Special Program Root Tag

Both the Securities Industry and Financial Markets Association and the Investment Company Institute sent letters to the Securities and Exchange Commission urging it not to discontinue 12b-1 fees, which, the ICI estimates, are used by 70% of funds today. SIFMA, representing the securities and bond industry, said that eliminating the fees would harm investors, since it helps fund critical investment guidance from financial advisers, and would also curtail innovation and competition in the marketplace. SIFMA did concede, however, that such fees should be properly disclosed to investors. “We disagree with the notion set forth that Rule 12b-1 was intended to be a temporary solution, or the notion that the rule did not contemplate payments to dealers,” SIFMA maintained, pointing to the SEC’s recent June 19 roundtable on the subject. SIFMA maintained that panelists, many of whom were involved in drafting the rule, “uniformly confirmed that Rule 12b-1 was never meant to be a temporary solution.” The group said 12b-1 fees support “necessary administrative and investment services for fund shareholders” that are largely borne by intermediaries rather than fund companies. SIFMA also said that the nine factors that the SEC set forth for fund boards to consider when deciding whether to levy 12b-1 fees have become outdated. For its part, the ICI also said that 12b-1 fees are “integral to the structure of the mutual fund industry and to the delivery of advice and other services that fund investors consider absolutely essential,” most notably advice from financial intermediaries. The ICI suggested that rather than naming the fees after a reference to an SEC rule, the fees should be renamed. And while the ICI called for better disclosure of the fees to investors, the trade group said, however, that if the SEC were to require funds to disclose such fees at the point of sale but not impose similar requirements on other types of investment products, it “could encourage intermediaries to steer clients to alternative investments that do not offer the same level of protection, diversification and liquidity as funds.” The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

As Boston-based Fidelity saw its news brokerage assets slip, San Francisco-based Charles Schwab saw assets swell during the second quarter, according to Reuters. Between proprietary and non-proprietary funds, new client assets to Fidelity’s brokerage division during the second quarter were $30.9 billion, a 26% drop from the same three-month span a year prior. The start of the third quarter, however, seems “very positive,” said Timothy Moran, chief financial officer and vice president at Fidelity Brokerage. “Year-over-year, the available flows in the industry in total are down a little bit, and that’s what you are seeing in numbers,” he said. But cross-country, discount brokerage rival Charles Schwab is seeing a surge in second quarter new assets raising to $26.4 billion, or by 41%, compared to the period a year prior. Fidelity suffered sagging new assets in other areas, too. New retail brokerage assets during the second quarter were $11.8 billion, or 17% less than the $14.2 billion in inflows. Institutional clearing plummeted 77%, from $19.1 billion to $4.3 billion, although Moran attributed $9 billion of the 2006 gains to new broker/dealer clients brought in that quarter. One bright spot for the quarter was a 75% jump in Fidelity institutional advisor assets. Moran attributed the $14.8 billion in assets to a new business partnership. Fidelity’s major on-line competitors include Schwab, TD Ameritrade, and E*Trade. As of May, Fidelity controlled a 20.6% market share, according to Moran. To date in July, the brokerage division’s retail daily average trading volume is up 4%, compared to second quarter. Overall client assets at the end of June were up 24% or $354 billion compared to the same time last year. Moran said that $194 million of that sum was market increase, while $160 million was new client assets. The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

Although Barclays Global Investors runs $301 billion in exchange-traded fund money through 137 funds- commanding a 60% share of the $500 billion ETF market-Vanguard and State Street are launching new products and marketing campaigns to catch up, Reuters reports.

Despite a recent survey that found 83% of executives believe that the Sarbanes-Oxley Act has had a positive impact on their company, industry experts do not agree.

The first of a new wave of 130/30 long/short mutual funds are hitting the mainstream investment landscape. They are taking their cue from the institutional arena where 130/30 strategies have been a scorching hot commodity and are rolling out to clients at a record pace.

CAMBRIDGE, Mass.-In the race to capture rollover retirement assets, retail banks have been somewhat of a sleeping giant.

We've got to hand it to the board of directors at AIM Investments for acting responsibly and in direct response to a profound change in public sentiment.

Securities America Fined For Directed Brokerage

Fidelity Selects Lawson As FMR Corp. President

CAMBRIDGE, Mass.-Retirees and their broker/dealers have one thing in common: they both want advice.

As firms increasingly start to focus on mass-affluent investors, they need to understand their behavior to effectively capture their assets, and this group is highly independent, unlikely to rely on a financial adviser and dependent on the Web, according to a survey by Aite Group of Boston.

Melissa Rosenbaum has joined ICON Advisers as marketing vice president, in charge of directing and managing marketing and sales of its mutual funds and private account products.

DST Systems announced Tuesday that its second-quarter earnings rose 31% to $72.8 million, or $1.01 a share, from $55.5 million, or 76 cents a share, in the second quarter of 2006. Adjusted earnings rose to $58.7 million, or 81 cents per share, from $51.6 million, or 70 cents per share.

Fidelity Investments announced Thursday that total client assets in Fidelity Brokerage Co. rose 23% from a year ago, to a record $1.87 trillion, and total client accounts increased 11% to 18 million. Daily average commissionable trades also rose, by 12%, for an average of 349,784 trades a day. Net new client assets were $30.9 billion.

Investors can now buy options on the HealthShares Emerging Cancer exchange-traded fund through the Philadelphia Stock Exchange electronic trading platform, the exchange announced.

Vanguard founder John C. Bogle blasted American Enterprise Institute Scholar Peter Wallison’s claims that market forces keep mutual fund fees in check, in an editorial published by The Wall Street Journal.

China is getting ready to introduce its first all-mainland stock index and an exchange-traded fund to track it, according to Shanghai Daily.

State Street announced that its second-quarter profit rose 60% from a year earlier, to $366 million, or $1.07 per diluted share.

Interested in the potential trading volume exchange-traded funds can bring to an exchange, stock markets are now vying with the New York Stock Exchange and the American Stock Exchange for ETF listings, The Wall Street Journal reports.

Although Barclays Global Investors runs $301 billion in exchange-traded fund money through 137 funds— commanding a 60% share of the $500 billion ETF market—Vanguard and State Street are launching new products and marketing campaigns to catch up, Reuters reports.