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Supreme Court to Weigh In on Mutual Fund Fees

Plus, more fund mergers announced.

Morningstar Analysts, 03/16/2009

Morningstar's fund analysts cover 2,000 mutual funds. Their full analyst reports, including Stewardship Grades, are available in Morningstar Principia Mutual Funds Advanced and Morningstar Advisor Workstation Office Edition.

The Supreme Court announced last week that it will review the fund fee case brought against Harris Associates, advisor to the Oakmark funds. The Supreme Court will hear oral arguments for Jones v. Harris this fall. The Supreme Court will weigh in on whether Harris' fees were excessive.

Transamerica Fires Advisors
Transamerica has fired TCW and AllianceBernstein from Transamerica Partners Large Value Fund DVEIX because of performance and volatility. Stepping in for AllianceBernstein is Philadelphia-based quant shop Aronson+Johnson+Ortiz (AJO), and Hotchkis and Wiley is taking over for TCW. AJO comanages another Transamerica fund, Transamerica Partners Large Core DVGIX, with BlackRock. AJO also manages Quaker Small-Cap Value QUSVX, a small-blend fund, and Absolute Strategies ASFIX, a fund of funds within the long-short category.

Rodriguez to Take Sabbatical
FPA's Bob Rodriguez announced that he will step back from day-to-day management of his funds, FPA Capital FPPTX and FPA New Income FPNIX, in 2010.

Vanguard Adopts New Policy for Controversial Holdings
Vanguard's fund board recently directed the firm to report back on companies in which it invests that might be involved with human rights' abuses. Vanguard, along with other investment firms, has been subject to criticism from special-interest groups that object to the funds' investments in firms such as PetroChina PTR.

Under the new policy, the fund board will receive regular reports on companies in which they invest "whose direct involvement in crimes against humanity or patterns of egregious abuses of human rights would warrant engagement or potential divestment."

It is unclear what impact this new procedure will ultimately have on a formal shareholder proposal from Investors Against Genocide, which would require a similar review process for holdings at 30 Vanguard funds.

RiverSource and Seligman Fund Merger Update
Just weeks after RiverSource's purchase of Seligman, RiverSource says it plans to merge 47 Seligman and RiverSource funds. The affected funds include Riversource Global Technology AXIAX, which would be merged into Seligman Global Technology SHGTX. Meanwhile, Seligman Common Stock SCSFX would merge into RiverSource Disciplined Equity AQEAX. In addition, the majority of Seligman's single-state municipal-bond fund lineup would be merged into Seligman National Municipal SNXEX.

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