September 27, 1990
TO: BOARD OF GOVERNORS NO. 72-90
MEMBERS - ONE PER COMPLEX NO. 40-90
RE: CENTRALIZED DATA COLLECTION AND DISSEMINATION PROJECT
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The growth and diversity of the mutual fund industry, as
well as the increase in public, media and governmental interest
in funds, has created an explosion in the requirements for data
about the industry and individual funds. This information is
required by fund management companies, various service providers
to the mutual fund industry, others in the financial marketplace,
regulatory bodies, the media, and the public.
This growing demand for mutual fund data has led to several
problems:
o mutual fund companies are often overwhelmed by
requests for data, most of which is already publicly
available;
o much of the information that has been compiled on
individual funds is not readily available in an
electronic format;
o the cost of accessing the data that is available has
often been high, and in some cases fund groups have had
to pay for data they supplied to vendors in the first
place; and
o some fund groups are concerned about the accuracy of
data being used by others to calculate their
investment performance.
In addition, the Institute has had to rely on outside sources for
basic mutual fund performance information. Such information is
needed to support regulatory, legislative and public information
objectives.
In its capacity as a primary repository of data about the
industry, excluding investment performance information, the
Institute has been aware of the growing needs for a modern data
collection and dissemination system for its members and other
data consumers. As a result, the Investment Company Institute
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has undertaken a project to become a centralized collector and
disseminator of publicly available data about individual funds,
including for the first time information needed to compute fund
investment performance (e.g. NAVs, distributions, date and price
of distribution reinvestment).
The Institute's role will be that of a utility, applying
modern technology to the efficient collection and dissemination
of data provided by thousands of funds and needed by hundreds of
end users.
The major benefits of the project will be a completed
system that will:
o provide a standardize electronic format for mutual
funds to report and verify data that is currently
collected in a variety of formats;
o provide timely dissemination of data and
information to members and other data
consumers;
o allow data vendors the flexibility and choice of
either using their own data collection procedures or
subscribing to receive the Institute's data at a
reasonable cost; and
o enhance the possibilities for analysis of industry
data by making a wide variety of data available in a
common, machine readable format to numerous
participating data analysts and value added vendors.
This project will be conducted in two stages:
STAGE I
The Institute will provide members with access, on a
subscription basis, to data compiled and maintained by Investment
Company Data Inc. (ICDI), a Des Moines, IA based company
specializing in mutual fund information. The Institute has
recently acquired rights to a historical database from ICDI, and
has a two year agreement under which ICDI will provide ICI with
monthly updates to this performance data.
Once the ICDI database has been integrated with the ICI
data and the monthly update procedures have been perfected, the
Institute will sublicense the use of this data to members only,
associate members will not be included. No dissemination of the
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ICDI data beyond the members is possible under ICI's contract
with ICDI until after June 1, 1992. You will be advised in the
near future of the terms and conditions for subscription to this
data service.
STAGE II
The Institute will develop its own data collection and
dissemination system which will be integrated with historical
information drawn from the ICDI database. The new system will be
a major feature of FUNDS II, a substantially improved version of
FUNDS, the Institute's computer communications network linking
the ICI with its members. FUNDS II will contain a more robust
user interface which will greatly reduce the time needed to input
and verify data while allowing for faster and more reliable
transmission of data to subscribers.
The new Industry Statistics Committee will assist the
Institute in developing standard computer file formats for
periodically reporting and verifying individual fund data. Once
compiled in these formats, the data could be used not only to
supply the Institute's data needs but also to respond to requests
from other data collectors.
Although the Institute will be collecting the primary
information needed to compute individual fund performance, it
will not publish calculated performance. Consequently, members
and other subscribers to the new database service will need to
compute their own performance numbers or rely on the services of
third party vendors for that service. We expect data analysts
may develop standardized software that can be integrated with the
FUNDS II system to facilitate members' use of this new resource.
For further information about the data collection and
dissemination project, contact Richard Pogue, Jacob Dreyer or
Michael Halbrook at the Institute.
David Silver
President