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Morningstar reported third quarter results on Thursday, indicating that net income rose 47% to $19.9 million, or 41 cents per diluted share, up from $13.5 million, or 29 cents per diluted share, in the third quarter of 2006.

Mutual fund giant Fidelity Investments is expected to lay off 200 employees this week in an effort to tighten spending, according to The Wall Street Journal.

T. Rowe Price may have achieved the biggest coup yet of U.S. fund companies looking to expand into China, BusinessWeek reports.

Burton Malkiel, the esteemed professor of economics at Princeton University, says the big growth story in the coming years will be China, and within 20 years, its economy with overtake that of the U.S., sister publication On Wall Street reports.

Changes to the Qualified Domestic Institutional Investor (QDII) program in China will free up some of the country’s $2.25 trillion in household savings to move to overseas markets, the International Herald Tribune reports.

While Advisor Perspectives, a consulting firm that specializes in high-net-worth investors, maintains that Morningstar’s star rating system works broadly well over a three-year period, it’s inconsistent across investment categories, Dow Jones reports.

Not to be outdone by Fidelity and Vanguard, which last month launched income funds of their own specially tailored for retirees, Charles Schwab has launched an income fund intended to compete with annuities, Dow Jones reports.

Bush Administration officials, pension plans and financial service firms joined the Investment Company Institute this week in testifying before Congress on how breaking out the various fees in 401(k) plans separately not only would be costly but would confuse investors.

Institutional and private investors in the two failed Bear Stearns hedge funds have joined forces to press for an inquiry and the replacement of the funds’ directors and general partner with broker/dealer FTI Capital Advisers.

The Securities and Exchange Commission and the Financial Industry Regulatory Authority will hold seminars to help chief compliance officers and broker/dealers, much as the SEC helps CCOs at investment companies through its CCOutreach. The program will be called CCOutreach BD, with the first national meeting tentatively scheduled for March, followed by regional meetings throughout the country.

Market share in the hedge fund industry is increasingly being dominated by the top six players, The Financial Times reports.

Faced with a decline in manufacturing jobs in Japan, Tokyo is trying to become the area’s financial capital, and one of the first steps in that crusade is the formation of a new stock exchange for Asian start-up companies, The Wall Street Journal reports.

Moody’s began cutting ratings on collateralized debt obligations (CDOs) on Friday, and now Fitch says it expects to severely downgrade scores of CDOs, including as many as two-thirds of those that carry the highest, triple-A rating, The Wall Street Journal reports.

For the first time since June 2006, hedge funds delivered a negative monthly return in August, declining by 1.53%, Investment Week reports, citing data from Lipper’s Hedge Fund Insight Report. And for the first time this year, all hedge fund categories were also negative.

The U.K.’s Financial Services Authority is concerned that hedge funds are remiss in their duty to stamp out market abuse, and as a result, plans to examine a wider range of funds, The Daily Telegraph reports. While some hedge funds have controls in place, they take a “complacent attitude” toward possible infractions.

The Financial Industry Regulatory Authority has fined Oppenheimer & Co. $1 million for intentionally submitting inaccurate mutual fund breakpoint data and for failing to properly supervise its brokers.

Assets in130/30 funds will explode at an annual compound growth rate of 141% over the next three years, rising from $140 billion this year to $2 trillion by 2010, according to TABB Group. By comparison, assets in actively managed equity funds will rise a scant 3%.

Following its acquisition by J.C. Flowers, BISYS Retirement Services will be renamed Ascensus, which is Latin for “moving forward.” Over the coming months, the BISYS name and logo will be gradually phased out.

A number of mutual funds and pension plans are investing in China’s thriving coal industry, the Associated Press reports. But unsafe worker conditions and pollution could create a backlash by socially responsible and sustainability investors.

Financial advisers are increasingly turning to equity income funds because of their ability to provide income while still growing from capital appreciation, MarketWatch reports.