Best-Execution Requirements Increase SMA “Step-out” Trading Activity, According to New FRC SMA Trading Practices Survey

Boston, MA, March 17, 2008 - “Step-out” trades, or the practice of “trading-away” as it is commonly called, is expected to grow significantly among managers participating in the retail Separately Managed Account (SMA) space, according to findings from FRC’s latest SMA trading practices survey. Findings are based on a survey of more than thirty retail SMA managers, collectively representing nearly a third of the SMA industry’s accounts. FRC was commissioned by Citi's Investment Administration Services, one of the leading providers of operations outsourcing to the managed accounts industry, to conduct this custom survey in February 2008.“As part of our current practice, we have noticed an increased trend toward step-out trades. At the same time, our clients have become increasingly interested in automating what is a time-consuming and inefficient manual settlement process for step-outs,” said Andrew Clipper, Director of Product Management at Citi Investment Administration Services. “We commissioned this survey to learn more about the drivers behind step-outs and the perceptions and experience of others in the industry as we look for innovative solutions to industry needs.” “Investment managers are striving to meet best-execution standards and we are seeing that as more sophisticated investment strategies enter the retail SMA space, managers are increasingly relying on step-out trades,” said Owen Concannon, Director of Managed Accounts and Alternatives at FRC. “Retail SMA managers have indicated that a growing percentage of their across-the-board volume will be traded-away in the future. More than Financial Research Corporation 100 Summer Street, Suite 1500 Boston, MA 02110 617-824-1325 www.frcnet.com Contact: Owen Concannon (617) 824-1286 owen.concannon@frcnet.com half of managers expect at least 50% or more of their model change volume will be traded-away.”

Other survey findings include:

Competing Motivations Spurn Step-Outs—
Step-out trading is primarily motivated by the need to meet best-execution standards and obtain specialized security coverage from institutional brokers. Additionally, many managers choose to step-out trades when blocking trade flow across multiple product lines.

Nearly 80% of surveyed firms indicated that they manage multiple product lines. Security Types Necessitate Use of Third-Party Brokers—Often, managers can receive best execution in less-efficient markets, such as International ordinaries, small caps, convertibles, and fixed-income securities, by trading away. Among those managers that trade-away large-cap domestic equity securities, nearly two-thirds indicated they often trade-away when blocking orders with the other product lines they manage. Costs of Stepping-Out—The largest percentage of firms reported that the costs of stepout trades are netted up into the trade, while nearly one-quarter of managers indicated that trading on their retail managed accounts was free as part of a broader institutional relationship.

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About Financial Research Corporation
Financial Research Corporation (FRC) provides the knowledge to build stronger relationships through product development and management, distribution solutions, and marketing strategies. For more than 20 years, our insightful research and consulting services have been assisting marketing, product development, and strategic planning professionals in the creation of innovative products and services. Based in Boston, FRC is at the forefront of assisting its clients to comprehend and respond to the rapid changes occurring in the manufacture and distribution of investment products. Our more than 200 clients include the world’s leading asset managers and distributors. For more information, visit the FRC Website at www.frcnet.com.

About Citi Investment Administration Services
Citi’s Investment Administration Services for Retail Separately Managed Accounts is an end-to-end operations platform designed to facilitate the growth of separately managed accounts and provide increased automation and support between Investment Managers and Sponsors of SMAs. Citi’s operations platform standardizes current and disparate processes across all aspects of the SMA industry, from account opening to reconciliation. Citi is the leading provider of retail SMA operations outsourcing services to the investment manager community with over 80,000 accounts.

Citi, the leading global financial services company, has some 200 million customer accounts and does business in more than 100 countries, providing consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management. Citi's major brand names include Citibank, CitiFinancial, Primerica, Smith Barney, Banamex, and Nikko. Additional information may be found at www.citigroup.com or www.citi.com.