Client Action Needed: Morningstar Clarification on Changes to Prospectus Benchmarks Following SEC Updates in Morningstar Fund API Center

Originally posted Aug. 4, 2025

We would like to provide you an explanation for why clients are seeing updates to the Primary Prospectus Benchmark and outline your options with the Morningstar Fund API Center to accommodate these changes.

Funds have been required since at least 1993 to disclose a broad-based Benchmark in the prospectus. The U.S. Securities & Exchange Commission (SEC) rule and amendments in the Tailored Shareholder Reports for Mutual Funds and Exchange-Traded Funds provide more contextual language of what benchmarks are not appropriate as broad-based market indexes.

In response to this, Morningstar has implemented changes to comply with the SEC's direction, whereby the Primary Prospectus Benchmark will consistently correspond to the leading or first broad-based index in the prospectus performance table.

These changes refine the current benchmark offering to match the intent and transparency of the data for compliance and performance measurement, as well as to ensure the consistent collection of benchmark data by eliminating custom collection rules and aligning with a single interpretation of benchmark data.

Morningstar Updates

Morningstar now has four benchmark data point fields, so the data we collect can match these requirements, providing investors with clarity and allowing for deeper analysis of portfolio performance against their objective benchmarks. A fund may include, in addition to the required broad-based securities market index (Primary), one or more additional indexes (Secondary).

Please note, if you are analyzing passive index funds, and other funds that have used the Primary Prospectus Benchmark as the performance-tracking index, you will want to leverage the Focus benchmark moving forward.

• The Primary Prospectus Benchmark now corresponds to the leading broad-based index, as collected from the fund's prospectus performance table graph, to comply with the SEC's Tailored Shareholder Report regulation.
• The Secondary Prospectus Benchmark corresponds to the benchmark listed in the prospectus immediately after the first/broad-based index in the prospectus performance table or, if available, in the Prospectus Fund Objective.
• The Tertiary Prospectus Benchmark corresponds to either the third benchmark in the prospectus performance graph or within the Prospectus Fund Objective.
• The Focus Prospectus Benchmark selects from the three benchmarks collected as the benchmark that most closely aligns with the fund's strategy.

Morningstar Fund API Center Impact and Client Action Needed

Since Inception Benchmark Return and Fund Benchmarks APIs

• The above-noted Primary and Secondary Prospectus Benchmark updates have been automatically applied to their corresponding data points within the Since Inception Benchmark Return and Fund Benchmarks APIs.
• The below Tertiary Prospectus Benchmark and Focus Prospectus Benchmark data points are available in the Fund Share Class Basic Info and Fund Benchmark APIs.
  • TertiaryProspectusBenchmarkId
  • TertiaryProspectusBenchmarkName
  • FocusProspectusBenchmarkId
  • FocusProspectusBenchmarkName
  • FocusProspectusBenchmarkChangeHistory*
    • *Is only available in the Fund Benchmarks API
• Client Action Needed: If your firm is utilizing Primary Prospectus Benchmark data points through the Fund Share Class Basic Info or Fund Benchmark APIs, we recommend reviewing your use case for the benchmark data to determine if adjustments are necessary to reflect the most appropriate benchmark.

Relative Risk API

• The above-noted Primary and Secondary Prospectus Benchmark updates have been automatically applied to their corresponding risk data points within the Relative Risk API.
• Starting Aug. 7, 2025, there will be the following four new APIs that provide Relative Risk Measure data points relative to the Focus Prospectus Benchmark. Please refer to the attached specification, which contains the API Summary, Data Point Specification, and Sample Responses.
  •  These APIs will differ in their return type methodology and as of dates, with having month-end or quarter-end data. 
    • RelRiskFocusBenchTotalRetME: Relative Risk Measures: Focus Benchmark (Total Return, Month End)
    • RelRiskFocusBenchTotalRetQE: Relative Risk Measures: Focus Benchmark (Total Return, Qtr. End)
    • RelRiskFocusBenchMktRetME: Relative Risk Measures: Focus Benchmark (Market Return, Month End)
    • RelRiskFocusBenchMktRetQE: Relative Risk Measures: Focus Benchmark (Market Return, Qtr. End) 
      • Please note that Focus Benchmark data points only apply to funds that have a named Focus Benchmark. Funds without a Focus Benchmark (i.e., funds sold outside of the U.S.) will not return data for Relative Risk Focus Benchmark data points.

• Client Action Needed:
  •  
    • Clients Entitled to RelativeRiskMeasuresProspectus API: Firm will be automatically entitled to the four new APIs, as they have standing entitlement to the current RelativeRiskMeasuresProspectus API.
      • If your firm utilizes Primary Prospectus Benchmark data points through the Relative Risk API, we recommend reviewing your use case for the benchmark data to determine if adjustments are necessary to reflect the most appropriate benchmark.
    • Clients Not Entitled to RelativeRiskMeasuresProspectus API: Please contact your Customer Success Manager or Sales Representative if your firm requires entitlement to the four new APIs.

For further details about the overall ruling changes and Morningstar's changes, please refer to the attached FAQ. Contact Morningstar Support with any additional questions or needs.