October 24, 1991
TO: OPERATIONS COMMITTEE NO. 32-91
RE: CHECK AGING STUDY - MARCH, 1991
__________________________________________________________
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 March, 1991. Forty-
two (42) management companies representing four hundred eighty-
nine (489) funds participated in the survey. Two hundred forty
(240) funds reported no returned check activity.
The results of the funds surveyed show that for the month
of March, 1991, a total of 1,039,400 shareholder checks were
deposited and cleared. A total of 3,444 shareholder purchase
checks were dishonored or returned. Of these, a total of 3,271
or 95% were returned within 10 days of deposit. Within 15 days
of deposit, 98.3% 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 implementation
of Federal Reserve rules under the Expedited Funds Availability
Act showed that only 76.7% of checks were returned within the
first 10 days and that it took a full 15 days after a check
deposit for greater than 90% (94.1%) of checks to be returned.
However, the Institute's Check Aging studies performed
after September 1, 1988, the effective date of the Federal
Reserve rules, show a steady improvement in check clearing times
in each year. The results of the March, 1991 study indicate that
checks are clearing a great deal faster than in each of the prior
study years. For analysis purposes, a summary table of the
previous eight check aging studies is attached.
The Operations Committee has been conducting check aging
studies yearly since 1980. The results of the Check Aging
Studies 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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