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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: How will these two sectors be affected by the expansion of the 401(k) and IRA contribution limits? Will enough people take advantage of that to make a difference?

Ms. Solotar: It’s hard to know the magnitude of the boost to the business, but certainly at the margin it could only be a positive. The majority of individuals don’t hit the limits today, and therefore a rise in the limit will not matter to them, but there is a clear number who do. I think that as it increases flows into the equities markets, which is where much of the IRA money rests, it adds liquidity and is a positive for the overall group.

TWST: In reference to your comments on mergers and acquisitions, you noted that buyers’ currency is weaker in this environment and that sellers don’t really want to sell when their valuations are so low. Does that mean that you don’t expect to see further consolidation among the brokers and asset managers this year?

Ms. Solotar: No, not necessarily. My earlier comments related to the broader M&A business, not the specific financial services sector. It’s always tough to call the deals, so I’d rather not list specific buyers and sellers. But I think that the motivations for a transaction are often related to a search for revenue and earnings growth. And I would suggest that the valuations on the brokers and the banks have not been hit nearly as hard as the valuations in technology, which is where much of the merger activity was expected to come from.

TWST: Are there any other companies that you’d like to highlight, ones that investors should be keeping an eye on even if they’re not companies to buy or nibble at?

Ms. Solotar: Two other names that we had rated a Strong Buy earlier in the year were Merrill Lynch (NYSE:MER) and Lehman (NYSE:LEH). We were opportunistic in downgrading them when they hit their peak prices for the year so far. So I would watch for further correction there and then perhaps would begin to purchase. Merrill has the strongest retail distribution system, so I think the stock should perform well when you start to see a recovery in retail.

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.

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 .

4) 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.

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