with a strategic partner. In 2022, DBRS Morningstar's largest markets by revenue were the United States, followed by Canada and EMEA. DBRS Morningstar competes with several other firms, including Fitch, Kroll Bond Ratings, Moody’s, and S&P Global Ratings. Morningstar Direct Morningstar Direct is an investment-analysis platform that delivers rich data and analytics across asset classes, built on Morningstar's global database of both registered and non-registered securities, as well as data from third-party providers. Users can create advanced performance comparisons and in-depth analysis of an investment's underlying investment style, as well as custom-branded reports and presentations. Morningstar Direct helps equity and multi-asset strategy asset managers with market research, product positioning, competitive analysis, and distribution strategies, whereas wealth managers predominately use the tool to assist with manager research, fund selection, and the construction, monitoring, and distribution of model portfolios. Morningstar Direct is built on everything that makes Morningstar special: data and research, ratings, analytics, design, and a mission of empowering investor success. Morningstar Direct is a Windows desktop application that is installed locally on users’ computers. The Direct desktop application connects over the internet to databases and application servers hosted primarily in Morningstar data centers, with some use of cloud (AWS) infrastructure. A large portion of Morningstar Direct’s features and functionality are delivered using modern web components and frameworks delivered within the legacy application. In 2022, Morningstar Direct continued to execute against a product strategy centered around removing barriers to its clients’ success, surfacing research within the product that enables users to take their next step faster, and expanding the data breadth and depth to more vehicle types. The team is dedicated to improving the user experience from the inside out by making innovative solutions within the platform even more accessible. During the year, the company introduced the flexibility to allow clients to create their own performance reporting feeds using Morningstar Direct as a delivery mechanism, streamlining the workflow for clients using Morningstar Direct’s robust performance reporting capabilities to better understand the competitive landscape. The company also continued to enrich and expand Analytics Lab, a data analytics platform introduced in 2021 that integrates Jupyter Notebooks, an open-source technology, with Morningstar’s proprietary data, research, and investment and portfolio objects. Throughout 2022, the company launched more than 20 new notebooks, all with the goal of helping clients answer the questions it know they are asking faster than ever before. Morningstar Direct also released two hubs which act as a central repository of research and tools related to a specific topic that lives inside the platform, connecting disparate areas together, so users don’t have to navigate across multiple menus and modules to get everything they need for a given workflow. These two hubs are dedicated to Sustainability and Portfolios, allowing the company’s users to access education and research content, and then seamlessly shift into an analytical workstream. Lastly, the company continues to expand portfolio level data within Morningstar Direct, enriching its data coverage across fixed income, ETFs, ESG, model portfolios, and alternatives to reflect investors' more complex and dynamic strategies. Morningstar Direct's primary competitors are Bloomberg, eVestment Alliance, FactSet Research System’s Cognity and SPAR, Zephyr, Strategic Insight’s Simfund, and Refinitiv’s Eikon. Morningstar Direct's primary markets are North America and EMEA. Morningstar Direct had 18,421 licensed users worldwide as of December 31, 2022. Investment Management Investment Management’s flagship offering is Morningstar Managed PortfoliosSM, an advisor service consisting of model portfolios designed for fee-based independent financial advisors. The company’s core markets are the U.S., U.K., South Africa, Australia, and India. The company targets like-minded advisors that hire it to manage a substantial portion of their client’s assets the Morningstar way—putting investors first, keeping costs low, and investing for the long-term. The company builds its multi-asset strategies using mutual funds, ETFs, and individual securities, and tailor them to meet specific investment time horizons, risk levels, and projected outcomes. Morningstar Managed Portfolios are available through two core distribution channels: the company’s fee-based discretionary asset management service, also known as a turnkey asset management program (TAMP), or as strategist models on third-party managed account platforms. The company charges asset-based program fees for Managed Portfolios, which are typically based on the distribution channel (i.e., TAMP versus auto models) and the products contained within the portfolios. The company has TAMPs available in the U.S. and India, and act as a fund and model provider in its other international markets. The company’s TAMP is an end-to-end digital investing experience, in which advisors access its model portfolios through a proprietary wealth management platform that offers functionality, such as risk assessments, proposals, digital account opening and ongoing management, client reporting, customer support, marketing services, and back-office features, such as trading