Summer 2015 - US Bancorp Fund Services, LLC

Mutual Fund Solutions
Alternative Investment Solutions
our vision
ETF Services
Distinct Services
SUMMER 2015
Sharing solutions on topics affecting our clients and their shareholders
through innovative insights, sophisticated technology, and a solid tradition.
Outperforming the Competition for 10 Consecutive Years
U.S. Bancorp Fund Services
Since 2001, Global Custodian has been surveying investment
advisers through its Mutual Fund Administration Survey to
better understand the support and requirements clients
desire from a service provider. As we continuously strive to
offer our clients outstanding service, U.S. Bancorp Fund
Services analyzes the survey results and comments to seek
opportunities to enhance and improve our service offerings.
Survey respondents rate each fund administrator on a
scale from “1” (very weak) to “7” (excellent). Thanks to the
feedback we received from our clients, we scored above
average in five of eight categories including Relationship
Management and Client Service, Value Delivered, Fund
Administration and Trustee, Distribution Support, and
Operations and Custody.
We were recognized in the survey for our consistent high
performance. “Indeed U.S. Bancorp [Fund Services] has
managed an uninterrupted run of global outperformance
spanning the entire period, and is the only provider to have
achieved this.”
“U.S. Bancorp [Fund Services] is set to maintain
the strong performance of the last decade well into
the future.”
- 2015 Global Custodian Mutual Fund
Administration Survey
We were also praised for our consistency in excellent scores
for Fund Accounting, with a score of 6.22 this year, as well
as our scores in Relationship Management and Client
Service, which have been well above 6.0 for the last five
years. Comments from this year’s survey participants
discussed the quality of our personnel and the effectiveness
of our technology.
We thank you, our clients, for your time and effort, and look
forward to our continued partnership as we provide you
with high-quality and customized services to support your
business needs.
For more information on our industry-leading services,
contact your relationship manager.
www.usbfs.com | 1.800.300.3863
SUMMER 2015
our vision
Quasar Distributors Celebrates 15 Years
Quasar Distributors
Earlier this summer, Quasar Distributors, LLC, a whollyowned subsidiary of U.S. Bancorp and the largest third-party
distributor, celebrated its 15th anniversary. When the brokerdealer opened its doors in
July of 2000, there were just
two employees supporting
the division: Jim Schoenike,
Quasar’s president, and
Teresa Cowan, Quasar’s chief
compliance officer. Other
Quasar managers now include
Michele Adyniec, Marketing,
who joined in May of 2001;
Susan LaFond, Ad Review, who
joined in September of 2001;
Cyndi Durfee, Registration, who
joined in December of 2002;
Jim Schoenike, President,
and Andrew Strnad, Legal, who
Quasar Distributors, LLC
joined in March of 2004.
“We built Quasar from scratch, unlike any
other brokerage firm. We have a fresh view
of regulations, built specifically for mutual
fund distribution.”
- Jim Schoenike
President
Quasar Distributors
Continued Growth & Service Enhancements
Throughout the last 15 years, Quasar developed into a team
of 25 employees serving more than 175 clients with more
than 700 funds and nearly $350 billion in assets. Along with
the increase in employees and client base, Quasar continues
to enhance the services they provide.
Quasar’s Ad Review team continues steady growth in the
number of pieces reviewed each year. In 2004, the team
reviewed 1,400 pieces while in 2014, they reviewed 4,500
2
pieces (34,000 pages) and filed 3,200 of those pieces
with FINRA. QuasarACCESS, Quasar’s proprietary webbased application for advertising review and approval, was
introduced in 2012. This milestone streamlined the ad
review process and increased efficiency for both Quasar and
its clients.
The Dealer Agreement department experienced similar
growth during the past decade. In 2004, Quasar executed
approximately 500 agreements per year. Now, Quasar
executes between 900 and 1,200 agreements annually.
Quasar’s Marketing team continues to provide additional
services as advertising mediums expand. The team provides
website design and hosting to approximately 90 sites,
development of mutual fund logo and brand guidelines, and
HTML email campaign assistance, in addition to the standard
fact sheet and investor guide materials. Quasar’s marketing
group produces more than 1,000 pieces a year.
Quasar also provides extensive education to our clients,
including compliance updates and outreach calls in addition
to numerous guidelines and one-on-one discussions. While
compliance updates through email began early on, Quasar
started offering compliance outreach calls in May of 2009 as
a means of reaching even more clients.
Looking Forward
Expanding its distribution services to exchange-traded funds
(ETFs) was a natural progression for Quasar in 2013. Quasar
expects to provide services for an increasing number of ETFs
as the industry continues to grow. In addition, more clients
are looking to Quasar to provide advice and guidance into the
marketplace of distribution.
