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Five analysts and top management from nineteen sector firms examine the Brokers & Asset Managers sector in this special 98-page issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info383.htm

TWST: Joan, how have the brokers and asset management stocks performed over the past six to 12 months?

Ms. Solotar: If you measure performance beginning in December 2000, which is when investors first began thinking about Fed easing, brokerage stock performance has been strong relative to the broader market. If you look at the group on a year-to-date basis, relative to the Dow and the S&P Financial Index, the group has generally underperformed.

TWST: There has been increasing talk about the privatization of retirement funds in Europe. Do you think that this will present some opportunities for US companies?

Ms. Solotar: I think that US firms are trying to figure how to access those clients and their money. We assume there will be large money flows but US firms generally do not have retail distribution in Europe. And it is nearly impossible to execute a pan-European strategy. A firm needs to build out country by country, which is expensive and takes time. We expect to see a greater number of joint ventures and distribution agreements, and I think it will be a big challenge for the US firms.

TWST: What are you telling investors today, Joan? Is this a time to be buying brokers and/or asset managers?

Ms. Solotar: I am more bullish on the prospects for the brokers than I am for the asset managers, in part because of the global opportunity. However, while we have been strong proponents of purchasing these stocks over the last few years, this year we are more cautious. I would wait. I think the valuations have held up very well, if not too well, in a period of extreme uncertainty in terms of second half recovery. I would not be aggressively pursuing them right now. For the asset managers we see some attractive models but the valuations appear pretty full at the moment. I would also wait for some pullback there too. The one name we’re recommending on the asset management side is Waddell & Reed (NYSE:WDR), because it has the elements I was speaking of earlier. It has had solid performance and it has captive distribution. It’s serving the retirement market, particularly the IRA part of that market. Its assets tend to be stable, enhancing the margin. And relative to the group, it is trading at a modest discount.

TWST: How have its funds performed?

Ms. Solotar: The firm has done quite well relative to their benchmarks over an extended period of time.

TWST: In conclusion, what’s your overall message to investors who are considering this industry today?

Ms. Solotar: My overall message is that the long-term prospects are extraordinary in terms of the opportunities for US brokerage firms to grow their earnings. These opportunities will come from the privatization of pension funds, the lifting of limits on IRA and 401(k) allowances, consolidation of industries and the globalization of capital markets. There are very few firms well positioned to take advantage of these trends today, and most of them are the US investment banks. I would then sprinkle all of that with a bit of caution in the near term, given the valuations and the uncertainty for third and fourth quarter earnings.

This special issue includes:

1) Brokers & Asset Managers - In an in-depth (11,900 words) Analyst Roundtable, Amy Butte, Managing Director at Bear, Stearns & Company, Mark Constant, Senior Vice President/Executive Director at Lehman Brothers and Dean Eberling, Senior Vice President at Keefe, Bruyette & Woods, examine the outlook for the sector including, brokerage stocks performance, money fund flows and share specific stock recommendations.

2) The TWST confidential Off-The-Record survey of management performance at twenty sector firms asked market insiders about the ability of management teams to create shareholder value.

3) Outlook for Brokers & Asset Managers - In an in-depth (2,700 words) Analyst Interview, Joan Solotar, Senior Brokerage & Asset Management Analyst at Credit Suisse First Boston, examines the outlook for the sector and shares specific stock recommendations .

5) Electronic Brokers - In an in-depth (3,600 words) Analyst Interview, L. Russell Keene III, Vice President at Keefe, Bruyette & Woods, Inc., examines the outlook for the sector and shares specific stock recommendations.

4) CEO interviews (average 2,500 words). Top management of nineteen sector firms examine the outlook for their firm and the sector.