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Fidelity Lowers Minimums and Fees on Index Funds

Blackstone drafts an alternative open-end fund, and eight former Regions Morgan Keegan mutual fund directors are charged by the SEC for failing to comply with federal securities law.

Morningstar Fund Analysts, 12/13/2012

Starting in January 2013, Fidelity will lower the investment minimums for 22 of the firm's index and enhanced index funds. The investment minimums for the Investor share classes of these funds will drop to $2,500 from $10,000. In addition, the less expensive Advantage share class of the firm's Spartan index funds will also become more accessible, with minimum investment amounts falling to $10,000 from $100,000 (qualifying investors in the Investor share classes will automatically be converted to the cheaper Advantage shares).

The decreased minimums for the Advantage shares make the Spartan index funds as accessible as many of Vanguard's less-expensive Admiral shares (Vanguard lowered its minimum investment for a suite of Admiral shares to $10,000 in October 2010), although Charles Schwab SCHW still holds the title for lowest minimum investment at $100.

Fidelity's index funds will become more attractively priced as well: Fees will be cut at eight of the firm's Spartan index funds, with total net costs decreasing between 1 and 8 basis points.

Blackstone Plans to Launch Alternative Open-End Mutual Fund
Private equity firm Blackstone Group BX has filed to launch an open-end mutual fund. According to the filing, the proposed Blackstone Alternative Multi-Manager Fund would follow various strategies including fundamental investing, global macro, short-term opportunistic trading, quantitative strategies, managed futures, and multistrategy, which may combine any of the above. The fund would be run primarily by subadvisors, although Blackstone could manage up to 25% of assets in investment funds and 25% of assets in a subsidiary or trading entities. The filing only lists an institutional share class and does not include estimates of expenses.

Mutual Fund Directors Charged by SEC
Eight former members of the board of directors overseeing bond funds run by Regions Morgan Keegan have been charged by the SEC for failure to comply with federal securities law. According to the SEC order, the board members failed to establish a methodology for valuing below-investment-grade debt securities in the funds they oversaw. This oversight in turn allowed the net asset values of four closed-end funds and three open-end funds to be materially misstated between 2007 and 2009 when the subprime mortgages backing the debt securities were declining in value. In 2010, the SEC charged the funds' managers with fraud, and in 2011, the firms agreed to pay $200 million to settle the charges and two employees also agreed to pay penalties (with one being barred from the securities industry).

Invesco IVZ continues to consolidate its lineup of funds. The board of trustees has approved the merger of six funds into the existing lineup. Invesco Constellation CSTGX and Invesco Leisure ILSAX will merge into Invesco American Franchise VAFAX, Invesco Dynamics IDYAX will merge with Invesco Mid Cap Growth VGRAX, Invesco High-Yield Securities HYLAX will merge into Invesco High Yield AMHYX, Invesco Leaders VLFAX will merge into Invesco Growth Allocation AADAX, and Invesco Municipal Bond AMBDX will merge into Invesco Municipal Income VKMMX. Shareholders will be asked to approve the mergers in April 2013.

Michael Wood-Martin is no longer listed as a comanager on Henderson International Opportunities HFOAX.

Maria Nikishkova replaced Leon Tucker on Fidelity Global Balanced FGBLX and Fidelity Advisor Global Balanced FGLAX.

Rodwell Chadehumbe joined Clark Wagner as comanager of First Investors Government FIGVX.

Prudential's board of trustees approved overhauling Target Moderate Allocation PAMGX. The fund will be renamed Prudential Defensive Equity, and its investment objective, to be approved by shareholders, will shift to focus on long-term capital appreciation (removing an emphasis on income), and instead of a multimanager fund, its sole subadvisor will become Quantitative Management Associates. In addition, Target Growth Allocation PHGAX will merge into Prudential Jennison Equity Income SPQAX.

Advisors Inner Circle filed to launch Harvest China All Assets Fund, which will invest at least 80% of assets in equity and bonds with business related to economic development of China and Hong Kong.

The board of trustees of ING Index Plus International Equity IFIAX approved the fund's liquidation on or about Feb. 22, 2013. The fund is now closed to new investments.

Nuveen filed to launch Nuveen Symphony High Yield Bond. According to the filing, the fund's subadvisor will be Symphony Asset Management with Gunther Stein and Jenny Rhee in charge of managing the fund. The A shares will cost 1.10% after waivers.

GMO will liquidate GMO Inflation Indexed Plus Bond GMIPX. GMO Strategic Opportunities Allocation GBATX added a 0.07% purchase and redemption fee. GMO U.S. Small/Mid Cap GMSUX has increased its management fee to 0.45% from 0.31%. Also, GMO Benchmark-Free Allocation GBMFX increased its fee waiver (decreasing overall expenses) by 6 basis points.

Inna Okounkova is no longer listed as a comanager on DWS Alternative Asset Allocation AAAAX.

Fidelity's Strategic Advisers Small-Mid Cap FSCFX and Strategic Advisers Small-Mid Cap Multi-Manager FNAPX funds added Kennedy Capital Management Inc. as a subadvisor. Donald Cobin and Christian McDonald were added as portfolio managers.

Northern Lights filed to launch GL Macro Performance. The fund will use a macro strategy to take long and short positions in stocks, bonds, foreign currencies, commodities, and derivatives to try to return a low volatility. According to the filing, total expenses will be 1.77%.

AllianceBernstein filed to launch Select U.S. Long/Short ASLAX. Waivers will be used to cap total expenses for the A shares at 2.25%.

Walthausen Small Cap Value WSCVX will close to new investors at the end of the year.

Shareholders approved the merger of Munder International Equity MUIAX into Munder International Core Equity MAICX.

Stavros Triantafilidis, Michael Bourke, and Eric Curiel will replace Aquico Wen as managers of Legg Mason Esemplia Emerging Markets Long-Short SMKAX.

U.S. Global Investors Global MegaTrends MEGAX will drop the second "Global" in its name and no longer require at least 40% of assets to be invested in at least three countries outside the United States.

The board of trustees of Altrius Small Cap Value ALTSX has decided to close the fund and liquidate its assets by the end of the year.

Wilmington Large Cap Value VEINX will no longer use NWQ Investment Management Company as a subadvisor.

Senior mutual fund analyst Katie Rushkewicz Reichart, mutual fund analyst Kathryn Spica, and ETF analyst Robert Goldsborough contributed to this report.

Morningstar fund analysts cover more than 1,700 mutual funds and write regular commentary covering fund industry news, fund investing trends, picks, portfolio planning, international investing, and more.

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