December 15, 1992
TO: MARKETING POLICY COMMITTEE NO. 42-92
DIRECT MARKETING COMMITTEE NO. 47-92
INDUSTRY STATISTICS COMMITTEE NO. 9-92
PUBLIC INFORMATION COMMITTEE NO. 45-92
RESEARCH COMMITTEE NO. 24-92
SALES FORCE MARKETING COMMITTEE NO. 47-92
SHAREHOLDER COMMUNICATIONS COMMITTEE NO. 38-92
RE: WALL STREET JOURNAL’S EXPANSION OF FUND DATA
__________________________________________________________
As you know, The Wall Street Journal recently selected
Lipper Analytical Services to provide the Journal with several
categories of performance information which will soon be added to
the daily mutual fund price listings.
The performance information would be updated daily, which
will require daily collection of dividend data from fund groups
or transfer agents.
The Wall Street Journal’s original plan was to add three new
columns to the three existing (NAV, offering price, and NAV
change) columns. With the three additional data columns, the
Journal planned to devote one column each day to four week
performance data and one column every day to year-to-date
performance. The third column would have different data each
day, as follows: Monday--1 year performance; Tuesday--3 years;
Wednesday--5 years; Thursday--front end load; and Friday--expense
ratio.
As these plans became known to mutual fund organizations,
primarily through Michael Lipper’s letter of request for
assistance in obtaining the necessary daily data, many fund
executives expressed their concerns about certain aspects of the
proposal. The main areas of concern were the emphasis on short
term performance and the possibility of confusing readers--
especially with the presentation of load and expense ratio data
on different days, and having funds with completely different
investment objectives (and thus very different performance)
listed next to each other.
Following extensive discussions with the chairs of seven
Institute Committees (Marketing Policy, Direct Marketing,
Industry Statistics, Public Information, Research, Sales Force
Marketing, and Shareholder Communications), as well as with
senior people at a number of ICI member firms, we decided to
request a meeting with the Journal editors responsible for this
project so we would make sure they understood our concerns--even
if it were unlikely that we could change their minds.
The meeting was held at Journal headquarters in New York
City on October 27. The Journal group consisted of John Prestbo,
markets editor and the person mainly responsible for the project;
Gay Miller, the editor who supervises mutual fund and personal
finance coverage; and the two mutual fund reporters: Jonathan
Clements and Bob McGough.
The Institute and fund industry were represented by Joyce
Fensterstock of PaineWebber, who chairs the Institute’s Marketing
Policy Committee, and myself.
Joyce and I were both pleasantly surprised to discover that
the Journal people were quite interested in our expressions of
concern and soon began to suggest possible alternative
approaches.
In our comments, we stressed that from our perspective the
three most important changes that should be made would be: (1)
to run expense ratio and load data on the same day to prevent the
confusion that would result from their plan to run these on
separate days; (2) to reduce emphasis on short-term performance
by eliminating the 4-week data; and (3) to add investment
objective information for each fund to reduce the chance that
readers will directly compare funds in different categories.
We have been informed by the Journal that they have
subsequently decided to change their proposed format, including
the running of the expense ratio and load numbers on the same
day--and to reduce the frequency of the 4-week performance data
to once a week instead of every day. They will also be adding
investment objective information for each fund, although they
have not yet determined how many categories to use.
Under the new format, information will be presented as
follows:
First New Column: Year-to-date total return every day.
Second New Column: Monday--Load; Tuesday--4 week total
return; Wednesday--13 week; Thursday--26 week; Friday--39 week.
Third New Column: Monday--Expense ratio; Tuesday--one year
total return; Wednesday--3 years; Thursday--4 years; and Friday--
5 years.
The Journal now intends to start running this additional
data in mid-January. We will keep you advised of any further
developoments.
L. Erick Kanter
Vice President, Public
Information & Marketing