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September 27, 1991
TO: MEMBERS - ONE PER COMPLEX NO. 45-91
OPERATIONS COMMITTEE NO. 30-91
TRANSFER AGENT ADVISORY COMMITTEE NO. 45-91
SMALL FUNDS MEMBERS NO. 12-91
RE: 1991 ICI/C&L MUTUAL FUNDS TRANSFER AGENT FEE SURVEY
__________________________________________________________
The Institute has commissioned the accounting firm of
Coopers & Lybrand to perform a fourth study of mutual fund
transfer agent fees, services and billing practices, to cover
1991 activity. This study was previously performed for 1986,
1987 and 1989. The final reports presented detailed analyses of
data grouped by investment objective, method of distribution,
classification of transfer agent arrangement (external, hybrid,
remote and captive), dividend frequency and other criteria.
These studies are widely regarded by ICI members as
providing essential information for reviewing transfer agency
arrangements. On the basis of an Operations Committee
recommendation, a fourth study will be conducted for 1991 which
will provide comparative analyses of current data to data
collected for 1987 and 1989.
As with the 1989 study, the primary responsibility for
conducting the 1991 study will rest with the Institute staff with
Coopers & Lybrand being retained on a consulting basis to assist
with the study and to maintain continuity with previous
methodology. The major objectives established in conducting this
year's transfer agent survey include:
o Delivering the final report as early as possible in
1992.
o Improving the quality of data received from fund
complexes.
o Reducing the amount of time and manual effort spent on
inputting data and on follow-up procedures.
o Increasing senior level participation in gathering
data.
In order to accomplish these objectives, a special task force
reviewed the survey questionnaire, developed format revisions and
approved a proposal for Coopers & Lybrand to develop an automated
questionnaire to enhance the data collection and verification
process. To expedite the completion of the 1991 report, survey
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data will be collected in two phases. The first phase will
collect fund specific data in November, 1991 for funds in the
sample with fiscal years ending September 1991 and prior. The
second data collection phase will begin in late January, 1992 to
collect complex-wide survey data and fund data for funds with
fiscal years ending in October, November and December 1991.
For the purpose of comparability, the survey will attempt
to include the same respondents as the 1989 survey. In addition,
the sample size will be increased by approximately 125 funds to
bring the total sample to about 500 funds from 70 complexes, in
order to reflect growth and change in the industry. A portion of
this increase is intended to expand the survey sample
specifically for affiliated broker/dealer funds.
A new addition to the 1991 report will be a separate
section on institutional funds. Transfer agent cost data will be
gathered from survey participants for a specific sample of
institutional funds for which both basis point and dollar fee
analysis will be presented in a separate section of the report.
Other new features of the 1991 survey are a section regarding
certain regulatory costs and their impact, and a series of
questions intended to elicit insights from senior transfer agent
executives on "quality of service" issues.
IT SHOULD BE NOTED THAT AS WITH THE PRIOR SURVEYS, THE 1991
SURVEY REPORT WILL BE PROVIDED ONLY TO FUND GROUPS WHICH CHOOSE
TO PARTICIPATE. THE OBLIGATIONS OF PARTICIPANTS ARE (1) TO
FURNISH TRANSFER AGENT COST DATA ON A CONFIDENTIAL BASIS TO
COOPERS & LYBRAND IF REQUESTED FOR FUNDS SELECTED TO BE INCLUDED
IN THE STUDY AND (2) TO PAY A PROPORTIONATE SHARE OF THE COST OF
THE SURVEY. SOME PARTICIPANTS MAY NOT HAVE TO PROVIDE DATA SINCE
THE SURVEY WILL BE BASED ON DATA FROM A REPRESENTATIVE SAMPLE OF
FUNDS, BUT EQUITY REQUIRES THAT ONLY GROUPS WHICH AGREE TO
PROVIDE THEIR DATA RECEIVE THE RESULTS OF THE SURVEY. As with
the 1989 survey, the cost of this year's survey will be shared by
the participants in accordance with an asset based fee schedule.
The cost of participation in the survey, which will be billed
during the data collection phase of the project, is as follows:
TRANSFER AGENT PARTICIPANT FEES
Total Assets of Open-end Funds Member Participation
in Complex (as of 8/31/91) Fee
Over - $10 Billion $6,500
$5 - $10 Billion $5,500
$2 - $ 5 Billion $4,500
$1 - $ 2 Billion $2,500
$0.25 - $ 1 Billion $1,200
Under - $ 0.25 Billion $ 500
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The automation of the survey is expected to be completed by
the end of October. The survey questionnaire will be distributed
in both a 5.25" and 3.5" diskette format. In order to access
this new format you must have an IBM PC or compatible hardware
and have installed "Windows" (version 3.0) as the operating
environment. It is anticipated that over 80% of the funds in the
sample have access to this configuration and will complete their
survey on diskette. Hardcopy of the questionnaire will also be
provided to each sample participant.
The Institute will sponsor a one-day workshop, hosted by
Coopers & Lybrand in Boston, MA, during November, 1991 (the
tentative date is November 6th) for member firms who have agreed
to participate and have been selected for the survey sample. The
purpose of the workshop is to review both the automated and
hardcopy versions of the survey questionnaire in detail with
individuals who will be responsible for actually completing the
questionnaire. A survey workshop was also presented in 1989
which was well attended by participants and answered many
questions that inevitably arise throughout the course of the
survey. Experienced survey team members of Coopers & Lybrand
will lead the discussion, which will include a general overview,
presentation of the automated and hardcopy versions of the
questionnaire, a question and answer period and smaller group
instruction sessions. Based on our experience with this survey
in prior years, this workshop will be extremely valuable in
facilitating the timely delivery of accurate data. If you agree
to participate and are selected for the survey, we strongly urge
you to send the appropriate person to this workshop . Survey
participants will be notified of the exact data and place as soon
as they are determined.
ACTION REQUESTED
Your organization is invited to participate in the 1991
transfer agent cost survey. So that we may proceed with this
project as quickly as possible, it is important that we hear from
you promptly as to your interest in participating . Please return
the attached form to the Institute by October 16, 1991 (by fax:
202/293-1058 or by mail) to indicate whether or not your
organization will participate. You may contact
Donald E. O'Connor, Vice President-Operations (202/955-3550) or
Kathleen C. Joaquin, Director - Operations/Fund Accounting
(202/955-3583) if you have questions regarding this project.
Donald E. O'Connor
Vice President-Operations
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