“Our ability to understand the marketplace and share our
knowledge with our clients in an effort to empower our clients
to implement their own plans for distribution is a key part of
what we offer,” said Vice President Andrew Strnad.
To learn more about Quasar’s comprehensive services,
contact your relationship manager.
www.usbfs.com | 1.800.300.3863
SEC Proposes New Reporting Requirements for RICs and RIAs
Fund Administration
The SEC is pushing for modernization, and that means new
rules for the investment industry. Proof of this initiative can
be seen in two new rules proposed by the SEC on May
20, 2015. One of the proposals is aimed at investment
companies and the other at investment advisers.
The proposed investment company rules will amend
Regulation S-X, which dictates content of financial and
registration statements, to expand disclosures for derivative
investments and securities lending transactions. Also, as part
of the modernization initiative, report delivery requirements
could be fulfilled through website posting instead of mailing
hard copies, as currently required. Other significant rule
updates include retiring Form N-Q and N-SAR. Form N-Q
would be replaced by Form N-PORT and Form N-SAR would
be replaced by Form N-CEN.
Form N-PORT would be a monthly holdings-based filing
with a greater level of detail surrounding derivatives, portfolio
risk, portfolio returns, fund flows, and controlled foreign
corporations than currently required by Form N-Q.
Form N-CEN would be an annual filing, requiring much
of the same information as Form N-SAR, but with
expanded reporting specific to different types of
investment companies.
The proposed rules relating to registered investment advisers
focus entirely on amendments to Form ADV. The amended
Form ADV would collect information about separately
managed accounts, with distinct reporting requirements that
vary based on assets under management.
U.S. Bancorp Fund Services maintains a committee of
professionals dedicated to monitoring industry news,
accounting pronouncements, and regulatory developments.
The committee provides guidance to our Fund Administration
and Quality Assurance departments. We will continue to
monitor the proposed Investment Company Reporting
Modernization rules as they move forward. U.S. Bancorp
Fund Services will leverage our working relationships with
multiple audit firms and experience with money market funds’
Form N-MFP to ensure we are well positioned as the
proposed rules develop.
For more information on the Investment Company Reporting
Modernization rules, please contact your relationship manager.
AIS Workstation Provides a Comprehensive and Dynamic Portal
Alternative Investment Solutions
Our AIS Workstation portal provides clients with a transparent
and interactive tool to view their investments.
Check out our new video at http://www.usbfs.com/usbfs/
about-us/videos.aspx#watch-video for an interactive look into
Workstation’s comprehensive data warehouse, customizable
dashboard, various reporting capabilities, and real-time
reconciliation tool.
Workstation’s flexible features and advanced technology
make it easy to manage funds in a single environment.
Contact your primary administrator or business development
officer to learn more about AIS Workstation.
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SUMMER 2015
our vision
Enhance Potential Returns with Global Securities Lending
U.S. Bank
U.S. Bank recently added another way to help clients enhance
potential returns on portfolios by lending international equities
from developed markets.*
Our securities lending program was initiated in 1990 and
has committed, experienced staff. Currently, our program
administers $72 billion in lendable assets for 149 legal entities
and 35 approved borrowers.
Certain parties, primarily brokers, need to borrow securities in
order to cover short sales or establish a market in a particular
issue. In return, lenders, such as mutual funds, receive
income. Lenders have the ability to recall a loaned security
at any time for any reason, such as to vote in an important
proxy.
borrower default, there is an indemnification agreement and
clients are compensated for a related loss.
Client
1. Authorize
Collateral investment risk is minimized by an internal credit
team and strict guidelines for liquidity, diversification, credit
quality, and duration. Separately managed accounts are also
available for client-directed risk parameters.
2. Loan
U.S. Bank
4. Earnings
3. Cash
Borrower
With a stable and strong parent, our program provides
scale, comprehensive compliance and risk management
procedures, and customizable reporting.
We can analyze your portfolio, discuss your potential income
boost, and present details to your board that will assist in the
approval of a securities lending program.
To get started with U.S. Bank’s Securities Lending
program, contact your relationship manager.
*Approved markets/depositories:
We have several controls in place to protect against borrower
insolvency. Our program includes initial and ongoing credit
reviews and limits for counterparties. In addition, at inception
of the loan, 102 percent collateral for domestic securities
and 105 percent collateral for foreign securities is collected
and marked-to-market daily. In the worst case scenario of a
Australia
France
Netherlands
Austria
Germany
New Zealand
Belgium
Hungary
Norway
Canada
Ireland
Portugal
Czech Republic
Italy
South Africa
Denmark
Japan
Sweden
Euroclear
Luxembourg
Switzerland
Finland
Mexico
United Kingdom
NOT FDIC INSURED/NO BANK GUARANTEE/MAY LOSE VALUE.
