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American Express Seal Diagnosis    2005
 

American Express Seal Diagnosis 2005

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    American Express Seal Diagnosis    2005 American Express Seal Diagnosis 2005 Document Transcript

    • DIAGNOSIS FOR THE DALBAR COMMUNICATIONS SEAL AMERICAN EXPRESS FUNDS SHAREHOLDER REPORTS MARCH 2005
    • INTRODUCTION BACKGROUND The DALBAR Communications Seal is the recognition awarded to financial service communications that display excellence in meeting the needs of customers. The DALBAR Communications Seal differentiates organizations that recognize the importance of communicating in a manner that is calculated to be understood by the average customer. The Seal is the third- party endorsement of communications that establish an organization as an industry leader in this critical area. DIAGNOSIS FOR THE SEAL DALBAR examines the communication to determine if the standards to earn the Seal are met and identifies any weaknesses that may exist. The Seal standards consist of a number of variables that satisfy: √ Customer needs and preferences √ Regulatory requirements √ Aesthetic criteria √ Industry practices The standards for the DALBAR Communications Seal are based upon 15 years of conducting customer surveys, collecting a vast inventory of communications used in financial services, studying industry innovation, and monitoring regulatory changes. Reports are evaluated based on several rating criteria, which are organized into five categories: √ Calculated to Be Understood: report features that strongly impact customers’ ability to understand important information √ Primary Content: report content that is critically important to customers √ Secondary Content: report content that is important but not critical to customers DALBAR, Inc. Page 2 Communications Seal Diagnosis
    • √ Desirable Design Features: design elements that positively impact the report √ Undesirable Design Features: design elements that negatively impact the report THIS REPORT This report presents the results of the DALBAR Communications Seal Diagnosis for American Express Funds Shareholder Reports. The report includes: √ Results Overview: Announcement of whether the reports earn the Seal. √ Strengths: Features of the reports that display industry leadership in meeting the needs and preferences of customers. √ Enhancements to Maintain Seal Standard in the Future: Enhancements to respond to regulatory requirements, meet customer needs, and meet competitive requirements. Dalbar, Inc. Page 3 Communications Seal Diagnosis
    • DIAGNOSIS RESULTS RESULTS OVERVIEW American Express Funds Shareholder Reports Earns The DALBAR Communications Seal STRENGTHS American Express Funds Shareholder Reports displays above-average qualities in the following elements of report content and design: Calculated to Be Understood Employs language and explanations that are appropriate for average investor √ Disclosure language is clear and does not interfere with flow of statement √ Reports avoid common abbreviations, jargon, and unfamiliar language Highlights of important performance results √ 1 year, 5 year, 10 year, and since inception √ Compares the fund to a benchmark or index √ Considers the effects of sale charges on the performance of the fund Dalbar, Inc. Page 4 Communications Seal Diagnosis
    • Primary Content Comments on the Fund’s performance Discussion of Past Year/Current Market Conditions Discussed actions taken to respond to market conditions √ General actions taken by the fund √ Holdings that were added or dropped from the fund Describe sources for questions and up to date information Desirable Design Features Highlights the most important information Data is presented in a consistent, logical sequence √ Data and commentary presented in logical order √ Important information is displayed first √ Consistent style of presentation Use of graphics, images and color to enhance data and messages Undesirable Design Features Avoids excessive number of pages √ Reports do not contain non-intentional blank pages √ Report length is appropriate √ Space is used adequately to inform the investor Secondary Content Description of company √ Company name and logo are consistent √ Companies description, history, affiliations, and size are stated √ Corporate mission statement Dalbar, Inc. Page 5 Communications Seal Diagnosis
    • How to make additional purchases, exchanges, and open accounts √ Provides several options for buying and selling shares √ States the investment options associated with each class of shares √ Provides detailed options for exchanging and selling shares Dalbar, Inc. Page 6 Communications Seal Diagnosis
    • RECOMMENDATIONS TO MAINTAIN THE SEAL American Express can enhance its report to: √ Meet current and pending legislative reform in financial communications. Numerous Congressional bills, passed and pending, require that financial communications be “calculated to be understood,” including: • Sarbanes Oxley (2002) • Pension Security Act of 2003 • Retirement Security Advice Act of 2003 • GAO Report on Mutual Fund Fees √ Meet competitive requirements. Leaders in the mutual fund industry are influencing calculated to be understood standards by adopting statement practices that impact customers’ ability to easily and fully understand the document. Firms that inspire calculated to be understood standards can avoid the cost and risk associated with reacting to legislation; that is, the cost of building new systems and processes to conform and the risk of a blow to the firm’s image as litigators seek out non-compliant firms. The following list identifies specific areas in which American Express trails industry-leading practices. American Express should consider incorporating some or all of these features in order to maintain the Seal. Desirable Features Appearance and presentation √ Increase the size of the text of the disclaimers and share summaries √ Un-bundle the prospectus from the report Secondary Content Products and services available from the company √ Increase the knowledge of other product lines available to the investor DALBAR, Inc. Page 7 Communications Seal Diagnosis
    • The following reports were reviewed by DALBAR and have earned the DALBAR Communications Seal. Growth Funds Category √ AXP Equity Select Fund √ AXP Global Technology Fund √ AXP Growth Fund √ AXP New Dimensions Fund √ AXP Strategy Aggressive Fund Blend Funds Category √ AXP Large Cap Equity Fund √ AXP Managed Allocation Fund √ AXP Precious Metals Fund √ AXP Small Cap Advantage Fund √ AXP Stock Fund √ AXP Discovery Fund √ AXP Quantitative Large Cap Equity Global and International Funds Category √ AXP Emerging Markets Fund √ AXP European Equity Fund √ Global Balanced Fund √ Global Equity Fund √ International Fund Value Funds Category √ AXP Diversified Equity Income Fund √ AXP Equity Value Fund √ AXP Large Cap Value Fund √ AXP Mid-Cap Value Fund √ AXP Mutual Fund √ Dividend Opportunity Dalbar, Inc. Page 8 Communications Seal Diagnosis
    • √ Real Estate Fund Income Funds Category √ AXP Diversified Bond Fund √ AXP Global Bond Fund √ AXP High Yield Bond Fund √ AXP Income Opportunities Fund √ AXP Selective Fund √ AXP Short Duration U.S. Government Fund √ AXP U.S. Government Mortgage Fund √ AXP Inflation Protected Securities Fund √ AXP Limited Duration Bond Fund √ AXP Core Bond Fund Tax-Exempt Income Funds Category √ AXP High Yield Tax-Exempt Fund √ State Tax-Exempt Funds √ Tax-Exempt Bond Fund AXP Partners Funds Category √ AXP Partners Aggressive Growth Fund √ AXP Partners Growth Fund √ AXP Partners International Aggressive Growth Fund √ AXP Partners Small Cap Growth Fund √ AXP Partners International Core Fund √ AXP Partners International Small Cap Fund √ AXP Partners Small Cap Core Fund √ AXP Partners International Select Value Fund √ AXP Partners Fundamental Value Fund √ AXP Partners Select Value Fund √ AXP Partners Small Cap Value Fund √ AXP Partners Value Fund Dalbar, Inc. Page 9 Communications Seal Diagnosis