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DTCC: Announces Technology Development Under Way for Systems Changes Related to Mutual Fund Breakpoints

Effort Supports Recent Recommendations of NASD/Industry Task Force

New York, August 4, 2003 - The Depository Trust & Clearing Corporation (DTCC) announced today that technology development is well under way on modifying two of its key services to support the recommendations of the NASD/Industry Task Force on Breakpoints involving mutual funds sales.

"We are committed to working with the Task Force in achieving its objectives to help the industry deliver information on breakpoint discounts with greater efficiency," said Ann Bergin, DTCC managing director for Distribution Services, which includes National Securities Clearing Corporation's (NSCC's) Mutual Fund Services. "Our Mutual Fund Services, specifically Fund/SERVâ and Mutual Fund Profile Service, are robust, flexible systems that have built-in capabilities to accommodate a broad range of information. Together, we believe they can become integral parts of the overall solution."

Bergin represents DTCC on the NASD Task Force. In addition, both she and Barbara Simon, vice president, Mutual Fund Services, are members of two of the new working groups formed by the Task Force.

Bergin explained that preliminary work began several months ago in anticipation of the Task Force's recommendations, and that DTCC was working with the Task Force, as well as fund companies, firms, the Investment Company Institute and the SIA, as it enhances its systems. "Any enhancements to existing services or, in fact, the development of new services, are brought to market by working closely with our various users. We expect that the same coordination with the industry regarding breakpoint issues will result in clear consensus on how our services can be delivered quickly and with minimum impact on our customers. We're hoping to complete this effort early in 2004."

The two NSCC Mutual Fund Services that have been identified as being able to provide part of the solution are Fund/SERV - to enable broker/dealers and fund transfer agents to transmit and receive information so that the transaction can be processed with the appropriate breakpoint information; and Mutual Fund Profile Service - to make available in a standardized format information related to breakpoint discounts offered by fund families.

Fund/SERV, introduced in 1986, links fund families with broker/dealers and other distributors of funds, and is considered the de facto industry standard for processing fund purchases, redemptions, exchange orders and account registrations. The Task Force concluded that Fund/SERV was the preferred vehicle for transmitting information necessary to identify and support proper breakpoint discounts.

Over the years, Fund/SERV's capabilities have been significantly expanded to support additional investment products, including 401(k) and other retirement plans, 529 Qualified State Tuition Plans, Stable Value Funds, Guaranteed and Bank Investment Contracts, Unit Investment Trusts, Bank Collective Investment Trusts and Separate Accounts.

Mutual Fund Profile Service (MFPS) is an automated, centralized system that improves the flow of critical information to and from fund families and their distributors. Examples of the information currently available with MFPS are daily Net Asset Value and daily accrual rates; as well as security information, including breakpoint and contingent deferred sales charge information. "The service in its present form does include breakpoint schedules from funds, but not the rules surrounding eligibility. Once the terminology is standardized, we will make changes to the service to reflect the eligibility requirements in our system," Bergin added.

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.