Robert McCormick, First Vice-President, Mellon Financial Corp.

The Money Money Management Institute

Technology Spotlight: Outsourcing for Separately Managed Account Operations

Presented by: Robert McCormick March 1, 2006

2004 Mellon Global Securities Services 2

Agenda

– Technology Platform

– Managed Account Technology Solution

– Service Offering

– Implementation

– Contact Information


Technology Platform


Technology Platform (Investment Manager)

Sponsors

Mellon Backoffice Environment

New accounts(fax, e-mail)

AccountAdministration

Inventory&

Record-keeping

PerformanceMeasurement

Statements(Flexpack) &

Billing(Billvue)

Daily Cash & Position Reconciliation

Mellon Workflow (Workflow/Imaging & Data Retention)

Transactions/Account Detail

Sponsor 2

Sponsor 1

Trading Reporting

Thin Client Workflow(web based)

CheckFree APL

XYZ Company Management

CheckFree APL

Trades


Technology Platform (Sponsor/TAMP)

Mellon Backoffice Environment

New accounts(Mellon Workflow)


Inventory&

Record-keeping

PerformanceMeasurement

Statements(Flexpack) &

Billing(Billvue)

Daily Cash & Position Reconciliation

Workflow/Imaging & Data Retention System

Transactions/Account Detail

Custodian 2

Custodian 1

Trading Reporting


Portfolio Management System

Manager 2

CheckFree APL

TradesTrading Reporting


Portfolio Management System

Manager 1

Sponsor/TAMP


Managed Account Technology Solution



Features• Displays all business events that require attention• View detail on any specific business event• Access to open items displaying all work in progress

associated with the investment manager• Submit comments back to Mellon regarding business

events



Features• Displays all indexing data associated with

the business event stored in Workflow• All comments on business events are

tracked and displayed• View Paperwork hyperlink is available for

user to view related documentation• An entry box is available to reply to the alert

notification


Service Offering


Service Offering• Support Multiple Client Types

– Investment Managers– Sponsors– Turnkey Asset Management Provider

• Support Multiple Account Types– Equity, Fixed Income, ADR, Balanced, MSP, Long / Short

• Partnership With Leading Application Provider– CheckFree Investment Services

• Largest and Most Experienced Managed Accounts Outsourcing Provider– 100% Growth in Accounts Supported in the Past Two Years – 65,000 accounts– On average, open 130+ Accounts Per Day– $5 Billion Growth in AUM in 2005 – over $32 Billion in assets– Investment Manager Support for 37 Sponsor Platforms– Sponsor/TAMP Support communicating with 57 different Investment Managers

• Dedicated Support Structure for Managed Accounts– Sales, Product Management, Relationship Management, Client Service, Operations

• Controlled and Scalable Operating Environment


Service Offering

Services Services ProvidedProvided

Benefits to Benefits to ClientsClients

AccountOpening

Verify receipt of new account paperwork and resolve discrepancies

Establish account numbers and data

Post seed assets and cash if necessary

Set account investment restrictions as instructed

Provide portfolio suitability support (optional)

Perform quality control checks to ensure correctness

Establish account tradability and notify manager

Streamline account set-up process through Mellon

Reduce amount of paperwork and faxing via Workflow solution

Ensure accuracy of account opening

New accounts available for trading next day

Account OpeningServices

DailyReconciliation

PerformanceSupport

OtherServices


Implementation Transaction

Support


Service Offering



TransactionSupport

Process contributions/withdrawals

Set-up pending cash movements for one-time or periodic client

requirements

Perform asset transfers

Obtain confirmation/notification on all cash and asset transfers

based on established tolerances

Verify receipt of daily trade files

Access to investable cash

Daily update of accounts requiring rebalancing

Ensure cash/share movements are authorized

Administrative support for all transaction activity


DailyReconciliation

PerformanceSupport

OtherServices



Support


Service Offering



DailyReconciliation

Review daily reconciliation reports (cash, positions, accounts) and

resolve discrepancies

Notify managers of accounts with exceptions

Post corrections

Perform trade discrepancy analysis to identify pending price

differences and resolve

Identify and notify managers of accounts with cash shortage

Ensure consistent, accurate records between manager and

sponsor

Confirm tradeable balances

Unresolved accounts are removed from trading environment

Timely reporting through Daily Notification Report


DailyReconciliation

PerformanceSupport

OtherServices



Support


Service Offering

Services Services ProvidedProvided(optional)(optional)


PerformanceSupport

Code accounts for AIMR composites

Report sponsor level performance returns

Review restricted accounts

Administer month-end closing process

Identify performance outliers to benchmarks

Review outliers and perform adjusting entries to correct performance

Support AIMR Compliance

Timely, accurate performance reporting

Process to review/resolve performance outliers

Comprehensive performance measurement tools and reporting for

managers


DailyReconciliation

PerformanceSupport

OtherServices



Support


Service Offering




Process account number changes and establish new accounts

Update client profile data

Modify investment restrictions, investment strategy for account

Restrict accounts from trading based on client instruction

Process account terminations

Perform file and records management

Mellon assumes accountability for account maintenance

Mellon facilitates communication with brokers/sponsors to ensure

data integrity

Electronic access to data and historical records via workflow

Controlled process for account terminations


DailyReconciliation

PerformanceSupport

OtherServices



Support


Service Offering

Services Services ProvidedProvided(optional)(optional)


OtherServices

Tax loss tracking support

Fulfillment (welcome letters/Form ADV mailings)

Customized reporting

Support other managed account applications for clients

Billing support

Dual Contract account support ( manual reconciliations,

compliance support, statement generation/mailing)

Support for tax-sensitive trading requirements

Tailored solutions

Flexible, value-added services available

Established model for supporting dual contract accounts


DailyReconciliation

PerformanceSupport

OtherServices



Support


Implementation


Implementation



Implementation

Dedicated Implementation/Project Management Team

Established Implementation Procedures

Customized Conversion Implementation Plan

Requirements and workflow analysis

Detailed Testing Process

Facilitate Electronic Transfer of Assets

Training

Controlled Process

Accountability

Proven implementation methodology

Relationship Focused Team

Experience implementing start-up clients and large asset transfers


DailyReconciliation

PerformanceSupport

OtherServices



Support


Implementation

Requirements Analysis

Mellon Proposal/Fees

0-2 Weeks

Negotiate Contract/Service Level Agreement

Project Plan

2-8 Weeks

Implementation/Conversion

Training (e.g.: Workflow)

8-16 Weeks

Production Environment

Anticipated TimeframeTasks


Contact Information

Robert McCormick First Vice President

Mellon Investment Manager Solutions 200 Park Avenue Room 105-5400

New York, NY 10166 (212) 922-8227 Office (212) 922-4505 Fax

[email protected]

Robert McCormick, First Vice-President, Mellon Financial Corp.

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