June 15, 1990
TO: OPERATIONS COMMITTEE NO. 17-90
RE: CHECK AGING STUDY - NOVEMBER, 1989
__________________________________________________________
Attached hereto are the results of the Operations Committee
Check Aging Study of investor's checks presented to money market
and other income funds during the month of November, 1989. Forty
(40) management companies representing three hundred eighty-seven
(387) funds participated in the survey. One hundred sixty-seven
(167) funds reported no returned check activity.
The results of the funds surveyed show that for the month
of November, 1989, a total of 782,857 shareholder checks were
deposited and cleared. A total of 2,653 shareholder purchase
checks were dishonored or returned. Of these, a total of 2,416
or 91.1% were returned within 10 days of deposit. Within 15 days
of deposit, 97.8% of all dishonored checks were returned to
funds. Comparisons of these figures with those of earlier (1987)
check aging studies, which occurred prior to the Federal
Reserves' Funds Availability Act, which was enacted in August of
1987, showed that only 76.7% of checks were returned within the
first 10 days. Within 15 days of deposit, 94.1% were returned .
The Results of the November, 1989 study indicate that, for the
first time, checks are clearing a great deal faster than in
previous years and it appears that the Federal Reserves' Rules
are serving their purpose.
For analysis purposes, a summary table of the previous
seven check aging studies is attached.
The Operations Committee has been conducting check aging
studies yearly since 1980. The results of the Check Aging
Studies through the years have aided mutual funds in establishing
appropriate redemption policies which further protect shareholder
assets where fund shares are purchased by personal checks.
Donald E. O'Connor
Vice President - Operations
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