and billing services. Using its TAMP allows the advisor to share fiduciary responsibility with the company. In 2022, Morningstar acquired Praemium’s U.K. and international wealth management platform business. Praemium offers proprietary, friction-free, SaaS-based technology and services that allow fee-based advisors to outsource key elements of the advice workflow. The platform enables the company to expand its wealth management platform capabilities internationally beyond the U.S. The company continued to enhance the advisor and client experience on its TAMP, augmenting customer support with a digital self-service help center, document submission, and case tracking center. In 2022, the company launched direct indexing capabilities through the TAMP allowing advisors to work with clients to personalize index portfolios to address individual preferences and tax management needs, as part of its ongoing strategy to build a comprehensive Wealth platform leveraging capabilities from across Morningstar. In addition to Morningstar Managed Portfolios, other services the company provides include institutional asset-management (e.g., act as a subadvisor) and asset-allocation services for asset managers, broker/dealers, and insurance providers. We offer these services through a variety of registered entities in Australia, Canada, the United Arab Emirates (UAE), France, India, Japan, South Africa, the U.K., and the U.S. For Morningstar Managed Portfolios offered through its TAMP, the company’s primary competitors are AssetMark, Orion/Brinker Capital, and SEI Investments. The company’s primary strategist offering competitors are Blackrock, Russell, and Vanguard in the U.S., and it faces competition from Financial Express and Tatton in EMEA, and Blackrock, Dimensional, and Vanguard in Australia. Workplace Solutions Morningstar Workplace Solutions includes several different offerings, including managed retirement accounts (MRA), fiduciary services, Morningstar Lifetime Allocation Funds, and custom models. Delivered primarily through the Morningstar Retirement Manager platform, the company’s MRA program helps retirement plan participants define, track, and achieve their retirement goals. As part of this service, the company delivers personalized recommendations for a target retirement income goal, a recommended contribution rate to help achieve that goal, a portfolio mix based on its Total Wealth methodology, and specific investment recommendations. The company then manages the participant’s investment portfolio for them, assuming full discretionary control. The company also offers Advisor Managed Accounts, a program that allows advisor firms to specify and assume fiduciary responsibility for the underlying portfolios that are used within MRA. The company’s main competitors in MRA are Edelman/Financial Engines, Fidelity, and NextCapital. Companies that provide automated investment advice to consumers, such as Betterment and Wealthfront, are also attempting to break into employer-sponsored retirement markets. The company’s main competitors in fiduciary services are Mesirow and Wilshire Associates, but it is starting to see growing competition from smaller players, such as LeafHouse Financial and IRON Financial. Broker/dealers are also looking to introduce their own fiduciary services distributed through their advisors. With its custom models, the company offers two different services. The company works with retirement plan record-keepers to design scalable solutions for their investment lineups, including target maturity models and risk-based models. The company also provides custom model services direct to large plan sponsors, creating target date funds that are customized around a plan’s participant demographics and investment menus. The company also serves as a non-discretionary subadvisor and index provider for the Morningstar Lifetime Allocation Funds, a series of target-date CITs offered by Benefit Trust to retirement plan sponsors. Retirement plan sponsors can select a conservative, moderate, or growth version of the glide path for the funds based on the needs of participants in the plan. In 2022, the company added 250 plans and 11,500 participants across the 16 RIAs and one asset manager on its advisor managed accounts network. The company also onboarded one of the nation’s largest retirement plans onto its managed accounts platform; developed a personal target-date fund service that can blend target-date vintages to provide a more customized asset allocation for a participant; and launched the Morningstar Center for Retirement and Policy Studies, which is tasked with helping the industry make better public policy, plan design, and product decisions. Morningstar Sustainalytics Morningstar Sustainalytics provides ESG data, research, analysis, and insights to institutional investors globally, covering equity, fixed income, and sovereign asset classes. Its flagship ESG Risk Ratings also underpin Morningstar’s Sustainability Fund Ratings for mutual funds and ETFs, multiple investable indexes, and numerous investment platforms. Morningstar Sustainalytics also serves issuers and banking institutions through its corporate solutions unit and is notably the world’s largest provider of green bond Second Party Opinions. In 2022, Morningstar Sustainalytics expanded its EU Action Plan Solutions to enable clients to comply with the increased reporting requirements created by European regulators. The EU Action Plan, first laid out in 2018, is a sweeping regulation with multiple components