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November 30, 2004 10:18 PM

Fidelity Tightens Trading Policy


Excerpt: Fidelity Investments, the biggest U.S. mutual fund company, said Tuesday that it has strengthened policies designed to combat excessive short-term trading in its funds.


Fidelity Investments, the biggest U.S. mutual fund company, said Tuesday that it has strengthened policies designed to combat excessive short-term trading in its funds.

"Frequent purchases and sales of fund shares can harm shareholders in various ways, including reducing the returns to long-term shareholders by increasing costs to a fund," Fidelity said in a regulatory filing.

Prior to the change, Fidelity permitted investors in most of its mutual funds to make up to four exchanges out of a fund and into another Fidelity fund or the same fund per calendar year, spokesman Scott Beyerl said.

Now, with certain exceptions, shareholders will be limited to two roundtrip transactions per fund within any rolling 90-day period. That is subject to an overall limit of four roundtrip transactions across all Fidelity funds over a rolling 12-month period, the filing said. A roundtrip transaction occurs when a shareholder buys and then sells fund shares within 30 days.

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