The Morningstar® Wide Moat Focus Index is comprised of the 20 wide moat stocks—those companies with sustainable competitive advantages—with the most attractive valuations as measured by the Morningstar price/fair value ratio. The Morningstar Wide Moat Focus Index has handily outperformed the S&P 500 Index, in the trailing one-, three-, and five-year periods on an annualized percentage return basis. In the past year alone, the index has outperformed the S&P 500 Index by 16.21 percentage points.

Within one of our flagship monthly newsletters, Morningstar® StockInvestor™, Editor Paul Larson manages the publication’s two real-money, market-beating model portfolios—the Tortoise and the Hare. We have two goals for these portfolios: to outperform the S&P 500 Index and to generate positive returns regardless of the broad market environment.

Versus the S&P 500 Index, the Morningstar Hare Portfolio has outperformed in the trailing one-, three-, and five-year periods on an annualized percentage return basis. The Morningstar Tortoise Portfolio has outperformed the S&P 500 Index for the trailing three- and five-year periods.

As of Sept. 30, 2009, there were 56 stocks with a 5-star Morningstar Rating, which is calculated by comparing a stock’s current market price with Morningstar’s estimate of the stock’s fair value. In the trailing one-, three-, and five-year periods, Morningstar’s 5-star-rated stocks have outperformed the S&P 500 Index on an annualized percentage return basis. Stocks assigned 4-star ratings also outperformed the S&P 500 Index in the same periods.

We also publish a quarterly column about our portfolio performance on our Web site for individual investors, Morningstar.com. Our latest article is available at http://news.morningstar.com/articlenet/article.aspx?id=304491&page=%252fstockratingperformance.