August 12, 1991
TO: OPERATIONS COMMITTEE NO. 25-91
TRANSFER AGENT ADVISORY COMMITTEE NO. 37-91
RE: RESULTS OF SHAREHOLDER CONFIRMATION SURVEY
__________________________________________________________
We have completed the shareholder confirmation survey and
highlights of the results are summarized below. The questionnaire
was distributed to members of the Operations and Transfer Agent
Advisory Committees on April 5, 1991 (see attached memo to
Operations Committee No. 10-91 and Transfer Agent Advisory
Committee No. 17-91). Forty responses were received which
represented a 67% response rate. These responses included 1,164
mutual funds with 29.5 million shareholder accounts, representing
37% and 47% of the industry, respectively.
Both discussions with task force and Committee members, and
the survey results indicate that fund groups have virtually no
interest in eliminating immediate confirmation statements for
voluntary investment and voluntary redemption (non-check/draft)
transactions. Therefore, the analysis presented concentrates on
the elimination of immediate confirmation statements for certain
automatic or systematic transactions, where it was felt that the
elimination of such statements would be most beneficial to the
industry.
A summary of the major findings are as follows:
- A number of money market funds do not send immediate
confirmation statements to shareholders for certain
transactions. Roughly one quarter of the funds do not
send immediate confirmations for dividend reinvestment
into the same fund, cash dividends, automatic investment
purchases (AIPs) and systematic withdrawal payments
(SWPs). Instead, they send monthly, or in several
instances, quarterly statements. Forty-five percent of
money market funds confirm draft/checkwriting redemptions
monthly rather than immediately.
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- For non-money market funds, 15% of the respondents
indicated that for "non-retirement plan accounts" they
had eliminated immediate confirmation of transactions
involving dividend reinvestment into the same fund.
Several respondents have also eliminated the immediate
confirmation of AIPs (7.5%), SWPs (12.5%) and certain
other transactions. Generally speaking, for "retirement
plan accounts," a slightly higher percentage of
respondents have eliminated immediate confirmation of
various transactions. Where immediate confirmations have
been eliminated for retirement plan or non-retirement
plan accounts, most respondents indicated that quarterly
statements were sent instead.
- Where applicable, respondents were asked if they would
prefer to eliminate the immediate confirmation of certain
transactions and, in lieu thereof, send quarterly
statements. As can be seen on Exhibit 1, a number of
funds responded affirmatively. The survey results show
that these funds could eliminate approximately 44.7
million confirmations annually, thereby resulting in
savings of approximately $14.3 million.
- Respondents indicated that shareholders have a number of
convenient ways to obtain account information in lieu of
receiving immediate confirmations. For example, all
retail funds make statements available immediately upon
written or telephone shareholder requests. All
respondents reported having an "800" number for
shareholders to call and speak with a representative.
Twenty percent of the fund groups offer this service
greater than 12 hours per day. Fifty-seven percent of
the fund groups reported having an automated voice
response unit available, through an "800" number, 96% of
which are available 24 hours per day, 7 days per week. A
majority of these systems allow shareholders to obtain
account balance, last transaction and last dividend
information as well as order duplicate copies of account
statements.
The detailed results of this survey have been enclosed for
each participating fund group and are identified as "Enclosure A".
If you wish to discuss any of the results, please call Kathy
Joaquin (202/955-3583) at the Institute.
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Based upon these results, we intend to pursue this matter
with the Institute's legal department and determine what actions
are necessary (i.e., SEC no-action letter, etc.) in order to allow
funds the optional ability to eliminate the immediate confirmation
of certain transaction types, including dividend reinvestment
(into either the same fund or another fund), AIPs and SWPs. We
will keep you informed of our progress on this project.
Ralph Spuehler Kathleen C. Joaquin
Keystone Investors Resource Center Director - Operations/
Chairman, Shareholder Confirmation Fund Accounting
Task Force
Attachments
Enclosure