that aims to direct private capital towards sustainable investments. To help investors fulfill their EU Action Plan requirements, the company expanded its Principle Adverse Indicator (PAI) data set to cover 13,000 companies, and it launched Sustainable Finance Disclosure Regulation (SFDR) PAI Portfolio Reporting Solution. In addition, the company expanded its EU Taxonomy Solution research, which includes coverage on more than 10,500 companies. With reporting central to compliance requirements, the company also released its EU Taxonomy Portfolio Reports, which are designed to help clients identify and understand the portions of their portfolios which are both eligible and aligned to the Taxonomy. During the year, additional new product launches included Physical Climate Risk Metrics, a data product that enables investors to assess the potential risks companies face as a result of physical hazards brought about by climate change. The company also incorporated Impact Metrics into Morningstar’s various software platforms. Impact Metrics support institutional investors’ diverse ESG investing activities, from selecting companies with desired social or environmental impacts to reporting on company or fund-level impact to product creation. Finally, Morningstar Sustainalytics expanded the company’s ratings coverage universe by approximately 30% to cover more than 16,300 analyst-based ESG Risk Ratings, spanning public equity, fixed-income, and privately held companies. The expanded research universe covers more Chinese companies listed in Shanghai and Shenzhen, which figure prominently in emerging-market indices. Morningstar Sustainalytics operates on a subscription-based pricing model for its ESG research products, which supports a recurring revenue model. The corporate solutions unit deploys a model that combines one-time revenue with subscription-based recurring licensing revenue. In 2022, Morningstar Sustainalytics' largest markets were EMEA and North America. Major competitors for Morningstar Sustainalytics include MSCI, FTSE Russell, Institutional Shareholder Services (ISS), S&P Global, Moody's, and Federated Hermes. While the traditional ESG research market continues to aggressively consolidate, it expects that the market will continue to evolve as new entrants emerge and investors acquire ESG data from new distributors (for example, directly from stock exchanges). Large asset managers like BlackRock, State Street, UBS, and JP Morgan are also investing heavily to build in-house ESG capabilities and sustainable investing products. New technologies, specifically those that employ artificial intelligence, are facilitating these trends by accelerating the sourcing and use of unstructured ESG data. Morningstar Advisor Workstation Morningstar Advisor Workstation is a web-based research, investment planning, and portfolio analysis platform that empowers financial professionals to build trusted client relationships through personalized investment advice. It is powered by Morningstar data, research, investor profiling tools, and robust portfolio analytics. The software is typically sold through an enterprise contract and is primarily for retail advisors due to its strong ties and integrations with home-office applications and processes and a library of Financial Industry Regulatory Authority (FINRA)-reviewed reports for compliance needs. It allows advisors to build and maintain a client portfolio database that can be fully integrated with the home-office firm's back-office technology and resources. This helps advisors present and clearly illustrate their portfolio investment strategies and show the value of their advice. In 2022, the company enhanced its investment planning tools with new capabilities to help advisors offer personalized investment advice to their clients. Upgrades to the Morningstar Risk Ecosystem enable remote risk profiling, making it easier for advisors to capture and integrate each client’s specific situation into investment proposals. Moreover, the company launched a new Risk Comfort Range that clearly shows how investment proposals align to a client's long-term willingness to take risk. Finally, the company added a new portfolio optimization tool that enables advisors to capture each client's values and sustainability preferences and then incorporate them into investment plans. To help advisors differentiate themselves to their clients with more specialized financial recommendations, the company expanded its research library to include data, screening, and comparison tools for public models via the Model Exchange, and structured products and annuities through a collaboration with Luma Technologies. The company also launched the App Hub in Advisor Workstation, a two-sided digital marketplace where clients can access third-party applications that connect into the platform. Furthermore, the company integrated Morningstar Research Portal, which delivers a modernized suite of tools and visuals to help advisors show the value of their advice to investors. Finally, the company launched Scenario Builder to help its enterprise clients meet the evolving regulatory requirements of the new SEC Marketing Rule, which prohibits an advisor from presenting hypothetical performance unless specific conditions are met to address its potentially misleading nature. Evolved from the legacy Hypothetical Illustration Tool, Scenario Builder provides several new enterprise-level customizations, like the ability to set firm-wide fee structures and control over which hypothetical workflows