December 15, 1992
TO: BOARD OF GOVERNORS NO. 90-92
RE: WALL STREET JOURNAL’S EXPANSION OF FUND DATA
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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 Lipper Analytical’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.
Joyce Fensterstock, who chairs the Institute’s Marketing
Policy Committee, and Erick Kanter of the Institute staff met
with several editors and reporters at Journal headquarters in New
York on October 27. The Journal group included John Prestbo,
markets editor and the person mainly responsible for the project.
Ms. Fensterstock and Mr. Kanter stressed that 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 the 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 they will 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 intends to start running this additional data
in mid-January. We will keep you advised of developments.
Please call Erick Kanter at 202/955-3530 if you have any
questions.
Matthew P. Fink
President