A s m u c h a s $ 9 .6 b illio n is b e in g ta k e n fro m m u tu a l fu n d s h a re h o ld e rs e a c h y e a r
to p a y fo r s h a re h o ld e r s e rv ic in g a n d re c o rd k e e p in g a c tiv itie s in h id d e n a c c o u n ts th a t
b ro k e rs a n d o th e r th ird -p a rty fin a n c ia l in te rm e d ia rie s m a n a g e fo r th e ir c lie n ts.
T ra n s a c tio n s in th e s e a c c o u n ts a re s h ie ld e d fro m m u tu a l fu n d c o m p lia n c e p e rs o n n e l.

A fu n d h a n d le s th is o rd e r a s a s in g le tra n s a c tio n , tre a tin g th e fin a n c ia lin te rm e d ia ry -in s te a do fth e u n d e rly in gi n v e s t o r s - a s th e a c c o u n t h o ld e r a n da s the shareholdero f record.

M a n y fin a n c ia l in te rm e d ia rie s c h a rg e m u tu a l fu n d s fo r s h a re h o ld e r s e rv ic in g a n d re c o rd k e e p in g a c tiv itie s . T h is c o m p e n s a tio n , w h ic h c a n b e a fo rmo frevenue-sharing, is o fte n p a id fo r e a c h u n d e rly in g s h a re h o ld e r p o s itio n in a p a rtic u la r fu n d .

1 2 b -l fe e p ro g ra m o r a n o th e r fu n d in g so u rc e . F re q u e n tly , m u tu a l fu n d s a re p a y in g th e ir in te rm e d ia rie s a h ig h e r p e r a c c o u n t fe e th a n th e p e r a c c o u n t fe e p a id b y th e fu n d s to th e ir transfer agent for the sam e services.

th e e x p e c te d a m o u n ts tob epaid to acquire these services. A further com plication is the fact that trusteeso f a m u tu a l fu n d a re n o t a b le to c o m p a re p ric in g fo r s h a re h o ld e r s e rv ic in g a n d re c o rd k e e p in g a c tiv itie s w h e n approving these arrangem ents becauseo fa la c ko f c o m p e titiv e b id d in go rarm 's le n g th b a rg a in in g .

T h e s e c h a rg e s ty p ic a lly are based upon the num ber or aggregate valueo fc lie n t p o s itio n s a n d th e le v e lso fservice provided.

fund, and th e re fo re m a in ta in a ll p e rtin e n t in d iv id u a l s h a re h o ld e r in fo rm a tio n fo r th e fu n d .

T ra d in g in th is m a n n e r re q u ire s th a t w e m a in ta in th e tra n s a c tio n history necessary to track and process sales charges, annual service fees, a n d

e a c h p o s itio n ,a sw e ll a s o th e r tra n s a c tio n d e ta ils re q u ire d fo r o n g o in g p o s itio n m aintenance purposes.

B e c a u se o m n ib u s tra d in g o ffe rs e c o n o m ie s fo r u s a n d th e fu n d s th a t a re g re a te s t w h e n d a ily tra d e v o lu m e s a re h ig h , w e h a v e s o u g h t to e s ta b lis h o m n ib u s tra d in g a rra n g e m e n ts w ith th e fu n d fa m ilie s th a t c lie n ts tra d e th e m o s t?

S e e a lso , K D S P a rtn e rs , C o n s u ltin g o n O m n ib u s A c c o u n tin g : A llo c a tio no f U S M u tu a l F u n d s b y R e c o rd k e e p in g M e th o d a n d C h a n g e in N u m b e ro fA c c o u n ts (2 0 0 5 -2 0 0 8 ), M a rc h 1 6 ,2 0 0 9 , a v a ila b le a t h ttp ://o m n ib u s re c o rd k e e p in g .c o m /C a s e

A c c o rd in g to p u b lic s o u rc e s , fin a n c ia l in te rm e d ia rie s a re b e in g p a id b y m u tu a l funds and their shareholders an averageo fbetw een $19 and $25 for each shareholder position held in a fund:

F o r e x a m p le , in s te a do fc h a rg in g $ 5 p e r a c c o u n t fo r\ue001 the year, the broker w ould charge $25 per account per year. The inflated am ount w ould be used to settle\ue001 revenue sharing agreem ents."), available at\ue001