their advisors can access. Scenario Builder is powerful tool that can be tailored to the custom compliance decisions unique to each enterprise. Morningstar Advisor Workstation is offered in the U.S. and Canada. Competitors for Morningstar Advisor Workstation include AdvisoryWorld (LPL Financial), YCharts, Riskalyze, Orion, Broadridge, and CapIntel outside of the U.S. Occasionally, broker/dealers also decide to build their own internal tools and attempt to bring their advisors’ practice management tools in-house. Morningstar.com The company’s largest website, Morningstar.com, helps individual investors discover, evaluate, and monitor stocks, ETFs, and mutual funds; build and monitor portfolios; and monitor the markets. Revenue is generated from paid memberships for Morningstar Investor, Morningstar Premium and Internet advertising sales. Morningstar Investor is the successor to Morningstar Premium in the U.S. and Australia. The company’s Morningstar Investor offering focuses on bringing clarity and confidence to investment decisions. Members have access to proprietary Morningstar research, ratings, data, and tools, including analyst reports, portfolio management tools (such as Portfolio X-Ray), and stock and fund screeners. The company offers Investor and Premium memberships in Australia, Canada, Italy, the U.K., and the U.S. Unlike many consumer-facing websites, Morningstar.com sells ad space directly to advertisers. This approach allows the company to build meaningful relationships with its advertisers and helps it protect the integrity of its brand. In 2022, the company continued to invest in the technology platform supporting Morningstar.com, which provides improved web performance, ranking in search engines, and cost savings in website maintenance. The company also further developed its new individual investor digital portfolio management and research tool in Morningstar Investor. The company charges a monthly or annual subscription fee for Morningstar Investor and Morningstar Premium and an annual subscription fee for Morningstar Newsletters. Morningstar.com primarily competes with trading platforms that concurrently offer research and investing advice, such as Fidelity, Schwab, and TD Ameritrade. Research sites, such as The Motley Fool, Seeking Alpha, and Zacks Investment Research, also compete with the company for paid membership. In addition, free or freemium websites, such as Yahoo Finance and Dow Jones/Marketwatch are also competitors for some customers, The Wall Street Journal, Kiplinger, and TheStreet.com, all compete for the advertising dollars of entities wishing to reach an engaged audience of investors. As of December 31, 2022, Morningstar.com had more than 108,000 paid Morningstar Investor members in the U.S. plus an additional roughly 13,700 Premium and Morningstar Investor members across other global markets. Morningstar Indexes Morningstar offers a broad range of market indexes that can be used as performance benchmarks and as the basis for investment products and other portfolio strategies for a wide range of retail and institutional investor clients. Drawing on Morningstar's deep intellectual property and focus on the end investor, the company’s indexes track all major global regions and asset classes, including equity, fixed income, and multi-asset, as well as private markets. In 2022, Morningstar Indexes continued to grow its capabilities. The team made significant progress on building its in-house index calculation, expected to be completed in 2023 and drive significant benefits for clients and the business. Morningstar Indexes also completed the acquisition, integration, and rebranding of the LCD Leveraged Loan Indexes under the Morningstar Indexes umbrella. The team also expanded on its U.K. and EMEA-based product, client, and service organization, grew its ESG indexes in collaboration with Morningstar Sustainalytics, and worked with PitchBook to introduce the Morningstar PitchBook Global Unicorn Indexes, the first global benchmark series to provide daily tracking for the late-stage venture capital market. The company licenses Morningstar Indexes to numerous institutions that offer ETFs, exchange-traded notes, mutual funds and separately managed accounts based on the indexes. Firms license Morningstar Indexes for both product creation (where it typically receives the greater of a minimum fee or basis points tied to assets under management) and data licensing (where it typically receives annual licensing fees). In both cases, its pricing varies based on the level of distribution, the type of user, and the specific indexes licensed. In 2022, Morningstar Indexes' largest markets were North America and EMEA. Major competitors for Morningstar Indexes include MSCI, FTSE Russell, S&P Dow Jones Indices (offered through S&P Global), and Bloomberg Indices. Largest Customer In 2022, the company’s largest customer accounted for less than 3% of its consolidated revenue. Acquisitions and Divestitures The company acquired Aquantix in the first quarter of 2022. The company acquired LCD and Praemium Portfolio Services Limited in the second quarter of 2022. International Operations The company conducts its business operations outside of the U.S. through wholly- or majority-owned subsidiaries located in each of the following 31 countries: Australia, Brazil, Canada, Cayman Islands, Chile, China, Cyprus, Denmark, France, Germany, Hong Kong, India, Italy, Japan, Jersey, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Romania, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Thailand, the