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5939- 1. Mutual Fund Services. National Securities Clearing Corporation Mutual Fund Services A Presentation for Bank Depository User Group Mutual Funds Update October 25, 2005 Denise Grant Director Distribution Services.

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5939- 1

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  1. 5939-1

  2. Mutual Fund Services National Securities Clearing Corporation Mutual Fund Services A Presentation for Bank Depository User Group Mutual Funds Update October 25, 2005 Denise Grant Director Distribution Services National Securities Clearing Corporation is a subsidiary ofThe Depository Trust & Clearing Corporation 5939-2

  3. Mutual Fund Services Today’s Agenda • Enhancements Overview • 2005 Enhancements • 2006 Potential Enhancements • New Initiatives • Statistics

  4. Enhancements Overview Mutual Fund Services Enhancements • NSCC works with various industry groups and special task forces to discuss the need for enhancements • Investment Company Institute (ICI) • Broker Dealer Advisory Committee (BDAC) • Bank and Trust Advisory Committee (BTAC) • Transfer Agent Advisory Committee (TAAC) • International Operations Advisory Committee (IOAC)

  5. Enhancements Overview Mutual Fund Services Enhancements • NSCC works with various industry groups and special task forces to discuss the need for enhancements • National Association of Securities Dealers (NASD) • Joint NASD/Industry Task Force on Breakpoints • Securities Industry Association (SIA) • SIA Operations Committee

  6. Mutual Fund Services 2005 Enhancements

  7. 2005 Enhancements March Release • Direct Accounts Through Networking • Important Notice A#5948 • Enhancements to Mutual Fund Profile Service II (MFPSII) for PCWeb Direct

  8. 2005 Enhancements May Release • Enhancements to Mutual Fund Profile Service II (MFPSII) for PCWeb Direct • Important Notice A#6005

  9. 2005 Enhancements August Release • Enhancements To Mutual Fund Profile Service II (MFPSII) for PCWeb Direct and Mainframe • Important Notice A#6062

  10. 2005 Enhancements September Release • Short-Term Redemption Fees • Important Notice A#6035, A#6056, A#6064, A#6080 • New sequential record Fund/SERV records • Allows for collection of short-term redemption fees at time of trade • Networking Activity file modified

  11. 2005 Enhancements September Release • Mutual Fund Profile Service – Daily Price & Rate • Important Notice A#6051 • Fund/SERV reject Codes • Important Notice A#6035 and A#6056

  12. 2005 Enhancements November Release • Enhancements to Mutual Fund Profile Service II (MFPSII) For Mainframe and PCWeb Direct • Important Notice A#6084 • Enhancements to Mutual Fund Profile Service II (MFPSII) For Mainframe and PCWeb Direct

  13. 2005 Enhancements December Release • Additional Social Security & Tax Identification Numbers • Important Notice A#6076 • Modifications To Social Codes On Mutual Fund Services • Important Notice A#6082 • Mutual Fund Commission Settlement Service Enhancements • Important Notice A#6092

  14. 2005 Enhancements December Release • New Codes for Defined Contribution Clearance & Settlement (DCC&S) on Fund/SERV • Important Notice A#6081 • IRA/DCP/529 Indicator renamed Asset Type Indicator • Ten new codes added

  15. 2005 Enhancements December Release • New Codes for Defined Contribution Clearance & Settlement (DCC&S) on Fund/SERV • Settlement Override Reason Code Field • 07 = Refer to Asset Type Indicator • NAV Reason Code Field • C = Refer to Asset Type Indicator

  16. 2005 Enhancements December Release • New Codes for Defined Contribution Clearance & Settlement (DCC&S) on Fund/SERV • TPA Number Field • Allowed only if Asset Type Indicator = B, F-O • Short Registration Exception

  17. Mutual Fund Services 2006 Enhancements

  18. Potential 2006 Releases • Networking SCRUB (Full & Partial) and Fund Acknowledgement Modifications • Reconcile static data discrepancies for client accounts • Fund and firms should reflect identical account information • Assist in resolving breaks of non-financial information • Identify breaks as they occur

  19. Potential 2006 Releases • Breakpoint Task Force – Client Data Share items • Allows a firm to provide customer related information in a standardized format on an account set-up • “Reverse” Position files for Omnibus accounts

  20. Potential 2006 Releases • Omnibus Task force Recommendations • Share Aging file modifications • CDSC file name changed to Share Aging • Broadens use of information on the file to include Short-Term Redemption Fee, Cost-basis, 12b-1 and other calculations based on holding period • Five new fields and indicators will be added

  21. Potential 2006 Releases • Mutual Fund Profile Service II (MFPSII) Task Force • Subcommittee of the Investment Company Institute (ICI) Broker/Dealer Advisory Committee (BDAC) • Continued modifications of MFPSII to create consistency and clarify ambiguity of fields

  22. Potential 2006 Releases • Tax Law – American Job Act Changes • Provide fields needed to accurately report the portion of the fund’s distribution subject to: American Jobs Creation Act of 2004 (AJCA) and Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) • Non-resident alien shareholders are subjected to the new tax laws with QII, short-term capital gains and withholding amounts affected

  23. Potential 2006 Releases • Tax Law – American Job Act Changes • Information needs to be passed from fund to firm at time of distribution/declaration • An automated process to allow firms to know the portion of the distribution that is attributable to gains as a result of U.S. real property interests • Proposed system changes • Networking Dividends • Profile Distribution

  24. Potential 2006 Releases • Standard Data Reporting • SEC Rule 22c-2 • Standard, automated facility for funds to request and retrieve shareholder trading information from intermediaries • SEC Compliance date October 16, 2006 • NSCC Pilot date 3Q 2006

  25. Mutual Fund Services New Initiatives

  26. Alternative Investment Products • Automate and standardizeinformation for: • Hedge Funds • Fund of Hedge Funds • Managed Futures • Commodity Pools • REITs • Advisory committee of more than 30 firms, funds, and service providers • Centralized USD settlement

  27. Alternative Investment Products Pilot launch (target June 2006) to include: • Subscriptions • Redemptions • Tender Offers • Account Maintenance • Commission Settlement • Account Maintenance • Valuation Reporting • Position Reporting • Distribution Reporting

  28. Separately Managed Accounts • Support SMA industry defined information message and processing standards • Sponsors • Investment Managers • Custodians • Provide a single conduit for data and message flows • Directly or via service provider • Utilize existing connectivity into DTCC • Provide central Infrastructure • Insure integrity standards • Development • Operations

  29. Separately Managed Accounts • Progress to date • Data Standards Committee • MMI Standards Version 1.1 complete • Version 2 in progress • Prototype HUB • Standard Message Flow • XML Schemas • Data repository and processing system • DTCC Advisory Group being established

  30. Mutual Fund Services Statistics

  31. Fund/SERV Statistics Lower Costs as Volume Increases

  32. Networking Statistics 1988 2004 Sub-Accounts 67,077 65,045,679 Users 15 979

  33. Resources • Your Relationship Manager • Mutual Fund Marketing 212-855-8877 • http://funds.dtcc.com • Important Notices • Manuals • User Guides • Record Layouts

  34. Mutual Fund Services Questions?

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