0 Service: The Customer Perspective What is important to you when doing business with a mutual fund sponsor? What do you expect from that company when you call or walk into one of their offices? What are some of the key customer service satisfiers that you might require from a mutual fund sponsor?

1 Service: The Customer Perspective Automatic Investment Check Writing Privileges Dividend and Capital Gains Reinvestment Exchange Privileges Information Via Telephone and Internet Investment Help Low minimum Investment Amount Reinstatement Privileges

2 Service: The Customer Perspective Shareholder Report Simplified Record keeping Systematic Withdrawal Plan Tax-deferred Retirement Account Web-based Screening Tools Wire Transfer

3 Mutual Fund Customer Service Satisfiers Typical high priority services –Accurate transaction processing –Knowledgeable representatives to turn to for help –Full array of products Other desired services –Easy-to-read communications and statements –Effective problem resolution processes –Easy ways of doing business

4 Organizational Position of a Transfer Agent

5 Role of the Transfer Agent Process accurately all shareholder transactions Handle all customer service inquiries and requests Send out transaction confirmations, periodic account statements, and tax summaries/reports Maintain books/accounts to ensure proper share allocation Ensure that transactions are in compliance with regulations Resolve customer problems

6 Organization of a Transfer Agent Shareholder services segment –Performs front-office operations and interacts with customers –Responds to written correspondence Transaction processing segment –Ensures accurate account transactions –Posts dividend payments –Reconciles cash daily

7 Organization of a Transfer Agent (cont.) Operations support segment –Maintains accurate records of customer accounts and transactions –Sorts and distributes mail –Produces confirmations and periodic statements Fund administration segment –Provides audit support –Bills and tracks fees between the fund and the transfer agent –Monitors blue sky registration fees

8 Technology and Shareholder Servicing Trends Typical technological aids to phone reps include –Intelligent workstations that allow access to complete account information and provide instant answers to many questions –“Imaged” or scanned customer documents that allow the phone rep to call up and view documents on-line –Advances in voice recognition and automated systems may help free phone reps’ time to respond to more complex queries

9 Technology and Shareholder Servicing Trends (cont.) Internet –Has transformed the delivery of service to fund shareholders –Has begun to merge with other consumer media, so phone reps may have an interactive chat with a customer; moving toward voice and video capabilities –May be utilized for more transactions as security advances are made and older investors become more comfortable with this technology

10 Technology and Shareholder Servicing Trends (cont.) Other servicing trends include –Programs to reduce mailing/production costs (e.g., installing high-speed sorters) –Moving transfer agent operations to lower cost locations

11 Decisions for Directors Internal versus external transfer agent— factors to consider –Costs of in-house support versus external vendor –Quality of customer service –Size of the mutual fund complex –Nature of the sales arrangements

12 Decisions for Directors (cont.) Quality control –Directors must monitor performance and establish acceptable level –Objective measures and customer satisfaction Pricing –Must agree on structure of billing arrangement –Should fairly compensate transfer agent, while fairly allocating costs among shareholders

13 Transfer Agent Pricing Strategies Per account charges –“Flat fee” is charged per account –May depend on factors such as account size, mandatory reports, and ancillary services Transaction charges –Based on the number of purchases, redemptions, exchanges, etc. Basis point charges –Based on the average amount of assets per account

14 Transfer Agent Pricing Strategies (cont.) Combinations/Other strategies –Relatively low flat fee per account plus transactional charges –Relatively low flat fee per account plus basis point charge –“Variable” or “allocated” methods