U.A.E., and the U.K. Intellectual Property and Other Proprietary Rights The company registered the Morningstar name and/or logo in approximately 50 jurisdictions, including the EU. Morningstar and the Morningstar logo are both registered marks of Morningstar in the U.S. The trademarks and service marks include Morningstar Advisor Workstation; Morningstar Analyst Rating; Morningstar ByAllAccounts; Morningstar Data; Morningstar Direct; Morningstar Enterprise Components; Morningstar Indexes; Morningstar Managed Portfolios; Morningstar Market Barometer; Morningstar Office Cloud; Morningstar Plan Advantage; Morningstar Portfolio X-Ray; Morningstar Rating; Morningstar Retirement Manager; Morningstar Style Box; Morningstar Sustainability Rating; Morningstar.com; PitchBook; DBRS; and Morningstar Sustainalytics. In addition to trademark registrations, the company holds several U.S. patents, either directly or through its wholly-owned subsidiary, Morningstar Investment Management LLC. These patents include those for coordinate-based document processing/data entry, portfolio management analysis, lifetime asset allocation, and asset allocation with annuities. Seasonality The company’s business has a minimal amount of seasonality. The company sells most of its products with subscription terms of at least one year (year ended December 31, 2022) and it recognizes revenue ratably over the term of each subscription agreement. This tends to mitigate most of the seasonality in its business. Competition Some of the company’s main competitors include Bloomberg, S&P Global, Refinitiv, Moody's, and Fitch. Government Regulation Three of the company’s subsidiaries, Morningstar Investment Management LLC (Morningstar Investment Management), Morningstar Investment Services LLC, and Morningstar Research Services LLC, are registered as investment advisors with the SEC under the Investment Advisers Act of 1940 (Advisers Act). As Registered Investment Advisors, these companies are subject to the requirements and regulations of the Advisers Act, including certain fiduciary duties to clients. The fiduciary duties of a Registered Investment Adviser to its clients include an obligation of good faith and full and fair disclosure of all facts material to the client’s engagement of the advisor, an obligation to provide investment advice suitable for the particular client, an obligation to have a reasonable, independent basis for investment recommendations, an obligation when directing client brokerage transactions to seek the best execution thereof, and an obligation to vote client proxies in the best interests of the client. Other requirements primarily relate to record-keeping and reporting, as well as general anti-fraud prohibitions. As Registered Investment Advisors, these subsidiaries are subject to examination by the SEC, which may include an on-site examination. Morningstar Funds Trust (the Trust) is registered with the SEC as an open-end management investment company under the Investment Company Act of 1940, as amended (Investment Company Act). Morningstar Investment Management serves as the sponsor and investment advisor of the Trust, and therefore is subject to the requirements of the Investment Company Act. These requirements relate primarily to record-keeping, reporting, standards of care, valuation, and distribution. As sponsor and investment advisor to the Trust, Morningstar Investment Management is subject to examinations by the SEC, which may include on-site examinations. Connected with the Trust, Morningstar Investment Management is registered with the U.S. Commodity Futures Trading Commission as a commodity pool operator (CPO) and a member of the National Futures Association (NFA). As such, Morningstar Investment Management is subject to the requirements and regulations applicable to CPOs under the Commodity Exchange Act. These requirements primarily relate to record-keeping and reporting. As a CPO, Morningstar Investment Management is subject to examinations by the NFA and/or the U.S. Commodity Futures Trading Commission, which may include on-site examinations. Morningstar Investment Services LLC is a broker/dealer registered under the Securities Exchange Act of 1934 (Exchange Act) and a member of FINRA. The regulation of broker/dealers has, to a large extent, been delegated by the federal securities laws to self-regulatory organizations, including FINRA. Subject to approval by the SEC, FINRA adopts rules that govern its members. FINRA and the SEC conduct periodic examinations of the brokerage operations of Morningstar Investment Services. Broker/dealers are subject to regulations that cover all aspects of their securities business, including sales practices, capital structure, record-keeping, and the registration and conduct of directors, officers, and employees. As a registered broker/dealer, Morningstar Investment Services LLC is subject to certain net capital requirements under the Exchange Act. These requirements are designed to regulate the financial soundness and liquidity of broker/dealers. Morningstar Australasia Pty Limited and Morningstar Investment Management Australia Limited are subsidiaries that provide financial services that include investment management, asset allocation, portfolio construction and investment research services in Australia. They are each registered under an Australian Financial Services license and subject to oversight by the Australian Securities and Investments Commission (ASIC). The licenses require them to maintain