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www.usbfs.com | 1.800.300.3863
Client Conference 2015:
Engage. Create. Innovate
U.S. Bancorp Fund Services
We were honored to host valued clients, business partners,
and friends at our 2015 Client Conference, held June 10-12,
in Fontana, Wisconsin. Attendees from across the street and
around the world joined U.S. Bancorp Fund Services for three
days to “Engage. Create. Innovate.” together.
The 28th annual conference kicked off with opening remarks
from U.S. Bancorp Fund Services President Joe Redwine,
Executive Vice President Joe Neuberger, and U.S. Bancorp
Wealth Management & Securities Services Vice Chairman
Terry Dolan.
Guests enjoying dinner on
The Abbey Resort’s harbor lawn.
Andy Chica participating in the
inaugural Mutual Fun Run.
Several industry-focused general sessions followed, featuring
a regulatory update, a collective investment trust (CIT) versus
mutual fund discussion, a panel discussion focused on mutual
fund audits, and a presentation on the current hot topic of
cybersecurity. Additionally, this year we were honored to host our
keynote speaker, Chairman, President, & CEO of U.S. Bancorp,
Richard Davis, who captivated the audience during dinner on
Thursday evening.
Along with innovative content and focused roundtable sessions,
conference attendees spent Thursday afternoon engaging
in an activity of their choice. From braving the elements on
the cool waters of Lake Geneva or out on the golf course, to
creating original painted artwork or enjoying a day in the spa,
there was something for everyone. Clients and partners had
the opportunity to unwind and have fun with colleagues while
forming relationships with new friends.
Jeff Rauman, Sam Zona, Erik Olstein, Michael Luper, and Sue Weber
attending Wednesday night’s outdoor dinner.
Thank you to everyone who joined us at our 28th annual Client
Conference and worked hard to make it a success. We look
forward to seeing all of our clients and partners again in 2016.
NEXT YEAR’S CONFERENCE IS
SCHEDULED FOR JUNE 8-10, 2016
Chairman, President & CEO of
U.S. Bancorp, Richard Davis
delivering his presentation.
Tom Pandick, Joe Neuberger,
Helge Lee, and Brad Adams
braving the golf course.
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SUMMER 2015
our vision
The Signature Guarantee Challenge
Transfer Agent
Signature guarantees have become a frequent topic of
discussion for both investors and fund clients as a number
of banks and financial institutions across the country are
reconsidering if and when guarantees should be provided.
Service providers rely on signature guarantees to authenticate
shareholders and validate individuals who have the authority
to provide instructions on which the guaranteed signatures are
required. While signature guarantees are important in protecting
shareholders from fraudulent activity on their accounts, this shift
has created a challenge for the mutual fund industry.
However, it is not surprising that some financial institutions
no longer provide guarantees. Institutions do not typically
generate any revenue from this service, but bear both the cost
of managing the responsibility and the expense of any losses
that could occur from another organization relying on the
guarantee given by one of their associates. This is particularly
true of institutions participating in the Securities Transfer Agents
Medallion Program, Inc. (STAMP). Members of this program
carry a surety limit, which is the threshold amount the institution
will insure in the event of fraud. Institutions that are non-STAMP
members offer no such warranty or financial backing and will
not have a surety limit. In the interest of providing shareholders
with maximum flexibility, U.S. Bancorp Fund Services accepts
signature guarantees from both STAMP and non-STAMP
members because of the additional security measures we take
to authenticate shareholders and requests. These steps include
reviewing account age, history, and other information.
As financial institutions review signature guarantees, some
have limited their availability to only offer STAMP signature
guarantees from their central branch offices, and only in their
larger city locations. Other financial institutions no longer offer
STAMP signature guarantees.
In 2008, the Securities Transfer Association, in conjunction
with Kemark Financial Services, the administrator of STAMP,
proposed the Signature Validation Program (SVP), allowing
financial institutions to provide a stamp that verified their
customer’s signature, specifically for non-financial transactions.
While this program has not received industry-wide acceptance,
more than 150 companies are listed as participants and it has
offered some alternatives for shareholders.
Within the mutual fund industry, both in-house and third-party
transfer agents have created their own solutions regarding
signature guarantees. Some transfer agents eliminated the
requirement of a signature guarantee on certain transactions
and others, including U.S. Bancorp Fund Services, are
accepting alternative forms of shareholder authentication
including:
Non-STAMP signature guarantees
SVP stamps
Financial notaries
Non-financial notaries
Lawyer signature guarantees or notaries
Lawyer letterhead
Financial institution letterhead (with call back if desired)
U.S. Bancorp Fund Services is sensitive to the challenges
associated with signature guarantees. Our goal is to protect
shareholders, funds, and ourselves. We will work with
you and your shareholders to ensure confidence in the
authentication and validation processes we use to prevent
any fraudulent activity.
For more information on signature guarantees, please
contact your relationship manager.
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www.usbfs.com | 1.800.300.3863
What the Heck is an ETF?
