Press Release

DTCC Plans Launch of Separately Managed Account Service

Rule Filing with SEC for Approval

New York, NY, October 27, 2003 – The fast-growing market for Separately Managed Accounts (SMAs) is poised for exponential growth, supported by the planned introduction of The Depository Trust & Clearing Corporation’s (DTCC) new centralized and automated communications system that will link sponsoring broker/dealers and investment managers throughout the industry.

DTCC’s new service will automate the flow of data related to establishing and servicing SMA accounts - which are now highly manual – and increase efficiencies while reducing errors and operational risks. In addition, the service will help eliminate the multiple connections that now exist between parties, decrease the cost and time it now takes to open and service SMA accounts, and provide opportunities for users to expand trading relationships.

A rule filing seeking approval to proceed with DTCC’s Separately Managed Account Service has been filed with the SEC and is pending. The service is an offering of National Securities Clearing Corporation, a subsidiary of DTCC.

“Our industry is facing a critical stage similar to the one faced by the mutual funds industry 20 years ago,” said Christopher L. Davis, executive director of the Money Management Institute, the national organization for the managed account industry. “Operational costs are disproportionately high, compared to the assets under management that the industry is bringing in. If separately managed accounts are to grow into a scalable business, we have to address critical information processing issues now.”

DTCC has been working closely with the MMI to prepare for this launch using newly standardized business notifications procedures developed by the organization. “With DTCC serving as the central communications and processing hub, we are in an excellent position to draw upon its considerable experience and expertise in streamlining industry operations,” explained Davis.

Ann Bergin, managing director for DTCC’s Distribution Services business unit (which includes Mutual Fund Services and Insurance Services), noted, “By creating operational efficiencies for this market – similar to the ones we introduced for equities, mutual fund and insurance transactions in the 1970s, ‘80s and ‘90s - we can offer firms providing SMA services and an innovative technology that can leverage our centralized communications capabilities and processing expertise to support future growth.”

Separately Managed Accounts are available to the high-net-worth clients of broker/dealer SMA program sponsors and investment managers who want to establish portfolios of investments tailored to their individual needs and investment goals. At the same time, SMA programs are being marketed to a broader “mass affluent market,” defined as individuals with liquid assets of at least $100,000 or total net worth of at least $500,000.

Market growth trends are clear. Statistical reports from the MMI show that assets in SMAs increased to nearly $459 billion at the end of the third quarter of 2003, more than doubling in the five-year period from 1997, when year-end assets were $220 billion. MMI and Financial Research Corporation, a research and consulting firm that analyzes financial services marketing and distribution trends, expect that assets will grow to $930 billion by 2006 and to $2.1 trillion by 2011.

DTCC has been testing a prototype of the service with several sponsoring broker/dealers and investment managers. This testing period has allowed DTCC to fine-tune the system and address customer concerns prior to launch.

In the near future, DTCC plans to expand the functionality of the service to include additional account maintenance specifications. Further out, as the SMA industry identifies other areas that could benefit from this technology, DTCC will work to create additional enhancements to meet the industry’s needs.

"We look forward to participating in this new service," said Mary Gentempo, senior vice president and director of Operations, AIM Private Asset Management. “As a firm active in providing separately managed account services, this new, automated method of communicating information should help AIM’s accounts team process accounts faster and with greater accuracy. All of the information will be in a standardized format versus having to review individual contracts to gain the information.”

“Universal adoption of a DTCC communications hub can be a huge win for both sponsors and investment managers by eliminating manual steps, improving operational efficiencies and ultimately providing improved client service,” said Rick Austin, senior vice president and manager, ICS Administration, Trading & Client Reporting for UBS Financial Services Inc. Austin is also co-chair of MMI’s Technology & Operations Committee, which is partnering this effort with DTCC.

About DTCC

The Depository Trust & Clearing Corporation (DTCC), through its subsidiaries, provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, over-the-counter credit derivatives and emerging market debt. DTCC's depository also provides custody and asset servicing for more than two million securities issues from the United States and 100 other countries and territories. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks. DTCC has operating facilities in multiple locations in the United States and overseas. For more information on DTCC, visit www.dtcc.com.