Administration August 9, 2005

Bay State's Galvin Fines Franklin $5M

September 20, 2004 (PLANSPONSOR.com) - A Massachusetts securities regulator announced Monday that he slapped two units of Franklin Templeton with a $5 million fine for permitting an investor to market time their mutual funds.
Reported by

William Galvin, the Bay State’s Secretary of the Commonwealth, said Franklin Advisers Inc. and Franklin Templeton Alternative Strategies Inc. agreed to the fine and admitted to allowing the improper trades, Reuters reported. The California-based mutual fund firm agreed last month to pay $50 million to settle market timing charges with the US Securities and Exchange Commission (SEC).

Galvin said Franklin allowed a “known market timer” to invest in mutual funds in exchange for an investment in a company hedge fund, in an arrangement also called “sticky assets.”

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“This case was a blatant example of one rule for the ordinary investor but a different practice for a high roller,” Galvin said in a statement. “The admission is a clear signal to investors and the industry that this double standard is illegal and will not be tolerated.”

State and federal regulators have been pursuing a wide-ranging investigation of the mutual fund industry focusing primarily on market timing, late trading, and certain sales practices.

More information about Galvin’s case against Franklin Templeton is at  http://www.sec.state.ma.us/sct/sctft/ftidx.htm .

Investing August 8, 2005

S&P: International Equities See Bullish July

August 8, 2005 (PLANSPONSOR.com) - July's 3.85% was the best month so far for the S&P/Citigroup Developed World Index, and its strong performance has vaulted the index to a year-to-date return of 4.20%, S&P has announced.
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An S&P news release said regions across the developed world finished July in positive territory, and remain there year-to-date.  The North America, Europe and Asia Pacific regions posted 4.18%, 3.76% and 2.70% gains respectively in July, and are now up 4.71%, 4.30% and 1.97% since January 1, 2005.  Individual country returns ranged from 0.18% for Finland to 11.57% for South Korea.

“Gains were widespread in July with every developed world country posting increases, whether calculated in US dollar or local currency terms,” said Nicholas Aninos, analyst at Standard & Poor’s, in the news release. “All of the major regions were in positive territory during the month, whether investors used cap-range, style, or industry to define their universe.”

According to the S&P data, countries in the S&P/Citigroup Emerging Markets Index registered July performances ranging from a 5.08% giveback in Venezuela to an 18.22% gain in Jordan.  The three heavyweights, Taiwan, South Africa and Brazil, posted strong gains of 3%, 7.66%, and 4.85% respectively during July.  The S&P/Citigroup Emerging Market Index increased 5.92% during the month.

The S&P/Citigroup Global Composite Index returned 3.95% for the month of July across developed and emerging markets. Year-to-date, the Emerging Market Index leads with an 11.59% gain, lifting the Global Composite to a 4.55% increase, according to the announcement.

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