Exchange Traded Funds
At this year’s Client Conference, held June 10-12 in Fontana,
Wisconsin, attendees participated in several industry-focused
general sessions including an overview on exchange-traded
funds titled, “What the Heck is an ETF?”
The session included information on the following:
1. Passive ETFs, Active ETFs, and ETMFs: ETFs
can be structured in a number of ways, and our
knowledgeable team has experience in servicing a
wide variety of products.
Passively-managed ETFs track an index. Similar to
index mutual funds, passive ETFs track a specific
index as detailed in its prospectus. Passive ETFs
must rebalance their portfolio holdings relative to the
specific holdings of that index at specified dates.
Actively-managed ETFs do not track an index
and, therefore, are not held to index holdings or
a rebalance schedule. This provides the actively
managed ETF portfolio manager the same flexibility
as a non-indexed mutual fund manager and allows
them to trade their portfolio at any time during the
trading day.
ETMFs or Exchange Traded Managed Funds are a
new product offering from Navigate Fund Solutions
that share some characteristics of ETFs and some of
mutual funds.
2. Sponsor and service provider roles and
responsibilities: From the ETF sponsor and
service provider to the NSCC/DTCC and authorized
participants, there are various parties responsible for
the smooth operation of an ETF. The team at U.S.
Bancorp Fund Services will provide guidance and
transparency through the entire process.
3. Legal requirements for launch and beyond: The
unique features of ETFs require advisers to obtain and
comply with special exemptive relief from the SEC,
adhere to rules of the applicable listing exchange
(e.g., NASDAQ, NYSE Arca, BATS), and regularly
disclose certain information on their websites, in
If you would like to learn
more about launching an ETF,
contact Mike Castino or your
relationship manager.
Mike Castino
Senior Vice President,
Exchange Traded Funds
P: 888.455.5553
E: [email protected]
shareholder reports, and in registration statements.
Our legal administration team has a dedicated
ETF staff to walk you through these various legal
requirements.
4. U.S. Bancorp Fund Services’ integrated service
line technology: We use two proprietary systems,
Genius™ and DASH™, to link all core applications
into one central database for a consolidated
processing center and to provide users with flexible
and comprehensive real-time reporting.
5. Key distribution aspects: Quasar Distributor’s
familiarity with FINRA and SEC rules allows them to
offer compliant website design and hosting services
for ETF clients. Additionally, Quasar has developed
relationships with a number of the important Lead
Market Makers (LMMs) and Authorized Participants
(APs), which support the creation of an active market
for an ETF.
For more information about our ETF services, visit
www.usbfs.com/usbfs/etf-services.aspx.
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SUMMER 2015
our vision
See US This Fall at Industry Conferences and Events
U.S. Bancorp Fund Services
From coast to coast, our team of professionals will be on-site at industry-leading conferences to discuss your servicing needs.
Visit US at the following conferences and events.
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September 21 | Bloomberg Hedge Fund
Start-Up Conference
New York, NY
September 27-30 | ICI Tax & Accounting
Conference
Orlando, FL
September 24 | U.S. Bancorp Fund Services
AIS Partner Outing
Wayne, NJ
October 5-6 | IIR Liquid Alternative Strategies East
New York, NY
September 24-25 | ETF Bootcamp
New York, NY
September 27-29 | Alpha Hedge West
San Francisco, CA
October 22 | HFMWeek Awards
New York, NY
October 25-28 | RIA Forum
Las Vegas, NV
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October 28-30 | Alternative Asset Summit
Las Vegas, NV
October 29 - 30 | NICSA GMM
Boston, MA
For more information about any
of our upcoming events, please
contact U.S. Bancorp Fund
Services at [email protected].
BUILDING ON FOUR DECADES OF INVESTMENT EXPERIENCE
With more than 45 years of service distinction, U.S. Bancorp Fund Services, LLC combines industry-leading technology with high-quality customer service
to provide our clients with customized solutions. For more information about our comprehensive suite of mutual fund, alternative investment, and ETF
products and services, call 800-300-3863 or visit www.usbfs.com.
U.S. Bancorp Fund Services, LLC
777 East Wisconsin Avenue
Milwaukee, WI 53202
Please send your comments and suggestions to [email protected]. Headquartered in Milwaukee since 1969, U.S. Bancorp Fund Services, LLC is a
subsidiary of U.S. Bank, N.A., the fifth largest commercial bank in the United States and an affiliate of Quasar Distributors, LLC. Quasar Distributors, LLC,
a wholly owned subsidiary of U.S. Bancorp, underwrites and distributes mutual funds and is a FINRA member firm. U.S. Bancorp is the parent company of
U.S. Bank, N.A. U.S. Bank, N.A. is not responsible for the obligations of its affiliates.
usbfs.com
1.800.300.3863
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