positive net asset levels and minimum capital requirements, and to comply with the audit requirements of the ASIC. Morningstar Investment Management Australia Limited is additionally the Responsible Entity and the issuer of units in managed funds for superannuation funds, institutions, platform distributors, financial advisers, and individuals within the Australian market. Morningstar Investment Management Europe Limited is authorized and regulated by the FCA to provide financial services commensurate with the regulatory permissions afforded. Those regulatory permissions allow Morningstar Investment Management Europe Limited to advise, arrange, deal and manage investments for professional and eligible counterparty clients across a range of investment instruments, including shares, debt securities and units in collective investment schemes. The related services are delivered through managed portfolios, manager selection, segregated mandates and U.K. authorized fund offerings, predominantly to U.K. domiciled clients and investors. As an authorized firm, Morningstar Investment Management Europe Limited is subject to the applicable requirements and regulations, as defined in the FCA Handbook of rules and guidance. Morningstar Investment Consulting France SAS is authorized by the Autorité de Contrôle Prudentiel et de Résolution (ACPR) as a Markets in Financial Instruments Directive (MiFID) investment firm. Under this authorization and commensurate with the passporting arrangements established, Morningstar Investment Consulting France SAS is permitted to provide investment advice pertaining to shares, debt securities and units, or shares, of collective investment undertakings to financial institutions based in the EU. Morningstar Investment Management South Africa (Pty) Ltd is an authorized financial services provider, regulated by the South African Financial Sector Conduct Authority to provide financial services, commensurate with the regulatory permissions afforded. Specifically, Morningstar Investment Management South Africa (Pty) Ltd is permitted to undertake activity under both Category I (advisory) and Category II (discretionary) licenses. The related advisory and discretionary activities are delivered pursuant to the associated product approvals, granted by the Financial Sector Conduct Authority. DBRS Morningstar’s U.S. credit rating entity, DBRS, Inc., is registered with the U.S. Securities and Exchange Commission (SEC) as a Nationally Recognized Statistical Rating Organization (NRSRO) and is authorized to rate classes of credit ratings in structured finance instruments, corporate credit issuers, sovereign entities, insurance companies, and financial institutions. As an NRSRO, DBRS, Inc. is subject to certain requirements and regulations under the Exchange Act. These requirements primarily relate to record-keeping, reporting, governance, and conflicts of interest. As part of its NRSRO registration, DBRS, Inc. is subject to annual examination by the SEC. DBRS, Inc.’s affiliated rating agencies, DBRS Limited, DBRS Ratings Limited, and DBRS Ratings GmbH, are each also registered with the SEC as credit rating affiliates of DBRS, Inc. DBRS Morningstar’s Canadian credit rating entity, DBRS Limited, is designated as a Designated Rating Organization (DRO) in Canada with the Ontario Securities Commission (OSC) as its principal regulator. DBRS Limited provides independent credit rating services in structured finance instruments, corporate credit issuers, governments, insurance companies, and financial institutions. As a DRO, DBRS Limited is subject to certain requirements and regulations under National Instrument 25-101. These requirements primarily relate to record-keeping, reporting, governance, and conflicts of interest. As part of its DRO registration, DBRS Limited is subject to examination by the OSC. DBRS Limited’s affiliated rating agencies, DBRS, Inc., DBRS Ratings Limited, and DBRS Ratings GmbH, are each also designated as DRO affiliates in Canada. DBRS Morningstar’s credit rating entity located in the U.K., DBRS Ratings Limited, is registered with, and regulated, by the U.K. Financial Conduct Authority (FCA) as a credit rating agency. DBRS Ratings Limited provides independent credit rating services in sovereign and public finance, structured finance, and corporate finance, including financial institutions, corporate credit issuers, and insurance undertakings. As a registered credit rating agency, DBRS Ratings Limited is subject to certain requirements under the U.K. regulations governing credit rating agencies. These requirements primarily relate to record-keeping, reporting, governance, and conflicts of interest. DBRS Morningstar´s credit rating entity in the European Union (EU), DBRS Ratings GmbH (located in Frankfurt, Germany), which together with its branches, DBRS Ratings GmbH Sucursal en España (located in Madrid, Spain) and DBRS Ratings GmbH, Branch India (located in Mumbai, India) is registered with, and regulated by the European Securities and Markets Authority (ESMA) as a credit rating agency. DBRS Ratings GmbH is registered to provide independent credit rating services in sovereign and public finance, structured finance, and corporate finance, including financial institutions, corporate credit issuers, and insurance undertakings. As a registered credit rating agency, DBRS Ratings GmbH is subject to certain requirements under Regulation (EC) No 1060/2009, as amended. History Morningstar, Inc. was founded in 1984. The company was incorporated in Illinois in 1984.