September 2, 1993
TO: MEMBERS - ONE PER COMPLEX NO. 60-93
OPERATIONS COMMITTEE NO. 29-93
SMALL FUNDS MEMBERS NO. 10-93
TRANSFER AGENT ADVISORY COMMITTEE NO. 46-93
RE: 1993 ICI/C&L MUTUAL FUNDS TRANSFER AGENT FEE SURVEY
__________________________________________________________
The Institute has commissioned the accounting firm of Coopers & Lybrand to
perform a fifth study of mutual fund transfer agent fees, services and billing practices to
cover 1993 activity. This study was previously performed for 1986, 1987, 1989 and 1991.
The final reports presented detailed analyses of data grouped by fund type (money
market, fixed income, equity), method of distribution, classification of transfer agent
arrangement (external, hybrid, remote and captive), dividend frequency, transfer agent
location and other criteria.
These studies are widely regarded by ICI members as providing essential
information for reviewing transfer agency arrangements. They also provide mutual fund
directors with an independent means of comparing their funds’ transfer agency fees with
other similar funds. On the basis of an Operations Committee recommendation, a fifth
study will be conducted for 1993 which will provide comparative analyses of current data
to data collected in the 1991 and 1989 studies.
As with the 1991 study, the primary responsibility for conducting the 1993 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.
SURVEY SAMPLE
To maintain comparability with prior survey results, the survey will attempt to
include the same respondents as the 1991 survey. In addition, the sample size will be
increased appropriately to reflect industry growth. The increase should allow us to
maintain the percent of the industry covered by the survey both in terms of the number of
funds and total assets.
Prior survey participants have indicated that earlier identification of funds selected
for the survey sample would better enable them to prepare for the survey and complete the
survey questionnaire. The Institute and C&L will identify the survey sample and provide
survey participants with a list of their funds which have been selected in late September.
SURVEY QUESTIONNAIRE
A major objective in conducting this year’s transfer agent survey will be to deliver
the final report as early as possible in 1994. To expedite the completion of the 1993 report,
survey data will again be collected in two phases. The first phase will collect fund specific
data in November 1993 for funds in the sample with fiscal years ending September 1993
and prior. The second data collection phase will begin in January 1994. The second
phase will collect complex-wide survey data and fund data for funds with fiscal years
ending in October, November and December 1993.
The survey questionnaire will again be distributed in automated format. In order
to access the automated questionnaire you must have an IBM PC or compatible hardware
with four megabytes of RAM and have installed "Windows" (version 3.1) as the operating
environment. A color monitor and a mouse are recommended but not required. These
hardware and software requirements are the same as those for the Institute’s current
Quality of Shareholder Service survey. A hardcopy version of the questionnaire will also
be provided to each sample participant.
SURVEY QUESTIONNAIRE WORKSHOP
The Institute will sponsor a one-day workshop, hosted by Coopers & Lybrand in
Boston duringNovember 1993 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. Similar workshops conducted
for previous surveys were well attended and participants have indicated that they are
extremely valuable in completing the questionnaire. Experienced survey team members
of Coopers & Lybrand will lead the discussion, which will include a general overview
presentation, 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 your
funds are included in the survey sample,
we strongly urge you to send the appropriate person to this workshop. Survey
participants will be notified of the workshop date and location as soon as they are
determined.
SURVEY ENHANCEMENTS
A sub-group of the Institute’s Transfer Agent Advisory Committee was convened
in February of 1993 to review the survey questionnaire and to recommend additional areas
of study. The Survey Advisory Committee met in June of this year to approve
modifications and provide additional member input. As a result of these meetings we plan
to incorporate several new analyses on multiple class funds, retirement plan servicing and
related fees, and telephone and mail operations.
PARTICIPANT FEES
As with prior surveys, THE 1993 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 for
funds selected to be included in the survey sample, 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. However, equity requires that
only fund groups which agree in advance to provide their data receive the results of the
survey. As with prior surveys, 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 SURVEY PARTICIPANT FEES
Total Assets of Open-end Funds Member
in Complex (as of 6/30/93) Participation 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
PEER GROUP ANALYSIS
An additional benefit of participation in the survey is the availability of customized
analyses based on current survey data. Subsequent to completion of the survey,
participants may contact the Institute and request special peer group analyses. These
analyses will compare your funds’ per-account fee to the average per-account fee of a
group of similar funds. Survey participants may specify types of analyses as well as the
fund groups to be included in the peer group. Peer group analyses will be prepared by
Coopers & Lybrand subject to a separate agreement.
ACTION REQUESTED
Your organization is invited to participate in the 1993 transfer agent cost survey.
So that we may proceed with this project it is important that we hear from you promptly as
to your interest in participating. Please return the attached form to the Institute by
September 24, 1993 to indicate whether or not your organization will participate. You
may contact the undersigned (202/955-3552) Greg Smith (202/955-6232) or Justine
Phoenix (202/955-6259) if you have any questions regarding this project.
Donald J. Boteler
Assistant Vice President - Operations
MUTUAL FUND TRANSFER AGENTS
TRENDS AND BILLING PRACTICES
INVESTMENT COMPANY INSTITUTE/COOPERS & LYBRAND
1993 SURVEY PARTICIPATION FORM
CHECK ONE
( ) The mutual fund group listed below agrees to participate in the ICI/C&L
Mutual Fund Transfer Agents Trends and Billing Practices Survey.
Participation includes a commitment to furnish transfer agent cost
information if one or more funds in your complex are selected for the
survey sample and a pledge to pay a share of the survey cost based on
the total open-end fund assets of your group.
( ) The fund group listed below will not participate.
FUND GROUP:
ADDRESS:
TOTAL ASSETS 6/30/93:
SURVEY CONTACT PERSON:
TELEPHONE:
AUTHORIZED SIGNATURE
NAME (PLEASE PRINT)
TELEPHONE
RETURN BY MAIL OR FAX TO:
Gregory M. Smith FAX 202/293-1058
Director - Operations/Compliance
Investment Company Institute
1600 M Street - Suite 600
Washington, D.C. 20036